UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





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





For
      the quarterly period ended March 31,
2009





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





Commission
file number 000-30853





INTERNATIONAL
MONETARY SYSTEMS, LTD.


(Exact
name of Registrant as specified in its charter)





Wisconsin
            
            39-1924096(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)16901
      West Glendale Drive, New Berlin, Wisconsin 53151(Address
      of principal executive offices)(262)
      780-3640(Registrant’s
      telephone number, including area code)





Indicate
by check mark whether the registrant has (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 o  No ý





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check One):





Large
      Accelerated Filer  o
            Accelerated
      Filer  o
            Non-Accelerated
      Filer  o
            Smaller
      Reporting Company  T(Do
      not check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o  No x





The
number of shares of Common Stock, $.0001 par value, outstanding as of May 11,
2009 was 61,585,404.










TABLE
OF CONTENTS
 
 INTERNATIONAL
MONETARY SYSTEMS, LTD.
 
  Page No.Part I.
                
                FINANCIAL
      INFORMATIONItem 1 -
                
                Financial
      Statements (March 31, 2009 - Unaudited)Condensed
      Consolidated Balance Sheets – March 31, 2009 and December 31,
      2008
                
                2Condensed Consolidated Statements of Operations – Three  Months
      Ended March 31, 2009 and 2008
                
                4Condensed Consolidated Statements of Cash Flows - Three Months Ended March
      31, 2009 and 2008
                
                5Condensed
      Consolidated Statement of Changes in Stockholders Equity  -
      Three Months Ended March 31, 2009
                
                7Notes
      to Condensed Consolidated Financial Statements
                
                8Item 2 -
                
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                
                14Item 3 -
                
                Quantitative
      and Qualitative Disclosures about Market Risk
                
                17Item 4 -
                
                Controls
      and Procedures
                
                17Part II.
                
                Other
      Information
                
                18Item 1A -
                
                Risk
      FactorsItem 2 -
                
                Unregistered
      Sales of Equity Securities and Use of ProceedsItem
      3 -
                
                Defaults
      on Upon Senior SecuritiesItem 4 -
                
                Submission
      of Matters to a Vote of Security HoldersItem 5
      -
                
                Other
      InformationItem 6 -
                
                Exhibits
  
  1





INTERNATIONAL
MONETARY SYSTEMS, LTD.


CONDENSED
CONSOLIDATED BALANCE SHEETS





March
      31, 2009
                
                
                December
      31, 2008(UNAUDITED)ASSETSCurrent
      assetsCash
                
                $
                519,648
                
                
                $
                279,227Restricted
      cash
                
                
                165,922
                
                
                
                495,803Marketable
      securities
                
                
                79,003
                
                
                
                84,808Accounts
      receivable, net
                
                
                1,170,215
                
                
                
                1,401,383Refundable
      income taxes
                
                
                48,500
                
                
                
                48,500Earned
      trade account
                
                
                -
                
                
                
                6,991Prepaid
      expenses
                
                
                134,415
                
                
                
                109,710Inventory
                
                
                33,839
                
                
                
                33,839Total
      current assets
                
                
                2,151,542
                
                
                
                2,460,261Net
      furniture and equipment
                
                
                979,902
                
                
                
                1,056,526Other
      assetsMembership
      lists, net
                
                
                9,241,309
                
                
                
                9,577,257Goodwill
                
                
                3,435,479
                
                
                
                3,435,479Deferred
      tax asset
                
                
                -
                
                
                
                75,000Assets
      held for investment
                
                
                99,298
                
                
                
                99,298Investment
      in real estate
                
                
                26,000
                
                
                
                26,000Cash
      surrender value
                
                
                44,525
                
                
                
                43,125Total
      other assets
                
                
                12,846,611
                
                
                
                13,256,159Total
      assets
                
                $
                15,978,055
                
                
                $
                16,772,946


2







INTERNATIONAL
MONETARY SYSTEMS, LTD.


CONDENSED
CONSOLIDATED BALANCE SHEETS





March
      31, 2009
                
                
                December
      31, 2008(UNAUDITED)LIABILITIESCurrent
      liabilitiesAccounts
      payable and accrued expenses
                
                $
                993,332
                
                
                $
                1,010,374Credit
      lines
                
                
                316,259
                
                
                
                340,746Current
      portion of notes payable
                
                
                621,736
                
                
                
                838,982Current
      portion of convertible notes payable
                
                
                213,226
                
                
                
                175,466Current
      portion of common stock subject to guarantee
                
                
                850,000
                
                
                
                1,268,500Total
      current liabilities
                
                
                2,994,553
                
                
                
                3,634,068Long-term
      liabilitiesNotes
      payable, less current portion
                
                
                107,412
                
                
                
                154,334Convertible
      notes payable, less current portion
                
                
                1,566,743
                
                
                
                1,306,813Convertible
      notes payable, related parties
                
                
                100,000
                
                
                
                -Common
      stock subject to guarantee, less current portion
                
                
                1,028,000
                
                
                
                1,359,500Deferred
      compensation
                
                
                263,750
                
                
                
                260,000Deferred
      income taxes
                
                
                1,944,000
                
                
                
                2,039,000Total
      long-term liabilities
                
                
                5,009,905
                
                
                
                5,119,647Total
      liabilities
                
                
                8,004,458
                
                
                
                8,753,715STOCKHOLDER
      EQUITYPreferred
      stock, $.0001 par value20,000,000
      authorized, 0 outstanding
                
                
                -
                
                
                
