UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934  For
                the Quarterly Period Ended September 30,
                2006




o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE****SECURITIES
                EXCHANGE ACT OF 1934  For
                the transition period from _________ to
                _________




Commission
      File Number: 0-24592





Tix
      Corporation


(Exact
      name of small business issuer as specified in its charter)





Delaware
            95-4417467(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                Number)




12001
      Ventura Place, Suite 340, Studio City, California 91604


(Address
      of principal executive offices)




Issuer’s
      telephone number, including area code: (818) 761-1002




Not
      applicable


(Former
      name, former address and former fiscal year, if
      changed since last report.)





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




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
o
      No x





As
      of
      October 31, 2006, the Company had 18,678,787 shares of common stock, $0.08
      par
      value, issued and outstanding.





Transitional
      Small Business Disclosure Format: Yes o No x





Documents
      incorporated by reference: None.










Special
      Note Regarding Forward-Looking Statements:





This
      Quarterly Report on Form 10-QSB for the quarterly period ended September 30,
      2006 contains "forward-looking" statements within the meaning of Section 27A
      of
      the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended, including statements that include the words
      “believes”, “expects”, “anticipates”, “intends”, “plans”, “may”, “will” or
      similar expressions that are intended to identify forward-looking statements.
      In
      addition, any statements that refer to expectations, projections or other
      characterizations of future events or circumstances, including any underlying
      assumptions, are forward-looking statements. These forward-looking statements
      may include, among others, statements concerning the Company's expectations
      regarding its business, growth prospects, revenue trends, operating costs,
      working capital requirements, facility expansion plans, competition, results
      of
      operations and other statements of expectations, beliefs, future plans and
      strategies, anticipated events or trends, and similar expressions concerning
      matters that are not historical facts. The forward-looking statements in this
      Quarterly Report on Form 10-QSB for the quarterly period ended September 30,
      2006 involve known and unknown risks, uncertainties and other factors that
      could
      cause the actual results, performance or achievements of the Company to differ
      materially from those expressed in or implied by the forward-looking statements
      contained herein.





Each
      forward-looking statement should be read in context with, and with an
      understanding of, the various disclosures concerning the Company and its
      business made throughout this Quarterly Report on Form 10-QSB for the quarterly
      period ended September 30, 2006, as well as other public reports filed with
      the
      United States Securities and Exchange Commission. Investors should not place
      undue reliance on any forward-looking statement as a prediction of actual
      results or developments. Except as required by applicable law or regulation,
      the
      Company undertakes no obligation to update or revise any forward-looking
      statement contained in this Quarterly Report on Form 10-QSB for the quarterly
      period ended September 30, 2006, whether as a result of new information, future
      events or otherwise.





2




TIX
      CORPORATION AND SUBSIDIARIES





INDEX





PART
                I.
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                StatementsCondensed
                Consolidated Balance Sheets - September 30, 2006 (Unaudited) and
                December
                31, 2005
            
            4Condensed
                Consolidated Statements of Operations (Unaudited) - Three Months
                and Nine
                Months Ended September 30, 2006 and 2005
            
            6Condensed
                Consolidated Statement of Stockholders’ Equity (Deficiency) (Unaudited) -
                Nine Months Ended September 30, 2006
            
            8Condensed
                Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended
                September 30, 2006 and 2005
            
            10Notes
                to Condensed Consolidated Financial Statements (Unaudited) - Three
                Months
                and Nine Months Ended September 30, 2006 and 2005
            
            12Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            
            27Item
                3.
            Controls
                and Procedures
            
            37PART
                II.
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            
            38Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            38Item
                3.
            Defaults
                upon Senior Securities
            
            39Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            39Item
                5.
            Other
                Information
            
            39Item
                6.
            Exhibits
            
            40SIGNATURES
            
            
            41




3




Tix
      Corporation and Subsidiaries


Condensed
      Consolidated Balance Sheets





September
                30,
              2006
            
            December
                31,
              2005(Unaudited)ASSETSCurrent
                assets:Cash
            
            $
            1,228,539
            
            $
            315,763Prepaid
                accounting fee to related party
            
            
            -
            
            
            8,758Prepaid
                expenses and other current assets
            
            
            21,622
            
            
            20,695Total
                current assets
            
            
            1,250,161
            
            
            345,216Property
                and equipment:Office
                equipment and furniture
            
            
            239,400
            
            
            188,728Equipment
                under capital lease
            
            
            386,494
            
            
            387,341Leasehold
                improvements
            
            
            260,912
            
            
            251,216886,806
            
            
            827,285Less
                accumulated depreciation
            
            
            (364,267
            )
            
            (245,165
            )Total
                property and equipment, net
            
            
            522,539
            
            
            582,120Other
                assets:Deferred
                offering costs
            
            
            -
            
            
            58,000Deposits
            
            
            54,946
            
            
            56,196Total
                other assets
            
            
            54,946
            
            
            114,196Total
                assets
            
            $
            1,827,646
            
            $
            1,041,532




(continued)




4




Tix
      Corporation and Subsidiaries


Condensed
      Consolidated Balance Sheets (continued)





September
                30,
              2006
            
            December
                31,
              2005(Unaudited)LIABILITIES
                AND STOCKHOLDERS’ EQUITY (DEFICIENCY)Current
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            1,350,938
            
            $
            1,656,448Current
                portion of capital lease obligations
            
            
            52,963
            
            
            76,007Notes
                payable
            
            
            3,000
            
            
            913,198Debentures
                payable, net of discount
            
            
            -
            
            
            465,584Liabilities
                related to discontinued operations
            
            
            -
            
            
            600Total
                current liabilities
            
            
            1,406,901
            
            
            3,111,837Non-current
                liabilities:Capital
                lease obligations, less current portion
            
            
            153,127
            
            
            194,997Deferred
                rent
            
            
            178,148
            
            
            134,267Total
                non-current liabilities
            
            
            331,275
            
            
            329,264Commitments
                and contingenciesStockholders’
                equity (deficiency):Preferred
                stock, $0.01 par value -
              Authorized
                - 500,000 shares
              Issued
                - None
            
            
            -
            
            
            -Common
                stock, $0.08 par value -
              Authorized
                - 100,000,000 shares
              Issued
                and Outstanding -
              18,608,787
                shares and 11,166,621
              shares
                at September 30, 2006 and
              December
                31, 2005, respectively
            
            
            1,488,703
            
            
            893,330Additional
                paid-in capital
            
            
            13,949,983
            
            
            12,155,991Deferred
                compensation
            
            
            (150,653
            )
            
            (35,000
            )Accumulated
                deficit
            
            
            (15,198,563
            )
            
            (15,413,890
            )Total
                stockholders’ equity (deficiency)
            
            
            89,470
            
            
            (2,399,569
            )Total
                liabilities and stockholders’ equity (deficiency)
            
            $
            1,827,646
            
            $
            1,041,532





See
      accompanying notes to condensed consolidated financial
      statements.


5


Tix
      Corporation and Subsidiaries


Condensed
      Consolidated Statements of Operations (Unaudited)





Three
                Months Ended
              September
                30,2006
            
            2005Revenues
            
            $
            1,434,233
            
            $
            740,989Costs
                and expenses:Direct
                costs of revenues
            
            
            564,925
            
            
            372,905Selling
                and marketing expenses
            
            
            120,884
            
            
            75,825General
                and administrative expenses,
              including
                non-cashequity-based
                costs
              of
                $771,613 in 2006 and $5,000 in 2005
              (including
                $468,717 and $0 to officers
              and
                directors in 2006 and 2005, respectively)
            
            
            1,221,108
            
            
            381,976Depreciation
                and amortization
            
            
            41,196
            
            
            27,230Total
                costs and expenses
            
            
            1,948,113
            
            
            857,936Loss
                from operations
            
            
            (513,880
            )
            
            (116,947
            )Other
                income (expense):Interest
                income
            
            
            7,039
            
            
            2Other
                income
            
            
            -
            
            
            100,000Gain
                on settlement with lender
            
            
            1,078,796
            
            
            -Write-off
                of deferred offering costs
            
            
            (58,000
            )
            
            -Interest
                expense
            
            
            (80,253
            )
            
            (181,851
            )Total
                other income (expense), net
            
            
            947,582
            
            
            (81,849
            )Income
                (loss) from continuing operations
            
            
            433,702
            
            
            (198,796
            )Income
                from discontinued operations:Income
                from closure of discontinued operations
            
            
            -
            
            
            102,617Income
                from discontinued operations
            
            
            -
            
            
            102,617Net
                income (loss)
            
            $
            433,702
            
            $
            (96,179
            )Net
                income (loss) per common share - basicFrom
                continuing operations
            
            $
            0.03
            
            $
            (0.02
            )From
                discontinued operations
            
            
            -
            
            
            0.01$
            0.03
            
            $
            (0.01
            )Net
                income (loss) per common share - dilutedFrom
                continuing operations
            
            $
            0.02
            
            $
            (0.02
            )From
                discontinued operations
            
            
            -
            
            
            0.01$
            0.02
            
            $
            (0.01
            )Weighted
                average common shares outstanding -
              Basic
            
            
            17,041,160
            
            
            10,876,621Diluted
            
            
            19,030,178
            
            
            10,876,621




See
      accompanying notes to condensed consolidated financial statements.




6


Tix
      Corporation and Subsidiaries


Condensed
      Consolidated Statements of Operations (Unaudited)





Nine
                Months Ended
              September
                30,2006
            
            2005Revenues
            
            $
            3,762,450
            
            $
            1,891,678Costs
                and expenses:Direct
                costs of revenues
            
            
            1,518,308
            
            
            1,082,744Selling
                and marketing expenses
            
            
            317,229
            
            
            235,603General
                and administrative expenses,
              including
                non-cash equity-based costs of
              $1,015,844
                in 2006 and $237,996 in 2005
              (including
                $610,648 and $0 to officers
              and
                directors in 2006 and 2005, respectively)
            
            
            2,341,016
            
            
            1,517,759Depreciation
                and amortization
            
            
            119,101
            
            
            66,622Total
                costs and expenses
            
            
            4,295,654
            
            
            2,902,728Loss
                from operations
            
            
            (533,204
            )
            
            (1,011,050
            )Other
                income (expense):Interest
                income
            
            
            7,574
            
            
            8Other
                income
            
            
            37,300
            
            
            100,000Gain
                on settlement with lender
            
            
            1,078,796
            
            
            -Write-off
                of deferred offering costs
            
            
            (58,000
            )
            
            -Interest
                expense
            
            
            (322,480
            )
            
            (491,302
            )Total
                other income (expense), net
            
            
            743,190
            
            
            (391,294
            )Income
                (loss) from continuing operations
            
            
            209,986
            
            
            (1,402,344
            )Income
                from discontinued operations:Income
                from closure of discontinued operations
            
            
            5,341
            
            
            94,224Income
                from discontinued operations
            
            
            5,341
            
            
            94,224Net
                income (loss)
            
            $
            215,327
            
            $
            (1,308,120
            )Net
                income (loss) per common share - basicFrom
                continuing operations
            
            $
            0.02
            
            $
            (0.13
            )From
                discontinued operations
            
            
            -
            
            
            0.01$
            0.02
            
            $
            (0.12
            )Net
                income (loss) per common share - dilutedFrom
                continuing operations
            
            $
            0.01
            
            $
            (0.13
            )From
                discontinued operations
            
            
            -
            
            
            0.01$
            0.01
            
            $
            (0.12
            )Weighted
                average common shares outstanding -
              Basic
            
            
            14,182,382
            
            
            10,673,801Diluted
            
            
            14,870,042
            
            
            10,673,801








See
      accompanying notes to condensed consolidated financial statements.





7




Tix
      Corporation and Subsidiaries


Condensed
      Consolidated Statement of Stockholders’ Equity (Deficiency)
      (Unaudited)


Nine
      Months Ended September 30, 2006




Common
                Stock
            
            Additional
              Paid-in
            
            Deferred
            
            Accumulated
            
            Total
              Stockholders’
                EquityShares
            
            Amount
            
            Capital
            
            Compensation
            
            Deficit
            
            (Deficiency)Balance,
                January 1, 2006
            
            
            11,166,621
            
            $
            893,330
            
            $
            12,155,991
            
            $
            (35,000
            )
            $
            (15,413,890
            )
            $
            (2,399,569
            )Sale
                of common stock and warrants, net of offering costs
            
            
            4,080,000
            
            
            326,400
            
            
            676,600
            
            
            -
            
            
            -
            
            
            1,003,000Issuance
                of common stock upon conversion of convertible debenture
            
            
            93,563
            
            
            7,485
            
            
            17,515
            
            
            -
            
            
            -
            
            
            25,000Vested
                portion of common stock issued to consultants
            
            
            316,250
            
            
            25,300
            
            
            218,596
            
            
            -
            
            
            -
            
            
            243,896Issuance
                of common stock to directors
            
            
            380,000
            
            
            30,400
            
            
            124,400
            
            
            -
            
            
            -
            
            
            154,800Issuance
                of common stock to officers
            
            
            1,000,000
            
            
            80,000
            
            
            407,000
            
            
            (143,000
            )
            
            -
            
            
            344,000Issuance
                of common stock to employees
            
            
            210,000
            
            
            16,800
            
            
            109,500
            
            
            -
            
            
            -
            
            
            126,300Issuance
                of common stock to law firm as payment of  accrued legal
                fees
            
            
            230,000
            
            
            18,400
            
            
            55,743
            
            
            -
            
            
            -
            
            
            74,143Issuance
                of common stock upon exercise of warrants
            
            
            580,000
            
            
            46,400
            
            
            43,600
            
            
            -
            
            
            -
            
            
            90,000Issuance
                of common stock upon exercise of warrants by officer
            
            
            505,588
            
            
            40,447
            
            
            25,279
            
            
            -
            
            
            -
            
            
            65,726Issuance
                of common stock upon exercise of stock options
            
            
            46,765
            
            
            3,741
            
            
            (3,741
            )
            
            -
            
            
            -
            
            
            -




(continued)




8


Tix
        Corporation and Subsidiaries
 Condensed
        Consolidated Statement of Stockholders’ Equity (Deficiency)
        (Unaudited)
 Nine
        Months Ended September 30, 2006


(continued)
  Common
                  Stock
              
              Additional
                Paid-in
              
              Deferred
              
              Accumulated
              
              Total
                Stockholders’
                  EquityShares
              
              Amount
              
              Capital
              
              Compensation
              
              Deficit
              
              (Deficiency)


Issuance
                of warrants to officer
            
            
            
            
            
            
            
            
            70,000
            
            
            (70,000
            )
            
            -
            
            
            -Extension
                of stock option held by officer charged to operations
            
            
            -
            
            
            -
            
            
            49,500
            
            
            -
            
            
            -
            
            
            49,500Amortization
                of deferred compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            97,347
            
            
            -
            
            
            97,347Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            215,327
            
            
            215,327Balance,
                September 30, 2006
            
            
            18,608,787
            
            $
            1,488,703
            
            $
            13,949,983
            
            $
            (150,653
            )
            $
            (15,198,563
            )
            $
            89,470




See
      accompanying notes to condensed consolidated financial statements.




