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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K







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

For the fiscal year ended December 31, 2008

OR



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

For the transition period from             to
            .

Commission File No. 000-51478





TRX, INC.

(Exact name of registrant as specified in charter)







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



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

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

Securities registered pursuant to Section 12(b) of the Act:



|                                       |  |                                          
|-------------------------------------- |  | -----------------------------------------
|Title of each class                    |  | Name of each exchange on which registered
|Common Stock, $.01 par value per share |  | NASDAQ Global Market                     

Securities registered pursuant to Section 12(g) of the Act:

None





Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes   ̈    No  x

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

Indicate by check mark if
disclosure of delinquent filer pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.   ̈

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

Large accelerated filer   ̈    Accelerated filer   ̈    Non-accelerated filer   ̈    Smaller
reporting company  x

(Do not check if a smaller reporting company)

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

As of June 30, 2008, the aggregate market value of the registrants voting stock held by non-affiliates based on the closing price of $1.43 per share was approximately $10.5 million.

The number of shares of the registrants common stock outstanding at February 1, 2009 was 18,406,996 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Specifically identified portions of the registrants Proxy Statement for the 2009 Annual Meeting of Shareholders are incorporated by reference in Part III of this Annual Report on Form 10-K.









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TRX, INC.

2008 FORM 10-K

TABLE OF CONTENTS



|             |  |                                                                                                              |  |           
|------------ |  | ------------------------------------------------------------------------------------------------------------ |  | ----------
|Item Number  |  |                                                                                                              |  | PageNumber
|             |  |                                                                                                             
|             |  | PART I                                                                                                       |  |           
|             |  |                                                                                                             
|ITEM 1.      |  | BUSINESS                                                                                                     |  | 1         
|             |  |                                                                                                             
|ITEM 1A.     |  | RISK FACTORS                                                                                                 |  | 9         
|             |  |                                                                                                             
|ITEM 1B.     |  | UNRESOLVED STAFF COMMENTS                                                                                    |  | 19        
|             |  |                                                                                                             
|ITEM 2.      |  | PROPERTIES                                                                                                   |  | 19        
|             |  |                                                                                                             
|ITEM 3.      |  | LEGAL PROCEEDINGS                                                                                            |  | 19        
|             |  |                                                                                                             
|ITEM 4.      |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                          |  | 19        
|             |  |                                                                                                             
|             |  | PART II                                                                                                      |  |           
|             |  |                                                                                                             
|ITEM 5.      |  | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |  | 19        
|             |  |                                                                                                             
|ITEM 6.      |  | SELECTED FINANCIAL DATA                                                                                      |  | 19        
|             |  |                                                                                                             
|ITEM 7.      |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |  | 20        
|             |  |                                                                                                             
|ITEM 7A.     |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |  | 29        
|             |  |                                                                                                             
|ITEM 8.      |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |  | 30        
|             |  |                                                                                                             
|ITEM 9.      |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         |  | 51        
|             |  |                                                                                                             
|ITEM 9A (T). |  | CONTROLS AND PROCEDURES                                                                                      |  | 51        
|             |  |                                                                                                             
|ITEM 9B.     |  | OTHER INFORMATION                                                                                            |  | 51        
|             |  |                                                                                                             
|             |  | PART III                                                                                                     |  |           
|             |  |                                                                                                             
|ITEM 10.     |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |  | 52        
|             |  |                                                                                                             
|ITEM 11.     |  | EXECUTIVE COMPENSATION                                                                                       |  | 52        
|             |  |                                                                                                             
|ITEM 12.     |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS               |  | 52        
|             |  |                                                                                                             
|ITEM 13.     |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                    |  | 52        
|             |  |                                                                                                             
|ITEM 14.     |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                       |  | 52        
|             |  |                                                                                                             
|             |  | PART IV                                                                                                      |  |           
|             |  |                                                                                                             
|ITEM 15.     |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |  | 53        
|             | 
|SIGNATURES   |  | 54                                                                                                          



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PART I



|Item 1. | Business
|------- | --------

Cautionary Notice Regarding Forward-Looking Statements

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

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

In evaluating these forward-looking statements, you should consider the following factors, as well as others set forth in Item 1A under the caption Risk Factors and as are detailed from time to
time in other reports we file with the SEC, any or all of which may cause our actual results to differ materially from any forward-looking statement:



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



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



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



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



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

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

Company Overview

TRX is a global technology company. We develop and host software applications to automate manual processes and track transaction data, enabling
our clients to optimize performance and control costs. We are a leading provider to the travel industry and expect to eventually include growth in industries beyond travel, such as financial services and health care. For the foreseeable future, we
intend to focus our efforts on the large opportunities within the travel industry. We deliver our technology applications as a service over the Internet to travel agencies, corporations, travel suppliers, government agencies, credit card
associations, credit card issuing banks, and third-party administrators. TRX is headquartered in Atlanta, Georgia with operations and associates in North America, Europe, and Asia.



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Our data reporting technologies allow our clients to use information from multiple and disparate sources
to gain new visibility, and to make better decisions, faster. We collect data for our clients in any format from anywhere in the world, and then normalize, validate, and translate this data into client-requested formats. The ability to view data
from disparate sources in a consistent, useable format on a timely basis is increasingly important to our target market. The increased use of the Internet as a preferred distribution channel and deregulation of GDS (global distribution system) rules
has caused suppliers to shift inventory between different systems and channels. We believe this trend has led to a splintering of inventory sources, and the dynamics will continue to evolve toward increasingly fractured data sources for the
foreseeable future. We believe that the importance of our data reporting services to our target market has increased and will continue to do so.

We generate economies of scale in our reservation processing and online booking applications by combining transactions from numerous clients. Our clients leverage our aggregated transaction volume to shift a portion of their fixed costs to
a more flexible, variable structure. Our scale, combined with our focus on process reengineering and automation, helps our clients reduce travel-related costs on an ongoing basis. We believe our scale cannot be achieved internally by our clients and
is not currently available from a single travel supplier, agency, or electronic travel distribution system.

We target clients in four
areas: travel agencies, travel suppliers, corporations, and credit card issuers. During the year ended December 31, 2008, we served more than 280 clients. Our client base includes global leaders in the markets we serve, including American
Airlines, Inc., American Express Travel Related Services Company, Inc. (American Express), Citibank, N.A. (Citibank), and Expedia, Inc.

We provide expertise in redesigning business processes and their associated systems and resources. We offer our processing capabilities and process reengineering expertise through a comprehensive service offering of
hosted technology applications. We provide each of our technology applications individually or as a comprehensive, integrated end-to-end processing solution. As a result, we can add value and earn compensation at multiple points during the lifecycle
of a single data record. Our clients typically pay us on a per-transaction basis. We have multi-year contracts with minimum volume commitments based on each clients scale and expected growth rate.

During this decade, we have achieved significant scale and experienced rapid growth as our transaction volumes and data records processed have increased.
In 2008, we handled 84.4 million travel processing transactions, up from 9.3 million in 1999, representing a compound annual growth rate of more than 28% during this time period. The growth in both transactions processed and data managed
has helped us generate a 15% compound annual growth rate in revenue in our core transaction processing and data reporting businesses over the last nine years, from $26.6 million in 1999 to $95.4 million in 2008. During 2008, we recognized revenue of
$96.2 million, of which $16.3 million was generated outside the U.S. See Note 2 to our consolidated financial statements in Item 8 of this Form 10-K for additional information about our geographical areas and business segment.

Corporate Background and History

Prior to January
1997, we conducted our business as a division and subsidiary of BCD Travel, formerly WorldTravel BTI, one of the largest corporate travel agencies in the U.S. In January 1997, our business was transferred into a separate business organization. In
1999, TRX was incorporated as a Georgia corporation, and we acquired International Software Products, a data integration provider. In 1999 and 2000, we established European joint ventures with Hogg Robinson International Benefits Ltd. and Kuoni
Reisen Holding AG to support travel distribution throughout Europe. In January 2004, we purchased the remaining interests in our European joint ventures. In addition, through a relationship with Siemens Shared Services, LLC (Siemens), we
established operations in Bangalore, India in 2004 to support multiple processing activities and technology development functions. In September 2005, we had our initial public offering and were listed for trading on



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NASDAQ. In December 2007, we acquired the workforce and certain property assets used by Siemens to provide services to TRX. We closed one acquisition in
August 2006 and a second acquisition in January 2007 to augment our data reporting offerings in the corporate market.

In 2004, we made a
strategic decision to gradually transition away from providing call center services, and since then have closed or sold our call centers in France, Switzerland, England and the United States. On a selective basis, we may continue to provide these
services to clients as part of our offering. We work closely with selected partners to offer end-to-end solutions, including our reservation processing and data reporting services, along with call center services.

Industry Background

Overview

We are a leading technology provider to the travel industry, which is among the largest industries globally and is undergoing dramatic and rapid change.
Total annual air, lodging, car, cruise, rail and vacation package travel purchases in North America, Europe and Asia in 2006 were over $600 billion, according to PhoCusWright. The World Travel & Tourism Council stated that Transportation
Security Administration results indicate that annual growth in Travel & Tourism demand in 2008 was 3.0%, down from 3.9% in 2007. The processes in these industries are complex and data-intensive. For example, the transaction record
associated with a single traveler may include 500 or more distinct data fields for each trip.

Rapidly changing dynamics in the travel
industry, including use of the Internet as a delivery mechanism, reduction in supplier commission payments, and deregulation of the GDSs, are driving the industry toward lower costs per transaction. Achieving a lower per transaction cost is
difficult due to the complexities and inefficiencies that exist throughout the travel transaction process (from booking through settlement). We believe that automating the travel transaction process is difficult without substantial scale, access to
all processes and technology throughout the travel transaction lifecycle, travel industry knowledge and relationships, and travel process reengineering expertise. In addition, we believe industry participants are challenged to reengineer their own
cost structure while remaining focused on their core competencies and daily business objectives.

Current Trends

The rapid growth of self-service online travel options has decreased the need for traditional travel agents functioning as intermediaries to place orders
for travelers with suppliers. Financial pressure on travel suppliers, particularly airlines, has driven investment in automation to decrease the distribution and fulfillment costs associated with travel transactions, which in the past few years has
resulted in market share gains by supplier websites at the expense of other online distribution channels. Other current industry trends include the following:



| |  |  | Continued migration to online booking. The online travel market provides travelers with a convenient, price-transparent, and cost effective option for
researching and purchasing travel options. We expect the use of online booking technology to continue to grow inside and outside of the U.S. We expect this trend to continue in both of the two main segments of the travel market, leisure and
corporate.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Impact of GDS deregulation. GDS deregulation in the U.S. has given suppliers more flexibility in the distribution of their inventory. New GDS contract
agreements in 2006 resulted in buyers lowering their transaction costs and enabling greater access to both existing and new distribution channels, including supplier direct and GDS-alternatives. This reduction in transaction costs has had and will
have a resulting material effect on compression along the entire supply chain of a travel transaction, and since we derive revenue in this supply chain, we have experienced, and expect to continue to experience, negative pressure on our revenue
earned per transaction. Similar GDS deregulation may impact non-U.S. markets in the future.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Emphasis on policy compliance and rules management. In an effort to lower travel costs, companies often enter into preferred provider contracts with travel
suppliers and also establish corporate travel
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | policies that require interpretation and enforcement on a real-time basis. The splintering of distribution, due in large part to the GDS deregulation and
shift to supplier direct bookings noted above, increases the demand for comprehensive data reporting about corporations travel spend.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Need to improve access to and usefulness of corporate data. Companies are generating data at a more rapid pace from a growing number of internal and external
sources, and managers need access to a consolidated view of this information in order to make timely, informed decisions.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Large sellers of travel, such as travel agencies, represent a significant segment of the travel industry and are a key client segment for us. We believe that industries with travel-related components, such as credit card issuers, are a
natural extension for our product and service offerings. We expect the need for products and services that address automation and data reporting for the travel industry to increase over time due to the trends outlined above, and for similar trends
to be evident in other industries as well.

Our Products and Services

We believe that our suite of products and services facilitates the distribution of travel in a cost-efficient manner and assists our clients in better managing the vast amounts of data generated by travel and
travel-related processes. Our clients are able to use our products and services individually or as a comprehensive, integrated end-to-end processing solution. We develop our products and services as hosted technologies. We believe that by hosting
solutions for our clients we can provide lower costs per transaction, scalability of solutions, continuity of business, rapid product development, compliance with and adaptability to business rules, and speed to market.

Our hosted technology suite includes the following solutions:

Data Reporting enables the aggregation, enhancement, extraction, and reporting of transaction data. Our data reporting suite consolidates data records from a variety of sources, including credit card issuers, credit
card networks, back office travel systems, hotel suppliers, airlines, and GDSs, and normalizes those records into a common structure in a single data repository. It also enables enhancement of data records with more detailed transaction data from
other sources, increasing the value and utility of the data to our clients. We host the application, warehouse multi-terabytes of client data, deliver information electronically back to clients in any format, and provide Web-based access to our
hosted reporting and analysis tool. Clients include American Express, British Airways PLC, Citibank, UAL Corporation, MasterCard Inc., One Mind Connect, Carlson Wagonlit Travel, United States General Services Administration and UBS AG.

Reservation Processing offers a suite of products that processes our clients travel data records in a cost efficient manner. Our CORREX product
enables automated quality control, file finishing, and electronic ticketing, including low fare searches, seat assignments, upgrades, and alternate route and carrier searches. We also handle multiple activities for our clients including exchanges,
refunds, waivers and split payments, commission management, fare loading, document distribution, debit memo processing, and back office hosting and settlement, with our TRANXACT tools. We offer our agency clients software functionality for exception
processing and agent workflow management and tracking with our SELEX tools. We host our Reservation Processing applications for our clients and provide access to them via the Internet. Our Reservation Processing services are in use by large travel
agencies, corporations and suppliers. Clients include American Airlines, Inc., American Express, BCD Travel, Boeing, Expedia, and Travel and Transport, Inc.

Online Booking offers a user-friendly, Web-based interface for business travelers and/or their travel arrangers to book policy-compliant air, car, and hotel reservations and manage their travel preferences. We host
the RESX Online Booking, RESX Profiler and RESX Agent Desktop applications for our clients and their customers and provide access to these applications via the Internet. We sell these tools to customers primarily through our distributor program that
supports corporate travel agencies. Online Booking clients and distributors include Adelman Travel Group, Carlson Wagonlit Travel, BCD Travel, and Travel and Transport, Inc.

See Note 2 to our consolidated financial statements in Item 8 of this Form 10-K for additional information about our products and services.



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Our Competitive Strengths

We believe our competitive strengths have enabled us to become a leading independent provider of data reporting, reservation processing and online booking technologies for the global travel industry and will continue
to enhance our leadership position and contribute to our growth in the future, both in travel and other industry channels. Those strengths include:



| |  |  | Independent, objective, and unbiased technology provider. We provide an objective and unbiased means to access travel inventory and integrate global data.
Our products and services provide quality control, ticketing, exception management and reporting, whether a booking is generated from a GDS, a supplier, or an alternative travel source. We believe that shifting travel industry dynamics, in
particular GDS ownership or affiliation with online travel agencies and booking engines, have made our clients reluctant to adopt non-independent third-party processing solutions. We believe that independent non-GDS owned booking engines, such as
RESX, have increased their market share over the last several years. Additionally, our independence has allowed us to develop a service offering combining the data associated with corporate credit card transactions from multiple processors, with
travel data, such as hotel folio data and travel agency back office data, in order to deliver a comprehensive report to the issuer. We believe our independence provides clients with confidential and unbiased processing capabilities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expertise in automation and process reengineering. One of our core competencies is our ability to automate and reengineer complicated travel and
travel-related processes. We have multiple, dedicated teams developing products and services that meet the evolving needs of our clients. We continually reengineer our processes and related automation to provide technologically advanced solutions to
meet the complex needs of our clients.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Leading market position in the global travel market. In 2008, we processed 84.4 million travel processing transactions for our clients. We service
travel agencies with locations on six continents. In the U.S., we have contracts with all of the top six travel agencies (traditional and online) based on 2007 gross sales as ranked byTravel Weekly (June 2008). In Europe, we had contracts
with four of the top five online travel agencies based on 2006 gross bookings as ranked by PhoCusWright. We believe our transaction volumes give us a cost advantage and help us deliver cost savings to our clients. As we continue to grow, we expect
to realize additional cost savings and expertise, making us the partner of choice for an increasing number of companies. We also believe that our experience and reputation serving the global travel market enhances our ability to penetrate other
travel-related industries.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Established long-term partnerships. We have long-standing collaborative relationships with many travel industry leaders. Areas of collaboration include
technology, operations, and other areas that are integral to our clients use of our products and services. By partnering with our clients, we are better able to understand their existing needs and can tailor our product development to better
anticipate future demands. We believe this approach improves the value proposition of our products and services to these clients. Many of our largest clients have a history of contract renewals and business expansion with us. Many of our clients
also commit to long-term contracts with us. We believe this is a testimony to our ability to forge strong, lasting relationships with clients to create joint long-term value.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Core travel processing infrastructure. We offer multiple products and services that allow us to address specific client needs across the complete travel
transaction lifecycle. We believe that automating the travel transaction process is difficult without substantial scale, access to the processes and technology throughout the travel transaction lifecycle, relationships with industry participants,
and the travel reengineering expertise that we possess. Furthermore, we update and refine our products and services on a regular basis, using client and market feedback to develop new improvements. Our ability to offer a flexible end-to-end solution
allows us to provide additional products and services to our existing clients on an individual basis or as part of an integrated solution.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Our Growth Strategy

We aim to capitalize on the broad industry trends, both in the U.S. and abroad, that affect our global travel and travel-related business, as well as act on our own insights to strengthen our global market position,
through the following strategies:



| |  |  | Expand the use of our data reporting technologies. We believe both purchasers and sellers of travel and travel-related products and services have an
increasing desire to consolidate and enhance disparate data in order to make better business decisions. We intend to broadly offer our existing and new technologies to those companies globally that would benefit from our independence and our
expertise in travel combined with our data reporting capabilities. We expect this expansion to eventually include growth in industries beyond travel, such as financial services and health care. For the foreseeable future, we intend to focus our
efforts on the large opportunities within the travel industry.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increase our client base. We believe that our existing and new data reporting technologies enable us to provide valuable services to a very large number of
corporations. We penetrated this large corporate market primarily in the U.S. beginning in 2007, and expect to expand globally into the future. We believe that increasing the number of users who interact with our technologies will lead to increased
adoption of our other products and services.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capitalize on the continuing migration to online travel. We believe that there are significant opportunities to increase the number of transactions and our
market share in the online travel agency channel. Our relationships with global online agency market leaders, coupled with our corporate online booking technologies, have positioned us to take advantage of the continued migration of booking to the
online channel.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Grow revenues from traditional travel agencies. A number of large agencies operate on a decentralized basis, using legacy systems that require substantial
manual labor. We believe that these companies will increasingly recognize that their decentralized legacy structures put them at a cost disadvantage, and that greater process efficiencies and technology will improve both service levels and margins.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue to enhance our technology offerings. We are focused on the early recognition of marketplace changes as well as the process reengineering and
automation of travel distribution to design products and services that meet the discrete needs of our client base. We offer these products and services as extensions to our existing product suite and cross-sell them to our clients. We intend to
continue to enhance and extend our offerings to allow our clients access to evolving travel technologies.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pursue strategic relationships and acquisition opportunities. We intend to pursue strategic relationships with leaders in travel and travel-related
industries both in the U.S. and abroad. We believe these relationships will increase the number of users who interact with our technologies and will lead to increased adoption rates of our products and services. Also, we will selectively consider
acquisitions of, and investments in, companies that offer complementary products, services, and technologies that further enhance our business or broaden the scope of our product offerings.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Clients and Partners

During 2008, more than 280
financial institutions, travel agencies, and companies used our products and services. In 2008, we handled 84.4 million travel processing transactions, up from 9.3 million in 1999, representing a compound annual growth rate of 28% during
this time period. Our primary clients and prospects are large online and offline travel agency distributors with an annual gross sales volume of at least $100 million. Additionally, we are targeting large corporations and credit card issuing banks
with our data reporting offerings. Our top five client contracts accounted for approximately 78% of our total revenues in 2008.



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The following alphabetical client list represents our largest clients, each of which generated at least
$500,000 of our revenue during 2008.



|                                     |  |                                     
|------------------------------------ |  | ------------------------------------
|American Airlines, Inc.              |  | Hogg Robinson plc                   
|American Express                     |  | MasterCard Incorporated             
|BCD Travel and affiliates            |  | Oracle                              
|Carlson Wagonlit Travel              |  | UAL Corporation                     
|Citibank                             |  | U.S. General Services Administration
|Expedia, Inc. and its affiliates (1) |  |                                     



|(1) | Includes expedia.com, expedia.co.uk, expedia.de, expedia.ca, Egencia Corporate Travel, hotels.com and Hotwire, Inc. Expedia, Inc. and its affiliates accounted for approximately 36%
of our revenue in 2008, including Expedia.com, which represented approximately 20% of our revenue in 2008.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our clients
include the global market leaders in each segment that we serve. We consider our client relationships to be a key strength. We have a history of client renewals and signing long-term contracts with our clients. We believe this is a testimony to our
ability to forge strong, lasting relationships with clients to create joint long-term value.