                -Common
      stock, $.0001 par value 280,000,000authorized,
      61,625,436 and 61,625,436issued
      and outstanding March 31, 2009and
      December 31, 2008 respectively
                
                
                6,163
                
                
                
                6,163Paid
      in capital
                
                
                12,171,038
                
                
                
                11,697,038Treasury
      stock, 2,922,542 and 2,322,542shares
      outstanding, respectively
                
                
                (1,853,216
                )
                
                
                (1,403,216
                )Deferred
      compensation
                
                
                (30,367
                )
                
                
                (25,467
                )Accumulated
      other comprehensive loss
                
                
                (61,205
                )
                
                
                (50,840
                )Accumulated
      deficit
                
                
                (2,258,816
                )
                
                
                (2,204,447
                )Total
      stockholder equity
                
                
                7,973,597
                
                
                
                8,019,231Total
      liabilities and stockholder equity
                
                $
                15,978,055
                
                
                $
                16,772,946





See
accompanying notes to condensed consolidated financial
statements.


3







INTERNATIONAL
MONETARY SYSTEMS, LTD.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)





Three
      Months EndedMarch
      31,2009
                
                
                2008Gross
      revenue
                
                $
                3,351,224
                
                
                $
                3,518,839ExpensesPayroll,
      related taxes and employee benefits
                
                
                2,044,249
                
                
                
                2,555,380General
      and administrative
                
                
                441,762
                
                
                
                445,201Occupancy
                
                
                305,247
                
                
                
                258,670Selling
                
                
                86,691
                
                
                
                115,411Depreciation
                
                
                76,624
                
                
                
                74,869Amortization
                
                
                335,948
                
                
                
                322,325Provision
      for bad debt
                
                
                4,389
                
                
                
                56,252Total
      expenses
                
                
                3,294,910
                
                
                
                3,828,108Net
      income (loss) from operations
                
                
                56,314
                
                
                
                (309,269
                )Other
      income (expense)Interest
      income
                
                
                375
                
                
                
                4,749Interest
      expense
                
                
                (58,058
                )
                
                
                (66,887
                )Total
      other income (expense)
                
                
                (57,683
                )
                
                
                (62,138
                )Loss
      before income taxes
                
                
                (1,369
                )
                
                
                (371,407
                )Income
      tax expense (benefit)
                
                
                53,000
                
                
                
                (140,500
                )Net
      loss
                
                $
                (54,369
                )
                
                $
                (230,907
                )Net
      loss percommon
      share - basic
                
                $
                (.00
                )
                
                $
                (.00
                )-
      dilutive
                
                $
                (.00
                )
                
                $
                (.00
                )Weighted
      average commonshares
      outstanding - basic
                
                
                61,576,943
                
                
                
                61,054,996-
      dilutive
                
                
                61,576,943
                
                
                
                61,054,996





See
accompanying notes to condensed consolidated financial
statements.


4







INTERNATIONAL
MONETARY SYSTEMS, LTD.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)





Three
      Months Ended March 31,2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                
                $
                (54,369
                )
                
                $
                (230,907
                )Adjustments
      to reconcile net loss to net cashprovided
      by operating activities:Depreciation
      and amortization
                
                
                412,572
                
                
                
                397,194Provision
      for bad debts
                
                
                4,389
                
                
                
                56,252Stock
      issued for services
                
                
                19,100
                
                
                
                -Loss
      on disposal of fixed assets
                
                
                -
                
                
                
                (277
                )Accretion
      of discount on notes payable
                
                
                -
                
                
                
                4,723Deferred
      compensation
                
                
                3,750
                
                
                
                3,750Interest
      on subscription receivable
                
                
                -
                
                
                
                (471
                )Changes
      in assets and liabilitiesAccounts
      receivable
                
                
                226,779
                
                
                
                346,706Earned
      trade account
                
                
                6,991
                
                
                
                (380,742
                )Deferred
      tax benefit
                
                
                75,000
                
                
                
                -Prepaid
      expense
                
                
                (24,705
                )
                
                
                1,229Accounts
      payable
                
                
                77,545
                
                
                
                (17,806
                )Accrued
      compensation & payroll taxes
                
                
                149,829
                
                
                
                187,997Accrued
      sales tax
                
                
                (26,188
                )
                
                
                (41,641
                )Accrued
      income taxes
                
                
                64,281
                
                
                
                (139,550
                )Deferred
      tax liability
                
                
                (95,000
                )
                
                
                -Trade
      payable
                
                
                (282,510
                )
                
                
                (143,000
                )Net
      cash provided by operating activities
                
                
                557,464
                
                
                
                43,457CASH
      FLOWS FROM INVESTING ACTIVITIES:Decrease
      in restricted cash
                
                
                329,881
                
                
                
                50,817Capital
      expenditures
                
                
                -
                
                
                
                (34,813
                )Increase
      in marketable securities
                
                
                (2,250
                )
                
                
                (2,250
                )Proceeds
      from sale of real estate
                
                
                -
                
                
                
                2,695Increase
      in cash surrender value
                
                
                (1,400
                )
                
                
                (1,400
                )Net
      cash provided by (used in) investing activities
                
                
                326,231
                
                
                
                15,049





5







INTERNATIONAL
MONETARY SYSTEMS, LTD.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


Continued





Three
      Months Ended March 31,2009
                    
                    
                    2008CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from credit lines
                    
                    
                    -
                    
                    
                    
                    210,000Proceeds
      from convertible notes payable, related parties
                    
                    
                    100,000
                    
                    
                    
                    -Payments
      on credit lines
                    
                    
                    (24,477
                    )
                    
