Primary SIC — Industry Classification 7900 - Services-Amusement & Recreation Services State Of Incorporation DE Country Of Incorporation USA Company Officers Avi Sivan, CEO Prem Ramchandani, President Kurt Streams, CFO
CIK 0000919603 Estimated Market Cap 106,285.671 as of Jul 25, 2007 Outstanding Shares 265,714,177 as of Jan 17, 2007 Authorized Shares 0 Number of Share Holders of Record 496 as of Jun 13, 2006 Float 0
-------------------- LIFE IS 10% HOW YOU MAKE IT AND 90% HOW YOU TAKE IT! Posts: 9276 | From: San Diego CA | Registered: Jul 2006
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U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-QSB
(Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 31, 2007
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ____________.
Commission file number 000-23506
IGIA, INC. (Exact name of registrant as specified in its charter)
Delaware 33-0601498 (State or jurisdiction of incorporation or organization) (IRS Employer Identification No.)
16 East 40 th Street, 12th Floor, New York, New York 10016 --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number: (212) 575-0500
( Former name, former address and former fiscal year, if changed since last report )
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) been subject to such filing requirements for the past 90 days. Yes x No o .
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No x
As of July 13, 2007, the Registrant had 403,634,177 shares of common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes o No x
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MAY 31, 2007
We will file an amendment to this quarterly report to provide management’s discussion and analysis or plan of operation as required by Item 303 of Regulation S-B.
We will file an amendment to this quarterly report to provide the disclosures relating to controls and procedures as required by Items 307 and 308 of Regulation S-B.
In the ordinary course of business, we may be involved in legal proceedings from time to time. Although occasional adverse decisions or settlements may occur, management believes that the final disposition of such matters will not have a material adverse effect on its financial position, results of operations or liquidity.
On March 28, 2006, a Notice of Effective Date of Revised First Amended Plan of Reorganization Proposed by Tactica and IGIA, Inc. (the “Plan”) was filed with The United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). On January 13, 2006, the Bankruptcy Court issued a confirmation order approving the Plan that provides for Tactica’s exit from bankruptcy. Tactica is a wholly-owned operating subsidiary of IGIA (the “Registrant”). The Registrant is not seeking bankruptcy protection.
Upon being declared effective by the Bankruptcy Court, the Plan eliminated $14,853,421 of Tactica’s pre-petition liabilities. The plan calls for Tactica's pre-petition creditors to receive distributions of the following assets: (i) $2,175,000 cash paid by Tactica’s former shareholders; (ii) $700,000 cash paid by Tactica; (iii) $75,000 cash paid by the Registrant, Tactica, and the Board Members; (iv) up to $275,000 cash paid by Innotrac Corporation; (v) the rights and proceeds in connection with avoidance and other actions including uncollected pre-petition invoices payable by a Tactica customer; and (vi) 5,555,033 newly issued shares of the Registrant’s common stock that was in number equal to 10% of the outstanding shares of common stock as of the Plan’s effective date and is exempted from the registration requirements of Section 5 of the Securities Act of 1933, as amended and State registration requirements by virtue of Section 1145 of the Bankruptcy Code and applicable non-bankruptcy law. Certain post-petition creditors, including firms that provided professional services to Tactica, have submitted a total of approximately $583,000 in claims to the Bankruptcy Court for post-petition administrative expenses. Tactica is reviewing the administrative expense claims to determine whether to seek possible settlements and payment schedules or a resolution by the Bankruptcy Court.
Claim of Singer Worldwide LLC and KSIN Luxembourg III, S.ar.I. for $30,000.00 in costs incurred under a April 2, 2003 license agreement with Tactica International, Inc.; the Company is required by a Consent Order for Permanent Injunction dated January 16, 2006, to make twelve monthly payments in 2007 as settlement of the remaining costs, to maintain and staff a dedicated toll-free customer service telephone number and perform certain other administrative tasks. Singer filed a contempt motion that in Bankruptcy Court concerning noncompliance with the Consent Order that was heard in June 2007, and the Company has addressed the noncompliance complaints, however the Company has objected to Singer’s request to pay Singer’s legal costs for filing the motion of approximately $15,000, which was scheduled to be heard in Bankruptcy Court on July 19, 2007. The parties have agreed in principal to settle this litigation.
Tactica has entered into a stipulated settlement agreement and confession of judgment with DLA Piper Rudnick Gray Cary US LLP for payment of $204,033 for services in connection with resolution of its post-petition administrative claims and disputed pre-petition claims.
