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 March 31, 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 R     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 R
              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
R





Number of
shares of Tix Corporation common stock, $.08 par value, issued and outstanding
as of April 29, 2009: 32,328,418, exclusive of treasury shares.













Special
Note Regarding Forward-Looking Statements:




This
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 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 March 31, 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 March 31, 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 March 31, 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 –March 31, 2009 (Unaudited) and December 31,
      2008
                  
                  
                  1Condensed
      Consolidated Statements of Operations and Comprehensive Income (Unaudited)
      - Three months ended March 31, 2009 and 2008
                  
                  
                  2Condensed
      Consolidated Statement of Stockholders’ Equity (Unaudited) – Three
      months ended March 31, 2009
                  
                  
                  3Condensed
      Consolidated Statements of Cash Flows (Unaudited) – Three months
      ended March 31, 2009 and 2008
                  
                  
                  4Notes
      to Condensed Consolidated Financial Statements (Unaudited)
                  
                  
                  6Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                  
                  
                  20Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                  
                  
                  34Item
      4. Controls and Procedures
                  
                  
                  34PART
      II. OTHER INFORMATIONItem
      1. Legal Proceedings
                  
                  
                  34Item
      1A. Risk Factors
                  
                  
                  34Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                  
                  
                  34Item
      3. Defaults upon Senior Securities
                  
                  
                  35Item
      4. Submission of Matters to a Vote of Security Holders
                  
                  
                  35Item
      5. Other Information
                  
                  
                  35Item
      6. Exhibits
                  
                  
                  35SIGNATURES
                  
                  
                  35








TIX
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





March
      31,
                                                            
                                                            
                                                            December 31,2009
                                                            
                                                            
                                                            2008(Unaudited)AssetsCurrent
      assets:Cash
                                                            
                                                            $
                                                            10,621,000
                                                            
                                                            
                                                            $
                                                            9,192,000Accounts
      receivable, including show revenues earned but not billed
                                                            
                                                            
                                                            725,000
                                                            
                                                            
                                                            
                                                            1,104,000Inventory,
      net
                                                            
                                                            
                                                            2,759,000
                                                            
                                                            
                                                            
                                                            3,320,000Prepaid
      expenses and other current assets
                                                            
                                                            
                                                            634,000
                                                            
                                                            
                                                            
                                                            867,000Total
      current assets
                                                            
                                                            
                                                            14,739,000
                                                            
                                                            
                                                            
                                                            14,483,000Property
      and equipmentOffice
      equipment and furniture
                                                            
                                                            
                                                            1,860,000
                                                            
                                                            
                                                            
                                                            1,816,000Equipment
      under capital lease
                                                            
                                                            
                                                            408,000
                                                            
                                                            
                                                            
                                                            408,000Leasehold
      improvements
                                                            
                                                            
                                                            365,000
                                                            
                                                            
                                                            
                                                            364,000Property
      and equipment, cost basis
                                                            
                                                            
                                                            2,633,000
                                                            
                                                            
                                                            
                                                            2,588,000Less
      accumulated depreciation
                                                            
                                                            
                                                            (1,286,000
                                                            )
                                                            
                                                            
                                                            (1,155,000
                                                            )Total
      property and equipment, net
                                                            
                                                            
                                                            1,347,000
                                                            
                                                            
                                                            
                                                            1,433,000Other
      assets:Intangible
      assets:Goodwill
                                                            
                                                            
                                                            5,895,000
                                                            
                                                            
                                                            
                                                            5,639,000Intangibles,
      net
                                                            
                                                            
                                                            6,261,000
                                                            
                                                            
                                                            
                                                            6,751,000Total
      intangible assets
                                                            
                                                            
                                                            12,156,000
                                                            
                                                            
                                                            
                                                            12,390,000Capitalized
      theatrical costs
                                                            
                                                            
                                                            400,000
                                                            
                                                            
                                                            
                                                            459,000Deposits
      and other assets
                                                            
                                                            
                                                            133,000
                                                            
                                                            
                                                            
                                                            83,000Total
      other assets
                                                            
                                                            
                                                            12,689,000
                                                            
                                                            
                                                            
                                                            12,932,000Total
      assets
                                                            
                                                            $
                                                            28,775,000
                                                            
                                                            
                                                            $
                                                            28,848,000Liabilities
      and Stockholders' EquityCurrent
      liabilities:Accounts
      payable
                                                            
                                                            $
                                                            4,073,000
                                                            
                                                            
                                                            $
                                                            4,822,000Accrued
      expenses
                                                            
                                                            
                                                            1,448,000
                                                            
                                                            
                                                            
                                                            1,515,000Current
      portion of capital lease obligations
                                                            
                                                            
                                                            51,000
                                                            
                                                            
                                                            
                                                            51,000Deferred
      revenue
                                                            
                                                            
                                                            281,000
                                                            
                                                            
                                                            
                                                            100,000Total
      current liabilities
                                                            
                                                            
                                                            5,853,000
                                                            
                                                            
                                                            
                                                            6,488,000Non-current
      liabilities:Capital
      lease obligations, less current portion
                                                            
                                                            
                                                            65,000
                                                            
                                                            
                                                            
                                                            78,000Deferred
      rent
                                                            
                                                            
                                                            69,000
                                                            
                                                            
                                                            
                                                            85,000Total
      non-current liabilities
                                                            
                                                            
                                                            134,000
                                                            
                                                            
                                                            
                                                            163,000Commitments
      and contingenciesStockholders’
      equity:Preferred
      stock, $.01 par value; 500,000 shares authorized; none
    issued
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            -Common
      Stock, $.08 par value; 100,000,000 shares authorized; 33,311,070 shares
      and 33,078,233 shares issued at March 31, 2009 and December 31, 2008
      respectively
                                                            
                                                            
                                                            2,664,000
                                                            
                                                            
                                                            
                                                            2,646,000Additional
      paid-in capital
                                                            
                                                            
                                                            88,713,000
                                                            
                                                            
                                                            
                                                            88,062,000Cost
      of shares held in treasury (958,170 shares at March 31, 2009 and 732,370
      shares at December 31, 2008, respectively)
                                                            
                                                            
                                                            (2,476,000
                                                            )
                                                            
                                                            
                                                            (2,098,000
                                                            )Accumulated
      deficit
                                                            
                                                            
                                                            (66,089,000
                                                            )
                                                            
                                                            
                                                            (66,384,000
                                                            )Accumulated
      other comprehensive loss
                                                            
                                                            
                                                            (24,000
                                                            )
                                                            
                                                            
                                                            (29,000
                                                            )Total
      stockholders' equity
                                                            
                                                            
                                                            22,788,000
                                                            
                                                            
                                                            
                                                            22,197,000Total
      liabilities and stockholders' equity
                                                            
                                                            $
                                                            28,775,000
                                                            
                                                            
                                                            $
                                                            28,848,000





See
accompanying notes to condensed consolidated financial
statements.


