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| (Mark One) |                                                                                                                                                                                                                                                                                       |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| x          | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                                                                                                                                                       |
|       | For the fiscal year ended December 31, 2010                                                                                                                                                                                                                                                |
|       |                                                                                                                                                                                                                                                                                       |
| OR         |
|       |                                                                                                                                                                                                                                                                                       |
| o          | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                                                                                                                                                       |
|       | For the transition period from   __________    to     ___________                            |

| Wisconsin                           |   | 39-1924096                           |
|-------------------------------------|--------|--------------------------------------|
| (State  of incorporation) |   | (I.R.S. Employer Identification No.) |

|   | Large accelerated filer o                                                              | Accelerated filer o         |   |
|--------|----------------------------------------------------------------------------------------|-----------------------------|--------|
|   |                                                                                   |                        |   |
|   | Non-accelerated filer   o (Do not check if a smaller reporting company) | Smaller reporting company x |   |

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TABLE OF CONTENTS

| PART I                         |                                                                                  | Page     |
|--------------------------------|---------------------------------------------------------------------------------------|----------|
|                           |                                                                                  |     |
|    Item 1.      | Description of Business                                                               | 3        |
|    Item 2.      | Description of Property                                                               | 5        |
|    Item 3.      | Legal Proceedings                                                                     | 6        |
|    Item 4.      | Rescinded and Reserved                                                                | 6        |
|                           |                                                                                  |     |
| PART II                        |                                                                                  |     |
|                           |                                                                                  |     |
|    Item 5.      | Market for IMSL Common Equity and Related Stockholder Matters                         | 6        |
|    Item 6.      | Selected Financial Data                                                               | 7        |
|    Item 7.      | Management's Discussion and Analysis of Financial Condition and Results of Operations | 7        |
|    Item 8.      | Financial Statements                                                                  | 11       |
|    Item 9.      | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  | 11       |
|    Item 9 A(T). | Controls and Procedures                                                               | 11       |
|    Item 9 B.         | Other Information                                                                     |  12 |
|                           |                                                                                  |     |
| PART III                       |                                                                                  |     |
|                           |                                                                                  |     |
|    Item 10.     | Directors and Executive Officers                                                      | 12       |
|    Item 11.     | Executive Compensation                                                                | 14       |
|    Item 12.     | Security Ownership of Certain Beneficial Owners and Management                        | 20       |
|    Item 13.     | Certain Relationships and Related Transactions                                        | 21       |
|    Item 14.     | Principal Accountant Fees and Services                                                | 22       |
|    Item 15.     | Exhibits, Financial Statement Schedules                                               | 23       |
|                           |                                                                                  |     |

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ITEM 1 - DESCRIPTION OF BUSINESS

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ITEM 1A – RISK FACTORS

ITEM 2 - DESCRIPTION OF PROPERTY

| Location                                           |   |        Sq. Ft.                                             |
|----------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
| 1545 University Avenue, Green Bay, WI              |   |  400                                                                                     |
| 5350 Commerce Blvd., Rohnert Park, CA              |   |            2,800                       |
| 8938 Cotter Street, Lewis Center, OH               |   |            6,840                       |
| 1317 Oakdale Road, Modesto, CA                     |   |            1,000                       |
| 7429 East Brainard Rd, Chattanooga, TN             |   |            1.230                       |
| 103 East Main Street, Plainview, CT                |   |            7,600                       |
| 6402 McLeod Drive, Las Vegas, NV                   |   |                833 |
| 7670 Wolff Court, Westminster, CO                  |   |            1,896                       |
| 7449 North Natchez Ave., Niles, IL                 |   | 7,000                                                                                         |
| 438 S. Greenwood, Wichita, KS                      |   |            1,200                       |
| 3418 Frankfort Ave, Louisville, KY                 |   |                250 |
| 1751 2nd Avenue, New York, NY                      |   |            1,400                       |
| One Edgewood Drive, Norwood, MA                    |   |            1,910                       |
| 3100 Steeles Avenue West, Concord, Ontario, Canada |   | 826                                                                                           |

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Table of Contents

ITEM 3 - LEGAL PROCEEDINGS

ITEM 4 – RESCINDED AND RESERVED

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

|                                   |   | High   |   |   | Low    |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|
| Fiscal 2010                            |   |   |   |   |   |   |
|                                   |   |   |   |   |   |   |
| First quarter ended March 31, 2010     |   | $      | 0.85   |   |   | $      | 0.75 |   |
| Second quarter ended June 30, 2010     |   | $      | 1.80   |   |   | $      | 0.56 |   |
| Third quarter ended September 30, 2010 |   | $      | 1.30   |   |   | $      | 0.72 |   |
| Fourth quarter ended December 31, 2010 |   | $      | 0.99   |   |   | $      | 0.61 |   |
|                                   |   |   |   |   |   |   |   |   |
| Fiscal 2009                            |   |   |   |   |   |   |   |   |
|                                   |   |   |   |   |   |   |   |   |
| First quarter ended March 31, 2009     |   | $      | 0.48   |   |   | $      | 0.42 |   |
| Second quarter ended June 30, 2009     |   | $      | 0.84   |   |   | $      | 0.78 |   |
| Third quarter ended September 30, 2009 |   | $      | 0.45   |   |   | $      | 0.45 |   |
| Fourth quarter ended December 31, 2009 |   | $      | 0.81   |   |   | $      | 0.75 |   |

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ITEM 6

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

| ●   | During the year 198,790 shares of the Company’s outstanding common stock were repurchased into treasury.  This represents approximately 1.8% of the outstanding shares of the Company. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | The Company’s stock generally traded in a higher range in 2010 than in 2009. |
|---------------------|------------------------------------------------------------------------------------|

| ●   |  In 2010, there was a loss from operations of $333,620, compared to income of $539,305 last year. The 2010 loss included approximately $182,000 in legal fees and a charge of $220,000 related to settlement of an employment contract. Also incurred were approximately $316,000 of other professional fees that are not expected to recur. Adjusted for these non-recurring expenses, net operating income was approximately $385,000. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | International Monetary Systems, Ltd. had EBITDA (earnings before interest, taxes, depreciation and amortization) of $1,297,547 or approximately $.12 per share. Exclusive of the non-recurring items noted above, EBITDA would be approximately $2,016,000 in 2010. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Cash flow from operations totaled approximately $960,000 or $.09 per share. |
|---------------------|-----------------------------------------------------------------------------|

| ●   | Total liabilities were reduced by $1,161,468 during the year. |
|---------------------|---------------------------------------------------------------|

| ●   | Corporate finance, accounting, and human resources were relocated to the corporate headquarters in Milwaukee, WI |
|---------------------|------------------------------------------------------------------------------------------------------------------|

| ●   |  In August 2010, the Company implemented its new TNT barter software, which allows for enhanced sales, operations and reporting.  |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

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| Adjustments to reconcile GAAP Net Income (Loss) to EBITDA |   |
|-----------------------------------------------------------|--------|
|                                                      |   | 2010 |   |   | 2009 |   |
| Net income (loss)                                         |   | $ | (490,133 | ) |   | $ | 206,817 |   |
| Interest expense                                          |   |   | 200,642 |   |   |   | 228,936 |   |
| Taxes                                                     |   |   | (42,118 | ) |   |   | 104,206 |   |
| Depreciation & amortization                           |   |   | 1,629,156 |   |   |   | 1,631,809 |   |
| Impairment                                                |   |   | - |   |   |   | 80,370 |   |
| Total EBITDA                                              |   | $ | 1,297,547 |   |   | $ | 2,252,138 |   |
|                                                      |   |   |   |   |   |   |   |   |

