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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission File No. 000-51478





TRX, INC.

(Exact name of registrant as specified in charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Georgia                                                        |  | 58-2502748                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)



|                                                 |  |           
|------------------------------------------------ |  | ----------
|2970 Clairmont Road, Suite 300, Atlanta, Georgia |  | 30329     
|(Address of principal executive offices)         |  | (Zip Code)

Issuers telephone number, including area code: (404) 929-6100





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                |  |                           |  |  
|----------------------- |  | ---------------------------------------------- |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                              |  | Accelerated filer         |  |  ̈
|                        |  |                                                | 
|Non-accelerated filer   |  |  ̈  (Do not check if a small reporting company) |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The number of shares of the registrants common stock, $0.01 par value, outstanding at May 1, 2010 was 18,466,271 shares.









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TRX, INC.

FORM 10-Q

TABLE OF CONTENTS



|           |  |                                                                                                              |  |        
|---------- |  | ------------------------------------------------------------------------------------------------------------ |  | -------
|           |  |                                                                                                              |  | PAGENO.
|PART I:    |  | FINANCIAL INFORMATION                                                                                        |  |        
|           |  |                                                                                                             
|Item 1.    |  | Financial Statements                                                                                         |  |        
|           |  | Condensed Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and December 31, 2009
(Audited)       |  | 1      
|           |  | Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009 |  | 2      
|           |  | Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009 |  | 3      
|           |  | Notes to Unaudited Condensed Consolidated Financial Statements                                               |  | 4      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                        |  | 11     
|Item 4T.   |  | Controls and Procedures                                                                                      |  | 17     
|           |  |                                                                                                             
|PART II:   |  | OTHER INFORMATION                                                                                            |  |        
|           |  |                                                                                                             
|Item 1A.   |  | Risk Factors                                                                                                 |  | 17     
|Item 6.    |  | Exhibits                                                                                                     |  | 19     
|Signatures |  |                                                                                                              |  |        



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PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

TRX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                   |  | March 31,2010 |         |   | December 31,2009 |  
|                                                                                                                                                   |  | (Unaudited)   |         |   | (Audited)        |  
|ASSETS                                                                                                                                             |  |               |         |   |                  |   |         |  
|CURRENT ASSETS:                                                                                                                                    |  |               |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                          |  | $             | 3,047   |   |                  | $ | 2,897   |  
|Trade accounts receivable, net                                                                                                                     |  |               | 6,927   |   |                  |   | 6,371   |  
|Prepaids and other                                                                                                                                 |  |               | 2,950   |   |                  |   | 2,693   |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total current assets                                                                                                                               |  |               | 12,924  |   |                  |   | 11,961  |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|NONCURRENT ASSETS:                                                                                                                                 |  |               |         |   |                  |   |         |  
|Property and equipment, net                                                                                                                        |  |               | 6,794   |   |                  |   | 6,996   |  
|Other assets, net                                                                                                                                  |  |               | 729     |   |                  |   | 791     |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total noncurrent assets                                                                                                                            |  |               | 7,523   |   |                  |   | 7,787   |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total assets                                                                                                                                       |  | $             | 20,447  |   |                  | $ | 19,748  |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|                                                                                                                                                   |  |              
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                                              |  |               |         |   |                  |   |         |  
|CURRENT LIABILITIES:                                                                                                                               |  |               |         |   |                  |   |         |  
|Accounts payable and accrued liabilities                                                                                                           |  | $             | 9,466   |   |                  | $ | 11,050  |  
|Customer deposits and deferred revenue                                                                                                             |  |               | 6,322   |   |                  |   | 6,427   |  
|Current portion of long-term debt                                                                                                                  |  |               | 1,167   |   |                  |   | 1,167   |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total current liabilities                                                                                                                          |  |               | 16,955  |   |                  |   | 18,644  |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|NONCURRENT LIABILITIES:                                                                                                                            |  |               |         |   |                  |   |         |  
|Long-term debtless current portion                                                                                                                |  |               | 3,992   |   |                  |   | 2,183   |  
|Other long-term liabilities                                                                                                                        |  |               | 1,913   |   |                  |   | 1,929   |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total noncurrent liabilities                                                                                                                       |  |               | 5,905   |   |                  |   | 4,112   |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total liabilities                                                                                                                                  |  |               | 22,860  |   |                  |   | 22,756  |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|COMMITMENTS AND CONTINGENCIES (NOTE 2)                                                                                                             |  |               |         |   |                  |   |         |  
|SHAREHOLDERS DEFICIT:                                                                                                                             |  |               |         |   |                  |   |         |  
|Common stock, $.01 par value; 100,000,000 shares authorized; 18,653,802 and 18,644,055 shares issued; 18,466,271 and 18,456,524
shares outstanding |  |               | 186     |   |                  |   | 186     |  
|Additional paid-in capital                                                                                                                         |  |               | 95,604  |   |                  |   | 95,653  |  
|Treasury stock, at cost; 187,531 shares                                                                                                            |  |               | (2,294  | ) |                  |   | (2,294  | )
|Cumulative translation adjustment                                                                                                                  |  |               | 437     |   |                  |   | 276     |  
|Accumulated deficit                                                                                                                                |  |               | (96,346 | ) |                  |   | (96,829 | )
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total shareholders deficit                                                                                                                        |  |               | (2,413  | ) |                  |   | (3,008  | )
|                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total liabilities and shareholders deficit                                                                                                        |  | $             | 20,447  |   |                  | $ | 19,748  |  
|                                                                                                                                                   |  |               |         |   |                  |   |         |  

See notes to unaudited condensed consolidated financial statements.



1



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TRX, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)



|                                                                              |  |                              |        |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------- | -
|                                                                              |  | Three Months EndingMarch 31, |       
|                                                                              |  | 2010                         |        |   | 2009 |  
|REVENUES:                                                                     |  |                              |        |   |      |   |         |  
|Transaction and other revenues                                                |  | $                            | 14,594 |   |      | $ | 14,899  |  
|Client reimbursements                                                         |  |                              | 84     |   |      |   | 102     |  
|                                                                              |  |                              |        |   |      |   |         |  
|Total revenues                                                                |  |                              | 14,678 |   |      |   | 15,001  |  
|                                                                              |  |                              |        |   |      |   |         |  
|EXPENSES:                                                                     |  |                              |        |   |      |   |         |  
|Operating, excluding depreciation and amortization                            |  |                              | 8,552  |   |      |   | 9,004   |  
|Selling, general, and administrative, excluding depreciation and amortization |  |                              | 3,046  |   |      |   | 2,274   |  
|Technology development                                                        |  |                              | 951    |   |      |   | 1,665   |  
|Client reimbursements                                                         |  |                              | 84     |   |      |   | 102     |  
|Impairment of goodwill, intangible assets and other long-lived assets         |  |                              | 89     |   |      |   | 43,692  |  
|Depreciation and amortization                                                 |  |                              | 1,030  |   |      |   | 2,381   |  
|                                                                              |  |                              |        |   |      |   |         |  
|Total expenses                                                                |  |                              | 13,752 |   |      |   | 59,118  |  
|                                                                              |  |                              |        |   |      |   |         |  
|OPERATING INCOME (LOSS)                                                       |  |                              | 926    |   |      |   | (44,117 | )
|INTEREST INCOME (EXPENSE):                                                    |  |                              |        |   |      |   |         |  
|Interest income                                                               |  |                              | 6      |   |      |   | 9       |  
|Interest expense                                                              |  |                              | (184   | ) |      |   | (191    | )
|                                                                              |  |                              |        |   |      |   |         |  
|Total interest expense, net                                                   |  |                              | (178   | ) |      |   | (182    | )
|                                                                              |  |                              |        |   |      |   |         |  
|INCOME (LOSS) BEFORE INCOME TAXES                                             |  |                              | 748    |   |      |   | (44,299 | )
|(PROVISION) BENEFIT FOR INCOME TAXES                                          |  |                              | (265   | ) |      |   | 684     |  
|                                                                              |  |                              |        |   |      |   |         |  
|NET INCOME (LOSS)                                                             |  | $                            | 483    |   |      | $ | (43,615 | )
|                                                                              |  |                              |        |   |      |   |         |  
|WEIGHTED AVERAGE NUMBER OF SHARES:                                            |  |                              |        |   |      |   |         |  
|Basic                                                                         |  |                              | 18,465 |   |      |   | 18,406  |  
|                                                                              |  |                              |        |   |      |   |         |  
|Diluted                                                                       |  |                              | 18,643 |   |      |   | 18,406  |  
|                                                                              |  |                              |        |   |      |   |         |  
|BASIC AND DILUTED NET INCOME (LOSS) PER SHARE                                 |  | $                            | 0.03   |   |      | $ | (2.37   | )
|                                                                              |  |                              |        |   |      |   |         |  

See notes to unaudited condensed consolidated financial statements.



