10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

S	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended September 30, 2012
£	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________

Commission File No. 333-133624

INTEGRATED MANAGEMENT INFORMATION, INC.

(Name of Small Business Issuer in its charter)

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

221 Wilcox, Suite A

Castle Rock, CO 80104

(Address of principal executive offices, including zip code)

Issuer’s telephone number, including area code:

(303) 895-3002

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 S     No £  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes S      No £   

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

Large accelerated filer:	£	Accelerated filer:	£
Non-accelerated filer:	£	Smaller reporting company:	S

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £     No S   

The number of shares of the registrant’s common stock, $.001 par value per share, outstanding as of October 26, 2012 was 21,173,799.

Integrated Management Information, Inc.
Table of Contents
September 30, 2012
Part 1 - Financial Information
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 4.	Controls and Procedures	27
Part II - Other Information
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits	28

2

Integrated Management Information, Inc.

Condensed Consolidated Balance Sheets

	September 30,			December 31,
	2012			2011
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	1,349,740		$	969,020
Accounts receivable, net		468,831			226,760
Investment in marketable securities		19,853			283,511
Prepaid expenses and other current assets		43,677			36,776
Deferred tax assets		242,944			224,350
Total current assets		2,125,045			1,740,417
Property and equipment, net		117,188			57,354
Intangible assets, net		331,336			9,205
Goodwill		377,581			—
Long-term deferred tax assets		376,481			—
Total assets	$	3,327,631		$	1,806,976
Liabilities and Equity
Current liabilities:
Accounts payable	$	245,645		$	148,384
Accrued expenses and other current liabilities		97,191			42,960
Customer deposits		28,533			—
Deferred revenue		161,517			—
Short-term debt and current portion of notes payable		20,823			25,644
Current portion of capital lease obligations		6,975			—
Total current liabilities		560,684			216,988
Capital lease obligations, net of current portion		15,990			—
Notes payable and other long-term debt		164,068			176,201
Notes payable, related party		200,000			250,000
Total liabilities		940,742			643,189
Commitments and contingencies
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; 21,677,046 (2012) and 21,049,006 (2011) shares issued, and 21,173,799 (2012) and 20,550,759 (2011) shares outstanding		21,677			21,049
Additional paid-in-capital		3,615,708			3,416,343
Treasury stock of 503,247 (2012) and 498,247 (2011) shares		(111,284	)		(109,014	)
Accumulated other comprehensive income (loss)		250			(6,693	)
Accumulated deficit		(1,427,710	)		(2,157,898	)
Total Integrated Management Information, Inc. equity		2,098,641			1,163,787
Non-controlling interest		288,248			—
Total equity		2,386,889			1,163,787
Total liabilities and stockholders’ equity	$	3,327,631		$	1,806,976

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

3

Integrated Management Information, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Quarter ended
	September 30,			September 30,
	2012			2011
Revenues:
Service revenues	$	1,237,215		$	892,360
Product sales		268,750			331,004
Other revenue		39,196			26,707
Total revenues		1,545,161			1,250,071
Costs of revenues:
Labor and other costs of services		543,362			329,969
Costs of products		198,862			248,959
Total costs of revenues		742,224			578,928
Gross profit		802,937			671,143
Selling, general and administrative expenses		686,538			460,357
Income from operations		116,399			210,786
Other expense (income):
Interest expense		6,068			7,046
Gain on sale of marketable securities		(9,581	)		—
Other income, net		(556	)		(210	)
Income before income taxes		120,468			203,950
Income tax expense		46,500			—
Net income		73,968			203,950
Net income attributable to non-controlling interest		(10,336	)		—
Net income attributable to Integrated Management Information, Inc.	$	63,632		$	203,950
Net income per share:
Basic	$	—		$	0.01
Diluted	$	—		$	0.01
Weighted average number of common shares outstanding:
Basic		21,063,153			20,643,862
Diluted		21,798,484			20,838,047

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

4

Integrated Management Information, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Year to date ended
	September 30,			September 30,
	2012			2011
Revenues:
Service revenues	$	3,255,266		$	2,512,652
Product sales		625,986			653,999
Other revenue		90,375			30,712
Total revenues		3,971,627			3,197,363
Costs of revenues:
Labor and other costs of services		1,387,499			920,594
Costs of products		454,279			476,355
Total costs of revenues		1,841,778			1,396,949
Gross profit		2,129,849			1,800,414
Selling, general and administrative expenses		1,755,873			1,220,839
Income from operations		373,976			579,575
Other expense (income):
Interest expense		19,761			22,496
Gain on sale of marketable securities		(12,155	)		—
Other income, net		(3,909	)		(1,238	)
Income before income taxes		370,279			558,317
Income tax benefit		(362,972	)		—
Net income		733,251			558,317
Net income attributable to non-controlling interest		(3,063	)		—
Net income attributable to Integrated Management Information, Inc.	$	730,188		$	558,317
Net income per share:
Basic	$	0.04		$	0.03
Diluted	$	0.03		$	0.03
Weighted average number of common shares outstanding:
Basic		20,843,311			20,667,409
Diluted		21,571,396			20,896,852

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

5

Integrated Management Information, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Quarter ended					Year to date ended
	September 30,			September 30,		September 30,			September 30,
	2012			2011		2012			2011
Net income	$	73,968		$	203,950	$	733,251		$	558,317
Unrealized gain on marketable securities		3,449			—		250			—
Comprehensive income		77,417			203,950		733,501			558,317
Comprehensive income attributable to non controlling interest		(10,336	)		—		(3,063	)		—
Comprehensive income attributable to Integrated Management Information, Inc.	$	67,081		$	203,950	$	730,438		$	558,317

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

6

Integrated Management Information, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Year to date ended September 30,
	2012			2011
Net cash provided by operating activities	$	317,877		$	639,803
Investing activities:
Acquisition of International Certification Services, Inc., net of cash acquired		(214,774	)		—
Proceeds from sale of marketable securities		282,756			—
Purchases of property and equipment		(22,529	)		—
Purchases of other long term assets		(13,664	)		(7,155	)
Net cash provided by (used in) investing activities		31,789			(7,155	)
Financing activities:
Proceeds from notes payable		—			200,000
Repayments of notes payable		(66,954	)		(82,787	)
Repayments of capital lease obligations		(5,820	)		—
Proceeds from stock option exercise		106,098			1,800
Stock repurchase under Buyback Program		(2,270	)		(47,368	)
Net cash provided by financing activities		31,054			71,645
Net change in cash and cash equivalents		380,720			704,293
Cash and cash equivalents at beginning of period		969,020			513,076
Cash and cash equivalents at end of period	$	1,349,740		$	1,217,369

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

7

Integrated Management Information, Inc.

Condensed Consolidated Statement of Equity

(Unaudited)

	Integrated Management Information, Inc.
	Common Stock					Additional Paid-in		Treasury			Other Comprehensive			Accumulated			Non-controlling
	Shares			Amount		Capital		Stock			(Loss) Gain			Deficit			Interest		Total
Balance at December 31, 2011		20,550,759		$	21,049	$	3,416,343	$	(109,014	)	$	(6,693	)	$	(2,157,898	)	$	—	$	1,163,787
Acquisition of International Certification Services, Inc.:
Shares issued		172,840			173		77,605		—			—			—			—		77,778
Non-controlling interest		—			—		—		—			—			—			285,185		285,185
Stock-based compensation expense		—			—		16,117		—			—			—			—		16,117
Stock repurchase on the open market		(5,000	)		—		—		(2,270	)		—			—			—		(2,270	)
Issuance of common shares upon exercise of options		455,200			455		105,643		—			—			—			—		106,098
Unrealized gain on marketable securities		—			—		—		—			6,943			—			—		6,943
Net income attributable to IMI common shareholders		—			—		—		—			—			730,188			3,063		733,251
Balance at September 30, 2012		21,173,799		$	21,677	$	3,615,708	$	(111,284	)	$	250		$	(1,427,710	)	$	288,248	$	2,386,889

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

8

Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

Note 1 - The Company and Basis of Presentation

Business Overview

Integrated Management Information, Inc., is a Colorado corporation based in Castle Rock, Colorado, (“IMI Global,” “IMI,” the “Company,” “our,” “we,” or “us,”). We provide verification and certification solutions for the agriculture, livestock and food industry. Our customers are located throughout the United States.

On February 29, 2012, we completed an acquisition of a 60% ownership investment in a North Dakota company, International Certification Services, Inc. (“ICS”) (Note 2). This acquisition has been accounted for using the acquisition method of accounting and, accordingly, its results are included in the Company’s condensed consolidated financial statements from the date of acquisition.

With the acquisition of ICS, we began aggregating ICS and IMI operations into one reportable segment: Certification and Verification Services. The factors considered in determining this aggregated reporting segment include the economic similarity of the businesses, the nature of services provided, production processes, types of customers and distribution methods. The Company’s chief operating decision maker (the Company’s CEO) allocates resources and assesses the performance of its Certification and Verification Services activities as one segment. The Company also has an operating segment: WFCF Licensing, which does not currently meet the quantitative threshold to be considered a reporting segment.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the results of operations, financial position and cash flows of Integrated Management Information, Inc. and its majority-owned subsidiary, ICS (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q). All intercompany balances have been eliminated.

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and should be read in conjunction with our audited financial statements and footnotes thereto for the year ended December 31, 2011, included in our Form 10-K filed on March 26, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. The consolidated operating results for the third quarter and year to date period ended September 30, 2012 are not necessarily indicative of the results to be expected for any other interim period of any future year.

Certain reclassifications to the 2011 condensed consolidated statement of operations have been made to conform to the 2012 presentation, none of which had any effect on total revenue, gross profit, income from operations, or net income.

Seasonality

Our business is subject to seasonal fluctuations. Significant portions of our revenues are typically realized during the second and third quarters of the fiscal year when the calf marketings and the growing seasons are at their peak. Because of the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

9

Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

Note 2 - Acquisition of 60% of outstanding shares of ICS

On February 29, 2012, we entered into a Purchase and Exchange Agreement (the “Purchase Agreement”), by and among IMI and ICS, and other shareholders as individually named in the Agreement (collectively the “Sellers”).

Pursuant to the Purchase Agreement, on February 29, 2012 (the “Closing”) the Company acquired 60% of the issued and outstanding common stock of ICS in exchange for aggregate consideration of approximately $427,800, which included $350,000 in cash and 172,840 shares of common stock of IMI valued at approximately $77,800 based upon the closing price of our common stock on February 29, 2012, of $0.45 per share. The Purchase Agreement provides for 50% of the Shares to be held in escrow for a period of eighteen months to support any indemnification claims by us for breach of ICS representations, warranties and covenants under the Purchase Agreement. The Purchase Agreement also includes non-dilution provisions, and we have right of first refusal on the remaining 40% of the outstanding stock. The transaction was accounted for using the acquisition method of accounting.

We believe that ICS is one of the leading organic certifiers in the United States and represents an opportunity to extend the range of our existing programs and establish our capabilities in other major food groups, including poultry, grains, fruits and vegetables, dairy, packaged and processed goods. As a result of this acquisition, we believe we are now positioned to offer our customers new solutions across the verification and certification spectrum. We also believe it provides diversification for our company, enables us to better serve our customers, and provides another avenue for our “Where Food Comes From” (WFCF) labeling program.

