Table ofContents

 

 

 

**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-K**

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

** **

**For the Fiscal Year Ended December 31, 2009**

** **
| **o** | **TRANSITION REPORT UNDER  SECTION 13 OR 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.) |

 

**221Wilcox, Suite A**

**CastleRock, CO 80104**

(Address ofprincipal executive offices, including zip code)

 

Issuer’s telephonenumber, including area code:

**(303)895-3002**

 

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

 

Securities registeredpursuant to Section 12(g) of the Act:

** **

**CommonStock, $0.001 par value**

(Title of Class)

 

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act.  Yes o No x

 

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act.  Yes o No x

 

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

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWebsite, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files). Yes  o  No  o

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405of this chapter) is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. x

 

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

 

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

 

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

 

The number of shares ofthe registrant’s common stock, $.001 par value per share, outstanding as of March 20,2010 was 20,849,481. The aggregate market value of the voting stock held bynon-affiliates of the registrant on June 30, 2009, the last business dayof our most recently completed second fiscal quarter was $1,104,672.

 

DOCUMENTS INCORPORATED BYREFERENCE: None

 

 

 

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**TABLE OF CONTENTS**

 
| ** **    | ** **                                                                                                         | ** ** | **PAGE** |
|---------------|--------------------------------------------------------------------------------------------------------------------|------------|----------|
| PART I   |
|          |                                                                                                               |       |     |
| ITEM 1.       | BUSINESS                                                                                                           |       | 3        |
| ITEM 1A.      | RISK FACTORS                                                                                                       |       | 10       |
| ITEM 1B.      | UNRESOLVED STAFF COMMENTS                                                                                          |       | 13       |
| ITEM 2.       | PROPERTIES                                                                                                         |       | 13       |
| ITEM 3.       | LEGAL PROCEEDINGS                                                                                                  |       | 13       |
|          |                                                                                                               |       |     |
| PART II  |
|          |                                                                                                               |       |     |
| ITEM 5.       | MARKET FOR REGISTRANT’S 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                              |       | 41       |
| ITEM 9A.      | CONTROLS AND  PROCEDURES                                                                                           |       | 41       |
| ITEM 9B.      | OTHER INFORMATION                                                                                                  |       | 42       |
|          |                                                                                                               |       |     |
| PART III |
|          |
| ITEM 10.      | DIRECTORS,  EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                            |       | 43       |
| ITEM 11.      | EXECUTIVE  COMPENSATION                                                                                            |       | 45       |
| ITEM 12.      | SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER  MATTERS                   |       | 46       |
| ITEM 13.      | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE                                          |       | 47       |
| ITEM 14.      | PRINCIPAL  ACCOUNTANT FEES AND SERVICES                                                                            |       | 48       |
| ITEM 15.      | EXHIBITS  AND FINANCIAL STATEMENT SCHEDULES                                                                        |       | 49       |
|          | SIGNATURES                                                                                                         |       | 50       |

 

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****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, 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 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 furtherdevelop programs to address other verification needs including, but not limitedto, 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. Then in March 2010, inresponse to consumers’ demand of increased transparency regarding the originsand safety of their food, we introduced our ‘Where Food Comes From’ consumerlabeling program. This program is a rigorous qualification protocol under whichonly those farmers, ranchers and processors who meet strict third-partyverification requirements may display the distinctive “Where Food Comes From”brand.  It is the first of its kind thatdirectly connects the consumer with the food supply chain in a way that fostersconfidence at the point of purchase. We believe that as consumers become bettereducated, they will have more confidence in their food purchase decisions. Inaddition to building consumer confidence, the ‘Where Food Comes From’ labelgives producers and processors a way to enhance, differentiate and even protecttheir valuable brands.

 

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**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, andother credence attributes of livestock for 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).

 

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 and ComplianceBranch has established the voluntary Quality System Assessment, Non HormoneTreated 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, third partyaudit. 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.

 

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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 exportdestination or specific Export Verification program requirements, US suppliersseeking to sell beef and other livestock products must participate in apre-approved QSA or PVP program so as to have an approved means ofverifying source, age, and other specific product requirements. Therefore,though the program is voluntary, it is mandatory to gain access to many exportmarkets.

 

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,is required 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, asonly 5% of the world’s population resides in the US. The following presents asequence of events over the past 7 years that significantly impacted the USlivestock and food industry:

 

·                  Prior to the discovery of the first case ofmad cow disease (BSE) in the US in December 2003, the USDA estimated thatthe industry exported approximately 2.5 billion pounds to Japan, Mexico, SouthKorea, and Canada.

·                  The governments of these and other countriesresponded to the discovery by forbidding import of beef and other livestockproducts from the US, and exports fell to approximately $0.4 billion during2004.

·                  During 2004 and 2005, mostly because ofimplementation of the USDA QSA initiatives, export partners’ confidence in USbeef and other livestock supply increased, and many export markets reopened,including Mexico, Canada, Hong Kong, Singapore, and Taiwan.

·                  In December 2005, Japan lifted its banon imported US beef and other livestock products. In January 2006, Japanreinstated its ban after an inspection revealed a case of non-compliance withthe Japanese import regulations.

 

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·                  Beginning in mid-2006, the U.S. governmentreached an agreement with Japan that allowed restricted access to the Japanesemarket. Consumption of beef has never fully recovered from the negativeconsumer reaction.  The Korean marketalso reopened, but imposed restrictions which make compliance extremelydifficult. The Chinese market remains closed.

·                  In May of 2007, the OIE (internationalanimal health organization) recognized the U.S. as a controlled-risk countryfor BSE. The U.S. is now trying to get all of its trading partners to acceptthis status which implies removal of restrictions for trading.  It will likely take some time yet but thiswould allow for better and more consistent access to beef markets.

·                  In September 2009, the Democratic Partyof Japan (DPJ) scored an overwhelming victory in Japan’s elections. Ofparticular concern for the U.S. meat industry is the fact that the DPJ hastaken a relatively harder line against expanded access for beef imports fromthe United States (US). Thus, it looks that in the near term, with Japanfocused on a transitional government, and being more protectionists in nature,the current agreement for supplying Japan—cattle must be age verified as 20months of age or less—will stay intact. This sets the stage for continuedgrowth in IMI’s third party source and age verification services.

·                  U.S. beef has been largely absent from theEuropean Union (EU) for the past 19 years. With limited domestic and Braziliansupply into the EU and a newly negotiated and implemented, as of August 2009,duty-free beef quota, there is great optimism in US beef demand in the EU.Currently the new quota is limited to non-hormone-treated beef (NHTC), which requiresthird party verification, but with duty-free access significantlylowering the cost of doing business in Europe, we believe that it offerssignificantly more potential for third party NHTC verification services and ournew product line, High Quality Beef verification services.

·                  With increased consumer consciousnessgenerated by movies such as “Food, Inc.” and Time Magazine’s August 2009cover article “The Real Cost of Cheap Food”, consumers are looking for answersto questions including food production practices and overall food safety andregulation. Additionally, there has been a shift in attitude within the newadministration that is uniquely positioning the agricultural industry. “KnowYour Farmer Know Your Food” is a new USDA initiative to help more Americansunderstand where their food comes from and how they can support development oflocal and regional food systems.

 

Beefexports for 2009 were projected at approximately 897 thousand metric tons,approximately 70 percent of the 2003 record export total. US red meat exportsfinished 2009 on a positive note with healthy gains in volume over December ayear ago, positioning both beef and pork exports to start 2010 on an upwardtrend, according to statistics compiled by the U.S. Meat Export Federation(USMEF). Additionally, mandatory compliance with the NAIS could make Americananimal products more saleable overseas. The opportunity to participate inexport markets presents a strong indicator of potential demand for approvedverification processes, which have become essential. However, during the timein which certain export markets are closed, demand for solutions to comply withthese regulatory requirements is constrained.

 

**SERVICEAND PRODUCT OFFERINGS**

 

Toaddress the livestock industry’s requirements to deploy and maintain identification,traceability, and verification systems and to facilitate participation in andcompliance with the USDA’s Quality System Assessment, Process Verification, andExport Verification Programs, we have developed and offer a balanced portfolioof products and services. These solutions address specific requirements at eachlevel of the livestock supply chain. In addition, we offer customized solutionsto 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 

 

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offersthe following 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 toefficiently and accurately track key data related to the source and age oflivestock. The USDA has informed us that our Supply Verified program was theindustry’s first USDA approved offsite evaluation process for cattle and otherlivestock suppliers 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.

