Table of Contents

 

 

 

**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 
| **x**  | ** ** | **QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**                                                                                                                                                            |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |       |                                                                                                                                                                                                                                                         |
|   |       | **For  the Quarterly period ended June 30, 2008**                                                                                                                                                                                                       |
|   |       |                                                                                                                                                                                                                                                         |
| **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.**

(Name of Small Business Issuer in its charter)

 

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

 

**221 Wilcox, Suite A**

**Castle Rock, CO 80104**

(Address of principal executive offices, including zip code)

 

Issuer’s telephone number, including area code:

**(303) 895-3002**

 

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

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seethe definitions of “large accelerated filer”, “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large  accelerated filer: | o | Accelerated  filer:         | o |
|---------------------------|---|-----------------------------|---|
| Non-accelerated  filer:   | o | Smaller  reporting company: | x |

 

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

 

Thenumber of shares of the registrant’s common stock, $.001 par value per share,outstanding as of July 28, 2008 was 28,620,506.

 

Transitionalsmall business disclosure format (check one):   Yes o     No x

 

 

 

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Table of Contents

 

**Integrated Management Information, Inc.**

**Table of Contents**

**June 30, 2008**

 
| **Part 1 - Financial Information** |
|-----------------------------------------|
| ** **                              | ** ** | ** ** |
| ** **                              | ** ** | **Page:** |
| Item 1.                                 | Financial  Statements: |   |
|                                    |   |   |
|                                    | Balance Sheets (unaudited), June 30, 2008 and  December 31, 2007 | 3 |
|                                    |   |   |
|                                    | Statements of Operations (unaudited), for the second  quarter and year to date periods ended June 30, 2008 and 2007 | 4 |
|                                    |   |   |
|                                    | Statements of Cash Flows (unaudited), for the year to  date periods ended June 30, 2008 and 2007 | 5 |
|                                    |   |   |
|                                    | Statements of  Stockholders’ Equity(unaudited), for the year ended December 31, 2007  and the year to date period ended March 31, 2008 | 6 |
|                                    |   |   |
|                                    | Notes to  Financial Statements | 7 |
|                                    |   |   |
| Item 2.                                 | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 19 |
|                                    |   |   |
| Item 3.                                 | Controls and  Procedures | 24 |
|                                    |   |   |
|                                    |   |   |
| **Part II  - Other Information**   |
|                                    |   |   |
| Item 1.                                 | Legal Proceedings | 25 |
|                                    |   |   |
| Item 2.                                 | Unregistered  Sales of Equity Securities and Use of Proceeds | 25 |
|                                    |   |   |
| Item 3.                                 | Defaults  upon Senior Securities | 25 |
|                                    |   |   |
| Item 4.                                 | Submission  of Matters to a Vote of Security Holders | 25 |
|                                    |   |   |
| Item 5.                                 | Other Information | 25 |
|                                    |   |   |
| Item 6.                                 | Exhibits | 30 |

 

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Table of Contents

 

**Integrated Management Information, Inc.**

**BalanceSheets**

**(Unaudited)**

 
| ** **                                                                                                                                                                            | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                            | ** ** | **2008**          | ** ** | **2007**              | ** ** |
| **Assets**                                                                                                                                                                            | ** ** | ** **        | ** ** | ** **            | ** ** |
| Current assets:                                                                                                                                                                       |       |              |       |                  |       |
| Cash and cash equivalents                                                                                                                                                             |       | $                 | 63,859     |                  | $          | 170,882 |   |
| Accounts receivable, net of allowance                                                                                                                                                 |       | 404,739           |       | 193,737               |       |
| Inventories                                                                                                                                                                           |       | 15,062            |       | 18,759                |       |
| Prepaid expenses and other current assets                                                                                                                                             |       | 19,961            |       | 43,495                |       |
| Total current assets                                                                                                                                                                  |       | 503,621           |       | 426,873               |       |
| Property and equipment, net                                                                                                                                                           |       | 71,377            |       | 54,134                |       |
| Goodwill                                                                                                                                                                              |       | 418,208           |       | 418,208               |       |
| Intangible assets, net                                                                                                                                                                |       | 21,113            |       | 28,395                |       |
| Total assets                                                                                                                                                                          |       | $                 | 1,014,319  |                  | $          | 927,610 |   |
|                                                                                                                                                                                  |       |              |       |                  |       |
| **Liabilities  and Stockholders’ Equity**                                                                                                                                        | ** ** | ** **        | ** ** | ** **            | ** ** |
| Current liabilities:                                                                                                                                                                  |       |              |       |                  |       |
| Accounts payable                                                                                                                                                                      |       | $                 | 319,140    |                  | $          | 259,103 |   |
| Accrued expenses and other current  liabilities                                                                                                                                       |       | 64,655            |       | 40,406                |       |
| Deferred revenues                                                                                                                                                                     |       | —            |       | 5,750                 |       |
| Short-term debt and current portion of  notes payable                                                                                                                                 |       | 444,000           |       | 420,000               |       |
| Total current liabilities                                                                                                                                                             |       | 827,795           |       | 725,259               |       |
| Notes payable and other long-term debt                                                                                                                                                |       | 300,000           |       | 300,000               |       |
| Commitments and contingencies                                                                                                                                                         |       |              |       |                  |       |
| 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; 28,245,506 and 28,245,506 shares issued, respectively; and  19,984,506 and 19,995,506 shares outstanding, respectively |       | 28,246            |       | 28,246                |       |
| Additional paid-in-capital                                                                                                                                                            |       | 4,709,396         |       | 4,705,679             |       |
| Treasury stock of 8,261,000 and 8,250,000  shares, respectively                                                                                                                       |       | (1,486,728        | )          | (1,485,000            | )          |
| Accumulated deficit                                                                                                                                                                   |       | (3,364,390        | )          | (3,346,574            | )          |
| Total stockholders’ equity                                                                                                                                                       |       | (113,476          | )          | (97,649               | )          |
| Total liabilities and stockholders’ deficit                                                                                                                                      |       | $                 | 1,014,319  |                  | $          | 927,610 |   |

 

The accompanying notes are an integral part of these financialstatements.

 

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**Integrated Management Information, Inc.**

**Statementsof Operations**

**(Unaudited)**

 
| ** **                                    | ** ** | **Second Quarter ended** | ** ** | **Year to Date Period ended** | ** ** |
|-----------------------------------------------|------------|------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                    | ** ** | **June 30,**                  | ** ** | **June 30,**                                 | ** ** | **June 30,** | ** ** | **June 30,** | ** ** |
| ** **                                    | ** ** | **2008**                           | ** ** | **2007**                                          | ** ** | **2008** | ** ** | **2007** | ** ** |
|                                          |       |                               |       |                                              |       |   |   |   |   |
| Revenues                                      |       | $                                  | 808,168    |                                              | $          | 529,952 |   | $ | 1,533,343 |   | $ | 1,001,267 |   |
| Costs of revenues                             |       | 377,882                            |       | 215,046                                           |       | 729,297 |   | 413,761 |   |
| Gross profit                                  |       | 430,286                            |       | 314,906                                           |       | 804,046 |   | 587,506 |   |
| Selling, general and administrative  expenses |       | 374,333                            |       | 517,808                                           |       | 796,900 |   | 1,075,660 |   |
| Income (loss) from operations                 |       | 55,953                             |       | (202,902                                          | )          | 7,146 |   | (488,154 | ) |
| Other expense (income):                       |       |                               |       |                                              |       |   |   |   |   |
| Interest expense                              |       | 13,334                             |       | 7,740                                             |       | 26,222 |   | 14,863 |   |
| Other income, net                             |       | (115                               | )          | (1,085                                            | )          | (1,260 | ) | (2,779 | ) |
| Income (loss) before income taxes             |       | 42,734                             |       | (209,557                                          | )          | (17,816 | ) | (500,238 | ) |
| Income taxes                                  |       | —                             |       | —                                            |       | — |   | — |   |
| Net income (loss)                             |       | $                                  | 42,734     |                                              | $          | (209,557 | ) | $ | (17,816 | ) | $ | (500,238 | ) |
|                                          |       |                               |       |                                              |       |   |   |   |   |
| Net income (loss) per share:                  |       |                               |       |                                              |       |   |   |   |   |
| Basic                                         |       | $                                  | 0.00       |                                              | $          | (0.01 | ) | $ | (0.00 | ) | $ | (0.03 | ) |
| Diluted                                       |       | $                                  | 0.00       |                                              | $          | (0.01 | ) | $ | (0.00 | ) | $ | (0.03 | ) |
|                                          |       |                               |       |                                              |       |   |   |   |   |
| Weighted average shares outstanding:          |       |                               |       |                                              |       |   |   |   |   |
| Basic                                         |       | 19,984,506                         |       | 19,328,839                                        |       | 19,988,797 |   | 19,189,950 |   |
| Diluted                                       |       | 20,047,389                         |       | 19,328,839                                        |       | 19,988,797 |   | 19,189,950 |   |

 

The accompanying notes are an integral part of these financialstatements.