9





Tix
      Corporation and Subsidiaries


Condensed
      Consolidated Statements of Cash Flows (Unaudited)




Nine
                Months Ended
              September
                30,2006
            
            2005Cash
                flows from operating activities:Net
                income (loss)
            
            $
            215,327
            
            $
            (1,308,120
            )Adjustments
                to reconcile net income (loss) to net cash provided by operating
                activities:Depreciation
                and amortization
            
            
            119,102
            
            
            66,622Gain
                on settlement with lender
            
            
            (1,078,796
            )
            
            -Amortization
                of prepaid accounting fee
            
            
            8,758
            
            
            60,521Amortization
                of prepaid legal fee
            
            
            -
            
            
            25,000Amortization
                of deferred compensation
            
            
            97,347
            
            
            15,000Common
                  stock and warrants issued forservices
            
            
            918,497
            
            
            222,996Convertible
                debenture issued for services
            
            
            -
            
            
            2,500Reduction
                  in carrying value of debt - discontinued operations
            
            
            -
            
            
            (70,977
            )Amortization
                of deferred loan costs
            
            
            64,416
            
            
            289,863Write-off
                of deferred offering costs
            
            
            58,000
            
            
            -Changes
                in operating assets and liabilities:(Increase)
                decrease in:Prepaid
                expenses and other current assets
            
            
            (927
            )
            
            (83,412
            )Deposits
            
            
            1,250
            
            
            (7,708
            )Increase
                (decrease) in:Accounts
                payable and accrued liabilities
            
            
            65,989
            
            
            746,990Deferred
                rent
            
            
            43,881
            
            
            102,655Liabilities
                  related to discontinuedoperations
            
            
            (600
            )
            
            (17,892
            )Net
                cash provided by operating activities
            
            
            512,244
            
            
            44,038Cash
                flows from investing activities:Purchases
                of property and equipment
            
            
            (59,521
            )
            
            (170,100
            )Net
                cash used in investing activities
            
            
            (59,521
            )
            
            (170,100
            )Cash
                flows from financing activities:Payments
                on capital lease obligations
            
            
            (64,914
            )
            
            (42,177
            )Payments
                on notes payable
            
            
            (128,759
            )
            
            (50,940
            )Payments
                on convertible debentures
            
            
            (505,000
            )
            
            -Net
                proceeds from convertible debenture
            
            
            -
            
            
            239,300Net
                proceeds from sale of common stock and warrants
            
            
            1,003,000
            
            
            -Exercise
                of warrants
            
            
            155,726
            
            
            -Net
                cash provided by financing activities
            
            
            460,053
            
            
            146,183Cash:Net
                increase
            
            
            912,776
            
            
            20,121Balance
                at beginning of period
            
            
            315,763
            
            
            131,186Balance
                at end of period
            
            $
            1,228,539
            
            $
            151,307




(continued)


10


Tix
        Corporation and Subsidiaries
 Condensed
        Consolidated Statements of Cash Flows (Unaudited) (continued)
  Nine
                  Months Ended
                September
                  30,2006
              
              2005


Supplemental
                disclosures of cash flow information:Cash
                paid for:Interest
            
            $
            146,932
            
            $
            36,538Income
                taxes
            
            
            800
            
            
            1,600Non-cash
                investing and financing activities:Acquisition
                of capital lease assets and related obligation
            
            $
            -
            
            $
            120,136Conversion
                of accounts payable to notes payable
            
            
            -
            
            
            24,000Issuance
                of common stock as payment of accounts payable
            
            
            74,143
            
            
            101,382Issuance
                of common stock for loan referral fees
            
            
            -
            
            
            201,600Issuance
                of common stock upon conversion of convertible debenture
            
            
            25,000
            
            
            -Issuance
                of convertible debenture for prepaid legal fees
            
            
            -
            
            
            12,500Beneficial
                conversion feature of convertible debenture
            
            
            -
            
            
            70,000Issuance
                of common stock and warrants to officers recorded as deferred
                compensation
            
            
            213,000
            
            
            -




See
      accompanying notes to condensed consolidated financial
      statements.


11




Tix
      Corporation and Subsidiaries


Notes
      to
      Condensed Consolidated Financial Statements (Unaudited)


Three
      Months and Nine Months Ended September 30, 2006 and 2005




1.
      Organization and Basis of Presentation





Basis
      of
      Presentation:





The
      condensed consolidated financial statements include the operations of Tix
      Corporation (formerly Cinema Ride, Inc.) and its wholly-owned subsidiaries
      (the
“Company”). All intercompany transactions and balances are eliminated in
      consolidation.





The
      interim condensed consolidated financial statements are unaudited, but in the
      opinion of management of the Company, contain all adjustments, which include
      normal recurring adjustments, necessary to present fairly the financial position
      at September 30, 2006, the results of operations for the three months and nine
      months ended September 30, 2006 and 2005, and the cash flows for the nine months
      ended September 30, 2006 and 2005. The consolidated balance sheet as of December
      31, 2005 is derived from the Company’s audited financial statements.





Certain
      information and footnote disclosures normally included in financial statements
      that have been presented in accordance with generally accepted accounting
      principles have been condensed or omitted pursuant to the rules and regulations
      of the Securities and Exchange Commission with respect to interim financial
      statements, although management of the Company believes that the disclosures
      contained in these financial statements are adequate to make the information
      presented therein not misleading. For further information, refer to the
      consolidated financial statements and notes thereto included in the Company’s
      Annual Report on Form 10-KSB/A for the fiscal year ended December 31, 2005,
      as
      amended, as filed with the Securities and Exchange Commission.





The
      Company’s results of operations for the three months and nine months ended
      September 30, 2006 are not necessarily indicative of the results of operations
      to be expected for the full fiscal year ending December 31, 2006.





Business
      Operations:





Through
      December 31, 2003, the Company was in the ride simulator business. This line
      of
      business was discontinued effective December 31, 2003 (see Note 3).





Since
      January 1, 2004, the Company's business activity, conducted through its
      wholly-owned subsidiary, Tix4Tonight, LLC, has been the sale of tickets for
      Las
      Vegas shows, generally at 50% of the original box office price, on the same
      day
      of the performance, from four ticket booths located in Las Vegas, Nevada (see
      Note 4).





Beginning
      August 10, 2006, as an adjunct to its Las Vegas show ticketing business, the
      Company launched its Tix4Dinner operations from the same locations as the sale
      of show tickets. Tix4Dinner offers reservations for discounted dinners at
      various restaurants on the Las Vegas strip, with dining at specific times on
      the
      same day as the sale. The operations of Tix4Dinner through September 30, 2006
      were not material.





Use
      of
      Estimates:





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities, disclosure of contingent
      assets and liabilities at the date of the financial statements, and the reported
      amounts of revenues and expenses during the reporting period. Actual results
      could differ from those estimates.





Reclassification:





Certain
      2005 amounts have been reclassified to conform to the presentation in
      2006.





12




Operating
      Liquidity:





The
      accompanying financial statements have been prepared in conformity with
      accounting principles generally accepted in the United States of America, which
      contemplate continuation of the Company as a going concern. However, the Company
      had a net loss of $1,022,952 during the year ended December 31, 2005, and had
      a
      working capital deficiency of $2,766,621 and a stockholders' deficiency of
      $2,399,569 at December 31, 2005. These factors raise substantial doubt about
      the
      Company's ability to continue as a going concern. The financial statements
      do
      not include any adjustments relating to the recoverability and classification
      of
      recorded asset amounts, or amounts and classification of liabilities that might
      result from this uncertainty.





During
      the three months and nine months ended September 30, 2006, the Company’s
      operations continued to improve, and the Company reported net income of $433,702
      and $215,327, respectively. The Company’s working capital deficiency decreased
      to $156,740 at September 30, 2006, as compared to $2,766,621 at December 31,
      2005, and the Company’s stockholder’s equity was $89,470 at September 30, 2006,
      as compared to a stockholder’s deficiency of $2,399,569 at December 31, 2005.
      During the nine months ended September 30, 2006, the Company’s operations
      provided $512,244 of cash flows from operations. In addition, during the three
      months ended September 30, 2006, the Company sold common stock and warrants
      to
      accredited investors for net proceeds of $400,000, bringing the total net
      proceeds from the sale of common stock and warrants to accredited investors
      for
      the nine months ended September 30, 2006 to $1,003,000. These funds have been
      used to reduce debt obligations of $1,572,407 that existed at December 31,
      2005,
      and to support the expansion of the operations of Tix4Tonight. Accordingly,
      based on the combination of cash flows from operations and funds from the sale
      of common stock and warrants, the Company believes that it has sufficient
      working capital resources to fund its near-term cash requirements.





Net
      Income (Loss) Per Common Share:





Statement
      of Financial Accounting Standards No. 128, “Earnings Per Share”, requires
      presentation of basic earnings per share (“Basic EPS”) and diluted earnings per
      share (“Diluted EPS”). Basic earnings (loss) per share is computed by dividing
      income (loss) available to common stockholders by the weighted average number
      of
      common shares outstanding during the period. Diluted earnings per share gives
      effect to all dilutive potential common shares outstanding during the period.
      These potentially dilutive securities were included in the calculation of
      earnings per share for the three months and nine months ended September 30,
      2006, but were not included in the calculation of loss per share for the three
      months and nine months ended September 30, 2005 because the Company incurred
      a
      loss during such periods and thus their effect would have been anti-dilutive.
      Accordingly, basic and diluted loss per share is the same for the three months
      and nine months ended September 30, 2005. At September 30, 2006, potentially
      dilutive securities consisted of outstanding warrants and stock options to
      acquire an aggregate of 3,120,096 shares. At September 30, 20005, potentially
      dilutive securities consisted of convertible debentures payable and outstanding
      warrants and stock options to acquire an aggregate of 7,175,934 shares.





Issued
      but unvested shares of common stock issued to outside consultants are excluded
      from the calculation of basic earnings per share, but are included in the
      calculation of diluted earnings per share.




Stock-Based
      Compensation:





The
      Company periodically issues shares of common stock for services rendered or
      for
      financing costs. Such shares are valued based on the market price on the
      transaction date. Issued but unvested shares of common stock issued to outside
      consultants are not recorded in the Company’s financial statements until they
      have vested.





The
      Company periodically issues shares of stock, stock options and warrants to
      employees and non-employees in non-capital raising transactions for services
      and
      for financing costs.





Statement
      of Financial Accounting Standards No. 123, "Accounting for Stock-Based
      Compensation" ("SFAS No. 123"), established a fair value method of accounting
      for stock-based compensation plans and for transactions in which an entity
      acquires goods or services from non-employees in exchange for equity
      instruments. SFAS No. 123 was amended by Statement of Financial Accounting
      Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
      Disclosure", which required companies to disclose in interim financial
      statements the pro forma effect on net income (loss) and net income (loss)
      per
      common share of the estimated fair market value of stock options or warrants
      issued to employees. Through December 31, 2005, the Company accounted for
      stock-based compensation utilizing the intrinsic value method prescribed in
      Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
      Employees" (“APB No. 25”), with pro forma disclosures of net income (loss) as if
      the fair value method had been applied. Accordingly, compensation cost for
      stock
      options was measured as the excess, if any, of the fair market price of the
      Company's stock at the date of grant over the amount an employee must pay to
      acquire the stock.




13





As
      the
      exercise price of stock options and warrants issued to employees was not less
      than the fair market value of the Company's common stock on the date of grant,
      and in accordance with accounting for such options utilizing the intrinsic
      value
      method, there was no related compensation expense recorded in the Company's
      2005
      consolidated financial statements. The fair value of stock options and warrants
      issued to officers, directors and employees at not less than fair market value
      of the Company's common stock on the date of grant was estimated using the
      Black-Scholes option-pricing model, and the effect on the Company's results
      of
      operations was shown as if such stock options and warrants had been accounted
      for pursuant to SFAS No. 123.





In
      December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
      No.
      123 (revised 2004), "Share Based Payment" ("SFAS No. 123R"), a revision to
      SFAS
      No. 123, "Accounting for Stock-Based Compensation". SFAS No. 123R superseded
      APB
      No. 25 and amended SFAS No. 95, "Statement of Cash Flows". Effective January
      1,
      2006, SFAS No. 123R requires that the Company measure the cost of employee
      services received in exchange for equity awards based on the grant date fair
      value of the awards, with the cost to be recognized as compensation expense
      in
      the Company’s financial statements over the vesting period of the
      awards.





The
      Company adopted SFAS No. 123R effective January 1, 2006, and is using the
      modified prospective method in which compensation cost is recognized beginning
      with the effective date (a) based on the requirements of SFAS No. 123R for
      all
      share-based payments granted after the effective date and (b) based on the
      requirements of SFAS No. 123R for all awards granted to employees prior to
      the
      effective date of SFAS No. 123R that remain unvested on the effective date.





Accordingly,
      the Company recognizes compensation cost for equity-based compensation for
      all
      new or modified grants issued after December 31, 2005. Information with respect
      to equity-based compensation for the three months and nine months ended
      September 30, 2006 is presented at Note 7.





In
      addition, commencing January 1, 2006, the Company is required to recognize
      the
      unvested portion of the grant date fair value of awards issued prior to the
      adoption of SFAS No. 123R based on the fair values previously calculated for
      disclosure purposes over the remaining vesting period of the outstanding stock
      options and warrants. The Company did not have any unvested outstanding stock
      options and warrants at December 31, 2005.





Pro
      forma
      information regarding net income (loss) per share is required by SFAS No. 123
      as
      if the Company had accounted for its employee stock options and warrants under
      the fair value method of such statement. However, during the three months and
      nine months ended September 30, 2005, the Company did not issue or have
      outstanding any unvested stock options or warrants to officers, directors and
      employees that vested during such periods. Accordingly, no pro forma financial
      disclosure has been presented for the three months and nine months ended
      September 30, 2005.





14




A
      summary
      of stock option activity under the Company’s options plans for the nine months
      ended September 30, 2006 is shown below.


Number
                  of
                Shares
              
              Weighted
                Average
                Exercise
                Price
              
              Weighted
                Average
                Remaining
                Contractual
                Life
                  (Years)
              
              Intrinsic
                ValueOptions
                  outstanding,December
                  31, 2005
              
              
              211,500
              
              $
              0.15
              
              
              0.6
              
              $
              25,380Granted
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              (60,000
              )
              
              0.15
              
              
              0.6Expired
              
              
              -
              
              
              -
              
              
              -Options
                  outstanding,September
                  30, 2006(all
                  exercisable)
              
              
              151,500
              
              $
              0.15
              
              
              2.7
              
              $
              160,590
  2.
        Recent
        Accounting Pronouncements and Developments
 
 In
        September 2006, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standards No. 157, “Fair Value Measurements”
(“SFAS No. 157”), which establishes a formal framework for measuring fair value
        under GAAP. SFAS No. 157 defines and codifies the many definitions of fair
        value
        included among various other authoritative literature, clarifies and, in
        some
        instances, expands on the guidance for implementing fair value measurements,
        and
        increases the level of disclosure required for fair value measurements. Although
        SFAS No. 157 applies to and amends the provisions of existing FASB and AICPA
        pronouncements, it does not, of itself, require any new fair value measurements,
        nor does it establish valuation standards. SFAS No. 157 applies to all other
        accounting pronouncements requiring or permitting fair value measurements,
        except for: SFAS No. 123(R), share-based payment and related pronouncements,
        the
        practicability exceptions to fair value determinations allowed by various
        other
        authoritative pronouncements, and AICPA Statements of Position 97-2 and 98-9
        that deal with software revenue recognition. SFAS No. 157 is effective for
        financial statements issued for fiscal years beginning after November 15,
        2007,
        and interim periods within those fiscal years.
 
 In
        September 2006, the FASB issued Statement of Financial Accounting Standards
        No.
        158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
        Plans - an Amendment of FASB Statements No. 87, 88, 106, and 123(R)” (“SFAS No.
        158”), which requires for public companies the full funding status of defined
        benefit pension and other postretirement plans to be recognized on the balance
        sheet as an asset (for overfunded plans) or as a liability (for underfunded
        plans). In addition, SFAS No. 158 calls for recognition in other comprehensive
        income of gains or losses and prior service costs or credits that are not
        yet
        included as components of periodic benefit expense. Finally, SFAS No. 158
        requires that the measurement of defined benefit plan assets and obligations
        be
        as of the balance sheet date. The Company plans to adopt the recognition
        provisions of SFAS No. 158 as of the end of the fiscal year end ending after
        December 15, 2006 and the measurement date provisions as of the balance sheet
        date for fiscal years ending after December 15, 2008. The Company does not
        currently have any defined benefit pension or other post retirement
        plans.
 