1





TIX
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME





Three Months Ended March 31,2009
                                            
                                            
                                            2008(Unaudited)
                                            
                                            
                                            (Unaudited)Revenues
                                            
                                            $
                                            20,170,000
                                            
                                            
                                            $
                                            23,163,000Operating
      expenses:Direct
      costs of revenues
                                            
                                            
                                            14,926,000
                                            
                                            
                                            
                                            16,730,000Selling
      and marketing expenses.
                                            
                                            
                                            606,000
                                            
                                            
                                            
                                            1,377,000General
      and administrative expenses, including non-cash equity-based costs of
      $413,000 and $602,000 in 2009 and 2008, respectively (including
      $390,000 and $414,000 for officers, directors and employees in 2009 and
      2008, respectively).
                                            
                                            
                                            3,756,000
                                            
                                            
                                            
                                            3,462,000Depreciation
      and amortization
                                            
                                            
                                            621,000
                                            
                                            
                                            
                                            1,122,000Total
      costs and expenses
                                            
                                            
                                            19,909,000
                                            
                                            
                                            
                                            22,691,000Operating
      Income
                                            
                                            
                                            261,000
                                            
                                            
                                            
                                            472,000Other:Other
      income (expense)
                                            
                                            
                                            25,000
                                            
                                            
                                            
                                            43,000Interest
      income
                                            
                                            
                                            13,000
                                            
                                            
                                            
                                            34,000Interest
      expense
                                            
                                            
                                            (4,000
                                            )
                                            
                                            
                                            (6,000
                                            )Other
      income (expense), net
                                            
                                            
                                            34,000
                                            
                                            
                                            
                                            71,000Net
      income before income tax expense
                                            
                                            
                                            295,000
                                            
                                            
                                            
                                            543,000Current
      income tax expense
                                            
                                            
                                            -
                                            
                                            
                                            
                                            82,000Net
      income
                                            
                                            
                                            295,000
                                            
                                            
                                            
                                            461,000Other
      comprehensive incomeForeign
      currency translation adjustments
                                            
                                            
                                            5,000
                                            
                                            
                                            
                                            -Comprehensive
      income
                                            
                                            $
                                            300,000
                                            
                                            
                                            $
                                            461,000Net
      income per common share -Basic
                                            
                                            $
                                            0.01
                                            
                                            
                                            $
                                            0.02Diluted
                                            
                                            $
                                            0.01
                                            
                                            
                                            $
                                            0.01Weighted
      average common shares outstanding -Basic
                                            
                                            
                                            32,304,286
                                            
                                            
                                            
                                            30,642,823Diluted
                                            
                                            
                                            32,429,891
                                            
                                            
                                            
                                            32,493,343





See
accompanying notes to the condensed consolidated financial
statements.


2





TIX
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


THREE
MONTHS ENDED MARCH 31, 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
                        
                        
                        4,167
                        
                        
                        
                        -
                        
                        
                        
                        5,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        5,000Issuance
      of common stock to officers and employees
                        
                        
                        38,194
                        
                        
                        
                        3,000
                        
                        
                        
                        5,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        8,000Fair
      value of options issued to employees and directors
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        382,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        382,000Earned
      shares related to acquisition of Magic Arts &
      Entertainment
                        
                        
                        190,476
                        
                        
                        
                        15,000
                        
                        
                        
                        241,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        256,000Fair
      value of warrants issued to outside consultants
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        18,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        18,000Net
      Income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        295,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        295,000Foreign
      currency translation adjustment
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        5,000
                        
                        
                        
                        5,000Cost
      of Treasury Stock
                        
                        
                        (225,800
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (378,000
                        )
                        
                        
                        -
                        
                        
                        
                        (378,000
                        )Balance, March
      31, 2009
                        
                        
                        32,352,900
                        
                        
                        $
                        2,664,000
                        
                        
                        $
                        88,713,000
                        
                        
                        $
                        (66,089,000
                        )
                        
                        $
                        (2,476,000
                        )
                        
                        $
                        (24,000
                        )
                        
                        $
                        22,788,000





See
accompanying notes to the condensed consolidated financial
statements.


3





TIX
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS





THREE MONTHS ENDED MARCH 31,2009
                                    
                                    
                                    2008(Unaudited)
                                    
                                    
                                    (Unaudited)Cash
      flows from operating activities:Net
      income
                                    
                                    $
                                    295,000
                                    
                                    
                                    $
                                    461,000Adjustments
      to reconcile net income to cash provided by operating
      activities:Depreciation
                                    
                                    
                                    131,000
                                    
                                    
                                    
                                    117,000Amortization
      of intangible assets
                                    
                                    
                                    490,000
                                    
                                    
                                    
                                    1,006,000Fair
      valued common stock issued for services to employees and
      consultants
                                    
                                    
                                    13,000
                                    
                                    
                                    
                                    188,000Fair
      value of options issued to employees and directors
                                    
                                    
                                    382,000
                                    
                                    
                                    
                                    414,000Fair
      value of warrants issued to consultants
                                    
                                    
                                    18,000
                                    
                                    
                                    
                                    -Change
      in allowance of inventory
                                    
                                    
                                    (30,000
                                    )
                                    
                                    
                                    115,000(Increase)
      decrease in:Accounts
      receivable
                                    
                                    
                                    379,000
                                    
                                    
                                    
                                    (3,719,000
                                    )Inventory
                                    
                                    
                                    590,000
                                    
                                    
                                    
                                    (3,000
                                    )Prepaid
      expenses and other current assets
                                    
                                    
                                    233,000
                                    
                                    
                                    
                                    101,000Capitalized
      theatrical costs, deposits and other assets
                                    
                                    
                                    9,000
                                    
                                    
                                    
                                    (2,000
                                    )Increase
      (decrease) in:Accounts
      payable and accrued expenses
                                    
                                    
                                    (816,000
                                    )
                                    
                                    
                                    3,482,000Deferred
      revenue
                                    
                                    
                                    181,000
                                    
                                    
                                    
                                    484,000Deferred
      rent
                                    
                                    
                                    (16,000
                                    )
                                    
                                    
                                    (61,000
                                    )Net
      cash provided by operating activities
                                    
                                    
                                    1,859,000
                                    
                                    
                                    
                                    2,583,000Cash
      flows from investing activities:Purchases
      of property and equipment
                                    
                                    
                                    (45,000
                                    )
                                    
                                    
                                    (131,000
                                    )Purchase
      of Magic Arts & Entertainment, net of cash acquired
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (2,133,000
                                    )Purchase
      of NewSpace Entertainment, net of cash acquired
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (1,456,000
                                    )Net
      cash used in investing activities
                                    
                                    
                                    (45,000
                                    )
                                    
                                    
                                    (3,720,000
                                    )Cash
      flows from financing activities:Cost
      of Treasury Stock
                                    
                                    
                                    (378,000
                                    )
                                    
                                    
                                    -Payments
      on capital lease obligations
                                    
                                    
                                    (12,000
                                    )
                                    
                                    
                                    (9,000
                                    )Net
      cash used in financing activities
                                    
                                    
                                    (390,000
                                    )
                                    
                                    
                                    (9,000
                                    )Effect
      of exchange rate changes on cash
                                    
                                    
                                    5,000
                                    
                                    
                                    
                                    -Change
      in Cash:Net
      increase
                                    
                                    
                                    1,429,000
                                    
                                    
                                    
                                    (1,146,000
                                    )Balance
      at beginning of period
                                    
                                    
                                    9,192,000
                                    
                                    
                                    
                                    7,769,000Balance
      at end of period
                                    
                                    $
                                    10,621,000
                                    
                                    
                                    $
                                    6,623,000





(Continued)


4


TIX
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)





THREE MONTHS ENDED MARCH 31,2009
                        
                        
                        2008(Unaudited)
                        
                        
                        (Unaudited)Supplemental
      disclosures of cash flow information:Cash
      paid for:Income
      taxes
                        
                        $
                        -
                        
                        
                        $
                        -Interest
                        
                        $
                        4,000
                        
                        
                        $
                        6,000Non-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


5




NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)





Note
1 - Summary of Significant Accounting Policies




Nature
of Business





Tix
Corporation (the “Company”) was incorporated in Delaware in April 1993. The
Company is an 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 our last minute ticketing services, premium ticketing services and
membership group sales; Exhibit Merchandising (EM) provides our event
merchandise sales and services; and Tix Productions Inc. (TPI), provides the
production and promotion of live entertainment.




