TABLE OF CONTENTS

Item		Page
Part I
Item 1.	Business
Item 2.	Property
Item 3.	Legal Proceedings
Item 4.	Submission of Matters to a Vote of Security Holders
Part II
Item 5.	Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
Item 6.	Management's Discussion and Analysis
Item 7.	Financial Statements and Supplementary Data
	Reports of Independent Registered Public Accounting Firms
	Consolidated Financial Statements:
	Consolidated Balance Sheet at December 31, 2007 and 2006 (As restated)
	Consolidated Statements of Operations for the Years Ended December 31, 2007 and December 31, 2006 ( As restated)
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2007 and December 31, 2006 (As restated)
	Consolidated Statements of Stockholder's Deficit for the Years Ended December 31, 2007 and December 31, 2006 (As restated)
	Notes to Consolidated Financial Statements
Item 8.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 8A.	Controls and Procedures
Part III
Item 9.	Directors and Executive Officers of the Registrant
Item 10.	Executive Compensation
Item 11.	Security Ownership of Certain Beneficial Owners and
	Management and Related Stockholder Matters
Item 12.	Certain Relationships and Related Transactions
Item 13.	Exhibits, List and Reports on Form 8-K
Item 14.	Principal Accountant Fees and Services

Signatures

 

This report contains trademarks and trade names that are the property of Integrated Media Holdings, Inc. and its subsidiaries, and of other companies, as indicated.

 

 

ITEM 1. DESCRIPTION OF BUSINESS

 

Corporate History

 

Integrated Media Holdings, Inc., a Delaware corporation (“TeleChem” “ArrayIt”. "Endavo," the "Company," "we," "us" or "our"), is headquartered in Sunnyvale, California. We are a holding company that, subsequent to our year-end, on February 5, 2008, entered into a Plan and Agreement of Merger (the “Merger”) by and among IMHI, TeleChem International, Inc. (“TeleChem”), the majority shareholders of TeleChem (“Shareholders”), Endavo Media and Communications, Inc., a Delaware corporation (“Endavo”) and TCI Acquisition Corp., a Nevada corporation, and wholly owned subsidiary of the Company (“Merger Sub”).  The Company, TeleChem, Endavo, Merger Sub and Shareholders are referred to collectively herein as the “Parties”.

 

Effective February 21, 2008, we completed the Plan and Agreement of Merger by and among us, TeleChem International, Inc., the majority shareholders of TeleChem, Endavo Media and Communications, Inc., a Delaware corporation and TCI Acquisition Corp., a Nevada corporation, and wholly owned subsidiary of the Company.  Consummation of the merger did not require a vote of our shareholders.  We issued 103,143 shares of Series C Convertible Preferred Stock to the Shareholders of TeleChem in exchange for 100% of the equity interests of TeleChem resulting in TeleChem being a wholly owned subsidiary ..  The former shareholders of TeleChem now own approximately 73.5% of the outstanding interest and voting rights of the parent company.  The Preferred Stock is convertible into 36,100,000 shares

 

 

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of common stock after, but not before, the effective date of the reverse split of the outstanding Integrated Media common stock.  Finally, in connection with the merger, we changed the address of our principal executive offices to 524 East Weddell Drive, Sunnyvale, CA 94089.  Simultaneously with the merger we transferred our wholly-owned subsidiary, Endavo to an individual.  As a result, the transaction will be accountedf or as a reverse merger, where Telechem is the accounting acquirer resulting in a recapitalization of our equity.

During 2006 and 2007 we provided digital content distribution and management solutions for content owners seeking to distribute online and over broadband, or Internet Protocol, networks. Prior to September 2005, the Company integrated broadband services, including voice, video, and data services to residential customers through IP based networks. The results of operations of Endavo, Bidchaser and WV Fiber (to April 11, 2007, the date of disposal) have been included in these financial statements and are presented as discontinued operations in the financial statements. On April11, 2007 we disposed of our wholly-owned subsidiary, WV Fiber, LLC.  During the fourth quarter of 2007, we  approved a plan to dispose of its wholly- owned subsidiaries, Endavo and Bidchaser.

We were originally incorporated as Ceristar, Inc. in December 1999. On September 10, 2002, we entered into a merger with a subsidiary of Planet Resources, Inc., a Delaware corporation, in which Ceristar survived the merger and became a wholly owned subsidiary of Planet and all of our issued and outstanding common and preferred stock was exchanged for Planet's common stock. Accordingly, as a result of the merger, we succeeded to the ownership of Planet, which was a holding company, changed the name to CeriStar, Inc., and we continued to operate our business through Susquina, Inc., a wholly-owned subsidiary of CeriStar. Prior to the merger, Planet had no operations for two years. Subsequent to the merger, we changed our name from CeriStar to Endavo Media and Communications, Inc. in order to more accurately reflect the new direction of the Company and our operating subsidiary remained Susquina, Inc. In 2006, we changed the name of our holding company to Integrated Media Holdings, Inc. and simultaneously changed the name of our sole operating company at the time to Endavo Media and Communications, to better reflect our corporate and operating structure. Endavo Media and Communications provides digital video delivery and asset management solutions to content owners and producers.

General Business Description, Operating History and Change in Control

 

Through our merger with TeleChem, we have undertaken a new strategic and business direction to become primarily a biotechnology company. Our  core activities and associated capital investments will be redirected towards Microarray Analysis.

 

TeleChem’s business activities are in the life sciences, chemical trading and disease diagnostics areas.  It was founded in 1993 by Rene Schena and Todd Martinsky as a chemical import and export trading company.  TeleChem’s chemicals division provides customers with the raw materials required for plastics, water soluble fertilizers, and alternative fuels.  TeleChem entered the biotechnology sector with the creation of the ArrayIt® Life Sciences Division in 1996.  Because of the public interest in the Human Genome Project and microarray technology, TeleChem focused on microarray products and services for the research, pharmaceutical and diagnostics markets.  TeleChem’s ArrayIt® Division currently provides its patented microarray platform (US 6,101,946) to more than 3,000 installations serving an estimated 10,000 laboratories, making it the most widely used microarray technology in the world.  Supporting instruments, kits, reagents, and hardware complete the ArrayIt® line of more than 400 products making up what management believes is a universal microarray platform for any type of biomolecule.

 

 

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During the year 2001, the Diagnostics Division was started in order to leverage the patented (6,913,879) multi-patient technology for genetic screening and testing.  This next generation microarray format allows clinical laboratories to examine tens of thousands of patients on a single microarray, providing much more cost-effective gene information for population-wide diagnostics than traditional “single patient” microarrays.  The company is currently developing or has developed tests for many major human diseases including cystic fibrosis, sickle cell anemia, and cancer.  ArrayIt intends to compete in the $20 billion molecular diagnostics arena.

 

The TeleChem customer base includes major universities, pharmaceutical and biotech companies, agricultural and chemical companies, government agencies, national research foundations and private sector enterprises around the world.  The company website receives more than 1,000,000 hits per month and the Shopping Cart allows on-line product ordering 24 hours a day. The website makes available the Electronic Library free-of-charge to the tens of thousands of researchers worldwide who wish to keep pace with the microarray literature. TeleChem scientists were featured on NOVA’s television show “Cracking the Code of Life” in 2001.  The company received the Rising Star Award from the City of Sunnyvale in 2002 and 2003, the Silicon Valley Top 50 Award from the San Jose Business Journal in 2003, and consecutive selection to the Inc. 500 List in 2002 and 2003 by Inc. magazine.

 

TeleChem’s principal office is in Sunnyvale, California. TeleChem presently has eight employees.

Industry Segment for 2008

 

Biotechnology in its simplest state, attempts to study the human gene to determine variances which when properly analyzed can identify differences which lead to cures for diseases. Each person has cells in their body which consist of DNA, RNA and proteins. Each DNA is 23 pair of chromosomes, each of which have certain unique characteristics. When analyzed under a microscope, these “genes” produces a “spot” on a graph that glows or reflects some color spectrum for analysis. In each cell in a human body, there are roughly 3 Billion of these spots. This is a finite number. Thus analysis of 3 Billion spots can produce anomalies which can further assist in determination of disease states and ultimately cures.

 

The industry which uses this technology is roughly 50% pharmaceutical and 50% research, including for-profit, governmental and educational institutions. The expected growth of this industry is exponential.

 

Arrayit, and its founders (specifically Mark Schena, Ph.D.) are leading providers of components which are used widely in the industry. Schena is acknowledged as the inventor of Microarray Analysis. Microarray Analysis is a five step procedure that uses microarrays to explore the biological, chemical and physical world of life sciences. It basically takes microscopic pieces of human material (saliva, blood, urine…etc.) and using a patented needle and print head gently places this on a customized glass slide. This slide can then be analyzed to determine the “spot” illumination. The print head was created by the founder’s father, and the glass slide along with other products are trade secrets. Prior to Microarray Analysis, the research laboratory or pharmaceutical company used a dish to grow and analyze these genes, as well as other creative procedures. Each had flaws which made the analysis unstable.  Microarray Analysis, the basis of Arrayit, creates a very stable, permanent description of the 3 Billion spots for long term analysis.

