**UNITED
      STATES**


**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 June 30, 2007





**INTEGRATED
      MICROMETALLURGICAL SYSTEMS, INC.**


Commission
      file number: 000-51870


State
      or
      other jurisdiction of incorporation or organization: NEVADA


I.R.S.
      Employer Identification Number: 20-0667864





7025
      North Espe


Spokane,
      Washington 99217-9788


Telephone:
      (509) 922-8804


COMMON
      STOCK $0.001 PAR VALUE





Securities
      registered under Section 12(b) of the Exchange Act





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




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not 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. o





State
      issuer’s revenues for its most recent fiscal year. **** $0





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates, computed by reference to the price at which the common equity
      was last sold was $97,000.*





The
      number of shares of Common Stock, par value $0.001, of the issuer outstanding
      as
      of September 30, 2007, was 11,200,000 shares.





DOCUMENTS
      INCORPORATED BY REFERENCE





Not
      Applicable.


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







FORWARD
      LOOKING STATEMENTS





Certain
      matters discussed herein are forward-looking statements. We have based these
      forward-looking statements on our current expectations and projections about
      future events. Certain, but not necessarily all, of such forward-looking
      statements can be identified by the use of forward-looking terminology, such
      as
      "believes," "expects," "may," "will," "should," "estimates," or "anticipates,"
      or the negative thereof or other variations thereof or comparable
      terminology.





All
      forward-looking statements involve known and unknown risks, uncertainties and
      other factors which may cause our actual transactions, results, performance
      or
      achievements to be materially different from any future transactions, results,
      performance or achievements expressed or implied by such forward- looking
      statements. Although we believe the expectations reflected in such
      forward-looking statements are based upon reasonable assumptions, we can give
      no
      assurance that our expectations will be attained or that any deviations will
      not
      be material. We disclaim any obligations or undertaking to publicly release
      any
      updates or revisions to any forward-looking statement contained in this annual
      report on Form 10-KSB to reflect any change in our expectations with regard
      thereto or any change in events, conditions or circumstances on which any such
      statement is based.




**PART
      I**





**Item
      1.**  **Business.**





**Business
      Development**





On
      June
      29, 2006 Integrated Micrometallurgical Systems, Inc. (“IMS or the Company”), a
      Nevada corporation and ECZ, Inc. (“ECZ”), a Nevada corporation and a reporting
      company under Section 13 or Section 15(d) of the Securities Exchange Act of
      1934, as amended (the “Exchange Act”), entered into an Acquisition Agreement and
      Plan of Merger (the “Acquisition Agreement”) whereby IMS acquired all of the
      outstanding shares of common stock of ECZ from its sole shareholder. IMS was
      the
      surviving corporation in the transaction and its officers and directors became
      those of the surviving corporation. Subsequent to the merger, the Company
      elected to change its year end from December 31 to June 30. Management’s
      discussion and analysis compares the year end June 30, 2007 to the short year
      ending June 30, 2006.





ECZ
      was a
      blank check company incorporated on December 21, 2005. ECZ had no business
      activities prior to the date of the Acquisition Agreement.  Pursuant
      to Rule 12g-3(g) of the General Rules and Regulations of the Securities and
      Exchange Commission, IMS is the successor issuer to ECZ for reporting purposes
      under the Exchange Act. The purpose of this transaction was for IMS to succeed
      to the registration status of ECZ under the Exchange Act pursuant to Rule 12g-3.
      ECZ, a reporting company was not engaged in any business. ECZ was incorporated
      for the purpose of becoming a fully reporting company and subsequently finding
      a
      merger candidate.


2


**Introduction,
      Business Strategy**




IMS
      intends to market a unique processing technology in the field of science known
      as Tribology. The Company intends to also market custom equipment in the field
      of industrial coatings or sometimes referred to as metal protection
      technologies. The Company utilizes a proprietary technology called NeoMetx(tm)
      for its coating process. NeoMetx(tm) technology offers metal surface coating
      to
      reduce friction, wear, and corrosion of mechanisms with direct metal-to-metal
      contact. Conventional methods of metal coating generally consist of thermal
      spray of layers of material onto the surfaces to reduce friction and wear,
      which
      subsequently require maintenance as surface treatments often crack, chip, peel
      and delaminate. The NeoMetx(tm) technology creates an entirely new surface,
      which alters the molecular structure of the surface metal, by dispersing dry
      chemical compounds into the substrate of the treated piece. The end product
      becomes part of the metal, unlike conventional treatments where layers adhere
      to
      the surface.





NeoMetx(tm)
      was developed by Dr. Paul Vose. As the inventor, Dr. Vose holds the patent
      pending applications on this process, which have been assigned to the Company
      pursuant to an exclusive License Agreement between Dr. Voss and the Company.
      Dr.
      Vose is not a shareholder in the Company, but will receive certain consideration
      in the form of a royalty for all goods and services sold by the company. The
      license of this technology allows IMS to continue Research and Development,
      as
      well as to undertake commercialize of the processing technology. The exclusive
      License Agreement relates to intellectual property, trade secrets and several
      applications for patents.





IMS
      intends to commercialize this technology through variety of strategies; 1)
      through licensing activities and sales of disposable compounds; 2) through
      the
      sale of custom processing equipment; and 3) by processing metal components
      for
      third parties as a vendor. IMS, subject to securing additional working capital,
      will move forward with the commercialization process, while at the same time
      continuing to conduct a research and development effort to further improve
      this
      technology and discover new applications.





Our
      executive offices are located at 7925 North Espe, Spokane, WA
      99217-9788





IMS
      was
      incorporated in Nevada on May 10, 2004, and our  fiscal
      year end is June 30.





**Integrated
      Micrometallurgical Systems Business Strategy**




The
      Company intends to market a processing technology and sell custom processing
      equipment which is tailored to specific applications in the field of industrial
      coatings. The general objectives of the processes available in the industrial
      coating field are increased resistance against wear and corrosion. The
      NeoMetx(tm) process results in a final product with at least the same or better
      performance than other products on the market, which are more complex than
      the
      NeoMetx(tm) process. One of the major advantages of the NeoMetx(tm) process
      is
      that the coating can be applied at “normal” atmospheric conditions and deliver a
      finished end product with an integrated-reengineered surface without a layer
      on
      top of the original surface. This makes the NeoMetx(tm) product easier to apply,
      at a lower cost and with no compromise in the tolerances of the component.


3


While
      many of the other coating processes could be replaced by the NeoMetx(tm)
      process, the realistic characterization is that this transition will take time,
      but because it offers a lower cost with improved performance, over time it
      could
      replace some of the coating processes currently being used.





The
      company operates in the field of industrial coatings, in a competitive and
      very
      fragmented environment on the supplier side, and diverse industries on the
      customer side. Our objective will be to grow into a full service company,
      whereby it will subcontract many of the tasks. The following is a summary of
      the
      products and services to be offered, providing the basis for revenues:





·
            Develop
                customer specific solutions to surface engineering issues as specified
                by
                customers, with emphasis on industries which require solution for
                increased lubrication, enhanced corrosion resistance, increased longevity
                of parts with heavy friction use.





·
            Design,
                produce and deliver application equipment for low and high quantity
                applications.





·
            Produce
                and deliver application materials (chemical compounds).





·
            Conclude
                exclusive and/or non-exclusive license agreements with customers/
                distributors in the U.S. and/or abroad (worldwide).





·
            Surface
                treatment of singular or small quantity parts as a service to specific
                companies, organizations or government agencies.








**Marketing
      and Sales**





We
      do not
      intend to manufacture the products we may develop. We intend to contract out
      the
      manufacturing of the systems and products to third party companies. We intend
      to
      license to, or enter into strategic alliances with companies in the surface
      treatment industry who can manufacture and/or market our products, if any,
      through their distribution networks. We may, however, do the initial marketing
      for the different products, before deciding on the cooperation partners, and
      may
      undertake such activities as sales through a franchising network for specific
      products, in which case we would subcontract the manufacturing of the
      product(s), and outsource the distribution. The best suited business form will
      be decided on a case-by-case basis.





We
      plan
      to expand our business by undertaking the following marketing
      strategies:





1.  Develop
      customer specific solutions to surface engineering issues and problems, with
      emphasis on industries which require solution for increased lubrication,
      enhanced corrosion resistance and increased longevity of parts with heavy
      friction use.





2.  Design,
      produce and deliver custom application and processing equipment for utilization
      of low and high quantity applications.


4





3.  Produce
      and deliver approximately 50 different chemical compounds.





4.  Enter
      into exclusive and/or non-exclusive license agreements with customers and
      distributors in the U.S. and worldwide.





5.  Surface
      treatment of singular or small quantity parts as a service to specific
      companies, organizations or government agencies.





**Patents
      and Intellectual Property**





We
      are
      substantially dependent on our ability to obtain and maintain patents and
      proprietary rights for our product candidates, particularly those relating
      to
      the technology underlying our core technology which relates to methods we use
      to
      treat metal surfaces with the NeoMetx(tm) process, our lead product and to
      avoid
      infringing on the proprietary rights of others.





Below
      is
      a summary and status of the various patent applications and trademarks filed
      as
      of this date and to be owned by the Company.





A
      patent
      filed October 12, 2004 titled Compositions and Methods Relating to Tribology.
      Filing Receipt # *OC000000014332796*. Code for filing abroad under the Paris
      Convention is serial number US60/618,285. This is the master patent by which
      all
      other patents will be based. Response to first set of comments from U.S. Patent
      and Trade Office (USPTO) was filed on October 4, 2005 including a response
      to
      file missing parts including declaration, the legal assignment to Integrated
      Micrometallurgical Systems, Inc. with copy of the license agreement, formal
      figures and preliminary amendments. A secondary set of comments from the U.S.
      Patent and Trade Office is expected in September or October 2006.  Current
      status is Patent Pending and management of the Company believes confirmation
      will be forthcoming.





A
      second
      patent application was filed as a provisional on December 16, 2004 titled
      Systems and Methods Related to Particle Kinematics and Recycling of Lubricating
      Bombardment Particles Relating to Tribology. Based within the master patent,
      this patent deals with the proprietary designs of the mechanisms for delivery
      of
      the NeoMetx technology. Serial number is 60/637,323 and the file number is
      2353-2-2. The provisional was converted from provisional status to standard
      patent application on November 29, 2005. This Patent is currently pending and
      we
      are expecting comments from U.S. Patent and Trade Office in fourth quarter
      2006.





A
      copy of
      the patent titled Compositions and Methods Relating to Tribology was filed
      with
      the International Bureau of World Intellectual Property Organization (WIPO)
      on
      October 11, 2005. The filing receipt is PCT/US2005/036915. The patent was
      accepted under the Patent Cooperation Trade Agreement and published on April
      20,
      2006 under publication number WO 2006/042317 A2.





A
      patent
      application for Malaysia was filed on October 11, 2005 under the title
      Compositions and Methods Relating to Tribology based on application numbers
      US
      60/618,285 & US 11/183,178. The Malaysian Patent Application was assigned
      number PI 20054777. Status is Patent Pending and awaiting a request for
      examination date on or before October 11, 2007.


5





The
      trademark NeoMetx, was filed November 4, 2004 and received a file number:
      78-511,379 by the USPTO. Final acceptance and confirmation for trademark use
      by
      the U.S. Patent and Trademark office was issued under file number 78-511,379
      and
      granted February 2, 2006.





**Exclusive
      Technology License Agreements**





On
      May
      25, 2004, pursuant to an Exclusive Technology License Agreement and Right to
      Purchase Patents entered into with ECZ, Inc., our predecessor in interest,
      IMS
      obtained an exclusive license from Paul Voss Ph.D. to a patent application
      and
      any proprietary technology developed by Dr. Voss. A patent application covered
      by the license agreement relating to this technology titled “Compositions and
      Methods Relating to Tribology” was subsequently filed on October 12, 2004 and as
      of this date has not yet been issued. Dr. Voss also agreed, in the event that
      he
      was granted domestic or foreign patents in the future, Dr. Voss would within
      60
      days; assign all right, title and interest in such patents to IMS. IMS must
      pay
      a royalty of 3% percent of the net selling price per unit of any licensed
      product sold by IMS. IMS was granted the right to enter into exclusive
      sublicenses concerning the licensed technology upon written authorization from
      Paul Voss. **** IMS
      will
      retain 70% of any royalty income and must pay Dr. Voss 30% of any royalty income
      on all product royalty income per unit received by IMS from a sub-licensee.
      In
      addition, IMS undertakes to pay Dr. Voss fifty percent of any license fee paid
      as part of a sub-license agreement.




Under
      the
      License Agreement, we are obligated to pay all patent related costs including
      filing, prosecution and maintenance costs. Dr. Voss, the licensor, has the
      first
      right to bring suit against any third party infringers and is responsible for
      all of our costs and expenses incurred in conjunction with such suit. If Dr.
      Voss chooses not to bring such a suit, we have the right to do so, and will
      pay
      the costs and expenses of such a suit against a third party infringer. Either
      party shall be entitled to recovery of damages in a suit against a third party
      infringer brought by that party.





Under
      the
      License Agreement, the license terminates upon expiration of the last to expire
      of the licensed patents or patents to be filed in the future concerning the
      proprietary IMS technology. IMS can terminate the License Agreements upon sixty
      day notice.





