AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL __, 2006
REGISTRATION NO: 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INTEGRATED MANAGEMENT INFORMATION, INC.
Colorado 0751 43-1802805
-------- ---- ----------
(State of jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
601 4th Street, Platte City, MO 64079
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(816) 858-4796
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(Address and Telephone Number of Principal Executive Offices)
John Saunders
President, Chief Executive Officer, and Chairman of the Board of Directors
601 4th Street, Platte City, MO 64079
(816) 858-4796
(Name, address and telephone number of agent for service)
Copy to:
Hank Vanderkam
Vanderkam & Associates
1301 Travis, #1200 Houston, TX 77002
(713) 547-8900, (713) 547-8910 fax
Approximate date of commencement of proposed sale to the public: As soon as
practical after the date this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, as amended, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
======================================================================================
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to Amount Offering Price Aggregate Amount of
be Registered To be Registered Per Share Offering Price Registration Fee
================ ================ ============== =============== ===============
Common Stock, $0.001
par value per share 17,867,515(1) $0.83 $14,830,037 $1,885.76
================ ================ ============== =============== ===============
(1) In the event of a stock split, stock dividend or similar transaction
involving our common stock, in order to prevent dilution, the number of shares
registered shall be automatically increased to cover the additional shares in
accordance with Rule 416(a).
(2) The maximum offering price has been estimated solely for the purpose of
determining our registration fee pursuant to Rule 457(c) as the most recent
sales prices of our common stock was that offered in our last private placement
which closed on February 12, 2006.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Subject to completion, dated April __, 2006
Preliminary Prospectus
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and the selling
shareholders are not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
Integrated Management Information, Inc.
17,867,515 Shares of Common Stock
This prospectus relates to the resale of up to 17,867,515 shares of our common
stock, from time to time, by some of our shareholders who purchased shares of
our common stock in private placements that we completed on May 30, 2005 and
February 12, 2006, shares issued for the partial conversion of a note, shares
issued to our underwriter as well as the shares of our founding shareholders.
These shareholders are referred to throughout this prospectus as the "selling
shareholders." The selling shareholders may sell the common stock covered by
this prospectus, from time to time, directly or through agents or dealers, on
terms to be determined at the time of sale. The prices at which the selling
shareholders may sell their shares will be determined by the prevailing market
price for the shares at the time of sale or in negotiated transactions.
The selling shareholders will receive all of the proceeds from any sales of our
common stock made pursuant to this prospectus. Accordingly, we will receive no
proceeds from sales of our common stock made pursuant to this prospectus. We are
paying the expenses of registering the shares covered by this prospectus and
preparing this prospectus, but the selling shareholders will pay any selling
expenses incurred by them in connection with the shares of common stock covered
by this prospectus.
Our common stock is not currently traded.
We reorganized our corporate structure on April __, 2006 to change the Company's
state of Incorporation from Delaware to Colorado and increased our number of
post three for two forward split shares authorized to 95,000,000 common shares
$0.001 par value and 5,000,000 preferred shares $0.001 par value from 50,000,000
shares of common stock, $0.01 par value.
Investing in our common stock involves a high degree of risk. Please see the
section entitled "Risk Factors" beginning on page 5 of this prospectus to read
about risks you should consider before buying our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is April
___, 2006.
TABLE OF CONTENTS
Prospectus Summary.......................................................... 4
Risk Factors................................................................ 5
Special Note Regarding Forward-Looking Statements........................... 9
Use of Proceeds............................................................. 10
Market for our Common Stock and Related Shareholder Matters................. 10
Management's Discussion and Analysis of Financial Condition and Results
of Operation................................................................ 10
Business.................................................................... 14
Description of Properties................................................... 19
Legal Proceedings........................................................... 19
Directors, Executive Officers and Significant Employees..................... 19
Executive Compensation...................................................... 22
Certain Relationships and Related Transactions.............................. 23
Security Ownership of Certain Beneficial Owners and Management.............. 24
Description of Common Stock................................................. 25
Indemnification For Securities Act Liabilities.............................. 26
Selling Shareholders........................................................ 28
Plan of Distribution........................................................ 29
Legal Opinion............................................................... 29
Experts..................................................................... 29
Additional Information...................................................... 29
Index to Financial Statements............................................... 30
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Dealer Prospectus Delivery Obligation
Until ________ 2006 (90 days from the date of this prospectus), all dealers that
effect transactions in these securities, whether or not participants in this
offering, may be required to deliver a prospectus.
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We have not authorized any dealer, salesperson or other person to give you any
information or to make any representations to you, other than those contained or
incorporated by reference in this prospectus, in connection with the offer
contained in this prospectus and, if given or made, you should not rely on such
information or representations as having been authorized by us.
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Neither the delivery of this prospectus nor any sale made pursuant to it shall
under any circumstance create an implication that there has been no change in
our affairs since the date of this prospectus. This prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, securities
other than those specifically offered hereby or of any securities offered hereby
in any jurisdiction where, or to any person to whom, it is unlawful to make such
offer or solicitation. The information contained in this prospectus speaks only
as of the date of this prospectus unless the information specifically indicates
that another date applies.
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This prospectus has been prepared based on information provided by us and by
other sources that we believe are reliable. In addition, this prospectus
summarizes certain documents and other information in a manner we believe to be
accurate, but we refer you to the actual documents, if any, for a more complete
understanding of the documents that we discuss in this prospectus. In making a
decision to invest in our common stock, you must rely on your own examination of
our company and the terms of the offering and the common stock, including the
merits and risks involved.
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We are not making any representation to you regarding the legality of an
investment in the common stock by you under any legal investment or similar laws
or regulations. You should not consider any information in this prospectus to be
legal, business, tax or other advice. You should consult your own attorney,
business advisor and tax advisor for legal, business and tax advice regarding an
investment in the common stock.
------------------------------------------------------
In this prospectus, "Integrated Management Information, Inc." "the company,"
"we," "us" and "our" refer to Integrated Management Information, Inc., a
Colorado corporation, unless the context otherwise requires. In this prospectus,
the "Securities Act" refers to the Securities Act of 1933, as amended.
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The following summary highlights important information about the offering of
common stock covered by this prospectus, but it may not contain all of the
information that is important to you. You should read this summary only in
conjunction with the more detailed information regarding this offering, our
company, our common stock and our financial statements appearing elsewhere in
this prospectus, including the section entitled "Risk Factors" beginning on page
5 of this prospectus.
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PROSPECTUS SUMMARY
Our Company
We were organized to apply information technology and electronic documentation
management to the livestock industry by addressing the growing importance to the
industry (producers, processors, and customers) of detailed information
regarding identification, traceability, and verification of marketing claims
such as: source of origin information, genetic background, animal treatment,
animal health history, animal age, animal movements, nutrition, and other
credence attributes (those claims made that can not be confirmed by visual
inspection once the product reaches the meat case and is marketed to the
consumer). To address this demand, we developed a range of proprietary computer
software, consulting methodologies, auditing processes, and other services to
allow the livestock industry to record, manage, report, and audit this
information .
General
Our principal executive offices are located at 601 4th Street, Platte City,
Missouri 64079. Our telephone number is (816) 858-4796. Our website address is
www.imiglobal.com.
Shares Being Registered
The Private Placements
We completed two private placements of securities on May 30, 2005 and February
12, 2006, respectively in which we sold shares of our common stock. In the May
30, 2005 Private Placement, we sold 928,796 shares of our common stock at $0.91
per share and the founding shareholders and two members of the Company's Board
of Directors directly sold 442,860 shares. In the February 12, 2006 Private
Placement, we sold 1,585,400 shares of our common stock at $1.25 per share.
Simultaneously, the Company purchased 5,500,000 shares, 4,800,000 from the
founding shareholders at $0.075 per share and 800,000 from two members of the
Board of Directors for $0.75 per share.
We offered and sold the shares in reliance on Section 4(2) of the Securities
Act. In connection with the sale, the selling shareholders represented to us
that they were "accredited investors" within the meaning of Regulation D
promulgated under the Securities Act.
Other Shares Being Registered
We are also registering 6,091,427 shares issued to our founding shareholders,
2,663,186 shares for the conversion of notes and options associated with the
notes, and 200,000 shares issued to our underwriters.
In February 2006, our shares were split on a three for two basis. Therefore, the
number of shares being registered is 150% of the afore-referenced number. Of the
"Other Shares", a significant number of these shares have been gifted to third
parties. See "Selling Shareholders".
The Offering
Issuer: Integrated Management Information, Inc.
Securities Offered: The selling shareholders are offering up
to 17,867,515 shares of our common stock.
The shares consist of 17,867,515 outstanding shares
of common stock that we sold in private placements
and shares originally issued to our founders
4
OTC Symbol: "________"
Securities Outstanding: As of April 15, 2006, 17,867,515 shares
of our common stock were issued and
outstanding. This
number represents the three (3) for
two (2) forward split approved by
the shareholders on February 14,
2006.
Use of Proceeds: We will not receive any proceeds from
sales of our common stock covered
by this prospectus. The selling
shareholders will receive all proceeds
from sales of common stock covered by this
prospectus.
Offering Price: The offering
price for the shares of
common stock covered by
this prospectus will be
determined by the
prevailing market price
for the shares at the
time of their sale or in
negotiated transactions.
Risk Factors: An investment in our common stock
is highly speculative. You should read the
"Risk Factors" section beginning on page 9
of this prospectus (along with other
matters referred to and incorporated by
reference in this prospectus) to ensure
that you understand the risks associated
with a purchase of our common stock.
Terms of Sale: The terms of sale for the shares
of our common stock covered by this
prospectus will be determined at the time
of their sale.
Summary Financial Data
The following financial information should be read together with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited financial statements included elsewhere in this prospectus.
- ------------------------------------- ----------------------- ------------------
Year Ended December 31, Year Ended December
2005 31, 2004
- ------------------------------------- ------------------- ---------------------
- ------------------------------------- ------------------- ---------------------
Statements of Operations Data:
- ------------------------------------- ------------------- ---------------------
- ------------------------------------- ------------------- ---------------------
Revenues $ 957,894 $ 451,305
- ------------------------------------- ------------------- ---------------------
- ------------------------------------- ------------------- ---------------------
Cost of Sales 534,158 160,832
- ------------------------------------- ------------------- ---------------------
- ------------------------------------- ------------------- ---------------------
Expenses 1,390,671 238,061
- ------------------------------------- ------------------- ---------------------
- ------------------------------------- ------------------- ---------------------
Other Income (expenses) (37,701) (11,913)
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- ------------------------------------- ------------------- ---------------------
Net income (loss) (1,004,636) 40,499
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- ------------------------------------- ------------------- ---------------------
Basic income (loss) per common share ($0.07) $3.37
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- ------------------------------------- ------------------- ---------------------
Average shares outstanding 15,358,417 12,000
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- ------------------------------------- ------------------- ---------------------
Balance Sheet: December 31, 2005 December 31, 2004
- ------------------------------------- ------------------- ---------------------
- ------------------------------------- ------------------- ---------------------
Cash and cash equivalents $ 684,833 $ 12
- ------------------------------------- ------------------- ---------------------
- ------------------------------------- ------------------- ---------------------
Working Capital 599,322 (67,429)
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- ------------------------------------- ------------------- ---------------------
Total assets 1,950,455 158,921
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- ------------------------------------- ------------------- ---------------------
Total liabilities 686,586 190,988
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- ------------------------------------- ------------------- ---------------------
Total shareholders' equity 1,263,869 (32,067)
- ------------------------------------- ------------------- ---------------------
5
RISK FACTORS
You should carefully consider the risks described below before purchasing our
common stock. The risks and uncertainties described below are not the only ones
we face. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business or cause the value of our
common stock to drop. If any of the following risks actually occur, our business
could be adversely affected. In those cases, the trading price of our common
stock could decline, and you may lose the value of your investment in our
securities.
Risks Related to Our Business
-------------------------------------------
We have had a history of operating losses, and there is no assurance that we
will achieve profitability in the future.
We have a history of operating losses. For our calendar year ended December 31,
2005, we experienced a net loss from continuing operations of $1,004,636 and we
were unprofitable during the first quarter of 2006. It is uncertain if our
future prospects will result in profitable operations and, if we experience
future losses, the value of an investment in our common stock could decline
significantly.
Market Acceptance of our recently introduced products is uncertain.
Although marketing research indicates that market acceptance of our recently
introduced products is likely, market adoption is not certain. The Company can
offer investors no assurances that its products will generate sufficient
revenues to support a profitable business. If sales are inadequate, revenues may
not be sufficient to sustain our business, which may result in cessation of
operations.
A significant portion of our projected near-term revenue growth is contingent
upon strong sales of USVerified Source and Age Verification System
We are currently benefiting from a slow but growing movement among US beef
producers to source verify beef products. The emerging trend is fueled in part
by anticipation of the reopening of US beef export trade with Japan and other
countries. The Company, however, can offer investors no assurances that trade
barriers to US beef exports, especially with respect to Japan, will be lifted
nor can the Company estimate the timing of the resumption of US beef export
trade with certain countries should it occur. In the event that trade
restrictions for meat exports to certain countries are not lifted, we may not be
able to achieve revenue growth as planned, thus jeopardizing our viability as a
profitable entity.
Unless the Japanese market for US Beef reopens, there is a limited U.S. market
for our products.
As a result of mad cow disease in at least one animal in the U.S., the Japanese
beef market was closed to U.S. cattle and has been so far a protracted period
except for a few weeks in December 2005 and January 2006. Because the Japanese
market is the largest beef export market for U.S. producers and because the
Japanese market requires verification, it is important to the sale of our
products. Because the U.S. market does not mandate verification, there is
limited incentive for beef producers to purchase our products. Therefore, unless
the Japanese market for U.S. beef reopens, our sales will be significantly
impaired and we will be unable to operate at a profit.
In the event that market demand for beef products declines, our customers may
not be able to generate sufficient revenues to justify purchase of our
verification solutions and consulting services
Public attitudes towards beef may be influenced by claims that beef products are
unsafe for consumption or pose unknown health risks. Decreased demand for beef
products could have a material adverse affect on the operating results and
financial condition of our existing or prospective customers. If operating
results are impaired, the resources that our customers can devote to building
information systems for tracking cattle and herd management would be reduced
which in turn would limit purchases of our verification solutions and consulting
services, our ability to generate revenue is subject to risks and uncertainties
relating to the financial condition of its customers.
6
Our future success in part depends upon our ability to establish strategic
partnerships and joint ventures for the marketing of its products and services
We can offer investors no assurance that we can successfully establish and
maintain long-term strategic relationships with key marketing partners under
conditions that are favorable to the Company. Furthermore, collaborative
arrangements with third parties may subject us to a number of risks. Agreements
with collaborative partners typically allow partners significant discretion in
electing whether or not to pursue any of the planned activities. The Company
cannot control the amount and timing of resources that its collaborative
partners may devote to joint activities. Our partners may not perform their
obligations as expected. Business combinations or significant changes in a
collaborative partner's business strategy may adversely affect a partner's
willingness or ability to perform its obligations under the arrangement.