 

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**Integrated Management Information, Inc.**

**Statementsof Cash Flows**

**(Unaudited)**

 
| ** **                                                                       | ** ** | **Year to Date Period ended June 30,** | ** ** |
|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                                                                       | ** ** | **2008**                                                             | ** ** | **2007** | ** ** |
| Operating activities:                                                            |       |                                                                 |       |   |   |
| Net income (loss)                                                                |       | $                                                                    | (17,816    | ) | $ | (500,238 | ) |
| Adjustments to reconcile net loss to net  cash provided by operating activities: |       |                                                                 |       |   |   |
| Depreciation and amorization                                                     |       | 24,270                                                               |       | 15,930 |   |
| Stock based compensation expense                                                 |       | 3,717                                                                |       | 35,215 |   |
| Provision for doubtful accounts                                                  |       | 1,000                                                                |       | 16,595 |   |
| Changes in assets and liabilities:                                               |       |                                                                 |       |   |   |
| Accounts receivable                                                              |       | (212,002                                                             | )          | 22,215 |   |
| Inventories                                                                      |       | 3,697                                                                |       | (8,059 | ) |
| Prepaid expenses and other current assets                                        |       | 23,534                                                               |       | 7,046 |   |
| Accounts payable                                                                 |       | 60,037                                                               |       | 4,409 |   |
| Accrued expenses and other current  liabilities                                  |       | 24,249                                                               |       | 6,346 |   |
| Deferred revenue                                                                 |       | (5,750                                                               | )          | 20,538 |   |
| Net cash used in operating activites                                             |       | (95,064                                                              | )          | (380,003 | ) |
|                                                                             |       |                                                                 |       |   |   |
| Investing activities:                                                            |       |                                                                 |       |   |   |
| Acquisition of property and equipment                                            |       | (34,731                                                              | )          | (14,245 | ) |
| Proceeds from sale of assets                                                     |       | 500                                                                  |       | — |   |
| Net cash used in investing activities                                            |       | (34,231                                                              | )          | (14,245 | ) |
|                                                                             |       |                                                                 |       |   |   |
| Financing activities:                                                            |       |                                                                 |       |   |   |
| Proceeds from line of credit, net                                                |       | 24,000                                                               |       | — |   |
| Proceeds from issuance of common stock                                           |       | —                                                               |       | 250,000 |   |
| Stock repurchase under Buyback Program                                           |       | (1,728                                                               | )          | — |   |
| Net cash provided by financing activities                                        |       | 22,272                                                               |       | 250,000 |   |
| Net change in cash and cash equivalents                                          |       | (107,023                                                             | )          | (144,248 | ) |
| Cash and cash equivalents at beginning of  year                                  |       | 170,882                                                              |       | 230,539 |   |
| Cash and cash equivalents at end of year                                         |       | $                                                                    | 63,859     |   | $ | 86,291 |   |

 

The accompanying notes are an integral part of these financialstatements.

 

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**Integrated Management Information, Inc.**

**Statementsof Stockholders’ Equity**

**(Unaudited)**

 
| ** **                                                                        | ** ** | **Common Stock** | ** ** | **Additional  Paid-in** | ** ** | **Retained** | ** ** | **Treasury** | ** ** | ** ** | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------------------|------------|-------------------------|------------|--------------|------------|--------------|------------|------------|------------|
| ** **                                                                        | ** ** | **Shares**            | ** ** | **Amount**              | ** ** | **Capital**  | ** ** | **Deficit**  | ** ** | **Stock**  | ** ** | **Total** | ** ** |
| Balance at December 31, 2006                                                 |       | 27,023,283            |       | 27,024                  |       | 4,315,571    |       | (2,587,014   | )          | (1,485,000 | )          | 270,581 |   |
|                                                                              |       |                  |       |                    |       |         |       |         |       |       |       |   |   |
| Issuance of common stock in connection with  a private placement in February 2007 |       | 555,556               |       | 555                     |       | 249,445      |       |         |       |       |       | 250,000 |   |
| Issuance of common stock in connection with  a private placement in August 2007   |       | 666,667               |       | 667                     |       | 99,333       |       |         |       |       |       | 100,000 |   |
| Stock-based compensation expense                                                  |       |                  |       |                    |       | 41,330       |       |         |       |       |       | 41,330 |   |
| Net loss                                                                          |       | —                |       | —                  |       | —       |       | (759,560     | )          | —     |       | (759,560 | ) |
| Balance at December 31, 2007                                                 |       | 28,245,506            |       | $                       | 28,246     |         | $          | 4,705,679    |       | $          | (3,346,574 | ) | $ | (1,485,000 | ) | $ | (97,649 | ) |
|                                                                              |       |                  |       |                    |       |         |       |         |       |       |       | — |   |
| Stock repurchase of 11,000 shares on the  open market                             |       |                  |       |                    |       |         |       |         |       | (1,728     | )          | (1,728 | ) |
| Stock-based compensation expense                                                  |       |                  |       |                    |       | 3,717        |       |         |       |       |       | 3,717 |   |
| Net loss                                                                          |       | —                |       | —                  |       | —       |       | (17,816      | )          | —     |       | (17,816 | ) |
| Balance at June 30, 2008                                                     |       | 28,245,506            |       | $                       | 28,246     |         | $          | 4,709,396    |       | $          | (3,364,390 | ) | $ | (1,486,728 | ) | $ | (113,476 | ) |

 

The accompanying notes are an integral part of these financialstatements.

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

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

 

****BusinessDescription****

 

IntegratedManagement Information, Inc. (“IMI Global,” “IMI,” or the “Company”)provides livestock tracking and herd management software database applications,consulting services, verification solutions for the livestock and meat industryand maintains an internet portal dedicated to news, trends, and products in theagricultural industry.

 

IMIGlobal stands at the forefront of a rapidly evolving movement to tracklivestock and verify sources of beef and other livestock products. In theaftermath of the discovery of the first case of mad cow disease in the UnitedStates in December, 2003, many of the largest U.S. beef and other livestockexport markets were closed resulting in significant losses to the industry. Inresponse to the crisis, several initiatives were enacted to facilitate thereopening of key export markets. Most notably, U.S. suppliers seeking to sellbeef and other livestock products to other countries must participate in apre-approved Quality System Assessment Program so as to have an approved meansof verifying specific product requirements. With the introduction of theUSVerified Source and Age Verification system in 2005, 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.

 

****Basisof Presentation****

 

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

 

**RecentAccounting Pronouncements**

 

InFebruary 2008, the Financial Accounting Standards Board (“FASB”) issuedFASB Staff Position (“FSP”) No. FAS 157-2, “Effective Date of FASBStatement No. 157” (“FSP FAS 157-2”), which delays the effective date ofStatement of Financial Accounting Standards (“SFAS”) No. 157, “Fair ValueMeasurements” (“SFAS 157”) for all non-financial assets and non-financialliabilities, except those that are recognized or disclosed at fair value in thefinancial statements on a recurring basis (at least annually) for fiscal yearsbeginning after November 15, 2008, and interim periods within those fiscalyears for items within the scope of this FSP. We are currently evaluating theimpact of adopting FSP FAS 157-2 for non-financial assets and non-financialliabilities on our financial position, cash flows, and results of operations.

 

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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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****Note2 - Basic and Diluted Income (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 obtained therebywere used to purchase common stock at the average market price during theperiod. Weighted average number of shares used to compute basic and dilutedloss per share is the same in these financial statements since the effect ofdilutive securities is anti-dilutive.

 

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

 
| ** **                                       | ** ** | **Second Quarter ended** | ** ** | **Year to Date Period ended** | ** ** |
|--------------------------------------------------|------------|------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                       | ** ** | **June 30,**                  | ** ** | **June 30,**                                 | ** ** | **June 30,** | ** ** | **June 30,** | ** ** |
| ** **                                       | ** ** | **2008**                           | ** ** | **2007**                                          | ** ** | **2008** | ** ** | **2007** | ** ** |
| Basic:                                           |       |                               |       |                                              |       |   |   |   |   |
| Weighted average shares outstanding              |       | 19,984,506                         |       | 19,328,839                                        |       | 19,988,797 |   | 19,189,950 |   |
|                                             |       |                               |       |                                              |       |   |   |   |   |
| Diluted:                                         |       |                               |       |                                              |       |   |   |   |   |
| Weighted average shares outstanding              |       | 19,984,506                         |       | 19,328,839                                        |       | 19,988,797 |   | 19,189,950 |   |
| Weighted average effects of dilutive  securities |       |                               |       |                                              |       |   |   |   |   |
| Stock options under Plans                        |       | 62,883                             |       | —                                            |       | — |   | — |   |
| Stock options granted to Founders                |       | —                             |       | —                                            |       | — |   | — |   |
| Warrants                                         |       | —                             |       | —                                            |       | — |   | — |   |
| Total                                            |       | 20,047,389                         |       | 19,328,839                                        |       | 19,988,797 |   | 19,189,950 |   |
|                                             |       |                               |       |                                              |       |   |   |   |   |
| Antidilutive securities:                         |       |                               |       |                                              |       |   |   |   |   |
| Stock options under Plans                        |       | 3,487,500                          |       | 3,487,500                                         |       | 3,742,500 |   | 3,487,500 |   |
| Stock options granted to Founders                |       | 6,000,000                          |       | 6,000,000                                         |       | 6,000,000 |   | 6,000,000 |   |
| Warrants                                         |       | 922,810                            |       | 922,810                                           |       | 922,810 |   | 922,810 |   |
| Total                                            |       | 10,410,310                         |       | 10,410,310                                        |       | 10,665,310 |   | 10,410,310 |   |