Under
      the
      License Agreements, either party can terminate the Exclusive Technology License
      Agreement if the other party defaults in the performance of any obligation
      under
      the agreement, is adjudged bankrupt, becomes insolvent, makes an assignment
      for
      the benefit of creditors or is placed in the hands of a receiver or trustee
      in
      bankruptcy, and such default or circumstance is not cured within 30 days after
      receiving notice by the other party specifying such default or circumstance.
      Termination of the agreement would not relieve either party of any obligation
      to
      the other party incurred prior to such termination.





**Competition**





In
      the
      field of coating and surface treatment, many different processes are known
      today. The field includes a number of well established competitors, who have
      more years of experience in the coating industry and are better financed to
      capture market share of the metal coating business. Some of the larger
      competitors in the coating arena include: Praxair Surface Technologies, Inc.,
      Akzo Nove, Inc., Balzer, Inc., White Engineering, Inc., Accurate Metallizaing,
      Inc., Northeast Coating, Inc., Precision Coating, Inc., Metallurgical
      Processing, Inc., Sulzer Plasma, Inc., South West Impreglon, Inc. Each of these
      companies covers an extensive spectrum of different coating processes.


6





**Employees**





We
      currently have one part time employee who serves as an officer and director,
      two
      consultants on retainer, one of which is an officer and director and we utilize
      part time employees on an as needed basis. Until the Company can demonstrate
      profitability on a consistent basis and secure additional operating capital,
      the
      Company does not plan on adding any full time employees.




**Item
      2.**  **Description
      of Property.**





Our
      operations are conducted from our offices in Spokane, Washington. We sub-lease
      approximately 1,000 square feet of office and research and development space
      in
      Spokane, Washington on a month by month renewable basis. At present there is
      no
      monthly amount due, under the agreement and no amount accrued. If, and when,
      we
      obtain financing, rent will be negotiated and paid monthly.





**Item
      3.**  **Legal
      Proceedings.**





We
      are
      not involved in any legal proceedings, and there are no material pending legal
      proceedings of which we are aware.





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





We
      have
      not submitted any matters to a vote of our stockholders as of this date.





**PART
      II**





**Item
      5.**  **Market
      for Common Equity and Related Stockholder Matters.**





Our
      common stock is not traded or quoted on any securities exchange or quotation
      medium, and there is currently no market for our common stock, and a market
      may
      never develop for it. It is our intention to undertake an initial public
      offering or engage in another strategy to have our common stock eligible to
      be
      quoted on the over-the-counter bulletin board, administered by the NASD. There
      can be no assurance that a substantial trading market will ever develop for
      our
      common stock, or be sustained, if developed, or that current or future
      shareholders will be able to resell their securities or otherwise liquidate
      their investment without considerable delay, if at all.





We
      have
      not obtained a market maker who has agreed to file an application for our
      securities to be quoted on the over-the-counter bulletin board, and obtaining
      a
      quotation will be up to the over-the-counter bulletin board. Thus, there can
      be
      no assurance that the NASD will accept our market maker’s application on Form
      211. A public market for our common stock may never develop. The
      over-the-counter bulletin board and the pink sheets are quotation systems,
      which
      allow brokers to buy and sell shares of stock quoted “by appointment.” The
      results are announced electronically. This differs from a stock market, such
      as
      the NASDAQ, which actually executes trades in over-the- counter securities
      electronically, and which and stock exchanges, such as the New York Stock
      Exchange and the American Stock Exchange, which utilize brokers on a trading
      floor to execute buy and sell orders, which are then reported electronically.
      Also, the NASDAQ stock market and stock exchanges have listing standards, which
      require companies to have a minimum number of shareholders and minimum
      capitalization and share prices in order to obtain and maintain a listing with
      them. Stocks traded on the over-the-counter bulletin board and the pink sheets,
      unlike the NASDAQ stock market and exchanges, have very limited liquidity and,
      as a result, investors may not be able to sell all their shares at a favorable
      price or at all.


7





**Penny
      Stock Status**





If
      and
      when we create a market for our common stock, our common stock is a "penny
      stock," as the term is defined by Rule 3a51-1 of the Securities Exchange Act
      of
      1934. This makes it obligated to reporting, disclosure and other rules imposed
      on broker-dealers by the Securities and Exchange Commission requiring brokers
      and dealers to do the following in connection with transactions in penny
      stocks:





Prior
      to
      the transaction, to approve the person's account for transactions in penny
      stocks by obtaining information from the person regarding his or her financial
      situation, investment experience and objectives, to reasonably determine based
      on that information that transactions in penny stocks are suitable for the
      person, and that the person has sufficient knowledge and experience in financial
      matters that the person or his or her independent advisor reasonably may be
      expected to be capable of evaluating the risks of transactions in penny stocks.
      In addition, the broker or dealer must deliver to the person a written statement
      setting forth the basis for the determination and advising in highlighted format
      that it is unlawful for the broker or dealer to effect a transaction in a penny
      stock unless the broker or dealer has received, prior to the transaction, a
      written agreement from the person. Further, the broker or dealer must receive
      a
      manually signed and dated written agreement from the person in order to
      effectuate any transactions is a penny stock.





Prior
      to
      the transaction, the broker or dealer must disclose to the customer the inside
      bid quotation for the penny stock and, if there is no inside bid quotation
      or
      inside offer quotation, he or she must disclose the offer price for the security
      transacted for a customer on a principal basis unless exempt from doing so
      under
      the rules.





Prior
      to
      the transaction, the broker or dealer must disclose the aggregate amount of
      compensation received or to be received by the broker or dealer in connection
      with the transaction, and the aggregate amount of cash compensation received
      or
      to be received by any associated person of the broker dealer, other than a
      person whose function in solely clerical or ministerial.





The
      broker or dealer, who has effected sales of penny stock to a customer, unless
      exempted by the rules, is required to send to the customer a written statement
      containing the identity and number of shares or units of each such security
      and
      the estimated market value of the security. Imposing these reporting and
      disclosure requirements on a broker or dealer make it unlawful for the broker
      or
      dealer to effect transactions in penny stocks on behalf of customers. Brokers
      or
      dealers may be discouraged from dealing in penny stocks, due to the additional
      time, responsibility involved, and, as a result, this may have a deleterious
      effect on the market for our stock. For individuals who wish to buy or sell
      penny stocks without a broker-dealer, there is no determination of suitability
      of the transaction, except for what judgment is made by the individual investor.


8





**Transfer
      Agent, Warrant and Registrar**





We
      are
      acting as our own transfer agent. As of June 30 **,** 2007
      there were approximately 48 holders of record of IMS’s common stock, of which
      11,200,000 were issued and outstanding.





We
      have
      never paid cash dividends on our common stock. We presently intend to retain
      future earnings, if any, to finance the expansion of our business and we do
      not
      anticipate that any cash dividends will be paid in the foreseeable future.
      Our
      future dividend policy will depend on our earnings, capital requirements,
      expansion plans, financial condition and other relevant factors.





**Equity
      Compensation Plan Information**





The
      following table sets forth information about the common stock available for
      issuance under compensatory plans and arrangements as of June 30,
      2007.





(a)
            
            (b)
            
            (c)Plan
                Category
            
            Number of securities to
                be issued upon exercise of
                outstanding options, warrants and rights.
            
            Weighted-average exercise
                price of outstanding options,
                warrants, and rights
            
            Number of securities
                remaining available for future
                issuance under equity compensation plans
                (excluding securities reflected
                in column (a))Equity
                compensation plan approved by security holders (1)
            
            
            2,525,000
            
            $
            0.20
            
            
            300,000Equity
                compensation plans not approved by security holders (2)
            
            
            0
            
            $
            0
            
            
            2,400,000Total
            
            
            2,525,000
            
            $
            0.20
            
            
            300,000





(1)
            On
                May 11, 2004 the shareholders of IMS adopted the 2004 Stock Option
                Plan
                with 2,525,000 shares of common stock reserved for issuance under
                the Plan
                under which the board of directors may grant incentive or non-statutory
                stock options to officers, directors, employees, consultants and
                advisors
                of IMS.





(2)
            On
                May 11, 2004, we granted options outside of our 2004 Stock Option
                Plan to
                IMS shareholders other than officers, directors, employees, consultants
                and advisors. No securities have been issued at this
                time.





**Recent
      Sales of Unregistered Securities; Use of Proceeds From Registered
      Securities**





During
      2004, the Company made a private offering of shares of common stock of the
      Company pursuant to Regulation D, Rule 506 of the Securities Act of 1933, as
      amended, whereby it sold 1,325,500 shares of the restricted Common Stock of
      the
      Company for cash of $265,000.





During
      2005, the Company completed a public offering of shares of common stock of
      the
      Company pursuant to Regulation D, Rule 504 of the Securities Act of 1933, as
      amended, whereby it sold 782,500 shares of the restricted Common Stock of the
      Company for cash of $156,500.


9


From
      January 1, 2006 until June 30, 2007 the company sold an additional 512,000
      share
      of restricted common stock pursuant to Regulation D, Rule 506 for cash of
      $102,500.




From
      inception until June 30, 2007, the Company has issue a total of 2,620,000 shares
      at $.20 per share to a total of 59 individuals and companies. All were deemed
      to
      be accredited investors. These shares were issued pursuant certain exempts
      from
      the registration requirements of the Securities Act pursuant to the exemption
      set forth in Section 4(2) and Regulation D, Rule 504 and 506 of the Securities
      Act. Gross proceeds of $524,000 were paid to IMS in this private placement
      as of
      June 30, 2007.





**Item
      6.**  **Management’s
      Discussion and Analysis or Plan of Operations**





**Results
      of Operations**





Since
      inception, we have had no revenues and have experienced losses. We have financed
      our operations primarily through the sale of our common stock or by
      contributions or loans from shareholders. We are still in the development stage,
      and the only operations we have commenced consist of the development of our
      products for market. In the year ended June 30, 2007, we had a net loss of
      $173,418, compared to a net loss of $126,875 at June 30, 2006. We consider
      a
      comparison of the two years to be meaningful, although, in the prior year,
      we
      were not engaged in any business activities, other than finding a suitable
      merger candidate.





**Liquidity
      and Capital Resources.**





As
      of
      June 30, 2007, we had $1,268 in cash, total current assets of $1,268 and a
      working capital deficit of $180,556, compared to a working capital deficit
      of
      $29,365 at June 30, 2006. We consider a comparison of the two years to be
      meaningful, although, in the prior year, we were not engaged in any business
      activities, other than finding a suitable merger candidate.




Net
      cash
      used in operating activities during the fiscal year ended June 30, 2007 was
      $17,329, compared to net cash used of $197,340 during the six months ended
      June
      30, 2006. We attribute the change to an increase in post merger operating
      expenses, and, therefore, a comparison with the prior year is meaningful,
      although the company was not engaged in business operations, other than the
      finding of a suitable merger candidate.





Net
      cash
      from financing activities for the fiscal year ended June 30, 2007 was $16,000.
      Net cash from financing activities for the year ended June 30, 2006 was
      $298,894. A comparison of the prior year is meaningful, as significant financing
      activities occurred.





Our
      current real estate sub-lease is on a month to month basis and requires a 30
      day
      written notice to vacate. We plan to finance our needs principally from the
      following:





·
            our
                existing capital resources and interest earned on that
                capital;


10





·
            sales
                of the Company’s systems, if any;





·
            licensing
                of technology; and





·
            through
                future private equity or debt
                financing.




We
      believe that we have sufficient capital resources to finance our plan of
      operation for at least the next twelve months. However, this is a
      forward-looking statement, and there may be changes that could consume available
      resources before such time. Our long term capital requirements and the adequacy
      of our available funds will depend on many factors, including the eventual
      reporting company costs, public relations fees, patent costs for filing,
      prosecuting, maintaining and defending our patent rights, among
      others.





Since
      inception, we have financed our operations and capital needs from private
      placements of our common stock and financial contributions or loans from our
      shareholders. We have no revenues, have experienced losses, and anticipate
      continuing to experience losses until the third or fourth quarter of 2008,
      when
      we expect that our operations can be commenced and we will start to generate
      limited revenue. We are dependent upon equity offerings of our common stock
      and
      contributions from our principals to finance our operations. We intend to
      commence a private offering of up to $1.0 million in common stock within the
      next twelve months, but there can be no assurance that this offering will be
      successful. Alternatively, we will rely on our principal shareholders for
      financial contributions. However, there are no firm commitments from our
      principal shareholders to contribute further capital at this time.




**Plan
      of Operations**





**In
      General.**





Since
      commencement of operations, our efforts have been principally devoted to
      research and development activities, including the development of core
      technology, testing various applications of our technology, conducting
      additional research & development, recruiting management personnel and
      advisors, and raising additional capital.





Our
      current business strategy is to concentrate our financial resources primarily
      on
      the further development of our metal surface treatment technology and processing
      equipment designed to utilize our technology and related products. In addition
      to the conducting tests on products submitted to us by third party companies,
      we
      plan to continue to undertake research and development on our core technology
      and designing processing and application systems and equipment.





The
      Company’s management has established a plan for the Company’s operation. This
      plan sets the stage for the Company’s operational objective and will serve as
      the foundation for detailed procedures. The plan is grounded on management’s
      experience at different function levels in a variety of industries. This
      knowledge, together with information about peer companies, is an invaluable
      resource for determining the direction of the Company.


