##### Table of Contents





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, 2010

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 ofincorporation or organization) |  | (I.R.S. EmployerIdentification 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 |  | Pink OTC Markets Inc.                    

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 whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    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, 2010, the aggregate market value of the registrants voting stock held by non-affiliates based on the closing
price of $0.87 per share was approximately $3.7 million.

The number of shares of the registrants common stock
outstanding at February 23, 2011 was 18,466,271 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Specifically identified portions of the registrants Proxy Statement for the 2011 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.

2010 FORM 10-K

TABLE OF CONTENTS



|            |  |                                                                                                              |    |            |    | 
|----------- |  | ------------------------------------------------------------------------------------------------------------ | -- | ---------- | -- | 
|Item
Number |  |                                                                                                              |    | PageNumber |   
|            |  |                                                                                                             
|            |  | PART I                                                                                                       |    |            |    | 
|            |  |                                                                                                             
|ITEM 1.     |  | BUSINESS                                                                                                     |    |            | 1  | 
|            |  |                                                                                                             
|ITEM 1A.    |  | RISK FACTORS                                                                                                 |    |            | 8  | 
|            |  |                                                                                                             
|ITEM 1B.    |  | UNRESOLVED STAFF COMMENTS                                                                                    |    |            | 18 | 
|            |  |                                                                                                             
|ITEM 2.     |  | PROPERTIES                                                                                                   |    |            | 18 | 
|            |  |                                                                                                             
|ITEM 3.     |  | LEGAL PROCEEDINGS                                                                                            |    |            | 18 | 
|            |  |                                                                                                             
|            |  | PART II                                                                                                      |    |            |    | 
|            |  |                                                                                                             
|ITEM 5.     |  | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |    |            | 19 | 
|            |  |                                                                                                             
|ITEM 7.     |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS                        |    |            | 20 | 
|            |  |                                                                                                             
|ITEM 8.     |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |    |            | 28 | 
|            |  |                                                                                                             
|ITEM 9.     |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         |    |            | 48 | 
|            |  |                                                                                                             
|ITEM 9A.    |  | DISCLOSURE CONTROLS AND PROCEDURES                                                                           |    |            | 48 | 
|            |  |                                                                                                             
|ITEM 9B.    |  | OTHER INFORMATION                                                                                            |    |            | 48 | 
|            |  |                                                                                                             
|            |  | PART III                                                                                                     |    |            |    | 
|            |  |                                                                                                             
|ITEM 10.    |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |    |            | 49 | 
|            |  |                                                                                                             
|ITEM 11.    |  | EXECUTIVE COMPENSATION                                                                                       |    |            | 49 | 
|            |  |                                                                                                             
|ITEM 12.    |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS               |    |            | 49 | 
|            |  |                                                                                                             
|ITEM 13.    |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                    |    |            | 49 | 
|            |  |                                                                                                             
|ITEM 14.    |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                       |    |            | 49 | 
|            |  |                                                                                                             
|            |  | PART IV                                                                                                      |    |            |    | 
|            |  |                                                                                                             
|ITEM 15.    |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |    |            | 50 | 
|            | 
|SIGNATURES  |  |                                                                                                              | 51 |           



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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 travel technology and data services provider, offering more than 20 software-as-a-service utilities for online booking, reservation processing, data intelligence, and process automation. We provide patented savings maximization solutions,
extending spend management services to travel buyers all over the world. We complement our offerings with a global workforce focused on travel process automation and reengineering. 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 services 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. We believe that the importance of our data intelligence services to our target market has increased due to
increasingly fractured data sources 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 governments, and credit card issuers. During the year ended December 31, 2010, we served more than 270 clients. Our client base includes global leaders in the markets we serve, such as American Airlines, Inc., American Express Travel
Related Services Company, Inc. (American Express), Citibank, N.A. (Citibank), and Expedia, Inc. (Expedia). Growing our client roster is a key objective as we strive to reduce dependency on a handful of clients.

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 typically have multi-year contracts with minimum volume
commitments based on each clients scale and expected growth rate.

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 a data integration provider. In 1999 and 2000, we
established European joint ventures to support travel distribution throughout Europe. In January 2004, we purchased the remaining interests in our European joint ventures. 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 NASDAQ Stock Market. As announced on March 12, 2010, and in light of receiving a notice of
noncompliance of the continued listing requirements from NASDAQ Stock Market, we voluntarily removed our securities from listing and registration on the NASDAQ Capital Market. On March 22, 2010, we filed a Form 25 delisting our shares from the
NASDAQ Capital Market, and trading of our shares was suspended effective at the open of business on March 30, 2010. Our common stock (OTCQB:TRXI) has been quoted on the Pink OTC Markets, Inc. (OTC Marketplace) electronic
quotation service under the OTCQB market tier beginning on April 1, 2010.

We closed one acquisition in August 2006 and a
second acquisition in January 2007 to augment our data intelligence offerings in the corporate market. In 2004, we made a strategic decision to gradually transition away from providing call center services, and in the subsequent years 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 offerings. We work closely with selected partners to offer end-to-end solutions,
including our reservation processing and data intelligence services, along with call center services.



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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. 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.

