UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 x QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the
Quarterly Period Ended June 30, 2009
 
 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
                  (I.R.S.
      Employerincorporation
      or organization)
                  Identification
      Number)
 
 12001 Ventura Place, Suite
340, Studio City, California 91604
 (Address
of principal executive offices)
 
 (818)
761-1002
 (Registrant’s
telephone number, including area code)
 
 Indicate
by check mark whether the Registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes x      No
 ̈
 
 Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
proceeding 12 months (or for such shorter period that the Registrant was
required to submit and post such reports).  Yes  ̈
     No  ̈ ‪
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large
      accelerated filer  ̈
              Accelerated
      filer x
              Non-accelerated
      filer  ̈
              Smaller
      reporting company  ̈(Do
      not check if a smaller reporting
company)
 
 Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12(b)-2 of the Exchange Act).  Yes  ̈
     No x
 
 Number of
shares of Tix Corporation common stock, $.08 par value, issued and outstanding
as of July 30, 2009: 32,428,626, exclusive of treasury
shares.


Special
Note Regarding Forward-Looking Statements:
  This
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009
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-Q for the quarterly period ended June 30, 2009
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-Q for the quarterly
period ended June 30, 2009, 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-Q for the quarterly
period ended June 30, 2009, whether as a result of new information, future
events or otherwise.
  
 
 Tix
Corporation and Subsidiaries
 
 Index
  Page No.PART
      I. FINANCIAL INFORMATIONItem
      1. Financial StatementsCondensed
      Consolidated Balance Sheets –June 30, 2009 (Unaudited) and December 31,
      2008
                  
                  1Condensed
      Consolidated Statements of Operations and Comprehensive Income (Loss)
      (Unaudited) - Three months ended June 30, 2009 and 2008
                  
                  2Condensed
      Consolidated Statements of Operations and Comprehensive Income (Loss)
      (Unaudited) - Six months ended June 30, 2009 and 2008
                  
                  3Condensed
      Consolidated Statement of Stockholders’ Equity (Unaudited) – Six
      months ended June 30, 2009
                  
                  4Condensed
      Consolidated Statements of Cash Flows (Unaudited) – Six months ended
      June 30, 2009 and 2008
                  
                  5-6Notes
      to Condensed Consolidated Financial Statements (Unaudited)
                  
                  7Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                  
                  21Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                  
                  38Item
      4. Controls and Procedures
                  
                  38PART
      II. OTHER INFORMATIONItem
      1. Legal Proceedings
                  
                  38Item
      1A. Risk Factors
                  
                  38Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                  
                  39Item
      3. Defaults upon Senior Securities
                  
                  39Item
      4. Submission of Matters to a Vote of Security Holders
                  
                  39Item
      5. Other Information
                  
                  40Item
      6. Exhibits
                  
                  40SIGNATURES
                  
                  40
  
 
 TIX
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 
 June
      30,
                  
                  
                  December
      31,2009
                  
                  
                  2008(Unaudited)AssetsCurrent
      assets:Cash
                  
                  $
                  12,944,000
                  
                  
                  $
                  9,192,000Accounts
      receivable, including show revenues earned but not billed
                  
                  
                  1,038,000
                  
                  
                  
                  1,104,000Inventory,
      net
                  
                  
                  2,248,000
                  
                  
                  
                  3,320,000Prepaid
      expenses and other current assets
                  
                  
                  624,000
                  
                  
                  
                  867,000Total
      current assets
                  
                  
                  16,854,000
                  
                  
                  
                  14,483,000Property
      and equipment:Office
      equipment and furniture
                  
                  
                  1,913,000
                  
                  
                  
                  1,816,000Equipment
      under capital lease
                  
                  
                  408,000
                  
                  
                  
                  408,000Leasehold
      improvements
                  
                  
                  365,000
                  
                  
                  
                  364,000Property
      and equipment, cost basis
                  
                  
                  2,686,000
                  
                  
                  
                  2,588,000Less
      accumulated depreciation
                  
                  
                  (1,419,000
                  )
                  
                  
                  (1,155,000
                  )Total
      property and equipment, net
                  
                  
                  1,267,000
                  
                  
                  
                  1,433,000Other
      assets:Intangible
      assets:Goodwill
                  
                  
                  5,895,000
                  
                  
                  
                  5,639,000Intangibles,
      net
                  
                  
                  5,768,000
                  
                  
                  
                  6,751,000Total
      intangible assets
                  
                  
                  11,663,000
                  
                  
                  
                  12,390,000Capitalized
      theatrical costs
                  
                  
                  815,000
                  
                  
                  
                  459,000Deposits
      and other assets
                  
                  
                  184,000
                  
                  
                  
                  83,000Total
      other assets
                  
                  
                  12,662,000
                  
                  
                  
                  12,932,000Total
      assets
                  
                  $
                  30,783,000
                  
                  
                  $
                  28,848,000Liabilities
      and Stockholders' EquityCurrent
      liabilities:Accounts
      payable
                  
                  $
                  4,101,000
                  
                  
                  $
                  4,822,000Accrued
      expenses
                  
                  
                  2,559,000
                  
                  
                  
                  1,515,000Current
      portion of capital lease obligations
                  
                  
                  63,000
                  
                  
                  
                  51,000Deferred
      revenue
                  
                  
                  80,000
                  
                  
                  
                  100,000Income
      taxes payable
                  
                  
                  106,000
                  
                  
                  
                  -Total
      current liabilities
                  
                  
                  6,909,000
                  
                  
                  
                  6,488,000Non-current
      liabilities:Capital
      lease obligations, less current portion
                  
                  
                  39,000
                  
                  
                  
                  78,000Deferred
      rent
                  
                  
                  52,000
                  
                  
                  
                  85,000Total
      non-current liabilities
                  
                  
                  91,000
                  
                  
                  
                  163,000Commitments
      and contingenciesStockholders'
      equity:Preferred
      stock, $.01 par value; 500,000 shares authorized; none
    issuedCommon
      Stock, $.08 par value; 100,000,000 shares authorized; 32,437,626 shares
      outstanding net of 1,005,000 treasury shares, and 32,345,863 shares
      outstanding net of 732,370 treasury shares at June 30, 2009 and December
      31, 2008 respectively
                  
                  
                  2,676,000
                  
                  
                  
                  2,646,000Additional
      paid-in capital
                  
                  
                  89,093,000
                  
                  
                  
                  88,062,000Cost
      of shares held in treasury (1,005,000 shares at June 30, 2009 and 732,370
      shares at December 31, 2008 respectively)
                  
                  
                  (2,541,000
                  )
                  
                  
                  (2,098,000
                  )Accumulated
      deficit
                  
                  
                  (65,430,000
                  )
                  
                  
                  (66,384,000
                  )Accumulated
      other comprehensive loss
                  
                  
                  (15,000
                  )
                  
                  
                  (29,000
                  )Total
      stockholders' equity
                  
                  
                  23,783,000
                  
                  
                  
                  22,197,000Total
      liabilities and stockholders' equity
                  
                  $
                  30,783,000
                  
                  
                  $
                  28,848,000
 
 See
accompanying notes to condensed consolidated financial
statements.
  1
 
 TIX
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
 
 Three Months Ended June
      30,2009
                  
                  
                  2008(Unaudited)
                  
                  
                  (Unaudited)Revenues
                  
                  $
                  26,584,000
                  
                  
                  $
                  16,864,000Operating
      expenses:Direct
      costs of revenues
                  
                  
                  21,410,000
                  
                  
                  
                  12,323,000Selling
      and marketing expenses
                  
                  
                  581,000
                  
                  
                  
                  799,000General
      and administrative expenses, including non-cash equity-based costs of
      $438,000 and $594,000 in 2009 and 2008, respectively (including
      $303,000 and $415,000 for officers, directors and employees in 2009 and
      2008, respectively)
                  
                  
                  3,337,000
                  
                  
                  
                  4,059,000Depreciation
      and amortization
                  
                  
                  626,000
                  
                  
                  
                  1,102,000Total
      costs and expenses
                  
                  
                  25,954,000
                  
                  
                  
                  18,283,000Operating
      Income (Loss)
                  
                  
                  630,000
                  
                  
                  
                  (1,419,000
                  )Other:Other
      income
                  
                  
                  129,000
                  
                  
                  
                  164,000Interest
      income
                  
                  
                  9,000
                  
                  
                  
                  11,000Interest
      expense
                  
                  
                  (3,000
                  )
                  
                  
                  (4,000
                  )Other
      income, net
                  
                  
                  135,000
                  
                  
                  
                  171,000Net
      income (loss) before income tax expense
                  
                  
                  765,000
                  
                  
                  
                  (1,248,000
                  )Current
      income tax expense (benefit)
                  
                  
                  106,000
                  
                  
                  
                  (82,000
                  )Net
      income (loss)
                  
                  
                  659,000
                  
                  
                  
                  (1,166,000
                  )Other
      comprehensive income (loss)Foreign
      currency translation adjustments
                  
                  
                  9,000
                  
                  
                  
                  (44,000
                  )Comprehensive
      income (loss)
                  
                  $
                  668,000
                  
                  
                  $
                  (1,210,000
                  )Net
      income (loss) per common share -Basic
                  
                  $
                  0.02
                  
                  
                  $
                  (0.04
                  )Diluted
                  
                  $
                  0.02
                  
                  
                  $
                  (0.04
                  )Weighted
      average common shares outstanding -Basic
                  
                  
                  32,361,325
                  
                  
                  
                  31,805,228Diluted
                  
                  
                  32,645,364
                  
                  
                  
                  31,805,228
 
 See
accompanying notes to the condensed consolidated financial
statements.
  2
  TIX
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
 
 Six Months Ended June
      30,2009
                  
                  
                  2008(Unaudited)
                  
                  
                  (Unaudited)Revenues
                  
                  $
                  46,754,000
                  
                  
                  $
                  40,027,000Operating
      expenses:Direct
      costs of revenues
                  
                  
                  36,336,000
                  
                  
                  
                  29,054,000Selling
      and marketing expenses
                  
                  
                  1,187,000
                  
                  
                  
                  2,175,000General
      and administrative expenses, including non-cash equity-based costs of
      $851,000 and $1,196,000 in 2009 and 2008, respectively
      (including $693,000 and $829,000 for officers, directors and employees in
      2009 and 2008, respectively)
                  
                  
                  7,093,000
                  
                  
                  
                  7,521,000Depreciation
      and amortization
                  
                  
                  1,247,000
                  
                  
                  
                  2,224,000Total
      costs and expenses
                  
                  
                  45,863,000
                  
                  
                  
                  40,974,000Operating
      Income (Loss)
                  
                  
                  891,000
                  
                  
                  
                  (947,000
                  )Other:Other
      income
                  
                  
                  154,000
                  
                  
                  
                  208,000Interest
      income
                  
                  
                  22,000
                  
                  
                  
                  45,000Interest
      expense
                  
                  
                  (7,000
                  )
                  
                  
                  (10,000
                  )Other
      income, net
                  
                  
                  169,000
                  
                  
                  
                  243,000Net
      income (loss) before income tax expense
                  
                  
                  1,060,000
                  
                  
                  
                  (704,000
                  )Current
      income tax expense
                  
                  
                  106,000
                  
                  
                  
                  -Net
      income (loss)
                  
                  
                  954,000
                  
                  
                  
                  (704,000
                  )Other
      comprehensive income (loss)Foreign
      currency translation adjustments
                  
                  
                  14,000
                  
                  
                  
                  (44,000
                  )Comprehensive
      income (loss)
                  
                  $
                  968,000
                  
                  
                  $
                  (748,000
                  )Net
      income (loss) per common share -Basic
                  
                  $
                  0.03
                  
                  
                  $
                  (0.02
                  )Diluted
                  
                  $
                  0.03
                  
                  
                  $
                  (0.02
                  )Weighted
      average common shares outstanding -Basic
                  
                  
                  32,332,963
                  
                  
                  
                  31,224,025Diluted
                  
                  
                  32,592,125
                  
                  
                  
                  31,224,025
 
 See
accompanying notes to the condensed consolidated financial
statements.
  3
 
 TIX
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 SIX
MONTHS ENDED JUNE 30, 2009 (UNAUDITED)
 
 AccumulatedAdditional
                    
                    
                    
                    
                    
                    
                    
                    
                    Other
                    
                    
                    TotalCommon
      Stock
                    
                    
                    Paid In
                    
                    
                    Accumulated
                    
                    
                    Treasury
                    
                    
                    Comprehensive
                    
                    
                    Stockholders’Shares
                    
                    
                    Amount
                    
                    
                    Capital
                    
                    
                    Deficit
                    
                    
                    Stock
                    
                    
                    Loss
                    
                    
                    EquityBalance,
      December 31, 2008
                    
                    
                    32,345,863
                    
                    
                    $
                    2,646,000
                    
                    
                    $
                    88,062,000
                    
                    
                    $
                    (66,384,000
                    )
                    
                    $
                    (2,098,000
                    )
                    
                    $
                    (29,000
                    )
                    
                    $
                    22,197,000Issuance of
      common stock to consultants
                    
                    
                    29,166
                    
                    
                    
                    3,000
                    
                    
                    
                    47,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    50,000Issuance
      of common stock to officers and employees
                    
                    
                    38,194
                    
                    
                    
                    3,000
                    
                    
                    
                    5,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    8,000Issuance
      of common stock on exercise of warrants and options
                    
                    
                    106,557
                    
                    
                    
                    9,000
                    
                    
                    
                    (55,000
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (46,000
                    )Fair
      value of options issued to employees and directors
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    685,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    685,000Issuance
      of common stock related to acquisition of Magic Arts &
      Entertainment
                    
                    
                    190,476
                    
                    
                    
                    15,000
                    
                    
                    
                    241,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    256,000Fair
      value of warrants issued to outside consultants
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    108,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    108,000Net
      Income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    954,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    954,000Foreign
      currency translation adjustment
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    14,000
                    
                    
                    
                    14,000Cost
      of Treasury Stock
                    
                    
                    (272,630
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (443,000
                    )
                    
                    
                    
                    
                    
                    
                    (443,000
                    )Balance,
      June 30, 2009
                    
                    
                    32,437,626
                    
                    
                    $
                    2,676,000
                    
                    
                    $
                    89,093,000
                    
                    
                    $
                    (65,430,000
                    )
                    
                    $
                    (2,541,000
                    )
                    
                    $
                    (15,000
                    )
                    
                    $
                    23,783,000
 
 See
accompanying notes to the condensed consolidated financial statements.
  4
 
 TIX
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Six Month Ended June 30,2009
                  
                  
                  2008(Unaudited)
                  
                  
                  (Unaudited)Cash
      flows from operating activities:Net
      income (loss)
                  
                  $
                  954,000
                  
                  
                  $
                  (704,000
                  )Adjustments
      to reconcile net income to cash provided by operating
      activities:Depreciation
                  
                  
                  264,000
                  
                  
                  
                  237,000Amortization
      of intangible assets
                  
                  
                  983,000
                  
                  
                  
                  1,987,000Fair
      valued common stock issued for services to employees
                  
                  
                  8,000
                  
                  
                  
                  24,000Fair
      valued common stock issued for services to consultants
                  
                  
                  50,000
                  
                  
                  
                  367,000Fair
      value of options issued to employees and directors
                  
                  
                  685,000
                  
                  
                  
                  805,000Fair
      value of warrants issued to consultants
                  
                  
                  108,000
                  
                  
                  
                  -Change
      in allowance of inventory
                  
                  
                  (2,000
                  )
                  
                  
                  60,000(Increase)
      decrease in:Accounts
      receivable
                  
                  
                  66,000
                  
                  
                  
                  (578,000
                  )Inventory
                  
                  
                  1,073,000
                  
                  
                  
                  104,000Prepaid
      expenses and other current assets
                  
                  
                  243,000
                  
                  
                  
                  320,000Capitalized
      theatrical costs, deposits and other assets
                  
                  
                  (456,000
                  )
                  
                  
                  (461,000
                  )Increase
      (decrease) in:Accounts
      payable and accrued expenses
                  
                  
                  324,000
                  
                  
                  
                  381,000Income
      taxes payable
                  
                  
                  106,000
                  
                  
                  
                  -Deferred
      revenue
                  
                  
                  (20,000
                  )
                  
                  
                  2,000Deferred
      rent
                  
                  
                  (33,000
                  )
                  
                  
                  (74,000
                  )Net
      cash provided by operating activities
                  
                  
                  4,353,000
                  
                  
                  
                  2,470,000Cash
      flows from investing activities:Purchases
      of property and equipment
                  
                  
                  (98,000
                  )
                  
                  
                  (336,000
                  )Purchase
      of Magic Arts & Entertainment, net of cash acquired
                  
                  
                  -
                  
                  
                  
                  (1,972,000
                  )Purchase
      of NewSpace Entertainment, net of cash acquired
                  
                  
                  -
                  
                  
                  
                  (1,254,000
                  )Net
      cash used in investing activities
                  
                  
                  (98,000
                  )
                  
                  
                  (3,562,000
                  )Cash
      flows from financing activities:Cost
      of Treasury Stock
                  
                  
                  (443,000
                  )
                  
                  
                  -Payments
      on capital lease obligations
                  
                  
                  (28,000
                  )
                  
                  
                  (22,000
                  )Net
      proceeds from exercise of options and warrants
                  
                  
                  (46,000
                  )
                  
                  
                  54,000Net
      cash provided by (used in) financing activities
                  
                  
                  (517,000
                  )
                  
                  
                  32,000Effect
      of exchange rate changes on cash
                  
                  
                  14,000
                  
                  
                  
                  (36,000
                  )Change
      in Cash:Net
      increase (decrease)
                  
                  
                  3,752,000
                  
                  
                  
                  (1,096,000
                  )Balance
      at beginning of period
                  
                  
                  9,192,000
                  
                  
                  
                  7,417,000Balance
      at end of period
                  
                  $
                  12,944,000
                  
                  
                  $
                  6,321,000
 
 (Continued)
  5
  TIX
      CORPORATION AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS
  (CONTINUED)
 
 Six Month Ended June 30,2009
                  
                  
                  2008(Unaudited)
                  
                  
                  (Unaudited)Supplemental
      disclosures of cash flow information:Cash
      paid for:Income
      taxes
                  
                  $
                  -
                  
                  
                  $
                  -Interest
                  
                  $
                  7,000
                  
                  
                  $
                  10,000Non-cash
      investing activities:Issuance
      of earn-out shares of 190,476 and originally issued 476,190 shares of
      common stock in conjunction with the acquisition of Magic Arts &
      Entertainment - Florida, Inc. in 2009 and 2008
    respectively.
                  
                  $
                  256,000
                  
                  
                  $
                  2,257,000Issuance
      of 571,428 shares of common stock in conjunction with the acquisition of
      NewSpace Entertainment, Inc.
                  
