UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-KSB

xANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year endedDecember 31, 2006



oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission file number333-122563



INTERNET ACQUISITION GROUP, INC.

(Exact name of small business issuer as specified in its charter)



California
        20-0624181(State or other jurisdiction of incorporation or organization)
        (I.R.S Employer Identification No.)




302 Creekside Ct. E.Huntertown, Indiana
        46748(Address of principal executive offices)
        (Zip Code)




(260) 385-0338

(Issuers telephone number)



Copies of Communications to:

Stoecklein Law Group

4695 MacArthur Court, 11th Floor

Newport Beach, CA 92660

(949) 798-5541

Fax (949) 258-5112



Securities registered pursuant to Section 12(b) of the Exchange Act: None



Securities registered pursuant to Section 12(g) of the Exchange Act: None



Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.o



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. YesxNoo



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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



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

Yesx
        Noo




The issuer's revenues for its most recent fiscal year ended December 31, 2006. $10,420



The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and ask price, as of March 22, 2007 was $2,008,535 based on a share value of $0.07.



The number of shares of Common Stock, $0.001 par value, outstanding on March 22, 2007 was 69,963,360 shares.



Transitional Small Business Disclosure Format (check one):  YesoNox



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INTERNET ACQUISITION GROUP, INC.

FOR THE YEAR ENDED

DECEMBER 31, 2006



Index to Report

on Form 10-KSB





PART I
        
        Page(s)Item 1.
        Description of Business
        2Item 2.
        Description of Property
        6Item 3.
        Legal Proceedings
        6Item 4.
        Submission of Matters to a Vote of Security Holders
        7PART IIItem 5.
        Market for Common Equity and Related Stockholder Matters
        7Item 6.
        Plan of Operation
        7Item 7.
        Financial Statements
        15Item 8.
        Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
        15Item 8A.
        Controls and Procedures
        15Item 8B.
        Other Information
        16PART IIIItem 9.
        Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance With Section 16(a) of the Exchange Act
        16Item 10.
        Executive Compensation
        19Item 11.
        Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
        19Item 12.
        Certain Relationships and Related Transactions, and Directors Independence
        20Item 13.
        Exhibits
        20Item 14.
        Principal Accountant Fees and Services
        20






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FORWARD-LOOKING STATEMENTS



This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.



Forward-looking statements may include the words may, could, estimate, intend, continue, believe, expect or anticipate or other similar words.  These forward-looking statements present our estimates and assumptions only as of the date of this report.  Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.



Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:




        our ability to successfully compete in the professional services industry;





        difficulties developing a new line of business in the professional services industry;





        failure to identify, develop or profitably manage additional businesses;





        failure to obtain new customers or retain existing customers;





        inability to efficiently manage our operations;





        inability to achieve future operating results;





        inability to obtain capital for future growth;





        loss of key executives; and





        general economic and business conditions.




For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see Factors That May Affect Our Results of Operation in this document.



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In this form 10-KSB references to IAG, the Company, we, us, and our refer to INTERNET ACQUISITION GROUP, INC.



AVAILABLE INFORMATION



We file annual, quarterly and special reports and other information with the SEC that can be inspected and copied at the public reference facility maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. The Company's filings are also available through the SEC's Electronic Data Gathering Analysis and Retrieval System which is publicly available through the SEC's website (www.sec.gov). Copies of such materials may also be obtained by mail from the public reference section of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405 at prescribed rates.



PART I



ITEM 1. DESCRIPTION OF BUSINESS



(a) Business Development



Internet Acquisition Group, Inc. (IAG) is a development stage company incorporated in the State of California in January of 2004.  The original concept of the company was to acquire existing Internet based businesses (hence the word Acquisition in the company name) and achieve economies of scale and develop cross-marketing opportunities between these businesses.



Following a failed merger, the business plan was revised to focus on developing Internet based businesses.  With the minimal barriers to entry for Internet based businesses, IAG determined that it was more cost-effective to develop its business rather than to seek to acquire existing businesses.   As a result, IAG developed three online stores that were fully functional websites with the ability to place orders through a secure shopping cart/checkout process.  The three different internet stores for marketing, selling and distributing products included an electronics store, a DVD movie store, and a specialty giftshop.



For operating these websites, IAG relied on a virtual operating model that included outsourcing the majority of its operating infrastructure to distribution and fulfillment companies.  We entered into an agreement with Dynamic Storefront to facilitate all our needs with regards to maintaining inventory, providing our ordering system to the consumer, and shipping the products directly from their warehouse.  Unfortunately as of December 31, 2006, IAG had to sever its relationship with Dynamic Storefront and shut down its Internet stores due to problems with the fulfillment of orders under this agreement.



IAG has now launched a new professional services business specializing in professional purchasing management for clients.    Initially, IAG has focused its attention on the purchasing and management of electronic goods and software specific to our clients needs.



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(b) Our Business



For most of the fiscal 2006 year, IAG was attempting to market, sell and distribute products through a number of its Internet based stores. Through our websites we offered a convenient shopping interface that featured product information. Our Internet or electronic commerce websites included clickable links between all of our Internet specialty stores and were designed to enhance the customers online shopping experience 24 hours a day, seven days a week.



However, towards the end of 2006, IAG changed its business focus and is currently in the business of providing professional purchasing management services.  IAG believes this type of servicing allows its clients to focus on the operation of their business.  Specifically, we assist our clients by purchasing goods and services specific to their needs and managing these services along with working to provide discounted prices on many products and services.



Principal Products and Services



IAGs original business plan included three online stores that were fully functional websites and had the ability to place orders through a secure shopping cart/checkout process.  Each website was developed with a different Internet consumer in mind.  The stores accessed through our initial websites were more of a specialty retail rather than general retail type.  By maintaining separate websites for each product category, the customer more easily find the items for which they are shopping, adding convenience and simplicity to the shopping experience.



Currently, IAG has changed is business plan to purchases general and specialized equipment as well as business services for use by our clients. Clients determine what their organizations need to keep their businesses functioning and then we oversee the process of acquiring goods and services by asking for proposals, consulting with suppliers, and reviewing price quotations. Once we have gathered this information, we set contract terms and conditions, and award contracts to specific vendors. We then set delivery schedules, track progress and contact clients and suppliers to correct any potential problems.



As mentioned previously, IAG has focused its attention on serving our clients needs with respect to the purchasing and management of electronic goods and software.  IAG is an authorized reseller of Dell products.  This means that we have the ability to purchase computer and network hardware and software at reseller pricing and then resale these items to our clients.  Based upon our clients needs, we can determine the specifications needed for a computer product, order directly from Dell, and provide it at a competitive price without the client needing to worry about the technical details.