The industry is focused on achieving a lower per transaction cost, which 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

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. In addition, suppliers have been utilizing add-on fees
as a means of generating incremental revenues after the primary sale for items such as upgrades, meals, and internet access. Other current industry trends include the following:



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



| |  |  | 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 intelligence 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 utilities facilitate the
distribution of travel in a cost-efficient manner and assist 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 bundled 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 primary solutions:



| |  |  | Data intelligence enables the aggregation, enhancement, extraction, and reporting of transaction data. Our data intelligence 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 (global distribution systems), and normalizes those records into a common structure in a single
data repository.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 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, Citibank, HealthPlan Services, UAL
Corporation, MasterCard Inc. Sabre Holdings Corporation and the United States General Services Administration.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reservation Processing offers a suite of utilities that processes our clients travel data records in a cost efficient manner. Our products enable
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. We offer our agency clients software functionality for exception processing and agent workflow
management and tracking. We host our Reservation Processing applications for our clients and provide access to them via the Internet. Our Reservation Processing services are used by large travel agencies, corporations and suppliers, including
American Airlines, Inc., American Express, The Boeing Company, Expedia, and Orbitz Worldwide, Inc.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Online Booking offers a user-friendly 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 online booking, profiler and agent desktop utilities 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 Carlson Wagonlit Travel, BCD Travel, Nationwide Hospitality and Travel and Transport, Inc.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our Competitive Strengths

We believe our competitive strengths have enabled us to become a leading independent provider of data intelligence, 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. 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.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our Growth Strategy

During the past several years, our revenues have
declined primarily due to our exit from call center operations in the United States and United Kingdom, pricing pressure in our reservation processing products, as well as a loss of and reduced volume from certain reservation processing and online
booking clients. We expect these trends to continue.

In order to counteract these continuing trends, we plan to focus on the
following:



| |  |  | Expand the use of our data intelligence utilities. 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 intelligence 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 intelligence technologies enable us to provide valuable services to a very
large number of corporations. We began focusing on this large corporate market primarily in the U.S. beginning in 2007, and are continuing to expand both within the U.S. and globally. We believe that increasing the number of users who interact with
our technologies will lead to increased adoption of our other utilities.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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. 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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Clients and Partners

During 2010, more than 270 corporations, financial institutions, travel agencies, and travel suppliers used our products and services. Our primary clients and prospects are large corporations and
governments, travel suppliers, credit card issuing banks, and medium and large travel agency distributors. Our top five client contracts accounted for approximately 69% of our total revenues in 2010.

The following alphabetical client list represents our largest clients, each of which generated at least $500,000 of our revenue during
2010.



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



|(1) | Includes expedia.com, expedia.co.uk, expedia.de, expedia.ca, Egencia Corporate Travel, hotels.com and Hotwire, Inc.
|--- | -------------------------------------------------------------------------------------------------------------------

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 accounted for 44% of our revenues in 2010 compared to 42% of our revenues in 2009. Expedia has been a
client since its launch in 1996. The Expedia Agreement is amended from time to time and now continues through December, 31 2012. We expect that 2011 revenues from Expedia will be approximately $10 million less than their 2010 level. We can give no
assurance that we will retain any business from Expedia during the current contract term or beyond.

In addition, during the
protracted global recession which began in 2008, a number of global airlines have enacted capacity reductions, some permanent and others seasonal, due to continuing weak air travel demand. In general, reduced airline capacity results in lower
transaction volumes for us. Based on our expectation of reduced revenues from Expedia and from lower transaction volumes generally, it is likely that our revenues, operating results and cash flows will be adversely impacted and the
impact will be material, unless sufficiently offset by new revenue growth, further cost reductions, or a combination of the two.

Competition

We have
different competitors in each category of services that we offer. The data intelligence 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, SAS, and large travel agencies. As the market for data intelligence 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.



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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.
| | - |  | ---------------------------------------------------------------------------------------

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 13.9 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. There continues to be
uncertainty about whether or how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to 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. In turn, such trends could decrease the demand for our products and services or increase our cost of
operations.

In addition, government agencies have been contemplating or developing initiatives to enhance national and
aviation security. These initiatives may result in conflicting legal requirements with respect to data handling. We may 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.



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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.

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, 2010, we had approximately 767 employees, of which approximately 229 were located in North America, 154 in Europe and 384 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.



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Risks Related to Our Business

A substantial portion of our revenue is generated by our key clients; a significant loss of business with any of these clients would 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 69% of our
total revenues in 2010. Entities affiliated with Expedia, our largest client, accounted for approximately 44% of our revenue in 2010. Our clients can generally terminate their agreements with us if we do not meet specified performance or other
criteria. Some clients, including Expedia, can terminate these agreements without cause upon notice and/or 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.

Expedia has been a client since its launch in
1996, and is currently under contract through December 31, 2012. We expect that 2011 revenues from Expedia will be approximately $10 million less than their 2010 level. We can give no assurance that we will retain any business from Expedia
during the current contract term or beyond.

In general, reduced airline capacity results in lower transaction volumes for us.
Based on our expectation of reduced revenues from Expedia and from lower transaction volumes generally, it is likely that our revenues, operating results and cash flows will be adversely impacted and the impact will be material,
unless sufficiently offset by new revenue growth, further cost reductions, or a combination of the two.

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 operating results and cash flows.

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



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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, 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 directly, as well as through a network of distributors, such as American Express, Expedia,
Inc. and its affiliates 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, whether direct sales or through our distributor network, for our services is
lengthy and unpredictable, requires pre-purchase evaluation by a significant number of employees in our clients organizations, and often involves a significant operational decision by our clients. Moreover, a purchase decision by a potential
large 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.



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

We incurred net losses in every year of our operations prior to 2008. We incurred a net loss of $44.0
million in 2009 and had an accumulated deficit of $94.4 million at the end of 2010. Although we experienced net income in 2010, we cannot assure you that we will be able to sustain levels of 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.

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 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 alternatives to the major GDSs, 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, travel industry deregulation has resulted in the emergence of alternatives to the traditional GDS providers. Moreover, significant
volumes of travel transactions from our clients may migrate to these alternatives. If we are not successful in integrating our systems with GDS alternatives as they evolve, 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.