 In
        June
        2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes, an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48
        provides criteria for the recognition, measurement, presentation and disclosure
        of uncertain tax positions that has an effect on a company’s financial
        statements accounted for in accordance with SFAS No. 109, “Accounting for Income
        Taxes”, as a result of positions taken or expected to be taken in a company’s
        tax return. A tax benefit from an uncertain position may be recognized only
        if
        it is “more likely than not” that the position is sustainable based on its
        technical merits. The provisions of FIN 48 are effective for fiscal years
        beginning after December 15, 2006. The Company is currently evaluating the
        potential effect that the adoption of FIN 48 will have on the Company’s
        financial statement presentation and disclosures.
  15
 
 On
        September 22, 2005, the Securities and Exchange Commission (“SEC”) issued rules
        to delay by one-year the required reporting by management on internal controls
        over financial reporting for non-accelerated filers. The new SEC rule extends
        the compliance date for such registrants to fiscal years ending on or after
        December 15, 2007. Accordingly, the Company qualifies for the deferral until
        its
        year ending December 31, 2007 to comply with the internal control reporting
        requirements.
  3.
        Ride
        Simulator Business
 
 During
        the year ended December 31, 2003, the Company operated two ride facilities
        for
        the full year, as well as one ride facility in a joint venture through February
        15, 2003. The Company operated a ride facility located in Las Vegas, Nevada
        (the
“Las Vegas Facility”), which commenced operations in October 1994 and was
        located in the Forum Shops at Caesar’s Palace Hotel and Casino (the “Forum
        Shops”), a high traffic tourist mall located between Caesar’s Palace Hotel and
        Casino and the Mirage Hotel, in Las Vegas, Nevada, and a ride facility located
        in Edmonton, Alberta, Canada (the “West Edmonton Mall Facility”), which
        commenced operations in August 1995 and was located in the West Edmonton
        Mall, a
        high traffic shopping mall.
 
 Beginning
        in early 2003, the Forum Shops had been engaged in construction related to
        an
        expansion program immediately adjacent to the Company’s Las Vegas ride facility,
        which the Company believed negatively impacted customer traffic and operating
        conditions at this ride facility during 2003. The Company had been in
        discussions with the management of the Forum Shops regarding this issue,
        as a
        result of which the Company suspended the payment of rent on the Las Vegas
        ride
        facility lease during mid-2003. During October 2003, the Forum Shops commenced
        litigation against the Company to collect back rent and to evict the Company’s
        ride facility and terminate the Company’s lease. As a result of the
        aforementioned factors, the Company’s business, operating results and financial
        condition were adversely affected, which contributed to the Company’s decision
        to close this ride facility on or about December 31, 2003.
 
 In
        December 2005, the Company and the Forum Shops entered into a Settlement
        Agreement and Mutual Release of Claims with respect to this litigation. The
        Settlement Agreement and Mutual Release provided that the Forum Shops would
        make
        a one-time cash payment to the Company of $50,000 in complete settlement
        of this
        matter, which was received by the Company on December 28, 2005. In addition,
        the
        Settlement Agreement and Mutual Release contained standard release provisions
        with respect to the Company’s former ride facility lease. In connection with
        this settlement, the Company recorded a gain of $676,657 in 2005, of which
        $50,000 represented the cash settlement and $626,657 reflected a reduction
        in
        previously recorded accrued rent included in liabilities related to discontinued
        operations.
 
 The
        Las
        Vegas Facility and the West Edmonton Mall Facility were closed on or about
        December 31, 2003, thus terminating this line of business. This line of business
        has been presented as a discontinued operation in the Company’s consolidated
        financial statements for the three months and nine months ended September
        30,
        2006 and 2005.
 
 For
        the
        three months ended September 30, 2006 and 2005, the Company recognized income
        related to the closure of the operations discontinued at December 31, 2003
        of $0
        and $102,617, respectively. For the nine months ended September 30, 2006
        and
        2005, the Company recognized income related to the closure of the operations
        discontinued at December 31, 2003 of $5,341 and $94,224, respectively.
 
 At
        September 30, 2006, the Company did not have any liabilities related to
        discontinued operations. At December 31, 2005, liabilities related to
        discontinued operations were $600.
  4.
        Tix4Tonight, LLC
 
 During
        the year ended December 31, 2003, the Company owned 50% of Tickets2Nite,
        LLC, a
        company engaged in the sale of tickets for Las Vegas shows at 50% of the
        original box office price, on the same day of the performance, from a ticket
        booth located on the Las Vegas Strip. The operations of this business were
        terminated effective December 31, 2003.
  16
 
 On
        January 1, 2004, the Company commenced the operation of a same-day discount
        ticket business at a different location and under a different name on the
        Las
        Vegas Strip through the formation of a wholly-owned Nevada limited liability
        company, Tix4Tonight, LLC, which was organized in December 2003. The Company
        owns 100% of the Tix4Tonight business, which has been the Company’s only source
        of operating revenues since January 1, 2004. The operations of Tickets2Nite,
        LLC
        and Tix4Tonight, LLC are not directly comparable, since Tickets2Nite, LLC
        was
        accounted for under the equity method of accounting and Tix4Tonight, LLC
        is
        consolidated with the Company’s operations. The Company’s competition includes
        its former partner in Tickets2Nite, LLC, which operates the same type of
        business in Las Vegas that competes with Tix4Tonight, LLC from one site on
        the
        Las Vegas Strip.
 
 The
        Company conducts the operations of Tix4Tonight at four locations in Las Vegas,
        Nevada: South Strip at the Hawaiian Marketplace Shopping Center (which commenced
        operations in November 2005 and replaced the location next to the
        Harley-Davidson Cafe at Harmon); the Fashion Show Mall Strip entrance in
        front
        of Neiman-Marcus (which commenced operations in February 2005); North Strip
        across from the Stardust Hotel and Casino; and in downtown Las Vegas at the
        Four
        Queens Hotel fronting onto the Fremont Street Experience (which commenced
        operations in December 2005).
 
 Tix4Tonight
        generally sells show tickets made available to it under short-term,
        non-exclusive agreements with approximately 60 Las Vegas shows, out of a
        total
        of approximately 80 Las Vegas shows running at any one time, and typically
        offers tickets for approximately 50 shows on any given day at a discount
        (usually half-price) plus a service fee. Tix4Tonight does not know exactly
        what
        shows it will be able to offer tickets for until the same day of the show.
        There
        are usually many more tickets available each day than are sold, although
        it is
        not uncommon for Tix4Tonight to sell-out its supply of tickets for individual
        shows. The shows are paid only for the tickets that Tix4Tonight actually
        sells
        to customers, thus Tix4Tonight has no financial risk with respect to unsold
        tickets.
 
 The
        Company’s Las Vegas show ticketing business recognizes as revenue the
        commissions and related transaction fees earned from the sale of Las Vegas
        show
        tickets at the time the tickets are paid for by and delivered to the customers.
        The Company’s commissions are calculated based on the face value of the show
        tickets sold. The Company’s transaction fees are charged on a per-ticket basis.
        Claims for ticket refunds, which are generally received and paid the day
        after
        the show date, are charged back to the respective shows and are recorded
        as a
        reduction to the Company’s commissions and fees at the time that such refunds
        are processed. The Company does not have accounts receivable associated with
        its
        sales transactions, as payment is collected at the time of sale.
 
 Beginning
        August 10, 2006, as an adjunct to its Las Vegas show ticketing business,
        the
        Company launched its Tix4Dinner operations from the same locations as the
        sale
        of show tickets. Tix4Dinner offers reservations for discounted dinners at
        various restaurants on the Las Vegas strip, with dining at specific times
        on the
        same day as the sale. The operations of Tix4Dinner through September 30,
        2006
        were not material.
 
 Tix4Dinner
        recognizes as revenue the transaction fees earned from the booking of dinner
        reservations at the time that the reservations are made. The Company expects
        that the number of restaurants participating in this program will initially
        be
        limited. At this time, the Company does not have accounts receivable or accounts
        payable associated with the Tix4Dinner operations, as the Company collects
        the
        transaction fee at the time that the reservation is made, and the dinner
        payment
        is collected directly by the restaurant.
 
 During
        the three months ended September 30, 2006, two hotel showrooms accounted
        for
        approximately 11.7% and 13.0% of revenues, respectively. During the three
        months
        ended September 30, 2005, one hotel showroom and one other ticket source
        each
        accounted for approximately 13.6% of revenues. During the nine months ended
        September 30, 2006, there were no hotel showrooms that accounted for 10.0%
        or
        more of revenues. During the nine months ended September 30, 2005, one hotel
        showroom and one other ticket source accounted for approximately 13.9% and
        13.5%
        of revenues, respectively.
  17
  5.
        Notes
        Payable
 
 Notes
        payable consisted of the following at September 30, 2006 and December 31,
        2005:
 
 2006
              
              2005(Unaudited)Notes
                  payable, Steamboat Capital VII(as
                  assigned by Finova on May 1,2006,
                  and as modified on October29,
                  2004)-
                  Discounted Amount
              
              $
              -
              
              $
              119,759-
                  Remaining Indebtedness
              
              
              -
              
              
              781,439Note
                  payable, other
              
              
              3,000
              
              
              12,000$
              3,000
              
              $
              913,198
  Note
        Payable, Steamboat Capital VII (as assigned by Finova):
 
 On
        December 31, 1996, the Company completed a financing agreement with Finova
        Technology Finance, Inc. (“Finova”), which was structured as a sale leaseback
        transaction of certain equipment owned by the Company. Based on the substance
        of
        this transaction, this financing agreement was accounted for as a note payable
        for financial reporting purposes. The gross loan amount was $1,575,027, with
        interest at 16.64% per annum, repayable over a four year period at $40,903
        per
        month, with a balloon payment of $157,503.
 
 On
        March
        10, 1999, the financing agreement was amended to reduce the monthly payments
        and
        to extend the maturity date of the note payable. On June 25, 2001 and April
        17,
        2002, the Company entered into modification agreements and waivers of default
        with the lender, which, among other provisions, cured prior defaults, provided
        for various modifications to the terms and conditions of the loan, extended
        the
        repayment date, and provided for the issuance of warrants to the
        lender.
  Effective
        October 29, 2004, the Company entered into a further agreement with the lender
        which provided for the Company to repay the lender its aggregate obligation
        at
        September 30, 2004 of $956,439 (including accrued interest payable of $240,197)
        as follows: (i) $175,000 of the $956,439 (the “Discounted Amount”), to be paid
        commencing November 1, 2004, and on the first day of each consecutive month,
        by
        payment of $3,000 to the lender, to be applied first against interest accruing
        for the prior month at the rate of 7.5% per annum, and then, to the extent
        available, as a reduction of the $175,000 principal balance; (ii) on December
        1,
        2006, the unpaid principal balance of the $175,000, plus accrued and unpaid
        interest, to be fully due and payable; and (iii) the $175,000 and any unpaid
        accrued interest may be paid by the Company at any time prior to December
        1,
        2006. The remaining indebtedness in excess of the $175,000 in the amount
        of
        $781,439 (the “Remaining Indebtedness”) will continue to bear interest at 16.64%
        per annum, but will be deemed fully satisfied if the Company pays the lender
        the
        entire $175,000, with interest, as specified above. In conjunction with this
        agreement, the Company also assigned to the lender as additional collateral
        its
        interest in and rights to a key man life insurance policy on the Company’s
        President and Chief Executive Officer. On May 1, 2006, Finova conveyed all
        of
        its right, title and interest in and to the October 29, 2004 agreement to
        Steamboat Capital VII, LLC (“Steamboat”).
 
 The
        balance of the discounted amount was $119,759 at December 31, 2005. On September
        13, 2006, the Company repaid in full its obligation to the lender of $1,180,493
        (including accrued interest of $297,632) by making a final cash payment of
        $101,697. As a result, the Company recognized a non-cash gain on settlement
        of
        debt of $1,078,796 during the three months ended September 30, 2006, which
        has
        been presented as other income (expense) in the consolidated statement of
        operations. At September 30, 2006, the Company had no continuing financial
        obligations of any kind to Finova or Steamboat. There were no early termination
        or prepayment penalties incurred by the Company in conjunction with this
        transaction.
  6.  Issuance
        of Convertible Debentures and Standby Equity Distribution Agreement
 
 Issuance
        of Convertible Debentures to Advantage Capital Development Corp.:
 
 On
        December 7, 2004, the Company closed a financing transaction in which it
        sold 5%
        secured convertible debentures with an aggregate face value of $530,000
        (collectively, the “Debentures”) to Advantage Capital Development Corp.
        (“Advantage”). The Company issued a Debenture with a face value of $250,000 upon
        closing (“Debenture No. 1”) and received net proceeds of $200,000. The Company
        issued another Debenture with a face value of $280,000 on January 6, 2005
        (“Debenture No. 2”) and received net proceeds of $239,300. The Debentures were
        originally scheduled to mature on March 7, 2006. Based on the maturity date
        of
        the Debentures, the Debentures were classified in the Company’s balance sheet as
        current liabilities at December 31, 2005.
  18
 
 Interest
        on the Debentures was originally due at the maturity date was paid monthly
        in
        cash (see below). The Debentures were secured by all of the assets and property
        of the Company. At the option of the holder, the Debentures were convertible
        from time to time after nine months from the date of closing into the Company’s
        common stock at a price per share of either (a) an amount equal to 120% of
        the
        volume weighted average price of the Common Stock as listed on the National
        Association of Securities Dealers, Inc.’s Over-The-Counter Bulletin Board, as
        quoted by Bloomberg, L.P. on the closing date or (b) an amount equal to 80%
        of
        the average volume weighted average price of the Company’s Common Stock, as
        quoted by Bloomberg, L.P. for the 5 trading days immediately preceding the
        conversion date. Notwithstanding the foregoing, at no time could the conversion
        price be less than $0.25 per share. The Company had an option to redeem all
        or a
        portion of the outstanding Debentures at a redemption price of 120% of the
        amount redeemed plus accrued interest.
 
 On
        November 4, 2004, the Company issued to Advantage a warrant to purchase 100,000
        shares of common stock exercisable at $0.25 per share through November 4,
        2007,
        which was determined to have a fair value, calculated pursuant to the
        Black-Scholes option-pricing model, of $36,000. On July 26, 2006 and August
        28,
        2006, Advantage exercised a portion of such warrant to purchase 80,000 shares
        of
        common stock upon payment to the Company of $20,000. On October 18, 2006,
        Advantage exercised the remaining portion of the warrant to purchase 20,000
        shares of common stock upon payment to the Company of $5,000.
 
 As
        described below, the Company had the right to determine the form of payment
        (cash or common stock) for any liquidated damages that the Company might
        be
        required to pay to Advantage as a result of its not fulfilling its registration
        statement requirements with the Securities and Exchange Commission (“SEC”) with
        respect to the shares of common stock underlying the warrant.
 
 The
        Debentures were convertible into equity based on their face amount, which
        resulted in a beneficial conversion feature with a fair value of $62,500
        for
        Debenture No. 1 and $70,000 for Debenture No. 2. The aggregate value of the
        warrant of $36,000, the value of the beneficial conversion features of $62,500
        and $70,000, and the aggregate related financing costs of $90,700 paid by
        the
        Company to the lender were recorded as a discount to the face value of the
        Debentures, and were charged to operations as interest expense over the term
        of
        the Debentures through March 31, 2006.
 