The purchase price allocation is preliminary and subject to change, as an analysis has not been completed as of the date of this report as we are still reviewing all of the underlying assumptions and calculations used in the allocation. However, the table below summarizes the provisional fair values assigned to the assets and liabilities acquired in addition to the excess of the purchase price over the net assets acquired:

Cash	$	135,200
Accounts receivable		49,700
Prepaid expenses and other current assets		21,000
Deferred tax assets		21,400
Property and equipment		60,600
Other assets		400
Accounts payable		(20,500	)
Accrued expenses		(12,500	)
Customer deposits		(29,400	)
Deferred revenue		(239,000	)
Capital lease obligation		(6,500	)
Excess attributable to intangible assets		732,600
Total fair value		713,000
Fair value of non-controlling interest		(285,200	)
Total consideration	$	427,800

10

Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

On the acquisition date, the provisional fair value of the non-controlling interest was estimated to be $285,200. This amount was based upon the gross consideration that would have been paid assuming 100% of the outstanding stock had been acquired. Excess attributable to intangible assets reflects the excess over the identifiable assets acquired, net of liabilities assumed, to intangible assets based on the preliminary provisional allocation of the purchase price. The provisional amounts of the components of intangible assets have been estimated as $355,000 for customer lists and $378,000 for goodwill.

From the February 29, 2012 acquisition date through September 30, 2012, ICS revenues and net income were approximately $714,500 and $7,700, respectively. The following unaudited pro forma information presents the results of operations for the year to date period ended September 30, 2012 and 2011, as if the acquisition of ICS had occurred on January 1, 2012 and 2011.

	Year to Date period ended
	September 30,		September 30,
	2012		2011
Total revenue	$	4,140,100	$	4,072,100
Net income	$	702,400	$	514,500
Diluted earnings per share	$	0.03	$	0.02

Included in the pro forma information for the year to date period ended September 30, 2012, is approximately $50,500 in accounting, advisory and legal fees incurred related to the acquisition of ICS.   

As of September 30, 2012, we have recorded approximately $30,700 in accounting, advisory and legal fees related to the acquisition of ICS. Additionally, we have recorded approximately $41,400 in amortization expense based on the provisional amount of the component of intangible assets of $355,000 for customer lists, using an estimated five year useful life. These amounts are reported within selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the year to date period ended September 30, 2012.

Note 3 - Basic and Diluted Income per Share

Basic income per share was computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted income 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.

11

Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

The following schedule is a reconciliation of the share data used in the basic and diluted income per share computations:

	Quarter ended				Year to Date ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Basic:
Weighted average shares outstanding		21,063,153		20,643,862		20,843,311		20,667,409
Diluted:
Weighted average shares outstanding		21,063,153		20,643,862		20,843,311		20,667,409
Weighted average effects of dilutive securities		735,331		194,185		728,085		229,443
Total		21,798,484		20,838,047		21,571,396		20,896,852
Antidilutive securities:		100,000		287,500		100,000		287,500

Note 4 - 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.

The fair value of stock options is estimated using the Black-Scholes option-pricing model, which incorporates ranges of assumptions for inputs. Our assumptions are as follows:

· Dividend yield is based on our historical and anticipated policy of not paying cash dividends.

· Expected volatility assumptions were derived from our actual volatilities.  

· The risk-free interest rate is based on the US Treasury yield curve in effect at the date of grant with maturity dates approximately equal to the expected term at the grant date.

· The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedules, based on historical exercise patterns, which we believe are representative of future behavior.

For the year to date period ended September 30, 2012 and 2011, stock options to purchase 100,000 and 220,000 shares of common stock were granted, respectively. The fair value of stock options granted was estimated using the following assumptions:

	For the Quarter ended					For the Year to Date Period ended
	September 30,			September 30,		September 30,			September 30,
	2012			2011		2012			2011
Expected term of options from date of grant		8 years			N/A		8 years			8 years
Risk free interest rate		2.56	%		N/A		2.56	%		2.26	%
Expected volatility		212.5	%		N/A		212.5	%		229.6	%
Assumed dividend yield		0	%		N/A		0	%		0	%

Stock-based compensation expense for the third quarter ended September 30, 2012 and 2011 was $7,335 and $4,394, respectively. Stock-based compensation expense for the year to date period ended September 30, 2012 and 2011 was $16,117 and $8,782, respectively. Stock-based compensation expense has been included in general and administrative expenses.

12

Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

Stock Option Plan Activity

Stock option activity under our Plans is summarized as follows:

	Number of			Weighted Avg. Exercise Price		Weighted Avg. Fair Value		Weighted Avg. Remaining Contractual Life		Aggregate
	Options/Warrants			per Share		per Share		(in years)		Intrinsic Value
Outstanding, December 31, 2011		1,321,000		$	0.25	$	0.07		2.83
Granted		100,000		$	1.15	$	1.15		9.72
Exercised		(455,200	)	$	0.23	$	0.04		0.47
Canceled		—		$	—	$	—		—
Outstanding, September 30, 2012		965,800		$	0.35	$	0.20		3.54	$	1,066,243
Exercisable, September 30, 2012		719,126		$	0.26	$	0.07		1.63	$	858,767

The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of our common stock on September 30, 2012 and the exercise price for the in-the-money options) that would have been received by the option holders if all the in-the-money options had been exercised on September 30, 2012.

Note 5 - 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. Repurchased shares under the Stock Buyback Plan by year are as follows:

For the year to date period ended:	Number of Shares		Cost of Shares		Average Cost per Share
December 31, 2008		57,200	$	16,124	$	0.28
December 31, 2009		22,325		4,020	$	0.18
December 31, 2010		171,031		27,273	$	0.16
December 31, 2011		247,691		61,597	$	0.25
September 30, 2012		5,000		2,270	$	0.45
Total		503,247	$	111,284	$	0.22

The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method.

Our stock buyback plan has been and will be used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. In the future, we may consider additional share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, and planned investment and financing needs.

13

Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

Note 6 – 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 (NOL) carry forwards are the most significant component of our deferred tax assets; however, the ultimate realization of our deferred 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. Utilization of our NOL carry forwards reduces our federal and state income tax liability incurred.

As of December 31, 2011, our net operating loss carry forwards for U.S. federal income tax purposes were $1.8 million, and were subject to the following expiration schedule:

Net operating loss incurred:	Amount		Expiration dates:
December 31, 2006	$	1,454,431	December 31, 2026
December 31, 2007		365,518	December 31, 2027
Total tax carryforwards	$	1,819,949

Our unused net operating loss carry forwards may be applied against future taxable income.

During the third quarter and year to date periods ended September 30, 2012 and 2011, utilization of NOL carry forwards reduced our effective tax rate. For the third quarter and year to date period ended September 30, 2012, we recorded income tax expense of approximately $46,500 and an income tax benefit of approximately $363,000, respectively. The income tax benefit for the nine months ended September 30, 2012 included the effect of reversing the remainder of our valuation allowance that existed as of December 31, 2011 after concluding the likelihood for a full realization of the benefits of our deferred tax assets is more likely than not.

Note 7 – Investments in Marketable Securities

The following table summarizes our investments in marketable securities.

	September 30, 2012
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Equity securities	$	19,603	$	250	$	—	$	19,853

Fair value accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements, for both financial and non-financial assets. It also establishes a fair value hierarchy that prioritizes the inputs used to measure fair value.

14

Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

The fair value hierarchy consists of three broad levels, which are described below:

· Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

· Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

· Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Our investments in available-for-sale marketable securities include individual corporate equity securities. For these securities, we use quoted prices in active markets for identical assets to determine their fair value, thus they are considered to be Level 1 instruments under the fair value hierarchy. The method described may produce a fair value calculation that may not be indicative of net realizable value of future fair values. Although we believe our valuation method is appropriate, the use of a different methodology or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

During the third quarter ended September 30, 2012, we sold a significant portion of our marketable securities and reinvested the cash in money market accounts to be used for operations and potential acquisitions. A gain from the sale of marketable securities of $9,581 and $12,155 was recognized for the third quarter and year to date period ended September 30, 2012, respectively. The gain has been recorded in other income on the statement of operations.

Note 8 - Notes Payable

Notes payable consist of the following:

	September 30,		December 31,
	2012		2011
Equipment Note Payable	$	4,271	$	11,630
Lapaseotes Note Payable - Related Party		200,000		250,000
Great Western Bank SBA Loan		180,620		190,215
		384,891		451,845
Less current portion of notes payable and other long-term debt		20,823		25,644
Notes payable and other long-term debt	$	364,068	$	426,201

Equipment Note Payable

In 2009, we issued a note payable in the amount of $35,963 for the purchase of a vehicle. Interest and principal payments are due in equal monthly installments of $870 over four years beginning March 17, 2009. This note bears an interest rate of 7.4% per annum and is collateralized by the vehicle.

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Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

Lapaseotes Note Payable – Related Party

In September 2007, we obtained $300,000 in unsecured debt financing. The notes are held by a major shareholder who is related to Mr. Lapaseotes, a member of our Board of Directors. In April 2011, modifications to the terms of the existing agreement were completed. Such modifications included a reduction in the interest rate from 9% to 6% annually, as well as an extension of the maturity date from September 12, 2012 to March 31, 2014. Principal is due in full upon the maturity date; interest is payable quarterly. In April 2012, we paid an additional $50,000 towards the principal.

Great Western Bank SBA Loan

On April 22, 2011, we entered into a U.S. Small Business Administration (“SBA”) Note with Great Western Bank. This note, which matures on May 1, 2021, provides for $200,000 in additional working capital. The interest rate is at prime plus 2.5% and is adjusted quarterly. Principal and interest are payable monthly. As of September 30, 2012, the effective interest rate is 5.75%. The note can be prepaid without penalties and contains certain customary affirmative and negative covenants.

The loan agreement is collateralized by the accounts receivable, property and equipment, and intangible assets of the Company. The note is further guaranteed by John and Leann Saunders, significant shareholders, officers and members of the Company’s Board of Directors, with a security interest in 3,000,000 shares of the Company’s common stock, which are personally owned by the Saunders.

ICS Revolving Line of Credit

ICS has a revolving line of credit (LOC) agreement which matures on April 4, 2014, and provides for $70,050 in working capital. The interest rate is at the bank index rate less 0.5% and is adjusted daily. Interest is calculated using a 360 day year. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only is due, with the principal balance due on maturity. As of September 30, 2012, the effective interest rate is 5.75%. The LOC is collateralized by all the business assets of ICS. As of the date of acquisition and through September 30, 2012, ICS had no amounts outstanding under this LOC.

Note 9 - Commitments and Contingencies

Operating Leases

In June 2012, we amended the building lease for our headquarters in Castle Rock, Colorado. The lease is for a period of three years with an expiration date of June 15, 2015. In addition to the primary rent, the lease requires additional payments for operating costs and other common area maintenance costs.

ICS owns approximately ¾ acre on which its corporate office is located in Medina, North Dakota. Currently, the ICS corporate office is leased for a period of 10 years with an initial expiration date of March 1, 2013. Two additional options to renew for 5-year terms exist and are deemed to automatically renew unless written notice is provided 60 days before the end of the term. Under the lease agreement, ICS pays a minimum monthly rental rate of approximately $150 plus all utilities, taxes and other expenses based on actual expenses to maintain the building.

