**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-Q**





x QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For
      the
      Quarterly Period Ended June 30, 2008





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)




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




Not
      applicable


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





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




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of
      the
      Exchange Act)




Large
                accelerated filer
            o
            Accelerated
                filer
            oNon-accelerated
                filer
            o
            Smaller
                reporting company
            x




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





As
      of
      August 14, 2008, the Company had 32,964,222 shares of common stock, $0.08 par
      value, issued and outstanding.




Documents
      incorporated by reference: None.
















Special
      Note Regarding Forward-Looking Statements:




This
      Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008
      contains "forward-looking" statements within the meaning of Section 27A of
      the
      Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
      Act of 1934, as amended, including statements that include the words “believes”,
“expects”, “anticipates”, “intends”, “plans”, “may”, “will” or similar
      expressions that are intended to identify forward-looking statements. In
      addition, any statements that refer to expectations, projections or other
      characterizations of future events or circumstances, including any underlying
      assumptions, are forward-looking statements. These forward-looking statements
      may include, among others, statements concerning the Company's expectations
      regarding its business, growth prospects, revenue trends, operating costs,
      working capital requirements, facility expansion plans, competition, results
      of
      operations and other statements of expectations, beliefs, future plans and
      strategies, anticipated events or trends, and similar expressions concerning
      matters that are not historical facts. The forward-looking statements in this
      Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008
      involve known and unknown risks, uncertainties and other factors that could
      cause the actual results, performance or achievements of the Company to differ
      materially from those expressed in or implied by the forward-looking statements
      contained herein.





Each
      forward-looking statement should be read in context with, and with an
      understanding of, the various disclosures concerning the Company and its
      business made throughout this Quarterly Report on Form 10-Q for the quarterly
      period ended June 30, 2008, as well as other public reports filed with the
      United States Securities and Exchange Commission. Investors should not place
      undue reliance on any forward-looking statement as a prediction of actual
      results or developments. Except as required by applicable law or regulation,
      the
      Company undertakes no obligation to update or revise any forward-looking
      statement contained in this Quarterly Report on Form 10-Q for the quarterly
      period ended June 30, 2008, whether as a result of new information, future
      events or otherwise.










Tix
      Corporation and Subsidiaries





Index




Page No.PART
              I. FINANCIAL INFORMATIONItem
                1. Financial StatementsCondensed
                Consolidated Balance Sheets –June 30, 2008 (Unaudited) and December 31,
                2007
            
            
            1Condensed
                Consolidated Statements of Operations (Unaudited) - Three Months
                Ended
                June 30, 2008 and 2007
            
            
            2Condensed
                Consolidated Statements of Operations (Unaudited) - Six Months Ended
                June
                30, 2008 and 2007
            
            
            3Condensed
                Consolidated Statement of Stockholders’ Equity (Unaudited) – Six
                Months Ended June 30, 2008
            
            
            4Condensed
                Consolidated Statements of Cash Flows (Unaudited) – Six Months Ended
                June 30, 2008 and 2007
            
            
            5Notes
                to Condensed Consolidated Financial Statements (Unaudited) – Six
                Months Ended June 30, 2008 and 2007
            
            
            7Item
                2. Management’s Discussion and Analysis or Plan of
                Operations
            
            
            25Item
                3. Quantitative and Qualitative Disclosures About Market Risk
            
            
            44Item
                4. Controls and Procedures
            
            
            45PART
                II. OTHER INFORMATIONItem
                1. Legal Proceedings
            
            
            45Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            
            45Item
                3. Defaults upon Senior Securities
            
            
            45Item
                4. Submission of Matters to a Vote of Security Holders
            
            
            46Item
                5. Other Information
            
            
            46Item
                6. Exhibits
            
            
            46SIGNATURES
            
            
            46









**TIX
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**




**June 30,**
              **2008**
            
            **December 31,**
              **2007**(Unaudited)**Assets****Current
                assets:**Cash
            
            $
            6,321,000
            
            $
            7,417,000Other
                receivable
            
            
            —
            
            
            345,000Accounts
                receivable, net
            
            
            1,226,000
            
            
            129,000Inventory
            
            
            4,190,000
            
            
            3,938,000Prepaid
                expenses and other current assets
            
            
            278,000
            
            
            178,000**Total
                current assets**
            
            
            12,015,000
            
            
            12,007,000**Property
                and equipment:**Office
                equipment and furniture
            
            
            1,742,000
            
            
            1,413,000Equipment
                under capital lease
            
            
            408,000
            
            
            386,000Leasehold
                improvements
            
            
            320,000
            
            
            313,0002,470,000
            
            
            2,112,000Less
                accumulated depreciation and amortization
            
            
            (901,000
            )
            
            (664,000
            )**Total
                property and equipment, net**
            
            
            1,569,000
            
            
            1,448,000**Other
                assets:**Intangible
                assets:Goodwill
            
            
            31,987,000
            
            
            27,115,000Intangible
                assets, net
            
            
            15,658,000
            
            
            14,524,000**Total
                intangible assets**
            
            
            47,645,000
            
            
            41,639,000Capitalized
                theatrical costs
            
            
            459,000
            
            
            —Deposits
                and other assets
            
            
            75,000
            
            
            74,000**Total
                other assets**
            
            
            48,179,000
            
            
            41,713,000**Total
                assets**
            
            $
            61,763,000
            
            $
            55,168,000**Liabilities
                and Stockholders' Equity****Current
                liabilities:**Accounts
                payable
            
            $
            2,543,000
            
            $
            1,945,000Accounts
                payable – related party
            
            
            330,000
            
            
            —Accrued
                expenses
            
            
            1,431,000
            
            
            1,082,000Current
                portion of capital lease obligations
            
            
            50,000
            
            
            45,000Deferred
                revenue
            
            
            64,000
            
            
            54,000


**Total
                current liabilities**
            
            
            4,418,000
            
            
            3,126,000**Non-current
                liabilities:**Capital
                lease obligations, less current portion
            
            
            103,000
            
            
            108,000Deferred
                rent
            
            
            114,000
            
            
            188,000**Total
                non-current liabilities**
            
            
            217,000
            
            
            296,000**Stockholders’
                equity:**Preferred
                  stock, $0.01 par value; 500,000 shares authorized; none
                  issued
            
            
            —
            
            
            —Common
                stock, $0.08 par value; 100,000,000 shares authorized; 32,964,222
                shares
                and 30,402,325 shares issued at June 30, 2008 and December 31, 2007,
                respectively
            
            
            2,637,000
            
            
            2,432,000Additional
                paid-in capital
            
            
            86,959,000
            
            
            81,034,000Accumulated
                deficit
            
            
            (32,424,000
            )
            
            (31,720,000
            )Accumulated
                other comprehensive loss
            
            
            (44,000
            )
            
            —**Total
                stockholders’ equity**
            
            
            57,128,000
            
            
            51,746,000**Total
                liabilities and stockholders' equity**
            
            $
            61,763,000
            
            $
            55,168,000





See
      notes
      to the condensed consolidated financial statements




1





**TIX
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**




**Three Months Ended June 30,****2008**
              
              **2007****(Unaudited)**
              
              **(Unaudited)**Revenues
              
              $
              16,864,000
              
              $
              4,712,000Operating
                  expenses:Direct
                  costs of revenues
              
              
              12,323,000
              
              
              2,910,000Selling
                  and marketing expenses.
              
              
              799,000
              
              
              306,000General
                  and administrative expenses, including non-cash equity-based costs
                  of
                  $593,000 and $5,118,000 in 2008 and 2007, respectively
                  (including $388,000 and $57,000 for officers and directors in 2008
                  and
                  2007, respectively).
              
              
              4,059,000
              
              
              7,541,000Depreciation
                  and amortization
              
              
              1,102,000
              
              
              120,000Total
                  costs and expenses
              
              
              18,283,000
              
              
              10,877,000Operating
                  Loss
              
              
              (1,419,000
              )
              
              (6,165,000
              )Other
                  income (expense):Other
                  income
              
              
              164,000
              
              
              4,000Interest
                  income
              
              
              11,000
              
              
              5,000Interest
                  expense
              
              
              (4,000
              )
              
              (40,000
              )Other
                  income (expense), net
              
              
              171,000
              
              
              (31,000
              )Loss
                  from operations
              
              
              (1,248,000
              )
              
              (6,196,000
              )Current
                  income tax (benefit)
              
              
              (82,000
              )
              
              —Net
                  loss
              
              
              (1,166,000
              )
              
              (6,196,000
              )Other
                  comprehensive lossForeign
                  currency translation adjustments
              
              
              (44,000
              )
              
              —Comprehensive
                loss
              
              $
              (1,210,000
              )
              $
              (6,196,000
              )Net
                  loss per common share – basic and diluted
              
              $
              (0.04
              )
              $
              (0.32
              )Weighted
                  average common shares outstanding - basic and diluted
              
              
              31,805,228
              
              
              19,374,693


See
      notes
      to the condensed consolidated financial statements




2


**TIX
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**




**SIX MONTHS ENDED JUNE 30,****2008**
            
            **2007****(Unaudited)**
            
            **(Unaudited)**Revenues
            
            $
            40,027,000
            
            $
            6,459,000Operating
                expenses:Direct
                costs of revenues
            
            
            29,054,000
            
            
            3,624,000Selling
                and marketing expenses.
            
            
            2,175,000
            
            
            561,000General
                and administrative expenses, including non-cash equity-based costs
                of
                $1,195,000 and $5,613,000 in 2008 and 2007, respectively
                (including $776,000 and $100,000 for officers and directors in 2008
                and
                2007, respectively).
            
            
            7,521,000
            
            
            8,776,000Depreciation
                and amortization
            
            
            2,224,000
            
            
            184,000Total
                costs and expenses
            
            
            40,974,000
            
            
            13,145,000Operating
                loss
            
            
            (947,000
            )
            
            (6,686,000
            )Other
                income (expense):Other
                income
            
            
            208,000
            
            
            4,000Interest
                income
            
            
            45,000
            
            
            12,000Interest
                expense
            
            
            (10,000
            )
            
            (46,000
            )Other
                income (expense), net
            
            
            243,000
            
            
            (30,000
            )Loss
                from operations
            
            
            (704,000
            )
            
            (6,716,000
            )Current
                income tax expense
            
            
            —
            
            
            —Net
                loss
            
            
            (704,000
            )
            
            (6,716,000
            )Other
                comprehensive loss:Foreign
                currency translation adjustments
            
            
            (44,000
            )
            
            —Comprehensive
                loss
            
            $
            (748,000
            )
            $
            (6,716,000
            )Net
                loss per common share – basic and diluted
            
            $
            (0.02
            )
            $
            (0.35
            )Weighted
                average common shares outstanding –basic and diluted
            
            
            31,224,025
            
            
            19,042,164




See
      notes
      to the condensed consolidated financial statements


3




**TIX
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY**


**SIX
      MONTHS ENDED JUNE 30, 2008 (Unaudited)**




**Accumulated****Additional**
            
            
            
            **other**
            
            **Total****Common Stock**
            
            **Paid In**
            
            **Accumulated**
            
            **comprehensive**
            
            **Stockholders’****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **loss**
            
            **Equity**Balance,
                December 31, 2007
            
            
            30,402,325
            
            $
            2,432,000
            
            $
            81,034,000
            
            $
            (31,720,000
            )
            
            —
            
            $
            51,746,000Issuance of
                common stock to consultants
            
            
            79,886
            
            
            6,000
            
            
            389,000
            
            
            —
            
            
            
            
            
            395,000Issuance
                of common stock to officers and employees
            
            
            108,334
            
            
            9,000
            
            
            15,000
            
            
            —
            
            
            
            
            
            24,000Issuance
                of common stock upon exercise of warrants and options
            
            
            1,326,059
            
            
            106,000
            
            
            (52,000
            )
            
            —
            
            
            
            
            
            54,000Fair
                value of options issued to employees
            
            
            —
            
            
            —
            
            
            805,000
            
            
            —
            
            
            
            
            
            805,000Issuance
                of common stock for acquisition of Magic Arts &
                Entertainment
            
            
            476,190
            
            
            38,000
            
            
            2,219,000
            
            
            —
            
            
            
            
            
            2,257,000Issuance
                of common stock for acquisition of NewSpace Entertainment
            