                  $
                  -
                  
                  
                  $
                  2,595,000
 
 See
accompanying notes to the condensed consolidated financial
statements.
  6
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
 Note
1 - Nature of Business
 
 Tix
Corporation (the “Company”) was incorporated in Delaware in April 1993. The
Company is a diversified integrated entertainment company providing ticketing
services, event merchandising and the production and promotion of live
entertainment. We operate three complementary business units: Ticketing Services
(Tix4Tonight) provides discount, premium and membership group sales; Exhibit
Merchandising (EM) provides our exhibit and event merchandise sales and
services; and Tix Productions Inc. (TPI), provides the production and promotion
of live entertainment.
  Preparation
of Interim Financial Statements
  The
consolidated financial statements included in this report have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”) and, in the opinion of management, include all adjustments
(consisting of normal recurring accruals and adjustments necessary for adoption
of new accounting standards) necessary to present fairly the results of the
interim periods shown. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles in the United States have been condensed or omitted
pursuant to such SEC rules and regulations. Management believes that its
disclosures are sufficiently presented to prevent this information from being
misleading. Due to seasonality and other factors, the results for the interim
periods are not necessarily indicative of results for a full year. The financial
statements contained herein should be read in conjunction with the consolidated
and combined financial statements and notes thereto included in the Company’s
2008 Annual Report on Form 10-K and interim financial statements and
information reported on Forms 8-K and 10-Q.
  Note
2 - Summary of Significant Accounting Policies
 
 Revenue
Recognition, Presentation and Concentrations:
  The
Company has several streams of income, each of which is required under Generally
Accepted Accounting Principles (GAAP) to be recognized in varying ways. The
following is a summary of our revenue recognition policies.
  The
Company’s Las Vegas discount 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 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. With
certain exceptions, ticket sales are generally non-refundable, although same-day
exchanges of previously sold tickets are permitted. 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.
 
 The
Company’s Tix4Members.com recognizes as revenue the commissions and related
transaction fees from the sale of tickets when the related event has occurred.
Refunds are only issued if the event is canceled or postponed. Payments for such
ticket sales received prior to the event are recorded as deferred revenue.
Claims for ticket refunds, which are generally received and paid the week 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. Presently, Tix4Members.com does not have any accounts receivable
associated with sales transactions to individual customers because payment is
collected at the time of sale.
  Tix4Dinner
offers reservations for discounted dinners at various restaurants surrounding
the Las Vegas strip and downtown with dining at specific times on the same day
as the sale. Tix4Dinner recognizes as revenue the transaction fees earned from
the booking of dinner reservations at the time the reservations are made. At
this time, the Company has minor accounts receivable and no accounts payable
associated with the Tix4Dinner operations, as the Company collects the
transaction fee at the time the reservation is made, and the dinner payment is
collected directly by the restaurant. The restaurants pay the Company a fee for
each reservation.
  Tix4Golf
recognizes as revenue the difference between how much it charges its customers
for tee-times and how much it pays golf courses for tee-times. The revenue per
tee-time, as well as the cost per tee-time, varies, depending on the
desirability of the golf course, tee-time, weather, time of year and several
other factors. Revenue per tee-time is significantly higher when tee-times are
guaranteed or pre-bought in large quantities. Tee-times are generally sold the
day before or the day of the tee-time, however, tee-times may be booked in
advance. Revenue is not recognized until the day of the tee-time. The Company
does not have any accounts receivable associated with this business because all
transactions are paid for at the time of purchase.
  Tix4AnyEvent
(AnyEvent) recognizes as revenue the gross amount from the sale of tickets that
it owns. AnyEvent bears the risk of economic loss if the tickets are not sold by
the date the event is scheduled to occur. Revenue is considered earned when the
related event has occurred. Refunds are only issued if the event is canceled or
postponed. Payments for such ticket sales received prior to the event are
recorded as deferred revenue. AnyEvent does not have any accounts receivable
associated with sales transactions to retail customers because payment is
collected at the time of sale. However, sales transactions to other ticket
brokers may be conducted on a credit basis, which would generate accounts
receivable.
  7
  Exhibit
Merchandising recognizes retail store sales at the time the customer takes
possession of the merchandise. Sales are recorded net of discounts and returns
and exclude sales tax. Discounts are estimated based upon historical experience.
For online sales, revenue is recognized free on board (“FOB”) origin where title
and risk of loss pass to the buyer when the merchandise leaves
the Company's distribution facility at the time of shipment, which we refer
to as the date of purchase by the customer. Sales are recognized net of
merchandise returns, which are reserved for based on historical experience.
Shipping and handling revenues from sales are included as a component of net
sales. Conversely, shipping and handling costs are a component of direct cost of
revenues. The Company does not have any accounts receivable associated with this
business as transactions are done by cash or credit card.
  On
January 1, 2008, the Company began its live entertainment business. Revenue from
the presentation and production of an event is recognized after the performance
occurs. Revenue collected in advance of the event is recorded as deferred
revenue until the event occurs. Revenue collected from sponsorship and other
revenue, which is not related to any single event, is classified as deferred
revenue and generally amortized over the tour’s season or the term of the
contract. We account for taxes that are externally imposed on revenue producing
transactions on a net basis, as a reduction to revenue.
 
 Tix
Productions Inc.’s (TPI) operating units Magic Arts & Entertainment and
NewSpace act as both presenters and promoters of productions, as well as
agent.  TPI’s revenues from live entertainment where it is acting as
the producer or promoter are a function of a number of elements; revenue is a
direct reflection of tickets sold times ticket prices plus ancillary revenue
streams including sponsorships and revenues generated through premium ticketing
opportunities. In instances where the Company acts as the presenter or
promoter it:
 
 ·
              selects
      the suppliers or approves the selection of the
supplier,·
              is
      the primary obligor with suppliers,·
              assumes
      credit risk,·
              directs
      the pricing of the tickets, and·
              purchases
      the advertising.
 
 The above
are indicators of ownership and would be evidence that revenues and related
expenses should be recorded at gross.  As the Company is acting as the
principal in the transaction, i.e., it has the risks and rewards of ownership
and has recorded the related revenues and expenses at gross. In other instances
where we only receive a fee and are not the principal obligors to vendors we
record these revenues at net.
  Consolidation:
  The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries. Intercompany transactions and balances are eliminated
in consolidation.
  Stock-Based
Compensation:
  The
Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and for financing
costs. The Company accounts for stock option and warrant grants issued and
vesting to employees using Statement of Financial Accounting Standards (SFAS)
No. 123R effective January 1, 2006, for all share-based payments granted based
on the requirements of SFAS No. 123R for all awards granted to employees.
The Company accounts for stock option and warrant grants issued and vesting to
non-employees in accordance with EITF No. 96-18: "Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services” and EITF 00-18 “Accounting
Recognition for Certain Transactions involving Equity Instruments Granted to
Other Than Employees” whereas the value of the stock compensation is based upon
the measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to
earn the equity instruments is complete.
  Intangible
Assets and Goodwill:
  The
Company accounts for intangible assets and goodwill in accordance with Statement
of Financial Accounting Standards No. 141, “Business Combinations” and Statement
of Financial Accounting Standards No. 142, “Goodwill and Other Intangible
Assets.” Intangibles are valued at their fair market value and are amortized
taking into account the character of the acquired intangible asset and the
expected period of benefit. The Company evaluates intangible assets for
impairment, at a minimum, on an annual basis and whenever events or changes in
circumstances indicate the carrying value may not be recoverable from its
estimated future cash flows. Recoverability of intangible assets is measured by
comparing their net book value to the related projected undiscounted cash flows
from these assets, considering a number of factors, including past operating
results, budgets, economic projections, market trends and product development
cycles. If the net book value of the asset exceeds the related undiscounted cash
flows, the asset is considered impaired, and a second test is performed to
measure the amount of impairment loss.
  8
 
 Impairment
of Long-Lived Assets:
  Statement
of Financial Accounting Standards No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets” (“SFAS No. 144”), established guidelines
regarding when impairment losses on long-lived assets, which include property
and equipment, should be recognized, and how impairment losses should be
measured. SFAS No. 144 also provided a single accounting model for long-lived
assets to be disposed of and significantly changed the criteria that would have
to be met to classify an asset as held-for-sale.
 
 Management
regularly reviews property, equipment and other long-lived assets for possible
impairment. This review occurs quarterly, or more frequently if events or
changes in circumstances indicate the carrying amount of the asset may not be
recoverable. If there is indication of impairment, then management prepares an
estimate of future cash flows (undiscounted and without interest charges)
expected to result from the use of the asset and its eventual disposition. If
these cash flows are less than the carrying amount of the asset, an impairment
loss is recognized to write down the asset to its estimated fair value.
Management believes that the accounting estimate related to impairment of its
property and equipment is a “critical accounting estimate” because: (1) it
is highly susceptible to change from period to period because it requires
management to estimate fair value, which is based on assumptions about cash
flows and discount rates; and (2) the impact that recognizing an impairment
would have on the assets reported on the Company’s balance sheet, as well as net
income, could be material. Management’s assumptions about cash flows and
discount rates require significant judgment because actual revenues and expenses
have fluctuated in the past and are expected to continue to do so. There were no
indications of impairment based on management’s assessment at June 30,
2009.  At December 31, 2008, we recorded an impairment charge of $33.1
million related to the goodwill and intangible assets from our acquisition of
EM.  As of June 30, 2009, we have $11.7 million of remaining goodwill
and intangible assets related to our acquisitions of John’s Tickets, LLC, EM,
Magic and NewSpace. Factors we consider important that could trigger an
impairment review include significant underperformance relative to historical or
projected future operating results, significant changes in the manner of the use
of our assets or the strategy for our overall business, and significant negative
industry or economic trends.  If current economic conditions worsen
causing decreased revenues and increased costs, we may have further goodwill
impairments.
 
 Income
Taxes:
  Current
income tax expense is the amount of income taxes expected to be payable for the
current year. A deferred income tax asset or liability is established for the
expected future consequences of temporary differences in the financial reporting
and tax basis of assets and liabilities. The Company considers future taxable
income and ongoing, prudent and feasible tax planning strategies, in assessing
the value of its deferred tax assets. If the Company determines that it is more
likely than not that these assets will not be realized, the Company will reduce
the value of these assets to their expected realizable value, thereby decreasing
net income. Evaluating the value of these assets is necessarily based on the
Company’s judgment. If the Company subsequently determines that the deferred tax
assets, which were written down, would be realized in the future, the value of
the deferred tax assets would be increased, thereby increasing net income in the
period when that determination was made.
  The
Company adopted the provisions of FIN 48 on January 1, 2007. FIN 48 prescribes a
recognition threshold and a measurement attributable for the financial statement
recognition and measurement of tax positions taken or expected to be taken in a
tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. The
amount recognized is measured as the largest amount of benefit that is greater
than 50% likelihood of being realized.
  Fair
Value of Financial Instruments:
  The
carrying amounts of financial instruments, including cash, accounts and other
receivables, accounts payable and accrued liabilities, and short-term loans
approximate fair value because of their short maturity. The carrying amounts of
capital lease obligations approximate fair value because the related
effective interest rates on these instruments approximate the rates currently
available to the Company.
  Cash
Concentrations:
  The
Company's cash balances on deposit with banks in savings accounts in the United
States (US) are guaranteed up to $250,000 by the Federal Deposit Insurance
Corporation (the “FDIC”). The Company may periodically be exposed to risk for
the amount of funds held in one bank in excess of the insurance limit. In order
to control the risk, the Company's policy is to maintain cash balances with high
quality financial institutions. At June 30, 2009, the Company’s aggregate cash
in excess of the FDIC insured amount was $11.4 million. In addition, the Company
had aggregate cash balances in Austria and The United Kingdom of $107,000 and
$14,000, respectively, which are within these respective countries’ equivalent
of the US FDIC guarantee.
 
 Foreign
Currency:
  Results
of foreign operations are translated into U.S. dollars using the average
exchange rates during the year. The assets and liabilities of those operations
are translated into U.S. dollars using the exchange rates at the balance sheet
date. The realized and unrealized exchange losses and gains were minor in the
three and six months ending June 30, 2009. The related translation adjustments
are recorded in a separate component of stockholders’ equity in accumulated
other comprehensive loss. Foreign currency transaction gains and losses are
included in the results of operations.
  9
 
 Accounting
Estimates:
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and 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.
 
 Advertising
Costs:
  Advertising
costs are charged to operations as selling and marketing expenses at the time
the costs are incurred. For the three and six months ended June 30, 2009 and
2008, advertising costs were $576,000 and $1.2 million, and $1.6 million and
$3.8 million, respectively.
 
 Recent
Accounting Pronouncements:
  References
to the “FASB”, “SFAS” and “SAB” herein refer to the “Financial Accounting
Standards Board”, “Statement of Financial Accounting Standards”, and the “SEC
Staff Accounting Bulletin”, respectively.
 
 In
April 2009, the Financial Accounting Standards Board (“FASB”) issued FASB
Staff Position (“FSP”) FAS 157-4, Determining Fair Value when the Volume and
Level of Activity for the Asset or Liability have Significantly Decreased and
Identifying Transactions that are not Orderly (“FSP 157-4”), which is effective
for the Company for the quarterly period beginning April 1, 2009. FSP 157-4
affirms that the objective of fair value when the market for an asset is not
active is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the
measurement date under current market conditions. The FSP provides guidance for
estimating fair value when the volume and level of market activity for an asset
or liability have significantly decreased and determining whether a transaction
was orderly. This FSP applies to all fair value measurements when appropriate.
The Company does not expect the adoption of this statement will have a
significant impact on its financial statements based on current market
conditions.
 
 In
April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and
Presentation of Other-Than-Temporary Impairments (“FSP 115-2”), which is
effective for the Company for the quarterly period beginning April 1, 2009.
FSP 115-2 amends existing guidance for determining whether an other than
temporary impairment of debt securities has occurred. Among other changes, the
FASB replaced the existing requirement that an entity’s management assert it has
both the intent and ability to hold an impaired security until recovery with a
requirement that management assert (a) it does not have the intent to sell
the security, and (b) it is more likely than not it will not have to sell
the security before recovery of its cost basis. The Company has not determined
the impact of the adoption of FSP 115-2 on its financial
statements.
 
 In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures
about Fair Value of Financial Instruments (“FSP 107-1”), which is effective for
the Company for the quarterly period beginning April 1, 2009. FSP 107-1
requires an entity to provide the annual disclosures required by FASB Statement
No. 107, Disclosures about Fair Value of Financial Instruments, in its
interim financial statements. The Company provides the additional disclosures as
required by FSP 107-1 in its quarterly report on Form 10-Q for the period ended
June 30, 2009.
 
 In June
2009, the FASB approved the “FASB Accounting Standards Codification” (the
“Codification”) as the single source of authoritative non-governmental U.S. GAAP
to be launched on July 1, 2009. The codification does not change current U.S.
GAAP, but is intended to simplify user access to authoritative literature
related to a particular topic in one place. All existing accounting standard
documents will be superseded and all accounting literature not included in the
codification will be considered nonauthoritative. The codification is effective
for the Company’s financial statements issued beginning in the quarter ending
September 30, 2009. The Company does not expect the adoption of the codification
to have an impact on its consolidated financial statements.
 
 Note
3 - Acquisitions
  On
January 2, 2008, the Company entered into separate letters of intent to acquire
Magic Arts and Entertainment, LLC (Magic) and NewSpace Entertainment, LLC
(NewSpace). As part of the letters of intent, the managements of Magic and
NewSpace agreed to manage the operations of their respective companies for the
benefit of the Company from January 2, 2008 until the transactions could be
finalized. The managements of Magic and NewSpace were required to consult and
obtain the approval of the management of the Company prior to entering into any
long term arrangements or transactions that were outside the normal course of
business. Further, the Company assumed all responsibility for any losses or
profits that might be incurred or earned during this period by both Magic and
NewSpace. As such, the Company has included the results of operation of Magic
and NewSpace in its consolidated operations as of January 2, 2008, the date the
company acquired effective control. The acquisition of Magic was completed on
February 29, 2008 and the acquisition of NewSpace was completed on
March 12, 2008.
  Magic
Arts and Entertainment:
  Pursuant
to the Merger Agreement and Plan of Merger, we paid to the two stockholders of
Magic, Joseph Marsh and Lee Marshall, a total of $2.1 million in cash and issued
to them a total of 476,190 restricted shares of our common stock with a market
value of $2.3 million. Mr. Marsh and Mr. Marshall were the former owners of
Exhibit Merchandising. Mr. Marsh, as a result of the two transactions and open
market purchases owns approximately 14% of the Company and Mr. Marshall owns
approximately 6% of the Company. Further, at February 28, 2009, we issued an
additional 190,476 shares of our common stock with a fair market value of
$256,000 to the former owners of Magic Arts and Entertainment as they achieved
the pre-determined EBITDA threshold. We will be required to issue to the former
Magic stockholders an additional 190,476 shares of our common stock if certain
EBITDA milestones are achieved during the next twenty-four months. These
milestones are based upon the results achieved by Tix Productions, Inc. (“TPI”),
a wholly owned subsidiary of the Company that focuses on providing live
entertainment.
  10
  The
assets of Magic consist primarily of agreements, copyrights and licenses to
theatres, productions, and touring acts. We carry on Magic’s business through
TPI.
  The
acquisition of Magic has been accounted for as a purchase in accordance with
SFAS No. 141, “Business Combinations,” and the operations of the company have
been consolidated commencing with the closing of the transaction. The $4.4
million purchase price was allocated based upon the fair value of the acquired
assets, as determined by management with the assistance of an independent
valuation firm. As a result of the additional shares issued with a fair market
value of $256,000, the adjusted purchase price of Magic is $4.7
million.
  Allocation
of the Purchase Price of Magic Arts & Entertainment:
 
 Tangible
      assets, net of liabilities assumed:
                  
                  $
                  143,000Intangible
      assets:Employment
      Agreement
                  
                  
                  1,775,000Technology-based
                  
                  
                  5,000Contract
                  
                  
                  476,000Goodwill
                  
                  
                  2,273,000Purchase
      price
                  
                  $
                  4,672,000
  In
conjunction with the completion of the Merger, we entered into written
employment agreements with Messrs. Marsh and Marshall, under which they serve as
the Co-Chief Executive Officers of TPI. The term of each of the employment
agreements commenced on February 29, 2008 and will expire on February 28, 2011,
unless sooner terminated in accordance with the applicable provisions of the
employment agreement. Under the employment agreements, Mr. Marsh is
entitled to an annual salary of $100,000 and Mr. Marshall is entitled to an
annual salary of $300,000 that will increase by $25,000 each year during the
term of the agreement. Mr. Marshall also is eligible to receive annual bonuses
based upon TPI exceeding performance milestones specified in his employment
agreement.
 
