PROPOSAL 2
To Ratify the Issuance of Shares of Common Stock in Connection with Certain Transactions
General Information
As previously disclosed, the
Company is a Business Process Outsourcing (BPO) and financial services corporation targeting the B2B and B2C markets in
the Asia Region. In order to finance the Companys current operations, the Company has raised capital through private
placements with Michael Ning and ArqueMax Ventures LLC (AMV), an entity controlled by Michael Ning, and the sale of our
shares in Taicom Securites Co Ltd (Taicom), a Japanese securities firm, to Taicom. Mr. Ning is the Chairman of Taicom.
Our Board has determined that it is in the best interests of the Company and our stockholders to enter into these transactions. All
of these transactions are described in more detail below.
These transactions involved the
Companys issuance of the following securities through a series of private placements:
warrants to purchase a total of 5,491,250 shares of our common
stock;
debentures that are currently convertible into 4,000,000 shares of our
common stock; and
Assuming the respective holders of
such convertible securities exercise their rights to receive shares of our common stock in full, 9,491,250 shares of our common
stock (or approximately 4.0% of the total common stock of IA Global issued and outstanding as of the record date) could be issued as
a result of the transactions described in this proposal. As of November 19, 2009, we had 236,153,489 shares of our common stock
issued and outstanding.
NYSE AMEX Stock Exchange Regulations
AMEX Company Guide Section 713 requires stockholder approval as a prerequisite for AMEXs approval to list newly issued shares on the AMEX if (i) the aggregate number of shares to be issued would result in the issuance of 20% or more of the amount of common stock issued and outstanding, and (ii) the sale price of the shares would be less than the greater of book or market value of the common stock.
We are requesting that our stockholders ratify the issuance of common stock under these transactions. Ratification is the confirmation by the stockholders of an act previously taken by a Company that required stockholder approval prior to such acts occurrence. We believe that the issuance of common stock pursuant to these transactions was in compliance with the rules of AMEX and did not require stockholder approval. However, because the aggregate number of shares in these transactions is significant, we are seeking stockholder ratification to ensure compliance with the rules of AMEX.
Taicom Securities Co. Ltd.
Taicom is a Japanese securities firm. Taicom provides a broad range of value-added financial services and competitive products. These services currently include the brokerage of Japanese commodities, options derivatives trading, foreign currency, equities and margin as well as offering wealth management and investment consulting services to diversified clients. In addition to offering a broad news and information gathering network, Taicom offers creative solutions that meet the sophisticated trading needs of its clients.
Taicom is a member of the Osaka Stock Exchange. Taicom is headquartered in Tokyo and in Osaka and has three branch offices in Japan.
Terms of Taicom Preferred Class B Stock
Taicom has two classes of stock: Preferred Class A Stock and Preferred Class B Stock. As of November 19, 2009, there are 1,000 shares of Preferred Class A Stock authorized, issued and outstanding, and there are 6,948,750 authorized shares of Preferred Class B Stock, with 6,634,650 shares issued and outstanding. The Preferred Class A Stock is held in its entirety by Mr. Ning, and no dividends are paid with respect to such shares. The Preferred Class B shareholders receive 100% of any dividend declared by Taicom and in the event of a partial or outright sale of Taicom, they will receive 100% of the proceeds.
The Preferred Class A shares carry voting rights, but the Preferred Class B shares are non-voting. There are no redemption rights for either series.
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Additional Warrants under April 24, 2008 and May 8, 2008 Private Placements
On July 28, 2008, the Company
issued warrants for a total of 1,900,000 shares of common stock to Mr. Ning related to the 1,000,000 shares of common stock that he
purchased for $200,000 on April 24, 2008 and the 1,500,000 shares of common stock that he purchased for $300,000 on May 8, 2008,
respectively. The warrants are exercisable at $.17 per share and expire on July 27, 2013. As the Company disclosed in its revised
definitive proxy statement pertaining to our June 1, 2009 Special Meeting of Stockholders (the Special Meeting Proxy
Statement), the warrants covered by this proposal became issuable pursuant to the Companys agreement with Mr. Ning when
the closing market price of our common stock was below $.20 per share on the day before a registration statement filed by the
Company covering certain other securities issued to Mr. Ning was declared effective by the SEC. The Company previously sought
stockholder approval of the issuance of these warrants in the Special Meeting Proxy Statement, but our stockholders did not approve
that proposal at the June 1, 2009 Special Meeting. Our Board believes that it is important for our stockholders to ratify the
Companys issuance of these warrants, including for the reasons set forth in this filing.
June 3, 2008 Share Exchange Agreement
On June 3, 2008, the Company
announced that it had closed a 20% equity investment in Taicom, a Japanese securities firm. This equity investment was an expansion
of the financial services business of IA Global. The transaction between the Company and Taicom was structured as a share exchange
in which the Company issued 26,000,000 shares of its common stock at $.20 per share, the close price during the negotiations in
exchange for 1,389,750 Class B Preferred Shares of Taicom. The transaction was valued at $5,200,000. This equity investment was an
expansion of the financial services business of IA Global.
The Company previously received
stockholder approval of the issuance of these shares at the July 29, 2008 Annual Meeting.
April 1, 2009 Form of Performance Warrant
As the Company disclosed in the
Special Meeting Proxy Statement, on December 12, 2008, the Company issued a Performance Warrant to Mr. Ning, which required him to
raise $500,000 by each of March 31, 2009, May 31, 2009, July 31, 2009 and September 30, 2009 (i.e., $2,000,000 in the aggregate).
The terms of the Performance Warrant provided that Mr. Ning would be entitled to warrants to purchase 8,125,000 shares of our common
stock for each $500,000 that he raised for the Company (or 32,500,000 shares in the aggregate, assuming he raised the full
$2,000,000). The exercise price for the warrants was set at $.04 per share from the date of issuance until their expiration on
December 11, 2013. The warrants relating to any of the $500,000 increments were to be forfeited if such funds were not raised by the
applicable deadline.