 

Many major research laboratories in the world use products manufactured or patented by Arrayit. Arrayit empowers the biotech industry by providing unique products and services to a universal biochemistry platform.

 

 

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Competitive Advantages

 

In 2008, we plan to generate revenues from the following:

 

 

     Product                                   Competitor                                                      Proprietary                         Percent of Revenues

Glass Slides	Corning, Schott	Trade Secret	20%
Print Head and Needles	NONE	Patented	35%
Array Machine and Instrumentation	Genetix, Harvard BioScience (Digilab)	Trade Secret	10 to 20%
Chemicals and Reagents	Qiagen, Stratagene, Invitrogen	Trade Secret	10%
Instrumentation Hardware and Accessories	NONE	Trade Secrets	10 to 20%

 

 

The government recently announced that $18 Billion would be spent in 2008 on Agricultural Life Sciences, it is estimated that over $50 Billion is spent annually utilizing the technology, products or services of companies like Arrayit.

 

 

The future of the Biotech market:

 

Currently the industry expects to purchase 10,000 scanners over the next 12 months, and 100,000 scanners over the next five years. The cost is roughly $25,000 to $50,000 per scanner, and the margins are as high as 40%. The company can purchase the manufacturing of these scanners, which use their patented print head for under $20,000 each.

 

The shelf life of these products is estimated at five to thirty years. Unlike much of the technology industry, the data field is finite, and the process has limited upside development. The major cost is in the analysis which is largely human driven.

 

This is a uniquely American venture, with virtually no foreign competition. Thirty percent (30%) of the revenues are from exports.

 

 

Regulatory Matters

 

 

 

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None

 

 

 

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ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

 

Our Common Stock

 

Our common stock now trades publicly on the OTC Bulletin Board under the symbol "IMHI". Previous to March 13, 2006, our common stock traded under the symbol "EDVO". The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in over-the-counter equity securities. The OTCBB securities are traded by a community of market makers that enter quotes and trade reports. This market is extremely limited and any prices quoted are not a reliable indication of the value of our common stock.

 

Fiscal Year	Quarter Ended	High	Low
2006	March 31, 2006*	$2.20	$0.25
	June 30, 2006	$2.09	$0.30
	September 30, 2006	$1.30	$0.36
	December 31, 2006	$0.65	$0.35
2007	March 31, 2007*	$0.31	$0.10
	June 30, 2007	$0.15	$0.03
	September 30, 2007	$0.11	$0.01
	December 31, 2007	$0.02	$0.01

On March 31, 2008, the closing sale price of our common stock on the OTC Bulletin Board was $0.08 per share.

 

* On March 22, 2006, the Company effected a 40-for-1reverse stock split. All prices in this table have been adjusted for the reverse split as if the split had occurred on January 1, 2006. For a more detailed discussion of this reverse stock split see Item 6, Management's Discussion and Analysis - Recent Developments.

 

Holders of Record

 

On December 31, 2007, there were approximately 1,840 holders of record of our common stock according to our transfer agent. The Company has no record of the number of shareholders who hold their stock in "street" name with various brokers.

 

Dividends

 

We have never paid a cash dividend on our common stock nor do we anticipate paying cash dividends on our common stock in the near future. It is our present policy not to pay cash dividends on the common stock but to retain earnings, if any, to fund growth and expansion. Under Delaware law, a company is prohibited from paying dividends if the company, as a result of paying such dividends, would not be able to

 

 

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Sales of Unregistered Securities

 

All sales of unregistered common stock that occurred in 2007 has been previously reported in our public filings with the Securities and Exchange Commission and is described in detail in Management' Discussion and Analysis below.

 

 

ITEM 6. PLAN OF OPERATIONS

 

For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the fiscal year ended December 31, 2007, this "Management's Discussion and Analysis" should be read in conjunction with the Consolidated Financial Statements, including the related notes, appearing in Item 7 of this Annual Report.

 

Forward-Looking Statements

 

This portion of this Annual Report on Form 10-KSB, includes statements that constitute "forward-looking statements." These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," or "anticipates," and do not reflect historical facts. Specific forward-looking statements contained in this portion of the Annual Report include, but are not limited to the Company's (i) expectation that certain of its liabilities listed on the balance sheet under the headings "Accounts Payable," "Accrued Liabilities" and "Note Payable" will be retired by issuing stock versus cash during the next 12 months; (ii) expectation that it will continue to devote capital resources to fund continued development of the ArrayIT technology; (iii) expectation that it will execute employment agreements with certain executive officers in the next fiscal quarter; (iv) anticipation that it will incur significantly capital expenditures to further its deployment of the ArrayIT offerings; and (v) anticipation of a significant increase in operational and SG&A costs as it accelerates the development and marketing of the ArrayIT operations in beginning in the second quarter of 2008.

 

Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled "Risk Factors," as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.

 

In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

Executive Overview

Through our merger with TeleChem, we have undertaken a new strategic and business direction to become primarily a biotechnology company. Our  core activities and associated capital investments will be redirected towards Microarray Analysis.

 

 

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TeleChem’s business activities are in the life sciences, chemical trading and disease diagnostics areas.  It was founded in 1993 by Rene Schena and Todd Martinsky as a chemical import and export trading company.  TeleChem’s chemicals division provides customers with the raw materials required for plastics, water soluble fertilizers, and alternative fuels.  TeleChem entered the biotechnology sector with the creation of the ArrayIt® Life Sciences Division in 1996.  Because of the public interest in the Human Genome Project and microarray technology, TeleChem focused on microarray products and services for the research, pharmaceutical and diagnostics markets.  TeleChem’s ArrayIt® Division currently provides its patented microarray platform (US 6,101,946) to more than 3,000 installations serving an estimated 10,000 laboratories, making it the most widely used microarray technology in the world.  Supporting instruments, kits, reagents, and hardware complete the ArrayIt® line of more than 400 products making up what management believes is a universal microarray platform for any type of biomolecule.

 

During the year 2001, the Diagnostics Division was started in order to leverage the patented (6,913,879) multi-patient technology for genetic screening and testing.  This next generation microarray format allows clinical laboratories to examine tens of thousands of patients on a single microarray, providing much more cost-effective gene information for population-wide diagnostics than traditional “single patient” microarrays.  The company is currently developing or has developed tests for many major human diseases including cystic fibrosis, sickle cell anemia, and cancer.  ArrayIt intends to compete in the $20 billion molecular diagnostics arena.

 

The TeleChem customer base includes major universities, pharmaceutical and biotech companies, agricultural and chemical companies, government agencies, national research foundations and private sector enterprises around the world.  The company website receives more than 1,000,000 hits per month and the Shopping Cart allows on-line product ordering 24 hours a day. The website makes available the Electronic Library free-of-charge to the tens of thousands of researchers worldwide who wish to keep pace with the microarray literature. TeleChem scientists were featured on NOVA’s television show “Cracking the Code of Life” in 2001.  The company received the Rising Star Award from the City of Sunnyvale in 2002 and 2003, the Silicon Valley Top 50 Award from the San Jose Business Journal in 2003, and consecutive selection to the Inc. 500 List in 2002 and 2003 by Inc. magazine.

 

TeleChem’s principal office is in Sunnyvale, California. TeleChem presently has eight employees.

 

 

 

 

Notes to Consolidated Financial Statements

 

December 31, 2007 and 2006

 

 

1. Description of Business and Summary of Significant Accounting Policies

 

Description of Business

Integrated Media Holdings, Inc. and subsidiaries (collectively referred to as IMHI) provides digital content distribution and management solutions for content owners seeking to distribute online and over broadband, or Internet Protocol, networks. Prior to September 2005, the Company integrated broadband services, including voice, video, and data services to residential customers through IP based networks. The Company, formed in December 1999, relocated to Atlanta, Georgia in December 2005 from Salt Lake City, Utah. IMHI was formerly known as CeriStar Inc. and Endavo Media Communications, Inc, which is also the current name of one of our subsidiaries.  The results of operations of Endavo, Bidchaser and WV Fiber (to April 11, 2007 – date of disposal) have been included in these statements and are presented as discontinued operations in the financial statements.