Expedia, Inc. and its affiliates and Citibank
represent 36% and 21%, respectively, of our revenues in 2008 compared to 41% and 13%, respectively, of our revenues in 2007. Recurring revenues from Citibank generated in 2008 were significantly less than revenues generated in 2007 because in
mid-2007 we agreed to sell a limited perpetual license of certain source code to Citibank in order for Citibank to perform certain services in-house that have previously been hosted by us. We continued to perform maintenance and project services for
Citibank after the license sale occurred in April of 2008. Expedia began decreasing the volume of transactions that we service for them, beginning in the first quarter of 2009, as permitted under our agreement with Expedia. In addition, a
number of global airlines have announced significant capacity reductions, which generally began in September 2008 and will continue through 2009, due to global macroeconomic conditions and the related impact on air travel demand. In
general, reduced airline capacity results in lower transaction volumes for us. We expect a significant decline in our transaction volume in 2009 as a result of Expedias intentions to reduce the level of services requested from
us and reduced volumes from our clients in general in 2009. Our revenues, operating results and cash flows will be materially lower in 2009.

Competition

We have different competitors in each category of services that we offer. The data reporting technologies we
offer are substantially tied to travel and travel-related processes. We compete against many of the traditional providers in this category. Companies offering such services include IBM, Informatica, and SAS. As the market for data reporting
grows, we believe a number of companies will increase their efforts to develop products and services that will compete with ours. It is also possible that new competitors or alliances among our competitors and potential clients may emerge and
rapidly acquire significant market share.

The market for reservation processing for the travel industry continues to evolve as agencies
and suppliers make strategic decisions about whether to outsource or insource these data-intensive and costly processes. Currently, the marketplace for reservation processing services for the travel industry is comprised primarily of in-house
solutions and operations residing mostly on legacy systems at travel agencies. All of the GDSs provide their own booking solution.

Our
competition comes from, or is anticipated to come from, the following sources:



| |  |  | in-house operations of prospective or existing clients;
| | - |  | -------------------------------------------------------



| |  |  | traditional travel service providers including travel agencies;
| | - |  | ---------------------------------------------------------------



| |  |  | operators of reservation systems;
| | - |  | ---------------------------------



7



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##### Index to Financial Statements

| |  |  | information technology service firms building customized solutions;
| | - |  | -------------------------------------------------------------------



| |  |  | teleservice companies introducing online customer support capabilities;
| | - |  | -----------------------------------------------------------------------



| |  |  | enterprise software companies adding travel management functionality to their products; and
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | other outsourced providers, including providers of customer care products and services.
| | - |  | ---------------------------------------------------------------------------------------

Intellectual Property

We are constantly developing
new technology and enhancing existing proprietary technology. We hold a U.S. patent entitled Tool for Analyzing Corporate Airline Bids (Patent #7,401,029 B2), which was issued on July 15, 2008. Our patent has a remaining life
of approximately 14.9 years. We also have a small portfolio of pending patent applications which relate to our proprietary technology. Currently, we primarily rely on a combination of patent, copyrights, trade secrets, confidential procedures
and contractual provisions to protect our technology. Despite these protections, it may be possible for unauthorized parties to copy, obtain or use certain portions of our proprietary technology. Any misappropriation of our intellectual property
could have a material adverse effect on our competitive position.

Government Regulation

The laws and regulations applicable to the travel industry affect us and our clients. We must comply with laws and regulations relating to the sale and
fulfillment of travel services. In addition, many of our clients and reservation systems providers are heavily regulated by the U.S. and other governments. Our services are indirectly affected by regulatory and legal uncertainties affecting the
businesses of our clients and reservation systems providers.

We are subject to federal regulations prohibiting unfair and deceptive
practices. In addition, federal regulations concerning the display and presentation of information currently applicable to airline booking services, as well as other laws and regulations aimed at protecting customers accessing online or other travel
services, could be extended to us in the future. In certain states, we are required to register as a seller of travel, comply with certain disclosure requirements and participate in the states restitution fund.

We must also comply with laws and regulations applicable to online commerce and businesses in general. Currently, few laws and regulations directly apply
to the Internet and commercial online services. Moreover, there is currently great uncertainty about whether or how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to the Internet
and commercial online services. As laws and regulations are adopted to address these and other issues, it is likely that such new laws or different applications of existing laws will impose additional burdens on companies conducting business online
and may decrease the growth of the Internet or commercial online services. In turn, this could decrease the demand for our products and services or increase our cost of operations.

In addition, during this decade government agencies have been contemplating or developing initiatives to enhance national and aviation security,
including the Transportation Security Administrations Computer-Assisted Passenger Prescreening System, known as CAPPS II, and its successors. These initiatives may result in conflicting legal requirements with respect to data handling. As
privacy and data protection becomes a more sensitive issue, we may also incur legal defense costs and become exposed to potential liabilities as a result of differing views on the privacy of travel data. Travel businesses have also been subjected to
investigations, lawsuits and adverse publicity due to allegedly improper disclosure of passenger information. It is expected that our business will continue to be affected by privacy and data protection legislation.

Numerous jurisdictions globally have privacy and data protection legislation, including the European Union (EU) through its Data Protection
Directive (and implementing statutes of this Directive in the EU Member States). This legislation is intended to protect the privacy of personal data that is collected, processed and transmitted in or from the governing jurisdiction. Enforcement
takes place under the force of national legislation of the EU Member States.



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We may be affected by regulations concerning issues such as exports of technology, telecommunications and
electronic commerce. Our business may be affected if regulations are adopted or changed in these areas. Any such regulations may vary among jurisdictions. We believe that we are capable of addressing these regulatory issues as they arise.

In addition, we are subject to a broad range of federal, foreign, state, and local laws and regulations relating to the pollution and
protection of the environment, health and safety, and labor. Based on continuing internal review and advice from independent consultants, we believe that we are currently in substantial compliance with applicable environmental requirements and
health and safety and labor laws. We do not currently anticipate any material adverse effect on our operations, financial condition, or competitive position as a result of our efforts to comply with environmental requirements.

Congress, the U.S. Department of Transportation, and other governmental agencies have under consideration and may consider and adopt new laws,
regulations, and policies regarding a variety of matters that could affect our business or operations. We cannot predict what other matters might be considered in the future by Congress, the U.S. Department of Transportation or such other agencies,
nor what the impact of this regulation might be on our business.

Employees

As of December 31, 2008, we had 830 employees, of which 345 were located in North America, 175 in Europe and 310 in India. None of our employees are
represented by a labor union, although our German operations are subject to German laws requiring, among other requirements, a Works Counsel. We have never experienced a work stoppage and believe our relationship with our employees is good.

Website Access to U.S. Securities and Exchange Commission Reports

Our Internet address is http://www.trx.com. Through our website, we make available, free of charge, access to all reports filed with the
U.S. Securities and Exchange Commission including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to these reports, as filed with or furnished to the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Copies of any materials we file with, or furnish to, the SEC can also be
obtained free of charge through the SECs website at http://www.sec.gov or at the SECs Public Reference Room at 100 F Street, N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330.



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

You should carefully consider the
following risk factors, as well as other information contained in or incorporated by reference in this Annual Report on Form 10-K. If any of the possible adverse events described below actually occur, our business, results of operations, or
financial condition would likely suffer and the market price of our common stock could decline.

Risks Related to Our Business

A substantial portion of our revenue is generated by our key clients; the loss of any of these clients would significantly reduce our revenues and our results of
operations and financial condition could deteriorate due to lower revenue.

Our top five client contracts accounted for
approximately 78% of our total revenues in 2008. Entities affiliated with Expedia, Inc. accounted for approximately 36% of our revenue in 2008. Our clients can generally terminate their agreements with us if we do not meet specified performance or
other criteria. Some clients, including Expedia.com, can terminate these agreements without cause upon notice and payment of specified fees. If agreements with these or other key clients are terminated, or if we are unable to negotiate favorable
renewal terms, our revenues and operating results would be significantly diminished.



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Expedia began decreasing the volume of transactions that we service for them, beginning in the first
quarter of 2009, as permitted under the agreement with Expedia. In addition, a number of global airlines have announced significant capacity reductions, which generally began in September 2008 and will continue through 2009, due to global
macroeconomic conditions and the related impact on air travel demand. In general, reduced airline capacity results in lower transaction volumes for us. We expect a significant decline in our transaction volume in 2009 as a result
of Expedias intentions to reduce the level of services requested from us and reduced volumes from our clients in general in 2009. We expect our revenues, operating results and cash flows will be materially lower in
2009.

On July 13, 2007, TRX Data Services, Inc. (TRX Data Services), a wholly-owned subsidiary of TRX and Citibank
executed an amendment to the Master Services Agreement dated February 1, 2002, as amended (the Amendment). The Amendment extends the scheduled expiration date of the Master Services Agreement from January 13, 2009 to
December 31, 2010. The primary purpose of the Amendment is for TRX Data Services to sell a limited perpetual license of certain source code to Citibank in order for Citibank to perform certain services in-house that were previously hosted by
TRX Data Services. The license sale was effective in April 2008. TRX Data Services will continue to perform maintenance and project services for Citibank. Recurring revenues from Citibank generated in 2009 will be significantly less than revenues
generated in the last three years as a result of the Amendment and the license sale.

Additionally, many of our large clients prepay us for
our services. Consequently, if we were to lose one or more of such prepayment arrangements, our liquidity and working capital would be affected, which could harm our ability to grow.

We experience volatility in the volume of transactions we service; such volatility may negatively impact our ability to provide consistent services and strain our operational capabilities.

We have experienced and expect to continue to experience significant levels of volatility in the volume of travel transactions we service. This volatility
is attributable to a number of factors, including travel industry conditions and promotional programs by our clients. Significant or unanticipated increases in transaction volume have strained and may continue to strain our operational capabilities,
leading to higher costs and lower quality of service. In addition, we may experience significantly lower transaction volume than expected, which would lead to decreased revenues and underutilization of our resources. Our failure to address
unanticipated transaction volume may decrease our profitability and harm our relationships with our clients.

We also experience volatility
in the number and scope of project requests for the customization of our products and services. There can be no assurance that we will be able to accurately forecast volatility related to project requests and that we will be able to meet all client
project delivery mandates in a manner satisfactory to our clients.

We also have experienced and expect to continue to experience seasonal
fluctuations in our business. Business and consumer travel bookings typically decline during the fourth quarter of each calendar year. This seasonality has caused, and will likely continue to cause, quarterly fluctuations in our operating results.

Failures of our software, hardware, and other systems could increase our operating costs, subject us to monetary damages, undermine our
clients confidence in our reliability, and cause us to lose clients or prevent us from gaining new clients.

Delivering our
services requires the successful integration and operation of a network of software, computer hardware, and telecommunications equipment. A failure of any element in this network could partially or completely disrupt our activities, which could
materially adversely affect our business, financial condition or results of operations by causing us to lose clients, prevent us from gaining new clients, or result in our owing monetary damages. Third parties provide some of these elements and,
accordingly, they are not within our control. In addition, this network is vulnerable to interruption from power failures, telecommunications outages,



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##### Index to Financial Statements

natural disasters, computer viruses, physical or electronic break-ins, and other network service outages and disruptions. The loss of one or more of our
facilities or failures of our software, hardware, and other systems could result in delays, service interruptions, service errors or loss of critical data and, therefore, significantly undermine our clients confidence in our reliability and
diminish the TRX brand name. We cannot guarantee that our back-up systems or disaster recovery plans will adequately protect against such failures. These failures or other interruptions may be costly to remedy as our business interruption or other
insurance may not protect us fully against any losses that may result.

Interruptions in our ability to access third-party computer systems could
impair the quality of our service.

We and our clients rely on third-party computer systems, including the computerized reservation
systems serving the airline industry, to make and complete travel reservations. We also rely on the compatibility of our proprietary software with these computer systems. Interruptions in our ability to access these systems or the failure of our
software to interact with these systems would significantly harm our business and operating results by causing us to lose clients, preventing us from gaining new clients, or resulting in our owing monetary damages.

Failure to meet our clients performance expectations and to provide their customers with high quality customer service could cause us to lose clients or
prevent us from gaining new clients.

Our clients expect us to maintain high levels of service quality for their businesses. In many
cases, specific performance criteria such as service levels, average response time, and timely processing are included in our contracts with clients. Any failure by us to meet specified or otherwise expected performance criteria or to provide the
level of service required by our clients could lead to financial penalties, the deterioration of our relationships with our clients, and a loss of credibility in the marketplace. Dissatisfied clients may choose to terminate or not renew their
contracts with us or seek services from other sources. This could reduce our revenues and harm our operating results, as well as make it more difficult to attract new clients.

Our strategy of sales through distributors may not be successful.

We currently sell our
products and services primarily through a network of distributors, such as American Express, Expedia, Inc. and BCD Travel. In many cases we must rely on the efforts of our partners to sell and implement our products and services. Expected growth may
not materialize as quickly as we are anticipating or at all, or distributors may decide to discontinue this relationship with us. Additionally, poor performance by our partners could cause harm to our reputation with the end user corporations and
travelers.

Our sales and implementation cycle is lengthy and variable, depends upon factors outside our control, and could cause us to expend
significant time and resources prior to earning associated revenues.

The typical sales cycle for our services is lengthy and
unpredictable, requires pre-purchase evaluation by a significant number of employees in our clients organizations, and involves a significant operational decision by our clients. Moreover, a purchase decision by a potential client typically
requires the approval of several senior decision makers. Our sales cycle for our larger clients is generally between six and eighteen months. Additionally, the implementation and testing of our services can take up to one year, and unexpected
implementation delays and difficulties can occur. This lengthy and variable sales and implementation cycle may have a negative impact on the timing of our revenues, causing our revenues and operating results to vary significantly from period to
period.

We have a history of net losses, and we cannot assure you that we will sustain profitability.

We incurred net losses in every year of our operations prior to 2006 and again in 2007. As of December 31, 2008, we had an accumulated deficit of
$52.8 million. We cannot assure you that we will be able to sustain profitability on a quarterly or annual basis. Our results of operations will be harmed if our revenues do not increase or are insufficient for us to achieve or sustain
profitability.



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##### Index to Financial Statements

Failure to manage our growth, or to recruit or retain qualified employees, could reduce our revenues or net income.

Rapid expansion strains our infrastructure, management, internal controls and financial systems. We may not be able to effectively
manage our present growth or any future expansion. New clients and the expansion of services from existing clients may cause rapid increases to our transaction volumes. Rapid increases in transaction volumes can inhibit our ability to train and
integrate our new employees. Inadequate training and integration of our employees may result in inefficiencies in our workforce and may reduce our revenues or net income.

We are also heavily dependent on our employees to provide the high level of service our clients expect. If we cannot recruit and retain enough qualified and skilled employees, the growth of our business may be
limited. Our ability to provide services to clients and grow our business depends, in part, on our ability to attract and retain qualified employees. If our employee turnover rate increases significantly, our recruiting and training costs could
rise, and our operating efficiency and productivity could decline. We may not be able to recruit or retain the caliber of employees required to carry out essential functions at the pace necessary to sustain or grow our business.

If we are not successful in adapting to changes in technology made by the major GDSs or integrating our systems with those of alternative GDS providers that have
recently emerged, we may lose clients and market share.

Most of our transaction processing originates from traditional GDSs and, in
general, our current solutions are tightly integrated with the four major GDS providers. Unforeseen changes in technologies, standards or procedures at any of the GDS providers could make it difficult for us to integrate our systems. Also, recent
travel industry deregulation has resulted in the emergence of alternative GDS providers. Moreover, significant volumes of travel transactions from our clients may migrate to the alternative GDS providers over time. We are currently in the process of
integrating our solutions into some of the alternative GDS providers. However, there is no guarantee that our integration efforts will be successful, nor is it certain that we are focusing our integration efforts on the right partners. If we are not
successful in integrating our systems with those alternative GDS providers, we may lose clients and market share.

Our ability to increase our
revenues will depend upon introducing new products and services, and if the marketplace does not accept these new products and services, our revenues may not increase or may decline.

To increase our revenues, we must enhance and improve existing products and continue to introduce new products and new versions of existing products that
satisfy increasingly sophisticated client requirements and achieve market acceptance. Products and services that we plan to market in the future are in various stages of development or are a result of recent acquisitions, and we are in the process
of integrating them into TRX. Significant human and capital investment is often made to develop and launch new products and services and to discontinue old products and services. We cannot assure you that the marketplace will accept our new products
and services. If our current or potential clients are not willing to switch to or adopt our new products and services, our ability to increase revenues will be significantly impaired.

We may seek to diversify our revenue streams by serving many different industry segments. If we are not successful in serving industry segments other than the travel and travel-related industries we currently
serve, we may not be successful in capturing these potential revenue streams or recapturing expenditures pursuing these diversified revenue streams.

We may seek to adapt our products and services to industries other than the travel and travel-related industries upon which we currently depend. Our ability to increase our revenues will depend on how effectively we
are able to modify and enhance our software, technology and networks in the future to address the various needs of different industry segments. If we are unable to accurately anticipate the needs of industry segments



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other than the travel and travel-related industries we currently serve, if costs associated with serving additional industries are higher than expected, or
if we are not successful in marketing our solutions to new industries, we may be unable to profitably grow our revenues.

If we fail to keep up with
rapidly changing technologies, our products and services could become less competitive or obsolete.

In our business, technology
changes rapidly, and there are continuous improvements and changes in computer hardware, software applications, network operating systems, programming tools, programming languages, operating systems, database technology, and communication protocols.
Advances in technology may result in changing client preferences for products and services and delivery formats. If we fail to enhance our current products and develop new products in response to changes in technology, industry standards, or client
preferences, our products and services could rapidly become less competitive or obsolete.

We face significant competition in the markets we serve.

We have different competitors in each category of services that we offer. The market for transaction processing for the travel
industry is new and continues to evolve as more agencies and suppliers look to outsource these processes. Currently, the marketplace for transaction processing services for the travel industry is comprised primarily of in-house solutions and
operations residing mostly on legacy systems at travel agencies. All of the GDSs provide their own booking solutions. Our competition comes from, or is anticipated to come from, the following sources:



| |  |  | in-house operations of prospective or existing clients;
| | - |  | -------------------------------------------------------



| |  |  | traditional travel service providers including travel agencies;
| | - |  | ---------------------------------------------------------------



| |  |  | operators of reservation systems;
| | - |  | ---------------------------------



| |  |  | information technology service firms building customized solutions;
| | - |  | -------------------------------------------------------------------



| |  |  | teleservice companies introducing online customer support capabilities;
| | - |  | -----------------------------------------------------------------------



| |  |  | enterprise software companies adding travel management functionality to their products; and
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | other outsourced providers, including providers of customer care products and services.
| | - |  | ---------------------------------------------------------------------------------------

Innovations in technology have increased the ability of travel suppliers to distribute their travel products and services directly to businesses and
consumers. As travel suppliers focus increasingly on direct distribution, new travel processing services competitors may emerge that offer greater flexibility, accuracy, reliability, speed of service, or price. In addition, as travel agencies,
travel specific websites and corporate travel management companies expand their size and financial resources through consolidation, they may combine existing businesses or create new businesses that compete directly with us. Additionally, increased
consolidation means that we have fewer new client prospects or could cause us to lose clients.

The data reporting services we offer are
substantially tied to travel and travel-related processes. We compete against many of the traditional providers in this category. Companies offering such services include Ascential Software Corporation, which is owned by International Business
Machines Corporation, Informatica Corporation, and SAS Institute Inc.

As the market for both data processing and data reporting grows, we
believe a number of companies will increase their efforts to develop products and services that will compete with ours. It is also possible that new competitors or alliances among our competitors and potential clients may emerge and rapidly acquire
significant market share. Moreover, our current and future competitors may have significantly greater financial, marketing and other resources than we have. If we are unable to effectively respond to market and competitive pressures, we may lose
clients and market share, which could decrease our revenues or margins.



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##### Index to Financial Statements

We could be required to pay damages due to errors, such as errors made in ticketing or fare loading processes.

We depend in part on manual programming, input of travel policies and restrictions, loading of fares, and other data used in
connection with the delivery of our products and services to our clients. Human errors, miscommunication and other factors could lead to errors made in ticketing, fare loading or other processes that result in tickets being issued at incorrect
prices or agency commissions being miscalculated. Such errors on our part have led to, and could lead to, claims against us and payments by us for damages.

Our international operations subject us to additional business risks that may reduce our profitability or revenues.

A significant part of our business is conducted outside of the U.S. During the year ended December 31, 2008, we received approximately 17% of our revenue from Europe-based clients. We incur costs in the United Kingdom, Germany and
India. We plan to continue to pursue opportunities abroad. As a result, our future operating results could be negatively affected by a variety of factors, many of which are beyond our control. The risks and potential costs of our international
operations include:



| |  |  | political and economic instability;
| | - |  | -----------------------------------



| |  |  | changes in regulatory requirements and policy and the adoption of laws detrimental to our operations, such as legislation relating to trade protection, and
restrictions on pricing and privacy;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | negative impact of currency exchange rate fluctuations;
| | - |  | -------------------------------------------------------



| |  |  | potentially adverse tax consequences;
| | - |  | -------------------------------------



| |  |  | increased restrictions on the repatriation of funds;
| | - |  | ----------------------------------------------------



| |  |  | general economic conditions in international markets;
| | - |  | -----------------------------------------------------



| |  |  | labor laws and restrictions;
| | - |  | ----------------------------



| |  |  | staffing key management positions;
| | - |  | ----------------------------------



| |  |  | cultural differences;
| | - |  | ---------------------



| |  |  | negative impact of wage rate increases and other costs subject to inflation;
| | - |  | ----------------------------------------------------------------------------



| |  |  | competition;
| | - |  | ------------



| |  |  | nationalization; and
| | - |  | --------------------



| |  |  | foreign tax and other laws.
| | - |  | ---------------------------

These
risks may adversely affect our ability to conduct and grow business internationally, which could cause us to increase expenditures and costs, decrease our revenue growth, or both.