On April 1, 2009, the Company and
Mr. Ning (through AMV) amended the Performance Warrant described above (Amended Warrant). The Amended Warrant reduced the number
of shares of common stock that AMV is entitled to receive upon the closing of the financings described above from 32,500,000 shares
to 3,591,250 shares. The Company agreed to register the common stock issuable upon the exercise of the Amended Warrant with NYSE
AMEX and file a registration statement on Form S-3 within sixty days of approval by NYSE AMEX. The Amended Warrant was issued to an
accredited investor in a transaction that will be exempt from registration pursuant to Section 4(2) of the Securities Act, and/or
Regulation D promulgated under the Securities Act.
The Company previously sought
stockholder approval of the issuance of these warrants in the Special Meeting Proxy Statement, but our stockholders did not approve
that proposal at the June 1, 2009 Special Meeting. Our Board believes that it is important for our stockholders to ratify the
Companys issuance of these warrants, which now provide for the issuance of substantially fewer shares of the Companys common
stock, including for the reasons set forth in this filing.
June 8, 2009 Services Agreement
On June 8, 2009, the Company
entered into a Services Agreement (the Agreement) with AMV. Pursuant to the Agreement, AMV is providing $300,000 to the Company in
exchange for IA Global Convertible Senior Debentures (Debentures) that carry a 12% interest rate and are due December 8, 2009.
Upon issuance, the Debentures were immediately convertible into 10,000,000 shares of IAO Common Stock at $0.03 per share. In the
event Company is not able to pay back the principal amount plus accrued interest by December 8, 2009, AMV shall have the right to
convert such Debenture into (1) the proportionate number of collateralized IAO Common Shares, or (2) exchange 940,121 shares of
Taicom Preferred Class B stock owned by the Company pro-rata. The $300,000 in funding will be paid in five tranches that are
independent of each other and that payment or non-payment of one or more tranches is not dependent on the payment or non-payment of
any one or more of the other tranches.
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On July 17, 2009 and September 28,
2009, AMV notified us that we were in default under the agreement and as a result did not fund the $60,000 due on each of June 30,
2009, July 15, 2009 and July 31, 2009. However, AMV was late in funding as required by the Agreement. AMV could claim ownership of
our Taicom shares. This would result in a loss on investment of approximately $2,861,000. Based on the $120,000 in funding under
this agreement, the Company may be required to issue 4,000,000 shares. On October 30, 2009, AMV requested the conversion of the
Debentures into 4,000,000 of our shares.
Effects of these Transactions
These transactions involved a significant increase in the number of shares of our common stock issued and outstanding and, as a result, current stockholders own a smaller percentage of our outstanding common stock and, accordingly, a smaller percentage interest in the voting power, liquidation value and aggregate book value of our Company.
Our Common Stock has no preemptive or similar rights.
Principal Effects of Not Ratifying this Proposal
If stockholder ratification is not obtained, it will have no effect on these transactions. However, if AMEX were to conclude these issuances were below market, we may be limited in our ability to conduct further equity issuances at discounts to the then current market prices.
Your Board Recommends That Stockholders Vote
FOR
Ratification of the Companys Issuance of Common Stock
in Connection with the Transactions Described Above.
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PROPOSAL 3
To Approve the Issuance of Shares of Common Stock
in Connection with a Transaction Involving Inter Asset LBO No 1 Fund
General Information
As previously disclosed, the Company is a BPO and financial services corporation targeting the B2B and B2C markets in the Asia Region. In order to finance the Companys current operations, the Company has raised capital through a private placement with Inter Asset Japan LBO No. 1 Fund (Shareholder), an existing shareholder of the Company. Our Board has determined that it is in the best interests of the Company and our stockholders to enter into these transactions, which are described in more detail below.
These transactions involved the
Companys agreement to issue approximately 10,250,000 shares of our common stock through private placements, or approximately
4.3% of the total common stock of IA Global issued and outstanding on the record date. In addition, the Shareholder is expected to
acquire 50,000,000 shares on November 18, 2009 and has the option to acquire an additional 50,000,000 shares of our common stock
through this private placement, or approximately 42.3% of the Companys issued and outstanding shares as of the record date (in
the aggregate, assuming the Shareholder exercises its option in its entirety). As of November 19, 2009, we had 236,153,489 shares of
our common stock issued and outstanding.
NYSE AMEX Stock Exchange Regulations
AMEX Company Guide Section 713
requires stockholder approval as a prerequisite for AMEXs approval to list newly issued shares on the AMEX if (i) the aggregate
number of shares to be issued would result in the issuance of 20% or more of the amount of common stock issued and outstanding, and
(ii) the sale price of the shares would be less than the greater of book or market value of the common stock. Section 713 also
provides that stockholder approval is required when the issuance or potential issuance of additional shares will result in a change
of control. According to AMEX guidance, an issuance or potential issuance of shares may result in a change of control in some
circumstances even when such issuance or potential issuance would not result in any one stockholder owning or controlling at least
50% of the issued and outstanding common stock of the issuer.
The Company does not believe that
AMEX rules require approval by our stockholders in connection with the issuances and potential issuances of shares to the
Shareholder described in this proposal, nor do we believe that such issuances and potential issuances would result in a change of
control of the Company for purposes of Section 713 of the AMEX Company Guide. If the Shareholder was to exercise its option in full,
however, the transaction would involve the Companys issuance of more than 20% of its issued and outstanding common stock and
significantly increase the Shareholders relative ownership interest in the Company. Accordingly, we are requesting that our
stockholders approve the issuance of common stock in connection with these transactions (and ratify such issuances to the extent
they have already occurred).
August 2, 2009 Stock Purchase Agreement
On August 2, 2009, the Company
entered into a Stock Purchase Agreement (Agreement 1) with the Shareholder. Under the terms of the Agreement 1, the Company issued
to the Shareholder 1,500,000 shares (the Shares) of the Companys common stock, par value $0.01 per share, for an aggregate
purchase price of $60,000, or $0.04 per share (the Purchase Price).
Agreement 1 contains certain representations and warranties of the Shareholder and the Company, including customary investment-related representations provided by the Shareholder, as well as acknowledgements by the Shareholder that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the Shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.