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TRX, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                     |  |                             |        |   |      |   |         |  
|------------------------------------------------------------------------------------ |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                                                     |  | Three Months EndedMarch 31, |       
|                                                                                     |  | 2010                        |        |   | 2009 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                |  |                             |        |   |      |   |         |  
|Net income (loss)                                                                    |  | $                           | 483    |   |      | $ | (43,615 | )
|                                                                                     |  |                             |        |   |      |   |         |  
|Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |                             |        |   |      |   |         |  
|Depreciation and amortization                                                        |  |                             | 1,067  |   |      |   | 2,381   |  
|Impairment of goodwill, intangible assets and other long-lived assets                |  |                             | 83     |   |      |   | 43,692  |  
|Provision for bad debts                                                              |  |                             | 79     |   |      |   | 27      |  
|Stock compensation (credit) expense                                                  |  |                             | (56    | ) |      |   | 68      |  
|Changes in assets and liabilities, net of affects of acquisition:                    |  |                             |        |   |      |   |         |  
|Trade accounts receivable                                                            |  |                             | (678   | ) |      |   | 209     |  
|Prepaids and other assets                                                            |  |                             | (288   | ) |      |   | (155    | )
|Accounts payable and accrued liabilities                                             |  |                             | (948   | ) |      |   | (619    | )
|Customer deposits and deferred revenue                                               |  |                             | (103   | ) |      |   | (2,065  | )
|                                                                                     |  |                             |        |   |      |   |         |  
|                                                                                     |  |                            
|Total adjustments                                                                    |  |                             | (844   | ) |      |   | 43,538  |  
|                                                                                     |  |                             |        |   |      |   |         |  
|                                                                                     |  |                            
|Net cash used in operating activities                                                |  |                             | (361   | ) |      |   | (77     | )
|                                                                                     |  |                             |        |   |      |   |         |  
|                                                                                     |  |                            
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                |  |                             |        |   |      |   |         |  
|Capital expenditures                                                                 |  |                             | (980   | ) |      |   | (1,192  | )
|Payment of contingent consideration                                                  |  |                             | (89    | ) |      |   | (138    | )
|                                                                                     |  |                             |        |   |      |   |         |  
|                                                                                     |  |                            
|Net cash used in investing activities                                                |  |                             | (1,069 | ) |      |   | (1,330  | )
|                                                                                     |  |                             |        |   |      |   |         |  
|                                                                                     |  |                            
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                |  |                             |        |   |      |   |         |  
|Repayments of long-term debt                                                         |  |                             | (291   | ) |      |   | (292    | )
|Borrowings from credit facility                                                      |  |                             | 6,200  |   |      |   | 3,500   |  
|Payments on credit facility                                                          |  |                             | (4,100 | ) |      |   | (3,000  | )
|Proceeds from stock plans                                                            |  |                             | 6      |   |      |   | 13      |  
|                                                                                     |  |                             |        |   |      |   |         |  
|Net cash provided by financing activities                                            |  |                             | 1,815  |   |      |   | 221     |  
|                                                                                     |  |                             |        |   |      |   |         |  
|                                                                                     |  |                            
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                         |  |                             | (235   | ) |      |   | (256    | )
|                                                                                     |  |                             |        |   |      |   |         |  
|                                                                                     |  |                            
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 |  |                             | 150    |   |      |   | (1,442  | )
|                                                                                     |  |                            
|CASH AND CASH EQUIVALENTSBeginning of period                                        |  |                             | 2,897  |   |      |   | 6,873   |  
|                                                                                     |  |                             |        |   |      |   |         |  
|                                                                                     |  |                            
|CASH AND CASH EQUIVALENTSEnd of period                                              |  | $                           | 3,047  |   |      | $ | 5,431   |  
|                                                                                     |  |                             |        |   |      |   |         |  

See notes to unaudited condensed consolidated financial statements.



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TRX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(In thousands, except share data)

1. ACCOUNTING AND REPORTING POLICIES

TRX is a travel technology and data services provider, offering more than 20 software-as-a-service utilities for online booking,
reservation processing, data intelligence, and process automation. We provide patented savings maximization solutions, extending spend management services to travel buyers all over the world. We complement all of this with a global workforce
focused on travel process automation and reengineering. For the foreseeable future, we intend to focus our efforts on the opportunities within the travel industry. We deliver our technology applications as a service over the Internet to travel
agencies, corporations, travel suppliers, government agencies, credit card associations, credit card issuing banks, and third-party administrators. TRX is headquartered in Atlanta, Georgia with operations and associates in North America, Europe, and
Asia. We are majority-owned by BCD Technology, S.A. (BCD).

Basis of PresentationThe
accompanying unaudited condensed consolidated financial statements of TRX, Inc. and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim
financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. As a result, these unaudited condensed
consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in our Form 10-K for the year ended December 31, 2009. Due to the seasonal fluctuations for
the purchase of air travel by leisure and corporate travelers as well as credit card volume related to corporate travel, interim results are not necessarily indicative of results for a full year.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting
of normal recurring items, considered necessary for a fair statement of results for the interim periods presented.

The
preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results will differ from those estimates.

ReclassificationsBorrowings and repayments under our senior secured revolving credit facility for the three months
ended March 31, 2009 previously presented on a net basis in the unaudited condensed consolidated statement of cash flows have been corrected and are presented gross in the accompanying unaudited condensed consolidated statement of cash flows in
order to conform to the current year presentation.

Allowance for Doubtful AccountsWe maintain an
allowance for doubtful accounts to reserve for potentially uncollectible receivables. The balance was $415 and $422 as of March 31, 2010 and December 31, 2009, respectively.

GoodwillAs a result of declining market conditions from January 1, 2009 to March 31, 2009, and their
related effect on current and anticipated volumes and pricing with clients, we determined that it was necessary to test goodwill for impairment as of March 31, 2009. We used estimates of future operating results and cash flows of the reporting
unit discounted using estimated discount rates ranging from 16% to 18%. The estimates of future operating results and cash flows were principally derived from an updated long-term financial outlook in light of the first quarter of 2009 market
conditions and the challenging economy. As a result of our impairment test, we determined that goodwill was fully impaired and recorded a noncash impairment charge to goodwill of $37.4 million during the first quarter of 2009, which is included in
Impairment of goodwill, intangible assets and other long-lived assets in our unaudited condensed consolidated statements of operations. We expect to record additional goodwill impairment charges for future earnout payments associated
with a previous business acquisition transaction, until our financial outlook improves thereby justifying the recording of a goodwill asset.

The following table discloses the changes in the carrying amount of goodwill during the three months ended March 31, 2010:



|                              |  |   |     |  
|----------------------------- |  | - | --- | -
|Balance, January 1            |  | $ |    |  
|                              |  |   |     |  
|Earnout on Travel Analytics   |  |   | 89  |  
|Impairment charge             |  |   | (89 | )
|                              |  |   |     |  
|Balance, March 31             |  |   |    |  
|Accumulated impairment losses |  |   | (89 | )
|                              |  |   |     |  
|                              |  | $ |    |  
|                              |  |   |     |  



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Other Intangible AssetsThe outcome of our goodwill impairment analysis
for the first quarter of 2009 indicated that the carrying amount of certain acquisition-related intangible assets or asset groups may not be recoverable. We assessed the recoverability of the acquisition-related intangible assets by determining
whether the unamortized balances could be recovered through undiscounted future net cash flows. We determined that certain of the acquisition-related intangible assets were impaired primarily due to the revised lower revenue forecasts associated
with the products incorporating the trademarks and patents, customer relationships and non-compete agreements. We measured the amount of impairment by calculating the amount by which the carrying value of the assets exceeded their estimated fair
values, which were based on projected discounted future net cash flows. As a result of this impairment analysis, we recorded a noncash impairment charge of approximately $1.1 million during the first quarter of 2009, which is included in
Impairment of goodwill, intangible assets and other long-lived assets in our unaudited condensed consolidated statements of operations.

We expect to record approximately $173 of amortization expense related to these intangible assets in each of the next four years. We
recorded related amortization expense of $43 and $90 during the three months ended March 31, 2010 and 2009, respectively.

