IMS Third Quarter Results
International Monetary Systems, Ltd. (OTCBB: ITNM), a worldwide leader in business-to-business barter services, reports its financial results for the third quarter and nine months ended September 30, 2010.
Financial Highlights Include:
-- Revenue increased 1.2% compared to the third quarter of 2009.
-- Year-to-date employee costs were reduced by 1.7% compared to the first
nine months of 2009.
-- Total liabilities have been reduced by more than $900,000 since
December 31, 2009.
-- Absent extraordinary legal fees and the cost of settling income tax
audits, year-to-date net income would have been approximately $350,000.
For the third quarter ended September 30, 2010 International Monetary Systems generated gross revenues of $3,760,487, an increase of $46,040 or 1.2%, compared to the third quarter of 2009. Much of this increase in gross revenue resulted from a significant transaction in its corporate barter division. The Company continues to develop and grow this division, with the anticipation that its corporate barter division will become an increasingly important part of its business model. Operating expenses in the quarter were $3,318,451, an increase of $149,325 or 4.7% compared to the third quarter of 2009. This increase is primarily due to increased legal and investor relations costs. The net operating profit was $197,278 for the quarter, compared to a net operating profit of $357,666 in the third quarter of 2009. After adjusting for interest and income taxes, the net loss for the current period of $37,642 compared to net income of $214,180 in the third quarter of 2009.
EBITDA (Earnings before interest, taxes, depreciation and amortization) for the quarters ended September 30, 2010 and 2009 was $602,901 for the third quarter 2010 compared with $748,792 in the prior year’s third quarter.
The following table details our EBITDA calculation:
September 30, September 30,
2010 2009
------------- --------------
Net income (loss) $ (37,642) $ 214,180
Interest expense 52,272 55,345
Income tax expense 180,436 88,224
Depreciation 76,811 55,095
Amortization 331,024 335,948
------------- --------------
EBITDA $ 602,901 $ 748,792
============= ==============
For the nine months ended September 30, 2010, revenue was $10,868,980 compared with $10,925,781 in the year-ago nine-month period. Much of the decrease was the result of a slower than average first quarter of the year. Operating expenses were $9,753,011, an increase of $98,037 or 1.0% compared to the first nine months of 2009. Included in operating results were non-recurring legal and accounting fees of approximately $400,000. Excluding these non-recurring fees, operating results would have improved approximately $300,000 or 3.1%. The extraordinary professional fees resulted primarily from the Company’s involvement in three separate lawsuits, two of which are now settled, and two tax audits, both of which are settled. The largest decreases in other categories versus 2009 are primarily due to efficiencies realized in personnel and selling costs. EBITDA for the nine month period ending September 30, 2010 was $1,591,573 compared with $1,921,768 in the year-ago nine-month period.
The following table details our EBITDA calculation:
Nine Months Ended
----------------------------
September 30, September 30,
2010 2009
------------- --------------
Net income (loss) $ (135,688) $ 339,762
Interest expense 154,173 180,335
Income tax expense 354,235 185,343
Depreciation 222,837 208,483
Amortization 996,016 1,007,845
------------- --------------
EBITDA $ 1,591,573 $ 1,921,768
============= ==============
Donald F. Mardak, Chief Executive Officer of International Monetary Systems, said, “During the quarter, we continued to build our corporate barter division, and we expect it to become an increasingly larger part of our business as we devote more of our efforts toward promoting this division. We also have been successful this quarter in recruiting new members throughout the country, and expect to see the impact of our new, active members on our revenues, in the quarters ahead. On the operational front, our new proprietary process management software was launched during the beginning of the quarter, and it is providing us with flexibility, customizability, in-house support, and cost savings,” Mr. Mardak added.
He concluded, “With the upcoming holiday season, we anticipate an increase in the popularity of our barter system, as our members seek ways to take full advantage of the benefits of the IMS platform. We look forward to the increased activity and participation of our new membership base.”
Use of Non-GAAP Measures
The company feels that EBITDA (Earnings before interest, taxes, depreciation and amortization) is an important measure of operations as it shows the contribution of ongoing operations, without the significant non-cash expenses associated with acquiring additional markets.
About International Monetary Systems
Founded in 1985, International Monetary Systems (IMS) serves 23,000 cardholders in 50 North American markets. Based in New Berlin, Wisconsin, and managed by seasoned industry veterans, IMS is one of the largest publicly traded barter companies in the world. The company’s proprietary transaction clearing software enables businesses and individuals to trade goods and services online using an electronic currency known as trade dollars. The IMS network allows companies to create cost savings and connect to new customers by incorporating barter opportunities in their business models. Further information can be obtained at the company’s Web site at: www.imsbarter.com.
Forward-Looking Statement
This press release contains forward-looking statements that involve risks and uncertainties concerning our expected performance as described without limitation in comments about the company’s performance 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 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 November 12, 2010, and International Monetary Systems, Ltd. undertakes no duty to update this information.