11





The
      major
      guiding principles are based on practicality and efficiency, and
      include:





·
            While
                the Company operates out of the currently available facility and
                with the
                current personnel, this will be maintained until the volume of work,
                as a
                consequence of contracts, requires to change the facility and to
                hire
                additional personnel.





·
            The
                decision about the scope of tasks executed by the Company itself
                vs.
                outsourcing and licensing to other companies will be done at the
                appropriate time, considering the marketing success in market environment
                to be characterized as extremely fragmented both on the supplier
                and the
                consumer side. Ideally, the Company will pursue the R & D and limited
                marketing, while subcontracting and licensing everything else out
                to other
                companies. The other strategy would be to establish IMS as a full
                service
                company with a network of affiliates and/or subsidiaries in most
                of the
                industrialized countries.





·
            The
                basis for the Company’s success is the development of an advanced
                NeoMetx(tm) process. Therefore, continued R & D is extremely important
                in order to stay ahead of the
                competition.





The
      paramount operating principles are Quality and Customer Satisfaction. We believe
      that everything has to be done professionally and that quality does not only
      include the quality of a product, but also being able to deliver goods and
      services on a timely basis. The overall objective is customer satisfaction
      which
      can only be reached by a team of dedicated persons selling and delivering
      excellent products and services





We
      have a
      history of losses and depend upon our principal shareholders or private
      offerings of our common stock for capital contributions. There can be no
      assurance that we will be able to fund our operations for the next twelve months
      without such capital contributions.





**Product
      Research and Development Plans**





Our
      current plan of operation for the next 12 months primarily involves research
      and
      development activities on all levels of our NeoMetx(tm) technology.





We
      plan
      to continue product research on improving the efficiency of the NeoMetx(tm)
      technology. We will begin development of variations of the product for specific
      markets. We anticipate spending between $100,000 and $150,000 on further
      research and development over the next twelve months, depending on availability
      of capital for improvement of our product, including the development of new
      applications and new product development, using the NeoMetx(tm)
      technology.





We
      plan
      to conduct additional research and development of our product, we intend to
      improve the current system and design larger scale systems that may allow us
      to
      seek customers in different industries.


12


While
      we
      have no plans to relocate our current research facility within the next twelve
      months, in the event equipment or system purchases are made to customers, it
      will be necessary to relocate to a larger facility. Such equipment or systems
      purchases to customers would require that we purchase additional equipment
      in
      the range of $100,000. We may also need to hire up to three more full time
      employees, if we receive orders from customers. We intend to contract out the
      bulk of the manufacturing of any equipment, with assembly, final testing and
      packaging of the systems to be done in house.





Our
      actual research and development and related activities may vary significantly
      from current plans depending on numerous factors, including changes in the
      costs
      of such activities from current estimates, the results of our research and
      development programs, technological advances, determinations as to commercial
      viability and the status of competitive products. The focus and direction of
      our
      operations will also be dependent on the establishment of our collaborative
      arrangement with other companies, the availability of financing and other
      factors.




We
      are
      pursuing potential equity financing, sub-licensing and other collaborative
      arrangements that may generate additional capital for us. We will need to raise
      additional capital or generate additional revenue to complete our development
      of
      products and systems. We cannot assure you that we will generate sufficient
      additional capital or revenues, if any, to fund our operations beyond the twelve
      month period ending June 30, 2008, that any future equity financings will be
      successful, or that other potential financings through bank borrowings, debt
      or
      equity offerings, or otherwise, will be available on acceptable terms or at
      all.





**Critical
      Accounting Policies and Estimates.**





This
      discussion and analysis of our financial condition and results of operations
      are
      based on our financial statements that have been prepared under accounting
      principles generally accepted in the United States of America. The preparation
      of financial statements in conformity with accounting principles generally
      accepted in the United States of America requires our management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of contingent assets and liabilities at the
      date
      of the financial statements and the reported amounts of revenue and expenses
      during the reporting period. Actual results could materially differ from those
      estimates. We have disclosed all significant accounting policies in note 2
      to
      the financial statements included in this Form 10-KSB. Our critical accounting
      policies are:





**Revenue
      recognition:** Revenue
      is recognized when amounts earned are fixed and determinable.





**Research,
      development costs:** Research
      and development costs are expensed as incurred.


13





**Risks
      and Uncertainties**





*You
      should carefully consider the risks described below in evaluating IMS and our
      business. If any of the following risks actually occur, our business could
      be
      harmed. This could cause the price of our stock to decline. This report on
      Form
      10-KSB contains, in addition to historical information, forward-looking
      statements, including statements about future plans, objectives, and intentions,
      that involve risks and uncertainties. Our actual results may differ materially
      from the results discussed in the forward-looking statements. Factors that
      might
      cause or contribute to these differences include those discussed below and
      elsewhere in this report.*





**Risks
      Related to Our Business**





**We
      will need additional funds, and if we are unable to raise them, we will have
      to
      curtail or cease operations.**





Our
      product development programs and the potential commercialization of our product
      candidates require substantial working capital, including expenses for in house
      and third party testing, manufacture of operating systems that can be sold
      to
      third party customers pursuant to a License Agreement. Our future working
      capital needs will depend on many factors, including:





·
            the
                progress and magnitude of our product development
                programs,


·
            the
                scope and results of product development
                testing,


·
            the
                costs under current and future license agreements for our product
                candidates, including the costs of obtaining and maintaining patent
                protection for our product
                candidates,


·
            the
                costs of acquiring any technologies or additional product
                candidates,


·
            the
                rate of technological advances,


·
            the
                commercial potential of our product
                candidates,


·
            the
                magnitude of our administrative and legal expenses, including office
                and
                research development facilities rent,
                and


·
            the
                costs of establishing third party arrangements for
                manufacturing.





We
      have
      incurred negative cash flow from operations since we incorporated and do not
      expect to generate positive cash flow from our operations for at least the
      next
      several years. Therefore, we expect that we will need additional future
      financings in order to carry out our plan of operations beyond the next twelve
      months.





We
      may
      not be able to obtain adequate financing to fund our operations and any
      additional financing we obtain may be on terms that are not favorable to us.
      In
      addition, any future financings could substantially dilute our stockholders.
      If
      adequate funds are not available we will be required to delay, reduce or
      eliminate one or more of our product development programs, to enter into new
      collaborative arrangements on terms that are not favorable to us (i.e., the
      collaborative arrangements could result in the transfer to third parties of
      rights that we consider valuable), or to cease operations
      altogether.





**We
      have a limited operating history. We have a large accumulated deficit and may
      never become profitable.**





We
      have a
      limited operating history upon which investors may base an evaluation of our
      likely future performance. Since we began operations, we have been engaged
      in
      developing our research programs, recruiting outside directors and key
      consultants. We have not generated any revenue to date. Our only income other
      than equity financings has been a modest amount of interest income. As of June
      30, 2007, we had an accumulated deficit of $820,607 and our operating losses
      are
      continuing.


14





**We
      have no products available for sale and we may never be successful in developing
      products suitable for commercialization.**





All
      of
      our product candidates are at an early stage of development and all of our
      product candidates will require expensive and lengthy testing. None of our
      product candidates have been approved by regulatory authorities. We have no
      products available for sale and we do not expect to have any products
      commercially available for several years, if at all. There can be no assurance
      that our research will lead to the discovery of any commercially viable systems
      to utilize the NeoMetx(tm) technology. There are many reasons that we may fail
      in our efforts to develop our product candidates, including that:





·
            our
                product candidates will be
                ineffective,


·
            our
                product candidates will not be validated by independent
                testing,


·
            our
                product candidates will be too expensive to manufacture or market
                or will
                not achieve broad market
                acceptance,


·
            third
                parties will hold proprietary rights that may preclude us from developing
                or marketing our product candidates,
                or


·
            third
                parties will market equivalent or superior
                products.





**We
      cannot assure you that we will have future revenue or operating profits and
      you
      could lose your entire investment.**





We
      expect
      to incur substantial operating losses for at least the next several years.
      We
      currently have sufficient capital resources to fund our operations, with
      necessary adjustments to our general and administrative budget. We currently
      have no sources revenue and we cannot assure you that we will be able to develop
      other revenue sources or that our operations will become profitable, even if
      we
      are able to commercialize any products. If we do not generate significant
      increases in revenue, at some point in the future we may not be in a position
      to
      continue operations and investors could lose their entire
      investment.





**We
      do not currently have the capability to undertake manufacturing, marketing,
      or
      sales of any potential products.**





We
      have
      not invested in manufacturing, marketing or product sales resources. We cannot
      assure you that we will be able to acquire such resources. It is likely that
      we
      will also need to hire additional personnel skilled in engineering, product
      development and manufacturing of components if we develop additional product
      candidates with commercial potential. We have no history of manufacturing or
      marketing. We cannot assure you that we will successfully manufacture or market
      any product we may develop, either independently or under manufacturing or
      marketing arrangements, if any, with other companies. We currently do not have
      any arrangements with other companies, and we cannot assure you that any
      arrangements with other companies can be successfully negotiated or that such
      arrangements will be on commercially reasonable terms. To the extent that we
      arrange with other companies to manufacture or market our products, if any,
      the
      success of such products may depend on the efforts of those other
      companies.


15





**There
      is considerable technological change and uncertainty in our
      industry.**





We
      are
      engaged in the field of metallic surface treatment, which is characterized
      by
      extensive research efforts and rapid technological progress. New developments
      in
      surface treatment are expected to continue at a rapid pace in both industry
      and
      academia. There can be no assurance that research and discoveries by others
      will
      not render some or all of our programs or products noncompetitive or
      obsolete **.** Our
      business strategy is based in large part upon the NeoMetx(tm) technology, which
      is our core technology related to Surface Engineering. There is no assurance
      that the application of these new and unproven technologies will result in
      the
      development of commercially viable products for the treatment of metal surfaces.
      No assurance can be given that unforeseen problems will not develop with the
      NeoMetx(tm) technology or applications or we that we will ultimately develop
      commercially feasible products.





**We
      are dependent on executive officers most of whom do not have employment
      contracts.**





Because
      of the specialized scientific nature of our business, we are highly dependent
      upon our ability to attract and retain qualified scientific and management
      personnel. The loss of Dr. Voss as a consultant and as the licensor of our
      patent rights would be particularly detrimental to us. Also the loss of any
      of
      our other executive officers would be detrimental to us. We do not currently
      have employment agreements with any of our executive officers. We do not carry
      key man insurance on any of our personnel.





There
      is
      intense competition for qualified personnel in the areas of our activities,
      and
      there can be no assurance that we will be able to continue to attract and retain
      qualified personnel necessary for the development of our business. Loss of
      the
      services of or failure to recruit additional key scientific, technical and
      management personnel would be detrimental to our research and development
      programs and business.





**Our
      business could be harmed if we fail to protect our intellectual
      property.**





We
      have
      licensed rights to certain patented technology from Dr. Paul Voss, a consultant,
      to whom we are obligated to pay royalties if we or our sublicensees develop
      products based upon the licensed NeoMetx(tm) technology. Because of the
      substantial length of time and expense associated with bringing new products
      through development and regulatory approval to the marketplace, IMS places
      considerable importance on patent and trade secret protection for new
      technologies, products and processes. We have interests in three patent
      applications in the United States pursuant to our license agreements with Dr.
      Paul Voss. We are obligated to pay the filing, prosecution and maintenance
      expenses with regard to all of these patents. We and our licensor plan to file
      patent applications in other countries, and we may seek additional patents
      in
      the future. Our patent position, like that of many technology development
      companies, is uncertain and involves complex legal and factual questions for
      which important legal principles are unresolved. We may not develop or obtain
      rights to products or processes that are patentable. Even if we do obtain
      additional patents, they may not adequately protect the technology we own or
      have in-licensed. In addition, others may challenge, seek to invalidate,
      infringe or circumvent any patents we own or in-license, and rights we receive
      under those patents may not provide competitive advantages to us. Further,
      the
      manufacture, use or sale of our products or processes, if any, may infringe
      the
      patent rights of others.


16





We
      cannot
      assure you as to the breadth or the degree of protection that any such patents,
      if issued, will afford us or that any patents based on the patent applications
      will be issued at all. In addition, we cannot assure you that others will not
      independently develop substantially equivalent proprietary information or
      otherwise obtain access to our know-how or that others may not be issued patents
      that may require licensing and the payment of significant fees or royalties
      by
      us for the pursuit of our business.





Other
      companies may have filed patent applications or received patents that cover
      technologies similar to ours. Our ability to make, use or sell any of our
      product candidates or systems may be blocked by patents that have been or will
      be issued to third parties that we may not be aware of. The United States patent
      applications are confidential while pending in the Patent and Trademark Office,
      and patent applications filed in foreign countries are often first published
      six
      months or more after filing. Therefore, until a patent is issued, we have no
      way
      of knowing if a third party has a patent that could preclude us from
      commercializing our product candidates. Third party patent applications and
      patents could significantly reduce the coverage of our patents and limit our
      ability to obtain meaningful patent protection. If other companies obtain
      patents with conflicting claims, we may be required to obtain licenses to these
      patents or to develop or obtain alternative technology. We may not be able
      to
      obtain any such license on acceptable terms or at all. Any failure to obtain
      such licenses could delay or prevent us from pursuing the development or
      commercialization of our product candidates, which would adversely affect our
      business.