Changes in other intangible assets during the three months ended March 31, 2010 were as follows:



|                                  |  |   |     |  
|--------------------------------- |  | - | --- | -
|Balance, January 1                |  | $ | 736 |  
|Amortization of intangible assets |  |   | (43 | )
|                                  |  |   |     |  
|Balance, March 31                 |  | $ | 693 |  
|                                  |  |   |     |  

A summary of our intangible assets as of March 31, 2010 and December 31, 2009 is as follows:



|                       |  |                    |  |                         |     |  |                    |      |                         |  |   |     |  |   |      |  
|---------------------- |  | ------------------ |  | ----------------------- | --- |  | ------------------ | ---- | ----------------------- |  | - | --- |  | - | ---- | -
|                       |  | UsefulLives        |  | March 31, 2010          |     |  | December 31, 2009  |     
|                       |  | GrossCarryingValue |  | AccumulatedAmortization |     |  | GrossCarryingValue |      | AccumulatedAmortization | 
|Trademarks and patents |  | 10 years           |  | $                       | 866 |  | $                  | (173 | )                       |  | $ | 866 |  | $ | (130 | )
|                       |  |                    |  |                         |     |  |                    |      |                         |  |   |     |  |   |      |  
|                       |  |                    |  | $                       | 866 |  | $                  | (173 | )                       |  | $ | 866 |  | $ | (130 | )
|                       |  |                    |  |                         |     |  |                    |      |                         |  |   |     |  |   |      |  

Impairment of Long-Lived AssetsWe regularly evaluate whether events and circumstances
have occurred that indicate whether the carrying amount of property and equipment and other intangible assets may warrant revision or may not be recoverable. When factors indicate that these long-lived assets should be evaluated for possible
impairment, we assess the recoverability by determining whether the carrying value of such long-lived assets will be recovered through the future undiscounted cash flows expected from the use of the asset and its eventual disposition. No such
indicator of impairment existed at March 31, 2010. During the first quarter of 2009, we experienced a continued decline in our business that led us to revise our short-term and long-term financial forecasts that indicated that an impairment of
long-lived assets may have occurred. Accordingly, we performed an analysis comparing the undiscounted cash flows estimated to be generated by the long-lived assets to the carrying amounts of those assets. The estimates of future operating results
and cash flows are derived from our updated long-term financial forecast. The results of the comparison of our undiscounted cash flows to the carrying value of the long-lived assets indicated a requirement to move to a fair value approach. The
values of the intangible long lived assets were determined using both the cost approach and an income approach. The relief from royalty method was the specific income approach utilized. We also used an appraisal of certain long-lived fixed assets to
support our conclusions related to those assets. As a result, we recorded a long-lived asset impairment noncash charge during the first quarter of 2009 of $5.2 million, which is included in Impairment of goodwill, intangible assets and other
long-lived assets in our unaudited condensed consolidated statement of operations.

Fair Value
MeasurementsWe adopted the FASBs guidance on Fair Value Measurements and Disclosures Topic for our financial assets and financial liabilities on January 1, 2008 and for our non-financial assets and non-financial liabilities
on January 1, 2009. Under this guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).
The guidance outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures.



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We currently do not have financial or non-financial assets and financial or non-financial
liabilities that are required to be measured at fair value on a recurring basis. The FASBs guidance establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. The following table shows the fair value of our
non-financial assets that were required to be measured at fair value on a non-recurring basis during the first quarter of 2009. These non-financial assets, which included our goodwill, intangible assets and our other long-lived assets, were required
to be measured at fair value in connection with the interim impairment tests we performed on our goodwill, intangible assets and other long-lived assets in the first quarter of 2009.



|                                            |  |                          |        |                                        |   |                                             |  |                                        |   |              |   |        |  |   |         |  
|------------------------------------------- |  | ------------------------ | ------ | -------------------------------------- | - | ------------------------------------------- |  | -------------------------------------- | - | ------------ | - | ------ |  | - | ------- | -
|                                            |  | Balance atMarch 31, 2009 |        | Quoted Pricesin ActiveMarkets(Level 1) |   | Significant 
OtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3) |   | Total Losses |  
|Goodwill                                    |  | $                        |       |                                        | $ |                                            |  | $                                      |  |              | $ |       |  | $ | (37,741 | )
|Property and Equipment, net:                |  |                          |        |                                        |   |                                             |  |                                        |   |              |   |        |  |   |         |  
|Leasehold improvements                      |  |                          | 514    |                                        |   |                                            |  |                                        |  |              |   | 514    |  |   | (765    | )
|Computers, purchased software and equipment |  |                          | 5,623  |                                        |   |                                            |  |                                        |  |              |   | 5,623  |  |   | (1,770  | )
|Internally-developed software               |  |                          | 2,814  |                                        |   |                                            |  |                                        |  |              |   | 2,814  |  |   | (2,639  | )
|Furniture and fixtures                      |  |                          | 373    |                                        |   |                                            |  |                                        |  |              |   | 373    |  |   |        |  
|Other Assets, net:                          |  |                          |        |                                        |   |                                             |  |                                        |   |              |   |        |  |   |         |  
|Trademarks and patents                      |  |                          | 866    |                                        |   |                                            |  |                                        |  |              |   | 866    |  |   | (714    | )
|Customer relationships                      |  |                          |       |                                        |   |                                            |  |                                        |  |              |   |       |  |   | (211    | )
|Non-compete agreements                      |  |                          |       |                                        |   |                                            |  |                                        |  |              |   |       |  |   | (188    | )
|                                            |  |                          |        |                                        |   |                                             |  |                                        |   |              |   |        |  |   |         |  
|                                            |  | $                        | 10,190 |                                        | $ |                                            |  | $                                      |  |              | $ | 10,190 |  | $ | (44,028 | )
|                                            |  |                          |        |                                        |   |                                             |  |                                        |   |              |   |        |  |   |         |  

Revenue Recognition and Cost DeferralWe recognize revenue when all of the following have
occurred: (1) persuasive evidence of an arrangement exists; (2) services have been performed; (3) the fee for services is fixed or determinable; and (4) collectability is reasonably assured. Generally, these criteria are
considered to have been met as follows:



| |  |  | For transaction revenue, in which we perform ticketing, file-finishing, data consolidation and reporting, and customer care services, when the services
are provided;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For short-term client-specific customizations, which do not generate direct on-going incremental transaction revenue, when the customization has been
delivered to our customer; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For implementation and set-up fees, which generate direct on-going incremental transaction revenue, over the life of the underlying transaction service
agreement. Related costs are deferred and recognized as expenses over the life of the underlying transaction service agreement.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Client reimbursements received for direct costs paid to third parties and related expenses are characterized as revenue. Client
reimbursements represent direct costs paid to third parties primarily for voice and data and items such as paper tickets.

Concentration of Credit RiskA significant portion of our revenues is derived from a limited number of clients. Our
top five clients accounted for approximately 68% and 69% of our total revenues in the three months ended March 31, 2010 and 2009, respectively. Contracts with the major clients may be terminated by the client if we fail to meet certain
performance criteria. Expedia, Inc. and its affiliates accounted for 44% and 42% of our total revenues in the three months ended March 31, 2010 and 2009, respectively. American Express Travel Related Services Company, Inc. (American
Express) accounted for 15% of our total revenues in both the three months ended March 31, 2010 and 2009, respectively. At March 31, 2010 and December 31, 2009, 26% and 16%, respectively, of our accounts receivable related to
American Express.

Earnings per ShareBasic earnings per share is computed by dividing reported income or
loss available to common shareholders by weighted average shares outstanding during the period. Income or loss available to common shareholders is the same as reported net income or loss for all periods presented.

Diluted earnings per share is computed by dividing reported earnings available to common shareholders, adjusted for the earnings effect
of potentially dilutive securities, by weighted average shares outstanding during the period and the impact of securities that, if exercised, would have a dilutive effect on earnings per share.



6



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##### Table of Contents

All common stock equivalents with an exercise price less than the average market share price
for the period are assumed to have a dilutive effect on earnings per share. The following table sets forth the computation of basic and diluted net income (loss) per share:



|                                    |  |                                  |     |                                  |        |           |   |          |  |   |                       |   |           |        |  |   |       |  
|----------------------------------- |  | -------------------------------- | --- | -------------------------------- | ------ | --------- | - | -------- |  | - | --------------------- | - | --------- | ------ |  | - | ----- | -
|                                    |  | Three Months EndedMarch 31,
2010 |     | Three Months EndedMarch 31,
2009 |       
|                                    |  | Net Income                       |     | WeightedAverageShares            |        | Per Share |   | Net Loss |  |   | WeightedAverageShares |   | Per Share |       
|Basic net income (loss) per share   |  | $                                | 483 |                                  | 18,465 |           | $ | 0.03     |  | $ | (43,615               | ) |           | 18,406 |  | $ | (2.37 | )
|Effect of dilutive securities:      |  |                                  |     |                                  |        |           |   |          |  |   |                       |   |           |        |  |   |       |  
|Options to acquire common stock     |  |                                  |    |                                  | 178    |           |   |         |  |   |                      |   |           |       |  |   |      |  
|                                    |  |                                  |     |                                  |        |           |   |          |  |   |                       |   |           |        |  |   |       |  
|Diluted net income (loss) per share |  | $                                | 483 |                                  | 18,643 |           | $ | 0.03     |  | $ | (43,615               | ) |           | 18,406 |  | $ | (2.37 | )
|                                    |  |                                  |     |                                  |        |           |   |          |  |   |                       |   |           |        |  |   |       |  

Because of their anti-dilutive effect on the net income (loss) per share recorded in each of the periods
presented, the diluted share base excludes incremental shares related to 1,853 employee stock options for the three months ended March 31, 2010 and all outstanding employee stock options for the three months ended March 31, 2009.