Operating
Segments





Ticketing
Services




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




Discount
Ticketing




Discount
Ticketing – 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 75 Las Vegas shows, out of a total of approximately 85 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.





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 more than 30 Las Vegas golf courses.





Discount
Ticketing – 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 uses the internet
as its customer interface, and has expanded the date range of ticket
availability instead of offering only deeply discounted 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.”




6




Management
expects that EM’s growth will be from direct merchandising opportunities derived
from our other operating units, for example, 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 operate under their
current names as a reflection of the marketplace’s recognition of those
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 eight 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 both upfront guaranteed
income and 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 the 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 eight 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, Fresno and Boise. 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.




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.




7




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 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. 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 on the Las
Vegas strip 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
patron.




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 because all
transactions are paid for at the time of purchase.




Tix4AnyEvent
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. Tix4AnyEvent does not have any accounts receivable
associated with sales transactions to individual 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.




Exhibit
Merchandising recognizes retail store sales at the time the customer takes
possession of the merchandise. All 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 where title and risk of loss
pass to the buyer generally 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. Shipping and handling revenues from our websites are
included as a component of net sales. The Company does not have any accounts
receivable associated with this business because all 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.





EITF
99-19 “Reporting Revenues Gross as a Principal versus Net as an Agent” discusses
whether revenues and cost of goods sold to arrive at gross profit and their
corresponding assets and liabilities should be recorded at gross or
net.  EITF 99-19 states the following items as indicators as of
whether something should be recorded at gross or net:





·
            Acts
      as principal in the transaction


·
            Has
      risk and rewards of ownership, such as risk of loss for collection,
      delivery and returns, and


o
            Takes
      title to the products


o
            Selects
      the supplier


o
            Flexibility
      in pricing


o
            Assumes
      credit risk


·
            Acts
      as an agent or broker (including performing services, in substance, as an
      agent or broker) with compensation on a commission or fee
      basis.  If the Company performs as an agent or broker with
      assuming the risks and rewards of ownership of the goods, sales should be
      reported on a net basis.





Tix
Productions Inc.’s (TPI) operating units Magic Arts & Entertainment and
NewSpace act as both presenter 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,




8




·
            assumes
      credit risk,


·
            directs
      the pricing of the tickets, and


·
            purchases
      the advertising.





EITF
99-19 states that 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:




The
Company accounts for intangible assets 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.




9




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 in the United States (US) with banks 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 March31,
2009, the Company’s aggregate cash in excess of the FDIC insured amount
was $9.2 million. In addition, the Company had aggregate cash balances in
Austria and The United Kingdom of $103,000 and $20,000, 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 months ending March 31, 2009 and were $(30,000) and $5,000, respectively.
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 operations. The Company began
operating in the United Kingdom in November 2007, with the opening of its
exhibit shop at the O2 for “Tutankhamen and The Golden Age of the Pharaohs.”
Additionally, in March 2008, the Company opened a second exhibit shop in Vienna,
Austria for “Tutankhamen and the World of the Pharaohs” and a third exhibit shop
for “The Undersea Treasures of Egypt” in Madrid, Spain.





Net
Income (Loss) Per Common Share:





Statement
of Financial Accounting Standards No. 128, “Earnings Per Share,” requires
presentation of basic earnings per share (“Basic EPS”) and diluted earnings per
share (“Diluted EPS”). Basic earnings (loss) per share is computed by dividing
income (loss) available to common stockholders by the weighted average number of
common shares outstanding during the period. The diluted earnings per share
calculation give effect to all potentially dilutive common shares outstanding
during the period using the treasury stock method. At March 31, 2009, basic and
diluted earning per share was $.01, while at March 31, 2008, basic earnings per
share was $.02 per share and diluted earnings per share was $.01 per share. At
March 31, 2009, we had outstanding warrants and stock options to acquire an
aggregate of 3.8 million common shares, of which 2.7 million were warrants to
purchase shares of our common stock and 1.1 million were options to
purchase shares of our common stock. At March 31, 2008, we had outstanding
warrants and options to acquire an aggregate of 3.9 million and 1.3 million
shares, respectively.





Issued
but unvested shares of common stock are excluded from the calculation of basic
earnings per share, but are included in the calculation of diluted earnings per
share, when dilutive.




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.




10




Advertising
Costs:




Advertising
costs are charged to operations as selling and marketing expenses at the time
the costs are incurred. For the three months ended March 31, 2009 and 2008,
advertising costs were $593,000 and $2.2 million, respectively.





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 March 31,
2009.  At December 31, 2008, we recorded an impairment charge related
to the goodwill and intangible assets of $33.1 million related to our
acquisition of EM.  As of March 31, 2009, we have $12.2 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.




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 March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
instruments and Hedging Activities. The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable better understanding of the effects
on financial position, financial performance, and cash flows. The effective date
is for fiscal years and interim periods beginning after November 15, 2008. The
Company has not yet determined the effect, if any, resulting from the adoption
of SFAS No. 161 will have on the Company’s consolidated financial
statements.





In April
2008, the FASB issued Staff Position No. FAS 142-3 which amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, “Goodwill and Other Intangible Assets.” The intent of this FSP is to
improve the consistency between the useful life of a recognized intangible asset
under Statement 142 and the period of expected cash flows used to measure the
fair value of the asset under FASB Statement No. 141 (revised 2007), Business Combinations, and
other U.S. generally accepted accounting principles (GAAP). The Company is in
the process of evaluating the effect of FAS No. 142-3 on the Company’s
consolidated financial statements.




In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles. This Statement identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States. The FASB believes that the GAAP hierarchy should be directed
to entities because it is the entity (not its auditor) that is responsible for
selecting accounting principles for financial statements that are presented in
conformity with GAAP. The FASB does not believe this Statement will result in a
change in current practice. SFAS 162 is effective November 15,
2008.





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.


11





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 will provide the additional
disclosures as required by FSP 107-1 in its quarterly report on Form 10-Q for
the period ended June 30, 2009.





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 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.
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.




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 Joseph B. Marsh and Lee D. Marshall, the co-founders
of Magic, 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.




12




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.  Mr. Marsh was a shareholder of Tix prior to its acquisition of Magic
and presently owns approximately 14% of Tix's common stock.





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





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 with or “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.


13




Note
4- Intangible Assets





The
following table summarizes the original cost, the related accumulated
amortization, impairment adjustment, and the net carrying amounts for the
Company’s intangible assets at March 31, 2009.





