ITEX (ITEX) 10-Q 11 Dec 15 2016 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information	3 Months Ended
	Oct. 31, 2015shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2015
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Entity Registrant Name	ITEX CORP
Entity Central Index Key	860,518
Current Fiscal Year End Date	--07-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	ITEX
Entity Common Stock, Shares Outstanding	2,084,869

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Oct. 31, 2015	Jul. 31, 2015
Current assets:
Cash and cash equivalents	$ 2,472	$ 2,047
Accounts receivable, net of allowance of $420 and $439	578	398
Prepaid expenses	76	174
Loans and advances	15	8
Deferred tax asset, net of allowance of $15 and $15	554	554
Notes receivable	281	291
Other current assets	14	11
Total current assets	3,990	3,483
Property and equipment, net of accumulated depreciation of $404 and $397	31	38
Goodwill	3,191	3,191
Deferred tax asset, net of allowance of $84 and $84 and net of current portion	3,043	3,124
Intangible assets, net of accumulated amortization of $3,339 and $3,325	88	102
Notes receivable - net of current portion	735	792
Other long-term assets	7	10
Total assets	11,085	10,740
Current liabilities:
Accounts and other expenses payable	64	50
Commissions payable to brokers	227	259
Accrued commissions to brokers	808	659
Accrued expenses	253	261
Deferred revenue	23	27
Advance payments	126	112
Total current liabilities	1,501	1,368
Total Liabilities	$ 1,501	$ 1,368
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 9,000 shares authorized; 1,908 shares and 1,890 shares issued and outstanding, respectively	$ 19	$ 19
Additional paid-in capital	22,417	22,361
Stockholder notes receivable	(5)	(6)
Accumulated deficit	(12,847)	(13,002)
Total stockholders' equity	9,584	9,372
Total liabilities and stockholders’ equity	$ 11,085	$ 10,740

CONSOLIDATED BALANCE SHEETS _Pa

CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($) shares in Thousands, $ in Thousands	Oct. 31, 2015	Jul. 31, 2015
Allowance for doubtful accounts receivable	$ 420	$ 439
Deferred tax assets, valuation allowance, current	15	15
Accumulated depreciation of property and equipment	404	397
Allowance for deferred tax asset, noncurrent	84	84
Accumulated amortization of intangible assets	$ 3,339	$ 3,325
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	9,000	9,000
Common stock, shares issued (in shares)	1,908	1,890
Common stock, shares outstanding (in shares)	1,908	1,890

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Oct. 31, 2015	Oct. 31, 2014
Revenue:
Marketplace revenue and other revenue	$ 2,814	$ 3,117
Costs and expenses:
Cost of Marketplace revenue	1,741	1,923
Corporate salaries, wages and employee benefits	432	445
Selling, general and administrative	405	516
Depreciation and amortization	21	23
Costs and Expenses, Total	2,599	2,907
Income from operations	215	210
Other income:
Interest, net	20	24
Nonoperating Income (Expense), Total	20	24
Income before income taxes	235	234
Income tax expense	80	79
Net income	$ 155	$ 155
Net income per common share:
Basic (in dollars per share)	$ 0.08	$ 0.06
Diluted (in dollars per share)	$ 0.08	$ 0.06
Weighted average shares outstanding:
Basic (in shares)	1,896	2,607
Diluted (in shares)	1,909	2,611

CONSOLIDATED STATEMENT OF STOCK

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Oct. 31, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Stockholder Notes Receivable [Member]	Accumulated Deficit [Member]
Balance at Jul. 31, 2015	$ 9,372	$ 19	$ 22,361	$ (6)	$ (13,002)
Balance (in shares) at Jul. 31, 2015		1,890
Common Stock repurchased and retired	(3)	$ 0	(3)	0	0
Common Stock repurchased and retired (in shares)		(1)
Payments on stockholder notes receivable	1	$ 0	0	1	0
Payments on stockholder notes receivable (in shares)		0
Stock based compensation expense	59	$ 0	59	0	0
Stock based compensation expense (in shares)		19
Net income	155	$ 0	0	0	155
Balance at Oct. 31, 2015	$ 9,584	$ 19	$ 22,417	$ (5)	$ (12,847)
Balance (in shares) at Oct. 31, 2015		1,908

