Tableof Contents

 

 

 

**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-K**

 

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

**                                   ****For the Fiscal Year Ended December 31,2008**

** **

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

**                                   ****For the transition period from                        to                      **

 

**Commission File No. 333-133634**

 

**INTEGRATEDMANAGEMENT INFORMATION, INC.**

 

| **Colorado**                                                    |   | **43-1802805**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |   | (I.R.S. Employer Identification No.) |

 

**221 Wilcox, Suite A**

**Castle Rock, CO 80104**

(Address of principal executive offices, including zip code)

 

Issuer’s telephone number, including area code:

**(303) 895-3002**

 

Securities registered pursuant to Section 12(b) of the Act:  **None**

 

Securities registered pursuant to Section 12(g) of the Act:

 

**Common Stock, $0.001 par value**

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act. Yes o  Nox

 

Indicate by check mark if the registrant is not required to filereports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

 

Checkwhether the issuer: (1) filed all reports required to be filed by Section 13or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the registrant was required to file such reports); and (2) hasbeen subject to such filing requirements for the past 90 days.                   Yes x                                                           No o

 

Checkif disclosure of delinquent filers in response to Item 405 of Regulation S-K isnot contained in this form, and will not be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-KSB. x

 

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

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

 

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

 

Thenumber of shares of the registrant’s common stock, $.001 par value per share,outstanding as of March 20, 2009 was 20,871,806. The aggregate marketvalue of the voting and non-voting common equity held by non-affiliates of theregistrant on March 20, 2009, based on the last sales price on the OTCBulletin Board as of such date, was approximately $1,787,053.

 

DOCUMENTSINCORPORATED BY REFERENCE: **None**

 

 

 

----

Tableof Contents

 

**TABLE OF CONTENTS**

 
| ** ** | ** ** | ** **                                                                                                       | ** ** | **PAGE** |
|------------|------------|------------------------------------------------------------------------------------------------------------------|------------|----------|
|       |       | PART I                                                                                                      |       |     |
|       |       |                                                                                                             |       |     |
| ITEM 1.    |       | DESCRIPTION OF BUSINESS                                                                                          |       | 3        |
| ITEM 1A.   |       | RISK FACTORS                                                                                                     |       | 9        |
| ITEM 1B.   |       | UNRESOLVED STAFF  COMMENTS                                                                                       |       | 13       |
| ITEM 2.    |       | PROPERTIES                                                                                                       |       | 13       |
| ITEM 3.    |       | LEGAL PROCEEDINGS                                                                                                |       | 13       |
| ITEM 4.    |       | SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS                                                             |       | 13       |
|       |       |                                                                                                             |       |     |
|       |       | PART II                                                                                                     |       |     |
|       |       |                                                                                                             |       |     |
| ITEM 5.    |       | MARKET FOR  COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY  SECURITIES                |       | 14       |
| ITEM 7.    |       | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                      |       | 15       |
| ITEM 8.    |       | FINANCIAL  STATEMENTS AND SUPPLEMENTARY DATA                                                                     |       | 22       |
| ITEM 9.    |       | CHANGES IN AND  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                            |       | 42       |
| ITEM 9A.   |       | CONTROLS AND  PROCEDURES                                                                                         |       | 42       |
| ITEM 9B.   |       | OTHER INFORMATION                                                                                                |       | 43       |
|       |       |                                                                                                             |       |     |
|       |       | PART III                                                                                                    |       |     |
|       |       |                                                                                                             |       |     |
| ITEM 10.   |       | DIRECTORS,  EXECUTIVE OFFICERS, CONTROL PERSONS AND COMPLIANCE WITH  SECTION 16(a) OF THE EXCHANGE ACT |       | 44       |
| ITEM 11.   |       | EXECUTIVE COMPENSATION                                                                                           |       | 46       |
| ITEM 12.   |       | SECURITY OF  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER  MATTERS              |       | 48       |
| ITEM 13.   |       | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE                                        |       | 49       |
| ITEM 14.   |       | PRINCIPAL ACCOUNTANT  FEES AND SERVICES                                                                          |       | 50       |
| ITEM 15.   |       | EXHIBITS AND  FINANCIAL STATEMENT SCHEDULES                                                                      |       | 51       |
|       |       | SIGNATURES                                                                                                       |       | 52       |

 

2

----

Tableof Contents

 

****PART I****

 

****ITEM 1.********                            ********BUSINESS****

 

**GENERAL**

 

IntegratedManagement Information, Inc. (“IMI Global,” “IMI,” the “Company,” “our,” “we,”or “us,”) is a leading provider of verification and communication solutions forthe agriculture, livestock and food industry.

 

Weprovide our owned and operated online properties and services which specializein identification and traceability, process, production practice and supplyverification, document control for USDA verification programs and third partyauditing services. We apply information technology to the agriculture,livestock and food industry by addressing the growing importance of marketingclaims such as: source of origin information, genetic background, animal treatment,animal health history, animal age, animal movements, nutrition, carbon creditsand other credence attributes. Our solutions provide assurance regarding thoseclaims made that can not be confirmed by visual inspection once the productreaches the meat case and is marketed to the consumer. We have developed arange of proprietary web based applications, consulting methodologies, auditingprocesses, and other services to allow the livestock and food industry torecord, manage, report, and audit this information. Our solutions help ourcustomers establish their own systems, meet government regulations, createtheir own premium brand identity, gain cost efficiencies and command a higherprice for their product.

 

Westand at the forefront of a rapidly evolving movement to track livestock andverify sources of meat and other livestock products. In the aftermath of thediscovery of the first case of mad cow disease in the United States inDecember, 2003, many of the largest U.S. beef and other livestock exportmarkets were closed resulting in significant losses to the industry. Inresponse to the crisis, several initiatives were enacted to facilitate thereopening of key export markets. Most notably, U.S. suppliers seeking to sellbeef and other livestock products to other countries must participate in apre-approved Quality System Assessment Program so as to have an approved meansof verifying specific product requirements. In response, we were the first todevelop a USDA Quality System Assessment document management system forauditing the tracking systems used by beef and other livestock producers toverify source and age. We introduced our USVerified Source and Age Verificationsystem in 2005, and over the years we have continued to enhance and further developprograms to address other verification needs including, but not limited to,non-hormone treated cattle (NHTC) and humane handling marketing claims. Morerecently, we worked with compliance programs, and marketing approaches inadvance of completion of the country of origin labeling (COOL) legislation’sfinal rule, requiring meat retailers to display the country of origin on theirmeat and produce labels. In March 2009, we introduced our VerifiedGreenTMVerification program. This program caters to producers and consumers who arecommitted to reducing their carbon footprint. Such a program is expected toappeal to forward-thinking producers and retailers who are both environmentallyconscious and looking for a marketing edge as well as to consumers who want tosupport producers practicing good environmental stewardship.

 

3

----

Tableof Contents

 

**INDUSTRYBACKGROUND**

 

Asthe livestock and food industry has matured and expanded internationally, therehas been an increasing need to record, manage, report and audit informationregarding the source, age, genetic background, animal treatment, nutrition, and other credence attributes of livestockfor the benefit of producers, processors, distributors, retailers, consumers,and regulators.

 

Demandfor livestock identification, traceability and verification solutions furtheraccelerated in recent years due to industry and consumer concerns regardingbovine spongiform encephalopathy (mad cow disease), governmental and industryregulations regarding recordkeeping for livestock, and technology, andtechnology advances, including radio frequency ID tags for livestock andweb-based systems facilitating real-time data entry, reporting, and auditing.The demand for verification continues to grow and present other opportunitiesfor our business in light of the many recent product recalls in fresh produceand with the advent of the new legislation concerning country of originlabeling (COOL). Effective September 30, 2008, all muscle cuts and groundbeef (including veal), lamb, chicken, goat and pork produced and packaged afterSeptember 30, 2008, must be labeled at retail to include a country oforigin label (COOL). The rule also covers perishable agriculturalcommodities (fresh and frozen fruits and vegetables), macadamia nuts, pecans,ginseng and peanuts.

 

Manyof the world’s largest beef and other livestock exporting countries, includingBrazil, Argentina, and Australia, have established mandatory traceability andverification standards. Other countries have issued voluntary animalidentification and traceability standards. Overall, the United States lags withregards to meeting this market demand, as the United States government has notto date established mandatory traceability standards.

 

***Initiatives under the United States Department of Agriculture***

 

Tosupport industry driven marketing programs and to comply with trade agreementsestablished with international export partners, the United States Department ofAgriculture (“USDA”), Agriculture Marketing Service, Audit, Review andCompliance Branch has established the voluntary Quality System Assessment, NonHormone Treated Cattle (NHTC), and Process Verified programs based on ISO 9001Instructions. These programs provide guidelines and structure to enablesuppliers of agricultural products and services to assure customers of theirability to provide consistent quality products or services by having theirprocesses audited by independent, third-party auditors using USDA approvedmethodologies and programs.

 

TheUSDA’s Quality System Assessment (QSA) program is a documented qualitymanagement system and verification trail that can support specific productclaims or customer requirements, as well as confirm compliance with exportstandards. The approved QSA must show that characteristics of the product arebeing monitored and measured accurately. Approved QSA programs are audited bythe USDA at least twice per year.

 

TheUSDA’s Process Verified Program (“PVP”) is similar to the QSA program, butbroader in scope. Like the QSA, PVP ensures that companies deliver productsthat meet stated product claims. In addition, it provides the livestock andfood industry with a verifiable marketing tool. Once marketing claims areverified by the USDA, the company may use the “USDA Process Verified” shield onits marketing materials.

 

Bothof the USDA’s QSA and PVP programs are applicable to a company’s entire programor certain portions of its programs where specified producer or productrequirements are supported by a document quality management system and thedocumented delivery processes are verified through an independent,

 

4

----

Tableof Contents

 

thirdparty audit. To operate an approved program, suppliers must submit a documentedquality management system to the Audit Review and Compliance Branch of the USDALivestock and Seed Program and successfully pass a document review and anon-site audit.

 

Withinthe United States, these USDA programs are voluntary and are primarily usefulin providing the industry with a process for demonstrating source, age, andquality attributes as the product moves through the supply chain. In addition,compliance with the programs allows producers to verify claims such as “ageverified,” “non-hormone treated,” or “guaranteed tender.”

 

TheUSDA also promotes participation in NAIS (National Animal IdentificationSystem). The purpose of the NAIS is to protect the health of U.S. livestock andpoultry and the economic well-being of those industries by quickly andeffectively tracing an animal disease to its source. While the federal programis voluntary, money received by some states, tribes, and non-profit entitiesfrom the USDA through cooperative agreements has been used to make parts or allof the program mandatory. Some countries have restricted the importation ofsome animal products because of the potential for disease. Effectivelyimplemented, NAIS could potentially allow trace back of a disease to its originwithin 48 hours, limiting the impact of a potential outbreak. This could havemonetary benefits for farmers, who would lose less livestock in the case ofdisease.

 

***Export Markets/Programs***

 

Tomarket beef and other livestock products outside of the United States,suppliers must comply with the QSA and PVP policies and procedures and addressthe specified product requirements addressed in the USDA Export Verification (“EV”)Instructions specific to each country. Regardless of final export destinationor specific Export Verification program requirements, US suppliers seeking tosell beef and other livestock products must participate in a pre-approvedQSA or PVP program so as to have an approved means of verifying source,age, and other specific product requirements. Therefore, though the program isvoluntary, it is mandatory to gain access to many export markets.

 

Japan,Mexico, South Korea, and Europe are the world’s largest export markets. Tomarket beef and other livestock products in these markets, beef for example, isrequired to be sourced from cattle that are of a certain maximum age at thetime of slaughter. The USDA’s QSA program is the standard mechanism forverifying source and age for these export markets and, therefore, is amandatory requirement for producers, packers, and distributors to export tothese key markets.

 

***Business Opportunies***

 

Exportmarkets represent a significant opportunity for the US livestock and foodindustry. Therefore, international market access and growth is critical. Futuregrowth opportunities for US protein lie in consumption growth internationally,as only 2% of the world’s population resides in the US. The following presentsa sequence of events over the past 5 years that significantly impacted the USlivestock and food industry:

 

·                 Priorto the discovery of the first case of mad cow disease (BSE) in the US in December 2003,the USDA estimated that the industry exported approximately 2.5 billion poundsto Japan, Mexico, South Korea, and Canada.

·                 Thegovernments of these and other countries responded to the discovery byforbidding import of beef and other livestock products from the US, and exportsfell to approximately $0.4B during 2004.

 

5

----

Tableof Contents

 

·                 During2004 and 2005, mostly because of implementation of the USDA QSA initiatives,export partners’ confidence in US beef and other livestock supply increased,and many export markets reopened, including Mexico, Canada, Hong Kong,Singapore, and Taiwan.

·                 InDecember 2005, Japan lifted its ban on imported US beef and otherlivestock products.

·                 InJanuary 2006, Japan reinstated its ban after an inspection revealed a caseof non-compliance with the Japanese import regulations.

·                 Beginningin mid-2006, the U.S. government reached an agreement with Japan that allowedrestricted access to the Japanese market. Consumption of beef has never fullyrecovered from the negative consumer reaction.

·                 TheKorean market also reopened, but imposed restrictions which make complianceextremely difficult.

·                 TheChinese market remains closed.

·                 InMay of 2007, the OIE (international animal health organization) recognizedthe U.S. as a controlled-risk country for BSE. The U.S. is now trying to getall of its trading partners to accept this status which implies removal ofrestrictions for trading.  It will likelytake some time yet but this would allow for better and more consistent accessto beef markets.

 

Beefexports for 2007 were projected at approximately 1.5 billion pounds, nearly 60percent of the 2003 record export total. Assuming more progress in the Asianmarkets, U.S. beef exports were forecasted to increase another 15 percent in2008. Mandatory compliance with the NAIS could make American animal productsmore saleable overseas. The opportunity to participate in export marketspresents a strong indicator of potential demand for approved verificationprocesses, which have become essential. However, during the time in which theexport markets are closed, demand for solutions to comply with these regulatoryrequirements is constrained.

 

**SERVICEAND PRODUCT OFFERINGS**

 

Toaddress the livestock industry’s requirements to deploy and maintainidentification, traceability, and verification systems and to facilitateparticipation in and compliance with the USDA’s Quality System Assessment,Process Verification, and Export Verification Programs, we have developed andoffer a balanced portfolio of products and services. These solutions addressspecific requirements at each level of the livestock supply chain. In addition,we offer customized solutions to address unique customer requirements.

 

Weoffer a range of products and services to track, record, manage, report, andaudit key data regarding livestock. Our distinct product line isUSVerifiedTM.com, a USDA Process Verified Product Line which offers thefollowing verification solutions: USDA Process Verified, QSA, NHTC and EVProgram Development for companies. Our offerings address the needs of eachindustry segment, and our customers span the supply chain from birth throughthe various stages of feeding and raising the livestock, to packing anddistribution. We have no principal suppliers because most of our revenue isservice related. The few products that we purchase, principally livestockidentification ear tags, are purchased primarily from Allflex. However,there are numerous other companies which manufacture and market such ear tags.Our USVerified products and services offerings are tailored to the needs ofeach level of the beef and other livestock supply chain in support of USDAprograms.

 

***Suppliers (Cow/Calf Producers)***

 

SupplyVerified is a verification and auditing service offered to livestock and foodindustry suppliers that enables them to demonstrate their ability to efficientlyand accurately track key data related to the source and age of livestock. TheUSDA has informed us that our Supply Verified program was the industry’s

 

6

----

Tableof Contents

 

firstUSDA approved offsite evaluation process for cattle and other livestocksuppliers to meet requirements under the USDA’s QSA and PVP programs.

 

Underthe Supply Verified program, suppliers provide documentation to us about theirprocesses and records. This documentation is evaluated and audited by us and,if warranted, we provide a certificate that the producer meets the requirementsof source and age verification. We charge each supplier a fixed annual fee forperforming the audit and providing the certification. In order to maintaincertification, a supplier must participate in the annual audits.

 

***Feed Yards***

 

Weoffer solutions to enable feed yards to comply with USDA’s verificationrequirements. Initially, we work with the feed yard to implement the requiredsystems and procedures to track key data regarding the cattle and otherlivestock that move through the operation, including source and age as well asadditional health and nutritional information. This service is provided andpriced to feed yards on a packaged basis, which includes access to ourproprietary web based applications and processes, completion of a USDA programcompliant manual, implementation services, and initial training. In addition, weoffer a monthly service to maintain the USDA compliant manual and web host thedata.