            
            571,428
            
            
            46,000
            
            
            2,549,000
            
            
            —
            
            
            
            
            
            2,595,000Net
                Loss for the Period
            
            
            
            
            
            
            
            
            
            
            
            (704,000
            )
            
            
            
            
            (704,000
            )Foreign
                currency translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (44,000
            )
            
            (44,000
            )Balance,
                June 30, 2008
            
            
            32,964,222
            
            $
            2,637,000
            
            $
            86,959,000
            
            $
            (32,424,000
            )
            $
            (44,000
            )
            $
            57,128,000





See
      notes
      to the condensed consolidated financial statements. ****


4




**TIX
      CORPORATION**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOW**




**For the Six Months Ended June 30,****2008**
            
            **2007********(Unaudited)******
            
            **(Unaudited)**Cash
                flows from operating activities:Net
                loss
            
            $
            (704,000
            )
            $
            (6,716,000
            )Adjustments
                to reconcile net loss to cash provided by (used in)   operating
                activities:Depreciation
                and amortization
            
            
            237,000
            
            
            99,000Amortization
                of intangible assets
            
            
            1,987,000
            
            
            85,000Fair
                valued common stock issued for services
            
            
            391,000
            
            
            1,998,000Fair
                value of options issued to employees
            
            
            805,000
            
            
            175,000Fair
                value of warrants issued to consultants
            
            
            —
            
            
            3,440,000Change
                in allowance of inventory
            
            
            60,000
            
            
            —(Increase)
                decrease in:Accounts
                receivable
            
            
            (578,000
            )
            
            (387,000
            )Inventory
            
            
            104,000
            
            
            (588,000
            )Prepaid
                expenses and other current assets
            
            
            320,000
            
            
            (481,000
            )Capitalized
                theatrical costs, deposits and other assets
            
            
            (461,000
            )
            
            (58,000
            )Increase
                (decrease) in:Accounts
                payable and accrued expenses
            
            
            381,000
            
            
            (588,000
            )Deferred
                revenue
            
            
            2,000
            
            
            391,000Deferred
                rent
            
            
            (74,000
            )
            
            6,000Net
                cash provided by (used in) operating activities
            
            
            2,470,000
            
            
            (2,624,000
            )Cash
                flows from investing activities:Purchases
                of property and equipment
            
            
            (336,000
            )
            
            (195,000
            )Purchase
                of Magic Arts & Entertainment, net of cash acquired
            
            
            (1,972,000
            )
            
            —Purchase
                of NewSpace Entertainment, net of cash acquired
            
            
            (1,254,000
            )
            
            —Purchase
                of ticket inventory from AnyEvent
            
            
            —
            
            
            (96,000
            )Acquisition
                of AnyEvent
            
            
            —
            
            
            (300,000
            )Net
                cash used in investing activities
            
            
            (3,562
                ,000
            )
            
            (591,000
            )Cash
                flows from financing activities:Proceeds
                from notes payable, stockholder
            
            
            —
            
            
            2,000,000Proceeds
                from common stock subscriptions
            
            
            —
            
            
            2,745,000Payments
                on capital lease obligations
            
            
            (22,000
            )
            
            (27,000
            )Net
                proceeds from exercise of options and warrants
            
            
            54,000
            
            
            149,000Net
                cash provided by financing activities
            
            
            32,000
            
            
            4,867,000Effect
                of exchange rate changes on cash
            
            
            (36,000
            )
            
            —Change
                in Cash:Net
                (decrease) increase
            
            
            (1,096,000
            )
            
            1,652,000Balance
                at beginning of period
            
            
            7,417,000
            
            
            1,944,000Balance
                at end of period
            
            $
            6,321,000
            
            $
            3,596,000





5




Six months ended June 30,2008
            
            2007Supplemental
                disclosures of cash flow information:Cash
                paid forIncome
                taxes
            
            $
            —
            
            $
            —Interest
            
            $
            10,000
            
            $
            33,000Non-cash
                investing and financing activities:Issuance
                of 476,190 shares of common stock in conjunction with the acquisition
                of
                Magic Arts & Entertainment - Florida, Inc.
            
            $
            2,257,000
            
            $
            —Issuance
                of 571,428 shares of common stock in conjunction with the acquisition
                of
                NewSpace Entertainment, Inc.
            
            $
            2,595,000
            
            $
            —Issuance
                of 137,500 shares of common stock in conjunction with the acquisition
                of
                John's Tickets, LLC.
            
            $
            —
            
            $
            550,000





**Related
      Notes:**





In April
      2008 the Company issued common stock as payment of a $29,000 bonus to a former
      owner of Stand-by Golf that was accrued for at December 31, 2007.





The
      Company, during the six months ended June 30, 2008, acquired $22,000 of
      telephone equipment that was financed through a capital lease obligation.




See
      notes
      to the condensed consolidated financial statements ****




6




**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      1 - Summary of Significant Accounting Policies**




***Nature
      of Business***





Tix
      Corporation (the “Company”) was incorporated in Delaware in April 1993 under the
      name Cinema Ride, Inc. The Company changed its name from Cinema Ride, Inc.
      to
      Tix Corporation effective March 3, 2005. The Company is an integrated
      entertainment company focusing on ticketing services, event merchandising and
      the production and promotion of live entertainment. We operate three
      complimentary business units: Ticketing Services, (Tix4Tonight) provides our
      last minute ticketing and premium ticketing services, Exhibit Merchandising
      (EM)
      provides our branded merchandise sales and services, and our newly formed
      subsidiary, Tix Productions Inc. (TPI), provides live entertainment.




***Operating
      Segments***





***Ticketing
      Services***




Our
      ticketing business falls under our wholly owned subsidiary Tix4Tonight.
      Ticketing Services offers two distinct services; discount ticketing and premium
      event ticketing.




**Discount
      Ticketing**




Discount
      Ticketing – Las Vegas




When
      selling discounted tickets, Tix4Tonight generally sells them 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, and typically
      offers tickets for more than 60 shows on any given day at a discount plus a
      service fee. Tix4Tonight usually 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 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 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 cost.





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





Discount
      Ticketing – HalfPriceTickets.com





Tix
      Corporation recently announced the launch of its internet based
      HalfPriceTickets.com. As with our Tix4Tonight operation in Las Vegas,
      HalfPriceTickets.com offers a unique marketing channel for producers,
      presenters, artists and theaters nationwide that will take advantage of our
      strong position in the live entertainment industry, and discounted ticket sales.
      HalfPriceTickets.com will operate in a manner similar to Tix4Tonight with a
      few
      key differences. Instead of relying on a strong local presence for direct sales
      we will primarily use the internet as our customer interface and instead of
      offering only deeply discounted day of show tickets we will expand the date
      range of our ticket availability.


7


***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 national retail
      ticket brokers. As a result of this philosophical-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. Most of the tickets offered by
      Tix4AnyEvent are for hard to obtain and sold out events such as the Super Bowl,
      Masters Golf tournament, NBA Finals and major musical and theatrical tours.
      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.




***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
“Tutankhamun and The Golden Age of the Pharaohs.”





Management
      expects that EM’s growth will be from direct merchandising opportunities
      directed 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 newly-formed
      wholly-owned subsidiary Tix Productions Inc. We believe that by combining the
      operations of the two companies into a single entity we will be able to leverage
      our resources, gain operating efficiencies and more fully utilize the
      combined network of producers and promoters. NewSpace and Magic will continue
      to
      operate under their current names for the foreseeable future 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 101 Dalmatians property.





As
      presenters, we generally contract for entertainment properties from producers
      to
      present in markets around the US and Canada. Throughout the US and Canada,
      we
      have a distinct competitive advantage in that we know and have worked in most
      major North American cities, something that few, if any, other organizations
      can
      claim. This allows us to work with shows throughout the country and 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.


8




Opportunities
      for growth in the Live Entertainment unit revolve around our expanding ownership
      of intellectual content, for example 101 Dalmatians and Bob the Builder, 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.




***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
      2007 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 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 HalfPriceTickets.com will recognize as revenue the commissions and
      related transaction fees from the sale of tickets will be 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 will
      be
      recorded as deferred revenue. Claims for ticket refunds, which will be generally
      received and paid the day after the show date, will be 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 will be processed. HalfPriceTIckets.com
      does not have any accounts receivable associated with sales transactions to
      individual customers because payment is collected at the time of sale.


9




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 that 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 that the reservation is made, and the dinner payment is collected
      directly by the restaurant. The restaurants pay the Company a fee per guest.




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, will vary, 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 net of discounts and returns and
      exclude sales tax. Discounts are estimated based upon historical experience.
      For
      online sales, revenue is recognized free on board ("FOB") origin where title
      and
      risk of loss pass to the buyer when the merchandise leaves the Company's
      distribution facility at the time of shipment, which we refer to as the date
      of
      purchase by the customer. 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 productions. Revenue
      from the presentation and production of an event is recognized after the
      performance occurs; 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.




***Consolidation:***




The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries. Intercompany transactions and balances are eliminated
      in consolidation.




***Accounts
      receivable and credit policies:***




Accounts
      receivable are primarily associated with the revenues of shows in the process
      of
      settlement of all related event accounting. Accounts receivable are stated
      at
      the amount management expects to collect from the outstanding balances.
      Management provides for probable uncollectible amounts as a charge to operations
      during the period in which such determination is made based upon its assessment
      of the collectability of individual accounts. Balances that remain outstanding
      after reasonable collection efforts are written off. The amount charged to
      operations to reflect uncollectible accounts receivable bad debt expense has
      not
      been material to the financial statements periods presented.


10


***Capitalization
      of Theatrical Production Development Costs:***




As
      there
      is no accounting guidance related to the capitalization of theatrical production
      development costs. Therefore consistent with SOP 00-2 for the capitalization
      of
      certain film production and development costs and by analogy applied to
      theatrical productions the Company capitalizes costs incurred in the development
      of its theatrical productions. Costs capitalized by the Company include, but
      are
      not limited to, payments to directors, authors, composers, crews and other
      expenses directly associated with bringing a production to market. Management
      periodically reviews each theatrical production and will write down or write-off
      those capitalized costs if management determines the likelihood those costs
      will
      be recouped or to receive earnings from all sources related to the production
      has diminished. The Company amortizes these capitalized costs when the
      production is open to the public or is licensed to a third party. At June
      30, 2008, the Company had $459,000 of capitalized costs, of which $400,000
      relates to the theatrical rights of 101 Dalmatians, and $59,000 relates to
      the
      theatrical rights of Bob the Builder, with both shows to begin staging in the
      second half of 2008 and 2009.




***Purchase
      Accounting***




The
      Company accounts for its business acquisitions under the purchase method of
      accounting. The total cost of acquisitions is allocated to the underlying
      identifiable net assets based on their respective estimated fair values. The
      excess of the purchase price over the estimated fair values of the assets
      acquired is recorded as goodwill. Determining the fair value of the assets
      acquired and liabilities assumed requires management’s judgment and often
      involves the use of significant estimates and assumptions with respect to future
      cash flows, discount rates, asset lives and market values, among other items.
      Reserves have been established on the Company’s balance sheet related to
      acquired liabilities and qualifying restructuring costs and contingencies based
      on assumptions made at the time of acquisition. The Company evaluates these
      reserves on a regular basis to determine the adequacies of the amounts.




***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.




The
      Company evaluates intangible assets for impairment, 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 its net book value to the 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
      undiscounted cash flows, the asset is considered impaired, and a second test
      is
      performed to measure the amount of impairment loss.  At March 31, 2008, we
      relinquished our rights to purchase season tickets to Cleveland Browns and
      Cleveland Cavaliers games, acquired through the purchase of Tix4AnyEvent. As
      a
      result, a one-time charge of $25,000 was recorded to the amortization of
      intangible expense to reduce the value of the related intangible asset. There
      were no other indications of impairment based on management’s assessment at June
      30, 2008.