Stock-Based Employee CompensationWe account for stock-based employee compensation under Compensation
 Stock Compensation Topic of the FASB Standards Codification. The weighted average grant-date fair value of the options granted during the three months ended March 31, 2010, calculated using the Black-Scholes model, ranged from $0.66 to
$0.70. The weighted average grant-date fair value of the options granted during the three months ended March 31, 2009, calculated using the Black-Scholes model, ranged from $0.23 to $0.27.

The following assumptions were used for grants in the three months ended March 31, 2010: dividend yield of zero, volatility of
133.5% to 175.8%, risk-free interest rate of 0.82% to 1.96%, and an expected life of 2.00 to 4.25 years. The following assumptions were used for grants in the three months ended March 31, 2009: dividend yield of zero, volatility of 117.6% to
129.8%, risk-free interest rate of 0.97% to 1.69%, and an expected life of 2.00 to 4.25 years. Volatility is based on the volatility of our stock. We use historical data to estimate the expected life and employee termination assumptions in our
accounting under the FASBs guidance. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant over the expected life of the grant.

The following table summarizes stock options outstanding as of March 31, 2010, as well as activity during the three months then
ended:



|                         |  |           |   |  |                               |     
|------------------------ |  | --------- | - |  | ----------------------------- | ----
|                         |  | Options   |   |  | WeightedAverageExercise Price
|Outstanding at January 1 |  | 2,458,000 |   |  | $                             | 3.63
|Granted                  |  | 20,000    |   |  |                               | 0.84
|Cancelled                |  | (30,000   | ) |  |                               | 9.00
|Exercised                |  |          |   |  |                               |    
|                         |  |           |   |  |                               |     
|Outstanding at March 31  |  | 2,448,000 |   |  | $                             | 3.54
|                         |  |           |   |  |                               |     

The intrinsic value of a stock option is the amount by
which the market value of the underlying stock exceeds the exercise price of the option. At March 31, 2010, the aggregate intrinsic value of options outstanding was $80 with a weighted average remaining contractual term of 7.5 years; the
aggregate intrinsic value of the 1,413,250 options exercisable was $4 with a weighted average exercise price of $5.42 and a weighted average remaining contractual term of 6.6 years; and the aggregate intrinsic value of the 2,188,512 options vested
or expected to vest was $71 with a weighted average exercise price of $3.54 and a weighted average remaining contractual term of 7.5 years.



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##### Table of Contents

The following table summarizes unvested stock options outstanding as of March 31, 2010,
as well as activity during the three months then ended:



|                         |  |           |   |  |                                     |     
|------------------------ |  | --------- | - |  | ----------------------------------- | ----
|                         |  | Options   |   |  | WeightedAverageGrant-DateFair Price
|Outstanding at January 1 |  | 1,235,584 |   |  | $                                   | 1.20
|Granted                  |  | 20,000    |   |  |                                     | 0.84
|Forfeited                |  |          |   |  |                                     |    
|Vested                   |  | (220,833  | ) |  |                                     | 1.98
|                         |  |           |   |  |                                     |     
|Outstanding at March 31  |  | 1,034,751 |   |  | $                                   | 1.45
|                         |  |           |   |  |                                     |     

Compensation cost from nonvested stock granted to
employees is recognized as expense using the straight-line method over the vesting period. As of March 31, 2010, total unrecognized compensation cost related to nonvested stock options was approximately $160. Approximately half of this cost is
expected to be recognized over the next year, with the remainder primarily over the subsequent two years. For the three months ended March 31, 2010, our total stock-based compensation credit was $54, and for the three months ended
March 31, 2009, our total stock-based compensation expense was approximately $70.

Comprehensive Income
(Loss)Our comprehensive income (loss) includes net income (loss) and cumulative translation adjustments. The components of comprehensive income (loss) are as follows:



|                                  |  |                             |     |      |   |         |  
|--------------------------------- |  | --------------------------- | --- | ---- | - | ------- | -
|                                  |  | Three Months EndedMarch 31, |    
|                                  |  | 2010                        |     | 2009 |  
|Net income (loss)                 |  | $                           | 483 |      | $ | (43,615 | )
|Cumulative translation adjustment |  |                             | 161 |      |   | (166    | )
|                                  |  |                             |     |      |   |         |  
|Total comprehensive income (loss) |  | $                           | 644 |      | $ | (43,781 | )
|                                  |  |                             |     |      |   |         |  

Statement of Cash FlowsCash paid for interest was $167 and $148 for the three months
ended March 31, 2010 and 2009, respectively. Cash paid for income taxes was $44 and $0 for the three months ended March 31, 2010 and 2009, respectively. We had accrued capital expenditures of $1 and $3 at March 31, 2010 and 2009,
respectively.

Segment ReportingOperating segments are defined by the Segments Topic of the FASB
Accounting Standards Codification. Our chief operating decision maker currently operates one operating segment and the expense structure of the business is managed functionally. Our measure of segment profit is consolidated operating income.

Our revenue, aggregated by service offering, is as follows:



|                               |  |                             |        |      |   |       
|------------------------------ |  | --------------------------- | ------ | ---- | - | ------
|                               |  | Three Months EndedMarch 31,
|                               |  | 2010                        |        | 2009
|Transaction processing         |  | $                           | 11,616 |      | $ | 12,046
|Data reporting                 |  |                             | 2,978  |      |   | 2,853 
|                               |  |                             |        |      |   |       
|Transaction and other revenues |  |                             | 14,594 |      |   | 14,899
|Client reimbursements          |  |                             | 84     |      |   | 102   
|                               |  |                             |        |      |   |       
|Total                          |  | $                           | 14,678 |      | $ | 15,001
|                               |  |                             |        |      |   |       

The following is a geographic breakdown of revenues for
the three months ended March 31, 2010 and 2009, and a geographic breakdown of property and equipment, net at March 31, 2010 and December 31, 2009:



|                    |  |                             |        |      |   |       
|------------------- |  | --------------------------- | ------ | ---- | - | ------
|                    |  | Three Months EndedMarch 31,
|                    |  | 2010                        |        | 2009
|Revenues:           |  |                             |        |      |   |       
|United States       |  | $                           | 10,648 |      | $ | 11,518
|Germany             |  |                             | 2,823  |      |   | 2,206 
|Other International |  |                             | 1,207  |      |   | 1,277 
|                    |  |                             |        |      |   |       
|Total               |  | $                           | 14,678 |      | $ | 15,001
|                    |  |                             |        |      |   |       



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##### Table of Contents

|                             |  |                  |       |                     |   |      
|---------------------------- |  | ---------------- | ----- | ------------------- | - | -----
|                             |  | At March 31,2010 |       | At December 31,2009
|Property and equipment, net: |  |                  |       |                     |   |      
|United States                |  | $                | 6,259 |                     | $ | 6,386
|Germany                      |  |                  | 283   |                     |   | 338  
|Other International          |  |                  | 252   |                     |   | 272  
|                             |  |                  |       |                     |   |      
|                             |  | $                | 6,794 |                     | $ | 6,996
|                             |  |                  |       |                     |   |      

LitigationWe are involved in a few
claims incidental to our business. In the opinion of management, the ultimate resolution of such claims will not have a material effect on our financial position, liquidity, or results of operations.

Recent Accounting Pronouncements

International Financial Reporting StandardsIn February 2010, the SEC issued a policy statement and staff work plan regarding
the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (IFRS). IFRS is a comprehensive series of accounting standards published by the International Accounting
Standards Board. Under the proposed timeline set forth by the SEC, we could be required in fiscal year 2015 to prepare financial statements in accordance with IFRS, and the SEC is expected to make a determination in 2011 regarding the mandatory
adoption of IFRS. We are currently assessing the impact that this potential change would have on our consolidated financial statements, and we will continue to monitor the development of the potential implementation of IFRS.

Certain Revenue Arrangement That Include Software ElementsIn October 2009, the FASB issued guidance that changed the
accounting model for revenue arrangements that include both tangible products and software elements. This guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after
June 15, 2010. Early adoption is permitted. We do not elect to adopt this guidance early and do not expect that the implementation of this guidance will have a material effect on our consolidated financial position and results of operations.

Accounting for transfers of financial assetsIn June 2009, the FASB issued accounting guidance that in part,
amended the derecognition guidance to eliminate the exemption from consolidation for qualifying special-purpose entities and require additional disclosures. This guidance is effective for financial asset transfers occurring after the beginning of an
entitys first fiscal year that begins after November 15, 2009. The implementation of this guidance did not have a material effect on our consolidated financial position and results of operations.

Consolidation of variable-interest entitiesIn June 2009, the FASB issued accounting guidance that amends the consolidation
guidance applicable to variable interest entities. The provisions of the new guidance significantly affect the overall consolidation analysis under the previous guidance. This guidance is effective as of the beginning of the first fiscal year that
begins after November 15, 2009. The implementation of this guidance did not have a material effect on our consolidated financial position and results of operations.

