UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

☒   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2015

 

☐   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 000-30853

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

(Exact name of Registrant as specified in its charter)

 

Wisconsin		39-1924096
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

16901 West Glendale Drive, New Berlin, Wisconsin 53151

(Address of principal executive offices)

(262) 780-3640

(Registrant’s telephone number, including area code)

 

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

 

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

 

Large Accelerated Filer   ☐	Accelerated Filer       ☐	Non-Accelerated Filer    ☐	Smaller Reporting Company  ☒
		(Do not check if a smaller reporting company)

 

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

 

The number of shares of Common Stock, $.0001 par value, outstanding as of October 31, 2015 was 614,175

 

 

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

 

TABLE OF CONTENTS

 

		Page No.
Part I.	FINANCIAL INFORMATION	3
Item 1 -	Financial Statements September 30, 2015	3
	Unaudited Consolidated Balance Sheets – September 30, 2015 and December 31, 2014	3
	Unaudited Consolidated Statements of Operations – Three Months and Nine Months Ended September 30, 2015 and 2014	4
	Unaudited Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2015 and 2014	5
	Unaudited Notes to Consolidated Financial Statements	7
Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3 -	Quantitative and Qualitative Disclosures about Market Risk	12
Item 4 -	Controls and Procedures	12
Part II.	OTHER INFORMATION	13
Item 1	Legal Proceedings	13
Item 1A -	Risk Factors	13
Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3 -	Defaults on Upon Senior Securities	13
Item 4 -	Specialized Matters	13
Item 5 -	Other Information	13
Item 6 -	Exhibits	14

 

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

		September 30, 2015				December 31, 2014
ASSETS
Current assets
Cash		$	759,352			$	796,547
Marketable securities			257,027				269,931
Accounts receivable, net			593,224				786,849
Earned trade account			38,104				26,821
Prepaid expenses			142,850				124,987
Total current assets			1,790,557				2,005,135
Other assets
Property and equipment, net			342,195				393,446
Membership lists and other intangibles, net			1,291,908				2,053,755
Goodwill			3,482,522				3,482,522
Deferred tax assets			206,269				-
Assets held for investment and other long term assets			95,072				84,773
Total non-current assets			5,417,966				6,014,496
Total assets		$	7,208,523			$	8,019,631
Current liabilities
Accounts payable and accrued expenses		$	930,019			$	1,032,380
Credit lines, short term notes, and current portion of long term debt			889,522				1,008,636
Current portion of notes payable to related parties			20,000				60,000
Common stock subject to guarantee			21,702				21,702
Total current liabilities			1,861,243				2,122,718
Long-term liabilities
Long term debt, net of current portion			1,089,475				1,571,546
Notes payable related parties, net of current portion			600,000				470,000
Deferred compensation			246,000				291,000
Deferred income taxes			-				27,290
Total long-term liabilities			1,935,475				2,359,836
Total liabilities			3,796,718				4,482,554
Commitments and Contingencies
Preferred stock, $.0001 par value, 2,000,000 authorized, -0- outstanding			-				-
Common stock, $.0001 par value 28,000,000 authorized, and 614,175 issued and outstanding at both September 30, 2015 and December 31, 2014			61				61
Paid in capital			6,104,004				6,104,004
Treasury stock, 36,524 and 24,709 shares at September 30, 2015 and December 31, 2014, respectively			(304,244	)			(232,598	)
Accumulated other comprehensive income			73,498				102,564
Accumulated deficit			(2,461,514	)			(2,436,954	)
Total stockholders’ equity			3,411,805				3,537,077
Total liabilities and stockholders’ equity		$	7,208,523			$	8,019,631

 

See accompanying notes to consolidated financial statements.

 

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Net revenue		$	2,898,645			$	2,987,878			$	8,843,134			$	8,883,522
Operating expenses:
Employee costs			1,794,504				1,833,930				5,545,235				5,501,425
Selling, general and administrative			795,008				755,925				2,371,856				2,230,204
Depreciation and amortization			264,171				325,659				889,967				996,451
Total operating expenses			2,853,683				2,915,514				8,807,058				8,728,080
Income (loss) from operations			44,962				72,364				36,076				155,442
Other income (expense)
Interest income			10				10				29				36
Gain (loss) on sales of assets			(2,750	)			-				(5,150	)			(4,075	)
Interest expense			(40,664	)			(53,413	)			(128,151	)			(166,409	)
Total other income (expense)			(43,404	)			(53,403	)			(133,272	)			(170,448	)
Income (loss) before income taxes			1,558				18,961				(97,196	)			(15,006	)
Income tax (expense) benefit			17,010				9,337				72,636				36,246
Net income (loss)			18,568				28,298				(24,560	)			21,240
Components of comprehensive income (loss):
Foreign currency translation adjustment			(16,821	)			(3,289	)			(16,227	)			(5,132	)
Unrealized gain (loss) on available for sale securities			(8,606	)			9,648				(12,839	)			18,550
Comprehensive income (loss)		$	(6,859	)		$	34,657			$	(53,626	)		$	34,658
Net income (loss) per common share
– basic		$	.03			$	.04			$	(.04	)		$	.03
– dilutive		$	.03			$	.04			$	(.04	)		$	.03
Weighted average common shares outstanding
– basic			614,175				633,727				614,175				668,580
– dilutive			614,175				633,727				614,175				668,580