Estimated
                            Useful
                          
                          Original
                          
                          
                          Accumulated
                          
                          
                          Impairment
                          
                          
                          
                          
                          
                          Net
                            CarryingLives
                          
                          Cost
                          
                          
                          Amortization
                          
                          
                          Adjustment
                          
                          
                          Adjustment
                          
                          
                          AmountMarketing
      Based
                          
                          3-6
      years
                          
                          $
                          12,277,000
                          
                          
                          $
                          (3,025,000
                          )
                          
                          $
                          (6,852,000
                          )
                          
                          $
                          -
                          
                          
                          $
                          2,400,000Contract
      commitments
                          
                          3-7
      years
                          
                          
                          6,794,000
                          
                          
                          
                          (2,451,000
                          )
                          
                          
                          (835,000
                          )
                          
                          
                          -
                          
                          
                          
                          3,508,000Customer
      relationships
                          
                          3
      years
                          
                          
                          612,000
                          
                          
                          
                          (423,000
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          189,000Technology
      Based
                          
                          3
      years
                          
                          
                          111,000
                          
                          
                          
                          (73,000
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          38,000Intellectual
      property (e.g. domain names)
                          
                          5
      years
                          
                          
                          130,000
                          
                          
                          
                          (4,000
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          126,000Goodwill
                          
                          indefinite
                          
                          
                          31,084,000
                          
                          
                          
                          -
                          
                          
                          
                          (25,445,000
                          )
                          
                          
                          256,000
                          
                          
                          
                          5,895,000Total
                          
                          
                          
                          $
                          51,008,000
                          
                          
                          $
                          (5,976,000
                          )
                          
                          $
                          (33,132,000
                          )
                          
                          $
                          256,000
                          
                          
                          $
                          12,156,000





Total
amortization expense related to intangible assets for the three months ending
March 31, 2009 and 2008 were $490,000 and $1,006,000, 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
                          
                          $
                          (1,476,000
                          )2010
                          
                          
                          (1,596,000
                          )2011
                          
                          
                          (1,326,000
                          )2012
                          
                          
                          (1,326,000
                          )2013
                          
                          
                          (403,000
                          )Beyond
      2013
                          
                          
                          (134,000
                          )Total
                          
                          $
                          (6,261,000
                          )





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 March 31, 2009, monthly payments
under these leases aggregated $5,600. The leases expire at various dates through
2013.





At March
31, 2009 and 2008, property and equipment included assets under capital leases
of $408,000 and $386,000, net of accumulated amortization of $288,000 and
$246,000, respectively.




Minimum
future payments under capital lease obligations for the remainder of 2009, and
thereafter are as follows:


14





Years
      Ending December 31,2009
                        
                        
                        47,0002010
                        
                        
                        67,0002011
                        
                        
                        9,0002012
                        
                        
                        9,0002013
                        
                        
                        3,000Total
      payments
                        
                        
                        135,000Less:
      amount representing interest
                        
                        
                        (19,000
                        )Present
      value of minimum lease payments
                        
                        
                        116,000Less:
      current portion
                        
                        
                        (51,000
                        )Non-current
      portion
                        
                        $
                        65,000





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 months ended
March 31, 2009, we paid Mr. Frankel or his firm $8,000 for tax preparation and
advisory services. No expenses were incurred for the three months ended March
31, 2008.





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 1,
2008.  For more details regarding the purchase of Magic, see Note 3.
-  Acquisitions.





Note
7- Stockholders’ equity





During
the three months ended March 31, 2009, the Company issued: 4,000 shares of
common stock to consultants with a fair market value of $5,000 on the date of
issuance, 38,000 shares of common stock to officers and employees with a fair
market value of $8,000 on the date of issuance, and 190,000 shares of common
stock with a fair market value on the date of issuance of $256,000 in 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 March 31, 2009, the Company repurchased
958,000 shares for $2,476,000. Through April 20, 2009, the Company has
repurchased 968,000 shares for $2,489,000. The shares were repurchased at prices
that range from $1.20 per share to $4.13 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 March 31, 2009 was $153,000, as compared to
$1,259,000 at March 31, 2008. The intrinsic value of exercisable stock options
at March 31, 2009 was $153,000, as compared to $989,000 at March 31, 2008. A
summary of the combined stock options for the three months ended March 31, 2009
is as follows:




WeightedNumber
                    
                    
                    averageof
                    
                    
                    exerciseoptions
                    
                    
                    priceBalance
      outstanding, December 31, 2008
                    
                    
                    1,263,000
                    
                    
                    $
                    5.41Options
      granted
                    
                    
                    -
                    
                    
                    
                    -Options
      exercised
                    
                    
                    -
                    
                    
                    
                    -Options
      expired or forfeited
                    
                    
                    (102,000
                    )
                    
                    
                    4.06Balance
      outstanding, March 31, 2009
                    
                    
                    1,161,000
                    
                    
                    $
                    5.52Balance
      exercisable, March 31, 2009
                    
                    
                    636,000
                    
                    
                    $
                    4.38




15




Information
relating to outstanding stock options at March 31, 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
                            
                            
                            816,000
                            
                            
                            
                            8.42
                            
                            
                            $
                            7.01
                            
                            
                            
                            316,000
                            
                            
                            $
                            7.02$4.00
      - $5.99
                            
                            
                            45,000
                            
                            
                            
                            6.45
                            
                            
                            $
                            4.52
                            
                            
                            
                            20,000
                            
                            
                            $
                            4.30$2.00
      - $3.99
                            
                            
                            150,000
                            
                            
                            
                            4.03
                            
                            
                            $
                            3.07
                            
                            
                            
                            150,000
                            
                            
                            $
                            3.07$0.15
      - $1.99
                            
                            
                            150,000
                            
                            
                            
                            0.42
                            
                            
                            $
                            0.15
                            
                            
                            
                            150,000
                            
                            
                            $
                            0.151,161,000
                            
                            
                            
                            6.74
                            
                            
                            $
                            5.52
                            
                            
                            
                            636,000
                            
                            
                            $
                            4.38




Tix
Corporation recorded compensation expense pursuant to FAS 123(R) for the three
months ended March 31, 2009 and 2008 of $382,000 and $402,000, respectively. As
of March 31, 2009, the Company has outstanding unvested options with future
compensation costs of $1.9 million, which will be recorded as compensation
expense as the options vest over their remaining average life of 6.74
years.





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, the related
consulting expense on these 100,000 warrants was recognized over the life of the
contract. In the three months ended March 31, 2009, the remaining 33,000
warrants vested, and we recorded an expense of $18,000.





A summary
of warrant activity for the three months ended March 31, 2009 is as
follows:





WeightedNumber
                    
                    
                    averageof
                    
                    
                    exercisewarrants
                    
                    
                    priceBalance
      outstanding, December 31, 2008
                    
                    
                    2,672,007
                    
                    
                    $
                    5.11Warrants
      granted
                    
                    
                    -
                    
                    
                    
                    -Warrants
      exercised
                    
                    
                    -
                    
                    
                    
                    -Warrants
      expired
                    
                    
                    -
                    
                    
                    
                    -Balance
      outstanding, March 31, 2009
                    
                    
                    2,672,007
                    
                    
                    $
                    5.11




The
intrinsic value of outstanding warrants at March 31, 2009 was $102,000, as
compared to $6.5 million at March 31, 2008. Information relating to outstanding
warrants at March 31, 2009, summarized by exercise price, is as
follows:





Outstanding
                              
                              
                              ExercisableWeighted
                              
                              
                              
                              
                              
                              WeightedLife
                              
                              
                              Average
                              
                              
                              
                              
                              
                              AverageExercise
      Price Per Share
                              
                              Shares
                              
                              
                              (Years)
                              
                              
                              Exercise
      Price
                              
                              
                              Shares
                              
                              
                              Exercise
      Price$2.00
      - $5.50
                              
                              
                              2,522,007
                              
                              
                              
                              0.59
                              
                              
                              $
                              5.38
                              
                              
                              
                              2,522,007
                              
                              
                              $
                              5.38$0.36
      - $1.99
                              
                              
                              150,000
                              
                              
                              
                              2.69
                              
                              
                              $
                              0.49
                              
                              
                              
                              150,000
                              
                              
                              $
                              0.492,672,007
                              
                              
                              
                              0.71
                              
                              
                              $
                              5.11
                              
                              
                              
                              2,672,007
                              
                              
                              $
                              5.11




16




Note
9- Income Taxes





At March
31, 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 will likely be
limited 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 March 31, 2009 and 2008.





