UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington
D.C., 20549
 
 FORM
10-Q
 
 [X] Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the
quarterly period ended September 30, 2008
  [
] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act
 (Mark
One)
 
 Commission
File No. 001-16381
 
 INTEGRATED
MEDIA HOLDINGS, INC.
 (Exact
name of registrant as specified in its charter)
 Doing
Business As
 ARRAYIT
COMPANY
   Delaware
              76-0600966(State
      of other jurisdiction of incorporation)
              (I.R.S.
      Employer Identification No.)524
      East Weddell Drive
                Sunnyvale,
      CA
              94089(Address
      of Principal Executive Office)
              (Zip
      Code)
 
 
 Registrant’s telephone number,
including area code: (408) 744-1331
 
 Securities registered pursuant to
Section 12 (b) of the Act:NONE
 
 Securities registered pursuant to
Section 12 (g) of the Act:Common Stock $0.001 par value
 
  
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes þ  No
[]
  APPLICABLE
ONLY TO CORPORATE ISSUERS
  The
number of shares of the issuer’s common equity outstanding as of November 13,
2008  was approximately 16,284,210  shares of common stock,
par value $.001
  Transitional
Small Business Disclosure Format: Yes []  No  þ
 
 
   1
   
 INDEX
TO FORM 10-Q FILING
 FOR
THE QUARTER ENDED September 30, 2008
  TABLE OF
CONTENTS
 
 Item
              
              PagePART IItem
      1.
              FINANCIAL STATEMENTS AND NOTES
              4Item
      2.
              MANAGEMENT'S  DISCUSSION AND ANALYSIS
              16Item
      3.
              QUANTITIATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
              21Item
      4.1
              CONTROLS AND PROCEDURES
              21Part
      IIItem
      1
              LEGAL PROCEEDINGS
              22Item
      2
              CHANGES IN SECURITIES
              22Iem
      3.
              DEFAULTS UPON SENIOR SECURITIES
              22Item
      4.
              SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              22Item
      5
              OTHER INFORMATION
              22Item
      6
              EXHIBITS AND REPORTS ON FORM 8-K
              2223
 
 Signatures
              
              23
 
  
   2
  
  This
report contains trademarks and trade names that are the property of Integrated
Media Holdings, Inc. and its subsidiaries, and of other companies, as
indicated.
 
 
 
 FORWARD-LOOKING
STATEMENTS
  Portions
of this Form 10-Q, including disclosure under “Management’s Discussion and
Analysis or Plan of Operation,” contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), Section 21E of the Securities and Exchange Act of 1934, as
amended (the “Exchange Act”), and the Private Securities Litigation Reform Act
of 1995, as amended. These forward-looking statements are subject to risks and
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from the results, performance or
achievements expressed or implied by the forward-looking statements. You should
not unduly rely on these statements. Forward-looking statements involve
assumptions and describe our plans, strategies, and expectations. You can
generally identify a forward-looking statement by words such as may, will,
should, expect, anticipate, estimate, believe, intend, contemplate or project.
Factors, risks, and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements include, among
others,
 
 ·
              our
      ability to raise capital,·
              our
      ability obtain and retain
customers,
 
 ·
              our
      ability to provide our products and services at competitive
      rates,·
              our
      ability to execute our business strategy in a very competitive
      environment,
 
 ·
              our
      degree of financial leverage,·
              risks
      associated with our acquiring and integrating companies into our
      own,
 
 ·
              risks
      related to market acceptance and demand for our
  services,·
              the
      impact of competitive services,
 
 ·
              other
      risks referenced from time to time in our SEC
  filings.
  With
respect to any forward-looking statement that includes a statement of its
underlying assumptions or bases, we caution that, while we believe such
assumptions or bases to be reasonable and have formed them in good faith,
assumed facts or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can be material
depending on the circumstances. When, in any forward-looking statement, we or
our management express an expectation or belief as to future results, that
expectation or belief is expressed in good faith and is believed to have a
reasonable basis, but there can be no assurance that the stated expectation or
belief will result or be achieved or accomplished. All subsequent written and
oral forward-looking statements attributable to us, or anyone acting on our
behalf, are expressly qualified in their entirety by the cautionary statements.
We do not undertake any obligations to publicly release any revisions to any
forward-looking statements to reflect events or circumstances after the date of
this report or to reflect unanticipated events that may occur.
  3
 
 
 PART
I – FINANCIAL INFORMATION
 ITEM
1.
 
 FINANCIAL
STATEMENTS
 INTEGRATED
MEDIA HOLDINGS, INC.
 d/b/a
Arrayit Company
 (formerly
ENDAVO MEDIA AND COMMUNICATIONS, INC.)
 CONDENSED
CONSOLIDATED UNAUDITED BALANCE SHEET
 As
      of September 30, 2008
              
              
              As
      of December 31, 2007AssetsCurrent
      assets:Cash
              
              $
              70,669
              
              
              $
              -Accounts
      receivable, net of allowance for doubtful accounts of $105,000 and
      factored liabilities of $192,261
              
              
              130,027
              
              
              
              294,186Inventory
              
              
              441,869
              
              
              
              309,246Prepaid
      expenses
              
              
              170,000
              
              
              
              120,000Total
      current assets
              
              
              832,565
              
              
              
              723,432Property
      and equipment, net
              
              
              44,951
              
              
              
              55,395Assets
      of discontinued operations
              
              
              247,945
              
              
              
              247,945Restricted
      cash
              
              
              102,270
              
              
              
              103,836Deposits
              
              
              18,924
              
              
              
              18,924Total
      assets
              
              $
              1,246,655
              
              
              $
              1,149,532Liabilities
      and Stockholders' DeficitCurrent
      liabilities:Accounts
      payable and accrued liabilities
              
              $
              5,852,934
              
              
              $
              5,652,418Due
      to related parties
              
              
              423,283
              
              
              
              337,616Bank
      overdraft
              
              
              -
              
              
              
              29,495Customer
      deposits
              
              
              156,582
              
              
              
              29,580Accrued
      interest
              
              
              332,894Derivative
      liability
              
              
              261,490
              
              
              
              326,544Notes
      payable including related parties
              
              
              3,184,155
              
              
              
              3,
      222,219Total
      current liabilities
              
              
              10,211,338
              
              
              
              9,597,872Long term
      debt
              
              
              273,544
              
              
              
              327,340Liabilities
      of discontinued operations
              
              
              1,463,966
              
              
              
              1,463,890Total
      Liabilities
              
              
              11,948,848
              
              
              
              11,389,102Stockholders'
      deficitPreferred
      stock, Series “A” $0.001 par value; 5,000,000 shares authorized,
      3,810,262  shares issued and outstanding
              
              
              3,810
              
              
              
              3,810Preferred
      stock, Series “C” $0.001 par value; 103,143 shares authorized, 103,143
      shares issued and outstanding
              
              
              103
              
              
              
              103Common
      stock, $.001 par value, voting, 100,000,000 shares authorized,
      16,419,262  shares issued and outstanding
              
              
              16,419
              
              
              
              16,419Additional
      paid-in capital
              
              
              -
              
              
              
              -Accumulated
      deficit
              
              
              (10,722,525
              )
              
              
              (10,
      259,902
              )Total
      stockholders' deficit
              
              
              (10,702,193
              )
              
              
              (10,239,570
              )Total
      liabilities and stockholders' deficit
              
              $
              1,246,655
              
              
              $
              1,149,532
 See
accompanying notes to condensed consolidated financial statements.
  