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Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

As of September 30, 2012, future minimum lease payments are as follows:

Years Ending December 31,		Amount
	2012 (remaining three months)	$	18,257
	2013		73,481
	2014		74,256
	2015		32,135
	Thereafter		3,939
	Total lease commitments	$	202,068

Sub-lease Agreement

ICS sub-leases approximately 300 square feet of space located within its corporate office to a third party on a month-to-month basis. Monthly rent of $302 includes utilities and other common area maintenance. The sub-lease agreement provides for 30 days’ notice to terminate the agreement.

Capital Leases

During the first quarter ended March 31, 2012, we entered into a capital lease for certain office equipment with a base rent of $405 per month. This 63-month lease expires April 2017. Approximately $22,300 in asset cost has been included in property and equipment and is being amortized over 63 months. Imputed interest of 5.25% was used in determining the minimum lease payments.

ICS leases certain office equipment under a capital lease with a base rent of $521 per month. The lease expires in April 2013. Included in property and equipment is $7,100 in asset cost. Imputed interest of 6.25% was used in determining the minimum lease payments.

As of September 30, 2012, future minimum lease payments for capital leases are as follows:

Years Ending December 31,	Amount
2012 (remaining three months)	$	2,775
2013		6,422
2014		4,860
2015		4,860
2016 and thereafter		6,657
Future minimum lease payments		25,574
Less amount representing interest		(2,609	)
Present value of net minimum lease payments		22,965
Less current portion		(6,975	)
Capital lease obligations	$	15,990

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Integrated Management Information, Inc.

Notes to the Condensed Consolidated Financial Statements

Employment Agreements

In January 2006, we entered into employment agreements with John Saunders, our Chief Executive Officer, and with Leann Saunders, our President. The agreements automatically renew annually unless a 60-day notice of non-renewal is provided by either the Company or the employee.

Effective January 1, 2012, ICS entered into an employment agreement with Christina Dockter as its Chief Executive Officer, for a period of 2 years. The agreement automatically renews annually unless a 60-day notice of non-renewal is provided by either the Company or the employee.

Legal proceedings

From time to time, we may become 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 our financial position, results of operations or cash flows. We are not aware of any such legal actions, proceedings or claims as of September 30, 2012.

Note 10 - Recent Accounting Pronouncements

In 2011, the Financial Accounting Standards Board (“FASB”) issued two Accounting Standards Updates (“ASU”) which amend guidance for the presentation of comprehensive income. The amended guidance requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The previous option to report other comprehensive income and its components in the statement of shareholders’ equity was eliminated. Although the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under existing guidance. We elected to report other comprehensive income and its components in a separate statement of comprehensive income for the quarter and year to date period ended September 30, 2012 and 2011. The adoption of these ASU’s did not have a material impact on our financial statements.

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 condensed consolidated financial statements.

Note 11 – Supplemental Cash Flow Information

	Year to date ended September 30,
	2012		2011
Cash paid during the year:
Interest on Lapaseotes Notes - related party	$	10,333	$	11,392
Other interest	$	8,280	$	6,521
Income taxes	$	10,120	$	—
Non-cash investing and financing activities:
Unrealized gain on marketable securities	$	6,943	$	—
Assets acquired under capital lease obligations	$	22,258	$	—
Common stock issued in connection with ICS acquisition	$	77,778	$	—

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

This information should be read in conjunction with the condensed consolidated financial statements and the notes included in Item 1 of Part I of this Quarterly Report and the audited condensed consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Form 10−K for the fiscal year ended December 31, 2011. The following discussion and analysis includes historical and certain forward−looking information that should be read together with the accompanying condensed consolidated financial statements, related footnotes and the discussion below of certain risks and uncertainties that could cause future operating results to differ materially from historical results or from the expected results indicated by forward−looking statements.

Business Overview

Integrated Management Information, Inc. (“IMI Global,” “IMI,” the “Company,” “our,” “we,” or “us,”) provides verification and certification solutions for the agriculture, livestock and food industry. We view our business as a single segment with a focus on verification and certification services. Our product sales and other revenue streams are either ancillary or supportive to our main business focus.

We were incorporated in 1998 as a Missouri corporation. In March, 2005, we reincorporated in Delaware, and in March 2006, we changed our domicile from Delaware to Colorado. Until December 31, 2004, we were structured as a Subchapter S corporation and on January 1, 2005, we converted to a Subchapter C corporation.

We provide our owned and operated online products and services which specialize in identification and traceability, process/production-practice/supply verification, document control for USDA verification programs and third party auditing services. We apply information technology to the agriculture, livestock and food industry by addressing the growing importance of marketing claims such as: source of origin information, genetic background, animal treatment, animal health history, animal age, animal movements, nutrition, carbon credits and other credence attributes. Our solutions provide assurance regarding those claims made that cannot be confirmed by visual inspection once the product reaches the retail food case and is marketed to the consumer. We have developed a range of proprietary web-based applications, consulting methodologies, auditing processes, and other services to allow the livestock and food industry to record, manage, report, and audit this information. Our solutions help our customers establish their own systems, meet government regulations, create their own premium brand identity, gain cost efficiencies and command a higher price for their product.

We stand at the forefront of a rapidly evolving movement to track livestock and verify sources of meat and other livestock products. In the aftermath of the discovery of the first case of mad cow disease in the United States (US) in December, 2003, many of the largest US 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, US 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. In response, 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. We introduced our USVerified Source and Age Verification system in 2005, and over the years we have continued to enhance and further develop programs to address other verification needs including, but not limited to, non-hormone treated cattle (NHTC) and humane handling marketing claims.

In 2009, we worked with compliance programs, and marketing approaches which required meat retailers to display the country of origin labels (COOL) on their meat and produce. Also in 2009, we introduced our VerifiedGreen™ Verification program. This program caters to producers and consumers who are committed to reducing their carbon footprint. Then in March 2010, in response to consumers’ demand of increased transparency

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regarding the origins and safety of their food, we introduced our “Where Food Comes From” (WFCF) consumer labeling program. This program is a rigorous qualification protocol under which only those farmers, ranchers and processors who meet strict third-party verification requirements may display the distinctive WFCF brand. It is the first of its kind that directly connects the consumer with the food supply chain in a way that fosters confidence at the point of purchase. We believe that as consumers become better educated, they will have more confidence in their food purchase decisions. In addition to building consumer confidence, the WFCF label gives producers and processors a way to enhance, differentiate and even protect their valuable brands.

Most recently, in June 2012, we changed our stock ticker symbol to “WFCF” to better reflect our brand strategy and to raise awareness in the investor community.

Management’s Strategy

For several years, management focused its efforts on building a strong foundation to enhance profitability for the long term. Initially our efforts focused on our age and source verification services. Throughout 2009, we introduced a more robust offering of verification services. We also internally developed automated processes which improved our efficiency and reduced our employee headcount. As a direct result, total verification sales and hardware sales improved. We were able to provide more verification certifications (a multiple service offering) in a single audit but this type of service has marginal increases in revenue with declining profit margins as compared to our single service offerings. Interestingly enough, because our customers were seeing more profit per head from multiple verifications at a minimal increase in cost per verification service, they increased the number of cattle within each group audited. We benefitted from increased hardware sales which has higher profit margins due to our process automation.

In early 2009, we understood that all this work was necessary to build a solid foundation but we also recognized a “potential market saturation and decreasing profits dilemma” early on and began working toward a solution. Through our research and development, we learned that we needed to be on the cutting edge of this industry and that the most significant person to influence the food industry was the consumer. We were concerned about various food claims that the industry made without any third party verification. In response, we identified opportunities for horizontal and vertical integration. In addition to our current business structure, we knew we needed to develop a self-sustaining revenue stream with minimal management and labor costs, while simultaneously addressing food concerns near to our heart. We had built a company with strong credibility in the industry and we had the technical expertise to make our processes operate very efficiently. The opportunities that we identified in early 2009 are built upon the verification services we provide and the solid reputation we have built.

In early 2010, we began to see some of the fruits of our labor. We were able to connect food processors and packers to those suppliers that provided product verified for the specific credence attributes demanded, thereby generating a new revenue stream based upon coordination within the food supply chain. We also introduced the WFCF brand. Revenue generated from WFCF is based upon a similar supply chain sales model. Many long hours of research went into this project and currently we are working hard to market this program to the consumer. Research indicates that transparency in food production is becoming more and more important to consumers. We believe that the future growth of verification services will be achieved only through consumer awareness and demand. WFCF is a labeling program that reconnects the consumer to the farmers and ranchers that produce the food. For the consumer, it is a seal of approval on a package or an individual product that provides assurance that those marketing claims are authentic and have been verified by an accredited, unbiased third party.

During 2010, management, along with the assistance of industry consulting experts, intentionally made the decision to invest heavily in marketing our services and our WFCF labeling program to build consumer awareness. Today, we still continue to invest heavily in marketing our verification services and our WFCF brand to build consumer awareness and demand through the use of videos, television exposure, word-of-mouth and the internet. We believe we are positioning ourselves to benefit significantly in 2012 and beyond, but, of course, no assurance can be given that this investment will generate future revenue nor can we determine for how long, if at all.

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Acquisition of 60% of outstanding shares of ICS

As part of our business strategy, we regularly evaluate acquisition opportunities as a means of accelerating our growth and achieving our long-term strategic objectives. On February 29, 2012, we entered into a Purchase and Exchange Agreement (the “Purchase Agreement”), by and among IMI and International Certification Services, Inc. (ICS), and other shareholders as individually named in the Agreement (collectively the “Sellers”).

Pursuant to the Purchase Agreement, on February 29, 2012 (the “Closing”) the Company acquired 60% of the issued and outstanding common stock of ICS in exchange for aggregate consideration of approximately $427,800, which included $350,000 in cash and 172,840 shares of common stock of IMI valued at approximately $77,800, based upon the closing price of our stock on February 29, 2012, of $0.45 per share. The Purchase Agreement provides for 50% of the Shares to be held in escrow for a period of eighteen months to support any indemnification claims by us for breach of ICS representations, warranties and covenants under the Purchase Agreement. The Purchase Agreement also includes non-dilution provisions, and we have right of first refusal on the remaining 40% of the outstanding stock.

ICS is a premier provider of organic accreditation services and has a strong reputation in the organic market segment. They have a large and growing customer base that includes food retailers as well as producers and processors of fruits, vegetables, dairy, livestock and honey. Their flagship certification program is Farm Verified Organic® – an ISO Guide 65 and IFOAM accredited program that meets the requirements of the USDA National Organic Program – that is designed for organic producers selling to the US and international markets. ICS also offers USDA National Organic Program, Canadian Organic Regime (COR) and Food Alliance sustainability certification as well as facilitation and compliancy of European Union (EU), Japan and Bio Suisse standards. It is estimated that the total organic market segment in the US and EU is more than $50 billion annually.

ICS represents an opportunity to extend the range of our existing programs and establish our capabilities in other major food groups, including poultry, grain, fruits and vegetables and dairy when sold as fresh, processed or packaged goods. We believe this acquisition has tremendous synergies for both IMI and ICS. As industry leaders in our respective product and service offerings, we are now positioned to offer our customers new solutions across the verification and certification spectrum. We also believe it provides diversification for our company in the produce, grain and dairy industries. It should enable us to better serve our customers, as well as accelerate our revenue growth, be accretive to earnings and provide another avenue for our WFCF program.