The tax
effects of temporary differences that give rise to a significant portion of the
deferred tax assets at March 31, 2009 and 2008 are presented
below:




March
      31,2009
                        
                        
                        2008Deferred
      tax assets:Net
      operating loss carryforward
                        
                        $
                        9,481,000
                        
                        
                        $
                        9,190,000Use
      of NOL
                        
                        
                        (103,000
                        )
                        
                        
                        (176,000
                        )Less:
      Valuation allowance
                        
                        
                        (9.378,000
                        )
                        
                        
                        (9,014,000
                        )Net
      deferred tax asset
                        
                        $
                        -
                        
                        
                        $
                        -




As a
result of the Company’s significant operating loss carryforwards and the
corresponding valuation allowance, no income tax benefit has been recorded
at March 31, 2009 and 2008. The provision for income taxes using the statutory
federal tax rate as compared to the Company’s effective tax rate is summarized
as follows:




Three months ended March 31,2009
                                          
                                          
                                          2008Tax
      benefit at statutory rate
                                          
                                          
                                          (35
                                          )%
                                          
                                          (35
                                          )%Adjustments
      to change in valuation allowance
                                          
                                          
                                          35
                                          
                                          
                                          35Effective
      tax rate
                                          
                                          
                                          -
                                          %
                                          
                                          -
                                          %





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:





March
      31,2009
                              
                              
                              2008NumeratorNet
      income
                              
                              $
                              295,000
                              
                              
                              $
                              463,000DenominatorWeighted
      average common shares
                              
                              
                              32,304,286
                              
                              
                              
                              30,642,823Effect
      of dilutive securitiesUnvested
      restrictive shares
                              
                              
                              -
                              
                              
                              
                              244,438Common
      stock
                              
                              
                              88,185
                              
                              
                              
                              316,598Warrants
                              
                              
                              37,420
                              
                              
                              
                              1,289,485Total
      dilutive effect of securities
                              
                              
                              125,605
                              
                              
                              
                              1,850,520Denominator
      of net income per common shares- diluted
                              
                              
                              32,429,891
                              
                              
                              
                              32,493,343Net
      income per common share:Basic
                              
                              $
                              0.01
                              
                              
                              $
                              0.02Diluted
                              
                              $
                              0.01
                              
                              
                              $
                              0.01


17





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 March 31, 2009 and December 31, 2008.




Financial Assets at Fair
      Value as of
      March 31, 2009Level
      1
                          
                          Level
      2
                          
                          Level
      3
                          
                          
                          Total(in
      thousands)Cash
      and cash equivalents
                          
                          $
                          10,608
                          
                          
                          $
                          —
                          
                          
                          $
                          —
                          
                          
                          $
                          10,608Short-term
      investments
                          
                          
                          13
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          13Long-term
      investments
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —Total
      cash and cash equivalents and investments
                          
                          $
                          10,621
                          
                          
                          $
                          —
                          
                          
                          $
                          —
                          
                          
                          $
                          10,621





Financial Assets at Fair
      Value as 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


18





There
were no unrealized gains or losses included in earnings resulting from long-term
investments associated with Level 3 financial assets during the three month
period ended March 31, 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.





Our
ticketing services are carried out by our wholly-owned subsidiary Tix4Tonight,
which offers for sale discount tickets, premium tickets, and membership group
sales through Tix4Members which was launched in February 2009 in association
with Costco. Discounted tickets are sold byTix4Tonight, membership group
discount ticket sales are sold by Tix4Members and premium tickets are offered
through Tix4AnyEvent. When selling last minute discounted tickets, Tix4Tonight
sells them under short-term, exclusive and non-exclusive agreements with
approximately 75 Las Vegas shows and attractions, out of a total of
approximately 85 Las Vegas shows and attractions running at any one time, and
typically offers tickets for more than 70 shows on any given day at a discount
plus a service fee. Tix4Tonight does not know the exact number of tickets for
each show it will be able to offer tickets for until the same day of the show.
There are usually many more tickets available each day than are sold, although
it is not uncommon for Tix4Tonight to sell-out its supply of tickets for
individual shows. The show producers 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 cost. Tix4Members has launched its first co-branded membership group discount
ticketing website with Costco Wholesale Corporation whose co-branded website
became operational in February 2009.





The
Company provides exhibit and event merchandising through its wholly-owned
subsidiary Exhibit Merchandising, LLC (EM), which was acquired August 8, 2007.
EM provides retail specialty stores with branded merchandise for touring museum
exhibitions and touring theatrical productions. EM owns and operates complete
turn-key retail stores with commercially-available and extensive custom-branded
products for sale in addition to professional management that complements the
exhibition or theatrical production it represents. It 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 “Tutankhamun and The Golden
Age of the Pharaohs.”





On
January 2, 2008, the Company began operating two live theatrical and concert
production companies; Magic Arts & Entertainment, LLC (Magic) and NewSpace
Entertainment, Inc. (NewSpace). The Company has combined the operations of
the two entertainment companies into its newly-formed wholly-owned subsidiary
Tix Productions Inc. We believe that by combining the operations of the two
companies under a single entity, we are able to leverage resources, gain
operating efficiencies and more fully utilize the combined network of
producers and promoters. NewSpace and Magic continue to operate under their
current names as a reflection of their marketplace recognition.





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)


Three
months ended March 31,





Ticketing
                          
                          
                          Exhibit
                          
                          
                          Live
                          
                          
                          Corporate
                          
                          
                          ConsolidatedServices
                          
                          
                          Merchandising
                          
                          
                          Entertainment
                          
                          
                          Expenses
                          
                          
                          and Combined2009Revenue
                          
                          $
                          4,155,000
                          
                          
                          $
                          2,789,000
                          
                          
                          $
                          13,226,000
                          
                          
                          $
                          -
                          
                          
                          $
                          20,170,000Direct
      operating expenses
                          
                          
                          1,534,000
                          
                          
                          
                          1,705,000
                          
                          
                          
                          11,687,000
                          
                          
                          
                          -
                          
                          
                          
                          14,926,000Selling,
      general and administrative expenses
                          
                          
                          871,000
                          
                          
                          
                          625,000
                          
                          
                          
                          1,194,000
                          
                          
                          
                          1,672,000
                          
                          
                          
                          4,362,000Depreciation
      and amortization
                          
                          
                          58,000
                          
                          
                          
                          296,000
                          
                          
                          
                          197,000
                          
                          
                          
                          70,000
                          
                          
                          
                          621,000Operating
      income (loss)
                          
                          $
                          1,692,000
                          
                          
                          $
                          163,000
                          
                          
                          $
                          148,000
                          
                          
                          $
                          (1,742,000
                          )
                          
                          $
                          261,000Total
      assets
                          
                          $
                          3,344,000
                          
                          
                          $
                          10,509,000
                          
                          
                          $
                          9,435,000
                          
                          
                          $
                          5,487,000
                          
                          
                          $
                          28,775,0002008Revenue
                          
                          $
                          2,995,000
                          
                          
                          $
                          3,102,000
                          
                          
                          $
                          17,065,000
                          
                          
                          $
                          -
                          
                          
                          $
                          23,162,000Direct
      operating expenses
                          
                          
                          1,529,000
                          
                          
                          
                          1,877,000
                          
                          
                          
                          13,325,000
                          
                          
                          
                          -
                          
                          
                          
                          16,731,000Selling,
      general and administrative expenses
                          
                          
                          599,000
                          
                          
                          
                          838,000
                          
                          
                          
                          2,026,000
                          
                          
                          
                          1,373,000
                          
                          
                          
                          4,836,000Depreciation
      and amortization
                          
                          
                          50,000
                          
                          
                          
                          786,000
                          
                          
                          
                          187,000
                          
                          
                          
                          100,000
                          
                          
                          
                          1,123,000Operating
      income (loss)
                          
                          $
                          817,000
                          
                          
                          $
                          (399,000
                          )
                          
                          $
                          1,527,000
                          
                          
                          $
                          (1,473,000
                          )
                          
                          $
                          472,000Total
      assets
                          
                          $
                          2,527,000
                          
                          
                          $
                          47,176,000
                          
                          
                          $
                          13,691,000
                          
                          
                          $
                          2,638,000
                          
                          
                          $
                          66,032,000





19




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 first 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
first quarter of 2009 were as follows:





Tix4Tonight





·
            For
      the three months ended March 31, 2009, Tix4Tonight sold 319,000 tickets,
      which represented an increase of 97,000 tickets over the prior year’s
      comparable three month period and reflected a 44% increase over the prior
      year’s ticket sales.