 4
   INTEGRATED
MEDIA HOLDINGS, INC.
 d/b/a
Arrayit Company
 (formerly
ENDAVO MEDIA AND COMMUNICATIONS, INC.)
 CONDENSED
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
  
  Three
      Months Ended
                September
      30
              
              Nine
      Months Ended
                September
      302008
              
              
              2007
              
              2008
              
              
              2007Total
      revenues
              $
              782,831
              
              $
              757,503
              
              $
              2,713,816
              
              
              $
              2,932,431Cost
      of sales
              
              559,914
              
              
              491,499
              
              
              1,811,160
              
              
              
              1,814,541Gross
      margin
              
              222,917
              
              
              266,004
              
              
              902,656
              
              
              
              1,117,890Selling,
      general, and administrative expense
              
              379,377
              
              
              585,047
              
              
              1,045,959
              
              
              
              1,977,363Profit
      (loss) from operations
              
              (156,460
              )
              
              (319,043
              )
              
              (143,303
              )
              
              
              (859,473
              )Income
      from discontinued operations
              
              
              
              
              441,154
              
              
              
              
              
              
              1,323,461Gain
      (loss) on derivative liability
              
              23,476
              
              
              181,080
              
              
              (22,538
              )
              
              
              543,240Legal
      expense
              
              (10,397
              )
              
              (1,802,679
              )
              
              (60,287
              )
              
              
              (3,519,934
              )Interest
      (expense)
              
              (146,474
              )
              
              (171,532
              )
              
              (435,496
              )
              
              
              (509,832
              )Net
      profit (loss)
              $
              (289,855
              )
              $
              (1,671,020
              )
              $
              (661,624
              )
              
              $
              (3,022,538
              )Net
      profit (loss) per common share -
                basic
      and diluted
              $
              (0.018
              )
              $
              (0.103)
              
              $
              (0.041
              )
              
              $
              (0.180)Weighted
      average shares - basic and diluted
              
              16,284,210
              
              
              16,810,710
              
              
              16,284,210
              
              
              
              16,810,710
   See
accompanying notes to condensed consolidated financial statements
  
 
 5
   INTEGRATED
MEDIA HOLDINGS, INC.
 d/b/a
Arrayit Company
 (formerly
ENDAVO MEDIA AND COMMUNICATIONS, INC.)
 NOTES
TOCONDENSED CONSOLIDATED UNAUDITED STATEMENTS
 FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2008
 
 
 
 
 NOTE 1 - BASIS OF PRESENTATION
 
 The
accompanying unaudited consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X,
and, therefore, do not include all information and footnotes necessary for a
complete presentation of financial position, results of operations, cash flows,
and stockholders’ equity in conformity with accounting principles generally
accepted in the United States of America. In the opinion of management, all
adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature. These financial statements should be read in
conjunction with the audited financial statements and notes thereto contained in
Arrayit’s Annual Report filed with the SEC on Form 10-KSB. The results of
operations for interim periods are not necessarily indicative of the results to
be expected for the full year. Notes to the consolidated financial statements,
which would, substantially duplicate the disclosure contained in the audited
financial statements for fiscal 2007 as reported in Form 10-KSB have been
omitted.
 
 
 NOTE
2- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
  Description
of Business
 
 Integrated
Media Holdings, Inc. and subsidiaries (collectively referred to as IMHI)
provides digital content distribution and management solutions for content
owners seeking to distribute online and over broadband, or Internet Protocol,
networks. Prior to September 2005, the Company integrated broadband services,
including voice, video, and data services to residential customers through IP
based networks. The Company, formed in December 1999, relocated to Atlanta,
Georgia in December 2005 from Salt Lake City, Utah. IMHI was formerly known as
CeriStar Inc. and Endavo Media Communications, Inc, which is also the current
name of one of our subsidiaries.  The results of operations of Endavo,
Bidchaser and WV Fiber (to April 11, 2007 – date of disposal) have been included
in these statements and are presented as discontinued operations in the
financial statements.
 
 Effective
February 21, 2008, IMHI completed the Plan and Agreement of Merger between IMHI,
TeleChem International, Inc., the majority shareholders of TeleChem, Endavo
Media and Communications, Inc., a Delaware corporation and TCI Acquisition
Corp., a Nevada corporation, and wholly-owned subsidiary of
IMHI.  Consummation of the merger did not require a vote of our
shareholders.  IMHI issued 103,143 shares of Series C Convertible
Preferred Stock to the Shareholders of TeleChem in exchange for 100% of the
equity interests of TeleChem resulting in TeleChem being a wholly owned
subsidiary of the Company.  The former shareholders of TeleChem now
own approximately 73.5% of the outstanding interest and voting rights of the
parent company.  The Preferred Stock is convertible into 36,100,000
shares of common stock after, but not before, the effective date of the reverse
split of the outstanding IMHI common stock.
 
 For SEC
reporting purposes, the merger between IMHI and TeleChem has been treated as a
reverse merger with TeleChem being the “accounting acquirer” and, accordingly,
it will assume the Company’s reporting obligations with the SEC after the
effective date of the merger.
 
  6
   Summary
of Significant Accounting Policies
  Principles
of Consolidation
  The
financial statements reflect the consolidated results of Integrated Media
Holdings, Inc. and its wholly owned subsidiaries Endavo Media and
Communications, Inc. (fka, Susquina Inc), WV Fiber Inc. (fka Louros Networks,
Inc), Bidchaser Inc. (fka BCI Acquisition Corporation) and New Planet Resources,
Inc. All material inter-company transactions have been eliminated in the
consolidation.
 
 Use of
Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
Significant estimates include the cash flow projections used for the impairment
tests, the assumption underlying estimate of the period used to amortize
deferred revenue and the assumptions used to value the stock options issued to
non-employees. It is possible that these estimates may change in the near term
and that such as change may be material.
  Cash and
Cash Equivalents
  Cash
includes all cash and highly liquid investments with original maturities of
three months or less.
 
 Property
and Equipment
 
 Property
and equipment are recorded at cost less accumulated depreciation. Depreciation
and amortization on property and equipment are determined using the
straight-line method over the three to five year estimated useful lives of the
assets.
  
 Impairment
of Long-Lived Assets
  IMHI
reviews its long-lived assets for impairment when events or changes in
circumstances indicate that the book value of an asset may not be recoverable.
IMHI evaluates, at each balance sheet date, whether events and circumstances
have occurred which indicate possible impairment. The Company uses an estimate
of future undiscounted net cash flows of the related asset or group of assets
over the estimated remaining life in measuring whether the assets are
recoverable. If it is determined that an impairment loss has occurred based on
expected cash flows, such loss is recognized in the statement of
operations.
 
 Inventory
 
 Inventories
are stated at the lower of cost or market, cost determined on the basis of
FIFO.
 
 Revenue
Recognition
 
 7
  Revenue
is recognized when title and risk of loss are transferred to customers upon
delivery based on terms of sale and collectiblity is reasonably
assured.
 
 Shipping
and Handling Costs
 
 Shipping
and handling costs billed to customers are recorded as revenue. Shipping and
handling costs paid to vendors are recorded as cost of sales.
 