Fluctuations in the exchange rate of the U.S. dollar and other foreign currencies could increase our operating expenses and decrease our operating margins.

A portion of our costs and revenues are denominated in non-U.S. currencies, such as the euro, British pound sterling and Indian rupee. As a result,
changes in the exchange rates of these currencies or any other applicable currencies to the U.S. dollar will affect our operating expenses and operating margins and could result in exchange losses. As it is not cost effective, we currently do not
hedge our exposure to currency fluctuation risks. The impact of future exchange rate fluctuations on our results of operations cannot be accurately predicted.



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A significant portion of our assets consists of goodwill, and any changes in strategy or market or other conditions
or the continuation of net losses could result in an impairment of our goodwill, which would lead to a decrease in our assets and shareholders equity and reduction in our net income or increase in our net losses.

Approximately 50% of our assets consisted of goodwill as of December 31, 2008. We assess the impairment of goodwill in accordance with by Statement
of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). Accordingly, we test our goodwill for impairment annually on September 30,
or more frequently if an event occurs or circumstances change that more likely than not reduce the value of a reporting unit below its carrying value. Impairment may result from, among other things, deterioration in the performance of our business,
adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of the acquired business, and a variety of other circumstances, which would lead to a decrease in our assets and
shareholders equity and reduction in our net income or increase in our net losses. If we determine that impairment has occurred, we are required to record an impairment charge for the difference between the carrying value of the goodwill and
the implied fair value of the goodwill in the period the determination is made. No impairment of goodwill was identified in our annual goodwill impairment test as of September 30, 2008 or 2007. Our market capitalization experienced a
significant decline between September 30, 2007 and December 31, 2007, and therefore, we determined that it was necessary to test goodwill for impairment as of December 31, 2007. The results of the impairment test as of
December 31, 2007 did not indicate an impairment of our goodwill. Similarly, we experienced a decline in our market capitalization from September 30, 2008 to December 31, 2008, which we determined was not due to company-specific
factors but rather macroeconomic conditions, including rising unemployment levels, turmoil in the credit markets, and deteriorating consumer confidence. However, given the decrease in market capitalization at December 31, 2008, we reconsidered
our cash flow projections utilized in our impairment test as of September 30, 2008, including an assessment of our actual results for the fourth quarter of 2008 as compared to our projections for such period, and also assessed whether the
discount rate used in our September 30, 2008 impairment test remained appropriate as of December 31, 2008. On the basis of our reconsideration of the cash flow projections and associated discount rate, we determined that it was not more
likely than not that the estimated fair value of our reporting unit was reduced below its carrying value.

If we are not able to adequately protect
our intellectual property rights, our competitors may be able to duplicate our services.

We rely in part upon our proprietary
technology to conduct our business. Our failure to adequately protect our intellectual property rights could harm our business by making it easier for our competitors to duplicate our services. We hold a U.S. patent entitled Tool for Analyzing
Corporate Airline Bids (Patent #7,401,029 B2), which was issued on July 15, 2008. We also have a small portfolio of pending patent applications which relate to our proprietary technology. Currently, we primarily rely on a combination
of copyrights, trade secrets, confidential procedures and contractual provisions to protect our technology. Despite these protections, it may be possible for unauthorized parties to copy, obtain or use certain portions of our proprietary technology.
Any misappropriation of our intellectual property could have a material adverse effect on our competitive position.

We cannot be certain
that third parties will not infringe or misappropriate our proprietary rights or that third parties will not independently develop similar proprietary information. Any infringement, misappropriation or independent development could harm our future
financial results. In addition, effective protection of intellectual property rights may not be available in every country where we provide services. We may, at times, have to incur significant legal costs and spend time defending our intellectual
property rights. Any defensive efforts, whether successful or not, would divert both time and resources from the operation and growth of our business.

There is also significant uncertainty regarding the applicability to the Internet of existing laws regarding matters such as property ownership, copyrights and other intellectual property rights. Legislatures adopted
the vast majority of these laws prior to the advent of the Internet, and as a result, these laws do not contemplate or address the unique issues of the Internet and related technologies. We cannot be sure what laws and regulations may ultimately
affect our business or intellectual property rights.



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##### Index to Financial Statements

Others may assert that our technology infringes their intellectual property rights.

We may be subject to infringement claims in the future. The defense of any claims of infringement made against us by third parties could involve
significant legal costs and require our management to divert time from our business operations. If we are unsuccessful in defending any claims of infringement, we may be forced to obtain licenses or to pay royalties to continue to use our
technology. We may not be able to obtain any necessary licenses on commercially reasonable terms or at all. If we fail to obtain necessary licenses or other rights, or if these licenses are too costly, our operating results may suffer either from
reductions in revenues through our inability to serve clients or from increases in costs to license third-party technology.

If any breaches or
compromises to the security systems of our databases occur, including theft of our customers personal information, our reputation could suffer, our customers may not be willing to use our products and services, and we may have difficulty
attracting new customers.

If the security systems of our databases are breached or compromised in any way, our business and
operations could be harmed. Our collection and processing of travel transactions through our RESX, SELEX, TRANXACT, and CORREX products, and enhancement of data through our TRAVELTRAX, DATATRAX and TRX TRAVEL ANALYTICS products, require us to
receive and store personally identifiable data, such as names and addresses, credit card information and transaction history records. Any breaches of the security systems of our databases could result in the theft of personal confidential
information of our customers or other modification of our records. We have had incidents of security breaches by former employees which led to the theft of confidential information. If any breaches or compromises to the security systems of our
databases were to occur, customers may be deterred from using our products and services, our reputation may be harmed, we may be exposed to liability, and we may incur increased costs relating to any liability.

The terms of our senior secured revolving credit facility may limit our ability to grow.

Our senior secured revolving credit facility may restrict our ability to take specific actions, even if such actions may be in our best interest. These
restrictions limit our ability to, among other things, make advances to our European operations, make acquisitions, make capital expenditures, incur additional debt and pay dividends. Under the facility, we are subject to maintenance of a maximum
consolidated senior leverage ratio (as defined in the facility) of 1 to 1 at December 31, 2008, increasing to 1.5 to 1 on June 30, 2009, 1.65 to 1 on September 30, 2009 and 1.75 to 1 on December 31, 2009. Our failure to comply
with these covenants could result in an event of default that, if not cured or waived, could result in our being required to repay any borrowings, which totaled $3.4 million as of December 31, 2008, before their due date. In addition, these
covenants and restrictions may limit our future growth opportunities.

We may be unsuccessful in pursuing and integrating business combinations and
strategic alliances, which could result in increased expenditures or cause us to fail to achieve anticipated cost savings or revenue growth.

In August 2006 and January 2007, we acquired certain assets and assumed of certain liabilities of Travel Analytics, Inc. (Travel Analytics) and Hi-Mark, LLC (Hi-Mark), respectively. In December 2007, we acquired the
assembled workforce and certain property assets used by Siemens to provide services to TRX, which constitute a business as defined by Emerging Issues Task Force (EITF) Issue 98-3 Determining Whether a Nonmonetary
Transaction Involves Receipt of Productive Assets or of a Business. We regularly evaluate potential business combinations and growth opportunities and may pursue acquisitions of other companies or technologies in the future in order
to maintain and grow revenues and increase our market position. We may not be successful in identifying suitable acquisition candidates or may not be able to obtain financing on acceptable terms for such business combinations or strategic alliances.



16



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##### Index to Financial Statements

Even if we are able to complete these types of business transactions, we may face additional risks,
including:



| |  |  | difficulties in integrating or assimilating acquired operations, technology and personnel;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | diversion of managements attention from other business concerns and market developments;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | loss of key management and technical personnel from acquired businesses;
| | - |  | ------------------------------------------------------------------------



| |  |  | impairment of relationships with existing clients, employees and business partners; and
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | expenses associated with amortization of acquired intangible assets and other expenses associated with a change in control.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------

If we are unable to successfully pursue and integrate business combinations and strategic alliances, our financial condition and results of operations
may be materially adversely affected due to the increased expenditures or our failure to achieve anticipated cost savings or revenue growth.

Risks
Related to Our Industry

We are currently dependent on the travel industry, and declines or disruptions in the travel industry could reduce our
revenues.

We rely in large part on the health and growth of the travel industry. Travel is highly sensitive to business and
personal discretionary spending levels and tends to decline during general economic downturns. In addition, other adverse trends or events that tend to reduce travel are likely to reduce our revenues. These may include:



| |  |  | price escalation in the airline industry or other travel-related industries due to increased fuel costs or other factors;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | financial instability of clients;
| | - |  | ---------------------------------



| |  |  | occurrence of travel-related accidents and concerns about passenger convenience and safety;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | airline or other travel-related strikes;
| | - |  | ----------------------------------------



| |  |  | advances in business technology and communication, such as videoconferencing and online teleconferencing;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | a slowdown in the growth of the adoption of online travel;
| | - |  | ----------------------------------------------------------



| |  |  | political instability, regional hostilities, terrorism, natural disasters and governmental terror warnings;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | consolidations in the airline industry;
| | - |  | ---------------------------------------



| |  |  | health-related fears; and
| | - |  | -------------------------



| |  |  | bad weather.
| | - |  | ------------

In addition, our
clients may seek reduced prices for our services in response to changing fare and commission structures and other travel industry conditions.

Acts
of terrorism and war could have an adverse effect on the travel industry, which in turn could adversely affect our business due to the possible decrease in new travel bookings.

Travel is sensitive to safety and security concerns, and thus declines after occurrences of and fears of future incidents of terrorism and hostilities
that affect the safety, security and confidence of travelers. For example, the start of the war in Iraq in March 2003 and the terrorist attacks of September 11, 2001 resulted in the cancellation of a significant number of flights and travel
bookings and a decrease in new travel bookings. Future revenues may be reduced by similar and/or other acts of terrorism or war. The effects of these events could include, among other things, a protracted decrease in demand for air travel due to
fears regarding additional acts of terrorism, military and governmental responses to acts of terrorism and a perceived inconvenience in traveling by air and



17



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##### Table of Contents

##### Index to Financial Statements

increased costs and reduced operations by airlines due, in part, to new safety and security directives adopted by the Federal Aviation Administration,
Transportation Security Administration, Homeland Security or other governmental agencies.

Travel industry and travel-related industry participants
may choose not to adopt outsourcing or may otherwise be precluded from adopting outsourcing.

Our business depends in significant
part on the continued adoption by travel industry participants of the outsourcing of transaction processing and data reporting services and by travel-related industry participants of the outsourcing of data reporting services as a means to achieve
cost savings and enhanced customer service. There is no guarantee that our services will lower the costs of our clients businesses or improve customer service. If these cost savings or customer service improvements do not occur, we may not be
able to retain clients or attract new clients.

Our processing, storage, use and disclosure of personal data could give rise to liabilities as a
result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights.

Our collection and
processing of travel transactions through our RESX, SELEX, TRANXACT, and CORREX products and our consolidation, extraction, and enhancement of data through our TRAVELTRAX, DATATRAX and TRX TRAVEL ANALYTICS products require us to receive and store a
large volume of personally identifiable data. This type of data is subject to legislation and regulation in various jurisdictions, including the European Union through the Data Protection Directive, and variations of this directive in legislation
enacted by member states of the European Union. Such laws typically protect the privacy of personal data that is collected, processed and transmitted in or from these jurisdictions. Our business, financial condition and results of operations could
be adversely affected if the laws and regulations are expanded, implemented or interpreted to require changes to our business practices and methods of data collection.

In the U.S., government agencies continue to discuss and develop initiatives to increase airline security, including the Transportation Security Administrations Computer-Assisted Passenger Prescreening System
and its successors. These government initiatives could change the way we handle data and may result in conflicting legal requirements in the various jurisdictions in which we operate.

As personal and legal issues relating to privacy and data protection become more sensitive, we may become exposed to potential liabilities with respect
to the data we collect, manage and process, and may incur legal costs if our or our vendors established information security policies and procedures are not effective or if we are required to defend our methods of collection, processing and
storage of personal data. Future investigations, lawsuits or adverse publicity relating to our methods of handling personal data could adversely affect our business, financial condition, and results of operations due to the costs and negative market
reaction to such developments.

Regulatory requirements and regulatory changes may impose burdens on our business.

The laws and regulations applicable to the travel and financial services industries affect us and our clients. We must comply with laws and regulations
relating to the sale and fulfillment of travel services and the financial services industry. Our services are indirectly affected by regulatory and legal uncertainties affecting the businesses of our clients and reservation systems providers.

We must also comply with laws and regulations applicable to online commerce and businesses in general. Currently, few laws and regulations
directly apply to the Internet and commercial online services. Moreover, there is currently great uncertainty about whether or how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to
the Internet and commercial online services. As laws and regulations are adopted to address these and other issues, it is likely that such new laws or different applications of existing laws will impose additional burdens on companies conducting
business online and may decrease the growth of the Internet or commercial online services. In turn, this could decrease the demand for our products and services or increase our cost of operations.



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##### Index to Financial Statements

|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------

None.



|Item 2. | Properties
|------- | ----------

Our headquarters are located in
Atlanta, Georgia and consist of 44,000 square feet of office space held under a lease that expires in October 2019. We lease a total of approximately 200,000 square feet globally. As of December 31, 2008, the locations of our other principal
leased facilities include Dallas, Texas, Milton, Florida, Tysons Corner, Virginia, Bangalore, India, Berlin, Germany, Leicester, United Kingdom and Crawley, United Kingdom. These leases expire at various times between
2009 and 2017.

We believe that our facilities are adequate for our current and near-term needs, and that we will be able to locate
additional facilities as needed.



|Item 3. | Legal Proceedings
|------- | -----------------

We expect to be a party from
time to time to certain routine legal proceedings arising in the ordinary course of our business. Although we are not currently involved in any litigation that we expect will have a material adverse effect on our financial condition and results of
operations, we cannot accurately predict the outcome of any such proceedings in the future.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

No matters were submitted to a vote of our shareholders during our fourth quarter ended December 31, 2008.

PART II



|Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ------------------------------------------------------------------------------------------------------------

Our common stock trades on the NASDAQ Global Market under the symbol TRXI. The following table sets forth, for the period indicated, the range
of high and low sales prices for our common stock.



|                              |  |      |      |     |   |     
|----------------------------- |  | ---- | ---- | --- | - | ----
|                              |  | High |      | Low
|Year Ended December 31, 2008: |  |      |      |     |   |     
|First Quarter                 |  | $    | 2.40 |     | $ | 1.00
|Second Quarter                |  | $    | 1.55 |     | $ | 1.21
|Third Quarter                 |  | $    | 1.51 |     | $ | 0.90
|Fourth Quarter                |  | $    | 1.14 |     | $ | 0.36
|Year Ended December 31, 2007: |  |      |      |     |   |     
|First Quarter                 |  | $    | 7.79 |     | $ | 3.26
|Second Quarter                |  | $    | 4.05 |     | $ | 2.86
|Third Quarter                 |  | $    | 3.54 |     | $ | 1.98
|Fourth Quarter                |  | $    | 2.62 |     | $ | 0.98

As of December 31, 2008, there were approximately 37 holders of record of our common stock.
This number does not include beneficial owners of our common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

We have not paid or declared any cash dividends on our common stock. We currently expect to retain all of our earnings for use in developing our business
and do not anticipate paying any cash dividends in the foreseeable future. Future cash dividends, if any, will be paid at the discretion of our board of directors and will depend, among other things, upon our future operations and earnings, capital
requirements and surplus, general financial condition, contractual restrictions and such other factors as our board of directors may deem relevant.



|Item 6. | Selected Financial Data
|------- | -----------------------

Not Applicable



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##### Index to Financial Statements

|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

You should read the following discussion together with our financial statements and the related notes included elsewhere in this annual report. This
discussion contains forward-looking statements that are based on our current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such
forward-looking statements as a result of a number of factors, including those we discuss under Risk Factors and elsewhere in this annual report.

Overview

TRX is a global technology company. We develop and host software applications to automate manual processes
and track transaction data, enabling our clients to optimize performance and control costs. We are a leading provider to the travel industry and expect to eventually include growth in industries beyond travel, such as financial services and health
care. For the foreseeable future, we intend to focus our efforts on the large opportunities within the travel industry. We deliver our technology applications as a service over the Internet to travel agencies, corporations, travel suppliers,
government agencies, credit card associations, credit card issuing banks, and third-party administrators. TRX is headquartered in Atlanta, Georgia with operations and associates in North America, Europe, and Asia.

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

A
significant portion of our revenue is derived from long-term contracts with several large clients. Our largest client, Expedia and its affiliates, accounted for 36% and 41% of our global revenues in 2008 and 2007, respectively. Expedia has been a
client since its launch in 1996. In December 2006, we replaced our existing contracts with Expedia with a Master Services Agreement (the Expedia Agreement). The Expedia Agreement continues through 2010.

Expedia began decreasing the volume of transactions that we service for them, beginning in the first quarter of 2009, as permitted under the Expedia
Agreement. In addition, a number of global airlines have announced significant capacity reductions, which generally began in September 2008 and will continue through 2009, due to global macroeconomic conditions and the related impact
on air travel demand. In general, reduced airline capacity results in lower transaction volumes for us. We expect a significant decline in our transaction volume in 2009 as a result of Expedias intentions to reduce the level of
services requested from us and reduced volumes from our clients in general in 2009. We expect our revenues, operating results and cash flows will be materially lower in 2009.

Our scale and process-reengineering expertise has allowed us to reduce our costs in several areas when measured on a per transaction basis, and we
continue to take steps to reduce our cost structure in the normal course of business. Additionally, in September 2008 we announced a cost reduction program specifically designed to align our costs with expectations of reduced 2009 revenues.
Reductions made in 2008 included personnel, leasehold and other operations-related costs. We have established pricing models that provide volume-based discounts to share scale efficiencies with our clients to ensure long-term, mutually-beneficial
relationships. As a result, our average revenue per transaction has generally declined over the last few years. We expect it to continue to decline in the future because of scale efficiencies, as well as trends in the travel processing supply chain
that are putting negative pressure on our revenue per transaction.

On July 13, 2007, TRX Data Services and Citibank executed an
amendment to the Master Services Agreement dated February 1, 2002, as amended. The Amendment extends the scheduled expiration date of the Citibank Master Services Agreement from January 13, 2009 to December 31, 2010. The primary
purpose of the



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##### Index to Financial Statements

Amendment was for TRX Data Services to sell a $4.5 million limited perpetual license of certain source code to Citibank in order for Citibank to perform
certain services in-house that had previously been hosted by TRX Data Services. TRX Data Services continues to perform maintenance and project services for Citibank. As a result of the Amendment, recurring revenues from Citibank generated in 2008
were significantly less than revenues generated in 2007 and we expect them to decline further in 2009.

The Amendment also provided that we
would continue to provide the hosting services historically provided to Citibank until the sale of the perpetual license occurred. The license sale was completed during the second quarter of 2008 and, as a result, we recognized $4.5 million of
revenue, the contractually-stated sales price of the license. In addition to the license sale, Citibank also paid us approximately $1.4 million for certain costs and assets that we had purchased in the past for Citibanks benefit, which are
essential to the functionality of the technology.

The sale of the license, the compensation for the assets referred to above, and the
hosting services are all elements of the Amendment. Revenue recognition for these elements is governed by SOP 97-2, Software Revenue Recognition (SOP 97-2). In accordance with SOP 97-2, as there was no vendor
specific objective evidence of the fair value of the perpetual license at the effective date of the Amendment, revenue associated with the hosting services was deferred until April 30, 2008, when the sale of the perpetual license
occurred. We recognized revenue for the hosting services of $10.0 million in the second quarter of 2008. All costs associated with the hosting services were expensed as incurred from July 2007 through April 2008.

In December 2007, we acquired for $0.8 million the assembled workforce and certain property assets used by Siemens to provide services to TRX. The
assembled workforce and assets acquired constitute a business as defined by EITF Issue 98-3 Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business, and accordingly we
accounted for this transaction as a business combination under SFAS No. 141, Business Combinations. While the employees and related assets migrated from Siemens to us in December 2007, we did not finalize the related purchase
agreement or pay consideration for the purchase until September 2008.

In June 2008, we and BCD Travel provided mutual notice of the
parties intent not to renew the Amended and Restated Master Agreement by and between TRX Technology and BCD Travel (the Master Agreement). We are in discussions with BCD Travel regarding a new contract, and the six-month notice was
required pursuant to the current Master Agreement. As a result of the notice, the Master Agreement expired by its terms on December 31, 2008, and did not automatically renew for an additional one year term. We expect a new agreement for TRX
services between us and BCD Travel to be finalized in the first quarter of 2009.

In 2008, we entered into a new office lease pursuant to
which we rent approximately 44,000 square feet of office space in Atlanta. We relocated our existing Atlanta operations to the new location in November 2008 and did not renew our existing lease agreement, which expired on October 31, 2008. The
initial term of the new lease, which commenced on November 1, 2008, is 11 years, and we received access to the space during October 2008 to complete construction. We have an option to extend the term of the lease for two additional
five year terms, subject to the satisfaction of certain conditions specified in the lease.