**Potential
      litigation concerning patent rights could involve significant expenses and
      damage our business.**





In
      the
      United States, the first to invent a technology is entitled to patent protection
      on that technology. For patent applications filed prior to January 1, 1996,
      United States patent law provides that a party who invented a technology outside
      the United States is deemed to have invented the technology on the earlier
      of
      the date it introduced the invention in the United States or the date it filed
      its patent application. In foreign countries, the first party to file a patent
      application on a technology, not the first to invent the technology, is entitled
      to patent protection on that technology. Under the patent laws of most
      countries, a product can be found to infringe a third party patent if the third
      party patent expressly covers the product or method of treatment using the
      product, or if the third party patent covers subject matter that is
      substantially equivalent in nature to the product or method, even if the patent
      does not expressly cover the product or method.





While
      we
      have not received notification of potential infringement of patents held by
      third parties, with respect to any of our product candidates, litigation, patent
      opposition and adversarial proceedings could result in substantial costs to us.
      Litigation and/or proceedings could be necessary or may be initiated to enforce
      any patents we own or in-license, or to determine the scope, validity and
      enforceability of other parties’ proprietary rights and the priority of an
      invention. The outcome of any of these types of proceedings could significantly
      affect our product candidates and technology. United States patents carry a
      presumption of validity and generally can be invalidated only through clear
      and
      convincing evidence.


17





Under
      our
      license agreement with Dr. Paul Voss, we have the right to pursue any actions
      against third parties for infringement of the patent rights covered by those
      agreements. Under those arrangements we are not obligated to share any recovery
      from infringement suits brought by us. If we do not bring an infringement
      action, our licensor may bring such action and will be entitled to any
      recovery.





An
      adverse outcome of these proceedings could subject us to significant liabilities
      to third parties, require disputed rights to be licensed from third parties
      or
      require us to cease using such technology, any of which could adversely affect
      our business. Moreover, the mere uncertainty resulting from the initiation
      and
      continuation of any technology related litigation or adversarial proceeding
      could adversely affect our business pending resolution of the disputed
      matters.





If
      we do
      not exercise our right to prosecute and our licensors institute and prosecute
      patent proceedings, our rights will depend in part upon the manner in which
      these licensors conduct the proceedings. In any proceedings they elect to
      initiate and maintain, these licensors may not vigorously pursue or defend
      or
      may decide to settle such proceedings on terms that are unfavorable to
      us.





**Despite
      the use of confidentiality agreements, which themselves may be of limited
      effectiveness, it may be difficult for us to protect our trade
      secrets.**





We
      rely
      on trade secrets to protect the NeoMetx(tm) technology in cases when we believe
      patent protection is not appropriate or obtainable. However, trade secrets
      are
      difficult to protect. While we require certain of our corporate collaborators,
      contractors and consultants to enter into confidentiality agreements, we may
      not
      be able to adequately protect our trade secrets or other proprietary
      information.





**We
      might face intellectual property claims that may be costly to resolve and could
      divert management attention.**





We
      may
      from time to time be subject to claims of infringement of other parties’
proprietary rights. We could incur substantial costs in defending ourselves
      in
      any suits brought against us claiming infringement of the patent rights of
      others or in asserting our patent rights in a suit against another company.
      Adverse determinations in any litigation could subject us to significant
      liabilities to third parties, require us to seek costly licenses from third
      parties and prevent us or our sublicensees from manufacturing and selling our
      potential products.





**If
      our product candidates do not achieve market acceptance, our business may never
      achieve profitability.**





Our
      success will depend on the market acceptance of any products or systems we
      may
      develop. The degree of market acceptance will depend upon a number of factors,
      including the receipt and scope of regulatory approvals, the establishment
      and
      demonstration in the business community of the safety and effectiveness of
      our
      products and their potential advantages over existing technologies. Consumers
      may not accept or utilize any product that we may develop.


18





**Our
      controlling stockholders may make decisions that you do not consider to be
      in
      your best interest.**





As
      of
      June 30, 2007, our directors and executive officers beneficially owned
      approximately 43% **** of
      our
      outstanding common stock. As a result, our controlling stockholders are able
      to
      control all matters requiring stockholder approval, including the election
      of
      directors and the approval of significant corporate transactions. This
      concentration of ownership could also delay or prevent a change in control
      of
      IMS that may be favored by other stockholders.





**We
      are significantly controlled by our management.**





Our
      executive officers comprise three of the four members of the Board of Directors.
      As a result, our management has the ability to exercise influence over our
      significant matters. This high level of influence may have a significant effect
      in delaying, deferring or preventing a change of control of our
      company.





**Risks
      Related to Our Industry**





**Potential
      technological changes in our field of business create considerable
      uncertainty.**





We
      are
      engaged in the metallic surface treatment industry, which is characterized
      by
      extensive research efforts and rapid technological progress. New developments
      in
      research concerning metallic surface treatment may occur at a rapid pace in
      both
      industry and academia. We cannot assure you that research and discoveries by
      others will not render some or all of our programs or product candidates
      noncompetitive or obsolete. We cannot assure you that unforeseen problems will
      not develop with our NeoMetx(tm) technology or application systems or that
      commercially feasible systems will ultimately be developed and marketed by
      us.





**The
      markets in which we seek to participate are intensely competitive and many
      of
      our competitors are better capitalized and have more experience than we
      do.**





There
      are
      many companies, both public and private, including well-known manufacturing
      and
      processing companies, engaged in developing new types of metallic surface
      treatments. Our major competitors are currently large companies such as Praxair
      Surface Technologies, Inc., Akzo Nove, Inc., Balzer, Inc., White Engineering,
      Inc., Accurate Metallizaing, Inc., Northeast Coating, Inc., Precision Coating,
      Inc., Metallurgical Processing, Inc., Sulzer Plasma, Inc., South West Impreglon,
      Inc. Each of these companies covers an extensive spectrum of different coating
      processes.





These
      are
      large and diversified companies with far ranging capabilities to market their
      products, processes and systems and to develop follow on products. In addition,
      until such time as the company secures additional capital we do not have the
      capability of marketing our systems or services and will have to enter into
      a
      collaborative relationship with a larger company in order to market our systems
      and services.





If
      we
      successfully develop our product candidates, we may face competition based
      on
      the effectiveness of our products and systems, marketing and sales capability,
      patent position and other factors. Our competitors may develop or commercialize
      more effective or more affordable products and systems, or obtain more effective
      patent protection, than we do. Accordingly, our competitors may commercialize
      products more rapidly or effectively than we do, which could hurt our
      competitive position.


19





**If
      product liability lawsuits are successfully brought against us, we may incur
      substantial liabilities and may be required to limit commercialization of our
      products.**





Our
      business, services and products will, in the future, expose us to potential
      product liability risks that are inherent in the manufacturing and marketing
      of
      products and systems use for the treatment of metallic surfaces. If we cannot
      successfully defend ourselves against liability claims, we may incur substantial
      liabilities or be required to limit commercialization of our products. Our
      inability to obtain sufficient product liability insurance at an acceptable
      cost
      to protect against potential product liability claims could prevent or inhibit
      the commercialization of products we develop, alone or with corporate
      collaborators. We do not carry product liability insurance at this time. We
      may
      not be able to obtain insurance at a reasonable cost, if at all.





**Other
      Risks**





**There
      is currently no market for our common stock; if listed, the price of our stock
      may experience considerable volatility.**





There
      currently is no trading market for our common stock. It is our intention to
      undertake an initial public offering or engage in another strategy to have
      our
      common stock traded on the OTC Bulletin Board under a symbol to be determined.
      The OTC Bulletin Board is a limited market and subject to substantial
      restrictions and limitations in comparison to the NASDAQ system. There can
      be no
      assurance that a substantial trading market will ever develop for our common
      stock, or be sustained, if developed, or that current or future shareholders
      will be able to resell their securities or otherwise liquidate their investment
      without considerable delay, if at all.





Recent
      history relating to the market prices of listed newly public companies indicates
      that, from time to time, there may be significant volatility in the market
      price
      of our securities because of factors unrelated, as well as related, to our
      operating performance. Factors that could have a significant impact on the
      future market price of our common stock include, but are not limited to,
      announcements of technological innovations or new products by IMS or its
      competitors, government regulatory action, patent or proprietary rights
      developments and market conditions for companies engaged in the development
      of
      alternative energy products. There can be no assurance that our common stock
      will ever qualify for inclusion within the NASDAQ System, or that more than
      a
      limited market will ever develop for our common stock.


20





**If
      our common stock is traded at a low price in the future, this may affect the
      ability of shareholders to sell their shares.**





Penny
      Stock Regulation Broker-dealer practices in connection with transactions in
      "Penny Stocks" are regulated by certain penny stock rules adopted by the
      Securities and Exchange Commission. Penny stocks generally are equity securities
      with a price of less than $5.00 (other than securities registered on certain
      national securities exchanges or quoted on the NASDAQ system). The penny stock
      rules require a broker-dealer, prior to a transaction in a penny stock not
      otherwise exempt from the rules, to deliver a standardized risk disclosure
      document that provides information about penny stocks and the risk associated
      with the penny stock market. The broker-dealer must also provide the customer
      with current bid and offer quotations for the penny stock, the compensation
      of
      the broker-dealer and its salesperson in the transaction, and monthly account
      statements showing the market value of each penny stock held in the customer's
      account. In addition, the penny stock rules generally require that prior to
      a
      transaction in a penny stock; the broker-dealer must make a written
      determination that the penny stock is a suitable investment for the purchaser
      and receive the purchaser's written agreement to the transaction. These
      disclosure requirements may have the effect of reducing the level of trading
      activity in the secondary market for a stock that becomes subject to the penny
      stock rules. When and if our common stock is listed on the OTC Bulletin Board,
      our stock will likely have a trading price of less than $5.00 per share and
      will
      not be traded on any exchanges, as they are defined. Therefore, our common
      stock
      is likely to become subject to the penny stock rules and investors may find
      it
      more difficult to sell their securities, should they desire to do
      so.





**We
      do not pay cash dividends.**





We
      have
      never paid dividends and do not presently intend to pay any dividends in the
      foreseeable future.





**Item
      7.**  **Financial
      Statements.**





The
      Audited Financial Statements for this Form 10-KSB appear in Item 13 of this
      annual report, and are hereby incorporated herein by reference.





**Item
      8.**  **Changes
      In and Disagreements With Accountants on Accounting and Financial
      Disclosure.**





On
      June
      29, 2006 the board of directors of IMS, Inc. unanimously passed resolutions
      dismissing the independent accounting firm Beckstead and Watts, LLP, Certified
      Public Accountants, 3340 Wynn Road, Suite B, Las Vegas, Nevada 89102 and
      appointing the independent accounting firm Williams & Webster, PS.,
      Certified Public Accountants, 601 W. Riverside, Suite 1940, Spokane, Washington
      99201 to audit the financial statements of IMS from inception to the year ending
      June 30, 2007. The board of directors dismissed the accounting firm Beckstead
      and Watts because that firm had performed the audits for ECZ, Inc., the blank
      check reporting company that IMS acquired for $4,000 and merged with on June
      29,
      2006 and was not familiar with the business of IMS, the surviving
      corporation.





In
      its
      audit of December 31, 2005, Beckstead and Watts had expressed substantial doubt
      about the ability of ECZ, Inc. the blank check pre-merger corporation, to
      continue as a going concern because ECZ, Inc. had had limited operations at
      the
      time of the audit and had not commenced planned principal operations. Beckstead
      and Watts' report on the audited financial statements of ECZ, Inc. did not
      contain an adverse opinion or a disclaimer of opinion nor was it modified as
      to
      uncertainty, audit scope, or accounting principles, except for the going concern
      paragraph. There were no disagreements at the most recent fiscal year end and
      any subsequent interim period through the date of dismissal with Beckstead
      and
      Watts concerning any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedure by either ECZ, Inc. or
      IMS.
      As IMS was the surviving corporation in the merger transaction the board of
      directors decided that the independent auditors of the pre-merger corporation
      IMS, Williams & Webster, PS., should continue in that
      capacity.


21




**Item
      8A.**  **Controls
      and Procedures.**





**Evaluation
      of Disclosure Controls and Procedures** .





Our
      management, including our Executive Officer and our Chief Financial Officer,
      has
      evaluated the effectiveness of our “disclosure controls and procedures” (as such
      term is defined in Rules 13a-14(c) and 15d-14(c) of the United States Securities
      Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the
      period covered by this Annual Report on Form 10-KSB. Based on that evaluation,
      our CEO and CFO have concluded that as of end of our last fiscal year, at which
      time we had just become a reporting company pursuant to Section 13 or 15(d)
      of
      the Exchange Act, our disclosure controls and procedures were not sufficiently
      effective to ensure that information required to be disclosed by us in reports
      that we file or submit under the Exchange Act is recorded, processed, summarized
      and reported within the time periods specified in United States Securities and
      Exchange Commission rules and forms. Material deficiencies were specifically
      cited in relation to our report on Form 8-K filed on July 13, 2006 concerning
      our merger/acquisition transaction with a full reporting company, and the manner
      in which information required to be disclosed therein was summarized and
      reported in that report under the recently accelerated filing deadlines
      applicable to Form 8-K reports. As a result of the material deficiencies
      identified in their evaluation, our CEO and CFO have subsequently put into
      place
      disclosure controls and procedures which they believe will provide reasonable
      assurance that we are enabled to ensure that information required to be
      disclosed by us in reports that we file or submit under the Exchange Act is
      recorded, processed, summarized and reported within the time periods specified
      in United States Securities and Exchange Commission rules and
      forms.