 On
        February 27, 2006, the Company entered into a settlement agreement (the
“Agreement”) with Advantage to modify the Securities Purchase Agreement, the
        Security Agreement, the Warrant, the Debentures, the Escrow Agreement and
        the
        Investor Registration Rights Agreement, each executed on November 4, 2004,
        and
        the Amendments dated December 2004, January 2005 and February 2005, to satisfy
        the outstanding amount due in Liquidated Damages pursuant to the Company’s late
        filing and effectiveness of its Registration Statement as set forth in the
        Investor Registration Rights Agreement. For the year ended December 31, 2005,
        the Company recorded Liquidated Damages of $79,500, which were included in
        interest expense in the Company’s consolidated statement of operations.
 
 In
        accordance with the Agreement, the Company agreed to honor the $25,000
        conversion notice previously submitted by Advantage, issue such conversion
        shares and reduce the balance on the Debentures accordingly. As a result,
        during
        February 2006, the Company issued 93,563 shares of common stock to Advantage
        with a fair market value of $25,000 based on a conversion price of $0.2672
        per
        share.
 
 The
        Company agreed to pay interest on the Debenture’s outstanding balance monthly
        and to repay one-third of the remaining loan balance plus the redemption
        premium
        each on April 1, 2006, June 1, 2006, and August 1, 2006 ($505,000 plus the
        20%
        redemption premium of $101,000, for a total of $606,000). On March 29, 2006,
        the
        Company paid the installment due on April 1, 2006 of $202,000, which consisted
        of a principal payment of $168,333 and a redemption premium of $33,667. On
        May
        30, 2006, the Company paid the installment due on June 1, 2006 of $202,000,
        which consisted of a principal payment of $168,333 and a redemption premium
        of
        $33,667. On July 1, 2006, the Company paid the final installment of $202,000
        due
        on August 1, 2006, which consisted of a principal payment of $168,334 and
        a
        redemption premium of $33,666.
  19
 
 The
        Company recognized the redemption premium as additional interest expense
        as the
        respective installments were paid. As a result of the payment of the final
        installment on July 1, 2006, the Company has fully complied with the terms
        of
        the Agreement.
 
 Standby
        Equity Distribution Agreement with Cornell Capital Partners, L.P.:
 
 On
        December 7, 2004, the Company entered into a financing transaction with Cornell
        Capital Partners, LP (“Cornell”) under which Cornell, at the request of the
        Company, would periodically purchase up to $10,000,000 of the Company’s common
        stock over 24 months pursuant to a Standby Equity Distribution Agreement.
        The
        Company had the right to decide if it would sell stock, as well as the timing
        and amount of such stock sold to Cornell, with the purchase price based upon
        the
        market price of the Company’s common stock at the time of each sale, subject to
        the satisfaction of certain conditions, including the SEC having declared
        effective a registration statement covering the shares of common stock to
        be
        purchased by Cornell. The Company issued 290,000 shares of its common stock
        to
        Cornell as a commitment fee and an additional 290,000 shares of its common
        stock
        on the first year anniversary of the Standby Equity Distribution Agreement.
 
 The
        Company entered into an agreement with Newbridge Securities Corporation
        (“Newbridge”) to serve as exclusive placement agent for the sale of the shares
        of common stock. In consideration for Newbridge’s services, the Company issued
        20,000 shares of its common stock to Newbridge. The shares of common stock
        issued to Cornell and Newbridge were recorded at par value of $0.08 per share
        (aggregate amount $48,000) and were included in deferred offering costs in
        the
        Company’s balance sheet at December 31, 2005.
  On
        July
        20, 2006, the Company terminated its $10,000,000 Standby Equity Distribution
        Agreement with Cornell. The Company never sold any shares of its common stock
        pursuant to such agreement and has no continuing financial obligations of
        any
        kind to Cornell. There were no early termination penalties incurred by the
        Company. As a result of the termination of the financing agreement with Cornell,
        deferred offering costs of $58,000 were charged to operations as other income
        (expense) during the three months ended September 30, 2006.
 
 Agreement
        with Knightsbridge Holdings, LLC:
 
 On
        January 6, 2005, pursuant to an agreement dated as of August 31, 2004 and
        as a
        result of the execution of the Standby Equity Distribution Agreement and
        the
        completion of the issuance of the Debentures, the Company issued 448,000
        shares
        of common stock to Knightsbridge Holdings, LLC (“Knightsbridge”) as a referral
        fee. The Company was obligated to file a registration statement to cover
        200% of
        the shares so issued. The agreement with Knightsbridge was for an initial
        term
        through February 28, 2005, and continued thereafter on a month-to-month basis,
        but the Company did not have the right to terminate the agreement until such
        time as it had fulfilled all of its obligations under its agreement with
        Advantage. The Company also agreed to pay Knightsbridge a monthly consulting
        fee
        of $2,500. The fair market value of the shares of $201,600 ($0.45 per share)
        was
        recorded as a discount to the face value of the Debentures on January 6,
        2005,
        and was charged to operations as interest expense over the remaining term
        of the
        Debentures through March 31, 2006.
 
 Effective
        July 30, 2006, the Company terminated its agreement with Knightsbridge, as
        the
        Company had fulfilled all of its obligations under its agreement with
        Advantage.
 
 Subsequent
        to July 30, 2006, the Company has no continuing financial obligations to
        Knightsbridge except that, for a period of two years thereafter, should the
        Company complete a financing transaction through a source introduced, directly
        or indirectly, by Knightsbridge, Knightsbridge will be entitled to receive
        a
        referral fee for debt financings ranging from 1.0% to 2.0%, and for equity
        financings ranging from 1.5% to 4.0%; and with respect to a merger or
        acquisition transaction, Knightsbridge will be entitled to receive 5.0% of
        any
        securities issued by the Company and a fee ranging from 3.0% to 5.0% of the
        defined transaction value.
  20
 
 Registration
        Rights:
 
 The
        Company was obligated to register the shares of common stock referred to
        above
        (the “Registrable Securities”).
 
 The
        Company was originally obligated to prepare and file, no later than 45 days
        from
        November 4, 2004 (the “Scheduled Filing Deadline”), a registration statement on
        Form S-1 or SB-2 (or, if the Company was then eligible, on Form S-3) with
        the
        SEC under the 1933 Act (the “Initial Registration Statement”) for the
        registration for the resale by all investors who purchased Debentures or
        the
        Company’s warrant. The Company was required to use its best efforts (i) to have
        the Initial Registration Statement declared effective by the SEC no later
        than
        120 days after the date of filing (the “Scheduled Effective Deadline”) and (ii)
        to insure that the Initial Registration Statement and any subsequent
        Registration Statement remained in effect until all of the Registrable
        Securities were sold. The Company would be in default if the Initial
        Registration Statement was not declared effective by the SEC within 120 days
        after filing thereof.
 
 In
        the
        event the Initial Registration Statement was not filed by the Scheduled Filing
        Deadline or was not declared effective by the SEC on or before the Scheduled
        Effective Deadline, or if after the Initial Registration Statement was declared
        effective by the SEC, sales could not be made pursuant to the Initial
        Registration Statement, the Company would be required to pay as liquidated
        damages (the “Liquidated Damages”) to the holder, at the Company’s option,
        either a cash amount or shares of the Company’s common stock within 3 business
        days, after demand therefore, equal to 2% of the liquidated value of the
        Debentures outstanding as Liquidated Damages for each 30 day period after
        the
        Scheduled Filing Deadline or the Scheduled Effective Deadline, as the case
        may
        be. The Debentures were repaid in full in cash on July 1, 2006. Accordingly,
        the
        Company has no further registration obligation with respect to the
        Debentures.
 
 On
        July
        20, 2005, the Company filed a Registration Statement on Form SB-2 with the
        SEC
        to register the shares of common stock pursuant to the Standby Equity
        Distribution Agreement with Cornell, as well as the shares of common stock
        with
        respect to the Company’s commitments to Advantage, Newbridge and Knightsbridge.
        The Registration Statement, as amended, was declared effective by the SEC
        on
        February 13, 2006.
  7.
        Equity-Based Transactions
 
 Arrangement
        with Financial Advisory Firm:
 
 Effective
        as of January 3, 2002, the Company entered into a two-year arrangement with
        a
        financial advisory firm, Gang Consulting Ltd., which provided for the payment
        of
        monthly compensation, either in the form of a payment of $10,000 or the issuance
        of 25,000 shares of common stock. This arrangement was subsequently extended
        through December 31, 2004.
 
 Effective
        January 3, 2005, the Company and Gang Consulting Ltd. entered into a new
        two-year consulting arrangement effective as of January 1, 2005 that provided
        for: (1) the termination of the consulting fee payable to Gang Consulting
        Ltd.
        of $10,000 per month; (2) the cancellation of common stock purchase warrants
        previously issued to Gang Consulting Ltd. to purchase an aggregate of 800,000
        shares of common stock in equal installments of 100,000 shares at $0.50,
        $1.00,
        $1.50, $2.00, $2.50, $3.00, $3.50 and $4.00 per share, respectively; and
        (3) the
        issuance of common stock purchase warrants to purchase 400,000 shares of
        common
        stock, which were fully vested at issuance and exercisable through May 1,
        2008
        as follows: 100,000 shares at $0.25 per share; 100,000 shares at $0.50 per
        share; 50,000 shares at $0.75 per share; 50,000 shares at $1.00 per share;
        25,000 shares at $1.25 per share; 25,000 shares at $1.50 per share; 25,000
        shares at $1.75 per share; and 25,000 shares at $2.00 per share. The aggregate
        fair value of such warrants of $172,000, as calculated pursuant to the
        Black-Scholes option-pricing model, was charged to operations as general
        and
        administrative expense at March 31, 2005, as the warrants were fully vested
        and
        non-forfeitable at the date of issuance.
  21
 During
          the three months and nine months ended September 30, 2006, the Company
          paid Gang
          Consulting Ltd. a cash finder’s fee of $17,000 with respect to the sale of the
          Company’s securities, and the Company issued 50,000 shares of common stock to
          Gang Consulting Ltd. for services rendered, as described
          below.
 Other
        Equity-Based Transactions during the Three Months and Nine Months Ended
        September 30, 2005:
 
 On
        January 31, 2005, the Company issued 104,845 shares of common stock under
        the
        2003 Consultant Stock Plan and 136,539 shares of common stock pursuant to
        an
        exemption from registration to Erick Richardson, a partner in the law firm
        of
        Richardson & Patel LLP, for legal services. The shares issued pursuant to an
        exemption from registration have piggyback registration rights. The aggregate
        fair market value of the 241,384 shares on the date of issuance was $101,382
        ($0.42 per share), all of which was applied to reduce the Company’s accounts
        payable balance to such law firm. The Company also issued an option to purchase
        18,800 shares of common stock under the 2003 Consultant Stock Plan, exercisable
        for a period of five years at $0.50 per share, which had a fair value calculated
        pursuant to the Black-Scholes option pricing model of $7,896. The Company
        also
        agreed to reduce the exercise price of a warrant to purchase 50,000 shares
        of
        common stock previously issued to Erick Richardson under the 2003 Consultant
        Stock Plan on June 16, 2004, from $1.00 per share to $0.50 per share, which
        had
        a fair value calculated pursuant to the Black-Scholes option-pricing model
        of
        $20,500. The aggregate fair value of such warrants of $28,396 was charged
        to
        operations as general and administrative expense at March 31, 2005.
 
 Effective
        February 28, 2005, the Company terminated a consulting agreement with a
        financial public relations firm and agreed to issue 36,000 shares of its
        common
        stock as payment of the accrued but unpaid fee to such firm of $18,000. The
        shares of common stock have piggyback registration rights. The effective
        price
        of $0.50 per share was in excess of the fair market value of the Company’s
        common stock on February 28, 2005.
 
 On
        January 6, 2005, the Company issued 448,000 shares of common stock to
        Knightsbridge Holdings, LLC as a loan referral fee with a value of $201,600
        (see
        Note 6).
 
 On
        May
        24, 2005, the Company entered into a one-year consulting services agreement
        with
        CollegeStock LLC for public relations and communications services, which
        provided for a cash payment of $7,500 and the issuance of a warrant to purchase
        20,000 shares of the Company’s common stock exercisable at $0.24 per share
        through May 24, 2008. The fair value of such warrant of $4,600, as calculated
        pursuant to the Black-Scholes option-pricing model, was charged to operations
        as
        general and administrative expense at June 30, 2005, as the warrant was fully
        vested and non-forfeitable at the date of issuance.
 
 On
        June
        30, 2005, the Company entered into a three-month consulting agreement with
        Wall
        Streets Inside Reporter, Inc. for marketing and strategic planning services,
        which provided for a monthly cash payment of $5,000 and the issuance of 140,000
        shares of common stock. The shares of common stock have piggyback registration
        rights. The aggregate fair market value of such shares of $35,000 was initially
        recorded as deferred compensation in the stockholders’ equity (deficiency)
        section of the Company’s consolidated balance sheet. The parties agreed that the
        services to be rendered pursuant to the consulting agreement would be provided
        beginning when the Company’s registration statement had been declared effective
        by the SEC. Accordingly, the $35,000 was charged to operations over the
        three-month period commencing February 13, 2006 (the date that the Company’s
        registration statement was declared effective by the SEC) and ending May
        13,
        2006.
 
 On
        October 10, 2003, the Company entered into a two-year consulting agreement
        with
        a consultant. The Company issued a warrant to the consultant to purchase
        400,000
        shares of common stock, exercisable at $0.10 per share through October 10,
        2006,
        in monthly installments of 16,667 shares. The fair value of such warrant
        of
        $40,000, as calculated pursuant to the Black-Scholes option-pricing model,
        was
        initially recorded as deferred compensation in the stockholder’s equity
        (deficiency) section of the Company’s consolidated balance sheet. This amount
        was charged to operations over the two-year period beginning October 1, 2003
        and
        ending September 30, 2005. Accordingly, for the three months and nine months
        ended September 30, 2005, $5,000 and $15,000, respectively, was charged to
        operations with respect to such warrant.
 
 Other
        Equity-Based Transactions during the Three Months and Nine Months Ended
        September 30, 2006:
 
 On
        February 23, 2006, the Company issued 230,000 shares of common stock to Erick
        Richardson, a partner in the law firm of Richardson & Patel LLC, under the
        Consultant Stock Plan, with an approximate fair market value of $74,143 ($0.32
        per share) as payment for accrued legal fees.
  22
 
 On
        March
        13, 2006, the Company issued 50,000 shares of common stock to Kimberly Simon,
        its Vice President, as a bonus for services rendered. The shares of common
        stock
        were recorded at their fair market value on the date of issuance of $11,000
        ($0.22 per share) and were charged to operations as general and administrative
        expense at March 31, 2006.
 
 On
        March
        13, 2006, the Company issued a total of 120,000 shares of common stock to
        its
        non-officer employees as a bonus for services rendered. The shares of common
        stock were recorded at their fair market value on the date of issuance of
        $26,400 ($0.22 per share) and were charged to operations as general and
        administrative expense at March 31, 2006.
 
 On
        March
        13, 2006, the Company issued 25,000 shares of common stock to a consultant,
        Ben
        Gayheart, for services rendered. The shares of common stock were recorded
        at
        their fair market value on the date of issuance of $5,500 ($0.22 per share)
        and
        were charged to operations as general and administrative expense at March
        31,
        2006.
 
 On
        March
        13, 2006, the Company issued a total of 300,000 shares of common stock to
        its
        two non-officer directors for services rendered, consisting of 150,000 shares
        to
        Benjamin Frankel and 150,000 shares to Norman Feirstein. The shares of common
        stock were recorded at their fair market value on the date of issuance of
        $66,000 ($0.22 per share) and were charged to operations as general and
        administrative expense at March 31, 2006.
 
 On
        March
        13, 2006, the Company issued 150,000 shares of common stock to Kimberly Simon,
        its Vice President. The shares of common stock are subject to pro rata
        forfeiture over a three-year period if Ms. Simon ceases to be employed by
        the Company. The 150,000 shares of common stock were recorded at their fair
        market value on the date of issuance of $33,000 ($0.22 per share) and such
        amount was initially recorded as deferred compensation in the stockholder’s
        equity (deficiency) section of the Company’s consolidated balance sheet. This
        amount is being charged to operations as general and administrative expense
        over
        the three-year period commencing March 13, 2006.
 
