IMS Third-Quarter Report Reveals Revenue & Cash Flow Increases

International Monetary Systems (OTCBB:INLM), a worldwide leader in business-to-business barter services, has filed its third-quarter report on form 10-QSB.

In the third quarter of 2007 IMS continued implementing its �Best Practices� program. As an integral part of this program, the company made substantial investments in infrastructure by acquiring new state-of-the-art equipment and hiring additional skilled employees.

Some of the events and expenditures during the first nine months of 2007 were:

�         Spending more than $500,000 on new computers, monitors, printers, servers, and other equipment to enhance the efficiency of its trade brokering staff.

�         Acquiring the source code for TradeWorks�IMS� proprietary clearing system�and migrating the entire program from its original RPGII format into a more current .NET technology.

�         Upgrading the IMSbarter.com web site in the process of creating a fully interactive online marketplace.

�         Hiring additional technicians to service the new equipment, to convert and enhance the software, and to develop the web site. The company has expanded its IT department to three employees, with plans to add a fourth. 

�         Enhancing sales and brokering departments by hiring a full-time national sales trainer and a full-time national broker trainer.

�         Doubling the size of its Columbus (OH) office for the purpose of expanding its telemarketing and telesales staff. There are now 14 people working to support the outside sales force.

�         Hiring a full-time marketing and public relations director, who has helped advance the new IMS web site and is designing a campaign to develop and strengthen the IMS brand in the marketplace. A resulting comprehensive PR program is scheduled for launch in the first quarter of 2008.

In continuing its commitment to the �Best Practices� program, the firm further expanded its outside sales force which enrolled nearly 900 new clients during the quarter.

Though these investments in infrastructure affect the bottom line, IMS management believes that it is in the company�s best interest to spend funds now on strategic initiatives that will produce significant future growth.

In the third quarter of 2007, IMS processed more than $25 million in trade transactions (measured in sales only) which generated gross revenues of $3,565,885, compared to revenues of $1,687,573 in the third quarter of 2006, an increase of 111%.

The higher revenue is a result of two acquisitions completed in September of 2006 and January of 2007, along with continuing internal growth. The company also converted $300,000 of debt to equity.

Total expenses increased 106%, from $1,803,266 in the third quarter of 2006 to $3,716,140 in the current period. The increased expenses are attributable to the costs of integrating the acquisitions described above, higher non-cash charges for amortization of membership lists, and the hiring of additional sales staff, trainers, public relations staff, and IT specialists.

In spite of the record revenues, the company had a third quarter net loss of $150,255 before the income tax benefit, compared to a net loss before taxes of $115,693 in the same period of 2006. After adding interest expense and making the adjustment for the tax benefit, the net loss for the current quarter was $47,406 compared to $120,198 last year.

The deferred tax benefit represents the adjustment to the deferred tax liability, which arises from the differences in basis of acquired membership lists for financial reporting versus tax reporting.

Year-to-date gross revenue ending September 30 totaled $10,298,396, compared to $5,240,400 for the same period in 2006, an increase of 97%. Total year-to-date expenses were $10,573,326, compared to $5,241,215 for the corresponding period in 2006, an increase of 102%.

Total year-to-date net loss, before the income tax benefit, was $522,737, compared to a before taxes loss of $181,369 for the same period in 2006. After adjustments for the tax benefit (expense), the losses were $261,594 and $192,369, respectively.

Operating profit or EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $827,295, an increase of 37% over the $602,425 reported for the same period last year.

Through September 30, 2007, the company had positive cash flow provided by operating activities of $976,872, compared to $475,863 for the same period of 2006, an increase of 105%.

International Monetary Systems� total assets increased to $18,630,615 from $15,203,887 at the end of 2006, with stockholders� equity increasing to $9,045,350 from $7,779,357.

 For more information go to www.internationalmonetary.com.