(An open letter to the stock-holders)
This past year has certainly strained many companies throughout the
world and I am pleased to report that ITEX has remained focused,
executed well on its core business, implemented several strategic
investments and experienced growth during a very difficult economic
time.
As in my past letters to you, I can once again boast that our
company is moving in a positive direction. In particular, our
financial condition continued to improve over the past year and has
never been stronger. We increased revenues when many companies in
the U.S. experienced declines; we retired all long-term debt when
many businesses have become more burdened with debt; and we
increased cash and assets when many saw their balance sheets
contract.
We ended the fiscal year with more than $2.5 million in cash and
almost $2.9 million in operational cash flow. Our operational income
increased in each of the four quarters of last year, from $22,000 in
the first quarter to $426,000 in the fourth quarter. Our credit
facility with U.S. Bank recently increased from $1.5 million to $2.5
million, with an exceptional 2.25% interest rate (adjustable),
displaying the bank�s confidence in us.
We attribute our financial success in part to our disciplined,
conservative and astute management of our finances, our ability to
run the company with a lean, smart and dedicated staff, and our
understanding that in order make forward leaps, we need to follow
our entrepreneurial drive and fearlessly pursue opportunities.
The four acquisitions we have undertaken since August 2005 were
calculated risks that have made us a larger and stronger company.
Our strategic initiatives, commenced in the past two years, have
been gaining momentum; adding revenues, cash flow, more brand
recognition and strengthening our position as the de facto industry
leader for barter and trading communities.
During fiscal 2009, we continued to allocate resources to personnel,
franchisee support and development, as well as technology; and
toward a number of strategic initiatives such as developing our Web
Services program, executing a national strategic partnership
strategy, launching ITEX Media Services, and beginning a national
advertisement campaign in premier business publications. Many of the
expenses incurred were for start up and one-time costs. However, we
do expect to continue to further invest in some of these initiatives
in 2010.
As unemployment and under-employment continues to impact more than
17 million nationwide, we believe many of these individuals will
take the future into their own hands. As entrepreneurs they will
start their own businesses and search for innovative ways to
generate sales. ITEX continues to be a perfect solution for these
new business owners.
We work very hard to create value for our stockholders. Since 2005,
stockholder equity has increased more than 182%. Though we are
pleased with this result, we understand for many stockholders the
most important metric is share price.
As a smaller public company, we continually seek to balance our
desire to create value for stockholders with the need to use our
resources wisely. We are cognizant of the burdensome costs of being
a public company. We seek to establish effective internal control
over our financial reporting in a cost-effective manner.
But primarily, we seek to emphasize corporate performance. Focusing
on our core customers, ITEX members and franchisees, and managing
the resources our customers generate is paramount to me and the
corporate staff. While corporate governance ratings are increasingly
important to investors, having the highest corporate governance
quotient or the most rigorous internal control system is not my
primary goal, particularly if such efforts impact our service to our
customers or significantly deplete our resources.
Our corporate headquarters employ 20 dedicated individuals who are
responsible for strategy and long term planning, branding,
technology, accounting, legal, investor relations, processing
transactions for the trading community, and customer relations. For
20 individuals to manage 90 offices (who collectively employ some
400 individuals), generating $16.5 million in annual revenue spreads
everyone quite thin. We have no time to waste and expect
extraordinary performance from everyone on our team. My priorities
for running the organization are:
�
Increase the value proposition to our members by making
participation in the ITEX Marketplace cost effective, easy and
profitable;
�
Provide exceptional service to our franchisees and pay an equitable
revenue share to help them succeed;
�
Fairly compensate our employees and provide a secure, innovative
work environment that provides opportunity for professional
advancement;
�
Increase stockholder value by improving operating performance,
building net assets and long-term potential.
For more information on ITEX go to
www.itex.com.