Effective February 21, 2008, IMHI completed the Plan and Agreement of Merger between IMHI, TeleChem International, Inc., the majority shareholders of TeleChem, Endavo Media and Communications, Inc., a Delaware corporation and TCI Acquisition Corp., a Nevada corporation, and wholly-owned subsidiary of IMHI.  Consummation of the merger did not require a vote of our shareholders.  IMHI issued 103,143 shares of Series C Convertible Preferred Stock to the Shareholders of TeleChem in exchange for 100% of the equity interests of TeleChem resulting in TeleChem being a wholly owned subsidiary of the Company.  The former shareholders of TeleChem now own approximately 73.5% of the outstanding interest and voting rights of the parent company.  The Preferred Stock is convertible into 36,100,000 shares of common stock after, but not before, the effective date of the reverse split of the outstanding IMHI common stock.

For SEC reporting purposes, the merger between IMHI and TeleChem will be treated as a reverse merger with TeleChem being the “accounting acquirer” and, accordingly, it will assume the Company’s reporting obligations with the SEC after the effective date of the merger.

 

Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The financial statements reflect the consolidated results of Integrated Media Holdings, Inc. and its wholly owned subsidiaries Endavo Media and Communications, Inc. (fka, Susquina Inc), WV Fiber Inc. (fka Louros Networks, Inc), Bidchaser Inc. (fka BCI Acquisition Corporation) and New Planet Resources, Inc. All material inter-company transactions have been eliminated in the consolidation.

 

Reverse Stock Split

 

On March 22, 2006, IMHI completed a reverse stock split whereby the shareholders received 1 share of stock for every 40 that they previously owned.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include the cash flow projections used for the impairment tests, the assumption underlying estimate of the period used to amortize deferred revenue and the assumptions used to value the stock options issued to non-employees. It is reasonable possible that these estimates may change in the near term and that such as change may be material.

 

Cash and Cash Equivalents

 

Cash includes all cash and highly liquid investments with original maturities of three months or less. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation and amortization on property and equipment are determined using the straight-line method over the three to five year estimated useful lives of the assets.

Reclassification

Certain prior period items have been reclassified to conform to the current period presentation.   Some of these reclassifications are related to discontinued operations [decision to dispose of Endavo, WV Fiber and Bidchaser] and had no impact on net income (loss).

Impairment of Long-Lived Assets

 

IMHI reviews its long-lived assets for impairment when events or changes in circumstances indicate that the book value of an asset may not be recoverable. IMHI evaluates, at each balance sheet date, whether events and circumstances have occurred which indicate possible impairment. The Company uses an estimate of future undiscounted net cash flows of the related asset or group of assets over the estimated remaining life in measuring whether the assets are recoverable. If it is determined that an impairment loss has occurred based on expected cash flows, such loss is recognized in the statement of operations.

Goodwill

Goodwill is the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. In July 2001, the FASB issued Statement of Financial Accounting Standards No. 142 (“SFAS 142”), “Goodwill and Intangible Assets”, which revises the accounting for purchased goodwill and intangible assets. Under SFAS 142, goodwill and intangible assets with indefinite lives will no longer be amortized and will be tested for impairment annually or whenever events or circumstances indicate that the estimated fair value is less than the related carrying value as determined on a reporting unit basis.

 

Effective December 31, 2006, IMHI reviewed goodwill for impairment consistent with the guidelines of SFAS 142 using a discounted future cash flow approach to approximate fair value. As a result of testing our goodwill for impairment the Company determined that there was no value to the goodwill and recorded a goodwill impairment of $3,142,219.

 

Convertible Debt

IMHI reviews its convertible instruments for embedded derivatives.  Statement of Financial Accounting Standard (“SFAS”) No. 133, “Accounting for Derivative Instruments and HedgingActivities,” as amended, requires all derivatives to be recorded on the balance sheet at fair value. These derivatives, including embedded derivatives, are separately valued and accounted for on our balance sheet.

Emerging Issues Task Force Issue No. 00-19, "Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in, a Company's Own Stock" ("EITF 00-19"), requires freestanding contracts that are settled in a company's own stock, including warrants to purchase common stock, to be designated as an equity instrument, asset or a liability. Under the provisions of EITF 00-19, a contract designated as an asset or a liability must be carried at fair value on a company’s balance sheet, with any changes in fair value recorded in the company’s results of operations. A contract designated as an equity instrument must be included within equity, and no fair value adjustments are required.

Income Taxes

 

Deferred taxes are computed using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for 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. 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. Deferred tax assets are not recognized unless it is more likely than not that the asset will be realized in future years.

 

Earnings per Common and Common Equivalent Share  

 

The computation of basic earnings per common share is computed using the weighted average number of common shares outstanding during the year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus common stock equivalents which would arise from the exercise of warrants outstanding using the treasury stock method and the average market price per share during the year. Options, warrants, convertible debt and convertible preferred stock which are common stock equivalents are not included in the diluted earnings per share calculation for 2007 and 2006, respectively, since their effect is anti-dilutive.

 

Stock-Based Compensation 

The Company accounts for stock issued to employees, officers and directors in accordance with Statement of Financial Standards No. 123 (revised 2004), Share-Based Payment ("SFAS No. 123(R)"), which is a revision of SFAS No. 123. SFAS No. 123 (R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95,Statement of Cash Flows. Generally, the approach to accounting for share-based payments in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all new share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.

Recent Accounting Pronouncements

 

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140, to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to permit fair value remeasurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, Accounting for the Impairment or Disposal of Long-Lived Assets, to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on the Company’s future reported financial position or results of operations.

 

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48,“Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the Company's financial statements in accordance with FASB Statement No. 109“Accounting for Income Taxes.” FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. FIN 48 is effective for the Company on January 1, 2007. Based on the Company's evaluation and analysis, FIN 48 is not expected to have a material impact on the Company's financial statements.

In September 2006, the FASB issued FASB Statement No. 157,“Fair Value Measurements” (“FAS 157”), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. The FASB believes that the new standard will make the measurement of fair value more consistent and comparable and improve disclosures about those measures. FAS 157 is effective for fiscal years beginning after November 15, 2007.   The Company is currently evaluating the requirements and impact of FAS 157 on the Company's consolidated financial statements, and will adopt the provisions on January 1, 2008. FAS 157 is not expected to have a material impact on the Company's financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin 108 (“SAB 108”), which expresses the Staff's views regarding the process of quantifying financial statement misstatements. The bulletin was effective at fiscal year end 2006. The implementation of this bulletin had no impact on the Company's results of operations, cash flows or financial position.

2. Going Concern

IMHI has a working capital deficit, a stockholders' deficit, and recurring net losses. These factors create substantial doubt about IMHI’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if IMHI  is unable to continue as a going concern.

 

The ability of IMHI to continue as a going concern is dependent on IMHI generating cash from the sale of its common stock or obtaining debt financing and attaining future profitable operations. Management's plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance IMHI will be successful in these efforts.

3. Restatement of Previously Issued Financial Statements as of and for the Period ended December 31, 2006

IMHI concluded as a result of various SEC comments letters to restate its financial results for the year ended December 31, 2006 to reflect additional non-operating gains/losses related to the classification of and accounting for (1) the conversion feature of the SSCN and SOVcap convertible notes and the warrants associated, (2) write off of certain uncollectible accounts receivable, (3) re-measurement of the goodwill associated with the purchase of WV Fiber, LLC and Bidchaser related to the preferred stock that was given in consideration of the merger; (4) impairment of the goodwill associated with WV Fiber and Bidchaser.  The accompanying financial statements for the year ended December 31, 2006 have been restated to effect the changes described above:

	As Initally Reported	Adjustment		As Adjusted
Consolidated Income Statement for the year ended December 31, 2006
Total revenues	1,504,000	(1,504,000)	(a)	-
Cost of sales	1,464,000	1,464,000	(a)	-
Selling, general, and administrative expense	5,901,000	4,055,035	(b)	(1,845,965
Loss from operations	(5,861,000)	4,015,035		(1,845,965
Other income (expense)	1,150,000	(1,150,000)	(a)	-
Gain on derivative liability		532,603	(c)	532,603
Interest expense	(1,002,000)	84,596	(a)	(917,404)
Loss from continuing operations	(5,713,000)	3,482,234		(2,230,766)
Loss from discontinued operations	-	(14,101,396)	(a)	(14,101,396)
Net loss	(5,713,000)	(10,619,162)		(16,332,162)
Deemed dividend on preferred stock	-	(1,072,992)	(d)	(1,072,992)
Net (loss) attributable to common shareholders	(5,713,000)	(11,692,154)		(17,405,154)
Net (loss) per common share - basic and diluted	$                  0.63	(2.44)	(e)	(1.81)
Weighted average shares - basic and diluted	9,041,961			9,041,961
(a)  Change due to reclass to discontinued operations.  See Note 6.
(b)  Change due to reclass to discontinue operations, correction to reduce stock based compensation of $1,229,906 in accordance with vesting terms,write-off of uncollectible receivables of $158,545 and impairment of fixed assets of $53,908
( c) To record gain on derivative liability based upon fair values at December 31, 2006.  See Note 5.
(d) To correct accretion of preferred stock  as a dividend
(e)  To reflect basic and diluted earnings per share based upon corrected net income and weighted average shares