 

OurVerifiedGreenTM Verification 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.

 

***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,we offer a monthly service to maintain the USDA compliant manual and web hostthe data.

 

***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), whichis broader 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.

 

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**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***

 

Servicesthat qualify for compliance with the USDA’s Quality System Assessment, ProcessVerification, and Export Verification Programs are:

 

·                  USVerifiedTM Source and Age Verification

·                  USVerifiedTM Non-Hormone Treated Cattle (NHTC)

·                  Verified Natural BeefTM

·                  Verified GreenTM

·                  Individual Animal Identification and TagAllocation

 

Weoffer other verification programs including:

 

·                  Where Food Comes From® - our consumerlabeling program for all of our verification services

·                  High Quality Beef — a program designed forthe European Union

·                  Verified Humane

·                  Verified Grassfed — our program was approvedfor a USDA claim in Febuary 2010

·                  Verified Pork — our program was approved fora USDA claim in February 2010

 

Allof our programs qualify for our WhereFoodComesFrom® verification seal ofapproval. As a third-party verification service provider, we must review eachindividual producer or food company’s claim and system to ensure that 100percent of the supply is managed through a third party verification programrecognized by the USDA, ISO and/or another internationally recognizedstandards.

 

Wealso offer consulting, program development and web-based development serviceson a customized basis to meet special customer requirements. For theyears-ended December 31, 2009 and 2008, our third party verificationprograms provided approximately 82% and 81% of our total revenue, respectively.

 

***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 18% and 17% of our total revenue was provided by the sale ofhardware during the years-ended December 31, 2009 and 2008, respectively.

 

**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.

 

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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.

 

InFebruary 2010, we announced our alliance with cowboy poet Baxter Black topromote our verification, identification and traceability solutions on RFD-TV’s“Cattlemen to Cattlemen” television program, a 60-minute news magazine focusedon the cattle industry. We believe that Baxter Black is a high profile, belovedfigure with enormous credibility in the agricultural community. He is anin-demand public speaker who has built a highly successful career exposing theflaws and foibles of everyday cowboy life. He is known nationwide through his print column, National Public Radioappearances, books, CDs, videos and commercial radio.

 

**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 6,000 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 third quarters of thefiscal year when the calf marketings are at their peak. Because of theseasonality of the business and our industry, results for any quarter are notnecessarily indicative of the results that may be achieved for any otherquarter or for the full fiscal year.

 

**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, 2009 we had 15 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 certain 

 

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risksrelated to our employees is included in Part I, Item 1A “Risk Factors” ofthis 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.********                                           ********RISK FACTORS****

 

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 to obtain additional capital, if and whenneeded, could have a material adverse effect upon our financial condition andour ability to continue as a going concern.

 

*****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.***

 

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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 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 of foreignbusiness partners in such markets. Certain international markets may be slowerthan domestic markets and our operations in international markets may notdevelop 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 traderegulations;

·                  difficulties in developing, staffing andsimultaneously managing a large number of varying foreign operations as aresult of distance, language and cultural differences;

 

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·                  stringent local labor laws and regulations;

·                  longer payment cycles;

·                  currency exchange rate fluctuations;

·                  political or social unrest or economicinstability;

·                  import or export restrictions;

·                  seasonal volatility in business activity;

·                  risks related to government regulation orrequired compliance with local laws in certain jurisdictions, including thosemore 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.

 

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

 

Inthe event that third parties claim that our current or future products or servicesinfringe upon their intellectual property, we may face litigation and beprevented from selling the products and services at issue. Infringement orother claims could be asserted or prosecuted against us in the future, and itis possible that past or future assertion or prosecutions could harm ourbusiness. Litigation either in defense of our intellectual property rights orin response to infringement claims made by others may be, both expensive andtime consuming, which in turn would adversely affect our business.

 

*****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

 

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andofficer liability insurance. We may be required to accept reduced coverage orincur significantly higher costs to obtain coverage. These requirements arealso likely to make it more difficult for us to attract and retain qualifiedindividuals to serve as members of our board of directors or committees of theboard.

 

*****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.

 

**ITEM 1B.               UNRESOLVEDSTAFF 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 $5,221 per month, which includes CAM charges.

 

****ITEM 3.****  ****LEGAL PROCEEDINGS****

 

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.

 

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****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.

 
| ** **      | ** ** | **2009** | ** ** | **2008** | ** ** |
|-----------------|------------|----------|------------|----------|------------|
| ** **      | ** ** | **High** | ** ** | **Low**  | ** ** | **High** | ** ** | **Low** | ** ** |
| First  quarter  |       | $        | 0.30       |     | $          | 0.30 |   | $ | 0.35 |   | $ | 0.10 |   |
| Second  quarter |       | $        | 0.20       |     | $          | 0.15 |   | $ | 0.34 |   | $ | 0.16 |   |
| Third  quarter  |       | $        | 0.15       |     | $          | 0.15 |   | $ | 0.45 |   | $ | 0.14 |   |
| Fourth  quarter |       | $        | 0.19       |     | $          | 0.19 |   | $ | 0.35 |   | $ | 0.06 |   |

 

***Stockholders***

 

Asof March 29, 2010, 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***

 

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.

 

***Issuer Purchases of Equity Securities***

 

None

 

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****ITEM 7.****  ****MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION 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 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 

 

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age.We introduced our USVerified Source and Age Verification system in 2005, andover the years we have continued to enhance and further develop programs toaddress other verification needs including, but not limited to, non-hormonetreated 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. Then in March 2010, inresponse to consumers’ demand of increased transparency regarding the originsand safety of their food, we introduced our ‘Where Food Comes From’ consumerlabeling program. This program is a rigorous qualification protocol under whichonly those farmers, ranchers and processors who meet strict third-partyverification requirements may display the distinctive “Where Food Comes From”brand.  It is the first of its kind thatdirectly connects the consumer with the food supply chain in a way that fostersconfidence at the point of purchase. We believe that as consumers become bettereducated, they will have more confidence in their food purchase decisions. Inaddition to building consumer confidence, the ‘Where Food Comes From’ labelgives producers and processors a way to enhance, differentiate and even protecttheir valuable brands.

 

**FinancialHighlights**

 

·                  Revenues for the year ended December 31,2009 increased 10.7% year over year to $2.7 million compared to $2.4 million.We continue to experience consistent growth in program development and webbased development services in connection with our third party verificationprograms.

 

·                  Excluding the 2009 bad debt provision of$169,555 related to a 2007/2008 USDA grant funded project for premiseregistrations, SG&A expenses were $1,298,982 compared to $1,440,541 for2008. This represents a 9.8% reduction in year over year expenses.

 

·                  For the year ended 2009 we achieved positivecash flow from operations of $102,678 compared to cash consumption of $438,537for 2008. This represents our first full year to generate positive cash flowfrom operations.

 

·                  Earnings before interest, taxes,depreciation, amortization, and other operating expenses (Adjusted EBITDA),which is calculated starting with income (loss) from continuing operations, was$112,260 for 2009 compared to an adjusted loss of $67,698 for 2008.

 

****Useof Non-GAAP Financial Information****

 

****Inaddition to the results reported in accordance with accounting principlesgenerally accepted in the United States of America (GAAP) included in thisfiling, we have has provided certain non-GAAP financial information and AdjustedEBITDA. Management believes that the presentation of this non-GAAP financialinformation provides useful information to investors because this informationmay allow investors to better evaluate ongoing business performance and certaincomponents of our results. This information should be considered in addition tothe results presented in accordance with GAAP, and should not be considered asubstitute for the GAAP results. We have reconciled the non-GAAP financialinformation included herein to the nearest GAAP measure in context.****

 

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****RESULTSOF OPERATIONS****

 

****YearEnded December 31, 2009 Compared to Year Ended December 31, 2008****

 

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 theprior year’s discontinued operations.