Distribution Methods and Marketing



Our original objective was to develop an e-commerce destination offering a broad selection of brand name products to consumers and small businesses.  We established an initial working relationship with Dynamic Storefront based in Santa Ana, California, which was to provide us with an ordering system that integrated their product warehouse with a customizable front end ordering application.  As a result of orders not being fulfilled by Dynamic Storefront, we decided to sever this relationship and focus our resources to another line of business.



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IAG recently established a new website to promote the purchasing management business (www.iagcompany.com).   The website offers information about the services provided by IAG and provides various methods to contact IAG to obtain a quote for a product that is needed.   The companys business leads are currently generated primarily by word of mouth of existing clients as well as contacts established by management and through its website.



On March 7, 2007, IAG initiated an online sweepstakes promotion entitled The Internet Acquisition Group Purchase Like A Pro Sweepstakes.   The Grand Prize Winner will receive $2,000 towards purchasing services of their choice from IAG.   This sweepstakes is seen as a cost-effective means of marketing and gaining additional exposure.  It is hoped that the sweepstakes will assist IAG to build additional name recognition and that those individuals that visit the website will become more familiar with the business of IAG and the services that it offers.



Competition and Market Overview



We will compete with a variety of businesses that specialize in providing business services, including those in the purchasing management business.  Consequently, we must compete with companies in the e-commerce market as well as the traditional business services industry.  We believe the primary competitive factors in purchasing management include the ability to obtain discounted prices on the products acquired, customer service, value-added services and ease of use.



The ability to obtain discounted prices on many products by a simple Internet search limits out ability to compete on price alone.   Competition among online retailers has increased as a result of the attractive commercial medium provided by the Internet and the relatively low barriers to enter this market. Therefore, we believe the success of our business will depend on our ability to provide superior customer service and sell the benefits of outsourcing the purchasing of products and services for businesses.



Principal Suppliers and Sources



Originally, we had an agreement with Dynamic Storefront to facilitate all our needs with regards to maintaining inventory, providing our ordering system to the consumer, and shipping the products directly from their warehouse.  We believed this would help avoid the costs associated with maintaining an inventory, storage costs, and personnel to handle orders.  However, we did not generate product sales of any significance through this relationship and subsequently severed this relationship.



Currently we do not rely on any one supplier for our products.  As mentioned previously, IAG is now a certified reseller of Dell computer products.  As we develop our business in the future, we hope to establish similar relationships with other suppliers in the future.



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Intellectual Property



During the majority of 2006, we ran and maintained three different Internet stores for marketing, selling and distributing products, which include the following domain names: www.electronic-superstores.com; www.millennium-superstore.com; and www.virtualgiftshops.com.  However, we no longer maintain those sites as a result of terminating our relationship with Dynamic Storefront.



IAG currently has one website that serves as a point of contact and provides information on the company.   The website has the domain name ofwww.iagcompany.com.   As we expand our operations, we may acquire additional domain names in conjunction with offering new products or services.



Governmental Approval and Regulation



All of our services are subject to federal and state consumer protection laws including laws protecting the privacy of consumer non-public information and regulations prohibiting unfair and deceptive trade practices. In particular, under federal and state financial privacy laws and regulations, we must provide notice to consumers of our policies on sharing non-public information with third parties, must provide advance notice of any changes to our policies and, with limited exceptions, must give consumers the right to prevent sharing of their non-public personal information with unaffiliated third parties. Furthermore, the growth and demand for online commerce could result in more stringent consumer protection laws that impose additional compliance burdens on online companies. These consumer protection laws could result in substantial compliance costs and could interfere with the conduct
of our business.



Moreover, in many states, there is currently great uncertainty whether or how existing laws governing issues such as property ownership, sales and other taxes, and libel and personal privacy apply to the Internet and commercial online services. These issues may take years to resolve.  For example, tax authorities in a number of states, as well as a Congressional advisory commission, are currently reviewing the appropriate tax treatment of companies engaged in online commerce, and new state tax regulations may subject us to additional state sales and income taxes. New legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business or the application of existing laws and regulations to the Internet and commercial online services could result in significant additional taxes on our business. These taxes could have an
adverse effect on our cash flows and results of operations. Furthermore, there is a possibility that we may be subject to significant fines or other payments for any past failures to comply with these requirements.



Additionally, once we are able to expend more resources on advertising and marketing, these efforts may be regulated by organization and statutes such as the CAN-SPAM act limiting the transmission of unsolicited commercial electronic mail via the Internet, the California Online Privacy Protection Act of 2003 which requires owners of commercial websites or online services to post a privacy policy, the Fair and Accurate Credit Transaction Act of 2003, which ensures that everyone is treated fairly when applying for credit and protecting consumers against identity  theft, the California Financial Information Privacy Act that prohibits the sharing of nonpublic



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personal information of a consumer with nonaffiliated third parties without  the  explicit prior consent of the consumer, California Civil Code Section 1798.82 which requires businesses to notify customers if an unauthorized person  may  have  obtained  access to their personal information, and California Civil Code Section 1798.83 that requires disclosure of sharing for marketing purposes.  The failure to satisfy these and other regulatory requirements could have a material adverse effect on our business financial condition and results of operations.



Personnel



We are a development stage company and currently have only one part-time employee, Matt Lettau, who is also our sole officer and director. We look to Mr. Lettau for his entrepreneurial skills and talents.  Initially Mr. Lettau will handle all of our operations. We plan to use consultants, attorneys and accountants as necessary and do not plan to engage any full-time employees in the near future. We believe the use of non-salaried personnel allows us to expend our capital resources as a variable cost as opposed to a fixed cost of operations.  We may hire marketing employees based on the projected size of the market and the compensation necessary to retain qualified sales employees.



Mr. Lettau currently handles all of the activities of our purchasing management business and has assisted us in our website design and functions, in addition to maintenance, and troubleshooting. Currently, we are able to generate sales through our website and through Mr. Lettaus personal contacts.  In order to substantially impact our revenues we will require additional personnel. These personnel will be added to our management when funds are available.



ITEM 2.  DESCRIPTION OF PROPERTY



Our offices are currently located at 302 Creekside Ct. E., Huntertown, Indiana 46748, the home of Mr. Lettau, our sole officer and director. Mr. Lettau does not receive any remuneration for the use of his home or time he spends on our behalf. We do not believe that we will need to obtain additional office space at any time in the foreseeable future, approximately 12 months, until our business plan is more fully implemented.



As a result of our method of operations and business plan we do not require personnel, other than Mr. Lettau, to conduct our business. In the future we anticipate requiring additional office space and additional personnel; however it is unknown at this time how much space or how many individuals will be required.



ITEM 3.  LEGAL PROCEEDINGS



From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.



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



We did not submit any matters to a vote of our security holders during the fiscal year ended December 31, 2006.



ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



(a) Market Information



IAGs Stock was approved for trading on the National Association of Security Dealers over-the-counter bulletin board market (OTC:BB) under the symbol IAGR on January 8, 2007.  Prior to that there was no public market for our securities.