Balance Sheet Impact

In addition to the effects on IMHI’s 2006 consolidated statement of operations discussed above, the restatement impacted IMHI’s consolidated balance sheet as of December 31, 2006.  The following table sets forth the effects of the restatement adjustments on IMHI’s balance sheet as of December 31, 2006 as compared to the consolidated balance sheet as of December 31, 2006 initially reported:

	As Initially Reported	Adjustment		As Adjusted
Consolidated Balance Sheet as of December 31, 2006
Assets
Current assets:
Cash	16,000	(14,618)	(a)	1,382
Accounts receivable, net of allowance for doubtful accounts	608,000	(608,000)	(b)	-
Prepaid Expenses	4,000	(4,000)	(a)	-
Total current assets	628,000	(626,618)		1,382
Property and equipment	1,182,000	(1,182,000)	(c)	-
Other assets	66,000	(56,000)	(a)	10,000
Goodwill	3,142,000	9,023,446	(d)	-
		(12,165,446)	(d)
Assets of discontinued operations	-	1,865,109	(a)	1,865,109
Total assets	5,018,000	(3,141,509)		1,876,491
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable	1,388,000	(1,251,939)	(e)	136,061
Accrued liabilities	1,050,000	(489,821)	(e)	560,179
Derivative liability	-	950,865	(f)	950,865
Notes payable including related parties	2,922,000	1,315,685	(g)	3,222,515
		(1,021,003)	(e)
		5,833	(o)
Total current liabilities	5,360,000	(490,380)		4,869,620
Liabilities of discontinued operations	-	2,975,058	(e)	2,975,058
Total liabilities	5,360,000	2,484,678		7,844,678
Stockholders' deficit
Preferred stock	3,000	(116)	(h)	2,884
Common stock	16,000	369	(i)	16,369
Additional paid-in capital	26,512,000	(1,425,000)	(j)	31,832,986
		(1,315,685)	(k)
		1,495,337	(l)
		7,528,109	(l)
		266,953	(m)
		368	(n)
		(1,229,096)	(p)
Accumulated deficit	(26,873,000)	(10,947,426)		(37,820,426)
Total stockholders' deficit	(342,000)	(5,626,187)		(5,968,187)
Total liabilities and stockholders' deficit	5,018,000	(3,141,509)		1,876,491
(a)  Change due to reclass to assets of discontinued operations.  See Note 6.
(b)  Change due to reclass to assets of discontinue operations and write-off of uncollectible receivables of $158,545
(c)  Change due to reclass to assets of discontinue operations and impairment of fixed assets of $53,908
(d)  Change due to increase in goodwill resulting from correction of purchase price noted in (k) and impairment of goodwill of $12,165,446
(e)  Change due to reclass to liabilities of discontinued operations.  See Note 6.
(f) To record derivative value for convertible notes and related warrants based on fair value at December 31, 2006
(g) See (k)
(h)  To correct the par value of the Series A Preferred stock
(i)  To correct the par value of the common stock
(j)  To reverse the impact of the convertible note balance of $1,425,000 which was discounted to zero by increasing additional paid in capital in 2005
(k) To reverse the impact of the 2005 and 2006 debt discount amortization from additional paid in capital to net of notes payable including related parties(g)
(l)  To record the increase in purchase price related to WV Fiber and Bidchaser by $7,528,109 and $1,495,337, respectively due to valuation correction of preferred stock issued at time of purchase
(m) To record fair value of warrants exercised
(n) To adjust additional paid in capital for changes in par values of common stock
(o) Rounding correction
(p) To record stock based compensation decrease for $1,229,906 in accordance with vesting terms.

 

The balance sheet effect of the above restatements would be to increase stockholders’ equity at December 31, 2006 by $~ and to decrease goodwill  at December 31, 2006 by $3,142,000.

Income for the nine months ended September 30, 3006 would therefore be: six months ended  June 30, 2006 loss of  $(4,920,177) plus three months ended September 30, 2006 income of $1,792,022 = $(3,128,055), which is off by $1 from the 9/30/06 10-QSB due to rounding.

 

4. Purchase  Of  WV Fiber, LLC

On August 8, 2006,  IMHI  acquired  100 percent of the outstanding common shares of WV Fiber LLC ('WVF"), in exchange for the issuance of 4,055,488 common shares of IMHI’s common stock. The results of WVF's operations have been included in the consolidated statement of operations since that date. WVF is a global fiber-optic and IP (Internet Protocol) network that provides Internet transit and network transport services to ISPs, carriers and enterprise customers. WV Fiber delivers digital content streaming, IP, VPN and Internet solutions. The company is also developing content delivery network capabilities to provide network distribution of video, music, games and downloads.   The WV Fiber network connects with over 400 other networks via peering agreements, encompassing the U.S., Canada, Latin America, Europe, the Middle East, Asia and the Far East.

The aggregate purchase price was:

Cash	$1,662,500
4,055,488 shares of the Company's common stock valued at $0.63	2,554,934
917,486 shares of the Company’s preferred stock convertible into 8,807,857 shares of the Company's common stock valued at $0.63	5,548,980
Fees satisfied by the issuance of 72,626 shares of the Company’s preferred stock convertible into 697,210shares of the Company's common stock valued at $0.63	439,242
Assumption of Notes Payable of $850,000	$850,000
	$11,055,655

 

The acquisition is accounted for as a purchase. Goodwill in the amount of $10,087,954 is recorded at the date of the acquisition.  The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition.

Current assets	$    363,259
Property, plant and equipment	650,000
Deposits	29,910
Total assets acquired	1,043,169
Current liabilities	(75,465)
Long-term liabilities	(850,000)
Total liabilities assumed	(925,465)
Net liabilities assumed	$   117,704

 

On April 1, 2007, the board of directors recommended and majority shareholders approved by consent the sale of WV Fiber Inc. to Ultra Global Investments, LLC, a company formed by Peter Marcum and Harish Shah for the purpose of completing this purchase. The effective date of the sale is April 11, 2007. Pursuant to the sale of WV Fiber, Peter Marcum and Harish Shah resigned from our board of directors on April 11, 2007. There was no disagreement between Mr. Marcum or Mr. Shah and the board of directors

The following table summarizes the consideration received from the sale of WV Fiber. Inc.

Cash and short term notes	$     200,000
Surrender for cancellation 3,246,000 shares of the Company's common stock valued at $0.15	486,900
Surrender for cancellation 646,744 shares of the Company’s preferred stock convertible into 6,209,030 shares of the Company's common stock valued at $0.15	931,355
Assumption by buyers of loans payable of $1,186,500 and accrued interest thereon of $128,153	1,314,653
Total consideration	$   2,932,908

 

As a result of the transaction, a gain on the sale of a subsidiary $3,510,458 was recognized during 2007.

 

5. Convertible Notes and Derivative Liabilities

 

On February 22, 2005 the Company sold 8% senior secured convertible notes, at par, in the aggregate principal amount of $1,425,000. The Notes carry an interest rate of 8% and a maturity date of February 22, 2007. Interest is payable in cash or shares of common stock. In the event of default, an additional penalty interest of 18% will be assessed on unpaid principal and interest.

The notes are convertible into our common shares at 85% of volume weighted average price for twenty 20 trading days prior to conversion date. The Company simultaneously issued to the Investors five year warrants to purchase 1,597,534 shares of common. During 2005, 1,585,623 warrant shares were exercised and  relieved to equity on the balance sheet at December 31, 2005.

 

The Company evaluated the convertible debentures and the warrants under SFAS No. 133 "Accounting for Derivatives" and EITF 00-19 "Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company's Own Stock". The Company determined that the convertible debentures contained an embedded derivative for the conversion option and the warrants qualified as free standing derivatives. The conversion option allows for an indeterminate number of shares to potentially be issued upon conversion.

This results in the Company being unable to determine with certainty they will have enough shares available to settle any and all outstanding common stock equivalent instruments.  The Company would be required to obtain shareholder approval to increase the number of authorized shares needed to share settle those contracts. Because increasing the number of shares authorized is outside of the Company’s control, this results in these instruments being classified as liabilities under EITF 00-19 and derivatives under SFAS No. 133. As a result, the Company has determined that all existing outstanding convertible notes are also subject to EITF 00-19 and  SFAS No. 133. The terms of those notes were disclosed under financial footnotes No. 6- Notes Payable.

 

The notes are carried at full face value as they are in default.  In addition, the fair market value of the derivative liability is recorded as of December 31, 2007 and 2006 to be $228,266 and $950,865, respectively.

