10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period ended March 31, 2007

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

Commission file number 333-122563

INTERNET ACQUISITION GROUP, INC.

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

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

302 Creekside Ct. E.

Huntertown, Indiana 46748

(Address of principal executive offices)

(260) 385-0338

(Issuer’s telephone number)

Copies of Communications to:

Stoecklein Law Group

402 West Broadway, Suite 400

San Diego, CA 92101

(619) 595-4882

Fax (619) 595-4883

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o

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

The number of shares of Common Stock, $0.001 par value, outstanding on May 14, 2007, was 69,963,630 shares.

Transitional Small Business Disclosure Format (check one): Yes o   No x

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

JASPERS + HALL, PC

CERTIFIED PUBLIC ACCOUNTANTS

9175 Kenyon Avenue, Suite 100

Denver, CO 80237

303-796-0099

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Internet Acquisition Group, Inc.

We have reviewed the accompanying balance sheet of Internet Acquisition Group, Inc. as of March 31, 2007 and the related statements of operations and cash flows for the three-months ended March 31, 2007 and 2006. These financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards established by the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States.

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

Jaspers + Hall, PC

May 11, 2007

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INTERNET ACQUISTION GROUP, INC.
BALANCE SHEET
(A DEVELOPMENTAL STAGE COMPANY)
MARCH 31, 2007
(Unaudited)
ASSETS:
Current Assets:
Cash	$ 7,138
Accounts Receivable	2,805
Inventory	29,581
Total Current Assets	39,524
TOTAL ASSETS	$ 39,524
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accrued liabilities	$ 5,860
Customer deposits	18,760
Sales tax payable	-
Total Current Liabilities	24,620
Stockholders' Equity:
Common stock, $0.001 par value, 100,000,000
shares authorized, 69,963,360 shares issued and
outstanding	69,964
Additional paid-in capital	57,100
Deficit accumulated during the development stage	(112,160)
Total Stockholders' Equity	14,904
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 39,524

See accountants’ review report and accompanying notes to the financial statements.

2

INTERNET ACQUISITION GROUP, INC.
STATEMENTS OF OPERATIONS
(A DEVELOPMENTAL STAGE COMPANY)
(Unaudited)
			January 16, 2004
	Three Months Ended		(Inception) to
	March 31,		March 31,
	2007	2006	2007
INCOME:
Revenue	$ 13,538	$ -	$ 24,038
Cost of goods sold	12,117	-	22,040
Gross profit	1,421	-	1,998
OPERATING EXPENSES:
General and Administrative Expenses	4,038	4,780	114,158
Total Operating Expenses	4,038	4,780	114,158
Net Loss from Operations	$ (2,617)	$ (4,780)	$ (112,160)
Weighted average number of
shares outstanding	69,963,630	69,963,630
Net Loss Per Share	$ (*)	$ (*)
* Less than $0.001 per share

See accountants’ review report and accompanying notes to the financial statements.

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INTERNET ACQUISITION GROUP, INC.
STATEMENTS OF CASH FLOWS
(A DEVELOPMENTAL STAGE COMPANY)
(Unaudited)
			January 16, 2004
	Three Months Ended		(Inception) to
	March 31,		March31,
	2007	2006	2007
Cash Flows From Operating Activities:
Net (Loss)	$ (2,617)	$ (4,780)	$ (112,160)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock issued for services	-	-	46,044
Changes in assets and liabilities:
Increase(decrease) in accounts receivable	(2,098)	(2,892)	(2,805)
Increase in inventory	3,047	-	(29,581)
Increase in accrued liabilities	281	-	5,860
Increase in customer deposits	-	7,752	18,760
Total adjustments	1,230	4,860	38,278
Net Cash Used in Operating Activities	(1,387)	80	(73,882)
Cash Flow From Financing Activities:
Issuance of Common Stock	-	-	81,020
Loan from shareholder	-	-	1,523
Repayment of loan from shareholder	(1,523)	-	(1,523)
Net Cash Provided By Financing Activities	(1,523)	-	81,020
Increase (Decrease) in Cash	(2,910)	80	7,138
Cash and Cash Equivalents - Beginning of period	10,048	43,099	-
Cash and Cash Equivalents - End of period	$ 7,138	$ 43,179	$ 7,138
Supplemental Cash Flow Information:
Interest paid	$ -	$ -	$ -
Taxes paid	$ -	$ -	$ -

See accountants’ review report and accompanying notes to the financial statements.