 Fair
Value of Financial Instruments
 
 The
carrying amounts reported in the accompanying balance sheets of all financial
instruments approximates their fair values because of the immediate or
short-term maturity of these financial instruments or comparable interest rates
of similar instruments.
 
 Allowance
for Doubtful Accounts
 
 The
Company records an allowance for estimated losses on customer accounts. The
allowance is increased by a provision for bad debts, which is charged to
expense, and reduced by charge-offs, net of recoveries.
 
 Patent
Costs
 
 Costs
incurred with registering and defending patent technology are charged to expense
as incurred.
  Convertible
Debt
 
 IMHI
reviews its convertible instruments for embedded
derivatives.  Statement of Financial Accounting Standard (“SFAS”) No.
133, “Accounting for Derivative Instruments and Hedging Activities,” as amended,
requires all derivatives to be recorded on the balance sheet at fair value.
These derivatives, including embedded derivatives, are separately valued and
accounted for on our balance sheet.
 
 Emerging
Issues Task Force Issue No. 00-19, "Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in, a Company's Own Stock" ("EITF
00-19"), requires freestanding contracts that are settled in a company's own
stock, including warrants to purchase common stock, to be designated as an
equity instrument, asset or a liability. Under the provisions of EITF 00-19, a
contract designated as an asset or a liability must be carried at fair value on
a company’s balance sheet, with any changes in fair value recorded in the
company’s results of operations. A contract designated as an equity instrument
must be included within equity, and no fair value adjustments are
required.
 
 Income
Taxes
  Deferred
taxes are computed using the asset and liability method. Under the asset and
liability method, deferred tax assets and liabilities are recognized for future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Deferred tax assets are not recognized
unless it is more likely than not that the asset will be realized in future
years.
 
 8
  At
September 30, 2008, the Company has net operating loss carryforwards of
approximately $650,000 available to offset future taxable income and has
established a valuation allowance equal to the tax benefit of the loss
carryforwards as realization of the asset is not assured.
  Earnings
per Common and Common Equivalent Share
  The
computation of basic earnings per common share is computed using the weighted
average number of common shares outstanding during the year. The computation of
diluted earnings per common share is based on the weighted average number of
shares outstanding during the year plus common stock equivalents which would
arise from the exercise of warrants outstanding using the treasury stock method
and the average market price per share during the year. Options, warrants,
convertible debt and convertible preferred stock which are common stock
equivalents are not included in the diluted earnings per share calculation for
2008 and 2007, respectively, since their effect is anti-dilutive.
  Stock-Based
Compensation
 
 The
Company accounts for stock issued to employees, officers and directors in
accordance with Statement of Financial Standards No. 123 (revised 2004),
Share-Based Payment ("SFAS No.
123(R)"),  SFAS No. 123(R) requires all new share-based
payments to employees, including grants of employee stock options, to be
recognized in the financial statements based on their fair values.
 
 Statement
of Cash Flows
 
 For the
nine months ended September 30, 2008 and 2007, cash flows provided (used) by
operating activities approximates net income (loss) and the net change in
cash.
 
  Recent
Accounting Pronouncements
   In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles". SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States. It is effective 60 days following the SEC's approval of the
Public Company Accounting Oversight Board amendments to AU Section 411, "The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles". The adoption of this statement is not expected to have a material
effect on the Company's financial statements.
   In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities - an amendment to FASB Statement No. 133". SFAS No. 161
is intended to improve financial standards for derivative instruments and
hedging activities by requiring enhanced disclosures to enable investors to
better understand their effects on an entity's financial position, financial
performance, and cash flows. It is effective for financial statements issued for
fiscal years beginning after November 15, 2008, with early adoption encouraged.
The Company is currently evaluating the impact of SFAS No. 161 on its financial
statements, and the adoption of this statement is not expected to have a
material effect on the Company's financial statements.
   In
December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations". This statement replaces SFAS No. 141 and defines the acquirer in
a business combination as the entity that obtains control of one or more
businesses in a business combination and establishes the acquisition date as the
date that the acquirer achieves control. This statement is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. Earlier adoption is prohibited. The adoption of this
statement is not expected to have a material effect on the Company's financial
statements.
   9
  In
December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
Consolidated Financial Statements Liabilities -an Amendment of ARB No. 51". This
statement amends ARB 51 to establish accounting and reporting standards for the
Non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. This statement is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. Earlier
adoption is prohibited. The adoption of this statement is not expected to have a
material effect on the Company's financial statements.
   In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115". This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. SFAS No. 159 is
effective as of the beginning of an entity's first fiscal year that begins after
November 15, 2007. The adoption of this statement had no effect on the Company's
financial statements.
  
 NOTE
3- GOING CONCERN
 
 IMHI has
a working capital deficit of $9,378,773, a stockholders' deficit, and recurring
net losses. These factors create substantial doubt about IMHI’s ability to
continue as a going concern. The financial statements do not include any
adjustment that might be necessary if IMHI is unable to continue as a going
concern.
  The
ability of IMHI to continue as a going concern is dependent on IMHI generating
cash from the sale of its common stock or obtaining debt financing and attaining
future profitable operations. Management's plans include selling its equity
securities and obtaining debt financing to fund its capital requirement and
ongoing operations; however, there can be no assurance IMHI will be successful
in these efforts.
 
 NOTE
4 – CASH AND RESTRICTED CASH
 
 Cash on
hand and bank overdrafts represent cash that may freely be used in the conduct
of our business.
 
 Restricted
cash is comprised of a $100,000 Certificate of Deposit and accrued interest of
$2,270 lodged with our bankers as security for a $100,000 letter of deposit we
were mandated to lodge with the Pennsylvania court, as part of the Pediatrix
legal action more fully described in Note 8.  Upon finalization of the
legal action, the letter of credit will be returned and the bankers will release
the restrictions on the Certificate of Deposit.
 
 
 NOTE
5 – ACCOUNTS RECEIVABLE SOLD WITH RECOURSE
 
 Pursuant
to an agreement dated July 5, 2007, the Company has sold some of its Accounts
Receivable to a financial institution with full recourse.  The
financial institution retains a 15% portion of the proceeds from the receivable
sales as reserves, which are released to the Company as the Receivables are
collected.  The maximum commitment under this facility is $500,000,
and is limited to receivables that are less than 31 days outstanding. The
facility bears interest at prime plus 7% currently 14.50% at September 30, 2008,
and is secured by an unconditional guarantee of the Company and a first charge
against the Accounts Receivable.  At September 30, 2008 the balance
outstanding under the recourse contracts was $179,832.   Because
of the Company’s credit policies, repossession losses and refunds in the event
of default have not been significant and losses under the present recourse
obligations are not expected to be significant, it is at least reasonably
possible that the Company’s estimate will change within the near
term.
 
 
 10
  NOTE
6 - CONVERTIBLE NOTES AND DERIVATIVE LIABILITIES
  On
February 22, 2005 the Company sold 8% senior secured convertible notes, at par,
in the aggregate principal amount of $1,425,000. The Notes carry an interest
rate of 8% and a maturity date of February 22, 2007. Interest is payable in cash
or shares of common stock. In the event of default, an additional penalty
interest of 18% will be assessed on unpaid principal and interest.
 