		2007		2006
Discounted convertible notes payable due to SovCap. SovCap is affiliated with an officer and director of the Company and is a significant stockholder of the Company. These notes have a face interest rate of 18%. The notes are unsecured and are due on demand. The notes are convertible at a rate of 75% of the average closing bid price of the Company's common stock for the five trading days ending on the trading day immediately preceding the conversion date. During 2007 and 2006, respectively, $50,000 and $195,000 of principal was converted into common stock.		$  405,300		$ 455,300
Notes payable due to SovCap bearing interest at 6% -8%		118,500		118,500
Notes payable due to SovCap, bearing interest at 8% and due on February 22, 2007.  The Company is presently in default of the payments on these notes, and as a result, the notes are accruing interest at the default rate of 26%. Balance is net of debt discount of $0 and $103,459 in 2007 and 2006, respectively.		1,425,000		1,321,541
Note payable to Dorn & Associates. Payable in 36 monthly installments of $890 at an interest rate of 5%. The Company is presently in default of the payment terms on this note, and has classified the entire note balance as current.		25,177	*	25,177
Convertible notes due to a former officer and shareholder of the Company, These notes bear interest at 12%, are unsecured, and due on demand. The Company is presently in default of the payment terms on these notes. The notes are convertible into approximately 10,251 shares at approximately $8.00 per share.		74,174		74,174
Notes payable to an individual with interest at 10% collaterialized by receivables and due on demand.		17,826	*	17,826
Note payable to a financial group with interest rate at 12% and due on demand.		25,000		25,000
Note payable to HT Investments LLC issued during asset purchase of WV Fiber LLC. The note bears no interest and is payable on November 8, 2006, secured by the assets purchased and placed in our subsidiary, WV Fiber, Inc. The note is payable in 60% cash and 40% of the note is payable in Series ! Preferred shares of the Company.  This note was sold as a part of the sale of WV Fiber, Inc. during 2007.		-		850,000
Notes payable to certain individual accredited investors with interest of 15% or 18% per annum and are payable on demand after 180 days from the issue date . Notes are convertible into units of common stock and warrants at a rate of one unit for every $5.00 converted.  Notes in the principal amount of $1,183,500 were sold as a part of the sale of WV Fiber, Inc.		44,500		1,228,000
Notes payable to former officer and other individual accredited investors		60,250		-
Notes payable due to SovCap		161,250	*	-
Note payable to a related party assumed during merger of BidChaser		-		128,000
		$  2,356,978		$  4,243,518
* Notes payables included in liabilities of discontinued operations		(204,254)		(1,021,003)
Notes payable including related parties		2,152,724		3,222,515

 

6.  Discontinued operations

On April11, 2007 IMHI disposed of our wholly-owned subsidiary, WV Fiber, LLC.  During the fourth quarter of 2007, IMHI approved a plan to dispose of its wholly- owned subsidiaries, Endavo and Bidchaser.  The results of operations of Endavo, Bidchaser and WV Fiber (to April 11, 2007, the date of disposal) have been included in these financial statements and are presented as discontinued operations in the financial statements.  The combined sales of Endavo, Bidchaser and WV Fiber, LLC, reported in discontinued operations, for the years ended December 31, 2007 and 2006, were $1,073,540 and $1,504,213, respectively. Endavo, Bidchaser and WV Fiber, LLC’s combined pretax loss, reported in discontinued operations, for the years ended December 31, 2007 and 2006, were $507,957 and $1,723,205, respectively. Prior year financial statements for 2006 have been restated to present the operations of Endavo, Bidchaser and WV Fiber, LLC as discontinued operations.

In conjunction with the discontinuance of operations,  IMHI recognized a loss of $3,142,419 in 2007 to record the impairment of goodwill. The assets and liabilities of the discontinued operations are presented separately under the captions “Assets of discontinued operations” and “Liabilities of discontinued operations,” in the accompanying Balance Sheets at December 31, 2007 and 2006, and consist of the following:

	2007		2006
Assets of discontinued operations:
Cash	$           99,996		$       14,813
Accounts receivable	-		608,423
Prepaid expenses	-		3,570
Property and equipments	-		1,182,099
Other noncurrent assets	147,949		56,204
Total assets of discontinued operations	$      -		$   1,865,109
Liabilities of discontinued operations
Accounts payable and accrued expenses	$      1,463,965		$      1,216,021

7. Income Taxes

At December 31, 2007, IMHI has net operating loss (NOL) carry-forwards available to offset future taxable income of approximately $11,431,338 which will begin to expire in 2019. The utilization of the net operating loss carry-forwards is dependent upon the tax laws in effect at the time the net operating loss carry-forwards can be utilized. It is also likely that utilization of the NOL's are limited based on announced changes in control of IMHI. A valuation allowance has been recorded against the deferred tax asset due to the uncertainty surrounding its realization caused by IMHI’s recurring losses.

 

8. Stockholders' Equity (Deficit)

 

Conversion of Debt to Common Stock

 

As discussed in Note 6, pursuant to the original terms of the agreements, certain creditors converted $102,701 (2006 -$169,500) of loans and accrued interest into 2,390,731 (2006 -296,725) shares of common stock (adjusted for reverse split).  During 2007 a subsidiary’s landlord converted $4,400 of unpaid rent into 30,345 shares of common stock.

 

Conversion of Preferred Stock to Common Stock

 

In the third quarter of 2004, certain shareholders converted 2,292,718 shares of common stock into 3,821,197 shares of Series A Convertible Preferred Stock.

The Series A Preferred Stock has no stated dividend rate and has a liquidation preference of $.001 per share. The Series A Preferred Stock also has voting rights that entitle the preferred shareholders to vote with the common shareholders as if the preferred stock had converted to common. The conversion ratio of the preferred into common is not subject to revision upon reverse stock dividends or splits that reduce the total shares outstanding.

 

The 3,821,197 shares of preferred stock are convertible at a fixed conversion ratio of 9.6 into 36,683,592 shares of common stock any time after September 30, 2005. On March 22, 2006, IMHI entered into a 40 to 1 reverse stock split.  As a result the conversion ratio did not  the Series A Preferred stock holders received an incremental 35,766,404 shares.  IMHI evaluated the effect of the reverse stock split under EITF 00-27, “ Application of Issue 98-5 to Certain Convertible Instruments,” and determined that a reset had occurred.  IMHI recorded a beneficial conversion feature of $1,072,992 as a deemed dividend.  We have restated the 2006 financial statements to present this deemed dividend on the statement of operations.

 

Common Shares Issued for Service

 

IMHI has issued 4,871,784 common shares and 108,023 Series A Preferred shares, as well as 800,000 warrants (with exercise prices of $0.25) to consultants under consulting agreements that are generally three years or less. The associated expenses are amortized over the term of the contracts, with the unamortized portion (totalling $0 at December 31, 2006 and 2005) reflected as a reduction to stockholders' equity (deficit).

Options and warrants

IMHI  has issued 250,000 and 1,597,529 warrants in conjunction with the issuance of its securities and convertible debt during the years ended December 31, 2006 and 2005, respectively. Warrants that were issued generally do not have a life that exceeds five years. We issued 6.907,500 options to employees and consultants in 2006. Information regarding warrants and options to purchase common shares is summarized below:

		Number of Options and Warrants		Weighted Average Exercise Price Per Share
Outstanding at January 1, 2006		112,972		$0.05	-
Granted		6,020,000		$0.08	-
Canceled/forfeited		-		-	-
Expired		-		-	-
Exercised		-		-	-
Outstanding at December 31, 2006		11,965,000		$0.09	- -
Granted		-		-	-
Canceled/forfeited		-		-	-
Expired		-		-	-
Exercised		-		-	-
Outstanding at December 31, 2007		8,952,500		$0.10	- -

The following table summarizes information about outstanding warrants and options for common stock at December 31, 2006:

 

Range of Exercise				Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercised		Average Exercise Price
$0.01	-	$0.05		421,362		6		0.03		0		0.70
0.09	-	0.10		1,673,512		7		0.08		0		0.10
0.10	-	0.60		6,593,781		8		9.34		0		0.37
0.60	-	0.42		236,345		8		1.19		0		1.19

F-14

 

 

9. Supplemental Cash Flow Information

 

During the year ended December 31, 2007, the Company had significant non - cash financing and investing activities as follows:

 

·	Converted $169,500 of notes and accrued interest into 296,725 (adjusted for reverse split)

 

·	Issued common stock and warrants to consultants and amortized the expense over the terms of the contracts, all in 2006, resulting in non-cash compensation expense of $4,173,541 in 2006

 

10. Commitments and Contingencies

 

IMHI may become or is subject to investigations, claims or lawsuits ensuing out of the conduct of its business. IMHI is currently unable to estimate the loss (if any) related to these matters.