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****Note3 - Stock-Based Compensation****

 

Ourstock based award plans (collectively referred to as the “Plans”) provide forthe issuance of stock-based awards to employees, officers, directors andconsultants. The Plans permit the granting of stock awards and stockoptions.  The vesting of stock-basedawards is generally subject to meeting certain performance based objectives,the passage of time or a combination of both, and continued employment throughthe vesting period. Stock option activity under our Plans is summarized asfollows:

 
| ** **                          | ** ** | ** **          | ** ** | **Weighted Avg.**  | ** ** |
|-------------------------------------|------------|---------------------|------------|-------------------------|------------|
| ** **                          | ** ** | **Number**          | ** ** | **Exercise Price** | ** ** |
| ** **                          | ** ** | **of Options** | ** ** | **per Share**      | ** ** |
|                                |       |                |       |                    |       |
| Outstanding, December 31, 2007 |       | 3,657,500           |       | $                       | 0.78       |   |
| Granted                             |       | 85,000              |       | $                       | 0.10       |   |
| Exercised                           |       | —              |       | $                       | —     |   |
| Forfeited                           |       | —              |       | $                       | —     |   |
| Outstanding, June 30, 2008     |       | 3,742,500           |       | $                       | 0.77       |   |
| Exercisable, June 30, 2008     |       | 3,487,500           |       | $                       | 0.81       |   |

 

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

 
| ** **                                  | ** ** | **For the Year to Date Period ended** | ** ** |
|---------------------------------------------|------------|---------------------------------------------------------------------|------------|
| ** **                                  | ** ** | **June 30,**                                                   | ** ** | **June 30,** | ** ** |
| ** **                                  | ** ** | **2008**                                                            | ** ** | **2007** | ** ** |
|                                        |       |                                                                |       |   |   |
| Expected life of options from date of grant |       | 3.0 years                                                           |       | 1.5 - 2.3 years |   |
| Risk free interest rate                     |       | 2.5                                                                 | %          | 4.7 | % |
| Expected volatility                         |       | 35.9                                                                | %          | 35.9 | % |
| Assumed dividend yield                      |       | 0.0                                                                 | %          | 0.0 | % |

 

Nostock options were granted during the second quarters ended June 30, 2008and June 30, 2007.

 

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

 

Ourstock-based compensation cost for the second quarters ended June 30, 2008and 2007 was $884 and $14,427, respectively, and has been included in generaland administrative expenses. Stock-based compensation cost for the year to dateperiods ended June 30, 2008 and 2007 was $3,717 and $35,215, respectively.No tax benefits were recognized for these costs due to our cumulative losses aswell as a full valuation reserve on our deferred tax assets.

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

**Note 4- 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. As of June 30, 2008, we repurchased 11,000 shares at an averageprice of $0.16 per share. Total cash consideration for the repurchased shareswas $1,728. The repurchased shares are recorded as part of treasury stock andare accounted for under the cost method.

 

****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 June 30, 2008 and 2007, we believe it is more likelythan not that our net deferred tax asset will not be realized and accordinglywe have recorded 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 a full year, we willreview qualitative and quantitative data, including events within our industry,the nature of our business, our future forecasts and historical trending. If weconclude that our prospects for the realization of our deferred tax assets aremore likely than not, we will then reduce our valuation allowance asappropriate and credit income tax expense after considering the followingfactors:

 

·                  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.

 

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

 

10

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****Note6 - Notes Payable****

 

Notespayable consist of the following:

 
| ** **                                                      | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                      | ** ** | **2008**          | ** ** | **2007**              | ** ** |
|                                                            |       |              |       |                  |       |
| Platte Valley Line of Credit                                    |       | $                 | 94,000     |                  | $          | 70,000 |   |
| Cattlefeeding.com Note                                          |       | 350,000           |       | 350,000               |       |
| Lapaesotes Note Payable                                         |       | 300,000           |       | 300,000               |       |
|                                                            |       | $                 | 744,000    |                  | $          | 720,000 |   |
| Less current portion of notes payable and other  long-term debt |       | 444,000           |       | 420,000               |       |
| Notes payable and other long-term debt                          |       | $                 | 300,000    |                  | $          | 300,000 |   |

 

**PlatteValley Line of Credit**

 

DuringApril 2008, ****our line of credit****with Platte Valley Bank****was increased from$75,000 to $125,000.****The line of credit is securedby the personal guarantees of our two founding shareholders and the accountsreceivable of the company. Interest is payable monthly based on the prime ratewith a floor and ceiling cap of 6.75% and 13.75%, respectively. As of June 30,2008 our interest rate was at 6.75%. Our line of credit expires September 25,2008 and as of June 30, 2008, we had remaining availability of $31,000.

 

**Cattlefeeding.comNote**

 

Inconnection with the 2005 acquisition of the assets of Cattlefeeding.com, weissued a note payable to Cattlefeeding.com, Inc. in the amount of$350,000. Under the Note, interest in the amount of 5% of outstanding principalis payable on a monthly basis, with all outstanding principal and interestpayable on June 12, 2008. In June 2008, the maturity of the note wasextended until July 15, 2008. Concurrent with the closing of the assetsale on July 15, 2008 as further described in Note 10, $350,000 of theproceeds was used to pay the Cattlefeeding.com note payable in full.

 

**LapaseotesNote Payable**

 

InSeptember 2007, we obtained $300,000 in unsecured debt financing. The$300,000 note held by a major shareholder, bears an interest rate of 9% perannum, payable quarterly. The principal balance is due on September 12,2011. Proceeds from the Note were used to pay down certain amounts outstandingunder the Platte Valley Bank line of credit.

 

****Note7 - Related Party Transactions****

 

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

 

****Duringthe third quarter of 2008, we completed a private placement with two of ourboard members for our common stock and issued 375,000 shares of our commonstock at $0.20 per share, netting total consideration of $75,000.****

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****Note8 - Commitments and Contingencies****

 

**OperatingLeases**

 

InJune 2006, we entered into a building lease for our new headquarters inCastle Rock, Colorado. The lease is for a period of five years and can beextended for an additional five years. We also lease a facility in Platte City,Missouri on a month-to-month basis at a monthly rate of $1,550. In addition tothe primary rent, both leases require additional payments for operating costsand other common area maintenance costs.

 

Asof June 30, 2008, the annual primary lease payments are as follows:

 
| **Years Ending December 31,** | ** ** | **Amount** | ** ** |
|----------------------------------------------|------------|------------|------------|
| 2008                                         |       | $          | 22,801     |   |
| 2009                                         |       | 46,171     |       |
| 2010                                         |       | 47,326     |       |
| 2011                                         |       | 48,509     |       |
| 2012                                         |       | 24,554     |       |
| Thereafter                                   |       | —     |       |
| Total lease commitments                      |       | $          | 189,361    |   |

 

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

 

**Contracts**

 

EffectiveOctober 1, 2006, we entered into a six month contract with Pfeiffer HighInvestor Relations which requires a fee of $4,000 per month.

 

**EmploymentAgreements**

 

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.

 

InFebruary 2007, we entered into an employment contract with Rob Streight asour Chief Operating Officer for an annual salary of $150,000 subject to annualperformance review adjustments. The agreement automatically renews annuallyunless a 60-day notice of non-renewal is provided by either the Company or theemployee.

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

**Legalproceedings**

 

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.

 

**Other**

 

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

 

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

 

IMIGlobal supports Born & Raised in the USA in its decision to defend itstrademarked labeling, believing that the trademarks were legally issued and arefully enforceable.  IMI Global continuesto market the label and verification program and has expressed its desire towork closely with Tyson Foods on this program.