                    
                    -Payments
      on notes payable
                    
                    
                    (266,487
                    )
                    
                    
                    (208,640
                    )Purchase
      of treasury stock
                    
                    
                    (450,000
                    )
                    
                    
                    (172,000
                    )Net
      cash used in financing activities
                    
                    
                    (640,964
                    )
                    
                    
                    (170,640
                    )Foreign
      currency translation adjustment
                    
                    
                    (2,310
                    )
                    
                    
                    (5,047
                    )Net
      increase (decrease) in cash
                    
                    
                    240,421
                    
                    
                    
                    (117,181
                    )Cash
      at beginning of period
                    
                    
                    279,227
                    
                    
                    
                    812,365Cash
      at end of period
                    
                    $
                    519,648
                    
                    
                    $
                    695,184SUPPLEMENTAL
      DISCLOSURESCash
      paid for interest
                    
                    $
                    58,058
                    
                    
                    $
                    66,887Cash
      paid for income taxes
                    
                    $
                    8,719
                    
                    
                    $
                    142,050SCHEDULE
      OF NONCASH INVESTING ANDFINANCING
      ACTIVITIES:Unrealized
      net loss on equity investments
                    
                    $
                    8,055
                    
                    
                    $
                    -Stock
      guarantees
                    
                    $
                    450,000
                    
                    
                    $
                    -Treasury
      stock acquired with long-term debt
                    
                    $
                    300,000
                    
                    
                    $
                    -





See
accompanying notes to condensed consolidated financial
statements.


6
  INTERNATIONAL
MONETARY SYSTEMS, LTD.
 CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
 For the
Three Months Ended March 31,2009
 
 Preferred
      Stock
                      
                      
                      Common
      Stock
                      
                      
                      
                      
                      
                      Treasury
      StockTotalPar
                      
                      
                      
                      
                      
                      Par
                      
                      
                      Paid
      in
                      
                      
                      Deferred.
                      
                      
                      Other
                      
                      
                      Accum.
                      
                      
                      
                      
                      
                      Par
                      
                      
                      StockholderShares
                      
                      
                      Value
                      
                      
                      Shares
                      
                      
                      Value
                      
                      
                      Capital
                      
                      
                      Comp
                      
                      
                      Income
                      
                      
                      Deficit
                      
                      
                      Shares
                      
                      
                      Value
                      
                      
                      EquityBalances
      atDecember
      31, 2008
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      61,625,436
                      
                      
                      $
                      6,163
                      
                      
                      $
                      11,697,038
                      
                      
                      $
                      (25,467
                      )
                      
                      $
                      (50,840
                      )
                      
                      $
                      (2,204,447
                      )
                      
                      
                      (2,322,542
                      )
                      
                      $
                      (1,403,216
                      )
                      
                      $
                      8,019,231Foreign
      currencytranslation
      adjustment
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (2,310
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (2,310
                      )Unrealized
      loss onavailable
      for salesecurities
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (8,055
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (8,055
                      )Net
      (loss) ThreeMonths
      EndedMarch
      31, 2009
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (54,369
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (54,369
                      )Net
      comprehensive(loss)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (64,734
                      )Stock
      issued forservices
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      300,000
                      
                      
                      
                      30
                      
                      
                      
                      23,970
                      
                      
                      
                      (24,000
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Deferred
      compexpensed
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      19,100
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      19,100Stock
      convertedto
      notes
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (300,000
                      )
                      
                      
                      (30
                      )
                      
                      
                      (299,970
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (300,000
                      )Guaranteed
      stockreturned
      forrestricted
      cash
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (600,000
                      )
                      
                      
                      (450,000
                      )
                      
                      
                      (450,000
                      )Reclassification
      ofshares
      issued atguaranteed
      pricesto
      liabilities
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      750,000
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      750,000Balances
      atMarch
      31, 2009
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      61,625,436
                      
                      
                      $
                      6,163
                      
                      
                      $
                      12,171,038
                      
                      
                      $
                      (30,367
                      )
                      
                      $
                      (61,205
                      )
                      
                      $
                      (2,258,816
                      )
                      
                      
                      (2,922,542
                      )
                      
                      $
                      (1,853,216
                      )
                      
                      $
                      7,973,597
 
 See
accompanying notes to condensed consolidated financial
statements.
   7


INTERNATIONAL
MONETARY SYSTEMS, LTD.


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


March 31,
2009





NOTE
1 - BASIS OF PRESENTATION





The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
2009, are not necessarily indicative of the results that may be expected for the
year ended December 31, 2009.





The
balance sheet at December 31, 2008, has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.





For
further information, refer to the consolidated financial statements and
footnotes thereto included in the company's 10K for the year ended December 31,
2008 and filed on April 8, 2009.





Principles
of Consolidation





The
consolidated financial statements for 2009 and 2008 include the accounts of the
Company and its wholly owned subsidiaries Continental Trade Exchange, Ltd.,
National Trade Association, Inc. and INLM Holdings, Inc. Significant
intercompany accounts and transactions have been eliminated in
consolidation.





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.





Earnings
Per Share





The
computation of earnings per share of common stock is based on the weighted
average number of shares outstanding at the date of the financial statements.
The assumed exercise of 2,220,000 and 3,570,000 stock options and warrants as of
March 31, 2009 and 2008 respectively is not included in the computation of
diluted loss per share as the effect is anti-dilutive. The assumed conversion of
notes payable to common stock of 5,733,710 and 2,907,528 shares as of March 31,
2009 and 2008 respectively is also not included in the computation of diluted
loss per share, as the effect is anti-dilutive.