Agreement 1 also grants the Shareholder registration rights that it may exercise at its option and provides the Shareholder with a right of first offer if the Company proposes to issue securities in the future (subject to certain customary exceptions). Finally, the Shareholder has the right to demand that the Company redeem all or any portion of the Shares at any time on or after October 31, 2009, for a redemption price equal to the greater of the Purchase Price or the listed market price for the Companys common stock as of the redemption date.
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August 17, 2009 Stock Purchase Agreement
On August 17, 2009, the Company
entered into a Stock Purchase Agreement (Agreement 2) with the Shareholder. Under the terms of Agreement 2, the Company issued to
the Shareholder 5,000,000 shares of our common stock for an aggregate purchase price of $200,000, or $0.04 per share.
Also under the terms of the Agreement, the Shareholder committed to purchase, and the Company agreed to issue and sell to the Shareholder, additional shares of the Companys common stock in accordance with the following schedule:
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2,500,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$100,000 on or before September 4, 2009.
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1,250,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$50,000 on or before September 18, 2009.
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50,000,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000 on or before November 10, 2009.
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The Shareholders obligation
to purchase the foregoing shares by the date specified is conditioned upon the representations and warranties of the Company
contained in Agreement 2 being accurate as of the date of such closing. As of November 18, 2009, the Company expects to have issued
a total of 60,250,000 shares of common stock to the Shareholder pursuant to Agreement 1 and Agreement 2. Accordingly, the Company is
seeking stockholder ratification of such past issuances.
Finally, the Shareholder has the option, but not the obligation, to purchase, on or before December 31, 2009, an additional 50,000,000 shares of Common Stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000.
Agreement 2 contains certain representations and warranties of the Shareholder and the Company, including customary investment-related representations provided by the Shareholder, as well as acknowledgements by the Shareholder that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.
Agreement 2 also grants the Shareholder registration rights that it may exercise at its option and provides the Shareholder with a right of first offer if the Company proposes to issue securities in the future (subject to certain customary exceptions).
Effects of these Transactions
These transactions resulted in a
significant increase in the number of issued and outstanding shares of our common stock and, as a consequence, current stockholders
own a smaller percentage of our outstanding common stock and, accordingly, a smaller percentage interest in the voting power,
liquidation value and aggregate book value of our Company. If the Shareholder exercises its option to purchase an additional
50,000,000 shares of our common stock, additional dilution of our other stockholders will occur.
In addition, following the
completion of these transactions, the Shareholder will be one of the Companys largest stockholders with 32.6% of the
outstanding shares of the Companys common stock. Accordingly, the Shareholder could have significant influence over matters
submitted to our stockholders, including any potential change of control transactions. The interests of the Shareholder may be
different from the interests of the Companys other stockholders, and the Shareholder may be able to influence the Company in a
way inconsistent with the interests of the Companys other stockholders. This concentration of voting power may deter other
companies from seeking to acquire the Company, which could have a negative effect on the trading price of the Companys Common
Stock.
Our Common Stock has no preemptive or similar rights.
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Principal Effects of Not Approving this Proposal
If stockholder approval is not obtained, the Company may be unable to obtain additional financing, we may lose our AMEX listing, we may need to restructure our operations, divest all or a portion of our business or file for bankruptcy.
In addition, if AMEX were to
conclude that these issuances were below market, or that they resulted in a change of control of the Company, we may be limited in
our ability to conduct further equity issuances at discounts to the then current market prices.
Your Board Recommends That Stockholders Vote
FOR
Approval of the Companys Issuance of Common Stock
in Connection with the Transaction Described Above.
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PROPOSAL 4
To Approve the Issuance of Shares of Common Stock
in Connection with a Transaction Involving Ascendiant Capital Group, LLC
Background
In order to raise capital to provide liquidity and help fund the Companys ongoing operations, the Company has entered into a Securities Purchase Agreement with Ascendiant Capital Group, LLC (Ascendiant), pursuant to which Ascendiant agreed to purchase up to $5,000,000 worth of shares of our Common Stock from time to time over a 24-month period, provided that certain conditions are met. The financing arrangement entered into by IA Global and Ascendiant, which is described in more detail below, is commonly referred to as an equity line of credit or an equity drawdown facility.
The number of shares of our common
stock issued under the equity line of credit will depend on, among other factors, the market price of our common stock. Based on the
closing market price of our common stock on November 6, 2009, or $.04 per share, the Company would issue a total of approximately
139,000,000 shares of common stock if it fully utilized the equity line of credit with Ascendiant. That amount represents 58.9% of
the 236,153,489 shares of our common stock issued and outstanding as of November 19, 2009. As described in this proposal, the
Companys agreement with Ascendiant would not allow for the issuance of that many shares under the equity line of credit unless
stockholder approval is obtained. In addition, other factors (including the outcome of Proposal 5 set forth in this filing) will
impact the Companys ability to utilize the equity line of credit. The pricing and other terms associated with the equity line
of credit, including the conditions that must be met for us to make draws against the facility, are described in more detail below.
Regardless, the Companys use of the facility will dilute our existing stockholders.
AMEX Company Guide Section 713
requires stockholder approval as a prerequisite for AMEXs approval to list newly issued shares on the AMEX if (i) the
aggregate number of shares to be issued would result in the issuance of 20% or more of the amount of common stock issued and
outstanding, and (ii) the sale price of the shares would be less than the greater of book or market value of the common stock.
Section 713 also provides that stockholder approval is required when the issuance or potential issuance of additional shares will
result in a change of control. According to AMEX guidance, an issuance or potential issuance of shares may result in a change of
control in some circumstances even when such issuance or potential issuance would not result in any one stockholder owning or
controlling at least 50% of the issued and outstanding common stock of the issuer.
We are requesting that our
stockholders approve the issuance of shares of our Common Stock to Ascendiant in connection with this transaction. We believe that
the issuance of common stock pursuant to these transactions would be in compliance with the rules of AMEX and does not require
stockholder approval. However, because the aggregate number of shares that may be issued pursuant to the equity line of credit is
significant, we are seeking stockholder approval to ensure compliance with the rules of AMEX.