 In the
event of the termination of employment of Mr. Marsh or Mr. Marshall for any
reason other than termination by us for “cause” (as defined in the employment
agreement) or termination by reason of his death or permanent disability, we
have agreed to continue to pay Mr. Marsh or Mr. Marshall or their personal
representatives, as the case may be, the annual salary under his employment
agreement for six months following their departure.
  Under
their employment agreements, each of Messrs. Marsh and Marshall agrees not to
compete with us during the period from the date on which their employment with
the Company is terminated for any reason through the fifth anniversary of such
date.
 
 NewSpace
Entertainment
  Pursuant
to the Merger, we paid to the three stockholders of NewSpace $1.4 million in
cash and issued to them a total of 571,428 restricted shares of our common stock
with a market value of $2.6 million.
  The
assets of NewSpace consist primarily of agreements, copyrights and licenses to
theatres, productions, and touring acts. We carry on the business of NewSpace
through TPI.
 
 The
acquisition of NewSpace has been accounted for as a purchase in accordance with
SFAS No. 141, “Business Combinations,” and the operations of the company have
been consolidated commencing with the closing of the transaction. The $4.0
million purchase price was allocated and based upon the fair value of the
acquired assets, as determined by management with the assistance of an
independent valuation firm. This valuation is still subject to change and
revision may occur in the assigned value. The Company does not believe any
changes or revisions will be significant.
  Allocation
of the Purchase Price of NewSpace Entertainment:
 
 Tangible
      assets, net of liabilities assumed:
                  
                  $
                  293,000Intangible
      assets:Licensing
      Contracts
                  
                  
                  64,000Employment
      Agreements
                  
                  
                  1,698,000Technology-based
                  
                  
                  5,000Goodwill
                  
                  
                  1,953,000Purchase
      price
                  
                  $
                  4,013,000
  11
 
 In
conjunction with the completion of the Merger, we entered into written
employment agreements with John Ballard, Steve Boulay and Bruce Granath, the
three stockholders of NewSpace, pursuant to which they serve as President, Chief
Operating Officer and Vice President - Marketing, respectively, at TPI. The term
of each of the employment agreements commenced on March 11, 2008, and will
expire on the third anniversary of such date, unless sooner terminated in
accordance with applicable provisions of the employment agreements.
  Mr.
Ballard and Mr. Boulay are entitled under their respective employment agreements
to an annual salary of $185,000. Mr. Granath, pursuant to his employment
agreement, is entitled to an annual salary of $115,000. Messrs. Ballard, Boulay
and Granath are each entitled to increases in their annual salaries of at least
3% per annum.
  If
Messrs. Ballard, Boulay and Granath are terminated “for cause” as defined in
their employment agreements or the employment agreements expire upon their
respective terms, each agrees not to compete with us during the period from the
date of termination or expiration through the fifth anniversary of such
date.
  If the
employment of Messrs. Ballard, Boulay or Granath is terminated “without cause”
(as defined in their respective employment agreements), we have agreed to
continue to pay Messrs. Ballard, Boulay, Granath, or their personal
representatives, as the case may be, their annual salary under his employment
agreement for six months.
 
 Note
4- Intangible Assets
 
 The
following tables summarize the original cost, the related accumulated
amortization, impairment adjustment, and the net carrying amounts for the
Company’s intangible assets at June 30, 2009.
 
 Estimated
                          Useful
                        
                        Original
                        
                        
                        Accumulated
                        
                        
                        Impairment
                        
                        
                        Other
                        
                        
                        Net
                          CarryingLives
                        
                        Cost
                        
                        
                        Amortization
                        
                        
                        Adjustment
                        
                        
                        Adjustment
                        
                        
                        AmountMarketing
      Based
                        
                        3-6
      years
                        
                        $
                        12,277,000
                        
                        
                        $
                        (3,168,000
                        )
                        
                        $
                        (6,852,000
                        )
                        
                        $
                        -
                        
                        
                        $
                        2,257,000Contract
      commitments
                        
                        3-7
      years
                        
                        
                        6,794,000
                        
                        
                        
                        (2,734,000
                        )
                        
                        
                        (835,000
                        )
                        
                        
                        -
                        
                        
                        
                        3,225,000Customer
      relationships
                        
                        3
      years
                        
                        
                        612,000
                        
                        
                        
                        (474,000
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        138,000Technology
      Based
                        
                        3
      years
                        
                        
                        111,000
                        
                        
                        
                        (82,000
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        29,000Intellectual
      property (e.g. domain names)
                        
                        5
      years
                        
                        
                        130,000
                        
                        
                        
                        (11,000
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        119,000Goodwill
                        
                        indefinite
                        
                        
                        31,084,000
                        
                        
                        
                        -
                        
                        
                        
                        (25,445,000
                        )
                        
                        
                        256,000
                        
                        
                        
                        5,895,000Total
                        
                        
                        
                        $
                        51,008,000
                        
                        
                        $
                        (6,469,000
                        )
                        
                        $
                        (33,132,000
                        )
                        
                        $
                        256,000
                        
                        
                        $
                        11,663,000
 
 Ticketing
      ServicesAssigned
                    
                    
                    Accumulated
                    
                    
                    
                    
                    
                    CarryingValue
                    
                    
                    Amortization
                    
                    
                    Adjustment
                    
                    
                    AmountMarketing
      Based
                    
                    $
                    75,000
                    
                    
                    $
                    (57,000
                    )
                    
                    $
                    -
                    
                    
                    $
                    18,000Contract
      commitments
                    
                    
                    124,000
                    
                    
                    
                    (46,000
                    )
                    
                    
                    -
                    
                    
                    
                    78,000Customer
      relationships
                    
                    
                    612,000
                    
                    
                    
                    (474,000
                    )
                    
                    
                    -
                    
                    
                    
                    138,000Technology
      Based
                    
                    
                    100,000
                    
                    
                    
                    (76,000
                    )
                    
                    
                    -
                    
                    
                    
                    24,000Intellectual
      property (e.g. domain names)
                    
                    
                    130,000
                    
                    
                    
                    (11,000
                    )
                    
                    
                    -
                    
                    
                    
                    119,000Total
                    
                    $
                    1,041,000
                    
                    
                    $
                    (664,000
                    )
                    
                    $
                    -
                    
                    
                    $
                    377,000
 
 MerchandisingAssigned
                    
                    
                    Accumulated
                    
                    
                    
                    
                    
                    CarryingValue
                    
                    
                    Amortization
                    
                    
                    Adjustment
                    
                    
                    AmountMarketing
      Based
                    
                    $
                    12,202,000
                    
                    
                    $
                    (3,111,000
                    )
                    
                    $
                    (6,852,000
                    )
                    
                    $
                    2,239,000Contract
      commitments
                    
                    
                    2,657,000
                    
                    
                    
                    (1,421,000
                    )
                    
                    
                    (835,000
                    )
                    
                    
                    401,000Goodwill
                    
                    
                    27,115,000
                    
                    
                    
                    
                    
                    
                    
                    (25,445,000
                    )
                    
                    
                    1,670,000Total
                    
                    $
                    41,974,000
                    
                    
                    $
                    (4,532,000
                    )
                    
                    $
                    (33,132,000
                    )
                    
                    $
                    4,310,000
  Live
      EntertainmentAssigned
                
                
                Accumulated
                
                
                
                
                
                CarryingValue
                
                
                Amortization
                
                
                Adjustment
                
                
                AmountContract
      commitments
                
                
                4,013,000
                
                
                
                (1,267,000
                )
                
                
                -
                
                
                
                2,746,000Technology
      Based
                
                
                11,000
                
                
                
                (6,000
                )
                
                
                -
                
                
                
                5,000Goodwill
                
                
                3,969,000
                
                
                
                
                
                
                
                256,000
                
                
                
                4,225,000Total
                
                $
                7,993,000
                
                
                $
                (1,273,000
                )
                
                $
                256,000
                
                
                $
                6,976,000
  12
  The 2009
adjustment to goodwill was the result of the issuance of 190,000 shares of
common stock with a fair market value on the date of issuance of $256,000 to the
former shareholders of Magic pursuant to an earn-out provision of the Magic Arts
and Entertainment merger agreement.
 
 Total
amortization expense related to intangible assets for the three months ending
June 30, 2009 and 2008 were $493,000 and $981,000, respectively. Total
amortization expense related to intangible assets for the six months ending June
30, 2009 and 2008 were $983,000 and $1,987,000, respectively. The decline in
amortization costs is primarily due to the $7.7 million impairment charge
associated with EM which was recorded at December 31, 2008, and will result in
an annual decrease of $2.0 million of amortization expense over the next four
years.  Total estimated amortization expense with respect to
intangible assets for the remainder of 2009 through 2013 is as
follows:
 
 Years Ending December 31,2009
                    
                    $
                    (983,000
                    )2010
                    
                    
                    (1,596,000
                    )2011
                    
                    
                    (1,326,000
                    )2012
                    
                    
                    (1,326,000
                    )2013
                    
                    
                    (403,000
                    )Beyond
      2013
                    
                    
                    (134,000
                    )Total
                    
                    $
                    (5,768,000
                    )
 
 Note
5- Obligations under Capital Leases
 
 The
Company has entered into various capital leases for equipment with monthly
payments ranging from $216 to $1,767 per month, including interest, at interest
rates ranging from 9.8% to 19.7% per annum. At June 30, 2009, monthly payments
under these leases aggregated $5,600. The leases expire at various dates through
2013.
 
 At June
30, 2009 and 2008, property and equipment for each period included assets under
capital leases of $408,000, net of accumulated amortization of $297,000 and
$257,000, respectively.
  Minimum
future payments under capital lease obligations for the remainder of 2009, and
thereafter are as follows:
  Years Ending December 31,2009
                    
                    
                    30,0002010
                    
                    
                    67,0002011
                    
                    
                    9,0002012
                    
                    
                    8,0002013
                    
                    
                    3,000Total
      payments
                    
                    
                    117,000Less:
      amount representing interest
                    
                    
                    (15,000
                    )Present
      value of minimum lease payments
                    
                    
                    102,000Less:
      current portion
                    
                    
                    (63,000
                    )Non-current
      portion
                    
                    $
                    39,000
 
 Note
6- Related Party Transactions
 
 During
2009 and 2008, Benjamin Frankel, a director of the Company, was a principal in
Frankel, LoPresti & Co., an accountancy corporation that provides tax
advisory and preparation services to the Company. For the three and six months
ended June 30, 2009, we paid Mr. Frankel or his firm $12,000 and $20,000,
respectively for tax preparation and advisory services. No expenses were
incurred for the three and six months ended June 30, 2008.
  13
 
 Mr.
Joseph Marsh, a greater than 10% shareholder of Tix, was a principal in Magic
Arts and Entertainment - Florida, Inc., a company Tix acquired on January 2,
2008.  For more details regarding the purchase of Magic, see Note 3. -
Acquisitions.
 
 Note
7- Stockholders’ equity
 
 During
the six months ended June 30, 2009, the Company issued: 29,000 shares of common
stock to consultants with a fair market value of $50,000 on the date of
issuance, and 38,000 shares of common stock to officers and employees with a
fair market value of $8,000 on the date of issuance. Additionally, the Company
issued 107,000 shares of common stock, net of 43,000 shares withheld related to
income taxes as a result of an employee option exercise. The company issued
190,000 shares of common stock with a fair market value on the date of issuance
of $256,000 pursuant to an earn-out provision of the Magic Arts and
Entertainment merger agreement.
 
 In the
third quarter of 2008, the Company’s board of directors authorized a share
repurchase program.  As of June 30, 2009, the Company repurchased
1,000,000 shares for $2,532,000. The shares were repurchased at prices that
range from $1.20 per share to $4.13 per share.
 
 In the
second quarter of 2009, the Company’s board of directors authorized an
additional share repurchase program (“the 2009 Repurchase Program”) as the
1,000,000 shares authorized to be repurchased under the program authorized in
the third quarter of 2008 had been purchased. Under the 2009 Repurchase Program,
the Company had repurchased 5,000 shares for $9,600, as of June 30, 2009.
Through July 20, 2009, the Company has repurchased 14,000 shares for $29,000.
The shares were repurchased at prices that range from $1.91 per share to $2.18
per share.
 
 Note
8- Stock-Based Compensation Plans
 
 Summary
of Stock Options:
 
 The
Company has various stock-based compensation plans. The intrinsic value of
outstanding stock options at June 30, 2009 was $296,000, as compared to
$927,000 at June 30, 2008. The intrinsic value of exercisable stock options at
June 30, 2009 was $296,000, as compared to $683,000 at June 30, 2008. A summary
of the combined stock options for the six months ended June 30, 2009 is as
follows:
 
 WeightedNumber
                    
                    
                    averageof
                    
                    
                    exerciseoptions
                    
                    
                    priceBalance
      outstanding, December 31, 2008
                    
                    
                    1,263,000
                    
                    
                    $
                    5.41Options
      granted
                    
                    
                    250,000
                    
                    
                    
                    1.27Options
      exercised
                    
                    
                    (150,000
                    )
                    
                    
                    0.15Options
      expired or forfeited
                    
                    
                    (128,000
                    )
                    
                    
                    4.20Balance
      outstanding, June 30, 2009
                    
                    
                    1,235,000
                    
                    
                    $
                    5.33Balance
      exercisable, June 30, 2009
                    
                    
                    585,000
                    
                    
                    $
                    4.93
  14




Information
relating to outstanding stock options at June 30, 2009, summarized by exercise
price, is as follows:





Outstanding
                            
                            
                            ExercisableWeighted
                            
                            
                            
                            
                            
                            WeightedLife
                            
                            
                            Average
                            
                            
                            
                            
                            
                            AverageExercise Price Per Share
                            
                            Shares
                            
                            
                            (Years)
                            
                            
                            Exercise Price
                            
                            
                            Shares
                            
                            
                            Exercise Price$6.00
      - $7.20
                            
                            
                            815,000
                            
                            
                            
                            7.31
                            
                            
                            $
                            7.01
                            
                            
                            
                            315,000
                            
                            
                            $
                            7.02$4.00
      - $5.99
                            
                            
                            20,000
                            
                            
                            
                            2.71
                            
                            
                            $
                            4.30
                            
                            
                            
                            20,000
                            
                            
                            $
                            4.30$2.00
      - $3.99
                            
                            
                            150,000
                            
                            
                            
                            3.78
                            
                            
                            $
                            3.07
                            
                            
                            
                            150,000
                            
                            
                            $
                            3.07$0.22
      - $1.99
                            
                            
                            250,000
                            
                            
                            
                            7.75
                            
                            
                            $
                            1.27
                            
                            
                            
                            100,000
                            
                            
                            $
                            1.251,235,000
                            
                            
                            
                            6.89
                            
                            
                            $
                            5.33
                            
                            
                            
                            585,000
                            
                            
                            $
                            4.93





Tix
Corporation recorded compensation expense pursuant to FAS 123(R) for the six
months ended June 30, 2009 and 2008 of $685,000 and $805,000, respectively. As
of June 30, 2009, the Company has outstanding unvested options with future
compensation costs of $1.7 million, which will be recorded as compensation
expense as the options vest over their remaining average life of 6.89
years.





The
assumptions used in calculating the fair value of the options granted during
2009, using the Black Scholes option-pricing model were as follows:





2009Risk
      free rate of return
                      
                      
                      1.36
                      %Option
      lives in years
                      
                      
                      3Annual
      volatility of stock price
                      
                      
                      100.6
                      %Dividend
      yield
                      
                      
                      0
                      %





In
conjunction with a consulting agreement in 2009, the Company issued 150,000
warrants, of which 75,000 vested immediately. The remaining 75,000 vest over six
months, which is the term of the consulting agreement. As the consulting
agreement can be terminated at any time and the consulting arrangement does not
contain any performance measurements or sufficiently large disincentives for
non-performance, the related consulting expense on these 75,000 warrants is
recognized over the life of the contract. In the six months ended June 30, 2009,
we recorded an expense of $90,000 related to this consulting agreement. In
conjunction with a consulting agreement in 2008, the Company issued 150,000
warrants, of which 50,000 vested immediately. The remaining 100,000 warrants
vested over six months, which is the term of the consulting agreement. As the
consulting agreement could have been terminated at any time and the consulting
arrangement does not contain any performance measurements or sufficiently large
disincentives for non-performance, the related consulting expense on these
100,000 warrants was recognized over the life of the contract. In the six months
ended June 30, 2009, the remaining 33,000 warrants vested, and we recorded an
expense of $18,000.





A summary
of warrant activity for the six months ended June 30, 2009 is as
follows:





WeightedNumber
                            
                            
                            averageof
                            
                            
                            exercisewarrants
                            
                            
                            priceBalance
      outstanding, December 31, 2008
                            
                            
                            2,672,007
                            
                            
                            $
                            5.11Warrants
      granted
                            
                            
                            150,000
                            
                            
                            
                            1.14Warrants
      exercised
                            
                            
                            -
                            
                            
                            
                            -Warrants
      expired
                            
                            
                            -
                            
                            
                            
                            -Balance
      outstanding, June 30, 2009
                            
                            
                            2,822,007
                            
                            
                            $
                            4.90





The
intrinsic value of outstanding warrants at June 30, 2009 was $491,000, as
compared to $846,000 at June 30, 2008. Information relating to outstanding
warrants at June 30, 2009, summarized by exercise price, is as
follows:


15





Outstanding
                                
                                
                                ExercisableWeighted
                                
                                
                                
                                
                                
                                WeightedLife
                                
                                
                                Average
                                
                                
                                
                                
                                
                                AverageExercise Price Per Share
                                
                                Shares
                                
                                
                                (Years)
                                
                                
                                Exercise Price
                                
                                
                                Shares
                                
                                
                                Exercise Price$2.00
      - $5.50
                                
                                
                                2,522,007
                                
                                
                                
                                0.34
                                
                                
                                $
                                5.38
                                
                                
                                
                                2,522,007
                                
                                
                                $
                                5.38$0.36
      - $1.99
                                
                                
                                300,000
                                
                                
                                
                                2.62
                                
                                
                                $
                                0.82
                                
                                
                                
                                255,000
                                
                                
                                $
                                0.762,822,007
                                
                                
                                
                                0.58
                                
                                
                                $
                                4.90
                                
                                
                                
                                2,777,007
                                
                                
                                $
                                4.96




Note
9- Income Taxes





At June
30, 2009, the Company had Federal net operating loss carryforwards of
approximately $27.1 million that begin expiring in 2009 in varying amounts
through 2028. The Company also had California state net operating loss
carryforwards of approximately $700,000. In October, 2008 California temporarily
suspended use of net operating losses for 2008 and 2009, and the California
state net operating losses expire beginning in 2015 in varying amounts through
2018.





SFAS No.
109 requires that a valuation allowance be established when it is more likely
than not that all or a portion of deferred tax assets will not be realized. Due
to the restrictions imposed by Internal Revenue Code Section 382 regarding
substantial changes in ownership of companies with loss carryforwards, the
utilization of the Company’s net operating loss carryforwards are limited to
$6.7 million per year as a result of cumulative changes in stock ownership. As a
result of the limitations related to Internal Revenue Code Section 382 and the
Company’s lack of history of profits, as such, the Company recorded a 100%
valuation allowance against its net deferred tax assets as of June 30, 2009 and
2008.