2. DEBT

Debt consists
of the following as of March 31, 2010 and December 31, 2009:



|                        |  |              |  |               |       |                  |   |      
|----------------------- |  | ------------ |  | ------------- | ----- | ---------------- | - | -----
|                        |  | MaturityDate |  | March 31,2010 |       | December 31,2009
|Note payable            |  | April 2011   |  | $             | 1,459 |                  | $ | 1,750
|Revolver                |  | April 2011   |  |               | 3,700 |                  |   | 1,600
|                        |  |              |  |               |       |                  |   |      
|                        |  |              | 
|Total                   |  |              |  |               | 5,159 |                  |   | 3,350
|Less current maturities |  |              |  |               | 1,167 |                  |   | 1,167
|                        |  |              |  |               |       |                  |   |      
|                        |  |              | 
|Long-term debt          |  |              |  | $             | 3,992 |                  | $ | 2,183
|                        |  |              |  |               |       |                  |   |      

Our note payable relates to the acquisition of certain
assets and the assumption of certain liabilities of Hi-Mark, LLC. Hi-Mark is principally owned by Kevin Austin, our Executive Vice President of Product Architecture. Our quarterly principal payments are approximately $300 plus interest at a fixed
annual rate of 8.0%. This note matures in April 2011, but all remaining amounts would become immediately due and payable upon a change in control (as defined in the Note Amendment) of TRX. During the three months ended March 31, 2010, we made
principal and interest payments of $292 and $35, respectively, compared to $292 and $61, respectively, during the three months ended March, 31, 2009.



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##### Table of Contents

Our credit agreement with Atlantic Capital Bank (ACB) provides for a senior
secured revolving credit facility with aggregate principal commitments not to exceed $10,000, which includes a $2,000 letter of credit subfacility. Any outstanding letters of credit on this subfacility reduce the borrowing capacity of the credit
agreement. A loan under the credit agreement may be a Base Rate loan or a LIBOR loan, at the option of TRX. Interest under the credit agreement accrues at an interest rate indexed to the prime rate as announced publicly by ACB from time to time (the
Base Rate) or LIBOR (plus 1.75% for Base Rate loans and 3.00% for LIBOR loans) for the revolving credit facility, with a minimum borrowing rate of 4.25%. For letters of credit, the letter of credit fee is equal to the Applicable Rate (as
defined in the credit agreement) times the daily amount available to be drawn under the letter of credit. Overdue amounts bear a fee of 2% per annum above the rate applicable to these amounts. We capitalized $215 of issuance cost related to
this facility and our letter of credit, which is amortized as interest expense over the specific terms of the facility and letter of credit.

The Credit Agreement requires us to meet certain financial tests including a consolidated leverage ratio, and a fixed charge coverage
ratio. The Credit Agreement also contains additional covenants which, among other things, require us to deliver to ACB specified financial information, including annual and quarterly financial information, and limit our ability to (or to permit any
subsidiaries to), subject to various exceptions and limitations, (i) merge with other companies, (ii) create liens on our property, (iii) incur debt obligations, (iv) enter into transactions with affiliates, except on an
arms-length basis, or (v) dispose of property.

BCD Holdings N.V. (BCD Holdings), the parent of our majority
shareholder, is the guarantor to our credit agreement. We pay BCD Holdings a guarantee fee of 250-350 basis points, depending on borrowing levels under the Credit Agreement.

Our financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our ability to continue as a going concern is dependent on having sufficient liquidity for our operations. As of March 31, 2010, we are
in compliance with all financial covenants in the Credit Agreement, $4,800 was available for borrowing, there were $3,700 of borrowings against the facility and there was a $1,500 letter of credit against this facility related to the lease of our
Atlanta office. As of March 31, 2010, the interest rate on our outstanding borrowings was 4.25%. We expect to remain in compliance with all financial covenants over the remaining term of our revolving credit facility with ACB, however, we
acknowledge that market conditions remain uncertain, and, as such, can provide no assurances that we will remain in compliance. We monitor our expected debt compliance and believe we would have time to further reduce our expenses and/or capital
expenditures if needed to remain in compliance. If we are not successful in maintaining our debt compliance the lender is entitled to enforce the guarantee under our credit facility. Management believes its additional sources of liquidity include
but are not limited to, generating positive operating cash flows, generating working capital through our clients and/or vendors, refinancing our debt, or selling assets. Management cannot provide assurance that we will be successful in executing one
or more of these liquidity initiatives in order to continue as a going concern.

3. RELATED-PARTY TRANSACTIONS

BCD Travel is majority-owned by the parent of our majority shareholder, BCD Holdings. In June 2008, we and BCD Travel
provided mutual notice of the parties intent not to renew the Amended and Restated Master Agreement by and between TRX Technology and BCD Travel (the Master Agreement). Effective January 1, 2009, the Master Agreement was
extended for the period January 1, 2009 through August 31, 2009 for the CORREX Services only. The provisions of the Master Agreement expired on December 31, 2008 with regard to all other services covered by that agreement. A separate
three year agreement with an effective date of January 1, 2009 was entered into between the parties for the RESX Services, which had previously been covered under the Master Agreement. During the three months ended March 31, 2010 and 2009,
we recognized transaction and other revenues from BCD Travel, totaling $353 and $1,020, respectively. At March 31, 2010 and December 31, 2009, respectively, $490 and $202 was receivable from BCD Travel.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion and analysis presents the factors that had a material effect on our results of operations during the three months ended
March 31, 2010 and 2009. Also discussed is our financial position as of March 31, 2010. You should read this discussion in conjunction with our unaudited condensed consolidated financial statements and the notes to those unaudited
condensed consolidated financial statements included elsewhere in this report and the audited consolidated financial statements in our Annual Report on Form 10-K. This Managements Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements. See Cautionary Notice Regarding Forward-Looking Statements for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

TRX is a
travel technology and data services provider, offering more than 20 software-as-a-service utilities for online booking, reservation processing, data intelligence, and process automation. We provide patented savings maximization solutions, extending
spend management services to travel buyers all over the world. We complement all of this with a global workforce focused on travel process automation and reengineering. For the foreseeable future, we intend to focus our efforts on the large
opportunities within the travel industry. We deliver our technology applications as a service over the Internet to travel agencies, corporations, travel suppliers, government agencies, credit card associations, credit card issuing banks, and
third-party administrators. TRX is headquartered in Atlanta, Georgia with operations and associates in North America, Europe, and Asia.

We are focused on transaction-based revenue from data reporting, reservation processing and online booking technologies that provide
economies of scale to our clients and to us. These transactions are an integral part of our clients daily operations. Transaction levels, and thus revenues, fluctuate with our clients business levels, which are impacted by market changes
and seasonality. We supplement our transaction-based revenue with short-term projects to implement, customize or enhance our service delivery.

A significant portion of our revenue is derived from long-term contracts with several large clients. Our largest client, Expedia and its
affiliates, accounted for 44% and 42% of our total revenues in the three months ended March 31, 2010 and 2009, respectively. Expedia has been a client since its launch in 1996. In 2006, we replaced our existing contracts with Expedia with a
Master Services Agreement (the Expedia Agreement). The Expedia Agreement continues through 2010. We expect that licensing and services that generated over half of our 2009 revenues from Expedia will cease at the end of 2010. We expect
that 2010 revenues from Expedia will be consistent with 2009 levels, and that 2011 revenues from Expedia will be approximately one-half their 2009 level, assuming we agree on renewal terms with Expedia. We can give no assurance that a renewal will
occur, nor that we will retain business from Expedia during the renewal term or beyond.

In addition, a number of global
airlines have enacted capacity reductions, some permanent and others seasonal, due to continuing weak air travel demand. In general, reduced airline capacity results in lower transaction volumes for us. Based on our expectation of reduced revenues
from Expedia and from lower transaction volumes generally, it is likely that our revenues, operating results and cash flows will be adversely impacted and the impact will be material, unless sufficiently offset by new revenue growth,
further cost reductions, or a combination of the two.

Our scale and process-reengineering expertise has allowed us to reduce
our costs in several areas when measured on a per transaction basis, and we continue to take steps to reduce our cost structure in the normal course of business. We have established pricing models that provide volume-based discounts to share scale
efficiencies with our clients to ensure long-term, mutually-beneficial relationships. As a result, our average revenue per transaction has generally declined over the last few years. We expect it to continue to decline in the future because of scale
efficiencies, as well as trends in the travel processing supply chain that are putting negative pressure on our revenue per transaction.

Effective January 1, 2009, we extended the Amended and Restated Master Agreement by and between TRX Technology and BCD Travel (the
Master Agreement) for the period January 1, 2009 through August 31, 2009 for reservation processing services only. The provisions of the Master Agreement expired on December 31, 2008 with regard to all other services
covered by that agreement. A separate three year agreement with an effective date of January 1, 2009 was entered into between the parties for online booking services, which had previously been covered under the Master Agreement.