 

****Note9 - 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 the performanceof each of our revenue streams focusing on third party verification solutionscompared with prior periods and our operating plan. Based on the continuedsales growth and ****overall improvement in our performance, we believe that we will achieveprofitability for the year ended December 31, 2008. The culmination of allour efforts toward profitability has recently brought significant opportunitiesto us such as the increase of our line of credit from $75,000 to $125,000,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.****

 

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**Integrated Management Information, Inc.**

**Notes to the Financial Statements**

 

****Note10 – Subsequent Event****

 

****On July 15,2008, we completed the sale (the “asset sale”) of three wholly-owned onlinebusinesses – CattleNetwork, CattleStore and AgNetwork – to Vance PublishingCorp. (“Vance”), a privately held provider of print and electronic media with astrong presence in the agricultural industry. The transaction, valued at approximately $2.1 million, included $800,000in cash at closing and $1.3 million in prepaid advertising placements in Vance’sindustry leading publications, including Drover’s, Pork, Bovine Veterinarianand Dairy Herd Management. Vance has also contracted with us to provide networkmaintenance and support for the websites as part of a separate supportagreement. In addition, Vance has agreed to open negotiations on another IMIGlobal product, AgTraderIndex (www.AgTraderIndex.com).****

 

****Thewholly-owned online businesses were considered significant revenue streams;however, they historically have not contributed materially to gross profit. Wesold the assets at a substantial premium to the original purchase in 2005. Weexpect to record a gain on sale of approximately $350,000 during the thirdquarter of 2008. The advertising rights will be accounted for as a gaincontingency as it involves uncertainties as to the possible gain that will beultimately realized. The advertising rights are not assignable or resalable,therefore the fair market value is not determinable until such time asadvertising actually occurs.****

 

****Inconnection with the closing of the asset sale, $350,000 of the proceeds wasused to pay the Cattlefeeding.com note payable in full. The remaining proceedswill be used to fund working capital needs.****

 

****Note11 – Pro Forma Financial Statement Information****

 

****Thefollowing unaudited pro forma condensed balance sheet information as of June 30,2008 has been presented to give effect to the asset sale as if it had occurredon June 30, 2008. The unaudited pro forma condensed statement ofoperations information for the year ended December 31, 2007 and for thesix months ended June 30, 2008 set forth below has been presented aftergiving effect to the asset sale as if it had occurred on January 1, 2007,and does not include the nonrecurring pro forma gain as a result of the assetsale.****

 

****Theunaudited pro forma financial statement information has been derived primarilyfrom the historical audited financial statements of the Company included in itsAnnual Report on Form 10-KSB for the year ended December 31, 2007 andunaudited financial statements of the Company for the six month period ended June 30,2008 included in this Quarterly Report. The unaudited pro forma financialstatement information is based upon available information and assumptions thatwe believe are reasonable under the circumstances and were prepared toillustrate the estimated effects of the asset sale.****

 

****Theunaudited pro forma financial statement information has been provided forinformational purposes and should not be considered indicative of the financialcondition or the results of operations that would have been achieved had theasset sale occurred as of the periods presented. In addition, the unaudited proforma financial statement information does not purport to indicate balancesheet data or results of operations as of any future date or any future period.The unaudited pro forma financial statement information should be read inconjunction with the historical financial statements, including the notesthereto, of the Company included in its Annual Reports on Form 10-KSB forthe year ended December 31, 2007 and this Quarterly Report for the periodended June 30, 2008.****

 

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**Integrated Management Information, Inc.**

**Pro Forma Condensed Balance Sheet Information**

**As of June 30, 2008 (Unaudited)**

 
| ** **                                                                                                                                                                            | ** ** | ** **     | ** ** | **Business to be** | ** ** | **Pro Forma** | ** ** | ** ** | ** **         | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------|------------|------------------------------|------------|--------------------|------------|------------|--------------------|------------|
| ** **                                                                                                                                                                            | ** ** | **Historical** | ** ** | **disposed (a)**        | ** ** | **Adjustments**    | ** ** | ** ** | **Pro Forma** | ** ** |
| **Assets**                                                                                                                                                                            | ** ** | ** **     | ** ** | ** **                   | ** ** | ** **         | ** ** | ** ** | ** **         | ** ** |
| Current assets:                                                                                                                                                                       |       |           |       |                         |       |               |       |       |               |       |
| Cash and cash equivalents                                                                                                                                                             |       | $              | 63,859     |                         | $          | —             |       | $          | 356,000            |       | (b)(c) | $ | 419,859 |   |
| Accounts receivable, net of allowance                                                                                                                                                 |       | 404,739        |       | —                       |       | —             |       |       | 404,739            |       |
| Inventories                                                                                                                                                                           |       | 15,062         |       | —                       |       | —             |       |       | 15,062             |       |
| Prepaid expenses and other current assets                                                                                                                                             |       | 19,961         |       | —                       |       |               |       | (b)        | 19,961             |       |
| Total current assets                                                                                                                                                                  |       | 503,621        |       | —                       |       | 1,638,000          |       |       | 859,621            |       |
| Property and equipment, net                                                                                                                                                           |       | 71,377         |       | 2,400                        |       | —             |       |       | 68,977             |       |
| Goodwill                                                                                                                                                                              |       | 418,208        |       | 418,208                      |       | —             |       |       | —             |       |
| Intangible assets, net                                                                                                                                                                |       | 21,113         |       | 21,113                       |       | —             |       |       | —             |       |
| Total assets                                                                                                                                                                          |       | $              | 1,014,319  |                         | $          | 441,721            |       | $          | 1,638,000          |       |   | $ | 928,598 |   |
|                                                                                                                                                                                  |       |           |       |                         |       |               |       |       |               |       |
| **Liabilities and Stockholders’ Equity**                                                                                                                                         | ** ** | ** **     | ** ** | ** **                   | ** ** | ** **         | ** ** | ** ** | ** **         | ** ** |
| Current liabilities:                                                                                                                                                                  |       |           |       |                         |       |               |       |       |               |       |
| Accounts payable                                                                                                                                                                      |       | $              | 319,140    |                         | $          | —             |       | $          | —             |       |   | $ | 319,140 |   |
| Accrued expenses and other current  liabilities                                                                                                                                       |       | 64,655         |       | —                       |       | 10,000             |       | (d)        | 74,655             |       |
| Deferred revenues                                                                                                                                                                     |       | —         |       | —                       |       | —             |       |       | —             |       |
| Short-term debt and current portion of  notes payable                                                                                                                                 |       | 444,000        |       | —                       |       | (444,000           | )          | (c)        | —             |       |
| Total current liabilities                                                                                                                                                             |       | 827,795        |       | —                       |       | (434,000           | )          |       | 393,795            |       |
| Notes payable and other long-term debt                                                                                                                                                |       | 300,000        |       | —                       |       | —             |       |       | 300,000            |       |
|                                                                                                                                                                                  |       |           |       |                         |       |               |       |       |               |       |
| Stockholders equity:                                                                                                                                                                  |       |           |       |                         |       |               |       |       |               |       |
| Net assets disposed of                                                                                                                                                                |       | —         |       | 441,721                      |       | 441,721            |       |       | —             |       |
| 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; 28,245,506 and 28,245,506 shares issued, respectively; and  19,984,506 and 19,995,506 shares outstanding, respectively |       | 28,246         |       | —                       |       | —             |       |       | 28,246             |       |
| Additional paid-in-capital                                                                                                                                                            |       | 4,709,396      |       | —                       |       | —             |       |       | 4,709,396          |       |
| Treasury stock of 8,261,000 and 8,250,000  shares, respectively                                                                                                                       |       | (1,486,728     | )          | —                       |       | —             |       |       | (1,486,728         | )          |
| Accumulated deficit                                                                                                                                                                   |       | (3,364,390     | )          | —                       |       | 348,279            |       | (e)        | (3,016,111         | )          |
| Total stockholders’ equity                                                                                                                                                       |       | (113,476       | )          | 441,721                      |       | 2,072,000          |       |       | 234,803            |       |
| Total liabilities and stockholders’ deficit                                                                                                                                      |       | $              | 1,014,319  |                         | $          | 441,721            |       | $          | 1,638,000          |       |   | $ | 928,598 |   |

 