The lease provides for approximate annual
lease payments, net of excused rent, as follows: $0.6 million in each of years one through four, $0.9 million in each of years five through seven, and $1.0 million in each of years eight through 11. In addition to the base rent, beginning in
2010, we are responsible for our pro rata share of certain other customary costs and charges. As security for our obligations under the lease, we delivered to the landlord an irrevocable letter of credit in the amount of $1.5 million, utilizing a
portion of our existing credit facility.

Industry factors impacting our operating results include the channel shifts toward online
bookings and direct distribution, cost compression in the travel processing supply chain, use of corporate credit cards, airline seat capacity, changing and increasing access methods to reach supplier inventory, supplier commission rates, GDS



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##### Index to Financial Statements

incentive levels, and overall economic conditions. Our estimates of future results are primarily affected by assumptions of transaction volumes, pricing
levels, our ability to efficiently scale with our clients, and client retention and acquisition. These anticipated results may be impacted by seasonality of the travel industry and credit card volumes related to travel.

Sources of Revenue

We principally operate a
transaction-based business model under long-term contracts using hosted technology applications. Transaction and other revenues are derived from two principal service offerings:



| |  |  | Transaction Processing: We generate transaction processing revenue from service and processing fees based primarily on the number of data records we process. Also
included in transaction revenue is customer care revenue, which consists of generated service fees based primarily on the number or length of telephone calls answered or the number of email responses delivered.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Data Reporting: We generate data reporting revenue from service and processing fees based primarily on the number of data records we consolidate, the number of
users accessing the data, the number of sources from which we receive data, and the frequency of data submissions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Transaction-based revenues are recognized when we perform the services. In connection with providing transaction processing and data reporting services, we generate revenues from short-term projects to customize or enhance service delivery.
Revenue generated from short-term project work is recognized as the services are performed, which is generally when billed. Revenue from implementation or set-up fees is recognized over the life of the client contract.

Client reimbursements reflect pass-through items, primarily voice and data costs and items such as ticket envelopes that we bill to our clients at cost.
In the future, if our clients decide to pay these items directly, our client reimbursement revenue and client reimbursement expense will decrease accordingly.

Historically, we have experienced sales cycles of six to eighteen months with respect to several of our larger clients. Additionally, the implementation of our services can take up to one year depending on the size
and complexity of the service offering and the speed at which our clients implement the service offering to their customer base. In 2006, we began offering components of our technology solutions to clients and potential clients. This change has
reduced the length of our sales cycle and has also reduced the average amount of revenue initially earned from each of our clients.

Costs

Our expenses include operating, selling, general and administrative, technology development, restructuring and depreciation and
amortization.

Operating expenses include salaries, benefits, and related overhead of personnel directly and indirectly supporting service
delivery. Personnel indirectly supporting service delivery include information technology, client services, training, and business integration personnel. Operating expenses also include communication costs, technology hosting, and processing errors.
Operating expenses are impacted by our revenue mix, with customer care services generally having higher operating expenses as a percentage of revenue due to the labor-intensive nature of providing customer care services. Our ability to efficiently
manage and utilize our employees along with our ability to provide services from low-cost labor markets also impacts operating expenses.

Selling, general and administrative expenses include salaries, benefits and related overhead associated with the selling and marketing of our products and services, as well as other support functions, including executive, accounting, legal,
centralized human resources and administration. Selling, general and administrative expenses also include professional services and insurance.



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##### Index to Financial Statements

Technology development expenses primarily include salaries, benefits and related overhead of personnel
focusing on developing and maintaining our technologies.

Depreciation and amortization expenses relate to fixed assets, software
development costs and other intangible assets. We currently purchase substantially all of our equipment.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements,
which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates. We believe that, of our significant accounting policies described
in Note 2 of the notes to our consolidated financial statements included elsewhere in this Form 10-K, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most
critical to assist investors in fully understanding and evaluating our consolidated financial condition and results of operations.

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

We recognize revenue in accordance EITF Issue 00-21,
Accounting for Revenue Arrangements with Multiple Deliverables, when certain other consulting or other services are combined with our transaction processing revenues and with SEC Staff Accounting Bulletin No. 104,
Revenue Recognition, when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) services have been performed, (3) the fee for services is fixed or determinable, and
(4) collectibility is reasonably assured. Generally, these criteria are considered to have been met as follows:



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



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



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

With respect to the Citibank Amendment discussed above in the Overview section, the sale of the license, the compensation for the assets referred to above, and the hosting services are all elements of the Amendment. Revenue
recognition for these elements is governed by SOP 97-2. In accordance with SOP 97-2, as there was no vendor specific objective evidence of the fair value of the perpetual license at the time of the Amendment, revenue associated with the hosting
services was being deferred until April 30, 2008, when the sale of the perpetual license occurred. We recognized revenue for the hosting services of $10.0 million in the second quarter of 2008. All costs associated with the hosting
services were expensed as incurred from July 2007 through April 2008.

Internal-Use Software Development Costs. We account for
internal-use software development costs in accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 98-1, Accounting for the Cost of Software Developed or Obtained for Internal
Use, or SOP 98-1. SOP 98-1 specifies that software costs, including internal payroll costs, incurred in connection with the development or acquisition of software for internal use is charged to technology development expense as incurred
until the project enters the application development phase. Costs incurred in the application development phase are capitalized and depreciated over an estimated useful life of three years, beginning when the software is ready for use.



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##### Index to Financial Statements

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

Goodwill. We assess the impairment of goodwill in accordance with SFAS No. 142. Accordingly, we test our goodwill for impairment annually on
September 30, or more frequently if an event occurs or circumstances change that more likely than not reduce the value of a reporting unit below its carrying value. Impairment may result from, among other things, deterioration in the
performance of our business, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of the acquired business, and a variety of other circumstances. If we determine that impairment
has occurred, we are required to record an impairment charge for the difference between the carrying value of the goodwill and the implied fair value of the goodwill in the period the determination is made. No impairment of goodwill was identified
in our annual goodwill impairment test as of September 30, 2008 or 2007. Our market capitalization experienced a significant decline between September 30, 2007 and December 31, 2007, and therefore, we determined that it was necessary
to test goodwill for impairment as of December 31, 2007. The results of the impairment test as of December 31, 2007 did not indicate an impairment of our goodwill. Similarly, we experienced a decline in our market capitalization from
September 30, 2008 to December 31, 2008, which we determined was not due to company-specific factors but rather macroeconomic conditions, including rising unemployment levels, turmoil in the credit markets, and deteriorating consumer
confidence. However, given the decrease in market capitalization at December 31, 2008, we reconsidered our cash flow projections utilized in our impairment test as of September 30, 2008, including an assessment of our actual results for
the fourth quarter of 2008 as compared to our projections for such period, and also assessed whether the discount rate used in our September 30, 2008 impairment test remained appropriate as of December 31, 2008. On the basis of our
reconsideration of the cash flow projections and associated discount rate, we determined that it was not more likely than not that the estimated fair value of our reporting unit was reduced below its carrying value.

Impairment of long-lived assets. We record our long-lived assets, such as property and equipment and software development costs, at cost. We
review the carrying value of our long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable in accordance with the provisions of SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. We evaluate these assets by examining estimated future cash flows to determine if their current recorded value is impaired. We evaluate these cash flows
by using weighted probability techniques as well as comparisons of past performance against projections. Assets may also be evaluated by identifying independent market values. If we determine that an assets carrying value is impaired, we will
record an impairment of the carrying value of the identified asset as an operating expense in the period in which the determination is made. Although we believe that the carrying values of our long-lived assets are appropriately stated, changes in
strategy or market conditions or significant technological developments could significantly impact these judgments and result in impairments of recorded asset balances.

Transaction processing provisions. We have recorded estimates to account for processing errors made in the ticketing or fareloading process that result in tickets being issued at incorrect prices or from agency
commissions being miscalculated. Our reserve for processing errors is based on several factors including historical trends, average debit memo lag time and timely identification of errors. Transaction processing provisions were $0.9 million and $2.9
million during 2008 and 2007, respectively, and are included as operating expenses in our consolidated statements of operations.



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##### Index to Financial Statements

Results of Operations

Comparison of Years Ended December 31, 2008 and December 31, 2007

The following table sets forth selected
statement of operations data.



|                                          |  |                          |        |   |      |     |   |        |   |        |   |  |     |   |  |   |        |   |  |     |   
|----------------------------------------- |  | ------------------------ | ------ | - | ---- | --- | - | ------ | - | ------ | - |  | --- | - |  | - | ------ | - |  | --- | --
|                                          |  | Years Ended December 31, |       
|                                          |  | 2008                     |        |   | 2007 |     |   | Change |  
|                                          |  | (dollars in thousands)   |       
|Revenue:                                  |  |                          |        |   |      |     |   |        |   |        |   |  |     |   |  |   |        |   |  |     |   
|Transaction processing                    |  | $                        | 63,517 |   |      | 67  | % |        | $ | 68,647 |   |  | 76  | % |  | $ | (5,130 | ) |  | (7  | )%
|Data reporting                            |  |                          | 31,908 |   |      | 33  |   |        |   | 20,885 |   |  | 23  |   |  |   | 11,023 |   |  | 53  |   
|                                          |  |                          |        |   |      |     |   |        |   |        |   |  |     |   |  |   |        |   |  |     |   
|Transaction and other revenues            |  |                          | 95,425 |   |      | 100 |   |        |   | 89,532 |   |  | 100 |   |  |   | 5,893  |   |  | 7   |   
|Client reimbursements                     |  |                          | 798    |   |      |     |   |        |   | 2,570  |   |  |     |   |  |   |        |   |  |     |   
|                                          |  |                          |        |   |      |     |   |        |   |        |   |  |     |   |  |   |        |   |  |     |   
|Total revenues                            |  |                          | 96,223 |   |      |     |   |        |   | 92,102 |   |  |     |   |  |   |        |   |  |     |   
|Expenses:                                 |  |                          |        |   |      |     |   |        |   |        |   |  |     |   |  |   |        |   |  |     |   
|Operating                                 |  |                          | 49,761 |   |      |     |   |        |   | 56,820 |   |  |     |   |  |   | (7,059 | ) |  | (12 | ) 
|Selling, general, and administrative      |  |                          | 17,185 |   |      |     |   |        |   | 16,184 |   |  |     |   |  |   | 1,001  |   |  | 6   |   
|Technology development                    |  |                          | 12,875 |   |      |     |   |        |   | 13,178 |   |  |     |   |  |   | (303   | ) |  | (2  | ) 
|Client reimbursements                     |  |                          | 798    |   |      |     |   |        |   | 2,570  |   |  |     |   |  |   | (1,772 | ) |  | (69 | ) 
|Depreciation and amortization             |  |                          | 10,659 |   |      |     |   |        |   | 11,217 |   |  |     |   |  |   | (558   | ) |  | (5  | ) 
|Interest:                                 |  |                          |        |   |      |     |   |        |   |        |   |  |     |   |  |   |        |   |  |     |   
|Interest income                           |  |                          | (101   | ) |      |     |   |        |   | (356   | ) |  |     |   |  |   | (255   | ) |  | (72 | ) 
|Interest expense                          |  |                          | 570    |   |      |     |   |        |   | 583    |   |  |     |   |  |   | (13    | ) |  | (2  | ) 
|Provision for (benefit from) income taxes |  |                          | 774    |   |      |     |   |        |   | (51    | ) |  |     |   |  |   | 825    |   |  |     |   
|                                          |  |                          |        |   |      |     |   |        |   |        |   |  |     |   |  |   |        |   |  |     |   
|Net income (loss)                         |  | $                        | 3,702  |   |      |     |   |        | $ | (8,043 | ) |  |     |   |  |   | 11,745 |   |  |     |   
|                                          |  |                          |        |   |      |     |   |        |   |        |   |  |     |   |  |   |        |   |  |     |   

Transaction processing revenues. The decrease for 2008 compared to the prior year was due
to a reduction in corporate and leisure travel volumes and a reduction in non-recurring transaction processing revenues, primarily related to a project in 2007 to expand a clients GDS access. This was partially offset by growth in our customer
care revenues. We expect revenues per transaction to continue to decline in the future because of scale efficiencies, as well as trends in the travel processing supply chain that are putting negative pressure on our revenue per transaction.

Data reporting revenues. The increase in data reporting revenues for the 2008 compared to the prior year was primarily due to the
recognition of $6.5 million of routine data reporting revenues from Citibank that were previously deferred and the sale of a $4.5 million limited perpetual license to Citibank, as previously discussed. Recurring revenues from Citibank generated in
2008 were significantly less than recurring revenues generated in 2007 and are expected to decline further in 2009.

Operating
expenses. The decrease in operating expenses for 2008 compared to the prior year was primarily due to the reduction in our revenues and a program to reduce our cost structure primarily through personnel reductions in preparation for
significantly lower revenues in 2009.

Selling, general and administrative expenses.The increase in selling, general and
administrative expenses for 2008 compared to the prior year was primarily due the recognition of $1.8 million in compensation expense primarily related to amounts due to our previous Chief Executive Officer and president pursuant to the terms of his
employment agreement, as amended, partially offset by a program to reduce our cost structure primarily through reductions in personnel, contract labor and travel in preparation for expected revenues in 2009.

Technology development expenses. The decrease in technology development expense for 2008 compared to the prior year was primarily due to a program
to reduce our cost structure primarily through reductions in personnel and contract labor in preparation for significantly lower revenues in 2009, partially offset by our



25



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##### Index to Financial Statements

increased investment in new product technology related to our data reporting, reservation processing and online booking product offerings during the first
half of 2008.

Depreciation and amortization. The decrease for 2008 compared to the prior year was primarily due to the reduction in
depreciation expense with the sale of certain assets to Citibank during the second quarter of 2008, partially offset by an increase in depreciation expense due to the acceleration of depreciation of leasehold improvements related to our previous
Atlanta location, for which the lease ended in October 2008.

Interest income. The decrease for 2008 compared to the prior year was
primarily due to reduced average cash balances available for investment.

Interest expense. The decrease for 2008 compared to the
prior year was primarily due to a reduction of interest expense as we repay our note payable related to the acquisition of certain assets and assumption of certain liabilities of Hi-Mark and as a result of a lower Prime and LIBOR interest rates,
partially offset by additional interest expense related to our credit facility borrowings.

Income tax provision.Income tax
provision of $0.8 million was recorded in 2008 and relates to deferred tax liabilities related to our goodwill which cannot be utilized to offset deferred tax assets. Deferred tax expense for 2008 and our deferred tax liability as of
December 31, 2008 includes an adjustment of $0.4 million to increase our deferred tax valuation allowance, which should have been recorded in 2007. Such adjustment was not material to any prior quarterly or annual periods. We recorded an income
tax benefit of $0.1 million in 2007 related to a refund of a portion of our 2006 alternative minimum tax.

Liquidity and Capital Resources

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

The
global financial markets have been and continue to be in turmoil, with volatility in the equity and credit markets and with many financial and other institutions experiencing significant financial distress. At December 31, 2008, our principal
sources of liquidity were cash and cash equivalents of $6.9 million and $5.1 million of availability under our revolving credit facility with Atlantic Capital Bank (ACB). We had $3.4 million of borrowings outstanding under our credit
facility at December 31, 2008. Neither our access to nor the value of our cash equivalents have been negatively affected by the recent liquidity problems of financial institutions. Although we have been prudent in our strategy for our
anticipated near-term liquidity needs, it is not possible to accurately predict how the financial market turmoil and the deteriorating economic conditions may affect our financial position, results of operations or cash flows. Additional failures of
financial and other institutions could impact our customers ability to pay us, reduce amounts available under our credit facility, cause losses to the extent cash amounts or the value of securities exceed government deposit insurance limits,
and restrict our access to the equity and debt markets. A continuation of the recent turmoil in the capital and credit markets and the general economic downturn could adversely impact the availability, terms and/or pricing of financing if we need to
raise additional liquidity. We would experience liquidity problems if we are unable to obtain sufficient additional financing as our debt becomes due, or we otherwise need additional liquidity. Adverse economic conditions, increased
competition, or other unfavorable events also could affect our liquidity.

If, at any time, additional capital or borrowing capacity is
required beyond amounts internally generated or available under our credit facility, we would consider issuing equity, issuing convertible debt or other securities, further reducing our expenses and capital expenditures, selling assets, or
requesting waivers or amendments with respect to the credit facility. Management believes that each of the above options would be available to us should they become necessary.



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##### Index to Financial Statements

Net cash provided by operating activities was $5.1 million during 2008 compared to $4.7 million during
2007. The increase was due to the tenant improvement allowance received from our landlords to build out and renovate our offices in Atlanta and Dallas. The offsetting capital expenditures are included in our cash used for investing activities. This
increase was partially offset by reduced revenues. Our 2008 working capital reduction was primarily related to payments received from Citibank in 2007 for revenue recognized in 2008 upon the completion of the license sale to Citibank.

Net cash used in investing activities was $7.5 million during 2008, compared to $19.1 million during 2007. The continuing driver of our investing
activities is our capital expenditures, which include costs associated with internally developed software, as well as infrastructure required to support volume expansion, the acquisition of new revenue streams with new and existing clients,
investment in business continuity, and opportunities to reduce costs. During 2008, we paid $0.8 million of cash in final consideration for the assembled workforce and certain property assets acquired from Siemens in 2007 and paid $1.1 million to
build out and renovate our offices in Atlanta and Dallas, which was funded from our tenant improvement allowance received from our landlords. Our 2007 investing activities include $10.0 million of cash paid in partial consideration for the
acquisition of certain assets and assumption of certain liabilities of Hi-Mark in January 2007. As of December 31, 2008, we had no material commitments related to capital expenditures.

Net cash provided by financing activities was $0.9 million during 2008 compared to net cash used in financing activities of $1.8 million during 2007. The
primary drivers for 2008 were borrowings under our credit facility, partially offset by debt repayments.

On May 30, 2008, we entered
into a three-year Credit Agreement with ACB. The Credit Agreement matures on May 31, 2011 and contains substantially the same terms and conditions as our previous credit facility with Bank of America, N.A. The Credit Agreement provides for a
senior secured revolving credit facility with aggregate principal commitments not to exceed $10.0 million, which includes a $2.0 million letter of credit subfacility. Any outstanding letters of credit on this subfacility reduce the borrowing
capacity of the Credit Agreement. A loan under the Credit Agreement may be a Base Rate loan or a LIBOR loan, at the option of TRX. Interest under the Credit Agreement accrues at an interest rate indexed to the prime rate as announced publicly by ACB
from time to time (the Base Rate) or LIBOR (plus 0.50% for Base Rate loans and 2.50% for LIBOR loans) for the revolving credit facility. For letters of credit, the letter of credit fee is equal to the Applicable Rate (as defined in the
Credit Agreement) times the daily amount available to be drawn under the letter of credit. Overdue amounts bear a fee of 2% per annum above the rate applicable to these amounts. We capitalized $0.2 million of issuance costs related to this
facility and our letter of credit, which will be amortized to interest expense over the specific terms of the facility and letter of credit.

The Credit Agreement requires us to meet certain financial tests including a consolidated leverage ratio, a fixed charge coverage ratio, and a cleandown provision whereby our borrowings under the facility are reduced to $2.0
million or less for 30 consecutive days during each calendar quarter. The Credit Agreement also contains additional covenants which, among other things, require us to deliver to ACB specified financial information, including annual and quarterly
financial information, and limit our ability to (or to permit any subsidiaries to), subject to various exceptions and limitations, (i) merge with other companies, (ii) create liens on our property, (iii) incur debt obligations,
(iv) enter into transactions with affiliates, except on an arms-length basis, or (v) dispose of property.

On December 3,
2008, we amended our Credit Agreement with ACB. The amendment increases the interest rate for loans made under the Credit Agreement, generally by 25 basis points and modifies certain covenants, which, among other things, (i) remove
cleandown provision, and (ii) adjust the leverage ratio and fixed charge coverage ratio, as defined. The amendment also adds BCD Holdings N.V. (BCD Holdings), the parent of our majority shareholder, as a guarantor of our
obligations under the Credit Agreement and changes the maturity date to April 30, 2010. We will pay BCD Holdings a guarantee fee of 250-350 basis points, depending on borrowing levels under the Credit Agreement.



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##### Index to Financial Statements

As of December 31, 2008, we are in compliance with all financial covenants, $5.1 million was
available for borrowing, there were $3.4 million of borrowings against the facility and there was a $1.5 million letter of credit against this facility related to the lease of our new Atlanta office. As of December 31, 2008, the effective rate
on our outstanding borrowings was 3.19%.

In connection with our entry into the Credit Agreement, we terminated our previous $10.0 million
credit facility with Bank of America, N.A. which was scheduled to mature in April 2009. There were no prepayment penalties related to terminating this credit facility, and we expensed all remaining unamortized debt issuance costs related to this
facility to interest expense in the second quarter of 2008.

On November 13, 2008, we entered into the First Amendment (the Note
Amendment) to the Promissory Note by and between TRX and Hi-Mark, dated January 11, 2007 (the Note). The Note Amendment reduces our quarterly principal payment by one-half to approximately $0.3 million, adjusts the rate of
interest from variable at the prime rate to a fixed interest rate of 8.0%, effective October 11, 2008, and extends the quarterly payments of the Note through April 2011. In addition, the Note Amendment provides that the remaining balance under
the Note becomes immediately due and payable upon a change in control (as defined in the Note Amendment) of TRX.