11


***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.




Effective
      January 1, 2008, the Company adopted Statement of Financial Accounting Standards
      (SFAS) No. 157, Fair Value Measurements. This Statement defines fair value
      for
      certain financial and nonfinancial assets and liabilities that are recorded
      at
      fair value, establishes a framework for measuring fair value, and expands
      disclosures about fair value measurements. This guidance applies to other
      accounting pronouncements that require or permit fair value measurements. On
      February 12, 2008, the Financial Accounting Standards Board (FASB) finalized
      FASB Staff Position (FSP) No.157-2, Effective Date of FASB Statement No. 157.
      This Staff Position delays the effective date of SFAS No. 157 for nonfinancial
      assets and liabilities to fiscal years beginning after November 15, 2008 and
      interim periods within those fiscal years, except for those items that are
      recognized or disclosed at fair value in the financial statements on a recurring
      basis (at least annually). The adoption of SFAS No. 157 had no effect on the
      Company’s consolidated financial position or results of operations.




***Cash
      Concentrations:***




The
      Company's cash balances on deposit with banks are guaranteed up to $100,000
      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.
      The Company had cash balances with a bank in excess of the $100,000 insurance
      limit as of June 30, 2008 and December 31, 2007.




***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 gains and losses were minor in 2007
      and were $7,000 and $(44,000) in 2008, 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 “Tutankamun and
      the World of the Pharaohs” and a third exhibit shop for “The Undersea Treasures
      of Egypt” in Madrid, Spain.


12




***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. These potentially dilutive
      securities were not included in the calculation of loss per share for the three
      and six months ended June 30, 2008 and 2007, because the Company incurred a
      loss
      during these periods and thus their effect would have been anti-dilutive.
      Accordingly, basic and diluted loss per share is the same for the three and
      six
      months ended June 30, 2008 and 2007. At June 30, 2008 we had outstanding
      warrants and stock options to acquire an aggregate of 3.8 million of which,
      2.6
      million were warrants to purchase shares of our common stock and 1.2
      million were options to purchase shares of our common stock.





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.




***Advertising
      Costs:***




Advertising
      costs are charged to operations as selling and marketing expenses at the time
      the costs are incurred. For the three and six months ended June 30, 2008 and
      2007, advertising costs were $1.6 million and $3.8 million, and $251,000 and
      $429,000, 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 June 30, 2008 or
      December 31, 2007.


13




***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
      May
      2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standards (“SFAS”) No. 162, “The Hierarchy of
      Generally Accepted Accounting Principles.”  SFAS No. 162 identifies
      the sources of accounting principles and the framework for selecting the
      principles used in the preparation of financial statements that are presented
      in
      conformity with generally accepted accounting principles.  SFAS No.
      162 becomes effective 60 days following the SEC’s approval of the Public Company
      Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present
      Fairly in Conformity With Generally Accepted Accounting
      Principles.”  The Company does not expect that the adoption of SFAS
      No. 162 will have a material impact on its financial statements.




In
      April
      2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of
      Intangible Assets.”  FSP No. FAS 142-3 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 SFAS No. 142, “Goodwill
      and Other Intangible Assets.”  The Company is required to adopt FSP
      No. FAS 142-3 effective at the beginning of 2010.  The Company is
      evaluating the impact that the adoption of FSP No. FAS 142-3 will have on its
      financial statements.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities - an amendment of FASB Statement No. 133” (“SFAS No.
      161”). SFAS No. 161 amends and expands the disclosure requirements of SFAS No.
      133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No.
      133”). The objective of SFAS No. 161 is to provide users of financial statements
      with an enhanced understanding of how and why an entity uses derivative
      instruments, how derivative instruments and related hedged items are accounted
      for under SFAS No. 133 and its related interpretations, and how derivative
      instruments and related hedged items affect an entity’s financial position,
      financial performance, and cash flows. SFAS No. 161 requires qualitative
      disclosures about objectives and strategies for using derivatives, quantitative
      disclosures about fair value amounts of and gains and losses on derivative
      instruments, and disclosures about credit-risk-related contingent features
      in
      derivative agreements. SFAS No. 161 applies to all derivative financial
      instruments, including bifurcated derivative instruments (and nonderivative
      instruments that are designed and qualify as hedging instruments pursuant to
      paragraphs 37 and 42 of SFAS No. 133) and related hedged items accounted for
      under SFAS No. 133 and its related interpretations. SFAS No. 161 also amends
      certain provisions of SFAS No. 131. SFAS No. 161 is effective for financial
      statements issued for fiscal years and interim periods beginning after November
      15, 2008, with early application encouraged. SFAS No. 161 encourages, but does
      not require, comparative disclosures for earlier periods at initial adoption.
      The Company has not yet determined the effect on its consolidated financial
      statements, if any, upon adoption of SFAS No. 161.





In
      December 2007, the FASB issued FASB Statement No. 141 (R), “Business
      Combinations” (FAS 141(R)), which establishes accounting principles and
      disclosure requirements for all transactions in which a company obtains control
      over another business. Statement 141(R) applies prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008. Earlier
      adoption is prohibited.


14




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS No. 160
      establishes accounting and reporting standards that require that the ownership
      interests in subsidiaries held by parties other than the parent be clearly
      identified, labeled, and presented in the consolidated statement of financial
      position within equity, but separate from the parent’s equity; the amount of
      consolidated net income attributable to the parent and to the noncontrolling
      interest be clearly identified and presented on the face of the consolidated
      statement of income; and changes in a parent’s ownership interest while the
      parent retains its controlling financial interest in its subsidiary be accounted
      for consistently. SFAS No. 160 also requires that any retained noncontrolling
      equity investment in the former subsidiary be initially measured at fair
      value when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the
      disclosure requirements to identify and distinguish between the interests of
      the
      parent and the interests of the noncontrolling owners. SFAS No. 160 applies
      to
      all entities that prepare consolidated financial statements, except
      not-for-profit organizations, but will affect only those entities that have
      an
      outstanding noncontrolling interest in one or more subsidiaries or that
      deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and
      interim periods within those fiscal years, beginning on or after December 15,
      2008. Earlier adoption is prohibited. SFAS No. 160 must be applied prospectively
      as of the beginning of the fiscal year in which it is initially applied, except
      for the presentation and disclosure requirements. The presentation and
      disclosure requirements are applied retrospectively for all periods
      presented.




The
      Company does not believe the adoption of the above
      recent pronouncements, with the exception of FAS 141(R), will have a material
      effect on the Company’s consolidated results of operations, financial position,
      or cash flows. FAS 141(R) introduces significant changes to the accounting
      for
      and reporting of business combinations, continuing the movement toward greater
      use of fair values in financial reporting and expanded disclosures. FAS 141(R)
      impacts the annual goodwill impairment test associated with acquisitions that
      occurred prior to the standard's effective date and acquisitions closing after
      the effective date. Thus, companies such as us that have goodwill from an
      acquisition that closed prior to the standard's effective date will need to
      understand and implement the provisions of FAS 141(R). Management is currently
      evaluating the potential effects of FAS 141(R) on its currently recorded
      goodwill, as well as any goodwill that could be recorded as result of a future
      acquisition.





**Note
      3. - Acquisitions**




On
      January 2, 2008, the Company announced that it had 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:***




On
      February 29, 2008 we completed our merger acquisition of Magic. Pursuant to
      the
      Merger Agreement and Plan of Merger, we paid to the two stockholders of Magic
      a
      total $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. Additionally,
      we
      will be required to issue to the former Magic stockholders a total of up to
      380,952 additional shares of our common stock if certain EBITDA milestones
      are
      achieved during the first thirty-six 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 Gemini Valuation Services, an independent valuation
      firm.


15





Allocation
      of the Purchase Price of Magic Arts & Entertainment:





Tangible
                assets, net of liabilities assumed:
            
            $
            143,000Intangible
                assets:Employment
                Agreement
            
            
            1,580,000Technology-based
            
            
            5,000Contract
            
            
            75,000Goodwill
            
            
            2,613,000Purchase
                price
            
            $
            4,416,000




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 will serve as the Co-Chief Executive Officers of
      TPI.
      The term of each of the employment agreements commenced on February 29, 2008
      and
      will expire on February 28, 2011, unless sooner terminated in accordance with
      the applicable provisions of the employment agreement. Under the employment
      agreements, Mr. Marsh is entitled to an annual salary of $100,000 and Mr.
      Marshall is entitled to an annual salary of $300,000 that will increase by
      $25,000 each year during the term of the agreement. Mr. Marshall also is
      eligible to receive annual bonuses based upon TPI exceeding performance
      milestones specified in his employment agreement.




In
      the
      event of the termination of employment of Mr. Marsh or Mr. Marshall for any
      reason other than termination by us for “cause” (as defined in the employment
      agreement) or termination by reason of his death or permanent disability, we
      have agreed to continue to pay Mr. Marsh or Mr. Marshall or their personal
      representatives, as the case may be, the annual salary under his employment
      agreement for six months following their departure.




Under
      their employment agreements, each 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 15% of Tix's common stock.





***NewSpace
      Entertainment***




On
      March
      11, 2008, we completed our merger acquisition of NewSpace . 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 Gemini Valuation Services, 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.


16





Allocation
      of the Purchase Price of NewSpace Entertainment:





Tangible
                assets, net of liabilities assumed:
            
            $
            291,000Intangible
                assets:Licensing
                Contracts
            
            
            62,000Employment
                Agreements
            
            
            1,394,000Technology-based
            
            
            5,000Goodwill
            
            
            2,261,000Purchase
                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 will 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. Under his employment agreement, Mr. Granath
      is
      entitled to an annual salary of $115,000. Each of Messrs. Ballard, Boulay and
      Granath are entitled to increases in such his  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.




In
      the
      event of our termination of employment of any of Messrs. Ballard, Boulay or
      Granath “without cause” (as defined in their respective employment agreements)
      or termination of any of Messrs. Ballard, Boulay and Granath for “good reason”
(as defined in their respective employment agreements), we have agreed to
      continue to pay each of Messrs. Ballard, Boulay and Granath or their personal
      representatives, as the case may be, his annual salary under his employment
      agreement for six months.




**Pro
      forma financial information (unaudited)**





The
      unaudited financial information in the table below summarizes the combined
      results of operations of the Company and Exhibit Merchandising (acquired August
      2007) , Magic Arts & Entertainment (acquired January 1, 2008) and NewSpace
      Entertainment (acquired January 2, 2008) on a pro forma basis, as though the
      companies had been combined as of the beginning of each of the periods
      presented. As NewSpace came into existence on July 1, 2007, no revenues or
      expenses are included in this pro forma. The pro forma financial information
      is
      presented for informational purposes only and is not indicative of the results
      of operations that would have been achieved if the these acquisitions had taken
      place at the beginning of the period presented.





The
      pro
      forma financial information for the period presented includes the business
      combination accounting effect on the amortization charges from acquired
      intangible assets, acquisition costs reflected in the Company’s and the acquired
      companies’ historical statements of operations for the period prior to the asset
      purchase, and the related tax effects.





The
      unaudited pro forma financial information for the three and six months ended
      June 30, 2007, combines the historical results for the Company for that period,
      with the historical results for the companies acquired as a separate entity
      for
      the similar period.




Pro
      forma:


**Six Months ended**
            
            **Three Months**
              **ended****June 30, 2007**
            
            **June 30, 2007**Total
                revenues
            
            $
            20,807,000
            
            $
            11,679,000Net
                loss
            
            $
            (6,079,000
            )
            $
            (5,082,000
            )Basic
                and diluted net loss per share
            
            $
            (0.25
            )
            $
            (0.23
            )





17




**Note
      4. Intangible Assets**





The
      following table summarizes the original cost, the related accumulated
      amortization, and the net carrying amounts for the Company’s intangible assets
      at June 30, 2008.