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ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8 - FINANCIAL STATEMENTS

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A(T) - CONTROLS AND PROCEDURES

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ITEM 9B – OTHER INFORMATION

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS

| Name                 |   | Age |   | Position                                                                           |
|----------------------|--------|-----|--------|------------------------------------------------------------------------------------|
| Donald F. Mardak     |   | 74  |   | Principal Executive Officer, President and Director                                |
| John E. Strabley     |   | 47  |   | Executive Vice President and Director                                              |
| Dale L. Mardak       |   | 50  |   | Senior Vice President and Director                                                 |
| David A. Powell      |   | 52  |   | Chief Financial Officer, Principal Financial and Accounting Officer, and Treasurer |
| Patricia A. Katisch  |   | 65  |   | Corporate Secretary                                                                |
| Wayne Emmer          |   | 56  |   | Director                                                                           |
| Gerald Van Dyn Hoven |   | 54  |   | Director                                                                           |
| Thomas Delacy        |   | 46  |   | Director                                                                           |
| Wayne Dalin          |   | 66  |   | Director                                                                           |
| Stephen Webster      |   | 66  |   | Director                                                                           |

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| Name                 |   | Fees Earned or Paid In Cash |   |   | Stock Awards (1) |   |   | Option Awards |   |   | Non-Equity Incentive Plan Compensation |   |   | Nonqualified Deferred Compensation Earnings |   |   | All Other Compensation |   |   | Total  |   |
|----------------------|--------|-----------------------------|--------|--------|------------------|--------|--------|---------------|--------|--------|----------------------------------------|--------|--------|---------------------------------------------|--------|--------|------------------------|--------|--------|--------|--------|
| Wayne Dalin          |   | $                           | 7,350  |   |             | $      | 7,280  |          |   | $      | -                                      |   |   | $                                           | -      |   |                   | $      | -      |   |   | $ | 3,000 |   |   | $ | 17,630 |   |
| Thomas Delacy        |   | $                           | 800    |   |             | $      | 7,280  |          |   | $      | -                                      |   |   | $                                           | -      |   |                   | $      | -      |   |   | $ | 2,000 |   |   | $ | 10,080 |   |
| Wayne Emmer          |   | $                           | 1,000  |   |             | $      | 7,280  |          |   | $      | -                                      |   |   | $                                           | -      |   |                   | $      | -      |   |   | $ | 2,000 |   |   | $ | 10,280 |   |
| Patricia Katisch     |   | $                           | 1,600  |   |             | $      | 7,280  |          |   | $      | -                                      |   |   | $                                           | -      |   |                   | $      | -      |   |   | $ | 2,000 |   |   | $ | 10,880 |   |
| Gerald Van Dyn Hoven |   | $                           | 1,600  |   |             | $      | 7,280  |          |   | $      | -                                      |   |   | $                                           | -      |   |                   | $      | -      |   |   | $ | 2,000 |   |   | $ | 10,880 |   |
| Stephen Webster      |   | $                           | 800    |   |             | $      | 7,280  |          |   | $      | -                                      |   |   | $                                           | -      |   |                   | $      | -      |   |   | $ | 2,000 |   |   | $ | 10,080 |   |

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ITEM 11 - EXECUTIVE COMPENSATION

| Name and Principle Position                                        | Year   |   | Salary  |    |   | Bonus  |   |   | Stock Awards |   |   | Option Awards |   |   | Pension Value and Nonqualified Deferred Compensation Earnings |   |   | Non-Equity Incentive Plan Compensation |   |   | All Other Compensation (1) |   |   | Total  |   |
|--------------------------------------------------------------------|--------|--------|---------|---------|--------|--------|--------|--------|--------------|--------|--------|---------------|--------|--------|---------------------------------------------------------------|--------|--------|----------------------------------------|--------|--------|----------------------------|--------|--------|--------|--------|
| Donald F. Mardak, Principal Executive Officer & President      | 2010   |   |    | 230,000 |   |   |   | 2,500  |         |   |   | --            |   |   |                                                          | --     |   |                                   |   | --     |                       |   |   | --     |   |   |   | 18,323 |   |   |   | 250,823 |   |
| 2009                                                               |   |   | 203,166 |    |   |   | --     |   |         |   | --     |          |   |   | --                                                            |   |   |                                   | --     |   |                       |   | --     |   |   |   | 14,337 |   |   |   | 217,503 |   |
| John E. Strabley, Executive Vice President & Director          | 2010   |   |    | 175,121 |   |   |   | 2,500  |         |   |   |          |   |   |                                                          |   |   |                                   |   |   |                       |   |   |   |   |   |   | 18,687 |   |   |   | 196,308 |   |
| 2009                                                               |   |   | 154,583 |    |   |   | 750    |   |         |   | --     |          |   |   | --                                                            |   |   |                                   | --     |   |                       |   | --     |   |   |   | 6,626 |   |   |   | 161,959 |   |
| Dale L. Mardak, Senior Vice President & Director               | 2010   |   |    | 164,999 |   |   |   | 2,500  |         |   |   |          |   |   |                                                          |   |   |                                   |   |   |                       |   |   |   |   |   |   | 12,564 |   |   |   | 180,063 |   |
| 2009                                                               |   |   | 144,888 |    |   |   | 750    |   |         |   |   |          |   |   |                                                          |   |   |                                   |   |   |                       |   |   |   |   |   | 7,287 |   |   |   | 152,925 |   |
| David A. Powell, Principal Financial Officer & Treasurer (2)   | 2010   |   |    | 115,587 |   |   |   | 2,000  |         |   |   | 6,316         |   |   |                                                          |   |   |                                   |   |   |                       |   |   |   |   |   |   | 16,814 |   |   |   | 140,717 |   |
| Danny W. Weibling, Principal Financial Officer & Treasurer (3) | 2010   |   |    | 53,414  |   |   |   | --     |         |   |   |          |   |   |                                                          |   |   |                                   |   |   |                       |   |   |   |   |   |   | 103,635 |   |   |   | 157,049 |   |
| 2009                                                               |   |   | 167,833 |    |   |   | 500    |   |         |   | --     |          |   |   | --                                                            |   |   |                                   | --     |   |                       |   | --     |   |   |   | 5,394 |   |   |   | 173,727 |   |

| ●   | Automatic renewal clause for additional one-year periods thereafter, unless terminated by either IMSL or the employee.. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------|

| ●   | Eighteen month non compete clause |
|---------------------|-----------------------------------|

| ●   | Confidentiality of trade secrets clause. |
|---------------------|------------------------------------------|

| ●   | An annual auto allowance of $6,000-$18,000, depending on position. |
|---------------------|--------------------------------------------------------------------|

| ●   | Health insurance benefits |
|---------------------|---------------------------|

| ●   | Stock options at the discretion of the CEO. |
|---------------------|---------------------------------------------|

| ●   | Change of control provisions. In the event of a merger, acquisition of IMSL or sale of substantially all of its assets, Donald Mardak's contract provided for compensation equal to two years' salary plus a lump sum payment of $400,000, John Strabley's and Dale Mardak's contracts provided for compensation equal to one year's salary plus a lump sum payment of $200,000. David Powell was to receive one year’s salary plus a lump sum payment of $100,000. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ●   | Salaries of $250,000, $192,000, $185,000, and $135,000, respectively, with increases to be determined annually by the board. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------|

| ●   | Bonuses ranging from $6,000 to $30,000, contingent on meeting pre-tax income goals. |
|---------------------|-------------------------------------------------------------------------------------|

| ●   | Stock options at the discretion of the Board of Directors |
|---------------------|-----------------------------------------------------------|