Our
      management, including our Chief Executive Officer and Chief Financial Officer,
      does not expect that our disclosure controls and procedures or internal control
      over financial reporting will prevent all errors and all fraud. A control
      system, no matter how well conceived and operated, can provide only reasonable,
      not absolute, assurance that the objectives of the system are met and cannot
      detect all deviations. Because of the inherent limitations in all control
      systems, no evaluation of controls can provide absolute assurance that all
      control issues and instances of fraud or deviations, if any, within the company,
      have been detected. While we believe that our disclosure controls and procedures
      have been effective, in light of the foregoing, we intend to continue to examine
      and refine our disclosure control and procedures to monitor ongoing developments
      in this area.




22




**PART
      III**





**Item
      9.**  **Directors
      and Executive Officers of the Registrant**





**Directors,
      Executive Officers, Promoters and Control Persons**





The
      current executive officers, directors and significant employees of IMS are
      as
      follows:




**Name**
              
              **Age**
              
              **Position**H.
                  Werner Huss
              
              64
              
              Chairman,
                  President, CEOLarry
                  K. Davis
              
              47
              
              Director,
                  CFO, COO & SecretaryJake
                  Huber
              
              64
              
              DirectorTed
                  Wagner
              
              47
              
              Director
                  & VP




H.
      Werner
      Huss: President & CEO, Chairman of the Board





Mr.
      Huss
      graduated Diplom Ingenieur Electrical Engineering, with emphasis on Electronics,
      from the Technical University in Munich/Germany. He currently serves as
      President and Chairman of IMS. He was recently involved in consulting for
      several start-up companies with promising new technologies, advising them in
      business and marketing matters. Previously, he has served in many functions
      in
      different companies here in the U.S. and in Europe, most notably in executive
      positions of several high tech companies in different industries, such as:
      President, Euromissile G.I.E. in Paris/France (a management and sales company
      for missile systems, in the EADS Group - European Aeronautics Defense and Space
      Company); President, MEADS International, Inc., in Orlando/Florida (tri-national
      management company for the Medium Extended Air Defense System, under contract
      from NAMEADSMA, the NATO agency in Huntsville, AL, managing this tri-national
      system under joint development in the U.S., Germany, and Italy); President,
      Magnetic Transit of America, Inc., in Los Angeles, CA (engineering and marketing
      company for a Mag-Lev Transportation system for inner urban use; a subsidiary
      of
      AEG/Daimler-Benz); General Manager of IBCOL Technical Services GmbH, in
      Munich/Germany (internationally operating marketing and sales company, mainly
      in
      the fields of aircraft, aircraft parts, transportation systems, security and
      surveillance systems, medical systems); Program Manager for a mobile air defense
      system at Euromissile, Paris/France and at MBB, Munich/Germany. His experience
      includes: (a) Program Management (complex technical projects); Extensive
      experience in all aspects and phases, from concept through design,
      industrialization, production, and logistics, (b) Company Management (Executive
      Management): Extensive hands-on experience in founding and managing of companies
      of various sizes, including the development of the business, business plans,
      financing and control, contracting, and license contracts, (c) Marketing and
      Sales: Extensive contacts with customers on all continents through marketing
      and
      sales missions and contracts. Extensive knowledge of business in various
      countries. He speaks German, French and English fluently, and Spanish on a
      working level.




23




Larry
      Davis: Secretary & CFO, COO Director





Mr.
      Davis
      attended East Tennessee State University, majoring in Industrial Electronic
      Technology with an emphasis in Business Management. Mr. Davis also attended
      Sheppard Technical University, where he received a Technical Degree in Advanced
      Digital Technology. Mr. Davis has recently served as President & Director of
      Titus Group, LLC, a private technical consulting company mainly active in the
      field of surface engineering. Mr. Davis was previously a Field Engineer for
      Sacred Heart Medical Center's engineering department as well as Project Manager
      for contractual compliance of outside contractors. He has also previously worked
      for Instrumentation Laboratories involved with production, quality assurance,
      and product development. He has also served as Senior Program Manager/ Engineer
      for companies such as Pulau Electronics Corporation and Ferranti International
      Corporation, as well as Liaison for Government Contracting. Mr. Davis is a
      veteran of The United States Air Force. He has also held high level security
      clearances.





Jake
      Huber, Ph.D.: Director





Dr.
      Huber
      received a B.S. in Mechanical Engineering Technology (Management minor) from
      Southern Illinois University, Carbondale, Illinois, in 1969, a M.S. in
      Mechanical Engineering Design (Management minor), from Southern Illinois
      University, Carbondale, Illinois in 1970 and a Ph.D. in Technical Education
      (double minor in Business Administration and Statistics/Research Design) from
      Oregon State University in 1973. He currently is the owner and manager of four
      real-estate development and construction firms operating in the state of Nevada.
      He operates a real estate partnership that is an investor and developer for
      125
      Community Living homes for the handicapped. Dr. Huber was the founder and
      president of Sierra Composite Design, Inc. This firm designed and manufactured
      components fabricated of advanced composite materials and polymers to customers
      in the military, aerospace, commercial, and medical fields. Flame-proof (2,000
      F) composite structures were developed for the SAAB/Fairchild 340, Lear Fan
      2100, and the Beech Starship aircrafts. Ballistic resistant structures were
      developed for the Army's Bradley Fighting Vehicle (tank), and radiolucent
      (stealth) injection-molded devices were developed for use in various medical
      and
      surgical applications. Dr. Huber has held very high military security
      clearances. Dr. Huber was a founder and president of Electromotive Technology
      Corporation. This private company was an advanced high-tech electro/mechanical
      engineering firm, which developed a high-output electrical generating system
      for
      use on aircraft and future automobiles. This single-customer company worked
      directly for the Design Center of Ford Motor Co. in Detroit. He was also the
      founder and manager of Alta Manufacturing Co., LLC. Alta is a single customer
      company created to develop a portion of a new military weapon system. He has
      personally supervised $25,000,000 worth of residential and light commercial
      construction (over 350 units). As an Associate Professor he personally
      supervised over 250 research and development projects during his nine years
      of
      university tenure from the proposal writing stage through to the final report,
      including all technical personnel. He personally financed and managed seven
      successful startup businesses in such areas as aerospace engineering, composite
      materials, neuro-surgical devices, automotive engineering, real-estate
      development, and construction. He also published 39 professional papers and
      articles in the areas of engineering, manufacturing, technical education,
      grantsmanship, and R&D management.





24




Ted
      Wagner: Director and Vice President





Mr.
      Wagner graduated from Washington State University in 1993 with a Bachelor of
      Science degree in Mechanical Engineering. He then worked at Johnson Matthey,
      a
      manufacturer of high purity metals used in computer chips. In 1993, he began
      working at RAHCO International, Inc., a custom mining equipment designer and
      manufacturer. While at RAHCO, Mr. Wagner developed equipment systems for some
      of
      the largest surface mines in the world, including properties owned by
      BHP-Billiton, Codelco, and Phelps-Dodge. As part of the supply of those systems,
      he helped coordinate the work of other manufacturers, such as Thyssen-Krupp
      and
      MAN-Takraf, as well as fabrication shops in North and South America. Mr. Wagner
      has substantial experience with heavy equipment and conveyor belt systems as
      one
      of the start up engineers on the Cananea, Mexico copper project where RAHCO
      commissioned mobile mining equipment. In 1999, he became Senior Application
      Engineer for RAHCO, integrating different bulk material handling methods to
      solve complex material handling problems for clients. In 2004, he was selected
      as one of the Lead Engineers for the mobile material handling system on the
      copper heap leach pad at the Chuquicamata Mina Sur project in Chile.





Each
      director is elected to hold office for a one year term or until the next annual
      meeting of stockholders and until his successor is elected and qualified. The
      officers of IMS serve at the pleasure of Integrated Micrometallurgical System’s
      Board of Directors.





As
      we are
      a development stage company with no revenues from operations, few employees,
      and
      relatively simple financial statements, we have not, at this stage, constituted
      any board committees, including an audit committee. We intend to do so in the
      near future. Consequently we do not have an audit committee financial expert
      who
      is an outside director. As our business grows and our financial statements
      become more complicated, we intend to seek an outside director who can qualify
      as an audit committee financial expert.





We
      have
      not adopted a code of ethics that applies to our President and CEO (principal
      executive officer), or our Chief Financial Officer (principal accounting
      officer). As we have just recently become a reporting company required to file
      periodic reports with the SEC and as our common stock is not currently listed
      on
      any exchange, we have not yet dealt with this issue, but we intend to do so
      in
      the near future.





**Section
      16(a) Beneficial Ownership Reporting Compliance.**




**Item
      10.** **Executive Compensation.**





**Summary
      Compensation Table**





The
      table
      below sets forth the aggregate annual and long-term compensation paid by us
      from
      inception in May 2004 and for the last three fiscal years ended June 30, 2007,
      June 30, 2006 and December 31, 2005 to our Chief Executive Officer (the “Named
      Operating Officer”). None of the other executive officers of IMS had an annual
      salary and bonus for any fiscal year that exceeded $100,000.


Annual
                  CompensationName
                  and principalposition
              
              Year
              
              Salary
                  ($)
              
              Bonus($)
              
              Other
                  annual
                compensation
                  (1)Larry
                        K. Davis
                      Director,
                        CFO and COO
              
              
              2007
              
              $
              0
              
              $
              0
              
              $
              02006
              
              $
              36,890
              
              $
              0
              
              $
              02005
              
              $
              73,780
              
              $
              0
              
              $
              0HH.
                        Werner HussCEO and President
              
              
              2007
              
              $
              0
              
              $
              0
              
              $
              02006
              
              $
              0
              
              $
              0
              
              $
              02005
              
              $
              0
              
              $
              0
              
              $
              32,500




25




**Option
      Grants in Fiscal Year 2007**





There
      were no option grants to our Named Executive Officer in 2005, 2006 and 2007.
      No
      option grants have been made to any of our executive officers under the IMS
      2004
      Stock Option Plan to date. We have not granted any stock appreciation rights
      from the Plan.





**Aggregate
      Option Exercises in Fiscal Year 2004 Year End Option
      Values**





In
      May of
      2004, 1,275,000 options were granted and held by the Executive Officers as
      of
      June 30, 2007.





The
      fair
      value of each option granted is estimated on the grant date using the Black
      Scholes Option Price Calculation. The following assumptions were made in
      estimating fair value: risk-free interest rate of 5%; volatility of 50%;
      expected life of 3 years; no dividends to be paid. The value of the options
      was
      $0.07 per share, or $89,250, which has been expensed as a consulting
      fee.





**Compensation
      of Directors**





We
      did
      not pay our non-employee directors (Messrs. Wagner, Huber and Huss) for
      attending board meetings in 2004, 2005, 2006 or 2007.





**Employment
      Contracts with Executive Officers and Termination of Employment and
      Change-in-Control Arrangements**





The
      Company does not have an employment contract with its Named Executive Officer
      or
      any of its executive officers.





We
      do not
      have any arrangements with our Named Executive Officer or any of our other
      executive officers triggered by termination of employment or change in
      control.




26




**Item
      11.**  **Security
      Ownership of Certain Beneficial Owners and Management.**





The
      following table sets forth certain information regarding beneficial ownership
      of
      our common stock as of June 30, 2007 (a) by each person known by us to own
      beneficially 5% or more of any class of our common stock, (b) by each of our
      executive officers and directors and (c) by all executive officers and directors
      of IMS as a group. As of June 30, 2007 there were 11,200,000 shares of our
      common stock issued and outstanding. The numbers of shares beneficially owned
      include shares of common stock which the listed beneficial owners have the
      right
      to acquire within 60 days of June 30, 2007 upon the exercise of all 1,275,000
      options and other rights beneficially owned on that date. Unless otherwise
      noted, we believe that all persons named in the table have sole voting and
      investment power with respect to all the shares beneficially owned by
      them.


**Amount****Title**
              
              **Name
                  and Address**
              
              
              
              **of
                  shares**
              
              **Percent****of**
              
              **of
                  Beneficial**
              
              
              
              **held
                  by**
              
              **of****Class**
              
              **Owner
                  of Shares**
              
              **Position**
              
              **Owner**
              
              **Class(1)****Common**
              
              
              **Werner
                  Huss(2**)****
              
              
              **Chairman**
              
              
              **1,950,000**
              
              
              **17.64**
              **%****Common**
              
              
              **Larry
                  K. Davis(3)**
              
              
              **Director/COO**
                **CFO/Sec.**
              
              
              **2,500,000**
              
              
              **22.60**
              **%****Common**
              
              
              **Jake
                  Huber(4)**
              
              
              **Director**
              
              
              **300,000**
              
              
              **4.00**
              **%****Common**
              
              
              **Ted
                  Wagner(5)**
              
              
              **Director/VP**
              
              
              **100,000**
              
              
              **.90****Common**
              
              
              **Tam
                  Cheuk Ho(6)**
              
              
              **Shareholder**
              
              
              **1,000,000**
              
              
              **9.04**
              **%****Common**
              
              
              **Wong
                  Wa On Edward(7)**
              
              
              **Shareholder**
              
              
              **1,000,000**
              
              
              **9.04**
              **%****All
                  Executive Officers, Directors as a Group (5 persons)**
              
              
              **4,850,000**
              
              
              **43.86**
              **%**




(1)
                The
                    percentages listed in the Percent of Class column are based upon
                    11,200,000 issued and outstanding shares of Common Stock and
                    of June 30,
                    2007.