**Estimated**
            
            **Original**
            
            **Accumulated**
            
            **Net**
              **Carrying****Useful Lives**
            
            **Cost**
            
            **Amortization**
            
            **Amount**Marketing Based
            
            
            3-6
                years
            
            $
            12,277,000
            
            $
            1,853,000
            
            $
            10,424,000Contract
                commitments
            
            
            3
                years
            
            
            5,891,000
            
            
            1,196,000
            
            
            4,695,000Customer
                relationships
            
            
            3
                years
            
            
            612,000
            
            
            269,000
            
            
            343,000Technology
                Based
            
            
            3
                years
            
            
            111,000
            
            
            45,000
            
            
            66,000Intellectual
                property (e.g. domain names)
            
            
            5
                years
            
            
            130,000
            
            
            —
            
            
            130,000Goodwill
            
            
            indefinite
            
            
            31,987,000
            
            
            —
            
            
            31,987,000Total
            
            
            
            
            $
            51,008,000
            
            $
            3,363,000
            
            $
            47,645,000





Total
      amortization expense related to intangible assets for the three months ending
      June, 2008 and 2007 was $981,000 and $85,000, respectively. Total amortization
      expense for the six months ended June 30, 2008 was $1,987,000 and $85,000.
      Total
      estimated amortization expense with respect to intangible assets for the
      remainder of 2008 though 2013 is as follows:





Years
                Ending December 31,Remaining
                2008
            
            $
            1,975,0002009
            
            
            3,813,0002010
            
            
            3,242,0002011
            
            
            2,655,0002012
            
            
            2,655,0002013
            
            
            1,243,000Thereafter
            
            
            75,000Total
            
            $
            15,658,000





**Note
      5. Obligations under Capital Leases**





The
      Company has entered into various capital leases for equipment with monthly
      payments ranging from $33 to $1,767 per month, including interest, at interest
      rates ranging from 9.8% to 19.7% per annum. At June 30, 2008, monthly payments
      under these leases aggregated $6,000. The leases expire at various dates through
      2013.





At
      June
      30, 2008 and 2007, property and equipment included assets under capital leases
      of $408,000 and $386,000, less accumulated amortization of $257,000 and
      $200,000, respectively.




Minimum
      future payments under capital lease obligations for the remainder of 2008,
      and
      thereafter are as follows:


18





Years
                Ending December 31,2008
            
            $
            34,0002009
            
            
            64,0002010
            
            
            67,0002011
            
            
            9,0002012
            
            
            8,0002013
            
            
            3,000Total
                payments
            
            
            185,000Less:
                amount representing interest
            
            
            (32,000
            )Present
                value of minimum lease payments
            
            
            153,000Less:
                current portion
            
            
            (50,000
            )Non-current
                portion
            
            $
            103,000





**Note
      6. Related Party Transactions**





In
      April,
      2008, the Company agreed to advance $329,000, to a ticket vendor to allow the
      vendor to purchase season seats to the Detroit Tigers. In return the Company
      received 900 tickets to Detroit Tiger’s games of the Company’s choosing and a
      promissory note from the ticket vendor to repay the entire $329,000. Joseph
      Marsh, Co-CEO of Tix Productions, advanced the funds to the vendor and submitted
      a request for reimbursement of the funds. The funds were recorded as a liability
      at June 30, 2008 and Mr. Marsh was repaid in July 2008.





During
      2008 and 2007, 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. No expenses have been incurred
      for the three and six months ended June 30, 2008. For the three and six months
      ended June 30, 2007, we paid Mr. Frankel or his firm for tax preparation
      and advisory services $15,000 and $21,000 respectively.





**Note
      7. Stock-Based Compensation Plans**





The
      Company has various stock-based compensation plans, which are described
      below.





**Consultant
      Stock Plan:**




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.





On
      December 11, 2003, the Company adopted the 2003 Consultant Stock Plan (the
      “Consultant Stock Plan”). The purpose of the Consultant Stock Plan is to advance
      the interests of the Company by helping the Company obtain and retain the
      services of persons providing consulting services upon whose judgment,
      initiative, efforts and/or services the Company is substantially dependent,
      by
      offering to or providing those persons with incentives or inducements affording
      such persons an opportunity to become owners of capital stock of the Company.
      Consultants or advisors are eligible to receive grants under the plan program
      only if they are natural persons providing bona fide consulting services to
      the
      Company or its subsidiaries, with the exception of any services they may render
      in connection with the offer and sale of the Company’s securities in a
      capital-raising transaction, or which may directly or indirectly promote or
      maintain a market for the Company’s securities.





The
      Consultant Stock Plan provides for the granting of either common share purchase
      options or stock bonuses as compensation. A total of 1,600,000 common shares
      were reserved for issuance under the Consultant Stock Plan. If any awards
      granted under the plan are forfeited for any reason before they have been
      exercised, vested or issued in full, the unused shares subject to those expired,
      terminated or forfeited awards will again be available for purposes of the
      plan.
      No awards may be issued after December 11, 2013.





On
      March
      3, 2004, the Company filed with the Securities and Exchange Commission a
      registration statement on Form S-8 for the purpose of registering 1,600,000
      common shares issuable under the Consultant Stock Plan under the Securities
      Act
      of 1933. As of June 30, 2008, 715,243 common
      shares were reserved for issuance under the Consultant Stock
      Plan.


19





**2004
      Option Plan:**





On
      March
      3, 2005, the Company adopted the 2004 Stock Option Plan (the “2004 Option Plan”)
      for officers and employees of the Company or its subsidiaries. The 2004 Option
      Plan was approved pursuant to a Joint Written Consent of the Board of Directors
      and Majority Stockholders of the Company dated September 22, 2004. The 2004
      Option Plan authorized the granting of incentive stock options and non-qualified
      stock options to purchase an aggregate of not more than 960,000 shares of the
      Company’s common stock. The 2004 Option Plan provided that options granted would
      generally be exercisable at any time during a ten-year period (five years for
      a
      stockholder owning in excess of 10% of the Company’s common stock) and vest
      one-third in each of the three years following the grant, unless otherwise
      provided by the plan administrator. The exercise price for non-qualified stock
      options would not be less than the par value of the Company’s common stock. The
      exercise price for incentive stock options would not be less than 100% of the
      fair market value of the Company’s common stock on the date of grant (110% of
      the fair market value of the Company’s common stock on the date of grant for a
      stockholder owning in excess of 10% of the Company’s common stock). No option
      may be exercised during the first six months of its term except in the case
      of
      death.





During
      the six months ended June 30, 2008, the Company did not issue options to
      purchase shares of its common stock under the 2004 Option Plan. As of June
      30,
      2008, options to purchase 163,000 shares of common stock were reserved for
      issuance under the 2004 Option Plan.




**2004
      Directors Option Plan:**




On
      March
      3, 2005, the Company adopted the Directors Stock Option Plan (the “2004
      Directors Option Plan”) for non-employee directors of the Company. The 2004
      Directors Option Plan was approved pursuant to a Joint Written Consent of the
      Board of Directors and Majority Stockholders of the Company dated September
      22,
      2004. The 2004 Directors Option Plan authorized the granting of non-qualified
      stock options to purchase an aggregate of not more than 240,000 shares of the
      Company’s common stock. The 2004 Directors Option Plan provided that options
      granted would be exercisable for a period not to exceed ten years and would
      vest
      on a cumulative basis as to one-third of the total number of shares covered
      thereby at any time after one year from the date the option was granted and
      an
      additional one-third of such total number of shares at any time after the end
      of
      each consecutive one-year period thereafter until the option had become
      exercisable as to all of such total number of shares. The exercise price for
      non-qualified stock options would be the fair value of the Company’s common
      stock at the date of the grant. No option may be exercised during the first
      six
      months of its term except in the case of death. The Company has not issued
      any
      options under the 2004 Directors Option Plan during the six months ended June
      30, 2008.





The
      fair
      value of each option on the date of grant was estimated using the
      Black-Scholes option pricing model with the following weighted average
      assumptions:





2008
            
            2007Risk
                free rate of return
            
            
            4
            %
            
            4
            %Option
                lives in years
            
            
            6
            
            
            6Annual
                volatility of stock price
            
            
            112.5
            %
            
            112.5
            %Dividend
                yield





**Summary
      of Stock Options:**





The
      intrinsic value of outstanding stock options at June 30, 2008 was $927,400,
      as
      compared to $1,848,000 at June 30, 2007. The intrinsic value of exercisable
      stock options at June 30, 2008 was $683,000, as compared to $868,000 at June
      30,
      2007. A summary of the combined stock option for the six months ended June
      30,
      2008 for the three plans discussed above is as follows:


20






Number
              of
              options
            
            Weighted
              average
              exercise
              priceBalance
                outstanding, December 31, 2007
            
            
            1,288,500
            
            $
            5.24Options
                granted
            
            
            —
            
            
            —Options
                exercised
            
            
            (100,500
            )
            
            2.01Options
                expired or forfeited
            
            
            —
            
            
            —Balance
                outstanding, June 30, 2008
            
            
            1,188,000
            
            $
            5.52Balance
                exercisable June 30, 2008
            
            
            235,000
            
            $
            2.46




Information
      relating to outstanding stock options at June 30, 2008, summarized by exercise
      price, is as follows:




**Outstanding**
            
            **Exercisable**Exercise Price Per Share
            
            **Shares**
            
            **Life**
              **(Years)**
            
            **Exercise Price**
            
            **Shares**
            
            **Weighted**
              **Average Exercise**
              **Price**$6.00
                - $7.20
            
            
            818,000
            
            
            9.17
            
            $
            7.01
            
            
            65,000
            
            $
            7.08$4.00
                - $5.99
            
            
            120,000
            
            
            5.34
            
            $
            4.05
            
            
            20,000
            
            
            4.30$2.00
                - $3.99
            
            
            100,000
            
            
            4.67
            
            $
            3.00
            
            
            —
            
            
            —$0.22
                - $1.99
            
            
            150,000
            
            
            1.17
            
            $
            0.22
            
            
            150,000
            
            
            0.221,188,000
            
            
            7.30
            
            $
            5.52
            
            
            235,000
            
            $
            2.46




For
      the
      three months ended June 30, 2008 and 2007, the value of options vesting during
      the period was $402,000 and $108,000 respectively. For the six months ended
      June
      30, 2008 the value of options vested during the period was $805,000 and
      $227,100, respectively. As of June 30, 2008, the Company has outstanding
      unvested options with future compensation costs of $3.2 million, which will
      be
      recorded as compensation cost as the options vest over their remaining average
      life of 6.8 years.




The
      assumptions used in calculating the fair value of the options granted during
      2007, using the Black-Scholes option-pricing model were as follows: risk free
      interest rate - 4%; expected life - 6 years; estimated volatility - 112.5%;
      dividends - $0.





A
      summary
      of warrant activity for the six months ended June 30, 2008 is as
      follows:





Number
              of
              warrants
            
            Weighted
              average
              exercise
              priceBalance
                outstanding, December 31, 2007
            
            
            3,972,007
            
            
            3.54Warrants
                grantedWarrants
                exercised
            
            
            (1,400,000
            )
            
            0.50Warrants
                expired
            
            
            —
            
            
            —Balance
                outstanding, June 30, 2008
            
            
            2,572,007
            
            $
            5.08






21







The
      intrinsic value of outstanding warrants at June 30, 2008 was $846,000, as
      compared to $7.6 million at June 30, 2007. Information relating to outstanding
      warrants at June 30, 2008, summarized by exercise price, is as follows:




Outstanding
            
            
            
            ExercisableExercise Price Per Share
            
            Shares
            
            Life
              (Years)
            
            Exercise
              Price
            
            Shares
            
            Weighted
              Average
              Exercise
              Price$2.00
                - $5.50
            
            
            2,372,007
            
            
            1.22
            
            $
            5.47
            
            
            2,372,007
            
            $
            5.47$0.36
                - $1.99
            
            
            200,000
            
            
            2.63
            
            $
            0.49
            
            
            200,000
            
            $
            0.492,572,007
            
            
            1.33
            
            $
            5.08
            
            
            2,572,007
            
            $
            5.08





**Note
      8. Income Taxes**





At
      June
      30, 2008, the Company had Federal net operating loss carryforwards of
      approximately $26.3 million expiring beginning in 2008 in varying amounts
      through 2027. The Company also had California state net operating loss
      carryforwards of approximately $700,000 expiring beginning in 2013 in varying
      amounts through 2016.





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 June 30, 2008 and 2007.





