Where Food Comes From, Inc. - Quarter Report: 2008 June (Form 10-Q)

Table of Contents

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the Quarterly period ended 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

 

INTEGRATED MANAGEMENT INFORMATION, INC.

(Name of Small Business Issuer in its charter)

 

 

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

 

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

 

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

 

 

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

 

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

 

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

 

 

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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Integrated Management Information, Inc.

Balance Sheets

(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 financial statements.

 

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Integrated Management Information, Inc.

Statements of 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 financial statements.

 

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Integrated Management Information, Inc.

Statements of 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 financial statements.

 

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Integrated Management Information, Inc.

Statements of 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 financial statements.

 

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Integrated Management Information, Inc.

Notes to the Financial Statements

 

Note 1 - The Company and Basis of Presentation

 

Business Description

 

Integrated Management 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 industry and maintains an internet portal dedicated to news, trends, and products in the agricultural industry.

 

IMI Global stands at the forefront of a rapidly evolving movement to track livestock and verify sources of beef and other livestock products. In the aftermath of the discovery of the first case of mad cow disease in the United States in December, 2003, many of the largest U.S. beef and other livestock export markets were closed resulting in significant losses to the industry. In response to the crisis, several initiatives were enacted to facilitate the reopening of key export markets. Most notably, U.S. suppliers seeking to sell beef and other livestock products to other countries must participate in a pre-approved Quality System Assessment Program so as to have an approved means of verifying specific product requirements. With the introduction of the USVerified Source and Age Verification system in 2005, we were the first to develop a USDA Quality System Assessment document management system for auditing the tracking systems used by beef and other livestock producers to verify source and age.

 

Basis of Presentation

 

Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. Actual results could differ from the estimates.

 

Recent Accounting Pronouncements

 

In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”), which delays the effective date of Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”) for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) for fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP. We are currently evaluating the impact of adopting FSP FAS 157-2 for non-financial assets and non-financial liabilities on our financial position, cash flows, and results of operations.

 

We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our consolidated financial statements.

 

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Integrated Management Information, Inc.

Notes to the Financial Statements

 

Note 2 - Basic and Diluted Income (Loss) per Share

 

Basic income (loss) per share was computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Weighted average number of shares used to compute basic and diluted loss per share is the same in these financial statements since the effect of dilutive securities is anti-dilutive.

 

The following is a reconciliation of the share data used in the basic and diluted income (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

 

Note 3 - Stock-Based Compensation

 

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

 

				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

 

The fair value of stock options is estimated using the Black-Scholes option-pricing model 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	%

 

No stock options were granted during the second quarters ended June 30, 2008 and June 30, 2007.

 

Dividend yield is based on our historical and anticipated policy of not paying cash dividends. Expected volatility is based on the “calculated value” method set forth in FAS 123R (based on historical volatilities of appropriate industry sector indices) because our stock did not have sufficient historic share price data available, as it was not publicly traded prior to November 15, 2006. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the options. The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedules.

 

Our stock-based compensation cost for the second quarters ended June 30, 2008 and 2007 was $884 and $14,427, respectively, and has been included in general and administrative expenses. Stock-based compensation cost for the year to date periods 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 as well 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

 

On January 7, 2008, we announced our intention to buy back up to one million shares of our common stock from the open market over the first six months of 2008. As of June 30, 2008, we repurchased 11,000 shares at an average price of $0.16 per share. Total cash consideration for the repurchased shares was $1,728. The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method.

 

Note 5 – Income Taxes

 

Deferred tax assets and liabilities have been determined based upon the differences between the financial statement amounts and the tax bases of assets and liabilities as measured by enacted tax rates expected to be in effect when these differences are expected to reverse. In assessing the reliability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our net operating loss carry forwards are the most significant component of our deferred income tax assets; however, the ultimate realization of our deferred income tax assets is dependent upon generation of future taxable income. We consider past history, the scheduled reversal of taxable temporary differences, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, 2008 and 2007, we believe it is more likely than not that our net deferred tax asset will not be realized and accordingly we have recorded a valuation allowance against the deferred tax assets.

 

We will continue to assess the need for a valuation allowance that results from uncertainty regarding our ability to realize the benefits of our deferred tax assets. As we move closer towards achieving net income for a full year, we will review qualitative and quantitative data, including events within our industry, the nature of our business, our future forecasts and historical trending. If we conclude that our prospects for the realization of our deferred tax assets are more likely than not, we will then reduce our valuation allowance as appropriate and credit income tax expense after considering the following factors:

 

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

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

 

The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income during the carry-forward periods are reduced.

 

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Integrated Management Information, Inc.

Notes to the Financial Statements

 

Note 6 - Notes Payable

 

Notes payable 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

 

Platte Valley Line of Credit

 

During April 2008, our line of credit with Platte Valley Bank was increased from $75,000 to $125,000. The line of credit is secured by the personal guarantees of our two founding shareholders and the accounts receivable of the company. Interest is payable monthly based on the prime rate with 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.com Note

 

In connection with the 2005 acquisition of the assets of Cattlefeeding.com, we issued a note payable to Cattlefeeding.com, Inc. in the amount of $350,000. Under the Note, interest in the amount of 5% of outstanding principal is payable on a monthly basis, with all outstanding principal and interest payable on June 12, 2008. In June 2008, the maturity of the note was extended until July 15, 2008. Concurrent with the closing of the asset sale on July 15, 2008 as further described in Note 10, $350,000 of the proceeds was used to pay the Cattlefeeding.com note payable in full.

