<FILENAME>ims1231200410ksb.txt
<PAGE>   1

                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549
                                FORM 10-KSB

Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2004

                             Commission File No. 0-30853

                        INTERNATIONAL MONETARY SYSTEMS, LTD.

                    (Name of small business issuer in its charter)

              Wisconsin                                        39-1924096
   (State or other jurisdiction of                          (I.R.S. Employer
    incorporation or organization)                        Identification Number)

       16901 West Glendale Drive
        New Berlin, Wisconsin                                      53151
 (Address of principal executive offices)                        (Zip Code)

                                  (262) 780-3640
                 (Issuer's telephone number, including area code)

      Securities registered under Section 12(b) of the Exchange Act: None

  Securities registered under Section 12(g) of the Exchange Act: Common Stock,
                          par value $0.0001 per share

Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months(or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
 Yes [X]   No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [X]

Issuer's consolidated revenues for its most recent fiscal year: $4,732,960

     Aggregate market value of voting and non-voting common equity held by
                    non-affiliates as of December 31, 2004:

$15,377,013 (calculated at $.40 per share, closing price on March 29, 2005)

Number of shares outstanding of each of the issuer's classes of common equity
                          as of December 31, 2004:

         38,442,532 shares of Common Stock, par value $0.0001 per share

                    DOCUMENTS INCORPORATED BY REFERENCE - None
<PAGE>   2


                       INTERNATIONAL MONETARY SYSTEMS, LTD.

                            Form 10-KSB Annual Report
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>
PART I ......................................................................  3

   Item 1.  Description of Business .........................................  3
   Item 2.  Description of Property .........................................  6
   Item 3.  Legal Proceedings ...............................................  7
   Item 4.  Submission of Matters to a Vote of Security Holders .............  7

PART II .....................................................................  7

   Item 5.  Market for IMS Common Equity and Related Stockholder Matters ....  7
   Item 6.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations ......................................  8
   Item 7.  Financial Statements ............................................ 10
   Item 8.  Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosures ...................................... 10

PART III .................................................................... 11

   Item 9.   Directors and Executive Officers ............................... 11
   Item 10.  Executive Compensation ......................................... 13
   Item 11.  Security Ownership of Certain Beneficial Owners and Management . 15
   Item 12.  Certain Relationships and Related Transactions ................. 17
   Item 13.  Exhibits List and Reports On Form 8-K .......................... 18
   Item 14.  Controls and Procedures ........................................ 18
   Item 15.  Principal Accountant Fees and Services ......................... 19
</TABLE>





















<PAGE>   3
                                      PART I

   In this report, "IMS", "The Company", "we", "us" and "our" refer to the
Registrant, International Monetary Systems, Ltd., a Wisconsin corporation,
and its subsidiaries.

ITEM 1. DESCRIPTION OF BUSINESS.

Introduction

   International Monetary Systems, Ltd. was incorporated in 1989 under the laws
of the State of Wisconsin. The Company acquires, owns, manages and operates
trade exchanges and other related businesses.

   Trade exchanges, or barter networks, are financial service firms which permit
companies and individuals to exchange goods and services utilizing an electronic
currency known as "trade dollars", the use of which is described below.
Currently, IMS services more than 6,500 barter customers. We have continually
expanded our customer base, principally through enrolling new members in our
existing markets, acquiring other barter exchanges, and by encouraging our
members to increase their trade volume.

   Our corporate headquarters mailing address is 16901 West Glendale Drive,
P.O. Box 510305, New Berlin, Wisconsin 53151, and our telephone numbers are
(800) 559-8515 and (262) 780-3640; the telephone number for our primary
facsimile line is (262) 780-3655. Our Internet addresses are
www.internationalmonetary.com and www.ctebarter.com.

The Modern Barter Industry

   The modern barter industry took shape in its current form in 1969 with the
creation of the first retail barter exchange. Currently there are an estimated
250 barter system firms - including several with multiple licensees - operating
in the United States and Canada. These exchanges provide services that involve
an estimated 200,000 member companies.

   Retail trade exchanges range in size from those operated by a single person
from a small office to large firms operating out of multiple offices located
over a wide area. The 35 largest commercial exchange firms handle approximately
50% of the estimated $700 million in transactions that flow through the barter
system annually. Most trade exchanges are private companies that make extensive
use of computers to track their members, match transactions, and provide
necessary accounting.

   The National Association of Trade Exchanges and the International Reciprocal
Trade Association are the two professional associations most active in the
industry.







                                        3

<PAGE>   4

How Barter Works

   In a typical barter transaction, a member offers to sell products or
services in return for the exchange's trade dollars, typically referenced as
"T$", which are paid to the member by the purchaser in the transaction. For
example, T$100 refers to $100 worth of trade dollars that are used to acquire
a product or service priced at $100 in U.S. currency. If the purchase price is
greater than the amount of earned trade dollars in the buyer's account, the
exchange may grant a trade dollar line of credit to the buyer. Periodically,
each member has to account for any deficit in its trade account just as it
would with a conventional loan or other credit facility.

   As compensation for providing its services, the trade exchange generally
charges a one-time membership fee, monthly maintenance fees and/or a percentage
of the price of each transaction (usually 10% to 12%). These fees are typically
paid by the member to the trade exchange in cash.

   Barter transactions which represent sales revenue are taxable as ordinary
income to the recipient of the trade dollars in the conventional dollar amount
of the trade dollars received, and conversely are deductible as ordinary expense
by a purchaser in the conventional dollar amount of the trade dollars paid.
Members' barter sales are reportable by the trade exchange to the Internal
Revenue Service on Form 1099B.

Advantages and Disadvantages

   Barter offers a number of advantages to those who utilize it. A principle
advantage to trade exchange members is referred to as "barter leverage".
This refers to the fact that the typical barter exchange member is purchasing
a product or service in exchange for its own product or service. Consequently,
each purchase results in a probable sale. And since the actual cash cost of
producing the product or service is typically less than its retail sale price,
a person utilizing barter is actually purchasing for a real cash cost that is
only a fraction of the price of the product or service purchased. In effect,
the barter exchange member buys at wholesale, but sells its own goods or
services at retail. Frequently, the member will charge a higher price for barter
than for cash to cover the charges due to the trade exchange. However, the
benefit to the person bartering for the product or service is still significant
as a result of the purchase being accomplished through barter.

   For example, a trade exchange member may incur a $1,000 cash cost to produce
a product or to purchase it at wholesale. If the member then barters this
product for a good or service priced at $1,500, representing the retail price at
which it is normally sold, the member has effectively bought the good or service
for a cost of only $1,000 in cash. Barter leverage is particularly effective in
the case of products that have become hard to sell. Rather than write down their
value, the producer may be able to secure full value by bartering them through
the trade exchange. Barter leverage works most effectively when trading for
something that is perishable, such as hotel rooms or airline tickets. Once the
hotel room lies vacant or the airline seat is unfilled for a flight, its value
is lost forever. In those cases, exchange of the room or seat in barter offers


                                      4

<PAGE>   5

an effective way to gain value from something that would otherwise have been
rendered worthless. Due to barter leverage, the value of barter to exchange
members will more than likely offset the fees charged by the barter exchange.

   Barter also provides an effective means by which a member may enter new
markets, gain trial usage by potential customers, or increase market share. The
member may well find that he can reach a customer who would not otherwise have
tried his product or service if the full price had to be paid in cash, but who
will try his goods or services, sometimes in large amounts or on extended
terms, when the price is being paid in goods or services of the purchaser in
the form of trade dollars. Because of the need to clear trade dollars over
time, barter exchanges become affinity marketing networks, in which members
seek out opportunities to do business with one another.

   The principal disadvantage of barter is that, in comparison to the general
cash-based economy, a more limited supply of products and services is available.


International Monetary Systems, Ltd.

   International Monetary Systems, Ltd. (IMS) is a holding company that
currently has one operating subsidiary: Continental Trade Exchange, Ltd.,
the CTE barter system which operates in the United States.

The Continental Trade Exchange Barter Network

   As a leader in the barter industry, Continental Trade Exchange has created a
network of more than 6,500 businesses who regularly trade their goods and
services with each other. Through their participation in our barter program,
these companies are provided with an effective revenue management tool which
enables them to identify and capture incremental income, move surplus
inventories and profitably capitalize on their excess capacity. CTE functions
as a third-party record keeper - a status granted by the Internal Revenue
Service - and also manages the barter system.  In addition, we act as a
principal in certain transactions in which we acquire products, fine art, real
estate and other commodities that are either held as investments or sold at a
profit. This allows us to fulfill one of the Company's objectives which is
long-term equity building.

   To provide clients with a flexible and effective means of trading,
Continental Trade Exchange has created an alternative monetary system with its
own unique currency. Upon enrolling in the program, each member is assigned a
barter account (much like a traditional bank account) through which it receives
CTE trade dollars - the medium of exchange for the barter system. Under the
T.E.F.R.A. act of 1982, we are required to report all barter sales to the IRS.
For accounting and tax purposes, the IRS has ruled that trade dollars are
treated the same as cash. Accordingly, the Company may in any period report
significant revenue, profits and increases in net assets from transactions
denominated in CTE trade dollars or other non-cash consideration.





                                        5

<PAGE>   6


   The CTE barter system began operations in July of 1985 and has had a record
of consistent and steady growth. This growth has been generated both internally
and through the acquisition of other barter networks. As we have continued to
add new members to the system, we have witnessed a compounded annual growth rate
of approximately 15% per year for the past decade. During that same period, we
have also acquired twelve independent trade exchange operations. We believe that
the barter industry, much like the banking industry, is ready for a period of
substantial consolidation and, therefore, we intend to continue acquiring
strategically located trade exchanges that we believe will enable us to achieve
and maintain a dominant market position. We believe that a dominant position
within a market gives us better visibility within that market, allows us to
offer a wider range of customer products and services for the benefit of our
clients, and ensures that we will achieve greater economies of scale.