Description of Securities Purchase Agreement
Under the terms of the Securities Purchase Agreement, Ascendiant will not be obligated to purchase shares of IA Globals common stock unless and until certain conditions are met, including but not limited to (i) approval of the transaction by the NYSE Amex, and (ii) the Company files by November 13, 2009 and the Securities and Exchange Commission (the SEC) declares effective by January 27, 2010 a Registration Statement on Form S-1 (the Registration Statement) registering Ascendiants resale of any shares purchased by it under the equity drawdown facility. The customary terms and conditions associated with Ascendiants registration rights are set forth in a Registration Rights Agreement that was also entered into by the parties on September 29, 2009.
If and when the SEC declares the Registration Statement effective, IA Global will have the right to sell and issue to Ascendiant, and Ascendiant will be obligated to purchase from IA Global, up to $5,000,000 worth of shares of the Companys common stock over a 24-month period beginning on such date (the Commitment Period). IA Global will be entitled to sell such shares from time to time during the Commitment Period by delivering a draw down notice to Ascendiant. In such draw down notices, IA Global will be required to specify the dollar amount of shares that it intends to sell to Ascendiant, which will be spread over a nine-trading-day pricing period. For each draw, IA Global will be required to deliver the shares sold to Ascendiant in three installments (following the third, sixth and ninth trading days in the pricing period, respectively). Ascendiant is entitled to
liquidated damages in connection with certain delays in the delivery of its shares.
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The Securities Purchase Agreement also provides for the following terms and conditions:
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Purchase Price 90% of IA Globals volume-weighted average price (VWAP).
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Threshold Price IA Global may specify a price below which it will not sell shares during the applicable nine-trading-day pricing period. If the purchase price falls below the threshold price on any day(s) during the pricing period, such day(s) will be removed from the pricing period (and Ascendiants investment amount will be reduced by 1/9 for each such day).
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Maximum Draw 15% of IA Globals total trading volume for the 10-trading-day period immediately preceding the applicable draw down, times the average VWAP during such period (but in no event more than $250,000).
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Minimum Time Between Draw Down Pricing Periods Two trading days.
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Minimum Use of Facility IA Global is obligated to sell at least $1,000,000 worth of shares of its common stock to Ascendiant during the Commitment Period.
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Commitment Fees Upon NYSE Amex approval, IA Global will be obligated to issue 2,371,917 shares of its common stock to Ascendiant ($125,000 worth of shares based on the Companys closing bid price on the trading day immediately prior to the date of the Securities Purchase Agreement). If and when the SEC declares the Registration Statement effective, IA Global will be obligated to issue another $125,000 worth of shares of its common stock in four installments over a period of 90 days following the effectiveness date.
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Other Fees and Expenses IA Global has agreed to pay $10,000 to Ascendiants legal counsel for the legal fees and expenses it incurred in connection with negotiating and documenting the equity line of credit. Pursuant to separate agreements, IA Global has also agreed to pay an aggregate of 3.0% in finders fees (to be paid in connection with each draw down).
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Indemnification Ascendiant is entitled to customary indemnification from IA Global for any losses or liabilities it suffers as a result of any breach by IA Global of any provisions of the Securities Purchase Agreement, or as a result of any lawsuit brought by any stockholder of IA Global (except stockholders who are officers, directors or principal stockholders of IA Global).
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Conditions to Ascendiants Obligation to Purchase Shares Trading in IA Globals common stock must not be suspended by the SEC or the NYSE Amex (or other applicable trading market); IA Global must not have experienced a material adverse effect; all liquidated damages and other amounts owing to Ascendiant must be paid in full; the Registration Statement must be effective with respect to Ascendiants resale of all shares purchased under the equity drawdown facility; there must be a sufficient number of authorized but unissued shares of IA Global common stock; and the issuance must not cause Ascendiant to own more than 9.99% of the then outstanding shares of IA Global common stock, or more than 19.9% of the number of shares of common stock outstanding on September 29, 2009 to have been issued under
the equity drawdown facility (without stockholder approval).
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Termination The Securities Purchase Agreement will terminate if IA Globals common stock is not listed on one of several specified trading markets (which include the NYSE Amex, OTC Bulletin Board and Pink Sheets, among others); if IA Global files for protection from its creditors; or if the Registration Statement is not declared effective by the SEC by June 29, 2010. IA Global may terminate the Securities Purchase Agreement if Ascendiant fails to fund a draw down within 10 trading days after the end of the applicable settlement period, or if the SEC provides comments on the Registration Statement requiring certain changes in the transaction structure and/or documents.
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The Securities Purchase Agreement also contains certain representations and warranties of IA Global and Ascendiant, including customary investment-related representations provided by Ascendiant, as well as acknowledgements by Ascendiant that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. IA Global provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations. IA Globals representations and warranties are qualified
in their entirety (to the extent applicable) by the Companys disclosures in the reports it files with the SEC. IA Global also delivered confidential disclosure schedules qualifying certain of its representations and warranties in connection with executing and delivering the Securities Purchase Agreement.
The shares to be issued by IA Global to Ascendiant under the Securities Purchase Agreement will be issued in private placements in reliance upon the exemption from the registration requirements set forth in the Securities Act of 1933 (the Securities Act) provided for in Section 4(2) of the Securities Act, and the rules promulgated by the SEC thereunder.
Effects of Ascendiant Transaction
If approved by the stockholders, these transactions will result in a significant increase in the number of issued and outstanding shares of our common stock and, as a result, current stockholders would own a smaller percentage of our outstanding common stock and, accordingly, a smaller percentage interest in the voting power, liquidation value and aggregate book value of our Company.
Our Common Stock has no preemptive or similar rights.