(b) Holders of Common Stock



As of March 22, 2007 there were approximately 69,963,630 outstanding shares of IAGs Common Stock and approximately 66 stockholders of record.



(c) Dividends



We have never declared or paid dividends on our Common Stock.  We intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future.  The declaration and payment of future dividends on the Common Stock will be the sole discretion of the Board of Directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.



(d) Securities Authorized for Issuance under Equity Compensation Plans



We currently do not maintain any equity compensation plans.



ITEM 6.  PLAN OF OPERATION



OVERVIEW AND OUTLOOK



The original plan of operation was to acquire existing internet based businesses and achieve economies of scale and develop cross-marketing opportunities between these businesses. The business plan was revised to focus on developing internet based businesses following a failed merger.  While IAG cannot rule out the possibility of a future merger or acquisition, with the approval of shareholders, IAGs business plan is not to engage in a merger or acquisition with an unidentified company or companies.



IAG has now launched a professional services business specializing in the purchasing and management of electronic goods and software for our clients.  Specifically, we assist our clients by purchasing goods and services specific to their needs and managing these services along with



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working to provide discounted prices on those products and services.



CURRENT OPERATIONS



IAGs new purchasing management business effectively allows businesses to outsource their business purchasing decisions.  Clients determine what their organizations need to keep their businesses functioning and then we oversee the process of acquiring goods and services by asking for proposals, consulting with suppliers, and reviewing price quotations. Once we have gathered this information, we set contract terms and conditions, and award contracts to specific vendors. We then set delivery schedules, track progress and contact clients and suppliers to correct any potential problems.



In addition to purchasing and management of services, IAG strives to provide the lowest costs possible to our clients. We work to establish relationships with national vendors of goods and services in order to negotiate discounts below their regular retail prices. Additionally, depending upon the vendor and the items being purchased, we also work to negotiate free or reduced rate shipping and handling and then pass a portion of those discounts on to our clients.



IAG plans to grow the purchasing management business by combining cost efficient marketing techniques coupled with word of mouth referrals.  Initially, IAG has focused its attention on the purchasing and management of electronic goods and software specific to our clients needs.  IAG is an authorized reseller of Dell products, thereby having the ability to purchase computer and network hardware and software at reseller pricing and then resold to our clients.  We anticipate this line of business will be promising and produce higher gross revenues then under the previous retain oriented business.



In 2006, IAG also began the process of seeking quotation on the OTC Bulletin Board with an authorized OTC Bulletin Board market maker.  On January 8, 2007 we commenced trading on the OTC Bulletin Board under the symbol IAGR.



Goals and Objectives:



As a result of our status as a development stage company with minimal amounts of equity capital initially available, our business plan set our goals in three stages: (1) begin basic operations based upon the availability of initial funding of less than $100,000; (2) grow our business through marketing and advertising based upon additional funding of $200,000; and (3) full scale operations with full-time staff and additional advertising based upon additional equity and/or debt financing in the approximate sum of $500,000 to $1,000,000. The first goal, listed as Stage I, was accomplished through a private placement that raised our start up capital in an amount of $81,020.



Satisfaction of our cash obligations for the next 12 months.



Initially we capitalized our company with $81,020 from a private placement. As of December 31, 2006, we had $17,521 in working capital. We estimate our new plan of operation will incur minimal expenditures during the next twelve months. We have based these



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assumptions on the fact that we will not incur additional obligations for personnel, office, etc. until such time as we either raise additional equity or debt, or generate significant revenues to support such expenditures.



Summary of any product research and development that we will perform for the term of the plan.



We do not anticipate performing any significant product research and development under our plan of operation. In lieu of product research and development we anticipate maintaining control over our advertising, especially on the Internet, to assist us in determining the allocation of our limited advertising dollars.



Expected purchase or sale of plant and significant equipment.



We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time or in the next 12 months.



Significant changes in number of employees.



The number of employees required to operate our business is currently one part time individual. After we have commenced generating revenues based upon the expenditures of our advertising dollars, and word of mouth advertising our plan of operation anticipates our requiring additional capital to hire at least one full time person.



LIQUIDITY AND CAPITAL RESOURCES



Since inception, we have financed our cash flow requirements through the issuance of common stock which has resulted in our receipt of $81,020. As we expand our activities, we may continue to experience net negative cash flows from operations, pending receipt of sales revenues. Additionally we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available; or to obtain additional financing to the extent necessary to augment our working capital.  In the event we can not obtain the necessary capital to pursue our strategic plan, we may have to cease or significantly curtail our operations. As of the date of this filing, we do not have any arrangements or agreement to provide for future financing.



The following table summarizes total current assets, liabilities and working capital at December 31, 2006 compared to December 31, 2005.



December 31, 2006
        December 31, 2005
        Increase / (Decrease)$
        %Current Assets
        $          43,383
        $           64,750
        $   (21,367)
        (33%)Current Liabilities
        $          25,862
        $           13,979
        $      11,883
        85%Working Capital
        $          17,521
        $           50,771
        $   (33,250)
        (65%)






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We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets.  To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, provide service order requests through the Internet, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.



Going Concern



The accompanying financial statements have been prepared assuming that IAG will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.  As noted, IAG is in the development stage and, accordingly, has generated limited revenues from operations.  Since its inception, IAG has been engaged substantially in financing activities and developing its product line, setting up its e-commerce website, and incurring substantial cost and expenses.  As a result, IAG incurred accumulated net losses from January 16, 2004 (inception) through the period ended December 31, 2006 of $109,543.  In addition, IAGs development activities since inception have been financially sustained through equity financing.



The ability of IAG to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues.  The accompanying financial statements do not include any adjustments that might be required should IAG be unable to recover the value of its assets or satisfy its liabilities.



Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.



Critical Accounting Policies and Estimates



Revenue Recognition: We are currently a developmental stage company and have not recognized significant revenues to date.  We will recognize revenue as clients are billed for services rendered.  We will primarily derive our revenues from the sales professional business services in the purchasing and management of specialized equipment and business services.



Recent Accounting Pronouncements



In September 2006, the United States Securities and Exchange Commission (SEC), adopted SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying



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Misstatements in Current Year Financial Statements. This SAB provides guidance on the consideration of the effects to prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 establishes an approach that requires quantification of financial statement errors based on the effects of each of the companys balance sheet and statement of operations financial statements and the related financial statement disclosures. The SAB permits existing public companies to record the cumulative effect of initially applying this approach in the first year ending after November 15, 2006 by recording the necessary correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings. Additionally, the use of the cumulative effect
transition method requires detailed disclosure of the nature and amount of each individual error being corrected through the cumulative adjustment and how and when it arose. The Company is currently evaluating the impact, if any, that SAB 108 may have on the Companys results of operations or financial position.