The
provision for income taxes was $106,000 for the three and six months ended June
30, 2009 compared with a benefit of $82,000 and no provision for the three and
six months ended June 30, 2008. The provision for income taxes for the three and
six months ended June 30, 2009 and 2008 was determined using our effective rate
estimated for the entire fiscal year.





In
addition, during 2009, we utilized certain federal net operating loss (“NOL”)
carryforwards. We have provided valuation allowances related to the benefits
from income taxes resulting from the application of a statutory tax rate to our
NOL’s generated in previous periods. The allowances were established and
maintained as a result of our history of losses from operations.





Note
10- Earnings Per Share





The
Company computes net income per common share in accordance with FASB Statement
of Financial Accounting Standard 128, Earnings per Share (“Statement 128”).
Under the provisions of Statement 128, basic net income per common share is
computed by dividing the net income applicable to common shares by weighted
average number of common shares outstanding during the period. Diluted net
income per common share adjusts basic net income per common share for the
effects of stock options, restricted stock and other potentially dilutive
financial instruments only in the periods in which such effect is
dilutive.





The
following table sets forth the computation of basic and diluted income per
common share:





Six Months Ended June 30,2009
                          
                          
                          2008Net
      income (loss)
                          
                          $
                          954,000
                          
                          
                          $
                          (704,000
                          )Weighted
      average common shares- basic
                          
                          
                          32,332,963
                          
                          
                          
                          31,224,025Dilutive
      effect of employee incentive plans
                          
                          
                          139,055
                          
                          
                          
                          -Dilutive
      effect of warrants issued to consultants
                          
                          
                          120,107
                          
                          
                          
                          -Weighted
      average shares- diluted
                          
                          
                          32,592,125
                          
                          
                          
                          31,224,025Net
      income per common share:Basic
                          
                          $
                          0.03
                          
                          
                          $
                          (0.02
                          )Diluted
                          
                          $
                          0.03
                          
                          
                          $
                          (0.02
                          )








16




Three
      Months Ended June 30,2009
                              
                              
                              2008Net
      income (loss)
                              
                              $
                              659,000
                              
                              
                              $
                              (1,166,000
                              )Weighted
      average common shares- basic
                              
                              
                              32,361,325
                              
                              
                              
                              31,805,228Dilutive
      effect of employee incentive plans
                              
                              
                              145,526
                              
                              
                              
                              -Dilutive
      effect of warrants issued to consultants
                              
                              
                              138,513
                              
                              
                              
                              -Weighted
      average shares- diluted
                              
                              
                              32,645,364
                              
                              
                              
                              31,805,228Net
      income per common share:Basic
                              
                              $
                              0.02
                              
                              
                              $
                              (0.04
                              )Diluted
                              
                              $
                              0.02
                              
                              
                              $
                              (0.04
                              )Potentially
      dilutive securities excluded from earnings per diluted share because their
      effect is anti-dilutive.





Note
11- Fair Value Measurements




The
Company uses various inputs in determining the fair value of its investments and
measures these assets on a recurring basis.  Financial assets recorded
at fair value in the consolidated balance sheets are categorized by the level of
objectivity associated with the inputs used to measure their fair
value.  SFAS No. 157 defines the following levels directly
related to the amount of subjectivity associated with the inputs to fair
valuation of these financial assets:





·
            Level 1 – quoted prices in active
      markets for identical
investments





·
            Level 2 – other significant
      observable inputs (including quoted prices for similar investments, market
      corroborated inputs, etc.)





·
            Level 3 – significant
      unobservable inputs (including the Company’s own assumptions in
      determining the fair value of
  investments)





The
inputs or methodology used for valuing securities are not necessarily an
indication of the credit risk associated with investing in those
securities.  The following table provides the fair value measurements
of applicable Company financial assets that are measured at fair value on a
recurring basis according to the fair value levels defined by SFAS No. 157
as of June 30, 2009 and December 31, 2008.




Financial Assets at Fair Valueas of June 30, 2009Level 1
                            
                            
                            Level 2
                            
                            
                            Level 3
                            
                            
                            Total(in
      thousands)Cash
      and cash equivalents
                            
                            $
                            12,931
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            12,931Short-term
      investments
                            
                            
                            13
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            13Long-term
      investments
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Total
      cash and cash equivalents and investments
                            
                            $
                            12,944
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            12,944





Financial Assets at Fair Valueas of December 31, 2008Level 1
                            
                            
                            Level 2
                            
                            
                            Level 3
                            
                            
                            Total(in
      thousands)Cash
      and cash equivalents
                            
                            $
                            9,179
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            9,179Short-term
      investments
                            
                            
                            13
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            13Long-term
      investments
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Total
      cash and cash equivalents and investments
                            
                            $
                            9,192
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            9,192




17





There
were no unrealized gains or losses included in earnings resulting from long-term
investments associated with Level 3 financial assets during the six month period
ended June 30, 2009.




The
Company also has assets that under certain conditions are subject to measurement
at fair value on a non-recurring basis.  These assets include goodwill
and intangible assets associated with the acquisition of John’s Tickets, EM,
Magic and NewSpace.  For these assets, measurement at fair value in
periods subsequent to their initial recognition is applicable if one or more is
determined to be impaired.





Note
12- Segment Reporting





We
operate in three reportable segments: ticketing services, event and branded
merchandising, and live entertainment.





Ticketing
Services




Our
ticketing business is operated by our wholly owned subsidiary Tix4Tonight.
Ticketing Services offers three distinct services: discount ticketing,
membership group sales, and premium event ticketing.




Discount
Ticketing – Tix4Tonight, Las Vegas




When
selling discounted tickets, Tix4Tonight generally sells them from six leased
locations in Las Vegas under short-term, exclusive and non-exclusive agreements
with approximately 80 Las Vegas shows, out of a total of approximately 100 shows
running at any one time. Tix4Tonight typically offers tickets for more than 70
shows on any given day at a discount plus a service fee. Tix4Tonight receives
inventory for sale the same day directly from the show producer, artist or
theater. This is a reflection of the Las Vegas market and its last minute
purchasing pattern. Tix4Tonight does not know the exact number of tickets for
each show it will be able to offer for sale 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 producers of the shows are paid on a weekly basis only for
the tickets that Tix4Tonight actually sells to customers. Tix4Tonight has no
financial risk with respect to unsold tickets and revenues are recorded at net
of ticket cost, that is, commissions and fees on tickets sold.





Our
opportunities to grow the Las Vegas operations are focused on growing our
inventory by reaching agreements with additional shows, increasing the number of
our storefront sales locations and working to further monetize the relationships
we have with customers by offering additional, complementary products and
services. Toward these ends, Tix4Tonight also offers discounted dining
reservation tickets to approximately 30 Las Vegas area restaurants and
discounted golf tee times to certain Las Vegas golf courses.





Membership
Group Sales – Tix4Members.com





Tix
Corporation launched its internet based Tix4Members.com in association with
Costco. As with our Tix4Tonight operation in Las Vegas, Tix4Members.com offers a
marketing channel for producers, presenters, artists, arenas and theaters
nationwide to take advantage of our strong position in the discounted ticket
sales and live entertainment industry. Tix4Members.com operates in a manner
similar to Tix4Tonight with a few key differences. Instead of relying on
physical ticket booth facilities for direct sales, Tix4Members.com uses the
internet as its customer interface, and has expanded the date range of ticket
availability instead of offering only day of show tickets.




Premium
Ticketing – Tix4AnyEvent





Tix4Tonight
operates a national event ticket broker called Tix4AnyEvent (AnyEvent), which
focuses on premium tickets for sporting events, concert tours and theatres. In
the area of premium tickets, we have changed from a retail ticket seller to the
public to a wholesaler of tickets, that is, our clients are usually national
retail ticket brokers. As a result of this change, we are assuming less risk,
have been able to reduce our overhead and increase the likelihood of
profitability. The tickets sold are generally obtained through the event
sponsor, artist or producer; although in some circumstances the tickets that we
sell are from secondary or resale markets. We continue to expand our event
offerings in this field through our strong industry relationships. Tix4AnyEvent
operations are located in the leased administrative offices of Tix4Tonight in
Las Vegas.




Exhibit
and Event Merchandising





The
Company provides exhibit and event merchandising through its wholly-owned
subsidiary, Exhibit Merchandising, LLC (EM). EM provides retail specialty stores
for touring museum exhibitions and touring theatrical productions. EM provides a
complete turn-key retail store including professional management and both
custom-branded products and commercially-available products for sale. EM
operates the stores in space provided in conjunction with the exhibit. To date,
revenues from the management of retail outlets associated with the sale of
merchandise related to touring exhibits have been primarily derived from
“Tutankhamen and The Golden Age of the Pharaohs.”


18





Management
expects that EM’s growth will be from merchandising opportunities derived from
shows produced or presented by our Live Entertainment segment, such as 101
Dalmatians, Jesus Christ Superstar and Mannheim Steamroller, or by adding
additional exhibits and events that we currently do not represent.




Live
Entertainment




In
January 2008, the Company acquired two live theatrical and concert production
companies: Magic Arts & Entertainment, LLC (Magic) and NewSpace
Entertainment, Inc. (NewSpace). Both Magic and NewSpace are independent
presenters of live theater and concerts with a history of working together. The
Company merged the two entertainment companies into its wholly-owned subsidiary
Tix Productions, Inc. We believe that by combining the operations of the two
companies into a single entity, we are able to leverage our resources, gain
operating efficiencies and more fully utilize the combined network of
producers and promoters. NewSpace and Magic continue to do business under their
former names as a reflection of the marketplace’s recognition of these
entities.




As a live
entertainment presenter, we book touring theatrical and concert presentations
with a history of successful commercial appeal and participate in the
development and roll out of new theatrical and concert presentations often
originating on Broadway in New York or the West End in London. We use a
wide variety of marketing channels to sell tickets to these programs including
our substantial subscriber-based businesses in eleven US cities, our Salt Lake
City based group sales team, and standard marketing tools including print,
radio, television, outdoor and internet marketing tools. In addition, we invest
in shows or productions in advance of their initial tour to obtain favorable
touring and distribution rights.




Our Live
Entertainment operation focuses on two major areas: production and presentation.
As producers, we invest in the creation of original entertainment properties,
which are then sold to third party presenters generating upfront guaranteed
income, revenue sharing opportunities, and additional opportunities for
sponsorship and other ancillary revenue streams. Examples of this are tours of
Mannheim Steamroller Christmas, Jesus Christ Superstar and our upcoming
theatrical production of 101 Dalmatians.





As
presenters, we generally contract for entertainment properties from producers to
present in markets in the US and Canada. We have worked in most major North
American cities and can negotiate terms that are unavailable to presenters in
individual markets. In eleven markets, we have substantial subscriber-based
operations operating as “Broadway in (city name)” series which greatly reduces
the risk associated with individual presentations and provides additional
opportunities to generate sponsorship and other ancillary revenue streams. These
markets are Salt Lake City, Eugene, Kalamazoo, Akron, Albuquerque, Colorado
Springs, Detroit, Fresno, Boise, Birmingham, and Milwaukee. In Canada, we have a
presenting relationship that operates under the name Canada Theatricals Live
which is now the second largest presenter of theater-based events in
Canada.





Revenue
and expenses earned and charged between segments are eliminated in
consolidation. Corporate expenses, interest income, interest expense and income
taxes are managed on a total company basis. Information related to these
operating segments is as follows:




Consolidating
Statement of Operations (unaudited)


Six
months ended June 30,





Ticketing
                              
                              
                              Exhibit
                              
                              
                              Live
                              
                              
                              Corporate
                              
                              
                              ConsolidatedServices
                              
                              
                              Merchandising
                              
                              
                              Entertainment
                              
                              
                              Expenses
                              
                              
                              and Combined2009Revenue
                              
                              $
                              8,825,000
                              
                              
                              $
                              5,110,000
                              
                              
                              $
                              32,819,000
                              
                              
                              $
                              -
                              
                              
                              $
                              46,754,000Direct
      operating expenses
                              
                              
                              3,263,000
                              
                              
                              
                              3,103,000
                              
                              
                              
                              29,970,000
                              
                              
                              
                              -
                              
                              
                              
                              36,336,000Selling,
      general and administrative expenses
                              
                              
                              1,775,000
                              
                              
                              
                              1,267,000
                              
                              
                              
                              2,334,000
                              
                              
                              
                              2,904,000
                              
                              
                              
                              8,280,000Depreciation
      and amortization
                              
                              
                              119,000
                              
                              
                              
                              593,000
                              
                              
                              
                              395,000
                              
                              
                              
                              140,000
                              
                              
                              
                              1,247,000Operating
      income (loss)
                              
                              $
                              3,668,000
                              
                              
                              $
                              147,000
                              
                              
                              $
                              120,000
                              
                              
                              $
                              (3,044,000
                              )
                              
                              $
                              891,000Current
      assets
                              
                              $
                              3,086,000
                              
                              
                              $
                              5,439,000
                              
                              
                              $
                              3,407,000
                              
                              
                              $
                              4,922,000
                              
                              
                              $
                              16,854,000Fixed
      assets
                              
                              
                              512,000
                              
                              
                              
                              582,000
                              
                              
                              
                              97,000
                              
                              
                              
                              76,000
                              
                              
                              
                              1,267,000Intangible
      assets and goodwill
                              
                              
                              119,000
                              
                              
                              
                              4,310,000
                              
                              
                              
                              6,976,000
                              
                              
                              
                              258,000
                              
                              
                              
                              11,663,000Other
      non-current assets
                              
                              
                              191,000
                              
                              
                              
                              13,000
                              
                              
                              
                              789,000
                              
                              
                              
                              6,000
                              
                              
                              
                              999,000Total
      assets
                              
                              $
                              3,908,000
                              
                              
                              $
                              10,344,000
                              
                              
                              $
                              11,269,000
                              
                              
                              $
                              5,262,000
                              
                              
                              
                              30,783,0002008Revenue
                              
                              $
                              6,363,000
                              
                              
                              $
                              6,082,000
                              
                              
                              $
                              27,582,000
                              
                              
                              $
                              -
                              
                              
                              $
                              40,027,000Direct
      operating expenses
                              
                              
                              2,810,000
                              
                              
                              
                              3,681,000
                              
                              
                              
                              22,563,000
                              
                              
                              
                              -
                              
                              
                              
                              29,054,000Selling,
      general and administrative expenses
                              
                              
                              1,213,000
                              
                              
                              
                              2,046,000
                              
                              
                              
                              3,536,000
                              
                              
                              
                              2,901,000
                              
                              
                              
                              9,696,000Depreciation
      and amortization
                              
                              
                              101,000
                              
                              
                              
                              1,580,000
                              
                              
                              
                              374,000
                              
                              
                              
                              169,000
                              
                              
                              
                              2,224,000Operating
      income (loss)
                              
                              $
                              2,239,000
                              
                              
                              $
                              (1,225,000
                              )
                              
                              $
                              1,109,000
                              
                              
                              $
                              (3,070,000
                              )
                              
                              $
                              (947,000
                              )Current
      assets
                              
                              $
                              2,064,000
                              
                              
                              $
                              5,829,000
                              
                              
                              $
                              2,903,000
                              
                              
                              $
                              1,219,000
                              
                              
                              $
                              12,015,000Fixed
      assets
                              
                              
                              643,000
                              
                              
                              
                              825,000
                              
                              
                              
                              72,000
                              
                              
                              
                              29,000
                              
                              
                              
                              1,569,000Intangible
      assets and goodwill
                              
                              
                              130,000
                              
                              
                              
                              39,362,000
                              
                              
                              
                              7,626,000
                              
                              
                              
                              527,000
                              
                              
                              
                              47,645,000Other
      non-current assets
                              
                              
                              45,000
                              
                              
                              
                              24,000
                              
                              
                              
                              459,000
                              
                              
                              
                              6,000
                              
                              
                              
                              534,000Total
      assets
                              
                              $
                              2,882,000
                              
                              
                              $
                              46,040,000
                              
                              
                              $
                              11,060,000
                              
                              
                              $
                              1,781,000
                              
                              
                              $
                              61,763,000




19




Consolidating
Statement of Operations (unaudited)


Three
months ended June 30,





Ticketing
                          
                          
                          Exhibit
                          
                          
                          Live
                          
                          
                          Corporate
                          
                          
                          ConsolidatedServices
                          
                          
                          Merchandising
                          
                          
                          Entertainment
                          
                          
                          Expenses
                          
                          
                          and
      Combined2009Revenue
                          
                          $
                          4,670,000
                          
                          
                          $
                          2,321,000
                          
                          
                          $
                          19,593,000
                          
                          
                          $
                          -
                          
                          
                          $
                          26,584,000Direct
      operating expenses
                          
                          
                          1,729,000
                          
                          
                          
                          1,398,000
                          
                          
                          
                          18,283,000
                          
                          
                          
                          -
                          
                          
                          
                          21,410,000Selling,
      general and administrative expenses
                          
                          
                          904,000
                          
                          
                          
                          642,000
                          
                          
                          
                          1,140,000
                          
                          
                          
                          1,232,000
                          
                          
                          
                          3,918,000Depreciation
      and amortization
                          
                          
                          61,000
                          
                          
                          
                          297,000
                          
                          
                          
                          198,000
                          
                          
                          
                          70,000
                          
                          
                          
                          626,000Operating
      income (loss)
                          
                          $
                          1,976,000
                          
                          
                          $
                          (16,000
                          )
                          
                          $
                          (28,000
                          )
                          
                          $
                          (1,302,000
                          )
                          
                          $
                          630,0002008Revenue
                          
                          $
                          3,368,000
                          
                          
                          $
                          2,979,000
                          
                          
                          $
                          10,517,000
                          
                          
                          $
                          -
                          
                          
                          $
                          16,864,000Direct
      operating expenses
                          
                          
                          1,281,000
                          
                          
                          
                          1,804,000
                          
                          
                          
                          9,238,000
                          
                          
                          
                          -
                          
                          
                          
                          12,323,000Selling,
      general and administrative expenses
                          
                          
                          613,000
                          
                          
                          
                          1,207,000
                          
                          
                          
                          1,510,000
                          
                          
                          
                          1,528,000
                          
                          
                          
                          4,858,000Depreciation
      and amortization
                          
                          
                          52,000
                          
                          
                          
                          794,000
                          
                          
                          
                          187,000
                          
                          
                          
                          69,000
                          
                          
                          
                          1,102,000Operating
      income (loss)
                          
                          $
                          1,422,000
                          
                          
                          $
                          (826,000
                          )
                          
                          $
                          (418,000
                          )
                          
                          $
                          (1,597,000
                          )
                          
                          $
                          (1,419,000
                          )




20





ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS:





“Tix”
(which may be referred to as the “Company”,“we”, “us” or “our”) means Tix
Corporation and its subsidiaries, or one of our segments or subsidiaries, as the
context requires. You should read the following discussion of our financial
condition and results of operations together with the unaudited consolidated
financial statements and notes to the financial statements included elsewhere in
this quarterly report.