 

11. Subsequent Events

On February 21, 2008, IMHI completed a plan and agreement of merger between IMHI and TeleChem International, Inc..  IMHI issued 103,143 shares of Series C Convertible Preferred Stock to the shareholders of Telechem in exchange for 100% of the equity interests of TeleChem.  The former shareholders of TeleChem now own approximately 73.5% of the oustanding interest in IMHI.  Simultaneously with the merger IMHI transferred its wholly-owned subsidiary, Endavo to Paul Hamm.  The consideration received by IMHI for the transfer to Mr. Hamm is the cancellation of 1,750,000 common stock purchase warrants.  As a result, the transaction will be accounted for as a reverse merger, where TeleChem is the accounting acquirer resulting in a recapitalization of IMHI’s equity.

 

F-18

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

 

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

 

Our directors will serve for a term of one year unless they resign or are earlier removed. Our executive officer and key employees and consultants are appointed by our board of directors and serve at its discretion.

 

Current Directors and Executive Officers

 

 

Name	Age	Position with the Company
Paul D. Hamm	40	President, Chief Executive Officer, and Chairman of the Board
Peter Marcum*	55	Director and Chief Executive Officer of WV Fiber, Inc.
Jerry Dunlap	54	Director
Harish Shah*	55	Director and President of Bidchaser, Inc.

 

PAUL D. HAMM . Mr. Hamm has served as our President, Chief Executive Officer and a member of our Board of Directors since June 24, 2004. Mr. Hamm is a 14-year financial services industry veteran, financial entrepreneur, investment banking professional and private equity fund manager. In 2002, Mr. Hamm founded and is currently the Managing Partner of AlphaWest Capital Partners, a specialized capital marketing firm providing extensive market/industry research, financial planning and modeling, transaction advisory, marketing and investment banking services to emerging public and "pre-public" U.S. companies. In 1998, Mr. Hamm co-founded and currently serves as Managing Director of SovCap Investment Management Group, the investment manager to SovCap Equity Partners, Ltd., an offshore private investment partnership, and our principal stockholder. As a principal investor, Mr. Hamm has made numerous private equity investments into publicly traded companies across technology and communications related industries. He has been actively involved with portfolio companies in business planning and execution, often serving as primary financial and strategic advisor to a portfolio company's management. Mr. Hamm holds NASD securities licenses, served as a Transportation/Civil Affairs Commissioned Officer for 8 years with the U.S. Army/USAR, and has a Bachelor of Science degree in Political Science from Stetson University.

 

JERRY DUNLAP . Mr. Dunlap has served as a member of our Board of Directors since July 1, 2004. Mr. Dunlap is co-founder and currently serves as President and Chief Executive Officer for ISDN-Net, a internet service provider located in Nashville, Tennessee. After ten years in existence, ISDN-Net is Tennessee's oldest and largest independent Internet Service Provider serving 87 of the state's 95 counties. Mr. Dunlap oversees many of the day-to-day operations of ISDN-Net and manages the company's long-term, strategic direction. Viewed as a pioneer in telecom networking and communications, Mr. Dunlap was asked by the Tennessee Public Service Commission in 1992 to direct a pilot project that ultimately resulted in the introduction of digital connectivity services in Tennessee. Shortly after that project, in 1994, Mr. Dunlap co-founded ISDN-Net to serve the data needs of Tennessee businesses. Mr. Dunlap has a Bachelor of Science degree in pharmacy from the University of Tennessee.

 

PETER MARCUM - Mr. Marcum resigned from his position as Director on our Board on April 11, 2007.

 

HARISH SHAH - Mr. Shah resigned from his position as Director on our Board and President of Bidchaser on April 11, 2007.

 

Directors and Executive Officers after merger

 

On February 21, 2008, the following persons were elected to serve as executive officers and directors for the next year and until their successors are elected and qualified.

 

NAME	AGE	POSITION
Rene’ A. Schena	44	Chairman , Director, CEO & CFO
Todd J. Martinsky	42	Director, Vice President & COO
Mark Schena, Ph.D.	44	Chief Technology Officer, Secretary & Treasurer
William L. Sklar	60	Director
Paul Haje	52	Director of Advertising and Public Relations

Ms. Schena holds a degree in Language Studies from the University of California Santa Cruz.  She has 23 years experience in international business, including translation, contract documentation and commodities trading with a subsidiary of ConAgra from 1985 to 1988, and as a chemical import and distribution specialist, department manager, and later President of NuSource Chemical Corporation.

She founded TeleChem International, Inc. in 1993, continuing the import and export chemical distribution specialty, expanding into government bid business, and moving into the biotech sector in 1996.  TeleChem is a market leader in DNA microarray technology, providing tools and expertise for the explosive functional genomics and diagnostic screening markets.  In 2002 and again in 2003, TeleChem made Inc. Magazine’s list of the top 500 fastest growing privately held companies in the USA. In 2005, the Silicon Valley Business Journal recognized Ms Schena as the President of the 11th largest woman-owned business enterprise in the Silicon Valley.  Ms. Schena’s long-term contacts in the chemical industry, strong business background and management expertise are key contributions to TeleChem's infrastructure.  Ms. Schena is the sister of Mr. Martinsky and the wife of Dr. Schena.

Mr. Martinsky , Co-founder of TeleChem International, Inc., previously served as director of education and consulting at the Codd and Date Consulting Group.  Mr. Martinsky has led the ArrayIt Division to play a significant role in the microarray industry. He has authored several book chapters and other scientific literature and has become an internationally recognized lecturer, writer, consultant and teacher.  In addition to providing consulting services, Mr. Martinsky has spearheaded ArrayIt’s technical support team since 1997. Along with his daily technical and business direction of the ArrayIt Product line, Mr. Martinsky established successful alliances with corporate partners in manufacturing, reagents, equipment and distribution.  He is responsible for an educational outreach program that ensures that the broadly patented ArrayIt Micro Spotting Device is applied in the field with optimal scientific and technological accuracy. He is currently serving on the panel that is crafting future regulatory requirements for microarray manufacturing for the United States Pharmacopeia.  Mr. Martinsky is the brother of Ms. Schena.

 

Dr. Schena is a world-renowned biochemist whose research focuses on microarray technology, genomics, proteomics, genotyping, molecular diagnostics, and gene expression.  Dr. Schena and his colleagues at Stanford University published the first paper on microarrays in 1995 (Science 270, 467-470), catalyzing the explosive proliferation of microarray technology at academic and commercial institutions internationally.  The 95’ Science paper is the most highly cited paper in the history of Arabidopsis research and a recent article in The Scientist places Dr. Schena at positions 1 and 2 on the “microarray family tree”, confirming his role as the founder of microarray technology and substantiating his status as the Father of Microarray Technology. More than 20,000 laboratories in 35 countries are using microarrays to explore basic questions in biology, chemistry, agriculture and medicine, and the proliferation of the technology has resulted in more than 26,000 publications since the original 95’ Science publication. Dr. Schena is the husband of Ms. Schena.

 

Dr. Schena’s success can be traced to an incomparable scientific pedigree. He trained as a postdoctoral fellow with Dr. Ronald W. Davis in the Department of Biochemistry at the Beckman Center at Stanford University, and earned a Ph.D. with Dr. Keith R. Yamamoto in the Department of Biochemistry at UCSF, graduating first in an exceptional class.  Dr. Schena performed his undergraduate thesis work with Dr. Daniel E. Koshland, Jr. in the Biochemistry Department at UC Berkeley, earning a baccalaureate degree with greatest achievement and highest honors in 1984.  As a professional scientist, he has authored more than thirty scientific papers and books on subjects ranging from bacteria and yeast to plants and humans, and has campaigned tirelessly with scientists, physicians, federal regulatory agencies, granting agencies, and charitable organizations to promote microarray technology for the betterment of humankind. Dr. Schena edited the first two books on microarrays, DNA Microarrays: A Practical Approach by Oxford University Press, and Microarray Biochip Technology by Eaton Publishing Company, wrote the first microarray textbook Microarray Analysis for J. Wiley & Sons, and the first book on the proteomic applications of microarrays entitled Protein Microarrays by Jones & Bartlett.  Dr. Schena has recently completed a new methods book DNA Microarrays-Methods Express for Scion Publishing, and continues to lecture widely, having given more than 120 speeches in 15 countries since 1995. Dr. Schena was featured as one of the “Stars of Genomics” on the NOVA television special Cracking the Code of Life, which received more than 100,000,000 viewers worldwide, and is the most highly funded science documentary in United States history.

