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October 15, 2002

Written by Bob Meyer, Editor of BarterNews

ITEX Corporation Hits Profitability For Second Consecutive Quarter

Lewis "Spike" Humer, ITEX President and CEO, has led a significant turnaround for one of the largest retail exchanges in the world. The Sacramento headquartered corporation (OTCBB: ITEX) reported for the quarter ending July 31, 2002 net income of $102,000 compared to a net loss of $917,000 for the same period last year.

Earnings before interests, taxes, depreciation and amortization (EBITDA) for the quarter were $227,000, compared to a loss of $744,000 for the same period last year.

For the fiscal year ending July 31, 2002, ITEX incurred a net loss of $593,000 compared to a net loss of $3,151,000 for the prior fiscal year. (EBITDA for the year was $200,000 compared to a loss of $2,269,000 for the prior fiscal year.)

The increase in net earnings for the fourth quarter were primarily the result of corporate restructuring, initiated in November 2001. Management and support staff in the corporate and regional offices were reduced, the corporate trade department was eliminated, and several regional offices were sold to independent licensed brokers.

According to Humer, the company has remained on target with the implementation of the restructuring plan and is now entering a mode of growth and revitalization. Much of the anticipated revenues will be reinvested in marketing and support infrastructure.

"It is our expectation that we will derive significant revenues through the sale of franchises in the coming quarters, favorably effecting our bottomline performance in 2003," Humer explained.

Editor's Note: At the recent IRTA convention in Florida, ITEX Corporation was represented by CEO Spike Humer, CFO Mel Kerr, and Business Development VP John Castoro. Humer was elected to the IRTA Global Board of Directors. And Castoro participated admirably in "The Main Event," a sales presentation contest that had six of the best sales people in the commercial barter industry showcasing their personal techniques of presenting a barter opportunity to a business owner.

Sophisticated Contra-Marketing And Barter Deals Drive Latest James Bond Movie

The legendary secret service agent, James Bond, returns to the screen next month in Die Another Day. It will be the 20th installment of the most successful franchise in movie history.

Playing an important role in the overall financial success of the movie are very sophisticated contra-marketing and barter deals with Metro-Goldwyn-Mayer, the U.S. distributor of 007 and the Broccoli family, which has produced 19 Bond films since 1962.

Under these deals film-makers place products in movies, in return for promotion and advertising before and after release. Product promotion has become a regular feature of big budget movies to help offset costs, such as the almost $100 million to produce Die Another Day.

Ford Motor Company has persuaded the producers to reintroduce its Aston Martin sports car as Bond's favorite get-away vehicle. The car-maker also supplied Jaguars and Thunderbirds, and is promoting the film.

Sony has an agreement that all audio-visual appliances in the movie would bear its name. In exchange for numerous products, it will get the James Bond licensing rights in retail promotions.

British Airways offered a 747 jet for filming on the understanding that its first class cabin would be featured in the final cut. And Philips, the Dutch electronics and consumer products group, went even further by securing private screenings for top clients after placing its latest shaver in Bond's bathroom.

The massive Bond movie marketing machine, with an assist from barter (product placement in exchange for promotional and advertising efforts), is just getting under way!

Editor's Note: Product placement has been around for decades. In issue #4 of BarterNews we reported on game-show placements--where companies would stretch their promotional dollar by providing products (which were used as prizes on the shows), in exchange for 10-second commercials (the product would be shown and its benefits described) on top-rated game shows.

Nobel Prize Winner In Economics Reinforce What The Barter Industry Has Known For Decades

Two Americans have won this year's Nobel prize in economics for trying to explain idiosyncrasies in people's ways of making decisions. One of them, Professor Daniel Kahneman, a professor of psychology at Princeton University, made the economically puzzling discovery that most of his subjects would make a 20-minute trip to buy a calculator for $10 instead of $15, but would not make the same trip to buy a jacket for $120 instead of $125, saving the same $5.

Kahneman exclaimed at a news conference, "it took me several years to realize that the textbooks were wrong, and the people in my class were correct."

Such findings, that people will go out of their way, travel farther distances, to save money is no surprise to those individuals who use barter to generate greater cash flow.

Talk to any experienced member of a trade exchange and they will candidly tell you, "Yes, I've traveled a bit more than usual to buy on trade. The cash savings easily compensates for the inconvenience."

Furthermore, the larger the purchase (with trade dollars) the farther the trader will travel.

Running a trade exchange is a 24/7 effort. At every national convention trade exchange owners always talk and nod in agreement about the importance of educating their clients--making them aware of the many benefits of barter so they will be better traders.