   Two of those acquisitions were consummated during 2004.  In March 2004,
IMS acquired the membership list and assets of California Barter Exchange (CBX),
an independent barter network located in Modesto, California. CBX has been
servicing businesses and professional people in Central Valley of California.
In July 2004, IMS acquired the membership list of Barter Network, Inc. (BNI) an
independent barter network located in Springfield, Virginia. BNI has been
servicing businesses and professional people in the Northern Virginia, Maryland
and Washington DC. With the addition of these two client bases, the Continental
Trade Exchange barter network now boasts a membership roster totaling almost
7,000 businesses.


Other Related Businesses

   In addition to expanding our Continental Trade Exchange, we intend to
acquire other related businesses that synergize with and enhance the barter
network.

   In 2003 we discontinued the operations of JM Graphics and International
Corporate Services, our 4-color printing company. We also sold the assets of
our Canadian barter network office.


ITEM 2. DESCRIPTION OF PROPERTY.

   Our company's executive offices and principal operating facilities occupy
11,000 square feet of leased space located at 16901 West Glendale Drive, New
Berlin, Wisconsin, under a lease from Glendale Investments, LLC., a Wisconsin
limited liability company owned by Donald F. Mardak, Dale L. Mardak and
John E. Strabley, officers and directors of IMS. Rent and other terms of our
lease, which expires September 30, 2006, are believed by us to be comparable
to those available for similar space from unaffiliated, third-party lessors
in the same area. We also lease (1) 1,600 square feet of office space at 2300
Green Bay Road, North Chicago, Illinois, (2) 400 square feet of office space
at 1545 University Avenue, Green Bay, Wisconsin, (3) 1,700 square feet of
office space at 5350 Commerce Blvd., Rohnert Park, CA, (4) 4,200 square feet
at 8938 Cotter Street, Lewis Center, Ohio, (5) 700 square feet of office

                                        6

<PAGE>   7

space at 8385 Brentwood Blvd, Brentwood, CA, (6) 1,850 square feet of office
space at 5446 Pirrone Road, Modesto, California, (7) 800 square feet of
office space at 7420 Alban Station Blvd.. Springfield, VA and (8) 200 square
feet of office space in Santa Monica, CA. The leases on all other properties
aside from the New Berlin, Wisconsin facility are from unaffiliated parties
and, are each on a month-to-month basis or a short term lease of less than 3
years. Upon the expiration of our current leases, we expect that, in each
case, we will be able to obtain either a renewal lease, if desired, or a new
lease at an equivalent or better location.


ITEM 3. LEGAL PROCEEDINGS.

   There are no material pending legal proceedings involving IMS or any of its
properties.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

   No matter was submitted to a vote of our security holders during the fourth
quarter of the fiscal year ended December 31, 2004.


                                    PART II

ITEM 5. MARKET FOR IMS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

   There currently is a limited trading market for our Common Stock. Our initial
public offering was concluded on December 31, 2001, and our Common Stock began
being quoted on the NASD's OTC Bulletin Board on June 25, 2002.  For the past
several months ending on December 31, 2004, the trading volume has averaged
about 15,000 shares per day.

   As of December 31, 2004, the approximate number of holders of record of our
Common Stock was 400.


                                        7


<PAGE>   8

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

   The following commentary should be read in conjunction with the financial
statements and related notes contained elsewhere in this report.

   Results of Operations

   Gross Revenue.  Our consolidated gross revenues consist of income from the
Continental Trade Exchange division in the form of: (a) transaction fees on
all client barter sales; (b) monthly maintenance fees; (c) membership setup
fees; (d) proceeds from the sale of merchandise from our own inventory and of
dining or gift certificates, also known as "scrip"; and (e) other miscellaneous
revenue;  Clients are billed monthly for the fees in the CTE barter system, and
we have an excellent record of collections on our receivables.

   During the calendar year ending on December 31, 2004, CTE processed $37
million in barter transactions which generated revenues of $4,732,960. This
compared to the year 2003 figures of $32 million in barter transactions that
produced revenues of $3,972,386. Total barter transactions for 2004 showed an
increase of 16% over those for year 2003. In the same comparable period,
revenues increased by 19%.

   The increased revenue was a result of the two acquisitions of trade
exchanges in Modesto, CA and Metro Washington, D.C., plus a higher volume of
transactions in the barter network.

   Operating Expenses. For 2004, operating expenses increased by $816,982 or
22% over 2003.

   All additional operating expenses were a result of the acquisitions made
during 2004 along with investor relations expenses for marketing our stock.
And though IMS now has more employees than it had in the past, the personnel
needed to operate the acquired offices has been reduced from the number of
employees that were there under previous management. The result of these
economies of scale was a profit for the year in the trade exchange. In
calendar 2004, the Continental Trade Exchange operation had a net profit of
$519,763. These profits were diluted by investor relations and other
expenses in the International Monetary Systems holding company of $413,469,
many of which were issuances of stock and other non-cash charges. This left
a pretax net income for ongoing operations of $116,294. After deducting
income tax expense, our net income from continuing operations was $91,012.


   Because we have now liquidated the final assets of our discontinued
printing divisions, we took an additional write-off of those assets totaling
$54,766. This loss from discontinued operations left net income of $36,246.




                                        8


<PAGE>   9


   In 2004, payroll expenses increased by $491,109 or 23% over 2003. Occupancy
expenses decreased from $432,176 in 2003 to $284,635 in 2004 or 34%. These
decreases were primarily a result of eliminating rent for the vacated printing
facility. Selling and other expenses increased by $203,011 or 52%. Much of
these costs were the investor relations charges referred to above.

   General and administrative expenses increased by 33% from $818,126 in 2003
to $1,088,529 in 2004.

   Net Income.  For the calendar year ending December 31, 2004, IMS had net
income of $36,246 compared to a loss of $242,259 for the same period in 2003.

   EBITDA. In 2004, earnings before interest, taxes, depreciation and
amortization totaled $426,171. From continued operations only, EBITA was
$494,137.

   Effects of Acquisitions.  During fiscal 2004, we incurred additional
charges associated with the acquisitions of California Barter Exchange
of Modesto, CA and Barter Network of Metro Washington, D.C. These charges,
which resulted from the integration of the operations of those firms into
our business, were not itemized separately. In the future, as we continue to
acquire additional trade exchanges or other businesses, we expect to incur
additional, higher charges in connection with the integration of those
acquired operations.


Financial Condition

   Liquidity; Commitments for Capital Resources; and Sources of Funds

   Our principal source of liquidity from operations has been cash earnings
from membership charges, monthly service fees, transaction processing charges,
and profits from our own trading activities. We anticipate that our principal
source of liquidity during the next year will be cash from operations. We
believe that cash from operations alone will be adequate to provide for our
liquidity needs for the next year and on a continuing basis thereafter.

   We do not currently have any major capital commitments. For example, we
are not currently obligated to purchase any trade exchanges or other
businesses; however, we intend to continue to seek opportunities to acquire
exchanges in the future.

   Changes in Assets and Liabilities

   During 2004, our cash on hand decreased from $113,023 at the end of year
2003 to $83,669 as of December 31, 2003. This slight reduction in cash was
a result of down payments for the two acquired trade exchanges along with
the buyback of shares issued for previous acquisitions. Also, at the end of
2004, we had $241,956 in restricted cash which has been placed in an escrow
account to guarantee the buyback of stock shares that were issued in the
acquisition of Tradecard, Inc.


                                       9

<PAGE>  10


   Accounts receivable increased from 2003 to 2004, by $107,555. Our
inventory for resale decreased by $2,036. Our earned trade account increased
by $51,060. As a result of these changes, our total current assets increased
from $1,215,397 in 2003 to $1,302,280 in 2004. This represents an increase of
7%. Fixed assets increased by $141,416 or 17% from 2003 to 2004. Our total
assets increased $747,253 or 18% from $4,123,107 at December 31, 2003 to
$4,870,360 at December 31, 2004.

   Current liabilities increased by $179,988 from 2003 to 2004. Long-term
debt increased by $129,364 during the same period. As a result, the debt to
equity ratio was increased from 61% in 2003 to 64% in 2004.

   Common stock and paid in capital increased 26% from 2003 to 2004, from
$3,154,638 to $3,968,095, principally as a result of the acquisitions made
during 2004, along with funds raised in several private placements. Our
retained earnings deficit decreased from 2003 to 2004, from $262,956 to
$226,710. Treasury stock increased from $353,201 (764,100 shares after
split) in 2003 to $765,003 (1,613,872 shares) in 2004. The increase was
a result of IMS purchasing 849,772 shares in 2004 for $411,802.


ITEM 7. FINANCIAL STATEMENTS.

   Our consolidated financial statements and related notes, and the report of
Smith & Gesteland LLP, independent auditors, with respect thereto, as described
in the Index to Financial Statements, appear elsewhere in this report at pages
F-1 through F-24.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

   None.























                                        10


<PAGE>   11

                                     PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS

Executive Officers and Directors

   The following table sets forth information concerning our executive officers
and directors, including their names, ages and the positions they held with IMS,
as of December 31, 2004.

<TABLE>
<CAPTION>
Name                      Age       Position
----                      ---       --------
<S>                       <C>       <C>
Donald F. Mardak           68       Chief Executive Officer, President and Director
John E. Strabley, Jr.      41       Executive Vice President and Director
Dale L. Mardak             44       Vice President and Director
Danny W. Weibling          56       Treasurer and Chief Financial Officer
Patricia A. Katisch        59       Corporate Secretary
Wayne Emmer                50       Director
Gerald Van Dyn Hoven       48       Director
Thomas Delacy              40       Director
</TABLE>

   Donald F. Mardak has been the Chief Executive Officer, President and a
director of IMS since our inception in 1988. From 1970 to 1974, Mr. Mardak was
a partner in Learning Unlimited, a division of Hal Leonard Publishing Corp. In
1974, he founded Don Mardak Piano & Organ Centers, Ltd., a chain of retail piano
and organ stores in the Greater Milwaukee area. In 1985, Mr. Mardak founded the
Continental Trade Exchange barter network under the name "Continental Trading
Company", a sole proprietorship. Continental Trading Company was incorporated
in 1988 as Continental Trade Exchange, Ltd. and is now our primary operating
subsidiary. Mr. Mardak is a two-term president of NATE, the National Association
of Trade Exchanges (1995-96 and 1999-2000) and served on the board of directors
of the organization for seven years. NATE is the principal barter industry trade
association.