 

Dr. Schena is currently a Visiting Scholar and Consultant in the ArrayIt® Life Sciences Division at TeleChem International, Inc.  Dr. Schena is also the Chairman of NGS-ArrayIt, Inc and the Founder and President of Mark Schena Inc., an educational consulting company providing consulting services to a host of leading organizations such as Affymetrix, AlphaGene, ArrayIt, Biodot, Cartesian Technologies, Clontech, diaDexus, General Scanning, Genomic Solutions, GSI Lumonics, Incyte Pharmaceuticals, Irell and Manella, Johnson & Johnson, Morrison & Foerster, Motorola, Packard Instruments, Perkins Coie, Roche, Synteni, Technology Mentors, TeleChem International, Wilson Sonsini, Goodrich & Rosati, and others.  Dr. Schena resides with Ms. Rene Schena, the Founder and President of TeleChem International, Inc., in Los Altos, California.

 

Mr. Sklar has served as a consultant with Willmar Management Corp. since 1988.  Since September 2004 Mr. Sklar has been the Chairman and a Director of PaperFree Medical Solutions, Inc., a company trading on the OTC BB.  Since October 26, 2005 Mr. Sklar has been a director of Radiate Research a public company.  From July 1983 to October 1988 Mr. Sklar was the owner of Western Bag & Burlap a textile manufacturer.  Mr. Sklar   holds a Bachelor of Commerce from the University of Toronto.

 

Mr. Haje joined TeleChem in 1999 as the Director of Advertising and Public Relations.  He has successfully produced 63 major trade shows in the USA and Canada, 17 workshops, 11 VIP events, 76 unique full page print advertising campaigns, 18 direct mail campaigns, e-mail blasts, web site imagery and two full color company catalogs.  In 2003, Mr. Haje won the 2003 Signet Advertising Award for Best Full Page Ad in the life sciences sector.  Mr. Haje represented the company at the United States Food and Drug Administration’s Microarray Quality Control projects I and II, drawing important attention in the scientific press to the company and its H25K Whole Human Genome Chip.  H25K was one of only seven microarray platforms allowed to participate in the project, including Affymetrix, Agilent, Illumina, GE Healthcare and Applied BioSystems.  Mr. Haje has promoted the ArrayIt brand name through company exposure on prime time television, in cover stories, feature articles, trade publications, newsletters and web broadcasts.  TV includes PBS NOVA, ABC Night Line, CNBC Business Odyssey.  He has regularly booked cover stories and feature articles in Science, The Scientist, Nature, Genetic Engineering News, BioTechniques, Genome Technology, American Chemical Society, JAMA, PharmaGenomics, Genomics and Proteomics, BioScience Technology, BioArray News, BioInform, and Genome Web.

ITEM 10. EXECUTIVE COMPENSATION

 

Summary compensation table

 

The following table sets forth the total compensation for the fiscal years ended December 31, 2007, 2006 and 2005 paid to or accrued for our chief executive officer and other executive officers, excluding executive officers paid less than $100,000 annually. Each of the following executive officers is referred to as a "Named Executive Officer."

		Annual Compensation		Long Term Compensation
Name and Principal Position	Year	Salary($)	Bonus($)	Securities Underlying Options/SARs (#)
Paul D. Hamm (1)	2007	$   3,125	-	3,150,560
Chief Executive Officer	2006	$ 75,000	--	3,150,560
and President	2005	$ 95,000	--	525,000

 

(1)

Consists of 35,060 shares of common stock owned directly by Mr. Hamm and 3,115,500 shares that Mr. Hamm has the right to acquire upon the exercise of currently exercisable stock options. Mr. Hamm may also be deemed to own 44,883 shares of Series A Preferred Stock owned by AlphaWest Capital Partners, of which Mr. Hamm is the sole member. However, the Series A Preferred Stock has not been converted to common stock, but may occur at a conversion ratio of 9.6 shares of common stock for each share of Series A Preferred Stock. Mr. Hamm, as a managing member of SovCap Investment Management Group, also may be deemed to beneficially own 592,294 shares of common stock and 2,280,013 shares of Series A preferred stock and approximately 2,800,000 shares related to convertible notes outstanding (based on conversion price of $0.22) beneficially owned by SovCap Investment Equity Partners, Ltd., due to the investment management relationship between SovCap Investment Management Group LLC and SovCap Equity Partners, Ltd. Mr. is a member of SovCap Investment Management Group. Mr. Hamm disclaims beneficial ownership of the securities held by SovCap Equity Partners, as neither he nor SovCap Investment Management Group has any interest in SovCap Equity Partners Ltd.

Executive Management Stock Option Grants And Exercises

EXECUTIVE MANAGEMENT OPTION GRANTS IN LAST 2 FISCAL YEARS

 

			Individual Grants
Name	Number of Securities Underlying Options Granted (#)	Percent of Total Options Granted to Employees in Fiscal Year	Exercise Price ($/Share)		Expiration Date
Paul D. Hamm	37,500	43%	$3.20-4.00	(4)	7/26/15
	1,450,000	21%	$ 0.25	(4)	3/22/16
	2,000,000	28%	$ 0.42	(4)	10/12/16
Peter Marcum	1,000,000	14%	$ 0.37	(4)	10/12/16

(1) Options granted pursuant to the 2004 Directors, Officers and Consultants Stock Option, Stock Warrant and Stock Award Plan, or "2004 Plan," which vest in three equal yearly installments commencing on 7/26/05. The options were not issued in tandem with stock appreciation or similar rights and are not transferable other than by will or the laws of descent and distribution. The options expire on July 16, 2015.

(2) Options granted pursuant to the 2004 Plan, which vest in three equal yearly installments commencing on 7/26/05. The options were not issued in tandem with stock appreciation or similar rights and are not transferable other than by will or the laws of descent and distribution. The options expire on December March 22, 2016.

(3) Options granted pursuant to the 2004 Plan, which were completely vested on January October 12, 2006. The options were not issued in tandem with stock appreciation or similar rights and are not transferable other than by will or the laws of descent and distribution. The options expire on October 12, 2016.

(4) The exercise price of these options was equal to the fair market value (closing price) of the underlying common stock on the date of grant. These options are nonqualified options.

(5)	Options granted pursuant to the 2004 Plan, which vest in three equal yearly installments commencing on 10/12/06.

The options were not issued in tandem with stock appreciation or similar rights and are not transferable other than by will or the laws of descent and distribution. The options expire on December October 12, 2016.

The following table provides information on the value of each of our Named Executive Officer's unexercised options at December 31, 2007. None of our Named Executive Officers exercised any options during 2007.

Fiscal Year End Option Values

Name	Number of Securities Underlying Unexercised Options at Fiscal Year--End (#)	Value of Unexercised In-the Money Options at Fiscal Year-End($)
Paul D Hamm	3,487,500	- 0 -
Peter Marcum	1,000,000	- 0 -

 

Name and Address of Beneficial Owner		Amount and Nature of Beneficial Ownership			Percent of Fully-Diluted Shares Outstanding
Executive Officers and Directors
Paul D. Hamm (1)			3,522,560			5.4	%
Peter Marcum (2)			250,000			*	%
Harish Shah (3)			2,205,268			3.8	%
Jerry Dunlap (4)			20,000			*
Five Percent Shareholders
SovCap Equity Partners Ltd. (5)			16,670,876			28.7	%
Wilhagan Ventures LLC (6)			6,998,169			12.1	%
All Directors and Executive Officers as a Group (4 persons) (1)(2)(3)(4)			5,625,828			9.7	%

* Less than one percent.

(1) Consists of 35,060 shares of common stock owned directly by Mr. Hamm and 3,487,500 shares that Mr. Hamm has the right to acquire upon the exercise of currently exercisable stock options. Mr. Hamm may also be deemed to own 44,883 shares of Series A Preferred Stock owned by AlphaWest Capital Partners, of which Mr. Hamm is the sole member. However, the Series A Preferred Stock has not been converted to common stock, but may occur at a conversion ratio of 9.6 shares of common stock for each share of Series A Preferred Stock. Mr. Hamm, as a managing member of SovCap Investment Management Group, also may be deemed to beneficially own 592,294 shares of common stock and 2,280,013 shares of Series A preferred stock and approximately 2,800,000 shares related to convertible notes outstanding (based on conversion price of $0.22) beneficially owned by SovCap Investment Equity Partners, Ltd., due to the investment management relationship between SovCap Investment Management Group LLC and SovCap Equity Partners, Ltd. Mr. is a member of SovCap Investment Management Group. Mr. Hamm disclaims beneficial ownership of the securities held by SovCap Equity Partners, as neither he nor SovCap Investment Management Group has any interest in SovCap Equity Partners Ltd.