Moreover, we could become involved in disputes with our partners, which could
lead to delays or termination of the collaborations and litigation or
arbitration. If collaborative arrangements fail to meet expectations, our
chances of successfully commercializing our products may be adversely impacted.
Our future success depends upon our ability to obtain and enforce patents;
prevent others from infringing on our patents, trademarks and other intellectual
property rights; and operate without infringing upon the patents and proprietary
rights of others.
We will be able to protect our intellectual property from unauthorized use of
third parties only to the extent that it is covered by valid and enforceable
patents and trademarks. Patent protection generally involves complex legal and
factual issues and, therefore, the enforceability of patent rights cannot be
predicted with certainty. Moreover, the laws of some foreign countries do not
protect proprietary rights to the same extent as the laws of the United States.
In the event that patents owned by us do not provide adequate protection, we may
not able to prevent competitors from offering substantially similar products and
services. Failure to protect our proprietary rights could seriously impair our
competitive position.
In the event that third parties claim that our current or future products or
services infringe upon their intellectual property, we may face litigation and
be prevented from selling the products and services at issue. Infringement or
other claims could be asserted or prosecuted against us in the future, and it is
possible that past or future assertion or prosecutions could harm our business.
Litigation either in defense of our intellectual property rights or in response
to infringement claims made by others may be expensive and involve substantial
costs.
We operate in a highly competitive industry characterized by changing
technology, frequent introductions of new products and product enhancements, and
evolving industry standards.
We compete with many other vendors of software products and services designed
for tracking cattle and for herd management. Our competitors range from small
start-up companies to large multi-national firms. A number of existing
competitors have significantly greater financial, technical and marketing
resources. Competition is likely to intensify as current competitors expand
their product offerings and as new companies enter the market. Increasing
competition may result in reduced margins and the loss of market share. Our
competitors may offer broader product lines or technologies that are more
commercially attractive and gain greater market acceptance than our current or
future products. Additionally, new technology may render our products obsolete.
Our future success depends to a significant degree upon the continued service of
key senior management personnel, in particular, John and Leann Saunders.
Both John and Leann Saunders' reputation and prominence in the field provide the
Company with a strong competitive advantage. While they are currently bound by
employment agreements, we can offer investors no assurance that John and or
Leann Saunders will be able to continue to work for us in the event of an
unforeseen accident, severe injury or major disease, or on a long-term basis.
The loss of key personnel could have a material adverse effect on our business
and operating results.
7
We may be unable to raise additional capital.
We will not receive any proceeds from the sale of the common stock covered by
this prospectus. If we are unable to generate sufficient revenue for our planned
operations, or if we encounter unforeseen costs, we will need to raise
additional capital. We can give no assurances that additional capital will be
available to us on favorable terms, or at all. Our inability to obtain
additional capital, if and when needed, would have a material adverse effect
upon our financial condition and our ability to continue to conduct our
operations.
We may not be able to recruit and retain the experienced personnel needed to
compete in the industry.
We compete with many other companies for experienced personnel. Management can
offer investors no assurance that we will be able to continue to be successful
in attracting and retaining qualified personnel.
New corporate governance requirements are likely to increase our costs and make
it more difficult to attract qualified directors.
We face new corporate governance requirements under the Sarbanes-Oxley Act of
2002, as well as rules adopted by the Securities and Exchange Commission. We
expect that these laws, rules and regulations will increase our legal and
financial compliance costs and make some activities more difficult,
time-consuming and costly. We also expect that these new requirements will make
it more difficult and more expensive for us to obtain director and officer
liability insurance. We may be required to accept reduced coverage or incur
significantly higher costs to obtain coverage. These new requirements are also
likely to make it more difficult for us to attract and retain qualified
individuals to serve as members of our board of directors or committees of the
board.
We are not presently subject to the same corporate governance standards as
companies listed on registered stock exchanges or NASDAQ.
Registered stock exchanges and NASDAQ have enhanced corporate governance
requirements that apply to issuers that list their securities on those markets.
Our common stock is quoted on the OTC Bulletin Board, which does not have
comparable requirements. For instance, we are not required to have any
independent directors or to adopt a code of ethics. In certain circumstances,
management may not have the same interests as the shareholders and conflicts of
interest may arise. We do not presently have a policy to resolve conflicts of
interest. Notwithstanding the exercise of their fiduciary duties as directors
and executive officers and any other duties that they may have to us or our
other shareholders in general, these persons may have interests different than
yours.
Risks Related to Owning Our Common Stock
There is limited liquidity on the OTC Bulletin Board.
We plan to apply for the listing of our shares on the OTC Bulletin Board. When
fewer shares of a security are being traded on the OTC Bulletin Board, price
volatility may increase and price movement may outpace the ability of the OTC
Bulletin Board to deliver accurate quote information. Due to lower trading
volumes in our common stock, there may be a lower likelihood of orders for
shares of our common stock being executed, and current prices may differ
significantly from prices quoted by the OTC Bulletin Board at the time of order
entry.
Our common stock is subject to the penny stock rules.
The term "penny stock" generally refers to low-priced, speculative securities of
very small companies. Before a broker-dealer can sell a penny stock, Securities
and Exchange Commission rules require the broker-dealer to first approve the
customer for the transaction and receive from the customer a written agreement
for the transaction. The broker-dealer must furnish the customer with a document
describing the risks of investing in penny stocks. The broker-dealer must tell
the customer the current market quotation, if any, for the penny stock and the
compensation the broker-dealer and its broker will receive for the trade.
Finally, the broker-dealer must send monthly account statements showing the
market value of each penny stock held in the customer's account. These
requirements make penny stocks more difficult to trade. Since our common stock
is subject to the penny stock rules, the market liquidity of our common stock
may be adversely affected.
8
There may be a greater risk of fraud on the OTC Bulletin Board.
OTC Bulletin Board securities are frequently targets for fraud or market
manipulation. Dealers may dominate the market and set prices that are not based
on competitive forces. Individuals or groups may create fraudulent markets and
control the sudden, sharp increase of price and trading volume and the equally
sudden collapse of market prices. If this should occur, the value of an
investment in our common stock could decline significantly.
You could suffer substantial dilution and our stock price could decline if we
issue additional securities in the future or if current holders of our
securities choose to sell a large portion of their holdings at the same time.
Our common stock may not continue to be traded on the OTC Bulletin Board.
We cannot provide any assurance that our common stock will continue to trade on
the OTC Bulletin Board. Should our common stock cease to trade on the OTC
Bulletin Board and fail to qualify for listing on another stock exchange or
trading system, our common stock would be listed for trading only on the "Pink
Sheets," which generally provide an even less liquid market than the OTC
Bulletin Board. In such event, shareholders may find it more difficult to trade
our common stock or to obtain accurate, current information concerning market
prices for our common stock.
We do not plan to pay dividends on our common stock.
We do not anticipate paying cash dividends to the holders of our common stock in
the foreseeable future. Accordingly, investors in our common stock must rely
upon subsequent sales after price appreciation as the sole method to realize a
gain on an investment in our common stock. There are no assurances that the
price of our common stock will ever appreciate in value. Investors seeking cash
dividends should not buy our common stock.
It can be difficult to edit or cancel orders on the OTC Bulletin Board, which
may impair your ability to sell our common stock at a favorable price.
Orders for OTC Bulletin Board securities may be canceled or edited like orders
for other securities. All requests to change or cancel an order must be
submitted to, received and processed by the OTC Bulletin Board. Due to the
manual order processing involved in handling OTC Bulletin Board trades, order
processing and reporting may be delayed. As a result, it may not be possible to
edit orders. Consequently, it may not be possible to sell our common stock at a
favorable price.
Increased dealer compensation could adversely affect the price of our common
stock.
The dealer's spread (the difference between the bid and ask prices) may be large
and may result in substantial losses to the seller of shares of our common stock
on the OTC Bulletin Board if such stock must be sold immediately. Further,
purchasers of our shares of common stock may incur an immediate "paper" loss due
to the price spread. Moreover, dealers trading on the OTC Bulletin Board may not
have a bid price for shares of our common stock on the OTC Bulletin Board. Due
to the foregoing, demand for our shares of common stock on the OTC Bulletin
Board may be decreased or eliminated.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Except for historical facts, the statements in this prospectus are
forward-looking statements. Forward-looking statements are merely our current
predictions of future events. These statements are inherently uncertain, and
actual events could differ materially from our predictions. Important factors
that could cause actual events to vary from our predictions include those
discussed under the headings "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business." We
assume no obligation to update our forward-looking statements to reflect new
information or developments. We urge readers to review carefully the risk
factors described in this prospectus and the other documents that we file with
the Securities and Exchange Commission. You can read these documents at
www.sec.gov.
9
We do not undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
or to reflect any events or circumstances after the date of this prospectus or
the date of any applicable prospectus supplement. Although we believe that our
plans, intentions and expectations reflected in or suggested by the
forward-looking statements made are reasonable, ultimately we may not achieve
such plans, fulfill such intentions or meet such expectations.
Use of Proceeds
We will not receive any proceeds from the sale of our common stock covered by
this prospectus. The selling shareholders listed on pages 26 through 28 will
receive all of the proceeds covered by this Prospectus.
Market for Common Stock and Related Shareholder Matters
There is presently no market for our common stock. None of our common stock is
subject to outstanding options or warrants to purchase our shares, except those
granted under the 2005 Stock Option Plan (1,462,500), warrants issued to our
placement agent (297,810), options issued in connection with our purchase of
Cattlefeeding.com (225,000), options to our founders as part of an arrangement
whereby they sold 4,800,000 (pre-split) shares to the company for $0.075 per
share (6,000,000), and 2006 options granted to the CFO (1,650,000) for a total
of 9,635,310 options and warrants. There are 17,867,515 shares of our common
stock outstanding, all of which are restricted securities. The restricted
securities as defined under Rule 144 of the Securities Act may only be sold
under Rule 144 or otherwise under an effective registration statement or an
exemption from registration, if available. Rule 144 generally provides that an
affiliate, including directors, officers and control shareholders, who have
satisfied a one year holding period for the restricted securities may sell,
within any three month period subject to certain manner of resale provisions, an
amount of restricted securities which does not exceed the greater of 1% of a
company's outstanding common stock. Sales under Rule 144 must also be made
without violating the manner-of-sale provisions, notice requirements, and the
availability of public information about us. A sale of shares by such security
holders, whether under Rule 144 or otherwise, may have a depressing effect upon
the price of our common stock in any market that might develop.
Penny stock considerations
Our common stock is expected to trade on the over-the-counter electronic
bulletin board or on the Pink Sheets and, therefore, is subject to the
requirements of certain rules promulgated under the Securities Exchange Act of
1934, which require additional disclosure by broker-dealers in connection with
any trades involving a stock defined as a "penny stock". A penny stock is
generally defined as any non-NASDAQ equity security that has a market price of
less than $5.00 per share, subject to certain exceptions.
Such rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith and impose various sales requirements on broker-dealers who sell penny
stocks to persons other than established customers and "accredited investors".
An accredited investor is generally defined as an investor with a net worth in
excess of $1,000,000, or annual income exceeding $200,000 individually or
$300,000 together with a spouse.
Transfer Agent and Registrar
We have appointed Corporate Stock Transfer, Inc. of Denver, Colorado to be the
registrar and transfer agent for our common shares.
Dividends
We have never declared or paid cash dividends on our capital stock, and we do
not plan to pay any cash dividends in the foreseeable future. We currently
intend to retain any future earnings to finance our operations and future
growth.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
We are engaged in the business of livestock tracking and herd management
verification solutions and consulting services for the livestock and the meat
industry, and we maintain an internet portal dedicated to publishing news and
trends in the agricultural industry and marketing products to this industry.
The following discussion and analysis contains forward-looking statements, which
involve risk and uncertainties. Our actual results may differ significantly from
the results, expectations and plans discussed in these forward looking
statements.
Overview
We were incorporated in 1998 as a Missouri corporation. In March, 2005, we
reincorporated in Delaware, and in April 2006, we changed our domicile from
Delaware to Colorado.
Until December 31, 2004 we were structured as a Subchapter S corporation, as
that term is defined in the Internal Revenue Code of 1986, as amended, with all
income or loss passed through to the shareholders. Beginning on January 1, 2005
we converted to a Subchapter C corporation and began to be directly subject to
income taxation.
On May 12, 2005, we completed an acquisition of the assets and assumed certain
liabilities of Cattlefeeding.com, Inc. which owned and operated the
Cattlenetwork.com and the Cattlestore.com websites and published an electronic
newsletter. The sales, costs, and expenses resulting from this acquisition have
been included in our results of operations since the acquisition date.
Therefore, approximately 7 1/2 months of the results of operations of these
acquired businesses are included in our financial statements for the year ended
December 31, 2005.
As set forth in Description of Business-Industry Background, customer demand for
our solutions is, to a large extent supported by the U.S. beef industry's
voluntary participation in quality verification programs related to the export
of beef to international markets, including Japan, Mexico, South Korea, Canada
and Europe. Subsequent to the discovery of the first case of mad cow disease in
the U.S. in December, 2003, the governments of these and other countries banned
the import of beef from the U.S. Since that time, based on increased confidence
resulting from implementation of quality verification programs (such as those
offered by us), some of these key export markets have reopened, but the Japan
market, which has historically been the largest, has remained closed (with the
exception of a brief period during December 2005 to January 2006). The
opportunity to participate in export markets presents a strong indicator of
potential demand for approved verification processes, which have become
essential. However, during the time in which the export markets are closed,
demand for solutions to comply with these regulatory requirements is
constrained.
Results of Operations
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
Revenues. Revenues are derived from our sales of our USVerified solutions
customized product and service offerings, related hardware products, and
advertising and subscriptions related to our internet-based online services.
Revenues for the year ended December 31, 2005 were $957,894, an increase of 112%
over the 2004 amount of $451,305. The primary reason for the increase in sales
was the mid-2005 launch of our USVerified offerings. In addition, approximately
12% of 2005 sales were attributable to revenues from internet-based online
services (Cattlenetwork.com and Cattlestore.com), which were acquired on May 12,
2005 and, therefore were not part of 2004 results. Sales of our USVerified
solutions represented a substantial proportion [43%] of revenues during 2005 and
are anticipated to continue to be so in the future. As set forth in Description
of Business--Industry Background, we believe that customer demand for its
USVerified solutions is substantially dependent upon the reopening of key export
markets.