**** ****
| ** **                                    | ** ** | **Years  ended December 31,** | ** ** | **2009**  | ** ** | **2009  - 2008** | ** ** |
|-----------------------------------------------|------------|------------------------------------|------------|-----------|------------|------------------|------------|
| **Selected Financial Data**                   | ** ** | **2009**                           | ** ** | **2008**  | ** ** | **Improvement**  | ** ** | **%  Change** | ** ** |
|                                          |       |                               |       |      |       |             |       |   |   |
| Revenues                                      |       | $                                  | 2,660,530  |      | $          | 2,402,830        |       | $ | 257,700 |   | 10.7 | % |
| Third  party verification                     |       | 2,171,080                          |       | 1,934,950 |       | 236,130          |       | 12.2 | % |
| Hardware                                      |       | 465,985                            |       | 400,130   |       | 65,855           |       | 16.5 | % |
| Other                                         |       | 23,465                             |       | 67,750    |       | (44,285          | )          | -65.4 | % |
| Costs  of revenues                            |       | 1,314,683                          |       | 1,073,328 |       | (241,355         | )          | * |   |
| Gross  profit                                 |       | 1,345,847                          |       | 1,329,502 |       | 16,345           |       | 1.2 | % |
| Gross  margin                                 |       | 50.6                               | %          | 55.3      | %          | —           |       | * |   |
| Selling,  general and administrative expenses |       | 1,468,537                          |       | 1,440,541 |       | (27,996          | )          | -1.9 | % |
| Gain  on sale of online businesses            |       | (4,000                             | )          | 357,802   |       | (361,802         | )          | * |   |
| Interest  expense                             |       | 35,507                             |       | 33,098    |       | (2,409           | )          | -7.3 | % |
| Income  (loss) from continuing operations     |       | (153,191                           | )          | 217,391   |       | (370,582         | )          | * |   |
| Net  income (loss)                            |       | (153,191                           | )          | 149,658   |       | (302,849         | )          | * |   |
|                                               |            |                                    |            |           |            |                  |            |  |  |  |  |  |

 

----

*calculation not meaningful for discussion purposes

 
| ** **                                | ** ** | **Years  ended December 31,** | ** ** | ** ** |       |       |   |   |
|-------------------------------------------|------------|-------------------------------|------------|------------|------------|------------|--------|--------|
| **Adjusted EBITDA:**                      | ** ** | **2009**                      | ** ** | **2008**   | ** ** | ** ** |   |   |   |   |
| Income  (loss) from continuing operations |       | $                             | (153,191   | )          | $          | 217,391    |   |   |   |   |   |   |
| Interest  expense                         |       | 35,507                        |       | 33,098     |       |       |   |   |   |   |
| Income  taxes                             |       | —                        |       | —     |       |       |   |   |   |   |
| Depreciation  and amortization            |       | 56,389                        |       | 39,615     |       |       |   |   |   |   |
| Adjust  for non-cash items:               |       |                          |       |       |       |       |   |   |   |   |
| Gain  on sale of online businesses        |       | 4,000                         |       | (357,802   | )          |       |   |   |   |   |
| Bad  debt for USDA grant project          |       | 169,555                       |       | —     |       |       |   |   |   |   |
| Adjusted  EBITDA                          |       | $                             | 112,260    |       | $          | (67,698    | )      |   |   |   |   |   |

 

****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, 2009 were $2,660,530 compared to$2,402,830 for 2008, an improvement of approximately 11%. ****While the improvementrepresents modest growth, we believe it is significant in light of the currenteconomic conditions severely impacting the food industry.****

 

During2009, our third party verification revenue, which includes sales of ourUSVerified solutions and related consulting, program development and web-baseddevelopment services, increased 12.2% to $2,171,080 from $1,934,950 in 2008.

 

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Forpurposes of further analysis of our verification revenue stream as discussedabove, when we exclude approximately $214,000 in 2008 revenue related to aspecial grant funded project for premise registrations throughout the USDA,third party verification revenue improved 26.2% in 2009 compared to 2008. Thisproject was specific to the years ended 2007 and 2008. Midway through the USDAgrant funded project, the USDA re-evaluated the project and decided todiscontinue the project.

 

Revenuesderived from sales of hardware, primarily sales of cattle identification eartags, increased 16.5% to $465,985 in 2009 compared to $400,130 in 2008.

 

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

 

Costof sales for 2009 was $1,314,683 compared to $1,073,328 during 2008. Grossmargin for 2009 declined by approximately 5 basis points to 50.6% of revenuesin 2009 compared to 55.3% in 2008.

 

Certainelements of costs of sales are fixed in nature such as salaries and rent.Accordingly, when sales volumes remain relatively constant or decrease during adifficult economic period, cost of sales does not decrease in the sameproportion. Therefore, cost of sales as a percentage of sales may be adverselyaffected by reduced volumes or the impact of inflation.

 

Thedecrease in our gross margins during 2009 compared to 2008 was partially due toshifts in the sales mix of lower margin hardware product sales coupled with theabsorption of certain costs which are generally fixed in nature. Morespecifically in early 2008, we increased our headcount of dedicated personnelproviding program development and web based development services in connectionwith our third party verification programs. Due to our focus on margins andcustomer service, we are committed to long term growth and the scalability ofthe programs we develop.

 

**Selling,General and Administrative Expenses**

 

Selling,general and administrative (SG&A) expenses for 2009 were $1,468,537, anincrease of $27,996, or 1.9% over the 2008 amount of $1,440,541. The increasewas primarily due to a bad debt provision of $169,555 for an account ****receivable outstanding duefrom the USDA that is greater than 90 days past due. The receivable is relatedto a special grant funded project for premise registrations throughout theUSDA. This project was specific to the years ended 2007 and 2008. Midwaythrough the USDA grant funded project, the USDA re-evaluated the project and decidedto discontinue the project. Numerous times, we have attempted to collect thisreceivable but due to the length of time it has remained outstanding, the factthat the program was discontinued and the lack of response we have receivedfrom those responsible for this project, we have reserved the full amountoutstanding as of December 31, 2009.****

 

Excludingthe 2009 bad debt provision of $169,555, SG&A expenses were $1,298,982compared to $1,440,541 for 2008. This represents a 9.8% reduction in year overyear expenses. The decrease was primarily due to a net reduction in salariesdue to a lesser number of office support personnel offset by adjustments tosalaries for costs of living and annual performance reviews.

 

**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.

 

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

 

Asa result of the foregoing, loss from continuing operations for the year ended December 31,2009 was $153,191 or $0.01 loss per basic and diluted common share, compared toincome from continuing operations of $217,391 or $0.01 per basic and dilutedcommon share for the year ended December 31, 2008.

 

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

 

Netloss for the year ended December 31, 2009 was $153,191, compared to netincome of $149,658 which includes loss from discontinued operations of $67,733for the year ended December 31, 2008.

 

****AdjustedEBITDA****

 

****Managementbelieves that the presentation of Adjusted EBITDA, a non-GAAP financialmeasurement, provides useful information to investors because this informationmay allow investors to better evaluate ongoing business performance and certaincomponents of our results. Excluding the gain from the sale of our onlinebusinesses and the bad debt provision for the USDA special grant fundedproject,****Adjusted EBITDA, which is calculated starting withincome (loss) from continuing operations, was $112,260 for 2009 compared to anadjusted loss of $67,698 for 2008.

 

****Liquidityand Capital Resources****

 

AtDecember 31, 2009, we had cash and cash equivalents of $214,329 comparedto $154,044 of cash and cash equivalents at December 31, 2008. Our workingcapital at December 31, 2009 was $263,989 compared to $387,901 at December 31,2008.

 

Netcash provided by operating activities during 2009 was $102,678 compared to netcash used in operating activities of $438,537 during the same period in 2008.Cash provided by (used in) operating activities (continuing and discontinuedoperations) is driven by our net loss and adjusted by non-cash items. Non-cashadjustments primarily include depreciation, amortization of intangible assetsand stock based compensation expense. The improvement was primarily driven bybetter operating performance. Additionally, the timing of cash receipts andcash disbursements affects our operating assets and cash balances.

 

Netcash used in investing activities of $107,711 is primarily attributable tocapital expenditures. Our capital expenditures were $111,711 and $70,951 forthe years 2009 and 2008, respectively. Our capital expenditures are primarilyrelated to purchases and internal development of information technology assetsto support our product and service offerings. As we anticipate continuedgrowth, we expect to continue investing additional capital in our informationtechnology assets. Net cash provided by investing activities of $729,849 forthe year 2008 was primarily due to the sale of the online businesses.