The
      tax
      effects of temporary differences that give rise to a significant portion of
      the
      deferred tax assets at June 30, 2008 and 2007 are presented below:




June
                30,2008
            
            2007Deferred
                tax assetsNet
                operating loss carryforward
            
            $
            9,190,000
            
            $
            6,262,000Use
                of NOL
            
            
            —Less:
                Valuation allowance
            
            
            (9,190,000
            )
            
            (6,262,000
            )Net
                deferred tax asset
            
            $
            —
            
            $
            —




22


As
      a
      result of the Company’s significant operating loss carryforwards and the
      corresponding valuation allowance, no income tax benefit has been recorded
      at
      June 30, 2008 and 2007. The provision for income taxes using the statutory
      federal tax rate as compared to the Company’s effective tax rate is summarized
      as follows:




Six Month Ended June 30,2008
            
            2007Tax
                benefit at statutory rate
            
            
            (35
            )%
            
            (35
            )%Adjustments
                to change in valuation allowance
            
            
            35
            
            
            35Effective
                tax rate
            
            
            —
            %
            
            —
            %





**Note
      9. 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 and premium tickets. Discounted tickets are
      sold
      byTix4Tonight, while 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 60 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.





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
      spaced 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.”





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’s 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 will be able to leverage resources, gain
      operating efficiencies and more fully utilize the combined network of
      producers and promoters. NewSpace and Magic will continue to operate under
      their
      current names for the foreseeable future 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.


23





**Consolidating
      Statement of Operations (unaudited)**


**Three
      months ended June 30,**





**Ticketing**
            
            **Exhibit**
            
            **Live**
            
            **Corporate**
            
            **Consolidated****Services**
            
            **Merchandising**
            
            **Entertainment**
            
            **Expenses**
            
            **and Combined****2008**Revenue
            
            $
            3,368,000
            
            $
            2,979,000
            
            $
            10,517,000
            
            $
            —
            
            $
            16,864,000Direct
                operating expenses
            
            
            1,281,000
            
            
            1,804,000
            
            
            9,238,000
            
            
            
            
            
            12,323,000Selling,
                general and administrative expenses
            
            
            613,000
            
            
            1,207,000
            
            
            1,510,000
            
            
            1,528,000
            
            
            4,858,000Depreciation
                and amortization
            
            
            52,000
            
            
            794,000
            
            
            187,000
            
            
            69,000
            
            
            1,102,000Operating
                income (loss)
            
            $
            1,422,000
            
            $
            (826,000
            )
            $
            (418,000
            )
            $
            (1,597,000
            )
            $
            (1,419,000
            )Total
                assets
            
            $
            2,882,000
            
            $
            46,040,000
            
            $
            11,060,000
            
            $
            1,781,000
            
            $
            61,763,000**2007**Revenue
            
            $
            4,712,000
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            4,712,000Direct
                operating expenses
            
            
            2,910,000
            
            
            —
            
            
            —
            
            
            —
            
            
            2,910,000Selling,
                general and administrative expenses
            
            
            597,000
            
            
            —
            
            
            —
            
            
            7,250,000
            
            
            7,847,000Depreciation
                and amortization
            
            
            47,000
            
            
            —
            
            
            —
            
            
            73,000
            
            
            120,000Operating
                income (loss)
            
            $
            1,158,000
            
            $
            —
            
            $
            —
            
            $
            (7,323,000
            )
            $
            (6,165,000
            )Total
                assets
            
            $
            2,809,000
            
            $
            —
            
            $
            —
            
            $
            3,946,000
            
            $
            6,755,000




**Consolidating
      Statement of Operations (unaudited)**


**Six
      months ended June 30,**




**Ticketing**
              **Services**
            
            **Exhibit**
              **Merchandising**
            
            **Live**
              **Entertainment**
            
            **Corporate**
              **Expenses**
            
            **Consolidated**
              **and** **Combined****2008**Revenue
            
            $
            6,363,000
            
            $
            6,082,000
            
            $
            27,582,000
            
            $
            —
            
            $
            40,027,000Direct
                operating expenses
            
            
            2,810,000
            
            
            3,681,000
            
            
            22,563,000
            
            
            
            
            
            29,054,000Selling,
                general and administrative expenses
            
            
            1,213,000
            
            
            2,046,000
            
            
            3,536,000
            
            
            2,901,000
            
            
            9,696,000Depreciation
                and amortization
            
            
            101,000
            
            
            1,580,000
            
            
            374,000
            
            
            169,000
            
            
            2,224,000Operating
                income (loss)
            
            $
            2,239,000
            
            $
            (1,225,000
            )
            $
            1,109,000
            
            $
            (3,070,000
            )
            $
            (947,000
            )Total
                assets
            
            $
            2,882,000
            
            $
            46,040,000
            
            $
            11,060,000
            
            $
            1,781,000
            
            $
            61,763,000**2007**Revenue
            
            $
            6,459,000
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            6,459,000Direct
                operating expenses
            
            
            3,624,000
            
            
            
            
            
            
            
            
            
            
            
            3,624,000Selling,
                general and administrative expenses
            
            
            1,032,000
            
            
            
            
            
            
            
            
            8,305,000
            
            
            9,337,000Depreciation
                and amortization
            
            
            91,000
            
            
            —
            
            
            —
            
            
            93,000
            
            
            184,000Operating
                income (loss)
            
            $
            1,712,000
            
            $
            —
            
            $
            —
            
            $
            (8,398,000
            )
            $
            (6,686,000
            )Total
                assets
            
            $
            2,809,000
            
            $
            —
            
            $
            —
            
            $
            3,946,000
            
            $
            6,755,000





24


**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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 2007
      Form 10-KSB and this quarterly report, as well as other factors described
      herein or in our annual, quarterly and other reports we file with the SEC
      (collectively, “cautionary statements”). Based upon changing conditions, should
      any one or more of these risks or uncertainties materialize, or should any
      underlying assumptions prove incorrect, actual results may vary materially
      from
      those described in any forward-looking statements. All subsequent written and
      oral forward-looking statements attributable to us or persons acting on our
      behalf are expressly qualified in their entirety by the applicable cautionary
      statements. We do not intend to update these forward-looking statements, except
      as required by applicable law.





**Executive
      Overview**





During
      the second quarter of 2008, 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 our segments for the first
      quarter of 2008 were as follows:





**Tix4Tonight**





·
            For
                the three and six months ended June 30, 2008, Tix4Tonight sold 253,000
                tickets and 475,000 tickets, respectively. These ticket sales represented
                an increase of 92,000 tickets and 164,000 tickets over the prior
                year’s
                comparable three and six month periods and reflected a 57% and 53%
                increase over the respective prior year’s period ticket sales.





·
            For
                the three and six months ended June 30, 2008, Tix4Tonight sold tickets
                with a value of $12.8 million and $23.4 million, respectively. The
                value
                of the tickets sold represented an increase of $5.4 million and $8.8
                million over prior year’s comparable three and six month periods and
                reflected a 72% and 60% increase over the respective prior year’s period
                ticket sales.




25





**Exhibit
      Merchandising**





·
            EM
                opened its second foreign gift shop. The second gift shop was for
                “Tutankhamun and the World of the Pharaohs” in Vienna, Austria at the
                Kunsthistorisches Museum. Tutankhamun is scheduled to be at the
                Kunsthistorisches Museum from March 2008 until September 2008.





·
            EM
                negotiated a new contract with HILTI Arts & Cultute GmbH to operate
                its exhibit “Egypt’s Sunken Treasures,” in Madrid, Spain and opened its
                third foreign gift shop. This exhibit opened April 15, 2008 and is
                scheduled to operate through September 2008.





**Live
      Entertainment**





·
            Live
                Entertainment acquired Magic Arts & Entertainment - Florida, Inc.
                (Magic) and NewSpace Entertainment, Inc. (NewSpace). 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 will
                be able
                to better leverage our resources, and gain operating
                efficiencies.





**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 HalfPriceTickets.com will recognize as revenue the commissions and the
      related transaction fees are 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. 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. HalfPriceTickets.com does not have any accounts
      receivable associated with sales transactions to individual customers, as
      payment is collected at the time of sale.


26





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 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.





January,
      2008 the Company began its live entertainment segment. Revenue from the
      presentation and production of an event is recognized 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.


27





**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 December 31, 2007 or June 30, 2008.





**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
      May 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standards (“SFAS”) No. 162, “The Hierarchy of
      Generally Accepted Accounting Principles.”  SFAS No. 162 identifies
      the sources of accounting principles and the framework for selecting the
      principles used in the preparation of financial statements that are presented
      in
      conformity with generally accepted accounting principles.  SFAS No.
      162 becomes effective 60 days following the SEC’s approval of the Public Company
      Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present
      Fairly in Conformity With Generally Accepted Accounting
      Principles.”  The Company does not expect that the adoption of SFAS
      No. 162 will have a material impact on its financial statements.





The
      Company does not believe the adoption of the above recent pronouncements, with
      the exception of FAS 141(R), will have a material effect on the Company’s
      consolidated results of operations, financial position, or cash flows. FAS
      141(R) introduces significant changes to the accounting for and reporting of
      business combinations, continuing the movement toward greater use of fair values
      in financial reporting and expanded disclosures. FAS 141(R) impacts the annual
      goodwill impairment test associated with acquisitions that occurred prior to
      the
      standard's effective date and acquisitions closing after the effective date.
      Thus, companies such as us that have goodwill from an acquisition that closed
      prior to the standard's effective date will need to understand the provisions
      of
      FAS 141(R). Management is currently evaluating the potential effects of FAS
      141(R) on its currently recorded goodwill, as well as any goodwill that could
      be
      recorded as result of a future acquisition.




28


In
      April
      2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of
      Intangible Assets.”  FSP No. FAS 142-3 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 SFAS No. 142, “Goodwill
      and Other Intangible Assets.”  The Company is required to adopt FSP
      No. FAS 142-3 effective at the beginning of 2010.  The Company is
      evaluating the impact that the adoption of FSP No. FAS 142-3 will have on its
      financial statements.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities - an amendment of FASB Statement No. 133” (“SFAS No.
      161”). SFAS No. 161 amends and expands the disclosure requirements of SFAS No.
      133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No.
      133”). The objective of SFAS No. 161 is to provide users of financial statements
      with an enhanced understanding of how and why an entity uses derivative
      instruments, how derivative instruments and related hedged items are accounted
      for under SFAS No. 133 and its related interpretations, and how derivative
      instruments and related hedged items affect an entity’s financial position,
      financial performance, and cash flows. SFAS No. 161 requires qualitative
      disclosures about objectives and strategies for using derivatives, quantitative
      disclosures about fair value amounts of and gains and losses on derivative
      instruments, and disclosures about credit-risk-related contingent features
      in
      derivative agreements. SFAS No. 161 applies to all derivative financial
      instruments, including bifurcated derivative instruments (and nonderivative
      instruments that are designed and qualify as hedging instruments pursuant to
      paragraphs 37 and 42 of SFAS No. 133) and related hedged items accounted for
      under SFAS No. 133 and its related interpretations. SFAS No. 161 also amends
      certain provisions of SFAS No. 131. SFAS No. 161 is effective for financial
      statements issued for fiscal years and interim periods beginning after November
      15, 2008, with early application encouraged. SFAS No. 161 encourages, but does
      not require, comparative disclosures for earlier periods at initial adoption.
      The Company has not yet determined the effect on its consolidated financial
      statements, if any, upon adoption of SFAS No. 161.





In
      December 2007, the FASB issued FASB Statement No. 141 (R), “Business
      Combinations” (FAS 141(R)), which establishes accounting principles and
      disclosure requirements for all transactions in which a company obtains control
      over another business. Statement 141(R) applies prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008. Earlier
      adoption is prohibited.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS No. 160
      establishes accounting and reporting standards that require that the ownership
      interests in subsidiaries held by parties other than the parent be clearly
      identified, labeled, and presented in the consolidated statement of financial
      position within equity, but separate from the parent’s equity; the amount of
      consolidated net income attributable to the parent and to the noncontrolling
      interest be clearly identified and presented on the face of the consolidated
      statement of income; and changes in a parent’s ownership interest while the
      parent retains its controlling financial interest in its subsidiary be accounted
      for consistently. SFAS No. 160 also requires that any retained noncontrolling
      equity investment in the former subsidiary be initially measured at fair
      value when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the
      disclosure requirements to identify and distinguish between the interests of
      the
      parent and the interests of the noncontrolling owners. SFAS No. 160 applies
      to
      all entities that prepare consolidated financial statements, except
      not-for-profit organizations, but will affect only those entities that have
      an
      outstanding noncontrolling interest in one or more subsidiaries or that
      deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and
      interim periods within those fiscal years, beginning on or after December 15,
      2008. Earlier adoption is prohibited. SFAS No. 160 must be applied prospectively
      as of the beginning of the fiscal year in which it is initially applied, except
      for the presentation and disclosure requirements. The presentation and
      disclosure requirements are applied retrospectively for all periods presented.