 

Lapaseotes Note Payable

 

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

 

Note 7 - Related Party Transactions

 

In September 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.

 

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

 

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Integrated Management Information, Inc.

Notes to the Financial Statements

 

Note 8 - Commitments and Contingencies

 

Operating Leases

 

In June 2006, we entered into a building lease for our new headquarters in Castle Rock, Colorado. The lease is for a period of five years and can be extended 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 to the primary rent, both leases require additional payments for operating costs and other common area maintenance costs.

 

As of 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

 

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

 

Contracts

 

Effective October 1, 2006, we entered into a six month contract with Pfeiffer High Investor Relations which requires a fee of $4,000 per month.

 

Employment Agreements

 

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

 

In January 2006, we entered into an employment contract with Leann Saunders as our Vice President of Quality Control for an annual salary of $90,000 subject to annual performance review adjustments. The agreement automatically renews annually unless a 60-day notice of non-renewal is provided by either the Company or the employee.

 

In February 2007, we entered into an employment contract with Rob Streight as our Chief Operating Officer for an annual salary of $150,000 subject to annual performance review adjustments. The agreement automatically renews annually unless a 60-day notice of non-renewal is provided by either the Company or the employee.

 

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Integrated Management Information, Inc.

Notes to the Financial Statements

 

Legal proceedings

 

The Company 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 these unresolved actions, we do not believe, based on current knowledge, that any legal proceeding or claim is likely to have a material effect on its financial position, results of operation or cash flows.

 

Other

 

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

 

Integrated Management Information, Inc. (IMI Global) is the exclusive worldwide marketing 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 is marketing the label and providing USDA compliance to retailers who must display on meat packaging a label identifying the country of origin (COOL) for meat products beginning in the fall of 2008.

 

IMI Global supports Born & Raised in the USA in its decision to defend its trademarked labeling, believing that the trademarks were legally issued and are fully enforceable.  IMI Global continues to market the label and verification program and has expressed its desire to work closely with Tyson Foods on this program.

 

Note 9 - Liquidity

 

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

 

The primary driver of our operating cash flow is our third-party verification solutions, specifically the gross margin generated from services provided. Therefore we focus on the elements of those operations including revenue growth and long term projects that ensure a steady stream of operating profits to enable us to meet our cash obligations. On a weekly basis we review the performance of each of our revenue streams focusing on third party verification solutions compared with prior periods and our operating plan. Based on the continued sales growth and overall improvement in our performance, we believe that we will achieve profitability for the year ended December 31, 2008. The culmination of all our efforts toward profitability has recently brought significant 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 and enhance websites, as well as the potential to develop business relationships with long term strategic partners. In keeping with our core business, we will continue to review our business model with a focus on profitability, long term capital solutions and the potential impact of acquisitions or divestitures, if such an opportunity arises.

 

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Integrated Management Information, Inc.

Notes to the Financial Statements

 

Note 10 – Subsequent Event

 

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 presence in the agricultural industry.  The transaction, valued at approximately $2.1 million, included $800,000 in cash at closing and $1.3 million in prepaid advertising placements in Vance’s industry leading publications, including Drover’s, Pork, Bovine Veterinarian and Dairy Herd Management. Vance has also contracted with us to provide network maintenance and support for the websites as part of a separate support agreement. In addition, Vance has agreed to open negotiations on another IMI Global product, AgTraderIndex (www.AgTraderIndex.com).

 

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

 

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. The remaining proceeds will be used to fund working capital needs.

 

Note 11 – Pro Forma Financial Statement Information

 

The following 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 occurred on June 30, 2008. The unaudited pro forma condensed statement of operations information for the year ended December 31, 2007 and for the six months ended June 30, 2008 set forth below has been presented after giving 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 asset sale.

 

The unaudited pro forma financial statement information has been derived primarily from the historical audited financial statements of the Company included in its Annual Report on Form 10-KSB for the year ended December 31, 2007 and unaudited financial statements of the Company for the six month period ended June 30, 2008 included in this Quarterly Report. The unaudited pro forma financial statement information is based upon available information and assumptions that we believe are reasonable under the circumstances and were prepared to illustrate the estimated effects of the asset sale.

 

The unaudited pro forma financial statement information has been provided for informational purposes and should not be considered indicative of the financial condition or the results of operations that would have been achieved had the asset sale occurred as of the periods presented. In addition, the unaudited pro forma financial statement information does not purport to indicate balance sheet data or results of operations as of any future date or any future period. The unaudited pro forma financial statement information should be read in conjunction with the historical financial statements, including the notes thereto, of the Company included in its Annual Reports on Form 10-KSB for the year ended December 31, 2007 and this Quarterly Report for the period ended 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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