IA Global Inc. (NYSE AMEX US: IAO) (the �Company�) announced
that it would not be able to file its Form 10-K for the twelve
months ended March 31, 2009 as required by July 14, 2009. This
delay is due to (i) the ongoing internal audit of Global Hotline,
Inc. (�Global Hotline�) operations; (ii) ongoing negotiations with
all Japanese lenders; and, (iii) the late and incomplete receipt of
March 31, 2009 financial records from Global Hotline and Taicom
Securities Co Ltd. The Company expects to file the Form 10K on
approximately July 24-31, 2009.
Review of Global Hotline, Inc.
Operations
On June 1, 2009, at the direction of the CEO, the Company
commenced a forensic and detailed internal audit of Global Hotline.
The detailed forensic audit is being conducted by our Chief
Financial Officer, assisted by two auditors and our CEO. The audit
was considered necessary because of the entry into an alleged loan
with an unlicensed Japanese lender by Global Hotline management, a
series of questionable transactions authorized by GHI management,
and the continued and unexpected unprofitable operations of Global
Hotline since August 2008.
Alleged Loan with Unqualified Lender-
As reported, on February 25, 2009 and February 27, 2009, Global
Hotline purportedly received a total of 250,000,000 Yen, or
approximately $2,577,000 at current exchange rates, in working
capital loans (the �Loans�) from an unlicensed Japanese lender. The
purported Loans were described as requiring a balloon payment of
250,000,000 Yen, or approximately $2,577,000 on April 30, 2009. A
year�s interest of 15.0% was paid on February 25, 2009, with a
default interest rate of 21.9%. A 10% fee was paid for this working
capital loan. The Loans were signed by SG Telecom and are
guaranteed by the two senior executives and two directors of Global
Hotline and by all Global Hotline affiliated entities.
On approximately April 1, 2009, the Company pledged its
ownership in Global Hotline as collateral for the purported loans,
subject to a thirty day notice period in the case of default under
the agreement.
On April 24, 2009, Global Hotline received 90,000,000 Yen or
$929,000 at current exchange rates from the CFO of Global Hotline.
The loan required a balloon payment of 90,000,000 Yen, or
approximately $929,000 on May 15, 2009. Interest of 15.0% is to be
paid starting on April 24, 2009, with a default interest rate of
21.9%. The loan was guaranteed by all Global Hotline affiliated
entities. The loan apparently was repaid in May, 2009.
On May 27, 2009, SG Telecom, Inc. did not repay the Loan as
requested by unlicensed Japanese lender.
After review by Japanese corporate counsel, the Company is
challenging the validity of the loan and the collateral claimed by
the unlicensed Japanese lender. We have discovered that Global
Hotline management provided slips of paper purporting to be stock
certificates to the unlicensed lender in early March 2009 in
violation of the loan agreements and while Global Hotline
apparently had sufficient cash to repay a portion of the alleged
loan to the lender. On June 9, 2009, the unlicensed Japanese lender
submitted documents claiming ownership of the Company�s 600 shares
of Global Hotline. However since the Company never issued any
documents evidencing ownership the claim is considered spurious.
The Company has disputed all notices received from unlicensed
Japanese lender. The Company is taking all legal actions in Japan
to secure its 100% ownership in Global Hotline and subsidiaries. In
addition, the parties continue to negotiate over the alleged unpaid
loans. We believe the current balance due to unlicensed Japanese
lender is approximately $1,500,000.
Until July 10, 2009, the unlicensed lender had refused to supply
any bank or transaction records for the Company to close its
records for the twelve months ended March 31, 2009 or conduct its
external audit.
Negotiations of Loans with Japanese Banks-
On April 30, 2009, Global Hotline entered into negotiations on
$12,379,000 in debt with its Japanese banks. Global Hotline is
proposing to refinance this debt on a long term basis and freeze
any payments in the short term. To date, eight loans have been
renegotiated. We expect to adjust the repayment dates on many loans
with our largest lender to a September 30, 2009 due date and then
to re-finance the loans on a long term basis. Additional details
will provided with the filing of the Form 10-K for the twelve
months ending March 31, 2009.
Review of Operations-
We have identified opportunities to correct the profitability of
Global Hotline and expect to implement these opportunities in the
near future.
Preliminary Results for the
Twelve Months Ended March 31, 2009
Preliminary results, before any potential audit adjustments, are
as follows for the twelve months ended March 31, 2009:
Total assets- $31-$33 million as of March 31, 2009
Total liabilities- $26-$27 million as of March 31, 2009
Total stockholder equity- $5-$6 million as of March 31, 2009
Sales- $60-$61 million for the twelve months ended March 31,
2009 as compared to $38.7 million for the twelve months ended March
31, 2008
Net loss- $8-$9 million for the twelve months ended March 31,
2009 as compared to $7.1 for the twelve months ended March 31,
2008. The net loss includes a one-time expense associated with an
unlicensed Japanese lender and a provision for $1.6 million of
restructuring costs under Japanese GAAP that is being evaluated
under US GAAP.