 The notes
are convertible into our common shares at 75% of volume weighted average price
for twenty 20 trading days prior to conversion date. The Company
simultaneously issued to the Investors five year warrants to purchase 1,597,534
shares of common stock. During 2005, 1,585,623 warrant shares were
exercised and relieved to equity on the balance sheet at December 31,
2005.
  The
Company evaluated the convertible debentures and the warrants under SFAS No. 133
"Accounting for Derivatives" and EITF 00-19 "Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in a Company's Own Stock". The
Company determined that the convertible debentures contained an embedded
derivative for the conversion option and the warrants qualified as free standing
derivatives. The conversion option allows for an indeterminate number of shares
to potentially be issued upon conversion.
 
 This
results in the Company being unable to determine with certainty they will have
enough shares available to settle any and all outstanding common stock
equivalent instruments.  The Company would be required to obtain
shareholder approval to increase the number of authorized shares needed to share
settle those contracts. Because increasing the number of shares authorized is
outside of the Company’s control, this results in these instruments being
classified as liabilities under EITF 00-19 and derivatives under SFAS No. 133.
As a result, the Company has determined that all existing outstanding
convertible notes are also subject to EITF 00-19 and  SFAS No.
133.
  The notes
are carried at full face value as they are in default.
 
 Notes
payable consisted of the following at September 30, 2008
  Discounted
      convertible notes payable due to SovCap. SovCap is affiliated with a
      former officer and director of the Company and is a significant
      stockholder of the Company. These notes have a face interest rate of 18%.
      The notes are unsecured and are due on demand. The notes are convertible
      at a rate of 75% of the average closing bid price of the Company's common
      stock for the five trading days ending on the trading day immediately
      preceding the conversion date. During 2008 none of the principal was
      converted into common stock.
              
              $
              405,300Notes
      payable due to SovCap, unsecured bearing interest at 6%
-8%
              
              
              118,500Notes
      payable due to SovCap,  unsecured bearing interest at 8% and due
      on February 22, 2007.  The Company is presently in default of
      the payments on these notes, and as a result, the notes are accruing
      interest at the default rate of 26%.
              
              
              1,425,000Note
      payable to Dorn & Associates. Payable in 36 monthly instalments of
      $890 at an interest rate of 5%. The Company is presently in default of the
      payment terms on this note, and has classified the entire note balance as
      current.  These notes are unsecured
              
              
              25,177Convertible
      notes due to a former officer and shareholder of the Company, These notes
      bear interest at 12%, are unsecured, and due on demand. The Company is
      presently in default of the payment terms on these notes. The notes are
      convertible into approximately 10,251 shares at approximately $8.00 per
      share.
              
              
              74,174
  11
  Notes
      payable to an individual with interest at 10% collateralized by
      receivables and due on demand.
              
              
              17,826Note
      payable to a financial group, unsecured with interest rate at 12% and due
      on demand.
              
              
              25,000Notes
      payable to certain individual accredited investors with interest of 15% or
      18% per annum and are payable on demand after 180 days from the issue
      date. Notes are convertible into units of common stock and warrants at a
      rate of one unit for every $5.00 converted.  Notes in the
      principal amount of $1,183,500 were sold as a part of the sale of WV
      Fiber, Inc.
              
              
              44,500Notes
      payable to former officer and other individual accredited investors,
      unsecured without specific terms of repayment
              
              
              60,250Notes
      payable due to SovCap, unsecured
              
              
              165,416Notes
      payable, interest free, unsecured due on demand from a
      shareholder
              
              
              23,500,Notes
      payable to Wells Fargo, payable in 60 monthly instalments of $8,572
      including interest at 10.25%, through November 2012
              
              
              340,926Notes
      payable, interest at 8%, unsecured due on demand from Arrayit
      creditors
              
              
              43,048Notes
      payable, interest at 5%, unsecured, due on demand from minority
      shareholders
              
              
              100,000Notes
      payable, interest at 8%, unsecured due on demand from the former TeleChem
      shareholders and their families
              
              
              797,501$
              3,666,118*
      Notes payables included in liabilities of discontinued
      operations
              
              
              (208,419
              )Notes
      payable including related parties
              
              $
              3,457,699
 
 12
 
 NOTE
7 -  STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 Common
      Stock
              
              
              Preferred
      “A”
              
              
              Preferred
      “C”
              
              
              Additional
      Paid in Capital
              
              
              Accumulated
                Deficit
              
              
              TotalIntegrated
      Media Holdings, Inc. prior to merger, December 31, 2007
              
              $
              16,419
              
              
              $
              3,810
              
              
              $ -
              
              
              $
              32,779,304
              
              
              $
              (37,250,329
              )
              
              $
              (4,450,795
              )TeleChem
      International prior to merger, December 31, 2007
              
              
              1,667
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (5,690,441
              )
              
              
              (5,688,774
              )Reverse
      merger entries
              
              
              (1,667
              )
              
              
              
              
              
              
              
              
              
              (32,878,201
              )
              
              
              32,879,868February
      21, 2008 issuance of Series “C” preferred shares
              
              
              
              
              
              
              
              
              
              
              103
              
              
              
              98,897
              
              
              
              99,000December
      31, 2007 as adjusted
              
              
              16,419
              
              
              
              3,810
              
              
              
              103
              
              
              
              -
              
              
              
              (10,060,901
              )
              
              
              (10,040,569
              )Loss
      for the period
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (661,624
              )
              
              
              (661,624
              )Balance
      – September 30, 2008
              
              $
              16,419
              
              
              $
              3,810
              
              
              $
              103
              
              
              $
              -
              
              
              $
              (10,722,525
              )
              
              $
              (10,702,193
              )
 
  
  Conversion
of Preferred Stock to Common Stock
  
 The
Series A Preferred Stock has no stated dividend rate and has a liquidation
preference of $.001 per share. The Series A Preferred Stock also has voting
rights that entitle the preferred shareholders to vote with the common
shareholders as if the preferred stock had converted to common. The conversion
ratio of the preferred into common is not subject to revision upon reverse stock
dividends or splits that reduce the total shares outstanding.
 
 The
Series C Preferred Stock has no stated dividend rate.  The Series A
Preferred Stock also has voting rights that entitle the preferred shareholders
to vote with the common shareholders as if the preferred stock had converted to
common. The conversion ratio of the preferred into common is not subject to
revision upon reverse stock dividends or splits that reduce the total shares
outstanding.
 
 
 The
103,143 Series C Preferred Stock was issued on February 21, 2008 as part of the
merger with TeleChem.   These Series C Preferred shares are
convertible into 36,100,000 common shares at the rate of 350:1.
 
 On August
15, 2008 the articles of designation for the Series C Preferred Stock were
amended to limit the conversion to common to shares to 10% of the holders’
original holdings in any quarter.
 