Cost of Sales and Gross Margin. Cost of sales for the year ended December 31,
2005 were $534,158, an increase of 232% over the 2004 amount of $160,832. Gross
margin decreased to 44% of revenues for 2005 compared to 64% for 2004. A
principal reason for this increase in cost of sales and corresponding decrease
in gross margin percentage was that the 2005 amount includes an allocation for
salaries paid to our founders. Prior to our conversion from a Subchapter S
corporation to a Subchapter C corporation under the Internal Revenue code on
January 1, 2005, these individuals received a substantial portion of their
compensation ($120,686 during 2004) as dividends (which are not included in cost
of sales) rather than salary. In addition, during 2005 there was a substantial
increase in the amount of revenue from sales of hardware, which carries a lower
gross margin percentage. We anticipate that in the future, sales of our
USVerified solutions will constitute an increasing proportion of overall
revenue, which will result in a corresponding increase in overall gross margin
percentage due to the comparatively higher margins derived from USVerified
relative to our other product and service offerings.
11
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the year ended December 31, 2005 were $1,390,671, an
increase of 484% over the 2004 amount of $238,061. The largest component of this
increase was salaries, wages, and benefits, resulting from i) a substantial
increase in our headcount associated with launch of the USVerified offering, ii)
addition to the headcount related to acquisition and continued growth of our
internet-based online services operations (Cattlenetwork,.com and
Cattlestore.com), and iii) allocation of salaries paid to our founders (as
described under Cost of Sales above). Our expenses for contracted services and
travel & entertainment increased substantially from 2004 to 2005, primarily as a
result of the launch of the USVerified offering. Additionally, our general and
administrative expenses have increased due to human resource, professional
services, and other costs related to our anticipated filing of a Registration
Statement.
Other Income (Expense). Net other expense for the year ended December 31, 2005
increased to $37,701 compared to $11,913 for the year ended December 31, 2004.
The increase during 2005 was primarily attributable to interest paid on the
Promissory Note (which was issued in October 2004 and retired in May 2005), the
Cattlefeeding.com Note (which was issued in May 2005), and increased borrowings
under our line of credit (see Liquidity and Capital Resources and Notes to
Financial Statements - Note 4 Notes payable),
Net Income (Loss). As a result of the foregoing, the net loss for the year ended
December 31, 2005 was $1,004, 636, compared to net income of $40,499 for the
year ended December 31, 2004.
Liquidity and Capital Resources
At December 31, 2005, we had cash and cash equivalents of $684,833 and working
capital of $599,322 compared to $12 of cash and negative working capital of
$67,429 at December 31, 2004. At December 31, 2005 we had restricted cash of
$471,664, including $421,664 held in escrow for the purchase of treasury stock
and a $50,000 certificate of deposit held as collateral pursuant to our line of
credit. We had no restricted cash at December 31, 2004. Net cash used by
operating activities during the year ended December 31, 2005 was $869,783
compared to $16,679 provided by operating activities during the year ended
December 31, 2005 was $156,634, compared to $12,983 during the year ended
December 31, 2004. Net cash provided by financing activities during the year
ended December 31, 2005 was $1,711,238 compared to $2,960 used by financing
activities during the year ended December 31, 2004. As described below,
investing activities during 2005 included acquisition of assets and certain
liabilities of Cattlefeeding.com. Financing activities during 2005 included two
private placements of Common Stock and borrowings under our line of credit,
which were partially offset by payments under a Promissory Note and purchase of
treasury stock.
The principal reason for the change in cash provided by (used in) operating
activities was the change in earnings from $40,499 to a loss of $1,004,636. This
change was partially offset by an increase of $28,830 in non-cash expenses and
changes in the current accounts.
Accounts receivable increased to $241,304 at December 31, 2005, compared to
$67,633 at December 31, 2004. Days sales outstanding (DSO) increased to 92 days
at December 31, 2005 compared with 55 days at December 31, 2004. The increase in
accounts receivable and DSO during 2005 was primarily attributable to the
increased level of USVerified revenues during the last two months of 2005 (which
had not yet been collected as of December 31, 2005) substantially resulting from
the temporary opening of the Japanese beef export market (see "Description of
Business - Industry Background").
12
As of December 31, 2005 we had inventory of $9,950 compared with no inventory as
of December 31, 2004. The inventory was acquired in November and December 2005
in anticipation of the opening of the Japanese market to U.S. beef and consists
principally of identification tags.
We had no prepaid expenses as of December 31, 2005, but $55,914 as of December
31, 2004. All of the prepaid expenses were pre-paid advertising.
Accounts payable and accrued expenses increased to $190,030 at December 31,
2005, compared to $18,318 at December 31, 2004. The increase in accounts payable
and accrued expenses was primarily attributable to an increased employee
headcount, contracted services, and other expenses resulting from the market
introduction of our USVerified solutions.
Deferred revenue at December 31, 2005 was $46,556, compared to $0 at December
31, 2004. The increase in deferred revenue was attributable to payments received
under consulting contracts that were in process, but not yet completed, as of
December 31, 2005.
Investing activities for the year ended December 31, 2005 included the
acquisition of assets and certain liabilities of Cattlefeeding.com for a total
purchase price of $515,000 ($150,000 cash plus additional consideration as
described below). We do not have any future material commitments for capital
expenditures.
Net financing activities for the year ended December 31, 2005 included the
partial conversion to equity and partial repayment of a Promissory Note, sale of
Common Stock under options related to the Promissory Note, two private
placements of Common Stock, and additional borrowings under our line of credit.
These transactions are discussed below.
In January 2005, in connection with the conversion from a Subchapter S
Corporation to a Subchapter C Corporation under the Internal Revenue Code of
1986, as amended and conversion of outstanding principal and interest under the
Promissory Note, under which interest was payable at 10% per annum, in the
principal amount of $75,000 (75% of the total principal amount of $100,000), we
issued 10,968,000 shares to our founders and 944,700 shares to the holders of
the Note. Concurrently, the holders of the Note exercised options to purchase an
aggregate of 2,745,300 shares of Common Stock from us for $217,855 cash.
In May 2005, in connection with repayment of the remaining $25,000 outstanding
principal, interest and options under the Promissory Note, we paid $50,000 and
issued 27,473 shares to the holder of the Note.
In May 2005, we completed a private placement offering under which we issued
928,796 shares of Common Stock for cash at $0.91 per share, which resulted in
proceeds of $668,423, net of issuance costs of $176,777. The offering also
included 442,860 shares which were sold directly by selling shareholders for
which we did not receive any proceeds. Additionally, 200,000 shares of Common
Stock and warrants to purchase 40,000 shares of Common Stock at $0.91 per share
expiring in May 2009 were issued by us to the placement agent in connection with
the offering.
In May 2005, in connection with the acquisition of assets and certain
liabilities of Cattlefeeding.com we issued a promissory note in the amount of
$350,000 payable with interest at a rate of 5% per annum. The note is payable
with monthly payments of interest only for thirty-six months. The balance of the
note and any unpaid interest will become due 37 months after closing. In
addition, we granted 150,000 options to purchase our Common stock, valued
pursuant to FAS 123 at $15,000.
In October 2005, we began a second private placement offering to sell a minimum
of 800,000 and a maximum of 4,000,000 shares of Common Stock at $1.25 per share
with net proceeds to be used for working capital, general corporate purposes and
repurchases of Common Stock up to 5,500,000 shares from certain existing,
related-party shareholders. Pursuant to this offering, in December 2005, we
issued 1,110,400 shares of Common Stock for cash at $1.25 per share, which
resulted in proceeds of $1,283,900, net of issuance costs of $104,100.
Additionally, warrants to purchase 158,540 shares of Common Stock at $1.25 per
share expiring in December 2009 were issued to the placement agent in connection
with the offering. This offering was completed in February 2006.
13
We increased its borrowings under its Line of Credit with Platte Valley Bank to
$100,000 at December 31, 2005 from $72,670 at December 31, 2004.
We believe that we have sufficient cash on hand to fund our operations during
2006. However, if the US beef export markets, particularly that of Japan (see
"Description of Business - Industry Background"), remain closed we may require
additional capital to support our operations during the next 12 months. We may
not be successful in our efforts to raise this additional capital. At the
present time, we do not have commitments for any such additional capital, and
there can be no assurance that, if needed, additional capital will be available
to us on commercially acceptable terms, or at all.
Critical Accounting Policies and Estimates
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported. The estimates that required
management's most difficult subjective or complex judgments are described below.
Impairment of Goodwill
We recorded goodwill as a result of the acquisition of Cattlefeeding.com, Inc.
Following the end of 2005, an assessment was made whether any of the goodwill
recorded had been impaired. After an assessment by us and review by the
independent accountants, no impairment charge was taken.
Allowance for Doubtful Accounts
The allowance for doubtful accounts is based on management's best assessment of
our outstanding receivables.
ORGANIZATION WITHIN THE LAST FIVE YEARS
Integrated Management Information, Inc. was incorporated in 1998 as a Missouri
corporation. In March, 2005, we reincorporated in Delaware and in April 2006 we
redomiciled to Colorado.
Until December 31, 2004 we operated as a Subchapter S corporation under the
Internal Revenue Code of 1986, as amended, with any income or loss passed
through to the shareholders for income tax purposes. Beginning January 1, 2005
we converted to a Subchapter C corporation and became subject to income
taxation.
Description of Business
Overview and Business Development
We were organized to apply information technology and electronic documentation
management to the livestock industry by addressing the growing importance to the
industry (producers, processors, and customers) of detailed information
regarding identification, traceability, and verification of marketing claims
such as: source of origin information, genetic background, animal treatment,
animal health history, animal age, animal movements, nutrition, and other
credence attributes (those claims made that can not be confirmed by visual
inspection once the product reaches the meat case and is marketed to the
consumer). To address this demand, we developed a range of proprietary computer
software, consulting methodologies, auditing processes, and other services to
allow the livestock industry to record, manage, report, and audit this
information.
In May 2005, we acquired certain assets and liabilities of Cattlefeeding.com,
Inc., an entity which operated Cattenetwork.com, an internet-based online
service providing news and information about the North American cattle industry.
Cattlenetwork.com contributes revenues from its e-commerce activities
(Cattlestore.com), paid subscriptions, and advertising.
Industry Background
As the cattle livestock industry has matured and expanded internationally, there
has been an increasing need to record, manage, report and audit information
regarding the source, age, genetic background, nutrition, and other credence
attributes of livestock for the benefit of producers, processors, distributors,
retailers, consumers, and regulators.
14
Demand for livestock identification, traceability and verification solutions
further accelerated in recent years due to industry and consumer concerns
regarding bovine spongiform encephalopathy (mad cow disease) governmental and
industry regulations regarding recordkeeping for livestock, and technology, and
technology advances, including radio frequency ID tags for livestock and
web-based systems facilitating real-time data entry and reporting.
Many of the world's largest beef exporting countries, including Brazil,
Argentina, and Australia, have established mandatory traceability and
verification standards. Other countries have issued voluntary animal
identification and traceability standards. The United States lags with regards
to meeting this market demand, as the United States government has not to date
established voluntary or mandatory traceability and verification standards.
Currently, the Agriculture and Plant Health Inspection Services Agency ("APHIS")
is working on the development of recommended voluntary animal identification and
traceability standards. However, the estimated time for launch is not until
January 2009.
To support industry driven marketing programs and to comply with regulations
established by international export partners, the United States Department of
Agriculture ("USDA"), Agriculture Marketing Service, Audit, Review and
Compliance Branch has established the voluntary Quality System Assessment, Non
Hormone Treated Cattle, and Process Verified programs based on ISO 9000
Standards. These programs provide guidelines and structure to enable suppliers
of agricultural products and services to assure customers of their ability to
provide consistent quality products or services by having their processes
audited by independent, third-party audits using USDA approved methodologies and
standards.
The USDA's Quality System Assessment (QSA) program is a documented quality
management system and verification trail that can support specific product
claims or customer requirements, as well as confirm compliance with export
standards. The approved QSA must show that characteristics of the product are
being monitored and measured accurately. Approved QSA programs are audited by
the USDA at least twice per year.
The USDA's Process Verified Program ("PVP") is similar to the QSA program, but
broader in scope. Like the QSA, PVP ensures that companies deliver products that
meet stated product claims. In addition, it provides beef suppliers with a
verifiable marketing tool. Once marketing claims are verified by the USDA, the
company may use the "USDA Process Verified" shield on its marketing materials.
Both Quality Systems Assessment and Process Verification Programs are applicable
to a company's entire program or certain portions of its programs where
specified producer or product requirements are supported by a document quality
management system and the documented delivery processes are verified through an
independent, third party audit. To operate an approved program, suppliers must
submit a documented quality management system to the Audit Review and Compliance
Branch of the USDA Livestock and Seed Program and successfully pass a document
review and an on-site audit.
Within the United States, these USDA programs are voluntary and are primarily
useful in providing the industry with a process for demonstrating source, age,
and quality attributes as the product moves through the supply chain. In
addition, compliance with the programs allows producers to verify claims such as
"all natural," "non-hormone treated," or "guaranteed tender."
To market beef products outside of the United States, suppliers must comply with
the QSA and PVP policies and procedures and address the specified product
requirements addressed in the USDA Export Verification ("EV") Program specific
to each country. Regardless of final export destination or specific Export
Verification program requirements, US suppliers seeking to sell beef products
must participate in a pre-approved Quality System Assessment so as to have an
approved means of verifying source, age, and other specific product
requirements. Therefore, though the program is voluntary, it is mandatory to
gain access to export markets.
To market beef products in Japan, Mexico, South Korea, Canada and Europe, the
world's largest export markets, beef is required to be sourced from cattle that
are of a certain maximum age at the time of slaughter. The USDA QSA program is
the standard mechanism for verifying source and age for these export markets
and, therefore, is a mandatory requirement for producers, packers, and
distributors to sell beef products for export to these key markets.
15
These export markets represent a significant opportunity for the US cattle
industry. Prior to the discovery of the first case of mad cow disease in the US
in December 2003, the USDA estimated that the industry exported approximately
$2.8B to Japan, Mexico, South Korea, and Canada. The governments of these and
other countries responded to the discovery by forbidding import of beef from the
US, and exports to these countries fell to approximately $0.4B during 2004. In
large part because of implementation of the USDA QSA initiatives export
partners' confidence in the US cattle supply increased, and many key export
markets reopened, including Mexico, Hong Kong, Singapore, and Taiwan. In
December 2005, Japan lifted its ban on imported US beef, but reinstated it in
January 2006 after an inspection revealed a case of non-compliance with the
Japanese import regulations. Current beef consumption within the US has not
changed over the past 20 years, while the productivity of the US beef industry
continues to improve. Therefore, international market access and growth is
critical for the US beef industry. Future growth opportunities for US protein
lie in consumption growth internationally, as only 2% of the world's population
resides in the US.
The opportunity to participate in export markets presents a strong indicator of
potential demand for approved verification processes, which have become
essential. However, during the time in which the export markets are closed,
demand for solutions to comply with these regulatory requirements is
constrained.