Current Marketplace Opportunities

We believe the following marketplace conditions will drive our business forward effectively increasing consumer demand for third party verification services and presenting additional opportunities:

• In 2010, Korea announced a “nationwide hog farm management system” to improve the farming environment and prevent swine fever. Also in 2010, Korea fully implemented a mandatory domestic and imported beef tracing system. We believe this provides significant international verification opportunities in predominately Asian markets which have historically been difficult for US markets to penetrate.

• US beef has been largely absent from the EU for the past 20+ years due to an EU ban on hormone-treated meat and meat products. In late 2009, the EU announced an annual duty-free quota of 20,000 metric tons for high-quality beef from cattle not treated with growth hormones (NHTC). In March 2012, the EU expanded the annual duty-free quota from 20,000 metric tons to 48,200 metric tons. NHTC requires third party verification, but with duty-free access lowering the cost of doing business in Europe, we believe that it offers significantly more potential for third party NHTC verification services and our  product line, High Quality Beef verification services.

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• One-fourth of the world’s beef and nearly one-fifth of the world’s grain, milk and eggs are produced in the United States. With increased consumer consciousness, Americans are demanding to know where their food comes from and how they can support development of local and regional food systems. We believe that as consumers become better educated they will have more confidence in their food purchase decisions. This demand should accelerate the growth of our “Where Food Comes From®” labeling program.

• Concerns about animal welfare continue to drive retailers to make program decisions based on animal handling, care, well-being and welfare programs. In late 2010 we introduced a new revenue stream for various retailers. We offer animal welfare audits at the supplier level on pork, beef and chicken farmers and ranchers. The service provided to retailers is having a significant impact in our third-party verification revenue and we believe this trend will continue to grow. 

• The worldwide market for certified organic products is estimated at $59.4 billion in 2010. The US market is estimated at $28.5 billion in 2010 and is expected to reach $42.5 billion by 2015. Increasing consumer demand for healthy, better-for-you products produced chemical free with sustainable agricultural practices is driving growth in the organic market. Additionally, specialty food-store chains, conventional grocery store chains and big box retailers are allocating more shelf space to organic products in order to meet the growing demand. Our acquisition of a 60% ownership investment in ICS creates a strategic transaction offering major participants in the food and agriculture industries a comprehensive range of verification services for the major food groups through a single platform.

Current Business Speculation

In 2003, the Japanese government imposed age restrictions on US beef imports to cattle aged below 21 months. Recently, Japanese sources are suggesting that the government may raise the cattle age limit for US beef exported to Japan from below 21 months of age to 30 months or younger. For many years, the US government has called for all age restrictions on beef imports to be abolished. Any agreement reached between Japan and the US would still have to be passed by Japan’s Diet, however. Historically, these discussions have not budged Japan’s strong food safety-minded approach to the issue.

Currently, age verification is conducted under a beef export verification system that uses two criteria: animal production records or physiological age. Traditional physiological methods of age verification, such as dentition, are not valid because of their inaccuracy at the 20-month age level. However, as the age of cattle progress beyond 20 months, and deciduous teeth are replaced by permanent teeth, general reliance upon cattle dentition increases because of the simplicity of the technique, record-keeping and costs involved.

All this speculation has negatively impacted our source and age verification business. However, our business is experiencing growth in our NHTC and Verified Natural Beef (VNB) programs as we see our domestic customers shift from source and age verification to NHTC and VNB. We are also seeing an increase in the number of “source verifications” requested in international markets. Although we cannot forecast the impact of the aforementioned speculation upon “age verifications,” we also cannot assume that Japan will change its requirement for source verification from US beef producers, especially considering that Japan has domestic traceability laws. Additionally, movement within the US for a regulatory program to address Animal Disease Traceability domestically may prove to be a significant opportunity for our business.

In summary, we know the inherent value of source and age verifications and the resulting peace of mind that is provided at the consumer level. We believe that the demand for verification, whether at the base level (source and age verification) or at a level that incorporates multiple credence factors (source and age with NHTC and VNB), will continue to grow as more consumers demand to know where their food comes from, and that is something that cattle dentition cannot provide.

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Seasonality

Our business is subject to seasonal fluctuations. Significant portions of our revenues are typically realized during the second and third quarters of the fiscal year when the calf marketings and the growing seasons are at their peak. Because of the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

Liquidity and Capital Resources

At September 30, 2012, we had cash and cash equivalents of $1,349,740 compared to $969,020 of cash and cash equivalents at December 31, 2011. Our working capital at September 30, 2012 was $1,564,361 compared to $1,523,429 at December 31, 2011.

Net cash provided by operating activities during the year to date period ended September 30, 2012 was $317,877 compared to cash provided of $639,803 during the same period in 2011. Cash provided by operating activities is driven by our net income and adjusted by non-cash items. Non-cash adjustments primarily include depreciation, amortization of intangible assets, stock based compensation expense, a deferred tax benefit resulting from the reversal of the valuation allowance and recognition of our deferred tax assets. Fluctuations are primarily due to the timing of cash receipts and cash disbursements offset by operating performance.

Net cash provided by investing activities during the year to date period ended September 30, 2012 was $31,789 compared to net cash used of $7,155 in the 2011 period. Net cash provided in 2012 was due to proceeds of $282,756 from the sale of marketable securities partially offset by the acquisition of 60% of the outstanding stock of ICS in which we paid $350,000 in cash less approximately $135,200 in cash acquired. Additionally, we spent $22,529 towards property and equipment and $13,664 to renew our USDA Accreditation.

Net cash provided by financing activities during the year to date period ended September 30, 2012 was $31,054 compared to $71,645 in the 2011 period. Net cash provided in 2012 was due to proceeds of $106,098 from stock option exercises offset by repayments towards notes payable and capital lease obligations of approximately $73,000. During the 2011 period, we received $200,000 under our new SBA loan agreement offset by repayments of approximately $82,787 towards our notes payable and approximately $47,368 in repurchases under our Stock Buyback program.

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. We believe that our various sources of capital, including cash flow from operating activities, overall improvement in our performance, and our ability to obtain additional financing are adequate to finance current operations as well as the repayment of current debt obligations. We are not aware of any other event or trend that would negatively affect our liquidity. In the event such a trend develops, we believe that there are sufficient financing avenues available to us and from our internal cash generating capabilities to adequately manage our ongoing business.

The culmination of all our efforts toward net income has brought opportunities to us including: increased investor confidence and renewed interest in our company, 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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Our plan for continued growth is primarily based upon intensifying our focus on international markets. We believe that there are significant growth opportunities available to us because often the only means to entry as imposed on international market imports/exports is via a quality verification program, like our USVerified™ product line.

Debt Facility

On April 22, 2011, we entered into a U.S. Small Business Administration Note with Great Western Bank. The Note which matures on May 1, 2021 provides for $200,000 in additional working capital. The interest rate on the Note is at prime plus 2.5% and is adjusted quarterly. Principal and interest are payable monthly. The note can be prepaid without penalties and contains certain customary affirmative and negative covenants.

The loan agreement is secured by the accounts receivable, property and equipment, and intangible assets of the Company. The Note is further guaranteed by John and Leann Saunders, founders of the Company, with a security interest in 3,000,000 shares of the Company’s common stock, which are personally owned by the Saunders.

Simultaneous with the closing of the new loan agreement with Great Western Bank, we amended the terms of our existing $300,000 in unsecured debt. The note is held by a major shareholder who is related to Pete Lapaseotes, a director of the Company. Modifications to the terms of the existing agreement include a reduction in the interest rate from 9% to 6% annually, as well as an extension of the maturity date from September 12, 2012 to March 31, 2014. Principal is due in full upon the maturity date; interest is payable quarterly.

ICS has a revolving line of credit (LOC) agreement which matures on April 4, 2014, and provides for $70,050 in working capital. The interest rate is at the bank index rate less 0.5% and is adjusted daily. Interest is calculated using a 360 day year. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only is due, with the principal balance due on maturity. The LOC is collateralized by all the business assets of ICS.

Off Balance Sheet Arrangements

As of September 30, 2012, we had no off-balance sheet arrangements of any type.   

RESULTS OF OPERATIONS

Third Quarter and Year to Date Period ended September 30, 2012 compared to the Same Period in Fiscal Year 2011

Revenues

Total revenues for the third quarter and year to date period ended September 30, 2012 increased 23.6% and 24.2%, respectively, compared to the third quarter and year to date period ended September 30, 2011. On a consolidated basis, we still continue to experience double-digit sales growth from quarter over comparable quarter and we believe this is significant performance in light of the current economic conditions severely impacting the food industry.

Service revenues include sales of our USVerified solutions and related consulting, program development and web-based development services. Service revenues for the third quarter ended September 30, 2012 increased approximately $344,900, or 38.6%, compared to the third quarter ended September 30, 2011. Included in our service revenues is approximately $369,900 attributable to ICS.

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Speculation regarding Japanese government imposed age restrictions on US beef imports has negatively impacted our source and age verification business by approximately 18% for the third quarter ended September 30, 2012 compared to the 2011 period. However, our business is experiencing approximately 15% growth in our NHTC, Verified Natural Beef (VNB), and other verification programs. We are seeing our domestic customers shift from source and age verification to NHTC and VNB. We are also seeing an increase in the number of “source verifications” requested in international markets. Although we cannot forecast the impact of the aforementioned speculation upon “age verifications,” we also cannot assume that Japan will change its requirement for source verification from US beef producers, especially considering that Japan has domestic traceability laws. Additionally, movement within the US for a regulatory program to address Animal Disease Traceability domestically may prove to be a significant opportunity for our business.

Service revenues for the year to date period ended September 30, 2012 increased approximately $743,000, or 29.6%, compared to 2011. Included in our service revenues is approximately $714,000 attributable to ICS. Overall, the improvement is due in large part to demand from retailers, offset by speculation over the Japanese markets. Concerns about animal welfare continue to drive retailers to make program decisions based on animal handling, care, well-being and welfare programs. In late 2010, we introduced a revenue stream specific to conducting animal welfare audits on pork, beef and chicken farmers and ranchers that supply specialty retailers.

Product sales are primarily sales of cattle identification ear tags. Product sales for the third quarter and year to date period ended September 30, 2012 decreased 18.8% and 4.3%, respectively, compared to the third quarter and year to date period ended September 30, 2011. The decrease was due to decreased volume in the quantity of tags sold in connection with our Source and Age verification programs.

Other revenue primarily represents the fees earned from our WFCF labeling program. Other revenue for the third quarter and year to date period ended September 30, 2012 increased 46.8% and 194.3% compared to the third quarter and year to date period ended September 30, 2011, respectively. This revenue source is still in its infancy and we anticipate exponential growth in the future as more and more food producers continue to show interest in this product offering.

Cost of Sales and Gross Margin

Cost of sales for the third quarter ended September 30, 2012 were approximately $742,200 compared to $578,900 during the third quarter 2011. Included in our cost of sales is approximately $202,300 attributable to ICS. Gross margin for the third quarter 2012 decreased to 52.0% of revenues compared to 53.7% for the third quarter ended September 30, 2011.

Cost of sales for the year to date period ended September 30, 2012 were approximately $1,841,800 compared to $1,396,900 during 2011. Included in our cost of sales is approximately $375,900 attributable to ICS. Gross margin for the year to date period ended September 30, 2012 decreased to 53.6% of revenues compared to 56.3% for the year to date period ended September 30, 2011.