(2)
            Werner
                Huss, 1328 So. Bundy, #2, Los Angeles, CA. 90025


(3)
            Larry
                K. Davis, 7925 N. Espe, Spokane, WA
                99217-9788


(4)
            Jake
                Huber,405
                Tenagaln, Verdi, NV. 89439


(5)
            Ted
                Wagner, 35925 N Pike Road, Deer Park, WA
                99217-9788


(6)
            Tam
                Cheuk Ho, Room 2105, West Tower, Shun Tak Centre, 168-200 Connaught
                Road
                Central, Sheung Wan, Hong Kong


(7)
                  Wong
                      Wa On Edward, Wong Wa On Edward, Unit 2301-2, 23/F.,SUP
                      Tower, 75-83 King's Road, North Point, Hong Kong





27




REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




We
      have
      audited the accompanying balance sheet of Integrated Micrometallurgical Systems,
      Inc., (a Nevada corporation and development stage company) as of June 30, 2007
      and 2006, and the related statements of operations, stockholders’ equity and
      cash flows for the year then ended and for the period from May 11, 2004
      (inception) to June 30, 2007. 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 audit.





We
      conducted our audit 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 audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Integrated Mircometallurgical
      Systems, Inc. as of June, 30, 2007 and 2006 and the results of its operations,
      stockholders equity and its cash flows for the year then ended and for the
      period from May 11, 2004 (inception) to June 30, 2007 in conformity with
      accounting principles generally accepted in the United States of
      America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 2 to the financial
      statements, the Company has no revenues, limited resources and a large
      accumulated deficit. These factors raise substantial doubt about the Company’s
      ability to continue as a going concern. Management’s plans are also discussed in
      Note 2. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.








/s/Williams
      & Webster, P.S.





Williams
      & Webster, P.S.


Certified
      Public Accountants


Spokane,
      Washington


November
      19, 2007





F
          - 1




**Item
      12** .  **Financial
      Statements.**




The
      financial statements as set forth under Item 7 of this report are incorporated
      by reference.




**INTEGRATED
            MICROMETALLURGICAL SYSTEMS,
            INC.**
 **(A
          DEVELOPMENT STAGE ENTERPRISE)**
 **BALANCE
        SHEETS**





June
                30,
            
            June
                30,2007
            
            2006**ASSETS**CURRENT
                ASSETSCash
            
            $
            1,268
            
            $
            2,597Total
                Current Assets
            
            
            1,268
            
            
            2,597PROPERTY
                AND EQUIPMENT, NET
            
            
            16,021
            
            
            23,956OTHER
                ASSETS, NET
            
            
            109,295
            
            
            118,403**TOTAL
                ASSETS**
            
            $
            126,584
            
            $
            144,956**LIABILITIES
                AND STOCKHOLDERS' EQUITY**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            31,061
            
            $
            16,096Related
                party payables
            
            
            147,901
            
            
            11,694Accrued
                liabilities
            
            
            2,862
            
            
            4,172Total
                Current Liabilities
            
            
            181,824
            
            
            31,962LONG-TERM
                LIABILITIESNote
                payable - related party, net
            
            
            11,590
            
            
            22,408Total
                Long-Term Liabilities
            
            
            11,590
            
            
            22,408COMMITMENTS
                AND CONTINGENCIES
            
            
            -
            
            
            -STOCKHOLDERS'
                EQUITYCommon
                stock, $0.001 par value; 200,000,000 shares authorized, 11,200,000
                and
                11,120,000 shares issued and outstanding,
                respectively
            
            
            11,200
            
            
            11,120Additional
                paid-in capital
            
            
            742,577
            
            
            726,657Accumulated
                deficit
            
            
            (820,607
            )
            
            (647,191
            )Total
                Stockholders' Equity
            
            
            (66,830
            )
            
            90,586**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY**
            
            $
            126,584
            
            $
            144,956




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




F
          - 2




**INTEGRATED
        MICROMETALLURGICAL SYSTEMS, INC.**
 **(A
        DEVELOPMENT STAGE ENTERPRISE)**
 **STATEMENTS
        OF OPERATIONS**


From
                May11,2004Year
                Ended
            
            Six
                Months Ended
            
            (Inception)June
                30,
            
            June
                30,
            
            to
                June 30,2007
            
            2006
            
            2007**REVENUES**
            
            $
            -
            
            
            -
            
            $
            -**OPERATING
                EXPENSES**Amortization
                and depreciation
            
            
            17,103
            
            
            20,059
            
            
            51,599Consulting
                expense
            
            
            0
            
            
            -
            
            
            163,053Salary
                and wages
            
            
            73,780
            
            
            39,974
            
            
            217,713General
                and administrative expenses
            
            
            42,792
            
            
            113,320
            
            
            176,744Research
                and development
            
            
            37,151
            
            
            -
            
            
            204,851Total
                Operating Expenses
            
            
            170,826
            
            
            173,353
            
            
            813,960**LOSS
                FROM OPERATIONS**
            
            
            (170,826
            )
            
            (173,353
            )
            
            (813,960
            )**OTHER
                INCOME (EXPENSE)**Interest
                income
            
            
            -
            
            
            -
            
            
            880Interest
                expense
            
            
            (2,592
            )
            
            (3,675
            )
            
            (7,527
            )Total
                Other Income (Expense)
            
            
            (2,592
            )
            
            (3,675
            )
            
            (6,647
            )**LOSS
                BEFORE TAXES**
            
            
            (173,418
            )
            
            (177,027
            )
            
            (820,607
            )**INCOME
                TAX EXPENSE**
            
            
            -
            
            
            -
            
            
            -**NET
                LOSS**
            
            $
            (173,418
            )
            
            (177,027
            )
            $
            (820,607
            )NET
                LOSS PER COMMON SHARE,BASIC
                AND DILUTED
            
            $
            (0.01
            )
            
            (0.01
            )WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING,BASIC
                AND DILUTED
            
            
            11,191,250
            
            
            10,158,333





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




F
          - 3




**INTEGRATED
        MICROMETALLURGICAL SYSTEMS, INC.** **(A
          DEVELOPMENT STAGE ENTERPRISE)**
 **STATEMENT
          OF STOCKHOLDERS' EQUITY**


Additional
            
            
            
            TotalCommon
                Stock
            
            Paid-in
            
            Accumulated
            
            Stockholders'Shares
            
            Amount
            
            Capital
            
            Deficit
            
            EquityCommon
                stock issued for cashat
                $0.001 per share
            
            
            8,500,000
            
            $
            8,500
            
            $
            -
            
            $
            -
            
            $
            8,500Options
                granted for consultingservices
            
            
            -
            
            
            -
            
            
            89,250
            
            
            -
            
            
            89,250Options
                granted for license
            
            
            -
            
            
            -
            
            
            112,500
            
            
            -
            
            
            112,500Benefical
                conversion featureof
                note payable-related party
            
            
            -
            
            
            -
            
            
            7,527
            
            
            -
            
            
            7,527Common
                stock issued for cashat
                $0.20 per share
            
            
            1,325,000
            
            
            1,325
            
            
            263,675
            
            
            -
            
            
            265,000Net
                loss for the year endedDecember
                31, 2004
            
            
            -
            
            
            -
            
            
            -
            
            
            (269,504
            )
            
            (269,504
            )Balance
                December 31, 2004
            
            
            9,825,000
            
            
            9,825
            
            
            472,952
            
            
            (269,504
            )
            
            213,273Common
                stock issued for cashat
                $.20 per share
            
            
            782,500
            
            
            783
            
            
            155,717
            
            
            -
            
            
            156,500Net
                loss for the year endedDecember
                31, 2005
            
            
            -
            
            
            -
            
            
            -
            
            
            (250,812
            )
            
            (250,812
            )Balance
                December 31, 2005
            
            
            10,607,500
            
            
            10,608
            
            
            628,669
            
            
            (520,316
            )
            
            118,961Common
                stock issued for cashat
                $0.20 per share
            
            
            512,500
            
            
            512
            
            
            101,988
            
            
            -
            
            
            102,500Merger
                and recapitalization
            
            
            -
            
            
            -
            
            
            (4,000
            )
            
            -
            
            
            (4,000
            )Net
                loss for the six months endedJune
                30, 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            (126,875
            )
            
            (126,875
            )Balance
                June 30, 2006
            
            
            11,120,000
            
            $
            11,120
            
            $
            726,657
            
            $
            (647,191
            )
            $
            90,586Commom
                stock issued for cashat
                $0.20 per share
            
            
            80,000
            
            
            80
            
            
            15,920
            
            
            
            
            
            16,000Net
                loss for the year ended June 30, 2007
            
            
            -
            
            
            -
            
            
            -
            
            
            (173,416
            )
            
            (173,416
            )Balance
                June 30, 2007
            
            
            11,200,000
            
            
            11,200
            
            
            742,578
            
            
            (820,607
            )
            
            (66,830
            )




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




F
          - 4





**INTEGRATED
      MICROMETALLURGICAL SYSTEMS, INC.**


**(A
      DEVELOPMENT STAGE ENTERPRISE)**


**STATEMENTS
      OF CASH FLOWS**


Six
                    Months
                
                From
                    May 11,Year
                    EndedJune
                    30,
                
                EndedJune
                    30,
                
                2004 (Inception)
                      to
                        June 30,2007
                
                2006
                
                2007**CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    loss
                
                $
                (173,418
                )
                $
                (126,875
                )
                $
                (820,609
                )Adjustments
                    to reconcile net loss to net cash provided (used) by operating
                    activities:
                
                
                
                
                
                
                
                
                -Amortization
                    and depreciation
                
                
                17,103
                
                
                7,429
                
                
                51,599Options
                    granted for services
                
                
                -
                
                
                -
                
                
                89,250Amortization
                    of beneficial conversion
                
                
                2,592
                
                
                1,299
                
                
                7,527Payroll
                    advances
                
                
                -
                
                
                7,000
                
                
                -Accounts
                    payable
                
                
                14,905
                
                
                6,753
                
                
                31,002Related
                    party payables
                
                
                122,799
                
                
                11,694
                
                
                134,493Accrued
                    expenses
                
                
                (1,310
                )
                
                3,354
                
                
                2,862Net
                    cash used by operating activities
                
                
                (17,329
                )
                
                (89,346
                )
                
                (503,876
                )**CASH
                    FLOWS PROVIDED BY INVESTING ACTIVITIES:**Purchase
                    of fixed assets
                
                
                -
                
                
                -
                
                
                (39,356
                )Net
                    cash used by investing activities
                
                
                -
                
                
                -
                
                
                (39,356
                )**CASH
                    FLOWS PROVIDED BY FINANCING ACTIVITIES:**Acquisition
                    of subsidiary and reorganization
                
                
                -
                
                
                (4,000
                )
                
                (4,000
                )Stock
                    issued for cash
                
                
                16,000
                
                
                102,500
                
                
                548,500Deposit
                    on stock purchase
                
                
                -
                
                
                (10,000
                )
                
                -Proceeds
                    from loan payable, related party
                
                
                -
                
                
                -
                
                
                5,000Payment
                    of loan payable, related party
                
                
                -
                
                
                (5,000
                )
                
                (5,000
                )Net
                    cash provided by financing activities
                
                
                16,000
                
                
                83,500
                
                
                544,500Net
                    increase (decrease) in cash and cash equivalents
                
                
                (1,329
                )
                
                (5,846
                )
                $
                1,268**Cash
                    at beginning of period**
                
                
                2,597
                
                
                8,444
                
                
                -**Cash
                    at end of period**
                
                $
                1,268
                
                $
                2,597
                
                $
                1,268**SUPPLEMENTAL
                    CASH FLOW DISCLOSURES:**Income
                    taxes paid
                
                $
                -
                
                $
                -
                
                $
                -Interest
                    paid
                
                $
                -
                
                $
                -
                
                $
                -**NON-CASH
                    INVESTING AND FINANCING ACTIVITIES:**License
                    acquired by issuance of stock options
                
                $
                -
                
                $
                -
                
                $
                112,500Note
                    payable issued for license
                
                $
                -
                
                $
                -
                
                $
                25,000Beneficial
                    conversion feature of note payable
                
                $
                -
                
                $
                -
                
                $
                7,527


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




F
          - 5




**NOTE
      1 – DESCRIPTION OF BUSINESS**





Integrated
      Micrometallurgical Systems, Inc., (hereinafter “IMS” or “the Company”) was
      incorporated on May 11, 2004 in the State of Nevada.





The
      principal business of the Company is research and development related to metal
      surface engineering solutions to problems caused by friction, wear and corrosion
      of metallic components with direct metal-to-metal contact. The NeoMetxTM
technology owned by the Company is part of the field of industrial coatings
      (metal protection technologies).