The Business
To address the livestock industry's requirements to deploy and maintain
identification, traceability, and verification systems and to facilitate
participation in and compliance with the USDA's Quality System Assessment,
Process Verification, and Beef Export Verification Programs, we have developed
and offer a balanced portfolio of products and services. These solutions address
specific requirements at each level of the livestock supply chain. In addition,
we offer customized solutions to address unique customer requirements. We
complement these products and services with our Cattlenetwork.com and
Cattlestore.com industry information services and internet portals.
Our product and services offerings are described in further detail below.
USVerified
We offer a range of products and services under our USVerified brand to track,
record, manage, report, and audit key data regarding livestock. Our offerings
address the needs of each industry segment, and our customers span the supply
chain from birth through the various stages of feeding and raising the
livestock, to packing and distribution.
Our USVerified products and services offerings are tailored to the needs of each
level of the beef supply chain in support of USDA programs:
Suppliers
SupplyVerified is a consulting and auditing service offered to cattle
suppliers that allows them to demonstrate their ability to efficiently
and accurately track key data related to the source and age of cattle.
Our SupplyVerified program was the industry's first USDA approved
offsite evaluation process for cattle suppliers to meet requirements
under the USDA's Quality Systems Assessment (QSA) program.
Under the SupplyVerified program, suppliers provide documentation to us
about their processes for compliance with the QSA program. This
documentation is evaluated and audited by us and, if warranted, we
provide a certificate that the producer meets the requirements of
source and age verification. We charge each cattle supplier a fixed
annual fee for performing the audit and providing the certification. In
order to maintain QSA certification, a supplier must participate in the
annual audits.
16
We estimate that there are approximately 850,000 independent suppliers
of cattle in the United States, of which approximately 5,000 have herds
of at least 500 head.
Feed Yards
We offer solutions to enable feed yards to comply with USDA's QSA
requirements. Initially, we work with the feed yard to implement the
required systems and procedures to track key data regarding the cattle
that move through the operation, including source and age as well as
additional health and nutritional information. This service is provided
and priced to feed yards on a packaged basis, which includes a license
to our proprietary software and processes, implementation services, and
initial training. In addition, we provide hosting services under which
we maintain and manage the data created by these systems on a monthly
basis.
We estimate that there are approximately 5,000 independent feed yards
in the United States.
Packers
We offer solutions to meat packers, processors and distributors to
demonstrate that their products comply with USDA's QSA requirements,
Export Verification ("EV") requirements as well as the USDA's Process
Verified Program ("PVP"), which is broader in scope than the QSA
program. Suppliers with approved USDA Process Verified Programs are
able to make marketing claims associated with their process verified
points -- such as age, source, feeding practices, or other raising and
processing claims -- and market themselves as "USDA Process Verified."
This service is provided and priced to meat packers on a packaged
basis, which includes a license to our proprietary software and
processes, implementation services, and initial training. In addition,
we provide hosting services under which we maintain and manage the data
created by these systems on a monthly basis.
We estimate that there are approximately 50 independent beef packers in
the United States, of which five packers constitute the majority of
volume.
Consulting
In addition to our standard product offerings, we offer consulting and licenses
its proprietary software and processes on a customized basis to meet special
customer requirements.
Hardware
In support of these proprietary product and service offerings, we offer hardware
products (primarily radio frequency identification cattle tags) to our
customers. While these hardware products have lower profit margins compared with
our proprietary offerings, they allow us to offer our customers a comprehensive
solution.
Internet-Based Online Services
We own and operate Cattlenetwork.com, an internet-based online service providing
news and information about the North American cattle industry and
Cattlestore.com, an e-commerce site for customers to purchase a wide range of
products and supplies related to cattle production.
We believe that Cattlenetwork.com is the largest online source of news and
information regarding the North American cattle industry. In addition,
Cattlenetwork publishes a biweekly newsletter that is distributed to subscribers
via email. Subscriptions to our Cattlenetwork information services and
newsletter are sold directly to customers on the Cattlenetwork website.
Web-based and newsletter advertisements are sold directly to advertisers.
17
We derive revenue from our internet-based online service offerings through a
combination of i) advertising sales to companies seeking to reach
Cattlenetwork's unique base of readers and subscribers, ii) sales of products
through Cattlestore.com, and iii) customer subscriptions. Although basic access
to Cattlenetwork.com is available without charge, we offer paid subscriptions to
Cattlenetwork's premium content ("Gold" and "Platinum" level subscriptions).
Cattlenetwork's premium content includes more extensive coverage of news events,
delayed, as well as real-time quotes and charts for commodities and related
financial markets, USDA and weather reports, and articles written by a network
of industry experts.
Sales and Marketing
We sell our USVerified products and services directly to customers at various
levels in the livestock supply chain. Our key customers include: Smithfield,
the largest U.S. pork packer and fifth largest beef packer; National Beef, the
fourth largest U.S. beef packer; Harris Ranch; PM Beef Group; Creekstone Foods;
US Premium Beef; America's Best Pork; Cargill Meat Solutions; Meyer Natural
Angus; Land O Lakes; Purina Mills; Visa Trace; Walco Animal Health; Schering
Plough Animal Health; Cargill Meat Solutions; Merial Corporation; Superior
Livestock Marketing; The Beef Marketing Group; Angus GeneNet; Montana Branded
Beef Association; Origen; the Missouri Department of Agriculture; the Missouri
Veterinary Medical Association.
Our marketing strategy includes direct marketing, advertising, event
sponsorship, and trade show participation. From a public relations perspective,
our staff is frequently quoted in industry trade journals and requested as
speakers at various industry events as subject matter experts on the topics of
animal identification, traceability, and the USDA QSA, EV and PVP programs. We
position ourselves as a recognized leader in the livestock industry and maintain
strong affiliations with the Beef Information Exchange, US Meat Export
Federation, National Cattlemen's Beef Association, and Livestock Marketing
Association.
In order to reach additional customers, we are developing strategic marketing
partnerships with leading companies in the industry with complementary abilities
and products. In February 2006, we entered into two strategic alliances:
o We announced a marketing agreement with Merial, Ltd. a leading
veterinary products company with $1.9B sales in 2005. Under this
agreement, Merial will offer our USVerified source and age verification
solutions to cattle producers together with Merial's SUREHEALTH calf
preconditioning program.
o We entered into an agreement with Superior Livestock, the largest
livestock auction operator in the US, under which we will assist
Superior Livestock in establishing a branded QSA compliant program,
Superior Verified. Under this agreement, we will offer certification
and auditing solutions to Superior Livestock's cattle producers.
Competition
Our key competitors are:
AgInfolink, a privately held global information technology company that develops
traceability tool for the worlds food supply. In 2005, this company also
acquired the business operations of Animal Permanent Electronic Identification
Systems, Inc., a leading provider of animal traceability solutions to cattle
producers in the central plains and Montana.
eMerge Interactive, Inc. a technology company serving the agricultural food
service and healthcare industries. Its two principal business foci are food
safety technology and livestock management principally through its Inspection
Control and Cattlelog Animal Information Systems.
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MicroBeef Technologies, the world's largest manufacturer of computerized
real-time management systems for the beef industry. Its management systems
include marketing management, information systems, nutrition programs and health
administration.
Sterling Solutions, an affiliate of Sterling Marketing, Inc. that offers a
market driven source verification programs designed for simplicity and
compliance with domestic and international standards Sterling Solutions is a
USDA Process Verification Program.
Intellectual Property
We have three patents pending: Serial No. 10/278,876 - Information system and
method for gathering information relating to livestock; Serial No. 10/462,169 -
Livestock pricing system; Serial No. 11/190, 245 - Computer program and method
for establishing, documenting, implementing and maintaining a quality management
system for quality systems assessment and product verification programs.
We have been granted a trademark for Passport to Profitability, Beef Passport
and Grid Max. We have filed trademark applications for Chuteside, Web
Integrator, US Verified, IMI Global, the IMI Logo, Cattlenetwork and
Cattlestore.
DESCRIPTION OF PROPERTIES
We lease approximately 4,000 square feet of office space in a two story building
in Platte City, Missouri, a suburb of Kansas City, Missouri. Our lease expires
on July 15, 2006, and we are in the process of moving our corporate headquarters
to Castle Rock, Colorado. Our rent for the facility in Platte City, Missouri is
$4,000 per month. We do not own or lease any other properties.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding. We are not aware of any
contemplated legal proceeding by a governmental authority or a private party
involving IMI Global.
DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES
Directors
Our Bylaws provide that we have a minimum of three directors on the board at any
one time. Vacancies are filled by a majority vote of the remaining directors
then in office. Our directors are as follows:
- ----------------- ------------ ----------------------------------- ------------------ -----------------
Name Age Positions Held Director Since Officer Since
- ----------------- ------------ ----------------------------------- ------------------ -----------------
John Saunders 34 President, CEO, & Chairman of the 1995 1995
Board
- ----------------- ------------ ----------------------------------- ------------------ -----------------
- ----------------- ------------ ----------------------------------- ------------------ -----------------
Dr. Gary Smith 67 Director 2006 -
- ----------------- ------------ ----------------------------------- ------------------ -----------------
- ----------------- ------------ ----------------------------------- ------------------ -----------------
Adam Larson 37 Director 2006 -
- ----------------- ------------ ----------------------------------- ------------------ -----------------
- ----------------- ------------ ----------------------------------- ------------------ -----------------
John Bellinger 51 Director 2006 -
- ----------------- ------------ ----------------------------------- ------------------ -----------------
The directors named above will serve until the next annual meeting of our
stockholders to be held within six (6) months of the close of our fiscal year or
until a successor is elected and qualified. Directors are elected for one year
terms.
Executive Officers
Our executive officers are as follows:
- ------------------ -------- -----------------------------------------------
Name Age Position
- ------------------ -------- -----------------------------------------------
- ------------------ -------- -----------------------------------------------
John Saunders 34 President, CEO & Chairman of the Board
- ------------------ -------- -----------------------------------------------
- ------------------ -------- -----------------------------------------------
Leann Saunders 35 Executive Vice-President of Quality Services
- ------------------ -------- -----------------------------------------------
- ------------------ -------- -----------------------------------------------
Mark D. McGregor 64 Chief Financial Officer
- ------------------ -------- -----------------------------------------------
- ------------------ -------- -----------------------------------------------
Cory Weaver 34 Vice-President of Information Services
- ------------------ -------- -----------------------------------------------
- ------------------ -------- -----------------------------------------------
Cara Gerken 36 Vice-President of Quality Services
- ------------------ -------- -----------------------------------------------
Our officers devote 100% of their time to our development and operation and do
not participate in any other significant business activities.
19
Significant Employees
Our significant employees are as follows.
Name Age Position Held
--- -------------
Dusty Markham 29 Assistant Vice President, Business Development
Rob Cook 39 Director, CattleNetwork.com
The business address for each of our officers and directors is 601 4th Street,
Platte City, MO 64079.
DIRECTORS
John Saunders
(See biographic information under officers)
Dr. Gary Smith
Dr. Gary Smith is a professor in the Department of Animal Science at Colorado
State University, a position he has held since 1990. Dr. Smith received his PhD
in Meat Science and Muscle Biology from Texas A&M University. Dr. Smith has also
taught at Washington State University, Texas A&M University and FSIS-USDA
National Meat Inspection Training Center. Dr. Smith is a member of multiple
professional associations and societies and has received numerous academic
awards.
John Bellinger
John W. Bellinger is the CEO of Agri-West International, Inc. (AWI), which he
founded in 1989. AWI is an international and domestic marketing firm offering
brokerage and consulting services for the food industry and represents U.S.
companies in various international markets along with trading U.S. meats
internationally. In addition, AWI markets meat products in domestic
supermarkets.
Mr. Bellinger received his Bachelor of Science degree from Texas A&M University
in 1976. In 1978, he received a Master of Science degree in Animal Science.
Mr.Bellinger is currently Chairman of the U.S. Meat Export Federation.
Adam Larson
Adam Larson has been in the cattle feeding and ranching business since 1991. He
is involved in the ownership and cattle financing of eight feedyard facilities
in Colorado, Kansas and South Dakota. Mr. Larson is a graduate of the University
of Colorado.
20
OFFICERS
John Saunders, President, Chief Executive Officer and Chairman of the Board
John Saunders founded our company in 1995 and has been its president and chief
executive officer since founding. Prior to establishing our company, Mr.
Saunders was a partner and consultant for Pathfinder Consulting Services, Inc.
in Parker, Colorado. An expert in both technology and the livestock industry,
Mr. Saunders is a graduate of Yale University.
Leann Saunders, Executive Vice President of Quality Services
Leann Saunders joined IMI in 2003 and is responsible for managing the product
development, implementation and delivery of the USVerified product line. Prior
to 2003, Mrs. Saundersworked for PM Beef Holdings, an integrated beef company,
and developed a supply system for PM's Ranch to Retail product line and managed
PM's USDA Process Verified program. She then served as the company's Vice
President of Marketing and Communications. Prior to joining PM in 1996, Mrs.
Saunders worked for McDonald's Corporation as a Purchasing Specialist, and
Hudson Foods Corporation.
Mrs. Saunders graduated with a BS in Agriculture Business and an MS in Beef
Industry Leadership from Colorado State University.
Mark D. McGregor, Chief Financial Officer
Mark McGregor joined us as of February 1, 2006 as our Chief Financial Officer.
From 1985 to 2005 when it was acquired by Sun Microsystems, Inc., Mr. McGregor
was Vice President - Corporate Treasurer and Corporate Development for Storage
Technology Corporation. Mr. McGregor holds a B.A. degree in accounting from
Texas A&M University and is a Certified Public Accountant.
Cory Weaver, Vice President of Information Technologies
Cory Weaver joined us in 1999 and serves as the company's Systems Project Leader
where he is responsible for overseeing our new development projects and
providing technical support to existing clients. Before joining us, Mr. Weaver
worked with SYS-TEC Corporation where he installed and implemented inventory
management systems for the US. Air Force and Navy. A graduate of Heidelberg
College, he received a BS. degree in Business Administration and is a Certified
Network Engineer.
21
Cara Gerken, Vice President of Quality Services
Cara Gerken is responsible for new product research, development and training
for the USVerified development and auditing services. Prior to joining IMI in
2005, Mrs. Gerken served as a Livestock and Meat Marketing Specialist with the
U.S. Department of Agriculture. Serving in that capacity since 1994, her work
included coordinating Process Verified Programs (PVP) using ISO 9000 standards
and developing the Department's PVP administration policy.
Mrs. Gerken is a graduate of Kansas State University where she earned a Bachelor
of Science degree in Animal Science, and she received her M.S. in food science
from Oklahoma State University.
Significant Employers
Dusty Markham, Assistant Vice President, Business Development
Dusty Markham joined IMI in September 2004. His main responsibilities are sales,
customer support, and data management. Prior to joining IMI, Mr. Markham served
as clinical database administrator for Pfizer Animal Health where he was
responsible for collecting and managing data for clinical trials and quality
assurance. He holds a B.S. degree in Computer Information Systems from Friend's
University and an M.S. degree in Management from Baker University.