Business
Segments





The
Company operates in one segment and therefore segment information is not
presented.





Stock-Based
Compensation





Effective
January 1, 2006, the Company adopted Statement No. 123R, Share-Based Payment
("SFAS 123R"), which requires companies to measure and recognize compensation
expense for all share-based payment awards made to employees and directors based
on estimated fair values. SFAS 123R is being applied on the modified prospective
basis. Prior to the adoption of SFAS 123R, the Company accounted for its
stock-based compensation plans under the recognition and measurement principles
of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees, as provided by SFAS 123. Accounting for Stock based compensation
("SFAS 123") and accordingly, recognized no compensation expense related to the
stock-based plans as stock options granted to employees and directors were equal
to the fair market value of the underlying stock at the date of grant. In March
2005, the SEC issued Staff Accounting Bulletin No. 107 ("SAB 107") relating to
SFAS 123R. The Company has applied the provisions of SAB 107 in its adoption of
SFAS 123R.


8


Common
stock, stock options and common stock warrants issued to other than employees or
directors are recorded on the basis of their fair value, as required by SFAS
No. 123(R), which is measured as of the date required by EITF
Issue 96-18, “Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services.” In accordance with EITF 96-18, the stock options or common stock
warrants are valued using the Black-Scholes option pricing model on the basis of
the market price of the underlying common stock on the “valuation date,” which
for options and warrants related to contracts that have substantial
disincentives to non-performance is the date of the contract, and for all other
contracts is the vesting date. Expense related to the options and warrants is
recognized on a straight-line basis over the shorter of the period over which
services are to be received or the vesting period. Where expense must be
recognized prior to a valuation date, the expense is computed under the
Black-Scholes option pricing model on the basis of the market price of the
underlying common stock at the end of the period, and any subsequent changes in
the market price of the underlying common stock up through the valuation date is
reflected in the expense recorded in the subsequent period in which that change
occurs.





Foreign
Currency Translation





The
financial statements of the Company's foreign subsidiary have been translated
into U.S. dollars in accordance with SFAS No. 52, Foreign Currency Translation
(SFAS 52). All balance sheet accounts have been translated using the exchange
rate in effect at the balance sheet date. Income statement amounts have been
translated using an appropriately weighted average exchange rate for the year.
The translation gains and losses resulting from the changes in exchange rates
during 2009 have been reported in accumulated other comprehensive income, except
for gains and losses resulting from the translation of intercompany receivables
and payables, which are included in earnings for the period.





Recent
Accounting Pronouncements





In April
2009, the FASB issued FASB Staff Position FAS-157-4, “Determining Whether a
Market Is Not Active and a Transaction Is Not Distressed” (“FSP FAS
157-4”).  FSP FAS 157-4 provides guidelines for making fair value
measurements more consistent with the principles presented in SFAS
157.  FSP FAS 157-4 provides additional authoritative guidance in
determining whether a market is active or inactive and whether a transaction is
distressed.  FSP FAS 157-4 is applicable to all assets and liabilities
(i.e. financial and nonfinancial) and will require enhanced
disclosures.  FSP FAS 157-4 is required to be adopted no later than
the periods ending after June 15, 2009.  We are currently assessing
the potential impact of the adoption of FSP FAS 157-4 on our consolidated
financial statement disclosures.





In April
2009, the FASB issued FASB Staff Position FAS 115-2 and FAS 124-2, “Recognition
and Presentation of Other-Than-Temporary Impairments” (“FSP FAS 115-2”) and
(“FSP FAS 124-2”).  FSP FAS 115-2 and FSP FAS 124-2 provide additional
guidance to provide greater clarity about the credit and noncredit component of
an other-than-temporary impairment event and to improve presentation and
disclosure of other than temporary impairments in the financial
statements.  FSP FAS 115-2 and FSP FAS 124-2 are required to be
adopted no later than the periods ending after June 15, 2009.  We are
currently assessing the potential impact of the adoption of FSP FAS 115-2 on our
consolidated financial statement disclosures.





In April
2009, the FASB issued FASB Staff Position FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1”) and
(“APB 28-1”).  FSP FAS 107-1 amends FASB Statement No. 107,
“Disclosures about Fair Value of Financial Instruments”, to require disclosures
about fair value of financial instruments in interim as well as in annual
financial statements and amends APB Opinion No. 28 “Interim Financial
Reporting”, to require those disclosures in interim financial
statements.    FSP FAS 107-1 and APB 28-1 are required to be
adopted no later than the periods ending after June 15, 2009.  We are
currently assessing the potential impact of the adoption of FSP FAS 107-1 on our
consolidated financial statement disclosures.





In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles. SFAS 162
directs the hierarchy to the entity, rather than the independent auditors, as
the entity is responsible for selecting accounting principles for financial
statements that are presented in conformity with generally accepted accounting
principles. SFAS 162, is effective 60 days following SEC approval of the Public
Company Accounting Oversight Board ("PCAOB") amendments to remove the hierarchy
of generally accepted accounting principles from the auditing standards. SFAS
162 is not expected to have an impact on the Company's consolidated financial
statements.


9







NOTE
2 - CASH AND EQUIVALENTS





For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents to the extent the funds are not being held for investment purposes.
As of March 31, 2009, the Company has cash in excess of FDIC insurance of
$46,220.





NOTE
3 - EARNED TRADE ACCOUNT





As part
of the operations of the subsidiaries the Company earns trade dollars, 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 purchases of goods and services using 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.