See accompanying notes to the unaudited Pro Forma Financial Information

**** ****

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**** ****

**Integrated Management Information, Inc.**

**Pro Forma Condensed Statement of Income**

**(Unaudited)**

 
| ** **                                    | ** ** | **Year to Date Period ended June 30, 2008** | ** ** |
|-----------------------------------------------|------------|--------------------------------------------------------------------------------|------------|
| ** **                                    | ** ** | ** **                                                                     | ** ** | **Business to be** | ** ** | ** ** | ** ** | **Pro Forma** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                    | ** ** | **Historical**                                                                 | ** ** | **disposed** | ** ** | ** ** | ** ** | **Adjustments** | ** ** | ** ** | ** ** | **Pro Forma** | ** ** |
|                                          |       |                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Revenues                                      |       | $                                                                              | 1,533,343  |   | $ | 361,007 |   |   |   | $ | — |   | (f) |   | $ | 1,172,336 |   |
| Costs of revenues                             |       | 729,297                                                                        |       | 304,194 |   |   |   | — |   |   |   | 425,103 |   |
| Gross profit                                  |       | 804,046                                                                        |       | 56,813 |   |   |   | — |   |   |   | 747,233 |   |
| Selling, general and administrative  expenses |       | 796,900                                                                        |       | 66,583 |   |   |   | (18,000 | ) | (f) (g) |   | 712,318 |   |
| Income (loss) from operations                 |       | 7,146                                                                          |       | (9,770 | ) |   |   | 18,000 |   |   |   | 34,916 |   |
| Other expense (income):                       |       |                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Interest expense                              |       | 26,222                                                                         |       | 8,750 |   |   |   | — |   |   |   | 17,472 |   |
| Other income, net                             |       | (1,260                                                                         | )          | — |   |   |   | — |   |   |   | (1,260 | ) |
| Income (loss) before income taxes             |       | (17,816                                                                        | )          | (18,520 | ) |   |   | 18,000 |   |   |   | 18,704 |   |
| Income taxes                                  |       | —                                                                         |       | — |   | (h) |   | — |   |   |   | — |   |
| Net income (loss)                             |       | $                                                                              | (17,816    | ) | $ | (18,520 | ) |   |   | $ | 18,000 |   |   |   | $ | 18,704 |   |
|                                          |       |                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per share:                  |       |                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Basic                                         |       | $                                                                              | (0.00      | ) |   |   |   |   |   |   |   |   | $ | 0.00 |   |
| Diluted                                       |       | $                                                                              | (0.00      | ) |   |   |   |   |   |   |   |   | $ | 0.00 |   |
|                                          |       |                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding:          |       |                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Basic                                         |       | 19,988,797                                                                     |       |   |   |   |   |   |   |   |   | 19,988,797 |   |
| Diluted                                       |       | 19,988,797                                                                     |       |   |   |   |   |   |   |   |   | 19,988,797 |   |

 

See accompanying notes to the unaudited Pro Forma Financial Information

**** ****

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**** ****

**Integrated Management Information, Inc.**

**Pro Forma Condensed Statement of Income**

**(Unaudited)**

 
| ** **                                    | ** ** | **Year ended December 31, 2007** | ** ** |
|-----------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                    | ** ** | ** **                                           | ** ** | **Business to be** | ** ** | **Pro Forma** | ** ** | ** ** | ** ** |
| ** **                                    | ** ** | **Historical**                                       | ** ** | **disposed** | ** ** | **Adjustments** | ** ** | ** ** | **Pro Forma** | ** ** |
|                                          |       |                                                 |       |   |   |   |   |   |   |   |
| Revenues                                      |       | $                                                    | 2,307,808  |   | $ | 658,730 |   | $ | — |   | (f) | $ | 1,649,078 |   |
| Costs of revenues                             |       | 968,475                                              |       | 538,772 |   | — |   |   | 429,703 |   |
| Gross profit                                  |       | 1,339,333                                            |       | 119,958 |   | — |   |   | 1,219,375 |   |
| Selling, general and administrative  expenses |       | 2,069,770                                            |       | 141,248 |   | (36,000 | ) | (f) (g) | 1,892,522 |   |
| Income (loss) from operations                 |       | (730,437                                             | )          | (21,290 | ) | 36,000 |   |   | (673,147 | ) |
| Other expense (income):                       |       |                                                 |       |   |   |   |   |   |   |   |
| Interest expense                              |       | 36,444                                               |       | 17,500 |   | — |   |   | 18,944 |   |
| Other income, net                             |       | (7,321                                               | )          | — |   | — |   |   | (7,321 | ) |
| Income (loss) before income taxes             |       | (759,560                                             | )          | (38,790 | ) | 36,000 |   |   | (684,770 | ) |
| Income taxes                                  |       | —                                               |       | — | (h) | — |   |   | — |   |
| Net income (loss)                             |       | $                                                    | (759,560   | ) | $ | (38,790 | ) | $ | 36,000 |   |   | $ | (684,770 | ) |
|                                          |       |                                                 |       |   |   |   |   |   |   |   |
| Net income (loss) per share:                  |       |                                                 |       |   |   |   |   |   |   |   |
| Basic                                         |       | $                                                    | (0.04      | ) |   |   |   |   |   | $ | (0.04 | ) |
| Diluted                                       |       | $                                                    | (0.04      | ) |   |   |   |   |   | $ | (0.04 | ) |
|                                          |       |                                                 |       |   |   |   |   |   |   |   |
| Weighted average shares outstanding:          |       |                                                 |       |   |   |   |   |   |   |   |
| Basic                                         |       | 19,512,401                                           |       |   |   |   |   |   | 19,512,401 |   |
| Diluted                                       |       | 19,512,401                                           |       |   |   |   |   |   | 19,512,401 |   |

 

See accompanying notes to the unaudited Pro Forma Financial Information

 

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----

****Notesto Unaudited Pro Forma Financial Information****

 

(a)          To reflect elimination of assets sold in connection with threewholly-owned online businesses based on the balances recorded as of June 30,2008.

 

(b)         To reflect consideration received from the sale of assets for $800,000in cash. Consideration received also included approximately $1.3 million inprepaid advertising rights.  Theadvertising rights will be accounted for as a gain contingency as it involvesuncertainties as to the possible gain that will be ultimately realized. Theadvertising rights are not assignable or resalable, therefore the fair marketvalue is not determinable until such time as advertising actually occurs. 

 

(c)          To reflect full payment of the outstanding $350,000 Cattlefeeding.comnote payable and to repay amounts outstanding under our line of credit therebyreleasing the collateral; settled concurrently with the closing of the asset sale.

 

(d)         To reflect estimated transaction and other costs directly attributableto the asset sale.

 

(e)          To reflect the estimated pro forma gain from the asset sale based onthe carrying values of the assets sold on an assumed closing date of June 30,2008. The actual gain will differ slightly from the carrying value of theassets sold based on the actual closing date of July 15, 2008.

 

(f)            Amortizationof prepaid advertising rights will be based on actual timing of usage and isconsidered a non-cash expense. Historically we have not advertised. Under theadvertising arrangement we have the right to decide when, how and if theadvertising occurs, within various time limits. Accordingly, no estimates havebeen provided to indicate the future sales (and the related advertisingexpenses) that we may realize as a result of the advertising arrangement.

 

(g)         To reflect a reduction in salaries expenses of $3,000 per month asprovided by under the service support agreement.

 

(h)         As a result of the Company’s operating losses in prior year’s andvaluation allowances on the Company’s deferred tax assets, no income taxexpense is attributable to the period presented.

 

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**** ****

****ITEM 2.**** ****MANAGEMENT’S DISCUSSION AND ANALYSIS****

 

****BusinessOverview****

 

Weare a recognized leader providing third-party verification and communicationsolutions for the agriculture industry. We also maintain internet websitesdedicated to publishing news and trends in the agricultural and food industriesand marketing products. To our customers, we provide our owned and operatedonline 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. To our advertisers, we provide arange of tools and marketing solutions designed to enable businesses to reachour customers.

 

**2008Performance Highlights**

 
| Revenues                |   | Our  revenues for the second quarter 2008 increased approximately 53% to $808,168  compared to revenue of $529,952 during second quarter 2007. We experienced  significant growth in consulting, program development and web based  development services in connection with our third party verification  programs.                                                                                                                                                                           |
|-------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Income  from Operations |   | During  the second quarter 2008, we recorded income from operations of $55,953  primarily due to the absorption of fixed overhead over a greater sales base  primarily generated by our USVerified identification and verification  solutions. Prior to second quarter 2008, we have historically recorded a loss  from operations.                                                                                                                                                           |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Net  Income             |   | For  the first time in our history, we recorded net income of $42,734 during the  second quarter 2008.                                                                                                                                                                                                                                                                                                                                                                                        |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Asset  Sale             |   | On  July 15, 2008, we completed an asset sale of three wholly-owned online  businesses – CattleNetwork, CattleStore and AgNetwork – to Vance Publishing  Corp. The transaction, valued at approximately $2.1 million, included  $800,000 in cash at closing and $1.3 million in prepaid advertising  placements. The wholly-owned online businesses were considered significant  revenue streams; however, they historically have not contributed materially  to gross profit. |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Debt  Repayment         |   | In  connection with the closing of the asset sale, $350,000 of the proceeds was  used to pay the Cattlefeeding.com note payable in full.                                                                                                                                                                                                                                                                                                                                                      |

 

 

****Liquidityand Capital Resources****

 

AtJune 30, 2008, we had cash and cash equivalents of $63,859 and a workingcapital deficit of $324,174 compared to $170,882 of cash and cash equivalentsand a working capital deficit of $298,386 at December 31, 2007.

 

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Netcash used by operating activities during the year to date period ended June 30,2008 was $95,064 compared to $380,003 used by operating activities during thesame period in 2007. Cash used by operating activities is driven by our netloss and adjusted by non-cash items. Non-cash adjustments primarily includedepreciation, amortization of intangible assets and stock based compensationexpense. The improvement was primarily driven by better operating performanceyields over a greater volume of sales at consistent overhead levels.Additionally, the timing of cash receipts and cash disbursements affects ouroperating assets and cash balances.

