ITEX Announces Results for Third Quarter of Fiscal 2010

Income from Operations Increases 22%

Earnings per share of $0.08

Jun 09, 2010, 15:00 ET from ITEX Corporation

BELLEVUE, Wash., June 9 /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 2010 third quarter ended April 30, 2010.  The financial statements for all periods presented in this press release have been adjusted to reflect the 1:5 reverse stock split effective May 3, 2010.

"We executed quite well in the third quarter and I'm pleased to recognize gains in revenue and income from operations compared to last year's third quarter," said Steven White, Chairman and CEO.  "Revenue growth was primarily due to our media and web services initiatives, which also provided the benefit of additional transaction opportunities for our members.  Income from operations increased as a result of revenue growth and a reduction in depreciation and amortization expense.  Our increased cash position reflected our operational income."

Mr. White continued, "Revenue from our core business remains steady and our cash flow strong. With our stable financial footing, we will continue to focus our efforts on organic growth, enhancing our internet and web services platforms and creating more stockholder value.  We are pleased to distribute our first ever quarterly dividend on June 30, 2010, to stockholders of record as of close of business on June 15, 2010."

Third Quarter 2010 Highlights

  • Income from operations increased to $421,000 from $344,000 in the same period last year;
  • Revenue increased to $4,158,000 from $3,981,000 in the same period last year;
  • Net income increased to $269,000 from $224,000 in the same period last year;
  • Earnings per share increased to $0.08 from $0.06 in the same period last year;
  • Cash at end of period increased to $4,193,000 from $2,557,000 on July 31, 2009;
  • Stockholder equity increased to $14,722,000 from $13,981,000 on July 31, 2009;
  • Broker incentive expense of $50,000 was recorded in the quarter for a computer upgrade initiative planned in conjunction with the upcoming launch of Office 2010.  $79,000 was expensed for the same incentive in the second quarter of 2010, with a total expense of $129,000 in the nine-months ended 2010;
  • Repurchased and retired 4,667 common shares.

Subsequent Events

  • Effective as of May 3, 2010 ("Effective Date"), the Company amended its Articles of Incorporation to effect a one for five reverse stock split of its common stock   Every five shares of ITEX's common stock issued and outstanding immediately prior to the Effective Date were automatically combined into one issued and outstanding share. Stockholders who were entitled to fractional shares received a cash payment in lieu of receiving fractional shares.  The number of shares of ITEX's common stock issued and outstanding was reduced from 18,027,914 shares to approximately 3,605,307 shares.
  • On May 11, 2010, the Board of Directors declared a cash dividend in the amount of $0.025 per share, payable on June 30, 2010 to stockholders of record as of the close of business on June 15, 2010.

ITEX Corporation's report on Form 10-Q can be found at www.sec.gov.

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.

ITEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

April 30, 2010

July 31, 2009

(unaudited)

ASSETS

Current assets:

    Cash and cash equivalents

$                 4,193

$               2,557

    Accounts receivable, net of allowance of $317 and $351

1,216

895

    Prepaid expenses

185

82

    Loans and advances

61

57

    Prepaid advertising credits

157

157

    Deferred tax asset

739

739

    Notes receivable - corporate office sales

139

242

    Other current assets

34

19

Total current assets

6,724

4,748

Property and equipment, net of accumulated depreciation of $393 and $280

146

247

Intangible assets, net of amortization of $1,956 and $1,703

1,118

1,572

Deferred tax asset, net of current portion

5,394

5,798

Notes receivable - corporate office sales, net of current portion

490

624

Other long-term assets

277

354

Goodwill

3,282

3,318

              Total assets

$               17,431

$             16,661

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$                    259

$                    98

Commissions payable to brokers

-

691

Accrued commissions to brokers

1,270

828

Accrued expenses

653

521

Deferred revenue

137

144

Advance payments

184

138

Total current liabilities

2,503

2,420

Long-term liabilities:

      Other long-term liabilities

206

260

Total Liabilities

2,709

2,680

Commitments and contingencies

Stockholders’ equity:

Common stock, $0.01 par value; 9,000 shares authorized; 3,573 and 3,571 shares issued and outstanding, respectively

36

36

Additional paid-in capital

29,128

29,105

Accumulated deficit

(14,442)

(15,160)

Total stockholders' equity

14,722

13,981

               Total liabilities and stockholders’ equity

$               17,431

$             16,661

ITEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

Three Months ended April 30

2010

(unaudited)

2009

(unaudited)

Revenue

Marketplace revenue and other revenue

$               4,158

$          3,981

Cost and expenses

Costs of marketplace revenue

2,618

2,530

Corporate salaries, wages and employee benefits

489

457

Selling, general and administrative

471

458

Depreciation and amortization

159

192

3,737

3,637

Income from operations

421

344

Other income

Net interest

10

12

Income before income taxes

431

356

Provision for income taxes

162

132

Net income

$                  269

$             224

Net income per common share

Basic

$                 0.08

$            0.06

Diluted

$                 0.08

$            0.06

Weighted average shares outstanding

Basic

3,575

3,558

Diluted

3,581

3,581

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:  the continuing development of successful marketing strategies for our concepts; our ability to increase revenues and sustain profitability; the availability of adequate working capital; our dependence both on key personnel and our franchise network; 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. All information set forth in this release is as of June 9, 2010, and ITEX undertakes no duty to update this information.

For more information, please visit www.itex.com

SOURCE ITEX Corporation



RELATED LINKS

http://www.itex.com