 

See accompanying notes to consolidated financial statements.

 

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

		Nine Months Ended September 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	(24,560	)		$	21,240
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			889,967				996,451
Bad debt expense (recovery)			(23,718	)			(8,792	)
Amortization of note discount			284				5,575
Loss on sales of assets			5,150				4,075
Changes in assets and liabilities
Accounts receivable			217,344				193,186
Earned trade account			(34,232	)			(176,060	)
Prepaid expenses			(17,598	)			(2,555	)
Other long term assets			3,750				-
Accounts payable and accrued expenses			(147,297	)			(30,230	)
Deferred income taxes			(233,559	)			(277,012	)
Net cash provided by operating activities			635,531				725,878
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(73,386	)			(8,660	)
Net cash used in investing activities			(73,386	)			(8,660	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable, related parties			150,000				50,000
Net change in credit lines			60,000				62,000
Payments on notes payable, convertible notes payable and related party notes			(721,467	)			(1,003,848	)
Purchase of treasury stock			(71,646	)			(40,261	)
Net cash used in financing activities			(583,113	)			(932,109	)
Effect of exchange rate changes			(16,227	)			(5,132	)
Net decrease in cash			(37,195	)			(220,023	)
Cash at beginning of period			796,547				1,035,493
Cash at end of period		$	759,352			$	815,470

 

See accompanying notes to consolidated financial statements.

 

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Continued

 

		Nine Months Ended September 30,
		2015				2014
SUPPLEMENTAL DISCLOSURES
Cash paid for interest		$	128,544			$	167,253
Cash paid for income taxes		$	255,079			$	181,134
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Unrealized net gain (loss) on marketable securities		$	(12,839	)		$	18,550
Notes issued for treasury stock		$	-			$	1,698,085
Treasury stock retired		$	-			$	1,626,850
Goodwill and note payable - purchase price adjustment		$	-			$	25,000
Release of common stock guarantee		$	-			$	18,000
Trade dollars exchanged for:
Capital assets		$	28,748			$	29,745
Treasury stock		$	-			$	18,000
Trade dollars received for capital assets		$	5,800			$	3,875

 

See accompanying notes to consolidated financial statements.

 

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2015

 

NOTE 1 - BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2015, are not necessarily indicative of the results that may be expected for the year ended December 31, 2015.

 

The Company's 10-K for the year ended December 31, 2014, filed on March 18, 2015, should be read in conjunction with this report.

 

Principles of Consolidation

 

The consolidated financial statements for 2015 and 2014 include the accounts of International Monetary Systems, Ltd. (“IMS” or “the Company”) and its’ wholly owned subsidiaries Continental Trade Exchange, Ltd., National Trade Association, Inc., INLM CN Inc. and INLM Holdings, Inc. Significant intercompany accounts and transactions have been eliminated in consolidation.

 

Revenue Sources and Cost of Revenue

 

The Company and its subsidiaries earn revenues in both traditional cash dollars and in IMS trade dollars.

 

Cash Revenue

 

Cash income is earned through fees assessed when a member joins, transaction fees generated when clients earn or spend their trade dollars, annual and monthly maintenance fees, finance charges on delinquent accounts receivable, and event fees.

 

Trade Dollar Revenue

 

Trade revenue is similarly generated through initial membership fees, monthly maintenance fees, transaction fees, finance charges on delinquent accounts, and event fees. Occasionally the Company will accept a favorable trade ratio in lieu of a cash fee.

 

Revenue Recognition

 

All revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured.

 

Transaction fees are recognized upon receipt of transactional information accumulated by our systems or reported by our clients.

 

Membership fees, monthly maintenance fees, finance charges, and other fees are billed monthly to members' accounts, and are recognized in the month the revenue is earned.

 

Use of Trade Dollars

 

The Company uses earned trade dollars to purchase various goods and services required in its operations. All barter transactions are reported at the estimated fair value of the products or services received.