In March 2009, as part of a program to reduce our cost structure, we decided not to pay bonuses globally for 2008 performance or provide
funding for the 401K program in the U.S. These expenses were accrued during 2008. The reversal of the amounts accrued for the bonuses and 401K program funding resulted in a reduction of employee related expenses of $1.8 million during the first
quarter of 2009.

Industry factors impacting our operating results include the channel shifts toward online bookings and
direct distribution, cost compression in the travel processing supply chain, use of corporate credit cards, reduction in airline seat capacity, changing and increasing access methods to reach supplier inventory, reduction in supplier commission
rates, global distribution system (GDS) incentive levels, and overall economic conditions. Our estimates of future results are primarily affected by assumptions of transaction volumes, pricing levels, our ability to efficiently scale
with our clients, and client retention and acquisition. These anticipated results may be impacted by seasonality of the travel industry and credit card volumes related to travel.



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##### Table of Contents

As announced on March 12, 2010, and in light of receiving a notice of noncompliance of
the continued listing requirements from The NASDAQ Stock Market, we voluntarily removed our securities from listing and registration on the NASDAQ Capital Market. On March 22, 2010, we filed a Form 25 delisting our shares from the NASDAQ
Capital Market, and trading of our shares was suspended effective at the open of business on March 30, 2010. Our common stock has been quoted on the Pink OTC Markets Inc. electronic quotation service (Pink Sheets) beginning on
April 1, 2010.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates. We believe that, of our significant accounting policies described
in Note 1 of the notes to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q and described in our Form 10-K for the year ended December 31, 2009, the following accounting policies involve a greater
degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to assist investors in fully understanding and evaluating our consolidated financial condition and results of operations.

Revenue recognition. A significant portion of our revenue is recognized based on objective criteria that do not require
significant estimates or uncertainties. Accordingly, revenues recognized under these methods do not require the use of significant estimates that are susceptible to change.

We recognize revenue when certain other consulting or other services are combined with our transaction processing revenues and when all
of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) services have been performed, (3) the fee for services is fixed or determinable, and (4) collectability is reasonably assured. Generally, these
criteria are considered to have been met as follows:



| |  |  | for transaction revenue, in which we perform ticketing, file-finishing, data consolidation and reporting, and customer care services, when the services
are provided;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | for short-term client-specific customizations, which do not generate direct on-going incremental transaction revenue, when the customization has been
delivered to our client; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | for implementation and set-up fees, which generate direct on-going incremental transaction revenue, over the life of the underlying transaction service
agreement. Related costs are deferred and recognized as expenses over the life of the underlying transaction service agreement.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Internal-Use Software Development Costs. We account for internal-use software development costs in accordance with the applicable
guidance which specifies that software costs, including internal payroll costs, incurred in connection with the development or acquisition of software for internal use is charged to technology development expense as incurred until the project enters
the application development phase. Costs incurred in the application development phase are capitalized and depreciated over an estimated useful life of three years, beginning when the software is ready for use.

Each of our software products enters the application development phase upon completion of a detailed program in which (1) we have
established that the necessary skills, hardware and software technology are available to us to produce the product, (2) the completeness of the detailed program design has been confirmed by documentation and tracing the design to product
specifications, and (3) the detailed program design has been reviewed for high-risk development issues (for example, novel, unique, unproven function and features or technological innovations), and any uncertainties related to identified
high-risk development issues have been resolved through coding and testing. Significant judgment is required in determining when the application development phase has begun.



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##### Table of Contents

Goodwill and other intangible assets. Goodwill represents the excess of the purchase
price over the fair value of assets acquired. We test goodwill for impairment annually as of September 30 or more frequently if an event occurs or circumstances change that more likely than not reduce the value of a reporting unit below its
carrying value. We have one reporting unit as defined by the applicable guidance. For purposes of goodwill impairment testing, we compare the fair value of the reporting unit determined on the basis of expected discounted future cash flows with its
carrying amount, including goodwill. We also compare the guideline public company and guideline transaction methods to the value derived from the income approach as a test of the reasonableness of our discounted cash flow analysis. If the carrying
amount of the reporting unit exceeds its fair value, goodwill is considered impaired. If goodwill is considered impaired, the impairment loss to be recognized is measured as the amount by which the carrying amount of the goodwill exceeds implied
fair value of that goodwill. As a result of declining market conditions from January 1, 2009 to March 31, 2009, and their related effect on current and anticipated volumes and pricing with clients, we determined that it was necessary to
test goodwill for impairment as of March 31, 2009. We used the same approach that was used during the 2008 impairment analysis, which required estimates of future operating results and cash flows of the reporting unit discounted using estimated
discount rates ranging from 16% to 18%. The estimates of future operating results and cash flows were principally derived from an updated long-term financial outlook in light of the first quarter of 2009 market conditions and the challenging
economic outlook. As a result of our impairment test, we determined that goodwill was fully impaired and recorded a noncash impairment charge to goodwill of $37.4 million during the first quarter of 2009, which is included in Impairment of
goodwill, intangible assets and other long-lived assets in our unaudited condensed consolidated statements of operations.

The outcome of our goodwill impairment analysis as of March 31, 2009 indicated that the carrying amount of certain
acquisition-related intangible assets or asset groups may not be recoverable. We assessed the recoverability of the acquisition-related intangible assets by determining whether the unamortized balances could be recovered through undiscounted future
net cash flows. We determined that certain of the acquisition-related intangible assets were impaired primarily due to the revised lower revenue forecasts associated with the products incorporating the trademarks and patents, customer relationships
and non-compete agreements. We measured the amount of impairment by calculating the amount by which the carrying value of the assets exceeded their estimated fair values, which were based on projected discounted future net cash flows. As a result of
this impairment analysis, we recorded a noncash impairment charge of approximately $1.1 million during the first quarter of 2009, which is included in Impairment of goodwill, intangible assets and other long-lived assets in our unaudited
condensed consolidated statements of operations.

Impairment of long-lived assets. We record our long-lived assets,
such as property and equipment and software development costs, at cost. We review the carrying value of our long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be
recoverable. We evaluate these assets by examining estimated future cash flows to determine if their current recorded value is impaired. We evaluate these cash flows by using weighted probability techniques as well as comparisons of past performance
against projections. Assets may also be evaluated by identifying independent market values. If we determine that an assets carrying value is impaired, we will record an impairment of the carrying value of the identified asset as an operating
expense in the period in which the determination is made. No such indicator of impairment existed at March 31, 2010. During the first quarter of 2009, we experienced a continued decline in our business that led us to revise our short-term and
long-term financial forecasts which indicated that an impairment of long-lived assets may have occurred. Accordingly, we performed an analysis comparing the undiscounted cash flows estimated to be generated by the long-lived assets to the carrying
amounts of those assets. The estimates of future operating results and cash flows are derived from our updated long-term financial forecast. The results of the comparison of our undiscounted cash flows to the carrying value of the long-lived assets
indicated a requirement to move to a fair value approach. The values of the intangible long lived assets were determined using both the cost approach and an income approach. The relief from royalty method was the specific income approach utilized.
We also used an appraisal of certain long-lived fixed assets to support our conclusions related to those assets. As a result, we recorded a long-lived asset impairment noncash charge during the first quarter of 2009 of $5.2 million, which is
included in Impairment of goodwill, intangible assets and other long-lived assets in our unaudited condensed consolidated statements of operations.

Transaction processing provisions. We have recorded estimates to account for processing errors made in the ticketing or
fareloading process that result in tickets being issued at incorrect prices or from agency commissions being miscalculated. Our reserve for processing errors is based on several factors including historical trends, average debit memo lag time and
timely identification of errors. Transaction processing provisions were approximately $25 and $162 during the three months ended March 31, 2010 and 2009, respectively, and are included as operating expenses in our unaudited condensed
consolidated statements of operations.



13



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##### Table of Contents

Results of Operations

The following table sets forth selected statement of operations data expressed as a percentage of transaction and other revenues for each
of the periods indicated.