Rob Cook, Director of Cattlenetwork.com
Rob Cook joined us as director of Cattlenetwork.com when we acquired
Cattlefeeding.com, Inc. in 2005. Mr. Cook founded Cattlefeeding.com in 2001 and
has operated it since inception. Prior to founding Cattlefeeding, Mr. Cook was
the Assistant General Manager of Brookover Company one of the twenty largest
cattle feeding companies in the U.S. Mr. Cook has a B.S. degree in Agricultural
Economics and Animal Science from the University of Nebraska and a J.D. in law
from Creighton University.
Executive Compensation
The following table sets forth the annual compensation paid by us to our
executive officers for services to us in all capacities during calendar years
2003, 2004 and 2005.
Annual Compensation Long-Term
Compensation
Other Annual Restricted Stock
Name & Position Year Salary Bonus Compensation Awards
John Saunders 2005 $105,397 $20,348 (2)(3)
2004 - $120,686(1) 9,511 (2)
2003 - - 2,111 (2)
(1) Subchapter S Corporation distributions (2) Health insurance (3) Automobile
allowance ($12,000)
Stock options
The following table indicates the total number of stock options we granted to
each named executive officers during calendar year 2005.
22
Options Granted During Calendar Year 2005 Individual Grants
Number of Percent of Total
Securities Options Granted
Underlying Options Employees in 2005 Exercise of Base
Name Granted (1) (1) Price ($/Share) Expiration Date
---- ----------- --- --------- ---------------
Cory Weaver 712,500 90% 0.61 3-4-08
Cara Gerken 75,000 10% 0.61 3-4-08
------ ---
787,500 100.00%
======= =======
(1) Reflects the 3:2 stock split of February 2006
The following table indicates the total number of exercisable and unexercised
stock options held by each named executive officers as of the close of business
on December 31, 2005, and the value of those options. No named executive officer
exercised stock options during calendar year 2005.
Aggregated Individual Grants/Options
Exercised in calendar year 2005
and Option Values as of
December 31, 2005
Number of Securities
Shares Acquired on Underlying Unexercised
Name Exercise No. Value Realized $ Options at 12/31/05
---- ------------ ---------------- -------------------
Exercised Unexercised
Cory Weaver 0 0 0 712,500
Cara Gerken 0 0 0 50,000
------
Total 0 0 0 787,500
= = = =======
Board Structure
The board of directors held five meetings during calendar year 2005. At the
present time, we have no nominating, executive or compensation committees. The
full board presently functions as the audit committee, and we do not have an
audit committee financial expert.
Director Compensation
We presently compensate all directors by paying them $500 per meeting attending
in person and $200 per telephonic meeting in excess of fifteen minutes. The some
compensation applies for any committee meetings attended. In addition, directors
are reimbursed for all company travel related expenses.
Certain Relationships and Related Transactions
John Saunders, the President, Chief Executive Officer and Chairman of the Board
of Directors is married to Leann Saunders our Executive Vice President of
Quality Services. As of December 31, 2005 Mr. Saunders was indebted to us in the
amount of $1,900, which was repaid in February 2006. At December 31, 2004, Mr.
Saunders owed the Company $22,197. This amount was repaid in 2005. In 2004 we
recorded sales of $24,065 to the father of Leann Saunders and had an outstanding
receivable as of December 31, 2004 of $21,585. This receivable was collected in
December 2005. In 2005, we recorded sales of $8,005 to the father of Leann
Saunders. The receivable of $8,005 was paid in April 2006. In 2005, we paid two
board members, Jay Belk and JW Roth a total of $110,000 for business and
investment services.
Employment Agreements
We presently have employment agreements with three persons, John Saunders our
president and Chief Executive Officer; Leann Saunders our Executive Vice
President of Quality Services; and Mark McGregor, our Chief Financial Officer.
Below is a summary of each agreement.
John Saunders. A one year agreement, which renews annually (unless terminated by
either party) and provides for an annual salary of $90,000. The agreement
contains a two year covenant not to compete in the event he leaves the company
and provides for normal fringe benefits and the use of a company vehicle.
23
Leann Saunders. A one year agreement, which renews annually (unless terminated
by either party) and provides for an annual salary of $90,000. The agreement
contains a two year covenant not to compete in the event she leaves the company
and provides for normal fringe benefits.
Mark McGregor. A one-year agreement, which renews annually (unless terminated by
either party) and provides for an annual salary of $85,000. The agreement
contains a two year covenant not to compete in the event he leaves the company,
provides for normal fringe benefits, and grants him 1,100,000 stock options of
which 400,000 vest immediately and the remaining 700,000 at various dates
between 1, 2007 and July 1, 2007.
Consulting Agreements
We have three consulting agreements, two for business development and market
support and one for administrative and financial services. A summary of each
agreement is detailed below.
Agreement with Jay D. Belk effective April 1, 2005. This agreement provides for
business development and market support services to be rendered by Mr. Belk in
exchange for $3,000 per month. The agreement will terminate twelve months after
a registration statement of the Company is approved by the SEC, and becomes
effective. Mr. Belk is a former director of the Company.
Agreement with JW Roth effective April 1, 2005. This agreement provides for
business development and market support services to be rendered by Mr. Roth in
exchange for $5,000 per month. The agreement will terminate twelve months after
a registration statement of the Company is approved by the SEC, and becomes
effective. Mr. Roth is a former director of the Company.
Agreement with Mark Byrne effective January 1, 2006 and ends on June 30, 2006.
Under the terms of the agreement, Mr. Byrne is assisting the Company in the
build out of the USVerified, Process Verified and Supply Verified Business lines
and assist the company with various other administrative and financial services.
For such services, Mr. Byrne is compensated $100 per hour.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of February 28, 2006, 17,867,515 shares of our common stock, $0.001 par
value, were outstanding. The following tabulates holdings of our common shares
by each person who, as of February 28, 2006, (a) holds of record or is known by
us to own beneficially more than 5.0% of our common shares and, in addition, (b)
by all of our directors and officers individually and as a group. To the best of
our knowledge, each named beneficial owner who has sole voting and investment
power with respect to the shares set forth opposite his name.
24
Name & Address of Officers &
Directors as a Group Number of Shares Percentage
-------------------- ------ ----------
John and Leann Saunders 7,977,143 44.65%
Cory Weaver 50,000 (4)
Cara Gerken 50,000 (4)
Mark McGregor -
Dr. Gary Smith 50,000 (4)
Adam Larson 60,000 (4)
John Bellinger ___-___
-------
All officers & directors as a group
(8 persons) 8,187,143 45.82%
=========
(1) This table is based upon information obtained from our stock records.
Unless otherwise indicated in the footnotes to the above table and
subject to community property laws where applicable, we believe that
each stockholder named in the above table has sole or shared voting and
investment power with respect to the shares indicated as beneficially
owned.
(2) John and Leann Saunders are husband and wife and own the shares as joint
tenants.
(3) The address for all persons is 601 4th Street, Platte City, MO 64079
(4) Less than 1%
Change of Control
There are currently no arrangements that would result in a change of control of
the company.
DESCRIPTION OF COMMON STOCK
The following description is a summary and is qualified in its entirety by the
provisions of our Articles of Incorporation and Bylaws, copies of which have
been filed as exhibits to the registration statement of which this prospectus is
a part.
Common Stock
Our Articles of Incorporation authorize us to issue up to 95,000,000 common
shares, $0.001 par value per share and 5,000,000 shares of preferred stock,
$0.001 par value. As of April 15, 2006, we had 17,867,515 shares of common stock
outstanding held by our stockholders. No shares of preferred stock have been
issued.
Liquidation Rights
Upon liquidation or dissolution, each outstanding common share will be entitled
to share equally in our assets legally available for distribution to
stockholders after the payment of all debts and other liabilities.
Dividend Rights
There are no limitations or restrictions upon the rights of our Board of
Directors to declare dividends, and we may pay dividends on our shares in cash,
property, or our own shares, except when we are insolvent or when the payment
thereof would render us insolvent subject to the provisions of the Delaware
Statutes. We have not paid dividends in the past and it is not anticipated that
any dividends will be paid in the foreseeable future.
Voting Rights
Holders of our common shares are entitled to cast one vote for each share held
at all stockholders meetings for all purposes. There are no cumulative voting
rights.
25
Other Rights
Our common shares are not redeemable, have no conversion rights and carry no
preemptive or other rights to subscribe to, or purchase, additional common
shares in the event of a subsequent offering. There are no other material rights
of the common stockholders not included herein. There is no provision in our
charter or by-laws that would delay, defer or prevent a change in control of IMI
Global. We have not issued any debt securities. Each stockholder of IMI Global
will receive an annual report, including audited financial statements. Although
IMI Global is not currently a reporting company, upon approval of this
registration statement, it will begin filing quarterly reports on Form 10-QSB
and annual reports on Form 10-KSB.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our charter provides that we will indemnify our current and former directors,
officers and employees against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement arising out of their services as directors,
officers or employees of the company. Section 7 of the Colorado Business
Corporation Act states that we have the power to indemnify any person made a
party to any lawsuit by reason of being our director or officer against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
Our employment agreements with our officers contain provisions requiring us to
indemnify them to the fullest extent permitted by Colorado law. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and persons controlling the company pursuant to
the foregoing provisions, or otherwise, we have been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Shares Owned
Name Before Offering After Offering
- -------------------------------------------------------------- ------------------- ------------------
John K Saunders & Leann Saunders * 7,977,143 7,977,143
JW Roth 1,350,000 1,350,000
Federal National Fin Corp Pension P/S FBO Jay Belk 714,387 714,387
Jay D Belk & Tracy L Belk 918,502 918,502
Cobank ACB 329,672 329,672
Amy Ames 30,000 30,000
Jon Angell 181,319 181,319
Jon L Angell & Charlotte A Angell 138,000 138,000
Justin Angell 404,837 404,837
Michael G Baker 150,000 150,000
Bank Of The West Cust FBO David H Hoark Self Directed IRA 28,800 28,800
James R Belk & B Kay Belk 41,210 41,210
Jeffrey P Belk 41,210 41,210
Keith Belk 30,000 30,000
Keith E Belk & Joann Belk 28,800 28,800
Sue Biddle 50,000 50,000
Melinda Birkeland 20,000 20,000
Dale Blasi 18,746 18,746
Rod Bowling 30,000 30,000
Frank H Brenton 12,000 12,000
Eugene S Burk & Jerry C Burk 41,210 41,210
Jerry W Buxton 18,000 18,000
Salvatore G Campoli & Lisa Campoli 12,000 12,000
Daniel L Carnahan 41,210 41,210
Alan Charmichael 30,000 30,000
Jason M Cooley 18,000 18,000
Robert Cooper 30,000 30,000
Cunningham Family Revocable Trust 12,000 12,000
Equity Trust Co Custodian FBO Tim R Mathes IRA 12,000 12,000
Equity Trust Co Custodian FBO Charles J Horak Jr IRA 30,000 30,000
Equity Trust Co Custodian FBO Barbara Horak IRA 30,000 30,000
Federal National Fin Corp Pension P/S FBO Dl Carnahan 714,388 714,388
Brian L Field 12,000 12,000
First Baptist Church Of Castle Rock DBA Creekside Bible
Church 30,000 30,000
Frontier Farm Credit 41,210 41,210
George L Black Jr Trust 41,210 41,210
Cara Gerken 50,000 50,000
William M Goldstein 30,000 30,000
Brian M Grahams & Patricia A Grahams 14,400 14,400
Rich Grisham 288,462 288,462
Michael S Hall 41,210 41,210
Brad A Haun & Michelle A Haun 30,000 30,000
Cecil D Haun & Carole L Haun 30,000 30,000
Torry P Head 9,000 9,000
Christopher D Hepler 6,000 6,000
James J Hepler 6,000 6,000
Charles J Horak Jr & Barbara Horak 36,000 36,000
David H Horak & Anne D Horak 271,200 271,200
Jamie Glen House 100,000 100,000
Torrey W House & Lori L House 28,800 28,800
Cadence International 39,284 39,284
Bilynn Johnson 20,000 20,000
Jennifer Johnson 30,000 30,000
Roland H Johnson & Janie C Johnson 32,969 32,969
Chuck Jolley 30,000 30,000
Kevin W Kackley 12,000 12,000
Kado Enterprises LLC 100,419 100,419
Eric Kelton 30,000 30,000
Jason Kraft 15,000 15,000
Michael Kramm & Doris Kramm 30,000 30,000
Pete Lapaseotes 41,210 41,210
Pete Lapaseotes Jr 132,000 132,000
Larson Brothers LLC 30,000 30,000
Amy Lieffring 20,000 20,000
Grant Farms LLC 12,000 12,000
Rumford Farms LLC 24,000 24,000
Brent Lee Lowderman & Kristene S Lowderman 12,000 12,000
Eduardo Loya & Barbara Loya 30,000 30,000
Doug Markham 8,243 8,243
Dusty Markham 50,000 50,000
Richard Markham & Rita Markham 74,177 74,177
Mary Kathleen Borck Trust 12,000 12,000
Tim R Mathes & Sharon Mathes 48,000 48,000
The Matthew R Cook Trust 24,000 24,000
Butch Mayfield 50,000 50,000
Jim Mayfield 30,000 30,000
Clark S Milligan & Marilyn F Milligan 180,000 180,000
Eric Moeder 30,000 30,000
Robert A Moreno 24,000 24,000
26
Grant Morgan 20,000 20,000
Matt Morgan 30,000 30,000
John Richard Newman & Virginia Newman 41,210 41,210
Norman W Hupe Trust 12,000 12,000
Jim Norwood 30,000 30,000
Robert J Overgaard & Carolyn F Overgaard 82,419 82,419
Terry L Phillips 12,000 12,000
Potomac Capital Partners LP 300,000 300,000
Progressive Ins Services Inc MPPP 11,700 11,700
Dan Pronovist 2,507 2,507
Dale A Redeker 41,210 41,210
Martin Redeker 41,210 41,210
Carol J Ross Trustee 60,000 60,000
Maynard Ross Trustee 60,000 60,000
Rodney L Ross & Tonda R Ross 120,000 120,000
Clint J Roth &\ Amy L Roth 164,837 164,837
Dennis D Roth & Margaret J Roth 41,210 41,210
Rosie Sampson 30,000 30,000
Susan Sanders 20,000 20,000
Emily Saunders 20,000 20,000
Saunders Investment Co LLC 227,144 227,144
Ken Saunders Jr 58,243 58,243
Ken Saunders Sr 30,000 30,000
Randy Saunders 30,000 30,000
Wade Saunders 30,000 30,000
Jan Saunders 30,000 30,000
Gary Smith 50,000 50,000
Linda Spire 18,746 18,746
Doug Stanton 50,000 50,000
Stower Ventures Inc 15,000 15,000
Rob Streight 20,000 20,000
William S Swafford & Laura Swafford 61,451 61,451
Timpas Creek Finance Co LLC 30,000 30,000
Yoshi Tsuchiya 30,000 30,000
Michael J Unrein 9,000 9,000
Jake Wagner 20,000 20,000
Ward Feedyard Inc 30,000 30,000
Cory Weaver 50,000 50,000
Wildcat Holdings Co LLC 17,400 17,400
Cheryl Wyatt 50,000 50,000
Deborah A Ziwot 150,000 150,000
----------- ------------------
Totals 17,867,515 17,867,515
* Even though all the shares of John & Leann Saunders are being registered, they
have pledged to the Board of Directors that they will only be sold in accordance
with Rule 144.