 

***Packers***

 

Weoffer solutions to meat packers, processors and distributors to demonstratethat their products comply with USDA’s QSA requirements, Export Verification (“EV”)requirements as well as the USDA’s Process Verified Program (“PVP”), which isbroader in scope than the QSA program. Suppliers with approved USDA ProcessVerified Programs are able to make marketing claims associated with theirprocess verified points – such as age, source, feeding practices, or otherraising and production claims. This service is provided and priced to meatpackers on a packaged basis, which includes access to our Proprietary web basedapplications and processes, completion of a USDA program compliant manual,obtaining USDA approval, implementation services, and initial training. Inaddition, we offer a monthly service to maintain the USDA compliant manual andweb host the data.

 

**SALES**

 

Ourrevenues are generated from sales of our USVerified identification andverification solutions, consulting services, web-based development and hardwaresales. We sell our products and services directly to customers at variouslevels in the livestock supply chain. Our customers include some of the largestU.S. beef and pork packers, however no single customer generates more than 10%of our revenue.

 

***Third Party Verification Services***

 

OurUSVerifiedTM.com product line offers the following verification solutions: USDAProcess Verified, QSA, NHTC and EV Program Development for companies.Additionally we provide various products and services to promote ourverification programs including:

 

·                  Sourceand Age Verification (USDA Process Verified Product Line)

·                  Non-HormoneTreated Cattle, NHTC (USDA Process Verified Product Line)

·                  PremiseRegistration (NAIS Program)

·                  IndividualAnimal Identification and Tag Allocation (USDA Process Verified Product Line)

·                  VerifiedNatural BeefTM (USDA Process Verified Product Line)

 

7

----

Tableof Contents

 

·                  PetSupplyVerified,building verification programs to verify marketing claims for the Pet FoodIndustry.

 

Wealso offer consulting, program development and web-based development serviceson a customized basis to meet special customer requirements. For theyears-ended December 31, 2008 and 2007, our third party verificationprograms provided approximately 81% of our total revenue.

 

***Hardware Sales***

 

Insupport of our third party verification service offerings, we offer hardwareproducts (primarily identification cattle ear tags) to our customers. Whilethese hardware products have lower profit margins compared with our proprietaryofferings, they allow us to offer our customers a comprehensive solution.Approximately 17% of our total revenue was provided by the sale of hardwareduring the years-ended December 31, 2008 and 2007.

 

**MARKETING**

 

Ourmarketing strategy includes direct marketing, advertising, event sponsorship,and trade show participation. From a public relations perspective, our staff isfrequently quoted in industry trade journals and requested as speakers atvarious industry events as subject matter experts on the topics of animalidentification, traceability, branding, and the USDA QSA, EV and PVP programs.We maintain strong affiliations with Breed Associations, US Meat ExportFederation, The National Meat Association, The National Cattlemen’s BeefAssociation, and Livestock Marketing Association.

 

Inorder to reach additional customers, we continually develop strategic marketingpartnerships with leading companies in the industry with complementaryabilities and products. We do not currently rely on any third party contractswith distributors, licenses or manufacturers in conducting our business.

 

**COMPETITION**

 

Ofthe 775,000 independent suppliers of cattle in the United States, we estimatethat only approximately 40,000 use some form of verification program. Wecurrently provide tracking information for approximately 5,000 of the mostsignificant independent suppliers which we believe supply greater than 50% ofthe beef and other livestock products available for exports markets.

 

Webelieve we differentiate ourselves from our competitors by providing better,more flexible solutions to all segments of the supply chain. We are also themarket leader in the area of diversifying to the Non-Hormone Treated CattleVerification Program and the USDA’s Never Ever 3 Verification Program.

 

Ourkey competitors for our SupplyVerified Program are: AgInfolink, MicroBeefTechnologies, and Sterling Solutions.

 

**SEASONALITY**

 

Ourbusiness is subject to seasonal fluctuations. Significant portions of ourrevenues are typically realized during the second and fourth quarters of thefiscal year when the calving season is at its peak. Because of the seasonalityof the business and our industry, results for any quarter are not necessarilyindicative of the results that may be achieved for any other quarter or for thefull fiscal year.

 

8

----

Table of Contents

 

**INTELLECTUALPROPERTY**

 

Wecreate, own and maintain a variety of intellectual property assets that webelieve are among our most valuable assets. Our intellectual property assetsinclude patents and patent applications related to our innovations, productsand services, trademarks related to our brands, products and services, andother property rights. We also have licensing arrangements when features fromour programs are desirable to incorporate into either a new or an existingtechnology we offer. We seek to protect our intellectual property right assetsthrough patent, copyright, trade secret, trademark and other laws of the UnitedStates and other countries, and through contractual provisions. Additionalinformation regarding certain risks related to our intellectual property isincluded in Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K.

 

**EMPLOYEES**

 

Asof December 31, 2008 we had 19 employees all of which are full-time. Ourfuture success is substantially dependent upon the performance of our keysenior management personnel, as well as our ability to attract and retainhighly qualified technical personnel. Additional information regarding certainrisks related to our employees is included in Part I, Item 1A “RiskFactors” of this Annual Report on Form 10-K.

 

****AVAILABLEINFORMATION****

 

****Ourwebsite is located at www.imiglobal.com. We make available free of charge onour investor relations website under “SEC Filings” our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and anyamendments to those reports as soon as reasonably practicable after weelectronically file or furnish such materials to the U.S. Securities andExchange Commission (“SEC”). Further, a copy of this annual report on Form 10-Kis located at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580,Washington, D.C. 20549. Information on the operation of the Public Reference Room canbe obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internetsite that contains reports, proxy and information statements and otherinformation regarding our filings at http://www.sec.gov.****

 

****ITEM 1A.       RISKFACTORS****

 

Inaddition to the other information included in this report and our other publicfilings and releases, the following factors should be considered whenevaluating our business, financial condition, results of operations andprospects:

 

*****We havehad a history of operating losses and negative cash flows from operations.There is no assurance that we will continue to achieve profitability in thefuture, or that we will be able to raise additional capital or continue as agoing concern.*****

 

Wehave a history of operating losses. It is uncertain if our future prospectswill continue to result in profitable operations. If we experience losses, thevalue of an investment in our common stock could decline significantly.

 

Ifwe are unable to grow the sales of our products and services in the next twelvemonths and if our business operations continue at their current levels, we maybe unable to generate sufficient cash for our planned operations. We may needto raise additional capital and/or further reduce operating costs. We can giveno assurances that additional capital will be available to us on favorableterms, or at all. Our inability 

 

9

----

Tableof Contents

 

toobtain additional capital, if and when needed, could have a material adverseeffect upon our financial condition and our ability to continue as a goingconcern.

 

*****Weoperate in a highly competitive industry with a limited market characterized bychanging technology, frequent introductions of new products, productenhancements, and evolving industry standards.*****

 

Wecompete with many other vendors of products and services designed for trackingcattle and other livestock and for herd management. Our competitors range fromsmall start-up companies to multi-national firms. Our competitors may havesignificantly greater financial, technical and marketing resources. Competitionis likely to intensify as current competitors expand their product offeringsand as new companies enter the market. Increasing competition may result inreduced margins and the loss of market share. Our competitors may offer broaderproduct lines or technologies that are more commercially attractive and gaingreater market acceptance than our current or future products. Additionally,new technology may render our products obsolete.

 

***The success of our business model depends on the broad acceptance ofour technologies into markets that are continuing to develop as a result of theincreasing focus on food safety and assurance.***

 

Weare currently benefiting from a slow but growing movement among U.S. andinternational beef and other livestock producers to source and age verifyproducts. This emerging trend is fueled in part by consumers focus on foodsafety and assurance. However, we can offer no assurances that there will bemarket acceptance of our technologies. Furthermore, some of our primary targetsegments within the livestock and food industry are experiencing unpredictableeconomic conditions and are expected to continue to struggle with supply, tradeand profitability issues in the near term. Although we believe that ourproducts, if adopted on a wide-scale basis, would have a significant impact onimproving the safety, quality and confidence in our nation’s food supply, ourcustomers for these products historically have been very slow to change andreluctant to adopt new technologies and business practices.

 

*****Ourbusiness may be negatively impacted by international export market activities,including trade barriers to US beef and other livestock exports and customeracceptance of US beef and other livestock products.*****

 

Inprior years, the Japanese and Korean beef and other livestock markets wereclosed to the U.S. as a result of mad cow disease in at least one animal in theUnited States. Currently, the Japanese and Korean markets are the largest beefand other livestock export markets for U.S. producers. Both markets requireverification, which is important to the sale of our products. Because the U.S.market does not mandate verification, there is limited incentive for beef andother livestock producers to purchase our products. Therefore, internationaltrade barriers and limited consumer acceptance of U.S. beef and other livestockproducts can significantly impair our sales and profitability.

 

*****In theevent that market demand for beef and other livestock products declines, ourcustomers may not be able to generate sufficient revenues to justify purchaseof our verification solutions and consulting services.*****

 

Publicattitudes towards beef and other livestock products may be influenced by claimsthat these products are unsafe for consumption or pose unknown health risks.Decreased demand for beef and other livestock products could have a materialadverse affect on the operating results and financial condition of our existingor prospective customers. If operating results of our customers are impaired,the resources that our customers can devote to building information systems fortracking cattle and other livestock and herd management would be reduced whichin turn would limit purchases of our verification solutions and 

 

10

----

Tableof Contents

 

consultingservices. Therefore, our ability to generate revenue is subject to the risksand uncertainties relating to the financial condition of its customers.

 

***We look for opportunities to expand our presence in internationalmarkets in which we may have limited experience and inherently internationaloperations are subject to increased risks which could harm our business,operating results and financial condition.***

 

Wecontinually seek to expand our product and service offerings in internationalmarkets. As we expand into new international markets, we will have only limitedexperience in marketing and operating our products and services in suchmarkets. In other instances, we may rely on the efforts and abilities offoreign business partners in such markets. Certain international markets may beslower than domestic markets and our operations in international markets maynot develop at a rate that supports our level of investment.

 

Inaddition to uncertainty about our ability to expand into international markets,there are certain risks inherent in doing business internationally, including:

 
| · |   | trade  barriers and changes in trade regulations;                                                                                                                            |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · |   | difficulties  in developing, staffing and simultaneously managing a large number of varying  foreign operations as a result of distance, language and cultural  differences; |
| · |   | stringent  local labor laws and regulations;                                                                                                                                 |
| · |   | longer  payment cycles;                                                                                                                                                      |
| · |   | currency  exchange rate fluctuations;                                                                                                                                        |
| · |   | political  or social unrest or economic instability;                                                                                                                         |
| · |   | import  or export restrictions;                                                                                                                                              |
| · |   | seasonal  volatility in business activity;                                                                                                                                   |
| · |   | risks  related to government regulation or required compliance with local laws in  certain jurisdictions, including those more fully described above; and                    |
| · |   | potentially  adverse tax consequences.                                                                                                                                       |

 

Oneor more of these factors could harm our future international operations andconsequently, could harm our brand, business, operating results and financialcondition.

 

*****Ourfuture success depends upon our ability to obtain and enforce patents; preventothers from infringing on our patents, trademarks and other intellectualproperty rights; and operate without infringing upon the patents andproprietary rights of others.*****

 

Wewill be able to protect our intellectual property from unauthorized use ofthird parties only to the extent that it is covered by valid and enforceablepatents and trademarks. Patent protection generally involves complex legal andfactual issues and, therefore, the enforceability of patent rights cannot bepredicted with certainty. Moreover, the laws of some foreign countries do notprotect proprietary rights to the same extent as the laws of the United States.In the event that patents owned by us do not provide adequate protection, wemay not be able to prevent competitors from offering substantially similarproducts and services. Failure to protect our proprietary rights couldseriously impair our competitive position.

 

*****Failureto protect our proprietary rights could seriously impair our competitiveposition.*****

 

Inthe event that third parties claim that our current or future products orservices infringe upon their intellectual property, we may face litigation andbe prevented from selling the products and services at 

 

11

----

Tableof Contents

 

issue.Infringement or other claims could be asserted or prosecuted against us in thefuture, and it is possible that past or future assertion or prosecutions couldharm our business. Litigation either in defense of our intellectual propertyrights or in response to infringement claims made by others may be, bothexpensive and time consuming, which in turn would adversely affect ourbusiness.

 

*****Ourfuture success depends to a significant degree upon the continued service ofkey senior management personnel, in particular, John and Leann Saunders.*****

 

BothJohn and Leann Saunders’ reputation and prominence in the field provide us witha strong competitive advantage. While they are currently bound by employmentagreements, we can offer no assurance that John and or Leann Saunders will beable to continue to work for us in the event of an unforeseen accident, severeinjury or major disease, or on a long-term basis. The loss of key personnelcould have a material adverse effect on our business and operating results.

 

*****Corporategovernance requirements are likely to increase our costs and make it moredifficult to attract qualified directors.*****

 

Weface corporate governance requirements under the Sarbanes-Oxley Act of 2002, aswell as rules adopted by the Securities and Exchange Commission. We expectthat changes in these laws, rules and regulations will continue toincrease our legal and financial compliance costs and make some activities moredifficult, time-consuming and costly particularly the outside review of ourinternal controls. We also expect that these requirements will make it moredifficult and more expensive for us to obtain director and officer liabilityinsurance. We may be required to accept reduced coverage or incur significantlyhigher costs to obtain coverage. These new requirements are also likely to makeit more difficult for us to attract and retain qualified individuals to serveas members of our board of directors or committees of the board.

 

*****Becausewe are not presently subject to the same corporate governance standards ascompanies listed on registered stock exchanges or NASDAQ, our officers andDirectors may have interests adverse to those of the Shareholders.*****

 

Registeredstock exchanges and NASDAQ have enhanced corporate governance requirements thatapply to issuers that list their securities on those exchanges. For example, weare not required to have any independent directors or to adopt a code ofethics. In certain circumstances, management may not have the same interests asthe shareholders and conflicts of interest may arise. We do not presently havea policy to resolve conflicts of interest. Notwithstanding the exercise oftheir fiduciary duties as directors and executive officers and any other dutiesthat they may have to us or our shareholders in general, these persons may haveinterests different than yours which could adversely affect your investment.

 

12

----

Tableof Contents

 

**ITEM 1B.       UNRESOLVED STAFF COMMENTS**

 

None

 

****ITEM 2.          PROPERTIES****

 

Welease approximately 3,100 square feet of office space in a one story officefacility in Castle Rock, Colorado which is used as our corporate headquarters.Our lease expires on June 18, 2011. Our rent for the facility in CastleRock, Colorado is $4,973 per month.

 

****ITEM 3.****          ****LEGALPROCEEDINGS****

 

Weare and may be involved in various unresolved legal actions, administrativeproceedings and claims in the ordinary course of business. Although it is notpossible to predict with certainty the outcome of these unresolved actions, wedo not believe, based on current knowledge, that any legal proceeding or claimis likely to have a material adverse effect on our financial position, resultsof operations or cash flows.

 

****ITEM 4.          SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS****

 

TheCompany held its Annual Meeting of Shareholders on November 12, 2008. Atthe Annual Meeting, shareholders were asked to consider three proposals. Eachproposal was passed by at least a majority of the shares entitled to vote atthe meeting. The following represents the proposals and the results of thecount:

 
| **Proposal** | ** ** | **For**                                                                                                                                                                                                                                                                   | ** ** | **Against** | ** ** | **Abstain** | ** ** |
|--------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|------------|-------------|------------|
| ** **   | ** ** | ** **                                                                                                                                                                                                                                                                | ** ** | ** **  | ** ** | ** **  | ** ** |
| 1.           |       | To elect five directors of the Company to  hold office until the next Annual Meeting of Shareholders or until their  successors are duly elected and qualified: john Saunders, Dr. Gary  Smith, Adam Larson, Robert VanSchoick II, and Peter C. Lapaseotes, Jr. |       | 17,252,199  |       | 288,462     |       | 3,370,845 |   |
|         |       |                                                                                                                                                                                                                                                                      |       |        |       |        |       |   |   |
| 2.           |       | To ratify the appointment of Randall  Gruber & Company, CPA, PC as the independent auditors of the books  and accounts of the Company for the year ending December 31, 2008                                                                                 |       | 17,540,661  |       | —      |       | 3,370,845 |   |
|         |       |                                                                                                                                                                                                                                                                      |       |        |       |        |       |   |   |
| 3.           |       | To ratify the asset sale of three wholly  owned online businesses – CattleNetwork, CattleStore and AgNetwork – to Vance  Publishing Corp.                                                                                                                       |       | 17,252,199  |       | 288,462     |       | 3,370,845 |   |

 

13

----

Tableof Contents

 

****PART II****

 

****ITEM 5.          MARKETFOR COMMON EQUITY’ RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES****

 

***Market Information for Common Stock***

 

Sincethe inception of the public trading of our securities on November 15,2006, our common stock has been listed on the over-the-counter electronicbulletin board (“OTC:BB”) under the symbol “INMG”. The following table setsforth the range of high and low bid prices since the debut of public trading inour shares. The quotations reflect inter-dealer prices without retail mark-up,mark-down or commission and may not represent actual transactions.

 
| ** **     | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------|------------|----------|------------|----------|------------|
| ** **     | ** ** | **High** | ** ** | **Low**  | ** ** | **High** | ** ** | **Low** | ** ** |
| First quarter  |       | $        | 0.35       |     | $          | 0.10 |   | $ | 0.40 |   | $ | 0.20 |   |
| Second quarter |       | $        | 0.34       |     | $          | 0.16 |   | $ | 0.27 |   | $ | 0.15 |   |
| Third quarter  |       | $        | 0.45       |     | $          | 0.14 |   | $ | 0.25 |   | $ | 0.14 |   |
| Fourth quarter |       | $        | 0.35       |     | $          | 0.06 |   | $ | 0.25 |   | $ | 0.07 |   |

 

***Stockholders***

 

Asof March 20, 2009, we estimate that there were approximately 260beneficial and actual owners of our Common Stock.