| ●   | Automatic renewal clause for additional one-year periods thereafter, unless terminated by either IMSL or the employee. |
|---------------------|------------------------------------------------------------------------------------------------------------------------|

| ●   | Twelve month non-compete clause and confidentiality of trade secrets clause. |
|---------------------|------------------------------------------------------------------------------|

| ●   | Annual auto allowances of $6,000-$18,000, depending on position. |
|---------------------|------------------------------------------------------------------|

| ●   | Health insurance benefits. |
|---------------------|----------------------------|

| ●   | Donald Mardak, John Strabley, and Dale Mardak will receive severance payments of two years’ salary and lump sum payments of $400,000, $300,000 and $300,000 respectively in the event of involuntary termination. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | In the event that a new Board of Directors substantially reduces their role in the Company, Donald Mardak, John Strabley and Dale Mardak will receive lump sum payments of $600,000, $400,000 and $400,000 respectively. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | All agreements contain a change of control provision. In the event of a merger, acquisition of IMSL or sale of substantially all of its assets, Donald Mardak's contract provides for compensation equal to two years' salary plus a lump sum payment of $400,000, John Strabley's and Dale Mardak's contracts provide for compensation equal to two years' salary plus a lump sum payment of $300,000. David Powell will receive one year’s salary plus a lump sum payment of $150,000. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;                               |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                  |
| full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications made by us;          |
|                                                                                                                                                                                  |
| compliance with applicable governmental laws, rules and regulations;                                                                                                                  |
|                                                                                                                                                                                  |
| the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and |
|                                                                                                                                                                                  |
| accountability for adherence to the Code of Business Conduct and Ethics                                                                                                               |

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ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

| ●                 each person known by us to beneficially own more than 5% of our common stock; |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ●                 each of our directors and our named executive officers; and                   |
| ●                 all of our directors and executive officers as a group.                       |

|  Name of Beneficial Owner                               |   | Shares beneficially owned as of December 31, 2010 |      |
|--------------------------------------------------------------|--------|---------------------------------------------------|-----------|
|                                                         |   | Number                                            |      |   | Percent |   |
| Donald F. Mardak (1)                                         |   |                                              | 2,964,000 |   |   |   | 28.11 | % |
| Dale L. Mardak (2)                                           |   |                                              | 232,000   |   |   |   | 2.20 | % |
| John E. Strabley (3)                                         |   |                                              | 112,667   |   |   |   | 1.07 | % |
| David A. Powell (4)                                          |   |                                              | 30,521    |   |   |   | 0.29 | % |
| Stephen Webster                                              |   |                                              | 148,001   |   |   |   | 1.40 | % |
| Thomas Delacy                                                |   |                                              | 105,334   |   |   |   | 1.00 | % |
| Gerald Van Dyn Hoven                                         |   |                                              | 83,667    |   |   |   | 0.79 | % |
| Wayne Emmer                                                  |   |                                              | 53,334    |   |   |   | 0.51 | % |
| Wayne Dalin                                                  |   |                                              | 57,577    |   |   |   | 0.55 | % |
| Patricia Katisch                                             |   |                                              | 21,334    |   |   |   | 0.20 | % |
| All directors and executive officers as a group (10 persons) |   |                                              | 3,808,435 |   |   |   | 36.12 | % |
| Other Beneficial Owners                                      |   |                                              |      |   |   |   |   |   |
|  Robert Libauer                                         |   |                                              | 906,502   |   |   |   | 8.60 | % |
| Praetorian Capital Management LLC  (5)             |   |                                              | 1,492,966 |   |   |   | 14.43 | % |

| (1)   | Does not include 112,667 shares held by his wife, Judy E. Mardak, as to which Mr. Mardak disclaims beneficial ownership. All shares owned by Donald F. and Judy E. Mardak are now held in a revocable living trust. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Does not include 1,400 shares held by his wife, Lisa L. Mardak, as to which Mr. Mardak disclaims beneficial ownership. |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

| (3)   | Does not include 213,334 shares held by his wife, Kimberly A. Strabley, as to which Mr. Strabley disclaims beneficial ownership. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------|

| (4)   | 13,855 shares are owned jointly with his wife, Janice L. Powell, in a revocable living trust. |
|-----------------|-----------------------------------------------------------------------------------------------|

| (5)   | Does not include 366,667 shares of exercisable warrants. |
|-----------------|----------------------------------------------------------|

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ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

|                                                        |   | 2010   |   |   | 2009   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Audit Fees                                                  |   | $      | 43,750 |   |   | $      | 63,324 |   |
| Audit-Related Fees                                          |   |   | -      |   |   |   | - |   |
| Tax Fees                                                    |   |   | -      |   |   |   | - |   |
| All Other Fees                                              |   |   | -      |   |   |   | - |   |
|          Total |   | $      | 43,750 |   |   | $      | 63,324 |   |

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ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES

| Exhibit |   |                                                                                                                |
|---------|--------|---------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description                                                                                                         |
| 3.1     |   | Articles of Incorporation of the Registrant *                                                                       |
| 3.2     |   | Articles of Amendment of the Registrant *                                                                           |
| 3.3     |   | Bylaws of the Registrant *                                                                                          |
| 10.1    |   | Lease Agreement, between Glendale Investments, LLC. and the Registrant *                                            |
| 31.1    |   | Certificate of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **         |
| 31.2    |   | Certificate of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **         |
| 32.1    |   | Certificate of the Principal Executive Officer to Section 906 of the Sarbanes-Oxley Act of 2002 **                  |
| 32.2    |   | Certificate of the Principal Financial Officer to Section 906 of the Sarbanes-Oxley Act of 2002 **                  |
|    |   |                                                                                                                |
|    |   | *  Incorporated by reference to the registration statement of the Company on Form SB-2 File No. 333-94597 |
|    |   |                                                                                                                |
|    |   | ** Filed herein                                                                                                     |

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SIGNATURES

| Dated:  March 11, 2011 |   | By:    |  /s/ Donald F. Mardak               |
|----------------------------------|--------|--------|------------------------------------------|
|                             |   |   |                                     |
|                             |   |   | Donald F. Mardak, President              |
|                             |   |   | (Principal Executive Officer)            |
|                             |   |   |                                     |
|                             |   |   |                                     |
| Dated:  March 11, 2011 |   | By:    | /s/ David A. Powell                 |
|                             |   |   |                                     |
|                             |   |   | David A. Powell, Chief Financial Officer |
|                             |   |   | (Principal Financial Officer)            |

| SIGNATURE               |   | TITLE                        |   | DATE           |
|-------------------------|--------|------------------------------|--------|----------------|
|                    |   |                         |   |           |
|                    |   |                         |   |           |
| /s/ Donald F. Mardak    |   | Principal Executive Officer, |   | March 11, 2011 |
|                    |   | President and Director       |   |           |
| Donald F. Mardak        |   |                         |   |           |
|                    |   |                         |   |           |
| /s/ David A Powell |   | Principal Financial Officer, |   | March 11, 2011 |
|                    |   | Principal Accounting Officer |   |           |
| David A Powell          |   |                         |   |           |
|                    |   |                         |   |           |
| /s/ Dale L. Mardak      |   | Senior Vice President        |   | March 11, 2011 |
|                    |   | and Director                 |   |           |
| Dale L. Mardak          |   |                         |   |           |
|                    |   |                         |   |           |
| /s/ John E. Strabley    |   | Executive Vice President     |   | March 11 2011  |
|                    |   | and Director                 |   |           |
| John E. Strabley        |   |                         |   |           |
|                    |   |                         |   |           |
| /s/ Thomas E. Delacy    |   | Director                     |   | March 11, 2011 |
|                    |   |                         |   |           |
| Thomas E. Delacy        |   |                         |   |           |
|                    |   |                         |   |           |
| /s/ Wayne R. Dalin      |   | Director                     |   | March 11, 2011 |
|                    |   |                         |   |           |
| Wayne R. Dalin          |   |                         |   |           |
|                    |   |                         |   |           |

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INTERNATIONAL MONETARY SYSTEMS, LTD.