   John E. Strabley, Jr. has been the Executive Vice President of IMS since 1992
and a director since 1997. Mr. Strabley joined Continental Trade Exchange, Ltd.
as a trade broker in 1991. In 1992, he was promoted to General Manager and, in
August of that year, was appointed as Vice President of Continental Trade
Exchange and IMS. In 1995, Mr. Strabley passed the barter industry certification
examination and was awarded with the industry's highest designation of CTB -
Certified Trade Broker. In 1997, Mr. Strabley became a director of both
Continental Trade Exchange, Ltd. and IMS.







                                     11

<PAGE>  12


   Dale L. Mardak has been Vice President of IMS since 1995, and a director
since 1997. He joined Continental Trade Exchange, Ltd. in 1993 as a trade broker
and was appointed trade director in 1995. In 1997, he was appointed Treasurer
and a director of both Continental Trade Exchange, Ltd. and IMS. In 1999, Mr.
Mardak received the designation of CTB - Certified Trade Broker. Currently, he
is serving a term on the NATE Board of Directors.

   Danny W. Weibling is a Certified Public Accountant and, along with his wife
Lisa, was the former owner of Trade Systems Interchange, the Rohnert Park, CA
barter network that IMS acquired in April of 2001. Mr. Weibling is also the
developer and programmer of TradeWorks, the barter industry's finest software
program, and he served six years as treasurer of the National Association of
Trade Exchanges. He became Treasurer and Chief Financial Officer of IMS in
April of 2001.

   Patricia A. Katisch is currently the owner of Katisch & Associates, a
marketing consulting and public relations firm. From 1998 - 2001, Ms. Katisch
was an Associate Dean in the College of Professional Studies at Marquette
University. Previous to that, she founded and published the Women's Yellow
Pages of Greater Milwaukee and was the producer of the Wisconsin World of
Women Show.

   Wayne Emmer is currently the President of Illinois Cement Co., a position
he has held since August of 1998. Wayne is also a former member of the Parkview
Christian Academy School Board.

   Gerald Van Dyn Hoven is currently the president of the Van Dyn Hoven
Automotive Group. Jerry is a director of American National Bank - Fox Cities,
and is a member of the Board of Trustees of Equitable Reserve Association.

   Thomas Delacy is currently the president and CEO of Independent Inspections,
Inc. Thomas has a degree in geology from the University of Wisconsin - LaCrosse,
and he is a Wisconsin State Certified Building Inspector.

   Donald F. and Judy E. Mardak are husband and wife. John E. Strabley, Jr. is
their son-in-law, and Dale L. Mardak is their son. Kimberly A. Strabley, the
daughter of Donald F. and Judy E. Mardak and the wife of John E. Strabley, Jr.,
is also employed by us as travel director and reciprocal accounts manager.

   All of our directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors. Officers
are elected annually by our board of directors and serve at the discretion of
the board.








                                      12


<PAGE>  13

Compliance with Section 16(a) of the Exchange Act

   Section 16(a) of the Securities Exchange Act of 1934 requires our directors,
executive officers and persons who own more than ten percent of a registered
class of our equity securities to file with the Securities and Exchange
Commission ("SEC") initial reports of ownership and reports of changes in
ownership of our Common Stock and other IMS equity securities. Officers,
directors and beneficial owners of more than ten percent of such equity
securities are required by SEC regulations to furnish us with copies of all
Section 16(a) reports filed by them.

   Based solely upon review of the copies of such reports furnished to us and
written representations that no other reports were required, IMS believes that
there was compliance for the fiscal year ended December 31, 2004 with all
Section 16(a) reports filed by them.


ITEM 10. EXECUTIVE COMPENSATION.

   Summary Compensation Table. The following table provides information
concerning compensation earned by our Chief Executive Officer for services
rendered to us in all capacities during the fiscal years ended December 31,
2002, 2003 and 2004, respectively. We are required to disclose in the table
the compensation we paid to our Chief Executive Officer and to any other
executive officer of our company who was paid in excess of $100,000. These
persons are referred to in this report as "named executive officers". Because
no other executive officer of our company was paid more than $100,000 for any
of our last three fiscal years, only the compensation paid by us to our Chief
Executive Officer is included in the table,

<TABLE>
<CAPTION>
                                       Annual Compensation
                                    -------------------------     All Other
   Name and Principal Positions     Year  Salary($)  Bonus($)  Compensation($)
   ------------------------------   ----  ---------  --------  ---------------
   <S>                              <C>   <C>        <C>       <C>
   Donald F. Mardak, Chief  . . .   2004   135,000      --          ---
    Executive Officer & President   2003   123,000      --          ---
                                    2002   122,000      --          ---
</TABLE>









                                      13


<PAGE>  14


  Options Grants in the Last Fiscal Year.  No options were granted to our
Chief Executive Officer, our only named executive officer, for our fiscal
year ended December 31, 2004.

   In January of 2004, options covering 400,000 and 200,000 shares of common
stock (amounts are post split), exercisable for five years commencing October
1, 2005 at $.15 per share, were granted to Danny W Weibling, Treasurer and CFO
and Alesia Peters, wife of Danny W Weibling, respectively.

Employment Agreements

   On October 4, 2004, we renewed the employment agreements with Donald F.
Mardak, our president, Danny W. Weibling, our Chief Financial Officer and John
E. Strabley, Jr., and  Dale L. Mardak our vice presidents, pursuant to which
these employees will receive annual base salaries of $145,000, $108,000,
$108,000 and $102,000, respectively, plus commissions and bonuses, if any, to
be determined by our chief executive officer at his discretion. Each such
contract is for a term of three years. Each of these contracts will be
automatically extended for additional one-year periods thereafter, unless
terminated by either IMS or the employee. Each agreement further provides
that, for eighteen months after the termination thereof, the employee will
not, either directly or indirectly, compete with the businesses of
International Monetary Systems, Ltd. Each employee also agrees to maintain
the confidentiality of trade secrets and other information concerning IMS.

   Each of the agreements entitle them to receive stock options at the
discretion of Management. All agreements contain a change of control provision.
In the event of a merger, acquisition of IMS 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 $300,000, Danny Weibling's, John Strabley's
and Dale Mardak's contracts provide for compensation equal to one year's salary
plus a lump sum payment of $150,000.



                                        14

<PAGE>  15

Limitation of Liability and Indemnification

   Our bylaws provide for the elimination, to the fullest extent permissible
under Wisconsin law, of the liability of our directors to us for monetary
damages. This limitation of liability does not affect the availability of
equitable remedies such as injunctive relief. Our bylaws also provide that we
shall indemnify our directors and officers against certain liabilities that may
arise by reason of their status for service as directors or officers, other than
liabilities arising from certain specified misconduct. We are required to
advance their expenses incurred as a result of any proceeding against them for
which they could be indemnified, including in circumstances in which
indemnification is otherwise discretionary under Wisconsin law. At the present
time, there is no pending litigation or proceeding involving a director,
officer, employee or other agent of our company in which indemnification would
be required or permitted. We are not aware of any threatened litigation or
proceeding which may result in a claim for such indemnification.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

   The following table sets forth certain information with respect to the
beneficial ownership of our common stock, as of December 31, 2004, by:

   -  each person known by us to beneficially own more than 5% of our common
      stock;

   -  each of our directors and our sole named executive officer; and

   -  all of our directors and executive officers as a group.

   We believe that, subject to applicable community and marital property laws,
the beneficial owners of our common stock listed below have sole voting and
dispositive power with respect to such shares.



















                                       15


<PAGE>  16

<TABLE>
<CAPTION>
                                                           Shares beneficially owned
                                                            as of December 31, 2004
                                                           -------------------------
Name of Beneficial Owner                                       Number      Percent
------------------------------------                        -----------    -------
<S>                                                         <C>            <C>
Donald F. Mardak (1) ...................................     17,546,000     45.64%

Dale L. Mardak (2) .....................................      1,392,000      3.62%

John E. Strabley, Jr. (3) ...............................       636,000      1.65%

Danny W Weibling (4) ....................................       193,000      0.50%

Gerald Van Dyn Hoven  ...................................       378,000      0.98%

Wayne Emmer  ............................................       210,000      0.55%

Thomas Delacy ...........................................       510,000      1.33%

Patricia Katisch  ........................................       18,000      0.05%

All directors and executive officers
   as a group (7 persons).................................   20,883,000     54.32%
</TABLE>

(1) Does not include 540,000 shares held by his wife, Judy E. Mardak, as to
    which Mr. Mardak disclaims beneficial ownership. Does not include 324,000
    shares of exercisable options.

*   All shares owned by Donald F. and Judy E. Mardak are how held in a
    revocable living trust.

(2) Does not include 8,400 shares held by his wife, Lisa L. Mardak, as to which
    Mr. Mardak disclaims beneficial ownership. Does not include 264,000 shares
    of exercisable options.

(3) Does not include 1,200,000 shares held by his wife, Kimberly A. Strabley,
    as to which Mr. Strabley disclaims beneficial ownership. Does not include
    264,000 shares of exercisable options.

(4) Does not include 150,000 shares held by his wife, Alesia Peters, as to
    which Mr. Weibling disclaims beneficial ownership. Does not include
    580,000 shares of exercisable options and 300,000 shares subject to
    options exercisable within 1 year.