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

Seasonality

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

Inflation and Changing Prices

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

Recent Accounting Pronouncements

In May 2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles (SFAS No. 162). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with GAAP. Any effect of applying the provisions of these Statements shall be reported as a change in accounting principle in accordance with SFAS No. 154, Accounting
Changes and Error Corrections. This statement is effective 60 days after the SECs approval of the Public Company Accounting Oversight Board amendments to AICPA Professional Standards AU Section 411, The Meaning
of Present Fairly in Conformity with Generally Accepted Accounting Principles. We do not expect that the adoption of this standard will have a material effect on our consolidated financial position and results of operations.



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In April 2008, the FASB issued FASB Staff Position (FSP) No. 142-3,
Determination of the Useful Life of Intangible Assets (FSP No. 142-3). FSP No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the
useful life of a recognizable intangible asset under SFAS No. 142. The intent of FSP No. 142-3 is to improve the consistency between the useful life of a recognizable intangible asset under SFAS No. 142 and the period of expected cash
flows used to measure the fair value of the asset under SFAS No. 141(R), Business Combinations and other GAAP. FSP No. 142-3 is effective for the first fiscal period beginning after December 15, 2008 and must be
applied prospectively to intangible assets acquired after the effective date. We will be required to adopt FSP No. 142-3 for intangible assets acquired beginning with the first quarter of 2009. We are currently assessing the impact of this
standard on our consolidated financial position and results of operations.

In December 2007, the Financial FASB issued SFAS
No. 141(R), Business Combinations (SFAS No. 141(R)), which replaces SFAS No. 141. SFAS No. 141(R) retains the fundamental requirements of SFAS No. 141 that the acquisition method
of accounting (which SFAS No. 141 called thepurchase method ) be used for all business combinations, but is designed to improve, simplify, and converge internationally the accounting for business combinations, including enhancing
principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree. Additionally, the standard establishes
disclosure requirements to enable the evaluation of the financial effects of the business combination. SFAS No. 141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the
beginning of the first annual period subsequent to December 15, 2008. We do not expect that the adoption of this standard will have a material effect on our consolidated financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an
Amendment of FASB Statement No. 115 (SFAS No. 159). Under SFAS No. 159, companies may elect to measure specified financial instruments and warranty and insurance contracts at fair value on a contract-by-contract
basis, with changes in fair value recognized in earnings each reporting period. This election, called the fair value option, will enable some companies to reduce volatility in reported earnings caused by measuring related assets and
liabilities differently. We did not elect the fair value option for any of our existing financial instruments as of January 1, 2008, and we have not determined whether or not we will elect this option for financial instruments we may acquire in
the future.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS
No. 157). SFAS No. 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement. In February 2008, the FASB issued
FSP No. 157-2, Effective Date of FASB Statement No. 157 (FSP No. 157-2), which delayed the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for nonfinancial
assets and liabilities, except for 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, effective January 1, 2008, did not have a material
effect on our consolidated financial statements. We have not determined the impact of implementing the provisions of SFAS No. 157 to the items deferred by FSP No. 157-2.

In October 2008 the FASB issued FASB Staff Position No. FAS 157-3 (FSP-157-3), which clarifies the application of SFAS No. 157 in an
inactive market, including how internal assumptions should be considered when measuring fair value, how observable market information in a market that is not active should be considered and how the use of market quotes should be used when assessing
observable and unobservable data. This FSP is effective upon issuance including prior periods for which financial statements have not been issued. The adoption of FSP 157-3 did not have a material effect on our consolidated financial statements.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

Not Applicable



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##### Index to Financial Statements

|Item 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------

CONSOLIDATED
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007



|                                                        |  |     
|------------------------------------------------------- |  | ----
|                                                        |  | Page
|Report of Independent Registered Public Accounting Firm |  | 31  
|Consolidated Balance Sheets                             |  | 32  
|Consolidated Statements of Operations                   |  | 33  
|Consolidated Statements of Shareholders Equity         |  | 34  
|Consolidated Statements of Cash Flows                   |  | 35  
|Notes to Consolidated Financial Statements              |  | 36  



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

TRX, Inc. and Subsidiaries

Atlanta, Georgia

We have audited the
accompanying consolidated balance sheets of TRX, Inc. and subsidiaries (the Company) as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of TRX, Inc. and subsidiaries as
of December 31, 2008 and 2007, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 5 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Interpretation No. 48,
Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109, effective January 1, 2007.

/s/    DELOITTE & TOUCHE LLP

February 23, 2009



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TRX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2008 and
2007

(In thousands, except share data)



|                                                                                                                                                   |  |      |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                   |  | 2008 |         |   | 2007 |  
|ASSETS                                                                                                                                             |  |      |         |   |      |   |         |  
|CURRENT ASSETS:                                                                                                                                    |  |      |         |   |      |   |         |  
|Cash and cash equivalents                                                                                                                          |  | $    | 6,873   |   |      | $ | 8,879   |  
|Trade accounts receivable, net                                                                                                                     |  |      | 7,916   |   |      |   | 16,181  |  
|Prepaids and other                                                                                                                                 |  |      | 2,480   |   |      |   | 2,846   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total current assets                                                                                                                               |  |      | 17,269  |   |      |   | 27,906  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|NONCURRENT ASSETS:                                                                                                                                 |  |      |         |   |      |   |         |  
|Property and equipment, net                                                                                                                        |  |      | 16,212  |   |      |   | 19,496  |  
|Goodwill                                                                                                                                           |  |      | 37,305  |   |      |   | 36,981  |  
|Other assets, net                                                                                                                                  |  |      | 2,706   |   |      |   | 3,406   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total noncurrent assets                                                                                                                            |  |      | 56,223  |   |      |   | 59,883  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total assets                                                                                                                                       |  | $    | 73,492  |   |      | $ | 87,789  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                               |  |      |         |   |      |   |         |  
|CURRENT LIABILITIES:                                                                                                                               |  |      |         |   |      |   |         |  
|Accounts payable and accrued liabilities                                                                                                           |  | $    | 13,409  |   |      | $ | 23,026  |  
|Customer deposits and deferred revenue                                                                                                             |  |      | 9,927   |   |      |   | 21,859  |  
|Current portion of long-term debt                                                                                                                  |  |      | 1,167   |   |      |   | 2,333   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total current liabilities                                                                                                                          |  |      | 24,503  |   |      |   | 47,218  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|NONCURRENT LIABILITIES:                                                                                                                            |  |      |         |   |      |   |         |  
|Long-term debtless current portion                                                                                                                |  |      | 5,150   |   |      |   | 2,917   |  
|Deferred income tax                                                                                                                                |  |      | 705     |   |      |   |        |  
|Other long-term liabilities                                                                                                                        |  |      | 1,917   |   |      |   | 635     |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total noncurrent liabilities                                                                                                                       |  |      | 7,772   |   |      |   | 3,552   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total liabilities                                                                                                                                  |  |      | 32,275  |   |      |   | 50,770  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|COMMITMENTS AND CONTINGENCIES (NOTE 3)                                                                                                             |  |      |         |   |      |   |         |  
|SHAREHOLDERS EQUITY:                                                                                                                              |  |      |         |   |      |   |         |  
|Common stock, $.01 par value; 100,000,000 shares authorized; 18,571,086 and 18,492,332 shares issued; 18,383,555 and 18,304,801 shares
outstanding |  |      | 185     |   |      |   | 184     |  
|Additional paid-in capital                                                                                                                         |  |      | 95,877  |   |      |   | 95,519  |  
|Treasury stock, at cost; 187,531 shares                                                                                                            |  |      | (2,294  | ) |      |   | (2,294  | )
|Cumulative translation adjustment                                                                                                                  |  |      | 279     |   |      |   | 142     |  
|Accumulated deficit                                                                                                                                |  |      | (52,830 | ) |      |   | (56,532 | )
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total shareholders equity                                                                                                                         |  |      | 41,217  |   |      |   | 37,019  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total liabilities and shareholders equity                                                                                                         |  | $    | 73,492  |   |      | $ | 87,789  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  

See notes to consolidated financial statements.



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##### Index to Financial Statements

TRX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS
ENDED DECEMBER 31, 2008 AND 2007

(In thousands, except per share data)



|                                                                              |  |      |        |   |      |   |        |  
|----------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                                              |  | 2008 |        |   | 2007 |  
|REVENUES:                                                                     |  |      |        |   |      |   |        |  
|Transaction and other revenues                                                |  | $    | 95,425 |   |      | $ | 89,532 |  
|Client reimbursements                                                         |  |      | 798    |   |      |   | 2,570  |  
|                                                                              |  |      |        |   |      |   |        |  
|Total revenues                                                                |  |      | 96,223 |   |      |   | 92,102 |  
|                                                                              |  |      |        |   |      |   |        |  
|EXPENSES:                                                                     |  |      |        |   |      |   |        |  
|Operating, excluding depreciation and amortization                            |  |      | 49,761 |   |      |   | 56,820 |  
|Selling, general, and administrative, excluding depreciation and amortization |  |      | 17,185 |   |      |   | 16,184 |  
|Technology development                                                        |  |      | 12,875 |   |      |   | 13,178 |  
|Client reimbursements                                                         |  |      | 798    |   |      |   | 2,570  |  
|Depreciation and amortization                                                 |  |      | 10,659 |   |      |   | 11,217 |  
|                                                                              |  |      |        |   |      |   |        |  
|Total expenses                                                                |  |      | 91,278 |   |      |   | 99,969 |  
|                                                                              |  |      |        |   |      |   |        |  
|OPERATING INCOME (LOSS)                                                       |  |      | 4,945  |   |      |   | (7,867 | )
|INTEREST INCOME (EXPENSE):                                                    |  |      |        |   |      |   |        |  
|Interest income                                                               |  |      | 101    |   |      |   | 356    |  
|Interest expense                                                              |  |      | (570   | ) |      |   | (583   | )
|                                                                              |  |      |        |   |      |   |        |  
|Total interest (expense) income, net                                          |  |      | (469   | ) |      |   | (227   | )
|                                                                              |  |      |        |   |      |   |        |  
|INCOME (LOSS) BEFORE INCOME TAXES                                             |  |      | 4,476  |   |      |   | (8,094 | )
|(PROVISION) BENEFIT FOR INCOME TAXES                                          |  |      | (774   | ) |      |   | 51     |  
|                                                                              |  |      |        |   |      |   |        |  
|NET INCOME (LOSS)                                                             |  | $    | 3,702  |   |      | $ | (8,043 | )
|                                                                              |  |      |        |   |      |   |        |  
|WEIGHTED AVERAGE NUMBER OF SHARES:                                            |  |      |        |   |      |   |        |  
|Basic                                                                         |  |      | 18,350 |   |      |   | 18,272 |  
|                                                                              |  |      |        |   |      |   |        |  
|Diluted                                                                       |  |      | 18,401 |   |      |   | 18,272 |  
|                                                                              |  |      |        |   |      |   |        |  
|BASIC AND DILUTED NET INCOME (LOSS) PER SHARE                                 |  | $    | 0.20   |   |      | $ | (0.44  | )
|                                                                              |  |      |        |   |      |   |        |  

See notes to consolidated financial statements.



33



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##### Index to Financial Statements

TRX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(In thousands, except share data)



|                                                                 |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   |        |  
|---------------------------------------------------------------- |  | ------------ |  | ------------------------ | --- | ------------- | - | ------ | ------------------------------- | - | ------------------ | - |  | ----- | --- |  | - | ------- | - |  | - | ------ | -
|                                                                 |  | Common Stock |  | AdditionalPaid-InCapital |     | TreasuryStock |   |        | CumulativeTranslationAdjustment |   | AccumulatedDeficit |   |  | Total |    
|                                                                 |  | Shares       |  | Amount                   |     |               |   |        |                                
|BALANCEDecember 31, 2006                                        |  | 17,772,771   |  | $                        | 179 |               | $ | 91,659 |                                 | $ | (2,294             | ) |  | $     | 77  |  | $ | (48,489 | ) |  | $ | 41,132 |  
|Comprehensive loss:                                              |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   |        |  
|Net loss                                                         |  |             |  |                          |    |               |   |       |                                 |   |                   |   |  |       |    |  |   | (8.043  | ) |  |   | (8,043 | )
|Cumulative translation adjustment                                |  |             |  |                          |    |               |   |       |                                 |   |                   |   |  |       | 65  |  |   |        |   |  |   | 65     |  
|                                                                 |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   |        |  
|Total comprehensive loss                                         |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   | (7,978 | )
|Employee stock purchase plan                                     |  | 32,030       |  |                          |    |               |   | 93     |                                 |   |                   |   |  |       |    |  |   |        |   |  |   | 93     |  
|Issuance of common stock in connection with business combination |  | 500,000      |  |                          | 5   |               |   | 3,400  |                                 |   |                   |   |  |       |    |  |   |        |   |  |   | 3,405  |  
|Share-based payment expense under SFAS 123(R)                    |  |             |  |                          |    |               |   | 367    |                                 |   |                   |   |  |       |    |  |   |        |   |  |   | 367    |  
|                                                                 |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   |        |  
|BALANCEDecember 31, 2007                                        |  | 18,304,801   |  |                          | 184 |               |   | 95,519 |                                 |   | (2,294             | ) |  |       | 142 |  |   | (56,532 | ) |  |   | 37,019 |  
|Comprehensive income:                                            |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   |        |  
|Net income                                                       |  |             |  |                          |    |               |   |       |                                 |   |                   |   |  |       |    |  |   | 3,702   |   |  |   | 3,702  |  
|Cumulative translation adjustment                                |  |             |  |                          |    |               |   |       |                                 |   |                   |   |  |       | 137 |  |   |        |   |  |   | 137    |  
|                                                                 |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   |        |  
|Total comprehensive income                                       |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   | 3,839  |  
|Employee stock purchase plan                                     |  | 78,754       |  |                          | 1   |               |   | 95     |                                 |   |                   |   |  |       |    |  |   |        |   |  |   | 96     |  
|Share-based payment expense under SFAS 123(R)                    |  |             |  |                          |    |               |   | 263    |                                 |   |                   |   |  |       |    |  |   |        |   |  |   | 263    |  
|                                                                 |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   |        |  
|BALANCEDecember 31, 2008                                        |  | 18,383,555   |  | $                        | 185 |               | $ | 95,877 |                                 | $ | (2,294             | ) |  | $     | 279 |  | $ | (52,830 | ) |  | $ | 41,217 |  
|                                                                 |  |              |  |                          |     |               |   |        |                                 |   |                    |   |  |       |     |  |   |         |   |  |   |        |  

See notes to consolidated financial statements.



34



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##### Table of Contents

##### Index to Financial Statements

TRX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS
ENDED DECEMBER 31, 2008 AND 2007

(In thousands)



|                                                                                         |  |      |         |   |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                         |  | 2008 |         |   | 2007 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |      |         |   |      |   |         |  
|Net income (loss)                                                                        |  | $    | 3,702   |   |      | $ | (8,043  | )
|                                                                                         |  |      |         |   |      |   |         |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |      |         |   |      |   |         |  
|Depreciation and amortization                                                            |  |      | 10,659  |   |      |   | 11,217  |  
|Provision (reduction to) for bad debts                                                   |  |      | 346     |   |      |   | (132    | )
|Stock compensation expense                                                               |  |      | 248     |   |      |   | 351     |  
|Deferred tax expense                                                                     |  |      | 705     |   |      |   |        |  
|Changes in assets and liabilities, net of effects of acquisitions:                       |  |      |         |   |      |   |         |  
|Trade accounts receivable                                                                |  |      | 7,677   |   |      |   | (5,802  | )
|Prepaids and other assets                                                                |  |      | 431     |   |      |   | (1,021  | )
|Accounts payable and accrued liabilities                                                 |  |      | (6,963  | ) |      |   | 200     |  
|Customer deposits and deferred revenue                                                   |  |      | (11,712 | ) |      |   | 7,975   |  
|                                                                                         |  |      |         |   |      |   |         |  
|Total adjustments                                                                        |  |      | 1,391   |   |      |   | 12,788  |  
|                                                                                         |  |      |         |   |      |   |         |  
|Net cash provided by operating activities                                                |  |      | 5,093   |   |      |   | 4,745   |  
|                                                                                         |  |      |         |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |      |         |   |      |   |         |  
|Capital expenditures                                                                     |  |      | (7,094  | ) |      |   | (8,716  | )
|Acquisitions, net of cash acquired                                                       |  |      | (989    | ) |      |   | (10,382 | )
|Proceeds from sale of assets                                                             |  |      | 578     |   |      |   |        |  
|                                                                                         |  |      |         |   |      |   |         |  
|Net cash used in investing activities                                                    |  |      | (7,505  | ) |      |   | (19,098 | )
|                                                                                         |  |      |         |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |      |         |   |      |   |         |  
|Repayments of long-term debt                                                             |  |      | (2,333  | ) |      |   | (1,907  | )
|Borrowings under credit facility                                                         |  |      | 3,400   |   |      |   |        |  
|Debt issue costs                                                                         |  |      | (215    | ) |      |   |        |  
|Proceeds from stock plans                                                                |  |      | 96      |   |      |   | 93      |  
|                                                                                         |  |      |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                                      |  |      | 948     |   |      |   | (1,814  | )
|                                                                                         |  |      |         |   |      |   |         |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                             |  |      | (542    | ) |      |   | 602     |  
|                                                                                         |  |      |         |   |      |   |         |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                                |  |      | (2,006  | ) |      |   | (15,565 | )
|                                                                                         |  |      |         |   |      |   |         |  
|CASH AND CASH EQUIVALENTSBeginning of year                                              |  |      | 8,879   |   |      |   | 24,444  |  
|                                                                                         |  |      |         |   |      |   |         |  
|CASH AND CASH EQUIVALENTSEnd of year                                                    |  | $    | 6,873   |   |      | $ | 8,879   |  
|                                                                                         |  |      |         |   |      |   |         |  

See notes to consolidated financial statements.



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##### Index to Financial Statements

TRX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007

(In thousands, except share data)

1. ORGANIZATION AND NATURE OF OPERATIONS

TRX, Inc.
and its subsidiaries (we, us, our or TRX) is a global technology company. We develop and host software applications to automate manual processes and track transaction data, enabling our clients to
optimize performance and control costs. We are a leading provider to the travel industry and expect to eventually include growth in industries beyond travel, such as financial services and health care. For the foreseeable future, we intend to focus
our efforts on the large opportunities within the travel industry. We deliver our technology applications as a service over the Internet to travel agencies, corporations, travel suppliers, government agencies, credit card associations, credit card
issuing banks, and third-party administrators. TRX is headquartered in Atlanta, Georgia with operations and associates in North America, Europe, and Asia. We are majority-owned by BCD Technology, S.A. (BCD). The accompanying consolidated
financial statements include the accounts of TRX, Inc. and its subsidiaries for the periods presented.

In February 2006, we entered into a
five-year agreement related to global business development with E2E SerWiz Solutions, Ltd. (SWS), a subsidiary of TATA Sons Ltd. Pursuant to the agreement, the parties market their respective offerings in the global travel marketplace in
consideration for specified fees based on new business referred. Additionally, in February 2006, we entered into a shared services agreement with SWS, effective November 1, 2005, in which we agreed to facilitate SWS establishment of
U.S.-based customer care operations during 2006. In connection with this agreement, we transferred all of our U.S.-based customer care assets and employees, located in Parkersburg, West Virginia and Milton, Florida to SWS on April 1, 2006. We
transferred assets with a net book value of approximately $75 to SWS for $250 and recorded revenue associated with this sale of approximately $175 in 2008.

2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Cash and Cash EquivalentsWe consider all
highly liquid investments with purchased maturities of three months or less to be cash equivalents. Cash equivalents consisted solely of money market funds and investment grade commercial paper at December 31, 2008 and 2007. Interest income
during 2008 and 2007 was $101 and $356, respectively.

Trade Accounts Receivable and Allowance for Doubtful
AccountsAccounts receivable are recorded at the invoiced amount and are non-interest bearing. We maintain an allowance for doubtful accounts to reserve for receivables that are not probable of collection. Management reviews the
accounts receivable by aging category to identify specific customers with known disputes or collectibility issues. In determining the amount of the reserve, management makes judgments about the creditworthiness of significant customers based on
ongoing credit evaluations. The following table shows our allowance for doubtful accounts and the associated activity for each of the two years ended December 31, 2008 and 2007.



|                                       |  |      |      |   |      |   |      |  
|-------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | -
|                                       |  | 2008 |      |   | 2007 |  
|Balance, January 1                     |  | $    | (229 | ) |      | $ | (688 | )
|Reduction to (provision for) bad debts |  |      | (346 | ) |      |   | 132  |  
|Writeoffs, net of recoveries           |  |      | 89   |   |      |   | 327  |  
|                                       |  |      |      |   |      |   |      |  
|Balance, December 31                   |  | $    | (486 | ) |      | $ | (229 | )
|                                       |  |      |      |   |      |   |      |  

Property and EquipmentProperty and equipment are stated at cost. Depreciation
is recorded over the estimated useful lives of the assets using the straight-line method. The useful lives of computers, software, office equipment, and furniture range from three to seven years. Amortization of leasehold improvements is recorded
over the shorter of the terms of the leases or estimated useful lives of five to seven years using the straight-line method.