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|                                                                                    |
|-----------------------------------------------------------------------------------------|
|                                                                                    |
|                                                                                    | Page |
|                                                                                    |   |
|                                                                                    |   |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                 | F-1 |
|                                                                                    |   |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – December 31, 2009 year. | F-2 |
|                                                                                    |   |
| FINANCIAL STATEMENTS                                                                    |   |
|                                                                                    |   |
| Consolidated Balance Sheets                                                             | F-3 |
|                                                                                    |   |
| Consolidated Statements of Operations and Comprehensive Income (Loss)                   | F-4 |
|                                                                                    |   |
| Consolidated Statements of Changes in Stockholders’ Equity                        | F-5 |
|                                                                                    |   |
| Consolidated Statements of Cash Flows                                                   | F-6 - F-7 |
|                                                                                    |   |
| Notes to Consolidated Financial Statements                                              | F-8 - F-29 |

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|                                                                                                                                                                   |   | 2010   |       |   | 2009   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| ASSETS                                                                                                                                                                 |   |
| Current assets                                                                                                                                                         |   |   |       |   |   |   |
|     Cash                                                                                                                                           |   | $      | 804,108    |   |   | $      | 894,396 |   |
|     Restricted cash                                                                                                                                |   |   | 41,829     |   |   |   | 149,682 |   |
|     Marketable securities                                                                                                                          |   |   | 157,014    |   |   |   | 115,110 |   |
|     Accounts receivable, net                                                                                                                       |   |   | 1,075,965  |   |   |   | 1,201,403 |   |
|     Refundable income taxes                                                                                                                        |   |   | --         |   |   |   | 133,000 |   |
|     Earned trade account                                                                                                                           |   |   | 285,282    |   |   |   | 33,561 |   |
|     Prepaid expenses                                                                                                                               |   |   | 184,513    |   |   |   | 103,027 |   |
|           Total current assets                                                                                       |   |   | 2,548,711  |   |   |   | 2,630,179 |   |
| Other assets                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Property and equipment, net                                                                                                                                            |   |   | 727,549    |   |   |   | 921,473 |   |
| Membership lists, net                                                                                                                                                  |   |   | 6,826,464  |   |   |   | 8,153,093 |   |
| Goodwill                                                                                                                                                               |   |   | 3,435,479  |   |   |   | 3,435,479 |   |
| Assets held for investment                                                                                                                                             |   |   | 179,181    |   |   |   | 174,659 |   |
|           Total non-current assets                                                                                   |   |   | 11,168,673 |   |   |   | 12,684,704 |   |
|                                                                                                                                                                   |   |   |       |   |   |   |   |   |
|           Total assets                                                                                               |   | $      | 13,717,384 |   |   | $      | 15,314,883 |   |
| LIABILITIES                                                                                                                                                            |   |
| Current liabilities                                                                                                                                                    |   |   |       |   |   |   |   |   |
|     Accounts payable and accrued expenses                                                                                                          |   | $      | 1,294,213  |   |   | $      | 1,290,464 |   |
|     Credit lines and current portions of long term debt                                                                                            |   |   | 465,120    |   |   |   | 782,608 |   |
|     Current portion of common stock subject to guarantee                                                                                           |   |   | 640,000    |   |   |   | 706,500 |   |
|     Current portion of convertible notes payable, related parties                                                                                  |   |   | --         |   |   |   | 50,000 |   |
|           Total current liabilities                                                                                  |   |   | 2,399,333  |   |   |   | 2,829,572 |   |
| Long-term liabilities                                                                                                                                                  |   |   |       |   |   |   |   |   |
|     Long term debt, net of current portion                                                                                                         |   |   | 1,491,377  |   |   |   | 1,523,445 |   |
|     Common stock subject to guarantee, less current portion                                                                                        |   |   | 178,500    |   |   |   | 620,000 |   |
|     Convertible notes payable to related parties, less current portion                                                                             |   |   | 120,000    |   |   |   | 50,000 |   |
|     Deferred compensation                                                                                                                          |   |   | 290,000    |   |   |   | 275,000 |   |
|     Deferred income taxes                                                                                                                          |   |   | 1,336,904  |   |   |   | 1,679,565 |   |
|           Total long-term liabilities                                                                                |   |   | 3,416,781  |   |   |   | 4,148,010 |   |
|           Total liabilities                                                                                          |   |   | 5,816,114  |   |   |   | 6,977,582 |   |
| Commitments and contingencies                                                                                                                                          |   |   |       |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY                                                                                                                                             |   |
| Preferred stock, $.0001 par value, 20,000,000 authorized, 0 outstanding                                                                                                |   |   | -          |   |   |   | - |   |
| Common stock, $.0001 par value 280,000,000 authorized 10,544,800 and 10,343,467 issued and outstanding December 31, 2010 and December 31, 2009, respectively |   |   | 1,050      |   |   |   | 1,030 |   |
| Paid in capital                                                                                                                                                        |   |   | 13,542,436 |   |   |   | 12,772,904 |   |
| Treasury stock, 904,049 and 646,095 shares, respectively                                                                                                               |   |   | (3,170,571 | )      |   |   | (2,428,422 | ) |
| Accumulated other comprehensive income (loss)                                                                                                                          |   |   | 16,118     |   |   |   | (10,581 | ) |
| Accumulated deficit                                                                                                                                                    |   |   | (2,487,763 | )      |   |   | (1,997,630 | ) |
|           Total stockholders’ equity                                                                           |   |   | 7,901,270  |   |   |   | 8,337,301 |   |
|                                                                                                                                                                   |   |   |       |   |   |   |   |   |
|           Total liabilities and stockholders’ equity                                                           |   | $      | 13,717,384 |   |   | $      | 15,314,883 |   |

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|                                                                                                                                                                                                                   |   | 2010   |       |   | 2009   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                                                                                                                                                                   |   |   |       |   |   |   |
| Gross revenue                                                                                                                                                                                                          |   | $      | 13,704,307 |   |   | $      | 13,968,152 |   |
|                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
| Operating Expenses                                                                                                                                                                                                     |   |   |       |   |   |   |   |   |
|     Employee costs                                                                                                                                                                                 |   |   | 7,949,398  |   |   |   | 7,727,461 |   |
|     Selling, general and administrative                                                                                                                                                                 |   |   | 4,057,286  |   |   |   | 4,069,577 |   |
|     Depreciation and amortization                                                                                                                                                                       |   |   | 1,629,156  |   |   |   | 1,631,809 |   |
|     Unusual items - cost of legal settlements                                                                                                                                                      |   |   | 402,087    |   |   |   | -- |   |
|          Total operating expenses                                                                                                                                    |   |   | 14,037,927 |   |   |   | 13,428,847 |   |
|                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
|      Income (loss) from operations                                                                                                                                                            |   |   | (333,620   | )      |   |   | 539,305 |   |
|                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
| Other income (expense)                                                                                                                                                                                                 |   |   |       |   |   |   |   |   |
|      Interest income                                                                                                                                                                          |   |   | 2,011      |   |   |   | 654 |   |
|      Interest expense                                                                                                                                                                         |   |   | (200,642   | )      |   |   | (228,936 | ) |
|                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
|         Total other income (expense)                                                                                                                                           |   |   | (198,631   | )      |   |   | (228,282 | ) |
|                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
| Income (loss) before income taxes                                                                                                                                                                                      |   |   | (532,251   | )      |   |   | 311,023 |   |
| Income tax (expense) benefit                                                                                                                                                                                           |   |   | 42,118     |   |   |   | (104,206 | ) |
|                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
|      Net income (loss)                                                                                                                                                                        |   |   | (490,133   | )      |   |   | 206,817 |   |
| Components of comprehensive income (loss):                                                                                                                                                                        |   |   |       |   |   |   |   |   |
|    Unrealized gain on available for sale investments                                                                                                                                                    |   |   | 16,685     |   |   |   | 21,938 |   |
|    Foreign currency translation gain                                                                                                                                                                    |   |   | 10,014     |   |   |   | 18,321 |   |
|                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
|       Comprehensive net income (loss)                                                                                                                                                    |   | $      | (463,434   | )      |   | $      | 247,076 |   |
|                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
|      Net income (loss) per                                                                                                                                                                    |   |   |       |   |   |   |   |   |
|       common share – basic                                                                                                                                                    |   | $      | (0.04      | )      |   | $      | 0.02 |   |
|                                  – dilutive |   | $      | (0.04      | )      |   | $      | 0.02 |   |
|  Weighted average common                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
|   shares outstanding – basic                                                                                                                                                                           |   |   | 10,462,465 |   |   |   | 9,731,062 |   |
|                                  – dilutive      |   |   | 10,462,465 |   |   |   | 9,731,602 |   |