                                        16


<PAGE>  17

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

   Certain Transactions

   We currently lease our executive offices and principal operating facilities,
consisting of 11,000 square feet of space located at 16901 West Glendale Drive,
New Berlin, Wisconsin, from Glendale Investments, LLC., a Wisconsin limited
liability company owned by Donald F. Mardak, Dale L. Mardak and John E.
Strabley, Jr., officers and directors of our company, under a triple net lease
which commenced in October, 2002 and expires September 30, 2006. For the fiscal
year ended December 31, 2003, we made rental payments of $72,000 and in the
fiscal year ended December 31, 2004, we made rental payments of $68,000 to
Glendale Investments, LLC. We believe that the rental payments required and
other terms of our lease are comparable to those available for similar space
from unaffiliated, third-party lessors in the area.

   Conflicts of Interest

   Certain potential conflicts of interest are inherent in the relationships
between our affiliates and us. From time to time, one or more of our affiliates
may form or hold an ownership interest in and/or manage other businesses both
related and unrelated to the type of business that we own and operate. These
persons expect to continue to form, hold an ownership interest in and/or manage
additional other businesses which may compete with ours with respect to
operations, including financing and marketing, management time and services and
potential customers. These activities may give rise to conflicts between or
among the interests of IMS and other businesses with which our affiliates are
associated. Our affiliates are in no way prohibited from undertaking such
activities, and neither we nor our shareholders will have any right to require
participation in such other activities.

   Further, because we intend to transact business with some of our officers,
directors and affiliates, as well as with firms in which some of our officers,
directors or affiliates have a material interest, including for example the
lease agreement described above under "Certain Relationships and Related
Transactions - Certain Transactions", potential conflicts may arise between the
respective interests of IMS and these related persons or entities. We believe
that such transactions will be effected on terms at least as favorable to us as
those available from unrelated third parties.

   With respect to transactions involving real or apparent conflicts of
interest, we have adopted policies and procedures which require that (1) the
fact of the relationship or interest giving rise to the potential conflict be
disclosed or known to the directors who authorize or approve the transaction
prior to such authorization or approval, (2) the transaction be approved by a
majority of our disinterested outside directors and (3) the transaction be fair
and reasonable to IMS at the time it is authorized or approved by our directors.





                                        17


<PAGE>  18


ITEM 13. EXHIBITS LIST AND REPORTS ON FROM 8-K

(a) Exhibits:

<TABLE>
<CAPTION>

   Exhibit
   Number                Description
   ------                -----------
<S>        <C>
     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 *
</TABLE>

             *  Incorporated by reference to the registration statement of the
                company on Form SB-2 File No. 333-94597

(b) Reports on Form 8-K

      Report 8-K on private investor funding was filed on March 21, 2005.


ITEM 14. CONTROLS AND PROCEDURES.

   (a) Evaluation of disclosure controls and procedures. An evaluation was
performed under the supervision and with the participation of the Company's
management, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), of the effectiveness of the design and operation of the
Company's disclosure controls and procedures within 90 days before the filing
date of this Form 10-KSB. Based on their evaluation, the Company's principal
executive officer and principal financial officer have concluded that the
Company's disclosure controls and procedures (as defined in Rules 13a-14(c)
and 15d-14(c) under the Securities Exchange Act of 1934 (the "Exchange Act"))
are effective to ensure that information required to be disclosed by the C
company in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. (b) Changes in internal
controls. There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect internal controls
subsequent to their evaluation. There were no significant deficiencies or
material weaknesses, and therefore there were no corrective actions taken.







                                       18


<PAGE>   19


ITEM 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

   The aggregate fees billed for our fiscal years ended December 31, 2004 and
2003 by Smith & Gesteland, LLP, our principal accountants in 2004 and 2003
respectively, for the audit of our financial statements for each of those years
and the review of our financial statements included in our Quarterly Reports on
Form 10-QSB during those financial years were $34,000 and $29,000 respectively.



                                   SIGNATURES

   Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                           INTERNATIONAL MONETARY SYSTEMS, LTD.



     Dated:  March 29, 2005                  By: /s/ DONALD F. MARDAK
                                             -----------------------------------
                                                 Donald F. Mardak, President
                                                 (Principal Executive Officer)




     Dated:  March 29, 2005                  By: /s/ DANNY W. WEIBLING, CPA
                                             -----------------------------------
                                                 Danny W. Weibling, Treasurer
                                                 (Principal Financial Officer)















                                      19


<PAGE>   20


   In accordance with the requirements of the Exchange Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates stated.


          SIGNATURE                       TITLE                       DATE

  /s/ DONALD F. MARDAK           Chief Executive Officer,        March 29, 2005
-----------------------------      President (Principal
      Donald F. Mardak              Executive Officer)
                                       and Director

  /s/ DALE L. MARDAK                 Vice President              March 29, 2005
-----------------------------         and Director
      Dale L. Mardak


  /s/ JOHN E. STRABLEY, JR.      Executive Vice President        March 29, 2005
-----------------------------         and Director
      John E. Strabley, Jr.
































                                        20

<PAGE>  21

CERTIFICATION PURSUANT TO RULE 13-A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Donald F Mardak, certify that:

1. I have reviewed this annual report on Form 10-KSB of International Monetary
Systems, LTD;

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

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

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

   a. designed such disclosure controls and procedures to ensure the material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

   b. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

   c. presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date.

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

   a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

   b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:      March 29, 2005          /s/ Donald F. Mardak
           --------------          ---------------------------------------------
                                       Donald F. Mardak, President
                                       (Chief Executive Officer)

                                        21

<PAGE>  22

CERTIFICATION PURSUANT TO RULE 13-A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Danny W. Weibling, certify that:

1. I have reviewed this annual report on Form 10-KSB of International Monetary
Systems, LTD;

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

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

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

   a. designed such disclosure controls and procedures to ensure the material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

   b. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

   c. presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date.

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

   a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

   b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:      March 29, 2005          /s/ Danny W. Weibling
           --------------         ----------------------------------------------
                                       Danny W. Weibling, Treasurer
                                       (Chief Financial Officer)

                                        22

<PAGE>  23



                      INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
<CAPTION>
                                                                        Page
                                                                        ----
<S>                                                                     <C>
Report of Independent Certified Public Accountants ...................  F-1

Financial Statements:

Consolidated Balance Sheets ..........................................  F-2

Consolidated Statements of Income ....................................  F-4

Consolidated Statements of Changes in Stockholder Equity .............  F-5

Consolidated Statements of Cash Flows ................................  F-6

Notes to Consolidated Financial Statements ...........................  F-8
</TABLE>






























<PAGE>  24


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Shareholders and Board of Directors
International Monetary Systems, Ltd.
New Berlin, Wisconsin


   We have audited the accompanying consolidated balance sheets of International
Monetary Systems, Ltd., and subsidiaries as of December 31, 2004 and 2003, and
the related consolidated statements of income, changes in stockholder equity,
and cash flows for each of the two years in the period ended December 31, 2004.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

   We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly
the consolidated financial position of International Monetary Systems, Ltd.,
and subsidiaries at December 31, 2004 and 2003, and the results of its
operations and cash flows for each of the two years in the period ended
December 31, 2004, in conformity with accounting principles generally
accepted in the United States of America.


Madison, Wisconsin                              /s/ SMITH & GESTELAND, LLP
February 16, 2005                                   SMITH & GESTELAND, LLP













                                      F-1


<PAGE>  25

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                           CONSOLIDATED BALANCE SHEETS
                                   December 31


<TABLE>
<CAPTION>
                                                           2004          2003
                                                        ---------     ---------
<S>                                                     <C>           <C>
             ASSETS

Current assets
   Cash                                                $   86,669    $  113,023
   Accounts receivable, net of allowance for doubtful
     accounts of $184,472 in 2004 and $158,774 in 2003    852,825       745,270
   Earned trade account                                   217,021       164,961
   Inventory                                              134,636       136,672
   Prepaid expenses                                        14,129         5,552
   Current portion of notes receivable                                   49,919
                                                        ---------     ---------
        Total current assets                            1,302,280     1,215,397
                                                        ---------     ---------
Property and equipment
   Leasehold improvements                                  25,578         9,652
   Furniture and equipment                                939,224       813,734
                                                        ---------     ---------
                                                          964,802       823,386

      Less accumulated depreciation                      (552,637)     (424,654)
                                                        ---------     ---------
        Net property and equipment                        412,165       398,732
                                                        ---------     ---------
Other assets
   Restricted cash                                        241,956       301,230
   Notes receivable                                        24,398        49,736
   Membership lists                                     2,096,973     1,363,109
   Goodwill                                               535,478       535,478
   Investment in real estate                               31,000        43,000
   Other                                                  111,475        92,425
   Deferred income taxes                                  114,635       124,000
                                                        ---------     ---------
        Total other assets                              3,155,915     2,508,978
                                                        ---------     ---------
        Total assets                                   $4,870,360    $4,123,107
                                                        =========     =========
</TABLE>

      The accompanying notes are an integral part of the financial statements.