NOTE
4 - REVENUE SOURCES AND REVENUE RECOGNITION





The
Company and its subsidiaries earn revenues in both traditional dollars (cash
income) and in trade dollars. Cash income is earned primarily through fees
assessed when a member joins, transaction fees generated when clients earn or
spend their trade dollars, monthly maintenance fees, finance charges on
delinquent accounts receivable, and event fees.





Trade
revenue is similarly generated through initial membership fees, monthly
maintenance fees, transaction fees and event fees. Occasionally the Company will
accept a favorable trade ratio in lieu of a cash fee. The Company uses earned
trade dollars 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.





Revenues
are recognized when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the price is fixed or determinable, and
collectability is reasonably assured.





Transaction
fees are recognized upon receipt of transactional information accumulated by our
systems or reported by our clients. Membership fees, monthly maintenance fees,
finance charges, and other fees are billed monthly to members' accounts, and are
recognized in the month the revenue is earned.





NOTE
5 - INVENTORY





Inventory
consists primarily of jewelry and other merchandise held for sale by the
Company. Inventory is carried at the lower of actual cost of acquisition, or
fair value.





NOTE
6 – BUSINESS ACQUISITIONS –





There
were no business acquisitions in the first quarter of 2009.





NOTE
7 – LINES OF CREDIT AND NOTES PAYABLE





As of
March 31, 2009 the company has drawn on its credit lines for a net amount of
$316,259.





On
January 15, 2009 IMS issued convertible notes payable totaling $300,000 in
exchange for release of the stock guarantee on, and the return of 300,000 shares
of IMS stock. The notes are interest only at 4.5% per annum, and annual
principal payments begin January 21, 2009. Principal payments range from $0 to
$120,000 at the discretion of the note holders, with a maximum of $120,000 per
year. At any time the note holders can convert any portion of the unpaid
principle into IMS common stock. Conversions reduce the principal amount at
$1.00 per share.





On March
31, 2009 IMS received $50,000 from an officer of the Company in exchange for an
interest-only convertible note, at 8% per annum, with a due date of July 10,
2010. At any time the note can be converted into 500,000 shares of IMS common
stock at $.10 per share, the fair value of the common stock on the date of the
note. Quarterly interest payments begin June 30, 2009.


10







On March
31, 2009 IMS received $50,000 from a member of the board of directors of the
Company in exchange for an interest-only convertible note, at 8% per annum, with
a due date of March  31, 2011. At any time the note can be converted
into 500,000 shares of IMS common stock at $.10 per share, the fair value of the
common stock on the date of the note. Quarterly interest payments begin June 30,
2009.





On March
31, 2009, the Company and a private investor agreed in principle, to extend an
interest only note payable with an original due date of July 2009 for two years,
to July 2011.





NOTE
8 - STOCK OPTIONS





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.





SFAS 123R
defines a fair value based method of accounting for employee stock options 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.





A summary
of the status of Company's fixed stock option plan as March 31, 2009 and the
changes during the period then ended is presented below:





March
      31, 2009Weighted
      AverageFixed
      Options
                
                Shares
                
                
                Exercise
      PriceOutstanding
      atbeginning
      of period
                
                
                660,000
                
                
                $
                0.16Granted
                
                
                -
                
                
                
                -Forfeited
                
                
                -
                
                
                
                -Expired
                
                
                (640,000
                )
                
                
                -Exercised
                
                
                -Outstanding
      at end of period
                
                
                20,000
                
                
                $
                0.30Options
      exercisable atperiod
      end
                
                
                20,000Weighted
      average fair valueof
      options granted toemployees
      during the year
                
                $
                -








As of
March 31, 2009 there were 20,000 options outstanding and exercisable, with a
weighted average remaining contractual life of .81 years, and a weighted average
exercise price of $0.30.





All
options had vested prior to January 1, 2006.


11







STOCK
ISSUANCES





On
January 2, 2009, the Company redeemed 600,000 shares of IMS common stock from
the former owner of Alliance Barter, who was paid $450,000 in cash per the stock
guarantee agreement.  Payment was made from restricted cash, and the
stock was placed in treasury.





On
January 15, 2009, the portion of the agreement, for the purchase of Kansas Trade
Exchange, that specified that 300,000 of shares IMS common stock were to be
issued, was cancelled. The stock had not yet been issued. In exchange two notes
payable were issued totaling $300,000. The notes are interest only at 4.5% per
annum, and annual principal payments begin January 21, 2009. Principal payments
range from $0 to $120,000 at the discretion of the note holders. This also
resulted in the release of $300,000 of the stock guarantee.





On March
16, 2009 IMS issued 300,000 shares of IMS stock to an investor relations firm.
The fair value of the stock was $24,000.





STOCK
WARRANTS





As of
March 31, 2009 there were 2,200,000 warrants outstanding. The warrants can be
used to buy shares of the Company’s common stock at $.55 per share. The warrants
expire May 31, 2011.





NOTE
9 - INCOME TAXES





The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("Statement 109"). Under
Statement 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities, and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.





NOTE
10 – COMPREHENSIVE INCOME





SFAS No.
130, Reporting Comprehensive Income (SFAS 130) establishes rules for reporting
and displaying of comprehensive income and its components. Comprehensive income
is the sum of the net income (loss) as reported in the consolidated statements
of operations and other comprehensive income transactions. Other comprehensive
income transactions that currently apply to the Company result from changes in
exchange rates used in translating the financial statements of its wholly owned
subsidiary in Toronto, Canada.