On July 7, 2006, IGIA was served with a Summons and Complaint filed in Los Angeles County Superior Court, Los Angeles, California by a major carrier. The Complaint seeks payment by IGIA of $783,344.86 plus $195,836.22 of collection costs and an unspecified amount of interest thereon as compensation for the breach of a contract between the major carrier and Brass Logistics, LLP. The Complaint alleges that Brass Logistics, LLP shipped packages using the services of the major carrier and failed to pay for the services. The Complaint further alleges that shipments contained products sold by IGIA and therefore benefited IGIA. IGIA believes that it has adequately reflected in its consolidated financial statements as of May 31, 2006, the liability for fulfillment services rendered by Brass Logistics, LLP that are the subject of the Complaint. The Company filed an answer and is currently seeking to
replace counsel it had retained in California. Discovery is ongoing and IGIA intends to vigorously defend this action. A trial date has been set in August 2007.
A civil complaint was filed on December 2, 2005 in the United States District Court Southern District of New York by Hughes Holdings, LLC, Global Asset Management, LLC, Allied International Fund, Inc., Robert DePalo, Gary Schonwald and Susan Heineman as plaintiffs against Peter Zachariou, Fountainhead Investments, Inc., Accessible Development, Corp., Allan Carter, Chadel, Ltd., John D'Avanzo, Jason Fok, Tabacalera, Ltd., Terrence DeFranco, Altitude Group, LLC, Virginia Casadonte, Shai Bar Lavi and IGIA, Inc. and its officers and directors. The plaintiffs claim for $279,480.60 plus costs, interest and punitive damages is alleged to have resulted from their holdings of securities issued by Diva Entertainment, Inc. and, subsequent to the Company's June 2004 reverse merger, those of IGIA, Inc. The Diva parties filed a counterclaim against the DePalo parties and a cross-claim against certain of the IGIA parties seeking in excess of $2.3 million; disgorgement of any profits realized by the DePalo parties and punitive damages. In June 2007, the Company entered into a settlement agreement that provides for the Company to issue a $300,000 convertible debenture, the liability for which has been provided for in its financial statements as of February 28, 2007. The Company is in discussions concerning terms for the convertible debenture and effectuating the final settlement.
In February 2006, Shopflash, Inc., a wholly owned subsidiary of the Company, began working with a media placement agent for direct response sales campaigns regarding two household products that Shopflash, Inc. has sold. The media placement agent placed the Shopflash, Inc. advertisements on television and the Internet and provided additional campaign support that allowed Shopflash, Inc. to further develop the campaigns. According to the agreement between the parties, the media placement agent receives fees and has a security interest in goods and proceeds related to the campaigns. The media placement agent has acted to exercise contractual rights to assume control over the sales campaigns. As a result, Shopflash, Inc. has discontinued its participation in the two sales campaigns. Shopflash, Inc. filed suit against DC Media Capital seeking damages resulting from the manner that they managed the sales campaigns and have withheld customer information needed by Shopflash to service customers. DC Media Capital has filed a lawsuit against Shopflash, Inc., Avi Sivan, Prem Ramchandani and Kurt Streams seeking $3,000,000 plus punitive damages and recovery costs, an amount that substantially exceeds the $1.6 million amount DC Media Capital previously sought. Motions to dismiss both of the actions are filed and opposed and the matters may be consolidated.
On September 22, 2006, an adversary proceeding was filed in the U.S. Bankruptcy Court, Eastern District of New York by H.Y. Applied under Data Services, Inc (a debtor in possession) against Shopflash, Inc. & Tactica International asserting for fulfillment services, allegedly provided for the two companies, both of which are wholly owned subsidiaries of IGIA. The claim against Tactica is for $1,660.57, the claim against Shopflash is for $54, 661.80. In January 2007, the bankruptcy of H.Y. Applied Inter Data Services, Inc. was converted to a Chapter 7 proceeding with a court appointed trustee handling the matter and asserting the claims in the U.S. Eastern District Bankruptcy Court. Both claims are disputed by the Company, which believes that the services claimed were not performed; that the Company was overcharged, and falsely billed, and that H.Y. Applied Data Services, Inc. converted funds and product belonging to the Company and that H.Y. Applied Data Services, Inc. actually owes in excess of $100,000.00 dollars to the Company. The Company has asserted an answer with counterclaims. Discovery is ongoing.