                                      F-2




<PAGE>  26

<TABLE>
<CAPTION>
                                                           2004          2003
                                                        ---------     ---------
<S>                                                     <C>           <C>
             LIABILITIES

Current liabilities
   Accounts payable                                    $  143,021    $   70,781
   Payroll and payroll taxes                              163,652       140,239
   Sales taxes                                             19,158        26,177
   Other accrued expenses                                                21,000
   Current portion of long-term debt                      559,519       447,165
                                                        ---------     ---------
        Total current liabilities                         885,350       705,362
                                                        ---------     ---------
Long-term liabilities
   Capital leases                                                         1,720
   Notes payable                                          744,390       684,613
   Notes payable to related parties                       193,243       128,886
   Deferred compensation payable                           70,995        64,045
                                                        ---------     ---------
        Total long-term liabilities                     1,008,628       879,264
                                                        ---------     ---------
        Total liabilities                               1,893,978     1,584,626
                                                        ---------     ---------
             STOCKHOLDER EQUITY

Common stock, $.0001 par value                              4,006         1,832

Paid in capital                                         3,964,089     3,152,806

Treasury stock                                           (765,003)     (353,201)

Retained earnings (deficit)                              (226,710)     (262,956)
                                                        ---------     ---------
        Total stockholder equity                        2,976,382     2,538,481
                                                        ---------     ---------
        Total libilities and stockholder equity        $4,870,360    $4,123,107
                                                        =========     =========
</TABLE>













                                      F-3


<PAGE>  27

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                        CONSOLIDATED STATEMENTS OF INCOME
                         For the Years Ended December 31

<TABLE>
<CAPTION>
                                                       2004            2003
                                                   -----------     -----------
<S>                                                <C>             <C>
Income
  Gross revenue                                    $ 4,732,960     $ 3,972,386


Expenses

  Payroll, related taxes and employee benefits       2,650,979       2,159,870

  General and administrative                         1,088,529         818,126

  Occupancy                                            284,635         432,176

  Selling                                              414,978         186,457

  Other                                                177,545         203,055
                                                   -----------     -----------
        Total expenses                               4,616,666       3,799,684
                                                   -----------     -----------
Income before income taxes                             116,294         172,702

Income tax expense                                      25,282          68,800
                                                   -----------     -----------
        Net income from continuing operations           91,012         103,902

Loss on discontinued operations net of tax benefit
  of $13,200 and $192,000                              (54,766)       (346,161)
                                                   -----------     -----------
        Net income (loss)                          $    36,246     $  (242,259)
                                                   ===========     ===========
        Basic earnings per common share            $       -       $     (0.01)

        Diluted earnings per common share                  -             (0.01)

</TABLE>

      The accompanying notes are an integral part of the financial statements.



                                      F-4





<PAGE>  28

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER EQUITY
                         For the Years Ended December 31

<TABLE>
<CAPTION>
                                        Common Stock                        Retained         Treasury Stock           Total
                                   ------------------------     Paid in     Earnings    ------------------------   Stockholder
                                       Shares       Amount      Capital     (Deficit)      Shares      Amount        Equity
                                   ------------  ----------   -----------   ---------   ----------   -----------   -----------
<S>                                <C>           <C>          <C>           <C>         <C>          <C>           <C>
Balance December 31, 2002
As previously reported               16,047,920    $ 1,605     $2,234,149   $   4,700     (268,306)  $ (268,306)   $ 1,972,148
Adjusted to accrue vacation pay                                               (25,397)                                 (25,397)
                                     ----------    -------     ----------   ---------   ----------   ----------    -----------
As adjusted                          16,047,920      1,605      2,234,149     (20,697)    (268,306)    (268,306)     1,946,751
                 2003
----------------------------------
Net loss for 2003                                                            (242,259)                                (242,259)
Stock offering                        1,909,649        191        573,093                                              573,284
Shares issued in conjunction with
  acquisition of businesses             363,600         36        345,564                                              345,600
Treasury stock purchases                                                                  (113,744)     (84,895)       (84,895)
                                     ----------    -------     ----------   ---------   ----------   ----------    -----------
Balance December 31, 2003            18,321,169      1,832      3,152,806    (262,956)    (382,050)    (353,201)     2,538,481

                 2004
----------------------------------
Net income for 2004                                                            36,246                                   36,246
2 for 1 stock split on 4/5/04        18,779,720      1,878         (1,878)                (705,350)
Stock offering                        2,052,245        206        463,251                                              463,457
Shares issued in conjunction with
  acquisition of businesses             903,270         90        349,910                                              350,000
Treasury stock purchases                                                                  (526,472)    (411,802)      (411,802)
                                     ----------    -------     ----------   ---------   ----------   ----------    -----------
Balance December 31, 2004            40,056,404    $ 4,006     $3,964,089   $(226,710)  (1,613,872)  $ (765,003)   $ 2,976,382
                                     ==========    =======     ==========   =========   ==========   ==========    ===========
</TABLE>








      The accompanying notes are an integral part of the financial statements.


                                      F-5
<PAGE>  29

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         For the Years Ended December 31

<TABLE>
<CAPTION>
                                                               2004           2003
                                                            ----------     ----------
<S>                                                         <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                         $  36,246      $(242,259)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities
       Depreciation and amortization                          264,991        248,476
       Loss on disposal or impairment of segment units                       521,238
       Loss on disposal of real estate                         12,000
       Bad debts provision                                     25,698          5,484
       Deferred income taxes                                    9,365       (124,000)
       Stock issued for exchange for services                 250,320
       Changes in assets and liabilities
          Accounts receivable                                 (84,539)        85,258
          Earned trade account                                (72,060       (205,346)
          Inventory                                             2,036          9,580
          Prepaid expenses                                     (8,577)        (5,552)
          Other assets                                        (19,050)       (14,914)
          Accounts payable                                     72,240       (232,802)
          Payroll and payroll taxes                            23,413         45,120
          Accrued rent                                        (21,000)         4,500
          Sales taxes                                          (7,019)        14,364
          Accrued income taxes                                               (10,350)
          Deferred compensation plan                            6,950         10,960
                                                            ---------      ---------
        Net cash provided by operating activities             491,014        109,757
                                                            ---------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Cash withdrawn (deposited) in escrow account                 59,274       (221,183)
  Business acquisitions                                      (100,000)       (24,000)
  Capital expenditures                                        (98,415)      (157,792)
                                                            ---------      ---------
        Net cash used in investing activities                (139,141)      (402,975)
                                                            ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net repayment of debt                                      (320,456)      (168,508)
  Net repayment for capital leases                             (1,720)        (1,819)
  Net borrowings from related parties                          64,357         65,512
  Repayment of notes receivable                                75,257
  Treasury stock acquisitions                                (411,802)       (84,895)
  Proceeds from issuance of stock                             213,137        573,284
                                                            ---------      ---------
        Net cash provided by (used in)
          financing activities                               (381,227)       383,574
                                                            ---------      ---------
        Net increase (decrease) in cash                       (29,354)        90,356

Cash at beginning of period                                   113,023         22,667
                                                            ---------      ---------
Cash at end of period                                       $  83,669      $ 113,023
                                                            =========      =========

</TABLE>

      The accompanying notes are an integral part of the financial statements.

                                      F-6
<PAGE>  30

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         For the Years Ended December 31
                                   continued

<TABLE>
<CAPTION>
                                                                2004           2003
                                                             ----------     ----------
<S>                                                          <C>            <C>

SUPPLEMENTAL DISCLOSURES:
  Cash paid for interest                                    $  118,269    $   112,115
  Cash paid for income taxes                                     2,717         11,150

SCHEDULE OF NONCASH INVESTING AND
  FINANCING ACTIVITIES:
    Acquisitions:
      Fair value of assets acquired                         $  962,587    $   722,353
      Less: Liabilities assumed                               (492,587)      (332,753)
            Stock issued                                      (350,000)      (345,600)
            Trade dollars paid                                 (20,000)       (20,000)
                                                            ----------    -----------
      Net cash paid for acquisitions                        $  100,000    $    24,000
                                                            ==========    ===========

  Stock issued for services                                 $  163,770    $   243,400
  Treasury stock for trade dollars                              60,000
  Notes receivable received from the sale of assets                            99,655

</TABLE>










      The accompanying notes are an integral part of the financial statements.



                                      F-7

<PAGE>  31

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

          A.   ORGANIZATION

               International Monetary Systems, Ltd. (IMS - the company), is a
               holding company located in New Berlin, Wisconsin with one
               wholly-owned operating subsidiary. Continental Trade Exchange,
               Ltd. (CTE) operates a barter trade exchange business in the
               United States. Previously, Continental Trade Exchange of Canada,
               Ltd. (CTE-Canada) operated a barter trade exchange business
               primarily in Ontario, Canada,  JM Graphics, Inc. (JMG) operated
               a pre-press company in New Berlin, Wisconsin and International
               Corporate Services, Inc. (ICS) operated a printing company,
               doing business as Imagers Ink in Menomonee Falls, Wisconsin.
               During 2003, the operations of CTE-Canada, JMG and ICS were
               discontinued.

          B.   ACQUISITIONS

               In March 2003, IMS purchased the assets of BarterNet; a barter
               trade exchange located in Brentwood, California for $720,000
               payable $22,000 in cash, $370,400 in notes, and $327,600 in
               stock. The acquisition included $545,000 for membership lists.

               In June 2003, CTEL purchased the assets of TradeMaster; a barter
               trade exchange located in Louisville, Kentucky for $40,000
               payable $2,000 in cash, $20,000 in trade, and $18,000 in stock.
               The acquisition included $31,000 for membership lists.

               On March 29, 2004, IMS purchased selected assets and liabilities
               of California Barter Exchange of Modesto, California for
               $600,000, discounted to a present value of $580,414. Terms of
               the acquisition included a down payment of $50,000, in three
               payments of $20,000, $10,000 and $20,000 paid in March, April
               and May of 2004, and 32 monthly payments of $6,000 and a final
               payment of $8,000 beginning in May 2004, including interest of
               $19,586 at 7.5%. IMS assumed a note payable to Dell Financial
               Services. IMS issued 350,000 shares of its common stock with a
               guarantee of $350,000

               The assets acquired include $48,714 for accounts receivable,
               $43,000 for furniture and equipment, and $500,000 for the
               membership list.

               On July 1, 2004, IMS purchased selected assets and liabilities
               of Barter Network, Inc of Springfield, Virginia for $370,873.
               Terms of the acquisition included a down payment of $50,000 in
               cash and $20,000 in trade dollars.  553,270 shares of IMS stock
               were issued and secured with a note payable of $250,000. IMS
               assumed liabilities in the amount of $50,873.