Our gross margins for 2012 are slightly declining compared to 2011, partially because ICS currently operates at a lower gross margin and due to shifts in our sales mix. Many of our customers are transitioning from verification of a single attribute to verification of multiple attributes performed in a single audit. A multiple attribute type of audit provides a slight increase in revenue but costs us more time to complete the audit, thereby resulting in lower gross margins as compared to our single service offerings. For a more detailed discussion regarding profitability, read “Management’s Strategy” above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the third quarter 2012 were approximately $686,500, an increase of $226,200, or 49.1% over the third quarter 2011. Included in our selling, general and administrative expenses is approximately $141,700 attributable to ICS.

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Excluding ICS expenses, our selling, general and administrative expenses for the third quarter 2012 increased approximately $83,000 over the third quarter 2011. The increase was partly due to $17,750 recorded as amortization expense based on the provisional amount of the component of intangible assets of $355,000 for customer lists, using an estimated five year useful life. Approximately $21,000 was predominately attributable to an increase in salaries associated with two additional employees. One of these employees is dedicated solely to promoting WFCF and IMI via various marketing channels and social media sites, including Facebook and Twitter. The other employee is specifically dedicated to marketing our products within retail sales channels, and for building brand awareness. Additionally, we accrued $60,000 in contract settlement expenses associated with the termination of a joint venture agreement established in 2010. The purpose of the joint venture was to conduct business in Guatemala, Latin America, South America and Mexico. After two years, the joint venture failed at its attempts to develop the business. The settlement releases us from any further obligations under the agreement.

Selling, general and administrative expenses for the year to date period ended September 30, 2012 were approximately $1,755,900, an increase of $535,000, or 43.8% over 2011. Included in our selling, general and administrative expenses is approximately $330,600 attributable to ICS.

Excluding ICS expenses, our selling, general and administrative expenses for the year to date period ended September 30, 2012 increased approximately $202,700 over 2011. Approximately $41,400 was recorded as amortization expense based on the provisional amount of the component of intangible assets of $355,000 for customer lists, using an estimated five year useful life. Another $45,000 of the increase was in salaries associated with two additional employees. One of these employees is dedicated solely to promoting WFCF and IMI via various marketing channels and social media sites, including Facebook and Twitter. The other employee is specifically dedicated to marketing our products within retail sales channels, and for building brand awareness. Also included in selling, general and administrative expenses for 2012, is approximately $15,000 in additional spending for consulting, marketing and advertising WFCF, $29,000 in accounting, advisory and legal fees specifically related to the acquisition of ICS, $60,000 in contract settlement expense related to the joint venture previously discussed and approximately $11,000 in additional costs related to various mandates required of public companies.

Income Tax Benefit

During the third quarter and year to date periods ended September 30, 2012 and 2011, utilization of NOL carry forwards reduced our effective tax rate. For the third quarter and year to date period ended September 30, 2012, we recorded income tax expense of approximately $46,500 and an income tax benefit of approximately $363,000, respectively. The income tax benefit for the nine months ended September 30, 2012 included the effect of reversing the remainder of our valuation allowance that existed as of December 31, 2011 after concluding the likelihood for a full realization of the benefits of our deferred tax assets is more likely than not.

Net Income and Per Share Information

As a result of the foregoing, net income attributable to IMI shareholders for the third quarter ended September 30, 2012 was approximately $63,600 or less than a penny per basic and diluted common share, compared to net income of $203,950 or $0.01 per basic and diluted common share for the third quarter ended September 30, 2011.

Net income attributable to IMI shareholders for the year to date period ended September 30, 2012 was approximately $730,200, or $0.03 and $0.04 per basic and diluted common share, respectively, compared to net income of approximately $558,300 or $0.03 per basic and diluted common share for the year to date period ended September 30, 2011. The benefit from income taxes that we recorded related to the reversal of our valuation allowance on our deferred tax assets had an impact of approximately $0.02 per share on a dilutive basis for the year to date period ended September 30, 2012.

26

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Compliance Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this report, have concluded that our disclosure controls and procedures are effective based on our evaluation of these controls and procedures as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.

Internal Control Over Financial Reporting

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

On February 29, 2012, we completed our acquisition of 60% of the issued and outstanding common stock of ICS. We are in the process of integrating ICS into our overall internal control over financial reporting process. See Note 2 to the accompanying condensed consolidated financial statements for additional information on the ICS acquisition.

PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

We are 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 adverse effect on our condensed consolidated financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

Our business is subject to a number of risks, including those identified in Item 1A. — “Risk Factors” of our 2011 Annual Report on Form 10−K, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. As of September 30, 2012, there have been no material changes to the risks disclosed in our most recent Annual Report on Form 10−K. We may also disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

27

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In connection with the acquisition of 60% of the issued and outstanding stock of ICS, we issued 172,840 shares of common stock of IMI valued at approximately $77,800 based upon the closing price of our stock on February 29, 2012, of $0.45 per share. These shares were issued pursuant to the exemption from registration provided by Section 4 (2) of the Securities Act of 1933. The shares bear a legend restricting the sale, transfer or exchange, and may only be sold, transferred or exchanged pursuant to a registration of such shares or a valid exemption therefrom.

On January 7, 2008, we announced our intention to buy back up to one million shares of our common stock from the open market. Repurchased shares under the Stock Buyback Plan by year are as follows:

For the year to date period ended:	Number of Shares		Cost of Shares		Average Cost per Share
December 31, 2008		57,200	$	16,124	$	0.28
December 31, 2009		22,325		4,020	$	0.18
December 31, 2010		171,031		27,273	$	0.16
December 31, 2011		247,691		61,597	$	0.25
September 30, 2012		5,000		2,270	$	0.45
Total		503,247	$	111,284	$	0.22

The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method.

Our stock buyback plan has been and will be used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. In the future, we may consider additional share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, and planned investment and financing needs.

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

28

SIGNATURES

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

Date: November 5, 2012	Integrated Management Information, Inc.
	By:	/s/ John K. Saunders
		Chief Executive Officer

By:	/s/ Dannette D. Henning
	Chief Financial Officer

29

EX-31.1

Integrated Management Information, Inc. 10-Q

EXHIBIT 31.1

I, John Saunders, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Integrated Management Information, Inc.

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2012

/s/ John Saunders

John Saunders, Chief Executive Officer

EX-31.2

 
Integrated Management Information, Inc. 10-Q 

EXHIBIT 31.2

I, Dannette Henning, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Integrated Management Information, Inc.

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2012

/s/ Dannette Henning

Dannette Henning, Chief Financial Officer

EX-32.1

Integrated Management Information, Inc. 10-Q

EXHIBIT 32.1

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, John Saunders the Chief Executive Officer of Integrated Management Information, Inc. (the “Company”), hereby certifies that, to his knowledge:

(i)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2012

/s/ John Saunders

John Saunders, Chief Executive Officer

EX-32.2

Integrated Management Information, Inc. 10-Q 

EXHIBIT 32.2

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Dannette Henning, the Chief Financial Officer of Integrated Management Information, Inc. (the “Company”), hereby certifies that, to her knowledge:

(i)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2012

/s/ Dannette Henning

Dannette Henning, Chief Financial Officer

XML

Investments in Marketable Securities (Details) (USD $)	Sep. 30, 2012
Gross Amortized Cost
Equity securities	$ 19,603
Gross Unrealized Gains
Equity securities	250
Gross Unrealized Losses
Equity securities
Estimated Fair Value
Equity securities	$ 19,853

XML

Stock-Based Compensation (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Sep. 30, 2011
Notes to Financial Statements
Expected life of options from date of grant	8 years	8 years	8 years
Risk free interest rate	2.56%	2.56%	22.60%
Expected volatility	212.50%	212.50%	229.60%
Assumed dividend yield	0.00%	0.00%	0.00%

XML

Notes Payable (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Notes payable

Notes payable consist of the following:

	September 30,		December 31,
	2012		2011
Equipment Note Payable	$	4,271	$	11,630
Lapaseotes Note Payable - Related Party		200,000		250,000
Great Western Bank SBA Loan		180,620		190,215
		384,891		451,845
Less current portion of notes payable and other long-term debt		20,823		25,644
Notes payable and other long-term debt	$	364,068	$	426,201

XML

Commitments and Contingencies (Narrative Details) (USD $)	7 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012 IMI Office Equipment	Sep. 30, 2012 ICS Office Equipment
ICS minimum monthly rental rate, corporate office	$ 150
Sub-leased space within its corporate office to third party, monthly rent	302
Asset cost, included in property and equipment		22,300	7,100
Office equipment, base rent		$ 405	$ 521
Future minimum payments under capital leases, imputed interest		5.25%	6.25%

XML

Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2007	Dec. 31, 2006	Sep. 30, 2012
Notes to Financial Statements
Tax carryforwards amount	$ 365,518	$ 1,454,431	$ 1,819,949
Expiration dates:	December 31, 2027	December 31, 2026

XML

Acquisition of 60% of outstanding shares of ICS

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Acquisition of 60% of outstanding shares of ICS

Note 2 - Acquisition of 60% of outstanding shares of ICS

On February 29, 2012, we entered into a Purchase and Exchange Agreement (the “Purchase Agreement”), by and among IMI and ICS, and other shareholders as individually named in the Agreement (collectively the “Sellers”).

Pursuant to the Purchase Agreement, on February 29, 2012 (the “Closing”) the Company acquired 60% of the issued and outstanding common stock of ICS in exchange for aggregate consideration of approximately $427,800, which included $350,000 in cash and 172,840 shares of common stock of IMI valued at approximately $77,800 based upon the closing price of our common stock on February 29, 2012, of $0.45 per share. The Purchase Agreement provides for 50% of the Shares to be held in escrow for a period of eighteen months to support any indemnification claims by us for breach of ICS representations, warranties and covenants under the Purchase Agreement. The Purchase Agreement also includes non-dilution provisions, and we have right of first refusal on the remaining 40% of the outstanding stock. The transaction was accounted for using the acquisition method of accounting.

We believe that ICS is one of the leading organic certifiers in the United States and represents an opportunity to extend the range of our existing programs and establish our capabilities in other major food groups, including poultry, grains, fruits and vegetables, dairy, packaged and processed goods. As a result of this acquisition, we believe we are now positioned to offer our customers new solutions across the verification and certification spectrum. We also believe it provides diversification for our company, enables us to better serve our customers, and provides another avenue for our “Where Food Comes From” (WFCF) labeling program.

The purchase price allocation is preliminary and subject to change, as an analysis has not been completed as of the date of this report as we are still reviewing all of the underlying assumptions and calculations used in the allocation. However, the table below summarizes the provisional fair values assigned to the assets and liabilities acquired in addition to the excess of the purchase price over the net assets acquired:

Cash	$	135,200
Accounts receivable		49,700
Prepaid expenses and other current assets		21,000
Deferred tax assets		21,400
Property and equipment		60,600
Other assets		400
Accounts payable		(20,500	)
Accrued expenses		(12,500	)
Customer deposits		(29,400	)
Deferred revenue		(239,000	)
Capital lease obligation		(6,500	)
Excess attributable to intangible assets		732,600
Total fair value		713,000
Fair value of non-controlling interest		(285,200	)
Total consideration	$	427,800

On the acquisition date, the provisional fair value of the non-controlling interest was estimated to be $285,200. This amount was based upon the gross consideration that would have been paid assuming 100% of the outstanding stock had been acquired. Excess attributable to intangible assets reflects the excess over the identifiable assets acquired, net of liabilities assumed, to intangible assets based on the preliminary provisional allocation of the purchase price. The provisional amounts of the components of intangible assets have been estimated as $355,000 for customer lists and $378,000 for goodwill.