 

Netcash provided by financing activities of $65,318 during 2009 was primarilyrelated to $50,000 additional financing acquired under an existing note payableand approximately $40,000 in new debt acquired in connection with theacquisition of equipment. Net cash used by financing activities of $308,150during 2008 was primarily related to the repayment of the CattleNetwork NotePayable.

 

Historically,our growth has been funded through a combination of convertible debt from privateinvestors and private placement offerings. We continually evaluate all fundingoptions including additional offerings of our securities to private, public andinstitutional investors and other credit facilities as they become available.

 

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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, ****overall improvement in our performance and our ability to secureadditional financing, we believe that we have sufficient cash on hand toexecute our current Business Plan a****lthough we cangive no assurance****.****The culmination of all our efforts hasbrought opportunities 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.

 

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.

 

**OffBalance Sheet Arrangements**

 

Asof December 31, 2009, 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. The assets sold in the transactionprimarily 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 recorded a gain on sale of approximately $358,000 in 2008.

 

****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 the reportedamounts of assets, liabilities, revenues and expenses, and the related disclosureof contingent assets and liabilities. We base our estimates on historicalexperience and on various other assumptions that we believe are reasonableunder the circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities that are notreadily 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.

 

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**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 tradedoptions on our common stock is a better indicator of expected volatility andfuture stock price trends than historical volatility. Therefore, expectedvolatility for the year ended December 31, 2009 and 2008 was based on amarket-based implied volatility. The assumptions used in calculating the fairvalue of stock-based awards represent our best estimates, but these estimatesinvolve inherent uncertainties and the application of management judgment. As aresult, if factors change and we use different assumptions, our stock-basedcompensation expense could be materially different in the future. In addition,we are required to estimate the expected forfeiture rate and only recognizeexpense for those shares expected to vest. We estimate the forfeiture ratebased on historical experience of our stock-based awards that are granted,exercised and cancelled. If our actual forfeiture rate is materially differentfrom our estimate, the stock-based compensation expense could be significantlydifferent from what we have recorded in the current period.

 

**RECENTACCOUNTING PRONOUCEMENTS**

 

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

 

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**ITEM 8.  FINANCIAL STATEMENTS ANDSUPPLEMENTARY DATA**

 

***Index to Financial Statements***

*** ***
| ** **                                                                                                      | **Page** |
|-----------------------------------------------------------------------------------------------------------------|----------|
| Financial  Statements:                                                                                          |     |
| Report of Independent Registered Public Accounting  Firm                                                        | 23       |
| Balance Sheets as of December 31, 2009 and 2008                                                            | 24       |
| Statements of Operations for the years ended  December 31, 2009 and  December 31, 2008                | 25       |
| Statements of Cash Flows for the years ended  December 31, 2009 and  December 31, 2008                | 26       |
| Statements of Stockholders’ Equity for the years ended  December 31, 2009 and  December 31, 2008 | 27       |
| Notes to Financial Statements                                                                                   | 28       |

 

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****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, 2009 and 2008 and the relatedstatements of operations, shareholders’ equity, and cash flows for the yearsended December 31, 2009 and 2008. 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, 2009 and 2008 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.

 

Theaccompanying financial statements have been prepared assuming that the Companywill continue as a going concern. As described in Note 1 to the financialstatements, conditions exist which raise substantial doubt about the Company’sability to continue as a going concern unless it is able to generate sufficientcash flows to meet its obligations and sustain its operations. Management’splans regarding those matters are also described in Note 1. The financialstatements do not include any adjustments that might result from the outcome ofthis uncertainty.

 

 

Gruber &Company, LLC

LakeSaint Louis, Missouri

March 29,2010

 

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**Integrated Management Information, Inc.**

**BalanceSheets**

 
| ** **                                                                                                                                                                             | ** ** | **December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                             | ** ** | **2009**              | ** ** | **2008** | ** ** |
| **Assets**                                                                                                                                                                             | ** ** | ** **            | ** ** | ** ** | ** ** |
| Current  assets:                                                                                                                                                                       |       |                  |       |   |   |
| Cash  and cash equivalents                                                                                                                                                             |       | $                     | 214,329    |   | $ | 154,044 |   |
| Accounts  receivable, net of allowance of $174,955 and $5,400 (Note 2)                                                                                                                 |       | 204,596               |       | 458,715 |   |
| Inventories                                                                                                                                                                            |       | —                |       | 14,350 |   |
| Prepaid  expenses and other current assets                                                                                                                                             |       | 65,695                |       | 33,073 |   |
| Total  current assets                                                                                                                                                                  |       | 484,620               |       | 660,182 |   |
| Property  and equipment, net                                                                                                                                                           |       | 134,035               |       | 78,275 |   |
| Intangible  assets, net                                                                                                                                                                |       | 655                   |       | 1,093 |   |
| Total  assets                                                                                                                                                                          |       | $                     | 619,310    |   | $ | 739,550 |   |
|                                                                                                                                                                                   |       |                  |       |   |   |
| **Liabilities and Stockholders’  Equity**                                                                                                                                         | ** ** | ** **            | ** ** | ** ** | ** ** |
| Current  liabilities:                                                                                                                                                                  |       |                  |       |   |   |
| Accounts  payable                                                                                                                                                                      |       | $                     | 161,049    |   | $ | 218,843 |   |
| Accrued  expenses and other current liabilities                                                                                                                                        |       | 51,115                |       | 53,438 |   |
| Short-term  debt and current portion of notes payable (Note 4)                                                                                                                         |       | 8,467                 |       | — |   |
| Total  current liabilities                                                                                                                                                             |       | 220,631               |       | 272,281 |   |
| Notes  payable and other long-term debt (Note 4)                                                                                                                                       |       | 360,871               |       | 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  20,929,006 shares issued, respectively; and 20,849,481 and 20,871,806 shares  outstanding, respectively |       | 20,929                |       | 20,929 |   |
| Additional  paid-in-capital                                                                                                                                                            |       | 3,387,130             |       | 3,359,380 |   |
| Treasury  stock of 79,525 and 57,200 shares, respectively                                                                                                                              |       | (20,144               | )          | (16,124 | ) |
| Accumulated  deficit                                                                                                                                                                   |       | (3,350,107            | )          | (3,196,916 | ) |
| Total  stockholders’ equity                                                                                                                                                       |       | 37,808                |       | 167,269 |   |
| Total  liabilities and stockholders’ deficit                                                                                                                                      |       | $                     | 619,310    |   | $ | 739,550 |   |

 

The accompanying notes are an integral part of thesefinancial statements.

 

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**Integrated Management Information, Inc.**

**Statementsof Operations**

 
| ** **                                           | ** ** | **Years ended December 31,** | ** ** |
|------------------------------------------------------|------------|-----------------------------------|------------|
| ** **                                           | ** ** | **2009**                          | ** ** | **2008** | ** ** |
|                                                 |       |                              |       |   |   |
| Revenues                                             |       | $                                 | 2,660,530  |   | $ | 2,402,830 |   |
| Costs  of revenues                                   |       | 1,314,683                         |       | 1,073,328 |   |
| Gross  profit                                        |       | 1,345,847                         |       | 1,329,502 |   |
| Selling,  general and administrative expenses        |       | 1,468,537                         |       | 1,440,541 |   |
| Gain  on sale of online businesses                   |       | (4,000                            | )          | (357,802 | ) |
| Income  (loss) from operations                       |       | (118,690                          | )          | 246,763 |   |
| Other  expense (income):                             |       |                              |       |   |   |
| Interest  expense                                    |       | 35,507                            |       | 33,098 |   |
| Other  income, net                                   |       | (1,006                            | )          | (3,726 | ) |
| Income  (loss) before income taxes                   |       | (153,191                          | )          | 217,391 |   |
| Income  taxes                                        |       | —                            |       | — |   |
| Income  (loss) from continuing operations            |       | $                                 | (153,191   | ) | $ | 217,391 |   |
| Loss  from discontinued operations                   |       | —                            |       | (67,733 | ) |
| Net  income (loss)                                   |       | $                                 | (153,191   | ) | $ | 149,658 |   |
|                                                 |       |                              |       |   |   |
| Income  (loss) per share from continuing operations: |       |                              |       |   |   |
| Basic                                                |       | $                                 | (0.01      | ) | $ | 0.01 |   |
| Diluted                                              |       | $                                 | (0.01      | ) | $ | 0.01 |   |
|                                                 |       |                              |       |   |   |
| Loss  per share from discontinued operations:        |       |                              |       |   |   |
| Basic                                                |       | $                                 | —     |   | $ | — |   |
| Diluted                                              |       | $                                 | —     |   | $ | — |   |
|                                                 |       |                              |       |   |   |
| Weighted  average shares outstanding:                |       |                              |       |   |   |
| Basic                                                |       | 20,867,150                        |       | 20,624,153 |   |
| Diluted                                              |       | 20,867,150                        |       | 20,680,922 |   |

 

The accompanying notes are an integral part of these financialstatements.