               The assets acquired included the membership list and client base
               booked at $370,873.
                                       F-8

<PAGE>  32

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -  INFORMATION ABOUT THE COMPANY AND SUMMARY OF SIGNIFICANT
               ACCOUNTING POLICIES (continued)

          C.   RESTRICTED CASH

               To facilitate the purchase of Tradecard, Inc., IMS agreed to
               deposit $20,000 per month into an escrow account for the first
               thirty-five months following the closing.  If during the thirty-
               six months following closing, the sellers received a total of
               $1,050,000 through a combination of deposits to the escrow
               account and sale of stock, the agreement for deposits will end.
               The cash balance in the escrow account is shown as restricted
               cash included in other assets.


          D.   OPERATIONS OF BARTER EXCHANGES

               Barter exchanges not only operate with traditional cash currency,
               but they can also issue trade credits, which constitute their own
               unique currency. Trade exchanges permit members/clients to barter
               their goods and services with other clients in several ways. Some
               sell their products to the barter network directly, others issue
               trade certificates that are redeemable for their goods or
               services, and the balance transact their barter business through
               electronic data transmission as authorizations are provided
               through a twenty-four hour authorization system. In return, the
               selling clients receive trade credits from the exchange, which
               may be used to purchase services or products from other members
               in the exchange.

               E.   REVENUE SOURCES

               The company and its subsidiaries earn revenues in both
               traditional dollars (cash income) and in trade dollars.  Cash
               income is earned through membership set-up fees assessed when a
               member joins, through service fees generated when clients spend
               and/or generate their trade dollars to purchase and/or sell
               goods and services through the exchange to/from other members,
               through monthly maintenance fees, and through sales for cash of
               products originally purchased by IMS with its own trade dollars.

               Trade profits are generated in various ways.  Monthly maintenance
               fees are assessed in trade dollars as well as in cash.
               Transaction fees are assessed in trade dollars rather than cash
               for clients in certain industries such as radio and TV stations.
               Occasionally the company will accept a favorable trade ratio in
               lieu of a cash service fee. The company also has an opportunity
               to create additional trade profits by purchasing wholesale,
               closeout, and liquidation merchandise for cash, and the
               liquidating of such products through the trade program.

               Earned trade dollars are used by the company to purchase various
               goods and services required in its operations.  All barter
               transactions are reported at the estimated fair value of the
               products or services received.


                                      F-9

<PAGE>  33

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -  INFORMATION ABOUT THE COMPANY AND SUMMARY OF SIGNIFICANT
               ACCOUNTING POLICIES (continued)


          F.   PRINCIPLES OF CONSOLIDATION

               The consolidated financial statements include the accounts of the
               company and its subsidiaries.  Significant intercompany accounts
               and transactions have been eliminated in consolidation.

          G.   USE OF ESTIMATES

               The preparation of financial statements in conformity with
               generally accepted accounting principles requires management to
               make estimates and assumptions that affect the amounts reported
               in the financial statements and accompanying notes.  Actual
               results could differ from those estimates.

          H.   RECEIVABLES AND ALLOWANCE FOR BAD DEBTS

               Accounts receivable are stated at face value, net of the
               allowance for bad debts.  Finance charges on receivables are
               calculated using the simple interest method on daily balances of
               the principal amount outstanding.

               The allowance for bad debts is maintained at a level that is
               management's best estimate of probable bad debts incurred as of
               the balance sheet date.  Management's determination of the
               adequacy of the allowance is based on an evaluation of the
               receivables, past collection experience, current economic
               conditions, volume, growth and composition of the receivables,
               and other relevant factors.  The allowance is increased by
               provisions for bad debts charged against income.

          I.   INVENTORY

               Inventory consists primarily of fine art and other merchandise
               which the company intends to sell.  Inventory is carried at the
               lower of actual cost of acquisition or fair value.

          J.   EARNED TRADE ACCOUNT

               As part of the operations of the subsidiaries, trade dollars are
               earned which can be and are used to purchase goods and services.
               This account is increased principally for service, membership and
               transaction fees, and is decreased by the company's purchase of
               goods and services for trade dollars.  An impairment loss is
               recognized if it becomes apparent that the fair value of the
               trade dollars in the account is less than the carrying amount or
               if it is probable that the company will not use all of its trade
               dollars.
                                      F-10

<PAGE>  34

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -  INFORMATION ABOUT THE COMPANY AND SUMMARY OF SIGNIFICANT
               ACCOUNTING POLICIES (continued)


          K.   PROPERTY AND EQUIPMENT

               Property and equipment are stated at cost less accumulated
               depreciation.  Depreciation is computed using accelerated methods
               over the estimated useful lives of five to thirty-nine years.

          L.   BUSINESS COMBINATIONS, GOODWILL, AND OTHER INTANGIBLE ASSETS

               Goodwill and membership lists are stated at cost and were
               incurred when the additional exchanges were purchased.
               Membership lists are being amortized over their estimated
               life of fifteen years.

               During 2002, the company adopted Statement of Financial
               Accounting Standards (SFAS) No. 142, "Goodwill and Other
               Intangibles," which requires that goodwill and intangible assets
               with indefinite lives no longer be amortized but, instead, be
               tested annually for impairment.  There was no impairment of
               goodwill in 2004 or 2003.

          M.   INCOME TAXES

               Income taxes are provided for the tax effects of transactions
               reported in the financial statements and consist of taxes
               currently due plus deferred taxes related to differences between
               the financial and income tax basis of assets and liabilities, and
               to the tax benefit of net operating loss carryovers.

               The deferred tax assets and liabilities represent the future tax
               return consequences of those differences, which will either be
               taxable or deductible when the assets and liabilities are
               recovered or settled.

          N.   CONCENTRATIONS OF CREDIT RISK

               The company grants credit to its customers, substantially all of
               whom are members of the Continental Trade Exchange barter network
               located in eastern Wisconsin and northern Illinois, California,
               and Ohio. The company routinely assesses the financial strength
               of its customers and, as a consequence, believes that its trade
               accounts receivable credit risk exposure is limited.

          O.   ADVERTISING

               Advertising costs, which are principally included in selling
               expenses, are expensed as incurred.  Advertising expense was
               $95,319 and $71,422 for the years ended December 31, 2004 and
               2003, respectively.

                                      F-11

<PAGE>  35

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -  INFORMATION ABOUT THE COMPANY AND SUMMARY OF SIGNIFICANT
               ACCOUNTING POLICIES (continued)

          P.   RECLASSIFICATION

               Certain items in the financial statements for the year ended
               December 31, 2003 have been reclassified to be consistent with
               the presentation adopted in 2004.

          Q.   EFFECT OF NEWLY ISSUED BUT NOT YET EFFECTIVE ACCOUNTING
               STANDARDS

               FAS 123R requires all public companies to record compensation
               cost for stock options provided to employees in return for
               employee service.  The cost is measured at the fair value of
               the options when granted, and this cost is expensed over the
               employee service period, which is normally the vesting period
               of the options.  This will apply to awards granted or modified
               after December 15, 2005. Compensation cost will also be recorded
               for prior option grants that vest after the date of adoption.
               The effect on results of operations will depend on the level of
               future option grants and the calculation of the fair value of
               the options granted at such future date, as well as the vesting
               periods provided, and so cannot currently be predicted. Existing
               options that will vest after adoption date are expected to
               result in an immaterial amount of compensation expense.

               The effect of this new standard on the company's financial
               position and results of operations is not expected to be
               material upon and after adoption.

NOTE 2 -  GOODWILL

          The change in the carrying amount of goodwill for the years ended
          December 31, 2003 and 2002 are as follows:

<TABLE>
<CAPTION>
                                                           For the year ended
                                                               December 31
                                                       -------------------------
                                                           2004          2003
                                                       ----------     ----------
<S>                                                    <C>            <C>
          Balance as January 1                          $ 535,478      $ 626,400
          Goodwill included in the loss on
            disposal of JM Graphics, Inc.                                (90,922)
                                                        ---------      ---------
                Balance at December 31                  $ 535,478      $ 535,478
                                                        =========      =========                                      F-12
</TABLE>
                                      F-12

<PAGE>  36

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 -  OTHER INTANGIBLE ASSETS

          A summary of other intangible assets for the years ended December
          31, 2004 and 2003, are as follows

<TABLE>
<CAPTION>
                                                          2004
                                          --------------------------------------
                                            Gross
                                           Carrying    Accumulated
                                            Amount     Amortization       Net
                                          ----------   ------------  ----------
<S>                                       <C>          <C>           <C>
          Amortizable intangible assets:
            Membership lists              $2,365,573    $ 268,600    $2,096,973
                                          ==========    =========    ==========

                                                           2003
                                          --------------------------------------
                                            Gross
                                           Carrying    Accumulated
                                            Amount     Amortization       Net
                                          ----------   ------------  ----------
<S>                                       <C>          <C>           <C>
          Amortizable intangible assets:
            Membership lists              $1,494,700    $ 131,591    $1,363,109
                                          ==========    =========    ==========
</TABLE>
          Aggregate amortization expense on other intangible assets was
          $137,009 and $89,530 for the years ended December 31, 2004 and
          2003, respectively:

          Estimated future amortization expense is as follows:

                          For the year ended December 31
                                        2005                   $  139,798
                                        2006                      139,798
                                        2007                      139,798
                                        2008                      139,798
                                        2009                      139,798
                                     Thereafter                 1,397,982
                                                                ---------
                                                               $2,096,973
                                                                =========


                                      F-13

<PAGE>  37

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 -  PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                 Accumulated
                                                   Cost          Depreciation
                                               -------------    --------------
<S>                                            <C>              <C>
               Balance December 31, 2002       $  1,300,813      $    405,956
               Additions during 2003                157,792
               Disposals during 2003               (635,219)         (140,248)
               Depreciation expense for 2003                          158,946
                                               ------------      ------------
               Balance December 31, 2003            823,386           424,654
               Additions during 2004                141,416
               Depreciation expense for 2004                          127,983
                                               ------------      ------------
               Balance December 31, 2004       $    964,802      $    552,637
                                               ============      ============
</TABLE>

NOTE 5 -  NOTES PAYABLE - LONG-TERM

          A subsidiary of the company (CTE) has a revolving line of credit with
          Bank One in the amount of $100,000, with a final maturity of May 5,
          2005.  Amounts drawn and outstanding were $87,278 and $80,659 as of
          December 31, 2004 and 2003, respectively.  Monthly payments are due
          based on the greatest of accrued interest, $250 or 3% of the total
          amount outstanding.  Interest is computed at prime plus 1.25% (6.50%
          as of December 31, 2004).