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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 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
intelligence software and consulting 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.



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As the market for both data processing and data intelligence 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.

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 2010, we received approximately 28% of our revenue from
Europe-based clients. We incur material costs in the United States, United Kingdom, Germany and India. We plan to continue to pursue opportunities abroad, and approximately half of our workforce is located in Bangalore, India. 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.



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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.

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.

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 and enhancement of data requires 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



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of security breaches 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.

Our business could be adversely affected by reduced levels of cash, whether from operations or pursuant to the terms of our debt, as well as our ability to refinance our existing debt.

Reduced levels of cash generated from operations as well as our ability to refinance our existing debt could adversely
impact our current business and our ability to grow.

Historically, our principal sources of cash have been cash flows from
operations and borrowings from banks and other sources. Operations may continue to generate less cash than in the past. Our current bank credit facility expires in June 2012. We believe that we will be able to secure future renewals with adequate
capacity, or to generate additional capital to meet our liquidity needs. However, we can provide no assurances that future renewals of our bank credit facility will be executed at favorable or desirable terms. If we are not successful in achieving
the anticipated refinancing the lender is entitled to enforce the guarantee under our credit facility. Management believes its additional sources of liquidity include but are not limited to, generating positive operating cash flows through revenue
growth, further reducing our expenses and/or capital expenditures, generating working capital through our clients and/or vendors, refinancing our debt, issuing equity, convertible debt or other securities, or selling assets.

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

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 1.75 to 1 at December 31, 2010. 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 $4.2 million as of December 31, 2010, before their due date. In addition, these covenants and restrictions may limit our future growth or operational opportunities.

Our common stock has been delisted from The NASDAQ Capital Market and is now quoted on the Pink OTC Markets electronic quotation service, which
may, among other things, reduce the price of our common stock and the levels of liquidity available to our shareholders.

As announced on March 12, 2010, and in light of receiving a notice of noncompliance of the continued listing requirements from The
NASDAQ Stock Market, we voluntarily removed our securities from listing and registration on the NASDAQ Capital Market. On March 22, 2010, we filed a Form 25 delisting our shares from the NASDAQ Capital Market, and trading of our shares was
suspended effective at the open of business on March 30, 2010. Our common stock (OTCQB:TRXI) has been quoted on the Pink OTC Markets Inc. (OTC Marketplace) electronic quotation service under the OTCQB market tier beginning on
April 1, 2010.

The trading of our common stock on the OTC Marketplace may reduce the price of our common stock and the
levels of liquidity available to our shareholders. In addition, the trading of our common stock in the OTC Marketplace may materially adversely affect our access to the capital markets, and the limited liquidity and potentially reduced price of our
common stock could materially adversely affect our ability to raise capital through alternative financing sources on terms acceptable to us. There may also be other negative implications, including the potential loss of confidence by suppliers,
customers and employees, the loss of institutional investor interest in our company. There is no assurance that our common stock will continue to be quoted on the OTC Marketplace, and failure to be quoted will have a material adverse effect on the
price and liquidity of our stock.



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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 in India. 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.

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.



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Acts of terrorism, war and/or pandemic or fear of pandemic 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, security, and health concerns, and thus declines after occurrences of and fears of future incidents that
affect the safety, security and confidence of travelers. For example, the H1N1 flu pandemic during 2009, the start of the war in Iraq in 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, war, or pandemic. The effects of these events could include, among other things, a protracted decrease in
demand for air travel due to fear, military and governmental responses and a perceived inconvenience in traveling by air and 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 intelligence services and by travel-related
industry participants of the outsourcing of data intelligence 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
and our consolidation, extraction, and enhancement of data requires 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.



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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 or interpreted 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 commercial online services. In turn, this could decrease the demand for our products and services or increase our cost of operations.



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

None.



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

Our
headquarters are located in Atlanta, Georgia and consist of approximately 44,000 square feet of office space held under a lease that expires in October 2019. We lease a total of approximately 140,000 square feet globally. As of December 31,
2010, 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 2011 and 2019. We ceased operations in Tysons Corner, Virginia during 2008 and have a sublease for the remainder of the lease which expires in 2011. During 2009, we ceased operations in Leicester, United
Kingdom with the lease expiring in 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.



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PART II



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

As announced on March 12, 2010, and in light of receiving a notice of noncompliance of the continued listing requirements from The
NASDAQ Stock Market, we voluntarily removed our securities from listing and registration on the NASDAQ Capital Market. On March 22, 2010, we filed a Form 25 delisting our shares from the NASDAQ Capital Market, and trading of our shares was
suspended effective at the open of business on March 30, 2010. Our common stock has been quoted on the Pink OTC Markets Inc. (OTC Marketplace) electronic quotation service under the OTCQB market tier beginning on April 1,
2010 under the symbol TRXI. Such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. See Our common stock has
been delisted from The NASDAQ Capital Market and is now quoted on the Pink OTC Markets electronic quotation service, which may, among other things, reduce the price of our common stock and the levels of liquidity available to our shareholdersin Item 1A Risk Factors, included herein. 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, 2010: |  |      |      |  |     |   |      | 
|First Quarter                 |  | $    | 0.93 |  |     | $ | 0.45 | 
|Second Quarter                |  | $    | 1.01 |  |     | $ | 0.40 | 
|Third Quarter                 |  | $    | 0.90 |  |     | $ | 0.51 | 
|Fourth Quarter                |  | $    | 0.70 |  |     | $ | 0.21 | 
|                              |  |     
|Year Ended December 31, 2009: |  |      |      |  |     |   |      | 
|First Quarter                 |  | $    | 0.59 |  |     | $ | 0.22 | 
|Second Quarter                |  | $    | 0.60 |  |     | $ | 0.25 | 
|Third Quarter                 |  | $    | 1.85 |  |     | $ | 0.36 | 
|Fourth Quarter                |  | $    | 0.95 |  |     | $ | 0.42 | 

As of
December 31, 2010, there were approximately 43 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. We have certain restrictions on the
declaration and payment of dividends as defined under the Restricted Payments section of our credit agreement with Atlantic Capital Bank that prohibit, among other things, cash dividend payments to non-equity holders. Dividend
payments in the form of common stock or other equity interests are not prohibited.