Comparison of Three Months Ended March 31, 2010 and March 31, 2009

The following tables set forth comparative revenue and expense items by type, in dollars and as a percentage of transaction and other
revenue, for the three months ended March 31, 2010 and 2009, respectively:



|                                                                      |  |                              |        |   |      |     |   |        |   |         |   |  |     |   |  |   |         |   |  |      |   
|--------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | --- | - | ------ | - | ------- | - |  | --- | - |  | - | ------- | - |  | ---- | --
|                                                                      |  | Three Months Ended March 31, |       
|                                                                      |  | 2010                         |        |   | 2009 |     |   | Change |  
|                                                                      |  | (dollars in thousands)       |       
|Revenue:                                                              |  |                              |        |   |      |     |   |        |   |         |   |  |     |   |  |   |         |   |  |      |   
|Transaction processing                                                |  | $                            | 11,616 |   |      | 80  | % |        |   | 12,046  |   |  | 81  | % |  | $ | (430    | ) |  | (4   | )%
|Data reporting                                                        |  |                              | 2,978  |   |      | 20  |   |        |   | 2,853   |   |  | 19  |   |  |   | 125     |   |  | 4    |   
|                                                                      |  |                              |        |   |      |     |   |        |   |         |   |  |     |   |  |   |         |   |  |      |   
|Transaction and other revenues                                        |  |                              | 14,594 |   |      | 100 | % |        |   | 14,899  |   |  | 100 | % |  |   | (305    | ) |  | (2   | )%
|Client reimbursements                                                 |  |                              | 84     |   |      |     |   |        |   | 102     |   |  |     |   |  |   |         |   |  |      |   
|                                                                      |  |                              |        |   |      |     |   |        |   |         |   |  |     |   |  |   |         |   |  |      |   
|Total revenues                                                        |  |                              | 14,678 |   |      |     |   |        |   | 15,001  |   |  |     |   |  |   |         |   |  |      |   
|Expenses:                                                             |  |                              |        |   |      |     |   |        |   |         |   |  |     |   |  |   |         |   |  |      |   
|Operating                                                             |  |                              | 8,552  |   |      |     |   |        |   | 9,004   |   |  |     |   |  |   | (452    | ) |  | (5   | ) 
|Selling, general, and administrative                                  |  |                              | 3,046  |   |      |     |   |        |   | 2,274   |   |  |     |   |  |   | 772     |   |  | 34   |   
|Technology development                                                |  |                              | 951    |   |      |     |   |        |   | 1,665   |   |  |     |   |  |   | (714    | ) |  | (43  | ) 
|Client reimbursements                                                 |  |                              | 84     |   |      |     |   |        |   | 102     |   |  |     |   |  |   | (18     | ) |  | (18  | ) 
|Impairment of goodwill, intangible assets and other long-lived assets |  |                              | 89     |   |      |     |   |        |   | 43,692  |   |  |     |   |  |   | (43,603 | ) |  | (100 | ) 
|Depreciation and amortization                                         |  |                              | 1,030  |   |      |     |   |        |   | 2,381   |   |  |     |   |  |   | (1,351  | ) |  | (57  | ) 
|Interest (expense) income:                                            |  |                              |        |   |      |     |   |        |   |         |   |  |     |   |  |   |         |   |  |      |   
|Interest income                                                       |  |                              | 6      |   |      |     |   |        |   | 9       |   |  |     |   |  |   | (3      | ) |  | (33  | ) 
|Interest expense                                                      |  |                              | (184   | ) |      |     |   |        |   | (191    | ) |  |     |   |  |   | (7      | ) |  | (4   | ) 
|Income tax (provision) benefit                                        |  |                              | (265   | ) |      |     |   |        |   | 684     |   |  |     |   |  |   | 949     |   |  | 139  |   
|                                                                      |  |                              |        |   |      |     |   |        |   |         |   |  |     |   |  |   |         |   |  |      |   
|                                                                      |  |                              |        |   |      |    
|Net income (loss)                                                     |  | $                            | 483    |   |      |     |   |        | $ | (43,615 | ) |  |     |   |  | $ | 44,098  |   |  |      |   
|                                                                      |  |                              |        |   |      |     |   |        |   |         |   |  |     |   |  |   |         |   |  |      |   

Transaction processing revenues. The decrease for the three months ended March 31,
2010 compared to the same period in the prior year was due to the decreased level of services provided to BCD Travel and Expedia. We expect revenues per transaction to continue to decline in the future because of scaled pricing we offer to clients
for increased volume, as well as trends in the travel processing supply chain that are putting negative pressure on our revenue per transaction.

Data reporting revenues. The data reporting revenues remained relatively constant for both the three months ended March 31,
2010 and 2009.

Operating expenses. The decrease in operating expenses for the three months ended March 31, 2010
compared to the same period in the prior year was primarily due to the program to reduce our cost structure primarily through personnel reductions which took place throughout 2009.

Selling, general and administrative expenses. The increase in selling, general and administrative expenses for the three months
ended March 31, 2010 compared to the same period in the prior year was primarily due to one-time reductions in personnel-related accrued expenses of $0.8 million in the first quarter of 2009, which were partially offset by severance expenses
during the same period.

Technology development expenses. The decrease in technology development expense for the three
months ended March 31, 2010 compared to the same period in the prior year was primarily due to a program to reduce our cost structure through reductions in personnel and contract labor.

Impairment of goodwill, intangible assets and other long-lived assets. We recorded an impairment charge of $43.9 million during
2009 as discussed above under Critical Accounting Policies and Estimates.



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##### Table of Contents

Depreciation and amortization. The decrease for the three months ended March 31,
2010 compared to the same period in the prior year was primarily due to a decrease in our capital additions and a reduction in our property and equipment balances as a result of our impairment of other long-lived assets recorded in the first quarter
of 2009.

Interest income. The decrease for 2009 compared to the prior year was primarily due to reduced average cash
balances available for investment.

Interest expense. Interest expense remained relatively constant for both the three
months ended March 31, 2010 and 2009.

Income tax (provision) benefit. Income tax provision of $0.3 million in the
three months ended March 31, 2010 was primarily due to income from our international operations. Income tax benefit of $0.6 million in the three months ended March 31, 2009 was primarily related to the reversal of $0.6 million of deferred
tax liabilities recorded in 2008 related to our goodwill, which was written-off during the first quarter of 2009.

Liquidity and Capital
Resources

We fund our ongoing operations primarily with cash from operating activities. The underlying drivers of cash
from operating activities include cash receipts from the sale of our products and services and cash payments to our employees and service providers. Most of our larger clients remit payment for our services 30 to 90 days in advance of our service
delivery. Advance payments from clients are recorded as customer deposits and deferred revenue until the service is performed.

The global financial markets have been and continue to be in turmoil, with volatility in the equity and credit markets and with many
financial and other institutions experiencing significant financial distress. At March 31, 2010, our principal sources of liquidity were cash and cash equivalents of $3.0 million and $4.8 million of availability under our revolving credit
facility with Atlantic Capital Bank (ACB). We had $3.7 million of borrowings outstanding under our credit facility at March 31, 2010. Neither our access to nor the value of our cash equivalents have been negatively affected by the
recent liquidity problems of financial institutions. Although we have been prudent in our strategy for our anticipated near-term liquidity needs, it is not possible to accurately predict how the financial market turmoil and the macroeconomic
conditions may affect our financial position, results of operations or cash flows. Additional failures of financial and other institutions could impact our customers ability to pay us, reduce amounts available under our credit facility, cause
losses to the extent cash amounts or the value of securities exceed government deposit insurance limits, and restrict our access to the equity and debt markets. A continuation of the turmoil in the capital and credit markets and the general economic
downturn could adversely impact the availability, terms and/or pricing of financing if we need additional liquidity. We would experience liquidity problems if we are unable to obtain sufficient additional financing as our debt becomes due, or
we otherwise need additional liquidity. Adverse economic conditions, increased competition, or other unfavorable events also could affect our liquidity.

Net cash used in operating activities was $0.4 million during the three months ended March 31, 2010, compared to $0.1 million during
the three months ended March 31, 2009. The increase in cash use was primarily caused by the payment of year-end performance bonuses to employees; no bonuses were paid in the year-ago quarter.

Net cash used in investing activities was $1.1 million during the three months ended March 31, 2010, compared to $1.3 million during
the three months ended March 31, 2009. The driver of our investing activities is our capital expenditures, which include costs associated with internally developed software, as well as infrastructure required to support and maintain our
existing systems and opportunities to reduce costs. As of March 31, 2010, we had no material commitments related to capital expenditures.

Net cash provided by financing activities was $1.8 million during the three months ended March 31, 2010, compared to $0.2 million
during the three months ended March 31, 2009. The primary driver for 2010 was net borrowings on our credit facility.

We
believe that we will be able to meet our current and long-term liquidity and capital requirements, including fixed charges, through our cash flow from operations and other available sources of liquidity, including borrowings under the Credit
Agreement and through our ability to obtain future external financing. We expect to continue to use a portion of our cash flows to fund our strategic capital expenditures, to invest in business opportunities and to meet our debt repayment
obligations.