 

***Dividends***

 

Wehave not declared or paid any cash dividends on our common stock. We presentlydo not have plans to pay any cash dividends in the future.

 

***Recent Sales of Unregistered Securities***

 

InFebruary 2007, we completed a private placement for our common stock andissued 555,556 shares at $0.45 per share resulting in proceeds of $250,000. In August 2007,we completed the sale of 666,667 shares of our common stock at $0.15 per shareresulting in proceeds of $100,000. There was no commission paid on the sale ofthese shares.

 

Duringthe third quarter of 2008, we completed a private placement of our common stockand issued 916,000 shares of our common stock at an average price of $0.14 pershare, netting total consideration of $125,000. The proceeds from the sale ofthe shares will be used for general working capital purposes.

 

Theissuance of these shares of our common stock described above was pursuant tothe exemption from registration provided by Section 4(2) of theSecurities Act of 1933, as amended and related state private offeringexemptions. All of the investors were Accredited Investors as defined in theSecurities Act who took their shares for investments purposes without a view todistribution and had access to information concerning the company and itsbusiness prospects, as required by the Securities Act.

 

Inaddition, there was no general solicitation or advertising for the purchase ofthese shares. All certificates for these shares issued pursuant to Section 4(2) containa restrictive legend. Finally, our stock transfer agent has been instructed notto transfer any of such shares, unless such shares are registered for resale orthere is an exemption with respect to their transfer.

 

14

----

Tableof Contents

 

***Issuer Purchases of Equity Securities***

 

None

 

****ITEM 7.****          ****MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS****

 

****Forward-LookingStatements****

 

Thisannual report on Form 10-K contains forward-looking statements within themeaning of the federal securities laws. These forwarding-looking statementsinclude without limitation statements regarding our expectations and beliefsabout the market and industry, our goals, plans, and expectations regarding ouroperations and properties and results, our intentions and strategies regardingfuture operations, acquisitions and sales of properties, our intentions andstrategies regarding the formation of strategic relationships, our beliefsregarding the future success of our operations, our expectations and beliefsregarding competition, competitors, the basis of competition and our ability tocompete, our beliefs and expectations regarding our ability to hire and retainpersonnel, our beliefs regarding period to period results of operations, ourexpectations regarding revenues, our expectations regarding future growth andfinancial performance, our beliefs and expectations regarding the adequacy ofour facilities, and our beliefs and expectations regarding our financialposition, ability to finance operations and growth and the amount of financingnecessary to support operations. These statements are subject to risks anduncertainties that could cause actual results and events to differ materially.We undertake no obligation to update forward-looking statements to reflectevents or circumstances occurring after the date of this annual report on Form 10-K.

 

Asused in this annual report on Form 10-K, unless the context otherwiserequires, the terms “we,” “us,” “the Company,” “IMI” and “IMI Global” refer toIntegrated Management Information, Inc., a Colorado corporation.

 

****BusinessOverview****

 

Weare a leading provider of verification and communication solutions for theagriculture, livestock and food industry.

 

Weprovide our owned and operated online properties and services which specializein identification and traceability, process, production practice and supplyverification, document control for USDA verification programs and third partyauditing services. We apply information technology to the agriculture,livestock and food industry by addressing the growing importance of marketingclaims such as: source of origin information, genetic background, animaltreatment, animal health history, animal age, animal movements, nutrition,carbon credits and other credence attributes. Our solutions provide assuranceregarding those claims made that can not be confirmed by visual inspection oncethe product reaches the meat case and is marketed to the consumer. We havedeveloped a range of proprietary web based applications, consultingmethodologies, auditing processes, and other services to allow the livestockand food industry to record, manage, report, and audit this information. Oursolutions help our customers establish their own systems, meet governmentregulations, create their own premium brand identity, gain cost efficienciesand command a higher price for their product.

 

Westand at the forefront of a rapidly evolving movement to track livestock andverify sources of beef and other livestock products. In the aftermath of thediscovery of the first case of mad cow disease in the United States inDecember, 2003, many of the largest U.S. beef and other livestock exportmarkets were 

 

15

----

Tableof Contents

 

closedresulting in significant losses to the industry. In response to the crisis,several initiatives were enacted to facilitate the reopening of key exportmarkets. Most notably, U.S. suppliers seeking to sell beef and other livestockproducts to other countries must participate in a pre-approved Quality SystemAssessment Program so as to have an approved means of verifying specificproduct requirements. In response, we were the first to develop a USDA QualitySystem Assessment document management system for auditing the tracking systemsused by beef and other livestock producers to verify source and age. Weintroduced our USVerified Source and Age Verification system in 2005, and overthe years we have continued to enhance and further develop programs to addressother verification needs including, but not limited to, non-hormone treatedcattle (NHTC) and humane handling marketing claims. More recently, we workedwith compliance programs, and marketing approaches in advance of completion ofthe country of origin labeling (COOL) legislation’s final rule, requiring meatretailers to display the country of origin on their meat and produce labels. InMarch 2009, we introduced our VerifiedGreenTM Verification program. Thisprogram caters to producers and consumers who are committed to reducing theircarbon footprint. Such a program is expected to appeal to forward-thinkingproducers and retailers who are both environmentally conscious and looking fora marketing edge as well as to consumers who want to support producerspracticing good environmental stewardship.

 

**PerformanceHighlights**

 
| Revenues        |   | Our  revenues for the year ended December 31, 2008 increased approximately  46% year over year to $2.4 million compared to $1.6 million. We experienced  significant growth in program development and web based development services  in connection with our third party verification programs. |
|-----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |   |                                                                                                                                                                                                                                                                                                  |
| Net  Income     |   | For  the year ended December 31, 2008 we had net income of $149,658 compared  to net loss of $759,560 for 2007. This represents our first year to achieve  net income.                                                                                                                           |
|            |   |                                                                                                                                                                                                                                                                                                  |
| Debt  Repayment |   | In  connection with the closing of the asset sale, $350,000 of the proceeds was  used to pay the Cattlefeeding.com note payable in full. Additionally, we  repaid amounts outstanding under our line of credit.                                                                                       |
|            |   |                                                                                                                                                                                                                                                                                                  |

****Liquidityand Capital Resources****

 

AtDecember 31, 2008, we had cash and cash equivalents of $154,044 comparedto $170,882 of cash and cash equivalents at December 31, 2007. Our workingcapital at December 31, 2008 was $387,901 compared to a deficit of$298,386 at December 31, 2007.

 

Netcash used by operating activities during 2008 was $438,537 compared to $638,646during the same period in 2007. Cash used by operating activities (continuingand discontinued operations) is driven by our net loss and adjusted by non-cashitems. Non-cash adjustments primarily include depreciation, amortization ofintangible assets and stock based compensation expense. The improvement wasprimarily driven by better operating performance yields over a greater volumeof sales at consistent overhead levels offset by increased expenses associatedwith the sale of the online businesses. Additionally, the timing of cashreceipts and cash disbursements affects our operating assets and cash balances.

 

Netcash provided by investing activities of $729,849 is primarily attributable tothe sale of the online businesses during the third quarter ended September 30,2008. Our capital expenditures were $70,951 and $34,389 for the years ended December 31,2008 and 2007, respectively. Our capital expenditures are primarily related topurchases and internal development of information technology assets to supportour 

 

16

----

Tableof Contents

 

productand service offerings. As we anticipate continued growth, we expect tocontinue investing additional capital in our information technology assets.

 

Netcash used by financing activities of $308,150 during 2008 was primarily relatedto the repayment of the CattleNetwork Note Payable. Cash provided by financingactivities of $613,378 during 2007 was due to the completion of a privateplacement offering of our common stock and issuance of new unsecured debt.

 

Historically,our growth has been funded through a combination of convertible debt fromprivate investors and private placement offerings. We continually evaluate allfunding options including additional offerings of our securities to private,public and institutional investors and other credit facilities as they becomeavailable.

 

Ourplan for continued growth is primarily based upon intensifying our focus oninternational markets. We believe that there are significant growthopportunities available to us because often the only way to access variousrestrictions as imposed on international market imports/exports is via aquality verification program, like our USVerifiedTM.com product line.

 

Theprimary driver of our operating cash flow is our third-party verificationsolutions, specifically the gross margin generated from services provided.Therefore we focus on the elements of those operations including revenue growthand long term projects that ensure a steady stream of operating profits toenable us to meet our cash obligations. On a weekly basis we review theperformance of each of our revenue streams focusing on third party verificationsolutions compared with prior periods and our operating plan. Based on thecontinued sales growth and overall improvement in our performance, we believethat we will continue to move closer towards profitability for the year ended December 31,2009. The culmination of all our efforts toward profitability has broughtopportunities to us ****including: increased investor confidence and renewed interest in ourcompany,**** third-party interest in our expertise todevelop and enhance websites, as well as the potential to develop businessrelationships with long term strategic partners. In keeping with our corebusiness, we will continue to review our business model with a focus onprofitability, long term capital solutions and the potential impact ofacquisitions or divestitures, if such an opportunity arises.

 

**OffBalance Sheet Arrangements**

 

Asof December 31, 2008, we had no off-balance sheet arrangements of anytype.

 

**AssetSale and Discontinued Operations**

 

OnJuly 15, 2008, we completed the sale (the “asset sale”) of threewholly-owned online businesses – CattleNetwork, CattleStore and AgNetwork – toVance Publishing Corp. (“Vance”), a privately held provider of print andelectronic media with a strong presence in the agricultural industry.  The transaction included $800,000 in cash andlong term advertising rights for placements in Vance’s industry leadingpublications, including Drover’s, Pork, Bovine Veterinarian and Dairy HerdManagement, over a three year period. Vance has also contracted with us toprovide network maintenance and support for the websites as part of a separatesupport agreement. In addition, Vance has agreed to open negotiations onanother IMI Global product, AgTraderIndex (www.AgTraderIndex.com).

 

Thewholly-owned online businesses were considered significant revenue streams;however, they historically have not contributed materially to gross profit. Theassets sold in the transaction primarily represented all of the goodwill andintangible assets recorded on the balance sheet. The long term advertisingrights will be accounted for as a gain contingency as it involves uncertaintiesas to the 

 

17

----

Tableof Contents

 

possiblegain that will be ultimately realized. The advertising rights are notassignable or resalable, therefore the fair market value is not determinableuntil such time as advertising actually occurs.

 

****RESULTSOF OPERATIONS****

 

****YearEnded December 31, 2008 Compared to Year Ended December 31, 2007****

 

OurStatements of Operations present income (loss) from continuing operations andloss from discontinued operations. All discussions are based on income fromcontinuing operations and therefore exclude all income statement items of thecurrent and prior year’s discontinued operations.

**** ****
| ** **                                    | ** ** | **Years ended December 31,** | ** ** | **2008**  | ** ** | **2008 - 2007** | ** ** |
|-----------------------------------------------|------------|---------------------------------------------|------------|-----------|------------|---------------------------|------------|
| **Selected Financial Data**         | ** ** | **2008**                                    | ** ** | **2007**  | ** ** | **Improvement**           | ** ** | **% Change** | ** ** |
|                                          |       |                                        |       |      |       |                      |       |   |   |
| Revenues                                      |       | $                                           | 2,402,830  |      | $          | 1,649,078                 |       | $ | 753,752 |   | 45.7 | % |
| Third party verification                      |       | 1,934,950                                   |       | 1,341,113 |       | 593,837                   |       | 44.3 | % |
| Hardware                                      |       | 400,130                                     |       | 278,370   |       | 121,760                   |       | 43.7 | % |
| Other                                         |       | 67,750                                      |       | 29,595    |       | 38,155                    |       | * |   |
| Costs of revenues                             |       | 1,073,328                                   |       | 429,703   |       | (643,625                  | )          | * |   |
| Gross profit                                  |       | 1,329,502                                   |       | 1,219,375 |       | 110,127                   |       | 9.0 | % |
| Gross margin                                  |       | 55.3                                        | %          | 73.9      | %          | —                    |       | * |   |
| Selling, general and administrative  expenses |       | 1,440,541                                   |       | 1,928,522 |       | 487,981                   |       | 25.3 | % |
| Gain on sale of online businesses             |       | 357,802                                     |       | —    |       | 357,802                   |       | * |   |
| Interest expense                              |       | 33,098                                      |       | 18,944    |       | (14,154                   | )          | -74.7 | % |
| Income (loss) from continuing operations      |       | 217,391                                     |       | (720,770  | )          | 938,161                   |       | * |   |
| Net income (loss)                             |       | 149,658                                     |       | (759,560  | )          | 909,218                   |       | * |   |
|                                               |            |                                             |            |           |            |                           |            |  |  |  |  |  |

 

----

* calculation not meaningful for discussionpurposes

 

****Revenues****

 

Revenuesare derived from sales of our USVerified identification and verificationsolutions, consulting services, web-based development and hardware sales.Revenues for year ended December 31, 2008 were $2,402,830 and $1,649,078,an improvement of 46%. The improvement in sales was primarily due tosignificant growth in program development and web based development services inconnection with our third party verification programs.

 

During2008, our third party verification revenue, which includes sales of ourUSVerified solutions and related consulting, program development and web-baseddevelopment services, increased 44% to $1,934,950 from $1,341,113 in 2007.

 

Webelieve that customer demand for third party verification services willcontinue to increase with the reopening of key export markets, increasingdemand for verification of NHTC and humane handling marketing claims. We alsobelieve the demand for verification will continue to grow and present otheropportunities for our business in light of the many recent product recalls infresh produce and with the advent of legislation concerning country of originlabeling (COOL). We are the exclusive worldwide marketing partner for Born &Raised in the USA® — a labeling program that we believe is ideally suited tohelp producers, packers and retailers comply with the new labelingrequirements.

 

Revenuesderived from sales of hardware, primarily sales of cattle identification eartags, increased 44% to $400,130 in 2008 compared to $278,370 in 2007.

 

18

----

Tableof Contents

 

****Costof Sales and Gross Margin****

 

Costof sales for 2008 was $1,073,328 compared to $429,703 during 2007. Gross marginfor 2008 declined by approximately 19 basis points to 55% of revenues in 2008compared to 74% in 2007. The change was partially due to the addition ofdedicated personnel providing program development and web based developmentservices in connection with our third party verification programs coupled withshifts in the sales mix of our lower margin hardware sales. Due to our focus onmargins, our commitment to long term growth and the scalability of the programswe develop, we anticipate that our margins will continue to be impacted duringthe next year.

 

**Selling,General and Administrative Expenses**

 

Selling,general and administrative expenses for 2008 were $1,440,541, a decrease of$487,981, or 25% over the 2007 amount of $1,928,522. The decrease was primarilydue to a $36,113 reduction in stock based compensation expense, $174,334reduction in spending for contracted services and other professional servicefees, $83,942 decrease in travel expenses and an overall decrease in variousother expenses due to management’s efforts to aggressively control costs.

 

**Gain onSale of Online Businesses**

 

OnJuly 15, 2008, we completed the sale of three wholly-owned onlinebusinesses – CattleNetwork, CattleStore and AgNetwork – to Vance PublishingCorp. (“Vance”), a privately held provider of print and electronic media with astrong presence in the agricultural industry. The assets sold in thetransaction primarily represented all of the goodwill and intangible assetsrecorded on the balance sheet. We sold the assets at a substantial premium tothe original purchase in 2005 and accordingly have recorded a gain on sale ofapproximately $358,000 for 2008.

 

****OtherIncome (Expense)****

 

Interestexpense for 2008 increased to $33,098 compared to $18,944 for 2007. Theincrease during 2008 was primarily attributable to more interest expenseincurred on a greater borrowing base at higher interest rates during part of2008 as compared to 2007.

