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Business Description

We are ITEX CORPORATION, a Nevada corporation. We operate the ITEX MARKETPLACE, in which products and services are exchanged by ITEX Marketplace members utilizing ITEX DOLLARS. ITEX dollars are only usable within the Marketplace and allow thousands of member businesses (“Members” or “ITEX Members”) to acquire products and services without exchanging cash. We service our member businesses through our independent licensed broker and franchise network in the United States and Canada. We administer the Marketplace and provide record-keeping and payment transaction processing services for our members. We generate revenue by charging members percentage-based transaction fees, association fees, and other fees assessed in United States dollars and Canadian dollars. The majority of members are businesses with fewer than 10 employees. We do business under the names "ITEX®,” “ITEX Corporation”, and the name of our wholly owned subsidiary “BXI Exchange, Inc.” We do not do business under any other names. In this Franchise Disclosure Document we are called “we” or “us” and “ITEX.” We have no parent. We have no predecessors or affiliates that offer franchises or provide products or services to franchisees. The address and telephone number of our franchise office is 15900 SE Eastgate Way, Suite 100, Bellevue, Washington 98008, (425) 463-4000. Information concerning our agents for service of process in various states that require the registration of franchise offering and a list of the relevant state franchise administrators may be found in Exhibit A to this Franchise Disclosure Document

Prior Experience

We have offered franchises in the United States since September 2002. We have not offered franchises in any other line of business. We retain the right to market and provide services to any and all ITEX Members. From our inception, we have owned or operated and worked with independent contractors who have operated businesses of the type now operated by our franchisees. We also refer to our franchisees as our “Brokers,” and to all Brokers collectively as our “Broker Network.” From time to time, we complement our Broker Network with corporateowned locations acquired either as a result of business acquisitions or as a result of ensuring the orderly transition of broker locations. These are typically sold to franchisees after an incubation period. We had no corporate-owned stores as of the date of this Franchise Disclosure Document. We focus activities on supporting and empowering our Broker Network and advancing the ITEX System and retain the right to own and operate additional brokerage offices of the type to be operated by our franchisees. We are not involved in any other business activities.

Business Offered

We grant you the right to establish and operate a Franchise office for selling goods and services among ITEX members in the ITEX Marketplace, using the ITEX Marks, and our business method and record keeping software (collectively these are called the "ITEX System"). The ITEX System utilizes the ITEX Marketplace which consists of businesses and to a limited extent, consumers, who have contracted to buy and sell goods and services among themselves. Transactions occur through an organized system regulated by the record keeping and administrative services of ITEX denominated in ITEX dollars (“ITEX Dollars”). We manage the ITEX Marketplace and act as a third-party record-keeper of the transactions entered into by the Members. We also track transactions for tax reporting purposes. We administer the clearinghouse function of the ITEX Marketplace for Members according to the terms and conditions found in the ITEX Member Application, the Member Agreement and the ITEX Marketplace Rules (collectively these are referred to as the “Member Agreement”). The ITEX Marketplace utilizes ITEX Dollars to enable our Members to purchase from and sell their products or services to other Members using ITEX Dollars instead of cash. An ITEX Dollar is an accounting unit used by the ITEX Marketplace to record the value of transactions as determined by the parties to the transaction. ITEX Dollars denote the right to receive goods or services available from other ITEX Members or the obligation to provide goods or services to other Members. ITEX Dollars may be used only in the manner and for the purposes set forth in the Member Agreement and the rules of the ITEX Marketplace. ITEX Dollars are not legal tender, securities or commodities and have no readily determinable correlation to US cash dollars (referred to as “US$” or “cash”). The Marketplace Rules are adopted and disseminated by us to govern transactions and relationships associated with the ITEX Marketplace.

Initial Fees

Except as otherwise provided below, the Initial Franchise Fee is $10,000. This Initial Franchise Fee is not payable using ITEX Dollars, trade credits, or any other barter currency. In this disclosure document the term “cash” includes all forms of legal tender and does not include trade or barter exchange currencies You pay 25% ($2,500) of the Initial Franchise Fee at the time the Franchise Agreement is signed. If you qualify for one of the reduced Franchise Fees disclosed below you pay 100% of the Initial Franchise Fee at the time the Franchise Agreement is signed. The remaining balance, if any, will be paid before you attend the mandatory training course described in Item 11, below. The Initial Franchise Fee is non-refundable unless you fail to successfully complete the training program described in Item 11, below. As provided in Section 3 of the Franchise Agreement, 75% of the Initial Franchise Fee is refundable if you do not pass the mandatory training program as described in Item 11. If you fail to open the Franchise within the time limits expressed in the Franchise Agreement as outlined in Item 11, below, we may terminate the Franchise Agreement and retain the Initial Franchise Fee

Financing

We do not offer direct or indirect financing. We do not guarantee your notes, leases, or obligations. Pursuant to the Franchise Agreement, we provide you a credit line of 5,000 ITEX Dollars for your Operating account, which can be changed at any time for any reason in our sole discretion. These ITEX Dollars may be used in the ITEX Marketplace and this credit line has no documentation apart from our standard member account billing programs and standard Marketplace Rules and, if utilized, generates interest charges payable in ITEX dollars at a rate of 0.5% per Cycle for a maximum rate of 6.5% annually (13 Cycles per year). We do not require you to provide any security interests to obtain financing. We do not have any practice or intent to sell, assign or discount to a third party all or part of the financing arrangement and will not receive any payments or other consideration from any other party for the placement of financing. The financing arrangement will not require you to waive legal rights and will not bar you from asserting any defenses against us.

Franchisee Revenue and Profit

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.