Principal Effects of Not Approving this Proposal
Stockholder approval is not specifically required as a condition to closing the Companys proposed transaction with Ascendiant, but there is a possibility that AMEX will not approve the listing of the shares of our Common Stock proposed to be sold to Ascendiant under the equity line of credit if stockholder approval is not obtained. As described above, AMEX approval of the listing of such shares is a condition to closing the equity line of credit. Accordingly, if our stockholders do not approve this proposal, there is a significant possibility that we may be unable to complete the proposed transaction with Ascendiant, which would leave the Company without the liquidity or ongoing access to capital that it would provide during the Commitment Period. Other potential outcomes that could be related to such an event include the Companys inability to obtain alternative or additional
financing (at all, or on terms acceptable to us), the delisting of our Common Stock from AMEX, the need to restructure our operations and/or divest all or a portion of our business, and the need to file for bankruptcy or other protection from our creditors. Additionally, if AMEX were to conclude that issuances of our Common Stock to Ascendiant pursuant to the equity line of credit were below market, we may be limited in our ability to conduct further equity issuances at discounts to the then-current market prices.
Your Board Recommends That Stockholders Vote
FOR
Approval of the Companys Issuance of Common Stock
in Connection with the Transaction Described Above.
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PROPOSAL 5
To Give the Board Discretion to Amend the Companys Certificate of Incorporation to
(i) Effect a Reverse Stock Split of the Common Stock Within a Specified Range of Ratios and
(ii) Decrease the Number of Authorized Shares of our Common Stock
From 450,000,000 Shares to 100,000,000 Shares
Background
On October 30, 2009, the Board adopted a resolution seeking stockholder approval to grant the Board discretionary authority to amend the Companys certificate of incorporation to (i) effect a reverse stock split of IA Globals common stock within a specified range of ratios and (ii) decrease the number of authorized shares of our common stock from 450,000,000 shares to 100,000,000 shares. If this proposal is approved, the Board may subsequently effect, in its sole discretion, the reverse stock split based upon any exchange ratio within the following range: 1-for-25 to 1-for-50. If approved, the Boards discretion to effect a reverse stock split within that range of ratios would last until the Companys 2010 Annual Meeting of Stockholders, when such discretion would terminate if not exercised by the Board. We currently anticipate that, if this proposal is approved by
our stockholders, the reverse stock split will be implemented as soon as practicable following the annual meeting.
As of November 19, 2009, the
Company had 450,000,000 shares of common stock authorized for issuance, of which 236,153,489 shares were issued and outstanding. If
our stockholders approve this proposal and the Board determines the effect a reverse stock split, our authorized capital would be
reduced to from 450,000,000 shares of common stock to 100,000,000 shares of common stock, and the number of shares issued and
outstanding (as of the record date) would be reduced to between 4,723,000 and 9,446,000 (each depending on the ratio ultimately
adopted by the Board).
Reasons for Effecting a Reverse Stock Split
The Board believes that a reverse stock split is desirable and in the best interests of IA Global and our stockholders for the following reasons:
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Increased Share
Price
. A reverse stock split may increase the trading price of shares of the Companys common stock,
making them more attractive investments generally and to institutional investors in particular. In addition, Section 1003(f)(v) of
the NYSE AMEX Company Guide provides that the Companys common stock could be delisted from the NYSE AMEX stock exchange if the
Company does not effect a reverse stock split or otherwise address its low market price ($.04 per share as of November 10, 2009) in
a timely manner.
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Reduced Stockholder Transaction Costs
. Because investors typically pay commissions based on the number of shares traded when they buy or sell shares of our common stock, such investors would pay lower commissions for trading a given dollar amount of Company common stock if the reverse stock split is completed.
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Increased Earnings Per Share
. To the extent that the Company has positive net income in future periods, a decrease in the number of shares of our common stock issued and outstanding would have the result of increasing our nominal earnings per share, which could help our visibility in the marketplace and increase the level of confidence in our common stock.
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Relative Increase in
Number of Shares Authorized For Issuance
. Currently, less than 50% of our authorized shares of common stock
are available for issuance. If our stockholders approval this proposal and our Board implements a reverse stock split, the relative
reduction in the number of our issued and outstanding shares of common stock will exceed the reduction in the number of shares of
our common stock that are authorized for issuance. Accordingly, relatively more shares of our common stock will be available for
future issuance for a variety of corporate purposes, including capital-raising and potential acquisitions. Although the Board has no
current or immediate plans to issue such shares (except as contemplated in connection with the other transactions described in this
proxy statement, including the Companys equity line of credit with Ascendiant), the Board believes this will provide the Company
with additional strategic and operational flexibility in the future.
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34
Factors Considered by Our Board of Directors
The Board believes that the continued listing of the common stock on the NYSE AMEX stock market is in the best interests of the Company and its stockholders, and that the delisting of the common stock may cause the liquidity in the trading market for the common stock to be significantly decreased, thereby reducing the trading price and increasing the transaction costs of trading shares of the common stock.
The Board also considered that as a matter of policy, many institutional investors are prohibited from purchasing stocks below certain minimum price levels. For the same reason, brokers often discourage their customers from purchasing such stocks. The Board believes that, to the extent that the price per share of our common stock remains at a higher per share price as a result of the reverse stock split, some of these concerns may be ameliorated.
The Board also considered that the structure of trading commissions, which are often set at a fixed price, tend to have an adverse impact on holders of lower-priced securities because the brokerage commissions on a sale of lower-priced securities generally represent a higher percentage of the sales prices than the commissions on relatively higher-priced issues, which may discourage trading in such lower-priced securities. A reverse stock split could result in a price level for our common stock that may reduce the adverse effect trading commissions have on our stockholders. Moreover, a reverse stock split would reduce the actual transaction costs imposed on those investors who pay commissions on trades of our common stock based on the number of shares actually traded.
In addition, the Board believes that the total number of shares of our common stock currently outstanding is disproportionately large relative to our present market capitalization and that a reverse stock split would bring the number of outstanding shares to a level more in line with other healthcare companies with comparable capitalizations. Moreover, the Board considered that when the number of outstanding shares of common stock is unreasonably large in relation to a companys earnings, a significant positive change in net earnings is required to create a noticeable improvement, in absolute terms, in such companys reported earnings per share levels. If we were to effect a reverse stock split and decrease the number of shares outstanding, our investors could more easily understand the impact on earnings per share attributable to the operational efforts of our management.