 

****Income(Loss) from Continuing Operations and per Share information****

 

Asa result of the foregoing, income from continuing operations for the year endedDecember 31, 2008 was $217,391 or $0.01 per basic and diluted commonshare, compared to loss from continuing operations of $759,560 or $0.04 lossper basic and diluted common share for the year ended December 31, 2007.

 

****NetIncome (loss)****

 

Netincome for the year ended December 31, 2008 was $149,658 which includesloss from discontinued operations of $67,733, compared to net loss of $759,560which includes loss from discontinued operations of $38,790 for the year ended December 31,2007.

 

****CRITICALACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES****

 

Ourdiscussion and analysis of our financial condition and results of operations isbased upon our financial statements, which have been prepared in accordancewith GAAP. The preparation of these consolidated financial statements requiresus to make estimates, judgments and assumptions that affect 

 

19

----

Tableof Contents

 

thereported amounts of assets, liabilities, revenues and expenses, and the relateddisclosure of contingent assets and liabilities. We base our estimates onhistorical experience and on various other assumptions that we believe arereasonable under the circumstances, the results of which form the basis formaking judgments about the carrying values of assets and liabilities that arenot readily apparent from other sources. Actual results may differ from theseestimates.

 

Anaccounting policy is considered to be critical if it requires an accountingestimate to be made based on assumptions about matters that are highlyuncertain at the time the estimate is made, and if different estimates thatreasonably could have been used, or changes in the accounting estimate that arereasonably likely to occur, could materially impact the consolidated financialstatements. We believe that the following critical accounting policies reflectthe more significant estimates and assumptions used in the preparation of theconsolidated financial statements.

 

****Goodwilland Other Intangible Assets****

 

****Goodwillis tested for impairment at the reporting unit level (operating segment or onelevel below an operating segment) on an annual basis and between annual testsin certain circumstances. Application of the goodwill impairment test requiresjudgment, including the identification of reporting units, assigning assets andliabilities to reporting units, assigning goodwill to reporting units, anddetermining the fair value of each reporting unit. Significant judgmentsrequired to estimate the fair value of reporting units include estimatingfuture cash flows, and determining appropriate discount rates, growth rates andother assumptions. Changes in these estimates and assumptions could materiallyaffect the determination of fair value for each reporting unit which couldtrigger impairment. Based on our 2008 and 2007 impairment test, there wouldhave to be a significant unfavorable change to our assumptions used in suchcalculations for an impairment to exist.****

 

****Weamortize other intangible assets over their estimated useful lives. We recordan impairment charge on these assets when we determine that their carryingvalue may not be recoverable. The carrying value is not recoverable if itexceeds the undiscounted future cash flows resulting from the use of the assetand its eventual disposition. When there is existence of one or more indicatorsof impairment, we measure any impairment of intangible assets based on aprojected discounted cash flow method using a discount rate determined by ourmanagement to be commensurate with the risk inherent in our business model. Ourestimates of future cash flows attributable to our other intangible assetsrequire significant judgment based on our historical and anticipated resultsand are subject to many factors. Different assumptions and judgments couldmaterially affect the calculation of the fair value of our other intangibleassets which could trigger impairment.****

 

****Aspreviously described, the assets sold in connection with the sale of threewholly-owned online businesses – CattleNetwork, CattleStore and AgNetwork –primarily represented all of the goodwill and intangible assets recorded on thebalance sheet. We sold the assets at a substantial premium to the originalpurchase in 2005 and accordingly have recorded a gain on sale of approximately$367,000 during the third quarter of 2008.****

 

**Stock-BasedCompensation Expense**

 

Calculatingstock-based compensation expense requires the input of highly subjectiveassumptions, including the expected term of the stock-based awards, stock pricevolatility, and the pre-vesting option forfeiture rate. We estimate theexpected life of options granted based on historical exercise patterns, whichwe believe are representative of future behavior. We estimate the volatility ofour common stock on the date of grant based on the implied volatility ofpublicly traded options on our common stock, with a term of one year orgreater. We believe that implied volatility calculated based on actively traded

 

20

----

Tableof Contents

 

optionson our common stock is a better indicator of expected volatility and futurestock price trends than historical volatility. Therefore, expected volatilityfor the year ended December 31, 2008 was based on a market-based impliedvolatility. The assumptions used in calculating the fair value of stock-basedawards represent our best estimates, but these estimates involve inherentuncertainties and the application of management judgment. As a result, iffactors change and we use different assumptions, our stock-based compensationexpense could be materially different in the future. In addition, we are requiredto estimate the expected forfeiture rate and only recognize expense for thoseshares expected to vest. We estimate the forfeiture rate based on historicalexperience of our stock-based awards that are granted, exercised and cancelled.If our actual forfeiture rate is materially different from our estimate, thestock-based compensation expense could be significantly different from what wehave recorded in the current period.

 

**RecentAccounting Pronouncements**

 

Referto Footnote 13 to the financial statements included in Item 8 of this Form 10-K.

 

21

----

Tableof Contents

 

**ITEM 8.          FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

 

***Index to Financial Statements***

*** ***
| ** **                                                                                                      | ** ** | **Page** |
|-----------------------------------------------------------------------------------------------------------------|------------|----------|
| Financial  Statements:                                                                                          |       |     |
| Report of Independent Registered Public Accounting  Firm                                                        |       | 23       |
| Balance Sheets as of December 31, 2008 and 2007                                                            |       | 24       |
| Statements of Operations for the years ended  December 31, 2008 and  December 31, 2007                |       | 25       |
| Statements of Cash Flows for the years ended  December 31, 2008 and  December 31, 2007                |       | 26       |
| Statements of Stockholders’ Equity for the years ended  December 31, 2008 and  December 31, 2007 |       | 27       |
| Notes to Financial Statements                                                                                   |       | 28       |

 

22

----

Table of Contents

 

****Report of IndependentRegistered Public Accounting Firm****

 

****To theBoard of Directors and Stockholders of Integrated Management Information, Inc.:****

 

Wehave audited the accompanying balance sheets of Integrated ManagementInformation, Inc. as of December 31, 2008 and 2007 and the relatedstatements of operations, shareholders’ equity, and cash flows for the yearsended December 31, 2008 and 2007. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audits.

 

Weconducted our audits in accordance with standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that weplan and perform the audits to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internalcontrol over financial reporting. Our audit included consideration of internalcontrol over financial reporting as a basis for designing audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control over financialreporting. Accordingly, we express no such opinion. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.

 

Inour opinion, the financial statements referred to above present fairly, in allmaterial respects, the financial position of Integrated Management Information, Inc.as of December 31, 2008 and 2007 and the results of its operations andcash flows for the years then ended in conformity with accounting principlesgenerally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming thatthe Company will continue as a going concern. As described in Note 1 to thefinancial statements, conditions exist which raise substantial doubt about theCompany’s ability to continue as a going concern unless it is able to generatesufficient cash flows to meet its obligations and sustain its operations.Management’s plans regarding those matters are also described in Note 1. Thefinancial statements do not include any adjustments that might result from theoutcome of this uncertainty.

 

Gruber &Company, LLC

LakeSaint Louis, Missouri

March 30,2009

 

23

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Balance Sheets**

 
| ** **                                                                                                                                                                            | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                            | ** ** | **2008**              | ** ** | **2007** | ** ** |
| **Assets**                                                                                                                                                                            |       |                  |       |   |   |
| Current assets:                                                                                                                                                                       |       |                  |       |   |   |
| Cash and cash equivalents                                                                                                                                                             |       | $                     | 154,044    |   | $ | 170,882 |   |
| Accounts receivable, net of allowance of  $5,400 and $3,200 (Note 2)                                                                                                                  |       | 458,715               |       | 193,737 |   |
| Inventories                                                                                                                                                                           |       | 14,350                |       | 18,759 |   |
| Prepaid expenses and other current assets                                                                                                                                             |       | 33,073                |       | 43,495 |   |
| Total current assets                                                                                                                                                                  |       | 660,182               |       | 426,873 |   |
| Property and equipment, net                                                                                                                                                           |       | 78,275                |       | 54,134 |   |
| Goodwill                                                                                                                                                                              |       | —                |       | 418,208 |   |
| Intangible assets, net                                                                                                                                                                |       | 1,093                 |       | 28,395 |   |
| Total assets                                                                                                                                                                          |       | $                     | 739,550    |   | $ | 927,610 |   |
|                                                                                                                                                                                  |       |                  |       |   |   |
| **Liabilities  and Stockholders’ Equity**                                                                                                                                        |       |                  |       |   |   |
| Current liabilities:                                                                                                                                                                  |       |                  |       |   |   |
| Accounts payable                                                                                                                                                                      |       | $                     | 218,843    |   | $ | 259,104 |   |
| Accrued expenses and other current  liabilities                                                                                                                                       |       | 53,438                |       | 40,406 |   |
| Deferred revenues                                                                                                                                                                     |       | —                |       | 5,750 |   |
| Short-term debt and current portion of  notes payable (Note 4)                                                                                                                        |       | —                |       | 420,000 |   |
| Total current liabilities                                                                                                                                                             |       | 272,281               |       | 725,260 |   |
| Notes payable and other long-term debt (Note  4)                                                                                                                                      |       | 300,000               |       | 300,000 |   |
| Commitments and contingencies (Note 11)                                                                                                                                               |       |                  |       |   |   |
| Stockholders equity:                                                                                                                                                                  |       |                  |       |   |   |
| Preferred stock, $0.001 par value;  5,000,000 shares authorized; none issued or outstanding                                                                                           |       | —                |       | — |   |
| Common stock, $0.001 par value; 95,000,000  shares authorized; 20,929,006 and 28,245,506 shares issued, respectively; and  20,871,806 and 19,995,506 shares outstanding, respectively |       | 20,929                |       | 28,245 |   |
| Additional paid-in-capital                                                                                                                                                            |       | 3,359,380             |       | 4,705,679 |   |
| Treasury stock of 57,200 and 8,250,000  shares, respectively                                                                                                                          |       | (16,124               | )          | (1,485,000 | ) |
| Accumulated deficit                                                                                                                                                                   |       | (3,196,916            | )          | (3,346,574 | ) |
| Total stockholders’ equity                                                                                                                                                       |       | 167,269               |       | (97,650 | ) |
| Total liabilities and stockholders’ deficit                                                                                                                                      |       | $                     | 739,550    |   | $ | 927,610 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

24

----

Table of Contents

 

**Integrated Management Information, Inc.**

**Statements of Operations**

 
| ** **                                           | ** ** | **Years ended December 31,** | ** ** |
|------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                           | ** ** | **2008**                                    | ** ** | **2007** | ** ** |
|                                                 |       |                                        |       |   |   |
| Revenues                                             |       | $                                           | 2,402,830  |   | $ | 1,649,078 |   |
| Costs of revenues                                    |       | 1,073,328                                   |       | 429,703 |   |
| Gross profit                                         |       | 1,329,502                                   |       | 1,219,375 |   |
| Selling, general and administrative  expenses        |       | 1,440,541                                   |       | 1,928,522 |   |
| Gain on sale of online businesses                    |       | (357,802                                    | )          | — |   |
| Income (loss) from operations                        |       | 246,763                                     |       | (709,147 | ) |
| Other expense (income):                              |       |                                        |       |   |   |
| Interest expense                                     |       | 33,098                                      |       | 18,944 |   |
| Other income, net                                    |       | (3,726                                      | )          | (7,321 | ) |
| Income (loss) before income taxes                    |       | 217,391                                     |       | (720,770 | ) |
| Income taxes                                         |       | —                                      |       | — |   |
| Income (loss) from continuing operations             |       | $                                           | 217,391    |   | $ | (720,770 | ) |
| Loss from discontinued operations                    |       | (67,733                                     | )          | (38,790 | ) |
| Net income (loss)                                    |       | $                                           | 149,658    |   | $ | (759,560 | ) |
|                                                 |       |                                        |       |   |   |
| Income (loss) per share from continuing  operations: |       |                                        |       |   |   |
| Basic                                                |       | $                                           | 0.01       |   | $ | (0.04 | ) |
| Diluted                                              |       | $                                           | 0.01       |   | $ | (0.04 | ) |
|                                                 |       |                                        |       |   |   |
| Loss per share from discontinued  operations:        |       |                                        |       |   |   |
| Basic                                                |       | $                                           | —     |   | $ | — |   |
| Diluted                                              |       | $                                           | —     |   | $ | — |   |
|                                                 |       |                                        |       |   |   |
| Weighted average shares outstanding:                 |       |                                        |       |   |   |
| Basic                                                |       | 20,624,153                                  |       | 19,512,401 |   |
| Diluted                                              |       | 20,680,922                                  |       | 19,512,401 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

25

----

Table of Contents

 

**Integrated Management Information, Inc.**

**Statements of Cash Flows**

 
| ** **                                                                            | ** ** | **Year ended December 31,** | ** ** |
|---------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                            | ** ** | **2008**                                   | ** ** | **2007** | ** ** |
| Operating activities:                                                                 |       |                                       |       |   |   |
| Net income (loss)                                                                     |       | $                                          | 149,658    |   | $ | (759,560 | ) |
| Adjustments to reconcile net income (loss)  to net cash used in operating activities: |       |                                       |       |   |   |
| Depreciation and amorization                                                          |       | 39,615                                     |       | 30,110 |   |
| Stock based compensation expense                                                      |       | 3,410                                      |       | 41,330 |   |
| Provision for doubtful accounts                                                       |       | 4,146                                      |       | 14,227 |   |
| Amortization under advertising rights                                                 |       | 5,000                                      |       | — |   |
| Loss on disposal of equipment                                                         |       | 4,708                                      |       | — |   |
| Gain on sale of online businesses                                                     |       | (357,802                                   | )          | — |   |
| Changes in assets and liabilities:                                                    |       |                                       |       |   |   |
| Accounts receivable                                                                   |       | (269,124                                   | )          | (29,805 | ) |
| Inventories                                                                           |       | 4,409                                      |       | (4,574 | ) |
| Prepaid expenses and other current assets                                             |       | 10,422                                     |       | (10,061 | ) |
| Accounts payable                                                                      |       | (40,261                                    | )          | 52,638 |   |
| Accrued expenses and other current  liabilities                                       |       | 13,032                                     |       | 32,119 |   |
| Deferred revenue                                                                      |       | (5,750                                     | )          | (5,070 | ) |
| Net cash used in operating activites                                                  |       | (438,537                                   | )          | (638,646 | ) |
|                                                                                  |       |                                       |       |   |   |
| Investing activities:                                                                 |       |                                       |       |   |   |
| Acquisition of property and equipment                                                 |       | (70,951                                    | )          | (34,389 | ) |
| Proceeds from sale of online businesses                                               |       | 800,000                                    |       | — |   |
| Proceeds from sale of equpment                                                        |       | 800                                        |       | — |   |
| Net cash provided by (used in) investing  activities                                  |       | 729,849                                    |       | (34,389 | ) |
|                                                                                  |       |                                       |       |   |   |
| Financing activities:                                                                 |       |                                       |       |   |   |
| Proceeds from line of credit                                                          |       | 38,000                                     |       | — |   |
| Repayments on line of credit                                                          |       | (108,000                                   | )          | (86,622 | ) |
| Proceeds from Lapaesotes Note Payable                                                 |       | —                                     |       | 300,000 |   |
| Repayment of CattleNetwork Note Payable                                               |       | (350,000                                   | )          | — |   |
| Proceeds from issuance of common stock                                                |       | 125,000                                    |       | 350,000 |   |
| Proceeds from exercise of stock options                                               |       | 2,974                                      |       | — |   |
| Stock repurchase under Buyback Program                                                |       | (16,124                                    | )          | — |   |
| Change in restricted cash balances                                                    |       | —                                     |       | 50,000 |   |
| Net cash provided by (used in) financing  activities                                  |       | (308,150                                   | )          | 613,378 |   |
| Net change in cash and cash equivalents                                               |       | (16,838                                    | )          | (59,657 | ) |
| Cash and cash equivalents at beginning of  year                                       |       | 170,882                                    |       | 230,539 |   |
| Cash and cash equivalents at end of year                                              |       | $                                          | 154,044    |   | $ | 170,882 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