Then they return home, and once again are inundated with simply not enough time in the day to get everything done...let along time to research and then write and layout an eye-appealing, interesting, educational and powerful marketing newsletter. One which points out and reinforces the benefits of your valuable services--each and every month...on a consistent and on-going basis.

As a trade exchange owner, you realize that having such a unique marketing tool to use for your existing members--as well as the hundreds of prospects in your marketplace--is really necessary in these competitive times. Yet who has the available time and ability to generate such a newsletter?

What's the answer? The highly effective Competitive Edge newsletter. For almost two decades now, unfailingly, each and every month CE has been published for your use only. It's the professionally written and designed, yet inexpensive answer for a busy, growing exchange like yours.

Check it here to see a sample copy.

As a newsletter subscriber, your exchange will also be listed here.

If you subscribe to CE this week, as a bonus you will receive 15 copies of the highly acclaimed 16-page special report, "Why and How Savvy Restaurateurs Trade." This incredibly effective hand-out shows a restaurant owner the value of joining your exchange.

Here And There. . .
  • A group known as the National Commission on Entrepreneurship plans to recommend a package of tax, regulatory and other measures designed to "expand and extend the entrepreneurial economy." It's expected that the recommendations, not yet in legislation form, will probably include tax breaks for both investors and start-up companies.

    Critics say that encouraging start-ups with legislation and assistance holds more risk than promise, in that today's entrepreneur starts a business out of burning desire, whereas those wooed from a job by a tax break have a different desire. Additionally, they contend, the ones who will get the benefits are likely to be those who have learned how to work the system, and are familiar with various government programs, rather than being driven by a burning desire.

  • The huge $500 billion airline currency (see September 10 Tuesday Report) will be getting stronger as United Airlines and US Airways begin to offer reciprocal deals to frequent fliers. Starting next month, members of either United Mileage Plus and US Airways Dividend Miles will be able to earn miles for travel in either program when flying on each other's airline...and redemption of those miles will begin next year. Other airlines will undoubtedly follow suit, making the airline currencies even more ubiquitous and valuable.

  • Time Inc. has closed Mutual Funds magazine, citing a long-term "difficult outlook" in the title's advertising market. And Forbes Inc. shuttered its Forbes ASAP magazine, the 10-year-old New Economy and technology magazine, also citing the weak advertising climate.

  • TAG Heuer, the Swiss sports-watch maker, has agreed to pay Tiger Woods $2 million annually for three years to promote its time piece...which sells for as much as $5,550. (Wood promoted Rolex's Tudor watch for the past five years.) TAG, which has annual sales of $320 million, spends close to 20% for its revenue on advertising and marketing.

  • Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of this issue (right hand corner) to sign up!

  • Interesting side note for sports buffs: Owners of major sport franchises often bemoan their operational expenses. "We just cannot make any money," they exclaim. (That's possible, although it might be more believable if they opened up their books one time.)

    However, one undeniable fact is that a franchise always appreciates in value. A recent example is the investor group that acquired the Boston Celtics for $18 million in 1983, and just sold the team for $360 million!

  • How many back issues of BarterNews have you read? How many do you have in your business library? Did you know that the cover of every issue ever published is found on our "Issues" page?

  • What's one major difference between Russia's growth and China's? Foreign direct investment (setting up manufacturing facilities in a country or buying local industrial assets) in Russia stood at $1.9 billion in the first half of this year--25% less than a year earlier. China meanwhile, attracted nearly $47 billion last year.

  • The Department of Commerce does an amazing job of counting things in the United States. Recently they reported that Americans' propensity to buy is growing steadily. For example, in 1992 we were a nation of 252.5 million consumers and spent $7,304 per person on retail purchases.

    By 2000, our population had grown to just less than 274 million, but now, each person was spending $11,254--a 54% increase! (No doubt, some price inflation is at play in driving those numbers, but the relatively low inflation of the past decade can only partially account for that growth.)

  • Hotelier's expect recovery, according to the PKF Consulting hospitality research group in Atlanta, as business travelers are expected to hit the road again. And hotels will see demand outstripping supply. All bets are off, however, if we go to war with Iraq.

This Issue's Glossary of Terms:

Free and Clear:
A property that has no indebtedness.

The expiration date of a due bill or scrip.

We welcome your comments, questions, and observations.
? Copyright BarterNews 2003. Redistribution of BarterNews content expressly prohibited without the prior written permission of BarterNews.