Certain
statements contained in this quarterly report (or otherwise made by us or on our
behalf from time to time in other reports, filings with the Securities and
Exchange Commission, news releases, conferences, internet postings or otherwise)
that are not statements of historical fact constitute “forward-looking
statements” within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Exchange Act of 1934, as amended,
notwithstanding that such statements are not specifically identified.
Forward-looking statements include, but are not limited to, statements about our
financial position, business strategy, competitive position, potential growth
opportunities, potential operating performance improvements, and the effects of
competition, the effects of future legislation or regulations and plans and
objectives of our management for future operations. We have based our
forward-looking statements on our management’s beliefs and assumptions based on
information available to our management at the time the statements are made. Use
of the words “may,” “should,” “continue,” “plan,” “potential,” “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “outlook,” “could,” “project,”
“seek,” “predict” or variations of such words and similar expressions are
intended to identify forward-looking statements but are not the exclusive means
of identifying such statements.





Forward-looking
statements are not guarantees of future performance and are subject to risks and
uncertainties that could cause actual results to differ materially from those in
such statements. Factors that could cause actual results to differ from those
discussed in the forward-looking statements include, but are not limited to,
those set forth under Item 1A. — Risk Factors in both our 2008
Form 10-K and this quarterly report, as well as other factors described
herein or in our annual, quarterly and other reports we file with the SEC
(collectively, “cautionary statements”). Based upon changing conditions, should
any one or more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results may vary materially from
those described in any forward-looking statements. All subsequent written and
oral forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the applicable cautionary
statements. We do not intend to update these forward-looking statements, except
as required by applicable law.





Executive
Overview





During
the second quarter of 2009, we continued to execute our strategy to improve and
build our operations comprised of Tix4Tonight, Exhibit Merchandising (EM) and
Tix Productions, Inc. (TPI). The highlights for each of our segments for the six
months ended June 30, 2009 were as follows:





Tix4Tonight





·
            For the three and six months
      ended June 30, 2009, Tix4Tonight sold 341,000 tickets and 659,000 tickets,
      respectively. These ticket sales represented an increase of 88,000 and
      184,000 tickets over the prior year’s comparable three and six month
      periods and reflected a 35% and 39% increase over the prior year’s ticket
      sales.





·
            For the three and six months
      ended June 30, 2009, Tix4Tonight sold tickets with a value of $19.5
      million and $37.1 million, respectively. The value of the tickets sold
      represented an increase of $6.7 million and $13.8 million over prior
      year’s comparable three and six month periods, and reflected a 53% and 59%
      increase over the prior year’s ticket
  sales.





·
            For the three and six months
      ended June 30, 2009, Tix4Tonight’s Tix4Dinner business sold dinner
      reservations with a value of $321,000 and $603,000, respectively. These
      reservation sales represented an increase of $101,000 and $212,000 over
      prior year’s comparable three and six month periods, and reflected a 46%
      and 54% increase over prior year’s dinner reservations
      revenue.





·
            In February 2009, Tix4Tonight
      launched its website Tix4Members in conjunction with an agreement with
      Costco. To date, the revenues have not been
    meaningful.





Exhibit
Merchandising





·
            Returned to profitability in the
      first quarter of 2009 and was profitable for the six months ended June 30,
      2009.





·
            Negotiated a royalty agreement
      with exhibition producers reducing our royalty rate by 25%, which we
      estimate is a savings of $30,000 per
  month.


21





Live
Entertainment





·
            TPI’s subscription series shows
      are presently selling slower than anticipated; however offsetting the
      decline in revenues from our subscription series are stronger than
      anticipated sales of shows such as Walking with
      Dinosaurs.





·
            Shows that are produced or
      presented by TPI such as David Copperfield, Rain, and Lord of the Dance
      continue to perform in line with
  expectations.




Critical
Accounting Policies and Estimates:





The
preparation of our consolidated financial statements is in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires management to make 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 its earlier estimates and judgments.
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 narrative describes the critical accounting policies that affect the
more significant judgments and estimates used in the preparation of the
Company's consolidated financial statements.





Revenue
Recognition and Presentation:





The
Company has several streams of income, each of which is required under GAAP to
be recognized in varying ways. The following is a summary of our revenue
recognition policies:





The
Company’s Las Vegas discount 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 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. With
certain exceptions, ticket sales are generally non-refundable, although same-day
exchanges of previously sold tickets are permitted. 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.





The
Company’s Tix4Members.com recognizes as revenue the commissions and the related
transaction fees earned when the related event has occurred. Refunds are only
issued if the event is canceled or postponed. Payments for such ticket sales
received prior to the event are recorded as deferred revenue. 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.
Tix4Members.com does not have any accounts receivable associated with sales
transactions to individual customers, as payment is collected at the time of
sale.





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 or in some
cases as much as 7 days after the day of the sale. Tix4Dinner recognizes as
revenue the transaction fees earned from the purchaser of the dinner
reservations at the time that the reservations are made and a subsequent nominal
fee from the restaurant at the time the reservation is used. At this time, the
Company has immaterial amounts of accounts receivable and does not have any
accounts payable associated with the Tix4Dinner operations because the Company
collects the transaction fee at the time that the reservation is made and the
dinner payment is collected directly by the restaurant.





Tix4Golf
recognizes as revenue the difference between how much it charges its customers
for tee-times and how much it pays golf courses for tee-times. The revenue per
tee-time, as well as the cost per tee-time, varies depending on the desirability
of the golf course and tee-time, weather, time of year and several other
factors. Revenue per tee-time is significantly higher when tee-times are
guaranteed or pre-bought in large quantities. Tee-times are generally sold the
day before or the day of the tee-time, however, tee-times may be booked in
advance. Revenue is not recognized until the day of the tee-time. The Company
does not have any accounts receivable associated with this business, as all
transactions are paid for at the time of purchase.





Tix4AnyEvent
(AnyEvent) recognizes as revenue the gross amount from the sale of tickets that
it owns. AnyEvent bears the risk of economic loss if the tickets are not sold by
the date that the event is scheduled to occur. Revenue is considered earned when
the related event has occurred. Refunds are only issued if the event is canceled
or postponed. Payments for such ticket sales received prior to the event are
recorded as deferred revenue. AnyEvent does not have any accounts receivable
associated with sales transactions to individual customers, as payment is
collected at the time of sale. However, sales transactions with other ticket
brokers may be conducted on a credit basis, which would generate accounts
receivable.


22





Exhibit
Merchandising recognizes retail store sales at the time the customer takes
possession of the merchandise. All sales are net of discounts and returns and
exclude sales tax. For online sales, revenue is recognized free on board ("FOB")
origin where title and risk of loss pass to the buyer when the merchandise
leaves the Company's distribution facility at the time of shipment, which
we refer to as the date of purchase by the customer. Sales are recognized net of
merchandise returns, which are reserved for based on historical experience.
Shipping and handling revenues from sales are included as a component of net
sales. Conversely, shipping and handling costs are a component of direct costs
of revenues, pursuant to EITF 00-10. The Company does not have any accounts
receivable associated with this business because all transactions are done by
cash or credit card.





Tix
Productions, Inc. recognizes revenue from the presentation and production of an
event after the performance occurs upon settlement of the event; however any
profits related to these tours is recognized after minimum revenue thresholds,
if any have been achieved. Revenue collected in advance of the event is recorded
as deferred revenue until the event occurs. Revenue collected from sponsorship
and other revenue, which is not related to any single event, is classified as
deferred revenue and generally amortized over the tour’s season or the term of
the contract. We account for taxes that are externally imposed on revenue
producing transactions on a net basis, as a reduction to revenue.





Stock-Based
Compensation:





The
Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and financing
costs. The Company accounts for stock option and warrant grants issued and
vesting to employees using SFAS No. 123R effective January 1, 2006, for all
share-based payments granted based on the requirements of SFAS No. 123R for
all awards granted to employees. The Company accounts for stock option and
warrant grants issued and vesting to non-employees in accordance with EITF No.
96-18: "Accounting for Equity Instruments that are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services” and
EITF 00-18 “Accounting Recognition for Certain Transactions involving Equity
Instruments Granted to Other Than Employees” whereas the value of the stock
compensation is based upon the measurement date as determined at either a) the
date at which a performance commitment is reached, or b) at the date at which
the necessary performance to earn the equity instruments is
complete.





Impairment
of Long-Lived Asset:





Our
long-lived assets, such as property and equipment, are reviewed for impairment
when events and circumstances indicate that depreciable or amortizable long
lived assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amount of those assets.
When specific assets are determined to be unrecoverable, the cost basis of the
asset is reduced to reflect the current value.





We use
various assumptions in determining the current fair value of these assets,
including future expected cash flows and discount rates, as well as other fair
value measures. Our impairment loss calculations require us to apply judgment in
estimating future cash flows, including forecasting useful lives of the assets
and selecting the discount rate that reflects the risk inherent in future cash
flows.





If actual
results are not consistent with our assumptions and judgments used in estimating
future cash flows and asset fair values, we may be exposed to future impairment
losses that could be material to our results.





Intangible
Assets and Goodwill:





The
Company accounts for intangibles and goodwill in accordance with Statement of
Financial Accounting Standards No. 141, “Business Combinations” and Statement of
Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”.
Intangibles are valued at their fair market value and are amortized taking into
account the character of the acquired intangible asset and the expected period
of benefit.





The
Company evaluates intangible assets and goodwill for impairment, at a minimum,
on an annual basis and whenever events or changes in circumstances indicate that
the carrying value may not be recoverable from its estimated future cash flows.
Recoverability of intangible assets is measured by comparing their net book
value to the related projected undiscounted cash flows from these assets,
considering a number of factors, including past operating results, budgets,
economic projections, market trends and product development cycles. If the net
book value of the asset exceeds the related undiscounted cash flows, the asset
is considered impaired, and a second test is performed to measure the amount of
impairment loss.  There were no indications of impairment based on
management’s assessment at June 30, 2009.  At December 31, 2008, we
recorded an impairment charge of $33.1 million related to goodwill and
intangible assets acquired from our acquisition of EM.  As of June 30,
2009, we have $11.7 million of remaining goodwill and intangible assets related
to our acquisitions of John’s Tickets, LLC, EM, Magic and NewSpace. Factors we
consider important that could trigger an impairment review include significant
underperformance relative to historical or projected future operating results,
significant changes in the manner of the use of our assets or the strategy for
our overall business, and significant negative industry or economic
trends.  If current economic conditions worsen causing decreased
revenues and increased costs, we may have further goodwill
impairments.


23


Recent
Accounting Pronouncements:





References
to the “FASB”, “SFAS” and “SAB” herein refer to the “Financial Accounting
Standards Board”, “Statement of Financial Accounting Standards”, and the “SEC
Staff Accounting Bulletin”, respectively.





In
April 2009, the Financial Accounting Standards Board (“FASB”) issued FASB
Staff Position (“FSP”) FAS 157-4, Determining Fair Value when the
Volume and Level of Activity for the Asset or Liability have Significantly
Decreased and Identifying Transactions that are not Orderly (“FSP
157-4”), which is effective for the Company for the quarterly period beginning
April 1, 2009. FSP 157-4 affirms that the objective of fair value when the
market for an asset is not active is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date under current market conditions. The FSP
provides guidance for estimating fair value when the volume and level of market
activity for an asset or liability have significantly decreased and determining
whether a transaction was orderly. This FSP applies to all fair value
measurements when appropriate. The Company does not expect the adoption of this
statement will have a significant impact on its financial statements based on
current market conditions.





In
April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments (“FSP 115-2”), which is effective for
the Company for the quarterly period beginning April 1, 2009. FSP 115-2
amends existing guidance for determining whether an other than temporary
impairment of debt securities has occurred. Among other changes, the FASB
replaced the existing requirement that an entity’s management assert it has both
the intent and ability to hold an impaired security until recovery with a
requirement that management assert (a) it does not have the intent to sell
the security, and (b) it is more likely than not it will not have to sell
the security before recovery of its cost basis. The Company has not determined
the impact of the adoption of FSP 115-2 on its financial
statements.





In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments (“FSP 107-1”), which is effective for the
Company for the quarterly period beginning April 1, 2009. FSP 107-1
requires an entity to provide the annual disclosures required by FASB Statement
No. 107, Disclosures
about Fair Value of Financial Instruments, in its interim financial
statements. The Company has provided the additional disclosures as required by
FSP 107-1 in its quarterly report on Form 10-Q for the period ended
June 30, 2009.





In June
2009, the FASB approved the “FASB Accounting Standards Codification” (the
“Codification”) as the single source of authoritative nongovernmental U.S. GAAP
to be launched on July 1, 2009. The codification does not change current U.S.
GAAP, but is intended to simplify user access to authoritative literature
related to a particular topic in one place. All existing accounting standard
documents will be superseded and all accounting literature not included in the
codification will be considered nonauthoritative. The codification is effective
for the Company’s financial statements issued beginning in the quarter ending
September 30, 2009. The Company does not expect the adoption of the codification
to have an impact on its consolidated financial statements.





Consolidated
Results of Operations –


Three
and Six Months Ended June 30, 2009 compared to the Three and Six Months Ended
June 30, 2008:





Consolidated
Results of Operations - Three and Six Months ended June 30,





%
                                                change
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              %
                                                changeThree Months Ended June 30,
                                              
                                              
                                              2009 v
                                              
                                              
                                              Six Months Ended June 30,
                                              
                                              
                                              2009 v2009
                                              
                                              
                                              2008
                                              
                                              
                                              2008
                                              
                                              
                                              2009
                                              
                                              
                                              2008
                                              
                                              
                                              2008Revenue
                                              
                                              $
                                              26,584,000
                                              
                                              
                                              $
                                              16,864,000
                                              
                                              
                                              
                                              58
                                              %
                                              
                                              $
                                              46,754,000
                                              
                                              
                                              $
                                              40,027,000
                                              
                                              
                                              
                                              17
                                              %Operating
      Expenses:Direct
      operating expenses
                                              
                                              
                                              21,410,000
                                              
                                              
                                              
                                              12,323,000
                                              
                                              
                                              
                                              74
                                              %
                                              
                                              
                                              36,336,000
                                              
                                              
                                              
                                              29,054,000
                                              
                                              
                                              
                                              25
                                              %Selling,
      general and administrative expenses
                                              
                                              
                                              2,686,000
                                              
                                              
                                              
                                              3,330,000
                                              
                                              
                                              
                                              -19
                                              %
                                              
                                              
                                              5,376,000
                                              
                                              
                                              
                                              6,795,000
                                              
                                              
                                              
                                              -21
                                              %Depreciation
      and Amortization
                                              
                                              
                                              626,000
                                              
                                              
                                              
                                              1,102,000
                                              
                                              
                                              
                                              -43
                                              %
                                              
                                              
                                              1,247,000
                                              
                                              
                                              
                                              2,224,000
                                              
                                              
                                              
                                              -44
                                              %Corporate
      expenses
                                              
                                              
                                              1,232,000
                                              
                                              
                                              
                                              1,528,000
                                              
                                              
                                              
                                              -19
                                              %
                                              
                                              
                                              2,904,000
                                              
                                              
                                              
                                              2,901,000
                                              
                                              
                                              
                                              0
                                              %Operating
      Income (Loss)
                                              
                                              
                                              630,000
                                              
                                              
                                              
                                              (1,419,000
                                              )
                                              
                                              
                                              144
                                              %
                                              
                                              
                                              891,000
                                              
                                              
                                              
                                              (947,000
                                              )
                                              
                                              
                                              194
                                              %Operating
      Margin
                                              
                                              
                                              2
                                              %
                                              
                                              
                                              -8
                                              %
                                              
                                              
                                              
                                              
                                              
                                              
                                              2
                                              %
                                              
                                              
                                              -2
                                              %Interest
      expense
                                              
                                              
                                              (3,000
                                              )
                                              
                                              
                                              (4,000
                                              )
                                              
                                              
                                              
                                              
                                              
                                              
                                              (7,000
                                              )
                                              
                                              
                                              (10,000
                                              )Interest
      income
                                              
                                              
                                              9,000
                                              
                                              
                                              
                                              11,000
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              22,000
                                              
                                              
                                              
                                              45,000Other
      income (expense) - net
                                              
                                              
                                              129,000
                                              
                                              
                                              
                                              164,000
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              154,000
                                              
                                              
                                              
                                              208,000Income
      (loss) before income taxes
                                              
                                              
                                              765,000
                                              
                                              
                                              
                                              (1,248,000
                                              )
                                              
                                              
                                              
                                              
                                              
                                              
                                              1,060,000
                                              
                                              
                                              
                                              (704,000
                                              )Income
      tax expense (benefit)
                                              
                                              
                                              106,000
                                              
                                              
                                              
                                              (82,000
                                              )
                                              
                                              
                                              
                                              
                                              
                                              
                                              106,000
                                              
                                              
                                              
                                              -Net
      income (loss)
                                              
                                              $
                                              659,000
                                              
                                              
                                              $
                                              (1,166,000
                                              )
                                              
                                              
                                              
                                              
                                              
                                              $
                                              954,000
                                              
                                              
                                              $
                                              (704,000
                                              )




24


Three
Months Ended June 30, 2009 and 2008:





Revenues





The
Company earns fee revenues from the sales of discounted tickets from purchasers
of the tickets and commissions from the entertainment supplier, as well as
revenues from the sale of premium tickets to sporting and other entertainment
events. Through our discounted ticket venues we also offer discount dinner
reservations and golf tee times. From Exhibit Merchandising, LLC “EM”, we earn
revenues from the management of retail outlets associated with the sale of
merchandise related to touring exhibits, such as “Tutankhamun and The Golden Age
of the Pharaohs.” Through our live entertainment segment, we earn revenues from
the presentation and production of events, as well as sponsorship and ancillary
revenues. Our revenues for the three months ended June 30, 2009 and 2008 were
$26.6 million and $16.9 million, respectively. Our revenues increased $9.7
million, or 58%, during the three months ended June 30, 2009 as compared to the
same period of the prior year. The increase in revenues was primarily the result
of a $9.1 million increase in Live Entertainment revenues and a $1.3 million
increase in Ticketing Services revenues, which was offset in part by a $658,000
million decline in revenues from our Merchandising segment.





More
detailed explanations of the three months ended June 30, 2009 and 2008 changes
are included in the applicable segment discussions following.





Direct
Operating Expenses





Direct
operating expenses include payroll and related costs, rents, cost of tickets and
goods sold, artist fees, show related marketing costs and advertising expenses
along with other related costs of promoting and producing live entertainment.
Direct costs of revenues for the three months ended June 30, 2009 and 2008 were
$21.4 million and $12.3 million, respectively. Our operating expenses increased
$9.1 million or 74% during the three months ended June 30, 2009 as compared to
the same period of the prior year. The increase in direct operating expenses is
reflective of the higher overall revenues earned in Live Entertainment and its
higher direct cost of goods and services than our other operations.