26

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Statements of Stockholders’ Equity**

 
| ** **                                                                             | ** ** | ** **            | ** ** | ** **  | ** ** | **Additional** | ** ** | ** **   | ** ** | ** ** | ** ** | ** **       | ** ** |
|----------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|----------------|------------|--------------|------------|------------|------------|------------------|------------|
| ** **                                                                             | ** ** | **Common Stock** | ** ** | **Paid-in** | ** ** | **Retained**   | ** ** | **Treasury** | ** ** | ** ** | ** ** |
| ** **                                                                             | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **Capital**    | ** ** | **Deficit**  | ** ** | **Stock**  | ** ** | **Total**        | ** ** |
| Balance at December 31, 2006                                                      |       | 27,023,283            |       | 27,024      |       | 4,315,571      |       | (2,587,014   | )          | (1,485,000 | )          | 270,581          |       |
|                                                                                   |       |                  |       |        |       |           |       |         |       |       |       | —           |       |
| Issuance of common stock in connection with  a private placement in February 2007 |       | 555,556               |       | 555         |       | 249,445        |       | —       |       | —     |       | —  250,000  |       |
| Issuance of common stock in connection with  a private placement in August 2007   |       | 666,667               |       | 667         |       | 99,333         |       | —       |       | —     |       | 100,000          |       |
| Stock-based compensation expense                                                       |       | —                |       | —      |       | 41,330         |       | —       |       | —     |       | 41,330           |       |
| Net loss                                                                               |       | —                |       | —      |       | —         |       | (759,560     | )          | —     |       | (759,560         | )          |
| Balance at December 31, 2007                                                      |       | 28,245,506            |       | $           | 28,246     |           | $          | 4,705,679    |       | $          | (3,346,574 | )                | $          | (1,485,000 | ) | $ | (97,649 | ) |
|                                                                                   |       |                  |       |        |       |           |       |         |       |       |       |             |       |
| Stock repurchase of 57,200 shares on the  open market                                  |       | —                |       | —      |       | —         |       | —       |       | (16,124    | )          | —   (16,124 | )          |
| Stock-based compensation expense                                                       |       | —                |       | —      |       | 3,410          |       | —       |       | —     |       | 3,410            |       |
| Issuance of common stock in connection with  a private placement in July 2008     |       | 916,000               |       | 916         |       | 124,084        |       | —       |       | —     |       | —   125,000 |       |
| Exercise of stock options                                                              |       | 17,500                |       | 17          |       | 2,957          |       | —       |       | —     |       | 2,974            |       |
| Retirement of treasury stock                                                           |       | (8,250,000            | )          | (8,250      | )          | (1,476,750     | )          | —       |       | 1,485,000  |       | —           |       |
| Net income                                                                             |       | —                |       | —      |       | —         |       | 149,658      |       | —     |       | 149,658          |       |
| Balance at December 31, 2008                                                      |       | 20,929,006            |       | $           | 20,929     |           | $          | 3,359,380    |       | $          | (3,196,916 | )                | $          | (16,124 | ) | $ | 167,269 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

27

----

Table of Contents

** **

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****Note1 - The Company and Basis of Presentation****

 

****BusinessOverview****

 

IntegratedManagement Information, Inc. (“IMI Global,” “IMI,” the “Company” or “we”)is a leading provider of verification and communication solutions in theagricultural and livestock industry. To our customers, we provide our owned andoperated online properties and services which specialize in identification andtraceability, process, production practice and supply verification, documentcontrol for USDA verification programs and third party auditing services. Oursolutions help our customers establish their own systems, meet governmentregulations, create their own premium brand identity, gain cost efficienciesand command a higher price for their product.

 

IMIGlobal stands at the forefront of a rapidly evolving movement to tracklivestock and verify sources of beef and other livestock products. In theaftermath of the discovery of the first case of mad cow disease in the UnitedStates in December, 2003, many of the largest U.S. beef and other livestockexport markets were closed resulting in significant losses to the industry. Inresponse to the crisis, several initiatives were enacted to facilitate thereopening of key export markets. Most notably, U.S. suppliers seeking to sellbeef and other livestock products to other countries must participate in apre-approved Quality System Assessment Program so as to have an approved meansof verifying specific product requirements. In response, we were the first todevelop a USDA Quality System Assessment document management system forauditing the tracking systems used by beef and other livestock producers toverify source and age. We introduced our USVerified Source and Age Verificationsystem in 2005, and over the years we have continued to enhance and furtherdevelop programs to address other verification needs including, but not limitedto, non-hormone treated cattle (NHTC) and humane handling marketing claims.More recently, we worked with compliance programs, and marketing approaches inadvance of completion of the country of origin labeling (COOL) legislation’sfinal rule, requiring meat retailers to display the country of origin on theirmeat and produce labels. In March 2009, we introduced our VerifiedGreenTMVerification program. This program caters to producers and consumers who arecommitted to reducing their carbon footprint. Such a program is expected toappeal to forward-thinking producers and retailers who are both environmentallyconscious and looking for a marketing edge as well as to consumers who want tosupport producers practicing good environmental stewardship.

 

****AssetSale and Discontinued Operations****

 

****On July 15,2008, we completed the sale (the “asset sale”) of three wholly-owned onlinebusinesses – CattleNetwork, CattleStore and AgNetwork – to Vance PublishingCorp. (“Vance”), a privately held provider of print and electronic media with astrong presence in the agricultural industry. The transaction included $800,000 in cash and an undeterminable value ofadvertising placements in Vance’s industry leading publications, includingDrover’s, Pork, Bovine Veterinarian and Dairy Herd Management, over a threeyear period. Vance has also contracted with us to provide network maintenanceand support for the websites as part of a separate support agreement. Inaddition, Vance has agreed to open negotiations on another IMI Global product,AgTraderIndex (www.AgTraderIndex.com).****

 

****Thewholly-owned online businesses were considered significant revenue streams;however, they historically have not contributed materially to gross profit. Theassets sold in the transaction primarily represented all of the goodwill andintangible assets recorded on the balance sheet. We sold the assets at asubstantial premium to the original purchase in 2005 and accordingly haverecorded a gain on sale of approximately $367,000. The advertising rights willbe accounted for as a gain contingency as it involves uncertainties as to thepossible gain that will be ultimately realized. The advertising rights are not********assignableor resalable, therefore the fair market value is not determinable until suchtime as advertising actually occurs.****

 

28

----

Table of Contents

 

**Integrated Management Information, Inc.**

**Notesto the Financial Statements**

 

OurStatements of Operations present income (loss) from continuing operations andloss from discontinued operations. All discussions are based on income fromcontinuing operations and therefore exclude all income statement items of thecurrent and prior year’s discontinued operations.

 

**Liquidity**

 

Historically,our growth has been funded through a combination of convertible debt fromprivate investors and private placement offerings. We continually evaluate allfunding options including additional offerings of our securities to private,public and institutional investors and other credit facilities as they becomeavailable.

 

Theprimary driver of our operating cash flow is our third-party verificationsolutions, specifically the gross margin generated from services provided.Therefore we focus on the elements of those operations including revenue growthand long term projects that ensure a steady stream of operating profits toenable us to meet our cash obligations. On a weekly basis we review theperformance of each of our revenue streams focusing on third party verificationsolutions compared with prior periods and our operating plan. Based on thecontinued sales growth and ****overall improvement in our performance, we believe that we will achieveprofitability for the year ended December 31, 2009. The culmination of allour efforts toward profitability has brought opportunities to us including:increased investor confidence and renewed interest in our company, third-partyinterest in our expertise to develop and enhance websites, as well as thepotential to develop business relationships with long term strategic partners.In keeping with our core business, we will continue to review our businessmodel with a focus on profitability, long term capital solutions and thepotential impact of acquisitions or divestitures, if such an opportunityarises.****

 

****Basisof Presentation****

 

Ourfinancial statements have been prepared in conformity with accountingprinciples generally accepted in the United States of America. The preparationof financial statements in conformity with accounting principles generallyaccepted in the United States of America requires us to make estimates andassumptions that affect reported amounts of assets and liabilities, disclosureof contingent assets and liabilities at the date of the financial statements,and the reported amounts of revenues, costs and expenses during the reportingperiod. Actual results could differ from the estimates.

 

Certainreclassifications have been made to conform previously reported data to thecurrent presentation. These reclassifications have no effect on our net income(loss) or financial position as previously reported.

 

****Note2 - Summary of Significant Accounting Policies****

 

****RevenueRecognition****

 

Revenuesare recognized only when realized / realizable and earned in accordance withgenerally acceptable accounting principles.

 

·                  Revenuefrom product sales is recognized when the goods are shipped and title passes tothe customer.

·                  Revenuefrom contracts for consulting and website development is recognized on thepercentage of completion method.

·                  Revenuederived from our US Verified program is recognized using the ProportionalPerformance Model. Contracts are cancelable only for non- performance.

 

29

----

Table of Contents

 

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****Allowancefor Doubtful Accounts****

 

****Themajority of our receivables are due from trade customers. Credit is extendedbased on our evaluation of the customer’s financial condition and generallycollateral is not required. Accounts receivable are due approximately 30 daysfrom invoice date and are stated at amounts due from customers net an allowancefor doubtful accounts. Accounts receivable that are outstanding longer than thecontractual payment terms are considered past due.  We determine our allowance by considering anumber of factors, including the length of time trade accounts receivable arepast due, our previous loss and payment history, the customer’s current abilityto pay its obligations to us and the condition of the general economy and theindustry as a whole. We write off accounts receivable when they becomeuncollectible, and payments subsequently received on such receivables arecredited to the allowance for doubtful accounts.****

 

As of December 31, 2008, we have approximately $150,000 inreceivables outstanding due from the Federal Government that is greater than 90days past due. We believe we will collect the full amount due and accordinglyhave not reserved any portion of the amount outstanding.

 

****Costof Goods Sold****

 

Costof goods sold includes the purchase price of products sold, which includeslivestock ear tags, in connection with the US Verified Source and AgeVerification programs. Salaries and related fringe benefits directly associatedwith development of the US Verified programs are allocated to cost of goodssold.

 

****Cashand Cash Equivalents****

 

Allcash and short-term investments with original maturities of three months orless are considered cash and cash equivalents, since they are readilyconvertible to cash. Amounts in-transit from credit card processors are alsoconsidered cash equivalents because they are both short-term and highly liquidin nature and are typically converted to cash within three days of the salestransaction. We place our cash with high quality financial institutions and attimes may exceed the FDIC $100,000 insurance limit.

 

****Inventory****

 

Ourinventory, which primarily consists of livestock identification ear tagsmaintained for overnight shipment, is valued using the lower of cost or marketon a first in, first out basis. The inventory is used in connection with the USVerify program. Due to the nature of our inventory, a provision for obsolete orslow moving inventory was not deemed necessary as of December 31, 2008 and2007.

 

****LongLived Assets****

 

Long-livedassets include:

 

·                  Propertyand equipment - These assets are recorded at cost and are depreciated generallyusing the straight-line method over the estimated useful lives of therespective assets, which range from one to seven years.

 

·                  Intangibleassets- Our intangibles assets resulted from the allocation of the estimatedfair values of identifiable assets acquired in connection with the acquisitionof Cattlefeeding.com, Inc. We amortize these assets on a straight linebasis over their estimated useful lives.

 

·                  Goodwill- Goodwill represents excess of cost over fair value of net assets acquired inthe acquisition of Cattelefeeding.com. Goodwill has an indefinite life andaccordingly is not amortized.

 

30

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

Wereview all of our long-lived assets, including goodwill and other intangibleassets, for impairment at least annually or whenever impairment indicators aredetermined to be present. If an impairment exists, the amount of impairment ismeasured as the excess of the carrying amount of the asset over its fair valueas determined utilizing the estimated discounted future cash flows, or someother fair value measure, or the expected proceeds, net of costs to sell, uponsale of the asset.

 

Aspreviously discussed above, in connection with the asset sale to Vance on July 15,2008, the assets sold in the transaction primarily represented all of thegoodwill and intangible assets recorded on the balance sheet.

 

****Researchand Development, Software Development Costs, and Internal Use SoftwareDevelopment Costs****

 

Researchand development costs are charged to operations as incurred.

 

Softwaredevelopment costs are accounted for in accordance with SFAS No. 86, “Accountingfor the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed.” ****Software development costsare capitalized once technological feasibility of a product is established andsuch costs are determined to be recoverable. For products where proventechnology exists, this may occur very early in the development cycle. Factorswe consider in determining when technological feasibility has been establishedinclude (i) whether a proven technology exists; (ii) the quality andexperience levels of the individuals developing the software; (iii) whetherthe software is similar to previously developed software which has used thesame or similar technology; and (iv) whether the software is beingdeveloped with a proven underlying engine. Technological feasibility isevaluated on a product-by-product basis. Capitalized costs for those productsthat are cancelled or abandoned are charged immediately to cost of sales. Therecoverability of capitalized software development costs is evaluated on theexpected performance of the specific products for which the costs relate.****

 

****Internaluse software development costs are accounted for in accordance with AICPAStatement of Position No. 98-1, “Accounting for the Costs of ComputerSoftware Developed or Obtained for Internal Use,” which requires thecapitalization of certain external and internal computer software costsincurred during the application development stage. The application developmentstage is characterized by software design and configuration activities, coding,testing and installation. Training costs and maintenance are expensed asincurred, while upgrades and enhancements are capitalized if it is probablethat such expenditures will result in additional functionality.****

 

****Inaccounting for website software development costs, we have adopted theprovisions of EITF No. 00-2. EITF No. 00-2 provides that certainplanning and training costs incurred in the development of website software beexpensed as incurred, while application development stage costs are to becapitalized pursuant to SOP 98-1.****

 

****Duringthe years ended December 31, 2008 and 2007, we have capitalized certainexternal and internal use software and website development costs totaling$63,521 and $24,401, respectively. The estimated useful life of costscapitalized is evaluated for each specific project and ranges from one to threeyears. During 2008 and 2007, the amortization of capitalized costs totaled$12,765 and $2,602, respectively. Capitalized costs are included in propertyand equipment, net.****

 

****AdvertisingExpenses****

 

Advertisingcosts are expensed as incurred. The total advertising expenses included in theStatement of Operations for the years ended December 31, 2008 and 2007were $11,717 and $4,384, respectively.

 

31

----

Table of Contents

 

**Integrated Management Information, Inc.**

**Notesto the Financial Statements**

 

****FairValue of Financial Instruments****

 

Forcertain of our financial instruments, including cash, accounts payable andaccrued interest, the carrying amounts approximate fair value due to theirshort maturities. The amounts shown for notes payable also approximate fairvalue because current interest rates and terms offered to us for similar debtare substantially the same.

 

****Note3 - Property and Equipment****

 

Themajor categories of property and equipment are as follows at December 31,2008 and 2007:

 
| ** **                                 | ** ** | **December 31,** | ** ** |
|--------------------------------------------|------------|-----------------------|------------|
| ** **                                 | ** ** | **2008**              | ** ** | **2007** | ** ** |
|                                       |       |                  |       |   |   |
| Automobiles                                |       | $                     | 37,660     |   | $ | 37,660 |   |
| Furniture and office equipment             |       | 65,577                |       | 75,635 |   |
| Software and tools                         |       | 23,070                |       | 12,082 |   |
| Website development and other enhancements |       | 63,521                |       | 24,401 |   |
|                                       |       | $                     | 189,828    |   | $ | 149,778 |   |
| Less accumulated depreciation              |       | 111,553               |       | 95,644 |   |
| Notes payable and other long-term debt     |       | $                     | 78,275     |   | $ | 54,134 |   |

 

Depreciationexpense for the years ended December 31, 2008 and 2007 were $32,114 and$18,053, respectively.

 

****Note4 - Notes Payable****

 

Notespayable consist of the following:

 
| ** **                                                      | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                      | ** ** | **2008**              | ** ** | **2007** | ** ** |
|                                                            |       |                  |       |   |   |
| Platte Valley Line of Credit                                    |       | $                     | —     |   | $ | 70,000 |   |
| Cattlefeeding.com Note                                          |       | —                |       | 350,000 |   |
| Lapaesotes Note Payable                                         |       | 300,000               |       | 300,000 |   |
|                                                            |       | $                     | 300,000    |   | $ | 720,000 |   |
| Less current portion of notes payable and  other long-term debt |       | —                |       | 420,000 |   |
| Notes payable and other long-term debt                          |       | $                     | 300,000    |   | $ | 300,000 |   |

 

32

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Notesto the Financial Statements**

 

***Platte Valley Line of Credit***

 

Concurrentwith the closing of the asset sale on July 15, 2008 as previouslydiscussed, $94,000 of the proceeds were used to settle our line of credit withPlatte Valley Bank********and release all security agreements. The lineof credit was secured by the personal guarantees of our two foundingshareholders and the accounts receivable of the company. Interest was payablemonthly based on the prime rate with a floor and ceiling cap of 6.75% and13.75%, respectively.

 

***Cattlefeeding.com Note***

 

Inconnection with the 2005 acquisition of the assets of Cattlefeeding.com, weissued a note payable to Cattlefeeding.com, Inc. in the amount of $350,000.Under the Note, interest in the amount of 5% of outstanding principal waspayable on a monthly basis, with all outstanding principal and interest payableon June 12, 2008. In June 2008, the maturity of the note was extendeduntil July 15, 2008. Concurrent with the closing of the asset sale on July 15,2008 as previously discussed, $350,000 of the proceeds were used to pay theCattlefeeding.com note payable in full.