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

The following discussion and analysis presents the factors that had a material effect on our results of operations during the years
ended December 31, 2010 and 2009. Also discussed is our financial position as of December 31, 2010. You should read this discussion in conjunction with our consolidated financial statements and the notes to those consolidated financial
statements included elsewhere in this report. This Managements Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See Cautionary Notice Regarding Forward-Looking Statements
for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

TRX is a travel technology and data services provider, offering more than 20 software-as-a-service utilities for online booking,
reservation processing, data intelligence, and process automation. We provide patented savings maximization solutions, extending spend management services to travel buyers all over the world. We complement all of this with a global workforce
focused on travel process automation and reengineering. 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 intelligence, 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 44% and 42% of our total revenues in 2010
and 2009, respectively.

Expedia has been a client since its launch in 1996. In 2006, we replaced our existing contracts with
Expedia with a Master Services Agreement (the Expedia Agreement). The Expedia Agreement is amended from time to time and now continues through December, 31 2012. We expect that 2011 revenues from Expedia will be approximately $10 million
less than their 2010 level. We can give no assurance that we will retain any business from Expedia during the current contract term or beyond.

In general, reduced airline capacity results in lower transaction volumes for us. Based on our expectation of reduced revenues from Expedia and from lower transaction volumes generally, it is likely
that our revenues, operating results and cash flows will be adversely impacted and the impact will be material, unless sufficiently offset by new revenue growth, further cost reductions, or a combination of the two.

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. 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.

Effective January 1, 2009, we
extended the Amended and Restated Master Agreement by and between TRX Technology and BCD Travel (the Master Agreement) for the period January 1, 2009 through August 31, 2009 for reservation processing services only. The
provisions of the Master Agreement expired on December 31, 2008



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with regard to all other services covered by that agreement. A separate three year agreement with an effective date of January 1, 2009 was entered into between the parties for online booking
services, which had previously been covered under the Master Agreement.

In March 2009, as part of a program to reduce our
cost structure, we decided not to pay bonuses globally for 2008 performance or provide funding for the 401(k) program in the U.S. These expenses were accrued during 2008. The reversal of the amounts accrued for the bonuses and 401(k) program funding
resulted in a reduction of employee related expenses of $1.8 million during the first quarter of 2009.

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, reduction in airline seat capacity, changing and
increasing access methods to reach supplier inventory, reduction in supplier commission rates, global distribution system (GDS) 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.

As announced on March 12, 2010, and in light of receiving a notice of noncompliance of the continued
listing requirements from The NASDAQ Stock Market, we voluntarily removed our securities from listing and registration on the NASDAQ Capital Market. On March 22, 2010, we filed a Form 25 delisting our shares from the NASDAQ Capital Market, and
trading of our shares was suspended effective at the open of business on March 30, 2010. Our common stock (OTCQB:TRXI) has been quoted on the Pink OTC Markets Inc. (OTC Marketplace) electronic quotation service under the OTCQB
market tier beginning on April 1, 2010.

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 Intelligence: We generate data intelligence 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 intelligence 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.



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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.

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 when
certain other consulting or other services are combined with our transaction processing revenues and 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 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Internal-Use Software Development Costs. We account for internal-use software
development costs in accordance with the applicable guidance which 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. 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 and other intangible assets.
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
reduces the value of a reporting unit below its carrying value. As a result of declining market conditions from January 1, 2009 to March 31, 2009, and their related effect on current and anticipated volumes and pricing with clients, we
determined that it was necessary to test goodwill for impairment as of March 31, 2009. We used the same approach that was used during the 2008 impairment analysis, which required estimates of future operating results and cash flows of the
reporting unit discounted using estimated discount rates ranging from 16% to 18%. The estimates of future operating results and cash flows were principally derived from an updated long-term financial outlook in light of the first quarter of 2009
market conditions and the challenging economic outlook. As a result of our impairment test, we determined that goodwill was fully impaired and recorded a noncash impairment charge to goodwill of $37.4 million during the first quarter of 2009, which
is included in Impairment of goodwill, intangible assets and other long-lived assets in our consolidated statements of operations. Subsequent to the goodwill impairment charge recorded in the first quarter of 2009, we recorded goodwill
of $0.3 million related to earnout payments on a previous business acquisition transaction. Since there was no improvement in our financial outlook, such goodwill was also impaired in that same period. We expect to record additional goodwill
impairment charges through December 31, 2011for future earnout payments associated with this business acquisition transaction, until our financial outlook improves thereby justifying the recording of a goodwill asset.

The outcome of our goodwill impairment analysis as of March 31, 2009 also indicated that the carrying amount of certain
acquisition-related intangible assets or asset groups may not be recoverable. We assessed the recoverability of the acquisition-related intangible assets by determining whether the unamortized balances could be recovered through undiscounted future
net cash flows. We determined that certain of the acquisition-related intangible assets were impaired primarily due to the revised lower revenue forecasts associated with the products incorporating the trademarks and patents, customer relationships
and non-compete agreements. We measured the amount of impairment by calculating the amount by which the carrying value of the assets exceeded their estimated fair values, which were based on projected discounted future net cash flows. As a result of
this impairment analysis, we recorded a noncash impairment charge of approximately $1.1 million during the first quarter of 2009, which is included in Impairment of goodwill, intangible assets and other long-lived assets in our
consolidated statements of operations.