·
            For
      the three months ended March 31, 2009, Tix4Tonight sold tickets with a
      value of $17.6 million, which represented an increase of $7.0 million over
      prior year’s comparable three month period, and reflected a 66% increase
      over the prior year’s ticket sales.




·
            For
      the three months ended March 31, 2009, Tix4Tonight’s Tix4Dinner business
      sold dinner reservations with a value of $298,000, which represented an
      increase of $111,000 over prior year’s comparable three month period, and
      reflected a 65% increase over prior year’s dinner reservations
      revenue.





·
            In
      February 2009, Tix4Tonight launched its website Tix4Members in conjunction
      with an agreement with Costco.




Exhibit
Merchandising





·
            Returned
      to profitability in the first quarter of
2009.





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





Live
Entertainment





·
            TPI’s
      subscription series shows are presently selling slower than anticipated;
      however off-setting 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.




20




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.





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.





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 our websites are included as a component of
net sales. The Company does not have any accounts receivable associated with
this business all transactions are done by cash or credit card.




21




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.


22





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:





The
Company accounts for intangibles 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 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 March 31, 2009.  At December 31, 2008, we
recorded an impairment charge related to goodwill and intangible assets of $33.1
million related to our acquisition of EM.  As of March 31, 2009, we
have $12.2 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.





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 March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
instruments and Hedging Activities. The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable better understanding of the effects
on financial position, financial performance, and cash flows. The effective date
is for fiscal years and interim periods beginning after November 15, 2008. The
Company has not yet determined the effect, if any, the adoption of SFAS No. 161
will have on the Company’s consolidated financial statements.





In April
2008, the FASB issued Staff Position No. FAS 142-3 which amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, “Goodwill and Other Intangible Assets.” The intent of this FSP is to
improve the consistency between the useful life of a recognized intangible asset
under Statement 142 and the period of expected cash flows used to measure the
fair value of the asset under FASB Statement No. 141 (revised 2007), Business Combinations, and
other U.S. generally accepted accounting principles (GAAP). The Company is in
the process of evaluating the effect of FAS No. 142-3 on the Company’s
consolidated financial statements.




In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles. This Statement identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States. The FASB believes that the GAAP hierarchy should be directed
to entities because it is the entity (not its auditor) that is responsible for
selecting accounting principles for financial statements that are presented in
conformity with GAAP. The FASB does not believe this Statement will result in a
change in current practice. SFAS 162 is effective November 15,
2008.




23




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 will provide the additional
disclosures as required by FSP 107-1 in its quarterly report on Form 10-Q for
the period ended June 30, 2009.





Consolidated
Results of Operations –


Three
Months Ended March 31, 2009 compared to the Three Months Ended March 31,
2008:





Consolidated
Results of Operations - Three Months ended March 31,





% change2009v2009
                                    
                                    
                                    2008
                                    
                                    
                                    2008Revenue
                                    
                                    $
                                    20,170,000
                                    
                                    
                                    $
                                    23,163,000
                                    
                                    
                                    
                                    -13
                                    %Operating
      Expenses:Direct
      operating expenses
                                    
                                    
                                    14,926,000
                                    
                                    
                                    
                                    16,731,000
                                    
                                    
                                    
                                    -11
                                    %Selling,
      general and administrative expenses
                                    
                                    
                                    2,690,000
                                    
                                    
                                    
                                    3,465,000
                                    
                                    
                                    
                                    -22
                                    %Depreciation
      and Amortization
                                    
                                    
                                    621,000
                                    
                                    
                                    
                                    1,122,000
                                    
                                    
                                    
                                    -45
                                    %Corporate
      expenses
                                    
                                    
                                    1,672,000
                                    
                                    
                                    
                                    1,373,000
                                    
                                    
                                    
                                    22
                                    %Operating
      Income
                                    
                                    
                                    261,000
                                    
                                    
                                    
                                    472,000
                                    
                                    
                                    
                                    -45
                                    %Operating
      Margin
                                    
                                    
                                    1
                                    %
                                    
                                    
                                    2
                                    %Interest
      expense
                                    
                                    
                                    (4,000
                                    )
                                    
                                    
                                    (6,000
                                    )Interest
      income
                                    
                                    
                                    13,000
                                    
                                    
                                    
                                    34,000Other
      income (expense) - net
                                    
                                    
                                    25,000
                                    
                                    
                                    
                                    43,000Income
      before income taxes
                                    
                                    
                                    295,000
                                    
                                    
                                    
                                    543,000Income
      tax expense
                                    
                                    
                                    -
                                    
                                    
                                    
                                    82,000Net
      Income
                                    
                                    $
                                    295,000
                                    
                                    
                                    $
                                    461,000




24




Three
Months Ended March 31, 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 March 31, 2009 and 2008 were
$20.2 million and $23.2 million, respectively. Our revenues decreased $3.0
million, or 13%, during the three months ended March 31, 2009 as compared to the
same period of the prior year. The decline in revenues was primarily the result
of a $313,000 decline in Merchandising revenues and a $3.9 million decline in
Live Entertainment revenues, which was offset in part by a $1.2 million increase
in revenues from our Ticketing Services segment. It is management’s belief that
revenues from its Live Entertainment segment will be earned more evenly between
the first three quarters of 2009 as compared to 2008, due to the timing of the
tours of the acts that we are producing and presenting.





More
detailed explanations of the three months ended March 31, 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 March 31, 2009 and 2008 were
$14.9 million and $16.7 million, respectively. Our operating expenses decreased
$1.8 million or 11% during the three months ended March 31, 2009 as compared to
the same period of the prior year, which is consistent with the 13% decrease in
revenues.





More
detailed explanations of the three months ended March 31, 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 March 31, 2009 and 2008 were $2.7 million and $3.5 million, respectively.
Our selling, general and administrative expenses decreased $775,000 or 22%,
during the three months ended March 31, 2009 as compared to the same period of
the prior year due to an $832,000 and $213,000 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 $272,000 increase in selling, general and administrative expenses at our
ticketing services segment.





More
detailed explanations of the three months ended March 31, 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 March 31, 2009 and 2008 were $1.7
million and $1.4 million, respectively. Corporate expenses increased $299,000
for the three months ended March 31, 2009, as compared to same period of the
prior year. This increase in corporate expenses is the result of an increase in
overall payroll expenses and accounting fees related to Sarbanes-Oxley
consulting and compliance costs.





Depreciation
and Amortization





Our
depreciation and amortization was $621,000 and $1.1 million for the three months
ended March 31, 2009 and 2008 respectively. The decrease of $500,000 in
depreciation and amortization expense in 2009 primarily reflects a $500,000
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.