 During
        March 2006, the Company issued 500,000 shares of common stock pursuant to
        a new
        three-year employment agreement with its President and Chief Executive Officer
        (see Note 9). The 500,000 shares of common stock were recorded at their fair
        market value on the date of issuance of $110,000 ($0.22 per share) and such
        amount was initially recorded as deferred compensation in the stockholder’s
        equity (deficiency) section of the Company’s consolidated balance sheet. This
        amount is being charged to operations as general and administrative expense
        over
        the three-year period commencing March 1, 2006.
 
 During
        April 2006, the Company entered into consulting agreement with a consultant,
        Gord Stetling, for investor relations and strategic planning services. The
        Company issued 50,000 shares of common stock, which were recorded at their
        fair
        value of $16,000 ($0.32 per share) and were charged to operations as general
        and
        administrative expense at June 30, 2006.
 
 During
        April 2006, the Company entered into a consulting agreement with a consultant,
        John Martin, for investor relations and strategic planning services. The
        Company
        issued 50,000 shares of common stock, which were recorded at their fair value
        of
        $16,000 ($0.32 per share) and were charged to operations as general and
        administrative expense at June 30, 2006.
 
 On
        April
        19, 2006, the Company extended the expiration date of a stock option to purchase
        150,000 shares of common stock held by Kimberly Simon, its Vice President.
        The
        expiration date was extended from June 5, 2006 to June 5, 2009. The fair
        value
        of such stock option of $49,500, as calculated pursuant to the Black-Scholes
        option-pricing model, was credited to additional paid-in capital and was
        charged
        to operations as general and administrative expense at June 30,
        2006.
 
 On
        April
        25, 2006, the Company issued 10,000 shares of common stock to a consultant,
        Jerry Cornwell, for investor relation services, which were recorded at their
        fair value of $3,400 ($0.34 per share) and were charged to operations as
        general
        and administrative expense at June 30, 2006.
  23
 
 On
        June
        5, 2006, Sue Harrison, a former employee exercised (on a cashless basis)
        a
        previously issued stock option for 60,000 shares of common stock with an
        exercise price of $0.15 per share. Accordingly, the aggregate exercise price
        of
        $9,000 was paid through the surrender and cancellation of 13,235 shares with
        a
        fair market value on the date of exercise of $0.68 per share, which resulted
        in
        the issuance of 46,765 shares of common stock.
 
 On
        June
        12, 2006, the Company issued 400,000 shares of common stock to Irwin Olian
        upon
        the exercise of a previously issued warrant at an exercise price of $0.10
        per
        share and received cash proceeds of $40,000.
 
 On
        July
        20, 2006, the Company entered into separate consulting agreements with two
        consultants, Rick Kraniak and Joe Marsh, to provide strategic advisory services
        to the Company over a two-year period which provide for each consultant to
        receive 150,000 shares of common stock vesting monthly over the term of the
        respective agreement. The 31,250 shares of common stock that had vested at
        September 30, 2006 were recorded at their approximate fair market value on
        such
        date of $36,496 and were charged to operations as general and administrative
        expense at September 30, 2006 **.**
 
 On
        July
        26, 2006, the Company issued 40,000 shares of common stock to Advantage upon
        the
        exercise of a previously issued warrant at an exercise price of $0.25 per
        share
        and received cash proceeds of $10,000.
 
 On
        July
        28, 2006, the Company issued 100,000 shares of common stock to Rick Kraniak
        upon
        the exercise of a previously issued warrant at an exercise price of $0.30
        per
        share and received cash proceeds of $30,000.
 
 On
        August
        28, 2006, the Company issued 40,000 shares of common stock to Advantage upon
        the
        exercise of a previously issued warrant at an exercise price of $0.25 per
        share
        and received cash proceeds of $10,000.
 
 On
        September 28, 2006, the Company issued 200,000 shares of common stock to
        Mitch
        Francis, its President and Chief Executive Officer, as a bonus for services
        rendered. The shares of common stock were recorded at their fair market value
        on
        the date of issuance of $222,000 ($1.11 per share) and were charged to
        operations as general and administrative expense at September 30, 2006.
 
 On
        September 28, 2006, the Company issued 100,000 shares of common stock to
        Kimberly Simon, its Vice President, as a bonus for services rendered. The
        shares
        of common stock were recorded at their fair market value on the date of issuance
        of $111,000 ($1.11 per share) and were charged to operations as general and
        administrative expense at September 30, 2006.
 
 On
        September 28, 2006, the Company issued a total of 90,000 shares of common
        stock
        to its non-officer employees as a bonus for services rendered. The shares
        of
        common stock were recorded at their fair market value on the date of issuance
        of
        $99,900 ($1.11 per share) and were charged to operations as general and
        administrative expense at September 30, 2006.
 
 On
        September 28, 2006, the Company issued a total of 80,000 shares of common
        stock
        to its two non-officer directors for services rendered, consisting of 40,000
        shares to Benjamin Frankel and 40,000 shares to Norman Feirstein. The shares
        of
        common stock were recorded at their fair market value on the date of issuance
        of
        $88,800 ($1.11 per share) and were charged to operations as general and
        administrative expense at September 30, 2006.
 
 On
        September 28, 2006, the Company issued 50,000 shares of common stock to each
        of
        three consultants (Rick Kraniak, Joe Marsh and Gang Consulting Ltd.) for
        services rendered, for a total of 150,000 shares of common stock. The 150,000
        shares of common stock were recorded at their fair market value on the date
        of
        issuance of $166,500 ($1.11 per share) and were charged to operations as
        general
        and administrative expense at September 30, 2006.
 
 During
        the nine months ended September 30, 2006, the Company raised additional equity
        capital through the sale of units in a private placement to accredited investors
        at $0.25 per unit, with each unit consisting of one share of restricted common
        stock and a warrant to purchase one-half share of common stock, exercisable
        at
        $0.50 per share for a period of 24 months. The shares and warrants have limited
        piggyback registration rights. The Company sold 4,080,000 units and received
        gross cash proceeds of $1,020,000, as a result of which the Company issued
        4,080,000 shares of common stock and 2,040,000 warrants. The Company paid
        a cash
        finder’s fee of $17,000 to Gang Consulting Ltd. with respect to such equity
        offering, which was recorded as a reduction to additional paid-in capital
        during
        the nine months ended September 30, 2006, as a result of which net cash proceeds
        from the private placement through September 30, 2006 were
        $1,003,000.
  24
 
 On
        September 28, 2006, Mitch Francis, the Company’s President and Chief Executive
        Officer, exercised a portion of a previously issued warrant to acquire 615,384
        shares of common stock at an exercise price of $0.13 per share. Pursuant
        to such
        warrant, Mr. Francis acquired 505,588 shares of common stock by offsetting
        accrued but unpaid compensation of $65,726.
 
 On
        January 18, 2006, the Company entered into an agreement with Kimberly Simon,
        its
        Vice President, that provides for her to receive a bonus in the form of a
        warrant for 100,000 shares of common stock, exercisable for a period of five
        years at $0.36 per share (the fair market value on the date of the agreement),
        that vests only in the event that the gross number of tickets sold in 2006
        is at
        least equal to 125% of the gross number of tickets sold in 2005. As of June
        30,
        2006, the Company had determined that such vesting milestone had been met.
        Accordingly, the fair value of such warrant of $70,000, calculated pursuant
        to
        the Black-Scholes option-pricing model, is being charged to operations as
        general and administrative expense over the six-month period commencing July
        1,
        2006 and ending December 31, 2006, as a result of which $35,000 was charged
        to
        operations as general and administrative expense during the three months
        ended
        September 30, 2006.
 
 8.
        Related Party Transactions
 
 During
        2006, Benjamin Frankel, a director of the Company, was a principal in Frankel,
        LoPresti & Co., an accountancy corporation. During 2005, Mr. Frankel
        was a principal in the accounting firm of Frankel, Lodgen, Lacher, Golditch,
        Sardi & Howard LLP.
 
 Effective
        March 6, 2006, the Company entered into a one-year agreement with
        Mr. Frankel’s current firm for certain business, accounting and tax
        advisory services to be provided by Mr. Frankel, for a monthly retainer fee
        of $5,000 commencing as of January 1, 2006. Other services outside the scope
        of
        this agreement will be invoiced separately by Mr. Frankel’s firm. This
        agreement was approved by the disinterested members of the Company’s Board of
        Directors.
 
 During
        the three months ended September 30, 2006 and 2005, the Company incurred
        fees to
        such accounting firms for accounting and tax services of $12,448 and $33,949,
        respectively. During the nine months ended September 30, 2006 and 2005, the
        Company incurred fees to such accounting firms for accounting and tax services
        of $55,984 and $65,670, respectively. In addition, during the nine months
        ended
        September 30, 2006, the Company wrote-off the remaining balance of the prepaid
        accounting fee to Mr. Frankel’s former firm at December 31, 2005 of $8,758.
 
 At
        December 31, 2005, the Company had recorded accrued compensation due to its
        President and Chief Executive Officer of $65,726, which was included in accounts
        payable and accrued liabilities at such date. On September 28, 2006, such
        accrued compensation amount was settled by offsetting it against the aggregate
        exercise price of a portion of an outstanding warrant to acquire 615,384
        shares
        of common stock exercisable at $0.13 per share that had been previously issued
        to the President and Chief Executive Officer, resulting in the issuance of
        505,588 shares of common stock.
 
 9.
        Commitments and Contingencies
 
 Effective
        March 1, 2006, the Company entered into a three-year employment agreement
        with
        Mitch Francis, its President and Chief Executive Officer, to serve as Chairman
        of the Board of Directors, President and Chief Executive Officer. The agreement
        provided for a base annual salary of $275,000, annual increases of 8%, benefits,
        and annual bonuses equal to 6% of the Company’s annual earnings in excess of
        $500,000 before taxes, depreciation and amortization, but after interest
        expense. The agreement also provided that the Company would issue to
        Mr. Francis 500,000 shares of restricted common stock within 30 days of
        March 1, 2006. The shares of common stock were issued on March 13, 2006.
        The
        shares of common stock are subject to a prohibition on being traded, encumbered
        or otherwise transferred (without prior board approval), which restriction
        shall
        lapse in equal annual installments on March 1, 2007, 2008 and 2009. Upon
        the
        occurrence of a change in control of the Company, as defined, Mr. Francis
        will be entitled to, among other compensation, an amount equal to five times
        his
        annual base salary immediately prior to the change in control event.
  25
 
 Effective
        July 31, 2006, the Company entered into a new Las Vegas, Nevada office facility
        lease commencing September 1, 2006 for a term of 61 months at an initial
        base
        rate of $4,786 per month.
 
 10.
        Income Taxes
 
 The
        Company did not provide for any Federal or state income tax expense during
        the
        three months and nine months ended September 30, 2006 as a result of the
        availability of net operating loss carryfowards. As of September 30, 2006,
        the
        Company had provided a 100% valuation allowance with respect to its Federal
        and
        state net operating loss carryforwards, as it cannot determine that it is
        more
        likely than not that it will be able to realize such deferred tax assets.
 
 As
        of
        December 31, 2005, for Federal income tax purposes, the Company had
        approximately $11,150,000 in net operating loss carryforwards expiring through
        2015. As of December 31, 2005, for state income tax purposes, the Company
        had
        approximately $1,002,000 in net operating loss carryforwards expiring through
        2015.
 
 Internal
        Revenue Code Section 382 substantially restricts the ability of a corporation
        to
        utilize existing net operating losses in the event of a defined “ownership
        change”. The Company has determined that there will likely be significant
        limitations on its ability to utilize its net operating loss carryforwards
        in
        future periods for Federal income tax purposes due to such ownership
        changes.
 
 Reconciliation
        of the effective income tax rate to the United States statutory income tax
        rate
        for the three months and nine months ended September 30, 2006 and 2005 is
        as
        follows:
 
 Three
                  Months Ended
              
              Nine
                  Months EndedSeptember
                  30,
              
              September
                  30,2006
              
              2005
              
              2006
              
              2005Tax
                  expense at U.S. statutoryincome
                  tax rate
              
              
              34.0
              %
              
              (34.0
              )%
              
              34.0
              %
              
              (34.0
              )%Increase
                  in the valuationallowance
              
              
              -
              
              
              34.0
              
              
              -
              
              
              34.0Utilization
                  of net operatingloss
                  carryforward
              
              
              (34.0
              )
              
              -
              
              
              (34.0
              )
              
              -Effective
                  income tax rate
              
              
              -
              %
              
              -
              %
              
              -
              %
              
              -
              %
  11.
        Subsequent Events
 
 On
        October 18, 2006, the Company issued 20,000 shares of common stock upon the
        exercise of a previously issued warrant at an exercise price of $0.25 per
        share
        and received cash proceeds of $5,000.
 
 On
        October 18, 2006, the Company issued 50,000 shares of common stock upon the
        exercise of a previously issued warrant at an exercise price of $0.50 per
        share
        and received cash proceeds of $25,000.
  26
  ITEM
        2.
        MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 Overview:
 
 Effective
        January 1, 2004, the Company’s sole business activity, conducted through its
        wholly-owned subsidiary, Tix4Tonight, LLC, was the sale of tickets for Las
        Vegas
        shows, generally at 50% of the original box office price, on the same day
        of the
        performance, from four ticket booths located in Las Vegas, Nevada.
 
 Beginning
        August 10, 2006, as an adjunct to its Las Vegas show ticketing business,
        the
        Company launched its Tix4Dinner operations from the same locations as the
        sale
        of show tickets. Tix4Dinner offers reservations for discounted dinners at
        various restaurants on the Las Vegas strip, with dining at specific times
        on the
        same day as the sale. The operations of Tix4Dinner through September 30,
        2006
        were not material.
 
 The
        Company conducts the operations of Tix4Tonight at four locations in Las Vegas,
        Nevada: South Strip at the Hawaiian Marketplace Shopping Center (which commenced
        operations in November 2005 and replaced the location next to the
        Harley-Davidson Cafe at Harmon); the Fashion Show Mall Strip entrance in
        front
        of Neiman-Marcus (which commenced operations in February 2005); North Strip
        across from the Stardust Hotel and Casino; and in downtown Las Vegas at the
        Four
        Queens Hotel fronting onto the Fremont Street Experience (which commenced
        operations in December 2005).
 
 Critical
        Accounting Policies and Estimates:
 
 The
        Company prepared its consolidated financial statements in accordance with
        accounting principles generally accepted in the United States of America.
        The
        preparation of these financial statements requires the use of estimates and
        assumptions that affect the reported amounts of assets and liabilities and
        the
        disclosure of contingent assets and liabilities at the date of the financial
        statements and the reported amount of revenues and expenses during the reporting
        period. Management periodically evaluates the estimates and judgments made.
        Management bases its estimates and judgments on historical experience and
        on
        various factors that are believed to be reasonable under the circumstances.
        Actual results may differ from these estimates as a result of different
        assumptions or conditions.
 
 The
        following critical accounting policies affect the more significant judgments
        and
        estimates used in the preparation of the Company’s consolidated financial
        statements.
 
 Revenue
        Recognition and Presentation:
 
 The
        Company’s Las Vegas show ticketing business recognizes as revenue the
        commissions and related transaction fees earned from the sale of Las Vegas
        show
        tickets at the time the tickets are paid for by and delivered to the customers.
        Tix4Dinner recognizes as revenue the transaction fees earned from the booking
        of
        dinner reservations at the time that the reservations are made. The Company’s
        commissions are calculated based on the face value of the show tickets sold.
        The
        Company’s transaction fees are charged on a per-ticket basis. Claims for ticket
        refunds, which are generally received and paid the day after the show date,
        are
        charged back to the respective shows or restaurants and are recorded as a
        reduction to the Company’s commissions and fees at the time that such refunds
        are processed. The Company does not have accounts receivable associated with
        its
        sales transactions, as payment is collected at the time of sale.
 