More
detailed explanations of the three months ended June 30, 2009 and 2008 changes
are included in the applicable segment discussions following.





Operating
Segment Selling, General and Administrative Expenses





Operating
segment selling, marketing and administrative expenses include advertising and
promotional costs related to the Company’s business activities. Our operating
segment selling, marketing and administrative expenses for the three months
ended June 30, 2009 and 2008 were $2.7 million and $3.3 million, respectively.
Our selling, general and administrative expenses decreased $644,000 or 19%
during the three months ended June 30, 2009 as compared to the same period of
the prior year due to a $370,000 and $565,000 decline in selling and general and
administrative expenses in our Live Entertainment segment and Exhibit
Merchandising segment, respectively.  This decline was offset in part
by a $291,000 increase in selling, general and administrative expenses at our
Ticketing Services segment.





More
detailed explanations of the three months ended June 30, 2009 and 2008 changes
are included in the applicable segment discussions following.





Corporate
Expenses





Corporate
expenses are expenses that relate to activities at or directed by our executive
offices. Significant components of corporate expenses consist of corporate
personnel and personnel-related costs, insurance, legal and accounting fees,
consulting and advisory fees, merchant fees and corporate occupancy costs.
Corporate expenses for the three months ended June 30, 2009 and 2008 were $1.2
million and $1.5 million, respectively. Corporate expenses decreased $296,000
for the three months ended June 30, 2009, as compared to same period of the
prior year. This decrease in corporate expenses is the result of a decrease in
employee costs associated with stock option expense and, lower local tax expense
and regulatory costs, which were offset in part by $110,000 higher board of
director expenses primarily associated with stock option grants.





Depreciation
and Amortization





Our
depreciation and amortization was $626,000 and $1.1 million for the three months
ended June 30, 2009 and 2008 respectively. The decrease of $476,000 in
depreciation and amortization expense in 2009 primarily is the result of the
$7.7 million impairment of intangible assets we recorded at December 31, 2008,
which reduced future amortization expense by $500,000 a
quarter.


25


Other
Income and (Expense)





Other
Income and Expense was $129,000 for the three months ended June 30, 2009, and
was the result of miscellaneous box office revenues, such as patron club income
and season handling fees, earned by our Live Entertainment segment Tix
Productions.





Interest
Income





Interest
income was immaterial for all periods presented. Fluctuations in interest income
were due primarily to fluctuations in our cash balances.





Income
Tax Expense





The
provision for income taxes was $106,000 for the three months ended June 30, 2009
compared with a benefit of $82,000 for the three months ended June 30, 2008. The
provision for income taxes for the three months ended June 30, 2009 and 2008
were determined using our effective rate estimated for the entire fiscal year.
We have provided valuation allowances related to any benefits from income taxes
resulting from the application of a statutory tax rate to our net operating
losses generated in previous periods, as a result of our history of losses from
operations.





Six
Months Ended June 30, 2009 and 2008:





Revenues





Our
revenues for the six months ended June 30, 2009 and 2008 were $46.7 million and
$40 million, respectively. Our revenues increased $6.7 million, or 17%, during
the six months ended June 30, 2009 as compared to the same period of the prior
year. The increase in revenues was primarily the result of a $5.2 million
increase in Live Entertainment revenues and a $2.5 million increase in Ticketing
Services revenues, which was offset in part by a $1.0 million decline in
revenues from our Merchandising segment.





More
detailed explanations of the six months ended June 30, 2009 and 2008 changes are
included in the applicable segment discussions following.





Direct
Operating Expenses





Direct
operating expenses include payroll and related costs, rents, cost of tickets and
goods sold, artist fees, show related marketing costs and advertising expenses
along with other related costs of promoting and producing live entertainment.
Direct costs of revenues were $36.3 million for the six months ended June 30,
2009 as compared to $29.1 million for the six months ended June 30, 2008. Our
operating expenses increased $7.2 million or 25% during the six months ended
June 30, 2009 as compared to the same period of the prior year. The increase in
direct operating expenses is reflective of the 17% higher overall revenues
earned and the 19% higher revenues earned in our Live Entertainment segment,
which has higher direct cost of goods and services than our other operating
segments.





More
detailed explanations of the six months ended June 30, 2009 and 2008 changes are
included in the applicable segment discussions following.





Operating
Segment Selling, General and Administrative Expenses





Operating
segment selling, marketing and administrative expenses include advertising and
promotional costs related to the Company’s business activities. Our operating
segment selling, marketing and administrative expenses were $5.4 million and
$6.8 million for the six months ended June 30, 2009 and 2008, respectively. Our
selling, general and administrative expenses decreased $1.4 million or 21%
during the six months ended June 30, 2009 as compared to the same period of the
prior year due to a $1.2 million and $779,000 decline in selling and general and
administrative expenses in our Live Entertainment segment and Merchandising
segment, respectively.  This decline was offset in part by a $562,000
increase in selling, general and administrative expenses at our Ticketing
Services segment.





More
detailed explanations of the six months ended June 30, 2009 and 2008 changes are
included in the applicable segment discussions following.





Corporate
Expenses





Corporate
expenses are expenses that relate to activities at or directed by our executive
offices. Significant components of corporate expenses consist of corporate
personnel and personnel-related costs, insurance, legal and accounting fees,
consulting and advisory fees, merchant fees and corporate occupancy costs.
Corporate expenses for the six months ended June 30, 2009 and 2008 were $2.9
million. No single expense category resulted in an expense savings or increase
that was individually significant.


26


Depreciation
and Amortization





Our
depreciation and amortization was $1.2 million and $2.2 million for the six
months ended June 30, 2009 and 2008 respectively. The decrease of $1 million in
depreciation and amortization expense in 2009 primarily reflects a $1 million
decrease in amortization expense. The decrease in amortization expense is the
result of the $7.7 million impairment of intangible assets we recorded at
December 31, 2008, which reduced future amortization expense by $500,000 a
quarter.





Other
Income and (Expense)





Other
Income and Expense was $154,000 for the six months ended June 30, 2009, and was
the result of miscellaneous box office revenues, such as patron club income and
season handling fees, earned by our Live Entertainment segment Tix
Productions.





Interest
Income





Interest
income was immaterial for all periods presented.





Income
Tax Expense





The
provision for income taxes was $106,000 for the six months ended June 30, 2009
compared with no provision for the six months ended June 30, 2008. The provision
for income taxes for the six months ended June 30, 2009 and 2008 were determined
using our effective rate estimated for the entire fiscal year. We have provided
valuation allowances related to any benefits from income taxes resulting from
the application of a statutory tax rate to our net operating losses generated in
previous periods, as a result of our history of losses from
operations.





Ticketing
Services:





Our
Ticketing Services segment operating results were as follows:





Segment
Reporting – Ticketing
Services





%
                                Change
                              
                              
                              
                              
                              
                              
                              
                              
                              %
                                ChangeThree Months Ended June 30,
                              
                              
                              2009 vs.
                              
                              
                              Six Months Ended June 30,
                              
                              
                              2009 vs.2009
                              
                              
                              2008
                              
                              
                              2008
                              
                              
                              2009
                              
                              
                              2008
                              
                              
                              2008Revenue
                              
                              $
                              4,670,000
                              
                              
                              $
                              3,368,000
                              
                              
                              
                              39
                              %
                              
                              $
                              8,825,000
                              
                              
                              $
                              6,363,000
                              
                              
                              
                              39
                              %Operating
      Expenses:Direct
      operating expenses
                              
                              
                              1,729,000
                              
                              
                              
                              1,281,000
                              
                              
                              
                              35
                              %
                              
                              
                              3,263,000
                              
                              
                              
                              2,810,000
                              
                              
                              
                              16
                              %Selling,
      general and administrative expenses
                              
                              
                              904,000
                              
                              
                              
                              613,000
                              
                              
                              
                              47
                              %
                              
                              
                              1,775,000
                              
                              
                              
                              1,213,000
                              
                              
                              
                              46
                              %Depreciation
      and amortization
                              
                              
                              61,000
                              
                              
                              
                              52,000
                              
                              
                              
                              17
                              %
                              
                              
                              119,000
                              
                              
                              
                              101,000
                              
                              
                              
                              18
                              %Operating
      income (loss)
                              
                              $
                              1,976,000
                              
                              
                              $
                              1,422,000
                              
                              
                              
                              39
                              %
                              
                              $
                              3,668,000
                              
                              
                              $
                              2,239,000
                              
                              
                              
                              64
                              %Operating
      margin
                              
                              
                              42
                              %
                              
                              
                              42
                              %
                              
                              
                              0
                              %
                              
                              
                              42
                              %
                              
                              
                              35
                              %
                              
                              
                              18
                              %





Three
months ended June 30, 2009 and 2008:





Revenues





Ticketing
Services has three operating units:





·           Tix4Tonight, our discount ticket
seller





·           Tix4AnyEvent (AnyEvent or AE), our
premium ticket operation





·           Tix4Members, our membership group
ticket sales program


27





The
Ticketing Services segment earns fee revenues from the sales of discounted
tickets from purchasers of the tickets and commissions from the entertainment
supplier, as well as revenues from the sale of premium tickets to sporting and
other entertainment events. Through our discounted ticket venues, we also
offer discount dinner reservations and golf tee times. Ticketing Services
revenues were $4.7 million for the three months ended June 30, 2009 as compared
to $3.4 million for the three months ended June 30, 2008. Our revenues increased
$1.3 million, or 39%, during the three months ended June 30, 2009 as compared to
the same period of the prior year. The increase in Ticketing Service revenues is
the result of a $1.3 million increase in Tix4Tonight revenues and a $93,000
increase in ancillary revenues i.e. the sale of dinner reservations and tee
times, offset by a $121,000 decline in premium ticket revenues. Revenues earned
through Tix4Members were not meaningful.





Tix4Tonight:





Tix4Tonight
revenues for the three months ended June 30, 2009 and 2008 were $4.5 million and
$3.1 million, which is an increase of $1.4 million or 47% in 2009 as compared to
the same period in 2008. The increase reflects a greater demand for discount
tickets as well as an increase in the average selling price per ticket in 2009
as compared to 2008. The average selling price per ticket in 2009 was $57.38 per
ticket, which represented an increase of $6.69 per ticket or 13% as compared to
$50.69 per ticket in 2008. Tix4Tonight discount tickets sold increased by 88,000
tickets or 35% to 341,000 discounted show tickets for the three months ended
June 30, 2009. The gross sales value of show tickets sold to customers plus
commissions and fees earned were $19.5 million for the three months
ended June 30, 2009, as compared to $12.8 million for the three months
ended June 30, 2008, or a 53% increase. Lastly, during the three months ended
June 30, 2009, revenues from miscellaneous sources of income including discount
golf, and dinner reservations increased by $93,000, to $334,000 or
39%.




AnyEvent:





AnyEvent
sells premium tickets to concerts, theatre shows and sporting events. AnyEvent’s
revenues are dependent in part on sporting events and special concerts
occurring, such as boxing matches and reunion tours, as well as our ability to
obtain tickets to these events. AnyEvent revenues for the three months ended
June 30, 2009 and 2008 were $196,000 and $317,000 respectively. The $121,000
decline in revenues is the result of management making the decision to change
from a retail ticket seller to the public to a wholesaler of tickets, that is,
our clients are national retail brokers. As a result of this change, we are
assuming less risk and have been able to reduce our overhead and increase the
likelihood of profitability. Management expects that AnyEvent’s revenues will be
relatively stable in 2009 as compared to 2008, but expects its net income to be
greater with the reduction of risk and a more measured approach in participating
in the sale and distribution of premium tickets to concerts, theatre shows and
sporting events.





Tix4Members:





Tix4Members.com
is our internet based ticketing operation that was launched in February 2009 in
conjunction with Costco Wholesale Corporation (Costco). Tix4Members sells
discount tickets to concerts, live theater and sporting events to membership
group members through co-branded websites. As with our Tix4Tonight operation in
Las Vegas, Tix4Members.com offers a marketing channel for producers, presenters,
artists, arenas and theaters nationwide to take advantage of our strong position
in the discounted ticket sales and live entertainment industry. Tix4Members.com
operates in a manner similar to Tix4Tonight with a few key differences. Instead
of relying on physical ticket booth facilities for direct sales, Tix4Members
uses the internet as its customer interface, and instead of offering only
discounted day of show tickets, it has expanded the date range of its ticket
availability of discount tickets to concerts, theatre shows and sporting events.
Tix4Members’ revenues are dependent in part on sporting events and special
concerts occurring, such as boxing matches and reunion tours, as well as our
ability to obtain tickets to these events. Tix4Members revenues for the three
months ended June 30, 2009 were not meaningful.





Direct
Operating Expenses





Direct
operating expenses include payroll and related costs, rents, and cost of tickets
sold. Direct costs of revenues for the three months ended June 30, 2009 and 2008
were $1.7 million and $1.3 million, respectively, which represented an increase
in direct operating expenses of $448,000 or 35%, which is reflective of a 39%
increase in revenues.  The direct operating expenses for the three
months ended June 30, 2009 and 2008, as a percentage of revenues were comparable
at 37% and 38%, respectively.





Selling,
General and Administrative Expenses





Marketing
and administrative expenses include advertising and promotional costs related
to our business activities, as well as the segment cost of management.
Selling, general and administrative expenses for the three months ended June 30,
2009 and 2008 were $904,000 and $613,000, respectively. Our selling, marketing
and general and administrative expenses increased $291,000 or 47%, during the
three months ended June 30, 2009 as compared to 2008. Selling, marketing and
administrative expenses were comparable at 19% percent of revenues during the
three months ended June 30, 2009 as compared to 18% during the three months
ended June 30, 2008.


28


Depreciation
and Amortization





Depreciation
and amortization expense incurred during the three months ended June 30, 2009
and 2008 were $61,000 and $52,000, respectively. We expect to incur a similar
level of depreciation and amortization for the foreseeable future.




Six
months ended June 30, 2009 and 2008:





Revenues





Ticketing
Services revenues were $8.8 million and $6.4 million for the six months ended
June 30, 2009 and 2008, respectively. Our revenues increased $2.4 million, or
39%, during the six months ended June 30, 2009 as compared to the same period of
the prior year. The increase in Ticketing Service revenues is the result of a
$2.7 million increase in Tix4Tonight revenues and a $197,000 increase in
ancillary revenues i.e. the sale of dinner reservations and tee times, offset by
a $491,000 decline in premium ticket revenues. Revenues earned through
Tix4Members were not meaningful.





Tix4Tonight:





Tix4Tonight
revenues for the six months ended June 30, 2009 and 2008 were $7.9 million and
$5.2 million, which is an increase of $2.7 million or 53% in 2009 as compared to
the same period in 2008. The increase reflects a greater demand for discount
tickets as well as an increase in the average selling price per ticket in 2009
as compared to 2008. The average selling price per ticket in 2009 was $56.35 per
ticket, which represented an increase of $7.13 per ticket or 14% as compared to
$49.22 per ticket in 2008. Tix4Tonight discount tickets sold increased by
184,000 tickets or 39% to 659,000 discounted show tickets for the six months
ended June 30, 2009. The gross sales value of show tickets sold to customers
plus commissions and fees earned were $37.1 million for the six months
ended June 30, 2009, as compared to $23.4 million for the six months
ended June 30, 2008, or a 59% increase. Lastly, during the six months ended June
30, 2009, revenues from miscellaneous sources of income including discount golf,
and dinner reservations increased by $197,000, to $632,000 or 45%.





AnyEvent:





AnyEvent
revenues for the six months ended June 30, 2009 and 2008 were $255,000 and
$746,000 respectively. The $491,000 decline in revenues is the result of
management making the decision to change from a retail ticket seller to the
public to a wholesaler of tickets, that is, our clients are national retail
brokers. As a result of this change, we are assuming less risk and have been
able to reduce our overhead and increase the likelihood of profitability.
Management expects that AnyEvent’s revenues will be relatively stable in 2009 as
compared to 2008, but expects its net income to be greater with the reduction of
risk and a more measured approach in participating in the sale and distribution
of premium tickets to concerts, theatre shows and sporting events.





Tix4Members:





Tix4Members.com
is our internet based ticketing operations that was launched in February 2009.
As with our Tix4Tonight operation in Las Vegas, Tix4Members.com offers a
marketing channel for producers, presenters, artists, arenas and theaters
nationwide to take advantage of our strong position in the discounted ticket
sales and live entertainment industry. Tix4Members.com operates in a manner
similar to Tix4Tonight with a few key differences. Instead of relying on
physical ticket booth facilities for direct sales, Tix4Members uses the internet
as its customer interface, and instead of offering only deeply discounted day of
show tickets, it has expanded the date range of its ticket availability of
discount tickets to concerts, theatre shows and sporting events. Tix4Members’
revenues are dependent in part on sporting events and special concerts
occurring, such as boxing matches and reunion tours, as well as our ability to
obtain tickets to these events. Tix4Members revenues for the six months ended
June 30, 2009 were immaterial.





Direct
Operating Expenses





Direct
operating expenses include payroll and related costs, rents, and cost of tickets
sold. Direct Costs of revenues for the six months ended June 30, 2009 and 2008
were $3.3 and $2.8 million, respectively, which represented an increase in
direct operating expenses of $453,000 or 16%, which was the result of 39%
increase in revenues.  The direct operating expenses for the six
months ended June 30, 2009 and 2008, as a percentage of revenues were 37% and
44%, respectively.  The decline in direct operating expenses as a
percentage of revenues in 2009 as compared to 2008 is reflective of the fixed
nature of these expenses.





Selling,
General and Administrative Expenses





Marketing
and administrative expenses include advertising and promotional costs related
to our business activities, as well as the segment cost of management.
Selling, general and administrative expenses for the six months ended June 30,
2009 and 2008 were $1.8 million and $1.2 million, respectively. Our selling,
marketing and general and administrative expenses increased $562,000 or 46%,
during the six months ended June 30, 2009 as compared to 2008. The increase in
selling, general and administrative expenses is reflective of the 39% increase
in revenue activity at Tix4Tonight. Selling, marketing and administrative
expenses were 20% percent of revenues during the six months ended June 30, 2009
as compared to 19% during the six months ended June30, 2008.


29


Depreciation
and Amortization





Depreciation
and amortization expense incurred during the six months ended June 30, 2009 and
2008 were $119,000 and $101,000, respectively. We expect to incur a similar
level of depreciation and amortization for the foreseeable future.





Exhibit
Merchandising:





Our
Exhibit Merchandising segment operating results were as follows:





Segment
Reporting - Exhibit Merchandising





%
                                Change
                              
                              
                              
                              
                              
                              
                              
                              
                              %
                                ChangeThree Months Ended June 30,
                              
                              
                              2009 vs.
                              