27
PLAN OF DISTRIBUTION
The selling shareholders, and any of their pledges, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of our common stock on any stock exchange, market or trading facility on which
the shares are traded. They may also sell the shares in private transactions in
accordance with applicable law. These sales may be at fixed or negotiated
prices. The selling shareholders may use any one or more of the following
methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o privately negotiated transactions;
o broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price
per share;
o a combination of any such methods of sale; or
o any other method permitted pursuant to applicable law.
The selling shareholders may also sell shares of our common stock under Rule 144
under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling shareholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated.
The selling shareholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. The selling shareholders have informed us
that they do not have any agreement or understanding, directly or indirectly,
with any person to distribute our common stock.
We are required to pay certain fees and expenses incurred by us incidental to
the registration of the shares of our common stock.
28
LEGAL OPINION
Vanderkam & Associates, of Houston, TX, will pass upon the validity of the
shares of common stock being offered pursuant to this prospectus.
EXPERTS
Our financial statements as of December 31, 2004 and December 31, 2005 included
in this prospectus have been audited by E Randall Gruber, CPA, PC, independent
registered accountants, as stated in their report included in this prospectus,
and have been so included in reliance upon their authority as experts in
accounting and auditing.
ADDITIONAL INFORMATION
We are not yet a public company. Once we become a public company, we will file
annual, quarterly and special reports, proxy statements and other information
with the Securities and Exchange Commission. Copies of the reports, proxy
statements and other information will be able to be read and copied at the
Securities and Exchange Commission's Public Reference Room at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. You can request copies of such
documents by writing to the Securities and Exchange Commission and paying a fee
for the copying cost. You may obtain information on the operation of the Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. All reports and other information that we file with the SEC are
also available to the public from the SEC's website at www.sec.gov, under our
company name or our CIK number: 0000796764.
This prospectus is part of a registration statement on Form SB-2 that we have
filed with the Securities and Exchange Commission. Certain information in the
registration statement has been omitted from this prospectus in accordance with
the rules and regulations of the Securities and Exchange Commission. We have
also filed exhibits and schedules with the registration statement that are
excluded from this prospectus. For further information about us, and the common
stock offered by this prospectus, we refer you to the registration statement and
its exhibits, which may be obtained as described above.
29
INDEX TO FINANCIAL STATEMENTS
IMI Global, Inc.
Table of Contents
Report of Independent Registered Public Accounting Firm 1
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Equity 4 - 5
Consolidated Statements of Cash Flows 6
Notes to Financial Statements 7 - 20
30
E. Randall Gruber, CPA, PC
================================================================================
Certified Public Accountant Telephone (636)561-5639
400 Lake Saint Louis Boulevard Fax (636)561-0735
Lake Saint Louis, Missouri 63367
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Integrated Management Information, Inc.
I have audited the accompanying balance sheets of Integrated Management
Information, Inc. as of December 31, 2005 and 2004, and the related statements
of operations, changes in stockholders' equity (deficit) and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my
audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Integrated Management Information,
Inc. as of December 31, 2005 and 2004 and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
E. Randall Gruber, CPA, PC
March 17, 2006
St. Louis, Missouri
Member: American Institute of Certified Public Accountants
Registered: Public Company Accounting Oversight Board (PCAOB)
31
Integrated Management Information, Inc.
d/b/a IMI Global, Inc.
Balance Sheet
December 31,
2005 2004
Assets
Current assets
Cash and cash equivalents $ 684,833 $ 12
Accounts receivable, net of allowance of $21,950 and $12,000 241,304 67,633
Inventory 9,771
Prepaid expenses --- 55,914
---------------- ---------------
Total current assets 935,908 123,559
Restricted cash
Cash restricted for purchase of treasury stock 421,664 ---
Cash restricted for payment of line of credit 50,000 ---
---------------- ---------------
Total restricted cash 471,664 ---
Property and equipment
Equipment and furniture, net of accumulated depreciation 99,514 86,988
Less accumulated depreciation (65,739) (51,626)
---------------- ---------------
Net property and equipment 33,775 35,362
Other assets
Goodwill 509,108 ---
---------------- ---------------
Total assets 1,950,455 158,921
================ ===============
Liabilities and shareholders' equity
Liabilities
Current liabilities
Notes payable 100,000 172,670
Accounts payable 178,847 12,623
Accrued expenses 11,183 5,695
Deferred revenues 46,556 ---
---------------- ---------------
Total current liabilities 336,586 190,988
Notes payable 350,000 ---
Shareholders' equity
Common stock, par value $.01 per share. Authorized 50,000,000
shares; issued and outstanding 16,936,669 and 12,000 169,366 120
Additional paid-in capital 2,099,139 880
Retained (deficit) (1,004,636) (33,067)
---------------- ---------------
Total shareholders' equity 1,263,869 (32,067)
---------------- ---------------
Total liabilities and shareholder's equity $ 1,950,455 $ 158,921
================ ===============
32
Integrated Management Information, Inc.
d/b/a IMI Global, Inc.
Statements of Operations
For the years ended December 31,
2005 2004
Revenues $ 957,894 $ 451,305
Cost of sales 534,158 160,832
--------------- ---------------
Gross profit 423,736 290,473
Selling, general and administrative expenses 1,390,671 238,061
--------------- ---------------
Income (loss) from operations (966,935) 52,412
Other income (expense)
Interest income 3,173 168
Interest expense (40,874) (12,081)
--------------- ---------------
Net other expense (37,701) (11,913)
--------------- ---------------
Loss before income taxes (1,004,636) 40,499
Income taxes --- ---
--------------- ---------------
Net income (loss) $ (1,004,636) $ 40,499
=============== ===============
Earnings (loss) per share (Note 1) $ (0.07) $ 3.37
=============== ===============
Average shares outstanding 15,358,417 12,000
=============== ===============
33
Integrated Management Information, Inc.
d/b/a IMI Global, Inc.
Statements of Stockholders' Equity
For the years ended December 31, 2005 and 2004
Common Stock Additional Retained
Shares Amount Paid-In Earnings
--------- --------- Capital (Deficit) Total
(Note 1) ----------- --------- --------
Balance, December 31, 2003 12,000 120 880 47,120 48,120
Net income for the year ended
December 31, 2004 40,499 40,499
Distributions to shareholders (120,686) (120,686)
-------------- --------- -------------- -------------- ----------
Balance, December 31, 2004 12,000 120 880 (33,067) (32,067)
January, 2005 - Additional common
shares issued to founders 10,968,000 109,680 (109,680)
January, 2005 - Common shares
issued as compensation - Related
parties 2,745,300 27,453 190,402 217,855
January, 2005 - Common stock
issued to convert note payable -
Related parties 944,700 9,447 65,553 75,000
March, 2005, stock options issued
to non-employees 30,000 30,000
May, 2005 - Common stock issued to
convert note payable 27,473 275 (275)
May, 2005 - Options issued for
purchase of Cattlefeeding.com, Inc. 15,000 15,000
May, 2005 - Common stock issued
as consulting fees 200,000 2,000 22,000 24,000
Integrated Management Information, Inc.
d/b/a IMI Global, Inc.
Statements of Stockholders' Equity
For the years ended December 31, 2005 and 2004
Common Stock Additional Retained
Shares Amount Paid-In Earnings
--------- -------- Capital (Deficit) Total
(Note 1) ----------- ---------- -------
May 27, 2005 - Proceeds from sale of
stock, net of fees totaling $176,777 928,796 9,287 635,136 644,423
December 31, 2005 - Proceeds from
sale of stock, net of fees
totaling $104,100 1,110,400 11,104 1,272,796 1,283,900
"S" Corp deficit / other (22,673) 33,067 10,394
Net income for the year ended
December 31, 2005 (1,004,636) (1,004,636)
------------ --------- ------------ -------------- ---------------
Balance, December 31, 2005 16,936,669 $ 169,366 $ 2,099,139 (1,004,636) $ 1,263,869
============ ========= ============ ============== ===============
34
Integrated Management Information, Inc.
d/b/a IMI Global, Inc.
Statement of Cash Flows
For the years ended December 31,
2005 2004
Cash flows from operating activities
Net income (loss) $ (1,004,636) $ 40,499
Adjustments to reconcile net earnings (loss) to net cash provided
by operating activities:
Depreciation 14,113 13,233
Provision for bad debts 9,950 12,000
Stock options issued to non-employees 30,000 ---
Changes in assets and liabilities
Accounts receivable (183,621) 16,275
Inventory (9,771)
Prepaid expenses 55,914 (55,914)
Accounts payable 166,224 (15,050)
Accrued expenses 5,488 5,636
Deferred revenues 46,556 ---
--------------- ----------------
Net cash provided (used) by operating activities (869,783) 16,679
Cash flows from investing activities
Acquisition of office furniture and equipment (12,526) (12,983)
Acquisition of goodwill (144,108) ---
--------------- ----------------
Net cash used by investing activities (156,634) (12,983)
Cash flows from financing activities
Proceeds from line of credit, net 27,330 119,374
Promissory note repayment (25,000) (120,686)
Proceeds from sale of common stock 2,180,572 (1,648)
Restricted cash (471,664)
--------------- ----------------
Net cash provided by financing activities 1,711,238 (2,960)
--------------- ----------------
Net increase in cash and equivalents 684,821 736
Cash and cash equivalents at beginning of period 12 (724)
--------------- ----------------
Cash and cash equivalents at end of period $ 684,833 $ 12
=============== ================
35
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
Integrated Management Information, Inc. ("IMI Global," "IMI," or the "Company")
was incorporated in 1998 as a Missouri corporation. In March 2005, IMI was
reincorporated in Delaware. The Company provides livestock tracking and herd
management software database applications, consulting services, verification
solutions for the livestock and meat industry and maintains an internet portal
dedicated to news, trends, and products in the agricultural industry.
IMI Global stands at the forefront of a rapidly evolving movement to track
cattle and verify sources of beef products. In the aftermath of the discovery of
the first case of mad cow disease in the United States in December, 2003, many
of the largest U.S. beef export markets were closed resulting in significant
losses to the industry.
In response to the crisis, several initiatives are being enacted to facilitate
the reopening of key export markets. Most notably, U.S. suppliers seeking to
sell beef and beef products to other countries must participate in a
pre-approved Quality System Assessment Program so as to have an approved means
of verifying specific product requirements. With the introduction of the
USVerified Source and Age Verification system last year, IMI Global was the
first to develop a USDA Quality System Assessment document management system for
auditing the tracking systems used by beef producers to verify source and age.
Liquidity
As shown in the accompanying financial statements, the Company has incurred a
loss from operations and negative cash flows from operations. During 2005, the
Company's growth was funded through a combination of convertible debt from
private investors and private placement offerings. The Company expects that it
may need to raise additional capital to accomplish its business objectives. The
Company will continually evaluate all funding options including additional
offerings of its securities to private, public and institutional investors and
other credit facilities as they become available. There can be no assurance as
to the availability or terms upon which financing alternatives might be
available.
Basis of presentation
All Common Stock shares are presented to reflect a 12 for 1 split approved by
the shareholders on March 4, 2005.
The Company accounts for acquired businesses using the purchase method of
accounting which requires that the assets acquired and liabilities assumed be
recorded at the date of acquisition at their respective fair values. The
Company's financial statements reflect an acquired business after the completion
of the acquisition and are not restated. The cost to acquire a business,
including transaction costs, is allocated to the underlying net assets of the
acquired businesses in proportion to their respective fair values. Any excess of
the purchase price over the estimated fair values of the net assets acquired is
recorded as goodwill.
On May 12, 2005, IMI completed an acquisition of Cattlefeeding.com, Inc.'s net
assets which has been accounted for under the purchase method of accounting.
Starting at the date of acquisition, the assets acquired and liabilities assumed
were recorded at their respective fair values and the Company's results of
operations included Cattlefeeding.com's advertising revenues, product sales,
costs and expenses from the acquisition date. Therefore, approximately 7 1/2
months of results of operations of Cattlefeeding.com's operations are included
in the Company's financial statements for the year ended December 31, 2005.
Estimates and assumptions
In preparing financial statements, the Company uses certain estimates and
assumptions that affect reported amounts and disclosures. For example, estimates
are used when accounting for depreciation, amortization, contingencies and asset
and liability valuations. Estimates are often based on complex judgments,
probabilities and assumptions that the Company believes to be reasonable but
that are inherently uncertain and unpredictable. Assumptions may be incomplete
or inaccurate and unanticipated events and circumstances may occur. It is also
possible that other professionals, applying reasonable judgment to the same
facts and circumstance, could develop and support a range of alternative
estimated amounts. The Company is also subject to risks and uncertainties that
may cause actual results to differ from estimated amounts, such as changes in
the administrative directives, rules and regulations of federal, state and local
regulatory agencies, including but not limited to the U.S. Department of
Agriculture, or the Agricultural Marketing Service and the Food Safety
Inspection Service.
36
Revenue recognition
Revenues are recognized only when realized / realizable and earned in accordance
with generally acceptable accounting principles.
* Revenue from product sales are recognized when the goods are shipped and
title passes to the customer.
* Revenue from contracts for consulting and website development are
recognized on the percentage of completion method.
* Advertising revenues earned by Cattlefeeding.com are recognized when the
underlying advertisements are published.
* Revenue derived from IMI's US Verified program is recognized ratably over
the contract term. Contracts are cancelable only for non-performance, and
the billable revenue of these contracts at December 31, 2005 was $106,000.
Cash and cash equivalents
All cash and short-term investments with original maturities of three
months or less are considered cash and cash equivalents, since they are
readily convertible to cash. These short-term investments are stated at
cost, which approximates fair value.
Restricted cash
Pursuant to the terms of the Company's line of credit with the Platte
Valley Bank, a $50,000 certificate of deposit is restricted to
collateralize the line of credit.
An escrow account has been created to hold the funding for stock that was
resold in the private offering. These funds totaling $421,664 were paid out
in January, 2006.
Research and development and software development costs
Research and development costs are charged to operations as incurred. SFAS
No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased
or Otherwise Marketed," requires the capitalization of certain computer
software development costs incurred upon the establishment of technological
feasibility. The Company's current process for developing software is
essentially completed concurrently with the establishment of technological
feasibility; therefore, no costs have been capitalized in 2005 or 2004.