An assignee of United Parcel Service filed suit against Tactica International seeking $152,299.06 for shipping services allegedly provided to IGIA. The Company is challenging the liability in the litigation.
The American Express Merchant Services Company asserted a claim on March 27, 2007 in Los Angeles County Superior Court in the amount of $324,941.87 against Brass Logistics, LLC, a fulfillment house used by the company in the past, the President of Brass Logistics and Tactica International. The plaintiff alleges that these services were provided on behalf of Tactica. The Company is seeking counsel in California and the parties have had preliminary settlement discussions.
Klestadt & Winters, LLP, a law firm previously employed by the company has commenced an action for legal fees allegedly earned in the total amount of $24,180.41. The action is pending in the Civil Court of the City of New York. The company has filed a response to the action and is engaged in settlement discussions with the plaintiff. The Company defeated a motion of summary judgment by the plaintiff and the action was scheduled to go to trial on July 18, 2007.
On February 28, 2007, an Agreed Final Order was executed and approved by the Circuit Court of Kanawha County in West Virginia that settled a civil enforcement action brought by the State of West Virginia, through its Attorney General, against IGIA, Inc. and Prem Ramchandani, individually and as President of IGIA, Inc. The settlement requires IGIA, Inc. to pay the State of West Virginia a civil penalty in the amount of $176,139.27, to be paid in equal monthly installments of $10,000 beginning March 5, 2007, with the final payment to be made on October 6, 2008. IGIA, Inc. also agreed not to transact business in the State of West Virginia until the full settlement amount has been paid. The State of West Virginia agreed that the civil penalties paid by IGIA, Inc. shall be used by the State to provide restitution to eligible consumers. In the settlement IGIA and Mr. Ramchandani did not admit any of the allegations contained in the State’s complaint.
The Attorney General of the State of Kansas has asserted a claim against the Company for alleged unfair trade practices. The matter appears to be resolved upon the entry of a consent judgment and the payment of up to $2,200. The terms are currently being negotiated.
The Attorney General of the State of Missouri has asserted a claim against Brass Logistics, LLC and Tactica International, Inc. for alleged unfair trade practices. The action seeks full restitution for all aggrieved Missouri consumers, a civil penalty of $1,000 per actual violation and a payment to the State equal to 10% of the restitution and penalties. Based on Tactica’s preliminary review of customer records, the population of Tactica’s Missouri customers who purchased vacuum cleaners was less than 10 customers. The Company plans to answer the complaint and work with the Attorney General’s office to resolve the matter.
On November 26, 2006, Moore Wallace North America, Inc, the lessor of subleased premises formerly occupied by the company’s wholly owned subsidiary, Tactica International, Inc. has obtained a judgment against Tactica for $45,572.92, in the Civil Court of the City of New York, in connection with Tactica’s former occupancy of the premises located at 521 Fifth Avenue, New York, New York. The Company recognizes the need to resolve this matter, and intends to open discussions towards that end, in the near future.
Rite Aid was sued by an individual who alleges injury caused by a product purchased from Rite Aid. Rite Aid is defending against the claim and has sued IGIA, Inc., the alleged product supplier, for any damages that may result. The amount of claims has not yet been established. We intend to defend the foregoing lawsuit vigorously, but, because the lawsuit is still in the preliminary stages, we cannot predict the outcome and are not currently able to evaluate the likelihood of success or the range of potential loss, if any, that might be incurred in connection with the action.
The Telemarketing Company, a telemarketing firm previously employed by the Company has commenced an action for service fees allegedly earned in the total amount of $8,485.88 in the First Civil Court of Cook County, Illinois, and obtained a default judgment. The Company is engaged in settlement discussions with the plaintiff.
In accordance with requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
IGIA, Inc.
Date: July 23, 2007 /s/ Avi Sivan --------------------------------------------------------------------------------
Name: Avi Sivan Title: Chief Executive Officer
-------------------- LIFE IS 10% HOW YOU MAKE IT AND 90% HOW YOU TAKE IT! Posts: 9276 | From: San Diego CA | Registered: Jul 2006
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posted
IGAI used to be a good stock to trade. Now with huge OS and dilution, it's hard to pop a few ticks without falling back. I like IGAI, but not dilution.
BTW. MGEN got to 0.0004 sooner than expected. It may get to 0.0001 and R/S sooner than expected too. Be careful about stocks with huge OS and dilution.
Posts: 3228 | From: Michigan | Registered: Aug 2005
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