Comprehensive
income consisted of the following for the three months ended March 31, 2009 and
2008:





Three
      Months
                
                
                Three
      MonthsEnded
                
                
                EndedMarch
      31, 2009
                
                
                March
      31, 2008Net
      loss
                
                $
                (54,369
                )
                
                $
                (230,907
                )Foreign
      currency translation adjustment
                
                
                (2,310
                )
                
                
                (5,047
                )Unrealized
      loss on available for sale securities
                
                
                (8,055
                )
                
                
                (10,211
                )Comprehensive
      loss
                
                $
                (64,734
                )
                
                $
                (246,165
                )







12







NOTE
11 – PENDING LEGAL PROCEEDINGS





On
January 20, 2008, a former employee filed a sexual harassment complaint with the
Equal Employment Opportunity Commission. The claim is still under investigation
by the EEOC but IMS believes the claims to be meritless and will vigorously
defend itself.





On March
20, 2008, a former employee filed a complaint alleging age discrimination with
the Connecticut Commission on Human Rights and Opportunities and the Equal
Employment Opportunity Commission. IMS has reached a settlement and the
complaint will be dismissed. The Company will pay the former employee
$15,000.





On May
29, 2008, a former employee filed a claim of sexual harassment with the
Connecticut Commission on Human Rights and Opportunities and the Equal
Employment Opportunity Commission. The claim is still under investigation by the
CHRO but IMS feels the claim is without merit and will vigorously defend
itself.





On
September 25, 2008, IMS was notified of a wage claim filed with the Canadian
Ministry of Labour by a former employee in the amount of $10,400. The claim is
still under review by the Ministry of Labour. While wages may be due to the
former employee, the amount is substantially less than the amount
claimed.





On
September 30, 2008, WRS, Inc D/B/A WRS Motion Picture and Video Laboratory filed
suit in Allegheny County, PA for breach of contract. The complaint seeks
$38,649.58 in damages. The complaint against IMS is meritless. The litigation
seeks payment for services provided to a former member of the Exchange. None of
the services at the heart of the litigation were provided to IMS and, therefore,
no payment is due from IMS. A motion to dismiss this matter is pending with the
court.





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





NOTE
12 – RELATED PARTY 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, officers and directors of our company, under a triple net lease which
commenced in October, 2008 and expires September 30, 2010. Monthly rental
payments are $7,500. 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.





On March
31, 2009 IMS received $50,000 from an officer of the Company in exchange for an
interest-only convertible note, at 8% per annum. After two years the note can be
converted into 500,000 shares of IMS common stock at $.10 per share, the fair
value of the common stock on the date of the note. Interest payments will be
quarterly starting June 30, 2009.





On March
31, 2009 IMS received $50,000 from a member of the board of directors of the
Company in exchange for an interest-only convertible note, at 8% per annum.
After two years the note can be converted into 500,000 shares of IMS common
stock at $.10 per share, the fair value of the common stock on the date of the
note. Interest payments will be quarterly starting June 30, 2009.








NOTE
13 - SUBSEQUENT EVENTS





On April
3, 2009, IMS paid $3,203 in trade dollars for 40,032 shares of IMS common stock,
which were placed in treasury stock.





13







INTERNATIONAL
MONETARY SYSTEMS, LTD.





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


OF
OPERATIONS





Results
of Operations





The
three-month period ended March 31, 2009 showed much improvement in the financial
performance of International Monetary Systems, Ltd. During the past nine months,
IMS has made a great effort to achieve profitability by reducing payroll and
other elements of overhead. As a result, net income from operations totaled
$56,314 for the first quarter of 2009, and net cash provided by operating
activities was $557,464, a substantial increase over all previous quarters.
Operating profits (EBITDA) totaled $469,261, also a major improvement over past
performances.





Primarily
due to the global recession, first quarter revenue of $3,351,224 declined 4.8%
from the $3,518,839 generated in the first quarter of 2008, despite an increase
in trade transactions of 2.1%, from $24,847,894 in the first quarter of 2008 to
$25,369,715 in the first quarter of 2009. As in the general economy IMS members
are experiencing declines in their businesses, with resulting reductions in
discretionary and luxury spending. Considering that U.S. gross domestic product
declined 7.1% in 2008, the IMS 4.8% decline is not remarkable.





Total
expenses decreased from $3,828,108 in the first quarter of 2008 to $3,294,910
for the same period in 2009, a reduction in expenses of 13.9%. This substantial
decrease was achieved because of payroll cuts and other overhead reductions.
Over the past twelve months, we’ve trimmed our work force by 40 people, without
substantial revenue reduction.





As a
result, the net profit from operations was $56,314 for the first three months of
2009, compared to a loss of $309,269 for the same period last year. After
deducting non-cash expenses such as depreciation, amortization, bad-debt expense
and stock issued for services rendered, the loss before income taxes was just
$1,369, compared to a loss of $371,407 for the same period of 2008. After
deducting current and deferred income taxes, the net loss in the first three
months of 2009 was $54,369, compared to $230,907 last year, which was net of a
deferred tax benefit.





The
deferred tax represents the adjustment to the deferred tax liability, which
arises primarily from the differences in basis of acquired membership lists for
financial reporting versus tax reporting.





The
income tax expense (benefit) consists of:





Three
      Months
                
                
                Three
      MonthsEnded
                
                
                EndedMarch
      31, 2009
                
                
                March
      31, 2008Income
      tax expense
                
                $
                73,000
                
                
                $
                2,500Deferred
      tax benefit
                
                
                (20,000
                )
                
                
                (143,000
                )$
                53,000
                
                
                $
                (140,500
                )








For the
three months ended March 31, 2009, net cash provided by operating activities
totaled $557,464, compared to $43,457 for the first quarter of 2008. A portion
of this substantial increase was the result of one-time occurrences. However,
management expects improvements in cash flow throughout the year as the effects
of cost reductions are fully realized. Furthermore, third and fourth quarter
revenues are typically significantly higher than the first quarter.





