8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 20, 2010

ITEX Corporation

 (Exact Name of Registrant as Specified in its Charter)

Nevada	0-18275	93-0922994
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS employer identification number)

3326 160th Avenue SE, Suite 100, Bellevue, WA	98008
(Address of principal executive offices)	(Zip code)

Registrant’s telephone, including area code    (425) 463-4000

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On October 20, 2010, ITEX Corporation issued a press release announcing its financial results for the fiscal year ended July 31, 2010, reporting a 63% increase in income from operations compared to the previous year, and a 56% increase in net income.  A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 8.01 Other Events

On October 20, 2010, ITEX Corporation issued a press release announcing its financial results for the fiscal year ended July 31, 2010, reporting a 63% increase in income from operations compared to the previous year, and a 56% increase in net income.  A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits.

Exhibit No.	Description
99.1	Press release dated October 20, 2010 with respect to ITEX Corporation’s financial results for the fiscal year ended July 31, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ITEX Corporation (Registrant)
Date: October 20, 2010
	By:	/s/ Steven White
		Steven White Chief Executive Officer

EX-99.1

ITEX Announces Results for Fiscal Year 2010

Income from Operations Increases 63%

Cash Position Increases 102%

Bellevue, WA – October 20, 2010 – ITEX Corporation (OTCBB: ITEX), The Membership Trading CommunitySM, a leading marketplace for cashless business transactions in North America, today filed its Form 10-K with the Securities and Exchange Commission and announced results for its fourth quarter and fiscal year ended July 31, 2010.

“I am pleased to report another strong fiscal year with impressive results,” said Steven White, Chairman and CEO.  “We are bearing the fruits of our timely acquisitions completed between 2005 and 2008.  Cash flow from the acquired companies largely covered the related acquisition debt and we were able to accelerate payments and eliminate all long-term debt early in calendar year 2009.  In fiscal year 2010 we recorded a 63 percent increase in income from operations compared to the previous year, a 56 percent increase in net income and we more than doubled our cash position to $5.2 million.”

“Income from operations increased as a result of revenue growth and a reduction in selling, general and administrative costs, depreciation and amortization expense.  Our increased cash position reflects our operational income and the skillful management of our assets by our executive and financial teams.”

Mr. White continued, “We have been successful in our efforts to increase our cash position during the last two years, providing the Company with a very stable financial platform from which to operate.  As the economic uncertainty persists we will continue to manage our finances in a disciplined and prudent manner while investing in our future to ensure our success.  For our shareholders, we are pleased to have commenced a quarterly dividend, with our first ever dividend paid in the fourth quarter.  Also in the fourth quarter, we completed a company-wide computer upgrade benefiting our Broker Network and corporate operations.”

Fiscal Year 2010 Highlights

·    Income from operations increased 63% to $1.674 million from $1.027 million last year;

·    Net income increased 56% to $946,000 from $607,000 last year;

·    Earnings per share increased 53% to $0.26 from $0.17 last year;

·    Revenue increased 3% to $16.925 million from $16.502 million last year;

·    Cash at end of period increased 102%  to $5.169 million from $2.557 million on July 31, 2009;

·    Stockholder equity increased 6% to $14.869 million from $13.981 million on July 31, 2009;

·    Completed a company-wide computer upgrade initiative in conjunction with the  launch of Office 2010, expensing $129,000;

·    Entered into an agreement with U.S. Bank to increase our revolving credit facility from $1.5 million to $2.5 million with a lower interest rate;

·    Completed a one for five reverse stock split of our common stock, reducing the number of shares of common stock from 18,027,914 to approximately 3,605,320;

·    Paid a $0.025 per share quarterly cash dividend in the fourth quarter;

·    Repurchased and retired 4,943 shares of common stock;

·    Sold our San Francisco, CA corporate-owned office to an existing franchisee.

Subsequent Event

On September 20, 2010, we paid a quarterly cash dividend in the amount of $0.025 per share.

ITEX Corporation’s report on Form 10-K can be found at www.sec.gov.

The financial statements for all periods presented in this press release have been adjusted to reflect the 1:5 reverse stock split effective May 3, 2010.