 

***Lapaseotes Note Payable***

 

InSeptember 2007, we obtained $300,000 in unsecured debt financing. The$300,000 note held by a major shareholder, bears an interest rate of 9% perannum, payable quarterly. The principal balance is due on September 12,2011.

 

****Note5 - Income Taxes****

 

Deferredtax assets and liabilities have been determined based upon the differencesbetween the financial statement amounts and the tax bases of assets andliabilities as measured by enacted tax rates expected to be in effect whenthese differences are expected to reverse. In assessing the reliability ofdeferred tax assets, management considers whether it is more likely than notthat some portion or all of the deferred tax assets will not be realized. Ournet operating loss carry forwards are the most significant component of ourdeferred income tax assets; however, the ultimate realization of our deferredincome tax assets is dependent upon generation of future taxable income. Weconsider past history, the scheduled reversal of taxable temporary differences,projected future taxable income, and tax planning strategies in making thisassessment. Although we achieved net income in 2008, we believe it is morelikely than not that our net deferred tax asset will not be realized andaccordingly we have recorded a valuation allowance against the deferred taxassets.

 

Wewill continue to assess the need for a valuation allowance that results fromuncertainty regarding our ability to realize the benefits of our deferred taxassets. As we move closer towards achieving net income for multiple years, wewill review qualitative and quantitative data, including events within ourindustry, the nature of our business, our future forecasts and historicaltrending. If we conclude that our prospects for the realization of our deferredtax assets are more likely than not, we will then reduce our valuationallowance as appropriate and credit income tax expense after considering thefollowing factors:

 

·                  Thelevels of historical taxable income and projections for future taxable incomeover periods in which the deferred tax assets would be deductible, and

·                  Accumulationof net income before tax utilizing a look-back period of three years.

 

Theamount of the deferred tax asset considered realizable, however, could bereduced if estimates of future taxable income during the carry-forward periodsare reduced.

 

33

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Notesto the Financial Statements**

 

OnJanuary 1, 2007, we adopted the provisions of FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes (“FIN 48”). Previously, we accountedfor tax contingencies in accordance with Statement of Financial AccountingStandards 5, Accounting for Contingencies. As Required by FIN 48, whichclarifies SFAS No. 109, we recognize the financial statement benefit of atax position only after determining that the relevant tax authority would morelikely than not sustain the position following an audit. For tax positionsmeeting the more-likely-than-not threshold, the amount recognized in thefinancial statements is the largest benefit that has a greater than 50%likelihood of being realized upon ultimate settlement with the relevant taxauthority. At the adoption date, we applied FIN 48 to all tax positions forwhich the statute of limitations remained open. There was no net effect to thefinancial statements and none of the unrecognized tax benefits will impact oureffective tax rate.

 

Theincome tax effects of temporary differences that give rise to significantportions of deferred tax assets as of December 31, 2008 and 2007 are as follows:

 
| ** **                       | ** ** | **December 31,** | ** ** |
|----------------------------------|------------|-----------------------|------------|
| ** **                       | ** ** | **2008**              | ** ** | **2007** | ** ** |
| Deferred tax assets:             |       |                  |       |   |   |
| Net operating loss carryforwards |       | $                     | 1,012,337  |   | $ | 1,290,105 |   |
| Other                            |       | (124,942              | )          | 2,800 |   |
| Deferred tax assets              |       | $                     | 887,394    |   | $ | 1,292,905 |   |
| Less valuation allowance         |       | (887,394              | )          | (1,292,905 | ) |
| Net deferred tax assets          |       | $                     | —     |   | $ | — |   |

 

Asof December 31, 2008, our net operating loss carry forwards for U.S.federal income tax purposes were $2.9 million, and were subject to thefollowing expiration schedule:

 
| **Net operating loss incurred:** | ** ** | **Amount** | ** ** | **Expiration dates:** | ** ** |
|-------------------------------------------------|------------|------------|------------|----------------------------|------------|
| December 31, 2005                          |       | 981,966    |       | December 31,  2025    |       |
| December 31, 2006                          |       | 1,544,906  |       | December 31,  2026    |       |
| December 31, 2007                          |       | 365,518    |       | December 31,  2027    |       |
| December 31, 2008                          |       | —     |       |                       |       |
| Total tax carryforwards                         |       | $          | 2,892,390  |                       |       |   |
|                                                 |            |            |            |                            |            |  |

 

Ourunused net operating loss carry forwards may be applied against future taxableincome. Utilization of net operating losses may be limited in the event of anownership change under Section 382 of the Internal Revenue Code.

 

****Note6 — Stockholders’ Equity****

 

***Common Stock***

 

Weare authorized to issue up to 95 million shares of common stock, par value$0.001 per share. As of December 31, 2008 and 2007, there were 20,871,806and 19,995,506 shares outstanding, respectively, net of 57,200 and 8,250,000shares held in treasury, respectively.

 

InFebruary 2007, we completed a private placement for our common stock andissued 555,556 shares at $0.45 per share resulting in proceeds of $250,000.

 

34

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

InAugust 2007, we completed the sale of 666,667 shares of our common stockat $0.15 per share resulting in proceeds of $100,000.

 

****Duringthe third quarter of 2008, we completed a private placement with a board memberand a major shareholder for our common stock. We issued 916,000 shares of ourcommon stock at $0.14 per share, netting total consideration of $125,000.****

 

***Preferred Stock***

 

Weare authorized to issue up to 5 million shares of our preferred stock, parvalue $0.001 per share. There are currently no issued shares.

 

***Stock Buyback Plan***

 

OnJanuary 7, 2008, we announced our intention to buy back up to one millionshares of our common stock from the open market over the first six months of2008. Our Board of Directors extended the period of time in which we can buyback shares until June 30, 2009.

 

During2008, we repurchased 57,200 shares at an average price of $0.28 per share.Total cash consideration for the repurchased shares was $16,124. Therepurchased shares are recorded as part of treasury stock and are accounted forunder the cost method.

 

****Note7 - Stock Option and Warrant Plans****

 

***2005 Stock Plan***

 

The2005 Stock Plan provides for the issuance of stock-based awards to employees,including executive officers, and consultants. The 2005 Stock Plan permits thegranting of non-qualified stock options. Options granted under this plangenerally become exercisable over a five-year period or less based on continuedemployment, vest pro-ratably over an annual basis and expire five years afterthe date of grant. On March 12, 2005 our Board of Directors granted1,687,500 options at $0.61 to acquire common stock to certain employees andadvisors. There are no more shares available for issuance under the 2005 StockPlan.

 

***2006 Equity Incentive Plan***

 

The2006 Equity Incentive Plan provides for the issuance of stock-based awards toemployees, officers, directors and consultants. The 2006 Stock Plan permits thegranting of stock awards and stock options. The vesting of stock-based awards is generally subject to meetingcertain performance based objectives, the passage of time or a combination ofboth, and continued employment through the vesting period. The 2006 EquityIncentive Plan provides for the issuance of a maximum of 3,000,000 shares ofour common stock of which 781,500 shares were still available for issuance asof December 31, 2008.

 

35

----

Table of Contents

 

**Integrated Management Information, Inc.**

**Notesto the Financial Statements**

 

***Stock Options Granted to the Former Chief Financial Officer***

 

InFebruary 2006, pursuant to an employment agreement with our former ChiefFinancial Officer, we granted an aggregate of 1,650,000 options to purchase ourcommon stock at exercise prices of $0.83 - $1.17. These options have a term ofthree years from the grant date and vest over a period beginning at the time ofgrant and ending in July 2007. There are no more shares available forissuance under this plan.

 

***Stock Options Granted to the Company’s Founders***

 

InFebruary 2006, the founders of the Company were granted options topurchase 6,000,000 shares of common stock. The options vest at 1,500,000 peryear over a period beginning January 1, 2007 to January 1, 2010 atexercise prices of $1.67 for the first three million and $2.67 for theremaining three million. The options expire January 1, 2011.

 

***Warrants Granted***

 

Historicallywarrants have been granted in various financing transactions, privateplacements and as part of consulting arrangements with independent contractors.Vesting of the warrants occurred immediately on the grant date. The warrantsexpire on various dates throughout 2009 and 2010.

 

***Stock Option and Warrant Activity***

 

Stockoption and warrant activity during 2008 is summarized as follows:

 
| ** **                          | ** ** | ** **           | ** ** | ** **              | ** ** | ** **             | ** ** | **Weighted Avg.**    | ** ** | ** **               | ** ** |
|-------------------------------------|------------|----------------------|------------|-------------------------|------------|------------------------|------------|---------------------------|------------|--------------------------|------------|
| ** **                          | ** ** | ** **           | ** ** | **Weighted Avg.**  | ** ** | **Weighted Avg.** | ** ** | **Remaining**             | ** ** | ** **               | ** ** |
| ** **                          | ** ** | **Number of**   | ** ** | **Exercise Price** | ** ** | **Fair Value**    | ** ** | **Contractual Life** | ** ** | **Aggregate**            | ** ** |
| ** **                          | ** ** | **Options/Warrants** | ** ** | **per Share**      | ** ** | **per Share**     | ** ** | **(in years)**       | ** ** | **Intrinsic Value** | ** ** |
|                                |       |                 |       |                    |       |                   |       |                      |       |                     |       |
| Outstanding, December 31, 2007 |       | 10,580,310           |       | $                       | 1.57       |                   |       |                      |       |                     |       |   |
| Granted                             |       | 1,758,500            |       | $                       | 0.24       |                   | $          | 0.04                      |       | 2.66                     |       |   |   |
| Exercised                           |       | (17,500              | )          | $                       | 0.17       |                   | $          | 0.04                      |       | 3.68                     |       |   |   |
| Canceled                            |       | (1,772,500           | )          | $                       | 0.58       |                   | $          | 0.03                      |       | 0.18                     |       |   |   |
| Outstanding, December 31, 2008 |       | 10,548,810           |       | $                       | 1.51       |                   | $          | 0.03                      |       | 1.78                     |       | $ | 120,768.00 |   |
| Exercisable, December 31, 2008 |       | 6,632,060            |       | $                       | 1.17       |                   | $          | 0.03                      |       | 1.55                     |       | $ | 57,741.53 |   |

 

Theaggregate intrinsic value of stock options represents the total pre-taxintrinsic value (the aggregate difference between the closing stock price ofour common stock on December 31, 2008 and the exercise price forin-the-money options) that would have been received by the option holders ifall in-the-money options had been exercised on December 31, 2008.

 

36

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

Thefollowing table summarizes information concerning outstanding and exercisableoptions as of December 31, 2008:

 
| ** **                          | ** ** | **Options and Warrants Outstanding** | ** ** | **Options and Warrants Exercisable** | ** ** |
|-------------------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                          | ** ** | ** **                                          | ** ** | **Average**                                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                          | ** ** | ** **                                          | ** ** | **Remaining**                                       | ** ** | **Weighted Avg.** | ** ** | ** ** | ** ** | **Weighted Avg.** | ** ** |
| ** **                          | ** ** | **Number**                                          | ** ** | **Contractual Life**                           | ** ** | **Exercise Price** | ** ** | **Number** | ** ** | **Exercise Price** | ** ** |
| ** **                          | ** ** | **Outstanding**                                     | ** ** | **(in years)**                                 | ** ** | **per Share** | ** ** | **Outstanding** | ** ** | **per Share** | ** ** |
|                                |       |                                                |       |                                                |       |   |   |   |   |   |   |
| Range of exercise prices per share: |       |                                                |       |                                                |       |   |   |   |   |   |   |
| $0.00 - $0.70                       |       | 1,886,000                                           |       | 2.59                                                |       | $ | 0.25 |   | 969,250 |   | $ | 0.26 |   |
| $0.71 - $0.94                       |       | 1,912,810                                           |       | 0.92                                                |       | $ | 0.83 |   | 1,912,810 |   | $ | 0.83 |   |
| $0.95 - $1.17                       |       | 750,000                                             |       | 0.09                                                |       | $ | 1.17 |   | 750,000 |   | $ | 1.17 |   |
| $1.18 - $3.00                       |       | 6,000,000                                           |       | 2.00                                                |       | $ | 2.17 |   | 3,000,000 |   | $ | 1.67 |   |
| Total                               |       | 10,548,810                                          |       | 1.78                                                |       | $ | 1.51 |   | 6,632,060 |   | $ | 1.17 |   |

 

****Note8 - Stock-Based Compensation****

 

Ourstock-based compensation cost for the years ended December 31, 2008 and2007 was $3,410 and $41,330 respectively and has been included in general andadministrative expenses. No tax benefits were recognized for these costs due toour cumulative losses as well as a full valuation reserve on our deferred taxassets.

 

Thefair value of stock options is estimated using the Black-Scholes option-pricingmodel with the following weighted average assumptions:

 
| ** **                                  | ** ** | **December 31,** | ** ** |
|---------------------------------------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2008**              | ** ** | **2007** | ** ** |
|                                        |       |                  |       |   |   |
| Expected life of options from date of grant |       | 3.0 years             |       | 2.5 - 3.0 years |   |
| Risk free interest rate                     |       | 2.5 - 2.9%            |       | 4.0 - 4.8% |   |
| Expected volatility                         |       | 35.9%                 |       | 35.9% |   |
| Assumed dividend yield                      |       | 0.0%                  |       | 0.0% |   |

 

Dividendyield is based on our historical and anticipated policy of not paying cashdividends. Expected volatility is based on the “calculated value” method setforth in FAS 123R (based on historical volatilities of appropriate industrysector indices) because our stock did not have sufficient historic share pricedata available, as it was not publicly traded prior to November 15, 2006.The risk-free interest rate is based on the U.S. Treasury yield curve in effectat the time of grant for periods corresponding with the expected term of theoptions. The expected term of options represents the period of time thatoptions granted are expected to be outstanding giving consideration to vestingschedules.

 

Asof December 31, 2008, we have $27,812 of total unrecognized compensationcost related to non-vested awards granted under our option plans, which weexpect to recognize over a weighted-average period of 0.35 years.

 

37

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****Note9 - Basic and Diluted Net Loss per Share****

 

Basicincome (loss) per share was computed by dividing income (loss) available tocommon shareholders by the weighted average number of common shares outstandingduring the period. Diluted income (loss) per share is based on the assumptionthat all dilutive convertible shares and stock options were converted orexercised. Dilution is computed by applying the treasury stock method. Underthis method, options and warrants are assumed to be exercised at the beginningof the period (or at the time of issuance, if later), and as if funds obtainedthereby were used to purchase common stock at the average market price duringthe period.

 

Thefollowing is a reconciliation of the share data used in the basic and dilutedincome (loss) per share computations:

 
| ** **                                       | ** ** | **Year ended December 31,** | ** ** |
|--------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                       | ** ** | **2008**                                   | ** ** | **2007** | ** ** |
| Basic:                                           |       |                                       |       |   |   |
| Weighted average shares outstanding              |       | 20,624,153                                 |       | 19,512,401 |   |
|                                             |       |                                       |       |   |   |
| Diluted:                                         |       |                                       |       |   |   |
| Weighted average shares outstanding              |       | 20,624,153                                 |       | 19,512,401 |   |
| Weighted average effects of dilutive  securities |       | 56,769                                     |       | — |   |
| Total                                            |       | 20,680,922                                 |       | 19,512,401 |   |
|                                             |       |                                       |       |   |   |
| Antidilutive securities:                         |       | 10,396,310                                 |       | 10,580,310 |   |

 

****Note10 - Related Party Transactions****

 

In2008 and 2007, we recorded revenue of $2,051 and $1,589, respectively, from arelated party (father of Leann Saunders, a founding shareholder).

 

InSeptember 2007, we obtained $300,000 in unsecured debt financing. The$300,000 note is held by a major shareholder who is related to Pete Lapaseotes,a director. The note bears an interest rate of 9% per annum, payable quarterly.The principal balance is due on September 12, 2011.

 

****Duringthe third quarter of 2008, we completed a private placement with a board memberand a major shareholder for our common stock. We issued 916,000 shares of ourcommon stock at $0.14 per share, netting total consideration of $125,000.****

 

****Note11 – Commitments, Contingencies and Concentrations of Risk****

 

***Operating Leases***

 

InJune 2006, we entered into a building lease for its new headquarters inCastle Rock, Colorado. The lease is for a period of five years and can beextended for an additional five years. In addition to the primary rent, thelease requires additional payments for operating costs and other common areamaintenance costs.