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Oct. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 155	$ 155
Items to reconcile to net cash provided by operations:
Depreciation and amortization	21	24
Stock based compensation	59	67
Bad debt expense	51	77
Change in deferred income taxes	81	79
Changes in operating assets and liabilities:
Accounts receivable	(231)	(74)
Prepaid expenses	98	20
Loans and advances	(7)	(5)
Other assets	0	(3)
Accounts payable and other expenses payable	14	5
Commissions payable to brokers	(32)	(16)
Accrued commissions to brokers	149	155
Accrued expenses	(8)	70
Deferred revenue	(4)	(8)
Advance payments	14	0
Net cash provided by operating activities	360	546
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	0	(1)
Payments on notes payables	0	(2)
Payments received from notes receivable	67	65
Advances on notes receivable	0	(15)
Net cash provided by investing activities	67	47
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on stockholder notes receivable	1	16
Repurchase of Common stock	(3)	(42)
Cash dividend paid to Common Shareholders	0	(143)
Net cash used in financing activities	(2)	(169)
Net increase in cash	425	424
Cash at beginning of period	2,047	3,673
Cash at end of period	2,472	4,097
Supplemental cash flow information:
Cash paid for taxes	$ 11	$ 2

DESCRIPTION OF OUR COMPANY AND

DESCRIPTION OF OUR COMPANY AND SUMMARY OF OUR SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Oct. 31, 2015
Accounting Policies [Abstract]
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]	Description of the Company ITEX Corporation (“ITEX”, “Company”, “we” or “us”) was incorporated in October 1985 in the State of Nevada. Through our independent licensed broker and franchise network (individually, “broker,” and together the “Broker Network”) in the United States and Canada, we operate a “Marketplace” in which products and services are exchanged by Marketplace members utilizing “ITEX dollars.” ITEX dollars are only usable in the Marketplace and allow thousands of member businesses (our “members”) to acquire products and services without exchanging cash. We administer the Marketplace and provide record-keeping and payment transaction processing services for our members. We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated balance sheets, operating results, and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amount of revenue and expenses during the reporting period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2015 Annual Report on Form 10-K filed with the SEC on October 13, 2015. The consolidated financial statements include the accounts of ITEX Corporation and its wholly owned subsidiary BXI Exchange, Inc. All inter-company accounts and transactions have been eliminated in consolidation. Management has made a number of estimates and assumptions relating to the reporting of revenues, expenses, assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Actual results could differ from these estimates. We present in our financial statements on the face of the income statement both basic and diluted earnings per share. Basic earnings per share excludes potential dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. As of October 31, 2015, we had no contracts to issue common stock. The Company had 176 Three-months Ended 2015 2014 Net income available for shareholders $ 155 $ 155 Weighted avg. outstanding shares of common stock 1,896 2,607 Dilutive effect of restricted shares 13 4 Common stock and equivalents 1,909 2,611 Earnings per share: Basic $ 0.08 $ 0.06 Diluted $ 0.08 $ 0.06 In November 2015, the FASB issued Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes, intended to improve how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will now be required to classify all deferred tax assets and liabilities as noncurrent. The pronouncement is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted as of the beginning of an interim or annual period. The adoption of ASU 2015-17 is not expected to have any material impact on the Company’s consolidated financial statements.