29





**Consolidated
      Results of Operations - Three and Six Months Ended June 30, 2008 compared to
      the
      Three and Six Months Ended June 30, 2007:**





**Consolidated
      Results of Operations:**




**% change**
            
            
            
            
            
            **% change****Three Months Ended June 30,**
            
            **2008 v**
            
            **Six Months Ended June 30**
            
            **2008 v****2008**
            
            **2007**
            
            **2007**
            
            **2008**
            
            **2007**
            
            **2007**Revenue
            
            $
            16,864,000
            
            $
            4,712,000
            
            
            258
            %
            $
            40,027,000
            
            $
            6,459,000
            
            
            520
            %Operating
                Expenses:Direct
                operating expenses
            
            
            12,323,000
            
            
            2,910,000
            
            
            323
            %
            
            29,054,000
            
            
            3,624,000
            
            
            702
            %Selling,
                general and administrative expenses
            
            
            3,330,000
            
            
            841,000
            
            
            296
            %
            
            6,795,000
            
            
            1,032,000
            
            
            558
            %Depreciation
                and Amortization
            
            
            1,102,000
            
            
            120,000
            
            
            818
            %
            
            2,224,000
            
            
            184,000
            
            
            1109
            %Corporate
                expenses
            
            
            1,528,000
            
            
            7,006,000
            
            
            -78
            %
            
            2,901,000
            
            
            8,305,000
            
            
            -65
            %Operating
                Loss
            
            
            (1,419,000
            )
            
            (6,165,000
            )
            
            77
            %
            
            (947,000
            )
            
            (6,686,000
            )
            
            86
            %Operating
                Margin
            
            
            -8
            %
            
            -131
            %
            
            
            
            
            -2
            %
            
            -104
            %Interest
                expense
            
            
            (4,000
            )
            
            (40,000
            )
            
            
            
            
            (10,000
            )
            
            (46,000
            )Interest
                income
            
            
            11,000
            
            
            5,000
            
            
            
            
            
            45,000
            
            
            12,000Other
                income (expense)
            
            
            164,000
            
            
            4,000
            
            
            
            
            
            208,000
            
            
            4,000Net
                loss before income taxes
            
            
            (1,248,000
            )
            
            (6,196,000
            )
            
            
            
            
            (704,000
            )
            
            (6,716,000
            )Income
                tax expense/(benefit)
            
            
            (82,000
            )
            
            —
            
            
            
            
            
            —
            
            
            —Net
                Loss
            
            $
            (1,166,000
            )
            $
            (6,196,000
            )
            
            
            
            $
            (704,000
            )
            $
            (6,716,000
            )





**Three
      Months Ended June 30, 2008 and 2007:**





**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. Additionally, with the formation of Exhibit
      Merchandising, LLC “EM”, from the assets acquired from Exhibit Merchandising,
      LLC (Ohio), 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.” Additionally, through our live
      entertainment segment we earn revenues from the presentation and production
      of
      an event, as well as sponsorship and ancillary revenues. Our revenues for the
      three months ended June 30, 2008 and 2007 were $ 16.9 million and $4.7 million,
      respectively. Our revenues increased $12.2 million, or 258%, during the three
      months ended June 30, 2008 as compared to the same period of the prior year
      due
      to acquisitions. During the three months ended June 30, 2008 the Company
      realized $13.8 million of revenues from operations that it purchased in the
      last
      twelve months including AnyEvent, Exhibit Merchandising, Magic Arts &
Entertainment and NewSpace Entertainment for which there were no corresponding
      revenues in 2007. More detailed explanations of the three month periods ended
      June 30, 2008 and 2007 changes are included in the applicable segment
      discussions following.





More
      detailed explanations of the three months ended June 30, 2008 and 2007 changes
      are included in the applicable segment discussions following.


30




**Direct
      operating expenses**





Direct
      operating expenses include payroll and related costs, rents, cost of tickets
      and
      goods sold, artist fees, show related marketing costs and advertising expenses
      along with other related costs of promoting and producing live entertainment.
      Direct Costs of Revenues for the three months ended June 30, 2008 and 2007
      were
      $12.3 million and $2.9 million for the three months ended June 30, 2007. Our
      operating expenses increased $9.4 million or 323% during the three months ended
      June 30, 2008 as compared to the same period of the prior year primarily as
      a
      result of a 258% increase in revenues. Additionally, the companies that we
      acquired have higher direct cost of goods and services than our discount
      ticketing operations, which was our primary source of revenue during the three
      months ended June 30, 2007.





**Operating
      Segment Selling, Marketing and Administrative Expenses**





Operating
      segment selling, marketing and administrative expenses include advertising
      and
      promotional costs related to the Company’s business activities. Our operating
      segment selling, marketing and administrative expenses for the three months
      ended June 30, 2008 and 2007 were $3.3 million and $841,000, respectively.
      Our
      selling, general and administrative expenses increased $2.5 million or
      296%, during the three months ended June 30, 2008 as compared to the same period
      of the prior year due to increases in selling, marketing and administrative
      expenses related to the four acquisitions that have occurred in the last twelve
      months.





More
      detailed explanations of the three months ended June 30, 2008 and 2007 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 decreased $ 5.5 million for the three months ended June
      30,
      2008, as compared to same period of the prior year. This decrease in corporate
      expenses is the result of a decline of $6.4 million of consulting costs incurred
      in 2007 for which there is no corresponding expense in 2008. The 2007 consulting
      expense was the result of the issuance of $4.8 million of stock based
      compensation and $1.6 million in cash compensation, given to consultants related
      to our ticketing services business. Offsetting the decrease in corporate
      consulting expenses was an increase in employee expenses of $534,000, and NASDAQ
      listing fees and expenses of $91,000, as well as $97,000 in other miscellaneous
      expenses. The $534,000 increase in corporate employee expenses relates to an
      increase in accounting and management personnel that have been added to support
      the increased level of corporate activity.





**Depreciation
      and Amortization**





Our
      depreciation and amortization was $1.1 million and $120,000 for the three months
      ended June 30, 2008 and 2007 respectively. The increase of $982,000 in
      depreciation and amortization expense in 2008 primarily reflects a $914,000
      increase in amortization expense and a $68,000 increase in depreciation expense.
      The increase in amortization expense relates primarily to the $19.0 million
      of
      intangible assets we have recorded related to our acquisitions of AnyEvent,
      Exhibit Merchandising, Magic and NewSpace during the last twelve months, of
      which $15.7 million will be amortized over the next twelve to sixty months.





**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.


31





**Six
      Months Ended June 30, 2008 and 2007:**





**Revenues.**





Our
      revenues for the six months ended June 30, 2008 and 2007 were $40.0 million
      and
      $6.5 million, respectively. Our revenues increased $33.6 million, or 520%,
      during the six months ended June 30, 2008 as compared to the same period of
      the
      prior year due to acquisitions. During the six months ended June 30, 2008 the
      Company realized $34.4 million of revenues from operations that it purchased
      in
      the last twelve months including AnyEvent, Exhibit Merchandising, Magic Arts
      & Entertainment and NewSpace Entertainment for which there is no
      corresponding revenues in 2007.





More
      detailed explanations of the six month periods ended June 30, 2008 and 2007
      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 to marketing costs and advertising
      expenses along with other related costs of promoting and producing live
      entertainment. Direct Costs of Revenues were $29.1 million for the six months
      ended June 30, 2008 as compared to $3.6 million for the six months ended June
      30, 2007. Our operating expenses increased $25.4 million or 702% during the
      six
      months ended June 30, 2008 as compared to the same period of the prior year
      primarily as a result of a 520% increase in revenues. Additionally, the
      companies that we acquired have higher direct cost of goods and services than
      our discount ticketing operations, which was our primary source of revenue
      during the six months ended June 30, 2007.





More
      detailed explanations of the six months ended June 30, 2008 and 2007 are
      included in the applicable segment discussions following.





**Operating
      Segment Selling, Marketing and Administrative Expenses**





Operating
      segment selling, marketing and administrative expenses, excluding those expenses
      that relate to activities at or directed by our executive offices, include
      advertising and promotional costs related to the company’s business activities.
      Our operating segment selling, marketing and administrative expenses were $6.8
      million for the six months ended June 30, 2008, as compared to $1.0 million
      for
      the six months ended June 30, 2007. Our selling, general and administrative
      expenses increased $5.8 million or 558%, during the six months ended June
      30, 2008 as compared to the same period of the prior year due to increases
      in
      selling and administrative expenses related to the four acquisitions.





More
      detailed explanations of the six months ended June 30, 2008 and 2007 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 decreased $5.4 million for the six months ended June 30,
      2008, as compared to same period of the prior year. This decrease in corporate
      expenses is the result of a decline of $6.4 million of consulting costs incurred
      in 2007 for which there is not corresponding expense in 2008. The 2007
      consulting expense was the result of the issuance of $4.8 million of stock
      based
      compensation and $1.6 million in cash compensation, given to consultants related
      to our ticketing services business. Offsetting the decrease in corporate
      consulting expenses was an increase in employee expenses of $1.0 million, and
      NASDAQ listing fees and expenses of $91,000, as well as $100,000 in other
      miscellaneous expenses. The $1.0 million increase in corporate employee expenses
      relates to an increase in accounting and management personnel that have been
      added to support the increased level of corporate activity.


32





**Depreciation
      and Amortization**





Our
      depreciation and amortization was $2.2 million and $184,000 for the six months
      ended June 30, 2008 and 2007 respectively. The increase of $2.0 million in
      depreciation and amortization expense in 2008, primarily reflect a $1.9 million
      increase in amortization expense and a $153,000 increase in depreciation
      expense. The increase in amortization expense relates primarily to the $19.0
      million of intangible assets we have recorded related to our acquisitions of
      AnyEvent, Exhibit Merchandising, Magic and NewSpace during the last twelve
      months, of which $15.7 million will be amortized over the next twelve to sixty
      months.


.


**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)**




**%Change**
            
            
            
            
            
            **%Change****Three
                Months Ended June 30,**
            
            **2008
                v**
            
            **Six
                Months Ended June 30,**
            
            **2008
                v****2008**
            
            **2007**
            
            **2007**
            
            **2008**
            
            **2007**
            
            **2007**Revenue
            
            $
            3,368,000
            
            $
            4,712,000
            
            
            -29
            %
            $
            6,363,000
            
            $
            6,459,000
            
            
            -1
            %Operating
                Expenses:Direct
                operating expenses
            
            
            1,281,000
            
            
            2,910,000
            
            
            -56
            %
            
            2,810,000
            
            
            3,624,000
            
            
            -22
            %Selling,
                general and administrative expenses
            
            
            613,000
            
            
            597,000
            
            
            3
            %
            
            1,213,000
            
            
            1,032,000
            
            
            18
            %Depreciation
                and amortization
            
            
            52,000
            
            
            47,000
            
            
            11
            %
            
            101,000
            
            
            91,000
            
            
            11
            %Operating
                income
            
            $
            1,422,000
            
            $
            1,158,000
            
            
            23
            %
            $
            2,239,000
            
            $
            1,712,000
            
            
            31
            %Operating
                margin
            
            
            42
            %
            
            25
            %
            
            
            
            
            35
            %
            
            27
            %






33





**Three
      months ended June 30, 2008 and 2007:**





**Revenues:**





Ticketing
      Services has two operating units: Tix4Tonight, our discount ticket seller and
      AnyEvent our premium ticketing operation. 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 $3.4 million for the three
      months ended June 30, 2008 as compared to $4.7 million for the three months
      ended June 30, 2007. Our revenues decreased $1.3 million, or 29%, during the
      three months ended June 30, 2008 as compared to the same period of the prior
      year. The decrease in Ticketing Service revenues is the result of a $2.1 million
      decline in revenues in AnyEvent, which was offset in part by a $741,000 increase
      in Tix4Tonight revenues and a $71,000 increase in ancillary revenues i.e. the
      sale of dinner reservations and tee times.