(2)

Consists of 250,000 shares that Mr. Marcum has the right to acquire upon the exercise of currently exercisable stock options. Mr. Marcum may also be deemed to own the 728,976 shares of Series A Preferred Stock owned by Wilhagan Ventures, of which Mr. Marcum is an owner. However, the Series A Preferred Stock has not been converted into common, but may occur at a conversion ratio of 9.6 shares of common stock for each share of Series A Preferred Stock. Mr. Marcum disclaims beneficial ownership of the securities held by Wilhagan Venture except to the extent of his proportionate interest therein.

(3)

Consists of 1,398,170 common shares, 73,656 preferred shares and 200,000 warrants owned by Mr. Shah, his wife or J&H Orlando Inc., which is owned by Mr. Shah. However, the Series A Preferred Stock has not been converted into common, but may occur at a conversion ratio of 9.6 shares of common stock for each share of Series A Preferred Stock.

(4)

Consists of 20,000 common shares owned by Mr. Dunlap. ISDN.Net, of which Mr. Dunlap is President and an owner, owns 74,000 shares of Series A Preferred Stock and 57,600 shares of common stock. However, the Series A Preferred Stock has not been converted into common stock, but may occur at a conversion ratio of 9.6 shares of common stock for each share of Series A Preferred Stock. Mr. Dunlap disclaims beneficial ownership of the securities owned by ISDN.Net except to the extent of his proportionate interest therein.

(5)

Consists of 592,294 shares of common stock and 1,466,519 shares of Series A preferred stock, which are convertible at a ratio of 9.6 common for each share of preferred, and approximately 2,000,000 shares related to convertible notes outstanding (based on conversion price of $0.25) beneficially owned by SovCap Investment Equity Partners, Ltd.

(6)	Consists of 728,976 shares of Series A Preferred Stock owned by Wilhagan Ventures, which are convertible at a ratio of 9.6 common for each share of preferred.

 

Equity Compensation Plan Information

 

We maintain the 2004 Directors, Officers and Consultants Stock Option, Stock Warrant and Stock Award Plan pursuant to which we may grant equity awards to eligible persons. The following table provides information as of December 31, 2006 about equity awards under this plan in 2007.

2004 Directors, Officers and Consultants Option Plan Vesting Schedule
Name	Effective Date	Term (yrs)	Shares	Options	Adjusted Amount	Strike Price	Adjusted Strike Price	Vested as of 12/31/06
Jay Kozhikotte	3/22/06	10		120,000	120,000	0.25	0.25	60,000
Jon Ellis	3/22/06	10		92,500	92,500	0.25	0.25	46,250
Jorge Tomassello	3/22/06	10		440,000	440,000	0.25	0.25	220,000
Mario Pino	3/22/06	10		440,000	440,000	0.25	0.25	220,000
Orlando Mastrapa	3/22/06	10		90,000	90,000	0.25	0.25	45,000
Paul D Hamm	3/22/06	10		1,450,000	1,450,000	0.25	0.25	725,000
John Sarko	3/22/06	10		25,000	25,000	0.25	0.25	12,500
Mashrua Inc.	3/30/06	na	1,800,000					1,800,000
Rossington Partners	3/30/06	na	1,800,000					1,800,000
Ronald Cole	3/30/06	na	1,800,000					1,800,000
Canouse	5/18/06	10		100,000	100,000	1.00	1.00	100,000
Paul D Hamm	10/2/06	15		2,000,000	2,000,000	0.42	0.42	2000000
Peter Marcum	10/12/06	15		1,000,000	1,000,000	0.37	0.37	250000
Karen Bairaktaris	10/12/06	15		300,000	300,000	0.37	0.37	75000
Bradley Bopp	10/12/06	15		150,000	150,000	0.37	0.37	37500
Mark Wilson	10/12/06	15		550,000	550,000	0.37	0.37	137500
Richard Eller	10/12/06	15		150,000	150,000	0.37	0.37	37500

 

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Agreements with Executive Officers

 

On October 1, 2005, our subsidiary Endavo entered into an executive management agreements with our President and CEO, Paul D Hamm,. Under this employment agreement, Mr. Hamm agreed to act as Endavo’s President and Chief Executive Officer. The agreement is for a term of three years. As compensation for services under the management agreement, Mr. Hamm is entitled to receive a base salary of $75,000 per year. If the company generates revenues of $104,166.67 ($1,250,000 annualized) in any given month, Mr. Hamm's salary will be increased to $120,000 per year. In connection with their engagement by the Company, Mr. Hamm is entitled to be issued incentive stock options to purchase 1,000,000 shares of our common stock. The options will vest in increments of approximately one-third on each of the 3 anniversaries of the agreement.

 

On August 8, 2006, WV Fiber entered into an executive management agreement with Peter Marcum. Under this agreement Mr Marcum agreed to act as WV Fiber’s Chief Executive Officer for a period of 3 years. As compensation for services under the management agreement, Mr Marcum is entitled to receive a base salary of $75,000 per year and received 1,000,000 15-year options priced at $0.37, the fair market value of our common stock at the time of issuance, which vest over a period of two years.

 

On August 8, 2006, WV Fiber entered into an executive management agreement with Mark Wilson. Under this agreement Mr Wilson agreed to act as WV Fiber’s Chief Operating Officer for a period of 3 years. As compensation for services under the management agreement, Mr Wilson is entitled to receive a base salary of $85,000 per year, plus sales commissions, and received 400,000 15-year options priced at $0.37, the fair market value of our common stock at the time of issuance, which vest over a period of two years.

 

On October 23, 2006, Integrated Media Holdings also entered into an executive management agreement with Mr. Hamm. Under this agreement, Mr, Hamm agreed to act as our President and Chief Executive Officer for a period of three years in exchange for 2,000,000 options priced at $0.42, which was fair market value of the company’s common stock at the time of issuance. Mr. Hamm has agreed to waive cash compensation under this agreement, but has the right to request cash compensation be established by the board, which will not be unreasonably withheld.

 

Other Relationships and Related Transactions

 

 

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Our board of directors, had prevously selected Maddox Unger Silberstein PLLC and its predecessor, Ronald N. Silberstein CPA PLLC, certified public accountants, as independent auditors to examine our annual consolidated financial statements for our fiscal year ending December 31, 2006 and 2007. The Company’s primary accountant, Maddox, Ungar, Silberstein, PLLC, was dismissed by the Company on March 19, 2008. The Company retained the services of the accounting firm of Malone & Bailey, PC on March 19, 2008 as their principal accountant to complete the examination of our consolidated financial statements for the fiscal year ending December 31, 2007.

 

We have paid or expect to pay the following fees toMaddox, Ungar Silberstein PPLC ( including the predecessor firm of Ronald N. Silberstein CPA PLLC) and Malone & Bailey, PC  for work performed in 2007and 2006 or attributable to the audits of our 2007 and 2006 consolidated financial statements:

	2006	2007
Audit Fees – Maddox Ungar Silberstein	$ 35,000	$13,456
Audit Fees Malone & Bailey		65,000
Audit-Related Fees	-	-
Tax Fees Maddox Ungar Silberstein	-	4,050
All Other Fees – Maddox Ungar Silberstein	1,855	13,600

 

In January 2003, the SEC released final rules to implement Title II of the Sarbanes-Oxley Act of 2003. The rules address auditor independence and have modified the proxy fee disclosure requirements. Audit fees include fees for services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to fees for an audit or review in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits, consents, and assistance with and review of documents filed with the SEC. Audit-related fees are assurance-related services that traditionally are performed by the independent accountant, such as employee benefit plan audits, due diligence related to mergers and acquisitions, internal control reviews, attest services that are not required by statute or regulation, and consultation concerning financial accounting and reporting standards.

 

The board of directors has reviewed the fees paid to Maddox, Ungar Silberstein PPLC (including the predecessor firm of Ronald N. Silberstein CPA PLLC) and Malone & Bailey, PC, and has considered whether the fees paid for non-audit services are compatible with maintaining their independence. The board of directors may additionally ratify certain de minimis services provided by the independent auditor without prior approval, as permitted by the Sarbanes-Oxley Act and rules of the SEC promulgated thereunder. We will disclose all such approvals, as applicable, in upcoming years.

 

 

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SIGNATURES

 

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

	INTEGRATED MEDIA HOLDINGS, INC.
Dated: April 15, 2008	By: /s/ RENE’ A. SCHENA
	Rene’ A. Schena, Chairman , Director, CEO & CFO

 

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

	INTEGRATED MEDIA HOLDINGS, INC.
Dated: April 15, 2008	By: /s/RENE’ A. SCHENA
	Rene’ A. Schena, Chairman , Director, CEO & CFO (Principal Executive Officer and acting Principal Financial and Accounting Officer)
Dated: April 15, 2008	By: /s/ TODD J. MARTINSKY
	Todd J. Martinsky, Director, Vice President & COO

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