Impairment of long-lived assets. We regularly evaluate whether events and
circumstances have occurred that indicate whether the carrying amount of property and equipment and other intangible assets may warrant revision or may not be recoverable. When factors indicate that these long-lived assets should be evaluated for
recoverability, 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. During the
first quarter of 2009, we experienced a continued decline in our business that led us to revise our short-term and long-term financial forecasts that indicated that an impairment of long-lived assets may



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have occurred. Accordingly, we performed an analysis comparing the undiscounted cash flows estimated to be generated by the long-lived assets to the carrying amounts of those assets. The
estimates of future operating results and cash flows are derived from our updated long-term financial forecast. The results of the comparison of our undiscounted cash flows to the carrying value of the long-lived assets indicated a requirement to
move to a fair value approach. The values of the intangible long lived assets were determined using both the cost approach and an income approach. The relief from royalty method was the specific income approach utilized. We also used an appraisal of
certain long-lived fixed assets to support our conclusions related to those assets. As a result, we recorded a long-lived asset impairment noncash charge during the first quarter of 2009 of $5.2 million, which is included in Impairment of
goodwill, intangible assets and other long-lived assets in our audited consolidated statement of operations. We assessed indicators to determine whether the carrying values of long-lived assets, including property and equipment and other
intangible assets should be impaired and determined no impairment was required at December 31, 2010.

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 $0.1 million and $0.6 million during 2010 and 2009, respectively,
and are included as operating expenses in our consolidated statements of operations. We expect transaction processing provisions to continue to decrease as we reduce our volume associated with this activity. We completed a review of our transaction
processing provisions and determined that no adjustments were required as of December 31, 2010.

Results of Operations

Comparison of Years Ended December 31, 2010 and December 31, 2009

The following table sets forth selected statement of operations data.



|                                                                      |                        |                          |        |      |  |  |        |   |  |   |         |   |  |  |     |   |  |   |         |   |  |  |       |   
|--------------------------------------------------------------------- | ---------------------- | ------------------------ | ------ | ---- |  |  | ------ | - |  | - | ------- | - |  |  | --- | - |  | - | ------- | - |  |  | ----- | --
|                                                                      |                        | Years Ended December 31, |       
|                                                                      | 2010                   |                          |        | 2009 |  |  | Change |  
|                                                                      | (dollars in thousands) |                         
|Revenue:                                                              |                        |                          |        |      |  |  |        |   |  |   |         |   |  |  |     |   |  |   |         |   |  |  |       |   
|Transaction processing                                                |                        | $                        | 44,764 |      |  |  | 80     | % |  | $ | 47,212  |   |  |  | 80  | % |  | $ | (2,448  | ) |  |  | (5    | )%
|Data intelligence                                                     |                        |                          | 11,470 |      |  |  | 20     |   |  |   | 11,661  |   |  |  | 20  |   |  |   | (191    | ) |  |  | (2    | ) 
|                                                                      |                        |                          |        |      |  |  |        |   |  |   |         |   |  |  |     |   |  |   |         |   |  |  |       |   
|Transaction and other revenues                                        |                        |                          | 56,234 |      |  |  | 100    | % |  |   | 58,873  |   |  |  | 100 | % |  |   | (2,639  | ) |  |  | (4    | ) 
|Client reimbursements                                                 |                        |                          | 497    |      |  |  |        |   |  |   | 470     |   |  |  |     |   |  |   |         |   |  |  |       |   
|                                                                      |                        |                          |        |      |  |  |        |   |  |   |         |   |  |  |     |   |  |   |         |   |  |  |       |   
|Total revenues                                                        |                        |                          | 56,731 |      |  |  |        |   |  |   | 59,343  |   |  |  |     |   |  |   |         |   |  |  |       |   
|Expenses:                                                             |                        |                          |        |      |  |  |        |   |  |   |         |   |  |  |     |   |  |   |         |   |  |  |       |   
|Operating                                                             |                        |                          | 33,637 |      |  |  |        |   |  |   | 36,406  |   |  |  |     |   |  |   | (2,769  | ) |  |  | (8    | ) 
|Selling, general, and administrative                                  |                        |                          | 11,778 |      |  |  |        |   |  |   | 10,979  |   |  |  |     |   |  |   | 799     |   |  |  | 7     |   
|Technology development                                                |                        |                          | 3,650  |      |  |  |        |   |  |   | 4,343   |   |  |  |     |   |  |   | (693    | ) |  |  | (16   | ) 
|Client reimbursements                                                 |                        |                          | 497    |      |  |  |        |   |  |   | 470     |   |  |  |     |   |  |   | 27      |   |  |  | 6     |   
|Impairment of goodwill, intangible assets and other long-lived assets |                        |                          | 323    |      |  |  |        |   |  |   | 43,939  |   |  |  |     |   |  |   | (43,616 | ) |  |  | (99   | ) 
|Depreciation and amortization                                         |                        |                          | 4,094  |      |  |  |        |   |  |   | 6,454   |   |  |  |     |   |  |   | (2,360  | ) |  |  | (37   | ) 
|Interest (expense) income:                                            |                        |                          |        |      |  |  |        |   |  |   |         |   |  |  |     |   |  |   |         |   |  |  |       |   
|Interest income                                                       |                        |                          | 13     |      |  |  |        |   |  |   | 15      |   |  |  |     |   |  |   | (2      | ) |  |  | (13   | ) 
|Interest expense                                                      |                        |                          | (685   | )    |  |  |        |   |  |   | (789    | ) |  |  |     |   |  |   | (104    | ) |  |  | (13   | ) 
|Income tax benefit                                                    |                        |                          | 399    |      |  |  |        |   |  |   | 23      |   |  |  |     |   |  |   | 376     |   |  |  | 1,635 |   
|                                                                      |                        |                          |        |      |  |  |        |   |  |   |         |   |  |  |     |   |  |   |         |   |  |  |       |   
|Net income (loss)                                                     |                        | $                        | 2,479  |      |  |  |        |   |  | $ | (43,999 | ) |  |  |     |   |  |   |         |   |  |  |       |   
|                                                                      |                        |                          |        |      |  |  |        |   |  |   |         |   |  |  |     |   |  |   |         |   |  |  |       |   