**Tix4Tonight:**





Tix4Tonight
      revenues for the three month ended June 30, 2008 and 2007 were $3.0 million
      and
      $2.3 million, which resulted in an increase of $741,000 or 32% in 2008 as
      compared to the same period in 2007. The increase reflects a greater demand
      for
      discount tickets as well as an increase in the average selling price per ticket
      in 2008 as compared to 2007. The average selling price per ticket in 2008 was
      $50.69 per ticket, which represented an increase of $4.29 per ticket or 9%
      as
      compared to $46.40 per ticket in 2007. Tix4Tonight discount tickets sold
      increased 92,000 tickets or 57% to 252,000 discounted show tickets for the
      three
      months ended June 30, 2008. Commissions and fees were earned on the gross sales
      value of show tickets sold to customers of $12.8 million for the three
      months ended June 30, 2008, as compared to $7.5 million for the three
      months ended June 30, 2007 or 71%. Lastly, during the three months ended June
      30, 2008, revenues from miscellaneous sources of income including discount
      golf,
      and dinner reservations increased by $71,000, to $354,000 or 25%.





**AnyEvent:**





AnyEvent
      sells premium tickets to concerts, theatre shows and sporting events. AnyEvents
      revenues are dependent in part on sporting events and special concerts
      occurring, such as boxing matches and reunion tours, as well as our ability
      to
      obtain tickets to these events. AnyEvent revenues for the three months ended
      June 30, 2008 and 2007 were $317,000 and $2.4 million respectively. The $2.1
      million decline in revenues is the result of two factors: First, management
      has
      made the decision to change from a retail ticket seller to the public to a
      wholesaler of tickets, that is out clients are national retail brokers. As
      a
      result of this philosophical change we are assuming less risk; have been able
      to
      reduce our overhead and increase the likelihood of profitability. Second, during
      the second quarter of 2007, the Company participated in the distribution of
      premium tickets to two major boxing matches for which there was no corresponding
      event in 2008. Management expects that AnyEvent’s revenues will decline in 2008
      as compared to 2007, 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.





**Direct
      operating expenses**





Direct
      operating expenses include payroll and related costs, rents, and cost of tickets
      sold. Direct Costs of revenues for the three months ended June 30, 2008 and
      2007
      were $1.3 million and $2.9 million, respectively, which represented a decrease
      in direct operating expenses of $1.6 million or 56%. Direct operating expenses
      decreased to 38% of revenues in 2008, as compared to 62% of revenues in 2007.
      The lower operating expenses were reflective of the higher revenues from our
      existing discount ticket operations, higher cost per ticket and lower margins
      related to our premiums ticket business, AnyEvent, and the opening of our fifth
      ticket booth location during the fourth quarter 2007 that is not reflected
      in
      the second quarter of 2007.





**Selling,
      Marketing 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, marketing and administrative expenses for the three months ended June
      30, 2008 and 2007 were $613,000 and $597,000, respectively. Our selling,
      marketing and general and administrative expenses increased $16,000 or 3%,
      during the three months ended June 30, 2008 and is associated with an overall
      increase in revenues and our acquisition of John’s Tickets
      (AnyEvent). Selling, marketing and administrative expenses were 18% percent
      of
      revenues during the three months ended June 30, 2008 as compared to 13% during
      the three months ended June 30 2007. The 5% percentage point increase in
      selling, marketing and general administrative expenses is reflective of the
      relatively fixed cost of the administrative expense portion of the Ticketing
      Services operations.


34





**Depreciation
      and amortization**





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





**Six
      months ended June 30, 2008 and 2007:**





Ticketing
      Services revenues were $6.4 million for the six months ended June 30, 2008
      as
      compared to $6.5 million for the six months ended June 30, 2007. Our revenues
      decreased $100,000, or 1%, during the six months ended June 30, 2008 as compared
      to the same period of the prior year. The decrease in Ticketing Service revenues
      is the result of a $1.7 million decline in revenues in AnyEvent, which was
      offset in part by a $1.5 million increase in Tix4Tonight revenues and a $100,000
      increase in ancillary revenues i.e. the sale of dinner reservations and tee
      times.





**Tix4Tonight:**





Tix4Tonight
      revenues for the six month ended June 30, 2008 and 2007 were $5.6 million and
      $4.0 million, an increase of $1.6 million or 40% in 2008 as compared to the
      same
      period in 2007. The increase reflects a greater demand for discount tickets
      as
      well as an increase in the average selling price per ticket in 2008 as compared
      to 2007. The average selling price per ticket in 2008 was $49.22 per ticket,
      which represented an increase of $2.28 per ticket or 5% as compared to $46.94
      per ticket in 2007. Tix4Tonight discount tickets sold increased 164,000 tickets
      or 53% to 475,000 discounted show tickets for the six months ended June 30,
      2008. Commissions and fees were earned on the gross sales value of show tickets
      sold to customers of $23.4 million for the six months ended June 30,
      2008, as compared to $14.6 million for the six months ended June 30,
      2007. Lastly, during the six months ended June 30, 2008, revenues from
      miscellaneous sources of income including discount golf, and dinner reservations
      increased by $101,000, to $687,000 or 17%.





**AnyEvent:**





AnyEvent
      revenues for the six months ended June 30, 2008 and 2007 were $746,000 and
      $2.5
      million, respectively. The $1.7 million decline in revenues is the result of
      two
      factors: First, management has made the decision to change from a retail ticket
      seller to the public to a wholesaler of tickets that is our clients are 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. Second, during the second quarter of 2007 the Company
      participated in the distribution of premium tickets to two major boxing matches
      for which there was no corresponding event in 2008. Management expects that
      AnyEvent’s revenues will decline in 2008 as compared to 2007 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.




**Direct
      operating expenses**


Direct
        operating expenses include payroll and related costs, rents, and cost of
        tickets
        sold. Direct Costs of revenues for the six months ended June 30, 2008 and
        2007
        were $2.8 million and $3.6 million, respectively, which represented a decrease
        in direct operating expenses of $814,000 or 22%. Direct operating expenses
        decreased to 44% of revenues in 2008, as compared to 56% of revenues in 2007.
        The lower operating expenses were reflective of the higher revenues from
        our
        existing discount ticket operations, higher cost per ticket and lower margins
        related to our premium ticket business, AnyEvent, and the opening of our
        fifth
        ticket booth location during the fourth quarter 2007 that is not reflected
        in
        the second quarter of 2007.


35





**Selling,
      Marketing 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,
      marketing and administrative expenses for the six months ended June 30, 2008
      and
      2007 were $1.2 million and $1.0 million, respectively. Our selling, marketing
      and general and administrative expenses increased $200,000 or 18%, during the
      six months ended June 30, 2008 and is associated with an overall increase
      in revenues and our acquisition of John’s Tickets (AnyEvent).
      Selling, marketing and administrative expenses were 19% percent of revenues
      during the three months ended June 30, 2008 as compared to 16% during the three
      months ended June 30 2007. The 3% increase in selling, marketing and general
      administrative expenses is reflective of the relatively fixed cost of the
      administrative expense portion of the Ticketing Services operations.





**Depreciation
      and amortization**





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





**Segment
      Reporting - Exhibit Merchandising**




**% Change**
            
            
            
            
            
            **% Change****Three Months Ended June 30,**
            
            **2008 v**
            
            **Six Months Ended June 30,**
            
            **2008 v****2008**
            
            **2007**
            
            **2007**
            
            **2008**
            
            **2007**
            
            **2007**Revenue
            
            $
            2,979,000
            
            $
            —
            
            
            N/A
            
            $
            6,082,000
            
            $
            —
            
            
            N/AOperating
                Expenses:Direct
                operating expenses
            
            
            1,804,000
            
            
            —
            
            
            N/A
            
            
            3,681,000
            
            
            —
            
            
            N/ASelling,
                general and administrative expenses
            
            
            1,207,000
            
            
            —
            
            
            N/A
            
            
            2,046,000
            
            
            —
            
            
            N/ADepreciation
                and amortization
            
            
            794,000
            
            
            —
            
            
            N/A
            
            
            1,580,000
            
            
            —
            
            
            N/AOperating
                loss
            
            $
            (826,000
            )
            $
            —
            
            
            N/A
            
            $
            (1,225,000
            )
            $
            —
            
            
            N/AOperating
                margin
            
            
            -28
            %
            
            N/A
            
            
            
            
            
            -20
            %
            
            N/A




Exhibit
      Merchandising was acquired in August 2007; therefore there are no comparable
      results or balances.





**Three
      Months Ended June 30, 2008:**





**Revenues.**





EM
      provides retail specialty stores for touring museum exhibitions and touring
      theatrical productions. EM provides a complete turn-key retail store with
      commercially available and extensive custom-branded product for sale. It
      operates the stores in space rented in conjunction with the exhibit. During
      the
      three months ended June 30, 2008, EM generated $3.0 million in revenues
      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” continued at the “02” in
      London, England and Vienna, Austria. Additionally, in April 2008, we opened
      a
      gift shop in Madrid, Spain related to the exhibit the “Egyptian Undersea
      Treasures.”


36




**Direct
      operating expenses**





EM’s
      operating expenses include payroll and related costs, rents, and cost of goods
      sold. Direct operating expenses were $1.8 million or 61% of revenues for the
      three months ended June 30, 2008, which is consistent with the 64% of revenues
      that was experienced during the five months that  we
      operated EM during 2007.





Statement
      of Financial Accounting Standard No. 141 “Business Combinations” (SFAS 141)
      requires an acquiring Company to record any inventory acquired at its fair
      market value adjusted for certain related period expenses, such as warehousing
      and selling costs. At the time we acquired EM, we increased the value of the
      inventory on hand by $485,000 using a methodology that we believe to be
      consistent with SFAS 141. Therefore, we will realize lower margins as this
      inventory is sold, than we would on inventory acquired from vendors. EM’s cost
      of goods sold during the three months ended June 30, 2008 reflects a charge
      of
      approximately $121,000 related to this increase in the inventory on hand at
      the
      time we acquired EM. At June 30, 2008, approximately $40,000 of unamortized
      SFAS
      141 fair market adjustment is included in the inventory value reflected in
      the
      financial statements.





**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 cost of management. EM’s selling; marketing and administrative expenses
      were $1.2 million. EM’s selling, general and administrative expenses were 41% of
      revenues.





**Depreciation
      and amortization**





Depreciation
      and amortization expense incurred during the three months ended June 30, 2008
      was $794,000 and relates primarily to the amortization of the intangible assets
      that were created as a result of EM being acquired in August 2007. During the
      three months ended June 30, 2008 amortization and depreciation expense was
      $730,000 and $64,000 respectively. We expect these levels of depreciation and
      amortization to continue through 2010.




37




****Six
      Months Ended June 30, 2008:****


**Revenues.**
  During
        the six months ended June 30, 2008, EM earned $6.1million in revenues 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” continued at the “02” in London, England and
        Vienna, Austria. Additionally, in April 2008 we opened a gift shop in Madrid,
        Spain related to the exhibit the “Egyptian Undersea Treasures.”
  **Direct
        operating expenses**





EM’s
      operating expenses include payroll and related costs, rents, and cost of goods
      sold. Direct operating expenses were $3.7 million or 61% of revenues for the
      six
      months ended June 30, 2008, which is consistent with the 64% of revenues that
      was experienced during the five months that  we
      operated EM during 2007.





Statement
      of Financial Accounting Standard No. 141 “Business Combinations” (SFAS 141)
      requires an acquiring Company to record any inventory acquired at its fair
      market value adjusted for certain related period expenses, such as warehousing
      and selling costs. At the time we acquired EM we increased the value of the
      inventory on hand by $485,000 using a methodology that we believe to be
      consistent with SFAS 141. Therefore, we will realize lower margins as this
      inventory is sold, than we would on inventory acquired from vendors. EM’s cost
      of goods sold during the six months ended June 30, 2008 reflects a charge of
      approximately $242,000 related to this increase in the inventory on hand at
      the
      time we acquired EM. At June 30, 2008, approximately $40,000 of unamortized
      SFAS
      141 fair market adjustment is included in the inventory value reflected in
      the
      financial statements.





**Selling,
      Marketing and Administrative Expenses**





EM’s
      selling; marketing and administrative expenses include advertising and
      promotional costs related to its business activities, as well as the segment
      cost of management. EM’s selling, marketing and administrative expenses were
      $2.1 million. EM’s selling, general and administrative expenses were 34% of
      revenues.