                              
                              Six Months Ended June 30,
                              
                              
                              2009 vs.2009
                              
                              
                              2008
                              
                              
                              2008
                              
                              
                              2009
                              
                              
                              2008
                              
                              
                              2008Revenue
                              
                              $
                              2,321,000
                              
                              
                              $
                              2,979,000
                              
                              
                              
                              -22
                              %
                              
                              $
                              5,110,000
                              
                              
                              $
                              6,082,000
                              
                              
                              
                              -16
                              %Operating
      Expenses:Direct
      operating expenses
                              
                              
                              1,398,000
                              
                              
                              
                              1,804,000
                              
                              
                              
                              -23
                              %
                              
                              
                              3,103,000
                              
                              
                              
                              3,681,000
                              
                              
                              
                              -16
                              %Selling,
      general and administrative expenses
                              
                              
                              642,000
                              
                              
                              
                              1,207,000
                              
                              
                              
                              -47
                              %
                              
                              
                              1,267,000
                              
                              
                              
                              2,046,000
                              
                              
                              
                              -38
                              %Depreciation
      and amortization
                              
                              
                              297,000
                              
                              
                              
                              794,000
                              
                              
                              
                              -63
                              %
                              
                              
                              593,000
                              
                              
                              
                              1,580,000
                              
                              
                              
                              -62
                              %Operating
      income (loss)
                              
                              $
                              (16,000
                              )
                              
                              $
                              (826,000
                              )
                              
                              
                              -98
                              %
                              
                              $
                              147,000
                              
                              
                              $
                              (1,225,000
                              )
                              
                              
                              112
                              %Operating
      margin
                              
                              
                              -1
                              %
                              
                              
                              -28
                              %
                              
                              
                              -98
                              %
                              
                              
                              3
                              %
                              
                              
                              -20
                              %
                              
                              
                              -114
                              %





Three
Months Ended June 30, 2009 and 2008:





Revenues





EM
provides retail specialty stores for touring museum exhibitions and touring
theatrical productions. EM provides a complete turn-key retail store with
commercially available and extensive custom-branded product for sale. It
operates the stores in space rented in conjunction with the exhibit. During the
three months ended June 30, 2009 and 2008, EM generated $2.3 million and
$3.0 million in revenues, respectively. Revenue is derived from the Company’s
retail outlets associated with the sale of merchandise related to touring
exhibits, primarily derived from “Tutankhamun and The Golden Age of the
Pharaohs.” EM is subject to revenue fluctuations as a result of the exhibits
that it represents moving from one location to another. The move of an exhibit
from one location to another generally results in the exhibit being closed from
four to six weeks. The length of time an exhibit is closed is dependent upon the
type of exhibit, the distance the exhibit is to be shipped, as well as any
special needs that may be required in re-setting the exhibit. “Tutankhamun and
The Golden Age of the Pharaohs” and “Tutankhamun the Golden King and the Great
Pharaohs” are currently booked in museums through July 2011 and December 2012,
respectively. The $660,000 decline in revenues during the second quarter of 2009
is due to the move of the exhibits, “Tutankhamun and The Golden Age of the
Pharaohs” from Dallas to San Francisco, and “Tutankhamun the Golden King and the
Great Pharaohs” from Atlanta to Indianapolis, which caused the exhibits to be
closed for approximately 45 days for which there was no corresponding closure in
2008. As a result, visitor attendance declined 39% for these two exhibits. This
decrease was offset in part by an increase of 82% in visitor attendance at the
small exhibits for which we support which were open for approximately 30 more
days than in 2008.





Direct
Operating Expenses





EM’s
operating expenses include payroll and related costs, rents, and cost of goods
sold. Direct operating expenses for the three months ended June 30, 2009 and
2008 were $1.4 million and $1.8 million, respectively and as a percent of
revenues were 60% and 61%, respectively.





Selling,
Marketing and Administrative Expenses





EM’s
selling, marketing and administrative expenses include advertising and
promotional costs related to our business activities, as well as the
segment’s cost of management. For the three months ended June 30, 2009 and 2008,
EM’s selling, marketing and administrative expenses were $642,000 or 28% of
revenues and $1.2 million or 41% of revenues, respectively. The decline in
selling, marketing and administrative expenses reflects the lower cost of
operating domestic stores as compared to operating stores abroad.  In
2009, the exhibits for which EM provides merchandising services were all
domestic shows, whereas in 2008, all of the shows were located
abroad.


30


Depreciation
and Amortization





Depreciation
and amortization expense incurred during the three months ended June 30, 2009
and 2008 was $297,000 and $794,000, respectively, and relates primarily to the
amortization of the intangible assets that were created as a result of EM being
acquired in August 2007. The decrease in amortization expense relates to the
$7.7 million impairment of intangible assets we recorded at December 31, 2008,
thereby reducing the annual amortization charge by approximately $2.0 million or
$500,000 quarterly. We expect the current level of depreciation and amortization
to continue through 2010.





Six
Months Ended June 30, 2009 and 2008:





Revenues





During
the six months ended June 30, 2009 and 2008, EM generated $5.1 million and
$6.1 million in revenues, respectively. Revenue is derived from the Company’s
retail outlets associated with the sale of merchandise related to touring
exhibits, primarily derived from “Tutankhamun and The Golden Age of the
Pharaohs.” EM is subject to revenue fluctuations as a result of the exhibits
that it represents moving from one location to another. The move of an exhibit
from one location to another generally results in the exhibit being closed from
four to six weeks. The length of time an exhibit is closed is dependent upon the
type of exhibit, the distance the exhibit is to be shipped, as well as any
special needs that may be required in re-setting the exhibit. “Tutankhamun and
The Golden Age of the Pharaohs” and “Tutankhamun the Golden King and the Great
Pharaohs” are currently booked in museums through July 2011 and December 2012,
respectively. The $1 million decline in revenues during the six months ended
June 30, 2009 is due to the move of the exhibit, “Tutankhamun and The Golden Age
of the Pharaohs” from Dallas to San Francisco which caused the exhibit to be
closed for approximately 45 days for which there was no corresponding closure in
2008. As a result, visitor attendance declined 49% for this exhibit. This
decrease was offset in part by a 107% increase in visitor attendance at the
small exhibits for which we support which were open for approximately 100 more
days than in 2008.





Direct
Operating Expenses





EM’s
operating expenses include payroll and related costs, rents, and cost of goods
sold. Direct operating expenses for the six months ended June 30, 2009 and 2008
were $3.1 million and $3.7 million, respectively and were 61% of
revenues.





Selling,
Marketing and Administrative Expenses





EM’s
selling, marketing and administrative expenses include advertising and
promotional costs related to our business activities, as well as the
segment’s cost of management. For the six months ended June 30, 2009 and 2008,
EM’s selling,marketing and administrative expenses were $1.3 million or 25% of
revenues and $2.0 million or 34% of revenues, respectively. The decline in
selling, marketing and administrative expenses reflect the lower cost of
operating domestic stores as compared to operating stores abroad.  In
2009, the exhibits for which EM provides merchandising services were all
domestic shows, whereas in 2008, all of the shows were located
abroad.





Depreciation
and Amortization





Depreciation
and amortization expense incurred during the six months ended June 30, 2009 and
2008 was $593,000 and $1.6 million, respectively, and relates primarily to the
amortization of the intangible assets that were created as a result of EM being
acquired in August 2007. The decrease in amortization expense relates to the
$7.7 million impairment of intangible assets we recorded at December 31, 2008,
thereby reducing the annual amortization charge by approximately $2.0 million or
$500,000 quarterly. We expect the current level of depreciation and amortization
to continue through 2010.


31


Live
Entertainment:





Our
Live Entertainment segment operating results were as follows:





Segment
Reporting- Tix Productions





% Change
                
                
                
                
                
                
                
                
                % ChangeThree Months Ended June 30,
                
                
                2009 vs.
                
                
                Six Months Ended June 30,
                
                
                2009 vs.2009
                
                
                2008
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                2008Revenue
                
                $
                19,593,000
                
                
                $
                10,517,000
                
                
                
                86
                %
                
                $
                32,819,000
                
                
                $
                27,582,000
                
                
                
                19
                %Operating
      Expenses:Direct
      operating expenses
                
                
                18,283,000
                
                
                
                9,238,000
                
                
                
                98
                %
                
                
                29,970,000
                
                
                
                22,563,000
                
                
                
                33
                %Selling,
      general and administrative expenses
                
                
                1,140,000
                
                
                
                1,510,000
                
                
                
                -25
                %
                
                
                2,334,000
                
                
                
                3,536,000
                
                
                
                -34
                %Depreciation
      and amortization
                
                
                198,000
                
                
                
                187,000
                
                
                
                6
                %
                
                
                395,000
                
                
                
                374,000
                
                
                
                6
                %Operating
      income (loss)
                
                $
                (28,000
                )
                
                $
                (418,000
                )
                
                
                -93
                %
                
                $
                120,000
                
                
                $
                1,109,000
                
                
                
                -89
                %Operating
      margin
                
                
                0
                %
                
                
                -4
                %
                
                
                -96
                %
                
                
                0
                %
                
                
                4
                %
                
                
                -91
                %





Tix
Productions, Inc., the Company’s Live Entertainment segment, does business under
the names Magic Arts & Entertainment (Magic) and NewSpace Entertainment
(NewSpace). We acquired Magic and NewSpace operations effective January 2, 2008.
Both Magic and NewSpace are independent presenters and producers of live theater
and concerts with a history of working together. Combining the operations of
these two companies under a single entity, we have better leveraged our
resources, and gained operating efficiencies.




As a live
entertainment presenter, we book touring theatrical and concert presentations
with a history of successful commercial appeal as well as participate in the
development and roll out of new theatrical and concert presentations often
originating on Broadway in New York or the West End in London. We use a
wide variety of marketing channels to sell tickets to these programs including
our substantial subscriber-based businesses in eleven US cities, our Salt Lake
City based group and corporate sales team, standard marketing tools including
print, radio, television, outdoor and, most recently we have been developing new
e-marketing tools. In addition, we invest in shows or productions in advance of
their initial tour to obtain favorable touring and distribution
rights.




Three
Months Ended June 30, 2009:





Revenues





During
the three months ended June 30, 2009 and 2008, revenues from our Live
Entertainment operations were $19.6 million and $10.5 million, respectively. The
$9.1 million increase in revenues is due to several factors
including:





·
            In the second quarter of 2009, we
      presented or produced 182 show dates as compared to 193 show dates in the
      second quarter of 2008. In 2009, several shows that were presented were in
      arenas where ticket prices and number of attendees are greater than the
      community theaters, where many of our shows generally play. As a result of
      these arena plays, our show revenues increased by $9.1 million while show
      count declined slightly.





·
            In 2008, tours of live
      entertainment companies began earlier and later in the year to avoid the
      presidential campaign season (July through October) when advertising
      prices were at their highest and audience attention at its lowest. As a
      result, Live Entertainment revenues in 2008 were higher than normal for
      the first and fourth quarters and lower than normal in the second and
      third quarters. In addition, in 2008, many productions that Tix was
      associated with toured Canada during the election cycle which, due to a
      strong Canadian dollar and economy, resulted in unusually strong profits.
      These combined factors resulted in an unusually large number of
      productions in the first and fourth quarters that under normal
      circumstances would have naturally fallen in the second or third
      quarters.





Revenues
from live entertainment are a function of a number of elements: tickets sold,
ticket prices and ancillary revenue streams including sponsorships and revenues
generated through premium ticketing opportunities.  In instances where the
Company acts as the primary obligor with suppliers, assumes credit risk, directs
the pricing of the tickets and purchases the advertising, the Company records
these revenues at gross. In other instances where we only receive a fee and are
not the principal obligors to vendors, we record these revenues at net. It is
management’s belief that this is consistent with EITF abstract 99-19 “Reporting
Revenues Gross as Principal Versus Net as an Agent.” Revenues from our Live
Entertainment operations are seasonal with the first and fourth quarters being
traditionally the strongest.





Opportunities
for growth in the Live Entertainment unit revolve around our expanding ownership
of intellectual content, for example our producing role in the new 101
Dalmatians-The Musical project, which gives us first rights to present these
shows and provides us the ability to direct ticket sales and branded
merchandising to our other operating segments. In addition, we see growth
opportunities to present in major marketplaces where competition has diminished
due to industry consolidation such as Detroit and Milwaukee, and even more
opportunities in smaller markets where individual promoters and competitors have
left the market.


32


Direct
Operating Expenses





During
the three months ended June 30, 2009 and 2008, direct operating expenses were
$18.3 million and $9.2 million and represented 93% and 88% of revenues,
respectively. The higher direct operating cost as a percentage of revenues
reflects the greater number of tickets that have been discounted in 2009 as
compared to 2008, as a strategic response to lower demand due to the poor
economic climate. Expenses that are direct operating expenses include the show
guarantees, profit sharing and royalties paid directly to the touring
productions; direct expenses of the theater which include staffing, rent and box
office charges; marketing costs and production costs which include equipment
rentals, stagehands and the cost of our production and settlement manager to
attend the production. Live Entertainment productions typically have large
back-end sharing relationships with the productions involved and, as a result,
significant increases in presentation revenue do not typically result in
comparable increases in operating income as much of that goes to the production
at hand. On the other hand, significant decreases in presentation revenue do
have a comparable impact on operating income as the largest burden of risk in
these presentations lies with the promoter. In instances where the Company acts
as the primary obligor with suppliers, assumes credit risk, directs the pricing
of the tickets and purchases the advertising, the Company records these expenses
at gross.




Selling,
Marketing and Administrative Expenses





Live
Entertainment’s selling, marketing and administrative expenses include
advertising and promotional costs related to its business activities, as well as
the segment cost of management. For the three months ended June 30, 2009 and
2008, Live Entertainment’s administrative expenses were $1.1 million or 6% of
revenues, and $1.5 million or 14% of revenues, respectively.




Depreciation
and Amortization





Depreciation
and amortization expense incurred during the three months ended June 30, 2009
and 2008 was $198,000 and $187,000, and primarily relates to amortization of the
intangible assets that resulted from the acquisitions of Magic and NewSpace. We
expect to incur a similar level of depreciation and amortization for the
remainder of 2009.





Six
Months Ended June 30, 2009:





Revenues





During
the six months ended June 30, 2009 and 2008, revenues from our Live
Entertainment operations were $32.8 million and $27.6 million, respectively. The
$5.2 million increase in revenues is due to several factors
including:





·
            During the six months ended June
      30, 2009, we presented or produced 397 show dates as compared to 440 show
      dates in the six months ended June 30, 2008. In 2009, several shows that
      were presented were in arenas where ticket prices and number of attendees
      are greater than the community theaters, where many shows generally play.
      As a result of these, our show revenues increased by $5.2
      million.





·
            In 2008, tours of live
      entertainment companies began earlier and later in the year to avoid the
      presidential campaign season (July through October) when advertising
      prices were at their highest and audience attention at its lowest. As a
      result, Live Entertainment revenues in 2008 were higher than normal for
      the first and fourth quarters and lower than normal in the second and
      third quarters. In addition, in 2008, many productions that Tix was
      associated with toured Canada during the election cycle which, due to a
      strong Canadian dollar and economy, resulted in unusually strong profits.
      These combined factors resulted in an unusually large number of
      productions in the first and fourth quarters that under normal
      circumstances would have naturally fallen in the second or third
      quarters.





Revenues
from live entertainment are a function of a number of elements: tickets sold,
ticket prices and ancillary revenue streams including sponsorships and revenues
generated through premium ticketing opportunities.  In instances where the
Company acts as the primary obligor with suppliers, assumes credit risk, directs
the pricing of the tickets and purchases the advertising, the Company records
these revenues at gross. In other instances where we only receive a fee and are
not the principal obligors to vendors, we record these revenues at net. It is
management’s belief that this is consistent with EITF abstract 99-19 “Reporting
Revenues Gross as Principal Versus Net as an Agent.” Revenues from our Live
Entertainment operations are seasonal with the first and fourth quarters being
traditionally the strongest.





Direct
Operating Expenses





During
the six months ended June 30, 2009 and 2008, direct operating expenses were $30
million and $22.6 million and represented 91% and 82% of revenues, respectively.
The higher direct operating cost as a percentage of revenues reflects the
greater number of tickets that have been discounted in 2009 as compared to 2008,
due to the poor economic climate. Expenses that are direct operating expenses
include the guarantees, profit sharing and royalties paid directly to the
touring productions; direct expenses of the theater which include staffing, rent
and box office charges; marketing costs and production costs which include
equipment rentals, stagehands and the cost of our production and settlement
manager to attend the production. Live Entertainment productions typically have
large back-end sharing relationships with the productions involved and, as a
result, significant increases in presentation revenue do not typically result in
comparable increases in operating income as much of that goes to the production
at hand. On the other hand, significant decreases in presentation revenue do
have a comparable impact on operating income as the largest burden of risk in
these presentations lies with the promoter. In instances where the Company acts
as the primary obligor with suppliers, assumes credit risk, directs the pricing
of the tickets and purchases the advertising, the Company records these expenses
at gross.


33


Selling,
Marketing and Administrative Expenses





Live
Entertainment’s selling, marketing and administrative expenses include
advertising and promotional costs related to its business activities, as well as
the segment cost of management. For the six months ended June 30, 2009 and 2008,
Live Entertainment’s administrative expenses were $2.3 million or 7% of
revenues, and $3.5 million or 13% of revenues, respectively.




Depreciation
and Amortization





Depreciation
and amortization expense incurred during the six months ended June 30, 2009 and
2008 was $395,000 and $374,000, and primarily relates to amortization of the
intangible assets that resulted from the acquisitions of Magic and NewSpace. We
expect to incur a similar level of depreciation and amortization for the
remainder of 2009.





Liquidity
and Capital Resources:




Summary
of consolidated cash flows:





For The Six Months Ended June
      30,2009
                  
                  
                  2008Net
      cash provided by operating activities
                  
                  $
                  4,353,000
                  
                  
                  $
                  2,470,000Net
      cash used in investing activities
                  
                  $
                  (98,000
                  )
                  
                  $
                  (3,562,000
                  )Net
      cash provided by (used in) financing activities
                  
                  $
                  (517,000
                  )
                  
                  $
                  32,000Effect
      of exchange rate on cash
                  
                  $
                  14,000
                  
                  
                  $
                  (36,000
                  )Change
      in cash:Net
      increase (decrease)
                  
                  
                  3,752,000
                  
                  
                  
                  (1,096,000
                  )Balance
      at beginning of period
                  
                  
                  9,192,000
                  
                  
                  
                  7,417,000Balance
      at end of period
                  
                  $
                  12,944,000
                  
                  
                  $
                  6,321,000





At June
30, 2009, we had cash of $12.9 million and total assets of
$30.8 million compared to $9.2 million and $28.8 million,
respectively, at December 31, 2008. Our working capital totaled $10.0
million at June 30, 2009, compared to $8.0 million at December 31, 2008. We had
no debt for the six months ended June 30, 2009 and the year ended December 31,
2008.