On
      June
      29, 2006, the Company acquired all of the outstanding common stock of ECZ,
      Inc.,
      a fully reporting public company. For accounting purposes, the acquisition
      has
      been treated as a recapitalization of IMS with IMS as the acquirer in a reverse
      acquisition. The historical financial statements prior to June 29, 2006 are
      those of IMS, the operating company, while the Company maintains the legal
      structure of the acquired ECZ, Inc. See Note 9.





During
      the six months ended June 30, 2006, the Company changed its year end from
      December 31 to June 30.





**NOTE
      2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES**





This
      summary of significant accounting policies of Integrated Micrometallurgical
      Systems, Inc. (hereinafter “the Company” or “IMS”) is presented to assist in
      understanding the Company’s financial statements. The financial statements and
      notes are representations of the Company’s management, which is responsible for
      their integrity and objectivity. These accounting policies conform to accounting
      principles generally accepted in the United States of America, and have been
      consistently applied in the preparation of the financial
      statements.





Accounting
      Method


The
      Company’s financial statements are prepared using the accrual basis of
      accounting in accordance with accounting principles generally accepted in the
      United States of America.





Accounting
      Pronouncements


In
      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
      Assets and Financial Liabilities (SFAS No. 159). SFAS No. 159 permits entities
      to choose to measure, on an item-by-item basis, specified financial instruments
      and certain other items at fair value. Unrealized gains and losses on items
      for
      which the fair value option has been elected are required to be reported in
      earnings at each reporting date. SFAS No. 159 is effective for fiscal years
      beginning after November 15, 2007, the provisions of which are required to
      be
      applied prospectively.





In
      September 2006, the Financial Accounting Standards Board issued
      Statement of Financial Accounting Standards No. 158, “Employers’ Accounting
      for Defined Benefit Pension and Other Postretirement Plans — An amendment
      of FASB Statements No. 87, 88, 106 and 132(R)” (SFAS No. 158).
      SFAS No. 158 requires the recognition of the funded status of a
      benefit plan in the balance sheet; the recognition in other comprehensive income
      of gains or losses and prior service costs or credits arising during the period
      but which are not included as components of periodic benefit cost; the
      measurement of defined benefit plan assets and obligations as of the balance
      sheet date (the measurement provisions); and disclosure of additional
      information about the effects on periodic benefit cost for the following fiscal
      year arising from delayed recognition in the current period. The
      Company does not anticipate that the adoption of this statement will have a
      material effect on the Company's financial condition and results of
      operations.




28


In
      September 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 157, “Fair Value Measurements” which defines
      fair value, establishes a framework for measuring fair value in generally
      accepted accounting principles (GAAP), and expands disclosures about fair value
      measurements. Where applicable, SFAS No. 157 simplifies and codifies
      related guidance within GAAP and does not require any new fair value
      measurements. SFAS No. 157 is effective for financial statements issued for
      fiscal years beginning after November 15, 2007, and interim periods within
      those fiscal years. Earlier adoption is encouraged. The Company does
      not expect the adoption of SFAS No. 157 to have a significant effect on its
      financial position or results of operation.





In
      June
      2006, the Financial Accounting Standards Board issued FASB Interpretation No.
      48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB
      Statement No. 109”, which prescribes a recognition threshold and measurement
      attribute for the financial statement recognition and measurement of a tax
      position taken or expected to be taken in a tax return. FIN 48 also provides
      guidance on de-recognition, classification, interest and penalties, accounting
      in interim periods, disclosure and transition. FIN 48 is effective for fiscal
      years beginning after December 15, 2006. The Company does not expect the
      adoption of FIN 48 to have a material impact on its financial reporting, and
      the
      Company is currently evaluating the impact, if any, the adoption of FIN 48
      will
      have on its disclosure requirements.





In
      March
      2006, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 156, “Accounting for Servicing of Financial Assets—an
      Amendment of FASB Statement No. 140.” This statement requires an entity to
      recognize a servicing asset or servicing liability each time it undertakes
      an
      obligation to service a financial asset by entering into a servicing contract
      in
      any of the following situations: a transfer of the servicer’s financial assets
      that meets the requirements for sale accounting; a transfer of the servicer’s
      financial assets to a qualifying special-purpose entity in a guaranteed mortgage
      securitization in which the transferor retains all of the resulting securities
      and classifies them as either available-for-sale securities or trading
      securities in accordance with FASB Statement No. 115; or an acquisition or
      assumption of an obligation to service a financial asset that does not relate
      to
      financial assets of the servicer or its consolidated affiliates. The statement
      also requires all separately recognized servicing assets and servicing
      liabilities to be initially measured at fair value, if practicable and permits
      an entity to choose either the amortization or fair value method for subsequent
      measurement of each class of servicing assets and liabilities. This statement
      is
      effective for fiscal years beginning after September 15, 2006, with early
      adoption permitted as of the beginning of an entity’s fiscal year. Management
      believes the adoption of this statement will not impact the Company’s financial
      condition or results of operations.




29


In
      February 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial
      Instruments, an Amendment of FASB Standards No. 133 and 140” (hereinafter “SFAS
      No. 155”). This statement established the accounting for certain derivatives
      embedded in other instruments. It simplifies accounting for certain hybrid
      financial instruments by permitting fair value remeasurement for any hybrid
      instrument that contains an embedded derivative that otherwise would require
      bifurcation under SFAS No. 133 as well as eliminating a restriction on the
      passive derivative instruments that a qualifying special-purpose entity (“SPE”)
      may hold under SFAS No. 140. This statement allows a public entity to
      irrevocably elect to initially and subsequently measure a hybrid instrument
      that
      would be required to be separated into a host contract and derivative in its
      entirety at fair value (with changes in fair value recognized in earnings)
      so
      long as that instrument is not designated as a hedging instrument pursuant
      to
      the statement. SFAS No. 140 previously prohibited
      a qualifying special-purpose entity from holding a derivative financial
      instrument that pertains to a beneficial interest other than another derivative
      financial instrument. This
      statement is effective for fiscal years beginning after September 15, 2006,
      with
      early adoption permitted as of the beginning of an entity’s fiscal year.
      Management believes the adoption of this statement will have no immediate impact
      on the Company’s financial condition or results of operations.





Cash
      and Cash Equivalents


For
      purposes of the statement of cash flows, the Company considers all highly liquid
      investments and short-term debt instruments with original maturities of three
      months or less to be cash equivalents.





Derivative
      Instruments


The
      Financial Accounting Standards Board issued Statement of Financial Accounting
      Standards No. 133, “Accounting for Derivative Instruments and Hedging
      Activities” (hereinafter “SFAS No. 133”), as amended by SFAS No. 137,
“Accounting for Derivative Instruments and Hedging Activities – Deferral of
      the Effective Date of FASB No. 133”, SFAS No. 138, “Accounting for Certain
      Derivative Instruments and Certain Hedging Activities”, SFAS No. 149, “Amendment
      of Statement 133 on Derivative Instruments and Hedging Activities”, SFAS No.
      150, “Accounting for Certain Financial Instruments with Characteristics of Both
      Liabilities and Equity”, and SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments, an amendment of FASB Standards No. 133 and 140”. These
      statements establish accounting and reporting standards for derivative
      instruments, including certain derivative instruments embedded in other
      contracts, and for hedging activities. They require that an entity recognize
      all
      derivatives as either assets or liabilities in the balance sheet and measure
      those instruments at fair value.





If
      certain conditions are met, a derivative may be specifically designated as
      a
      hedge, the objective of which is to match the timing of gain or loss recognition
      on the hedging derivative with the recognition of (i) the changes in the fair
      value of the hedged asset or liability that are attributable to the hedged
      risk
      or (ii) the earnings effect of the hedged forecasted transaction. For a
      derivative not designated as a hedging instrument, the gain or loss is
      recognized in income in the period of change.





At
      June
      30, 2007 and 2006, the Company has not engaged in any transactions that would
      be
      considered derivative instruments or hedging activities.




30


Earnings
      Per Share


The
      Company has adopted Statement of Financial Accounting Standards No. 128, which
      provides for calculation of "basic" and "diluted" earnings per share. Basic
      earnings per share includes no dilution and is computed by dividing net income
      (loss) available to common shareholders by the weighted average common shares
      outstanding for the period. Diluted earnings per share reflect the potential
      dilution of securities that could share in the earnings of an entity similar
      to
      fully diluted earnings per share. Basic and diluted loss per share were the
      same, at the reporting dates, as the exercisable options totaling 2,525,000
      shares and 125,000 shares under convertible debt are considered
      anti-dilutive.





Fair
      Value of Financial Instruments


The
      Company's financial instruments as defined by Statement of Financial Accounting
      Standards No. 107, "Disclosures about Fair Value of Financial Instruments,"
      include cash, trade accounts receivable, and accounts payable and accrued
      expenses. All instruments are accounted for on a historical cost basis, which,
      due to the short maturity of these financial instruments, approximates fair
      value at June 30, 2007 and 2006.





Provision
      for Taxes


Income
      taxes are provided based upon the liability method of accounting pursuant to
      Statement of Financial Accounting Standards No. 109, “Accounting for Income
      Taxes” (hereinafter “SFAS No. 109.”) Under this approach, deferred income taxes
      are recorded to reflect the tax consequences in future years of differences
      between the tax basis of assets and liabilities and their financial reporting
      amounts at each year-end. A valuation allowance is recorded against deferred
      tax
      assets if management does not believe the Company has met the “more likely than
      not” standard imposed by SFAS No. 109 to allow recognition of such an
      asset.





At
      June
      30, 2007, the Company had deferred tax assets calculated at an expected rate
      of
      34% of approximately $279,000, principally arising from net operating loss
      carryforwards for income tax purposes. As management of the Company cannot
      determine that it is more likely than not that the Company will realize the
      benefit of the deferred tax asset, a valuation allowance equal to the deferred
      tax asset has been established at June 30, 2007. The significant components
      of
      the deferred tax asset at June 30, 2007 and 2006 were as
      follows:


June
                  30,
                2007
              
              June
                  30,
                2006Net
                  operating loss carryforward****
              
              $
              820,607
              
              $
              558,000Deferred
                  tax asset
              
              $
              279,000
              
              $
              189,000Deferred
                  tax assetvaluation
                  allowance
              
              
              (279,000
              )
              
              (189,000
              )Net
                  deferred tax asset
              
              $
              -
              
              $
              -




31




At
      June
      30, 2007, the Company has net operating loss carryforwards of $820,607, which
      expire in the years 2024 and 2027. Not included in the above calculations is
      $89,250 for stock options granted that are not deductible for tax purposes.
      The
      change in the allowance account from June 30, 2006 to June 30, 2007 was
      $43,000.





Property
      and Equipment


Property
      and equipment are stated at cost. Depreciation of property and equipment is
      calculated using the straight-line method over the estimated useful lives of
      the
      assets, which range from three to seven years. See Note 3.





Going
      Concern


As
      shown
      in the accompanying financial statements, the Company had an accumulated deficit
      of $820,607 incurred through June 30, 2007 and has no revenues. The Company
      is
      currently putting technology in place which will, if successful, mitigate these
      factors which raise substantial doubt about the Company’s ability to continue as
      a going concern. The financial statements do not include any adjustments
      relating to the recoverability and classification of recorded assets, or the
      amounts and classification of liabilities that might be necessary in the event
      the Company cannot continue in existence.





Management
      has established plans designed to begin sales of the Company’s systems, license
      the NeoMetxTM technology, raise additional equity capital and decrease debt.
      Management intends to seek additional capital from new equity securities
      offerings that will provide funds needed to increase liquidity, fund internal
      growth and fully implement its business plan. An estimated $1 million is
      believed necessary to continue operations and increase development through
      the
      next fiscal year. The timing and amount of capital requirements will depend
      on a
      number of factors, including demand for products and services and the
      availability of opportunities for international expansion through strategic
      alliances with larger corporations, licensing of the NeoMetxTM technology and the
      sale of systems.





Research
      and Development


Research
      and development expenses are charged to operations as incurred. The cost of
      intellectual property purchased from others that is immediately marketable
      or
      that has an alternative future use is capitalized and amortized as intangible
      assets. Capitalized costs are amortized using the straight-line method over
      the
      estimated economic life, typically 10 years, of the related asset. The Company
      periodically reviews its capitalized patent costs to assess recoverability
      based
      on the projected undiscounted cash flows from operations. Impairments are
      recognized in operating results when a permanent diminution in value occurs.
      At
      June 30, 2007 and 2006, the Company had no capitalized research and development
      costs.





Use
      of
      Estimates


The
      process of preparing financial statements in conformity with accounting
      principles generally accepted in the United States of America requires the
      use
      of estimates and assumptions regarding certain types of assets, liabilities,
      revenues, and expenses. Such estimates primarily relate to unsettled
      transactions and events as of the date of the financial statements. Accordingly,
      upon settlement, actual results may differ from estimated amounts.




32


Accounting
      for Stock Options and Warrants Granted to Employees and
      Nonemployees


Statement
      of Financial Accounting Standards No. 123, “Accounting for Stock-Based
      Compensation” *,* defines
      a
      fair value-based method of accounting for stock options and other equity
      instruments. The Company has adopted this method, which measures compensation
      costs based on the estimated fair value of the award and recognizes that cost
      over the service period. In 2004, the Company adopted the changes to SFAS No.
      123 as prescribed by SFAS No. 123(R). See Note 6.