In evaluating whether or not to recommend a reverse stock split, in addition to the considerations described above, the Board also took into account various negative factors associated with a reverse stock split. These factors include:
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the negative perception of reverse stock splits held by some investors, analysts and other stock market participants;
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the fact that the stock price of some companies that have effected reverse stock splits has subsequently declined back to pre-reverse stock split levels;
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the adverse effect on liquidity that might be caused by a reduced number of shares outstanding; and
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the costs associated with implementing a reverse stock split.
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Also, other factors such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock. As a result, there can be no assurance that the price of our common stock would be maintained at the per share price in effect immediately following the effective time of the reverse stock split.
Stockholders should recognize that if a reverse split is effected, they will own a fewer number of shares than they currently own. While we expect that the reverse split will result in an increase in the per share price of our common stock, the reverse stock split may not increase the per share price of our common stock in proportion to the reduction in the number of shares of our common stock outstanding or result in a permanent increase in the per share price (which depends on many factors, including our performance, prospects and other factors that may be unrelated to the number of shares outstanding).
If a reverse stock split is effected and the per share price of our common stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of a reverse stock split. Furthermore, the liquidity of our common stock could be adversely affected by the reduced number of shares that would be outstanding after the reverse stock split. In addition, the reverse split will likely increase the number of stockholders who own odd lots (less than 100 shares). Stockholders who hold odd lots typically will experience an increase in the cost of selling their shares, as well as possible greater difficulty in effecting such sales. Accordingly, a reverse stock split may not achieve the desired results that have been outlined above.
35
The Board considered all of the foregoing factors, and determined that the reverse stock split is in the best interests of IA Global and its stockholders. As noted above, even if stockholders approve the reverse stock split, the Board reserves the right not to effect the reverse stock split if the Board does not deem it to be in the best interests of the Company or its stockholders.
Effects of Reverse Stock Split
Registration and Reporting Requirements
Our common stock is currently registered under the Securities Exchange Act of 1934 (the Exchange Act), and we are subject to the periodic reporting and other requirements of the Exchange Act. The reverse stock split will not affect the registration of our common stock under the Exchange Act.
Issued and Outstanding Capital Stock
If approved by our stockholders (and assuming the Board exercises its discretion to effect the reverse stock split), this proposal will result in a significant decrease in the number of authorized and issued and outstanding shares of our common stock. The reverse stock split will not change the proportionate equity interests of our stockholders, nor will the respective voting rights or other rights of stockholders be altered in any way. The common stock issued pursuant to the reverse stock split will remain fully paid and non-assessable.
Convertible Securities
We have warrants outstanding for
the purchase of approximately 11.5 million shares of our common stock. We issued these warrants in connection with financing
arrangements. Pursuant to the applicable warrant agreements, upon effectiveness of the reverse stock split, the number of shares
into which the warrants may be exercised (and the corresponding exercise price) will be adjusted in a manner that corresponds to the
reverse stock split ratio ultimately adopted by the Board (within the range specified above). Similar adjustments would occur with
respect to the options that are currently outstanding to purchase approximately 18.4 million shares of the Companys common
stock.
Fractional Shares
If the reverse stock split is
effected by our Board and results in certain stockholders being entitled to receive fractional shares, such share amounts will be
rounded up to the nearest whole share. The Company will not make any cash payments in lieu of issuing fractional shares.
Accounting Matters
The reverse stock split would not
affect total stockholders equity on our balance sheet. However, because the par value of our common stock will remain
unchanged, the components that make up total stockholders equity would change by offsetting amounts. As a result of the
reverse stock split, the stated capital component attributable to our common stock would be reduced in accordance with the reverse
stock split ratio ultimately adopted by the Board, and the additional paid-in capital component would be increased by the amount by
which the stated capital is reduced. The net book value per share of our common stock would be increased as a result of the reverse
stock split because there will be fewer shares of our common stock outstanding. Prior periods per share amounts will be
restated to reflect the reverse stock split.
Potential Anti-Takeover Effects
If the reverse stock split is
effected, the increased proportion of authorized but unissued shares of the Companys common stock to issued and outstanding shares
could, under certain circumstances, have an anti-takeover effect. For example, such a change could permit future issuances of our
common stock that would dilute the stock ownership of a person seeking to effect a change of control in the composition of our Board
or contemplating a tender offer or other transaction involving the combination of the Company with another entity. The Board is not,
however, making this proposal in response to any effort of which it is aware to accumulate shares of the Companys common stock or
obtain control of the Company or the Board. Rather, the Board is proposing the reverse stock split for the reasons identified above.
As noted in this proposal, the Board has no current or immediate plans to issue the additional authorized but unissued shares that
would result from the reverse stock split (if approved by our stockholders and implemented by the Board), except as contemplated in
connection with the other transactions described in this proxy statement, including our equity line of credit with
Ascendiant.
Our Common Stock has no preemptive or similar rights.
36
Procedure for Effecting Proposed Amendment and Exchange of Stock Certificates
If our stockholders approve this proposal and the Board determines that a reverse stock split, within the specified range of ratios, continues to be in the best interests of IA Global and our stockholders, the Board will file an amendment to our certificate of incorporation reflecting the reverse split and the reduction of the authorized number of shares of our common stock with the Secretary of State of the State of Delaware. The reverse stock split and the reduction of the authorized number of shares of our common stock will become effective upon filing which time and date will be referred to as the effective time. At the effective time, a certain number of shares (based on the reverse stock split ratio ultimately adopted by the Board) of common stock issued and outstanding immediately prior to the effective time will, automatically and without any further action on the
part of our stockholders, be combined into and become one share of common stock and each certificate that immediately prior to the effective time represented pre-reverse stock split shares, will be deemed for all corporate purposes to evidence ownership of post-reverse stock split shares and the number of authorized shares of our common stock will be decreased in accordance with the ratio adopted by the Board.