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|                                                                                                  |   | 2010   |       |   | 2009   |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                 |   |   |       |   |   |   |
|     Net income (loss)                                                             |   | $      | (490,133   | )      |   | $      | 206,817 |   |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities:              |   |   |       |   |   |   |   |   |
|        Depreciation and amortization                               |   |   | 1,629,156  |   |   |   | 1,631,809 |   |
|        Impairment loss                                             |   |   | --         |   |   |   | 80,370 |   |
|        Stock issued for services                                   |   |   | 172,423    |   |   |   | 96,200 |   |
|        Bad debt expense                                            |   |   | 108,673    |   |   |   | (303,923 | ) |
|        Deferred compensation                                       |   |   | 15,000     |   |   |   | 15,000 |   |
|        Loss on disposal of assets                                  |   |   | 1,024      |   |   |   | - |   |
|      Changes in assets and liabilities                                       |   |   |       |   |   |   |   |   |
|         Accounts receivable                                   |   |   | 16,765     |   |   |   | 503,903 |   |
|         Earned trade account                                  |   |   | (251,721   | )      |   |   | (26,570 | ) |
|         Tax refund receivable                                 |   |   | 133,000    |   |   |   | (84,500 | ) |
|         Deferred tax benefit                                  |   |   | -          |   |   |   | 75,000 |   |
|         Inventory                                             |   |   | -          |   |   |   | 33,839 |   |
|         Prepaid expenses                                      |   |   | (34,647    | )      |   |   | 6,683 |   |
|         Accounts payable and accrued expenses                 |   |   | 3,751      |   |   |   | 601,566 |   |
|         Deferred tax liability                                |   |   | (342,661   | )      |   |   | (359,435 | ) |
|         Trade payable                                         |   |   | -          |   |   |   | (321,476 | ) |
|           Net cash provided by operating activities |   |   | 960,630    |   |   |   | 2,155,283 |   |
|                                                                                                  |   |   |       |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                 |   |   |       |   |   |   |   |   |
|     (Increase) decrease in restricted cash                                        |   |   | 107,853    |   |   |   | (480,379 | ) |
|     Capital expenditures                                                          |   |   | (109,209   | )      |   |   | (152,962 | ) |
|     (Increase) in marketable securities                                           |   |   | (25,219    | )      |   |   | (8,365 | ) |
|     (Increase) in cash surrender value                                            |   |   | (4,523     | )      |   |   | (6,236 | ) |
|           Net cash used by investing activities     |   |   | (31,098    | )      |   |   | (647,942 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                 |   |   |       |   |   |   |   |   |
| Proceeds from notes payable                                                                           |   |   | -          |   |   |   | 125,092 |   |
| Proceeds from convertible notes payable, related parties                                              |   |   | 20,000     |   |   |   | 100,000 |   |
| Payments on credit lines                                                                              |   |   | (20,602    | )      |   |   | (119,443 | ) |
| Payments on notes payable                                                                             |   |   | (236,997   | )      |   |   | (885,176 | ) |
| Payments on convertible notes payable                                                                 |   |   | (91,957    | )      |   |   | (59,608 | ) |
| Proceeds from issuance of stock                                                                       |   |   | -          |   |   |   | 826,500 |   |
| Purchase of treasury stock                                                                            |   |   | (699,860   | )      |   |   | (897,859 | ) |
|  Net cash used by financing activities                                                           |   |   | (1,029,416 | )      |   |   | (910,494 | ) |
|                                                                                                  |   |   |       |   |   |   |   |   |
| Effect of exchange rate changes                                                                       |   |   | 9,596      |   |   |   | 18,322 |   |
|                                                                                                  |   |   |       |   |   |   |   |   |
|  Net increase (decrease) in cash                                                                 |   |   | (90,288    | )      |   |   | 615,169 |   |
|                                                                                                  |   |   |       |   |   |   |   |   |
| Cash at beginning of period                                                                           |   |   | 894,396    |   |   |   | 279,227 |   |
|                                                                                                  |   |   |       |   |   |   |   |   |
| Cash at end of period                                                                                 |   | $      | 804,108    |   |   | $      | 894,396 |   |

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|                                                               |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| SUPPLEMENTAL DISCLOSURES                                           |   |   |    |   |   |   |
|     Cash paid for interest                     |   | $      | 202,737 |   |   | $      | 228,936 |   |
|     Cash paid for income taxes                 |   | $      | 420,761 |   |   | $      | 58,296 |   |
|                                                               |   |   |    |   |   |   |   |   |
| SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:            |   |   |    |   |   |   |   |   |
|    Unrealized net gain (loss) on equity investments |   | $      | 16,685  |   |   | $      | (21,302 | ) |
|                                                               |   |   |    |   |   |   |   |   |
|    Release of common stock guarantees               |   | $      | 658,000 |   |   | $      | 1,301,500 |   |
|                                                               |   |   |    |   |   |   |   |   |
|    Adjustment for stock guarantee agreement         |   | $      | 150,000 |   |   | $      | - |   |
|                                                               |   |   |    |   |   |   |   |   |
|    Common stock issued for prepaid services              |   | $      | 46,840  |   |   | $      | - |   |