About ITEX

ITEX, The Membership Trading CommunitySM, is a thriving network of participating member businesses.  Members increase sales through an exclusive distribution channel managed by franchisees, licensees and corporate-owned locations, by utilizing ITEX dollars 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, WA.  For more information, please visit ITEX’s website at www.itex.com.  We routinely post important information on the investor relations portion of our website.

This press release contains forward-looking statements that involve risks and uncertainties concerning our expected performance (as described without limitation in the quotations from current management in this release) and comments within the safe harbor provisions established under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of our future performance. We believe that these potential risks and uncertainties include, without limitation:  the continuing development of successful marketing strategies for our concepts; our ability to increase revenues and sustain profitability; the availability of adequate working capital; our dependence both on key personnel and our franchise network; and the effect of changes in the overall economy and in technology. Statements in this release should be evaluated in light of these factors.  These risk factors and other important factors that could affect our business and financial results are discussed in our periodic reports and filings with the Securities and Exchange Commission, including our Forms 10-K and Forms 10-Q, which are available at www.sec.gov. All information set forth in this release is as of October 20, 2010, and ITEX undertakes no duty to update this information.

For more information, please visit www.itex.com

Contact: Alan Zimmelman, ITEX Corporation

425.463.4017 or alan@itex.com

ITEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(Inthousands, except per share amounts)

	Year End July 31
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	5,169		$	2,557
Accounts receivable, net of allowance of$319 and $322		859			895
Prepaid expenses		118			82
Loans and advances		55			57
Prepaid advertising credits		157			157
Deferred tax asset		1,018			739
Notes receivable - corporate office sales		125			242
Other current assets		24			19
Total current assets		7,525			4,748
Property and equipment, net of accumulated depreciation of $380 and $280		169			247
Intangible assets, net of amortization of $2,205 and $1,703		994			1,572
Deferred tax asset, net of current portion		5,000			5,798
Notes receivable - corporate office sales, net of current portion		480			624
Other long-term assets		188			354
Goodwill		3,282			3,318
Total assets	$	17,638		$	16,661
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	124		$	98
Commissions payable to brokers		661			691
Accrued commissions to brokers		789			828
Accrued expenses		705			521
Deferred revenue		133			144
Advance payments		167			138
Total current liabilities		2,579			2,420
Long-term liabilities:
Other long-term liabilities		190			260
Total Liabilities		2,769			2,680
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 9,000 shares authorized; 3,573 and 3,571 shares issued and outstanding, respectively		36			36
Additional paid-in capital		29,138			29,105
Accumulated deficit		(14,305	)		(15,160	)
Total stockholders' equity		14,869			13,981
Total liabilities and stockholders’ equity	$	17,638		$	16,661

ITEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

	Year End July 31
	2010			2009
Revenue
Marketplace revenue and other revenue	$	16,925		$	16,502
Cost and expenses:
Costs of marketplace revenue		10,777			10,481
Corporate salaries, wages and employee benefits		1,850			1,895
Selling, general and administrative		1,980			2,337
Depreciation and amortization		644			762
		15,251			15,475
Income from operations		1,674			1,027
Other income/(expense):
Interest, net		42			31
Other expense, net		(159	)		(30	)
		(117	)		1
Income before income taxes		1,557			1,028
Provision for income taxes		611			421
Net income	$	946		$	607
Net income per common share:
Basic	$	0.26		$	0.17
Diluted	$	0.26		$	0.17
Weighted average shares outstanding:
Basic		3,572			3,564
Diluted		3,577			3,565

Selected Quarterly Financial Results

Year ended July 31, 2010	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Revenue		3,924		4,537		4,158		4,306		16,925
Income from operations		340		526		421		387		1,674
Net cash flows from operating activities		433		462		548		1,093		2,536
Total stockholders' equity		14,271		14,460		14,722		14,869		14,869
Year ended July 31, 2009	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Revenue		3,899		4,365		3,981		4,257		16,502
Income from operations		22		235		344		426		1,027
Net cash flows from operating activities		706		481		348		1,340		2,875
Total stockholders' equity		13,381		13,538		13,756		13,981		13,981