The Companys transfer agent, American Stock and Transfer, will act as exchange agent for purposes of implementing the exchange of stock certificates, and is referred to as the exchange agent. As soon as practicable after the effective time, a letter of transmittal will be sent to stockholders of record as of the effective time for purposes of surrendering to the exchange agent certificates representing pre-reverse stock split shares in exchange for certificates representing post-reverse stock split shares in accordance with the procedures set forth in the letter of transmittal. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholders outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the exchange agent. From and after the effective time, any certificates
formerly representing pre-reverse stock split shares which are submitted for transfer, whether pursuant to a sale, other disposition or otherwise, will be exchanged for certificates representing post-reverse stock split shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Even if our stockholders approve this proposal, we reserve the right not to effect the reverse stock split or decrease the number of authorized share of our common stock if in the opinion of the Board it would not be in the best interests of IA Global and its stockholders.
No Appraisal Rights
Under the Delaware General Corporation Law, stockholders will not be entitled to exercise appraisal rights in connection with the reverse split or decrease in the number of authorized shares of our common stock, and IA Global will not independently provide stockholders with any such right.
Certain United States Federal Income Tax Consequences
IN ACCORDANCE WITH 31 C.F.R. § 10.35(B) (5), THE DISCUSSION OF THE TAX ASPECTS PROVIDED HEREIN HAS NOT BEEN PREPARED, AND MAY NOT BE RELIED UPON BY ANY PERSON, FOR PROTECTION AGAINST ANY FEDERAL TAX PENALTY. THE TAX DISCUSSION HEREIN IS WRITTEN TO SUPPORT PROPOSED AMENDMENT AND STOCKHOLDER SHOULD SEEK ADVICE BASED ON THE PROSPECTIVE STOCKHOLDERS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
The following is a summary of certain United States federal income tax consequences of the reverse stock split generally applicable to beneficial holders of shares of our common stock. This summary addresses only such stockholders who hold their pre-reverse stock split shares as capital assets and will hold the post-reverse stock split shares as capital assets. This discussion does not address all United States federal income tax considerations that may be relevant to particular stockholders in light of their individual circumstances or to stockholders that are subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, and foreign stockholders. The following summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, applicable Treasury Regulations thereunder, judicial decisions and current
administrative rulings, as of the date hereof, all of which are subject to change, possibly on a retroactive basis. Tax consequences under state, local, foreign, and other laws are not addressed herein. Each stockholder should consult its tax advisor as to the particular facts and circumstances which may be unique to such stockholder and also as to any estate, gift, state, local or foreign tax considerations arising out of the reverse stock split. The Company has not and will not seek a ruling from the Internal Revenue Service regarding the United States federal income tax consequences of the proposed reverse stock split. Therefore, the income tax consequences discussed below are not binding on the Internal Revenue Service and there can be no assurance that such income tax consequences, if challenged, would be sustained.
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Subject to the above stated, the United States federal income tax consequences of the proposed reverse stock split may be summarized as follows:
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The reverse stock split would qualify as a tax-free recapitalization under the Internal Revenue Code. Accordingly, a stockholder will not recognize any gain or loss for United States federal income tax purposes as a result of the receipt of the post-reverse stock split common stock pursuant to the reverse stock split.
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The shares of post-reverse stock split common stock in the hands of a stockholder will have an aggregate basis for computing gain or loss on a subsequent disposition equal to the aggregate basis of the shares of pre-reverse split common stock held by the stockholder immediately prior to the reverse stock split.
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A stockholders holding period for the post-reverse stock split common stock will include the holding period of the pre-reverse split common stock exchanged.
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Principal Effects of Not Approving this Proposal
If stockholder approval is not obtained, the market price of the Companys stock may remain at or near current levels, and the Company may lose its NYSE AMEX listing.
Your Board Recommends That Stockholders Vote
FOR
Giving the Board Discretion to Amend the Companys Certificate of Incorporation to
Effect a Reverse Stock Split of the Common Stock Within the Specified Range of Ratios Described Above and Decrease the Number of Authorized Shares of Common Stock
From 450,000,000 Shares to 100,000,000 Shares.
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38
PROPOSAL 6
Ratification of the Appointment of Sherb and Co., LLP
as the Companys Independent Registered Public Accounting Firm (Independent Auditors)
for the fiscal year ended March 31, 2010
At its October 30, 2009 meeting, the Audit Committee recommended and approved the appointment of Sherb and Co., LLP as the Companys independent registered public accounting firm (independent auditors) to examine the consolidated financial statements of the Company for the year ending March 31, 2010. The Board of Directors is seeking the stockholders ratification of such action.
Action by our stockholders is not required by law in connection with the appointment of the Companys independent accountants. If the Companys stockholders do not ratify this appointment, however, the appointment will be reconsidered by the Audit Committee.
Sherb and Co., LLP has no direct or indirect financial interest in the Company or in any of its subsidiaries, nor has it had any connection with the Company or any of its subsidiaries in the capacity of promoter, underwriter, voting trustee, director, officer or employee. It is expected that representatives of Sherb and Co., LLP will not attend the Annual Meeting.
Your Board And The Audit Committee Recommend That Stockholders Vote
FOR
Ratification of the Appointment of Sherb and Co., LLP
as the Companys Independent Registered Public Accounting Firm (Independent
Auditors)
For the fiscal year ended March 31, 2010.
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AUDIT COMMITTEE DISCLOSURE
The Audit Committee is comprised solely of independent and, among other things, is responsible for:
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the appointment of independent registered accounting firm;
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review the arrangements for and scope of the audit by independent auditors;
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review the independence of the independent auditors;
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consider the adequacy and effectiveness of the system of internal accounting and financial controls and review any proposed corrective actions;
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review and monitor our policies regarding business ethics and conflicts of interest;
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discuss with management and the independent auditors our draft quarterly interim and annual financial statements and key accounting and reporting matters;
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review the activities and recommendations of our accounting department.
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Audit Committee Pre-Approval Policy
The Audit Committee has established a pre-approval policy and procedures for audit, audit-related and tax services that can be performed by the independent auditors without specific authorization from the Audit Committee subject to certain restrictions. The policy sets out the specific services pre-approved by the Audit Committee and the applicable limitations, while ensuring the independence of the independent auditors to audit the Companys financial statements is not impaired. The pre-approval policy does not include a delegation to management of the Audit Committee responsibilities under the Exchange Act. During the fiscal year ended March 31, 2009, the Audit Committee pre-approved all audit and permissible non-audit services provided by our independent auditors.