Stock-based compensation
SFAS No. 123 "Accounting for Stock-Based Compensation," established and
encourages the use of the fair value based method of accounting for
stock-based compensation arrangements under which compensation cost is
determined using the fair value of stock-based compensation determined as
of the date of the grant and is recognized over the periods in which the
related services are rendered. The statement also permits companies to
elect to continue using the current intrinsic value accounting method
specified in Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees", to account for stock-based
compensation. The Company has elected to use the intrinsic value based
method and has disclosed the pro forma effect of using the fair value based
method to account for its stock-based compensation issued to employees (see
Note 7 - Stock-based compensation). For options granted to employees where
the exercise price is less than the fair value of the stock at the date of
grant, the Company recognizes an expense in accordance with APB 25. For
non-employee stock-based compensation the Company recognizes an expense in
accordance with SFAS No. 123 and values the equity securities based on the
fair value of the security on the date of grant.
37
Amortization of intangible assets, depreciation and certain long-lived assets
Long-lived assets include:
* Goodwill - Goodwill represents the difference between the purchase price of
a business acquisition and the fair value of its net assets. Goodwill is
not amortized.
* Property, plant and equipment - These assets are recorded at original cost
and increased by the cost of any significant improvements made after
purchase, The Company depreciates the cost over the estimated useful lives
of the respective assets using straight line depreciation.
The Company reviews all of its long-lived assets, including goodwill and
other intangible assets, for impairment at least annually. The Company
records changes for impairments of long-lived assets for the amount by
which the present value of future cash flows, or some other fair value
measure, is less than the carrying value of these assets.
Advertising expenses
Advertising costs are expensed as incurred. The total advertising expenses
included in the Statement of Operations for the year ended December 31, 2005 and
December 31, 2004 were $48,429 and $5,336, respectively.
Fair value of financial instruments
For certain of the Company's financial instruments, including cash, accounts
payable and accrued interest, the carrying amounts approximate fair value due to
their short maturities. The amounts shown for notes payable also approximate
fair value because current interest rates and terms offered to the Company for
similar debt are substantially the same.
Income (Loss) per share
In accordance with SFAS No. 128, "Earnings Per Share," the basic income / (loss)
per common share is computed by dividing net income / (loss) available to common
stockholders by the weighted average number of common shares outstanding.
Diluted income per common share is computed similar to basic income per share
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive.
Concentration of credit risk
Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist of cash and cash equivalents and accounts receivable.
The Company places its cash with high quality financial institutions and at
times may exceed the FDIC $100,000 insurance limit. The Company extends credit
based on an evaluation of the customer's financial condition, generally without
collateral. Exposure to losses on receivables is principally dependent on each
customer's financial condition. The Company monitors its exposure for credit
losses and maintains allowances for anticipated losses, as required. Accounts
are "written-off" when deemed uncollectible.
38
Note 2 - Acquisitions
On May 12, 2005, IMI Global, Inc. acquired Cattlefeeding.com, Inc. net assets
for a purchase price of $500,000 and options for 150,000 shares of IMI Global,
Inc. Common Stock exercisable at $0.91 per share for a three year period from
closing.
The $500,000 purchase price consisted of $150,000 cash at closing, plus a note
in the amount of $350,000 payable with interest at a rate of 5% per annum (the
"Cattlefeeding.com Note"). The note is payable with monthly payments of interest
only for thirty-six months. The balance of the note and any unpaid interest is
due on June 12, 2008. The 150,000 options were valued pursuant to FAS 123 at
$15,000.
Cattlefeeding.com, Inc. owned and operated the internet domain names known as
CattleNetwork.com and CattleStore.com and all of the intellectual and personal
property located at or related to the businesses.
The following table summarizes the components of the purchase price:
Cash $ 150,000
Cattlefeeding.com Note 350,000
Stock Options 15,000
---------------
$ 515,000
===============
Allocation of Cattlefeeding.com, Inc. assets purchase price
The purchase price allocation was based on an estimate of the fair value of
assets acquired and liabilities assumed.
Book value of net assets acquired $ 5,892
Goodwill 509,108
---------------
$ 515,000
===============
Pro forma results of Cattlefeeding.com, Inc. assets purchase
the following unaudited pro forma financial information presents the combined
results of operations of IMI Global, Inc. and Cattlefeeding.com, Inc. as if the
acquisition had occurred as of the beginning of the period presented. The
unaudited pro form financial information is not necessarily indicative of what
the Company's consolidated results of operations actually would have been had
the Company completed the acquisition at the beginning of each period. In
addition, the unaudited pro forma financial information does not attempt to
project the future results of operations of the combined company.
Years Ended December 31
-----------------------------
2005 2004
------------ ------------
Revenues $ 991,201 $ 527,237
Net income (1,067,071) (22,299)
Per share amounts:
Net loss per common share $ 0.07 $ (22.30)
39
Note 3 - Property and equipment
The major categories of property and equipment are as follows at December 31,
2005 and December 31, 2004:
December 31
2005 2004
----------- ------------
Automotive equipment $ 37,660 $ 37,660
Furniture and office equipment 52,772 39,662
Software and tools 9,082 9,666
----------- ------------
99,514 86,988
Less - Accumulated depreciation (65,739) (51,626)
----------- ------------
Net property and equipment $ 33,775 $ 35,362
=========== ============
Depreciation expense for the years ended December 31, 2005 and December 31, 2004
was $14,113 and $13,233, respectively
Note 4 - Notes payable
Notes payable consist of the following:
December 31
2005 2004
---------- ---------
Current Maturities
Platte Valley Bank Line of Credit $ 100,000 $ 72,670
Promissory Note 0 100,000
----------- ---------
Total Current Maturities 100,000 172,670
----------- ---------
Long-Term Maturities
Cattlefeeding.com Note 350,000 0
----------- ---------
Total Long-Term Maturities 350,000 0
Total Notes Payable $ 450,000 $ 172,670
=========== =========
The Company maintains a $100,000 line of credit with Platte Valley Bank. The
line of credit is secured by a $50,000 certificate of deposit and the personal
guarantee of the two founding shareholders. Interest, which is payable monthly,
was at an annual rate of 5% during 2005 and can be increased annually to 2%
above the bank's certificate of deposit rate.
On October 12, 2004, the Company issued a note in the principal amount of
$100,000 to two related parties (50% and 25%, respectively) and a non-related
investor (25%) (the "Promissory Note"). Terms of the notes provided for annual
interest of 10% payable on a monthly basis, conversion at the option of the
lenders into an aggregate of 7% of the Company's outstanding Common Stock (with
anti-dilution provisions and a further option to purchase an additional 7% of
the Company's outstanding Common Stock for an additional $100,000) and final
repayment of outstanding interest and principal on October 13, 2007. In January
2005, $75,000 principal amount of the note (the portion held by the two related
parties) was converted to Common Stock. In May 2005, the remaining $25,000
principal amount under the note (held by the non-related investor) was exchanged
by the Company for $50,000 cash and 27,473 shares of Common Stock in
satisfaction of all obligations under the Promissory Note. Further details
regarding these transactions are provided in Note 8 - Common Stock.
On May 12, 2005, in connection with the acquisition of Cattlefeeding.com, Inc.'s
net assets (see Note 2 - Acquisitions), the Company issued a Note Payable to
Cattlefeeding.com, Inc. in the amount of $350,000. Under the Note, interest in
the amount of 5% of outstanding principal is payable on a monthly basis, with
all outstanding principal and interest payable on June 12, 2008.
40
Note 5 - Income taxes
Until December 31, 2004, the Company was structured as a Subchapter S
corporation under the Internal Revenue Code, with any income or loss passed
through to shareholders for tax purposes. Beginning January 1, 2005, the Company
converted to a Subchapter C and began to be subject to income taxation under the
Code.
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. The
ultimate realization of deferred tax assets is dependent upon the realization of
future taxable income during the periods in which those temporary differences
become deductible. Management considers past history, the scheduled reversal of
taxable temporary differences, projected future taxable income, and tax planning
strategies in making this assessment. As of December 31, 2005 and 2004,
management believes it is more likely than not that the Company's net deferred
tax asset will not be realized and accordingly has recorded a valuation
allowance against the deferred tax assets.
Significant components of the Company's deferred income tax assets and
liabilities are as follows:
Deferred income tax asset $ 343,400
Valuation allowance $ (343,400)
The Company has available as of December 31, 2005 for federal income tax
purposes, unused net operating loss carryforwards of approximately $1,010,000
which may be applied against future taxable income and expire in years beginning
in 2020. Utilization of net operating losses may be limited in the event of an
ownership change under Section 382 of the Internal Revenue Code.
Note 6 - Common Stock
As of December 31, 2005, the Company had 50,000,000 authorized shares of $0.01
par value Common Stock with 16,936,669 shares outstanding. As of December 31,
2004, the Company had 100,000 authorized shares of $1.00 par value Common Stock
with 12,000 shares outstanding.
In January 2005, in connection with the conversion of the Company from a
Subchapter S Corporation to a Subchapter C Corporation under the Internal
Revenue Code and conversion of outstanding principal and interest under the
Promissory Note in the principal amount of $75,000 (75% of the total principal
amount of $100,000), the Company issued 10,968,000 shares to its founders and
944,700 shares to the holders of the Promissory Note. Concurrently, the holders
of the Promissory Note exercised options to purchase an aggregate of 2,745,300
shares of Common Stock from the Company for $217,855 cash. Pursuant to the
transaction, the two former holders of the Promissory Note were appointed to the
Company's Board of Directors.
In addition, the Company committed to use its best efforts to develop a strategy
of liquidity including, but not limited to: a sale of the Company, a merger with
a public company, or an initial public offering. If such an event of liquidity
has not occurred by January 5, 2006, the Company agreed to pay annual dividends
to the Common shareholders representing 75% of each year's earnings before
depreciation, amortization and other non-cash expenses payable by March 15 of
the succeeding year. The Company is preparing the initial public offering
document, and anticipates filing it during the second quarter of 2006. The
Company did not have earnings for the year ending December 31, 2005, and
therefore does not owe dividends to shareholders for the current year.
In May 2005, the Company settled the remaining $25,000 principal amount of the
Promissory Note, including the related interest and the option to purchase
Common Stock, by paying $50,000 cash and issuing 27,473 shares of Common Stock
to the remaining holder of the Promissory Note.
In May 2005, the Company issued 928,796 shares of Common Stock for cash at $0.91
per share, which resulted in proceeds of $668,423, net of issuance costs of
$176,777. The offering also included 442,860 shares which were sold directly by
selling shareholders for which the company did not receive any proceeds.
Additionally, 200,000 shares of Common Stock and warrants to purchase 40,000
shares of Common Stock at $0.91 per share expiring in May 2009 were issued by
the Company to the placement agent in connection with the offering.
41
In October 2005, the Company began a private placement offering to sell a
minimum of 800,000 and a maximum of 4,000,000 shares of Common Stock at $1.25
per share with net proceeds to be used for working capital, general corporate
purposes and repurchase of Common Stock up to 5,500,000 shares from certain
existing, related-party shareholders. Pursuant to this offering, in December
2005, the Company issued 1,110,400 shares of Common Stock for cash at $1.25 per
share, which resulted in proceeds of $1,283,900, net of issuance costs of
$104,100. Additionally, warrants to purchase 158,540 shares of Common Stock at
$1.25 per share expiring in December 2009 were issued to the placement agent in
connection with the offering. The offering continued into January 2006 (see Note
12 - Subsequent Events).
Note 7 - Employee stock options
On March 12, 2005 the Company's Board of Directors granted options to acquire
Common Stock to certain employees and advisors. These stock options have a term
of three years and a vesting period of one year from the date the option is
granted.
A summary of stock option transactions for the year ended December 31, 2005
follows:
Exercise
Options Price
------------- ----------
Balance Outstanding December 31, 2004 0
Granted 1,125,000 $0.91
Exercised 0 $0.91
Cancelled (150,000) $0.91
Balance Outstanding December 31, 2005 975,000 $0.91
As of December 31, 2005, there were 975,000 options outstanding with exercise
price of $0.91 and weighted-average remaining contractual life of 2.2 years.
None of these options were exercisable as of December 31, 2005.
Note 8 - Stock-based compensation
The Company uses the intrinsic-value method of accounting to measure
compensation expense associated with grants of stock options and other
stock-based awards to employees and directors. As permitted under SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure," which
amended SFAS No. 123, "Accounting for Stock-Based Compensation," the Company has
elected to continue to follow the intrinsic-value method in accounting for its
stock-based employee compensation arrangements as defined by Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations including Financial Interpretation
Number ("FIN") 44, "Accounting for Certain Transactions Involving Stock
Compensation," an interpretation of APB No. 25.
No stock-based employee compensation cost is reflected in net loss, as all
options granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of the grant. Had the Company
recognized compensation for its stock options and other awards based on the
fair-value method of accounting for awards under those plans, pro-forma net
income would have been as follows:
42
Years Ended December 31
--------------------------------
2005 2004
--------------- ------------
Net income (loss), as Reported $ (1,004,636) $ 40,499
Less total stock-based employee compensation determined (33,510) ---
under fair-value-based method
Pro forma net income (loss) $ ($1,038,146) $ $40,499
The fair values used to compute pro-forma net loss were estimated on the grant
date using the Black-Scholes option-pricing model with the following
assumptions:
Years Ended December 31
-----------------------------
2005 2004
------------ ------------
Risk-free interest rate 3.48% N/A
Expected life of option grants (years) 2.0 N/A
Expected volatility of underlying stock 0% N/A
Expected dividend payment rate 0% N/A
The Company uses the intrinsic-value method of accounting to measure
compensation expense associated with grants of stock options and other
stock-based awards to consultants and other nonemployees. The Company records
the fair value of stock options and warrants granted to nonemployees in exchange
for services under the fair-value method in accordance with SFAS No. 123 and
Emerging Issues Task Force Issue No. 96-18, "Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services," in the statements of operations. Under this method,
the resulting compensation is measured at the fair value of the equity
instrument on the date of vesting and recognized as a charge to operations over
the service period, which is usually the vesting period.
Note 9 - Basic and diluted net income (loss) per share
Net loss per share is calculated in accordance with the Statement of Financial
Accounting Standards No. 128 (SOFAS No. 128), "Earnings per Share". Basic net
loss per share is based upon the weighted average number of common shares
outstanding. Diluted net loss per share is based on the assumption that all
dilutive convertible shares and stock options were converted or exercised.
Dilution is computed by applying the treasury stock method. Under this method,
options and warrants are assumed to be exercised at the beginning of the period
(or at the time of issuance, if later), and as if funds obtained thereby were
used to purchase Common Stock at the average market price during the period.
Weighted average number of shares used to compute basic and diluted loss per
share is the same in these financial statements since the effect of dilutive
securities is anti-dilutive.