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|                                                   |   |                  |   |               |         |   |          |   |   | Accumulated    |   |   |          |           |   |         |   |              |   |               |                 |   |   |          |              |   |         |   | Total  |   |
|--------------------------------------------------------|--------|-----------------------|--------|--------------------|--------------|--------|---------------|--------|--------|---------------------|--------|--------|---------------|----------------|--------|--------------|--------|-------------------|--------|--------------------|----------------------|--------|--------|---------------|-------------------|--------|--------------|--------|-------------|--------|
|                                                   |   | Preferred Stock  |   | Common Stock  |         |   | Paid in  |   |   | Comprehensive  |   |   |          | Deferred  |   |         |   | Accumulated  |   |               | Treasury Stock  |   |   |          | Stockholder  |   |
|                                                   |   | Shares           |   |               | Amount  |   | Shares   |   |   | Amount         |   |   | Capital  |           |   | Income  |   |              |   | Compensation  |                 |   |   | Deficit  |              |   | Shares  |   |        |   | Amount  |   |   |   | Equity  |   |
| Balance December 31, 2008                              |   | -                     |   | $                  | -            |   | 10,270,939    |   | $      | 1,028               |   | $      | 11,702,173    |           | $      | (50,840      | )      |              | $      | (25,467            | )                    |   | $      | (2,204,447    | )                 |   | (387,090     | )      |        | $      | (1,403,216 | ) |   | $ | 8,019,231 |   |
| Foreign currency translation adjustment                |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | 18,321       |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | 18,321 |   |
| Unrealized gain on available for sale securities       |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | 21,938       |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | 21,938 |   |
| Net income for 2009                                    |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | -            |   |              |   | -                  |                 |   |   | 206,817       |              |   | -            |   |        |   | - |   |   |   | 206,817 |   |
| Total comprehensive income                             |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | 247,076 |   |
|                                                   |   |                  |   |               |         |   |          |   |   |                |   |   |          |           |   |         |   |              |   |               |                 |   |   |          |              |   |         |   |        |   |   |   |   |   |   |   |
| Stock issued for services                              |   | -                     |   |               | -            |   | 122,333       |   |   | 7                   |   |   | 69,226        |           |   | -            |   |              |   | (24,000            | )                    |   |   | -             |              |   | 3,000        |   |        |   | 1,500 |   |   |   | 46,733 |   |
| Deferred comp expensed                                 |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | -            |   |              |   | 49,467             |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | 49,467 |   |
| Stock converted to notes                               |   | -                     |   |               | -            |   | (50,000       | )      |   | (5                  | )      |   | (299,995      | )              |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | (300,000 | ) |
| Treasury stock purchases                               |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | (262,005     | )      |        |   | (1,026,706 | ) |   |   | (1,026,706 | ) |
| Stock split adjustments                                |   | -                     |   |               | -            |   | 195           |   |   | -                   |   |   | -             |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | - |   |
| Repurchase of shares under common stock guarantee      |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | 1,301,500     |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | 1,301,500 |   |
| Balance December 31, 2009                              |   | -                     |   | $                  | -            |   | 10,343,467    |   | $      | 1,030               |   | $      | 12,772,904    |           | $      | (10,581      | )      |              | $      | -                  |                 |   | $      | (1,997,630    | )                 |   | (646,095     | )      |        | $      | (2,428,422 | ) |   | $ | 8,337,301 |   |
| Foreign currency translation adjustment                |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | 10,014       |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | 10,014 |   |
| Unrealized gain on available for sale securities       |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | 16,685       |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | 16,685 |   |
| Net income(loss)                                       |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | -            |   |              |   | -                  |                 |   |   | (490,133      | )                 |   | -            |   |        |   | - |   |   |   | (490,133 | ) |
| Total comprehensive income                             |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | (463,434 | ) |
|                                                   |   |                  |   |               |         |   |          |   |   |                |   |   |          |           |   |         |   |              |   |               |                 |   |   |          |              |   |         |   |        |   |   |   |   |   |   |   |
| Stock issued for services and prepaid expenses         |   | -                     |   |               | -            |   | 201,333       |   |   | 20                  |   |   | 194,243       |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | 20,000       |   |        |   | 25,000 |   |   |   | 219,263 |   |
| Adjustment for stock guarantee agreement               |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | (150,000      | )              |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | -            |   |        |   | - |   |   |   | (150,000 | ) |
| Treasury stock purchases                               |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | -             |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | (44,789      | )      |        |   | (41,860 | ) |   |   | (41,860 | ) |
| Return of shares from  litigation settlement |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | 67,289        |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | (79,164      | )      |        |   | (67,289 | ) |   |   | - |   |
| Repurchase of shares under common stock guarantee      |   | -                     |   |               | -            |   | -             |   |   | -                   |   |   | 658,000       |           |   | -            |   |              |   | -                  |                 |   |   | -             |              |   | (154,001     | )      |        |   | (658,000 | ) |   |   | - |   |
| Balance December 31, 2010                              |   | -                     |   |               | -            |   | 10,544,800    |   | $      | 1,050               |   |   | 13,542,436    |           | $      | 16,118       |   |              | $      | -                  |                 |   | $      | (2,487,763    | )                 |   | (904,049     | )      |        | $      | (3,170,571 | ) |   | $ | 7,901,270 |   |

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| NOTE 1 - | INFORMATION ABOUT THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----------|------------------------------------------------------------------------------|

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|                                          |   | 2010   |      |   | 2009   |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Shares issuable upon the                      |   |   |      |   |   |   |
|    conversion of notes payable |   |   | 1,252,481 |   |   |   | 955,621 |   |
| Shares issuable upon the                      |   |   |      |   |   |   |   |   |
|    exercise of warrants        |   |   | 366,667   |   |   |   | 366,667 |   |
|                                          |   |   | 1,619,148 |   |   |   | 1,322,288 |   |

| NOTE 2 - | MARKETABLE SECURITIES |
|---------------|-----------------------|

|                                               |   | 2010   |    |   | 2009   |   |
|----------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Available for sale securities:                     |   |   |    |   |   |   |
| Cost                                               |   | $      | 140,329 |   |   | $      | 107,966 |   |
| Unrealized gain or (loss)                          |   |   | 16,685  |   |   |   | 7,144 |   |
| Marketable equity securities classified as current |   | $      | 157,014 |   |   | $      | 115,110 |   |

|                   |   | 2010 |   |   | 2009   |   |
|------------------------|--------|------|--------|--------|--------|--------|
| Unrealized gain (loss) |   | $    | (1,034 | )      |   | $      | 21,302 |   |

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| NOTE 3 - | INTANGIBLE ASSETS |
|---------------|-------------------|

|                              |   | 2010   |       |   | 2009   |   |
|-----------------------------------|--------|--------|------------|--------|--------|--------|
| Membership lists                  |   | $      | 13,345,448 |   |   | $      | 13,345,448 |   |
| Accumulated amortization          |   |   | (6,518,984 | )      |   |   | (5,192,355 | ) |
|      Net |   | $      | 6,826,464  |   |   | $      | 8,153,093 |   |
|                              |   |   |       |   |   |   |   |   |
| Goodwill                          |   | $      | 3,448,602  |   |   | $      | 3,448,602 |   |
| Accumulated amortization          |   |   | (13,123    | )      |   |   | (13,123 | ) |
|      Net |   | $      | 3,435,479  |   |   | $      | 3,435,479 |   |

| 2011       |   | $      | 1,321,226 |   |
|------------|--------|--------|-----------|--------|
| 2012       |   |   | 1,277,701 |   |
| 2013       |   |   | 1,187,008 |   |
| 2014       |   |   | 1,122,879 |   |
| thereafter |   |   | 1,917,650 |   |
|       |   | $      | 6,826,464 |   |

| NOTE 4 - | PROPERTY AND EQUIPMENT |
|---------------|------------------------|

|                                                |   | 2010   |       |   | 2009   |   |
|-----------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Office furniture, equipment, computers and software |   | $      | 1,904,634  |   |   | $      | 1,906,801 |   |
| Leasehold improvements                              |   |   | 253,814    |   |   |   | 211,202 |   |
|                                                |   |   | 2,158,448  |   |   |   | 2,118,003 |   |
| Accumulated depreciation                            |   |   | (1,430,899 | )      |   |   | (1,196,530 | ) |
|                                                |   | $      | 727,549    |   |   | $      | 921,473 |   |