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Service Fees Paid to the Independent Registered Public Accounting Firm
The Audit Committee engaged Sherb and Co., LLP to perform an annual audit of the Companys financial statements for the fiscal years ended March 31, 2009 and 2008 and December 31, 2007. The following is the breakdown of aggregate fees paid to the auditors for the Company for the last three fiscal years:
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Year Ended
March 31, 2009
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Year Ended
March 31, 2008
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Year Ended
December 31, 2007
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Audit fees
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$
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120,000
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$
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125,000
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$
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105,000
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Audit related fees
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48,000
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33,100
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30,000
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Tax fees
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6,000
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9,300
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6,000
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All other fees
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138
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65,284
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$
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174,138
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$
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167,400
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$
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206,284
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Audit fees
are fees paid for professional services for the audit of our financial statements.
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Audit Related fees
are fees billed by Sherb and Co., LLP to us for services not included in the Audit Fees category, specifically, SAS 100 reviews, SEC filings and consents, and accounting consultations on matters addressed during the audit or interim reviews, and review work related to quarterly filings.
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Tax fees
are fees primarily for tax compliance in connection with filing U.S. income tax returns.
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All other fees
are fees paid to Horwath, Sakura and Co. for the audit of our subsidiary Rex Tokyo in 2004, which the Company agreed to pay as part of the sale in April 2006. For the fiscal year ended March 31, 2009, these fees included miscellaneous expenses.
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AUDIT COMMITTEE REPORT
The Audit Committee, which is composed of two independent directors (Eric La Cara and Masazumi Ishii), operates under a written charter adopted by the Board of Directors. Among its functions, the Audit Committee recommends to the Board of Directors the selection of independent registered accounting firm.
Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls, and the independent auditors are responsible for auditing those financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The Audit Committees responsibility is to oversee the financial reporting process on behalf of the Board of Directors and to report the result of their activities to the Board of Directors.
In this context, the Audit Committee has met and held discussions with management and the independent auditors. Management represented to the Audit Committee that our financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the financial statements with management and the independent auditors. The Audit Committee discussed with the independent auditors matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Communication with Audit Committees).
The independent auditors also provided to the committee the written disclosures required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the Audit Committee discussed with the independent auditors their independence and considered the compatibility of permissible non-audit services with the auditors independence.
Based upon the Audit Committees discussion with management and the independent auditors and the Audit Committees review of the representation of management and the report of the independent auditors to the committee, and relying thereon, the Audit Committee recommended that the Board of Directors include the audited financial statements in our Annual Report on Form 10-K for the fiscal years ended March 31, 2009 and 2008 and December 31, 2007, as filed with the SEC.
Audit Committee of the Board of Directors,
Eric La Cara, Chairman
Masazumi Ishii
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SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Companys executive officers, directors and 10% stockholders are required under Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Copies of these reports must also be furnished to the Company.
Based solely on a review of copies of reports furnished to the Company, or written representations that no reports were required, the Company believes that during fiscal year 2009 its executive officers, directors and 10% stockholders timely filed all reports required to be filed by them pursuant to Section 16(a) of the Exchange Act Act, except for Derek Schneideman, who was late in filing two Form 4s; Mark Scott, who was late in filing three Form 4s; and Eric LaCara, who was late in filing one Form 4. The late filings by Messrs. Schneideman and Scott were due to initial issuances of stock grants under the Companys 2007 Stock Incentive Plan. In addition, Inter Asset Japan Co Ltd. was late in filing one Form 13-D, Taicom Securities and Michael Ning were late in filing one Form 13-D, and DJ Capital and John Margersion were each late in filing one Form 4.
STOCKHOLDER PROPOSALS FOR THE 2010 ANNUAL MEETING OF STOCKHOLDERS
If any stockholder intends to submit a proposal to be considered for inclusion in the Companys proxy statement for the 2010 Annual Meeting of Stockholders, the proposal must be submitted to the Secretary of the Company (addressed to IA Global, Inc., Attn: Corporate Secretary, 101 California Street, Suite 2450, San Francisco, CA 94111) in proper form (per SEC Regulation 14A, Rule 14a-8Stockholder Proposals) and received by the Secretary on or before July 27, 2010. If, however, the date of the 2010 Annual Meeting of Stockholders is not within 30 days before or after December 18, 2010, any stockholder proposal must be received by the Secretary of the Company a reasonable time before we begin to print and send our proxy materials.
In accordance with the provisions of the Companys Amended and Restated Bylaws, any stockholder proposals for the 2010 Annual Meeting of Stockholders that are submitted outside the processes of Rule 14a-8 (i.e., proposals that are not submitted for inclusion in the Companys proxy statement) will be considered untimely if they are received by the Secretary of the Company after September 10, 2010. If, however, the date of the 2010 Annual Meeting of Stockholders is not within 30 days before or after December 18, 2010, any such proposal will be considered untimely if it is received (i) after the date that is 45 days prior to the date of the 2010 Annual Meeting of Stockholders (if at least 60 days advance notice of the meeting is given to stockholders), or, if less than 60 days advance notice is given to stockholders, (ii) after the date that is 15 days after the date on
which notice of the 2010 Annual Meeting of Stockholders is given to stockholders.
OTHER BUSINESS
The Companys management does not know of any other matter to be presented for action at the Annual Meeting. If any other matter should be properly presented at the Annual Meeting, however, it is the intention of the persons named in the accompanying proxy to vote said proxy in accordance with their best judgment.
INCORPORATION BY REFERENCE OF ANNUAL REPORT ON FORM 10-K
A copy of our Annual Report on Form 10-K for the fiscal year ended March 31, 2009, as filed with the SEC, accompanies this Proxy Statement. Any exhibit to the Form
10-K will be made available, free of charge, upon written request. Written requests should be addressed to IA Global, Inc., Attn: Investor Relations, 101 California Street, Suite 2450, San Francisco, CA 94111. Copies of these documents may also be accessed electronically via the SECs website at http://www.sec.gov. The Companys Form
10-K is not part of these proxy solicitation materials.
Mark Scott
Secretary
San Francisco, California
November 25, 2009
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