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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENTAL STATE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MARCH 31, 2007

Note 1 – Organization and summary of significant accounting principles

Organization

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

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

Accounting period

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

Use of estimates

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

Cash and cash equivalents

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

Revenue recognition

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

Furniture and equipment

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

Estimated useful lives range as follows:

	Years
Furniture and equipment	3 – 5
Computer hardware	3
Vehicles	5

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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENTAL STATE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MARCH 31, 2007

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2007. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable and notes payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Earnings per share

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

Income taxes

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

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

Note 2 – Going concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has generated limited revenues from operations. Since its

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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENTAL STATE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MARCH 31, 2007

inception, the Company has been engaged substantially in financing activities and developing its product line, setting up its e-commerce website, and incurring substantial costs and expenses. As a result, the Company incurred accumulated net losses from January 16, 2004 (inception) through the period ended March 31, 2007 of $112,160. In addition, the Company’s development activities since inception have been financially sustained through equity financing.

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

Note 3 – Inventory

At March 31, 2007, Inventory consisted of the following:

Finished goods - $29,581

Note 4 – Customer Deposit

As of March 31, 2007, the Company received from a customer a deposit of $18,760 towards the purchase of a document storage and retrieval system machine.

Note 5 – Income taxes

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

Deferred tax assets:
	Net operating loss carryforwards	$112,160
	Valuation allowance for deferred tax assets	(112,160)
Net deferred tax assets		$ -0-

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. As of March 31, 2007, the Company had net operating loss carryforwards of $112,160 for federal income tax purposes. Utilization of the net operating loss may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss before utilization.

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INTERNET ACQUISITION GROUP, INC.

(A DEVELOPMENTAL STATE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MARCH 31, 2007

Note 6 – Stockholders’ equity

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

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

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

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

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

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

During the current three months ended March 31, 2007, the company had no new stock transactions.

Note 7 – Warrants and options

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

Note 8 – Related party transactions

Amounts due to the Company’s chief executive officer totaled approximately $1,523 at December 31, 2006. These amounts primarily represent loans to pay company telephone and fax expenses. The Company paid these amounts back to its chief executive officer during the three months ended March 31, 2007.

Note 9 – Commitments and contingent liabilities

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

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FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

• failure to obtain new customers or retain existing customers;

• inability to efficiently manage our operations;

• inability to achieve future operating results;

• inability to obtain capital for future growth;

• loss of key executives; and

• general economic and business conditions.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Factors That May Affect Our Results of Operation” in this document and in our Annual Report on Form 10-KSB for the year ended December 31, 2006.

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Item 2. Management’s Discussion and Analysis

OVERVIEW AND OUTLOOK

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

IAG has now launched a professional services business specializing in the purchasing and management of electronic goods and software for our clients. Clients determine what their organizations need to keep their businesses functioning and then we oversee the process of acquiring goods and services by asking for proposals, consulting with suppliers, and reviewing price quotations. Once we have gathered this information, we set contract terms and conditions, and award contracts to specific vendors. We then set delivery schedules, track progress and contact clients and suppliers to correct any potential problems.

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

CURRENT OPERATIONS

IAG plans to grow the purchasing management business by combining cost efficient marketing techniques coupled with word of mouth referrals. Initially, IAG has focused its attention on the purchasing and management of electronic goods and software specific to our clients’ needs. IAG is an authorized reseller of Dell products, thereby having the ability to purchase computer and network hardware and software at reseller pricing and then resold to our clients. We anticipate this line of business will be promising and produce higher gross revenues than under the previous business. IAG recently established a new website to promote the purchasing management business (www.iagcompany.com). The website offers information about the services provided by IAG and provides various methods to contact IAG to obtain a quote for a product that is needed.

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

Results of Operations for the period ended March 31, 2007.

We are in the early stage of developing our new line of business and currently have minimal revenues from our purchasing management business. Revenues for the three months

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ended March 31, 2007 were $13,538 compared to $0 in 2006. We anticipate continued growth in revenues as a result of new business focus but can not guarantee any significant revenues unless we continue to expand our line of services and increase our clientele base. Therefore, these operations reflected in the quarter ended March 31, 2007 may not be indicative of future operations.

Operation Plan

During the next twelve months we plan to continue locating additional clients that need purchasing and management of electronic goods and software. Currently, we have the ability to purchase computer and network hardware and software at reseller pricing and then resale these items to our clients.

Because of our limited operating history we have yet to generate any significant revenues from our financial service platform (only $13,538 through March 31, 2007). Our activities have been limited to determining our clients’ needs, locating specific computer products while trying to provide competitive prices. Consequently, we have incurred the expenses of a start-up.