 

Occasionally, the Company sells IMS trade dollars for US dollars. The cash received in these sales is included in gross revenue and the carrying value of the trade dollars up to the value of the cash received is netted against revenue, with any excess cost included in selling, general and administrative expenses.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

 

Reclassifications

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

 

 

Recent Accounting Pronouncements

 

Management does not anticipate that the recently issued but not yet effective accounting pronouncements will materially impact the Company’s financial condition.

  

NOTE 2 – CASH

 

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. As of September 30, 2015, the Company has cash in excess of FDIC insurance of approximately $423,000. No losses have been incurred related to this credit risk exposure.

 

NOTE 3 – DEBT

 

In the first nine months of 2015, the Company issued notes totaling $150,000 to an officer for cash. The terms of the notes call for quarterly interest payments at 8% for two years, after which the notes are payable in full.

 

In February 2015, notes payable to private investors, with outstanding balances totaling $275,000, were renewed for two years. The notes are now due in February 2017, and call for payments of quarterly interest at 9%.

 

In May 2015, a $60,000 convertible note payable to a relative of the chairman matured and was repaid.

 

The Company’s indebtedness as of September 30, 2015 includes the following:

 

Lines of credit payable to financial institutions, due in 2015		$	155,000
Convertible notes payable to related parties, mature between 2016 and 2017			170,000
Non-convertible notes payable to related parties, maturing in 2017			450,000
Notes payable to third parties, $222,446 due in 2015			1,823,997
Total indebtedness			2,598,997
Less current maturities, including credit lines and short term debt			(909,522	)
Long term debt, net of current maturities		$	1,689,475

 

Additionally, the Company has lines of credit (including the one described above) with various financial institutions with unused borrowing capacity totaling approximately $392,000 as of September 30, 2015, which may be drawn as needed.

 

A financial institution has issued a $65,000 standby letter of credit to a landlord in lieu of a security deposit.

 

NOTE 4 – EQUITY

 

Common Stock Guarantee Repurchase

 

No repurchases were made in the first nine months of 2015, under the remaining common stock guarantee agreement. 

 

Share Buyback Program

 

In accordance with a board approved plan, the following stock buybacks were made in open market and private transactions:

 

In the first quarter of 2015, the Company purchased 7,056 shares, at a cost of $42,184.

 

In the second quarter of 2015, the Company purchased 2,962 shares at a cost of $17,494.

 

In the third quarter of 2015, the Company purchased 1,797 shares at a cost of $11,968.

 

All repurchased shares were placed in treasury.

 

Treasury Stock Retirements

 

There were no shares retired in the first nine months of 2015.

 

Stock Issued for Services

 

No stock has been issued for services in 2015.

 

 

Stock Options

 

The Company has adopted an incentive stock option plan under which certain officers, key employees, or prospective employees may purchase shares of the Company's stock at an established exercise price, which shall not be less than the fair market value at the time the option is granted. The final exercise date is any time prior to the five-year anniversary of the first exercise date.

 

There are no options outstanding at September 30, 2015. 

 

Stock Warrants

 

No warrants were issued in the current period. 

 

There are no warrants outstanding as of September 30, 2015.

 

NOTE 5 – INCOME TAXES

 

The difference between the combined Federal and state statutory rate and the effective rate for the nine months ended September 30, 2015 relates to the difference in timing of deduction for certain expenses, primarily bad debts, amortization of acquired membership lists, and depreciation of property and equipment, and the rates at which deferred taxes were originally established.

 

NOTE 6 – CONTINGENT LIABILITIES

 

In the ordinary course of business, the Company is occasionally involved in litigation, both as plaintiff and defendant. Management either litigates or settles claims after evaluating the merits of the actions and weighing the costs of settling vs. litigating. There are currently no open litigation matters which the Company feels will result in a material loss.

 

NOTE 7– COMMITMENTS

 

Effective June 1, 2015, the Company entered into a new lease agreement and relocated its Wichita, Kansas office. The new agreement calls for annual rent of $17,440 for a term of 5 years.

 

Effective September 24, 2015, the Company extended its lease on offices in Rohnert Park, California. The extension agreement requires base rent of $26,208 per year and, as previously, common area charges. The term of the extension is 5 years.

 

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

 

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

 

In addition to current and historical information, this Quarterly Report on Form 10-Q contains forward-looking statements.  These statements relate to our future operations, prospects, potential products, services, developments, business strategies or our future financial performance.  These statements can generally be identified by the use of terms such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “target,” “will” or the negative of these terms or other similar expressions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties.  Actual events or results may differ materially.  We undertake no obligation to update or revise publicly any forward-looking statement after the date of this report, whether as a result of new information, future events or otherwise.