36



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##### Index to Financial Statements

We have incurred expenditures for software used to facilitate internal data consolidation processes and
to enable transaction processing services for our clients. We follow the guidance set forth in AICPA Statement of Position 98-1, Accounting for the Cost of Software Developed or Obtained for Internal Use.Software costs,
including internal payroll costs, incurred in connection with the development or acquisition of software for internal use are charged to technology development expense as incurred until the project enters the application development phase. Costs
incurred in the application development phase are capitalized and depreciated over the estimated useful life of three years, beginning when the software is ready for use.

The following details the components of property and equipment (and estimated useful lives) at December 31, 2008 and 2007:



|                                                         |  |      |         |   |      |   |         |  
|-------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                         |  | 2008 |         |   | 2007 |  
|Computers, purchased software, and equipment (3-5 years) |  | $    | 36,937  |   |      | $ | 42,538  |  
|Internally-developed software costs (3 years)            |  |      | 11,785  |   |      |   | 8,423   |  
|Leasehold improvements (up to 10 years)                  |  |      | 2,510   |   |      |   | 5,234   |  
|Furniture and fixtures (7 years)                         |  |      | 2,352   |   |      |   | 2,937   |  
|                                                         |  |      |         |   |      |   |         |  
|                                                         |  |      | 53,584  |   |      |   | 59,132  |  
|Accumulated depreciation                                 |  |      | (37,372 | ) |      |   | (39,636 | )
|                                                         |  |      |         |   |      |   |         |  
|                                                         |  | $    | 16,212  |   |      | $ | 19,496  |  
|                                                         |  |      |         |   |      |   |         |  

Depreciation expense was $10,294 and $10,852 during 2008 and 2007, respectively.

GoodwillGoodwill represents the excess of the purchase price over the fair value of assets acquired. We test goodwill for impairment
annually as of September 30 or more frequently if an event occurs or circumstances change that more likely than not reduce the value of a reporting unit below its carrying value. We have one reporting unit as defined by Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). We use September 30 as our annual impairment testing date for goodwill. For purposes of
goodwill impairment testing, we compare the fair value of the reporting unit determined on the basis of expected discounted future cash flows with its carrying amount, including goodwill. We also compare the guideline public company and guideline
transaction methods to the value derived from the income approach as a test of the reasonableness of our discounted cash flow analysis. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired. If goodwill
is considered impaired, the impairment loss to be recognized is measured by the amount by which the carrying amount of the goodwill exceeds implied fair value of that goodwill. No impairment of goodwill was identified in our annual goodwill
impairment test as of September 30, 2008 or 2007. Our market capitalization experienced a significant decline between September 30, 2007 and December 31, 2007, and therefore, we determined that it was necessary to test goodwill
for impairment as of December 31, 2007. The results of the impairment test as of December 31, 2007 did not indicate an impairment of our goodwill. Similarly, we experienced a decline in our market capitalization from September 30,
2008 to December 31, 2008, which we determined was not due to Company-specific factors but, rather, macroeconomic conditions, including rising unemployment levels, turmoil in the credit markets, and deteriorating consumer confidence. However,
given the decrease in market capitalization at December 31, 2008, we reconsidered our cash flow projections utilized in our impairment test as of September 30, 2008, including an assessment of our actual results for the fourth quarter of
2008 as compared to our projections for such period, and also assessed whether the discount rate used in our September 30, 2008 impairment test remained appropriate as of December 31, 2008. On the basis of our reconsideration of the cash
flow projections and associated discount rate, we determined that it was not more likely than not that the estimated fair value of our reporting unit was reduced below its carrying value.

Our goodwill was acquired through the 1999 purchase of International Software Products in the United States, the 2004 purchase of the remaining unowned
interests in the United Kingdom and Central Europe equity method investments, the 2006 purchase of Travel Analytics, Inc. (Travel Analytics), the 2007 acquisition of



37



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##### Index to Financial Statements

certain assets and assumption of certain liabilities of Hi-Mark, LLC (Hi-Mark) (Note 8) and the goodwill resulting from the purchase of the
assembled workforce and certain property assets used by Siemens Shares Services LLC (Siemens) to provide services to TRX (Note 8).

The following table discloses the changes in the carrying amount of goodwill during the years ended December 31, 2008 and 2007:



|                            |  |      |        |      |   |       
|--------------------------- |  | ---- | ------ | ---- | - | ------
|                            |  | 2008 |        | 2007
|Balance, January 1          |  | $    | 36,981 |      | $ | 23,122
|Goodwill acquired (Note 8)  |  |      |       |      |   | 13,817
|Earnout on Travel Analytics |  |      | 324    |      |   | 42    
|                            |  |      |        |      |   |       
|Balance, December 31        |  | $    | 37,305 |      | $ | 36,981
|                            |  |      |        |      |   |       

Other Intangible AssetsWe recorded $1,905 in 2007 to recognize the value of
identifiable intangible assets acquired as part of our purchase of certain assets of Hi-Mark (Note 8), we recorded $539 in 2006 to recognize the value of identifiable intangible assets acquired as part of our purchase of certain assets of Travel
Analytics, and we recorded $615 to recognize the value of certain customer relationships as part of our purchase of our European equity method investments in 2004. These amounts are included in other assets, net in the accompanying consolidated
balance sheets. We expect to record approximately $365 of amortization expense related to these intangible assets in the next year, $354 of amortization expense in the second year, $338 of amortization expense in the third year, $206 of amortization
expense in the fourth year, $206 of amortization expense in the fifth year and $600 in the years thereafter. We recorded related amortization expense of $365 during both 2008 and 2007.

Changes in other intangible assets during 2008 and 2007 were as follows:



|                                  |  |      |       |   |      |   |       |  
|--------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                  |  | 2008 |       |   | 2007 |  
|Balance, January 1                |  | $    | 2,433 |   |      | $ | 893   |  
|Acquisitions (see Note 8)         |  |      |      |   |      |   | 1,905 |  
|Amortization of intangible assets |  |      | (365  | ) |      |   | (365  | )
|                                  |  |      |       |   |      |   |       |  
|Balance, December 31              |  | $    | 2,068 |   |      | $ | 2,433 |  
|                                  |  |      |       |   |      |   |       |  

A summary of our intangible assets as of December 31, 2008 and 2007 is as follows:



|                       |  |             |  |                    |       |                         |                   |      |                    |  |                         |       |  |   |      |  
|---------------------- |  | ----------- |  | ------------------ | ----- | ----------------------- | ----------------- | ---- | ------------------ |  | ----------------------- | ----- |  | - | ---- | -
|                       |  |             |  | December 31, 2008  |       |                         | December 31, 2007 |     
|                       |  | UsefulLives |  | GrossCarryingValue |       | AccumulatedAmortization |                   |      | GrossCarryingValue |  | AccumulatedAmortization |      
|Customer relationships |  | 6  8 years |  | $                  | 615   |                         | $                 | (386 | )                  |  | $                       | 615   |  | $ | (309 | )
|Trademarks and patents |  | 10 years    |  |                    | 2,062 |                         |                   | (430 | )                  |  |                         | 2,062 |  |   | (224 | )
|Non-compete agreements |  | 4  5 years |  |                    | 382   |                         |                   | (175 | )                  |  |                         | 382   |  |   | (93  | )
|                       |  |             |  |                    |       |                         |                   |      |                    |  |                         |       |  |   |      |  
|                       |  |             |  | $                  | 3,059 |                         | $                 | (991 | )                  |  | $                       | 3,059 |  |   | (626 | )
|                       |  |             |  |                    |       |                         |                   |      |                    |  |                         |       |  |   |      |  

Impairment of Long-Lived AssetsWe regularly evaluate whether events and
circumstances have occurred that indicate the carrying amount of property and equipment and other intangible assets may warrant revision or may not be recoverable, in accordance with SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets (SFAS No. 144). When factors indicate that these long-lived assets should be evaluated for possible impairment, we assess the recoverability by determining whether the carrying value
of such long-lived assets will be recovered through the future undiscounted cash flows expected from the use of the asset and its eventual disposition. In managements opinion, the carrying values of long-lived assets, including property and
equipment and other intangible assets, are not impaired at December 31, 2008.



38



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##### Index to Financial Statements

Other AssetsAt December 31, 2008 and 2007, other assets include $569 and $746,
respectively, of deposits related to our India operations and deferred costs associated with the issuance of our revolving credit facility and debt (Note 4). The deferred costs are being amortized to interest expense using the straight-line method
over the life of the related debt.

Accounts Payable and Accrued LiabilitiesThis balance consists of the following
components at December 31, 2008 and 2007:



|                           |  |      |        |      |   |       
|-------------------------- |  | ---- | ------ | ---- | - | ------
|                           |  | 2008 |        | 2007
|Accounts payable and other |  | $    | 5,954  |      | $ | 10,103
|Personnel-related accruals |  |      | 5,016  |      |   | 5,603 
|Client-related accruals    |  |      | 2,180  |      |   | 6,706 
|Accrued interest           |  |      | 101    |      |   | 95    
|Facility-related accruals  |  |      | 158    |      |   | 519   
|                           |  |      |        |      |   |       
|                           |  | $    | 13,409 |      | $ | 23,026
|                           |  |      |        |      |   |       

Customer Deposits and Deferred RevenueSeveral customer agreements require
prepayments to us for transaction revenue. These deposits are recognized as revenue as the service is provided. In addition, deferred revenue primarily represents services and implementation fees that are prepaid, and recognized as revenue when
earned. As a result of our Citibank amendment discussed below, $6.5 million of revenue associated with the hosting services was deferred as of December 31, 2007 and was recognized as revenue during the second quarter when the sale was
completed. Customer deposits and deferred revenue consist of the following at December 31, 2008 and 2007:



|                                             |  |      |       |      |   |       
|-------------------------------------------- |  | ---- | ----- | ---- | - | ------
|                                             |  | 2008 |       | 2007
|Customer deposits                            |  | $    | 4,308 |      | $ | 9,013 
|Deferred revenue                             |  |      | 5,619 |      |   | 12,846
|                                             |  |      |       |      |   |       
|Total customer deposits and deferred revenue |  | $    | 9,927 |      | $ | 21,859
|                                             |  |      |       |      |   |       

Revenue Recognition and Cost DeferralWe recognize revenue in accordance with
Emerging Issues Task Force (EITF) Issue 00-21, Accounting for Revenue Arrangements with Multiple Deliverableswhen certain other consulting or other services are combined with our transaction processing
revenues and Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 104, Revenue Recognition, when all of the following have occurred: (1) persuasive evidence of an arrangement
exists; (2) services have been performed; (3) the fee for services is fixed or determinable; and (4) collectability is reasonably assured. Generally, these criteria are considered to have been met as follows:



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



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



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

On
July 13, 2007, TRX Data Services and Citibank executed an amendment to the Master Services Agreement dated February 1, 2002, as amended. The Amendment extends the scheduled expiration date of the Citibank Master Services Agreement from
January 13, 2009 to December 31, 2010. The primary purpose of the Amendment was for TRX Data Services to sell a $4.5 million limited perpetual license of certain source code to Citibank in order for Citibank to perform certain services
in-house that had previously been hosted by TRX Data



39



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Services. TRX Data Services continues to perform maintenance and project services for Citibank. As a result of the Amendment, recurring revenues from
Citibank generated in 2008 were significantly less than revenues generated in 2007.

The Amendment also provided that we would continue to
provide the hosting services historically provided to Citibank until such time as the sale of the perpetual license occurred. The license sale was completed during the second quarter of 2008 and, as a result, we recognized $4.5 million of
revenue, the contractually-stated sales price of the license. In addition to the license sale, Citibank also paid us approximately $1.4 million for certain costs and assets that we had purchased in the past for Citibanks benefit, which are
essential to the functionality of the technology.

The sale of the license, the compensation for the assets referred to above, and the
hosting services are all elements of the Amendment. Revenue recognition for these elements is governed by SOP 97-2, Software Revenue Recognition (SOP 97-2). In accordance with SOP 97-2, as there was no vendor
specific objective evidence of the fair value of the perpetual license at the effective date of the Amendment, revenue associated with the hosting services was deferred until April 30, 2008, when the sale of the perpetual license
occurred. We recognized revenue for the hosting services of $10.0 million in the second quarter of 2008. All costs associated with the hosting services were expensed as incurred from July 2007 through April 2008.

We apply EITF Issue 01-14, Income Statement Characterization of Reimbursements Received for Out of Pocket Expenses
Incurred, which requires that client reimbursements received for direct costs paid to third parties and related expenses be characterized as revenue. Client reimbursements represent direct costs paid to third parties primarily for
voice and data and items such as paper tickets.

Concentration of Credit RiskA significant portion of our revenues is
derived from a limited number of clients. Our top five clients accounted for approximately 78% and 74% of our total revenues in 2008 and 2007, respectively. Contracts with the major clients may be terminated by the client if we fail to meet certain
performance criteria. Expedia, Inc. and its affiliates accounted for 36% and 41% of revenues in 2008 and 2007, respectively. Citibank accounted for 21% and 13% of revenues during 2008 and 2007, respectively. American Express Travel Related Services
Company, Inc. (American Express) accounted for 11% of revenues during both 2008 and 2007. At December 31, 2008 and 2007, 22% of our accounts receivable related to American Express and 15% of our accounts receivable related to
Citibank, respectively.

Fair Value of Financial InstrumentsThe carrying values of cash and cash equivalents, trade
accounts receivable, accounts payable, and other financial instruments approximate their fair values principally because of the short-term nature of these instruments. The fair value of our fixed rate long-term debt is estimated based on the current
rates offered to us for debt of similar terms and maturities. The fair value of our variable rate long-term debt approximates carrying value.

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

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



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



|                                    |  |           |       |                       |        |          |   |          |  |   |                       |   |          |        |  |   |       |  
|----------------------------------- |  | --------- | ----- | --------------------- | ------ | -------- | - | -------- |  | - | --------------------- | - | -------- | ------ |  | - | ----- | -
|                                    |  | 2008      |       | 2007                  |       
|                                    |  | NetIncome |       | WeightedAverageShares |        | PerShare |   | Net Loss |  |   | WeightedAverageShares |   | PerShare |       
|Basic net income (loss) per share   |  | $         | 3,702 |                       | 18,350 |          | $ | 0.20     |  | $ | (8,043                | ) |          | 18,272 |  | $ | (0.44 | )
|Effect of dilutive securities:      |  |           |       |                       |        |          |   |          |  |   |                       |   |          |        |  |   |       |  
|Options to acquire common stock     |  |           |      |                       | 51     |          |   |         |  |   |                      |   |          |       |  |   |      |  
|                                    |  |           |       |                       |        |          |   |          |  |   |                       |   |          |        |  |   |       |  
|Diluted net income (loss) per share |  | $         | 3,702 |                       | 18,401 |          | $ | 0.20     |  | $ | (8,043                | ) |          | 18,272 |  | $ | (0.44 | )
|                                    |  |           |       |                       |        |          |   |          |  |   |                       |   |          |        |  |   |       |  

Because of their anti-dilutive effect on the income per share recorded in each of the periods
presented, the diluted share base excludes incremental shares related to employee stock options of 2,389 and 1,599 for 2008 and 2007, respectively.

Stock-Based Employee CompensationWe account for stock-based employee compensation under SFAS No. 123 (revised 2004) entitled, Share-Based Payment (SFAS 123(R)).

The weighted average grant-date fair value of the options granted during 2008, calculated using the Black-Scholes model, ranged from $0.13
to $0.46. The weighted average grant-date fair value of the options granted during 2007, calculated using the Black-Scholes model, ranged from $0.29 to $1.81.

The following assumptions were used for grants in 2008: dividend yield of zero, volatility of 26.4% to 44.2%, risk-free interest rate of 0.79% to 2.96%, and an expected life of 2.00 to 4.25 years. The following
assumptions were used for grants in 2007: dividend yield of zero, volatility of 22.1% to 27.9%, risk-free interest rate of 3.03% to 4.86%, and an expected life of 2.00 to 4.25 years. Through December 2008 expected volatility was based on the
volatility of a group of stocks we view as peer companies, due to the limited history of our stock trading on an exchange. We use historical data to estimate the expected life and employee termination assumptions in our accounting under SFAS 123(R).
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant over the expected life of the grant.

At December 31, 2008, options to purchase 99,690 shares of common stock were available for future grant under our stock plan. The following table summarizes information about stock options outstanding and exercisable at
December 31, 2008:



|                         |  |                     |  |                               |  |                               |      |                 |           |                               |   |     
|------------------------ |  | ------------------- |  | ----------------------------- |  | ----------------------------- | ---- | --------------- | --------- | ----------------------------- | - | ----
|                         |  | Options Outstanding |  | Options Exercisable          
|Range of Exercise Prices |  | Number ofShares     |  | WeightedAverageRemaining Life |  | WeightedAverageExercise Price |      | Number ofShares |           | WeightedAverageExercise Price
|$0.51  $6.89            |  | 1,536,000           |  | 8.9                           |  | $                             | 2.48 |                 | 409,833   |                               | $ | 4.30
|$9.00  $12.24           |  | 904,500             |  | 6.4                           |  | $                             | 9.23 |                 | 778,500   |                               | $ | 9.24
|                         |  |                     |  |                               |  |                               |      |                 |           |                               |   |     
|                         |  | 2,440,500           |  | 8.0                           |  | $                             | 4.98 |                 | 1,188,333 |                               | $ | 7.52
|                         |  |                     |  |                               |  |                               |      |                 |           |                               |   |     



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##### Index to Financial Statements

Information regarding activity under our stock plan is summarized as follows:



|                           |  |           |   |      |                               |      |         |           |   |                               |   |     
|-------------------------- |  | --------- | - | ---- | ----------------------------- | ---- | ------- | --------- | - | ----------------------------- | - | ----
|                           |  | 2008      |   | 2007
|                           |  | Options   |   |      | WeightedAverageExercise Price |      | Options |           |   | WeightedAverageExercise Price
|Outstanding at January 1   |  | 1,598,810 |   |      | $                             | 8.18 |         | 1,814,810 |   |                               | $ | 8.92
|Granted                    |  | 1,090,000 |   |      |                               | 1.20 |         | 273,000   |   |                               |   | 4.93
|Cancelled                  |  | (248,310  | ) |      |                               | 8.99 |         | (489,000  | ) |                               |   | 9.11
|Exercised                  |  |          |   |      |                               |     |         |          |   |                               |   |    
|                           |  |           |   |      |                               |      |         |           |   |                               |   |     
|Outstanding at December 31 |  | 2,440,500 |   |      | $                             | 4.98 |         | 1,598,810 |   |                               | $ | 8.18
|                           |  |           |   |      |                               |      |         |           |   |                               |   |     

The intrinsic value of a stock option is the amount by which the market value of the underlying
stock exceeds the exercise price of the option. At December 31, 2008, the aggregate intrinsic value of options outstanding was $0 with a weighted average exercise price of $4.98 and a weighted average remaining contractual term of 8.0 years;
the aggregate intrinsic value of the 1,188,333 options exercisable was $0 with a weighted average exercise price of $7.52 and a weighted average remaining contractual term of 7.1 years; and the aggregate intrinsic value of the 2,181,807 options
vested or expected to vest was $0 with a weighted average exercise price of $4.98 and a weighted average remaining contractual term of 7.6 years.

The following table summarizes unvested stock options outstanding as of December 31, 2008 as well as activity during the year then ended:



|                           |  |                  |   |  |                                      |     
|-------------------------- |  | ---------------- | - |  | ------------------------------------ | ----
|                           |  | Unvested Options
|                           |  | Options          |   |  | Weighted AverageGrant-Date FairValue
|Outstanding at January 1   |  | 631,500          |   |  | $                                    | 7.27
|Granted                    |  | 1,090,000        |   |  |                                      | 1.20
|Cancelled                  |  | (86,750          | ) |  |                                      | 6.57
|Vested                     |  | (382,583         | ) |  |                                      | 5.41
|                           |  |                  |   |  |                                      |     
|Outstanding at December 31 |  | 1,252,167        |   |  | $                                    | 2.60
|                           |  |                  |   |  |                                      |     

Compensation cost from nonvested stock granted to employees is recognized as expense using the
straight-line method over the vesting period. As of December 31, 2008, total unrecognized compensation cost related to nonvested stock options was approximately $0.3 million. Approximately half of this cost is expected to be recognized over the
next year, with the remainder primarily over the subsequent two years. For 2008 and 2007, our total stock-based compensation expense was approximately $263 and $366, respectively.

Income TaxesWe account for income taxes under the liability method, which requires the recognition of deferred tax assets and
liabilities for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases. A valuation allowance is recorded when appropriate to reduce
deferred tax assets to amounts expected to be realized.

Statement of Cash FlowsCash paid for interest was $409 and
$440 for 2008 and 2007, respectively. Cash paid for income taxes net of amounts refunded was $77 in 2008 and $172 in 2007. We had accrued capital expenditures of $581 and $5 at December 31, 2008 and 2007, respectively. For 2007, non-cash
investing and financing activities related to the acquisition of certain assets and assumption of certain liabilities of Hi-Mark in January 2007 include the issuance of a $7,000 promissory note and common stock valued at $3,405 (Note 8).