  13
 
 Options
and warrants
 
 On
January 19, 2008 IMHI issued 1,250,000 warrants, expiring on January 19, 2013,
exercisable at $0.01.  Warrants that were issued generally do not have
a life that exceeds ten years.. No options or warrants were issued during 2007
or during the nine months ended September 30, 2008.  Information
regarding warrants and options to purchase common shares is summarized
below:
 
 Number
      of Options and Warrants
              
              
              Weighted
      Average Exercise Price Per ShareOutstanding
      at December 31, 2006
              
              
              11,965,000
              
              
              $
              0.09Granted
              
              
              -
              
              
              
              -Cancelled/forfeited
              
              
              (3,013,000
              )
              
              
              -Expired
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Outstanding
      at December 31, 2007
              
              
              8,952,000
              
              
              $
              0.10Granted
              
              
              1,250,000
              
              
              $
              0.01Cancelled/forfeited
              
              
              (1,750,000
              )
              
              
              -Expired
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -Outstanding
      at September 30 , 2008
              
              
              8,452,000
              
              
              $
              0.089
 
 The
following table summarizes information about outstanding warrants and options
for common stock at September 30, 2008:
  
 Range
      of Exercise
              
              
              Number
      Outstanding
              
              
              Weighted
      Average Remaining Contractual Life (years)
              
              
              Weighted
      Average Exercise Price
              
              
              Number
      Exercised
              
              
              Average
      Exercise Price$
              0.01
              
              
              
              
              
              
              
              
              
              1,250,000
              
              
              
              5
              
              
              
              0.01
              
              
              
              0
              
              
              
              0.01$
              0.01
              
              
              
              -
              
              
              $
              0.05
              
              
              
              421,362
              
              
              
              5
              
              
              
              0.03
              
              
              
              0
              
              
              
              0.700.09
              
              
              
              -
              
              
              
              0.10
              
              
              
              1,673,512
              
              
              
              6
              
              
              
              0.08
              
              
              
              0
              
              
              
              0.100.10
              
              
              
              -
              
              
              
              0.60
              
              
              
              4,870,781
              
              
              
              7
              
              
              
              9.34
              
              
              
              0
              
              
              
              0.370.60
              
              
              
              -
              
              
              
              0.42
              
              
              
              236,345
              
              
              
              7
              
              
              
              1.19
              
              
              
              0
              
              
              
              1.19
   14
  NOTE
8 -  COMMITMENTS AND CONTINGENCIES
  Pediatrix
Screening LP
 
 The
controversy in issue arose from a failed grant collaboration between Pediatrix
and TeleChem involving TeleChem proprietary microarray technology and subsequent
agreement by the parties to commercialize TeleChem microarray technology through
the formation of a joint corporation.  Pediatrix brought a lawsuit in
the United States District Court for the Western District of Pennsylvania
alleging multiple claims for breach of contract in connection with both the
grant collaboration and Pre-Incorporation Agreement.  TeleChem
counterclaimed alleging breach of the Pre-Incorporation Agreement, as well as
for fraudulent misrepresentation and trade secret misappropriation, inter alia, stemming from the
failed grant collaboration and subsequent Pre-Incorporation
Agreement.
 
 On August
11, 2007, after five weeks of trial, the jury returned a verdict finding that,
while both parties were in breach of contract, Pediatrix also engaged in
fraudulent misrepresentation and awarded TeleChem $500,000 in damages and
$3,500,000 in punitive damages for the fraudulent misrepresentation claim and
$1,000,000 in damages on the breach of contract claim.   The jury
also awarded Pediatrix $1,085,000 in damages for Pediatrix’s breach of contract
claim against TeleChem.
 
 Pediatrix’s
Rule 59 motion to amend the judgement was denied by the District
Court.  Pediatrix appealed the jury verdict on fraudulent
misrepresentation and the $4,000,000 in damages awarded thereunder to the U.S.
Court of Appeals for the Third Circuit.  Pediatrix has indicated that
it will not pursue on appeal the breach of contract verdict and damage award
against it.   TeleChem did not appeal any portion of the jury
verdict.
 
 The
appeal is currently pending before the U.S. Court of Appeals for the Third
Circuit and involved in the Third Circuit’s mandatory mediation
program.
 
 
 Other
Matters
 
 IMHI may
become or is subject to investigations, claims or lawsuits ensuing out of the
conduct of its business. IMHI is currently unable to estimate the loss (if any)
related to these matters.  Other than the Pediatrix matter referred to
above, IMHI is not aware of any other matters.
 
 
 
 
 15
 ITEM
2.                      MANAGEMENT’S
DISCUSSION AND ANALYSIS
 
 For a
description of our significant accounting policies and an understanding of the
significant factors that influenced our performance during the nine months ended
September  30, 2008, this “Management’s Discussion and Analysis”
should be read in conjunction with the Condensed Consolidated Unaudited
Financial Statements, including the related notes, appearing in Item 1 of this
Quarterly Report, as well as the Company’s Annual Report on Form 10-KSB for the
year ended December 31, 2007.  The preparation of this Quarterly
Report on Form 10-Q requires us to make estimates and assumptions that affect
the reported amount of assets and liabilities, disclosure of contingent assets
and liabilities at the date of our financial statements, and the reported
amounts of revenue and expenses during the reporting period. There can be no
assurance that actual results reported in the future will not differ from those
estimates or that revisions of these estimates may not become necessary in the
future.
 
 Forward-Looking
Statements
 
 This
Quarterly Report on Form 10-Q, includes statements that constitute
“forward-looking statements.”  These forward-looking statements are
often characterized by the terms "may," "believes," "projects," "expects," or
"anticipates," and do not reflect historical facts. Specific forward-looking
statements contained in this portion of the Annual Report include, but are not
limited to the Company's (i) expectation that certain of its liabilities listed
on the balance sheet under the headings "Accounts Payable," "Accrued
Liabilities" and "Note Payable" will be retired by issuing stock versus cash
during the next 12 months; (ii) expectation that it will continue to devote
capital resources to fund continued development of the Arrayit technology; (iii)
expectation that it will execute employment agreements with certain executive
officers in the next fiscal quarter; (iv) anticipation that it will incur
significantly capital expenditures to further its deployment of the Arrayit
offerings; and (v) anticipation of a significant increase in operational and
SG&A costs as it accelerates the development and marketing of the Arrayit
operations in beginning in the third quarter of 2008.
 
 Forward-looking
statements involve risks, uncertainties and other factors, which may cause our
actual results, performance or achievements to be materially different from
those expressed or implied by such forward-looking statements. Factors and risks
that could affect our results and achievements and cause them to materially
differ from those contained in the forward-looking statements include those to
be identified in our Annual Report on Form 10-KSB for the year ended December
31, 2007 in the section titled “Risk Factors,” as well as other factors that we
are currently unable to identify or quantify, but may exist in the
future.
 
 In
addition, the foregoing factors may affect generally our business, results of
operations and financial position.  Forward-looking statements speak
only as of the date the statement was made.  We do not undertake and
specifically decline any obligation to update any forward-looking
statements.
 
 Executive
Overview
 
 Through
our merger with TeleChem, we have undertaken a new strategic and business
direction to become primarily a biotechnology company. Our core activities
and associated capital investments will be redirected towards Microarray
Analysis.
 