 

HIGHLIGHTS

 

Operations

 

Year to date revenue is flat versus prior year, while other companies in our industry are reporting declines in revenue.

 

The new Sarasota, Florida franchise office has made a positive contribution to results in both the third quarter and year to date.

 

Return to Shareholders

 

During the nine months ended September 30, 2015, 11,815 shares of the Company’s stock have been repurchased under the Company’s stock buyback plan.  

 

RESULTS OF OPERATIONS

 

THIRD QUARTER RESULTS

 

Revenue

 

Revenue was down 3% in the third quarter of 2015 compared to the same period in 2014, as we continue to see the residual effects of uncertain economic and regulatory climates on the Company’s primary members, small businesses.

 

Expenses

 

Operating expenses in the quarter ended September 30, 2015 were $2,853,683, a decrease of $61,831 or 2.1% compared to the third quarter of 2014. This decrease is primarily due to decreased employee costs due to lower headcount and lower occupancy costs.

 

The Company generated operating income of $44,962 for the quarter, compared to operating income of $72,364 in 2014.  After adjusting for interest and income taxes, there was a net profit for the quarter of $18,568 compared to a net profit of $28,298 in the same quarter of 2014.  Interest expense has decreased as the Company has aggressively paid down the debt load taken on strategically in prior years to fund acquisitions and the stock buyback program expanded in 2011.

 

EBITDA for the three months ended September 30, 2015 and 2014 are as follows:

 

Adjustments to Reconcile GAAP Net Income to EBITDA

 

		2015				2014
Net income		$	18,568			$	28,298
Interest expense			40,664				53,413
Income taxes			(17,010	)			(9,337	)
Depreciation and amortization			264,171				325,659
EBITDA		$	306,393			$	398,033

 

 

YEAR TO DATE

 

Revenue

 

Revenue is flat in the first nine months of 2015 compared to the same period in 2014, as we continue to see the residual effects of uncertain economic climates, especially among small businesses, the Company's primary client base.

 

Expenses

 

Operating expenses for the nine months ended September 30, 2015 were $8,807,058, an increase of $78,978, or 1% compared to the first nine months of 2014. This increase is primarily due to increased franchisee costs and other administrative expenses. These increases are partially offset by lower occupancy costs.

 

The Company has generated operating income of $36,076 for year to date, compared to operating income of $155,442 in 2014.  After adjusting for interest and income taxes, the net loss for the first nine months of 2015 was $24,560 compared to net income of $21,240 in the comparable period in 2014.  Interest expense has decreased as the Company has aggressively paid down the debt load taken on strategically to fund acquisitions and the stock buyback program expanded in 2011.

 

EBITDA for the nine months ended September 30, 2015 and 2014 are as follows:

 

Adjustments to Reconcile GAAP Net Income to EBITDA

 

		2015				2014
Net income (loss)		$	(24,560	)		$	21,240
Interest expense			128,151				166,409
Income taxes			(72,636	)			(36,246	)
Depreciation and amortization			889,967				996,451
EBITDA		$	920,922			$	1,147,854

 

LIQUIDITY, SOURCES OF CAPITAL AND LINES OF CREDIT

 

At September 30, 2015, there was a working capital deficit of approximately $71,000, compared to a deficit of approximately $118,000 at December 31, 2014. We believe that current cash needs can be met with the present cash and investments balances and from working capital generated from operations over the next 12 months. Additionally, the Company has letters of credit with various financial institutions with unused borrowing capacity of approximately $392,000, which may be drawn as needed.

  

CRITICAL ACCOUNTING POLICIES

 

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management's applications of accounting policies. Critical accounting policies for IMS include the following:

 

REVENUE SOURCES AND REVENUE RECOGNITION

 

The Company and its subsidiaries earn revenues in both traditional cash dollars and in IMS trade dollars.

 

Cash Revenue

 

Cash income is earned through fees assessed when a member joins, transaction fees generated when clients earn or spend their trade dollars, annual and monthly maintenance fees, finance charges on delinquent accounts receivable, and event fees.

 

Trade Dollar Revenue

 

Trade revenue is similarly generated through initial membership fees, monthly maintenance fees, transaction fees and event fees. Occasionally the Company will accept a favorable trade ratio in lieu of a cash fee.

 

Revenue Recognition

 

All revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured.

 

Transaction fees are recognized upon receipt of transactional information accumulated by our systems or reported by our clients.