Additional details will be provided with the filing of the Form
10-K for the twelve months ending March 31, 2009. The financial
results are subject to adjustment.
Receipt of NYSE AMEX Deficiency
Letter Dated July 10, 2009
The Company received a Deficiency Letter from the NYSE AMEX
Stock Exchange dated July 10, 2009. In this letter, Staff has now
determined that the Company�s securities have been selling for a
low price per share for a substantial period of time and, pursuant
to Section 1003(f)(v) of the NYSE Amex Company Guide (the �Company
Guide�), the Company�s continued listing is predicated on it
effecting a reverse stock split of its Common Stock by January 11,
2010. The Company will review a reverse stock split in accordance
with the Deficiency Letter.
The Company was previously notified by Staff that the Exchange
deemed it appropriate for the Company to effect a reverse stock
split to address its low selling price.
The Company has seen unprecedented volume in its stock. In June
2009, over 52 million shares were traded and over 40 million of the
shares were crossing trades between two alleged shorting
organizations.
Receipt of NYSE AMEX Deficiency
Letter Dated July 14, 2009
The Company received a Deficiency Letter from the NYSE AMEX
Stock Exchange dated July 14, 2009. In this letter, Staff has now
determined that the Company has not filed its Form 10K for the
twelve months ended March 31, 2009. The timely filing of this
report is a condition of the Company�s continuing listing on the
Exchange, as required by Sections 134 and 1101 of the Exchanges
Company Guide. In addition, the Company�s failure to file this
report is a material violation of its listing agreement with the
Exchange. Pursuant to 1003(d) of the Company Guide, the Exchange is
authorized to suspend, and unless prompt corrective action is
taken, remove the Company�s security from the Exchange.
The Company is required to submit a plan to the Exchange by July
28, 2009 to bring the Company in compliance with Sections 134 and
1101 of the Exchanges Company Guide by October 12, 2009. The
Company expects to submit this plan and be in compliance with
Sections 134 and 1101 of the Exchanges Company Guide by October 12,
2009.
Services Agreement with ArqueMax
Ventures LLC (�AMV�)
On June 8, 2009, the Company entered into a Services Agreement
with AMV. Pursuant to this agreement, AMV agreed to provide funding
to the Company of $300,000 in exchange for IA Global Convertible
Senior Debentures that carry a 12% interest rate and are due
December 8, 2009. AMV has funded the $120,000 due June 10, 2009 and
June 22, 2009. AMV has not funded the $60,000 due June 30, 2009 and
may not fund the $60,000 due July 15, 2009. The Company is
negotiating with AVM on the remaining amounts due.
About IA Global,
Inc.
IA Global, Inc. (�IA Global�) is a Business Process Outsourcing
(�BPO�) and Financial Services corporation targeting the B2B and
B2C markets in the Asia Region, the US and Australia. The Company
is actively seeking to expand its investments in the BPO, B2B and
Financial services sectors. In Japan, IA Global is 100% owner,
except as disclosed, of Global Hotline, Inc., a BPO organization,
operating several major call centers providing primarily outbound
telemarketing services for telecommunications and insurance
products. In the Philippines, IA Global is the 100% owner of Global
Hotline Philippines Inc., a BPO organization, providing inbound and
outbound telemarketing services, and collocation facilities to a
variety of industries. In the Asia region, the Company has equity
investments of 20.25% in Slate Consulting Co Ltd, 36.0% in
Australian Secured Financial Limited and 12.6% in Taicom Securities
Co. Ltd.
For further information, contact:Investor RelationsIA Global,
Inc.101 California Street, Suite 2450San Francisco, CA
94111415-946-8828 (t)415-946-8801
(f)ir@iaglobalinc.comwww.iaglobalinc.com
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: This press release contains forward-looking
statements (within the meaning of Section 27a of the Securities Act
of 1933 and Section 21e of the Securities Exchange Act of 1934)
regarding us and our business, financial condition, results of
operations and prospects. Forward-looking statements in this report
reflect the good faith judgment of our management and the
statements are based on facts and factors as we currently know
them. Forward-looking statements are subject to risks and
uncertainties and actual results and outcomes may differ materially
from the results and outcomes discussed in the forward-looking as a
result of either the matters set forth or incorporated in this
report generally or certain economic and business factors, some of
which may be beyond the control of IA Global. Specifically, we are
exposed to various risks related to a decline in general economic
conditions, our need for additional financing, our level of
indebtedness, our Global Hotline business, our ASFL investment, our
NYSE AMEX listing, our controlling shareholder groups, the sale of
significant numbers of our shares and a volatile market price for
our common stock. Readers are urged not to place undue reliance on
these forward-looking statements which speak only as of the date of
this press release. We undertake no obligation to revise or update
any forward-looking statements in order to reflect any event or
circumstance that may arise after the date of the press
release.
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