For the
period ended March 31, 2009, operating profit or EBITDA - earnings before
interest, taxes, depreciation and amortization - totaled $469,261, an increase
of 406% from the $92,674 reported for the first quarter of
2008.  EBITDA is calculated as follows:


14








Three
      Months
                
                
                Three
      MonthsEnded
                
                
                EndedMarch
      31, 2009
                
                
                March
      31, 2008Net
      loss
                
                $
                (54,369
                )
                
                $
                (230,907
                )Interest
      expense
                
                
                58,058
                
                
                
                66,887Income
      tax (benefit)
                
                
                53,000
                
                
                
                (140,500
                )Depreciation
                
                
                76,624
                
                
                
                74,869Amortization
                
                
                335,948
                
                
                
                322,325$
                469,261
                
                
                $
                92,674





Liquidity,
Sources of Capital and Lines of Credit




On March
31, 2009, current assets were $2,151,542, and total assets were $15,978,055.
Current liabilities were $2,994,553 and total liabilities were $8,004,458,
resulting in total shareholder equity of $7,973,597 and a working capital
deficiency of $843,011.





At the
end of the first quarter of 2009 the Company's unrestricted cash balance was
$519,648 compared to $279,227 on December 31, 2008.





We
believe that current cash needs can be met with the current cash balance and
from working capital generated from operations over the next 12
months.





CRITICAL
ACCOUNTING POLICIES





Our
financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses. These
estimates and assumptions are affected by management's applications of
accounting policies. Critical accounting policies for IMS include the
following:





REVENUE
SOURCES AND REVENUE RECOGNITION





The
Company and its subsidiaries earn revenues in both traditional cash dollars and
in IMS trade dollars. Cash income is earned through fees assessed when a member
joins, transaction fees generated when clients earn or spend their trade
dollars, monthly maintenance fees, finance charges on delinquent accounts
receivable, and event fees.





Trade
revenue is similarly generated through initial membership fees, monthly
maintenance fees, transaction fees and event fees. Occasionally the Company will
accept a favorable trade ratio in lieu of a cash fee. The Company uses earned
trade dollars 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. Revenues are recognized when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the
price is fixed or determinable, and collectability is reasonably
assured.





Transaction
fees are recognized upon receipt of transactional information accumulated by our
systems or reported by our clients. Membership fees, monthly maintenance fees,
finance charges, and other fees are billed monthly to members' accounts, and are
recognized in the month the revenue is earned.





RECEIVABLES
AND ALLOWANCE FOR DOUBTFUL ACCOUNTS





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 the
amount outstanding.


15







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 accounts receivable, past collection experience, current
economic conditions, volume, growth and composition of the accounts receivable,
and other relevant factors. Actual results may differ from these estimates. The
allowance is increased by provisions for bad debts charged against
income.





GOODWILL
AND MEMBERSHIP LISTS





Goodwill
and membership lists are stated at cost and arise when IMS acquires another
company. Membership lists are amortized over the estimated life of ten
years.





In 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 be tested annually for impairment. There was no
impairment of goodwill or membership lists in the first nine months of
2008.





INCOME
TAXES





The
Company accounts for income taxes under the Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.  Under SFAS 109,
the effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.





Recent
Accounting Pronouncements





In April
2009, the FASB issued FASB Staff Position FAS-157-4, “Determining Whether a
Market Is Not Active and a Transaction Is Not Distressed” (“FSP FAS
157-4”).  FSP FAS 157-4 provides guidelines for making fair value
measurements more consistent with the principles presented in SFAS
157.  FSP FAS 157-4 provides additional authoritative guidance in
determining whether a market is active or inactive and whether a transaction is
distressed.  FSP FAS 157-4 is applicable to all assets and liabilities
(i.e. financial and nonfinancial) and will require enhanced
disclosures.  FSP FAS 157-4 is required to be adopted no later than
the periods ending after June 15, 2009.  We are currently assessing
the potential impact of the adoption of FSP FAS 157-4 on our consolidated
financial statement disclosures.





In April
2009, the FASB issued FASB Staff Position FAS 115-2 and FAS 124-2, “Recognition
and Presentation of Other-Than-Temporary Impairments” (“FSP FAS 115-2”) and
(“FSP FAS 124-2”).  FSP FAS 115-2 and FSP FAS 124-2 provide additional
guidance to provide greater clarity about the credit and noncredit component of
an other-than-temporary impairment event and to improve presentation and
disclosure of other than temporary impairments in the financial
statements.  FSP FAS 115-2 and FSP FAS 124-2 are required to be
adopted no later than the periods ending after June 15, 2009.  We are
currently assessing the potential impact of the adoption of FSP FAS 115-2 on our
consolidated financial statement disclosures.





In April
2009, the FASB issued FASB Staff Position FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1”) and
(“APB 28-1”).  FSP FAS 107-1 amends FASB Statement No. 107,
“Disclosures about Fair Value of Financial Instruments”, to require disclosures
about fair value of financial instruments in interim as well as in annual
financial statements and amends APB Opinion No. 28 “Interim Financial
Reporting”, to require those disclosures in interim financial
statements.    FSP FAS 107-1 and APB 28-1 are required to be
adopted no later than the periods ending after June 15, 2009.  We are
currently assessing the potential impact of the adoption of FSP FAS 107-1 on our
consolidated financial statement disclosures.