**Depreciation
      and amortization**





Depreciation
      and amortization expense incurred during the six months ended June 30, 2008
      was
      $1.6 million and relates primarily to the amortization of the intangible assets
      that were created as a result of EM being acquired in August 2007. During the
      six months ended June 30, 2008 amortization and depreciation expense was $1.5
      million and $100,000 respectively. We expect these levels of depreciation and
      amortization to continue through 2010.




**Live
      Entertainment:**




**Three Months Ended June 30,**
            
            **2008**
              **v**
            
            **Six Months Ended June 30,**
            
            **2008**
              **v****2008**
            
            **2007**
            
            **2007**
            
            **2008**
            
            **2007**
            
            **2007**Revenue
            
            $
            10,517,000
            
            $
            —
            
            
            N/A
            
            $
            27,582,000
            
            $
            —
            
            
            N/AOperating
                Expenses:Direct
                operating expenses
            
            
            9,238,000
            
            
            —
            
            
            N/A
            
            
            22,563,000
            
            
            —
            
            
            N/ASelling,
                general and administrative expenses
            
            
            1,510,000
            
            
            —
            
            
            N/A
            
            
            3,536,000
            
            
            —
            
            
            N/ADepreciation
                and amortization
            
            
            187,000
            
            
            —
            
            
            N/A
            
            
            374,000
            
            
            —
            
            
            N/AOperating
                income (loss)
            
            $
            (418,000
            )
            $
            —
            
            
            N/A
            
            $
            1,109,000
            
            $
            —
            
            
            N/AOperating
                margin
            
            
            -4
            %
            
            N/A
            
            
            
            
            
            4
            %
            
            N/A




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 will be able
      to
      better leverage our resources, and gain operating efficiencies.




38




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 June 30, 2008:**





**Revenues.**





During
      the three months ended June 30, 2008, revenues from our Live Entertainment
      operations were $10.5 million. 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.





**Direct
      Operating Expenses**





During
      the three months ended June 30, 2008, direct operating expense was $9.2 million
      or 88% of revenues. 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.





**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. Live Entertainment’s administrative expenses
      were $1.5 million or 14% of revenues.





**Depreciation
      and amortization**





Depreciation
      and amortization expense incurred during the three months ended June 30, 2008
      was $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 through
      2009.





**Six
      Months Ended June 30, 2008:**





**Revenues.**





During
      the six months ended June 30, 2008, revenues from our Live Entertainment
      operations were $27.6 million. 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.





39




**Direct
      Operating Expenses**





During
      the six months ended June 30, 2008 direct operating expense was $22.6 million
      or
      82% of revenues. 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.





**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. Live Entertainment’s administrative expenses
      which were $3.5 million or 13% of revenues.





**Depreciation
      and amortization**





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





**Liquidity
      and Capital Resources:**




**Summary
      of consolidated cash flows:**




**For The Six Months Ended June 30,****2008**
            
            **2007**Net
                cash provided by (used in) operating activities
            
            $
            2,470,000
            
            $
            (2,624,000
            )Net
                cash used in investing activities
            
            $
            (3,562
                ,000
            )
            $
            (591,000
            )Net
                cash provided by financing activities
            
            $
            32,000
            
            $
            4,867,000Effect
                of exchange rate on cash
            
            $
            (36,000
            )
            $Change
                in cash:Net
                (decrease) increase
            
            
            (1,096,000
            )
            
            1,652,000Balance
                at beginning of period
            
            
            7,417,000
            
            
            1,944,000Balance
                at end of period
            
            $
            6,321,000
            
            $
            3,596,000





40




At
      June
      30, 2008, we had cash and cash equivalents of $6.3 million and total assets
      of $61.8 million compared to $7.4 million and $55.2 million,
      respectively, at December 31, 2007. Our working capital totaled $7.6
      million at June 30, 2008, compared to $8.9 million at December 31, 2007. We
      had
      no debt for the six months ended June 30, 2008 and the year-ended December
      31,
      2007.





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 Merchandizing 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.




**Operating
      Activities:**


Cash
        flows from operations were $2.5 million for the six months ended June 30,
        2008,
        compared to cash used in operations of $2.6 million for the six months ended
        June 30, 2007. The $5.1 million increase in cash flows provided from operations
        was the result of a net loss in 2008 of $704,000, as compared to a net loss
        in
        2007 of $6.7 million and adjustments for non-cash items and changes in accounts
        reflecting operating activities. Significant items adjusting net loss in
        2008
        were a $578,000 increase in accounts receivable, a $461,000 increase in
        capitalized theatrical costs, deposits and other assets which was off-set
        by a
        $381,000 increase in accounts payable, a $320,000 decrease in prepaid expenses
        and other current assets, $2.2 million of amortization and depreciation expense
        and $1.2 million of fair value of common stock issued for services. During
        2007
        items adjusting the net loss included a $5.6 million of common stock, warrants
        and stock options issued for services, which was offset by increases of $391,000
        in deferred revenues, $387,000 in accounts receivable, $588,000 in inventory,
        $481,000 in prepaid expenses and other assets, offset by a decrease in accounts
        payable and accrued expenses of $588,000. 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.


41




**Cash
      Flows from Investing Activities:**





Acquisitions





During
      the six months ended June 30, 2008 and 2007 we used $3.6 million and $591,000
      related to investing activities. Effective January 2, 2008, we acquired through
      merger Magic and NewSpace As consideration for the acquisition of Magic, the
      Company paid $2.0 million, net of cash acquired and issued 476,190 shares of
      stock that had market value of $2.3 million, which approximated the fair market
      value of the shares at the time of issuance. As consideration for the
      acquisition of NewSpace, the Company paid $1.3 million, net of cash acquired
      and
      issued 571,428 shares of stock that had market value of $2.7 million, which
      approximated the fair market value of the shares at the time of issuance. During
      the six months ended June 30, 2007 the Company paid $396,000 for AnyEvent and
      the related inventory.





Other





During
      the six months ended June 30, 2008 and 2007, we purchased fixed assets with
      a
      value of $336,000 and $195,000 respectively.





**Cash
      Flows from Financing Activities:**





During
      the six months ended June 30, 2008 and 2007, financing activities provided
      $32,000 and $4.9 million. During 2008, cash generated from financing activities
      was the result of the receipt of the proceeds from the exercise of options
      and
      warrants of $54,000, offset by a minor amount of payments related to capital
      leases. During 2007, cash generated from financing activities was the result
      of
      proceeds from note payable, stockholder of $2.0 million, proceeds from stock
      subscriptions of $2.7 million, and proceeds from exercise of options and
      warrants of $149,000 offset a minor amount of payments to 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.





**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.





42




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 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 ended****June 30, 2008**
            
            
            
            **June 30, 2007**Net
                loss
            
            
            
            
            $
            (1,166,000
            )
            
            
            
            $
            (6,196,000
            )Interest
                income
            
            $
            11,000
            
            
            
            
            $
            5,000Interest
                expense
            
            
            (4,000
            )
            
            
            
            
            (40,000
            )Net
                interest income (expense)
            
            $
            7,000
            
            
            7,000
            
            $
            (35,000
            )
            
            (35,000
            )Depreciation
            
            
            
            
            
            121,000
            
            
            
            
            
            54,000Amortization
            
            
            
            
            
            981,000
            
            
            
            
            
            66,000Income
                taxes
            
            
            
            
            
            (82,000
            )
            
            
            
            
            —EBITDA
            
            
            
            
            $
            (153,000
            )
            
            
            
            $
            (6,041,000
            )**Six months ended**
            
            
            
            
            
            **Six months ended****June 30, 2008**
            
            
            
            
            
            **June 30, 2007**Net
                loss
            
            
            
            
            $
            (704,000
            )
            
            
            
            $
            (6,716,000
            )Interest
                income
            
            $
            45,000
            
            
            
            
            $
            12,000Interest
                expense
            
            
            (10,000
            )
            
            
            
            
            (46,000
            )Net
                interest income (expense)
            
            $
            35,000
            
            
            35,000
            
            $
            (34,000
            )
            
            (34,000
            )Depreciation
            
            
            
            
            
            237,000
            
            
            
            
            
            99,000Amortization
            
            
            
            
            
            1,987,000
            
            
            
            
            
            85,000Income
                Taxes
            
            
            
            
            
            —
            
            
            
            
            
            —EBITDA
            
            
            
            
            $
            1,485,000
            
            
            
            
            $
            (6,498,000
            )





43




**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 five 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 June 30, 2008, 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 31,2012 andTotal
            
            2008
            
            2009
            
            2010
            
            2011
            
            beyondEmployment
                agreements
            
            $
            3,159,000
            
            $
            953,000
            
            $
            1,273,000
            
            $
            875,000
            
            $
            58,000
            
            $
            —Capital
                lease obligations
            
            
            185,000
            
            
            34,000
            
            
            64,000
            
            
            67,000
            
            
            9,000
            
            
            11,000Operating
                lease obligations
            
            
            6,893,000
            
            
            1,128,000
            
            
            2,092,000
            
            
            1,609,000
            
            
            1,136,000
            
            
            928,000Total
                contractual cash obligations
            
            $
            10,237,000
            
            $
            2,115,000
            
            $
            3,429,000
            
            $
            2,551,000
            
            $
            1,203,000
            
            $
            939,000





Employment
      Agreements:




The
      Company has employment agreements with its President and Chief Executive Officer
      and 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 $50,000
      and
      $3,000 for the six months ended June 30, 2008 and 2007,
      respectively.




**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**




Not
      applicable.




44




**ITEM
      4. CONTROLS AND PROCEDURES**





(a)
      Evaluation of Disclosure Controls and Procedures




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





The
      Company is the process of carrying out an evaluation, under the supervision
      and
      with the participation of the Company's management, including its principal
      executive and financial officer, of the effectiveness of the Company's
      disclosure controls and procedures as of the end of the period covered by this
      report as a result of its acquisitions of Magic and NewSpace. Based upon and
      as
      of the date of that evaluation, the Company's principal executive and financial
      officer concluded that the Company's disclosure controls and procedures are
      effective to ensure that information required to be disclosed in the reports
      the
      Company files and submits under the Securities Exchange Act of 1934 is recorded,
      processed, summarized and reported within the time periods specified in the
      Securities and Exchange Commission's rules and forms.





(b)
      Changes in Internal Control Over Financial Reporting





There
      were no changes in the Company's internal control over financial reporting
      or in
      other factors that could have materially affected or is reasonably likely to
      materially affect the Company’s internal controls 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
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**




On
      February 29, 2008, we completed our merger acquisition of Magic Arts &
Entertainment -Florida, Inc., a privately held Florida corporation (“Magic”).
      Pursuant to the merger, we paid to the two stockholders of Magic $2.0 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. Additionally, we will be required to
      issue to the former Magic stockholders a total of up to 380,952 additional
      shares of our common stock if certain EBITDA milestones are achieved during
      the
      next thirty-six months. These milestones are based upon the results of Tix
      Productions, Inc., a wholly owned subsidiary of the Company that will focus
      on providing live entertainment.




On
      March
      11, 2008, we completed our merger acquisition of NewSpace Entertainment, Inc.,
      (“NewSpace”). Pursuant to the Merger, we paid to the three stockholders of
      NewSpace $1 million in cash and issued to them a total of 571,428 restricted
      shares of our common stock with a market value of $2.7 million.





All
      securities were exempt from registration pursuant to section 4(a) of the
      Securities Act of 1934 as amended and Regulation D.  The certificates
      evidencing the securities bear a restrictive legend.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





Not
      applicable.





45




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





Not
      applicable.





**ITEM
      5. OTHER INFORMATION**




Not
      applicable.





**ITEM
      6. EXHIBITS**





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





SIGNATURES




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.




TIX
                CORPORATION
              (Registrant)Date:
                August 17, 2008
            By:
            /s/Mitch
                FrancisMitch
                FrancisChief
                Executive OfficerDate:
                August 17, 2008
            By:
            /s/
                Matthew NatalizioMatthew
                NatalizioChief
                Financial Officer
              (Duly
                Authorized Officer and
              Principal
                Financial Officer)




INDEX
      TO
      EXHIBITS





**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.





46