Note 10 - Related party transactions
In 2004, the Company recorded $24,065 in sales from a related party (father of
Leann Saunders, a founding shareholder) and had an account receivable
outstanding at December 31, 2004 in the amount of $21,585. The sales occurred in
the normal course of business, and the account receivable was subsequently paid
in December 2005.
In 2005, the Company recorded $8,005 in sales from a related party (father of
Leann Saunders, a founding shareholder) and the amount was outstanding at
December 31, 2005.
In 2005, the Company paid two members of its Board of Directors a total of
$110,000 for advisory and business development services.
43
At December 31, 2005 and 2004, advances of $1,900 and $22,197 were outstanding
from the Company's Chief Executive Officer and Chairman of the Board. The amount
of $22,197 was repaid during the year 2005, and $1,900 was repaid in February,
2006.
Note 11 - Commitments
In February 2005, the Company entered into agreements with two members of its
Board of Directors to provide business development and investor relations
advisory services. The agreements were amended in October 2005 and will
terminate one year from the date the Company realizes an event of liquidity. The
fees for these services are $8,500 per month, plus reimbursement of related
expenses.
The Company leases office space and office furniture for use in its operations.
In addition to rent, the leases may require the Company to pay directly for
taxes, insurance , maintenance and other operating expenses, or to pay higher
rent when operating expenses increase. Rental expense was $38,273 for the year
ended December 31, 2005. The current lease is for the term beginning July 15,
2005 and ending July 15, 2006, with automatic renewal unless one party to the
agreement gives the other party at least ninety days notice prior to the
expiration of the then term of the lease. The remaining lease commitment for the
period January 1, 2006 through July 15, 2006 is in the monthly amount of $3,589,
resulting in a total minimum lease commitment at December 31, 2005 of $23,328.
Note 12 - Subsequent events
In January 2006, the Company completed the private placement offering initiated
in October 2005 (see Note 8 - Common Stock) and issued an additional 475,000
shares of Common Stock for cash at $1.25 per share, which resulted in proceeds
of $549,219, net of issuance costs of $44,531. Concurrently, the Company
purchased 700,000 shares at $0.75 per share from two members of the Company's
Board of Directors and 4,800,000 shares at $0.075 per share from the Company's
founders for an aggregate purchase price of $885,000. As additional
consideration for the purchase of the foregoing shares from the Company's
founders, the Company granted options to purchase an aggregate of 4,000,000
shares of Common Stock to the founders. These options vest at 1,000,000 per year
over a period beginning January 1, 2007 to January 1, 2010 at exercise prices of
$2.50 for the first two million and $4.00 for the remaining two million.
In February 2006, pursuant to an employment agreement with the Company's Chief
Financial Officer, the Company granted an aggregate of 1,100,000 options to
purchase Common Stock at exercise prices of $1.25 - $1.75. These options have a
term of three years and vest over a period beginning at the time of grant and
ending in July 2007.
In February 2006 at a special meeting of shareholders, Company's shareholders
approved a resolution to move the Company's state of incorporation from Delaware
to Colorado. The Shareholders also approved a three for two stock split,
effective as of February 14, 2006.
Note 13 - Recent accounting pronouncements
In March, 2004, the FASB approved the consensus reached on the Emerging Issues
Task Forces (EITF) Issue No. 03-1, "The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments." The objective of this
Issue is to provide guidance for identifying impaired investments. EITF 03-1
also provides new disclosure requirements for investments which are deemed to be
temporarily impaired. In September 2004, the FASB issued a FASB Staff Position
(FSP) EITF 03-1-1 that delays the effective date of the measurement and
recognition are effective only for annual periods ending after June15, 2004. The
Company has evaluated the impact of the adoption of the disclosure requirements
of EITF 03-1 and does not believe it will have an impact to the Company's
overall combined results of operations or combined financial position. Once the
FASB reaches a final decision on the measurement and recognition provisions, the
Company will evaluate the impact of the adoption of EITF 03-1.
44
In November 2004, the FASB issued SFAS No. 151 "Inventory Costs", an amendment
of ARB No. 43, Chapter 4 ("SFAS No. 151"). The amendments made by SFAS 151
clarify that abnormal amount of idle facility expense, freight, handling costs,
and wasted materials (spoilage) should be recognized as current-period charges
and require the allocation of fixed production overheads to inventory based on
the normal capacity of the production facilities. The guidance is effective for
inventory costs incurred during fiscal years beginning after June 15, 2005.
Earlier application is permitted for inventory costs incurred during fiscal
years beginning after November 23, 2004. The Company has evaluated the impact of
the adoption of SFAS 151, and does not believe the impact will be significant to
the Company's overall results of operations or financial position.
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Asset,
an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions."
The amendments made by SFAS 153 are based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the assets
exchanged. Further, the amendments eliminate the narrow exception for
nonmonetary exchanges of similar productive assets and replace it with a broader
exception for exchanges of nonmonetary assets that do not have commercial
substance. Previously, Opinion 29 required that the accounting for an exchange
of a productive asset for a similar productive asset or an equivalent interest
in the same or similar productive asset should be based on the recorded amount
of the asset relinquished. Opinion 29 provided an exception to its basis
measurement principle (fair value) for exchanges of similar productive assets.
That exception required that some nonmonetary exchanges, although commercially
substantive, to be recorded on a carryover basis. By focusing the exception on
exchanges that lack commercial substance, the FASB believes SFAS No. 153 is
effective for nonmonetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005. Earlier application is permitted for nonmonetary asset
exchanges occurring in fiscal periods beginning after the date of issuance. The
provisions of SFAS No. 153 shall be applied prospectively. The Company has
evaluated the impact of the adoption of SFAS 153, and does not believe there
will be any impact to the Company, as no transactions of this type are currently
contemplated.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment" ("SFAS 123R"). SFAS 123R will provide investors and other users of
financial statements with more complete and neutral financial information by
requiring that the compensation costs relating to share-based payment
transactions be recognized in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments issued. SFAS 123R
covers a wide range of share-based compensation arrangements including share
options, restricted share plans, performance-based awards, share appreciation
rights and employee share purchase plans. SFAS 123R replaces SFAS No. 123,
"Accounting for Stock-Based Compensation", and supercedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees". SFAS 123, as originally issued in
1995, established as preferable a fair-value-based method of accounting for
share-based payment transactions with employees. However, that statement
permitted entities the option of continuing to apply the guidance in Opinion 25,
as long as the footnotes to financial statements disclosed what net income would
have been had the preferable fair-value based method been used. Public entities
(other than those filing as small business issuers) will be required to apply
SFAS 123R as of the first interim or annual reporting period that begins after
June 15, 2005. The Company has evaluated the impact of the adoption of SFAS 123R
and believes the impact could be significant to the Company's overall results of
operations to the extent it issues stock options.
45
[Outside Back Cover of Prospectus]
DEALER PROSPECTUS DELIVERY OBLIGATION
Until ________, 2006 (30 days from the date of this prospectus), all
dealers that effect transactions in these securities, whether or not
participants in this offering, may be required to deliver a prospectus.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Title 7 of the Colorado Revised Statutes permits the indemnification of
directors and officers of Colorado corporations. Our charter provides that we
shall indemnify our directors and officers to the fullest extent permitted by
Colorado law.
Under Colorado law, we have the power to indemnify our directors and
officers against claims arising in connection with their service to us except
when an director's or officer's conduct involves: (a) violations of criminal
laws, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful; (b) deriving an
improper personal benefit from a transaction; (c) voting for or assenting to an
unlawful distribution; or (d) willful misconduct or conscious disregard for our
best interests in a proceeding by or in the right of a shareholder.
We will indemnify our directors and officers to the extent permitted by our
charter and to advance their expenses incurred in connection with a proceeding
with respect to which they are entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers or persons in control
pursuant to the foregoing provisions or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Our charter limits the liability of current and former directors for
monetary damages if they have acted in good faith and conformed to a standard of
reasonable care. Furthermore, and notwithstanding anything to the contrary in
our charter or bylaws, Section 7 of the Colorado Revised Statutes Act limits the
liability of directors for monetary damages for any statement, vote, decision or
failure to act relating to management or policy of the corporation unless he or
she breached or failed to perform her duties as a director, and the breach or
failure constitutes: (a) a violation of criminal law, unless the director had
reasonable cause to believe the conduct was lawful or had no reasonable cause to
believe it was unlawful; (b) a transaction from which the director derived an
improper personal benefit; (c) an unlawful distribution; (d) in a proceeding by
or in the right of the corporation or one or more of our shareholders, conscious
disregard for our best interests or willful misconduct; or (e) in a proceeding
brought by someone other than the corporation or one or more of our
shareholders, recklessness or an act or omission committed in bad faith, with
malicious purpose, or in a manner exhibiting willful disregard of human rights,
safety or property.
We have purchased insurance with respect to, among other things, the
liabilities that may arise under the statutory provisions referred to above. Our
directors and officers are also insured against certain liabilities, including
certain liabilities arising under the Securities Act of 1933, which might be
incurred by them in such capacities and against which they are not indemnified
by us.
Item 25. Other Expenses of Issuance and Distribution.
The following table provides information regarding the various anticipated
expenses payable by us in connection with the issuance and distribution of the
securities being registered. We are paying the expenses incurred in registering
the shares, but all selling and other expenses incurred by the selling
shareholders will be borne by the selling shareholders. All amounts shown are
estimates, except the Securities and Exchange Commission registration fee.
46
Nature of Expense Amount
------------------------ -----------
Registration fee Accounting fees and expenses Legal fees and expenses Transfer
agent fees Printing and related fees Miscellaneous
Total
Item 26. Recent Sales of Unregistered Securities.
On March 18, 2005 following the incorporation in Delaware, the following persons
were issued shares in the new Delaware corporation for property and / or cash
contributed.
Name Number of Shares
- --------------------------------------------------- -----------------------
John K. & Leann Saunders 16,452,000
- --------------------------------------------------- -----------------------
J.W. Roth 2,295,000
- --------------------------------------------------- -----------------------
Federal National Financial Corp. Pen & P/S Plan 1,890,000
- --------------------------------------------------- -----------------------
Jay D. Belk 1,349,993
- --------------------------------------------------- -----------------------
Conversion of Promissory Note 41,210
- --------------------------------------------------- -----------------------
May 30 Private Placement 1,393,212
- --------------------------------------------------- -----------------------
Underwriter Shares 300,000
- --------------------------------------------------- -----------------------
February 12 Private Placement 2,378,100
- --------------------------------------------------- -----------------------
No. of shares repurchased (8,250,000)
- --------------------------------------------------- -----------------------
Total 17,849,515*
- --------------------------------------------------- -----------------------
* Does not include 18,000 shares issued in 1998.
These shares were issued in reliance on the exemption provided by Section
4(2) of the Securities Act of 1933, as amended.
May 5, 2005 we issued 41,210 shares of our common stock for the partial
conversion of the promissory note. These shares were issued in reliance on the
exemption provided by Section 4(2) of the Securities Act of 1933 as amended.
On May 30, 2005 we issued 1,393,212 shares of our common stock and warrants
to purchase 60,000 shares of our common stock to accredited investors in a
private placement pursuant to Regulation D of the Securities Act of 1933, as
amended. The gross proceeds of this issuance were $845,200, and the net proceeds
to us were shares sold $668,423, after fees expenses and other costs. We also
issued 300,000 shares to the underwriter as part of their compensation. The
issuance of these shares and the warrant was exempt under Regulation D and under
Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving
a public offering.
On February 12, 2006 we completed the sale of 2,378,100 shares of our
common stock and warrants to purchase 237,810 shares of our common stock to
accredited investors in a private placement pursuant to Regulation D of the
Securities Act of 1933, as amended. 7,200,000 shares were also repurchased from
our principal shareholders for $0.05 per share and an additional 1,050,000
shares from two Board members for $0.50. The gross proceeds of this issuance
were $1,981,750 and the net proceeds to us were $1,833,119 after fees, expenses
and other costs. The issuance of these shares and the warrants were exempt under
Regulation D and under Section 4(2) of the Securities Act of 1933, as amended,
as a sale not involving a public offering.
47
Item 27. Exhibits
Exhibit No. Exhibit Description
--- -------------------
2.1 Cattlefeeding.com, Inc. Asset Purchase Agreement
3.1 Articles of Incorporation
3.2 By-laws of the Registrant
4.1* Form of the Registrant's Common Stock Certificate
4.2 Registrant's 2005 Stock Option Plan
4.3 Registrants Equity Incentive Plan
5.1 Form of Legal Opinion of Vanderkam & Associates
10.1 Lease dated July 15, 2005 for offices in Platte City, Missouri
10.2 Employment Agreement dated January 1, 2006 between the Registrant and
John K. Saunders
10.3 Employment Agreement dated January 1, 2006 between the Registrant and
Leann Saunders
10.4 Employment Agreement dated February 1, 2006 between the Registrant and
Mark McGregor
10.5 Consulting Agreement dated January 1, 2006 with Mark Byrne
10.6 Consulting Agreement dated April 1, 2005 between the Registrant and Jay
Belk
10.7 Consulting contract dated April 1, 2005 between the Registrant and JW Roth
10.8 Marketing Contract dated February 2, 2006 with Merial Ltd.
10.9 Marketing Contract dated February 22, 2006 with Superior Livestock, Inc.
10.10 Sample Underwriter's Warrant
11.1 Computation of Earnings Per Share (included in the notes to Financial
Statements included with the
Prospectus)
23.1 Form of Consent of Vanderkam & Associates (included in Exhibit 5.1)
23.2 Consent of E. Randall Gruber, CPA PC
99,1 Power of Attorney (See the signature page of this Registration statement)
* To be filed
48
Item 28. Undertakings.
(a) The undersigned registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities , a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
49
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing a registration statement on Form SB-2 and
authorized this registration statement to be signed on its behalf by the
undersigned, in Platte City, State of Missouri, on April 27, 2006.
Integrated Management Information, Inc.
/s/ John K. Saunders
- -------------------------------------------------------
John K. Saunders
President, Chief Executive Officer, and a Director
/s/ Mark D. McGregor
- ----------------------------------------------------------
Mark D. McGregor, Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Arnie Geller and Brian Wainger, and each
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits and schedules thereto, and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing, which they, or either of them, may
deem necessary or advisable to be done in connection with this Registration
Statement, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes or any of them, may
lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
Date Signature Title
- ----------------- ------------------------ -------------------------------------
/s/John K. Saunders
---------------------- Chairman, President, Chief Executive
April 27, 2006 John K. Saunders Officer, and a Director
/s/ Dr. Gary Smith
----------------------
April 27, 2006 Dr. Gary Smith Director
/s/ Adam Larson
----------------------
April 27, 2006 Adam Larson Director
- - /s/ John Bellinger
----------------------
April 27, 2006 John Bellinger Director