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Transaction processing revenues. The decrease for 2010 was due to the decreased level
of services provided to BCD Travel and Expedia. We expect revenues per transaction to continue to decline in the future because of scaled pricing we offer to clients for increased volume, as well as trends in the travel processing supply chain that
are putting negative pressure on our revenue per transaction.

Data intelligence revenues. The decrease for 2010
compared to the prior year was primarily due to lower consulting and other nonrecurring activities, mostly offset by growth with new and existing recurring clients. We expect growth in data intelligence revenues based on recent sales activity and
market interest in these products and services.

Operating expenses. The decrease in operating expenses for 2010
compared to the prior year was primarily due to the program to reduce our cost structure primarily through personnel reductions, which took place throughout 2009.

Selling, general and administrative expenses.The increase in selling, general and administrative expenses for 2010 compared to the prior year was primarily due to a stock compensation credit
recorded in 2009 as a result of the reductions in personnel.

Technology development expenses. The decrease in
technology development expense for 2010 compared to the prior year was primarily due to a program to reduce our cost structure through reductions in personnel and contract labor.

Impairment of goodwill, intangible assets and other long-lived assets. We recorded impairment charges of $43.9 million during 2009
as discussed above under Critical Accounting Policies and Estimates.

Depreciation and amortization. The
decrease for 2010 compared to the prior year was primarily due to a decrease in our capital additions and a reduction in our property and equipment balances as a result of our impairment of other long-lived assets recorded in the first quarter of
2009.

Interest income. The decrease for 2010 compared to the prior year was primarily due to reduced average cash
balances available for investment.

Interest expense.The decrease for 2010 compared to the prior year was primarily
due to lower interest expense related to our Hi-Mark note payable as we pay down the note.

Income tax benefit.Income
tax benefit of $0.4 million was recorded in 2010. This benefit was composed of $0.5 million of current tax benefit from the settlement of uncertain tax positions in Germany, $0.2 million of net deferred tax benefit, and $0.3 of current tax expense.
The $0.2 million net deferred tax benefit included $1.5 million of deferred tax benefit from the release of valuation allowance. This release was prompted by usage of deferred tax inventory during 2010 and by the completion of international contract
negotiations during fourth quarter of 2010 that allowed us to reassess the amount of our deferred tax inventory that we were more likely than not to realize. Income tax benefit of $23 thousand was recorded in 2009 primarily due to $0.5 million of
tax expense recorded as a result of an increase for uncertain tax positions related to our operations in Germany and $0.1 million of tax expense related to our operations in India, largely offset by the reversal of $0.6 million of deferred tax
liabilities recorded in 2008 related to our goodwill, which was written-off during the first quarter of 2009.

Liquidity and Capital
Resources

We fund our ongoing operations primarily with cash from operating activities. 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.



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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, 2010, our principal sources of liquidity were cash and cash equivalents of $2.6 million and $4.3 million of
availability under our revolving credit facility with Atlantic Capital Bank (ACB). We had $4.2 million of borrowings outstanding under our credit facility at December 31, 2010. 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 macroeconomic 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 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 additional liquidity. We will experience liquidity problems if we are unable to obtain sufficient
additional financing as our debt becomes due. Adverse economic conditions, increased competition, or other unfavorable events also could affect our liquidity.

On November 9, 2010, we amended our Credit Agreement with ACB. The amendment extends the maturity date to June 30, 2012. The amendment also maintains BCD Holdings as a guarantor to the Credit
Agreement. There were no changes to financial or other covenants from the prior Credit Agreement, and we will continue to pay BCD a guarantee fee of 250-350 basis points, depending on borrowing levels under the Credit Agreement.

Net cash provided by operating activities was $1.7 million during 2010, compared to $1.9 million during 2009.

Net cash used in investing activities was $3.2 million during 2010, compared to $3.1 million during 2009. The driver of our investing
activities is our capital expenditures, which include costs associated with internally developed software, as well as infrastructure required to support and maintain our existing systems and opportunities to reduce costs. As of December 31,
2010, we had no material commitments related to capital expenditures. We expect our 2011 capital expenditures will be approximately $2.5 million.

Net cash provided by financing activities was $1.4 million during 2010, compared to net cash used in financing activities of $3.0 million during 2009. The primary driver for 2010 was net borrowings on our
credit facility.

