ITEX Announces Results for First Quarter of Fiscal Year 2011

Dec 14, 2010, 06:00 ET from ITEX Corporation

BELLEVUE, Wash., Dec. 14, 2010 /PRNewswire-FirstCall/ -- ITEX Corporation (OTC Bulletin Board: ITEX), The Membership Trading Community(SM), a leading marketplace for cashless business transactions in North America, today filed its Form 10-Q with the Securities and Exchange Commission and announced results for its fiscal 2011 first quarter ended October 31, 2010.

"Revenue increased 5 percent in the first quarter of fiscal 2011 compared to the same period last year," said Steven White, Chairman and CEO.  "The increase in revenue is largely attributed to our web services initiative with our core business revenues remaining steady."

Mr. White continued, "Income from operations of $292,000 decreased compared to the first quarter of fiscal 2010, primarily due to an increase in legal fees for current litigation and the recent proxy contest. Putting aside the increase in legal expenses, we are pleased with this quarter's results.  Despite the ongoing difficult economic conditions, our company continues to perform well."

First Quarter 2010 Highlights

  • Revenue increased 5 percent to $4.112 million compared to $3.924 million in the same period last year;
  • Income from operations of $292,000 compared to $340,000 in the same period last year;
  • Net income of $203,000 compared to $277,000 in the same period last year;
  • Cash at end of period increased to $5.399 million from $5.169 million on July 31, 2010;
  • Stockholder equity increased to $14.993 million from $14.869 million on July 31, 2010;
  • Paid a $0.025 per share quarterly cash dividend in the first quarter;
  • Purchased the member list of Genesis International, LTD of Greenwich, CT, consisting of approximately 160 members.

Subsequent Event

  • In November, we entered into an agreement with U.S. Bank to increase the maximum loan amount under our revolving credit facility from $2.5 million to $3 million.
  • Announced a $0.04 per share quarterly cash dividend for shareholders of record on December 10, 2010.

ITEX CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)

October 31, 2010

July 31, 2010

(unaudited)

ASSETS

Current assets:

    Cash and cash equivalents

$                  5,399

$                5,169

    Accounts receivable, net of allowance of $421 and $349

773

859

    Prepaid expenses

102

118

    Loans and advances

39

55

    Prepaid advertising credits

157

157

    Deferred tax asset

1,018

1,018

    Notes receivable - corporate office sales

113

125

    Other current assets

19

24

Total current assets

7,620

7,525

Property and equipment, net of accumulated depreciation of $420 and $380

148

169

Intangible assets, net of amortization of $2,329 and $2,205

941

994

Deferred tax asset, net of current portion

4,880

5,000

Notes receivable - corporate office sales, net of current portion

531

480

Other long-term assets

88

188

Goodwill

3,282

3,282

              Total assets

$                17,490

$              17,638

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$                     206

$                   124

Commissions payable to brokers

316

661

Accrued commissions to brokers

898

789

Accrued expenses

652

705

Deferred revenue

117

133

Advance payments

135

167

Total current liabilities

2,324

2,579

Long-term liabilities:

      Other long-term liabilities

173

190

Total Liabilities

2,497

2,769

Commitments and contingencies

Stockholders’ equity:

Common stock, $0.01 par value; 9,000 shares authorized; 3,579 and 3,576 shares issued and outstanding, respectively

36

36

Additional paid-in capital

29,149

29,138

Accumulated deficit

(14,192)

(14,305)

Total stockholders' equity

14,993

14,869

               Total liabilities and stockholders’ equity

$                17,490

$              17,638

ITEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts)

Three Months ended October 31

(unaudited)

2010

2009

Revenue

       Marketplace revenue and other revenue

$               4,112

$          3,924

Cost and expenses:

Costs of marketplace revenue

2,479

2,549

Corporate salaries, wages and employee benefits

463

411

Selling, general and administrative

724

454

Depreciation and amortization

154

170

3,820

3,584

Income from operations

292

340

Other income/(expense):

      Interest, net

10

11

      Other expense, net

34

99

44

110

Income before income taxes

336

450

      Provision for income taxes

133

173

Net income

$                  203

$             277

Net income per common share:

Basic

$                 0.06

$            0.08

Diluted

$                 0.06

$            0.08

Weighted average shares outstanding:

Basic

3,578

3,571

Diluted

3,587

3,571

About ITEX

ITEX, The Membership Trading Community(SM), is a thriving network of participating member businesses.  Members increase sales through an exclusive distribution channel managed by franchisees, licensees and corporate-owned locations, by utilizing ITEX dollars to exchange goods and services.  ITEX is powered by ITEX Payment Systems, the leading payment technology platform for processing cashless business transactions.  ITEX is headquartered in Bellevue, WA.  For more information, please visit ITEX's website at www.itex.com.  We routinely post important information on the investor relations portion of our website.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties concerning our expected performance (as described without limitation in the quotations from current management in this release) and comments within the safe harbor provisions established under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of our future performance. We believe that these potential risks and uncertainties include, without limitation:  our revenue growth and success being tied to the operations of our broker network; our future revenue growth remaining uncertain; our brokers taking actions that could harm our business or our reputation; our failure to deal effectively with member disputes; our business being subject to online security risks; unplanned system interruptions or system failures; claims and lawsuits against us that may result in adverse outcomes; and the effect of changes in the overall economy and in technology.  Statements in this release should be evaluated in light of these factors.  These risk factors and other important factors that could affect our business and financial results are discussed in our periodic reports and filings with the Securities and Exchange Commission, including our Forms 10-K and Forms 10-Q, which are available at www.sec.gov. ITEX undertakes no duty to update or revise any forward-looking statements.

For more information, please visit www.itex.com

SOURCE ITEX Corporation



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