Our future financial results will depend primarily on: (i) the ability to continue to locate inventory and suppliers; (ii) the ability to develop existing services and (iii) the ability to fully implement our development program, which is dependent on the availability of capital resources. There can be no assurance that we will be successful in any of these respects, or that we will be able to obtain additional funding to increase our current capital resources.

Satisfaction of our cash obligations for the next 12 months.

Initially we capitalized our company with $81,020 from a private placement. As of December 31, 2006, we had $17,521 in working capital. We estimate our new plan of operation will incur minimal expenditures during the next twelve months. We have based these assumptions on the fact that we will not incur additional obligations for personnel, office, etc. until such time as we either raise additional equity or debt, or generate significant revenues to support such expenditures.

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

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

Expected purchase or sale of plant and significant equipment.

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

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Significant changes in number of employees.

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

LIQUIDITY AND CAPITAL RESOURCES

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

The following table summarizes total current assets, liabilities and working capital at March 31, 2007 compared to December 31, 2006.

	March 31, 2007	December 31, 2006	Increase / (Decrease)
			$	%
Current Assets	$ 39,524	$ 43,383	$ (3,859)	(9%)
Current Liabilities	$ 24,620	$ 25,862	$ (1,242)	(5%)
Working Capital	$ 14,904	$ 17,521	$ (2,617)	(15%)

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

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Going Concern

The accompanying financial statements have been prepared assuming that IAG will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted, IAG is in the development stage and, accordingly, has generated limited revenues from operations. Since its inception, IAG has been engaged substantially in financing activities and developing its product line, setting up its e-commerce website, and incurring substantial cost and expenses. As a result, IAG incurred accumulated net losses from January 16, 2004 (inception) through the period ended March 31, 2007 of $112,160. In addition, IAG’s development activities since inception have been financially sustained through equity financing.

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

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

Recent Accounting Pronouncements

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

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FACTORS THAT MAY AFFECT OUR RESULTS OF OPERATION

Risk Associated with Our Business and Marketplace

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

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

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

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

• establish a customer base;

• enhance our name recognition;

• expand our service offerings to clients;

• access sufficient product inventory and vendors to fulfill our customers’ orders;

• successfully implement our business and marketing strategy;

• provide superior customer service and order processing; and

• attract and retain qualified personnel.

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

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

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

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

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

We have operated since our inception as internet retail provider and have accordingly incurred losses from operations. For the year ended December 31, 2006 and from the date of inception of January 14, 2004 to March 31, 2007 we have sustained net losses of $33,250 and $112,160, respectively. We are in need of additional capital to continue our operations and may be dependent on the proceeds of private placements of securities to satisfy working capital requirements. We will continue to be dependent upon the proceeds of future offerings or public offerings to fund continued development of our internet sites, the expansion of our product and service offerings; short-term working capital requirements, marketing activities and to continue implementing the current business strategy. There can be no assurance that we will be able to raise the necessary capital to continue operations.

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

Due to our start-up nature, we will have to incur the costs of developing professional marketing materials, hiring new employees and commencing marketing activities for our services. To fully implement our business plan we will require substantial additional funding.

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Our current cash on hand is anticipated to enable us to maintain minimum operations and working capital requirements for at least six months.

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

Risk Factors Relating to Our Common Stock

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

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

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

• Disclose certain price information about the stock;

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

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

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

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

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

In addition to the “penny stock” rules described above, the National Association of Securities Dealers (NASD) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about

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the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

During the first quarter of 2007, we began quotation on the OTC Bulletin Board and we will have to meet certain requirements such as remaining current on our reporting requirements; otherwise we could be removed from the OTC Bulletin Board.

Companies trading on the OTC Bulletin Board must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board.  More specifically, NASD has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission.  Upon being listed on the OTC Bulletin Board, we will be required to abide by Rule 6530(e), which states if a company files their reports late with the Commission three times in a two-year period or their securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period then the company will be ineligible for quotation on the OTC Bulletin Board.  As a result, the market liquidity for securities could be severely adversely affected by limiting the ability of broker-dealers to sell securities and the ability of stockholders to sell their securities in the secondary market.

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

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of IAG; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of IAG are being made only in accordance with authorizations of management and directors of IAG, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of IAG’s assets that could have a material effect on the financial statements.