 

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**Integrated Management Information, Inc.**

**Statementsof Cash Flows**

 
| ** **                                                                            | ** ** | **Year ended December 31,** | ** ** |
|---------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                            | ** ** | **2009**                         | ** ** | **2008** | ** ** |
| Operating  activities:                                                                |       |                             |       |   |   |
| Net  income (loss)                                                                    |       | $                                | (153,191   | ) | $ | 149,658 |   |
| Adjustments  to reconcile net income (loss) to net cash used in operating activities: |       |                             |       |   |   |
| Depreciation  and amorization                                                         |       | 56,389                           |       | 39,615 |   |
| Stock  based compensation expense                                                     |       | 27,750                           |       | 3,410 |   |
| Provision  for doubtful accounts                                                      |       | 223,422                          |       | 4,146 |   |
| Amortization  under advertising rights                                                |       | —                           |       | 5,000 |   |
| Loss  on disposal of equipment                                                        |       | —                           |       | 4,708 |   |
| Gain  on sale of assets                                                               |       | (4,000                           | )          | (357,802 | ) |
| Changes  in assets and liabilities:                                                   |       |                             |       |   |   |
| Accounts  receivable                                                                  |       | 30,697                           |       | (269,124 | ) |
| Inventories                                                                           |       | 14,350                           |       | 4,409 |   |
| Prepaid  expenses and other current assets                                            |       | (32,622                          | )          | 10,422 |   |
| Accounts  payable                                                                     |       | (57,794                          | )          | (40,261 | ) |
| Accrued  expenses and other current liabilities                                       |       | (2,323                           | )          | 13,032 |   |
| Deferred  revenue                                                                     |       | —                           |       | (5,750 | ) |
| Net  cash provided by (used in) operating activites                                   |       | 102,678                          |       | (438,537 | ) |
|                                                                                  |       |                             |       |   |   |
| Investing  activities:                                                                |       |                             |       |   |   |
| Acquisition  of property and equipment                                                |       | (111,711                         | )          | (70,951 | ) |
| Proceeds  from sale of online businesses                                              |       | —                           |       | 800,000 |   |
| Proceeds  from sale of equpment                                                       |       | 4,000                            |       | 800 |   |
| Net  cash provided by (used in) investing activities                                  |       | (107,711                         | )          | 729,849 |   |
|                                                                                  |       |                             |       |   |   |
| Financing  activities:                                                                |       |                             |       |   |   |
| Proceeds  from line of credit                                                         |       | —                           |       | 38,000 |   |
| Repayments  on line of credit                                                         |       | —                           |       | (108,000 | ) |
| Proceeds  from Notes Payable                                                          |       | 89,964                           |       | — |   |
| Repayment  under Notes Payable                                                        |       | (20,626                          | )          | — |   |
| Repayment  of CattleNetwork Note Payable                                              |       | —                           |       | (350,000 | ) |
| Proceeds  from issuance of common stock                                               |       | —                           |       | 125,000 |   |
| Proceeds  from exercise of stock options                                              |       | —                           |       | 2,974 |   |
| Stock  repurchase under Buyback Program                                               |       | (4,020                           | )          | (16,124 | ) |
| Change  in restricted cash balances                                                   |       | —                           |       | — |   |
| Net  cash provided by (used in) financing activities                                  |       | 65,318                           |       | (308,150 | ) |
| Net  change in cash and cash equivalents                                              |       | 60,285                           |       | (16,838 | ) |
| Cash  and cash equivalents at beginning of year                                       |       | 154,044                          |       | 170,882 |   |
| Cash  and cash equivalents at end of year                                             |       | $                                | 214,329    |   | $ | 154,044 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

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**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, 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 |   |
|                                                                               |       |             |       |        |       |           |       |         |       |       |       |       |       |
| Stock  repurchase of 22,325 shares on the open market                              |       | —           |       | —      |       | —         |       | —       |       | (4,020     | )          | (4,020     | )          |
| Stock-based  compensation expense                                                  |       | —           |       | —      |       | 27,750         |       | —       |       | —     |       | 27,750     |       |
| Net  loss                                                                          |       | —           |       | —      |       | —         |       | (153,191     | )          | —     |       | (153,191   | )          |
| Balance  at December 31, 2009                                                 |       | 20,929,006       |       | $           | 20,929     |           | $          | 3,387,130    |       | $          | (3,350,107 | )          | $          | (20,144 | ) | $ | 37,808 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

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**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.

 

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 closed resulting in significant losses to the industry. In responseto the crisis, several initiatives were enacted to facilitate the reopening ofkey export markets. Most notably, U.S. suppliers seeking to sell beef and otherlivestock products to other countries must participate in a pre-approvedQuality System Assessment Program so as to have an approved means of verifyingspecific product requirements. In response, we were the first to develop a USDAQuality System Assessment document management system for auditing the trackingsystems used 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.

 

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. Then in March 2010, inresponse to consumers’ demand of increased transparency regarding the originsand safety of their food, we introduced our ‘Where Food Comes From’ consumerlabeling program. This program is a rigorous qualification protocol under whichonly those farmers, ranchers and processors who meet strict third-partyverification requirements may display the distinctive “Where Food Comes From”brand.  It is the first of its kind thatdirectly connects the consumer with the food supply chain in a way that fostersconfidence at the point of purchase. We believe that as consumers become bettereducated, they will have more confidence in their food purchase decisions. Inaddition to building consumer confidence, the ‘Where Food Comes From’ labelgives producers and processors a way to enhance, differentiate and even protecttheir valuable brands.

 

****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. The assets sold in the transactionprimarily 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 recorded a gain on sale of approximately $358,000 in 2008.

 

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**Integrated Management Information, Inc.**

**Notes to 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, ****overall improvement in our performance and our ability to secureadditional financing, we believe that we have sufficient cash on hand toexecute our current Business Plan a****lthough we cangive no assurance****. The culmination of all our efforts has brought opportunities to usincluding: increased investor confidence and renewed interest in our company,third-party interest in our expertise to develop and enhance websites, as wellas the potential to develop business relationships with long term strategicpartners. In keeping with our core business, we will continue to review ourbusiness model with a focus on profitability, long term capital solutions andthe potential 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 and assumptionsthat affect reported amounts of assets and liabilities, disclosure ofcontingent assets and liabilities at the date of the financial statements, andthe 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.

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

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

**** ****

****RevenueRecognition****

 

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

 

·                  Revenue from product sales is recognized whenthe goods are shipped and title passes to the customer.

·                  Revenue from contracts for consulting andwebsite development is recognized on the percentage of completion method.

·                  Revenue derived from our US Verified programis recognized using the Proportional Performance Model. Contracts arecancelable only for non-performance.

 

****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 31,2009, we have $169,555 in receivables outstanding due from the USDA that isgreater than 90 days past due. The receivable is related to a special grantfunded project for premise registrations throughout the USDA. This project wasspecific to the years ended 2007 and 2008. Midway through the USDA grant fundedproject, the USDA re-evaluated the project and decided to discontinue theproject. Numerous times, we have attempted to collect this receivable but dueto the length of time it has remained outstanding, the fact that the programwas discontinued and the lack of response we have received from thoseresponsible for this project, we have reserved the full amount outstanding asof December 31, 2009. The bad debt provision has been recorded in selling,general and administrative expenses within the Statements of Operations.****

 

****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 $250,000 insurance limit. We 

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

havenot experienced any losses related to balances that exceed the $250,000 FDICinsurance limit and we believe our credit risk is minimal.

 

****LongLived Assets****

 

Ourlong-lived assets primarily represent our property and equipment. These assetsare recorded at cost and are depreciated generally using the straight-linemethod over the estimated useful lives of the respective assets, which rangefrom one to seven years.