FINANCIAL TABLES FOLLOW
INTERNATIONAL MONETARY SYSTEMS, LTD.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2010 2009
(UNAUDITED)
-------------- --------------
ASSETS
Current assets
Cash $ 545,427 $ 894,396
Restricted cash 124,293 149,682
Marketable securities 139,368 115,110
Accounts receivable, net 939,612 1,201,403
Refundable income taxes -- 133,000
Earned trade account 723,482 33,561
Prepaid expenses 311,382 103,027
-------------- --------------
Total current assets 2,783,564 2,630,179
-------------- --------------
Property and equipment, net 711,424 921,473
-------------- --------------
Other assets
Membership lists, net 7,157,247 8,153,093
Goodwill 3,435,479 3,435,479
Assets held for investment 99,298 99,298
Investment in real estate 26,000 26,000
Cash surrender value 53,234 49,361
-------------- --------------
Total other assets 10,771,258 11,763,231
-------------- --------------
Total assets $ 14,266,246 $ 15,314,883
============== ==============
INTERNATIONAL MONETARY SYSTEMS, LTD.
CONSOLIDATED BALANCE SHEETS
Continued
September 30, December 31,
2010 2009
(UNAUDITED)
------------ ------------
LIABILITIES
Current liabilities
Accounts payable and accrued expenses $ 670,938 $ 867,469
Income taxes payable 483,329 422,995
Credit lines 234,984 246,385
Current portion of notes payable 67,108 236,997
Current portion of convertible notes
payable 200,464 299,226
Current portion of common stock subject to
guarantee 640,000 706,500
Current portion of convertible notes
payable, related parties 100,000 50,000
------------ ------------
Total current liabilities 2,396,823 2,829,572
------------ ------------
Long-term liabilities
Notes payable, less current portion 360,000 100,000
Convertible notes payable, less current
portion 1,151,698 1,423,445
Common stock subject to guarantee, less
current portion 396,000 620,000
Convertible notes payable, related parties,
less current portion 20,000 50,000
Deferred compensation 286,250 275,000
Deferred income taxes 1,418,936 1,679,565
------------ ------------
Total long-term liabilities 3,632,884 4,148,010
------------ ------------
Total liabilities 6,029,707 6,977,582
------------ ------------
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value
20,000,000 authorized, 0 outstanding - -
Common stock, $.0001 par value 280,000,000
authorized 10,544,800 and 10,343,467
issued and outstanding September 30, 2010
and December 31, 2009 respectively 1,053 1,030
Paid in capital 13,324,932 12,772,904
Treasury stock, 851,050 and 646,095
shares, respectively (2,951,496) (2,428,422)
Accumulated other comprehensive loss (4,632) (10,581)
Accumulated deficit (2,133,318) (1,997,630)
------------ ------------
Total stockholders' equity 8,236,539 8,337,301
------------ ------------
Total liabilities and stockholders'
equity $ 14,266,246 $ 15,314,883
============ ============
INTERNATIONAL MONETARY SYSTEMS, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ------------------------
2010 2009 2010 2009
---------- ---------- ----------- -----------
Gross revenue $3,760,487 $3,714,447 $10,868,980 $10,925,781
---------- ---------- ----------- -----------
Cost of revenues 244,758 187,655 741,136 565,946
---------- ---------- ----------- -----------
Gross profit 3,515,729 3,526,792 10,127,844 10,359,835
---------- ---------- ----------- -----------
Operating Expenses
Employee costs 1,918,628 1,773,103 5,660,553 5,758,093
General and
administrative 624,857 431,632 1,821,018 1,282,224
Occupancy 293,682 287,037 837,110 908,189
Selling 73,449 286,311 215,477 490,140
Depreciation 76,811 55,095 222,837 208,483
Amortization 331,024 335,948 996,016 1,007,845
---------- ---------- ----------- -----------
Total operating
expenses 3,318,451 3,169,126 9,753,011 9,654,974
---------- ---------- ----------- -----------
Income from operations 197,278 357,666 374,833 704,861
---------- ---------- ----------- -----------
Other income (expense)
Interest income 62 83 161 579
Loss on disposal of
assets (2,274) - (2,274) -
Interest expense (52,272) (55,345) (154,173) (180,335)
---------- ---------- ----------- -----------
Total other income
(expense) (54,484) (55,262) (156,286) (179,756)
---------- ---------- ----------- -----------
Income before income
taxes 142,794 302,404 218,547 525,105
Income tax expense (180,436) (88,224) (354,235) (185,343)
---------- ---------- ----------- -----------
Net income (loss) $ (37,642) $ 214,180 $ (135,688) $ 339,762
========== ========== =========== ===========
Net income (loss) per
common share - basic $ (0.00) $ 0.02 $ (0.01) $ 0.03
- dilutive $ (0.00) $ 0.02 $ (0.01) $ 0.03
Weighted average common
shares outstanding -
basic 10,529,191 9,715,606 10,434,718 9,740,880
- dilutive 10,529,191 9,715,606 10,434,718 9,740,880
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