FACTORS THAT MAY AFFECT OUR RESULTS OF OPERATION



Risk Associated with Our Business and Marketplace



We are a development stage company organized in January 2004 and have a limited operating history, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, potential investors have a high probability of losing their investment.



We were incorporated in January of 2004 as a California corporation. As a result of being a relatively new company, we have yet to generate significant revenues from operations and have been focused on organizational, start-up, and market analysis activities since we incorporated. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably.  Our future operating results will depend on many factors, including our ability to raise adequate working capital, demand for our services, the level of our competition and our ability to attract and maintain key management and employees.



Our prospects are subject to the risks and expenses encountered by start-up companies establishing a business as a professional business services in the purchasing and management of specialized equipment and business services.  Our limited operating history makes it difficult or impossible to predict future results of our operations. We may not establish a clientele that will make us profitable, which might result in the loss of some or all of your investment in our common stock.



One should consider our prospects in light of the risks and difficulties frequently encountered by early stage companies in the rapidly evolving online commerce market. These risks include, but are not limited to, an unpredictable business environment, the difficulty of managing growth and the use of our business model. To address these risks, we must, among other things:



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
        establish a customer base;



        enhance our name recognition;



        expand our service offerings to clients;



        access sufficient product inventory and vendors to fulfill our customers orders;



        successfully implement our business and marketing strategy;



        provide superior customer service and order processing; and



        attract and retain qualified personnel.




We are significantly dependent on Matt Lettau, our sole officer and director, who has limited experience in running a business such as ours. The loss or unavailability to IAG of Mr. Lettaus services would have an adverse effect on our business, operations and prospects which could result in a loss of your investment in us.



Our business plan is significantly dependent upon the abilities and continued participation of Matt Lettau, our sole officer and director. Mr. Lettau is not irreplaceable; however it would be difficult to replace Mr. Lettau at this stage of development of IAG. The loss by or unavailability to IAG of Mr. Lettaus services would have an adverse effect on our business, operations and prospects. There can be no assurance that we would be able to locate or employ personnel to replace Mr. Lettau, should his services be discontinued. In the event we are unable to locate or employ personnel to replace Mr. Lettau, then we would be required to cease pursuing our business opportunity, which could result in a loss of your investment.



Our limited resources may prevent us from retaining key employees or inhibit our ability to hire and train a sufficient number of qualified management, professional, technical and regulatory personnel.



Our success may also depend on our ability to attract and retain other qualified management and sales and marketing personnel.  Currently, we only have one part-time person that is required to perform various roles and duties as a result of our limited financial resources.  We intend to use the services of independent consultants and contractors to perform various professional services, when appropriate to help conserve our capital.  However, if and when we determine to acquire additional personnel, we will compete for such persons with other companies and other organizations, some of which have substantially greater capital resources than we do.  We cannot give you any assurance that we will be successful in recruiting or retaining personnel of the requisite caliber or in adequate numbers to enable us to conduct our business.



We have incurred losses since our inception and expect to continue to incur losses for the foreseeable future.



We have operated since our inception as internet retail provider and have accordingly incurred losses from operations.  For the year ended December 31, 2006 and from the date of inception of January 14, 2004 to December 31, 2006, we have sustained net losses of $33,250 and $109,623, respectively.  We are in need of additional capital to continue our operations and may be dependent on the proceeds of private placements of securities to satisfy working capital requirements.  We will continue to be dependent upon the proceeds of future offerings or public



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offerings to fund continued development of our internet sites, the expansion of our product and service offerings; short-term working capital requirements, marketing activities and to continue implementing the current business strategy.  There  can  be  no  assurance  that  we  will  be  able  to  raise the necessary  capital to continue operations.



We will require additional financing in order to implement our marketing plan. In the event we are unable to acquire additional financing, we may not be able to implement our marketing plan resulting in a loss of revenues and ultimately the loss of your investment.



Due to our start-up nature, we will have to incur the costs of developing professional marketing materials, hiring new employees and commencing marketing activities for our services. To fully implement our business plan we will require substantial additional funding. Our current cash on hand is anticipated to enable us to maintain minimum operations and working capital requirements for at least six months.



We will need to raise additional funds to expand our operations, especially as we pursue our plans of establishing and maintaining our own websites and inventory. We plan to raise additional funds through private placements, registered offerings, debt financing or other sources to maintain and expand our operations. Adequate funds for this purpose on terms favorable to us may not be available, and if available, on terms significantly more adverse to us than are manageable. Without new funding, we may be only partially successful or completely unsuccessful in implementing our business plan, and our shareholders may lose part or all of their investment.



Risk Factors Relating to Our Common Stock



Our common stock is deemed a low-priced Penny stock which could make it cumbersome for brokers and dealers to trade in our common stock, making the market for our common stock less liquid and negatively effect the price of our stock.



Since being accepted for trading in the over-the-counter market, trading of our common stock is subject to certain provisions of the Securities Exchange act of 1934, commonly referred to as the penny stock rules as defined in Rule 3a51-1.  A penny stock is generally defined to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions.  If our stock is deemed to be a penny stock, trading will be subject to additional sales practice requirements on broker-dealers.  These require a broker-dealer to:




        Deliver to the customer, and obtain a written receipt for, a disclosure document;



        Disclose certain price information about the stock;



        Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;



        Send monthly statements to customers with market and price information about the penny stock; and



        In some circumstances, approve the purchasers account under certain standards and deliver written statements to the customer with information specified in the rules.




13



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Consequently, penny stock rules may restrict the ability or willingness of broker-dealers to trade and/or maintain a market in our common stock.  Also, prospective investors may not want to get involved with the additional administrative requirements, which may have a material adverse effect on the trading of our shares.



NASD sales practice requirements may also limit a stockholder's ability to buy and sell our stock, if and when we are quoted on the OTC Bulletin Board.



In addition to the penny stock rules described above, the National Association of Securities Dealers (NASD) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to
buy and sell our stock and have an adverse effect on the market for our shares.



Subsequent to the year-end, we began quotation on the OTC Bulletin Board and we will have to meet certain requirements such as remaining current on our reporting requirements; otherwise we could be removed from the OTC Bulletin Board.



Companies trading on the OTC Bulletin Board 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.  More specifically, NASD has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission.  Upon being listed on the OTC Bulletin Board, we will be required to abide by Rule 6530(e), which states if a company files their reports late with the Commission three times in a two-year period or their securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period then the company will be ineligible for quotation on the OTC Bulletin Board.  As a result, the market liquidity
for securities could be severely adversely affected by limiting the ability of broker-dealers to sell securities and the ability of stockholders to sell their securities in the secondary market.



Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.



Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted



14



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accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of IAG; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of IAG are being made only in accordance with authorizations of management and directors of IAG, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of IAGs assets that could have a material effect on the financial statements.