Foreign Currency TranslationWe have subsidiaries operating in the United Kingdom, Germany and India at December 31, 2008. The
functional currency of these operations is the local currency. Gains and losses on transactions denominated in currencies other than the functional currency are included in determining net



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income (loss) for the period in which the exchange rates change. Foreign exchange transaction gains or losses were not material for any period presented.
Balance sheet accounts of international subsidiaries are translated at the year-end exchange rate, and income statement accounts are translated at the average rates prevailing during the year. The resulting translation adjustment is recorded as a
component of shareholders equity.

Foreign Currency Exchange RiskApproximately 17% of our consolidated revenues
during 2008 and 12% of our consolidated assets at December 31, 2008 are associated with operations outside of the United States. The U.S. dollar balance sheets and statements of operations for these businesses are subject to currency
fluctuations. We are most vulnerable to fluctuations in the British pound, Euro and Indian rupee against the U.S. dollar. Historically, we have not entered into derivative financial instruments to mitigate this risk, as it has not been
cost-effective to do so. Through 2008, the impact of currency fluctuations on our results of operations has not been significant since both revenues and operating costs of these businesses are denominated in local currency.

Segment ReportingOperating segments are defined by SFAS No. 131, Disclosure About Segments of an Enterprise and
Related Information (SFAS No. 131). Our chief operating decision maker currently reviews information and makes operating decisions based on one operating segment and the expense structure of the business is managed
functionally. Our measure of segment profit is consolidated operating income.

Our revenue, aggregated by service offering, is as follows
for each of the two years ended December 31, 2008 and 2007:



|                               |  |      |        |      |   |       
|------------------------------ |  | ---- | ------ | ---- | - | ------
|                               |  | 2008 |        | 2007
|Transaction processing         |  | $    | 63,517 |      | $ | 68,647
|Data reporting                 |  |      | 31,908 |      |   | 20,885
|                               |  |      |        |      |   |       
|Transaction and other revenues |  |      | 95,425 |      |   | 89,532
|Client reimbursements          |  |      | 798    |      |   | 2,570 
|                               |  |      |        |      |   |       
|Total                          |  | $    | 96,223 |      | $ | 92,102
|                               |  |      |        |      |   |       

The following is a geographic breakdown of revenues for the years ended December 31, 2008 and
2007, and a geographic breakdown of long-lived assets at December 31, 2008 and 2007:



|                    |  |      |        |      |   |       
|------------------- |  | ---- | ------ | ---- | - | ------
|                    |  | 2008 |        | 2007
|Revenues:           |  |      |        |      |   |       
|United States       |  | $    | 79,926 |      | $ | 75,656
|Germany             |  |      | 8,923  |      |   | 8,925 
|Other International |  |      | 7,374  |      |   | 7,521 
|                    |  |      |        |      |   |       
|                    |  | $    | 96,223 |      | $ | 92,102
|                    |  |      |        |      |   |       
|Long-Lived Assets:  |  |      |        |      |   |       
|United States       |  | $    | 15,467 |      | $ | 18,587
|Germany             |  |      | 445    |      |   | 275   
|Other International |  |      | 300    |      |   | 634   
|                    |  |      |        |      |   |       
|                    |  | $    | 16,212 |      | $ | 19,496
|                    |  |      |        |      |   |       

Use of 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 liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results will differ from those estimates.



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Recent Accounting PronouncementsIn May 2008, the Financial Accounting Standards Board
(FASB) issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS No. 162). SFAS No. 162 identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. Any effect of applying the provisions of these Statements shall be reported as a change in accounting
principle in accordance with SFAS No. 154, Accounting Changes and Error Corrections. This statement is effective 60 days after the SECs approval of the Public Company Accounting Oversight Board amendments to AICPA
Professional Standards AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. We do not expect that the adoption of this standard will have a material effect on our
consolidated financial position and results of operations.

In April 2008, the FASB issued FASB Staff Position (FSP)
No. 142-3, Determination of the Useful Life of Intangible Assets (FSP No. 142-3). FSP No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognizable intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). The intent of FSP No. 142-3 is to improve the consistency between the
useful life of a recognizable intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R), Business Combinationsand other GAAP. FSP
No. 142-3 is effective for the first fiscal period beginning after December 15, 2008 and must be applied prospectively to intangible assets acquired after the effective date. We will be required to adopt FSP No. 142-3 for intangible
assets acquired beginning with the first quarter of 2009. We are currently assessing the impact of this standard on our consolidated financial position and results of operations.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141(R)), which
replaces SFAS No. 141. SFAS No. 141(R) retains the fundamental requirements of SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called thepurchase method ) be used for all business combinations,
but is designed to improve, simplify, and converge internationally the accounting for business combinations, including enhancing principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree. Additionally, the standard establishes disclosure requirements to enable the evaluation of the financial effects of the business combination. SFAS
No. 141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008. We do not expect that the adoption of
this standard will have a material effect on our consolidated financial position and results of operations.

In February 2007, the FASB
issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of FASB Statement No. 115 (SFAS No. 159). Under SFAS No. 159, companies
may elect to measure specified financial instruments and warranty and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in earnings each reporting period. This election, called the fair
value option, will enable some companies to reduce volatility in reported earnings caused by measuring related assets and liabilities differently. We did not elect the fair value option for any of our existing financial instruments as of
January 1, 2008, and we have not determined whether or not we will elect this option for financial instruments we may acquire in the future.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 establishes a single authoritative definition of fair value, sets out a framework for
measuring fair value, and expands on required disclosures about fair value measurement. In February 2008, the FASB issued FSP No. 157-2, Effective Date of FASB Statement No. 157 (FSP No. 157-2), which
delayed the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets and liabilities, except for 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, effective January 1, 2008, did not have a material effect on our consolidated financial statements. We have not determined the impact of implementing the provisions of SFAS
No. 157 to the items deferred by FSP No. 157-2.



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In October 2008 the FASB issued FASB Staff Position No. FAS 157-3 (FSP-157-3), which
clarifies the application of SFAS No. 157 in an inactive market, including how internal assumptions should be considered when measuring fair value, how observable market information in a market that is not active should be considered and how
the use of market quotes should be used when assessing observable and unobservable data. This FSP is effective upon issuance including prior periods for which financial statements have not been issued. The adoption of FSP 157-3 did not have a
material effect on our consolidated financial statements.

3. COMMITMENTS AND CONTINGENCIES

Lease ObligationsWe lease certain facilities and equipment under noncancelable operating lease agreements which expire at various
times through 2019. Some of these leases contain renewal options under various terms. Future minimum annual lease payments under the related noncancelable operating leases and future sublease income at December 31, 2008 are as follows:



|           |  |       |        |                 |   |       |  |   |       
|---------- |  | ----- | ------ | --------------- | - | ----- |  | - | ------
|           |  | Gross |        | Sub-leaseincome |   | Net  
|2009       |  | $     | 3,034  |                 | $ | 620   |  | $ | 2,414 
|2010       |  |       | 2,752  |                 |   | 639   |  |   | 2,113 
|2011       |  |       | 2,098  |                 |   | 377   |  |   | 1,721 
|2012       |  |       | 1,717  |                 |   |      |  |   | 1,717 
|2013       |  |       | 1,183  |                 |   |      |  |   | 1,183 
|Thereafter |  |       | 6,067  |                 |   |      |  |   | 6,067 
|           |  |       |        |                 |   |       |  |   |       
|Total      |  | $     | 16,851 |                 | $ | 1,636 |  | $ | 15,215
|           |  |       |        |                 |   |       |  |   |       

Rental expense for 2008 and 2007 was $3,220 and $2,740, respectively. The increase in rent expense
is due to a full year of rent expense from our India operations, which were purchased in December 2007.

Employment
AgreementsWe have entered into employment agreements with certain key executives. The agreements provide for compensation and benefits through the expiration of the individual agreement upon termination of employment, other than by the
employee voluntarily or by us for cause. Minimum commitments under these agreements are $2,708, $1,802 and $446 for 2009, 2010 and 2011, respectively. In 2008, we recorded $1.7 million in compensation expense related to amounts due to our previous
chief executive officer and president pursuant to the terms of his employment agreement, as amended, which is included in our minimum commitments related to our employment agreements to be paid in 2009 and 2010.

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

Savings PlanIn
the U.S., we sponsor a 401(k) profit-sharing plan (the Plan) under which substantially all full-time employees are eligible to participate. Participants are also eligible to receive a discretionary match. Total expense recognized under
the Plan was $414 and $500 for 2008 and 2007, respectively.

In the United Kingdom, Germany and India, we participate in
defined-contribution plans. Total expense recognized under these plans was $91 and $122 in 2008 and 2007, respectively.



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##### Index to Financial Statements

4. DEBT

Debt consists of the following as of December 31, 2008 and 2007:



|                        |  |      |       |      |   |      
|----------------------- |  | ---- | ----- | ---- | - | -----
|                        |  | 2008 |       | 2007
|Note payable            |  | $    | 2,917 |      | $ | 5,250
|Revolver                |  |      | 3,400 |      |   |     
|                        |  |      |       |      |   |      
|Total                   |  |      | 6,317 |      |   | 5,250
|Less current maturities |  |      | 1,167 |      |   | 2,333
|                        |  |      |       |      |   |      
|Long-term debt          |  | $    | 5,150 |      | $ | 2,917
|                        |  |      |       |      |   |      

Our note payable relates to the acquisition of certain assets and assumption of certain
liabilities of Hi-Mark (Note 8), which was amended on November 13, 2008. Hi-Mark is principally owned by Kevin Austin, our Executive Vice President of Product Architecture. This note was amended on November 13, 2008. The Note Amendment reduces
our quarterly principal payment by one-half to approximately $0.3 million, adjusts the rate of interest from variable at the prime rate to a fixed interest rate of 8.0%, effective October 11, 2008, and extends the quarterly payments of the Note
through June 2011. In addition, the Note Amendment provides that the remaining balance under the Note becomes immediately due and payable upon a change in control (as defined in the Note Amendment) of TRX. During 2008 we made principal and interest
payments of $2.3 million and $0.3 million, respectively, compared to $1.8 million and $0.4 million, respectively, during 2007.

The
maturities for the note payable are as follows:



|               |  |   |      
|-------------- |  | - | -----
|2009           |  | $ | 1,167
|2010           |  |   | 4,567
|2011           |  |   | 583  
|               |  |   |      
|Long-term debt |  | $ | 6,317
|               |  |   |      

On May 30, 2008, we entered into a three-year Credit Agreement with ACB. The Credit Agreement
matures on May 31, 2011 and contains substantially the same terms and conditions as our previous credit facility with Bank of America, N.A. The Credit Agreement provides for a senior secured revolving credit facility with aggregate principal
commitments not to exceed $10.0 million, which includes a $2.0 million letter of credit subfacility. Any outstanding letters of credit on this subfacility reduce the borrowing capacity of the Credit Agreement. A loan under the Credit Agreement may
be a Base Rate loan or a LIBOR loan, at the option of TRX. Interest under the Credit Agreement accrues at an interest rate indexed to the prime rate as announced publicly by ACB from time to time (the Base Rate) or LIBOR (plus 0.50% for
Base Rate loans and 2.50% for LIBOR loans) for the revolving credit facility. For letters of credit, the letter of credit fee is equal to the Applicable Rate (as defined in the Credit Agreement) times the daily amount available to be drawn under the
letter of credit. Overdue amounts bear a fee of 2% per annum above the rate applicable to these amounts. We capitalized $215 of issuance cost related to this facility and our letter of credit, which will be amortized to interest expense over
the specific terms of the facility and letter of credit.

The Credit Agreement requires us to meet certain financial tests including a
consolidated leverage ratio, a fixed charge coverage ratio, and a cleandown provision whereby our borrowings under the facility are reduced to $2.0 million or less for 30 consecutive days during each calendar quarter. The Credit
Agreement also contains additional covenants which, among other things, require us to deliver to ACB specified financial information, including annual and quarterly financial information, and limit our ability to (or to permit any subsidiaries to),
subject to various exceptions and limitations, (i) merge with other companies, (ii) create liens on our property, (iii) incur debt obligations, (iv) enter into transactions with affiliates, except on an arms-length basis, or
(v) dispose of property.



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On December 3, 2008, we amended our Credit Agreement with ACB. The amendment increases the interest
rate for loans made under the Credit Agreement, generally by 25 basis points and modifies certain covenants, which, among other things, (i) remove the cleandown requirement, and (ii) adjust the leverage ratio and fixed charge
coverage ratio, as defined. The amendment also adds BCD Holdings N.V. (BCD Holdings), the parent of our majority shareholder, as a guarantor to the Credit Agreement and changes the maturity date to April 30, 2010. We will pay BCD
Holdings a guarantee fee of 250-350 basis points, depending on borrowing levels under the Credit Agreement.

As of December 31, 2008,
we are in compliance with all financial covenants, $5.1 million was available for borrowing, there were $3.4 million of borrowings against the facility and there was a $1.5 million letter of credit against this facility related to the lease of our
new Atlanta office. As of December 31, 2008, the effective rate on our outstanding borrowings was 3.19%.

5. INCOME TAXES

Our domestic and foreign income before income taxes for 2008 is $1,586 and $2,890, respectively. Our domestic and foreign loss before income taxes for
2007 was $8,085 and $9, respectively.

For the years ended December 31, 2008 and 2007, income tax provision (benefit) is comprised of
the following:



|         |  |      |     |      |   |     |  
|-------- |  | ---- | --- | ---- | - | --- | -
|         |  | 2008 |     | 2007 |  
|Current  |  | $    | 69  |      | $ | (51 | )
|Deferred |  |      | 705 |      |   |    |  
|         |  |      |     |      |   |     |  
|Total    |  | $    | 774 |      | $ | (51 | )
|         |  |      |     |      |   |     |  

Deferred taxes are as follows at December 31, 2008 and 2007:



|                                                    |  |      |         |   |      |   |         |  
|--------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                    |  | 2008 |         |   | 2007 |  
|Current deferred tax assets:                        |  |      |         |   |      |   |         |  
|Accruals                                            |  | $    | 1,245   |   |      | $ | 1,326   |  
|Allowance for doubtful accounts                     |  |      | 66      |   |      |   | 59      |  
|Deferred revenue                                    |  |      | 122     |   |      |   | 2,537   |  
|                                                    |  |      |         |   |      |   |         |  
|Total current deferred tax assets                   |  |      | 1,433   |   |      |   | 3,922   |  
|Noncurrent deferred tax assets:                     |  |      |         |   |      |   |         |  
|Net operating loss carryforwardsU.S.               |  |      | 12,785  |   |      |   | 10,908  |  
|Net operating loss carryforwardsforeign            |  |      | 2,995   |   |      |   | 5,900   |  
|Stock compensation                                  |  |      | 452     |   |      |   | 538     |  
|Charitable contribution carryforward                |  |      | 1       |   |      |   | 24      |  
|Indian adjustment                                   |  |      | 6       |   |      |   |        |  
|Indian MAT credit carryforward                      |  |      | 47      |   |      |   |        |  
|Alternative minimum tax credit (AMT) carryforward |  |      | 168     |   |      |   | 168     |  
|                                                    |  |      |         |   |      |   |         |  
|Total noncurrent deferred tax assets                |  |      | 16,454  |   |      |   | 17,538  |  
|                                                    |  |      |         |   |      |   |         |  
|Deferred tax liabilities:                           |  |      |         |   |      |   |         |  
|Intangible assets                                   |  |      | 705     |   |      |   | 402     |  
|Property and equipment                              |  |      | 158     |   |      |   | 86      |  
|                                                    |  |      |         |   |      |   |         |  
|Total deferred tax liabilities                      |  |      | 863     |   |      |   | 488     |  
|                                                    |  |      |         |   |      |   |         |  
|Net deferred tax assets                             |  |      | 17,024  |   |      |   | 20,972  |  
|Valuation allowance                                 |  |      | (17,729 | ) |      |   | (20,972 | )
|                                                    |  |      |         |   |      |   |         |  
|Net deferred tax liabilities                        |  | $    | (705    | ) |      | $ |        |  
|                                                    |  |      |         |   |      |   |         |  



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Deferred tax expense for 2008 and our deferred tax liability as of December 31, 2008 includes an
adjustment of $0.4 million to increase our deferred tax valuation allowance which should have been recorded in 2007. Such adjustment was not material to any prior quarterly or annual periods.

At December 31, 2008 and 2007, U.S. net operating losses of $35,316 and $27,968, respectively, are available to offset future taxable income, and
expire beginning in 2021 through 2028. At December 31, 2008 and 2007, AMT carryforwards of $168 are available and can be carried forward indefinitely. At December 31, 2008, Indian Minimum Alternative Tax (MAT) credit
carryforwards of $48 are available and can be carried forward indefinitely. We do not provide for deferred taxes on the excess of the financial reporting over the tax basis in our investments in foreign subsidiaries that are essentially permanent in
duration. This amount becomes taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. As it is our intent to reinvest the earnings of our non-US subsidiaries in those operations, it is not required to
provide deferred taxes on any excess.

Benefits for income taxes are not presented in the accompanying statements of operations, as the net
deferred tax assets have been fully reserved. The valuation allowance was recorded because management is unable to conclude that it is more likely than not that our net deferred tax assets will be realized. A reconciliation of income taxes at the
federal statutory rate to the tax provision recorded by us for 2008 and 2007 is as follows:



|                                                 |  |       |   |  |       |  
|------------------------------------------------ |  | ----- | - |  | ----- | -
|                                                 |  | 2008  |   |  | 2007  |  
|Federal income tax benefit at statutory rate     |  | 34.0  | % |  | 34.0  | %
|State income taxesnet of federal benefit        |  | 2.2   |   |  | 5.0   |  
|Other                                            |  | 44.1  |   |  | (1.1  | )
|Change in deferred tax asset valuation allowance |  | (63.0 | ) |  | (37.3 | )
|                                                 |  |       |   |  |       |  
|                                                 |  | 17.3  | % |  | 0.6   | %
|                                                 |  |       |   |  |       |  

Effective January 1, 2007, we adopted the provisions of FASB Interpretation (FIN)
No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109. Under FIN 48, the evaluation of an uncertain tax position is a two-step process of recognition and
measurement. We recognize the benefit of an uncertain tax position if we determine that the position will be more likely than not to be sustained, based on the technical merits of the position. We measure the amount of the benefit at the largest
amount that is more than 50% likely of being recognized upon settlement.

Total unrecognized tax benefits as of December 31, 2008 were
$424; however, this entire amount is offset by available net operating loss carryforwards.

A reconciliation of unrecognized tax benefits
for 2008 is presented in the table below.



|                                                                  |  |      |    
|----------------------------------------------------------------- |  | ---- | ---
|                                                                  |  | 2008
|Unrecognized tax benefits, January 1                              |  | $    | 393
|Increase related to prior years unrecognized income tax benefits |  |      | 31 
|                                                                  |  |      |    
|Unrecognized income tax benefits, December 31                     |  | $    | 424
|                                                                  |  |      |    

We are currently being audited in the jurisdiction in which these unrecognized tax benefits
reside. We cannot conclude that the audit will be completed during the next 12 months.

We account for accrued interest related to
unrecognized tax benefits as income tax expense. At December 31, 2008, we had no accrued interest or accrued penalties recorded due to the existence of net operating loss carryforwards to offset any unrecognized tax benefits.



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##### Index to Financial Statements

The following summarizes the open tax years by jurisdiction as of December 31, 2008:



|               |  |               
|-------------- |  | --------------
|Jurisdiction   |  | Open Tax Years
|Federal        |  | 2005-2008     
|Georgia        |  | 2005-2008     
|Florida        |  | 2005-2008     
|South Carolina |  | 2005-2008     
|Texas          |  | 2004-2008     
|Virginia       |  | 2005-2008     
|West Virginia  |  | 2005-2008     
|United Kingdom |  | 2007-2008     
|Germany        |  | 2004-2008     
|India          |  | 2007-2008     
|France         |  | 2005          

Our last federal audit was for the 2004 tax year, and it was concluded in 2007. We are not
currently under audit domestically as of December 31, 2008. We are under audit in Germany for the 2004-2006 tax years. We are not under audit for any other international jurisdictions as of December 31, 2008.

6. SHAREHOLDERS EQUITY

Issuance of
Common StockIn 2007, we issued 500,000 shares of our common stock valued at $3.4 million in connection with our acquisition of certain assets and assumption of certain liabilities of Hi-Mark (Note 8). The proceeds of these common stock
issuances were used for general corporate purposes.

Stock OptionsWe have two stock-based employee compensation plans.
The TRX, Inc. Omnibus Incentive Plan (the Stock Plan) was amended upon our initial public offering in September 2005 to, among other things, increase the number of shares available for issuance to employees from 1.3 million to
3.3 million and to expand the types of awards permitted to be made. The Stock Plan allows the issuance of incentive stock options, nonqualified stock options, and stock purchase rights. Option awards are generally granted with an exercise price
equal to the fair market value of our stock at the date of grant; those option awards generally vest ratably over four years and have 10-year contractual terms. Certain option awards provide for accelerated vesting if there is a change of control
(as defined in the Stock Plan). In addition, in September 2005 we also amended our TRX, Inc. Employee Stock Purchase Plan (ESPP) to reflect our public company status, among other things. 500,000 shares are reserved for issuance under our
ESPP. As of December 31, 2008, 144,103 shares have been issued under our ESPP. See Note 2 for further information about our stock options.

Preferred StockWe are authorized to issue up to 10,000,000 shares of preferred stock, par value $.01 per share. As of December 31, 2008 and 2007, no preferred stock was outstanding.