 Impairment
        of Long-Lived Assets:
 
 The
        Company’s long-lived assets consist of property and equipment. In assessing the
        impairment of property and equipment, the Company makes assumptions regarding
        the estimated future cash flows and other factors to determine the fair value
        of
        the respective assets. If these estimates or the related assumptions change
        in
        the future, the Company may be required to record impairment charges for
        these
        assets.
 
 Income
        Taxes:
 
 The
        Company records a valuation allowance to reduce its deferred tax assets to
        the
        amount that is more likely than not to be realized. In the event the Company
        was
        to determine that it would be able to realize its deferred tax assets in
        the
        future in excess of its recorded amount, an adjustment to the deferred tax
        assets would be credited to operations in the period such determination was
        made. Likewise, should the Company determine that it would not be able to
        realize all or part of its deferred tax assets in the future, an adjustment
        to
        the deferred tax assets would be charged to operations in the period such
        determination was made.
  27
 
 Recent
        Accounting Pronouncements and Developments:
 
 In
        September 2006, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standards No. 157, “Fair Value Measurements”
(“SFAS No. 157”), which establishes a formal framework for measuring fair value
        under GAAP. SFAS No. 157 defines and codifies the many definitions of fair
        value
        included among various other authoritative literature, clarifies and, in
        some
        instances, expands on the guidance for implementing fair value measurements,
        and
        increases the level of disclosure required for fair value measurements. Although
        SFAS No. 157 applies to and amends the provisions of existing FASB and AICPA
        pronouncements, it does not, of itself, require any new fair value measurements,
        nor does it establish valuation standards. SFAS No. 157 applies to all other
        accounting pronouncements requiring or permitting fair value measurements,
        except for: SFAS No. 123(R), share-based payment and related pronouncements,
        the
        practicability exceptions to fair value determinations allowed by various
        other
        authoritative pronouncements, and AICPA Statements of Position 97-2 and 98-9
        that deal with software revenue recognition. SFAS No. 157 is effective for
        financial statements issued for fiscal years beginning after November 15,
        2007,
        and interim periods within those fiscal years.
 
 In
        September 2006, the FASB issued Statement of Financial Accounting Standards
        No.
        158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
        Plans - an Amendment of FASB Statements No. 87, 88, 106, and 123(R)” (“SFAS No.
        158”), which requires for public companies the full funding status of defined
        benefit pension and other postretirement plans to be recognized on the balance
        sheet as an asset (for overfunded plans) or as a liability (for underfunded
        plans). In addition, SFAS No. 158 calls for recognition in other comprehensive
        income of gains or losses and prior service costs or credits that are not
        yet
        included as components of periodic benefit expense. Finally, SFAS No. 158
        requires that the measurement of defined benefit plan assets and obligations
        be
        as of the balance sheet date. The Company plans to adopt the recognition
        provisions of SFAS No. 158 as of the end of the fiscal year end ending after
        December 15, 2006 and the measurement date provisions as of the balance sheet
        date for fiscal years ending after December 15, 2008. The Company does not
        currently have any defined benefit pension or other post retirement
        plans.
 
 In
        June
        2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes, an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48
        provides criteria for the recognition, measurement, presentation and disclosure
        of uncertain tax positions that has an effect on a company’s financial
        statements accounted for in accordance with SFAS No. 109, “Accounting for Income
        Taxes”, as a result of positions taken or expected to be taken in a company’s
        tax return. A tax benefit from an uncertain position may be recognized only
        if
        it is “more likely than not” that the position is sustainable based on its
        technical merits. The provisions of FIN 48 are effective for fiscal years
        beginning after December 15, 2006. The Company is currently evaluating the
        potential effect that the adoption of FIN 48 will have on the Company’s
        financial statement presentation and disclosures.
 
 On
        September 22, 2005, the Securities and Exchange Commission (“SEC”) issued rules
        to delay by one-year the required reporting by management on internal controls
        over financial reporting for non-accelerated filers. The new SEC rule extends
        the compliance date for such registrants to fiscal years ending on or after
        December 15, 2007. Accordingly, the Company qualifies for the deferral until
        its
        year ending December 31, 2007 to comply with the internal control reporting
        requirements.
 
 Results
        of Operations:
 
 Three
        Months Ended September 30, 2006 and 2005:
 
 Revenues.
        Revenues from ticket commissions and fees were $1,434,233 **** for
        the
        three months ended September 30, 2006, as compared to $740,989 for the three
        months ended September 30, 2005, an increase of $693,244 or 93.6 **%.** Commissions
        and fees were earned on the gross sales value of show tickets sold to customers
        of $6,217,781 for the three months ended September 30, 2006, as compared
        to
        $2,735,018 for the three months ended September 30, 2005, an increase of
        $3,482,762 or 127.3%. Commissions and fees earned as a percentage of gross
        show
        ticket sales were 23.0% for the three months ended September 30, 2006, as
        compared to 27.1% for the three months ended September 30, 2005, as a result
        of
        lower than normal discounts from face value for some higher-priced shows.
  28
 
 Direct
        Costs of Revenues. Direct costs of revenues were $564,925 for the three months
        ended September 30, 2006, as compared to $372,905 for the three months ended
        September 30, 2005, an increase of $192,020 or 51.5%. Direct costs of revenues
        decreased to 39.4% of revenues for the three months ended September 30, 2006,
        as
        compared to 50.3% of revenues for the three months ended September 30, 2005,
        as
        a result of the significant increase in revenues in 2006 as compared to 2005.
        Direct costs of revenues increased on an absolute basis in 2006 as compared
        to
        2005 as a result of an increase in rent expense resulting from expanded or
        additional ticketing locations opened in late 2005, and an increase in payroll
        costs resulting from the hiring of additional employees to staff these
        locations.
  Selling
        and Marketing Expenses. Selling and marketing expenses were $120,884 for
        the
        three months ended September 30, 2006, as compared to $75,825 for the three
        months ended September 30, 2005, an increase of $45,059 or 59.4%, primarily
        as a
        result of an increase in discretionary magazine advertising expenditures.
        Selling and marketing expenses decreased to 8.4% of revenues for the three
        months ended September 30, 2006, as compared to 10.2% of revenues for the
        three
        months ended September 30, 2005.
 
 Selling
        and marketing expenses consist primarily of advertising and promotional costs
        related to the Tix4Tonight business.
 
 General
        and Administrative Expenses. General and administrative expenses were $1,221,108
        for the three months ended September 30, 2006, as compared to $381,976 for
        the
        three months ended September 30, 2005, an increase of $839,132 or 219.7%.
        General and administrative expenses were 85.1% of revenues for the three
        months
        ended September 30, 2006, as compared to 51.6% of revenues for the three
        months
        ended September 30, 2005. Included in general and administrative expenses
        were
        equity-based compensation expenses of $771,613 for the three months ended
        September 30, 2006, as compared to $5,000 for the three months ended September
        30, 2005, of which $468,717 related to officers and directors in 2006, as
        compared to $0 in 2005.
 
 General
        and administrative expenses also increased on an absolute basis in 2006 as
        compared to 2005 as a result of an increase in merchant fees and corporate
        staffing costs, which were offset in part by a decrease in consulting and
        legal
        fees.
 
 Significant
        components of general and administrative expenses consist of personnel and
        personnel-related costs, insurance, legal and accounting fees, consulting and
        advisory fees, and occupancy costs.
 
 Depreciation
        and Amortization. Depreciation and amortization was $41,196 for the three
        months
        ended September 30, 2006, as compared to $27,230 for the three months ended
        September 30, 2005, an increase of $13,966 or 51.3%, primarily as a result
        of
        increased depreciation and amortization incurred with respect to leasehold
        improvements and equipment acquired for Tix4Tonight’s new ticketing locations in
        Las Vegas, Nevada.
 
 Loss
        from
        Operations. As a result of the aforementioned factors, the loss from operations
        for the three months ended September 30, 2006 was $513,880, which included
        non-cash compensation expense of $771,613, as compared to a loss from operations
        of $116,947 for the three months ended September 30, 2005, which included
        non-cash compensation expense of $5,000.
 
 Interest
        Income. Interest income was $7,039 for the three months ended September 30,
        2006, as compared to $2 for the three months ended September 30,
        2005.
 
 Other
        Income. Other income was $100,000 for the three months ended September 30,
        2005,
        as the Company recognized a cash payment it had received in April 2005 for
        the
        early termination of a lease for its administrative offices in Las Vegas,
        Nevada. The Company had no other income for the three months ended September
        30,
        2006.
 
 Gain
        on
        Settlement with Lender. On September 13, 2006, the Company repaid in full
        its
        obligation to Finova/Steamboat of $1,180,493 (including accrued interest
        of
        $297,632) by making a final cash payment of $101,697. As a result, the Company
        recognized a non-cash gain on settlement of debt of $1,078,796 during the
        three
        months ended September 30, 2006.
 
 29


Write-off
      of Deferred Offering Costs. On July 20, 2006, the Company terminated its
      $10,000,000 Standby Equity Distribution Agreement with Cornell. The Company
      never sold any shares of its common stock pursuant to such agreement. As a
      result of the termination of the financing agreement with Cornell, deferred
      offering costs of $58,000 were charged to operations during the three months
      ended September 30, 2006.





Interest
      Expense. Interest expense was $80,253 for the three months ended September
      30,
      2006, as compared to $181,851 for the three months ended September 30, 2005,
      a
      decrease of $101,598. The decrease in interest expense in 2006 as compared
      to
      2005 was in part a result of non-cash interest charges generated by the
      amortization of the discount related to the Debentures that were issued in
      December 2004 and January 2005 being fully amortized through March 31, 2006.





For
      the
      three months ended September 30, 2006, $33,666 of interest expense related
      to
      the premium paid on the July 1, 2006 installment payment on the Debentures
      pursuant to the Agreement with Advantage. For the three months ended September
      30, 2005, $15,547 of interest expense was the result of the Company not having
      timely accomplished an effective registration statement with the SEC to register
      the shares of common stock issuable upon conversion of the Debentures by March
      31, 2005.





Income
      (Loss) from Continuing Operations. As a result of the aforementioned factors,
      income from continuing operations was $433,702 for the three months ended
      September 30, 2006, as compared to a loss from continuing operations of
      $(198,796) for the three months ended September 30, 2005.





Income
      (Loss) from Discontinued Operations. Income from discontinued operations was
      $102,617 for the three months ended September 30, 2005, relating to the
      Company’s former ride simulator business, which was terminated effective
      December 31, 2003. The Company did not have any income (loss) from discontinued
      operations for the three months ended September 30, 2006.





Net
      Income (Loss). As a result of the aforementioned factors, net income was
      $433,702 for the three months ended September 30, 2006, as compared to a net
      loss of $(96,179) for the three months ended September 30, 2005.





Nine
      Months Ended September 30, 2006 and 2005:





Revenues.
      Revenues from ticket commissions and fees were $3,762,450 for the nine months
      ended September 30, 2006, as compared to $1,891,678 for the nine months ended
      September 30, 2005, an increase of $1,870,772 or 98.9%. Commissions and fees
      were earned on the gross sales value of show tickets sold to customers of
      $15,735,823 for the nine months ended September 30, 2006, as compared to
      $7,160,405 for the nine months ended September 30, 2005, an increase of
      $8,575,418 or 119.8%. Commissions and fees earned as a percentage of gross
      show
      ticket sales were 23.9% for the nine months ended September 30, 2006, as
      compared to 26.4% for the nine months ended September 30, 2005, as a result
      of
      lower than normal discounts for some higher-priced shows.





Direct
      Costs of Revenues. Direct costs of revenues were $1,518,308 for the nine months
      ended September 30, 2006, as compared to $1,082,744 for the nine months ended
      September 30, 2005, an increase of $435,564 or 40.2%. Direct costs of revenues
      decreased to 40.4% of revenues for the nine months ended September 30, 2006,
      as
      compared to 57.2% of revenues for the nine months ended September 30, 2005,
      as a
      result of the significant increase in revenues in 2006 as compared to 2005.
      Direct costs of revenues increased on an absolute basis in 2006 as compared
      to
      2005 as a result of an increase in rent expense resulting from expanded or
      additional ticketing locations opened in late 2005, and an increase in payroll
      costs resulting from the hiring of additional employees to staff these
      locations.




Selling
      and Marketing Expenses. Selling and marketing expenses were $317,229 for the
      nine months ended September 30, 2006, as compared to $235,603 for the nine
      months ended September 30, 2005, an increase of $81,626 or 34.7%, primarily
      as a
      result of an increase in discretionary magazine advertising expenditures.
      Selling and marketing expenses decreased to 8.4% of revenues for the nine months
      ended September 30, 2006, as compared to 12.5% of revenues for the nine months
      ended September 30, 2005.




30





Selling
      and marketing expenses consist primarily of advertising and promotional costs
      related to the Tix4Tonight business.





General
      and Administrative Expenses. General and administrative expenses were $2,341,016
      for the nine months ended September 30, 2006, as compared to $1,517,759 for
      the
      nine months ended September 30, 2005, an increase of $823,257 or 54.2%. General
      and administrative expenses were 62.2% of revenues for the nine months ended
      September 30, 2006, as compared to 80.2% of revenues for the nine months ended
      September 30, 2005. Included in general and administrative expenses were
      equity-based compensation expenses of $1,015,844 for the nine months ended
      September 30, 2006, as compared to $237,996 for the nine months ended September
      30, 2005, of which $610,648 related to officers and directors in 2006, as
      compared to $0 in 2005.





General
      and administrative expenses also increased on an absolute basis in 2006 as
      compared to 2005 as a result of an increase in merchant fees and corporate
      staffing costs, which were offset in part by a decrease in consulting and legal
      fees. Significant components of general and administrative expenses consist
      of
      personnel and personnel-related costs, insurance, legal and accounting fees,
      consulting and advisory fees, and occupancy costs.





Depreciation
      and Amortization. Depreciation and amortization was $119,101 for the nine months
      ended September 30, 2006, as compared to $66,622 for the nine months ended
      September 30, 2005, an increase of $52,479 or 78.8%, primarily as a result
      of
      increased depreciation and amortization incurred with respect to leasehold
      improvements and equipment acquired for Tix4Tonight’s new ticketing locations in
      Las Vegas, Nevada.





Loss
      from
      Operations. As a result of the aforementioned factors, the loss from operations
      for the nine months ended September 30, 2006 was $533,204, which included
      non-cash compensation expense of $1,015,844, as compared to a loss from
      operations for the nine months ended September 30, 2005 of $1,011,050, which
      included non-cash compensation expense of $237,996.




Interest
      Income. Interest income was $7,574 for the nine months ended September 30,
      2006,
      as compared to $8 for the nine months ended September 30, 2005.





Other
      Income. Other income was $37,300 for the nine months ended September 30, 2006,
      which consisted of the reversal of an accrued liability of $37,300 at December
      31, 2005 relating to a potential claim from a supplier. Other income was
      $100,000 for the nine months ended September 30, 2005, as the Company recognized
      a cash payment it had received in April 2005 for the early termination of a
      lease for its administrative offices in Las Vegas, Nevada.





Gain
      on
      Settlement with Lender. On September 13, 2006, the Company repaid in full its
      obligation to Finova/Steamboat of $1,180,493 (including accrued interest of
      $297,632) by making a final cash payment of $101,697. As a result, the Company
      recognized a non-cash gain on settlement of debt of $1,078,796 during the nine
      months ended September 30, 2006.