We have one individual performing the functions of all officers and directors. This individual is responsible for monitoring and ensuring compliance with our internal control procedures. As a result, our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.



ITEM 7.  FINANCIAL STATEMENTS



See Index to Financial Statements and Financial Statement Footnotes appearing on page F-1 through F-14 of this Form 10-KSB.



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



None.




ITEM 8A.  CONTROLS AND PROCEDURES



We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods.  As of the end of the period covered by this report, Matt Lettau, our Chief Executive Officer and Principal Financial Officer evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based on the evaluation, which disclosed no significant deficiencies or material weaknesses, Mr. Lettau, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting him to material information required to be included in our periodic SEC filings. There were no changes in our internal control over financial reporting
that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



It should be noted, however, that no matter how well designed and operated, a control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems (including faulty judgments in decision making or breakdowns resulting from



15



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simple errors or mistakes), there can be no assurance that any design will succeed in achieving its stated goals under all potential conditions. Additionally, controls can be circumvented by individual acts, collusion or by management override of the controls in place.



ITEM 8B.  OTHER INFORMATION



None.



PART III



ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT



The members of the Board of Directors of the Company serve until the next annual meeting of stockholders, or until their successors have been elected.  The officers serve at the pleasure of the Board of Directors.  Officers are elected by the Board and their terms of office are, except to the extent governed by employment contract, at the discretion of the Board. Information as to our current director and executive officer is as follows:



NAME
        AGE
        POSITIONMatt Lettau
        41
        President, Secretary/Treasurer, Director




Duties, Responsibilities and Experience



Matt Lettauhas been the President, Secretary/Treasurer and Director since founding IAG in January 2004. From 1991 to January 2004, Mr. Lettau was employed by The Bob Rohrman Group as Manager and worked on developing service and sales. The Bob Rohrman Group is a privately owned automotive group with 26 automotive dealerships. Mr. Lettaus duties included Service and Parts director at Fort Wayne Acura, Subaru and General Sales Manager at Fort Wayne Nissan, Infiniti, and Kia. In addition Mr. Lettau was in charge of the Parts and Service at the Groups Nissan dealership.



Election of Directors and Officers



Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.



No Executive Officer or Director of the Corporation has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.



16



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No Executive Officer or Director of the Corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding, which is currently pending.



No Executive Officer or Director of the Corporation is the subject of any pending legal proceedings.



Director Independence



The Board of Directors has analyzed the independence of each director and has concluded that there are no independent directors as a result having one individual serve as the sole officer and director.



Audit Committee and Financial Expert



We do not have an Audit Committee, our sole director performs some of the same functions of an Audit Committee, such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditors independence, the financial statements and their audit report; and reviewing managements administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.



We have no financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our start-up operations, we believe the services of a financial expert are not warranted.



Code of Ethics



A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:



(1)
        Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;


(2)
        Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;


(3)
        Compliance with applicable governmental laws, rules and regulations;


(4)
        The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and


(5)
        Accountability for adherence to the code.




We have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.



17



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Our decision to not adopt a code of ethics results from having only one officer and director operating as the management for the Company. We believe that as a result of the limited interaction which occurs having such a small management structure for the Company eliminates the current need for such a code, in that violations of such a code would be reported to the party generating the violation.



Nominating Committee



We do not have a Nominating Committee or Nominating Committee Charter. Our sole director performs some of the functions associated with a Nominating Committee. We have elected not to have a Nominating Committee in that we are a development stage company with limited operations and resources.



Limitation of Liability of Directors



Pursuant to General Corporation Law of California, our Bylaws has excluded personal liability on the part of our directors for monetary damages based on any violation of their fiduciary duties as directors, except as to liability for any acts or omissions which involve intentional misconduct, fraud, or a knowing violation of law, or improper payment of dividends.  This exclusion of liability does not limit any right which a director may have to be indemnified and does not affect any directors liability under federal securities or applicable state securities laws.



Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our executive officers and directors, and persons who beneficially own more than ten percent of an issuers common stock, which has been registered under Section 12 of the Exchange Act, to file initial reports of ownership and reports of changes in ownership with the SEC.



As a company with securities registered under Section 15(d) of the Exchange Act, our executive officers and directors, and persons who beneficially own more than ten percent of our common stock are not required to file Section 16(a) reports.  However, our sole officer and director, Mr. Lettau, has elected to voluntarily file Section 16(a) reports.  This is not a standing policy of the board of directors and may not continue in the future, until such time as we register our common stock under Section 12 of the Exchange Act.



ITEM 10.  EXECUTIVE COMPENSATION



Executive Compensation



Mr. Lettau has agreed to provide services to us without compensation as a result of the stock position Mr. Lettau holds in IAG.  Furthermore, as a result of having only one officer and director that has not received any compensation for the fiscal 2006 year, we have omitted the Summary Compensation Table, Equity Awards Table, and Director Compensation Table.



18



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Termination of Employment



There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person associated with the Company which would in any way result in payments to any such person because of his resignation, retirement, or other termination of such persons employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the persons responsibilities following a change in control of the Company.



Compensation Committee



For the year ended December 31, 2006, IAG did not have a compensation committee as a result of not providing any compensation to our sole officer and director.  Additionally, we elected not to have a Compensation Committee in that we are a development stage company with limited operations and resources.



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



The following table presents information, to the best of IAGs knowledge, about the beneficial ownership of its common stock on March 22, 2007, held by those persons known to beneficially own more than 5% of its capital stock and by its directors and executive officers. The percentage of beneficial ownership for the following table is based on 69,963,360 shares of common stock outstanding as of March 22, 2007.



Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the shareholder has sole or shared voting or investment power. It also includes (unless footnoted) shares of common stock that the shareholder has a right to acquire within 60 days after March 22, 2007 through the exercise of any option, warrant or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock.



|Name of Directors, Officers, & Beneficial Holder (1) | Number
		of Shares | Percent
		Of Class (2)
|---------------------------------------------------- | ------------------ | ----------------------
|Matt Lettau                                          | 41,270,000         | 59%                   
|                                                     |                    |                       
|All Directors & Officers as a Group                  | 41,270,000         | 59%                   


        Beneficial ownership means the sole or shared power to vote or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of or to direct the disposition of, a security).  In addition, for purposes of this table, a person is deemed, as of any date, to have beneficial ownership of any security that such person has the right to acquire within 60 days from the date of this 10-KSB.



        Figures are rounded to the nearest tenth of a percent




19



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ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE



Matt Lettau



As of December 31, 2006, our sole officer and director was owed approximately $1,523.  This amount was paid by Mr. Lettau on behalf of IAG for telephone and fax expenses.