 

Membership fees, monthly maintenance fees, finance charges, and other fees are billed monthly to members' accounts, and are recognized in the month the revenue is earned.

 

 

Use of Trade Dollars

 

The Company uses earned trade dollars to purchase various goods and services required in its operations. All barter transactions are reported at the estimated fair value of the products or services received.

 

Occasionally, the Company sells IMS trade dollars for US dollars. The cash received in these sales is included in gross revenue and the carrying value of the trade dollars up to the value of the cash received is netted against revenue, with any excess cost included in selling, general and administrative expenses.

 

RECEIVABLES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

 

Accounts receivable are stated at face value, net of the allowance for bad debts. Finance charges on receivables are calculated using the simple interest method on the amount outstanding.

 

The allowance for bad debts is maintained at a level that is management's best estimate of probable bad debts incurred as of the balance sheet date. Management's determination of the adequacy of the allowance is based on an evaluation of the accounts receivable, past collection experience, current economic conditions, volume, growth and composition of the accounts receivable, and other relevant factors. Actual results may differ from these estimates. The allowance is increased by provisions for bad debts charged against income and decreased by accounts written off as uncollectable.

 

GOODWILL AND MEMBERSHIP LISTS

 

Goodwill and membership lists are stated at cost and arise when IMS acquires another company or the assets of another trade exchange. Membership lists are amortized over the estimated life of ten years.

 

The Company tests goodwill and intangible assets at least annually for impairment, or when facts and circumstances indicate impairment is probable. It is the Company’s policy to test impairment at the end of each year. Therefore, no impairment of goodwill or membership lists was recorded in the first nine months of 2015.

 

INCOME TAXES

 

The Company accounts for income taxes in accordance with FASB ASC 740. Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

Management does not anticipate that any recently issued, but not yet effective, accounting pronouncements will materially impact the Company’s financial condition.

 

OFF BALANCE SHEET ARRANGEMENTS

 

We do not have any off balance sheet arrangements or other relationships with unconsolidated entities.

 

ITEM 3    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required by Smaller Reporting Companies.

 

ITEM 4    CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of management, including our Chief Executive Officer (principal executive officer)  and Chief Financial Officer (principal financial officer), we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. 

 

 

Management's Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

Based on our evaluation under the framework in Internal Control — Integrated Framework (2013) issued by COSO, our management concluded that our internal control over financial reporting was effective as of September 30, 2015.

 

Changes in Internal Control over Financial Reporting

 

There was no change in internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during our first fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

PART II OTHER INFORMATION

 

Item 1    Legal Proceedings

 

In the ordinary course of business, the Company is occasionally involved in litigation, both as plaintiff and defendant. Management either litigates or settles claims after evaluating the merits of the actions and weighing the costs of settling vs. litigating. There are currently no open litigation matters which the Company feels will result in a material loss.

 

Item 1A  Risk Factors

 

Not applicable for Smaller Reporting Companies.

 

Item 2    Unregistered Sales of Equity Securities and Use of Proceeds

 

(a) and (b) There were no unregistered sales of equity securities.

 

(c) Repurchases were as follows:

 

										Maximum
		Total								Number of Shares
		Number				Average				That May Yet
		of Shares				Price Paid				be Purchased
Period		Purchased				Per Share				Under the Plans
Purchase related stock buyback guarantees
July 1 to July 31, 2015			-			$	-
August 1 to August 31, 2015			-			$	-
September 1 to September 30, 2015			-			$	-				723
Board Authorized repurchase plan
July 1 to July 31, 2015			200			$	5.73
August 1 to August 31, 2015			1,278			$	5.97
September 1 to September 30, 2015			319			$	10.00				unlimited

 

Item 3    Defaults Upon Senior Securities

 

None

 

Item 4    Mine Safety Disclosures

 

No applicable items for disclosure.

 

Item 5    Other Information

 

None

 

 

Item 6    Exhibits and Reports on Form 8-K

 

(a)   Exhibits

 

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
31.2	Certification of Principal Financial and Accounting Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document***
101.SCH	XBRL Taxonomy Extension Schema Document ***
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document ***
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document ***
101.LAB	XBRL Taxonomy Extension Label Linkbase Document ***
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document ***

 

*** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.

 

(b)   Reports on Form 8-K 

 

 

INTERNATIONAL MONETARY SYSTEMS, LTD.

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

International Monetary Systems, Ltd. (Registrant)
/s/ John E. Strabley
John E. Strabley, Chief Executive Officer
(Principal Executive Officer)
November 4, 2015
/s/ David A. Powell
David A. Powell, Chief Financial Officer
(Principal Accounting and Financial Officer)
November 4, 2015

 

 

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