 

Netcash used in investing activities is primarily attributable to capitalexpenditures. Our capital expenditures were $34,731 and $14,245 for the year todate periods ended June 30, 2008 and 2007, respectively. Our capitalexpenditures are primarily related to purchases and internal development ofinformation technology assets to support our product and service offerings.As we anticipate continued growth, we expect to continue investingadditional capital in our information technology assets.

 

Netcash provided by financing activities during the year to date period ended June 30,2008 was $22,272, compared to $250,000 provided by financing activities duringthe same period in 2007. Cash provided by financing activities during 2007 wasrelated primarily to the completion of a private placement offering of ourcommon stock.

 

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

 

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

 

Theprimary driver of our operating cash flow is our third-party verificationsolutions, specifically the gross margin generated from services provided.Therefore we focus on the elements of those operations including revenue growthand long term projects that ensure a steady stream of operating profits toenable us to meet our cash obligations. On a weekly basis we review theperformance of each of our revenue streams focusing on third party verificationsolutions compared with prior periods and our operating plan. Based on thecontinued sales growth and overall improvement in our performance, we believethat we will achieve profitability for the year ended December 31, 2008.The culmination of all our efforts toward profitability has recently broughtsignificant opportunities to us such as the increase of our line of credit from$75,000 to $125,000, third-party interest in our expertise to develop andenhance websites, as well as the potential to develop business relationships withlong term strategic partners. In keeping with our core business, we willcontinue to review our business model with a focus on profitability, long termcapital solutions and the potential impact of acquisitions or divestitures, ifsuch an opportunity arises.

 

**AssetSale**

 

****On July 15,2008, we completed the sale (the “asset sale”) of three wholly-owned onlinebusinesses – CattleNetwork, CattleStore and AgNetwork – to Vance PublishingCorp. The transaction, valued at approximately $2.1 million, included $800,000in cash at closing and $1.3 million in prepaid advertising placements in Vance’sindustry leading publications, including Drover’s, Pork, Bovine Veterinarianand Dairy Herd Management. Vance has also contracted with us to provide networkmaintenance and support for the websites as part of a separate supportagreement. In addition, Vance has agreed to open negotiations on another IMIGlobal product, AgTraderIndex (www.AgTraderIndex.com).****

 

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****Thewholly-owned online businesses constituted the bulk of our network revenue andwere considered significant revenue streams; however, the online businesseshistorically have not contributed materially to gross profit.****We believe the sale of these assets allows usto focus more resources on growing our core food verification business whileforging an important advertising and promotion partnership with theagricultural industry’s premier provider of agricultural news and information.

 

****We soldthe assets at a substantial premium to the original purchase in 2005. We expectto record a gain on sale of approximately $350,000 during the third quarter of2008. The advertising rights will be accounted for as a gain contingency as itinvolves uncertainties as to the possible gain that will be ultimatelyrealized. The advertising rights are not assignable or resalable, therefore thefair market value is not determinable until such time as advertising actuallyoccurs.****

 

****Inconnection with the closing of the asset sale, $350,000 of the proceeds wasused to pay the Cattlefeeding.com note payable in full. The remaining proceedswill be used to fund working capital needs.****

 

**OffBalance Sheet Arrangements**

 

Asof June 30, 2008, we had no off-balance sheet arrangements of any type.

 

****RESULTSOF OPERATIONS****

 

****SecondQuarter and Year to Date Periods ended June 30, 2008 compared to SamePeriods in 2007****

 

****Revenues****

 

Revenuesare derived from sales of our USVerified identification and verificationsolutions, consulting services, web-based development, advertising and productsales related to our internet-based online information/news and e-commercesites. Revenues for the second quarter and year to date period ended June 30,2008 were $808,168 and $1,533,343, an improvement of 53% over the same periodsin 2007, respectively. The improvement in sales was primarily due tosignificant growth in consulting, program development and web based developmentservices in connection with our third party verification programs.

 

Duringthe second quarter and year to date period ended June 30, 2008, our thirdparty verification revenue, which includes sales of our USVerified solutionsand related consulting, program development and web-based development services,increased 91% to $548,620 in second quarter 2008 from $287,390 in the samequarter 2007. For the year to date period ended June 30, 2008, salesincreased 71% to $978,885 compared to $571,233 in the same 2007 period. Webelieve that customer demand for third party verification services willcontinue to increase with the reopening of key export markets and increasingdemand for verification of NHTC and humane handling marketing claims. We alsobelieve the demand for verification will continue to grow and present otheropportunities for our business in light of the many recent product recalls infresh produce.

 

Revenuesderived from our networks through a combination of advertising sales and salesof products through our websites (primarily Cattlenetwork.com andCattlestore.com) increased 7% to $259,548 in the second quarter 2008 comparedto $242,562 in the second quarter 2007. For the year to date period ended June 30,2008, sales increased 18% to $509,208 compared to $430,035 in the same 2007period.

 

Oure-learning solutions represent a new revenue stream for us in 2008 andgenerated $45,250 for the year to date period ended June 30, 2008.

 

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

 

Costof sales for the second quarter 2008 were $377,882 compared to $215,046 duringthe second quarter 2007 and $729,297 for the 2008 year to date period comparedto $413,761 in the 2007 period. Gross margin for the second quarter 2008declined slightly by approximately 6 basis points to 53% of revenues comparedto 59% for the second quarter 2007 and approximately 7 basis points to 52% ofrevenues for the 2008 year to date period compared to 59% for the same 2007period. The change was partially due to the addition of dedicated personnelproviding program development and web based development services in connectionwith our third party verification programs coupled with shifts in the sales mixof our lower margin e-commerce sales. Due to our focus on margins, ourcommitment to long term growth and the scalability of the programs we develop,we anticipate that our margins will continue to be impacted for the next fewquarters.

 

**Selling,General and Administrative Expenses**

 

Selling,general and administrative expenses for the second quarter 2008 were $374,333,a decrease of $143,475, or 28% over the second quarter 2007 amount of $517,808.The decrease was primarily due to a $13,543 reduction in stock basedcompensation expense, $49,568 reduction in spending for contracted services andother professional service fees, and an overall decrease in expenses due tomanagement’s efforts to aggressively control costs.

 

Forthe year to date period ended June 30, 2008, expenses were $796,900, adecrease of $278,760, or 26% compared to $1,075,660 for the same period in2007. The decrease was primarily due to a $31,498 reduction in stock basedcompensation expense, $111,587 reduction in spending for contracted servicesand other professional service fees, and an overall decrease in expenses due tomanagement’s efforts to aggressively control costs.

 

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

 

Netother expense for the second quarter 2008 increased to $13,219 compared to$6,655 for the second quarter 2007 and $24,962 for the year to date periodended June 30, 2008 compared to $12,084 for the same period in 2007. Theincrease during 2008 was primarily attributable to more interest expenseincurred on a greater borrowing base at higher interest rates during part of2008 as compared to 2007.

 

****NetIncome (Loss)****

 

Asa result of the foregoing, net income for the second quarter 2008 was $42,734or less than $0.01 per basic and diluted common share, compared to net loss of$209,557 or $0.01 loss per basic and diluted common share for the secondquarter 2007. Net loss for the year to date period ended June 30, 2008 was$17,816 or less than $0.01 loss per basic and diluted common share, compared tonet loss of $500,238 or $0.03 loss per basic and diluted common share for thesame period in 2007.

 

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

 

Ourdiscussion and analysis of our financial condition and results of operations isbased upon our financial statements, which have been prepared in accordancewith GAAP. The preparation of these consolidated financial statements requiresus to make estimates, judgments and assumptions that affect the reportedamounts of assets, liabilities, revenues and expenses, and the relateddisclosure of contingent assets and liabilities. We base our estimates onhistorical experience and on various other assumptions 

 

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thatwe believe are reasonable under the circumstances, the results of which formthe basis for making judgments about the carrying values of assets andliabilities that are not readily apparent from other sources. Actual resultsmay differ from these estimates.

 

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

 

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

 

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

 

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

 

**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 to date period ended June 30, 2008 and for theyear ended December 31, 2007 was based on a market-based impliedvolatility. The assumptions used in calculating the fair value of stock-basedawards represent our best estimates, but these estimates involve inherentuncertainties and the application of management judgment. As a result, iffactors change and we use different assumptions, our stock-based compensationexpense could be materially different in the future. In addition, we arerequired to estimate the expected forfeiture rate and only recognize expensefor those shares expected to vest. We estimate the forfeiture rate based onhistorical experience of our 

 

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stock-basedawards that are granted, exercised and cancelled. If our actual forfeiture rateis materially different from our estimate, the stock-based compensation expensecould be significantly different from what we have recorded in the currentperiod.