25




Other
Income and (Expense)





Other
Income and Expense was immaterial for all periods presented.





Interest
Income





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





Ticketing
Services:





Our
Ticketing Services segment operating results were as follows:





Segment
Reporting (T4T, AE)





% ChangeThree Months Ended March 31,
                        
                        
                        2009 vs.2009
                        
                        
                        2008
                        
                        
                        2008Revenue
                        
                        $
                        4,155,000
                        
                        
                        $
                        2,995,000
                        
                        
                        
                        39
                        %Operating
      Expenses:Direct
      operating expenses
                        
                        
                        1,534,000
                        
                        
                        
                        1,529,000
                        
                        
                        
                        0
                        %Selling,
      general and administrative expenses
                        
                        
                        871,000
                        
                        
                        
                        599,000
                        
                        
                        
                        45
                        %Depreciation
      and amortization
                        
                        
                        58,000
                        
                        
                        
                        50,000
                        
                        
                        
                        16
                        %Operating
      income (loss)
                        
                        $
                        1,692,000
                        
                        
                        $
                        817,000
                        
                        
                        
                        107
                        %Operating
      margin
                        
                        
                        41
                        %
                        
                        
                        27
                        %
                        
                        
                        49
                        %





Three
months ended March 31, 2009 and 2008:





Revenues





Ticketing
Services has three operating units:





·
            Tix4Tonight,
      our discount ticket seller





·
            AnyEvent,
      our premium ticket operation





·
            Tix4Members,
      our membership group ticket sales
program





The
Ticketing Service 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 $4.2 million for the three months ended March 31, 2009 as compared
to $3.0 million for the three months ended March 31, 2008. Our revenues
increased $1.2 million, or 39%, during the three months ended March 31, 2009 as
compared to the same period of the prior year. The increase in Ticketing Service
revenues is the result of a $1.4 million increase in Tix4Tonight revenues and a
$104,000 increase in ancillary revenues i.e. the sale of dinner reservations and
tee times, offset by a $370,000 decline in premium ticket revenues. Revenues
earned through Tix4Members were not meaningful.





Tix4Tonight:





Tix4Tonight
revenues for the three months ended March 31, 2009 and 2008 were $3.8 million
and $2.4 million, which resulted in an increase of $1.4 million or 60% 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 $55.10 per ticket, which represented an increase of $7.55 per ticket or 16%
as compared to $47.55 per ticket in 2008. Tix4Tonight discount tickets sold
increased by 97,000 tickets or 44% to 319,000 discounted show tickets for the
three months ended March 31, 2009. Commissions and fees were earned on the gross
sales value of show tickets sold to customers of $17.6 million for the
three months ended March 31, 2009, as compared to $10.6 million for
the three months ended March 31, 2008 or a 66% increase. Lastly, during the
three months ended March 31, 2009, revenues from miscellaneous sources of income
including discount golf, and dinner reservations increased by $104,000, to
$298,000 or 54%.




26




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
March 31, 2009 and 2008 were $59,000 and $429,000 respectively. The $370,000
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, 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 March 31, 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 were comparable at $1.5 million for the three
months ended March 31, 2009 and 2008.  The direct operating expenses
for the three months ended March 31, 2009 and 2008, as a percentage of revenues
were 37% and 51%, 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 three months ended March
31, 2009 and 2008 were $871,000 and $599,000, respectively. Our selling,
marketing and general and administrative expenses increased $272,000 or 45%,
during the three months ended March 31, 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 21% percent of revenues during the three months
ended March 31, 2009 as compared to 20% during the three months ended March 31,
2008.





Depreciation
and Amortization





Depreciation
and amortization expense incurred during the three months ended March 31, 2009
and 2008 was $58,000 and $50,000, respectively. We expect to incur a similar
level of depreciation and amortization for the foreseeable future.




27




Exhibit
Merchandising:





Our
Exhibit Merchandising segment operating results were as follows:





Segment
Reporting - Exhibit Merchandising





% ChangeThree Months Ended March 31,
                        
                        
                        2009 vs.2009
                        
                        
                        2008
                        
                        
                        2008Revenue
                        
                        $
                        2,789,000
                        
                        
                        $
                        3,102,000
                        
                        
                        
                        -10
                        %Operating
      Expenses:Direct
      operating expenses
                        
                        
                        1,705,000
                        
                        
                        
                        1,877,000
                        
                        
                        
                        -9
                        %Selling,
      general and administrative expenses
                        
                        
                        625,000
                        
                        
                        
                        838,000
                        
                        
                        
                        -25
                        %Depreciation
      and amortization
                        
                        
                        296,000
                        
                        
                        
                        786,000
                        
                        
                        
                        -62
                        %Operating
      income (loss)
                        
                        $
                        163,000
                        
                        
                        $
                        (399,000
                        )
                        
                        
                        -141
                        %Operating
      margin
                        
                        
                        6
                        %
                        
                        
                        -13
                        %
                        
                        
                        -145
                        %




Three
Months Ended March 31, 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 March 31, 2009 and 2008, EM generated $2.8 million and
$3.1 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” in October 2008 in Dallas, Texas and will
continue through May 2009. ”Tutankhamun and the Golden King and the Great
Pharaohs” opened in Atlanta, Georgia, in November 2008 and will close in June
2009. These shows are currently booked in other museums through July 2011 and
December 2012. The 10% decline in revenues was due to a corresponding decline in
visitor attendance at the exhibits in 2009 as compared to 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 March 31, 2009 and
2008 were $1.7 million and $1.9 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 three months ended March 31, 2009 and
2008, EM’s selling, marketing and administrative expenses were $625,000 or 22%
of revenues and $838,000 or 27% 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 three months ended March 31, 2009
and 2008 was $296,000 and $786,000, 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.




28




Live
Entertainment:





Our
Live Entertainment segment operating results were as follows:





Segment
Reporting- Tix Productions





% ChangeThree Months Ended March 31,
                        
                        
                        2009 vs.2009
                        
                        
                        2008
                        
                        
                        2008Revenue
                        
                        $
                        13,226,000
                        
                        
                        $
                        17,065,000
                        
                        
                        
                        -22
                        %Operating
      Expenses:Direct
      operating expenses
                        
                        
                        11,687,000
                        
                        
                        
                        13,325,000
                        
                        
                        
                        -12
                        %Selling,
      general and administrative expenses
                        
                        
                        1,194,000
                        
                        
                        
                        2,026,000
                        
                        
                        
                        -41
                        %Depreciation
      and amortization
                        
                        
                        197,000
                        
                        
                        
                        187,000
                        
                        
                        
                        5
                        %Operating
      income (loss)
                        
                        $
                        148,000
                        
                        
                        $
                        1,527,000
                        
                        
                        
                        -90
                        %Operating
      margin
                        
                        
                        1
                        %
                        
                        
                        9
                        %
                        
                        
                        -87
                        %





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. We believe that by combining
the operations of the two companies under a single entity, we have better
leveraged our resources, and gained operating efficiencies.




29




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 eight US cities, our Salt Lake
City based group and corporate sales team and standard marketing tools including
print, radio, television, outdoor and 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 March 31, 2009:





Revenues





During
the three months ended March 31, 2009 and 2008, revenues from our Live
Entertainment operations were $13.2 million and $17.1 million, respectively. The
$3.9 million decline in revenues is due to several factors
including:





·
            management’s decision to present
      or produce fewer shows in 2009 than in 2008 due to the poor economic
      climate and theatergoers’ desire to see shows that have a franchise. In
      the first quarter of 2009, we presented or produced 302 show dates as
      compared to 437 show dates in the first quarter of 2008. In past years,
      management would present shows that they believed were marginal in the
      belief that single ticket sales (non-subscription consumers) would allow
      the show to become profitable, while in 2009, we believe the economic
      environment does not favor this strategy. Thus we are presenting fewer
      shows overall.