 

38

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

Theannual primary lease payments are as follows:

 
| **Years Ending December 31,** | ** ** | **Amount** | ** ** |
|----------------------------------------------|------------|------------|------------|
| 2009                                         |       | $          | 46,171     |   |
| 2010                                         |       | 47,326     |       |
| 2011                                         |       | 48,509     |       |
| 2012                                         |       | 24,554     |       |
| Thereafter                                   |       | —     |       |
| Total lease commitments                      |       | $          | 166,560    |   |

 

Welease a copier machine which requires a base rent of $189.00 per month or $2,268annually. The lease expires in September 2009.

 

***Employment Agreements***

 

InJanuary 2006, we entered into an employment contract with John Saunders asour President and Chief Executive Officer for an annual salary of $90,000subject to annual performance review adjustments. The agreement automaticallyrenews annually unless a 60-day notice of non-renewal is provided by either theCompany or the employee.

 

InJanuary 2006, we entered into an employment contract with Leann Saundersas our Vice President of Quality Control for an annual salary of $90,000subject to annual performance review adjustments. The agreement automaticallyrenews annually unless a 60-day notice of non-renewal is provided by either theCompany or the employee. In September 2008, Mrs. Saunders waspromoted to the position of President. There was no adjustment to Mrs. Saundersannual salary at that time.

 

***Legal proceedings***

 

TheCompany is and may be involved in various unresolved legal actions,administrative proceedings and claims in the ordinary course of business.Although it is not possible to predict with certainty the outcome of theseunresolved actions, we do not believe, based on current knowledge, that anylegal proceeding or claim is likely to have a material effect on its financialposition, results of operation or cash flows.

 

***Concentrations of Risk***

 

Livestockidentification ear tags sold in connection with our verification offerings arepurchased primarily from Allflex. However, there are numerous othercompanies which manufacture and market such ear tags.

 

***Other***

 

OnJune 3, 2008, Tyson Foods, Inc. filed a petition to cancel thetrademark “Beef Born & Raised in the USA®”.  On July 14, 2008, Born & Raisedin the USA® filed a motion to dismiss the cancellation action.  Both motions are pending before the UnitedStates Patent and Trademark Office.

 

IntegratedManagement Information, Inc. (IMI Global) is the exclusive worldwidemarketing partner for the Born & Raised in the USA® labeling program,which includes unique and distinctive labeling for beef, pork, poultry, lamb,fish and game.  As such, IMI Global ismarketing the label and providing USDA compliance to retailers who must displayon meat packaging a label identifying the country of origin (COOL) for meatproducts beginning in the fall of 2008.

 

39

----

Tableof Contents

 

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

IMIGlobal supports Born & Raised in the USA® in its decision to defendits trademarked labeling, believing that the trademarks were legally issued andare fully enforceable.  IMI Globalcontinues to market the label and verification program and has expressed itsdesire to work closely with Tyson Foods on this program.

 

****Note12 – Employee Benefit Plan****

 

OnFebruary 13, 2006, we established a 401(K) plan for the benefit ofour employees. The Plan covers substantially all of our employees who haveattained age 21. We may make a discretionary matching contribution in an amountthat is determined by our Board of Directors. If a matching contribution ismade, the amount cannot exceed the elective deferral contributions. For theyears ended December 31, 2008 and 2007, we did not make a matchingcontribution.

 

****Note13 - Recent Accounting Pronouncements****

 

InDecember 2007, the FASB issued SFAS 141 (revised 2007), BusinessCombinations, (“SFAS 141R”). SFAS 141R establishes principles and requirementsfor how an acquirer recognizes and measures in its financial statements theidentifiable assets acquired, including goodwill, the liabilities assumed andany non-controlling interest in the acquiree. The Statement also establishesdisclosure requirements to enable users of the financial statements to evaluatethe nature and financial effects of the business combination. SFAS 141R iseffective for business combinations for which the acquisition date is on orafter the beginning of the first annual reporting period beginning on or after December 15,2008. The impact of adopting SFAS 141R will be dependent on the future businesscombinations that we may pursue after its effective date.

 

InDecember 2007, the SEC issued SAB 110 Share-Based Payment. SAB 110 amendsand replaces Question 6 of Section D.2 of Topic 14, “Share-Based Payment,”of the Staff Accounting Bulletin series. Question 6 of Section D.2 ofTopic 14 expresses the views of the staff regarding the use of the “simplified”method in developing an estimate of the expected term of “plain vanilla” shareoptions and allows usage of the “simplified” method for share option grantsprior to December 31, 2007. SAB 110 allows public companies which do nothave historically sufficient experience to provide a reasonable estimate tocontinue use of the “simplified” method for estimating the expected term of “plainvanilla” share option grants after December 31, 2007. SAB 110 is effectiveJanuary 1, 2008. We currently use the “simplified” method to estimate theexpected term for share option grants as we do not have enough historicalexperience to provide a reasonable estimate. We will continue to use the “simplified”method until we have enough historical experience to provide a reasonableestimate of expected term in accordance with SAB 110. We do not expect SAB 110will have a material impact on our balance sheets, statements of operations andcash flows.

 

Weadopted Financial Accounting Standards Board (FASB) Statement of FinancialAccounting Standards (SFAS) No. 157, Fair Value Measurements, (SFAS 157)on January 1, 2008, which became effective for fiscal periods beginningafter November 15, 2007. SFAS 157 defines fair value, establishes aframework for using fair value to measure assets and liabilities, and expandsdisclosure about fair value measurements. SFAS 157 applies whenever otherstatements require or permit assets or liabilities to be measured at fairvalue. The adoption of SFAS 157 did not have an impact on our financialstatements.

 

Weadopted SFAS No. 159, The Fair Value Option for Financial Assets andFinancial Liabilities-Including an Amendment of FASB Statement No. 115(SFAS No. 159) on January 1, 2008, which became effective for fiscalperiods beginning after November 15, 2007. This standard permits entitiesto choose to measure many financial instruments and certain other items at fairvalue. While SFAS No. 159

 

40

----

Table of Contents

 

**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

becameeffective for our 2008 fiscal year, we did not elect the fair value measurementoption for any of our financial assets or liabilities.

 

InMarch 2008, the FASB issued SFAS No. 161, Disclosures about DerivativeInstruments and Hedging Activities, an amendment of FASB Statement No. 133(SFAS 161). This statement changes the disclosure requirements for derivativeinstruments and hedging activities.  SFAS161 requires enhanced disclosures about (a) how and why an entity usesderivative instruments, (b) how derivative instruments and related hedgeditems are accounted for under SFAS 133 and its related interpretations, and (c) howderivative instruments and related hedged items affect an entity’s financial position,financial performance, and cash flows. SFAS 161 is effective as of the beginning of our 2009 fiscal year. Weare currently evaluating the potential impact, if any, of the adoption of SFAS161 on our financial statements.

 

InApril 2008, the FASB issued FASB Staff Position No. FAS 142-3,Determination of the Useful Life of Intangible Assets (FSP 142-3).  FSP 142-3 amends the factors that should beconsidered in developing renewal or extension assumptions that are used todetermine the useful life of a recognized intangible asset under FASB StatementNo. 142, Goodwill and Other Intangible Assets and requires enhancedrelated disclosures.  FSP 142-3 must beapplied prospectively to all intangible assets acquired as of and subsequent tofiscal years beginning after December 15, 2008.  We are currently evaluating the impact thatFSP 142-3 will have on our financial statements.

 

InMay 2008, the FASB issued SFAS No. 162, The Hierarchy of GenerallyAccepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources ofaccounting principles to be used in the preparation of financial statements ofnongovernmental entities that are presented in conformity with generallyaccepted accounting principles (GAAP) in the United States (the GAAPhierarchy). This Statement will be effective November 15, 2008. Wecurrently adhere to the hierarchy of GAAP as presented in SFAS 162 and do notexpect its adoption will have a material impact on its results of operationsand financial condition.

 

Wehave considered all other recently issued accounting pronouncements and do notbelieve the adoption of such pronouncements will have a material impact on ourconsolidated financial statements.

 

41

----

Table of Contents

** **

****ITEM 9.****          ****CHANGES IN ANDDISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE****

 

None

 

****ITEM 9A.       CONTROLSAND PROCEDURES****

 

**Evaluationof Disclosure Controls and Procedures**

 

OurChief Executive Officer and Chief Financial Officer, after evaluating theeffectiveness of the Company’s “disclosure controls and procedures” (as definedin the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or15d-15(e)) as of the end of the period covered by this annual report, hasconcluded that our disclosure controls and procedures are effective at areasonable assurance level based on his evaluation of these controls andprocedures as required by paragraph (b) of Exchange Act Rules 13a-15or 15d-15.

 

**Management’sReport on Internal Control over Financial Reporting**

 

Ourmanagement is responsible for establishing and maintaining adequate internalcontrol over our financial reporting. Internal control over financial reportingis a process to provide reasonable assurance regarding the reliability of ourfinancial reporting for external purposes in accordance with generally acceptedaccounting principles. Internal control over financial reporting includespolicies and procedures that: (i) pertain to maintaining records that inreasonable detail accurately and fairly reflect our transactions; (ii) providereasonable assurance that transactions are recorded as necessary forpreparation of our financial statements and that receipts and expenditures of companyassets are made in accordance with management authorization; and (iii) providereasonable assurance that unauthorized acquisition, use or disposition ofcompany assets that could have a material effect on our financial statementswould be prevented or detected on a timely basis. Because of its inherentlimitations, internal control over financial reporting is not intended toprovide absolute assurance that a misstatement of our financial statementswould be prevented or detected.

 

Ourmanagement evaluated the effectiveness of our internal control over financialreporting based on the framework in Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.Based upon that evaluation, management concluded that the company’s internalcontrol over financial reporting was effective as of December 31, 2008.

 

**Lack ofSegregation of Duties**

 

Managementis aware that there is a lack of segregation of duties at the Company due tothe small number of employees dealing with general administrative and financialmatters. However, at this time management has decided that considering theabilities of the employees now involved and the control procedures in place,the risks associated with such lack of segregation are low and the potentialbenefits of adding employees to clearly segregate duties do not justify thesubstantial expenses associated with such increases. Management willperiodically reevaluate this situation.

 

**AttestaionReport of the registered Public Accounting Firm**

 

Thisannual report does not include an attestation report of the Company’sregistered public accounting firm regarding internal control over financialreporting. Management’s report was not subject to attestation by the Company’sregistered public accounting firm pursuant to temporary rules of the 

 

42

----

Tableof Contents

 

Securitiesand Exchange Commission that permit the company to provide only management’sreport in this annual report.

 

**Changesin Internal Control over Financial Reporting**

 

Duringthe fiscal quarter ended December 31, 2008, there have been no changes inour internal control over financial reporting that have materially affected orare reasonably likely to materially affect our internal controls over financialreporting.

 

****ITEM 9B.       OTHERINFORMATION****

 

None

 

43

----

Tableof Contents

 

****PART III****

 

****ITEM 10.****       ****DIRECTORS,EXECUTIVE OFFICERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OFTHE EXCHANGE ACT****

 

****Directorsand Officers****

 

Ourdirectors are elected by the stockholders to a term of one (1) year andserve until his successor is elected and qualified. Our key executive officersare appointed by the Board of Directors to a term of one (1) year andserve until his successor is duly elected and qualified, or until he is removedfrom office.

 

****Thenames and ages of our directors and executive officers and their positions areas follows:****

**** ****
| **Name**            | ** ** | **Age** | ** ** | **Position  Held**             |
|---------------------|------------|---------|------------|--------------------------------|
| John Saunders       |       | 37      |       | CEO and Chairman of the  Board |
| Leann Saunders      |       | 38      |       | President                      |
| Dannette Boyd       |       | 39      |       | Chief Financial Officer        |
| Pete Lapasotes      |       | 50      |       | Director                       |
| Adam Larson         |       | 40      |       | Director                       |
| Dr. Gary Smith |       | 70      |       | Director                       |
| Robert VanSchoick   |       | 58      |       | Director                       |

 

**JohnSaunders** founded ourcompany in 1998 and has been the chief executive officer since founding.Previously, Mr. Saunders was a partner and consultant for PathfinderConsulting Services, Inc. in Parker, Colorado. An expert in bothtechnology and the livestock industry, Mr. Saunders is a graduate of YaleUniversity.

 

**LeannSaunders** joined IMIin 2003. In September 2008, Mrs. Saunders was promoted to President. Mrs. Saundersis responsible for overseeing key customer relationships along with managementof product development and delivery of USVerified solutions. Prior to 2003, Mrs. Saundersworked for PM Beef Holdings, an integrated beef company, and developed a supplysystem for PM’s Ranch to Retail product line and managed PM’s USDA ProcessVerified program. She then served as the company’s Vice President of Marketingand Communications. Prior to joining PM in 1996, Mrs. Saunders worked forMcDonald’s Corporation as a Purchasing Specialist, and Hudson FoodsCorporation. Mrs. Saunders graduated with a BS in Agriculture Business andan MS in Beef Industry Leadership from Colorado State University.

 

**DannetteBoyd** was engaged as aconsultant beginning in November 2007 and accepted responsibilities as theChief Financial Officer in early 2008. From 2004 to 2007, Ms. Boyd was theController for Einstein Noah Restaurant Group. From 2001 to 2003, she served asthe Assistant Controller for Vari-L Company. Ms. Boyd’s previousexperience includes financial management positions with KPMG Peat Marwick,DF&R Restaurant Company, and CSI/CDC Company. Ms. Boyd is a CPA withmore than 15 years of professional experience. She received a BBA degree inAccounting from the University of Texas at Arlington.

 

**PeteLapaseotes** co-managesthe Lapaseotes family farm and feeding operations in Bridgeport, Nebraska. Thebusiness includes a cow calf operation, a grass cattle operation and a finishfeed yard. Mr. Lapaseotes is also a partner in five John Deere dealershipsand 11 The Mercantile Farm, Ranch & Home retail stores. He is a memberof the board of directors of Valley Bank and Trust.

 

44

----

Table of Contents

 

**AdamLarson** has beeninvolved in the cattle feeding and ranching business since 1991. During thatperiod, he has been a member and manager of eight family organizations involvedin cattle ranching and cattle feeding and is primarily involved in cattlefinancing. Mr. Larson is a graduate of the University of Colorado.

 

**Dr. GarySmith** is a professorin the Department of Animal Science at Colorado State University, a position hehas held since 1990. Dr. Smith received his PhD in Meat Science and MuscleBiology from Texas A&M University. Dr. Smith has also taught atWashington State University, Texas A&M University and FSIS-USDA National MeatInspection Training Center. Dr. Smith is a member of multiple professionalassociations and societies and has received numerous academic awards.

 

**RobertVan Schoick II**ispresident of Med-Pharmex Animal Health. His previous experience includes 28years in sales and marketing with pharmaceutical giant Merck & Co.,where he served for nine years with Merial, Merck’s world leading animal healthjoint venture. He holds BA and MA degrees from Austin College and a BS inAnimal Science from Texas A&M.

 

**Family Relationships**

 

JohnSaunders and Leann Saunders are husband and wife.

 

**BoardStructure**

 

Theboard of directors held two meetings during calendar year 2008. We currentlyhave no nominating, executive, compensation committee or other board committeeperforming equivalent functions. Currently, all members of our board ofdirectors participate in discussions concerning executive officer compensation.Our independent outside directors’ function as the Audit Committee and AdamLarson acts as a financial expert.

 

**DirectorCompensation**

 

Wepresently compensate all directors by paying them $500 per meeting attending inperson and $200 per telephonic meeting in excess of fifteen minutes. The samecompensation applies for any committee meetings attended. In addition, directorsare reimbursed for all company travel related expenses. Equity awards were notgranted to members of our board of directors during the fiscal year ended December 31,2008.