 

****ITEM 3. CONTROLS AND PROCEDURES****

 

**DisclosureControls and Procedures**

 

TheCompany’s management, with the participation of the Company’s principalexecutive officer and principal financial officer, has evaluated theeffectiveness of the Company’s disclosure controls and procedures (as such termis defined in Rules 13a-15(e) and 15d-15(e) under the ExchangeAct) as of the end of the period covered by this report. Based on suchevaluation, the Company’s principal executive officer and principal financialofficer have concluded that, as of the end of such period, the Company’sdisclosure controls and procedures were effective.

 

**InternalControl Over Financial Reporting**

 

Therehave not been any changes in the Company’s internal control over financialreporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) underthe Exchange Act) during the most recent fiscal quarter that have materiallyaffected, or are reasonably likely to materially affect, the Company’s internalcontrol over financial reporting.

 

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****PART II – OTHERINFORMATION****

 

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

 

****ITEM 2.  UNREGISTERED SALES OFEQUITY SECURITIES AND USE OF PROCEEDS****

 

****Duringthe third quarter of 2008, we completed a private placement with two of ourboard members for our common stock and issued 375,000 shares of our commonstock at $0.20 per share, netting total consideration of $75,000. The proceedsfrom the sale of the shares will be used for general working capital purposes.****

 

****Commonstock issued was offered and sold by us in reliance upon the exemption fromregistration under Section 4(2) of the Securities Act, relating tosales by an issuer not involving a public offering. The sales of securitieswere made without the use of an underwriter. All recipients either receivedadequate information about us or had access, through relationships with us, toinformation about us.****

 

****ITEM 3.  DEFAULTS UPON SENIORSECURITIES****

 

****None****

 

****ITEM 4.  SUBMISSION OF MATTERS TOA VOTE OF SECURITY HOLDERS****

 

****None****

 

****ITEM 5.  OTHER INFORMATION****

 

****AssetSale****

 

****On July 15,2008, we completed the sale (the “asset sale”) of three wholly-owned online businesses– CattleNetwork, CattleStore and AgNetwork – to Vance Publishing Corp. (“Vance”),a privately held provider of print and electronic media with a strong presencein the agricultural industry.  Thetransaction, valued at approximately $2.1 million, included $800,000 in cash atclosing and $1.3 million in prepaid advertising placements in Vance’s industryleading publications, including Drover’s, Pork, Bovine Veterinarian and DairyHerd Management. Vance has also contracted with us to provide networkmaintenance and support for the websites as part of a separate supportagreement. In addition, Vance has agreed to open negotiations on another IMIGlobal product, AgTraderIndex (www.AgTraderIndex.com).****

 

****Thewholly-owned online businesses were considered significant revenue streams;however, they historically have not contributed materially to gross profit. Wesold the assets at a substantial premium to the original purchase in 2005. Weexpect to record a gain on sale of approximately $350,000 during the thirdquarter of 2008. The advertising rights will be accounted for as a gaincontingency as it involves uncertainties as to the possible gain that will beultimately realized. The advertising rights are not assignable or resalable,therefore the fair market value is not determinable until such time asadvertising actually occurs.****

 

****Inconnection with the closing of the asset sale, $350,000 of the proceeds wasused to pay the Cattlefeeding.com note payable in full. The remaining proceedswill be used to fund working capital needs.****

 

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**** ****

****PROFORMA FINANCIAL STATEMENT INFORMATION****

 

****Thefollowing unaudited pro forma condensed balance sheet information as of June 30,2008 has been presented to give effect to the asset sale as if it had occurredon June 30, 2008. The unaudited pro forma condensed statement ofoperations information for the year ended December 31, 2007 and for thesix months ended June 30, 2008 set forth below has been presented after givingeffect to the asset sale as if it had occurred on January 1, 2007, anddoes not include the nonrecurring pro forma gain as a result of the asset sale.****

 

****Theunaudited pro forma financial statement information has been derived primarilyfrom the historical audited financial statements of the Company included in itsAnnual Report on Form 10-KSB for the year ended December 31, 2007 andunaudited financial statements of the Company for the six month period ended June 30,2008 included in this Quarterly Report. The unaudited pro forma financialstatement information is based upon available information and assumptions thatwe believe are reasonable under the circumstances and were prepared toillustrate the estimated effects of the asset sale.****

 

****Theunaudited pro forma financial statement information has been provided forinformational purposes and should not be considered indicative of the financialcondition or the results of operations that would have been achieved had theasset sale occurred as of the periods presented. In addition, the unaudited proforma financial statement information does not purport to indicate balancesheet data or results of operations as of any future date or any future period.The unaudited pro forma financial statement information should be read inconjunction with the historical financial statements, including the notesthereto, of the Company included in its Annual reports on Form 10-KSB forthe year ended December 31, 2007 and this Quarterly Report for the periodended June 30, 2008.****

**** ****

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**Integrated Management Information, Inc.**

**Pro Forma Condensed Balance Sheet Information**

**As of June 30, 2008 (Unaudited)**

 
| ** **                                                                                                                                                                            | ** ** | ** **     | ** ** | **Business to be** | ** ** | **Pro Forma** | ** ** | ** ** | ** **         | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------|------------|------------------------------|------------|--------------------|------------|------------|--------------------|------------|
| ** **                                                                                                                                                                            | ** ** | **Historical** | ** ** | **disposed (a)**        | ** ** | **Adjustments**    | ** ** | ** ** | **Pro Forma** | ** ** |
| **Assets**                                                                                                                                                                            | ** ** | ** **     | ** ** | ** **                   | ** ** | ** **         | ** ** | ** ** | ** **         | ** ** |
| Current assets:                                                                                                                                                                       |       |           |       |                         |       |               |       |       |               |       |
| Cash and cash equivalents                                                                                                                                                             |       | $              | 63,859     |                         | $          | —             |       | $          | 356,000            |       | (b)(c) | $ | 419,859 |   |
| Accounts receivable, net of allowance                                                                                                                                                 |       | 404,739        |       | —                       |       | —             |       |       | 404,739            |       |
| Inventories                                                                                                                                                                           |       | 15,062         |       | —                       |       | —             |       |       | 15,062             |       |
| Prepaid expenses and other current assets                                                                                                                                             |       | 19,961         |       | —                       |       |               |       | (b)        | 19,961             |       |
| Total current assets                                                                                                                                                                  |       | 503,621        |       | —                       |       | 1,638,000          |       |       | 859,621            |       |
| Property and equipment, net                                                                                                                                                           |       | 71,377         |       | 2,400                        |       | —             |       |       | 68,977             |       |
| Goodwill                                                                                                                                                                              |       | 418,208        |       | 418,208                      |       | —             |       |       | —             |       |
| Intangible assets, net                                                                                                                                                                |       | 21,113         |       | 21,113                       |       | —             |       |       | —             |       |
| Total assets                                                                                                                                                                          |       | $              | 1,014,319  |                         | $          | 441,721            |       | $          | 1,638,000          |       |   | $ | 928,598 |   |
|                                                                                                                                                                                  |       |           |       |                         |       |               |       |       |               |       |
| **Liabilities and Stockholders’ Equity**                                                                                                                                         | ** ** | ** **     | ** ** | ** **                   | ** ** | ** **         | ** ** | ** ** | ** **         | ** ** |
| Current liabilities:                                                                                                                                                                  |       |           |       |                         |       |               |       |       |               |       |
| Accounts payable                                                                                                                                                                      |       | $              | 319,140    |                         | $          | —             |       | $          | —             |       |   | $ | 319,140 |   |
| Accrued expenses and other current liabilities                                                                                                                                        |       | 64,655         |       | —                       |       | 10,000             |       | (d)        | 74,655             |       |
| Deferred revenues                                                                                                                                                                     |       | —         |       | —                       |       | —             |       |       | —             |       |
| Short-term debt  and current portion of notes payable                                                                                                                                 |       | 444,000        |       | —                       |       | (444,000           | )          | (c)        | —             |       |
| Total current liabilities                                                                                                                                                             |       | 827,795        |       | —                       |       | (434,000           | )          |       | 393,795            |       |
| Notes payable and other long-term debt                                                                                                                                                |       | 300,000        |       | —                       |       | —             |       |       | 300,000            |       |
|                                                                                                                                                                                  |       |           |       |                         |       |               |       |       |               |       |
| Stockholders equity:                                                                                                                                                                  |       |           |       |                         |       |               |       |       |               |       |
| Net assets disposed of                                                                                                                                                                |       | —         |       | 441,721                      |       | 441,721            |       |       | —             |       |
| 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; 28,245,506  and 28,245,506 shares issued, respectively; and 19,984,506 and 19,995,506  shares outstanding, respectively |       | 28,246         |       | —                       |       | —             |       |       | 28,246             |       |
| Additional paid-in-capital                                                                                                                                                            |       | 4,709,396      |       | —                       |       | —             |       |       | 4,709,396          |       |
| Treasury stock of 8,261,000 and 8,250,000 shares, respectively                                                                                                                        |       | (1,486,728     | )          | —                       |       | —             |       |       | (1,486,728         | )          |
| Accumulated deficit                                                                                                                                                                   |       | (3,364,390     | )          | —                       |       | 348,279            |       | (e)        | (3,016,111         | )          |
| Total stockholders’ equity                                                                                                                                                       |       | (113,476       | )          | 441,721                      |       | 2,072,000          |       |       | 234,803            |       |
| Total liabilities and stockholders’ deficit                                                                                                                                      |       | $              | 1,014,319  |                         | $          | 441,721            |       | $          | 1,638,000          |       |   | $ | 928,598 |   |