 

Wereview all of our long-lived assets for impairment at least annually orwhenever impairment indicators are determined to be present. If an impairmentexists, the amount of impairment is measured as the excess of the carryingamount of the asset over its fair value as determined utilizing the estimateddiscounted future cash flows, or some other fair value measure, or the expectedproceeds, net of costs to sell, upon sale of the asset.

 

****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 ASC Topic No. 985. ****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****ASC Topic No.350****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****ASC Topic No. 350.********ASCTopic No. 350****provides that certain planning and training costs incurred in thedevelopment of website software be expensed as incurred, while applicationdevelopment stage costs are to be capitalized.****

 

****Duringthe years ended December 31, 2009 and 2008, we have capitalized certainexternal and internal use software and website development costs totaling$67,559 and $39,120, respectively. The estimated useful life of costscapitalized is evaluated for each specific project and ranges from one to threeyears.****

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****During2009 and 2008, the amortization of capitalized costs totaled $32,225 and$12,765, respectively. Capitalized costs are included in property andequipment, net.****

 

****AdvertisingExpenses****

 

Advertisingcosts are expensed as incurred. The total advertising expenses included in theStatement of Operations for the years ended December 31, 2009 and 2008were $6,413 and $11,717, respectively.

 

****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:

 
| ** **                                  | ** ** | **December 31,** | ** ** |
|---------------------------------------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2009**              | ** ** | **2008** | ** ** |
|                                        |       |                  |       |   |   |
| Automobiles                                 |       | $                     | 39,946     |   | $ | 37,660 |   |
| Furniture  and office equipment             |       | 69,784                |       | 65,577 |   |
| Software  and tools                         |       | 23,070                |       | 23,070 |   |
| Website  development and other enhancements |       | 131,080               |       | 63,521 |   |
|                                        |       | $                     | 263,880    |   | $ | 189,828 |   |
| Less  accumulated depreciation              |       | 129,845               |       | 111,553 |   |
| Property  and equipment, net                |       | $                     | 134,035    |   | $ | 78,275 |   |

 

Depreciationexpense for the years ended December 31, 2009 and 2008 were $55,952 and$32,114, respectively.

 

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

 

Notespayable consist of the following:

 
| ** **                                                      | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                      | ** ** | **2009**              | ** ** | **2008** | ** ** |
|                                                            |       |                  |       |   |   |
| Equipment  Note Payable                                         |       | $                     | 29,338     |   | $ | — |   |
| Lapaesotes  Note Payable                                        |       | 340,000               |       | 300,000 |   |
|                                                            |       | $                     | 369,338    |   | $ | 300,000 |   |
| Less  current portion of notes payable and other long-term debt |       | 8,467                 |       | — |   |
| Notes  payable and other long-term debt                         |       | $                     | 360,871    |   | $ | 300,000 |   |

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

***Equipment Note Payable***

 

OnJanuary 31, 2009, we issued a note payable in the amount of $35,963 forthe purchase of a vehicle used primarily for business purposes. Under the Note,interest and principal payments are due in equal monthly installments of $870.55over 4 years beginning March 17, 2009. The Note bears an interest rate of7.4% per annum and is fully secured by the vehicle.

 

***Lapaseotes Note Payable***

 

InSeptember 2007, we obtained $300,000 in unsecured debt financing. In April 2009,an additional $50,000 was obtained under the same financing terms. The notesare held by a major shareholder; bear an interest rate of 9% per annum, payablequarterly. The principal balance is due on September 12, 2011.

 

****Ourobligations under our notes payable for the five years as of December 31,2009 are as follows:****

**** ****

Fiscal year endedDecember 31:

**** ****
| 2010       |   |   | $ | 8,520   |   |
|------------|--------|--------|---|---------|--------|
| 2011       |   |   | $ | 349,187 |   |
| 2012       |   |   | $ | 9,906   |   |
| 2013       |   |   | $ | 1,725   |   |
| Thereafter |   |   | $ | —  |   |
|       |   |   | $ | 369,338 |   |

 

****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. As of December 31, 2009, we believe it is more likely than notthat our net deferred tax asset will not be realized and accordingly we haverecorded a valuation allowance against the deferred tax assets.

 

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:

 

·                  The levels of historical taxable income andprojections for future taxable income over periods in which the deferred taxassets would be deductible, and

·                  Accumulation of net income before taxutilizing a look-back period of three years.

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

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

 

Inaccordance with ASC Topic No. 740, we recognize the financial statement benefitof a tax position only after determining that the relevant tax authority wouldmore likely 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% likelihoodof being realized upon ultimate settlement with the relevant tax authority. Wehave applied ASC Topic No. 740 to all tax positions for which the statute oflimitations remain open. There was no net effect to the financial statementsand none of the unrecognized tax benefits will impact our effective tax rate.

 

Theincome tax effects of temporary differences that give rise to significantportions of deferred tax assets as of December 31, 2009 and 2008 are asfollows:

 
| ** **                        | ** ** | **December 31,** | ** ** |
|-----------------------------------|------------|-----------------------|------------|
| ** **                        | ** ** | **2009**              | ** ** | **2008** | ** ** |
| Deferred  tax assets:             |       |                  |       |   |   |
| Net  operating loss carryforwards |       | $                     | 946,592    |   | $ | 1,012,337 |   |
| Other                             |       | (9,889                | )          | (124,942 | ) |
| Deferred  tax assets              |       | $                     | 936,703    |   | $ | 887,395 |   |
| Less  valuation allowance         |       | (936,703              | )          | (887,395 | ) |
| Net  deferred tax assets          |       | $                     | —     |   | $ | — |   |

 

Asof December 31, 2009, our net operating loss carry forwards for U.S.federal income tax purposes were $2.7 million, and were subject to thefollowing expiration schedule:

 
| **Net operating loss incurred:** | ** ** | **Amount** | ** ** | **Expiration  dates:** | ** ** |
|----------------------------------|------------|------------|------------|------------------------|------------|
| December 31,  2005          |       | 794,124    |       | 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         |       | $          | 2,704,548  |                   |       |   |
|                                  |            |            |            |                        |            |  |

 

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, 2009 and 2008, there were 20,849,481and 20,871,806 shares outstanding, respectively, net of 79,525 and 57,200shares held in treasury, respectively.

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****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, 2010.

 

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. During 2009,we repurchased an additional 22,325 shares at an average price of $0.18 pershare. Total cash consideration for the repurchased shares was $4,020. Therepurchased shares are recorded as part of treasury stock and are accounted forunder the cost method.

 

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

 

***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 789,000 shares were still available for issuance asof December 31, 2009.

 

***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.

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

***Stock Option and Warrant Activity***

 

Stockoption and warrant activity during 2009 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, 2008 |       | 10,548,810           |       | $                   | 1.51       |               | $          | 0.03                  |       | 1.78                 |       |   |   |
| Granted                              |       | —               |       | $                   | —     |               | $          | —                |       | —               |       |   |   |
| Exercised                            |       | —               |       | $                   | —     |               | $          | —                |       | —               |       |   |   |
| Canceled                             |       | (1,955,310           | )          | $                   | 0.95       |               | $          | 0.12                  |       | 0.01                 |       |   |   |
| Outstanding,  December 31, 2009 |       | 8,593,500            |       | $                   | 1.64       |               | $          | 0.01                  |       | 1.13                 |       | $ | 31,285.00 |   |
| Exercisable,  December 31, 2009 |       | 7,066,000            |       | $                   | 1.43       |               | $          | 0.01                  |       | 1.15                 |       | $ | 27,160.00 |   |

 

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, 2009 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, 2009.