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. Our financial statements are prepared in accordance with generally accepted accounting principles
applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our ability to continue as a going concern is dependent on having sufficient liquidity for our
operations. We are currently in compliance with all financial covenants in the Credit Agreement. As of December 31, 2010, we have borrowed $4.2 million against the facility and there was a $1.5 million letter of credit against this facility
relating to the lease of our Atlanta office, leaving $4.3 million that is currently available for borrowing. As of December 31, 2010, the interest rate on our outstanding borrowings was 4.25%. We expect to remain in compliance with all
financial covenants over the remaining term of our revolving credit facility with ACB, however, we acknowledge that market conditions remain uncertain, and, as such, can provide no assurances that we will remain in compliance. We monitor our
expected debt compliance and believe we would have time to further reduce our expenses and/or capital expenditures if needed to remain in compliance. If we are not successful in maintaining our debt compliance, ACB as lender is entitled to enforce
the guarantee under our credit facility. Management believes that the



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existing cash on hand, availability under the Credit Agreement and cash flow from operations will provide the needed liquidity to fund operations sufficient to continue as a going concern. The
Credit Agreement requires us to maintain (i) a ratio of consolidated funded indebtedness to consolidated EBITDA (as defined in the credit agreement, which may not be comparable to consolidated total debt or measures of GAAP profitability
presented elsewhere in this document) of not more than 1.75 to 1.00 and (ii) a ratio of the remainder of consolidated EBITDA minus capital expenditures to the sum of interest expense for the period and debt principal payments required to be
made in the next twelve months of not more than 1.40 to 1.00. 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, (v) dispose of property, or (vi) pay dividends.

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 two years.

Recent Accounting Pronouncements

Certain Revenue Arrangements That
Include Software ElementsIn October 2009, the FASB issued guidance that changed the accounting model for revenue arrangements that include both tangible products and software elements. This guidance is effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The adoption of this guidance did not have a material effect on our consolidated financial position and results of operations.

Business CombinationsIn December 2010, the FASB issued ASU No. 2010-29, which updates the guidance in ASC Topic 805,
Business Combinations. The objective of ASU 2010-29 is to address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The amendments in ASU
2010-29 specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of
the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly
attributable to the business combination included in the reported pro forma revenue and earnings. The amendments affect any public entity as defined by ASC 805 that enters into business combinations that are material on an individual or aggregate
basis. This guidance will become effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is
permitted. We do not expect the adoption of this guidance will have a material effect on our financial position and results of operations.



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

CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009



|                                                        |  |      |    | 
|------------------------------------------------------- |  | ---- | -- | 
|                                                        |  | Page |   
|Report of Independent Registered Public Accounting Firm |  |      | 29 | 
|Consolidated Balance Sheets                             |  |      | 30 | 
|Consolidated Statements of Operations                   |  |      | 31 | 
|Consolidated Statements of Shareholders Deficit        |  |      | 32 | 
|Consolidated Statements of Cash Flows                   |  |      | 33 | 
|Notes to Consolidated Financial Statements              |  |      | 34 | 



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

TRX, Inc. and Subsidiaries

We have audited the accompanying consolidated balance
sheets of TRX, Inc. and Subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of operations, shareholders (deficit) 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, 2010 and 2009, 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.

/s/    Deloitte & Touche LLP

Atlanta, Georgia

March 1, 2011



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TRX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2010 and 2009

(In thousands, except share data)





|                                                                                                                                                   |  |      |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                   |  | 2010 |         |   | 2009 |  
|ASSETS                                                                                                                                             |  |      |         |   |      |   |         |  
|CURRENT ASSETS:                                                                                                                                    |  |      |         |   |      |   |         |  
|Cash and cash equivalents                                                                                                                          |  | $    | 2,565   |   |      | $ | 2,897   |  
|Trade accounts receivable, net                                                                                                                     |  |      | 6,127   |   |      |   | 6,371   |  
|Prepaids and other                                                                                                                                 |  |      | 3,318   |   |      |   | 2,693   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total current assets                                                                                                                               |  |      | 12,010  |   |      |   | 11,961  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|NONCURRENT ASSETS:                                                                                                                                 |  |      |         |   |      |   |         |  
|Property and equipment, net                                                                                                                        |  |      | 5,743   |   |      |   | 6,996   |  
|Deferred income tax                                                                                                                                |  |      | 264     |   |      |   |        |  
|Other assets, net                                                                                                                                  |  |      | 795     |   |      |   | 791     |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total noncurrent assets                                                                                                                            |  |      | 6,802   |   |      |   | 7,787   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total assets                                                                                                                                       |  | $    | 18,812  |   |      | $ | 19,748  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                                              |  |      |         |   |      |   |         |  
|CURRENT LIABILITIES:                                                                                                                               |  |      |         |   |      |   |         |  
|Accounts payable and accrued liabilities                                                                                                           |  | $    | 8,275   |   |      | $ | 11,050  |  
|Customer deposits and deferred revenue                                                                                                             |  |      | 4,624   |   |      |   | 6,427   |  
|Current portion of long-term debt                                                                                                                  |  |      | 583     |   |      |   | 1,167   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total current liabilities                                                                                                                          |  |      | 13,482  |   |      |   | 18,644  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|NONCURRENT LIABILITIES:                                                                                                                            |  |      |         |   |      |   |         |  
|Long-term debtless current portion                                                                                                                |  |      | 4,200   |   |      |   | 2,183   |  
|Other long-term liabilities                                                                                                                        |  |      | 1,759   |   |      |   | 1,929   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total noncurrent liabilities                                                                                                                       |  |      | 5,959   |   |      |   | 4,112   |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total liabilities                                                                                                                                  |  |      | 19,441  |   |      |   | 22,756  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|COMMITMENTS AND CONTINGENCIES (NOTE 3)                                                                                                             |  |      |         |   |      |   |         |  
|SHAREHOLDERS DEFICIT:                                                                                                                             |  |      |         |   |      |   |         |  
|Common stock, $.01 par value; 100,000,000 shares authorized; 18,653,802 and 18,644,055 shares issued; 18,466,271 and 18,456,524
shares outstanding |  |      | 186     |   |      |   | 186     |  
|Additional paid-in capital                                                                                                                         |  |      | 95,416  |   |      |   | 95,653  |  
|Treasury stock, at cost; 187,531 shares                                                                                                            |  |      | (2,294  | ) |      |   | (2,294  | )
|Cumulative translation adjustment                                                                                                                  |  |      | 413     |   |      |   | 276     |  
|Accumulated deficit                                                                                                                                |  |      | (94,350 | ) |      |   | (96,829 | )
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total shareholders deficit                                                                                                                        |  |      | (629    | ) |      |   | (3,008  | )
|                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total liabilities and shareholders deficit                                                                                                        |  | $    | 18,812  |   |      | $ | 19,748  |  
|                                                                                                                                                   |  |      |         |   |      |   |         |  

See notes to consolidated financial statements.