**NOTE
      3 – PROPERTY AND EQUIPMENT**





Property
      and equipment are stated at cost. Depreciation is provided using the
      straight-line method over the estimated useful lives of the assets. The useful
      lives of property, plant and equipment for purposes of computing depreciation
      are three to seven years. The following is a summary of property, equipment,
      and
      accumulated depreciation:




June
                  30,
                2007
              
              June
                  30,
                2006Plant
                  assets
              
              $
              23,820
              
              $
              23,820Office
                  equipment
              
              
              15,535
              
              
              15,535Subtotal
              
              
              39,355
              
              
              39,355Less
                  accumulateddepreciation
              
              
              (23,334
              )
              
              (15,399
              )$
              16,021
              
              $
              23,956





Depreciation
      expense on tangible assets for the periods ended June 30, 2007 and 2006 was
      $7,935 and $2,846,
      respectively .
      The
      Company evaluates the recoverability of property and equipment when events
      and
      circumstances indicate that such assets might be impaired. The Company
      determines impairment by comparing the undiscounted future cash flows estimated
      to be generated by these assets to their respective carrying amounts.
      Maintenance and repairs are expensed as incurred. Replacements and betterments
      are capitalized. The cost and related reserves of assets sold or retired are
      removed from the accounts, and any resulting gain or loss is reflected in
      results of operations.





**NOTE
      4 – TECHNOLOGY LICENSE AGREEMENT AND TRANSACTION**





On
      May
      25, 2004, the Company signed an agreement with Dr. Paul Vose, a consultant,
      who
      granted the Company exclusive rights to patents and applications relating to
      the
      patents for use by the Company. These patents are related to the NeoMetxTM
technology, an essential part of the Company’s business plan. Under the
      agreement, the Company will pay Dr. Vose $25,000 cash and 1,250,000 options
      valued at $112,500 in a one-time payment, May 25, 2007. (See Note 6.) The
      Company also agreed to pay to Dr. Vose a 3% royalty on the net selling price
      of
      any products, equipment, consumables or services sold by the Company that uses
      the technologies under the patents.




33


The
      Company accounted for this transaction by recording a license cost of $137,500,
      a payable of $25,000 for the amount of cash to be paid on May 25, 2007, and
      issuing the options valued at $112,500. The Company has determined that the
      estimated useful life of the license is 15 years, and is amortizing the license
      over that period of time. The useful life is based upon the expected underlying
      patents and provisional patent filings. Amortization expense for the six months
      ended June 30, 2007 and 2006 was $9,167 and $9,167 respectively.





The
      debt
      is convertible into shares of common stock at a rate of $0.20 per share, or
      125,000 shares at the discretion of Dr. Vose.





The
      $25,000 note relating to the license was discounted for the difference in the
      effective interest of 12% and the lack of a stated interest rate and is
      considered a beneficial conversion feature. Following EITF 00-27, “Application
      of Issue No. 98-5 to Certain Convertible Instruments,” the Company calculated
      the value of the beneficial conversion feature of the note and recorded the
      value as a discount on debt on its balance sheets. The beneficial conversion
      (or
      discount), valued and recorded at $7,527, is being amortized (effectively,
      a
      decreasing discount to debt) as interest expense over the life of the loan,
      or
      three years. Interest expense for the year ended June 30, 2007 and the six
      months ended June 30, 2006 was $2,592, and $1,299 respectively.





**NOTE
      5 – CAPITAL STOCK**





The
      Company is authorized to issue 200,000,000 shares of $0.001 par common stock.
      All shares have equal voting rights, are non-assessable and have one vote per
      share. Voting rights are not cumulative and, therefore, the holders of more
      than
      50% of the common stock could, if they choose to do so, elect all of the
      directors of the Company.





During
      the year ended December 31, 2004, the Company issued 8,500,000 shares of common
      stock at par value to founders for cash of $8,500.





During
      the year ended December 31, 2004, the Company issued 1,325,000 shares of common
      stock valued at $0.20 per share for cash of $265,000.





During
      the year ended December 31, 2005, the Company issued 782,500 shares of common
      stock valued at $0.20 per share for cash of $156,500.





During
      the year ended June 30, 2006, the Company issued 512,500 shares of common stock
      valued at $0.20 per share for cash of $102,500.





During
      the year ended June 30, 2007, the Company issued 80,000 shares of common stock
      valued at $0.20 per share for cash of $16,000.




34


**NOTE
      6 – STOCK OPTIONS**





During
      the year ended December 31, 2004, the Company granted to its founding officers
      1,275,000 options to purchase shares of common stock. This amount was 15% of
      the
      shares these same officers purchased for par. See Note 5. The Company also
      granted 1,250,000 options to Dr. Paul Vose as part of a licensing agreement.
      See
      Note 4.





No
      stock
      options were granted during the year ended December 31, 2005 or the period
      ended
      June 30, 2006 and 2007.





The
      fair
      value of each option granted is estimated on the grant date using the
      Black-Scholes Option Price Calculation. The following assumptions were made
      in
      estimating fair value: risk-free interest rate of 5%; volatility of 50%;
      expected life of 3 to 5 years; no dividends to be paid. The value of the
      founders’ options was $0.07 per share, or $89,250, which has been expensed as a
      consulting fee, while the options granted for the license were valued at $0.09
      per share, or $112,500.





The
      following is a summary of the Company's non-qualified and non-stockholder
      approved options granted:





SharesUnderOptions
            
            WeightedAverageExercise PriceOptions
                at May 11, 2004
            
            
            -
            
            
            -Options
                issued
            
            
            2,525,000
            
            $
            0.20Options
                at December 31, 2004
            
            
            2,525,000
            
            $
            0.20Options
                exercisable at December 31, 2004
            
            
            2,525,000
            
            $
            0.20Weighted
                average fair value ofoptions
                granted at December 31, 2004
            
            
            
            
            $
            0.08Options
                at January 1, 2005
            
            
            2,525,000
            
            $
            0.20Options
                issued
            
            
            -
            
            
            -Options
                at December 31, 2005
            
            
            2,525,000
            
            $
            0.20Options
                exercisable at December 31, 2005
            
            
            2,525,000
            
            $
            0.20Weighted
                average fair value ofoptions
                granted at December 31, 2005
            
            
            
            
            
            -Options
                at January 1, 2006
            
            
            2,525,000
            
            $
            0.20Options
                issued
            
            
            -
            
            
            -Options
                at June 30, 2006
            
            
            2,525,000
            
            $
            0.20Options
                exercisable at June 30, 2006
            
            
            2,525,000
            
            $
            0.20Weighted
                average fair value ofoptions
                granted at June 30, 2006
            
            
            
            
            
            -Options
                at January 1, 2007
            
            
            2,525,000
            
            $
            0.20Options
                issued
            
            
            -
            
            
            -Options
                at June 30, 2007
            
            
            2,525,000
            
            $
            0.20Options
                exercisable at June 30, 2007
            
            
            2,525,000
            
            $
            0.20Weighted
                average fair value ofoptions
                granted at June 30, 2007
            
            
            
            
            
            -




35




**NOTE
      7 – NOTE PAYABLE**





At
      June
      30, 2007, the Company had notes payable as follows: $9,980 to Suncraft Limited
      for business operations, $6,400 to Triax Capital Management for business
      operations and $1,500 to a shareholder of the Company for business operations.
      Notes payable-long term on the balance sheet is $114,255, the sum of the $9,980
      Suncraft Limited note, the $6,400 Triax Capital Management note and $1,500,
      the
      long-term portion of the shareholder’s note.





The
      notes
      payable have the following terms: The Suncraft Limited note has a 6% interest
      rate, no monthly interest payments and payment of the principal is due in full
      on June 29, 2010. The Triax Capital Management notes have maturity dates of
      January 9, 2008, February 22, 2008, March 7, 2008, March 23, 2008, and April
      20,
      2008, when the principals are due in full. The shareholder’s note has a 6%
      interest rate, no monthly interest payments and payment of the principal is
      due
      in full on October 31, 2009.





The
      Company issued a promissory note, for a total of $5,000 on October 17, 2005
      to a
      shareholder of the Company. The underlying loan is unsecured and due on demand
      and does not bear interest. During the period ended June 30, 2006, the Company
      repaid the loan. For additional information on related party transactions,
      see
      Notes 4 and 8.


**NOTE
      8 – RELATED PARTY TRANSACTIONS**





For
      additional information on related party transactions, see Notes 4.





36





**NOTE
      9 – ACQUISITION OF ECZ, INC.**





On
      June
      29, 2006, the Company acquired all of the outstanding common stock of ECZ,
      Inc.
      (a fully reporting public company) from its sole shareholder by paying $4,000
      in
      cash. In the acquisition, the Company acquired 200,000 shares of common stock,
      which were subsequently retired. The Company re-issued its outstanding common
      shares to its shareholders of record in compliance with a transaction pursuant
      to Rule 12g-3 of the Securities and Exchange Commission. For accounting
      purposes, the acquisition has been treated as a recapitalization of IMS, with
      IMS as the acquirer (reverse acquisition). The historical financial statements
      prior to June 29, 2006 are those of IMS while the legal structure of ECZ, Inc.
      remains in place. ECZ, Inc. had no assets or liabilities at the time of the
      acquisition.





**NOTE
      10 – COMMITMENTS AND CONTINGENCIES**





The
      Company is obligated to pay a royalty on certain sales. This is more fully
      described in Note 4.





On
      October 15 th ,
      2006
      the company entered into a 3 year lease agreement with U.S. Dent Master for
      office space. Monthy payments are $400 per month. Rent expense was $4,000 and
      $4,400 as of June 30, 2007 and 2006 respectively.




37





**(b)**  **Reports
      on Form 8-K.**





We
      filed
      a Current Report on Form 8-K, Items 1.01, 2.01, 5.01, 5.02, 5.03, and 8.01
      on
      July 13, 2006 disclosing the entry into an Acquisition Agreement and Plan of
      Merger on June 28, 2006 with ECZ, Inc., a fully reporting Nevada corporation
      (the registrant corporation), pursuant to which IMS acquired all of the
      outstanding shares of common stock of EMZ, Inc. from its sole shareholder for
      cash. We disclosed that IMS was the surviving corporation of the transaction
      and
      became a fully reporting company as a result of the transaction. We disclosed
      the resignation of Edward Zimmerman, Jr. as an officer and director of the
      registrant corporation as part of the transaction. We also disclosed amendments
      to the Articles of Incorporation of ECZ, the registrant corporation, changing
      its name.





**(c)**  **Exhibits** .
      The
      Exhibits listed on the accompanying Index to Exhibits are filed as part of
      this
      Annual Report on Form 10-KSB.





**Item
      14.**  **Principal
      Accountant Fees and Services.**





**Audit
      Fees.** For
      the
      fiscal years ended June 30, 2007 and 2006 respectively, we paid $9,000 and
      $6,000 for audit fees.





**Audit
      Related Fees/All Other fees/Tax Fees.** We
      did
      not pay our auditors for any other services in 2006, and 2007.





**INTEGRATED
      MICROMETALLURGICAL SYSTEMS, INC.**


**INDEX
      TO EXHIBITS**


Exhibits
              
              Description
                  of Document2.1
              
              Acquisition
                  Agreement and Plan of Merger between Integrated Micrometallurgical
                  Systems, Inc. and ECZ, Inc. dated June 29, 2006 (Incorporated by
                  reference
                  to the corresponding exhibit to the Form 8-K previously filed by
                  IMS on
                  July 13, 2006 (File No. 000-51870) (the “June 28 Form
                  8-K”)2.2
              
              Articles
                  of Merger (Nevada) dated June 29, 2006 (Incorporated by reference
                  to
                  exhibit 2.1 to the June 28, 2006 Form 8-K)3.1
              
              Restated
                  Articles of Incorporation dated June 28, 20063.2
              
              By-Laws10.1
              
              2004
                  Stock Option Plan
  38
  10.2
              
              Exclusive
                  Technology License Agreement and Right to Purchase Patents between
                  Integrated Micrometallurgical Systems, Inc. and Dr. Paul Voss,
                  dated May
                  25th, 2004.31.1
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Executive
                  Officer31.2
              
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Financial
                  Officer32
              
              Section
                  1350 Certifications




39




**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act of 1934, as amended,
      the
      registrant caused this Annual Report on Form 10-KSB to be signed on its behalf
      by the undersigned, thereunto duly authorized, in the City of Spokane,
      Washington on this 20 day of November, 2007.


Integrated
                  Micrometallurgical Systems, INC.By:
              /s/
                  H. Werner HussH.
                  Werner HussPresident
                  & Chief Executive Officer




In
      accordance with Section 13 or 15(d) of the Exchange Act of 1934, as amended,
      this Annual Report on Form 10-KSB has been signed below by the following persons
      on behalf of the registrant in the capacities indicated below on this
      20 th day of
      November, 2007.





**Signature**
            
            **Title**/s/
                H. Werner Huss
            
            Director,
                President & Chief Executive Officer(Principal
                Executive Officer)/s/
                Larry K. Davis
            
            Director,
                Chief Financial Officer,Secretary,
              Chief
              Operating Officer(Principal
                  Financial and Accounting Officer)/s/
                Ted Wagner
            
            Director
                and Vice PresidentTed
                Wagner/s/
                Jake Huber, Ph.D.
            
            DirectorJake
                Huber, Ph.D.




40