From the February 29, 2012 acquisition date through September 30, 2012, ICS revenues and net income were approximately $714,500 and $7,700, respectively. The following unaudited pro forma information presents the results of operations for the year to date period ended September 30, 2012 and 2011, as if the acquisition of ICS had occurred on January 1, 2012 and 2011.

	Year to Date period ended
	September 30,		September 30,
	2012		2011
Total revenue	$	4,140,100	$	4,072,100
Net income	$	702,400	$	514,500
Diluted earnings per share	$	0.03	$	0.02

Included in the pro forma information for the year to date period ended September 30, 2012, is approximately $50,500 in accounting, advisory and legal fees incurred related to the acquisition of ICS.   

As of September 30, 2012, we have recorded approximately $30,700 in accounting, advisory and legal fees related to the acquisition of ICS. Additionally, we have recorded approximately $41,400 in amortization expense based on the provisional amount of the component of intangible assets of $355,000 for customer lists, using an estimated five year useful life. These amounts are reported within selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the year to date period ended September 30, 2012.

XML

Commitments and Contingencies (Details) (USD $)	Sep. 30, 2012
Notes to Financial Statements
2012 (reminaing three months)	$ 18,257
2013	73,481
2014	74,256
2015	32,135
Thereafter	3,939
Total lease commitments	$ 202,068

XML

Acquisition of 60% of outstanding shares of ICS (Details) (USD $)	Sep. 30, 2012	Feb. 29, 2012
Notes to Financial Statements
Cash	$ 135,200
Accounts receivable	49,700
Prepaid expenses and other current assets	21,000
Deferred tax assets	21,400
Property and equipment	60,600
Other assets	400
Accounts payable	(20,500)
Accrued expenses	(12,500)
Customer deposits	(29,400)
Deferred revenue	(239,000)
Capital lease obligation	(6,500)
Excess attributable to intangible assets	732,600
Total fair value	713,000
Fair value of non-controlling interest	(285,200)	(285,200)
Total consideration	$ 427,800	$ 427,800

XML

Acquisition of 60% of outstanding shares of ICS (Narrative Details) (USD $)	7 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Feb. 29, 2012	Dec. 31, 2011
Notes to Financial Statements
Common stock of ICS acquired in exchange for aggregate consideration	$ 427,800	$ 427,800	$ 427,800
Consideration for ICS stock, cash			350,000
Consideration for ICS stock, IMI shares			172,840
Consideration for ICS stock, IMI shares, value			77,800
Closing price of common stock			$ 0.45
Percent of shares held in escrow under purchase agreement		50.00%
Percent for which IMI has the right of first refusal under purchase agreement		40.00%
Fair value of the non-controlling interest	285,200	285,200	285,200
Intangible assets, client lists			355,000
Intangible assets, goodwill	377,581	377,581	378,000
ICS revenues	714,500
ICS net income (losses)	7,700
Accounting, advisory and legal fees incurred related to the acquisition of ICS.		50,500
Accounting, advisory and legal fees related to the acquisition of ICS, reported selling, general and administrative expenses		30,700
Amorization Expense		$ 41,400

XML

Commitments and Contingencies (Details 1) (USD $)	Sep. 30, 2012
Notes to Financial Statements
2012 (reminaing three months)	$ 2,775
2013	6,422
2014	4,860
2015	4,860
2016 and thereafter	6,657
Future minimum lease payments	25,574
Less amount representing interest	(2,609)
Present value of net minimum lease payments	22,965
Less current portion	(6,975)
Capital lease obligations	$ 15,990

XML

Acquisition of 60% of outstanding shares of ICS (Details 1) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Notes to Financial Statements
Total revenue	$ 4,140,100	$ 4,072,100
Net income	$ 702,400	$ 514,500
Basic and diluted earnings per share; * less than $0.01 per share	$ 0.03	$ 0.02

XML

Basic and Diluted Income per Share (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Notes to Financial Statements
Basic	21,063,153	20,643,862	20,843,311	20,667,409
Weighted average effects of dilutive securities	735,331	194,185	728,085	229,443
Diluted	21,798,484	20,838,047	21,571,396	20,896,852
Antidilutive securities:	$ 100,000	$ 287,500	$ 100,000	$ 287,500

XML

The Company and Basis of Presentation

9 Months Ended

Sep. 30, 2012

Company And Basis Of Presentation

The Company and Basis of Presentation

Note 1 - The Company and Basis of Presentation

Business Overview

Integrated Management Information, Inc., is a Colorado corporation based in Castle Rock, Colorado, (“IMI Global,” “IMI,” the “Company,” “our,” “we,” or “us,”). We provide verification and certification solutions for the agriculture, livestock and food industry. Our customers are located throughout the United States.

On February 29, 2012, we completed an acquisition of a 60% ownership investment in a North Dakota company, International Certification Services, Inc. (“ICS”) (Note 2). This acquisition has been accounted for using the acquisition method of accounting and, accordingly, its results are included in the Company’s condensed consolidated financial statements from the date of acquisition.

With the acquisition of ICS, we began aggregating ICS and IMI operations into one reportable segment: Certification and Verification Services. The factors considered in determining this aggregated reporting segment include the economic similarity of the businesses, the nature of services provided, production processes, types of customers and distribution methods. The Company’s chief operating decision maker (the Company’s CEO) allocates resources and assesses the performance of its Certification and Verification Services activities as one segment. The Company also has an operating segment: WFCF Licensing, which does not currently meet the quantitative threshold to be considered a reporting segment.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the results of operations, financial position and cash flows of Integrated Management Information, Inc. and its majority-owned subsidiary, ICS (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q). All intercompany balances have been eliminated.

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and should be read in conjunction with our audited financial statements and footnotes thereto for the year ended December 31, 2011, included in our Form 10-K filed on March 26, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. The consolidated operating results for the third quarter and year to date period ended September 30, 2012 are not necessarily indicative of the results to be expected for any other interim period of any future year.

Certain reclassifications to the 2011 condensed consolidated statement of operations have been made to conform to the 2012 presentation, none of which had any effect on total revenue, gross profit, income from operations, or net income.

Seasonality

Our business is subject to seasonal fluctuations. Significant portions of our revenues are typically realized during the second and third quarters of the fiscal year when the calf marketings and the growing seasons are at their peak. Because of the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

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Stock-Based Compensation (Narrative Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Notes to Financial Statements
Stock options granted			100,000	220,000
Stock-based compensation expense	$ 7,335	$ 4,394	$ 16,117	$ 8,782

XML

Notes Payable (Narrative Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Notes to Financial Statements
note payable for the purchase of a vehicle	$ 35,963
Interest and principal payments on note payable for purchase of a vehicle	870
Interest rate on note payable for purchase of a vehicle	7.40%
Note payable - related party	300,000
Reduction in the interest rate, from	9.00%
Reduction in the interest rate, to	6.00%
Principal payment	50,000
Great Western Bank SBA Loan	200,000
Great Western Bank SBA Loan, interest rate	2.50%
Great Western Bank SBA Loan, current effective rate	5.75%
John and Leann Saunders security interest personally owned, shares	3,000,000
ICS Revolving Line of Credit	$ 70,050
ICS Revolving Line of Credit, interest rate less than	0.50%
ICS Revolving Line of Credit, current effective rate	5.75%

XML

Condensed Consolidated Balance Sheets (Unaudited) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 1,349,740	$ 969,020
Accounts receivable, net	468,831	226,760
Investment in marketable securities	19,853	283,511
Prepaid expenses and other current assets	43,677	36,776
Deferred tax assets	242,944	224,350
Total current assets	2,125,045	1,740,417
Property and equipment, net	117,188	57,354
Intangible assets, net	331,336	9,205
Goodwill	377,581
Long-term deferred tax assets	376,481
Total assets	3,327,631	1,806,976
Current liabilities:
Accounts payable	245,645	148,384
Accrued expenses and other current liabilities	97,191	42,960
Customer deposits	28,533
Deferred revenue	161,517
Short-term debt and current portion of notes payable	20,823	25,644
Current portion of capital lease obligations	6,975
Total current liabilities	560,684	216,988
Capital lease obligations, net of current portion	15,990
Notes payable and other long-term debt	164,068	176,201
Notes payable, related party	200,000	250,000
Total liabilities	940,742	643,189
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; 21,677,046 (2012) and 21,049,006 (2011) shares issued, and 21,173,799 (2012) and 20,550,759 (2011) shares outstanding	21,677	21,049
Additional paid-in-capital	3,615,708	3,416,343
Treasury stock of 503,247 (2012) and 498,247 (2011) shares	(111,284)	(109,014)
Accumulated other comprehensive loss	250	(6,693)
Accumulated deficit	(1,427,710)	(2,157,898)
Total Integrated Management Information, Inc. equity	2,098,641	1,163,787
Non-controlling interest	288,248
Total equity	2,386,889	1,163,787
Total liabilites and stockholders' equity	$ 3,327,631	$ 1,806,976

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Supplemental Cash Flow Information (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Notes to Financial Statements
Interest on Lapaseotes Notes - related party	$ 10,333	$ 11,392
Other interest	8,280	6,521
Income taxes	10,120
Unrealized gain on marketable securities	6,943
Assets acquired under capital lease obligations	22,258
Common stock issued in connection with ICS acquisition	$ 77,778

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating activities:
Net cash provided by operating activites	$ 317,877	$ 639,803
Investing activities:
Acquisition of International Certification Services, net of cash acquired	(214,774)
Proceeds from sale of marketable securities	282,756
Purchases of property and equipment	(22,529)
Purchase of other long term assets	(13,664)	(7,155)
Net cash used in investing activities	31,789	(7,155)
Financing activities:
Proceeds from notes payable		200,000
Repayments of notes payable	(66,954)	(82,787)
Repayments of capital lease obligations	(5,820)
Proceeds from stock option exercise	106,098	1,800
Stock repurchase under Buyback Program	(2,270)	(47,368)
Net cash (used in) provided by financing activities	31,054	71,645
Net change in cash and cash equivalents	380,720	704,293
Cash and cash equivalents at beginning of period	969,020	513,076
Cash and cash equivalents at end of period	$ 1,349,740	$ 1,217,369

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Stock Buyback Plan (Details) (USD $)	9 Months Ended	12 Months Ended				50 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008	Sep. 30, 2012
Notes to Financial Statements
Number of shares	5,000	247,691	171,031	22,325	57,200	503,247
Cost of shares	$ 2,270	$ 61,597	$ 27,273	$ 4,020	$ 16,124	$ 111,284
Average cost per share	$ 0.45	$ 0.25	$ 0.16	$ 0.18	$ 0.28	$ 0.22

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Stock Buyback Plan (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Repurchased shares under the Stock Buyback Plan

Repurchased shares under the Stock Buyback Plan by year are as follows:

For the year to date period ended:	Number of Shares		Cost of Shares		Average Cost per Share
December 31, 2008		57,200	$	16,124	$	0.28
December 31, 2009		22,325		4,020	$	0.18
December 31, 2010		171,031		27,273	$	0.16
December 31, 2011		247,691		61,597	$	0.25
September 30, 2012		5,000		2,270	$	0.45
Total		503,247	$	111,284	$	0.22

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Income Taxes (Narrative Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Notes to Financial Statements
Net operating loss carry forwards for U.S. federal income tax			$ 1,800,000
Deferred tax benefit	$ 46,500	$ 363,000

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Investments in Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Investments in marketable securities summary

The following table summarizes our investments in marketable securities.