16







In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles. SFAS 162
directs the hierarchy to the entity, rather than the independent auditors, as
the entity is responsible for selecting accounting principles for financial
statements that are presented in conformity with generally accepted accounting
principles. SFAS 162, is effective 60 days following SEC approval of the Public
Company Accounting Oversight Board ("PCAOB") amendments to remove the hierarchy
of generally accepted accounting principles from the auditing standards. SFAS
162 is not expected to have an impact on the Company's consolidated financial
statements.







OFF
BALANCE SHEET ARRANGEMENTS





We do not
have any off balance sheet arrangements or other relationships with
unconsolidated entities.







ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not
applicable for Smaller Reporting Companies.








ITEM
4. CONTROLS AND PRODCECURES





Members
of our management, including Don F Mardak, our Chief Executive Officer, Danny W
Weibling, our Chief Financial Officer, have evaluated the effectiveness of our
disclosure controls and procedures, as of March 31, 2009, the end of the period
covered by this report. Based upon that evaluation, Mr. Mardak and Mr. Weibling
concluded that our disclosure controls and procedures are
effective.








INTERNAL
CONTROL OVER FINANCIAL REPORTING





Under the
supervision and with the participation of our management, including the
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(c) and Rule 15d-15(c) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as of March 31, 2009. Based on
this evaluation, our principal executive officer and principal financial officer
have concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in the reports we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time period specified in the Securities and Exchange Commission's
rules and forms, and that our disclosure and controls are designed to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, or
persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.





Changes
in Internal Controls





There
were no changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in our internal controls over financial
reporting that occurred during the first quarter of fiscal 2009 that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.


17





INTERNATIONAL
MONETARY SYSTEMS, LTD.





Part
II.                      Other
Information





Item
1.     Legal Proceedings





On
January 20, 2008, Celia Greengrass filed a sexual harassment complaint with the
Equal Employment Opportunity Commission.  The claim is still under
investigation by the EEOC but IMS believes the claims to be meritless and will
vigorously defend itself.





On March
20, 2008, Joan Mansfield filed a complaint alleging age discrimination with the
Connecticut Commission on Human Rights and Opportunities and the Equal
Employment Opportunity Commission.  IMS has reached a settlement with
Ms. Mansfield and the complaints will be dismissed. The Company will pay Ms.
Mansfield $15,000.





On May
29, 2008, John Lounsbury filed a claim of sexual harassment with the Connecticut
Commission on Human Rights and Opportunities and the Equal Employment
Opportunity Commission.  The claim is still under investigation by the
CHRO but IMS feels the claim is without merit and will vigorously defend
itself.





On
September 25, 2008, IMS was notified of a wage claim filed with the Canadian
Ministry of Labour by Gerard Domet in the amount of $10,400.00.  The
claim is still under review by the Ministry of Labour.  There may be
wages due to Mr. Domet; however, the amount is substantially less than the
amount claimed.





On
September 30, 2008, WRS, Inc D/B/A WRS Motion Picture and Video Laboratory filed
suit in Allegheny County, PA for breach of contract.  The complaint
seeks $38,649.58 in damages.  The complaint against IMS is meritless;
the litigation seeks payment for services provided to a former member of the
Exchange, none of the services at the heart of the litigation were provided to
IMS and therefore, no payment is due from IMS.  A motion to dismiss
this matter is pending with the court.





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





Item 1A.
Risk Factors - None





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





On
January 2, 2009, the Company redeemed 600,000 shares of IMS common stock from
the former owner of Alliance Barter, who was paid $450,000 in cash per the stock
guarantee agreement.  Payment was made from restricted cash, and the
stock was placed in treasury. The transaction is exempt from registration under
the Securities Act of 1933 in reliance on an exemption provided by Section 4(2)
of that act.





On
January 15, 2009, the portion of the agreement, for the purchase of Kansas Trade
Exchange, that specified that 300,000 of shares IMS common stock were to be
issued, was cancelled. The stock had not yet been issued. In exchange two notes
payable were issued totaling $300,000. The notes are interest only at 4.5% per
annum, and annual principal payments begin January 21, 2009. Principal payments
range from $0 to $120,000 at the discretion of the note holders. This also
resulted in the release of $300,000 of the stock guarantee. The transaction is
exempt from registration under the Securities Act of 1933 in reliance on an
exemption provided by Section 4(2) of that act.





On March
16, 2009 IMS issued 300,000 shares of IMS stock to an investor relations firm.
The fair value of the stock was $24,000. The transaction is exempt from
registration under the Securities Act of 1933 in reliance on an exemption
provided by Section 4(2) of that act.





Item
3.    Defaults Upon Senior Securities - None





Item
4.    Submission of Matters to a Vote of Security Holders
–  None.





Item
5.    Other Information – None





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Item
6.     Exhibits and Reports on Form 8-K





(a)   Exhibits





31.1  Certification
of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange
Act.





31.2  Certification
of Principal Financial and Accounting Officer Pursuant to Rule 13a-14(a) of the
Exchange Act.





32.1  Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.





32.2  Certification
of Principal Financial and Accounting Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.





(b)  Reports
on Form 8-K





None.





19












INTERNATIONAL
MONETARY SYSTEMS, LTD.





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. (Registrant)











/s/ Donald M
Mardak





Donald F.
Mardak, President


(Principal
Executive Officer)





May 14,
2009











/s/ Danny W
Weibling





Danny W
Weibling, CPA, Treasurer


(Chief
Financial Officer)





May 14,
2009


20