          CTE has an additional business line of credit with Wells Fargo Bank
          in the amount of $102,000.  The line has no maturity date.  The
          balance outstanding was $95,140 and $82,685 as of December 31, 2004
          and 2003, respectively.  Monthly payments are based on 2% of the
          outstanding balance. Interest is computed at prime plus 6.0% (11.25%
          as of December 31, 2004).

          CTE, in connection with its acquisition of Trade Systems Interchange,
          has a loan payable to DWW Software in the amount of $60,000, with no
          specified maturity date.  The balance outstanding was $59,512 and
          $59,566 as of December 31, 2004 and 2003, respectively.  Quarterly
          payments of $5,000 of principal plus interest are due until the
          balance is paid.  Interest is computed at 9%.  The owner of DWW
          Software is also a shareholder in the company.


                                      F-14

<PAGE>  38

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 -  NOTES PAYABLE - LONG-TERM (continued)

          A former subsidiary of the company (JMG) had a business loan (which
          was subsequently assumed by CTE) with M&I Marshall & Ilsley Bank,
          with a final maturity date of May 1, 2004.  The balance outstanding
          was $-0- and $9,214 as of December 31, 2004 and 2003, respectively.

          JMG (a former subsidiary for which IMS has assumed the debt) also
          has a $100,000 loan payable to Joseph Lekan, the former owner of JM
          Graphics, Inc., arising from the company's purchase of JMG during
          April 2001.  The balance outstanding was $40,917 and $61,778 as of
          December 31, 2004 and 2003, respectively.  Monthly payments of $2,000
          including interest are payable with a maturity date of April 15, 2006,
          at which time any unpaid amount is due.  Interest is computed at 6%.

          CTE has a business loan with Creative Services in the amount of
          $27,817 and $32,260 with no specified maturity date and an interest
          rate of 12.0% as of December 31, 2004 and 2003, respectively.

          A former subsidiary of the company (ICS) ( had a business loan with
          Marshall & Ilsley Bank with a final maturity of May 1, 2005, which
          was assumed by IMS at the discontinued date.  The balance outstanding
          was $177,265 and $257,722 as of December 31, 2004 and 2003,
          respectively.  Monthly payments of $5,712 of principal and interest
          of 6.9% are due until the balance is paid.  The loan is secured by a
          general business security agreement and a personal guaranty.

          The company had agreed to purchase as treasury stock 247,306 shares
          from Mehdi Ghafourifar at $1.00 per share.  The balance outstanding
          was $-0- and $114,306 as of December 31, 2004 and 2003, respectively.

          CTE has a business line of credit with M&I Marshall & Ilsley Bank in
          the amount of $50,000 with a maturity of August 1, 2005.  The balance
          outstanding was $37,200 and $22,899 as of December 31, 2004 and 2003,
          respectively.  Interest is at 6.25%.

          CTE has business lines of credit with several credit card companies
          in the aggregate amount of $110,200 and $143,500 as of December 31,
          2004 and 2003, respectively.  Balances outstanding on the credit
          lines were $66,292 and $86,980 as of December 31, 2004 and 2003,
          respectively.  Monthly payments approximate $3,000.  Interest rates
          range from 8% to 13.99%.

          CTE has two separate notes payable to the former owners of the
          Brentwood, California exchange purchased in 2003 (see Note 1). The
          maturity dates range from July 2006 to February 2010, with aggregate
          current payments of $4,600. The balance outstanding was $165,683 and
          $204,669 as of December 31, 2004 and 2003, respectively.

                                      F-15

<PAGE>  39

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 -  NOTES PAYABLE - LONG-TERM (continued)

          IMS purchased an automobile through Ford Credit in April of 2003.
          The maturity date of the note is March 2009, with monthly payments
          of $852 including interest at 8.75%.  The balance outstanding was
          $36,187 and $42,923 as of December 31, 2004 and 2003, respectively.

          CTE has a business loan with an individual in the amount of $5,124
          at December 31, 2004 and 2003.  The note has monthly payments of
          $879 including interest at 10%.  The loan has a final maturity in
          June 2005.

          CTE, in connection with its acquisition of Barter Network, Inc.,
          assumed a business line of credit with Wachovia Bank in the amount
          of $35,000 maturing in 2005.  The balance outstanding was $14,654
          as of December 31, 2004.  Interest is at 5.75%.

          CTE, in connection with its acquisition of Barter Network, Inc.,
          issued a note payable to the former owners of the Barter Network,
          Inc.  Terms of the note call for thirty-five monthly payments of
          $6,754 including interest at 6.0%, plus a final balloon payment of
          $40,000 plus accrued interest on August 30, 2007.  The balance
          outstanding was $233,385 as of December 31, 2004.

          CTE, in connection with its acquisition of California Barter Exchange,
          issued a note payable to the former owners of the California Barter
          Exchange.  Terms of the note call for thirty-two monthly payments of
          $6,000 including interest at 7.5%, plus a final balloon payment of
          $8,000 plus accrued interest on April 7, 2007.  The balance
          outstanding was $150,642 as of December 31, 2004.

          CTE, in connection with its acquisition of California Barter Exchange,
          assumed a note payable to Dell Financial.  The note requires month
          payments of $361 and matures in 2007.  The balance outstanding was
          $8,139 as of December 31, 2004.

                                       F-16
<PAGE>  40

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 -  NOTES PAYABLE - LONG-TERM (continued)

<TABLE>
<CAPTION>
                                         Balance
                                          as of
                                       December 31,        Current        Long-Term
                                           2004            Portion         Portion
                                     ---------------    ------------    ------------
<S>                                  <C>                <C>             <C>
          Bank One                   $      87,278      $    87,278     $
          Wells Fargo                       95,140           12,000          83,140
          Credit cards                      66,292           29,962          36,330
          DWW Software                      59,512           19,837          39,675
          M&I Marshall & Ilsley Bank       214,465           73,430         141,035
          Joseph Lekan                      40,917           22,148          18,769
          Jim Briner, Sr.                  128,172           21,103         107,069
          Jim Briner, Jr.                   37,511           23,172          14,339
          Ford Credit                       36,187            7,350          28,837
          Creative Services                 27,817            9,272          18,545
          Karl Fiasca                        5,124            5,124
          Wachovia Bank                     14,654           14,654
          Barter Network, Inc.             233,385           68,927         164,458
          Andy Boom                         75,321           31,494          43,827
          Paul Jewell                       75,321           31,494          43,827
          Dell Financial                     8,139            3,600           4,539
          Related parties (see Note 6)     289,864           96,621         193,243
          Capital leases                     2,053            2,053
                                      ------------      -----------     -----------
                Total                 $  1,497,152      $   559,519     $   937,633
                                      ============      ===========     ===========
</TABLE>
          The aggregate amount of maturities of long-term debt for each of the
          next five years is as follows:
<TABLE>
<S>                                                            <C>
                                     2005                      $   559,519
                                     2006                          442,320
                                     2007                          364,284
                                     2008                           47,956
                                     2009                           42,979
                                   Thereafter                       40,094
                                                               -----------
                                                               $ 1,497,152
                                                               ===========
</TABLE>
                                      F-17

<PAGE>  41

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 -  NOTES PAYABLE TO RELATED PARTIES

          From time to time officers and stockholders of the company have
          loaned funds to the subsidiaries.  There is no definite repayment
          schedule, although management has elected to treat approximately
          one-third as currently payable.  Interest is payable quarterly based
          on rates of 9% to 12% per annum.
 <TABLE>
<CAPTION>
                                                        2004           2003
                                                    -----------    -----------
<S>                                                 <C>            <C>
          Related party notes as of January 1       $  193,329    $   127,817
          New loans during the year                    205,629        188,549
          Repayments during the year                  (109,094)      (123,037)
                                                    ----------     ----------
                    Balance at December 31          $  289,864     $  193,329
                                                    ==========     ==========
</TABLE>

NOTE 7 -  DEFERRED COMPENSATION PAYABLE

          As part of the acquisition of Tradecard, Inc., the company assumed a
          deferred compensation liability for payment to a key employee after
          her retirement of $2,500 per month for 120 months.

          The present value, using an after-tax interest factor of 7% of future
          payments required under the agreement, is being charged to operations
          over the period of active employment until her age 65 retirement date
          in approximately nine years.

          Assets intended to fund this liability include a Merrill Lynch
          investment account with a value of $73,668 and $60,188 as of December
          31, 2004 and 2003, respectively, and a life insurance policy with a
          $300,000 death benefit payable to the company and a cash value as of
          December 31, 2004 and 2003, of $22,527 and $17,457, respectively.
          The investment account and the cash value are included in other
          assets.


                                      F-18

<PAGE>  42

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 -  INCOME TAXES

          Income tax expense consists of the following components:
<TABLE>
<CAPTION>
                                                      2004          2003
                                                  -----------   -----------
<S>                                               <C>           <C>
              Allocated to income from
               continuing operations
                 Currently payable - state         $    2,717    $      800
                 Deferred - federal                    17,400        59,000
                 Deferred - state                       5,165         9,000
                                                   ----------    ----------
                 Total - continuing operations         25,282        68,800
             Allocated to losses on
               discontinued operations
                 Deferred - federal                   (10,200)     (183,000)
                 Deferred - state                      (3,000)       (9,000)
                                                   ----------    ----------
                   Total expense                   $   12,082    $ (123,200)
                                                   ==========    ==========
 </TABLE>

          The company has a federal net operating loss carry forward of
          approximately $330,000 which expires in 2023.  A deferred tax asset
          of $124,000 was recorded in 2003 based on expected utilization
          of the carryforward in the future. Net deferred tax expense for
          2004 of $9,365 reduced the deferred tax asset to $114,635.