Our financial statements are prepared in accordance with generally accepted accounting principles applicable to
a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our ability to continue as a going concern is dependent on having sufficient liquidity for our operations. As of
March 31, 2010, we are in compliance with all financial covenants of our revolving credit facility with ACB, $4.8 million was available for borrowing, there were $3.7 million of borrowings against the facility and there was a $1.5 million
letter of credit against this facility related to the lease of our Atlanta office. As of March 31, 2010, the interest rate on our outstanding borrowings was 4.25%. We expect to remain in compliance with all financial covenants over the
remaining term of our revolving credit facility with ACB, however, we acknowledge that market conditions remain uncertain, and, as such, can provide no assurances that we will remain in compliance. We monitor our expected debt compliance and believe
we would have time to further reduce our expenses and/or capital expenditures if needed to remain in compliance. If we are not successful in maintaining our debt compliance the lender is entitled to enforce the guarantee under our credit facility.
Management believes its additional sources of liquidity include but are not limited to, generating positive operating cash flows, generating working capital through our clients and/or vendors, refinancing our debt, or selling assets. Management
cannot provide assurance that we will be successful in executing one or more of these liquidity initiatives in order to continue as a going concern.



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##### Table of Contents

Seasonality

Our business experiences seasonal fluctuations, reflecting seasonal trends for the purchase of air travel by both leisure and corporate
travelers as well as credit card volume related to corporate travel. For example, traditional leisure air travel bookings are higher in the first two calendar quarters of the year in anticipation of spring and summer vacations and holiday periods.
Corporate travel air bookings and credit card spending levels are generally higher in the first and third calendar quarters of the year. Business and consumer travel bookings typically decline during the fourth quarter of each calendar year.
Accordingly, our fourth calendar quarter generally reflects lower revenues as compared to the first three calendar quarters.

Inflation and
Changing Prices

We do not believe that inflation and changing prices have materially impacted our results of operations
during the past two years.

Recent Accounting Pronouncements

International Financial Reporting StandardsIn February 2010, the SEC issued a policy statement and staff work plan regarding
the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (IFRS). IFRS is a comprehensive series of accounting standards published by the International Accounting
Standards Board. Under the proposed timeline set forth by the SEC, we could be required in fiscal year 2015 to prepare financial statements in accordance with IFRS, and the SEC is expected to make a determination in 2011 regarding the mandatory
adoption of IFRS. We are currently assessing the impact that this potential change would have on our consolidated financial statements, and we will continue to monitor the development of the potential implementation of IFRS.

Certain Revenue Arrangement That Include Software ElementsIn October 2009, the FASB issued guidance that changed the
accounting model for revenue arrangements that include both tangible products and software elements. This guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after
June 15, 2010. Early adoption is permitted. We do not elect to adopt this guidance early and do not expect that the implementation of this guidance will have a material effect on our consolidated financial position and results of operations.

Accounting for transfers of financial assetsIn June 2009, the FASB issued accounting guidance that in part,
amended the derecognition guidance to eliminate the exemption from consolidation for qualifying special-purpose entities and require additional disclosures. This guidance is effective for financial asset transfers occurring after the beginning of an
entitys first fiscal year that begins after November 15, 2009. The implementation of this guidance did not have a material effect on our consolidated financial position and results of operations.

Consolidation of variable-interest entitiesIn June 2009, the FASB issued accounting guidance that amends the consolidation
guidance applicable to variable interest entities. The provisions of the new guidance significantly affect the overall consolidation analysis under the previous guidance. This guidance is effective as of the beginning of the first fiscal year that
begins after November 15, 2009. The implementation of this guidance did not have a material effect on our consolidated financial position and results of operations.

Cautionary Notice Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute forward-looking statements as defined in
Section 27A of the Securities Act of 1933 (the Securities Act), Section 21E of the Securities Exchange Act of 1934 (the Exchange Act), the Private Securities Litigation Reform Act of 1995 (the PSLRA), or
in releases made by the Securities and Exchange Commission (the SEC), all as may be amended from time to time. Statements contained in this annual report that are not historical facts may be forward-looking statements within the meaning
of the PSLRA. You can identify forward-looking statements as those that are not historical in nature, particularly those that use terminology such as may, should, expect, anticipate,
contemplate, estimate, believe, plan, project, predict, potential or continue, or the negative of these, or similar terms.

Any such forward-looking statements reflect our beliefs and assumptions and are based on information currently available to us.
Forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such forward-looking statements. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of
the safe harbor provisions of such laws. We caution investors that any forward-looking statements we make are not guarantees or indicative of future performance.



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##### Table of Contents

In evaluating these forward-looking statements, you should consider the following factors,
as well as others set forth in Item 1A under the caption Risk Factors included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC and as are detailed from time
to time in other reports we file with the SEC, any or all of which may cause our actual results to differ materially from any forward-looking statement:



| |  |  | the loss of current key clients or the inability to obtain new clients;
| | - |  | -----------------------------------------------------------------------



| |  |  | volatility in the number of transactions we service;
| | - |  | ----------------------------------------------------



| |  |  | failure or interruptions of our software, hardware or other systems;
| | - |  | --------------------------------------------------------------------



| |  |  | industry declines and other competitive pressures; and
| | - |  | ------------------------------------------------------



| |  |  | our ability to control costs and implement measures designed to enhance operating efficiencies.
| | - |  | -----------------------------------------------------------------------------------------------

Any subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements set forth or referred to above, as well as the risk factors contained in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009 . Except as required by law, we disclaim
any obligation to update such statements or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.



|Item 4T. | Controls and Procedures
|-------- | -----------------------

(a)
Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive officer and principal
financial officer, concluded an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2010. Our evaluation tested controls and other procedures designed to ensure that information required to be disclosed by
us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. Based on
our evaluation, as of March 31, 2010, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting

There have been changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15(d)-15(f) of the Exchange
Act, identified in connection with the evaluation that occurred during the first quarter of fiscal 2010 that has materially affected our internal control over financial reporting.

On January 1, 2010, we implemented a new General Ledger system. We have taken the necessary steps to monitor internal controls
during this period of change and will continue to evaluate the operating effectiveness of related key controls during subsequent periods. This implementation was not undertaken in response to any identified deficiency or weakness to our internal
controls over financial reporting.

With the exception of the implementation noted above, there were no changes to internal
controls in the first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II  OTHER INFORMATION



|Item 1A. | Risk Factors
|-------- | ------------

Other
than as set forth below, the risk factors that could have a negative impact on our business, revenues and performance results remain the same as presented in our annual report on Form 10-K, filed on March 9, 2010, under Item 1A, Risk
Factors.

Our common stock has been delisted from The NASDAQ Capital Market and is now quoted on the Pink Sheets electronic
quotation service, which may, among other things, reduce the price of our common stock and the levels of liquidity available to our shareholders.

As announced on March 12, 2010, and in light of receiving a notice of noncompliance of the continued listing requirements from The
NASDAQ Stock Market, we voluntarily removed our securities from listing and registration on the NASDAQ Capital Market. On March 22, 2010, we filed a Form 25 delisting our shares from the NASDAQ Capital Market, and trading of our shares was
suspended effective at the open of business on March 30, 2010. Our common stock has been quoted on the Pink OTC Markets Inc. electronic quotation service (Pink Sheets) beginning on April 1, 2010.



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##### Table of Contents

The trading of our common stock in the Pink Sheets may reduce the price of our common stock
and the levels of liquidity available to our shareholders. In addition, the trading of our common stock in the Pink Sheets may materially adversely affect our access to the capital markets, and the limited liquidity and potentially reduced price of
our common stock could materially adversely affect our ability to raise capital through alternative financing sources on terms acceptable to us. There may also be other negative implications, including the potential loss of confidence by suppliers,
customers and employees, the loss of institutional investor interest in our company. There is no assurance that our common stock will continue to be quoted on the Pink Sheets, and failure to be quoted will have a material adverse effect on the price
and liquidity of our stock.



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------



|           |  |                                                                                                                                                                                                                                                        
|---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNo. |  | Description                                                                                                                                                                                                                                            
|           | 
|10.1       |  | American Express Amended and Restated Master Service Agreement for Application Service Provider, including Statements of Work #1-#3
and #6, between TRX, Inc. and American Express Travel Related Services Company, Inc., effective January 1, 2010. *
|           | 
|10.2       |  | First Amendment to Asset Purchase Agreement by and among TRX, Inc., Hi-Mark, LLC, Hi-Mark Travel Systems, Inc. and the Owner Entity
Shareholders, dated January 11, 2010. *                                                                           
|           | 
|10.3       |  | Second Amendment to Employment Contract between Kevin Austin and TRX, Inc. dated January 1, 2010.                                                                                                                                                     
|           | 
|31.1       |  | Certification of H. Shane Hammond, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                
|           | 
|31.2       |  | Certification of David D. Cathcart, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                               
|           | 
|32.1       |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                              



| | Filed herewith.
|- | ---------------

|* | Confidential treatment requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange
Commission.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURE

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 thereunto duly authorized.



|                    |  |           |  |                                                                     
|------------------- |  | --------- |  | --------------------------------------------------------------------
|                    |  | TRX, INC.
|                    |  |          
|Dated: May 13, 2010 |  | By:       |  | /s/ David D. Cathcart                                               
|                    |  |           |  | David D. Cathcart                                                   
|                    |  |           |  | Chief Financial Officer
(principal financial and accounting officer)