·
            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. In addition, 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 actions 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: 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 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 101 Dalmatians, 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 Chicago, Detroit and Boston,
and even more opportunities in smaller markets where individual promoters have
gone out of business.





Direct
Operating Expenses





During
the three months ended March 31, 2009 and 2008, direct operating expenses were
$11.7 million and $13.3 million and represented 88% and 78% 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 would be
characterized as 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.




30




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 March 31, 2009 and
2008, Live Entertainment’s administrative expenses were $1.2 million or 9% of
revenues, and $2.0 million or 12% of revenues, respectively.




Depreciation
and Amortization





Depreciation
and amortization expense incurred during the three months ended March 31, 2009
and 2008 was $197,000 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.





Liquidity
and Capital Resources:




Summary of consolidated cash
flows:





For The Three Months Ended March 31,2009
                        
                        
                        2008Net
      cash provided by operating activities
                        
                        $
                        1,859,000
                        
                        
                        $
                        2,583,000Net
      cash used in investing activities
                        
                        $
                        (45,000
                        )
                        
                        $
                        (3,720,000
                        )Net
      cash used in financing activities
                        
                        $
                        (390,000
                        )
                        
                        $
                        (9,000
                        )Effect
      of exchange rate on cash
                        
                        $
                        5,000
                        
                        
                        $
                        -Change
      in cash:Net
      increase (decrease)
                        
                        
                        1,429,000
                        
                        
                        
                        (1,146,000
                        )Balance
      at beginning of period
                        
                        
                        9,192,000
                        
                        
                        
                        7,769,000Balance
      at end of period
                        
                        $
                        10,621,000
                        
                        
                        $
                        6,623,000





At March
31, 2009, we had cash of $10.6 million and total assets of
$29.0 million compared to $9.2 million and $28.8 million,
respectively, at December 31, 2008. Our working capital totaled $8.9
million at March 31, 2009, compared to $8.0 million at December 31, 2008. We had
no debt for the three months ended March 31, 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, as well as borrowings from
related and unrelated parties. We will need to incur debt or issue equity to
make other strategic acquisitions. 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
first and fourth quarters. Exhibit Merchandising and AnyEvent are not subject to
seasonal fluctuation, but other factors. Exhibit Merchandising is less subject
to seasonal fluctuations in revenues than our other businesses. EM is however,
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. We expect cash flows from operations and
other financing alternatives, to satisfy working capital, and capital
expenditures for at least the succeeding year.




31




Operating
Activities:




Cash
flows from operations were $1.9 million for the three months ended March 31,
2009, compared to $2.6 million for the three months ended March 31, 2008. The
$724,000 decrease in cash flows provided from operations was the result of a
$166,000 decline 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 $621,000 in depreciation and amortization expense,
$382,000 of fair value of common stock options issued for services, a $379,000
decrease in accounts receivable, $318,000 decrease in inventory, and a $332,000
decrease in prepaid expenses and other current assets, which were offset by a
$616,000 decrease in accounts payable. Significant items adjusting net income in
2008 included $1.1 million in depreciation and amortization expense, $602,000 of
common stock and stock options issued for services, $3.5 million increase in
accounts payable, and $484 increase in deferred revenue, which were offset by
increases of $3.7 million increase in accounts receivable. 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 three months ended March 31, 2009 and 2008, we used $45,000 and $3.7 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 $1.7 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 three months ended March 31, 2009 and 2008, we purchased fixed assets with a
value of $45,000 and $131,000 respectively.





Cash
Flows from Financing Activities:





During
the three months ended March 31, 2009 and 2008, we used $390,000 and $10,000,
respectively, related to financing activities. During 2009, cash used by
financing activities resulted from the repurchase of 225,800 shares of our
common stock with a fair value of $378,000 and $12,000 related to capital
leases. During 2008, cash used by financing activities was the result of 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 its operating performance with 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.





32





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 endedMarch 31, 2009
                              
                              
                              
                              
                              
                              March 31, 2008Net
      income (loss)
                              
                              
                              
                              
                              $
                              295,000
                              
                              
                              
                              
                              
                              $
                              461,000Interest
      income
                              
                              $
                              13,000
                              
                              
                              
                              
                              
                              
                              $
                              34,000Interest
      expense
                              
                              
                              (4,000
                              )
                              
                              
                              
                              
                              
                              
                              (6,000
                              )Net
      interest income (expense)
                              
                              $
                              9,000
                              
                              
                              
                              9,000
                              
                              
                              $
                              28,000
                              
                              
                              
                              28,000Depreciation
                              
                              
                              
                              
                              
                              
                              131,000
                              
                              
                              
                              
                              
                              
                              
                              116,000Amortization
                              
                              
                              
                              
                              
                              
                              490,000
                              
                              
                              
                              
                              
                              
                              
                              1,006,000Income
      taxes
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              82,000EBITDA
                              
                              
                              
                              
                              
                              $
                              907,000
                              
                              
                              
                              
                              
                              
                              $
                              1,637,000




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.




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 March 31, 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
                      
                      
                      2013Employment
      agreements
                      
                      $
                      4,212,000
                      
                      
                      $
                      1,572,000
                      
                      
                      $
                      1,874,000
                      
                      
                      $
                      679,000
                      
                      
                      $
                      87,000
                      
                      
                      $
                      -Capital
      lease obligations
                      
                      
                      135,000
                      
                      
                      
                      47,000
                      
                      
                      
                      67,000
                      
                      
                      
                      9,000
                      
                      
                      
                      9,000
                      
                      
                      
                      3,000Operating
      lease obligations
                      
                      
                      5,541,000
                      
                      
                      
                      1,800,000
                      
                      
                      
                      1,788,000
                      
                      
                      
                      1,120,000
                      
                      
                      
                      833,000
                      
                      
                      
                      -Total
      contractual cash obligations
                      
                      $
                      9,888,000
                      
                      
                      $
                      3,419,000
                      
                      
                      $
                      3,729,000
                      
                      
                      $
                      1,808,000
                      
                      
                      $
                      929,000
                      
                      
                      $
                      3,000




33




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 $33,000 and
$11,000 for the three months ended March 31, 2009 and 2008,
respectively.




ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




The
Company is subject to certain market risks, including changes in interest rates
and currency exchange rates.





The
Company does not undertake any specific actions to limit those
exposures.




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 March 31, 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.





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




(c) Common stock repurchases
made in the quarter





In the
first quarter of 2009, we paid $378,000 for the purchase of 225,800 of our
common shares in the open market for the recipients of our 2009 common stock
grants.




34




Maximum 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
                  
                  
                  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
                  
                  
                  
                  41,830Total
                  
                  
                  225,800
                  
                  
                  
                  1.68
                  
                  
                  
                  958,170
                  
                  
                  
                  41,830





There
were no other issues.





ITEM
3. DEFAULTS UPON SENIOR SECURITIES





None.




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





None.





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:
      May 6, 2009
                  By:
                  /s/Mitch FrancisMitch
      FrancisChief
      Executive OfficerDate:
      May 6, 2009
                  By:
                  /s/ Matthew NatalizioMatthew
      NatalizioChief
      Financial Officer
                    (Duly
      Authorized Officer and
                    Principal
      Financial
Officer)




35




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.


36