 

See accompanying notes to the unaudited Pro Forma Financial Information

**** ****

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**Integrated Management Information, Inc.**

**Pro Forma Condensed Statement of Income**

**(Unaudited)**

 
| ** **                                   | ** ** | **Year to Date Period ended June 30, 2008** | ** ** |
|----------------------------------------------|------------|--------------------------------------------------------------------------------|------------|
| ** **                                   | ** ** | ** **                                                                     | ** ** | **Business to be** | ** ** | **Pro Forma** | ** ** | ** ** | ** ** | ** ** |
| ** **                                   | ** ** | **Historical**                                                                 | ** ** | **disposed** | ** ** | **Adjustments** | ** ** | ** ** | **Pro Forma** | ** ** |
|                                         |       |                                                                           |       |   |   |   |   |   |   |   |
| Revenues                                     |       | $                                                                              | 1,533,343  |   | $ | 361,007 |   | $ | — |   | (f) | $ | 1,172,336 |   |
| Costs of revenues                            |       | 729,297                                                                        |       | 304,194 |   | — |   |   | 425,103 |   |
| Gross profit                                 |       | 804,046                                                                        |       | 56,813 |   | — |   |   | 747,233 |   |
| Selling, general and administrative expenses |       | 796,900                                                                        |       | 66,583 |   | (18,000 | ) | (f)(g) | 712,318 |   |
| Income (loss) from operations                |       | 7,146                                                                          |       | (9,770 | ) | 18,000 |   |   | 34,916 |   |
| Other expense (income):                      |       |                                                                           |       |   |   |   |   |   |   |   |
| Interest expense                             |       | 26,222                                                                         |       | 8,750 |   | — |   |   | 17,472 |   |
| Other income, net                            |       | (1,260                                                                         | )          | — |   | — |   |   | (1,260 | ) |
| Income (loss) before income taxes            |       | (17,816                                                                        | )          | (18,520 | ) | 18,000 |   |   | 18,704 |   |
| Income taxes                                 |       | —                                                                         |       | — | (h) | — |   |   | — |   |
| Net income (loss)                            |       | $                                                                              | (17,816    | ) | $ | (18,520 | ) | $ | 18,000 |   |   | $ | 18,704 |   |
|                                         |       |                                                                           |       |   |   |   |   |   |   |   |
| Net income (loss) per share:                 |       |                                                                           |       |   |   |   |   |   |   |   |
| Basic                                        |       | $                                                                              | (0.00      | ) |   |   |   |   |   | $ | 0.00 |   |
| Diluted                                      |       | $                                                                              | (0.00      | ) |   |   |   |   |   | $ | 0.00 |   |
|                                         |       |                                                                           |       |   |   |   |   |   |   |   |
| Weighted average shares outstanding:         |       |                                                                           |       |   |   |   |   |   |   |   |
| Basic                                        |       | 19,988,797                                                                     |       |   |   |   |   |   | 19,988,797 |   |
| Diluted                                      |       | 19,988,797                                                                     |       |   |   |   |   |   | 19,988,797 |   |

 

See accompanying notes to the unaudited Pro Forma Financial Information

**** ****

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**Integrated Management Information, Inc.**

**Pro Forma Condensed Statement of Income**

**(Unaudited)**

 
| ** **                                   | ** ** | **Year ended December 31, 2007** | ** ** |
|----------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                   | ** ** | ** **                                           | ** ** | **Business to be** | ** ** | **Pro Forma** | ** ** | ** ** | ** ** |
| ** **                                   | ** ** | **Historical**                                       | ** ** | **disposed** | ** ** | **Adjustments** | ** ** | **Pro Forma** | ** ** |
|                                         |       |                                                 |       |   |   |   |   |   |   |
| Revenues                                     |       | $                                                    | 2,307,808  |   | $ | 658,730 |   | $ | — | (f) | $ | 1,649,078 |   |
| Costs of revenues                            |       | 968,475                                              |       | 538,772 |   | — |   | 429,703 |   |
| Gross profit                                 |       | 1,339,333                                            |       | 119,958 |   | — |   | 1,219,375 |   |
| Selling, general and administrative expenses |       | 2,069,770                                            |       | 141,248 |   | (36,000 | )(f)(g) | 1,892,522 |   |
| Income (loss) from operations                |       | (730,437                                             | )          | (21,290 | ) | 36,000 |   | (673,147 | ) |
| Other expense (income):                      |       |                                                 |       |   |   |   |   |   |   |
| Interest expense                             |       | 36,444                                               |       | 17,500 |   | — |   | 18,944 |   |
| Other income, net                            |       | (7,321                                               | )          | — |   | — |   | (7,321 | ) |
| Income (loss) before income taxes            |       | (759,560                                             | )          | (38,790 | ) | 36,000 |   | (684,770 | ) |
| Income taxes                                 |       | —                                               |       | — | (h) | — |   | — |   |
| Net income (loss)                            |       | $                                                    | (759,560   | ) | $ | (38,790 | ) | $ | 36,000 |   | $ | (684,770 | ) |
|                                         |       |                                                 |       |   |   |   |   |   |   |
| Net income (loss) per share:                 |       |                                                 |       |   |   |   |   |   |   |
| Basic                                        |       | $                                                    | (0.04      | ) |   |   |   |   | $ | (0.04 | ) |
| Diluted                                      |       | $                                                    | (0.04      | ) |   |   |   |   | $ | (0.04 | ) |
|                                         |       |                                                 |       |   |   |   |   |   |   |
| Weighted average shares outstanding:         |       |                                                 |       |   |   |   |   |   |   |
| Basic                                        |       | 19,512,401                                           |       |   |   |   |   | 19,512,401 |   |
| Diluted                                      |       | 19,512,401                                           |       |   |   |   |   | 19,512,401 |   |

 

See accompanying notes to the unaudited Pro Forma Financial Information

 

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****NOTESTO UNAUDITED PRO FORMA FINANCIAL INFORMATION****

 

(a)   To reflectelimination of assets sold in connection with three wholly-owned online businessesbased on the balances recorded as of June 30, 2008.

 

(b)   To reflectconsideration received from the sale of assets for $800,000 in cash. Considerationreceived also included approximately $1.3 million in prepaid advertisingrights.  The advertising rights will beaccounted for as a gain contingency as it involves uncertainties as to thepossible gain that will be ultimately realized. The advertising rights are notassignable or resalable, therefore the fair market value is not determinableuntil such time as advertising actually occurs.

 

(c)   To reflect fullpayment of the outstanding $350,000 Cattlefeeding.com note payable and to repayamounts outstanding under our line of credit thereby releasing the collateral;settled concurrently with the closing of the asset sale.

 

(d)   To reflectestimated transaction and other costs directly attributable to the asset sale.

 

(e)   To reflect theestimated pro forma gain from the asset sale based on the carrying values ofthe assets sold on an assumed closing date of June 30, 2008. The actualgain will differ slightly from the carrying value of the assets sold based onthe actual closing date of July 15, 2008.

 

(f)    Amortization ofprepaid advertising rights will be based on actual timing of usage and isconsidered a non-cash expense. Historically we have not advertised. Under theadvertising arrangement we have the right to decide when, how and if theadvertising occurs, within various time limits. Accordingly, no estimates havebeen provided to indicate the future sales (and the related advertisingexpenses) that we may realize as a result of the advertising arrangement.

 

(g)   To reflect areduction in salaries expenses of $3,000 per month as provided by under theservice support agreement.

 

(h)   As a result ofthe Company’s operating losses in prior year’s and valuation allowances on theCompany’s deferred tax assets, no income tax expense is attributable to theperiod presented.

 

****ITEM 6.  EXHIBITS****

 

****(a) ****Exhibits

 
| **Number** | ** ** | **Description**                        |
|------------|------------|----------------------------------------|
| 31.1       |       | Section 302  Certification of CEO |
| 31.2       |       | Section 302  Certification of CFO |
| 32.1       |       | Section 906  Certification of CEO |
| 32.2       |       | Section 906  Certification of CFO |

 

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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:  August 13, 2008 | Integrated  Management Information, Inc. |
|-----------------------------|-----------------------------------------------|
|                        |                                          |
|                        |                                          | By: | /s/  John K. Saunders |
|                        |                                          |   | Chief  Executive Officer |
|                        |                                          |   |   |
|                        |                                          | By: | /s/  Dannette D. Boyd |
|                        |                                          |   | Chief  Financial Officer |

 

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