 TeleChem’s
business activities are in the life sciences, chemical trading and disease
diagnostics areas.  It was founded in 1993 by Rene Schena and Todd
Martinsky as a chemical import and export trading company.  TeleChem’s
chemicals division provides customers with the raw materials required for
plastics, water soluble fertilizers, and alternative fuels.  TeleChem
entered the biotechnology sector with the creation of the Arrayit® Life Sciences
Division in 1996.  Because of the public interest in the Human Genome
Project and microarray technology, TeleChem focused on microarray products and
services for the research, pharmaceutical and diagnostics
markets.  TeleChem’s Arrayit® Division currently provides its patented
microarray platform (US 6,101,946) to more than 3,000 installations serving an
estimated 10,000 laboratories, making it the most widely used microarray
technology in the world.  Supporting instruments, kits, reagents, and
hardware complete the Arrayit® line of more than 400 products making up what
management believes is a universal microarray platform for any type of
biomolecule.
  16
  During
the year 2001, the Diagnostics Division was started in order to leverage the
patented (6,913,879) multi-patient technology for genetic screening and
testing.  This next generation microarray format allows clinical
laboratories to examine tens of thousands of patients on a single microarray,
providing much more cost-effective gene information for population-wide
diagnostics than traditional “single patient” microarrays.  The
company is currently developing or has developed tests for many major human
diseases including cystic fibrosis, sickle cell anaemia, and
cancer.  Arrayit intends to compete in the $20 billion molecular
diagnostics arena.
  The
TeleChem customer base includes major universities, pharmaceutical and biotech
companies, agricultural and chemical companies, government agencies, national
research foundations and private sector enterprises around the
world.  The company website receives more than 1,000,000 hits per
month and the Shopping Cart allows on-line product ordering 24 hours a day. The
website makes available the Electronic Library free-of-charge to the tens of
thousands of researchers worldwide who wish to keep pace with the microarray
literature. TeleChem scientists were featured on NOVA’s television show
“Cracking the Code of Life” in 2001.  The company received the Rising
Star Award from the City of Sunnyvale in 2002 and 2003, the Silicon Valley Top
50 Award from the San Jose Business Journal in 2003, and consecutive selection
to the Inc. 500 List in 2002 and 2003 by Inc. magazine.
  TeleChem’s
principal office is in Sunnyvale, California. TeleChem presently has eight
employees.
 
 Corporate
History
  Integrated
Media Holdings, Inc., a Delaware corporation (“TeleChem” “Arrayit”. "Endavo,"
the "Company," "we," "us" or "our"), is headquartered in Sunnyvale, California.
We are a holding company that, subsequent to our year-end, on February 5, 2008,
entered into a Plan and Agreement of Merger (the “Merger”) by and among IMHI,
TeleChem International, Inc. (“TeleChem”), the majority shareholders of TeleChem
(“Shareholders”), Endavo Media and Communications, Inc., a Delaware corporation
(“Endavo”) and TCI Acquisition Corp., a Nevada corporation, and wholly owned
subsidiary of the Company (“Merger Sub”).  The Company, TeleChem,
Endavo, Merger Sub and Shareholders are referred to collectively herein as the
“Parties”.
  Effective
February 21, 2008, we completed the Plan and Agreement of Merger by and among
us, TeleChem International, Inc., the majority shareholders of TeleChem, Endavo
Media and Communications, Inc., a Delaware corporation and TCI Acquisition
Corp., a Nevada corporation, and wholly owned subsidiary of the
Company.  Consummation of the merger did not require a vote of our
shareholders.  We issued 103,143 shares of Series C Convertible
Preferred Stock to the Shareholders of TeleChem in exchange for 100% of the
equity interests of TeleChem resulting in TeleChem being a wholly owned
subsidiary.  The former shareholders of TeleChem now own approximately
73.5% of the outstanding interest and voting rights of the parent
company.  The Preferred Stock is convertible into 36,100,000 shares of
common stock after, but not before, the effective date of the reverse split of
the outstanding Integrated Media common stock.  Finally, in connection
with the merger, we changed the address of our principal executive offices to
524 East Weddell Drive, Sunnyvale, CA 94089.  Simultaneously with the
merger we transferred our wholly-owned subsidiary, Endavo to an
individual.  As a result, the transaction will be accounted for as a
reverse merger, where Telechem is the accounting acquirer resulting in a
recapitalization of our equity.
 
 During
2006 and 2007 we provided digital content distribution and management solutions
for content owners seeking to distribute online and over broadband, or Internet
Protocol, networks. Prior to September 2005, the Company integrated broadband
services, including voice, video, and data services to residential customers
through IP based networks. The results of operations of Endavo, Bidchaser and WV
Fiber (to April 11, 2007, the date of disposal) have been included in these
financial statements and are presented as discontinued operations in the
financial statements. On April 11, 2007 we disposed of our wholly-owned
subsidiary, WV Fiber, LLC.  During the fourth quarter of 2007,
we approved a plan to dispose of its wholly- owned subsidiaries, Endavo and
Bidchaser.
 
 
 We were
originally incorporated as Ceristar, Inc. in December 1999. On September 10,
2002, we entered into a merger with a subsidiary of Planet Resources, Inc., a
Delaware corporation, in which Ceristar survived the merger and became a wholly
owned subsidiary of Planet and all of our issued and outstanding common and
preferred stock was exchanged for Planet's common stock. Accordingly, as a
result of the merger, we succeeded to the ownership of Planet, which was a
holding company, changed the name to CeriStar, Inc., and we continued to operate
our business through Susquina, Inc., a wholly-owned subsidiary of CeriStar.
Prior to the merger, Planet had no operations for two years. Subsequent to the
merger, we changed our name from CeriStar to Endavo Media and Communications,
Inc. in order to more accurately reflect the new direction of the Company and
our operating subsidiary remained Susquina, Inc. In 2006, we changed the name of
our holding company to Integrated Media Holdings, Inc. and simultaneously
changed the name of our sole operating company at the time to Endavo Media and
Communications, to better reflect our corporate and operating structure. Endavo
Media and Communications provides digital video delivery and asset management
solutions to content owners and producers.
 
 17
  Recent Developments
  Summary
of TeleChem Purchase and Share Exchange Terms:
 
 On
February 5, 2008 Integrated Media, TeleChem and the TeleChem Shareholders
entered into the Merger Agreement pursuant to which Integrate Media will acquire
100% of the outstanding equity interest of TeleChem.  The Merger
Agreement was amended effective February 11, 2008.
 
 On or
about February 21, 2008 there was the issuance of 103,143 Series C shares of
preferred stock that is convertible upon into 36,100,000 shares (a majority) of
the common stock to the TeleChem Shareholders in exchange for 100% of the equity
interests of TeleChem.  The parent company will then change its name
to Arrayit Corporation.  Afterwards there will be  a reverse
split and increase in the number of authorized and unissued shares and
conversion of the preferred shares. TeleChem will be then be a wholly-owned
subsidiary of Integrated Media and the present TeleChem Shareholders will own
approximately 73.5% of the outstanding equity interest and voting rights of the
parent company.  Neither the first or second step of the Merger will
require approval of shareholders of Integrate Media.
 
 Upon
completion of the “reverse-split” approved and reincorporation to the State of
Nevada and adoption of the Nevada Articles of Incorporation that has been
authorized by the board of directors and majority shareholders of Integrated
Media, there will be approximately 47,637,860 outstanding common
shares.  Approximately 35,000,000 common shares (73.5%) will be held
by the present TeleChem Shareholders and approximately 11,537,860 common shares
(24.20%) will be held by the present Integrated Media shareholders.
 
 
 Results
of Operations
 
 Comparison
of Operating Results- Three Months Ended September 30, 2008 and
2007
 
 Gross
revenues for the three months ended September 30, 2008 and 2007 were $782,831
and $757,503, with Cost of Sales for the three months ended September 30, 2008
amounting to $559,913 and $491,499 resulting in Gross Profit for the three
months ended September 30, 2008 and 2007 of $229,917 and $266,004
respectively.  Freed of the distraction of its Pediatrix law suit the
Company was able to concentrate on sales in its Biomedical
Segment.   Chemical sales were insignificant during the
quarter.
 