	September 30, 2012
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Equity securities	$	19,603	$	250	$	—	$	19,853

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (USD $)	Common Stock	Additional Paid-in Capital	Treasury Stock	Other Comprehensive (Loss)/Gain	Accumulated Deficit	Noncontrolling Interest	Total
Balance beginning at Dec. 31, 2011	$ 21,049	$ 3,416,343	$ (109,014)	$ (6,693)	$ (2,157,898)		$ 1,163,787
Balance beginning, shares at Dec. 31, 2011	20,550,759						20,550,759
Acquisition of International Certification Services, Inc.:
Shares issued	173	77,605
Shares issued, shares	172,840
Non-controlling interest						285,185
Stock-based compensation expense		16,117					16,117
Stock repurchase on the open market			(2,270)
Stock repurchase on the open market, shares	(5,000)
Issuance of common shares upon exercise of options	455	105,643
Issuance of common shares upon exercise of options, shares	455,200
Unrealized gain on marketable securities				6,943			250
Net income attributable to IMI common shareholders					730,188	3,063	733,251
Balance ending at Sep. 30, 2012	$ 21,677	$ 3,615,708	$ (111,284)	$ 250	$ (1,427,710)	$ 288,248	$ 2,386,889
Balance ending, shares at Sep. 30, 2012	21,173,799						21,173,799

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	95,000,000	95,000,000
Common stock, shares issued	21,677,046	21,049,006
Common stock, shares outstanding	21,173,799	20,550,759
Treasury stock, shares	503,247	498,247

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 10 - Recent Accounting Pronouncements

In 2011, the Financial Accounting Standards Board (“FASB”) issued two Accounting Standards Updates (“ASU”) which amend guidance for the presentation of comprehensive income. The amended guidance requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The previous option to report other comprehensive income and its components in the statement of shareholders’ equity was eliminated. Although the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under existing guidance. We elected to report other comprehensive income and its components in a separate statement of comprehensive income for the quarter and year to date period ended September 30, 2012 and 2011. The adoption of these ASU’s did not have a material impact on our financial statements.

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 condensed consolidated financial statements.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 26, 2012
Document And Entity Information
Entity Registrant Name	Integrated Management Information, Inc.
Entity Central Index Key	0001360565
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		21,173,799
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

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Supplemental Cash Flow Information

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Supplemental Cash Flow Information

Note 11 – Supplemental Cash Flow Information

	Year to date ended September 30,
	2012		2011
Cash paid during the year:
Interest on Lapaseotes Notes - related party	$	10,333	$	11,392
Other interest	$	8,280	$	6,521
Income taxes	$	10,120	$	—
Non-cash investing and financing activities:
Unrealized gain on marketable securities	$	6,943	$	—
Assets acquired under capital lease obligations	$	22,258	$	—
Common stock issued in connection with ICS acquisition	$	77,778	$	—

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidated Statements Of Operations
Service revenues	$ 1,237,215	$ 892,360	$ 3,255,266	$ 2,512,652
Product sales	268,750	331,004	625,986	653,999
Other revenue	39,196	26,707	90,375	30,712
Total revenues	1,545,161	1,250,071	3,971,627	3,197,363
Labor and other costs of services	543,362	329,969	1,387,499	920,594
Costs of products	198,862	248,959	454,279	476,355
Total costs of revenues	742,224	578,928	1,841,778	1,396,949
Gross profit	802,937	671,143	2,129,849	1,800,414
Selling, general and administrative expenses	686,538	460,357	1,755,873	1,220,839
Income from operations	116,399	210,786	373,976	579,575
Interest expense	6,068	7,046	19,761	22,496
Gain on sale of marketable securities	(9,581)		(12,155)
Other income, net	(556)	(210)	(3,909)	(1,238)
Income before income taxes	120,468	203,950	370,279	558,317
Income tax expense (benefit)	46,500		(362,972)
Net Income	73,968	203,950	733,251	558,317
Net (income) loss attributable to non-controlling interest	(10,336)		(3,063)
Net income attributable to Integrated Management Information, Inc.	$ 63,632	$ 203,950	$ 730,188	$ 558,317
Basic		$ 0.01	$ 0.04	$ 0.03
Diluted		$ 0.01	$ 0.03	$ 0.03
Basic	21,063,153	20,643,862	20,843,311	20,667,409
Diluted	21,798,484	20,838,047	21,571,396	20,896,852

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Stock Buyback Plan

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Stock Buyback Plan

Note 5 - 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. Repurchased shares under the Stock Buyback Plan by year are as follows:

For the year to date period ended:	Number of Shares		Cost of Shares		Average Cost per Share
December 31, 2008		57,200	$	16,124	$	0.28
December 31, 2009		22,325		4,020	$	0.18
December 31, 2010		171,031		27,273	$	0.16
December 31, 2011		247,691		61,597	$	0.25
September 30, 2012		5,000		2,270	$	0.45
Total		503,247	$	111,284	$	0.22

The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method.

Our stock buyback plan has been and will be used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. In the future, we may consider additional share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, and planned investment and financing needs.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Stock-Based Compensation

Note 4 - 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.

The fair value of stock options is estimated using the Black-Scholes option-pricing model, which incorporates ranges of assumptions for inputs. Our assumptions are as follows:

· Dividend yield is based on our historical and anticipated policy of not paying cash dividends.

· Expected volatility assumptions were derived from our actual volatilities.  

· The risk-free interest rate is based on the US Treasury yield curve in effect at the date of grant with maturity dates approximately equal to the expected term at the grant date.

· The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedules, based on historical exercise patterns, which we believe are representative of future behavior.

For the year to date period ended September 30, 2012 and 2011, stock options to purchase 100,000 and 220,000 shares of common stock were granted, respectively. The fair value of stock options granted was estimated using the following assumptions:

	For the Quarter ended					For the Year to Date Period ended
	September 30,			September 30,		September 30,			September 30,
	2012			2011		2012			2011
Expected term of options from date of grant		8 years			N/A		8 years			8 years
Risk free interest rate		2.56	%		N/A		2.56	%		2.26	%
Expected volatility		212.5	%		N/A		212.5	%		229.6	%
Assumed dividend yield		0	%		N/A		0	%		0	%

Stock-based compensation expense for the third quarter ended September 30, 2012 and 2011 was $7,335 and $4,394, respectively. Stock-based compensation expense for the year to date period ended September 30, 2012 and 2011 was $16,117 and $8,782, respectively. Stock-based compensation expense has been included in general and administrative expenses.

Stock Option Plan Activity

Stock option activity under our Plans is summarized as follows:

	Number of			Weighted Avg. Exercise Price		Weighted Avg. Fair Value		Weighted Avg. Remaining Contractual Life		Aggregate
	Options/Warrants			per Share		per Share		(in years)		Intrinsic Value
Outstanding, December 31, 2011		1,321,000		$	0.25	$	0.07		2.83
Granted		100,000		$	1.15	$	1.15		9.72
Exercised		(455,200	)	$	0.23	$	0.04		0.47
Canceled		—		$	—	$	—		—
Outstanding, September 30, 2012		965,800		$	0.35	$	0.20		3.54	$	1,066,243
Exercisable, September 30, 2012		719,126		$	0.26	$	0.07		1.63	$	858,767

The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of our common stock on September 30, 2012 and the exercise price for the in-the-money options) that would have been received by the option holders if all the in-the-money options had been exercised on September 30, 2012.

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Operating loss carry forward expiration schedule

As of December 31, 2011, our net operating loss carry forwards for U.S. federal income tax purposes were $1.8 million, and were subject to the following expiration schedule:

Net operating loss incurred:	Amount		Expiration dates:
December 31, 2006	$	1,454,431	December 31, 2026
December 31, 2007		365,518	December 31, 2027
Total tax carryforwards	$	1,819,949

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Acquisition of 60% of outstanding shares of ICS (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Fair values assigned to the assets and liabilities acquired

Cash	$	135,200
Accounts receivable		49,700
Prepaid expenses and other current assets		21,000
Deferred tax assets		21,400
Property and equipment		60,600
Other assets		400
Accounts payable		(20,500	)
Accrued expenses		(12,500	)
Customer deposits		(29,400	)
Deferred revenue		(239,000	)
Capital lease obligation		(6,500	)
Excess attributable to intangible assets		732,600
Total fair value		713,000
Fair value of non-controlling interest		(285,200	)
Total consideration	$	427,800

Results of operations as if the acquisition of ICS had occurred on January 1, 2012 and 2011.

	Year to Date period ended
		September 30,		September 30,
		2012		2011
Total revenue		$	4,140,100	$	4,072,100
Net income		$	702,400	$	514,500
Diluted earnings per share		$	0.03	$	0.02

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Notes Payable

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Notes Payable

Note 8 - Notes Payable

Notes payable consist of the following:

	September 30,		December 31,
	2012		2011
Equipment Note Payable	$	4,271	$	11,630
Lapaseotes Note Payable - Related Party		200,000		250,000
Great Western Bank SBA Loan		180,620		190,215
		384,891		451,845
Less current portion of notes payable and other long-term debt		20,823		25,644
Notes payable and other long-term debt	$	364,068	$	426,201

Equipment Note Payable

In 2009, we issued a note payable in the amount of $35,963 for the purchase of a vehicle. Interest and principal payments are due in equal monthly installments of $870 over four years beginning March 17, 2009. This note bears an interest rate of 7.4% per annum and is collateralized by the vehicle.

Lapaseotes Note Payable – Related Party

In September 2007, we obtained $300,000 in unsecured debt financing. The notes are held by a major shareholder who is related to Mr. Lapaseotes, a member of our Board of Directors. In April 2011, modifications to the terms of the existing agreement were completed. Such modifications included a reduction in the interest rate from 9% to 6% annually, as well as an extension of the maturity date from September 12, 2012 to March 31, 2014. Principal is due in full upon the maturity date; interest is payable quarterly. In April 2012, we paid an additional $50,000 towards the principal.

Great Western Bank SBA Loan

On April 22, 2011, we entered into a U.S. Small Business Administration (“SBA”) Note with Great Western Bank. This note, which matures on May 1, 2021, provides for $200,000 in additional working capital. The interest rate is at prime plus 2.5% and is adjusted quarterly. Principal and interest are payable monthly. As of September 30, 2012, the effective interest rate is 5.75%. The note can be prepaid without penalties and contains certain customary affirmative and negative covenants.

The loan agreement is collateralized by the accounts receivable, property and equipment, and intangible assets of the Company. The note is further guaranteed by John and Leann Saunders, significant shareholders, officers and members of the Company’s Board of Directors, with a security interest in 3,000,000 shares of the Company’s common stock, which are personally owned by the Saunders.

ICS Revolving Line of Credit

ICS has a revolving line of credit (LOC) agreement which matures on April 4, 2014, and provides for $70,050 in working capital. The interest rate is at the bank index rate less 0.5% and is adjusted daily. Interest is calculated using a 360 day year. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only is due, with the principal balance due on maturity. As of September 30, 2012, the effective interest rate is 5.75%. The LOC is collateralized by all the business assets of ICS. As of the date of acquisition and through September 30, 2012, ICS had no amounts outstanding under this LOC.