COMMITMENTS

COMMITMENTS	3 Months Ended
	Oct. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Commitments Disclosure [Text Block]	NOTE 2 – COMMITMENTS The Company leases office space under operating leases. Lease commitments include a lease for the Company’s corporate headquarters in Bellevue, Washington. The Company operates on this lease under a month-to-month basis. As of October 31, 2015, there are no future minimum commitments under this operating lease. The lease expense for our executive office space for the three-months ended October 31, 2015 and 2014 was $ 21 40

LEGAL PROCEEDINGS AND LITIGATIO

LEGAL PROCEEDINGS AND LITIGATION CONTINGENCIES	3 Months Ended
	Oct. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Legal Matters and Contingencies [Text Block]	NOTE 3 – LEGAL PROCEEDINGS AND LITIGATION CONTINGENCIES From time to time we are subject to a variety of claims and litigation incurred in the ordinary course of business. In our opinion, the outcome of our pending legal proceedings, individually or in the aggregate, will not have a material adverse effect on our business operations, results of operations, cash flows or financial condition. Management has regular litigation reviews, including updates from outside counsel, to assess the need for accounting recognition or disclosure of contingencies relating to pending lawsuits. The Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable, and the amount can be reasonably estimated. The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Company discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our litigation contingency disclosures, “significant” includes material matters as well as other items which management believes should be disclosed. Management judgment is required related to contingent liabilities and the outcome of litigation because both are difficult to predict. Litigation is subject to inherent uncertainties and unfavorable rulings could occur. Although management currently does not believe resolving any pending proceeding will have a material adverse impact on our financial statements, management’s view of these matters may change in the future. A material adverse impact on our financial statements could occur in the future if the effect of an unfavorable final outcome becomes probable and reasonably estimable.

INCOME TAXES

INCOME TAXES	3 Months Ended
	Oct. 31, 2015
Income Tax Disclosure [Abstract]
Income Tax Disclosure [Text Block]	NOTE 4 – INCOME TAXES Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The Federal effective tax rate related to our provision for income taxes in the three-months ended October 31, 2015 is similar to that used in the period ended October 31, 2014. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes. As of October 31, 2015 we have recognized a net income tax expense of $80 which is our estimated federal and state income tax liability for the three-months ended October 31, 2015. Realization of our deferred tax asset is dependent upon future earnings in specific tax jurisdictions, the timing and amount of which are uncertain. As of October 31, 2015 the net deferred tax asset was $3,597. We account for any uncertainty in income taxes by recognizing the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. We measure the tax benefits recognized in the financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The application of income tax law is inherently complex. As such, we are required to make subjective assumptions and judgments regarding income tax exposures. The result of the reassessment of our tax positions did not have an impact on the consolidated financial statements.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	3 Months Ended
	Oct. 31, 2015
Stockholders' Equity Note [Abstract]
Stockholders' Equity Note Disclosure [Text Block]	NOTE 5 – STOCKHOLDERS’ EQUITY (in thousands, except per share amounts) The Company has 5,000 0.01 On March 9, 2010, the Company announced a $ 2,000 1 3 14 42

STOCK-BASED PAYMENTS

STOCK-BASED PAYMENTS	3 Months Ended
	Oct. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	NOTE 6 – STOCK-BASED PAYMENTS (in thousands) We account for stock-based compensation in accordance with the related guidance. Under the fair value recognition provisions, we estimate stock-based compensation cost at the grant date based on the fair value of the award. We recognize that expense ratably over the requisite service period of the award and recognized $ 59 67 At October 31, 2015, 161 543

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Oct. 31, 2015
Subsequent Events [Abstract]
Subsequent Events [Text Block]	NOTE 7 – SUBSEQUENT EVENTS On August 20, 2015 0.10 December 10, 2015 December 1, 2015