 The
Company had a significant order backlog, in excess of $300,000 at September 30,
2008 which it was not able to fulfill until October 2008.  Had these
orders shipped the company would have been profitable for the
quarter.
  Selling,
General and Administrative expenses for the three months ended September 30,
2008 amounted to $379,377 which were virtually all incurred by
TeleChem.   For the three months ended September 30, 2007
Selling, General and Administrative expenses amounted to $585,047.
  Interest
Expense for the three months ended September 30, 2008 and 2007 was $146,474 and
$171,532 respectively.  The reduction in 2008 resulted from the
reduction in outstanding debt.
  We
incurred a gain from the imbedded derivatives in our debt instruments of $23,476
during the three months ended September 30, 2008 and a gain of $181,080 during
the three months ended September 30, 2007.
 
 Legal
expenses of $10,397 were incurred during the three months ended September 30,
2008 which were significantly less than the $1,802,679 incurred during the three
months ended September 30, 2007.   The conclusion of the trial
stage of the Pediatrix law suit during 2007 accounts for most of the
reduction.
  The three
months ended September 30, 2007 include income from discontinued operations of
$441,154 resulting from the Endavo, Bidchaser and WV Fiber
subsidiaries.
  Cash
flows from operations approximated net income (loss) for the three months ended
September 30, 2008 and 2007.  The Company has funded its operating
deficits through debt financing.
 
 
 18
  Comparison
of Operating Results- Nine Months Ended September 30, 2008 and 2007
 
 Gross
revenues for the nine months ended September 30, 2008 and 2007 were $2,713,816
and $2,932,431, with Cost of Sales for the nine months ended September 30, 2008
amounting to $1,811,161 and $1,814,541 resulting in Gross Profit for the nine
months ended September 30, 2008 and 2007 of $902,656 and
$1,117,891  respectively.  Freed of the distraction of its
Pediatrix law suit, particularly in the latter part of the nine months ended
September 30, 2008  the Company was able to concentrate on sales in
its Biomedical Segment.   Chemical sales were insignificant
during the period.
  Selling,
General and Administrative expenses for the nine months ended September 30, 2008
amounted to $1,045,959 which were virtually all incurred by
TeleChem.   For the nine months ended September 30, 2007 Selling,
General and Administrative expenses amounted to $1,977,363.
  Interest
Expense for the nine months ended September 30, 2008 and 2007 was $435,496 and
$509,832 respectively.  The reduction in 2008 resulted from the
reduction in outstanding debt.
  We
incurred a loss from the imbedded derivatives in our debt instruments of $22,538
during the nine months ended September 30, 2008 and a gain of $543,240 during
the nine months ended  September 30, 2007.
 
 Legal
expenses of $60,287 were incurred during the nine months ended September 30,
2008 which were significantly less than the $3,519,934 incurred during the nine
months ended September 30, 2007.   The conclusion of the trial
stage of the Pediatrix law suit during 2007 accounts for most of the
reduction.
  The nine
months ended September 30, 2007 include income from discontinued operations of
$1,323,461resulting from the Endavo, Bidchaser and WV Fiber
subsidiaries.
  Cash
flows from operations approximated net income (loss) for the nine months ended
September 30, 2008 and 2007.  The Company has funded its operating
deficits through debt financing.
 
 Off-Balance
Sheet Arrangements
 
 We
currently do not have any off-balance sheet arrangements.
 
 Recent
Accounting Pronouncements
 
 We are
evaluating the impact that recently adopted accounting pronouncements discussed
in the notes to the financial statements will have on our financial statements
but do not believe their adoption will have a significant impact.
 
 Going
Concern
 
 Our
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States applicable to a going concern that
contemplates the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. Our general business strategy is
unproven, and we have only recently begun to record revenues. To date, we have
relied primarily on the sale of our equity and debt securities to fund our
operations. We have incurred losses since our inception and we continue to incur
legal, accounting, and other business and administrative expenses. Our auditor
has therefore recognized that there is substantial doubt about our ability to
continue as a going concern.
 
 Risk
Factors
  In
addition to the other information set forth in this report, you should carefully
consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual
Report on Form 10-KSB for the year ended December 31, 2007, which could
materially affect our business, financial condition or future results. The risks
described in our Annual Report on Form 10-KSB is not the only risks facing our
Company. Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our
business, financial condition and/or operating results.
  19
  If We Do Not Obtain Additional
Financing, We Will Not Be Able to Acquire Any Assets
  As of
September 30, 2008 we had only $70,669 cash on hand . We will likely have
to raise funds to acquire new assets and finance operation or acquire new assets
and to finance operations. If we are not able to raise the funds necessary to
fund our business objectives, we may have to delay the implementation of any
future business plan.
  We do not
have any arrangements for financing and we can provide no assurance that we will
be able to obtain the required financing when needed. Obtaining additional
financing will be subject to a number of factors, including:
  *       Market conditions;
 *       Investor acceptance of potential business
assets; and
 *       Investor sentiment.
  These
factors may make the timing, amount, terms and conditions of additional
financing unattractive or unavailable to us. If we are not successful in
achieving financing id operation or acquire business assets, our development
will be delayed.
   If
We Are Unable To Generate Significant Revenues From Our Operations, Our Business
Will Fail.
 
 If we are
unable to generate significant revenues from resumption of operations or any
business interest we acquire, we will not be able to achieve profitability or
continue operations.
  Our
Securities May Be Subject to Penny Stock Regulation.
 
 If an
active trading market for our securities develops and the price of our common
stock falls below $5.00 per share, then we will be subject to “penny stock”
regulation. “Penny stock” rules impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together with a
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser’s written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the “penny
stock” rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a
result.
  Forward-Looking
Statements
 This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
ac
 
 
 
 20
  ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 The
Company is subject to certain market risks primarily related to changes in
interest rates.  The Company does not undertake any specific actions
to limit these exposures at this time.
 
 
 ITEM
4.1.                      CONTROLS
AND PROCEDURES
 
 Disclosure
controls and procedures are designed with an objective of ensuring that
information required to be disclosed in our periodic reports filed with the
Securities and Exchange Commission, such as this Quarterly Report on Form 10-Q,
is recorded, processed, summarized and reported within the time periods
specified by the Securities and Exchange Commission. Disclosure controls also
are designed with an objective of ensuring that such information is accumulated
and communicated to our management, including our chief executive officer and
chief financial officer, in order to allow timely consideration regarding
required disclosures.
 
 The
evaluation of our disclosure controls by our chief executive officer, who is
also our acting chief financial officer, included a review of the controls’
objectives and design, the operation of the controls, and the effect of the
controls on the information presented in this Quarterly Report. Our management,
including our chief executive officer, does not expect that disclosure controls
can or will prevent or detect all errors and all fraud, if any. A control
system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Also,
projections of any evaluation of the disclosure controls and procedures to
future periods are subject to the risk that the disclosure controls and
procedures may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
 
 Based on
his review and evaluation as of the end of the period covered by this Form 10-Q,
and subject to the inherent limitations all as described above, our chief
executive officer, who is also our acting chief financial officer, has concluded
that our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934) contain material weaknesses
and are not effective.
 