During January 2004, Mr. Lettau received 41,270,000 shares of common stock, at a price of $0.001 per share, which were issued for services rendered by Mr. Lettau. Mr. Lettau is the sole officer, director, and promoter of IAG.



ITEM 13. EXHIBITS



Incorporated by referenceExhibit
        Exhibit Description
        Filed herewith
        Form
        Period ending
        Exhibit
        Filing date3.1(i)
        Articles of Incorporation
        
        SB-2
        
        3.1(i)
        02/02/043.1(ii)
        Bylaws of the Internet Acquisition Group. Inc.
        
        SB-2
        
        3.1(ii)
        02/02/0431
        Certification of Matt Lettau pursuant to Section 302 of the Sarbanes-Oxley Act
        X32
        Certification of Matt Lettau pursuant to Section 906 of the Sarbanes-Oxley Act
        X




ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES




        AUDIT FEES




The aggregate fees billed for professional services rendered by Jaspers + Hall, PC, for the audit of our financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal years 2006 and 2005 were $7,500 and $4,500, respectively.



(2) AUDIT-RELATED FEES



NONE



(3) TAX FEES



NONE





20



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(4) ALL OTHER FEES



NONE



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



We do not have an audit committee.




(6) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.



Not applicable.



SIGNATURES



In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INTERNET ACQUISITION GROUP, INC.

By:
			/s/ Matt Lettau


Matt Lettau, President




Date:April 2, 2007

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

Name
        Title
        Date/s/ Matt Lettau
        President & Director
        April 2, 2007Matt Lettau/s/ Matt Lettau
        Principal Accounting Officer
        April 2, 2007Matt Lettau






21



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Internet Acquisition Group, Inc.

Index To Consolidated Financial Statements



Report of Independent Registered Public Accounting Firm
        F-1Consolidated Balance Sheets, December 31, 2006 and 2005
        F-2Consolidated Statement of Operations for the Years Ended December 31, 2006 and 2005
        F-3Consolidated Statement of Stockholders' Equity for the years ended December 31, 2006 and 2005
        F-4Consolidated Statement of Cash Flows for the Year Ended December 31, 2006 and 2005
        F-5Notes to Consolidated Financial Statements
        F-6  F-14




---



JASPERS + HALL, PC

CERTIFIED PUBLIC ACCOUNTANTS

9175 Kenyon Avenue, Suite 100

Denver, CO 80237

303-796-0099



Report of Independent Registered Public Accounting Firm

To the Board of Directors

Internet Acquisition Group, Inc., Inc.



We have audited the accompanying balance sheet of Internet Acquisition Group, Inc.. (A Development Stage Company) as of December 31, 2006 and 2005, and the related statements of operations, changes in stockholders equity, and cash flows for the years ended and for the period January 16, 2004 (date of inception) to December 31, 2006.  These financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audit.



We conducted our audits in accordance with auditing standards 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 financial position of Internet Acquisition Group, Inc. at December 31, 2006 and 2005, and the results of its operations and its cash flows for the years then ended and for the period January 16, 2004 (date of inception) to December 31, 2006, in conformity with accounting principles generally accepted in the United States.



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As described in Note 2 to the financial statements, conditions exist which raise substantial doubt about the Companys ability to continue as a going concern.  Managements plans in regard to these matters are also discussed in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/Jaspers + Hall, PC

March 13, 2007



F-1



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Balance Sheets



December 31,2006
        2005AssetsCurrent assets:Cash
        $         10,048
        $         43,099Accounts receivable
        707
        -Inventory
        32,628
        21,651Total current assets
        43,383
        64,750Total assets
        $         43,383
        $         64,750Liabilities and Stockholders EquityCurrent liabilities:Accrued liabilities
        $           5,579
        $                  -Advances from shareholder  related party
        1,523
        -Customer Deposit
        18,760
        13,979Total current liabilities
        25,862
        13,979Stockholders equityCommon stock, $0.001 par value, 100,000,000 shares authorized; 69,963,360 shares issued and outstanding
        69,964
        69,964Additional paid-in capital
        57,100
        57,100Deficit accumulated during development stage
        (109,543)
        (76,293)Total Stockholders Equity
        17,521
        50,771Total Liabilities and Stockholders Equity
        $         43,383
        $         64,750




The accompanying notes are an integral part of these financial statements



F-2



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Statements of Operations



December 31,
        January 16, 2004(Inception) to December 31,2006
        2005
        2006Revenue
        $         10,420
        $                80
        $               10,500Cost of Goods Sold
        9,923
        -
        9,923Gross Profit
        497
        80
        497Expenses:General and administrative expenses
        33,747
        10,517
        110,120Total expenses
        33,747
        10,517
        110,120Net loss from operations
        $      (33,250)
        $      (10,437)
        $        (109,623)Weighted average number of common shares outstanding - basic and fully diluted
        69,963,630
        69,963,630Net (loss) per share  basic and fully diluted
        $          (*)
        $          (*)


* Less than $0.001 per share



The accompanying notes are an integral part of these financial statements



F-3



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Statements of Changes in Stockholders Deficit

For the Period January 16, 2004 (Inception) to December 31, 2006



|                                      | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total
		Stockholders
		Equity
|------------------------------------- | ------------ | -------------------------- | ------------------- | ------------------------------
|Shares                                | Amount       |                            |                     |                               
|                                      |              |                            |                     |                               
|                                      |              |                            |                     |                               
|Balance, January 16, 2004             | -            | $           -              | $                 - | $                  -          
|                                      |              |                            |                     |                               
|Shares issued to founder for services | 41,270,000   | 41,270                     | -                   | -                             
|                                      |              |                            |                     |                               
|Shares issued for services            | 3,400,000    | 3,400                      | -                   | -                             
|                                      |              |                            |                     |                               
|Shares issued for services            | 1,373,630    | 1,374                      | -                   | -                             
|                                      |              |                            |                     |                               
|Shares issued for cash                | 23,920,000   | 23,920                     | 57,100              | -                             
|                                      |              |                            |                     |                               
|Net loss                              |              |                            |                     | (65,856)                      
|                                      |              |                            |                     |                               
|Balance December 31, 2004             | 69,963,630   | 69,964                     | 57,100              | (65,856)                      
|                                      |              |                            |                     |                               
|Net loss                              |              |                            |                     | (10,437)                      
|                                      |              |                            |                     |                               
|Balance December 31, 2005             | 69,963,630   | 69,964                     | 57,100              | (76,293)                      
|                                      |              |                            |                     |                               
|Net loss                              |              |                            |                     | (33,250)                      
|                                      |              |                            |                     |                               
|Balance, December 31, 2006            | 69,963,630   | $  69,964                  | $       57,100      | $    (109,543)                