 

Thefollowing table summarizes information concerning outstanding and exercisableoptions as of December 31, 2009:

 
| ** **                           | ** ** | **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                       |       | 1,818,500                             |       | 1.66                                  |       | $ | 0.24 |   | 1,791,000 |   | $ | 0.24 |   |
| $0.71  - $0.94                       |       | 775,000                               |       | 0.87                                  |       | $ | 0.83 |   | 775,000 |   | $ | 0.83 |   |
| $0.95  - $1.17                       |       | —                                |       | —                                |       | $ | — |   | — |   | $ | — |   |
| $1.18  - $3.00                       |       | 6,000,000                             |       | 1.00                                  |       | $ | 2.17 |   | 4,500,000 |   | $ | 2.00 |   |
| Total                                |       | 8,593,500                             |       | 1.13                                  |       | $ | 1.64 |   | 7,066,000 |   | $ | 1.43 |   |

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

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

 

Ourstock-based compensation cost for the years ended December 31, 2009 and2008 was $27,750 and $3,410 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,** | ** ** |
|----------------------------------------------|------------|-----------------------|------------|
| ** **                                   | ** ** | **2009**              | ** ** | **2008** | ** ** |
|                                         |       |                  |       |   |   |
| Expected  life of options from date of grant |       | N/A                   |       | 3.0  years |   |
| Risk  free interest rate                     |       | N/A                   |       | 2.5  - 2.9% |   |
| Expected  volatility                         |       | N/A                   |       | 35.9% |   |
| Assumed  dividend yield                      |       | N/A                   |       | 0.0% |   |

 

No stock options have been granted during theyear ended December 31, 2009.

 

Dividendyield is based on our historical and anticipated policy of not paying cashdividends. Expected volatility is based on the “calculated value” method setforth in ASC Topic Nos. 718 and 505 (based on historical volatilities ofappropriate industry sector indices) because our stock did not have sufficienthistoric share price data 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 ineffect at the time of grant for periods corresponding with the expected term ofthe options. The expected term of options represents the period of time thatoptions granted are expected to be outstanding giving consideration to vestingschedules.

 

Asof December 31, 2009, we have $62 of total unrecognized compensation costrelated to non-vested awards granted under our option plans, which we expect torecognize by the end of the first quarter of fiscal year 2010.

 

****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.

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

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

 
| ** **                                       | ** ** | **Year ended December 31,** | ** ** |
|--------------------------------------------------|------------|----------------------------------|------------|
| ** **                                       | ** ** | **2009**                         | ** ** | **2008** | ** ** |
| Basic:                                           |       |                             |       |   |   |
| Weighted  average shares outstanding             |       | 20,867,150                       |       | 20,624,153 |   |
|                                             |       |                             |       |   |   |
| Diluted:                                         |       |                             |       |   |   |
| Weighted  average shares outstanding             |       | 20,867,150                       |       | 20,624,153 |   |
| Weighted  average effects of dilutive securities |       | —                           |       | 56,769 |   |
| Total                                            |       | 20,867,150                       |       | 20,680,922 |   |
|                                             |       |                             |       |   |   |
| Antidilutive  securities:                        |       | 8,593,500                        |       | 10,396,310 |   |

 

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

 

In2009 and 2008, we recorded revenue of $1,231 and $2,051, respectively, from arelated party (father of Leann Saunders, a founding shareholder).

 

Aspreviously discussed in Note 4, we have unsecured debt payable to a majorshareholder who is related to Pete Lapaseotes, a director.

 

****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 our headquarters in CastleRock, Colorado. The lease is for a period of five years and can be extended foran additional five years. In addition to the primary rent, the lease requiresadditional payments for operating costs and other common area maintenancecosts. Rent expense for the years ended December 31, 2009 and 2008 was$65,321 and $76,446, respectively.

 

Futureminimum lease payments for our headquarters are as follows:

 
| **Years Ending December 31,** | ** ** | **Amount** | ** ** |
|------------------------------------|------------|------------|------------|
| 2010                               |       | 47,326     |       |
| 2011                               |       | 48,509     |       |
| 2012                               |       | 24,554     |       |
| Thereafter                         |       | —     |       |
| Total  lease commitments           |       | $          | 120,388    |   |
|                                    |            |            |            |  |

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

Wealso lease a copier machine with a base rent of $375.00 per month, or $4,500annually, which includes maintenance and all necessary copier supplies. The60-month lease expires April 2014.

 

***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.

 

***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.

 

****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, 2009 and 2008, we did not make a matchingcontribution.

 

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

 

InMay 2009, the FASB issued guidance regarding subsequent events, which wassubsequently updated in February 2010. This guidance established generalstandards of accounting for and disclosure of events that occur after thebalance sheet date but before financial statements are issued or are availableto be issued. In particular, this guidance sets forth the period after thebalance sheet date during which management of a reporting entity shouldevaluate events or transactions that may occur for potential 

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

recognitionor disclosure in the financial statements, the circumstances under which anentity should recognize events or transactions occurring after the balancesheet date in its financial statements, and the disclosures that an entityshould make about events or transactions that occurred after the balance sheetdate. This guidance was effective for financial statements issued for fiscalyears and interim periods ending after June 15, 2009, and was thereforeadopted by us for the second quarter 2009 reporting. The adoption did not havea significant impact on the subsequent events that we report, either throughrecognition or disclosure, in the financial statements. In February 2010,the FASB amended its guidance on subsequent events to remove the requirement todisclose the date through which an entity has evaluated subsequent events,alleviating conflicts with current SEC guidance. This amendment was effectiveimmediately and therefore we did not include the disclosure in this Form 10-K.

 

InJune 2009, the FASB issued SFAS No. 168, The FASB AccountingStandards Codification and the Hierarchy of Generally Accepted AccountingPrinciples (SFAS No. 168), which identifies the FASB Accounting StandardsCodification as the authoritative source of generally accepted accountingprinciples in the United States. Rules and interpretive releases of theSecurities and Exchange Commission (SEC) under federal securities laws are alsosources of authoritative generally accepted accounting principles for SECregistrants. SFAS No. 168 is effective for financial statements issued forinterim and annual periods ending after September 15, 2009. Adoption didnot have a material impact on our consolidated financial statements.

 

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.

 

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****ITEM 9.****     ****CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE****

 

None

 

****ITEM 9A.********                                           ********CONTROLS AND 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 ofcompany assets 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, 2009.

 

**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.

 

**AttestationReport 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 

 

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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, 2009, 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.********                                           ********OTHER INFORMATION****

 

None

 

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****PART III****

 

****ITEM 10.****            ****DIRECTORS, EXECUTIVE OFFICERS, CONTROLPERSONS 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       |       | 38      |       | CEO and Chairman of the  Board |
| Leann Saunders      |       | 39      |       | President                      |
| Dannette Boyd       |       | 40      |       | Chief Financial Officer        |
| Pete Lapasotes      |       | 51      |       | Director                       |
| Adam Larson         |       | 40      |       | Director                       |
| Dr. Gary Smith |       | 71      |       | Director                       |
| Robert VanSchoick   |       | 59      |       | Director                       |

 

**JohnSaunders** founded our company in 1998 and has been the chiefexecutive officer since founding. Previously, Mr. Saunders was a partnerand consultant for Pathfinder Consulting Services, Inc. in Parker,Colorado. An expert in both technology and the livestock industry, Mr. Saundersis a graduate of Yale University.

 

**LeannSaunders** joined IMI in 2003. In September 2008, Mrs. Saunderswas promoted to President. Mrs. Saunders is responsible for overseeing keycustomer relationships along with management of product development anddelivery of USVerified solutions. Prior to 2003, Mrs. Saunders worked forPM Beef Holdings, an integrated beef company, and developed a supply system forPM’s Ranch to Retail product line and managed PM’s USDA Process Verifiedprogram. She then served as the company’s Vice President of Marketing andCommunications. 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 a consultant beginning in November 2007 andaccepted responsibilities as the Chief Financial Officer in early 2008. From2004 to 2007, Ms. Boyd was the Controller for Einstein Noah RestaurantGroup. From 2001 to 2003, she served as the Assistant Controller for Vari-LCompany. Ms. Boyd’s previous experience includes financial managementpositions with KPMG Peat Marwick, DF&R Restaurant Company, and CSI/CDCCompany. Ms. Boyd is a CPA with more than 15 years of professionalexperience. She received a BBA degree in Accounting from the University ofTexas at Arlington.

 

**PeteLapaseotes** co-manages the Lapaseotes family farm and feedingoperations in Bridgeport, Nebraska. The business includes a cow calf operation,a grass cattle operation and a finish feed yard. Mr. Lapaseotes is also apartner in five John Deere dealerships and 11 The Mercantile Farm, Ranch &Home retail stores. He is a member of the board of directors of Valley Bank andTrust.

 

**AdamLarson** has been involved in the cattle feeding and ranching business since1991. During that period, he has been a member and manager of eight familyorganizations involved in cattle ranching and cattle feeding and is primarilyinvolved in cattle financing. Mr. Larson is a graduate of the Universityof Colorado.