NOTE 9 -  STOCK OPTIONS

          During 2000, the company adopted an incentive stock option plan under
          which certain officers, key employees, or prospective employees may
          purchase shares of the company's stock at an established exercise
          price, which shall not be less than the fair market value at the time
          the option is granted.  Final exercise date is any time prior to the
          five-year anniversary of the first exercise date.




                                        F-19
<PAGE>  43


                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 -  STOCK OPTIONS (continued)

          Pursuant to the plan, options were granted to purchase shares at
          $3.00 per share ($.25 per share after six-for-one and two-for-one
          splits) as follows:

<TABLE>
<CAPTION>

                    Grant Date           First Exercise Date        Shares
                    ----------           -------------------        --------
<S>                 <C>                  <C>                        <C>
                    July 17, 2000        January 15, 2002           708,000
                    July 26, 2000        August 1, 2001             336,000
                    July 26, 2000        September 1, 2001           96,000
                    July 26, 2000        December 1, 2001           120,000
                    August 26, 2000      September 1, 2001          120,000
                    March 28, 2001       April 1, 2003              120,000
                    April 5, 2001        April 1, 2003              180,000
                                                                  ---------
                              Total at $.25 per share             1,680,000
                                                                  =========
</TABLE>


          During 2001, options were granted to purchase shares at $6.00
          ($.50 per share after six-for-one and two-for-one splits) as
          follows:

<TABLE>
<CAPTION>

                    Grant Date           First Exercise Date       Shares
                    ----------           -------------------       --------
<S>                 <C>                  <C>                       <C>
                    January 26, 2001     April 1, 2002            1,200,000
                    December 21, 2001    March 1, 2003              576,000
                    December 21, 2001    September 1, 2003          216,000
                    December 21, 2001    March 1, 2004               48,000
                    December 21, 2001    April 1, 2004              360,000
                    December 21, 2001    June 1, 2004                36,000
                    December 21, 2001    October 1, 2004            192,000
                                                                  ---------
                              Total at $.50 per share             2,628,000
                                                                  =========
</TABLE>

                                      F-20
<PAGE>  44

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 -  STOCK OPTIONS (continued)

          During 2002, 2003 and 2004 , options were granted to purchase shares
          as follows:
<TABLE>
<CAPTION>
                   Grant Date                 First Exercise Date       Shares
          ---------------------------------  ---------------------     --------
<S>       <C>                                <C>                       <C>
          At $.60 per Share ($.30 per share
            after two-for-one split)
          ---------------------------------
          November 8, 2002                    September 30, 2004        30,000

          At $.50 per Share ($.25 per share
            after two-for-one split)
          ---------------------------------
          November 8, 2003                    April 30, 2006            40,000

          At $.30 per Share ($.15 per share
            after two-for-one split)
          ---------------------------------
          December 16, 2003                   April 1, 2004            160,000
          January 16, 2004                    October 1, 2005          600,000

          At $.25 per Share ($.125 per share
            after two-for-one split)
          ---------------------------------
          December 12, 2002                   March 1, 2004            200,000


</TABLE>

          Statement of Financial Accounting Standards No. 123 (SFAS 123),
          "Accounting for Stock-Based Compensation" establishes financial
          accounting and reporting standards for stock-based employee
          compensation plans.

          SFAS 123 defines a fair value based method of accounting for employee
          stock option or similar equity instruments.  Under the fair value
          based method, compensation cost is measured at the grant date based on
          the fair value of the award using an option-pricing model that takes
          into account the stock price at the grant date, the exercise price,
          the expected life of the option, the volatility of the underlying
          stock, expected dividends, and the risk-free interest rate over the
          expected life of the option.  The resulting compensation cost is
          recognized over the service period, which is usually the vesting
          period.

          Compensation cost can also be measured and accounted for using the
          intrinsic value based method of accounting prescribed in Accounting
          Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued
          to Employees."  Under the intrinsic value based method, compensation
          cost is the excess, if any, of the quoted market price of the stock at
          grant date or other measurement date over the amount paid to acquire
          the stock.  Under APB 25, no compensation cost is recognized for the
          stock option plan because the exercise price is at least equal to the
          quoted market price at the date of grant and therefore there is no
          intrinsic value.

          As permitted by SAFS 123, the company continues to measure
          compensation cost for the stock option plan using the accounting
          method prescribed by APB 25.  Compensation cost based on SFAS 123 is
          not estimable.  Accordingly, proforma net income and earnings per
          share data based on SFAS 123 is not presented.

                                      F-21

<PAGE>  45

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 -  STOCK OPTIONS (continued)

          As permitted by SFAS 123, the company continues to measure
          compensation cost for the stock option plan using the accounting
          method prescribed by APB 25.  Compensation cost based on SFAS 123
          is not estimable. Accordingly, proforma net income and earnings
          per share data based on SFAS 123 is not presented.

NOTE 10 - RELATED PARTY TRANSACTIONS

          The company currently leases its executive offices and principal
          operating facilities in New Berlin, Wisconsin from Glendale
          Investments, LLC, a Wisconsin limited liability company which is
          100% owned by officers and stockholders of the company. The original
          lease commenced October 1, 2002, and expired September 30, 2004. The
          lease has been extended for an additional two year period through
          September 30, 2006. Lease payments are $6,000 per month plus certain
          operating costs including sales and use taxes, insurance, utilities,
          maintenance, and other-than-structural repairs.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

          The company has various leases for office facilities and vehicles
          which are classified as operating leases. Total rent expense for all
          operating leases for 2004 and 2003, is summarized below:
<TABLE>
<CAPTION>
                                                             2004          2003
                                                          ----------    ----------
<S>                                                       <C>            <C>
            Office facilities on month-to-month leases    $   2,400    $    2,400
            Related party lease (see Note 10)                72,000        66,500
            North Chicago, Illinois                          25,200        25,200
            Rohnert Park, California                         21,846        20,628
            San Jose, California                              1,430         8,092
            Lewis Center, Ohio                               39,750        38,636
            Brentwood, California                            16,150        14,675
            Durham, Ontario, Canada                                         3,410
            Modesto, California                              23,902
            Springfield, Virginia                             5,225
            Santa Monica, California                          1,550
            Vehicle leases                                   29,139        19,506
            Equipment                                        21,583        20,826
                                                          ---------     ---------
                                                          $ 260,175     $ 219,873
                                                          =========     =========
</TABLE>





                                      F-22

<PAGE>  46

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - COMMITMENTS AND CONTINGENCIES

          Minimum future lease commitments as of December 31, 2004, are
          summarized as follows:
<TABLE>
<CAPTION>
                                                      Office
                                                    Facilities        Vehicles
                                                    ----------      -----------
<S>                                                 <C>             <C>
              Year ended December 31
                     2005                           $ 227,374       $   20,226
                     2006                             104,027            8,499
                     2007                              43,526
                     2008                               3,636
                                                    ---------       ----------
                                                    $ 378,563       $   28,725
                                                    =========       ==========
</TABLE>


NOTE 12 - EARNINGS PER SHARE

          Earnings per share are based on the weighted average number of shares
          outstanding for the year, restated for the six-for-one stock split on
          January 2, 2002, and the two-for-one stock split on April 5, 2004.
          Weighted average shares outstanding were 38,989,699 and 33,746,148
          for 2004 and 2003, respectively.

NOTE 14 - DISCONTINUED OPERATIONS

          On April 1, 2003, the company disposed of a majority interest in its
          printing and graphics businesses.  As a result, International
          Corporate Services, Inc. discontinued operations on April 1, 2003,
          and JM Graphics discontinued operations on November 1, 2003.

          On October 3, 2003, Continental Trade Exchange of Canada was sold.

          The revenues and pretax income (loss) of the discontinued operations
          and the loss on disposition were as follows for 2003. During 2004 an
          additional loss related to the printing segment of $67,966 before
          taxes was booked based on final adjustments related to agreements
          with the seller.

<TABLE>
<CAPTION>
                                                        Printing         Barter
                                                        Segment         Segment
                                                       ----------    -----------
<S>                                                    <C>           <C>
              Total revenues                           $ 190,887     $   60,894
              Pretax income (loss) from operations      (124,678)         7,756
              Loss on disposition                       (410,346)       (10,893)
</TABLE>

                                      F-23

<PAGE>  47

                      INTERNATIONAL MONETARY SYSTEMS, LTD.
                              New Berlin, Wisconsin

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 15 - PRIOR PERIOD ADJUSTMENT

          During the year ended December 31, 2004, the company recorded a
          liability of $25,397 for vacation time owed to employees.  Since
          this amount had been earned in years prior to the current year
          end, it was recorded as a prior period adjustment.  Accrued
          vacation pay at December 31, 2004 is included with accrued
          payroll and payroll taxes.







                                      F-24

<PAGE>  48

EXHIBIT INDEX

<TABLE>
<CAPTION>

   Exhibit
   Number                          Description
   ------                          -----------
<S>          <C>
     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 *
    99.1   Certification of Chief Executive Officer and Chief Financial
           Officer pursuant to 18 U.S.C. section 1350
</TABLE>

             *  Incorporated by reference to the registration statement of the
                company on Form SB-2 File No. 333-94597


Exhibit 99.1

                             CERTIFICATION PURSUANT TO
                              18 U.S.C. SECTION 1350
                              AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of International Monetary Systems,
Ltd. ("Company") on Form 10-KSB for the period ending December 31, 2004
as filed with the Securities and Exchange Commission ("Report"), we,
Donald M. Mardak, Chief Executive Officer of the Company, and Danny W.
Weibling, Chief Financial Officer of the Company, jointly and severally
certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906
of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ Donald M. Mardak
    -----------------------
    Donald M. Mardak
    Chief Executive Officer


/s/ Danny W. Weibling
    -----------------------
    Danny W. Weibling
    Chief Financial Officer

March 29, 2005