ITEX Corporation (OTCBB: ITEX), a leading marketplace for cashless business transactions in North America, has signed an agreement to acquire BXI Exchange, Inc. (BXI) of San
Francisco, California. The transaction combines the two largest companies in the cashless marketplace industry.

The company will operate from Bellevue, Washington under the ITEX brand.

“We are aggressively pursuing revenue growth and market share, and this merger achieves both objectives and further extends our leadership position within the industry,” said Steven White, ITEX chairman and CEO.

“As a combined company, we are in a much stronger position to further expand revenue and profits by offering more content and transaction opportunities than our competitors.”

BXI is credited with inventing the business-to-business barter concept in 1960 and in the 1970’s became the first company in the United States to open multiple offices and centralize the processing of cashless transaction data.

According to Mr. White, ITEX and BXI have similar corporate structures and independent licensed contractor networks supporting the membership base. Integration of the two marketplaces, where members of both companies can purchase and sell to each other, is expected to be completed by the end of July.

“We believe this merger will provide added value for members, the Broker and Area Director network and for our shareholders,” White said. “We believe the transaction will be accretive to earnings in fiscal year 2006, beginning August 1, 2005.”

Marketplace Statistics and Operational Highlights
Prior to the merger, ITEX processed more than $170 million a year in cashless transactions through 13,000 member businesses managed by 60 franchisee and licensee offices. BXI processed $130 million a year in transactions through 8,000 members businesses managed by 35 offices.

ITEX management expects the two companies, operated as a single entity for its next fiscal year ending July 31, 2006, to lead the cashless marketplace industry in every significant metric and achieve the following:

• Annual cash revenue of more than $14.5 million, a 45% increase over ITEX’s fiscal 2005 revenue
• Annual transaction volume of more than $300 million
• 21,000+ member businesses
• 95 independently owned office locations
• $14,000 in transaction volume per member, per year
• 300,000 transactions per year, equal to one transaction every 30 seconds of each business day

Terms of the Transaction
The purchase price was approximately $3,680,000, which includes a $2.035 million down payment (including approximately $1.4 million consisting of repayments of BXI stockholder indebtedness and a payment for transition services); a $1 million note financed by the seller; assumption of approximately $230,000 in estimated liabilities; and a maximum earn-out up to $450,000 over three years. The earn-out is based on certain performance requirements and is payable quarterly.

The earnout payments are subject to reduction to satisfy certain claims for indemnification that may be made by ITEX.

ITEX secured $1.3 million in financing from US Bank to fund a portion of the down payment. The balance of the down payment came from existing cash. ITEX continues to have at its disposal a $500,000 revolving credit line with U.S. Bank.

About ITEX
Founded in 1982, ITEX is a leading marketplace for cashless business transactions in North America. ITEX processes more than $170 million a year in transactions through 13,000 member businesses managed by 60 franchisees and licensees.

Member businesses increase sales and open new markets by utilizing the ITEX Dollar to exchange goods and services. ITEX is powered by ITEX Payment Systems, the leading payment technology
platform for processing cashless business transactions. ITEX is headquartered in Bellevue, Washington.

Bellevue, WA – July 6, 2005 –