 

**Dr. GarySmith** is a professor in the Department of Animal Science at Colorado StateUniversity, a position he has held since 1990. Dr. Smith received his PhDin Meat Science and Muscle Biology from Texas A&M 

 

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University.Dr. Smith has also taught at Washington State University, Texas A&MUniversity and FSIS-USDA National Meat Inspection Training Center. Dr. Smithis a member of multiple professional associations and societies and hasreceived numerous academic awards.

 

**RobertVan Schoick II**is president of Med-Pharmex Animal Health. Hisprevious experience includes 28 years in sales and marketing withpharmaceutical giant Merck & Co., where he served for nine years withMerial, Merck’s world leading animal health joint venture. He holds BA and MAdegrees from Austin College and a BS in Animal Science from Texas A&M.

 

**FamilyRelationships**

 

JohnSaunders and Leann Saunders are husband and wife.

 

**BoardStructure**

 

Theboard of directors held one meetings during calendar year 2009. 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,directors are reimbursed for all company travel related expenses. Equity awardswere not granted to members of our board of directors during the fiscal yearended December 31, 2009.

 

****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) formsthey file 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 31,2009 all applicable filing requirements were complied with by our executiveofficers and directors.****

 

****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.****

 

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

 

**SummaryCompensation Table**

 

Thefollowing table sets forth, for the last two completed fiscal years ended December 31,2009 and 2008, 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 two other executive officers of theCompany in all capacities in which they served:

 
| ** **               | ** ** | **Annual  Compensation** | ** ** |
|--------------------------|------------|--------------------------|------------|
| **Name and Position**    | ** ** | **Year**                 | ** ** | **Salary  ($)** | ** ** | **Bonus  ($)** | ** ** | **Other  ($)** | ** ** |
| John  Saunders           |       | 2009                     |       | 125,000 |   | — |   | — |   |
| CEO                      |       | 2008                     |       | 90,000 |   | — |   | — |   |
|                     |       |                     |       |   |   |   |   |   |   |
| Leann  Saunders          |       | 2009                     |       | 96,425 |   | — |   | — |   |
| President                |       | 2008                     |       | 91,250 |   | — |   | — |   |
|                     |       |                     |       |   |   |   |   |   |   |
| Dannette  Boyd           |       | 2009                     |       | 65,000 |   | — |   | — |   |
| Chief  Financial Officer |       | 2008                     |       | 65,000 |   | — |   | — |   |

 

**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.

 

**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 31,2009:

 
| ** **                 | ** ** | **Number  of Outstanding Options** | ** ** | **Value  of Outstanding in-the-  Money Options** | ** ** |
|----------------------------|------------|------------------------------------|------------|--------------------------------------------------|------------|
| **Name Executive Officer** | ** ** | **Exercisable  (#)**               | ** ** | **Unexercisable  (#)**                           | ** ** | **Exercise  Price** | ** ** | **Expiration  Date** | ** ** | **Exercisable  ($)** | ** ** | **Unexercisable  ($)** | ** ** |
| John  Saunders             |       | 1,500,000                          |       | —                                           |       | $ | 1.67 |   | 1/01/2011 |   | $ | — |   | $ | — |   |
|                       |       | 750,000                            |       | 750,000                                          |       | $ | 2.67 |   | 1/01/2011 |   |   |   |   |   |
| Leann  Saunders            |       | 1,500,000                          |       | —                                           |       | $ | 1.67 |   | 1/01/2011 |   | $ | — |   | $ | — |   |
|                       |       | 750,000                            |       | 750,000                                          |       | $ | 2.67 |   | 1/01/2011 |   |   |   |   |   |
| Dannette  Boyd             |       | 50,000                             |       | —                                           |       | $ | 0.24 |   | 7/7/2011 |   | $ | 500 |   | $ | — |   |

 

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****ITEM 12.****            ****SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS****

 

Thefollowing table sets forth as of March 15, 2010 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, 2010 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                                   |       | 2,429,562               | (1)           | 8.3                       | %          |
| 3310  I-40 West, Suite 100, Amarillo, TX 79102 |       |                    |          |                      |       |
| John  and Leann Saunders                            |       | 13,977,143              | (2), (3), (4) | 47.5                      | %          |
| Pete  Lapasotes                                     |       | 433,210                 | (2), (5)      | *                         |       |
| Adam  Larson                                        |       | 135,000                 | (2), (5)      | *                         |       |
| Dr. Gary  Smith                                |       | 60,000                  | (2), (5)      | *                         |       |
| Robert  VanSchoick                                  |       | 10,000                  | (2), (5)      | *                         |       |
| Dannette  Boyd                                      |       | 50,000                  | (2), (6)      | *                         |       |
| All  officers and directors as a group (7 persons)  |       | 14,665,353              |          | 49.8                      | %          |

 

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*Less than 1% beneficial ownership

 

(1)          This table is based upon informationobtained from our stock records. Unless otherwise indicated in the footnotes tothe above table and subject to community property laws where applicable, webelieve that each stockholder named in the above table has sole or sharedvoting and investment power with respect to the shares indicated asbeneficially owned.

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

(3)          John and Leann Saunders are husband andwife and own the shares as joint tenants.

(4)          Includes options to purchase 6,000,000 shares ofcommon stock which are currently exercisable or will become exercisable within60 days.

(5)          Includes options to purchase 10,000 shares of commonstock which are currently exercisable or will become exercisable within 60days.

(6)          Includes options to purchase 50,000 shares of commonstock which are currently exercisable or will become exercisable within 60days.

 

**Changeof Control**

 

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

 

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**EquityCompensation Plan Information**

 

Thefollowing table sets forth securities authorized for issuance under our equitycompensation plans as of December 31, 2009:

 
| **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:     |       |                                                                                            |       |                                                                          |       |                                                                                                      |       |
| 2006  Equity Incentive Plan                                  |       | 3,000,000                                                                                       |       | $                                                                             | 0.63       |                                                                                                      | 789,000    |   |
| 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                                                        |       | 9,922,810                                                                                       |       |                                                                          |       | 789,000                                                                                                   |       |

 

****ITEM 13.****            ****CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS AND DIRECTOR INDEPENDENCE****

 

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

 

In2009 and 2008, the Company recorded revenue of $1,231 and $2,051, respectively,from a related party (father of Leann Saunders, a founding shareholder).

 

InSeptember 2007, we obtained $300,000 in unsecured debt financing. In April 2009,an additional $50,000 was obtained under the same financing terms. The notes areheld by a major shareholder who is related to Pete Lapaseotes, a director. Thenote bears an interest rate of 9% per annum, payable quarterly. The principalbalance 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.

 

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****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, 2008 and December 31,2007 and fees billed for other services rendered by E. Randall Gruber, CPA PCduring those periods.

 
| ** **              | ** ** | **2009** | ** ** | **2008** | ** ** |
|-------------------------|------------|----------|------------|----------|------------|
| Audit  fees (1)         |       | $        | 26,500     |     | $          | 26,500 |   |
| Audit  related fees (2) |       | —   |       | —   |       |
| Tax  fees               |       | —   |       | —   |       |
|                    |       | $        | 26,500     |     | $          | 26,500 |   |

 

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(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.

 

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****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                |       | Sale of assets of  CattleNetwork, CattleStore and AgNetwork businesses to Vance Publishing  Corporation                  |   | Incorporated by reference  from Registrant’s Annual Report on Form 10-K for the year ended December  31, 2008 |
|                |       |                                                                                                                     |   |   |
| 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 |

 

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****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, 2010 | 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,  2010 |
| John  K. Saunders        |       |                         |       |                 |
|                     |       |                         |       |                 |
| /s/  Pete Lapasotes      |       | Director                     |       | March 31,  2010 |
| Pete  Lapasotes          |       |                         |       |                 |
|                     |       |                         |       |                 |
| /s/  Adam Larson         |       | Director                     |       | March 31,  2010 |
| Adam  Larson             |       |                         |       |                 |
|                     |       |                         |       |                 |
| /s/  Dr. Gary Smith |       | Director                     |       | March 31,  2010 |
| Dr. Gary  Smith     |       |                         |       |                 |
|                     |       |                         |       |                 |
| /s/  Robert VanSchoick   |       | Director                     |       | March 31,  2010 |
| Robert  VanSchoick       |       |                         |       |                 |

 

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