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11/18/2008

IMS Future Looks Bright

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

During the quarter ended September 30, 2008, IMS processed more than $27 million in trade transactions compared to over $26 million in the third quarter of 2007, an increase of more than 4.5%. The trade volume generated gross revenues of $3,537,840, compared to revenue of $3,563,578 in the third quarter of last year, a slight decrease of 0.7%.

Total expenses decreased 5.5%, from $3,716,140 in the third quarter of 2007 to $3,511,054 in the current period. The decrease is the result of its efforts to consolidate administrative operations, and to streamline sales and marketing costs by more quickly identifying under-performing elements.

Despite slightly lower revenues, the net income from operations was $26,786, compared to a loss from operations of $152,562 during the same period last year. After adjusting for interest expense and the income tax benefit, the net loss for the current period was $121,516, a decrease of 9.5% over the loss of $134,232 in the third quarter of 2007.

During the nine months ended September 30, 2008, International Monetary Systems generated gross revenue of $10,596,113 compared to $10,285,250 last year, an increase of 3.0%.

Total expenses increased from $10,573,326 in the first nine months of 2007 to $11,039,616 for the same period in 2008, an increase of 4.4%. The net loss from operations was $443,503 for the first nine months of 2008, compared to a loss of $288,076 for the same period last year. Most of the 2008 operating loss was generated in the first two quarters of this 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.

Operating profit or EBITDA � earnings before interest, taxes, depreciation and amortization � totaled $791,304, a decrease of 4.35% from the $827,295 reported for the same period of 2007. The lower total for 2008 is primarily the result of greater non-cash expenses such as depreciation and amortization. EBITDA is calculated as follows:

 

Nine Months Ended

September 30, 2008

Nine Months Ended

September 30, 2007

Net loss

$ (416,616)

$ (261,594)

Interest expense

202,485

271,426

Income tax (benefit)

(219,718)

(261,143)

Depreciation

222,192

180,228

Amortization

1,002,961

898,378

 

$ 791,304

$ 827,295

Liquidity, Sources Of Capital, Lines Of Credit

On September 30, 2008, current assets were $3,258,814, and total assets were $18,103,362. Current liabilities were $3,399,105 and total liabilities were $9,073,204, resulting in total shareholder equity of $9,030,158.

At the end of the third quarter of 2008, the unrestricted cash balance was $408,221 compared to $812,365 on December 31, 2007. Though operations and financing activities generated $310,428 and $61,511, respectively, the company used $765,834 in cash for investing activities: $495,000 for business acquisitions, more than $70,000 for equipment purchases, nearly $11,000 for marketable securities and life insurance, and nearly $192,000 to fund restricted cash. Cash also decreased due to a foreign currency translation adjustment of $10,249 from its Canadian operation.

In March 2008, IMS drew $210,000 on a line of credit of which $100,000 was used as the down payment on the accelerated acquisition of New York Commerce Group. In June of 2008, $50,000 was paid to reduce the line of credit. In total the company has borrowed net $309,000 against lines of credit in 2008.

CEO, Don Mardak, asserted, �Considering the present economic environment, we are quite pleased with our company�s third-quarter results. Earlier this year, we made a commitment to reducing expenses, and this process will continue into the fourth quarter of 2008 and beyond. As a result, we believe that IMS has turned the corner toward ongoing profitability.�

For more information visit www.imsbarter.com



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