7. RELATED-PARTY TRANSACTIONS

BCD Travel, formerly
WorldTravel BTI, is majority-owned by our majority shareholder, BCD. During 2008 and 2007, we recognized transaction and other revenues from BCD Travel, totaling $7,167 and $8,651, respectively. At December 31, 2008 and 2007, respectively,
$1,392 and $1,077 was receivable from BCD Travel.

8. ACQUISITIONS

Hi-Mark

In January 2007, we purchased substantially all of the assets and assumed
certain liabilities of Hi-Mark, a Delaware limited liability company and Atlanta-based provider of data acquisition and business intelligence technologies. The strategic addition of Hi-Marks operations expands our opportunities in global
corporate travel data reporting. The total consideration for this acquisition was approximately $20.9 million, which



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##### Index to Financial Statements

consisted of 500,000 shares of our common stock (valued at $3.4 million, or $6.81 per share based on the closing price of our common stock on the two trading
days preceding through the two trading days following our announcement of the acquisition on December 7, 2006 in accordance with EITF Issue 99-12 Determination of the Measurement Date for the Market Price of Acquirer Securities
Issued in a Purchase Business Combination), $10.4 million of cash on hand, a promissory note in favor of Hi-Mark in the amount of $7.0 million that amortizes quarterly over three years and bears interest at the Prime rate (Note 4),
and approximately $0.1 million of our transaction costs. This note was amended on November 13, 2008 to reduce our quarterly principal payment by one-half to approximately $0.3 million, adjust the rate of interest from variable at the prime rate
to a fixed interest rate of 8.0%, effective October 11, 2008, and extend the quarterly payments of the Note through June 2011. In addition, the Note Amendment provides that the remaining balance under the Note becomes immediately due and
payable upon a change in control of TRX. In addition, we may make earnout payments to Hi-Mark of up to $12.0 million dependent on the achievement of defined revenue targets. As of December 31, 2008, we have not made or accrued earnout payments
to Hi-Mark because such revenue targets have not been met.

We have included the results of operations of Hi-Mark in our consolidated
financial statements from the date of acquisition. This acquisition was accounted for using the purchase method of accounting, which includes an evaluation of the existence of any identifiable intangibles at the date of acquisition. Goodwill of
$13.1 million was recorded in connection with the acquisition. The goodwill is deductible for tax purposes over a period of 15 years. The following table summarizes the purchase price allocation of the fair values of the assets acquired and
liabilities assumed (in millions).



|                            |  |   |      |  
|--------------------------- |  | - | ---- | -
|Current assets              |  | $ | 2.0  |  
|Property and equipment, net |  |   | 5.1  |  
|Intangible assets           |  |   | 1.9  |  
|Goodwill                    |  |   | 13.1 |  
|                            |  |   |      |  
|Total assets acquired       |  |   | 22.1 |  
|Current liabilities assumed |  |   | (1.2 | )
|                            |  |   |      |  
|Total consideration         |  | $ | 20.9 |  
|                            |  |   |      |  

The intangible assets acquired include non-compete agreements with an estimated value of $0.3
million and a life of five years, and trademarks with an estimated value of $1.6 million and a life of 10 years.

India Operations

In December 2007, we acquired the assembled workforce and certain property assets used by Siemens to provide services to TRX. The
assembled workforce and assets acquired constitute a business as defined by EITF Issue 98-3 Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business, and accordingly we
accounted for this transaction as a business combination under SFAS No. 141, Business Combinations. The employees and related assets migrated from Siemens to us in December 2007, and in September 2008 we paid the final purchase
price of $764. This acquisition was accounted for using the purchase method of accounting, which includes an evaluation of the existence of any identifiable intangibles at the date of acquisition. Due to the strategic nature of the acquisition and
low asset base, goodwill of $750 was recorded in connection with the acquisition in the fourth quarter of 2007. The goodwill is expected to be deductible for tax purposes over a period of 15 years.

The following table summarizes the final purchase price allocation of the fair values of the assets acquired.



|                            |  |   |    
|--------------------------- |  | - | ---
|Property and equipment, net |  | $ | 14 
|Goodwill                    |  |   | 750
|                            |  |   |    
|Total consideration         |  | $ | 764
|                            |  |   |    



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|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

None.



|Item 9A(T). | Controls and Procedures
|----------- | -----------------------

Evaluation of Disclosure Controls and
Procedures

Our management, including our principal executive officer and principal financial officer, concluded an evaluation of the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities and Exchange Act of 1934 as of December 31, 2008. Our evaluation tested controls and other procedures designed
to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms. Based on our evaluation, as of December 31, 2008, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were
effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting or in other factors that occurred during the quarter ended December 31, 2008 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

Managements Report on Internal Control over Financial Reporting

This annual report does not include an attestation report of the companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only
managements report in this annual report

Our management is responsible for establishing and maintaining adequate internal control
over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal ControlIntegrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO Framework). Based on our evaluation under the COSO Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2008.



|Item 9B. | Other Information
|-------- | -----------------

None.



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PART III



|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

The information required by this section will be set forth in our Proxy Statement for the 2009 Annual Meeting of Stockholders in the sections entitled Proposal 1Election of Directors, Executive Officers and
Directors, Section 16(a) Beneficial Ownership Reporting Compliance and Corporate Governance. Such information is incorporated herein by reference.

Code of Ethics

We have adopted the TRX, Inc. Code of Business Conduct and Ethics, which applies to
all of our employees, officers and directors. The Code of Business Conduct and Ethics meets the requirements of a code of ethics as defined by Item 406 of Regulation S-K, and applies to our Chief Executive Officer, Chief Financial
Officer (who is both our principal financial and principal accounting officer), as well as all other employees, as indicated above. The Code of Business Conduct and Ethics also meets the requirements of a code of conduct under the NASDAQ listing
standards. The Code of Business Conduct and Ethics is posted on our website at www.trx.com under the links Investor CenterCorporate GovernanceConduct. We intend to disclose any amendments to the Code of Business Conduct and
Ethics, as well as any waivers for executive officers or directors, on our website at www.trx.com.



|Item 11. | Executive Compensation
|-------- | ----------------------

Information required by
this Item 11 relating to executive compensation and other matters is set forth under the captions Executive Compensation and Non-Employee Director Compensation in the Proxy Statement referred to in Item 10 above.
Such information is incorporated herein by reference.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

Information relating to ownership of our common stock is set forth under the caption Security Ownership of Certain Beneficial Owners and
Management in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference. Information regarding securities authorized for issuance under our equity compensation plans is set forth under the
caption Equity Compensation Plan Information in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.



|Item 13. | Certain Relationships and Related Transactions, and Director Independence
|-------- | -------------------------------------------------------------------------

Information relating to existing or proposed relationships or transactions between us and any of our affiliates is set forth under the caption Certain Relationships and Related Transactions and
Corporate Governance in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.



|Item 14. | Principal Accountant Fees and Services
|-------- | --------------------------------------

Information
relating to our principal accountants fees and services is set forth under the caption Principal Accountant Fees and Services in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by
reference.



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PART IV



|Item 15. | Exhibits and Financial Statement Schedules
|-------- | ------------------------------------------

(a) Documents filed as
part of this report.

1. Consolidated Financial Statements

Our consolidated financial statements are set forth in Item 8Financial Statements and Supplementary Data of this report.

2. Financial Statement Schedules

All schedules to our consolidated financial statements have been
omitted because they are not required under the related instruction or are inapplicable, or because we have included the required information in our consolidated financial statements or related notes.

3. Exhibits

The exhibits filed as part of the Annual
Report on Form 10-K and listed on the Exhibit Index immediately preceding such exhibits, which Exhibit Index is incorporated in this Item 15 by reference.

(b) Exhibits

See Item 15(a) (3) above.

(c) Financial Statement Schedules

See Item 15(a) (2) above.



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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.



TRX, Inc.By:

/s/    H. SHANE
HAMMONDH. Shane HammondPresident, Chief Executive OfficerDate:

February 23, 2009


POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints H. Shane Hammond and David D. Cathcart, and each of them his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K for the calendar
year ended December 31, 2008, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite or necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents,
or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



|                                                                       |  |                                                                                    |  |                  
|---------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | -----------------
|Signature                                                              |  | Title                                                                              |  | Date             
|                                                                       |  |                                                                                   
|/s/    H. SHANE HAMMOND H. Shane Hammond                               |  | President, Chief Executive Officer (principal executive officer)                   |  | February 23, 2009
|                                                                       |  |                                                                                   
|/S/    DAVID D.
CATHCART David D. Cathcart                             |  | Chief Financial Officer and Treasurer (principal financial and accounting officer) |  | February 23, 2009
|                                                                       |  |                                                                                   
|/s/    NORWOOD H. (TRIP) DAVIS, III Norwood H. (Trip) Davis, III   |  | Chairman of the Board and Director                                                 |  | February 23, 2009
|                                                                       |  |                                                                                   
|/s/    JOHAN G. (JOOP)
DRECHSEL Johan G. Drechsel                    |  | Director                                                                           |  | February 23, 2009
|                                                                       |  |                                                                                   
|/s/    MARK R.
BELL Mark R. Bell                                       |  | Director                                                                           |  | February 23, 2009
|                                                                       |  |                                                                                   
|/s/    JOHN F. DAVIS,
III John F. Davis, III                           |  | Director                                                                           |  | February 23, 2009
|                                                                       |  |                                                                                   
|/s/    JOHN A. FENTENER VAN VLISSINGEN John A. Fentener van Vlissingen |  | Director                                                                           |  | February 23, 2009
|                                                                       |  |                                                                                   
|/s/    WILLIAM A. CLEMENT,
JR. William A. Clement, Jr.                 |  | Director                                                                           |  | February 23, 2009



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TRX, INC.

FORM 10-K

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                                      
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                          
|3.1         |  | Amended and Restated Articles of Incorporation of TRX, Inc. (filed as Exhibit 3.3 to Amendment No. 3 to our Registration Statement on Form S-1, filed on July 11, 2005 and incorporated
herein by reference).                                                                                                        
|            | 
|3.2         |  | Amended and Restated Bylaws of TRX, Inc. (filed as Exhibit 3.4 to Amendment No. 3 to our Registration Statement on Form S-1, filed on July 11, 2005 and incorporated herein by reference).                                                                                                                           
|            | 
|4.1         |  | Specimen Common Stock certificate (filed as Exhibit 4.1 to Amendment No. 4 to our Registration Statement on Form S-1, filed on July 27, 2005 and incorporated herein by
reference).                                                                                                                                  
|            | 
|10.1        |  | Letter Agreement, dated December 31, 2004, by and among BCD Technology, S.A. and Norwood H. Davis, III, Davis Family Holdings, LLC and Davis Family Holdings II, LLC (filed as Exhibit 10.5
to our Registration Statement on Form S-1, filed on May 9, 2005 and incorporated herein by reference).                   
|            | 
|10.2        |  | Credit Agreement, dated May 30, 2008, by and between TRX, Inc. and Atlantic Capital Bank (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q, filed on August 14, 2008 and incorporated
herein by reference).                                                                                                
|            | 
|10.3        |  | First Amendment to Credit Agreement by and between TRX, Inc. and Atlantic Capital Bank, effective December 3, 2008.                                                                                                                                                                                                 
|            | 
|10.4        |  | Promissory Note made by TRX, Inc. in favor of Hi-Mark, LLC, dated January 11, 2007 (filed as Exhibit 10.4 to our Annual Report on Form 10-K, filed on February 21, 2007 and incorporated
herein by reference).                                                                                                       
|            | 
|10.5        |  | First Amendment to the Promissory Note made by TRX, Inc. in favor of Hi-Mark, LLC, dated as of November 7, 2008.                                                                                                                                                                                                    
|            | 
|10.6        |  | Services Agreement, dated December 23, 2002, by and between American Airlines, Inc. and TRX Fulfillment Services, LLC (filed as Exhibit 10.17 to Amendment No.1 to our Registration Statement
on Form S-1, filed on June 17, 2005 and incorporated herein by reference).*                                            
|            | 
|10.7        |  | Amendment #1 to Services Agreement between TRX Fulfillment Services, LLC and American Airlines, Inc., dated February 1, 2006 (filed as Exhibit 10.8 to our Annual Report on Form 10-K, filed
on March 11, 2008 and incorporated herein by reference).*                                                               
|            | 
|10.8        |  | Amendment II to Services Agreement between TRX Fulfillment Services, LLC and American Airlines, Inc., effective July 1, 2008 (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q, filed on
November 14, 2008 and incorporated herein by reference).*                                                         
|            | 
|10.9        |  | Amended and Restated Agreement for the Provision of Services, dated December 1, 2005, by and between TRX, Inc. and American Express Travel Related Services Company, Inc. (filed as Exhibit
10.7 to our Annual Report on Form 10-K, filed on February 22, 2006 and incorporated herein by reference).*               
|            | 
|10.10       |  | Amendment #1 to TRX, Inc. Amended and Restated Agreement for the Provision of Services between TRX, Inc. and American Express Travel Related Service Company, Inc., dated October 23, 2007
(filed as Exhibit 10.10 to our Annual Report on Form 10-K, filed on March 11, 2008 and incorporated herein by reference).*
|            | 
|10.11       |  | Amendment #2 to Amended and Restated Agreement for the Provision of Services between TRX, Inc. and American Express Travel Related Services Company, Inc., effective January 1,
2008.*                                                                                                                              
|            | 
|10.12       |  | Amendment #3 to Amended and Restated Agreement for the Provision of Services between TRX, Inc. and American Express Travel Related Services Company, Inc., effective October 1,
2008.*                                                                                                                              



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                
|10.13       |  | Master Services Agreement, dated February 1, 2002, as amended January 10, 2003, with Addendums, by and between Citibank, N.A. and TRX Data Services, Inc. (filed as Exhibit 10.47 to
Amendment No.6 to our Registration Statement on Form S-1, filed on August 18, 2005 and incorporated herein by reference).*                                                                            
|            | 
|10.14       |  | Amendment to Exhibit VIII to Master Services Agreement dated December 20, 2005, by and between Citibank, N.A. and TRX Data Services, Inc. (filed as Exhibit 10.25 to our Annual Report on
Form 10-K, filed on February 22, 2006 and incorporated herein by reference).*                                                                                                                    
|            | 
|10.15       |  | Amendment Number 2 to the Master Services Agreement between Citibank, N.A. and TRX Data Services Inc., dated December 6, 2005 (filed as Exhibit 10.40 to our Annual Report on Form 10-K,
filed on February 22, 2006 and incorporated herein by reference).*                                                                                                                                
|            | 
|10.16       |  | Amendment to Work Order for Ongoing TRX Global Data Services and Work Order for TRX Datatrax Ad-Hoc Reporting of the Citi Global Data Repository (GDR) and Master Services Agreement between
CitiBank, N.A. and TRX Data Services, Inc., dated July 13, 2007 (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q, filed on November 8, 2007 and incorporated herein by reference).*
|            | 
|10.17       |  | Alliance Agreement dated February 9, 2006 by and between TRX, Inc. and E2E SerWiz Solutions Ltd (filed as Exhibit 10.38 to our Annual Report on Form 10-K, filed on February 22, 2006
and incorporated herein by reference)*                                                                                                                                                               
|            | 
|10.18       |  | Shared Services Agreement dated February 10, 2006 by and between TRX, Inc., TRX Fulfillment Services, LLC and E2E SerWiz Solutions Ltd (filed as Exhibit 10.39 to our Annual Report on Form
10-K, filed on February 22, 2006 and incorporated herein by reference).*                                                                                                                       
|            | 
|10.19       |  | Master Services Agreement between Expedia, Inc. and TRX, Inc., dated January 1, 2007 (filed as Exhibit 10.15 to our Annual Report on Form 10-K, filed on February 21, 2007 and
incorporated herein by reference).*                                                                                                                                                                         
|            | 
|10.20       |  | Amendment # 1 to Master Services Agreement between Expedia, Inc. and TRX, Inc., dated March 30, 2007 (filed as Exhibit 10.46 to our Quarterly Report on Form 10-Q, filed on May 10, 2007
and incorporated herein by reference).*                                                                                                                                                           
|            | 
|10.21       |  | Employment Contract, dated December 31, 2004, by and between Norwood H. Davis, III and TRX, Inc. (filed as Exhibit 10.24 to our Registration Statement on Form S-1, filed on May 9, 2005
and incorporated herein by reference).                                                                                                                                                            
|            | 
|10.22       |  | First Amendment to Employment Contract dated August 26, 2005, by and between Norwood H. Davis, III and TRX, Inc. (filed as Exhibit 10.65 to Amendment No. 8 to our Registration Statement on
Form S-1, filed on September 9, 2005 and incorporated herein by reference).                                                                                                                   
|            | 
|10.23       |  | Second Amendment to Employment Contract dated June 30, 2006 between Norwood H. Davis, III and TRX, Inc. (filed as Exhibit 10.1 to our Current Report on Form 8-K, filed June 30, 2006
and incorporated herein by reference).                                                                                                                                                               
|            | 
|10.24       |  | Third Amendment to Employment Contract dated April 5, 2007 between Norwood H. Davis, III and TRX, Inc. (filed as Exhibit 10.1 to our Current Report on Form 8-K, filed April 5, 2007 and
incorporated herein by reference).                                                                                                                                                                
|            | 
|10.25       |  | Fourth Amendment to Employment Contract dated January 10, 2008 between Norwood H. Davis, III and TRX, Inc. (filed as Exhibit 10.1 to our Current Report on Form 8-K, filed January 11,
2008 and incorporated herein by reference).                                                                                                                                                         
|            | 
|10.26       |  | Fifth Amendment to Employment Contract, dated December 10, 2008, between Norwood H. Davis, III and TRX, Inc.                                                                                                                                                                                                                                                                              
|            | 
|10.27       |  | Employment Contract, dated April 5, 2004, as amended April 27, 2005, by and between Victor Pynn and TRX, Inc. (filed as Exhibit 10.27 to our Registration Statement on Form S-1, filed
on May 9, 2005 and incorporated herein by reference).                                                                                                                                               



56



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##### Table of Contents

##### Index to Financial Statements

|            |  |                                                                                                                                                                                                                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                
|10.28       |  | Second Amendment to Employment Contract between Victor Pynn and TRX, Inc., dated December 12, 2008.                                                                                                                                                                                                                       
|            | 
|10.29       |  | Employment Contract between David Cathcart and TRX, Inc., dated July 1, 2005 (filed as Exhibit 10.27 to our Annual Report on Form 10-K, filed on February 21, 2007 and incorporated
herein by reference).                                                                                                                  
|            | 
|10.30       |  | First Amendment to Employment Contract between David Cathcart and TRX, Inc., dated November 15, 2006 (filed as Exhibit 10.28 to our Annual Report on Form 10-K, filed on February 21,
2007 and incorporated herein by reference).                                                                                          
|            | 
|10.31       |  | Second Amendment to Employment Contract between David Cathcart and TRX, Inc., dated December 31, 2008.                                                                                                                                                                                                                    
|            | 
|10.32       |  | Employment Contract between H. Shane Hammond and TRX, Inc., dated December 10, 2008.                                                                                                                                                                                                                                      
|            | 
|10.33       |  | Office Lease, dated June 25, 2008, by and between TRX, Inc. and NNN Park Central, LLC et. al. (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q, filed on August 14, 2008 and
incorporated herein by reference).                                                                                                 
|            | 
|10.34       |  | TRX, Inc. Omnibus Incentive Plan (filed as Exhibit 10.32 to our Annual Report on Form 10-K, filed February 22, 2006 and incorporated herein by reference).                                                                                                                                                                 
|            | 
|10.35       |  | TRX, Inc. Employee Stock Purchase Plan. (filed as Exhibit 10.59 to Amendment No. 3 to our Registration Statement on Form S-1, filed on July 11, 2005 and incorporated herein by reference).                                                                                                                                
|            | 
|10.36       |  | TRX, Inc. Executive Annual Incentive Plan (filed as Exhibit 10.37 to our Annual Report on Form 10-K, filed February 22, 2006 and incorporated herein by reference).                                                                                                                                                        
|            | 
|10.37       |  | Asset Purchase Agreement by and among TRX, Inc., Hi-Mark, LLC, Hi-Mark Travel Systems, Inc., Integrated Profitmark Corporation, LLC and the Owner Entity Shareholders, dated December 7, 2006
(filed as Exhibit 10.44 to our Annual Report on Form 10-K, filed on February 21, 2007 and incorporated herein by reference).*
|            | 
|10.38       |  | Asset Purchase Agreement by and among Travel Analytics, Inc., Scott Gillespie, Kristina O. Gillespie and TRX, Inc., dated August 2, 2006 (filed as Exhibit 10.45 to our Annual Report on Form
10-K, filed on February 21, 2007 and incorporated herein by reference).*                                                     
|            | 
|21.2        |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                           
|            | 
|23.1        |  | Consent of Deloitte & Touche LLP.                                                                                                                                                                                                                                                                                         
|            | 
|24.1        |  | Power of Attorney (included with signature page hereto).                                                                                                                                                                                                                                                                   
|            | 
|31.1        |  | Certification of H. Shane Hammond, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                    
|            | 
|31.2        |  | Certification of David Cathcart, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                      
|            | 
|32.1        |  | Section 906 Principal Executive Officer and Principal Financial Officer Certification.                                                                                                                                                                                                                                    



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

| | Furnished herewith.
|- | -------------------

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



57