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

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Item 3. Controls and Procedures

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

It should be noted, however, that no matter how well designed and operated, a control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems (including faulty judgments in decision making or breakdowns resulting from simple errors or mistakes), there can be no assurance that any design will succeed in achieving its stated goals under all potential conditions. Additionally, controls can be circumvented by individual acts, collusion or by management override of the controls in place.

PART II--OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no new issuances of stock during the first quarter of 2007.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

On February 20, 2007, we issued a press release announcing anticipated increased revenues for the first quarter of 2007. In the press release we indicated that our first quarter revenues were more than double the gross revenues of the entire 2006 year. However, upon the conclusion of first quarter, we did not have double the gross revenues of 2006 but rather only an increase of $3,118, for a total of $13,538 in revenues for the first quarter of 2007. The decrease in anticipated revenues was a result of a large order being cancelled by a customer. The order was cancelled before any products were shipped to the customer and we do believe we will be able to resell the inventory in the future to hopefully recoup the anticipated revenue.

A copy of the press release is attached hereto as Exhibit 99.

Item 6. Exhibits

			Incorporated by reference
Exhibit	Exhibit Description	Filed herewith	Form	Period ending	Exhibit	Filing date
3.1(i)	Articles of Incorporation		SB-2		3.1(i)	02/02/04
3.1(ii)	Bylaws of the Internet Acquisition Group. Inc.		SB-2		3.1(ii)	02/02/04
31	Certification of Matt Lettau pursuant to Section 302 of the Sarbanes-Oxley Act	X
32	Certification of Matt Lettau pursuant to Section 906 of the Sarbanes-Oxley Act	X
99	Internet Acquisition Group Press Release Announcing Increase Revenues, dated February 20, 2007	X

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INTERNET ACQUISITION GROUP, INC.

(Registrant)

By:/s/ Matt Lettau                                            

Matt Lettau, Chief Executive Officer

(On behalf of the Registrant and as

Principal Financial

Officer)

Date: May 15, 2007

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EX-31

EXHIBIT 31

CERTIFICATION

I, Matt Lettau, certify that:

1. I have reviewed this report on Form 10-QSB of Internet Acquisition Group, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: May 15, 2007

/s/ Matt Lettau                             

Matt Lettau

Chief Executive Officer and

Principal Accounting Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Internet Acquisition Group, Inc. (the “Company”) on Form 10-QSB for the quarter ended March 31, 2007 as filed with the Securities and Exchange Commission on or about the date hereof (“Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Matt Lettau                                

Matt Lettau

Chief Executive Officer

Principal Accounting Officer

May 15, 2007

EX-99

Exhibit 99

Internet Acquisition Announces Increased Revenues

Tuesday February 20, 4:05 pm ET

HUNTERTOWN, IN--(MARKET WIRE)--Feb 20, 2007 -- Internet Acquisition Group, Inc. (OTC BB:IAGR.OB - News) announced today that gross revenues increased during the first quarter of 2007.

Though the first quarter is not yet complete, gross revenues during the first quarter are more than double gross revenues of the entire 12-month period of 2006.

Matt Lettau, CEO of Internet Acquisition Group, stated, "I am pleased that the company has achieved recent increases in overall gross revenues. I believe that the company has a solid business model and we will continue to work diligently to add to our list of clients."

Lettau further stated, "Internet Acquisition Group, Inc. strives to eliminate the time consuming and expensive worries and hassles associated with the day to day purchasing and management of goods and services specific to our clients' needs. We focus our energy on acquiring and managing these needs in the most cost affective way so that our clients may focus on the goods or services they provide and in turn realize more profit."

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

About Internet Acquisition Group, Inc. (OTC BB:IAGR.OB - News) -- Internet Acquisition Group, Inc. is a publicly traded company trading on the OTC Bulletin Board under the symbol IAGR. For more information about Internet Acquisition Group, Inc., please visit the Company's website at http://www.iagcompany.com

This press release contains certain "forward-looking" statements, as defined in the United States Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. Statements, which are not historical facts, are forward-looking statements. The Company, through its management, makes forward-looking public statements concerning its expected future operations, performance and other developments. Such forward-looking statements are necessarily estimates reflecting the Company's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. It is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by the Company. They include, but are not limited to, the Company's ability to develop operations, the Company's ability to consummate and complete an acquisition, the Company's access to future capital, the successful integration of acquired companies, government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, competition, sales and other factors that may be identified from time to time in the Company's public announcements.

This press release is provided for information purposes only and is not intended to constitute an offer to sell or a solicitation of an offer to buy securities.

Contact:

Contact:

Internet Acquisition Group, Inc.

Matt Lettau

260-385-0338