 

****Section 16(a) BeneficialOwnership Reporting Compliance****

 

****Section 16(a) ofthe Securities Exchange Act of 1934, as amended, requires our reportingdirectors and executive officers, and persons who own more than ten percent ofa registered class of our equity securities, to file initial reports ofownership and reports of changes in ownership of common stock and other equitysecurities of the Company with the Securities and Exchange Commission.Officers, directors and stockholders holding more than 10% of the class ofstock are required to furnish us with copies of all Section 16(a) forms theyfile with the Commission.****

 

****To ourknowledge, based solely on review of the copies of such reports furnished to usand written representations, we believe that during the fiscal year ended December 31,2008 all applicable filing requirements were complied with by our executiveofficers and directors.****

 

45

----

Tableof Contents

 

****Codeof Conduct****

 

****Ourboard of directors has adopted a code of conduct, which is posted on ourwebsite at http://imiglobal.com.  OurCode of Conduct applies to all employees, including our Chief ExecutiveOfficer, Chief Financial Officer and Controller. The Code of Conduct sets forthspecific policies to guide the designated officers in their duties. We intendto satisfy the disclosure requirement under Item 5.05 of Form 8-Kregarding any amendment to, or waiver from, a provision of this Code of Ethicsby posting such information on our website, at the address and locationspecified above.****

 

****ITEM 11.       EXECUTIVECOMPENSATION****

 

**SummaryCompensation Table**

 

Thefollowing table sets forth, for the last two completed fiscal years ended December 31,2008 and 2007, the cash compensation paid by the Company, as well as certainother compensation paid with respect to those years and months, to the ChiefExecutive Officer and to each of the three other executive officers of theCompany in all capacities in which they served:

 
| ** **                      | ** ** | **Annual Compensation** | ** ** |
|---------------------------------|------------|------------------------------|------------|
| **Name and Position** | ** ** | **Year**                     | ** ** | **Salary ($)** | ** ** | **Bonus ($)** | ** ** | **Other ($)** | ** ** |
| John Saunders                   |       | 2008                         |       | 90,000 |   | — |   | — |   |
| CEO                             |       | 2007                         |       | 90,000 |   | — |   | — |   |
|                            |       |                         |       |   |   |   |   |   |   |
| Leann Saunders                  |       | 2008                         |       | 91,250 |   | — |   | — |   |
| President                       |       | 2007                         |       | 91,250 |   | — |   | — |   |
|                            |       |                         |       |   |   |   |   |   |   |
| Dannette Boyd (1)               |       | 2008                         |       | 65,000 |   | — |   | — |   |
| Chief Financial Officer         |       | 2007                         |       | — |   | — |   | — |   |
|                            |       |                         |       |   |   |   |   |   |   |
| Rob Streight (2)                |       | 2008                         |       | 123,500 |   | — |   | — |   |
| Chief Operating Officer         |       | 2007                         |       | 150,000 |   | — |   | — |   |

 

----

(1)          Ms. Boyd began consulting for theCompany in December 2007 and accepted the responsibilities as the ChiefFinancial Officer in early 2008.  Ms. Boydwas granted stock options to purchase 50,000 shares of our common stock at anexercise price of $0.24 per share.

 

(2)          Mr. Streight began his employment withthe Company on January 1, 2007. In connection with his employmentagreement, we granted 300,000 stock options at an exercise price of $0.83 pershare. During 2008, Mr. Streight was granted additional stock options topurchase 5,000 and 300,000 shares of common stock at an exercise price of $0.10and $0.24 per share, respectively.  In September 2008,Mr. Streight began working on an as-needed basis and subsequently providednotice of his intention not to renew his employment agreement. His last day ofemployment was December 31, 2008. Currently, there are no plans to re-fillhis position.

 

46

----

Table of Contents

 

**EmploymentContracts**

 

InJanuary 2006, we entered into an employment contract with John Saunders asour President and Chief Executive Officer for an annual salary of $90,000subject to annual performance review adjustments. The agreement automaticallyrenews annually unless a 60-day notice of non-renewal is provided by either theCompany or the employee.

 

InJanuary 2006, we entered into an employment contract with Leann Saundersas our Vice President of Quality Control for an annual salary of $90,000subject to annual performance review adjustments. The agreement automaticallyrenews annually unless a 60-day notice of non-renewal is provided by either theCompany or the employee. In September 2008, Mrs. Saunders waspromoted to the position of President. There was no adjustment to Mrs. Saundersannual salary.

 

**OptionGrants in the Last Fiscal Year**

 

Thefollowing table sets forth the total number of options granted to our namedexecutive officers as of December 31, 2008:

 
| **Name Executive Officer** | ** ** | **Grant Date** | ** ** | **Securities   underlying   Stock Options   (#)** | ** ** | **Percentage of   Total Options   Granted in   2008** | ** ** | **Exercise Price** | ** ** | **Expiration   Date of   Options** | ** ** |
|--------------------------------------|------------|---------------------|------------|-----------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|-------------------------|------------|---------------------------------------------------|------------|
| Dannette Boyd                        |       | 7/7/2008            |       | 50,000                                                                |       | 2.84                                                                                | %          | $                       | 0.24       |                                              | 7/7/2011   |   |
| Rob Streight                         |       | 2/28/2008           |       | 5,000                                                                 |       | 0.28                                                                                | %          | $                       | 0.10       |                                              | 2/28/2013  |   |
| Rob Streight                         |       | 7/7/2008            |       | 300,000                                                               |       | 17.06                                                                               | %          | $                       | 0.24       |                                              | 7/7/2011   |   |

 

**AggregatedOption Exercises in the Last Fiscal Year and Year End Option Values**

 

Thefollowing table sets forth the total number of securities underlyingunexercised options held by our named executive officers as of December 31,2008:

 
| ** **                           | ** ** | **Number of Outstanding Options** | ** ** | **Value of Outstanding in-the-  Money Options** | ** ** |
|--------------------------------------|------------|--------------------------------------------------|------------|---------------------------------------------------------------------|------------|
| **Name Executive Officer** | ** ** | **Exercisable (#)**                         | ** ** | **Unexercisable   (#)**                                        | ** ** | **Exercisable ($)** | ** ** | **Unexercisable   ($)** | ** ** |
| John Saunders                        |       | 1,500,000                                        |       | 1,500,000                                                           |       | $ | — |   | $ | — |   |
| Leann Saunders                       |       | 1,500,000                                        |       | 1,500,000                                                           |       | $ | — |   | $ | — |   |
| Dannette Boyd                        |       | 25,000                                           |       | 25,000                                                              |       | $ | 1,500 |   | $ | 1,500 |   |
| Rob Streight                         |       | 450,000                                          |       | 155,000                                                             |       | $ | 9,000 |   | $ | 10,000 |   |

 

47

----

Tableof Contents

 

****ITEM 12.****       ****SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERSMATTERS****

 

Thefollowing table sets forth as of March 15, 2009 the record and beneficialownership of Common Stock held by (i) each person who is known to theCompany to be the beneficial owner of more than 5% of the Common Stock of theCompany; (ii) each current director; (iii) each “named executiveofficer” (as defined in Regulation S-B, Item 402 under the Securities Act of1933); and (iv) all executive officers and directors of the Company as agroup. Securities reported as “beneficially owned” include those for which thenamed persons may exercise voting power or investment power, alone or withothers. Voting power and investment power are not shared with others unless sostated. The number and percent of shares of Common Stock of the Companybeneficially owned by each such person as of March 15, 2009 includes thenumber of shares, which such person has the right to acquire within sixty (60)days after such date.

 
| **Name and Address**                      | ** ** | **Number of   Shares** | ** **    | **Percentage   Ownership** | ** ** |
|-----------------------------------------------------|------------|----------------------------------|---------------|---------------------------------|------------|
| Michael D. Smith                                    |       |                             |          |                            |       |
| 3310 I-40 West, Suite 100, Amarillo,  TX 79102 |       | 1,268,890                        | (1)           | 4.0                             | %          |
| John and Leann Saunders                             |       | 12,477,143                       | (2), (3), (4) | 39.7                            | %          |
| Pete Lapasotes                                      |       | 10,000                           | (2), (5)      | *                               |       |
| Adam Larson                                         |       | 70,000                           | (2), (5)      | *                               |       |
| Dr. Gary Smith                                 |       | 60,000                           | (2), (5)      | *                               |       |
| Robert VanSchoick                                   |       | 10,000                           | (2), (5)      | *                               |       |
| Rob Streight                                        |       | 522,500                          | (2), (6)      | 1.7                             | %          |
| Dannette Boyd                                       |       | 33,334                           | (2), (7)      | *                               |       |
| All officers and directors as a group (7  persons)  |       | 13,182,977                       |          | 42.0                            | %          |

 

----

* Lessthan 1% beneficial ownership

 

(1)          Thistable is based upon information obtained from our stock records. Unlessotherwise indicated in the footnotes to the above table and subject tocommunity property laws where applicable, we believe that each stockholdernamed in the above table has sole or shared voting and investment power withrespect to the shares indicated as beneficially owned.

(2)          Theaddress for all persons is 221 Wilcox, Suite A, Castle Rock, CO 80104

(3)          Johnand Leann Saunders are husband and wife and own the shares as joint tenants.

(4)          Includes options to purchase 4,500,000 sharesof common stock which are currently exercisable or will become exercisablewithin 60 days.

(5)          Includes options to purchase 10,000 shares ofcommon stock which are currently exercisable or will become exercisable within60 days.

(6)          Includes options to purchase 502,500 sharesof common stock which are currently exercisable or will become exercisablewithin 60 days.

(7)          Includes options to purchase 33,334 shares ofcommon stock which are currently exercisable or will become exercisable within60 days.

 

48

----

Table of Contents

 

**Changeof Control**

 

Thereare currently no arrangements that would result in a change of control of thecompany.

 

**EquityCompensation Plan Information**

 

Thefollowing table sets forth securities authorized for issuance under our equitycompensation plans as of December 31, 2008:

 
| **Plan Category**                                       | ** ** | **No. of securities   to be issued upon   exercise of   outstanding   options and   warrants** | ** ** | **Weighted   average   exercise   price of   outstanding   options and   warrants** | ** ** | **No. of securities   remaining   available for   future issuance   under equity   compensation   plans** | ** ** |
|--------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                         |       |                                                                                                                                                       |       |                                                                                                                        |       |                                                                                                                                                             |       |
| Equity compensation plans approved by  security holders:     |       |                                                                                                                                                       |       |                                                                                                                        |       |                                                                                                                                                             |       |
| 2005 Stock Plan                                              |       | 1,462,500                                                                                                                                                  |       | $                                                                                                                           | 0.61       |                                                                                                                                                             | —     |   |
| 2006 Equity Incentive Plan                                   |       | 3,000,000                                                                                                                                                  |       | $                                                                                                                           | 0.63       |                                                                                                                                                             | 781,500    |   |
| Former CFO Stock Option Grant                                |       | 1,650,000                                                                                                                                                  |       | $                                                                                                                           | 0.99       |                                                                                                                                                             | —     |   |
| Equity compensation plans not approved by  security holders: |       |                                                                                                                                                       |       |                                                                                                                        |       |                                                                                                                                                             |       |
| Options held by John and Leann Saunders                      |       | 6,000,000                                                                                                                                                  |       | $                                                                                                                           | 2.17       |                                                                                                                                                             | —     |   |
| Warrants issued to consultants                               |       | 922,810                                                                                                                                                    |       | $                                                                                                                           | 0.76       |                                                                                                                                                             | —     |   |
| Total                                                        |       | 13,035,310                                                                                                                                                 |       |                                                                                                                        |       | 781,500                                                                                                                                                          |       |

 

****ITEM 13.****       ****CERTAIN RELATIONSHIPSAND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE****

 

JohnSaunders, our CEO and Chairman of the Board, is married to Leann Saunders, ourPresident.

 

In2008 and 2007, the Company recorded revenue of $2,051 and $1,589, respectively,from a related party (father of Leann Saunders, a founding shareholder).

 

InSeptember 2007, we obtained $300,000 in unsecured debt financing. The$300,000 note is held by a major shareholder who is related to Pete Lapaseotes,a director. The note bears an interest rate of 9% per annum, payable quarterly.The principal balance is due on September 12, 2011.

 

Messrs. Lapasoetes,Larson, Smith and Van Schoick are considered independent directors. The soledirector who is not independent is Mr. John Saunders, who is also the CEOand Chairman of the Board of the Company. Since we have not designated an auditcommittee, the independent directors constitute the audit committee.

 

49

----

Tableof Contents

 

****ITEM 14.       PRINCIPALACCOUNTANTS FEES AND SERVICES****

 

****FeesPaid to Independent Public Accountants****

 

Thefollowing table presents fees for professional audit services rendered by E.Randall Gruber, CPA PC for the audit of the Company’s annual financialstatements for the years ended December 31, 2007 and December 31,2006 and fees billed for other services rendered by E. Randall Gruber, CPA PCduring those periods.

 
| ** **             | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------|------------|----------|------------|----------|------------|
| Audit fees (1)         |       | $        | 26,500     |     | $          | 26,500 |   |
| Audit related fees (2) |       | —   |       | —   |       |
| Tax fees               |       | —   |       | —   |       |
|                   |       | $        | 26,500     |     | $          | 26,500 |   |

 

----

(1)           Audit Fees consist of fees billed forprofessional services rendered for the audit of the Company’s consolidatedannual financial statements and review of the interim consolidated financialstatements included in quarterly reports and services that are normallyprovided by Gruber & Company, LLC in connection with statutory andregulatory filings or engagements.

 

(2)           Audit-Related Fees consist of feesbilled for assurance and other services not explicitly related to theperformance of the audit or review of the Company’s consolidated financialstatements and are not reported under “Audit Fees.” This category includes feesrelated to the Company’s registration statements, review of proxy statementsand accounting research.

 

50

----

Tableof Contents

 

****ITEM 15.       EXHIBITSAND FINANCIAL STATEMENT SCHEDULES****
| **Exhibit   Number** | ** ** | **Document  Name**                                                                                                       |
|---------------------------|------------|--------------------------------------------------------------------------------------------------------------------------|
| 2.1                       |       | Cattlefeeding.com, Inc.  Asset Purchase Agreement (1)                                                               |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 3.1                       |       | Articles of Incorporation  (1)                                                                                           |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 3.2                       |       | By-laws of the Registrant  (1)                                                                                           |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 4.1                       |       | Form of the  Registrant’s Common Stock Certificate (1)                                                         |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 4.2                       |       | 2005 Stock Option Plan (1)                                                                                               |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 4.3                       |       | 2006 Equity Incentive Plan  (1)                                                                                          |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 10.1                      |       | Lease dated July 15,  2005 for offices in Platte City, Missouri (1)                                                 |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 10.2                      |       | Employment Agreement dated  January 1, 2006 between the Registrant and John K. Saunders (1)                         |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 10.3                      |       | Employment Agreement dated  January 1, 2006 between the Registrant and Leann Saunders (1)                           |   | Incorporated by reference  from Registrant’s Registration Statement on Form SB-2 |
|                      |       |                                                                                                                     |   |   |
| 10.4                      |       | Employment Agreement  between the Registrant and Rob Streight (2)                                                        |   | Incorporated by reference  from Registrant’s Annual Report on Form 10-KSB for the year ended  December 31, 2006 |
|                      |       |                                                                                                                     |   |   |
| 10.5                      |       | Sale of assets of  CattleNetwork, CattleStore and AgNetwork businesses to Vance Publishing  Corporation                  |   | Filed herewith |
|                      |       |                                                                                                                     |   |   |
| 31.1                      |       | Certification Pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002                                            |   | Filed herewith |
|                      |       |                                                                                                                     |   |   |
| 31.2                      |       | Certification Pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002                                            |   | Filed herewith |
|                      |       |                                                                                                                     |   |   |
| 32.1                      |       | Certification Pursuant to  18 U.S.C. Section 1350 as adopted by Section 906 of the  Sarbanes-Oxley Act of 2002 |   | Filed herewith |
|                      |       |                                                                                                                     |   |   |
| 32.2                      |       | Certification Pursuant to  18 U.S.C. Section 1350 as adopted by Section 906 of the  Sarbanes-Oxley Act of 2002 |   | Filed herewith |

 

51

----

Tableof Contents

 

****SIGNATURES****

 

Inaccordance with Section 13 or 15(d) of the Exchange Act, theregistrant caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

 
| Date:  March 31, 2009 | Integrated  Management Information, Inc. |
|----------------------------|-----------------------------------------------|
|                       | By:                                           | /s/  John K. Saunders |
|                       |                                          | Chief  Executive Officer |

 

Inaccordance with the Exchange Act, this report has been signed below by thefollowing persons on behalf of the registrant and in the capacities and on thedates indicated.

 
| **Signatures**           | ** ** | **Title**                    | ** ** | **Date**             |
|--------------------------|------------|------------------------------|------------|----------------------|
|                     |       |                         |       |                 |
| /s/  John K. Saunders    |       | Chairman,  President and CEO |       | March 31,  2009 |
| John  K. Saunders        |       |                         |       |                 |
|                     |       |                         |       |                 |
| /s/  Pete Lapasotes      |       | Director                     |       | March 31,  2009 |
| Pete  Lapasotes          |       |                         |       |                 |
|                     |       |                         |       |                 |
| /s/  Adam Larson         |       | Director                     |       | March 31,  2009 |
| Adam  Larson             |       |                         |       |                 |
|                     |       |                         |       |                 |
| /s/  Dr. Gary Smith |       | Director                     |       | March 31,  2009 |
| Dr. Gary  Smith     |       |                         |       |                 |
|                     |       |                         |       |                 |
| /s/  Robert VanSchoick   |       | Director                     |       | March 31,  2009 |
| Robert  VanSchoick       |       |                         |       |                 |

 

52

----