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Income Taxes

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Income Taxes

Note 6 – 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 (NOL) carry forwards are the most significant component of our deferred tax assets; however, the ultimate realization of our deferred 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. Utilization of our NOL carry forwards reduces our federal and state income tax liability incurred.

As of December 31, 2011, our net operating loss carry forwards for U.S. federal income tax purposes were $1.8 million, and were subject to the following expiration schedule:

Net operating loss incurred:	Amount		Expiration dates:
December 31, 2006	$	1,454,431	December 31, 2026
December 31, 2007		365,518	December 31, 2027
Total tax carryforwards	$	1,819,949

Our unused net operating loss carry forwards may be applied against future taxable income.

During the third quarter and year to date periods ended September 30, 2012 and 2011, utilization of NOL carry forwards reduced our effective tax rate. For the third quarter and year to date period ended September 30, 2012, we recorded income tax expense of approximately $46,500 and an income tax benefit of approximately $363,000, respectively. The income tax benefit for the nine months ended September 30, 2012 included the effect of reversing the remainder of our valuation allowance that existed as of December 31, 2011 after concluding the likelihood for a full realization of the benefits of our deferred tax assets is more likely than not.

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Investments in Marketable Securities

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Investments in Marketable Securities

Note 7 – Investments in Marketable Securities

The following table summarizes our investments in marketable securities.

	September 30, 2012
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Equity securities	$	19,603	$	250	$	—	$	19,853

Fair value accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements, for both financial and non-financial assets. It also establishes a fair value hierarchy that prioritizes the inputs used to measure fair value.

The fair value hierarchy consists of three broad levels, which are described below:

· Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

· Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

· Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Our investments in available-for-sale marketable securities include individual corporate equity securities. For these securities, we use quoted prices in active markets for identical assets to determine their fair value, thus they are considered to be Level 1 instruments under the fair value hierarchy. The method described may produce a fair value calculation that may not be indicative of net realizable value of future fair values. Although we believe our valuation method is appropriate, the use of a different methodology or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

During the third quarter ended September 30, 2012, we sold a significant portion of our marketable securities and reinvested the cash in money market accounts to be used for operations and potential acquisitions. A gain from the sale of marketable securities of $9,581 and $12,155 was recognized for the third quarter and year to date period ended September 30, 2012, respectively. The gain has been recorded in other income on the statement of operations.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Commitments and Contingencies

Note 9 - Commitments and Contingencies

Operating Leases

In June 2012, we amended the building lease for our headquarters in Castle Rock, Colorado. The lease is for a period of three years with an expiration date of June 15, 2015. In addition to the primary rent, the lease requires additional payments for operating costs and other common area maintenance costs.

ICS owns approximately ¾ acre on which its corporate office is located in Medina, North Dakota. Currently, the ICS corporate office is leased for a period of 10 years with an initial expiration date of March 1, 2013. Two additional options to renew for 5-year terms exist and are deemed to automatically renew unless written notice is provided 60 days before the end of the term. Under the lease agreement, ICS pays a minimum monthly rental rate of approximately $150 plus all utilities, taxes and other expenses based on actual expenses to maintain the building.

As of September 30, 2012, future minimum lease payments are as follows:

Years Ending December 31,		Amount
	2012 (remaining three months)	$	18,257
	2013		73,481
	2014		74,256
	2015		32,135
	Thereafter		3,939
	Total lease commitments	$	202,068

Sub-lease Agreement

ICS sub-leases approximately 300 square feet of space located within its corporate office to a third party on a month-to-month basis. Monthly rent of $302 includes utilities and other common area maintenance. The sub-lease agreement provides for 30 days’ notice to terminate the agreement.

Capital Leases

During the first quarter ended March 31, 2012, we entered into a capital lease for certain office equipment with a base rent of $405 per month. This 63-month lease expires April 2017. Approximately $22,300 in asset cost has been included in property and equipment and is being amortized over 63 months. Imputed interest of 5.25% was used in determining the minimum lease payments.

ICS leases certain office equipment under a capital lease with a base rent of $521 per month. The lease expires in April 2013. Included in property and equipment is $7,100 in asset cost. Imputed interest of 6.25% was used in determining the minimum lease payments.

As of September 30, 2012, future minimum lease payments for capital leases are as follows:

Years Ending December 31,	Amount
2012 (remaining three months)	$	2,775
2013		6,422
2014		4,860
2015		4,860
2016 and thereafter		6,657
Future minimum lease payments		25,574
Less amount representing interest		(2,609	)
Present value of net minimum lease payments		22,965
Less current portion		(6,975	)
Capital lease obligations	$	15,990

Employment Agreements

In January 2006, we entered into employment agreements with John Saunders, our Chief Executive Officer, and with Leann Saunders, our President. The agreements automatically renew annually unless a 60-day notice of non-renewal is provided by either the Company or the employee.

Effective January 1, 2012, ICS entered into an employment agreement with Christina Dockter as its Chief Executive Officer, for a period of 2 years. The agreement automatically renews annually unless a 60-day notice of non-renewal is provided by either the Company or the employee.

Legal proceedings

From time to time, we may become 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 our financial position, results of operations or cash flows. We are not aware of any such legal actions, proceedings or claims as of September 30, 2012.

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Stock-Based Compensation (Details 1) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Granted	100,000	220,000
Number of Options/Warrants
Outstanding, Beginning	1,321,000
Granted	100,000
Exercised	(455,200)
Canceled
Outstanding, Ending	965,800
Exercisable, Ending	719,126
Weighted Avg. Exercise Price per Share
Outstanding, Beginning	0.25
Granted	1.15
Exercised	0.23
Canceled
Outstanding, Ending	0.35
Exercisable, Ending	0.26
Weighted Avg. Fair Value per Share
Outstanding, Beginning	0.07
Granted	1.15
Exercised	0.04
Canceled
Outstanding, Ending	0.20
Exercisable, Ending	0.07
Weighted Avg. Remaining Contractual Life (in years)
Outstanding, Beginning	2 years 9 months 29 days
Granted	9 years 8 months 19 days
Exercised	0 years 5 months 19 days
Canceled	0 years 0 months
Outstanding, Ending	3 years 6 months 14 days
Exercisable, Ending	1 year 7 months 17 days
Aggregate Intrinsic Value
Outstanding, Ending	1,066,243
Exercisable, Ending	858,767

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Stock option activity under plans, summarized

The fair value of stock options granted was estimated using the following assumptions:

	For the Quarter ended					For the Year to Date Period ended
	September 30,			September 30,		September 30,			September 30,
	2012			2011		2012			2011
Expected term of options from date of grant		8 years			N/A		8 years			8 years
Risk free interest rate		2.56	%		N/A		2.56	%		2.26	%
Expected volatility		212.5	%		N/A		212.5	%		229.6	%
Assumed dividend yield		0	%		N/A		0	%		0	%

Fair value of stock options granted, estimation assumptions

Stock option activity under our Plans is summarized as follows:

	Number of			Weighted Avg. Exercise Price		Weighted Avg. Fair Value		Weighted Avg. Remaining Contractual Life		Aggregate
	Options/Warrants			per Share		per Share		(in years)		Intrinsic Value
Outstanding, December 31, 2011		1,321,000		$	0.25	$	0.07		2.83
Granted		100,000		$	1.15	$	1.15		9.72
Exercised		(455,200	)	$	0.23	$	0.04		0.47
Canceled		—		$	—	$	—		—
Outstanding, September 30, 2012		965,800		$	0.35	$	0.20		3.54	$	1,066,243
Exercisable, September 30, 2012		719,126		$	0.26	$	0.07		1.63	$	858,767

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Operating leases future minimum lease payments

As of September 30, 2012, future minimum lease payments are as follows:

Years Ending December 31,		Amount
	2012 (remaining three months)	$	18,257
	2013		73,481
	2014		74,256
	2015		32,135
	Thereafter		3,939
	Total lease commitments	$	202,068

Capital leases future minimum lease payments

As of September 30, 2012, future minimum lease payments for capital leases are as follows:

Years Ending December 31,	Amount
2012 (remaining three months)	$	2,775
2013		6,422
2014		4,860
2015		4,860
2016 and thereafter		6,657
Future minimum lease payments		25,574
Less amount representing interest		(2,609	)
Present value of net minimum lease payments		22,965
Less current portion		(6,975	)
Capital lease obligations	$	15,990

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Notes Payable (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Notes to Financial Statements
Equipment Note Payable	$ 4,271	$ 11,630
Lapaesotes Note Payable - Related Party	200,000	250,000
Great Western Bank SBA Loan	180,620	190,215
[LongTermNotesPayable]	384,891	451,845
Less current portion of notes payable and other long-term debt	20,823	25,644
Notes payable and other long-term debt	$ 364,068	$ 426,201

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidated Statements Of Comprehensive Income
Net income	$ 73,968	$ 203,950	$ 733,251	$ 558,317
Unrealized (loss) gain on marketable securities	3,449		250
Comprehensive income	77,417	203,950	733,501	558,317
Comprehensive (income) loss attributable to non controlling interest	(10,336)		(3,063)
Comprehensive income attributable to Integrated Management Information, Inc.	$ 67,081	$ 203,950	$ 730,438	$ 558,317

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Basic and Diluted Income per Share

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Basic and Diluted Income per Share

Note 3 - Basic and Diluted Income per Share

Basic income per share was computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted income 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.

The following schedule is a reconciliation of the share data used in the basic and diluted income per share computations:

	Quarter ended				Year to Date ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Basic:
Weighted average shares outstanding		21,063,153		20,643,862		20,843,311		20,667,409
Diluted:
Weighted average shares outstanding		21,063,153		20,643,862		20,843,311		20,667,409
Weighted average effects of dilutive securities		735,331		194,185		728,085		229,443
Total		21,798,484		20,838,047		21,571,396		20,896,852
Antidilutive securities:		100,000		287,500		100,000		287,500

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Supplemental Cash Flow Information

	Year to date ended September 30,
	2012		2011
Cash paid during the year:
Interest on Lapaseotes Notes - related party	$	10,333	$	11,392
Other interest	$	8,280	$	6,521
Income taxes	$	10,120	$	—
Non-cash investing and financing activities:
Unrealized gain on marketable securities	$	6,943	$	—
Assets acquired under capital lease obligations	$	22,258	$	—
Common stock issued in connection with ICS acquisition	$	77,778	$	—

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Investments in Marketable Securities (Narrative Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Notes to Financial Statements
Gain on sale of marketable securities	$ (9,581)		$ (12,155)

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Basic and Diluted Income per Share (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Schedule reconciliation of the share data used in the basic and diluted income per share computations

The following schedule is a reconciliation of the share data used in the basic and diluted income per share computations:

	Quarter ended				Year to Date ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Basic:
Weighted average shares outstanding		21,063,153		20,643,862		20,843,311		20,667,409
Diluted:
Weighted average shares outstanding		21,063,153		20,643,862		20,843,311		20,667,409
Weighted average effects of dilutive securities		735,331		194,185		728,085		229,443
Total		21,798,484		20,838,047		21,571,396		20,896,852
Antidilutive securities:		100,000		287,500		100,000		287,500