DESCRIPTION OF OUR COMPANY AN14

DESCRIPTION OF OUR COMPANY AND SUMMARY OF OUR SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Oct. 31, 2015
Accounting Policies [Abstract]
Quarterly Financial Information Policy [Policy Text Block]	Unaudited Interim Financial Information We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated balance sheets, operating results, and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amount of revenue and expenses during the reporting period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2015 Annual Report on Form 10-K filed with the SEC on October 13, 2015.
Consolidation, Policy [Policy Text Block]	Principles of Consolidation The consolidated financial statements include the accounts of ITEX Corporation and its wholly owned subsidiary BXI Exchange, Inc. All inter-company accounts and transactions have been eliminated in consolidation.
Use of Estimates, Policy [Policy Text Block]	Use of Estimates Management has made a number of estimates and assumptions relating to the reporting of revenues, expenses, assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Actual results could differ from these estimates.
Earnings Per Share, Policy [Policy Text Block]	Income Per Share We present in our financial statements on the face of the income statement both basic and diluted earnings per share. Basic earnings per share excludes potential dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. As of October 31, 2015, we had no contracts to issue common stock. The Company had 176 Three-months Ended 2015 2014 Net income available for shareholders $ 155 $ 155 Weighted avg. outstanding shares of common stock 1,896 2,607 Dilutive effect of restricted shares 13 4 Common stock and equivalents 1,909 2,611 Earnings per share: Basic $ 0.08 $ 0.06 Diluted $ 0.08 $ 0.06
New Accounting Pronouncements, Policy [Policy Text Block]	Recent Accounting Pronouncements There have been no recent accounting pronouncements or changes in accounting pronouncements during the three-months ended October 31, 2015, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K, that are of significance, or potential significance to the Company.

DESCRIPTION OF OUR COMPANY AN15

DESCRIPTION OF OUR COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Oct. 31, 2015
Accounting Policies [Abstract]
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	The following table presents a reconciliation of the denominators used in the computation of net income per common share basic and net income per common share – diluted for the three-month period ended October 31, 2015 (in thousands, except per share data) (unaudited): Three-months Ended 2015 2014 Net income available for shareholders $ 155 $ 155 Weighted avg. outstanding shares of common stock 1,896 2,607 Dilutive effect of restricted shares 13 4 Common stock and equivalents 1,909 2,611 Earnings per share: Basic $ 0.08 $ 0.06 Diluted $ 0.08 $ 0.06

DESCRIPTION OF OUR COMPANY AN16

DESCRIPTION OF OUR COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Oct. 31, 2015	Oct. 31, 2014
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income available for shareholders	$ 155	$ 155
Weighted avg. outstanding shares of common stock (in shares)	1,896	2,607
Dilutive effect of restricted shares (in shares)	13	4
Common stock and equivalents (in shares)	1,909	2,611
Earnings per share:
Basic (in dollars per share)	$ 0.08	$ 0.06
Diluted (in dollars per share)	$ 0.08	$ 0.06

DESCRIPTION OF OUR COMPANY AN17

DESCRIPTION OF OUR COMPANY AND SUMMARY OF OUR SIGNIFICANT ACCOUNTING POLICIES (Details Textual)	Oct. 31, 2015shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Unvested Restricted Stock Units	176

COMMITMENTS (Details Textual)

COMMITMENTS (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Oct. 31, 2014
Other Commitments [Line Items]
Operating Leases, Rent Expense	$ 21	$ 40

INCOME TAXES (Details Textual)

INCOME TAXES (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Oct. 31, 2014
Income Taxes [Line Items]
Income Tax Expense (Benefit)	$ 80	$ 79
Deferred Tax Assets, Net, Total	$ 3,597

STOCKHOLDERS' EQUITY (Details T

STOCKHOLDERS' EQUITY (Details Textual) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Mar. 09, 2010
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.01
Preferred Stock, Shares Authorized (in shares)	5,000
Stock Repurchase Program, Authorized Amount			$ 2,000
Stock Repurchased During Period, Shares	1	14
Stock Repurchased During Period, Value	$ 3	$ 42

STOCK-BASED PAYMENTS (Details T

STOCK-BASED PAYMENTS (Details Textual) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Oct. 31, 2015	Oct. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation, Total	$ 59	$ 67
Equity Incentive 2014 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 543
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	6 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	161

SUBSEQUENT EVENTS (Details Text

SUBSEQUENT EVENTS (Details Textual)	1 Months Ended
	Aug. 20, 2015$ / shares
Subsequent Event [Line Items]
Dividends Payable, Amount Per Share (in dollars per share)	$ 0.10
Dividends Payable, Date to be Paid	Dec. 10, 2015
Dividends Payable, Date of Record	Dec. 1, 2015