| NOTE 5 - | DEBT |
|---------------|------|

|                                                                                                                                                                                                                                                        |   |   | 2010    |   |   |   | 2009    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| Credit Lines                                                                                                                                                                                                                                                |   |   |    |   |   |   |    |   |
|                                                                                                                                                                                                                                                        |   |   |    |   |   |   |    |   |
| $500,000 revolving credit line with a financial institution, interest at LIBOR plus 3.24% per annum(3.49% at December 31, 2010), matures in June, 2011, secured by virtually all assets of the Company. This line of credit is guaranteed by Donald Mardak. |   | $      | 203,866 |   |   | $      | 154,420 |   |
| $122,000 unsecured business credit line with a financial institution, with no maturity date and an interest rate of prime plus 6% per annum (11% at December 31, 2010).                                                                                     |   |   | --      |   |   |   | 69,967  |   |
| $50,000 unsecured business credit line with a financial institution, with no maturity date and an interest rate of 4.25% per annum.                                                                                                                         |   |   | 21,917  |   |   |   | 21,998  |   |
|                                                                                                                                                                                                                                                        |   |   |    |   |   |   |    |   |
| Notes Payable                                                                                                                                                                                                                                               |   |   |    |   |   |   |    |   |
|                                                                                                                                                                                                                                                        |   |   |    |   |   |   |    |   |
| Note payable to an individual assumed in connection with the purchase of a trade exchange in 2003. The original note was $207,500 discounted to $161,510 with maturity in February, 2010, and monthly payments of $2,500.                                   |   |   | --      |   |   |   | 4,953   |   |

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| Unsecured note payable for $300,000 issued in 2007 in connection with the acquisition of a trade exchange. Terms include thirty-six monthly payments of $9,267 including interest at 6% per annum beginning January 10, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | --                                  |   |   |   | 106,041                             |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------|--------|--------|--------|-------------------------------------|--------|
| Unsecured note payable for $125,000 issued in 2008 in connection with the acquisition of a trade exchange. Terms included monthly payments of $5,540 and interest at 6% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | --                                  |   |   |   | 43,340                              |   |
| On July 17, 2009, the Company redeemed 18,222 shares of IMS common stock from the former owner of a trade exchange purchased. He was paid $82,000 ($6,000 per month starting August 2009) in cash per the stock guarantee agreement.  The stock was placed in treasury. A discounted note in the amount of $79,907 was issued for the transaction using an imputed interest rate of 4.25% per annum.                                                                                                                                                                                                                                                                                                                                                                                    |   |   | --                                  |   |   |   | 51,119                              |   |
| On August 20, 2009, the Company redeemed 11,111 shares of IMS common stock from the former owner of a trade exchange purchased in 2008. The former owner was paid $50,000 ($4,500 per month starting in September 2009) in cash per the stock guarantee agreement.  The stock was placed in treasury. A discounted note in the amount of $48,944 was issued for the transaction using an imputed interest rate of 4.25% per annum.                                                                                                                                                                                                                                                                                                                                                      |   |   | --                                  |   |   |   | 31,544                              |   |
| A loan from a private investor of $100,000 was made in November, 2009, due in May, 2012, with quarterly interest payments at 10% per annum and principal payments of $5,000 per month beginning in February, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 100,000                             |   |   |   | 100,000                             |   |
| On January 15, 2009, IMS issued notes payable totaling $300,000 in exchange for release of the stock    guarantee on,     and the return of 300,000 shares of IMS stock. The notes were interest only at 4.5% per annum. In December, 2009, the Company and the note holder renegotiated the agreement so that interest is now at 7% per annum and annual principal payments begin January 21, 2011. In November, 2010, the notes were again renewed to pay interest only for the year 2011, with principal payments to begin January, 2012. Principal payments can range from $0 to $100,000 at the discretion of the note holders. If mutually agreed, the Company can issue stock to repay principal at share price equivalent of $6.00 per share |   |   | 300,000                             |   |   |   | 300,000                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |                                |   |   |   |                                |   |
| Convertible Notes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |                                |   |   |   |                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |                                |   |   |   |                                |   |
| $1,200,000 of notes payable, with 60 monthly payments of $15,858 including interest of 10% per annum, and a balloon payment of $746,367 due September 2013. The investor has the option to convert the principle balance to shares of IMS common stock at $1.86 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 1,030,714                           |   |   |   | 1,122,671                           |   |
| Loans of $100,000 and $200,000 were made to IMS by a private investor in 2008. The due dates of the notes were July, 2009 to April, 2010, with quarterly interest payments of 10% per annum. The notes were convertible to 41,667 shares of IMS stock at $2.40 per share, and 62,893 shares of IMS stock at $3.18 per share, at the option of the holder. On July 15, 2009, the $100,000 note was renewed to mature in July, 2011. The conversion agreement was also changed so that the note may now be converted to 151,515 shares of common stock at $.66 per share. On April 22, 2010, the $200,000 note was renewed. It is now due in July, 2012, pay interest at 10% per annum, and, at the lender’s option, is convertible into 266,667 shares at $0.75 per share.                   |   |   |         300,000 |   |   |   |         300,000 |   |
| Total notes payable and long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 1,956,497                           |   |   |   | 2,306,053                           |   |
| Less current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 465,120                             |   |   |   | 782,608                             |   |
| Notes payable and long-term debt, net of current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $      | 1,491,377                           |   |   | $      | 1,523,445                           |   |

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| Common Shares Subject to Guarantees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |    |   |   |   |      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|-----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |    |   |   |   |      |   |
| As part of various prior acquisition agreements which included stock consideration by the Company, the Company guaranteed the stock price of the stock consideration based on the fair market value of the stock at the time of the applicable acquisition agreements.  Accordingly, the guaranteed values of the shares are recorded as a liability on the accompanying financial statements.                                                                                                                                                                                                                                                                                                                                                                      |   |   |    |   |   |   |      |   |
| Guarantee issued in 2002 redeemable in trade dollars at $3.00 per share at the discretion of the guarantee holder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $      | 100,000 |   |   | $      | 125,000   |   |
| Guarantee issued in February 2007 to a member of the board of directors in connection with the purchase of a trade exchange formerly owned by him. A monthly payment of $40,000 is made to a restricted cash account and used to repurchase the stock at a price of $4.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 613,500 |   |   |   | 1,201,500 |   |
| Guarantee issued in connection with the amendment of an Asset Purchase Agreement between IMS and the former owner of a barter exchange acquired in a prior year. The amended agreement guarantees the 50,000 shares of IMS common stock held by the former owner to a price of $3.00 per share.  The former owner has the right to redeem 1,667 shares of IMS common stock for $5,000 in cash, per month, starting March 1, 2010. The guarantee expires on the earlier of March 1, 2013 or fulfillment by the Company of its obligation under the agreement.  As a result of this amendment, the Company reclassified $150,000 from additional paid-in capital to common shares subject to guaranteed (liability) during the period ended March 31, 2010. |   |   | 105,000 |   |   |   | --        |   |
| Total common shares subject to guarantees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 818,500 |   |   |   | 1,326,500 |   |
| Less current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 640,000 |   |   |   | 706,500   |   |
| Long term portion of common shares subject to guarantees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $      | 178,500 |   |   | $      | 620,000   |   |

| Interest-only convertible note issued March 31, 2009, at 8% per annum, due July 10, 2010. At any time the note can be converted into 83,334 shares of IMS common stock at $.60 per share, the fair value of the common stock on the date of the note. Quarterly interest payments started June 30, 2009. This note has been renewed and now has a maturity date of July 10, 2012.                                |   | $      | 50,000  |   |   | $      | 50,000  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| Interest-only convertible note issued March 31, 2009, at 8% per annum, due March 31, 2011.  At any time the note can be converted into 83,334 shares of IMS common stock at $.60 per share, the fair value of the common stock on the date of the note. Quarterly interest payments started June 30, 2009. This note has been renewed on the same terms and now has a maturity date of March 31, 2013. |   |   | 50,000  |   |   |   | 50,000  |   |
| Note payable to an officer and shareholder in the amount of $20,000 issued in June 2010. It is due June 10, 2012 and requires quarterly interest payments at 8% per annum. At the option of the officer, the note may be converted to 23,256 shares of the Company’s common stock at a fixed rate of $.86 per share, the price on the origination date of the note.                                        |   |   | 20,000  |   |   |   | --      |   |
| Total notes payable and long-term debt                                                                                                                                                                                                                                                                                                                                                                           |   |   | 120,000 |   |   |   | 100,000 |   |
| Less:  Current portion                                                                                                                                                                                                                                                                                                                                                                                 |   |   | --      |   |   |   | 50,000  |   |
| Notes payable and long-term debt, net of current portion                                                                                                                                                                                                                                                                                                                                                         |   | $      | 120,000 |   |   | $      | 50,000  |   |