Our
working capital requirements and capital for our general corporate purposes,
including acquisitions and capital expenditures, are funded from operations or
from the selling of equity securities and to a much lesser extent upon proceeds
received upon the exercise of options and warrants. We will need to incur debt
or issue equity to make other strategic acquisitions. We currently do not have
any lines of credit available to us. We have no commitments from third parties
to provide us with any additional future financing, and may not be able to
obtain future financing on favorable terms.





We
generally receive cash related to the sale of discount tickets and merchandise
at the time of purchase and for Live Entertainment at the time of the settlement
of revenues and expenses of the show, which is generally on the last date of the
show. In certain instances, but not all, the sale of premium tickets occurs
before the event. In these instances, the sale is recorded as deferred revenue
until the event occurs. We pay the majority of event related expenses at the
time of or after the event occurs.





Our
revenues and cash fluctuate based upon the seasonality of our various
businesses. Examples of seasonality of our businesses include Ticketing
Services, which reports slightly greater revenues in the third and fourth
quarters than those reported in the first half of the year. Our Live
Entertainment segment expects to record the majority of its revenues in the
fourth quarter. Exhibit Merchandising and AnyEvent are not subject to seasonal
fluctuation. Exhibit Merchandising is subject to revenue fluctuations as a
result of exhibits that it represents moving from one location to another.
Moving an exhibit from one location to another generally results in the exhibit
being closed from four to six weeks. The length of time an exhibit is closed is
dependent upon the type of exhibit, the distance the exhibit is to be shipped,
as well as any special needs that may be required in re-setting the exhibit.
AnyEvent revenues are not subject to seasonal fluctuation, but depend on our
ability to obtain tickets for events. We expect cash flows from operations and
other financing alternatives, to satisfy working capital, and capital
expenditures for at least the succeeding year.


34




Operating
Activities:




Cash
flows from operations were $4.4 million for the six months ended June 30, 2009,
compared to $2.5 million for the six months ended June 30, 2008. The $1.9
million increase in cash flows provided from operations was the result of a $1.7
million increase in net income in 2009, and adjustments for non-cash items and
changes in accounts reflecting operating activities. Significant items adjusting
net income in 2009 were $1.2 million in depreciation and amortization expense,
$685,000 of fair value of common stock options issued for services, a $1.1
million decrease in inventory, a $243,000 decrease in prepaid expenses and other
current assets, and a $324,000 increase in accounts payable and accrued
expenses, which were offset by a $456,000 increase in capitalized theatrical
costs, deposits and other assets. Significant items adjusting net loss in 2008
were a $578,000 increase in accounts receivable, a $461,000 increase in
capitalized theatrical costs, deposits and other assets which was offset by a
$381,000 increase in accounts payable, a $320,000 decrease in prepaid expenses
and other current assets, $2.2 million of amortization and depreciation expense
and $1.2 million of fair value of common stock issued for services. The
remaining amounts relate to operating accounts that are reflective of the level
and timing of activity that occurred during the period, e.g., accrued
liabilities.




Cash
Flows from Investing Activities:





During
the six months ended June 30, 2009 and 2008, we used $98,000 and $3.6 million
related to investing activities.





Acquisitions





Effective
January 2, 2008, we acquired Magic and NewSpace. As consideration for the
acquisition of Magic, the Company paid $2.0 million, net of cash acquired and
issued 476,190 shares of stock that had market value of $2.3 million, which
approximated the fair market value of the shares at the time of issuance. As
consideration for the acquisition of NewSpace, the Company paid $1.3 million,
net of cash acquired and issued 571,428 shares of stock that had market value of
$2.7 million, which approximated the fair market value of the shares at the time
of issuance.





Other





During
the six months ended June 30, 2009 and 2008, we purchased fixed assets with a
value of $98,000 and $336,000 respectively.





Cash
Flows from Financing Activities:





During
the six months ended June 30, 2009, we used $517,000 related to financing
activities. During the six months ended June 30, 2009, financing activities
provided $32,000. During 2009, cash used by financing activities included the
repurchase of 273,000 shares of our common stock with a fair value of $443,000,
$46,000 related to the exercise of options and warrants, and $28,000 related to
capital leases. During 2008, cash generated by financing activities was the
result of the receipt of proceeds from the exercise of options and warrants of
$54,000, offset by a minor amount of payments for capital leases.





Summary





Our
primary short-term liquidity needs are to fund general working capital
requirements while our long-term liquidity needs are primarily acquisition
related. Our primary source of funds for our short-term needs will be cash flows
from operations, while our long-term sources of funds will be from operations
and debt or equity financing. We have sufficient cash on hand and are generating
sufficient cash from operations to meet our current operating
needs.





Earnings
before interest, income taxes, depreciation and amortization or
EBITDA:





The
following includes the financial measure of performance earnings before
interest, income taxes, depreciation and amortization, or EBITDA, that is a
commonly used measure of performance in the entertainment industry. EBITDA is
not a measure of performance calculated in accordance with accounting principles
generally accepted in United States of America or GAAP. Management has
historically evaluated the operating performance of management of Tix
Productions, Tix4AnyEvent and Exhibit Merchandising based upon this non-GAAP
measure.





EBITDA is
presented solely as a supplemental disclosure because (1) management believes it
enhances an overall understanding of its past and current performance; (2)
management believes it is a useful tool for investors to assess the operating
performance of the business in comparison to other entertainment businesses
since EBITDA excludes certain items that may not be indicative of management’s
operating results; (3) measures that are comparable to EBITDA are often used as
an important basis for the valuation of entertainment companies; and (4)
management uses EBITDA internally to evaluate its operating performance in
comparison to its competitors.


35


The use
of EBITDA has certain limitations. EBITDA should be considered in addition to,
not as a substitute for or superior to any GAAP financial measure including net
income as an indicator of management’s performance, or cash flows provided by
operating activities as an indicator of the Company’s liquidity, nor should it
be considered as an indicator of management’s overall performance. Management’s
calculation of EBITDA may be different from the calculation of EBITDA or other
similarly titled measurements used by other entertainment companies, and
therefore comparability may be limited. EBITDA eliminates certain substantial
recurring items from net income, such as depreciation, amortization, interest
expense and income taxes. Each of these items has been incurred in the past,
will continue to be incurred in the future and should be considered in the
overall evaluation of the Company’s results. We compensate for these limitations
by providing the relevant disclosure of depreciation and amortization, interest
expense and income taxes that are excluded in the calculation of EBITDA both in
the reconciliation to the GAAP financial measure of net income (loss) and in the
consolidated financial statements and related footnotes, all of which should be
considered when evaluating the Company’s results. Management strongly encourages
readers to review our financial information in its entirety and not to rely on a
single measure. A reconciliation of EBITDA to net income (loss)
follows:





Three months ended
                
                
                
                
                Three months endedJune 30, 2009
                
                
                
                
                June 30, 2008Net
      income (loss)
                
                
                
                
                $
                659,000
                
                
                
                
                
                $
                (1,166,000
                )Interest
      income
                
                $
                9,000
                
                
                
                
                
                
                $
                11,000Interest
      expense
                
                
                (3,000
                )
                
                
                
                
                
                
                (4,000
                )Net
      interest income (expense)
                
                $
                6,000
                
                
                
                6,000
                
                
                $
                7,000
                
                
                
                7,000Depreciation
                
                
                
                
                
                
                133,000
                
                
                
                
                
                
                
                121,000Amortization
                
                
                
                
                
                
                493,000
                
                
                
                
                
                
                
                981,000Income
      taxes
                
                
                
                
                
                
                106,000
                
                
                
                
                
                
                
                (82,000
                )EBITDA
                
                
                
                
                
                $
                1,385,000
                
                
                
                
                
                
                $
                (153,000
                )Six
      months ended
                
                
                
                
                
                Six
      months endedJune 30, 2009
                
                
                
                
                
                June 30, 2008Net
      income (loss)
                
                
                
                
                
                $
                954,000
                
                
                
                
                
                
                $
                (704,000
                )Interest
      income
                
                $
                22,000
                
                
                
                
                
                
                $
                45,000Interest
      expense
                
                
                (7,000
                )
                
                
                
                
                
                
                (10,000
                )Net
      interest income (expense)
                
                $
                15,000
                
                
                
                15,000
                
                
                $
                35,000
                
                
                
                35,000Depreciation
                
                
                
                
                
                
                264,000
                
                
                
                
                
                
                
                237,000Amortization
                
                
                
                
                
                
                983,000
                
                
                
                
                
                
                
                1,987,000Income
      Taxes
                
                
                
                
                
                
                106,000
                
                
                
                
                
                
                
                -EBITDA
                
                
                
                
                
                $
                2,292,000
                
                
                
                
                
                
                $
                1,485,000





Principal
Commitments:




Lease
Commitments:





The
Company leases office space for its corporate headquarters in Studio City,
California. Additionally, the Company’s wholly-owned subsidiaries, Tix4Tonight,
LLC, Tix Productions, LLC and Exhibit Merchandising, lease space. Tix4Tonight
leases its six ticket facilities and its administrative offices in Las Vegas,
Nevada, for various periods ranging from one year to five years. Tix Production,
LLC leases office space in Salt Lake City, Utah and Aurora, Ohio. Exhibit
Merchandising leases warehouse and office space in Streetsboro,
Ohio.


36


Many of
the Company’s operating leases contain predetermined fixed increases in the
minimum rental rate during the initial lease term and/or rent holiday periods.
For these leases, the Company recognizes the related rent expense on a
straight-line basis beginning on the effective date of the lease.  The
Company records the difference between the amounts charged to expense and the
rent paid as deferred rent on the Company’s balance sheet.





The
aggregate minimum future rental payments under non-cancelable operating leases
for facilities in operation at June 30, 2009, excluding operating expenses,
annual rent escalation provisions, and contingent rental payments based on
achieving certain pre-determined sales levels, are as follows:





Payments due by Fiscal Years Ending December 31,Total
                
                
                2009
                
                
                2010
                
                
                2011
                
                
                2012
                
                
                2013 and beyondEmployment
      agreements
                
                $
                3,712,000
                
                
                $
                1,060,000
                
                
                $
                1,886,000
                
                
                $
                679,000
                
                
                $
                87,000
                
                
                $
                -Capital
      lease obligations
                
                
                117,000
                
                
                
                30,000
                
                
                
                67,000
                
                
                
                9,000
                
                
                
                8,000
                
                
                
                3,000Operating
      lease obligations
                
                
                8,462,000
                
                
                
                1,288,000
                
                
                
                2,458,000
                
                
                
                1,817,000
                
                
                
                1,558,000
                
                
                
                1,341,000Total
      contractual cash obligations
                
                $
                12,291,000
                
                
                $
                2,378,000
                
                
                $
                4,411,000
                
                
                $
                2,505,000
                
                
                $
                1,653,000
                
                
                $
                1,344,000




37




Employment
Agreements:




The
Company has employment agreements with its President and Chief Executive
Officer, as well as several of its key officers and employees that are for
varying periods of one to three years.





Retirement
Plan:





The
Company has a 401(k) retirement plan which covers substantially all employees.
Under the plan, participants may defer the receipt of up to 75% percent of their
annual compensation, but not to exceed the maximum amount as determined by the
Internal Revenue Code. The amount of the employer matching contribution is equal
to 100% of the first 3% withheld and 50% for the next 2% withheld. The Company
may make additional matching contributions as determined and approved by the
Board of Directors. Total 401(k) retirement plan expense amounted to $76,000 and
$50,000 for the six months ended June 30, 2009 and 2008,
respectively.




ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




As
substantially all of our investments are in short-term bank deposits, our
exposure to market risk is limited primarily to interest income sensitivity,
which is affected by changes in the general level of U.S. interest rates. The
primary objective of our investment activities is to preserve principal. Due to
the nature of our short-term investments, we believe that we are not subject to
any material market risk exposure. We do not have any derivative financial
instruments or foreign currency instruments. If interest rates had varied by 10%
in the three- or six month periods ended June 30, 2009, it would not have had a
material effect on our results of operations or cash flows for that
period.




ITEM
4. CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





We
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer, of the effectiveness of our disclosure controls and
procedures (as defined  in  Rules  13a-15(e) and
15d-15(e) of the  Exchange  Act (defined  below)).
Based upon that evaluation, our principal executive officer and principal
financial officer concluded that, as of the end of the period covered in this
report, our disclosure controls and procedures were effective to ensure that
information required to be disclosed in reports filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed,
summarized and reported within the required time periods and is accumulated and
communicated to our management, including our principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding
required disclosure.





Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error or fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints and the benefits of controls must be considered relative to their
costs. Due to the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected. Accordingly, management
believes that the financial statements included in this report fairly present in
all material respects our financial condition, results of operations and cash
flows for the periods presented.





Changes
in Internal Control Over Financial Reporting





In
addition, our management with the participation of our Principal Executive
Officer and Principal Financial Officer have determined that no change in our
internal control over financial reporting (as that term is defined in Rules
13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of 1934) occurred
during or subsequent to the quarter ended June 30, 2009 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.




PART
II. OTHER INFORMATION





ITEM
1. LEGAL PROCEEDINGS





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





ITEM
1A. RISK FACTORS





There are
no material changes from the risk factors set forth under Part I, Item 1A “Risk
Factors” in the Company’s 2008 Annual Report on Form 10-K.


38


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




(c) Common stock repurchases
made in the quarter





In the
six months ended June 30, 2009, we paid $443,000 for the purchase of 272,630 of
our common shares in the open market for the recipients of our 2009 common stock
grants.




2008 Repurchase Program
 Maximum numberTotal number of
                        
                        of shares that mayAverage
                        
                        shares purchased as
                        
                        yet be purchasedprice
                        
                        part of publicly
                        
                        under a publiclyTotal number of
                        
                        paid per
                        
                        announced plan or
                        
                        announced plan orPeriod
                        
                        shares purchased
                        
                        share
                        
                        program
                        
                        programJanuary
      2009
                        
                        91,300
                        
                        $
                        1.99
                        
                        823,670
                        
                        
                        176,330February
      2009
                        
                        83,600
                        
                        $
                        1.60
                        
                        907,270
                        
                        
                        92,730March
      2009
                        
                        50,900
                        
                        $
                        1.25
                        
                        958,170
                        
                        
                        41,830Q1
      2009
                        
                        225,800
                        
                        
                        1.68
                        
                        958,170
                        
                        
                        41,830April
      2009
                        
                        28,482
                        
                        $
                        1.30
                        
                        986,652
                        
                        
                        13,348May
      2009
                        
                        11,100
                        
                        $
                        1.29
                        
                        997,752
                        
                        
                        2,248June
      2009
                        
                        2,248
                        
                        $
                        1.85
                        
                        1,000,000
                        
                        
                        -Q2
      2009
                        
                        41,830
                        
                        
                        1.32
                        
                        1,000,000
                        
                        
                        -Total
                        
                        267,630
                        
                        $
                        1.62
                        
                        1,000,000
                        
                        
                        -





2009 Repurchase ProgramMaximum numberTotal number of
                      
                      of shares that mayshares purchased as
                      
                      yet be purchasedpart of publicly
                      
                      under a publiclyTotal number of
                      
                      Average price
                      
                      announced plan or
                      
                      announced plan orPeriod
                      
                      shares purchased
                      
                      paid per share
                      
                      program
                      
                      programJune
      2009
                      
                      5,000
                      
                      $
                      1.91
                      
                      5,000
                      
                      
                      995,000Total
                      
                      5,000
                      
                      $
                      1.91
                      
                      5,000
                      
                      
                      995,000





On March
15, 2009, the Company issued 50,000 shares of common stock pursuant to an
agreement with a consultant for services rendered. Should the agreement be
terminated by the company during the first six months, any unvested shares will
be returned to the company. Therefore, the shares of common stock are recorded
as general and administrative expense at their fair market value as they vest
monthly over the six month agreement. The shares were issued in a transaction
exempt from the registration requirements of the Securities Act of 1933, as
amended, pursuant to Section 4(2).





ITEM
3. DEFAULTS UPON SENIOR SECURITIES





None.




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





The
Company’s Annual Meeting of Stockholders was held on Wednesday, July 8, 2009, in
Studio City, California, at which the following matters were submitted to a vote
of the Stockholders:


39


I.


Votes
regarding the election of the persons named below as Directors for a term
expiring in 2010 were as follows:


For
                
                
                Against
                
                
                AbstentionsMitch
      Francis
                
                
                27,220,796
                
                
                
                -
                
                
                
                1,000Benjamin
      Frankel
                
                
                27,220,650
                
                
                
                -
                
                
                
                1,146Norman
      Feirstein
                
                
                27,218,002
                
                
                
                -
                
                
                
                3,794Sam
      Georges
                
                
                27,221,796
                
                
                
                -
                
                
                
                0Andrew
      Pells
                
                
                27,220,796
                
                
                
                -
                
                
                
                1,000Joseph
      Marsh
                
                
                27,211,180
                
                
                
                -
                
                
                
                10,616





II.


Votes on
a proposal regarding the Tix 2009 Equity Incentive Plan were as
follows:


For
                  
                  Against
                  
                  
                  Abstentions
                  
                  
                  Broker Non-votes24,697,378
                  
                  
                  2,438,512
                  
                  
                  
                  113,230
                  
                  
                  
                  5,557,299





III.


Votes on
a proposal regarding an amendment to the Tix 2004 Directors Stock Option Plan to
increase the number of shares of common stock under the Plan from 100,000 to
1,000,000 were as follows:


For
                          
                          Against
                          
                          
                          Abstentions
                          
                          
                          Broker Non-votes18,816,762
                          
                          
                          70,521
                          
                          
                          
                          1,040
                          
                          
                          
                          13,918,096





IV.


Votes
regarding ratification of the appointment of Weinberg & Co., P.A. as
independent registered public accounting firm for the Corporation for the fiscal
year ending December 31, 2009 were as follows:


For
                          
                          Against
                          
                          
                          Abstentions
                          
                          
                          Broker Non-votes27,009,321
                          
                          
                          260,657
                          
                          
                          
                          -
                          
                          
                          
                          5,536,441





ITEM
5. OTHER INFORMATION




Not
applicable.





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.





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:
      August 6, 2009
                By:
                /s/Mitch FrancisMitch
      FrancisChief
      Executive OfficerDate:
      August 6, 2009
                By:
                /s/ Matthew NatalizioMatthew
      NatalizioChief
      Financial Officer
                  (On
      behalf of the registrant and
                  Principal
      Financial and Accounting
Officer)


40




INDEX TO
EXHIBITS





10.1
            
            Employment
      Agreement dated as of March 1, 2009 between Mitch Francis and the Company.
      (1)31.1
            
            Officer’s
      Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.31.2
            
            Officer’s
      Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.32.1
            
            Officer’s
      Certificate Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
            
            Officer’s
      Certificate Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





(1)
Previously filed as an exhibit to the Company’s Current Report on Form 8-K filed
with the Securities and Exchange Commission on April 7, 2009.


41