 A
material weakness is a significant deficiency, or a combination of significant
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.
 
 The
material weaknesses we have identified are the direct result of a lack of
adequate staffing in our accounting department. Currently, our chief executive
officer and a controller have sole responsibility for receipts and
disbursements. We do not employ any other parties to prepare the periodic
financial statements and public filings. Reliance on these limited resources
impairs our ability to provide for a proper segregation of duties and the
ability to ensure consistently complete and accurate financial reporting, as
well as disclosure controls and procedures. As we grow, and as resources permit,
we project that we will hire such additional competent financial personnel to
assist in the segregation of duties with respect to financial reporting, and
Sarbanes-Oxley Section 404 compliance.
 
 We
believe, with the completion of the business merger with Arrayit and the
addition of more staff during the next few quarters, that we will be able to
improve our financial reporting and disclosure controls and procedures and
remedy the material weakness identified above.
 
 
 21
  PART
II – OTHER INFORMATION
 
 ITEM
1 - LEGAL PROCEEDINGS
 
 Other
than the matter with Pediatrix Screening, LP described below, we are not
aware of any known or potential matters, although we may, from time to time, be
party to certain legal proceedings and other various claims and lawsuits in the
normal course of our business, which, in the opinion of management, are not
material to our business or financial condition.
 
 Pediatrix
Screening LP
 
 The
Company entered into a joint venture with Pediatrix Screening LP for the
Company’s biomedical products.   In the opinion of Management of
the Company, Pediatrix breached the terms of the contract and accordingly the
Company brought an action against Pediatrix.  Civil Action number
01-2226 between TeleChem International, Inc., Pediatrix Screening, Inc. and
Pediatrix Screening LP went to jury trial in the United States District Court in
the Western District of Pennsylvania in the summer of 2007.  In
November 2007 the jury awarded TeleChem $5 million in damages for Pediatrix's
breach of contract, fraudulent misrepresentation, and punitive
damages.  The jury also awarded Pediatrix $1,085,001 for TeleChem's
breach of contract.
 
 Pediatrix
appealed the jury's decision concerning the quantum of the damages (but not the
decision finding breach itself), and requested that the damages awarded to
TeleChem be reduced.  This request to the presiding judge was
denied.    Pediatrix put $5 million in bond, and submitted
an appeal to the Third Circuit Court of Appeals to request that the damages
award to TeleChem be reduced.  The parties await the Third Circuit
Court's response.
 
 ITEM
2 - CHANGES IN SECURITIES
  None.
   ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
  Other
than defaults on some of our notes payable, as more fully explained in note 4 to
our financial statements, we are not in default on Senior
Securities.
   ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  NONE
   ITEM
5 - OTHER INFORMATION
  NONE
   22
  ITEM
6 - EXHIBITS AND REPORTS ON FORM 8-K
 None.
 
 
 (b).
Reports on Form 8-K.
 
 On
January 9, 2008 and we filed on form 8-K information about the resignation of
Paul D Hamm and Jerry Dunlap as directors and the appointment of William L.
Sklar as a director.
 
 On
February 5, 2008 we filed on form 8-K information that the Company had signed a
definitive merger agreement to combine with TeleChem International
Inc.
 
 On
February 11, 2008 we filed on form 8-K information about amendments made to the
February 5, 2008 merger agreement with TeleChem International, Inc.
 
 On March
19, 2008 we filed on form 8-K information about our change of auditors from
Maddox, Unger, Silberstein PLLC to Malone & Bailey PC.
 
 On May 8,
2008 we filed on form 8-K information about our change of auditors from Malone
& Bailey PC. To Berman, Hopkins, Wright & LaHam LLP.
   
 
 SIGNATURES
  In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 INTEGRATED
      MEDIA HOLDINGS, INC.Dated:
      November 14, 2008
              By:
      /s/ RENE’ A. SCHENARene’
      A. Schena, Chairman , Director, CEO &
CFO
   In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
  
 INTEGRATED
      MEDIA HOLDINGS, INC.Dated:
      November 14, 2008
              By:
      /s/RENE’ A. SCHENARene’
      A. Schena, Chairman , Director, CEO & CFO
                (Principal
      Executive Officer and acting Principal Financial and Accounting
      Officer)Dated:
      November 14, 2008
              By:
      /s/ TODD J. MARTINSKYTodd
      J. Martinsky, Director, Vice President &
COO
 
 23
  
 Exhibit 31.1
  CERTIFICATION
PURSUANT TO
 18 U.S.C.
SECTION 1350,
 AS
ADOPTED PURSUANT TO
 SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
 
  I, Rene
A. Schena certify that:
 
  1.
                I
      have reviewed this Quarterly Report on Form 10-Q of Integrated Media
      Holdings, Inc.;
 
  2.
                Based
      on my knowledge, this 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
      report;
 
  3.
                Based
      on my knowledge, the financial statements, and other financial information
      included in this 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
      report;
 
  4.
                The
      registrant’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)) 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 registrant, 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)
                Designed
      such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, 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;
 
  (c)
                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
 
  (d)
                Disclosed
      in this report any change in the registrant’s internal control over
      financial reporting that occurred during the registrant’s most recent
      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant’s internal control over financial
      reporting; and
 
  5.
                The
      registrant’s other certifying officer(s) and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control
      over financial reporting.
 
  /s/  Rene
A. Schena
 
 Rene A.
Schena
 Chief
Executive Officer
  November
14, 2008
 24
 
 Exhibit 31.2
  CERTIFICATION
PURSUANT TO
 18 U.S.C.
SECTION 1350,
 AS
ADOPTED PURSUANT TO
 SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
 
  I, Rene
A. Schena certify that:
 
  1.
                I
      have reviewed this Quarterly Report on Form 10-Q of Integrated Media
      Holdings, Inc.;
 
  2.
                Based
      on my knowledge, this 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
      report;
 
  3.
                Based
      on my knowledge, the financial statements, and other financial information
      included in this 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
      report;
 
  4.
                The
      registrant’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)) 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 registrant, 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)
                Designed
      such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, 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;
 
 (c)
                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
 
 (d)
                Disclosed
      in this report any change in the registrant’s internal control over
      financial reporting that occurred during the registrant’s most recent
      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant’s internal control over financial
      reporting; and
 
  5.
                The
      registrant’s other certifying officer(s) and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control
      over financial reporting.
 
  /s/  Rene
A. Schena
 
 Rene A.
Schena
 Chief
Financial Officer
 November 14,
2008
 25
 
 
 Exhibit 32.1
  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 Integrated Media
Holdings,  Inc. (the “Company”) on Form 10-Q for the period
ending September 30, 2008 as filed with the Securities and Exchange Commission
on the date hereof (the “Report”), I, Rene A. Schena certify, pursuant to
18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
 
  (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/  Rene
A. Schena
 Rene A.
Schena
 Chief
Executive Officer
  November 14,
2008
 
 26
 
  Exhibit 32.2
  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 Integrated Media
Holdings,  Inc. (the “Company”) on Form 10-Q for the period
ending September 30, 2008 as filed with the Securities and Exchange Commission
on the date hereof (the “Report”), I, Rene A. Schena certify, pursuant to
18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
 
  (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/  Rene
A. Schena
 Rene A.
Schena
 Chief
Financial Officer
  November 14,
2008
 
 27