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| 2011   |   |   | 1,105,120 |   |
|--------|--------|--------|-----------|--------|
| 2012   |   |   | 714,401   |   |
| 2013   |   |   | 1,015,476 |   |
| 2014   |   |   | 60,000    |   |
| 2015   |   |   | -         |   |
|   |   | $      | 2,894,997 |   |

| NOTE 6 - | DEFERRED COMPENSATION |
|---------------|-----------------------|

| NOTE 7 - | INCOME TAXES |
|---------------|--------------|

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|                                         |   | Years Ending December 31 |     |
|----------------------------------------------|--------|--------------------------|----------|
|                                         |   | 2010                     |     |   | 2009 |   |
| Federal                                      |   |                     |     |   |   |   |
|       Current  |   | $                        | 272,425  |   |   | $ | 355,016 |   |
|       Deferred |   |                     | (289,809 | ) |   |   | (222,261 | ) |
| State and Local                              |   |                     |     |   |   |   |   |   |
|       Current  |   |                     | 28,119   |   |   |   | 33,711 |   |
|       Deferred |   |                     | (52,853  | ) |   |   | (62,260 | ) |
|                                         |   | $                        | (42,118  | ) |   | $ | 104,206 |   |

|                                                          |   | Years Ended December 31 |     |
|---------------------------------------------------------------|--------|-------------------------|----------|
|                                                          |   | 2010                    |     |   | 2009 |   |
|                                                          |   |                    |     |   |   |   |
| Statutory rate applied to earnings (loss) before income taxes |   | $                       | (212,902 | ) |   | $ | 124,132 |   |
| Increase (decrease) in income taxes resulting from:           |   |                    |     |   |   |   |   |   |
|    Nondeductible impairment loss               |   |                    | -        |   |   |   | 32,148 |   |
|    Change in allowance for doubtful accounts   |   |                    | (31,820  | ) |   |   | (117,844 | ) |
|    Depreciation variances                 |   |                    | 35,206   |   |   |   | 21,785 |   |
|    Audit settlements                           |   |                    | 133,000  |   |   |   | - - |   |
|    Utilization of net operating loss carryover |   |                    | -        |   |   |   | 18,240 |   |
|    Other                                       |   |                    | 34,398   |   |   |   | 25,745 |   |
|                                                          |   | $                       | (42,118  | ) |   | $ | 104,206 |   |

|                                            |    | December 31 |
|-------------------------------------------------|---------|-------------|
|                                            |    | 2010        |   |   | 2009 |
|                                            |    |        |   |   |   |
| Deferred income tax liabilities:                |    |        |   |   |   |
| Primarily difference in tax basis of            |    |        |   |   |   |
|    Membership lists and goodwill | $  | 1,336,904   |   | $  | 1,679,565 |

| NOTE 8 - | STOCKHOLDERS’ EQUITY |
|---------------|----------------------------|

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| NOTE 9 - | RELATED PARTY TRANSACTIONS |
|---------------|----------------------------|

| NOTE 10 - | COMMITMENTS AND CONTINGENCIES |
|----------------|-------------------------------|

|                 |   | 2010   |    |   | 2009   |   |
|----------------------|--------|--------|---------|--------|--------|--------|
| Related party leases |   | $      | 180,947 |   |   | $      | 172,200 |   |
| Office leases        |   |   | 762,383 |   |   |   | 805,790 |   |
| Vehicle leases       |   |   | 18,399  |   |   |   | 15,795 |   |
|                 |   | $      | 961,729 |   |   | $      | 993,785 |   |

| Year ending December 31 |   | Office Facilities |      |   | Vehicles |   |
|-------------------------|--------|-------------------|-----------|--------|----------|--------|
| 2011                    |   | $                 | 421,143   |   |     | $      | 16,284 |   |
| 2012                    |   |              | 307,484   |   |     |   | 7,473 |   |
| 2013                    |   |              | 259,271   |   |     |   | 6,672 |   |
| 2014                    |   |              | 156,650   |   |     |   | 4,448 |   |
| thereafter              |   |              | 279,990   |   |     |   | - |   |
|                    |   | $                 | 1,424,538 |   |     | $      | 34,877 |   |

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| o   | Automatic renewal clause for additional one-year periods thereafter, unless terminated by either IMSL or the employee.. |
|---------------|-------------------------------------------------------------------------------------------------------------------------|

| o   | Eighteen month non compete clause |
|---------------|-----------------------------------|

| o   | Confidentiality of trade secrets clause. |
|---------------|------------------------------------------|

| o   | An annual auto allowance of $6,000-$18,000, depending on position. |
|---------------|--------------------------------------------------------------------|

| o   | Stock options at the discretion of the CEO. |
|---------------|---------------------------------------------|

| o   | Change of control provisions |
|---------------|------------------------------|

| ●   | Salaries of $250,000, $192,000, $185,000, and $135,000, respectively, with increases to be determined annually by the board. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------|

| ●   | Bonuses ranging from $6,000 to $30,000, per individual, contingent on meeting pre-tax income goals. |
|---------------------|-----------------------------------------------------------------------------------------------------|

| ●   | Stock options at the discretion of the Board of Directors |
|---------------------|-----------------------------------------------------------|

| ●   | Automatic renewal clause for additional one-year periods thereafter, unless terminated by either IMSL or the employee. |
|---------------------|------------------------------------------------------------------------------------------------------------------------|

| ●   | Twelve month non-compete clause and confidentiality of trade secrets clause. |
|---------------------|------------------------------------------------------------------------------|

| ●   | Annual auto allowances of $6,000-$18,000, depending on position |
|---------------------|-----------------------------------------------------------------|

| ●   | Health insurance benefit paid for by IMSLs. |
|---------------------|---------------------------------------------|

| ●   | Donald Mardak, John Strabley, and Dale Mardak will receive severance payments of two years’ salary and lump sum payments of $400,000, $300,000 and $300,000 respectively in the event of involuntary termination, payable upon termination. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | In the event that a new Board of Directors substantially reduces their role in the Company, Donald Mardak, John Strabley and Dale Mardak will receive lump sum payments of $600,000, $400,000 and $400,000 respectively. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | All agreements contain a change of control provision. In the event of a merger, acquisition of IMSL or sale of substantially all of its assets, Donald Mardak's contract provides for compensation equal to two years' salary plus a lump sum payment of $400,000, John Strabley's and Dale Mardak's contracts provide for compensation equal to two years' salary plus a lump sum payment of $300,000. David Powell will receive one year’s salary plus a lump sum payment of $150,000. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 11 - | CONTINGENT LIABILITIES |
|----------------|------------------------|

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| NOTE 12 - | SUBSEQUENT EVENTS |
|----------------|-------------------|