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White Reveals Value Of Intagio Acquisition

On August 1, 2007, ITEX announced it had acquired the trade exchange marketplace previously operated by Intagio Corporation. The final purchase price was $3,137,000, including certain accounts receivable.

In addition, the purchase agreement encompassed a revenue based earn-out payment up to $150,000, based on certain performance requirements. After assimilating the new members and identifying overlapping accounts, ITEX summarized the acquisition results:

  • 2,800 new member accounts;

  • Total business membership of more than 24,000;

  • July cash revenue exclusively from the new Intagio members of $125,000;

  • Additional monthly operational net income estimated to be approximately $50,000, excluding member list amortization;

  • New overhead estimated to be $75,000 per month, including staffing costs, office leases, and general costs related to the acquired members.

�We are pleased to see the current metrics of this acquisition holding up very strongly,� declared ITEX Chairman and CEO Steven White. �The numbers stated above are reported net of estimated allowances for inactive accounts and estimated reserves for uncollectible accounts.

�There are several valuation methods we consider when determining acquisition price, including member cost, cash flow, opportunity costs, future revenue and net income. We place a high emphasis on operational income and cash flows from operations, which are both expected to be positively impacted by this transaction.�

White continued, �The purchase price for this acquisition was analyzed differently from the Business Exchange (BXI) purchase two years ago. The primary difference is that we do not share revenue with independently licensed offices. Furthermore, we have the option to retain or resell the new offices to existing or future franchisees, allowing us more opportunities to capitalize on the transaction.�

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