Write-off
      of Deferred Offering Costs. On July 20, 2006, the Company terminated its
      $10,000,000 Standby Equity Distribution Agreement with Cornell. The Company
      never sold any shares of its common stock pursuant to such agreement. As a
      result of the termination of the financing agreement with Cornell, deferred
      offering costs of $58,000 were charged to operations during the nine months
      ended September 30, 2006.





Interest
      Expense. Interest expense was $322,480  for
      the
      nine months ended September 30, 2006, as compared to $491,302 for the nine
      months ended September 30, 2005, a decrease of $168,822. The decrease in
      interest expense in 2006 as compared to 2005 was in part a result of non-cash
      interest charges generated by the amortization of the discount related to the
      Debentures that were issued in December 2004 and January 2005 being fully
      amortized through March 31, 2006.





For
      the
      nine months ended September 30, 2006, $101,000 of interest expense related
      to
      the premium paid on the March 29, 2006, May 30, 2006 and July 1, 2006
      installment payments on the Debentures pursuant to the Agreement with Advantage.
      For the nine months ended September 30, 2005, $47,700 of interest expense was
      the result of the Company not having timely accomplished an effective
      registration statement with the SEC to register the shares of common stock
      issuable upon conversion of the Debentures by March 31, 2005.




31





Income
      (loss) from Continuing Operations. As a result of the aforementioned factors,
      income from continuing operations was $209,986 for the nine months ended
      September 30, 2006, as compared to a loss from continuing operations of
      $(1,402,344) for the nine months ended September 30, 2005.





Income
      from Discontinued Operations. Income from discontinued operations was $5,341
      for
      the nine months ended September 30, 2006, as compared to income from
      discontinued operations of $94,224 for the nine months ended September 30,
      2005,
      relating to the Company’s former ride simulator business, which was terminated
      effective December 31, 2003.





Net
      Income (Loss). As a result of the aforementioned factors, net income was
      $215,327 for the nine months ended September 30, 2006, as compared to a net
      loss
      of $(1,308,120) for the nine months ended September 30, 2005.





Liquidity
      and Capital Resources - September 30, 2006:





During
      the last several years, the Company has relied on the proceeds from loans from
      both unrelated and related parties, capital leases and the sale of its debt
      and
      equity securities to provide the resources necessary to fund its operations
      and
      develop its show ticketing business.





The
      Company has continued its efforts to raise new capital in 2006 to support the
      development and expansion of its Las Vegas show ticketing business. During
      the
      nine months ended September 30, 2006, the Company raised $1,003,000 of new
      equity capital through the sale of units comprised of shares of its common
      stock
      and warrants.





Operating
      Liquidity:





The
      accompanying financial statements have been prepared in conformity with
      accounting principles generally accepted in the United States of America, which
      contemplate continuation of the Company as a going concern. However, the Company
      had a net loss of $1,022,952 during the year ended December 31, 2005, and had
      a
      working capital deficiency of $2,766,621 and a stockholders' deficiency of
      $2,399,569 at December 31, 2005. These factors raise substantial doubt about
      the
      Company's ability to continue as a going concern. The financial statements
      do
      not include any adjustments relating to the recoverability and classification
      of
      recorded asset amounts, or amounts and classification of liabilities that might
      result from this uncertainty.





During
      the three months and nine months ended September 30, 2006, the Company’s
      operations continued to improve, and the Company reported net income of $433,702
      and $215,327, respectively. The Company’s working capital deficiency decreased
      to $156,740 at September 30, 2006, as compared to $2,766,621 at December 31,
      2005, and the Company’s stockholder’s equity was $89,470 at September 30, 2006,
      as compared to a stockholder’s deficiency of $2,399,569 at December 31, 2005.
      During the nine months ended September 30, 2006, the Company’s operations
      provided $512,244 of cash flows from operations. In addition, during the three
      months ended September 30, 2006, the Company sold common stock and warrants
      to
      accredited investors for net proceeds of $400,000, bringing the total net
      proceeds from the sale of common stock and warrants to accredited investors
      for
      the nine months ended September 30, 2006 to $1,003,000. These funds have been
      used to reduce debt obligations of $1,572,407 that existed at December 31,
      2005,
      and to support the expansion of the operations of Tix4Tonight. Accordingly,
      based on the combination of cash flows from operations and funds from the sale
      of common stock and warrants, the Company believes that it has sufficient
      working capital resources to fund its near-term cash requirements.





Operating
      Activities. Operating activities provided cash of $512,244 during the nine
      months ended September 30, 2006, as compared to $44,038 during the nine months
      ended September 30, 2005, primarily as a result of the improved operating
      performance of the Company’s ticketing operations. At September 30, 2006, the
      Company had cash of $1,228,539, as compared to $315,763 at December 31, 2005.




32





The
      Company had a working capital deficiency of $156,740 at September 30, 2006,
      as
      compared to a working capital deficiency of $2,766,621 at December 31, 2005,
      primarily as a result of the cash raised from the sale of units of the Company’s
      securities, the settlement of the Finova/Steamboat note payable at substantially
      less than face value, and the improved operating performance of the Company’s
      ticketing operations.  At
      September 30, 2006 and December 31, 2005, the Company had accrued compensation
      due to its President and Chief Executive Officer of $0 and $65,726,
      respectively, which was included in accounts payable and accrued
      liabilities.




Investing
      Activities. For the nine months ended September 30, 2006 and September 30,
      2005,
      investing activities utilized net cash of $59,521 and $170,100, respectively,
      for the purchases of property and equipment.





Financing
      Activities. For the nine months ended September 30, 2006, financing activities
      provided net cash of $460,053, consisting of net proceeds of $1,003,000 from
      the
      sale of units of the Company securities and $155,726 from the exercise of
      warrants, reduced by payments on capital lease obligations of $64,914, payments
      on notes payable of $128,759, and installment payments on the Debentures of
      $505,000 (see below). For the nine months ended September 30, 2005, financing
      activities provided net cash of $146,183, consisting of the net proceeds from
      the issuance of a convertible debenture of $239,300, reduced by payments on
      capital lease obligations of $42,177 and payments on notes payable of
      $50,940.





Issuance
      of Convertible Debentures and Standby Equity Distribution Agreement:





Issuance
      of Convertible Debentures to Advantage Capital Development Corp. On December
      7,
      2004, the Company closed a financing transaction in which it sold 5% secured
      convertible debentures with an aggregate face value of $530,000 (collectively,
      the “Debentures”) to Advantage Capital Development Corp. (“Advantage”). The
      Company issued a Debenture with a face value of $250,000 upon closing
      (“Debenture No. 1”) and received net proceeds of $200,000. The Company issued
      another Debenture with a face value of $280,000 on January 6, 2005 (“Debenture
      No. 2”) and received net proceeds of $239,300. The Debentures were originally
      scheduled to mature on March 7, 2006. Based on the maturity date of the
      Debentures, the Debentures were classified in the Company’s balance sheet as
      current liabilities at December 31, 2005.





Interest
      on the Debentures was originally due at the maturity date was paid monthly
      in
      cash (see below). The Debentures were secured by all of the assets and property
      of the Company. At the option of the holder, the Debentures were convertible
      from time to time after nine months from the date of closing into the Company’s
      common stock at a price per share of either (a) an amount equal to 120% of
      the
      volume weighted average price of the Common Stock as listed on the National
      Association of Securities Dealers, Inc.’s Over-The-Counter Bulletin Board, as
      quoted by Bloomberg, L.P. on the closing date or (b) an amount equal to 80%
      of
      the average volume weighted average price of the Company’s Common Stock, as
      quoted by Bloomberg, L.P. for the 5 trading days immediately preceding the
      conversion date. Notwithstanding the foregoing, at no time could the conversion
      price be less than $0.25 per share. The Company had an option to redeem all
      or a
      portion of the outstanding Debentures at a redemption price of 120% of the
      amount redeemed plus accrued interest.





On
      November 4, 2004, the Company issued to Advantage a warrant to purchase 100,000
      shares of common stock exercisable at $0.25 per share through November 4, 2007,
      which was determined to have a fair value, calculated pursuant to the
      Black-Scholes option-pricing model, of $36,000. On July 26, 2006 and August
      28,
      2006, Advantage exercised a portion of such warrant to purchase 80,000 shares
      of
      common stock upon payment to the Company of $20,000. On October 18, 2006,
      Advantage exercised the remaining portion of the warrant to purchase 20,000
      shares of common stock upon payment to the Company of $5,000.





As
      described below, the Company had the right to determine the form of payment
      (cash or common stock) for any liquidated damages that the Company might be
      required to pay to Advantage as a result of its not fulfilling its registration
      statement requirements with the Securities and Exchange Commission (“SEC”) with
      respect to the shares of common stock underlying the warrant.





The
      Debentures were convertible into equity based on their face amount, which
      resulted in a beneficial conversion feature with a fair value of $62,500 for
      Debenture No. 1 and $70,000 for Debenture No. 2. The aggregate value of the
      warrant of $36,000, the value of the beneficial conversion features of $62,500
      and $70,000, and the aggregate related financing costs of $90,700 paid by the
      Company to the lender were recorded as a discount to the face value of the
      Debentures, and were charged to operations as interest expense over the term
      of
      the Debentures through March 31, 2006.




33





On
      February 27, 2006, the Company entered into a settlement agreement (the
“Agreement”) with Advantage to modify the Securities Purchase Agreement, the
      Security Agreement, the Warrant, the Debentures, the Escrow Agreement and the
      Investor Registration Rights Agreement, each executed on November 4, 2004,
      and
      the Amendments dated December 2004, January 2005 and February 2005, to satisfy
      the outstanding amount due in Liquidated Damages pursuant to the Company's
      late
      filing and effectiveness of its Registration Statement as set forth in the
      Investor Registration Rights Agreement. For the year ended December 31, 2005,
      the Company recorded Liquidated Damages of $79,500, which were included in
      interest expense in the Company’s consolidated statement of operations.





In
      accordance with the Agreement, the Company agreed to honor the $25,000
      conversion notice previously submitted by Advantage, issue such conversion
      shares and reduce the balance on the Debentures accordingly. As a result, during
      February 2006, the Company issued 93,563 shares of common stock to Advantage
      with a fair market value of $25,000 based on a conversion price of $0.2672
      per
      share.





The
      Company agreed to pay interest on the Debenture's outstanding balance monthly
      and to repay one-third of the remaining loan balance plus the redemption premium
      each on April 1, 2006, June 1, 2006, and August 1, 2006 ($505,000 plus the
      20%
      redemption premium of $101,000, for a total of $606,000). On March 29, 2006,
      the
      Company paid the installment due on April 1, 2006 of $202,000, which consisted
      of a principal payment of $168,333 and a redemption premium of $33,667. On
      May
      30, 2006, the Company paid the installment due on June 1, 2006 of $202,000,
      which consisted of a principal payment of $168,333 and a redemption premium
      of
      $33,667. On July 1, 2006, the Company paid the final installment of $202,000
      due
      on August 1, 2006, which consisted of a principal payment of $168,334 and a
      redemption premium of $33,666.





The
      Company recognized the redemption premium as additional interest expense as
      the
      respective installments were paid. As a result of the payment of the final
      installment on July 1, 2006, the Company has fully complied with the terms
      of
      the Agreement.





Standby
      Equity Distribution Agreement with Cornell Capital Partners, L.P. On December
      7,
      2004, the Company entered into a financing transaction with Cornell Capital
      Partners, LP ("Cornell") under which Cornell, at the request of the Company,
      would periodically purchase up to $10,000,000 of the Company's common stock
      over
      24 months pursuant to a Standby Equity Distribution Agreement. The Company
      had
      the right to decide if it would sell stock, as well as the timing and amount
      of
      such stock sold to Cornell, with the purchase price based upon the market price
      of the Company's common stock at the time of each sale, subject to the
      satisfaction of certain conditions, including the SEC having declared effective
      a registration statement covering the shares of common stock to be purchased
      by
      Cornell. The Company issued 290,000 shares of its common stock to Cornell as
      a
      commitment fee and an additional 290,000 shares of its common stock on the
      first
      year anniversary of the Standby Equity Distribution Agreement.





The
      Company entered into an agreement with Newbridge Securities Corporation
      ("Newbridge") to serve as exclusive placement agent for the sale of the shares
      of common stock. In consideration for Newbridge's services, the Company issued
      20,000 shares of its common stock to Newbridge. The shares of common stock
      issued to Cornell and Newbridge were recorded at par value of $0.08 per share
      (aggregate amount $48,000) and were included in deferred offering costs in
      the
      Company's balance sheet at December 31, 2005.




On
      July
      20, 2006, the Company terminated its $10,000,000 Standby Equity Distribution
      Agreement with Cornell. The Company never sold any shares of its common stock
      pursuant to such agreement and has no continuing financial obligations of any
      kind to Cornell. There were no early termination penalties incurred by the
      Company. As a result of the termination of the financing agreement with Cornell,
      deferred offering costs of $58,000 were charged to operations as other income
      (expense) during the three months ended September 30, 2006.





Agreement
      with Knightsbridge Holdings, LLC. On January 6, 2005, pursuant to an agreement
      dated as of August 31, 2004 and as a result of the execution of the Standby
      Equity Distribution Agreement and the completion of the issuance of the
      Debentures, the Company issued 448,000 shares of common stock to Knightsbridge
      Holdings, LLC ("Knightsbridge") as a referral fee. The Company was obligated
      to
      file a registration statement to cover 200% of the shares so issued. The
      agreement with Knightsbridge was for an initial term through February 28, 2005,
      and continued thereafter on a month-to-month basis, but the Company did not
      have
      the right to terminate the agreement until such time as it had fulfilled all
      of
      its obligations under its agreement with Advantage. The Company also agreed
      to
      pay Knightsbridge a monthly consulting fee of $2,500. The fair market value
      of
      the shares of $201,600 ($0.45 per share) was recorded as a discount to the
      face
      value of the Debentures on January 6, 2005, and was charged to operations as
      interest expense over the remaining term of the Debentures through March 31,
      2006.




34





Effective
      July 30, 2006, the Company terminated its agreement with Knightsbridge, as
      the
      Company had fulfilled all of its obligations under its agreement with
      Advantage.





Subsequent
      to July 30, 2006, the Company has no continuing financial obligations to
      Knightsbridge except that, for a period of two years thereafter, should the
      Company complete a financing transaction through a source introduced, directly
      or indirectly, by Knightsbridge, Knightsbridge will be entitled to receive
      a
      referral fee for debt financings ranging from 1.0% to 2.0%, and for equity
      financings ranging from 1.5% to 4.0%; and with respect to a merger or
      acquisition transaction, Knightsbridge will be entitled to receive 5.0% of
      any
      securities issued by the Company and a fee ranging from 3.0% to 5.0% of the
      defined transaction value.





Registration
      Rights. The Company was obligated to register the shares of common stock
      referred to above (the "Registrable Securities").





The
      Company was originally obligated to prepare and file, no later than 45 days
      from
      November 4, 2004 (the "Scheduled Filing Deadline"), a registration statement
      on
      Form S-1 or SB-2 (or, if the Company was then eligible, on Form S-3) with the
      SEC under the 1933 Act (the "Initial Registration Statement") for the
      registration for the resale by all investors who purchased Debentures or the
      Company's warrant. The Company was required to use its best efforts (i) to
      have
      the Initial Registration Statement declared effective by the SEC no later than
      120 days after the date of filing (the "Scheduled Effective Deadline") and
      (ii)
      to insure that the Initial Registration Statement and any subsequent
      Registration Statement remained in effect until all of the Registrable
      Securities were sold. The Company would be in default if the Initial
      Registration Statement was not declared effective by the SEC within 120 days
      after filing thereof.