The accompanying notes are an integral part of these financial statements



F-4



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Statements of Cash Flows

Indirect Method



December 31,
        January 16, 2004 (Inception) to December 31,2006
        2005
        2006Cash flows from operating activitiesNet (loss)
        $      (33,250)
        $    (10,437)
        $      (109,543)Adjustments to reconcile net loss to net cash used by operating activities:Stock issued for services
        -
        -
        46,044Changes in assets and liabilities:(Increase) in accounts receivable
        (707)
        -
        (707)(Increase) in inventory
        (10,977)
        (21,651)
        (32,628)Increase in accrued liabilities
        5,579
        -
        5,579Increase in customer deposits
        4,781
        13,979
        18,760Net cash used by operating activities
        (34,574)
        (18,109)
        (72,495)Cash flows from financing activitiesIssuance of common stock
        -
        -
        81,020Advances from shareholder
        1,524
        -
        1,524Net cash provided by financing activities
        1,524
        -
        82,544Increase (decrease) in cash
        (33,050)
        (18,109)
        10,049Cash and cash equivalents  beginning of period
        43,099
        61,208
        -Cash and cash equivalents  end of period
        $         10,049
        $       43,099
        $          10,049Supplemental disclosures:Interest paid
        $                  -
        $                 -
        $                    -Taxes paid
        $                  -
        $                 -
        $                    -




The accompanying notes are an integral part of these financial statements



F-5



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



Note 1  Organization and summary of significant accounting principles

Organization

The Company was organized January 16, 2004 under the laws of the State of California, as Internet Acquisition Group, Inc. The Company began activities to engage in the business of marketing, selling, and distributing products through a number of company and non-company owned web-sites.   The Company is currently in the business of professional purchasing management with a specialization in the purchasing and management of electronic goods and software.



The Company has not commenced significant operations and, in accordance with SFAS #7, the Company is considered a development stage company.



Accounting period

The Company has adopted an annual accounting period of January through December.



Use of estimates

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



Cash and cash equivalents

For the purpose of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents.



Revenue recognition

The company provides professional business services in the purchasing and management of specialized equipment and business services for its clients.  Revenue is recognized as clients are billed for services rendered.



Furniture and equipment

Furniture and equipment are stated at cost less accumulated depreciation.  It is the policy of the Company to capitalize items greater than or equal to $1,000 and provide depreciation based on the estimated useful life of individual assets, calculated using the straight line method.



Estimated useful lives range as follows:



YearsFurniture and equipment
        3  5Computer hardware
        3Vehicles
        5






F-6



---



INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2006. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable and notes payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.



Earnings per share

The Company has adopted Statement of Financial Accounting Standards No. 128.Earnings Per Share("SFAS No. 128").  Basic earnings per common share ("EPS") calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year.  Diluted earning per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.  During periods when common stock equivalents, if any, are anti- dilutive they are not considered in the computation.



Income taxes

The Company has adopted Statement of Financial Accounting Standard No. 109,Accounting for Income Taxes("SFAS No. 109") for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.  Deferred income tax expenses or benefits are based on the changes in the asset or liability each period.  If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.  Future changes in such valuation allowance are included in
the provision for deferred income taxes in the period of change.



The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes because of differences in amounts deductible for tax purposes.  Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.  Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate.  Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.



Recent pronouncements

In June 2003, the Securities and Exchange Commission (SEC) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404). Commencing with our annual report for the year ended December 31, 2007, we will be required to include a report of management on our internal control ever financial reporting. The internal control report must



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



include a statement,




        of managements responsibility for establishing and maintaining adequate internal control over our financial reporting;





        of managements assessment of the effectiveness of our internal control over financial reporting as of year end;





        of the framework used by management to evaluate the effectiveness of our internal control over financial reporting; and





        that our independent accounting firm has issued an attestation report on managements assessment of our internal control over financial reporting, which report is also required to be filed




In December 2005 the SECs advisory committee on small business recommended that the SEC allow most companies with market values of less than $700 million to avoid having their internal controls certified by auditors. The advisory committee recommended that most companies with market capitalizations under $100 million be exempted totally. It further recommended that companies with market capitalizations of $100 million to $700 million not face audits of internal controls. Some Companies with large revenues but low market values would still be required to comply with the act. There can be no assurances that these proposals or similar proposals will be adopted.



In November 2004, the FASB issued SFAS 151 Inventory Costs. This Statement amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). In addition, this Statement requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities. The provisions of this Statement will be effective for the Company beginning with its fiscal year ending December 31, 2007. The Company is currently evaluating the impact this new Standard will have on its operations, but believes that it will not have a material impact on the Companys financial position, results of operations or cash flows.



In December 2004, the FASB issued SFAS 152, "Accounting for Real Estate Time-Sharing Transactions." The FASB issued this Statement as a result of the guidance provided in AICPA Statement of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing Transactions." SOP 04-2 applies to all real estate time-sharing transactions. Among other items, the SOP provides guidance on the recording of credit losses and the treatment of selling costs, but does not change the revenue recognition guidance in SFAS 66, "Accounting for Sales of Real Estate," for real estate time-sharing transactions. SFAS 152 amends Statement 66 to reference the guidance provided in SOP 04-2. SFAS 152 also amends SFAS 67, "Accounting for Costs and Initial Rental Operations of Real Estate Projects," to state that SOP 04-2 provides the relevant guidance on accounting for incidental operations and costs related to the sale of real estate time-



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



sharing transactions. SFAS 152 is effective for years beginning after June 15, 2005, with restatements of previously issued financial statements prohibited. Management does not expect adoption of SFAS 152 to have a material impact on the Company's financial statements.



In December 2004, the FASB issued SFAS 153, "Exchanges of Nonmonetary Assets," an amendment to Opinion No. 29, "Accounting for Nonmonetary Transactions." Statement 153 eliminates certain differences in the guidance in Opinion No. 29 as compared to the guidance contained in standards issued by the International Accounting Standards Board. The amendment to Opinion No. 29 eliminates the fair value exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. Such an exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring in periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in periods
beginning after December 16, 2004. Management does not expect adoption of SFAS 153 to have a material impact on the Company's financial statements.



In December 2004, the FASB issued SFAS 123(R), "Share-Based Payment." SFAS 123(R) amends SFAS 123, "Accounting for Stock-Based Compensation," and APB Opinion 25, "Accounting for Stock Issued to Employees." SFAS 123(R) requires that the cost of share-based payment transactions (including those with employees and non-employees) be recognized in the financial statements. SFAS 123(R) applies to all share-based payment transactions in which an entity acquires goods or services by issuing (or offering to issue) its shares, share options, or other equity  instruments (except for those held by an ESOP) or by incurring liabilities (1) in amounts based (even in part) on the price of the entity's shares or other equity instruments, or (2) that require (or may require) settlement by the issuance of an entity's shares or other equity instruments. This statement is effective (1) for public companies qualifying as SEC
small business issuers, as of the first interim period or fiscal year beginning after December 15, 2005, or (2) for all other public companies, as of the first interim period or fiscal year beginning after June 15, 2005, or (3) for all nonpublic entities, as of the first fiscal year beginning after December 15, 2005. Management does not expect adoption of SFAS 123(R) to have a material impact on the Company's financial statements.