In
      the
      event the Initial Registration Statement was not filed by the Scheduled Filing
      Deadline or was not declared effective by the SEC on or before the Scheduled
      Effective Deadline, or if after the Initial Registration Statement was declared
      effective by the SEC, sales could not be made pursuant to the Initial
      Registration Statement, the Company would be required to pay as liquidated
      damages (the "Liquidated Damages") to the holder, at the Company's option,
      either a cash amount or shares of the Company's common stock within 3 business
      days, after demand therefore, equal to 2% of the liquidated value of the
      Debentures outstanding as Liquidated Damages for each 30 day period after the
      Scheduled Filing Deadline or the Scheduled Effective Deadline, as the case
      may
      be. The Debentures were repaid in full in cash on July 1, 2006. Accordingly,
      the
      Company has no further registration obligation with respect to the
      Debentures.





On
      July
      20, 2005, the Company filed a Registration Statement on Form SB-2 with the
      SEC
      to register the shares of common stock pursuant to the Standby Equity
      Distribution Agreement with Cornell, as well as the shares of common stock
      with
      respect to the Company's commitments to Advantage, Newbridge and Knightsbridge.
      The Registration Statement, as amended, was declared effective by the SEC on
      February 13, 2006.





Transactions
      with Primary Secured Lender:





On
      December 31, 1996, the Company completed a financing agreement with Finova
      Technology Finance, Inc. (“Finova”), which was structured as a sale leaseback
      transaction of certain equipment owned by the Company. Based on the substance
      of
      this transaction, this financing agreement was accounted for as a note payable
      for financial reporting purposes. The gross loan amount was $1,575,027, with
      interest at 16.64% per annum, repayable over a four year period at $40,903
      per
      month, with a balloon payment of $157,503.





On
      March
      10, 1999, the financing agreement was amended to reduce the monthly payments
      and
      to extend the maturity date of the note payable. On June 25, 2001 and April
      17,
      2002, the Company entered into modification agreements and waivers of default
      with the lender, which, among other provisions, cured prior defaults, provided
      for various modifications to the terms and conditions of the loan, extended
      the
      repayment date, and provided for the issuance of warrants to the
      lender.




35




Effective
      October 29, 2004, the Company entered into a further agreement with the lender
      which provided for the Company to repay the lender its aggregate obligation
      at
      September 30, 2004 of $956,439 (including accrued interest payable of $240,197)
      as follows: (i) $175,000 of the $956,439 (the “Discounted Amount”), to be paid
      commencing November 1, 2004, and on the first day of each consecutive month,
      by
      payment of $3,000 to the lender, to be applied first against interest accruing
      for the prior month at the rate of 7.5% per annum, and then, to the extent
      available, as a reduction of the $175,000 principal balance; (ii) on December
      1,
      2006, the unpaid principal balance of the $175,000, plus accrued and unpaid
      interest, to be fully due and payable; and (iii) the $175,000 and any unpaid
      accrued interest may be paid by the Company at any time prior to December 1,
      2006. The remaining indebtedness in excess of the $175,000 in the amount of
      $781,439 (the “Remaining Indebtedness”) will continue to bear interest at 16.64%
      per annum, but will be deemed fully satisfied if the Company pays the lender
      the
      entire $175,000, with interest, as specified above. In conjunction with this
      agreement, the Company also assigned to the lender as additional collateral
      its
      interest in and rights to a key man life insurance policy on the Company's
      President and Chief Executive Officer. On May 1, 2006, Finova conveyed all
      of
      its right, title and interest in and to the October 29, 2004 agreement to
      Steamboat Capital VII, LLC (“Steamboat”).





The
      balance of the discounted amount was $119,759 at December 31, 2005. On September
      13, 2006, the Company repaid in full its obligation to the lender of $1,180,493
      (including accrued interest of $297,632) by making a final cash payment of
      $101,697. As a result, the Company recognized a non-cash gain on settlement
      of
      debt of $1,078,796 during the three months ended September 30, 2006, which
      has
      been presented as other income (expense) in the consolidated statement of
      operations. At September 30, 2006, the Company had no continuing financial
      obligations of any kind to Finova or Steamboat. There were no early termination
      or prepayment penalties incurred by the Company in conjunction with this
      transaction.




Principal
      Commitments:





At
      September 30, 2006, the Company did not have any material commitments for
      capital expenditures. The Company’s principal commitments for the next five
      fiscal year periods consist of contractual commitments as summarized below.




Payments
                Due by 12 Month Periods Ending September 30,Contractual
                cash obligations
            
            Total
            
            2007
            
            2008
            
            2009
            
            2010
            
            2011Note
                payable - other
            
            $
            3,000
            
            $
            3,000
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Employment
                agreement
            
            
            732,343
            
            
            287,833
            
            
            310,860
            
            
            133,650
            
            
            -
            
            
            -Capital
                lease obligations
            
            
            266,625
            
            
            77,762
            
            
            61,659
            
            
            56,647
            
            
            58,086
            
            
            12,471Operating
                lease obligations
            
            
            3,309,471
            
            
            867,304
            
            
            901,102
            
            
            926,215
            
            
            493,869
            
            
            120,981Total
                contractual cash obligations
            
            $
            4,311,439
            
            $
            1,235,899
            
            $
            1,273,621
            
            $
            1,116,512
            
            $
            551,955
            
            $
            133,452




Off-Balance
      Sheet Arrangements:





At
      September 30, 2006, the Company did not have any transactions, obligations
      or
      relationships that could be considered off-balance sheet
      arrangements.




36




ITEM
      3.
      CONTROLS AND PROCEDURES





(a)
      Evaluation of Disclosure Controls and Procedures





Disclosure
      controls and procedures are designed to ensure that information required to
      be
      disclosed in the reports filed or submitted by the Company under the Securities
      Exchange Act of 1934 is recorded, processed, summarized and reported, within
      the
      time periods specified in the rules and forms of the Securities and Exchange
      Commission. Disclosure controls and procedures include, without limitation,
      controls and procedures designed to ensure that information required to be
      disclosed in the reports filed under the Securities Exchange Act of 1934 is
      accumulated and communicated to the Company's management, including its
      principal executive and financial officers, as appropriate, to allow timely
      decisions regarding required disclosure.





The
      Company carried out an evaluation, under the supervision and with the
      participation of the Company's management, including its principal executive
      and
      financial officer, of the effectiveness of the design and operation of the
      Company's disclosure controls and procedures as of the end of the period covered
      by this report. Based upon and as of the date of that evaluation, the Company's
      principal executive and financial officer concluded that the Company's
      disclosure controls and procedures are effective to ensure that information
      required to be disclosed in the reports the Company files and submits under
      the
      Exchange Act of 1934 is recorded, processed, summarized and reported within
      the
      time periods specified in the Securities and Exchange Commission's rules and
      forms. The Company's principal executive and financial officer concluded that
      the Company had made significant progress in correcting a material weakness
      in
      the Company's internal controls relating to the recording and disclosing of
      equity-based transactions on a timely basis, by increasing the staffing and
      resources allocated to its accounting department and by reviewing and revising
      its internal accounting policies and procedures.




(b)
      Changes in Internal Controls





There
      were no changes in the Company’s internal controls or in other factors that
      could have significantly affected those controls subsequent to the date of
      the
      Company’s most recent evaluation.




37




PART
      II.
      OTHER INFORMATION





ITEM
      1.
      LEGAL PROCEEDINGS





The
      Company is not a party to any current or pending legal
      proceedings.





ITEM
      2.
      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





On
      July
      20, 2006, the Company entered into separate consulting agreements with two
      consultants, Rick Kraniak and Joe Marsh, to provide strategic advisory services
      to the Company over a two-year period which provide for each consultant to
      receive 150,000 shares of common stock vesting monthly over the term of the
      respective agreement. The 31,250 shares of common stock that had vested at
      September 30, 2006 were recorded at their approximate fair market value on
      such
      date of $36,496 and were charged to operations as general and administrative
      expense at September 30, 2006 **.**





On
      July
      26, 2006, the Company issued 40,000 shares of common stock to Advantage upon
      the
      exercise of a previously issued warrant at an exercise price of $0.25 per share
      and received cash proceeds of $10,000.





On
      July
      28, 2006, the Company issued 100,000 shares of common stock to Rick Kraniak
      upon
      the exercise of a previously issued warrant at an exercise price of $0.30 per
      share and received cash proceeds of $30,000.





On
      August
      28, 2006, the Company issued 40,000 shares of common stock to Advantage upon
      the
      exercise of a previously issued warrant at an exercise price of $0.25 per share
      and received cash proceeds of $10,000.





On
      September 28, 2006, the Company issued 200,000 shares of common stock to Mitch
      Francis, its President and Chief Executive Officer, as a bonus for services
      rendered. The shares of common stock were recorded at their fair market value
      on
      the date of issuance of $222,000 ($1.11 per share) and were charged to
      operations as general and administrative expense at September 30, 2006.





On
      September 28, 2006, the Company issued 100,000 shares of common stock to
      Kimberly Simon, its Vice President, as a bonus for services rendered. The shares
      of common stock were recorded at their fair market value on the date of issuance
      of $111,000 ($1.11 per share) and were charged to operations as general and
      administrative expense at September 30, 2006.





On
      September 28, 2006, the Company issued a total of 90,000 shares of common stock
      to its non-officer employees as a bonus for services rendered. The shares of
      common stock were recorded at their fair market value on the date of issuance
      of
      $99,900 ($1.11 per share) and were charged to operations as general and
      administrative expense at September 30, 2006.





On
      September 28, 2006, the Company issued a total of 80,000 shares of common stock
      to its two non-officer directors for services rendered, consisting of 40,000
      shares to Benjamin Frankel and 40,000 shares to Norman Feirstein. The shares
      of
      common stock were recorded at their fair market value on the date of issuance
      of
      $88,800 ($1.11 per share) and were charged to operations as general and
      administrative expense at September 30, 2006.





On
      September 28, 2006, the Company issued 50,000 shares of common stock to each
      of
      three consultants (Rick Kraniak, Joe Marsh and Gang Consulting Ltd.) for
      services rendered, for a total of 150,000 shares of common stock. The 150,000
      shares of common stock were recorded at their fair market value on the date
      of
      issuance of $166,500 ($1.11 per share) and were charged to operations as general
      and administrative expense at September 30, 2006.





During
      the nine months ended September 30, 2006, the Company raised additional equity
      capital through the sale of units in a private placement to accredited investors
      at $0.25 per unit, with each unit consisting of one share of restricted common
      stock and a warrant to purchase one-half share of common stock, exercisable
      at
      $0.50 per share for a period of 24 months. The shares and warrants have limited
      piggyback registration rights. The Company sold 4,080,000 units and received
      gross cash proceeds of $1,020,000, as a result of which the Company issued
      4,080,000 shares of common stock and 2,040,000 warrants. The Company paid a
      cash
      finder’s fee of $17,000 to Gang Consulting Ltd. with respect to such equity
      offering, which was recorded as a reduction to additional paid-in capital during
      the nine months ended September 30, 2006, as a result of which net cash proceeds
      from the private placement through September 30, 2006 were
      $1,003,000.




38





On
      September 28, 2006, Mitch Francis, the Company’s President and Chief Executive
      Officer, exercised a portion of a previously issued warrant to acquire 615,384
      shares of common stock at an exercise price of $0.13 per share. Pursuant to
      such
      warrant, Mr. Francis acquired 505,588 shares of common stock by offsetting
      accrued but unpaid compensation of $65,726.





On
      January 18, 2006, the Company entered into an agreement with Kimberly Simon,
      its
      Vice President, that provides for her to receive a bonus in the form of a
      warrant for 100,000 shares of common stock, exercisable for a period of five
      years at $0.36 per share (the fair market value on the date of the agreement),
      that vests only in the event that the gross number of tickets sold in 2006
      is at
      least equal to 125% of the gross number of tickets sold in 2005. As of June
      30,
      2006, the Company had determined that such vesting milestone had been met.
      Accordingly, the fair value of such warrant of $70,000, calculated pursuant
      to
      the Black-Scholes option-pricing model, is being charged to operations as
      general and administrative expense over the six-month period commencing July
      1,
      2006 and ending December 31, 2006, as a result of which $35,000 was charged
      to
      operations as general and administrative expense during the three months ended
      September 30, 2006.





The
      shares of common stock, stock options and warrants acquired by officers,
      employees, consultants and/or investors were issued without registration
      pursuant to an exemption provided by Section 4(2) of the Securities Act of
      1933,
      as amended, based on certain representations made to the Company by the
      recipients.





Each
      investor qualified as an "accredited investor" as that term is defined in the
      Securities Act of 1933, as amended. The following conditions were all met with
      respect to the issuance of the securities in the private placement: (1) the
      Company did not advertise this issuance in any public medium or forum, (2)
      the
      Company did not solicit any investors with respect to this issuance, (3) the
      Company did not publicize any portion of the purchase or sale of the securities
      issued, and (4) none of the securities issued were offered in conjunction with
      any public offering.





ITEM
      3.
      DEFAULTS UPON SENIOR SECURITIES





Not
      applicable.





ITEM
      4.
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





Not
      applicable.





ITEM
      5.
      OTHER INFORMATION





On
      September 11, 2006, Mitch Francis, the President and Chief Executive Officer
      of
      the Company, entered into a Voting Agreement (the “Agreement") dated as of July
      12, 2006 with Iqbal Ashraf, an individual ("Ashraf"). The parties entered into
      the Agreement in connection with the Company's $995,000 private equity financing
      that closed on July 11, 2006.





Pursuant
      to the Agreement, Ashraf agreed to grant voting power to Mr. Francis over
      2,000,000 shares of the Company's common stock and 1,000,000 shares of common
      stock issuable upon exercise of a warrant that Ashraf holds (the "Voting
      Shares"). The parties agreed that at each shareholders meeting of the Company
      at
      which a vote will take place and in connection with any action by written
      consent, Mr. Francis will vote the Voting Shares (or execute such written
      consent) or cause the Voting Shares to be voted (or such consent to be
      executed).




39




ITEM
      6.
      EXHIBITS





A
      list of
      exhibits required to be filed as part of this report is set forth in the Index
      to Exhibits, which immediately precedes such exhibits, and is incorporated
      herein by reference.





40




SIGNATURES





Pursuant
      to the requirements of Section 13 or 15(d) 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.




TIX
                CORPORATION
                (Registrant)Date: November
              9, 2006
            By:
            /s/
                MITCH FRANCISMitch
                Francis
              Chief
                  Executive Officer and
              Chief
                    Financial Officer
                    (Duly
                      Authorized Officer
                      and
                        Principal Financial
                        Officer)




41





INDEX
      TO
      EXHIBITS


ExhibitNumber
              Description
                  of Document3.1
              Certificate
                  of Incorporation, as filed with the State of Delaware on April
                  6,1993
                  (1)3.2
              Certificate
                  of Amendment to Certificate of Incorporation of Cinema Ride, Inc.,as
                  filed with the State of Delaware on August 31, 1993 (1)3.3
              Certificate
                  of Amendment to Certificate of Incorporation of Cinema Ride, Inc.,as
                  filed with the State of Delaware on September 16, 1996
                  (1)3.4
              Fourth
                  Amendment to Certificate of Incorporation of Cinema Ride, Inc.,
                  as filedwith
                  the State of Delaware, effective March 3, 2005 (2)3.5
              Bylaws
                  of the Company (1)31
              Officer’s
                  Certification pursuant to Section 302 of the Sarbanes-Oxley Act
                  of2002
                  (3)32
              Officer’s
                  Certification pursuant to Section 906 of the Sarbanes-Oxley Act
                  of2002
                  (3)








(1)
            Previously
                filed as an Exhibit to the Company’s Registration Statement on Form S-3,
                as filed with the Securities and Exchange Commission on June 16,
                1997, and
                incorporated herein by reference.





(2)
            Previously
                filed as an Exhibit to the Company’s Annual Report on Form 10-KSB for the
                fiscal year ended December 31, 2004, and incorporated herein by
                reference.





(3)
            Filed
                herewith.




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