In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections  a replacement of APB Opinion 20, Accounting Changes and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements.  SAFS requires retrospective application to prior periods financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. When it is impracticable to determine the period specific effects of an accounting change on one or more individual prior periods presented, this Statement requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained
earnings (or other appropriate



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



components of equity or net assets in the statement of financial position) for that period rather than being reported in an income statement. When it is impracticable to determine the cumulative effect of applying a change in accounting principle to all prior periods, this Statement requires that the new accounting principle be applied as if it were adopted prospectively from the earliest date practicable.  This statement is effective for accounting changes and errors made in fiscal years beginning after December 15, 2005.  Management does not expect adoption of SFAS 152 to have a material impact on the Company's financial statements.



In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial Instruments."  This Statement amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in Statement 133 Implementation Issue No. Dl, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. This Statement:



a)
        Permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation.




b)
        Clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133.




c)
        Establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation.




d)
        Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives.




e)
        Amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.




The fair value election provided for in paragraph 4(e) of this Statement may also be applied upon adoption of this Statement for hybrid financial instruments that had been bifurcated under paragraph 12 of Statement 133 prior to the adoption of this Statement. Earlier adoption is permitted as of the beginning of our fiscal year, provided we have not yet issued financial statements, including financial statements for any interim period, for that fiscal year. Provisions of this Statement may be applied to instruments that we hold at the date of adoption on an instrument-by-instrument basis.



Adoption of this Statement is required as of the beginning of the first fiscal year that begins after September 15, 2005. The adoption of this statement is not expected to have a material impact on the Companys financial statements.



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



In March 2006, The FASB issued SEAS 156,Accounting for Servicing of Financial Assets. This Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement:



a)
        Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations.




b)
        Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.




c)
        Permits an entity to choose either the amortization method or the fair value measurement method for each class of separately recognized servicing assets and servicing liabilities.




d)
        At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entitys exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value.




e)
        Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities.




Adoption of this Statement is required as of the beginning of the first fiscal year that begins after September 15, 2006. The adoption of this statement is not expected to have a material impact on the Companys financial statements.



In September 2006, the FASB issued Statement No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurement. The implementation of this guidance is not expected to have any impact on the Companys financial statements.



In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of PASS Statements No. 87, 106, and 132(R) (SFAS No. 158). SFAS No. 158 requires companies to recognize a net liability or asset and an offsetting adjustment to accumulated other comprehensive income to report the funded status of defined benefit pension



F-11



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



and other postretirement benefit plans. SFAS No. 158 requires prospective application, recognition and disclosure requirements effective for the Companys fiscal year ending December 31, 2007. Additionally, SFAS No. 158 requires companies to measure plan assets and obligations at their year-end balance sheet date. This requirement is effective for the Companys fiscal year ending December 31, 2009. The Company is currently evaluating the impact of the adoption of SFAS No. 258 and does not expect that it will have a material impact on its financial statements.



In September 2006, the United States Securities and Exchange Commission (SEC), adopted SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. This SAB provides guidance on the consideration of the effects to prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 establishes an approach that requires quantification of financial statement errors based on the effects of each of the companys balance sheet and statement of operations financial statements and the related financial statement disclosures. The SAB permits existing public companies to record the cumulative effect of initially applying this approach in the first year ending after November 15, 2006 by recording the necessary correcting adjustments to the carrying values of assets
and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings. Additionally, the use of the cumulative effect transition method requires detailed disclosure of the nature and amount of each individual error being corrected through the cumulative adjustment and how and when it arose. The Company is currently evaluating the impact, if any, that SAB 108 may have on the Companys results of operations or financial position.



In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Interpretation No. 48 also provides guidance on derecognition, classification, interest and penalties,accounting in interim periods, disclosure, and transition. Interpretation No. 48 is effective for fiscal years beginning after December 15, 2006 and the Company is currently evaluating the impact, if any, that FASB No. 48 may have on the Companys results of operations or financial position.



Note 2  Going concern



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has generated limited revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its product line, setting up its e-commerce website, and incurring substantial costs and expenses. As



F-12



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



a result, the Company incurred accumulated net losses from January 16, 2004 (inception) through the period ended December 31, 2006 of $109,543. In addition, the Companys development activities since inception have been financially sustained through equity financing.



The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities.

Note 3Inventory

At December 31, 2006, Inventory consisted of the following:

Finished goods -
        $32,628


Note 4  Customer Deposit



As of December 31, 2006, the Company received from a customer a deposit of $18,760 towards the purchase of a document storage and retrieval system machine.



Note 5  Income taxes



There has been no provision for U.S. federal, state, or foreign income taxes for any period because the Company has incurred losses in all periods and for all jurisdictions. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets are as follows:



Deferred tax assets:Net operating loss carryforwards
        $        109,623Valuation allowance for deferred tax assets
        (109,623)Net deferred tax assets
        $                    -




Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. As of December 31, 2006, the Company had net operating loss carryforwards of $109,623 for federal income tax purposes. Utilization of the net operating loss may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss before utilization.



F-13



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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)



Notes to Financial Statements

For the Year Ended December 31, 2006



Note 6  Stockholders equity

The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock.



The following transactions occurred during the year ended December 31, 2004.



During January 2004, the Company issued 41,270,000 shares of common stock at $0.001 per share to its founder in exchange for services valued at $41,270.



During January 2004, the Company issued 3,400,000 shares of common stock at $0.001 per share for consulting service valued at $3,400.



During January 2004, the Company issued 1,373,630 shares of common stock at $0.001 per share for legal services valued at $1,374.



From February to March, 2004, the Company completed a private placement that was offered without registration under the Securities Act of 1933, as amended (The Act), in reliance upon the exemption from registration afforded by sections 4(2) and 3(b) of the Securities Act and Regulation D promulgated there-under. The Company sold 23,920,000 shares of its common stock for a total amount raised of $81,020.



During the current year ending December 31, 2006, the company had no new stock transactions.



Note 7  Warrants and options



There are no warrants or options outstanding to acquire any additional shares of common stock.



Note 8  Related party transactions



Amounts due to the Companys chief executive officer totaled approximately $1,523 at December 31, 2006.  These amounts primarily represent loans to pay company telephone and fax expenses.



Note 9  Commitments and contingent liabilities



Legal matters- The Company is occasionally party to litigation or threat of litigation arising in the normal course of business.  Management, after consultation with legal counsel, does not believe that the resolution of any such matters will have a material effect on the Companys financial position or results of operations.





F-14