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TRX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(In thousands, except per
share data)



|                                                                              |  |      |        |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | -
|                                                                              |  | 2010 |        |   | 2009 |  
|REVENUES:                                                                     |  |      |        |   |      |   |         |  
|Transaction and other revenues                                                |  | $    | 56,234 |   |      | $ | 58,873  |  
|Client reimbursements                                                         |  |      | 497    |   |      |   | 470     |  
|                                                                              |  |      |        |   |      |   |         |  
|Total revenues                                                                |  |      | 56,731 |   |      |   | 59,343  |  
|                                                                              |  |      |        |   |      |   |         |  
|EXPENSES:                                                                     |  |      |        |   |      |   |         |  
|Operating, excluding depreciation and amortization                            |  |      | 33,637 |   |      |   | 36,406  |  
|Selling, general, and administrative, excluding depreciation and amortization |  |      | 11,778 |   |      |   | 10,979  |  
|Technology development                                                        |  |      | 3,650  |   |      |   | 4,343   |  
|Client reimbursements                                                         |  |      | 497    |   |      |   | 470     |  
|Impairment of goodwill, intangible assets and other long-lived assets         |  |      | 323    |   |      |   | 43,939  |  
|Depreciation and amortization                                                 |  |      | 4,094  |   |      |   | 6,454   |  
|                                                                              |  |      |        |   |      |   |         |  
|Total expenses                                                                |  |      | 53,979 |   |      |   | 102,591 |  
|                                                                              |  |      |        |   |      |   |         |  
|OPERATING INCOME (LOSS)                                                       |  |      | 2,752  |   |      |   | (43,248 | )
|INTEREST INCOME (EXPENSE):                                                    |  |      |        |   |      |   |         |  
|Interest income                                                               |  |      | 13     |   |      |   | 15      |  
|Interest expense                                                              |  |      | (685   | ) |      |   | (789    | )
|                                                                              |  |      |        |   |      |   |         |  
|Total interest expense, net                                                   |  |      | (672   | ) |      |   | (774    | )
|                                                                              |  |      |        |   |      |   |         |  
|INCOME (LOSS) BEFORE INCOME TAXES                                             |  |      | 2,080  |   |      |   | (44,022 | )
|BENEFIT FOR INCOME TAXES                                                      |  |      | 399    |   |      |   | 23      |  
|                                                                              |  |      |        |   |      |   |         |  
|NET INCOME (LOSS)                                                             |  | $    | 2,479  |   |      | $ | (43,999 | )
|                                                                              |  |      |        |   |      |   |         |  
|WEIGHTED AVERAGE NUMBER OF SHARES:                                            |  |      |        |   |      |   |         |  
|Basic                                                                         |  |      | 18,466 |   |      |   | 18,432  |  
|                                                                              |  |      |        |   |      |   |         |  
|Diluted                                                                       |  |      | 18,533 |   |      |   | 18,432  |  
|                                                                              |  |      |        |   |      |   |         |  
|BASIC AND DILUTED NET INCOME (LOSS) PER SHARE                                 |  | $    | 0.13   |   |      | $ | (2.39   | )
|                                                                              |  |      |        |   |      |   |         |  

See notes to consolidated financial statements.



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TRX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(In thousands, except
share data)



|                                |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   |         |  
|------------------------------- | ------ | ------------ | ---------- | ------ | ------------------------ | - | --- | ------------- |  | - | ------------------------------- | - |  | ------------------ | ------ | - | ----- | - | --- | - |  | - | ------- | - |  | - | ------- | -
|                                |        | Common Stock |            |        | AdditionalPaid-InCapital |   |     | TreasuryStock |  |   | CumulativeTranslationAdjustment |   |  | AccumulatedDeficit |        |   | Total |  
|                                | Shares |              |            | Amount |                          |   |     |               |  |  
|BALANCEDecember 31, 2008       |        |              | 18,383,555 |        |                          | $ | 185 |               |  | $ | 95,877                          |   |  | $                  | (2,294 | ) |       | $ | 279 |   |  | $ | (52,830 | ) |  | $ | 41,217  |  
|Comprehensive loss:             |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   |         |  
|Net loss                        |        |              |           |        |                          |   |    |               |  |   |                                |   |  |                    |       |   |       |   |    |   |  |   | (43,999 | ) |  |   | (43,999 | )
|Translation adjustment          |        |              |           |        |                          |   |    |               |  |   |                                |   |  |                    |       |   |       |   | (3  | ) |  |   |        |   |  |   | (3      | )
|                                |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   |         |  
|Total comprehensive loss        |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   | (44,002 | )
|Employee stock purchase plan    |        |              | 72,969     |        |                          |   | 1   |               |  |   | 32                              |   |  |                    |       |   |       |   |    |   |  |   |        |   |  |   | 33      |  
|Stock-based compensation credit |        |              |           |        |                          |   |    |               |  |   | (256                            | ) |  |                    |       |   |       |   |    |   |  |   |        |   |  |   | (256    | )
|                                |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   |         |  
|BALANCEDecember 31, 2009       |        |              | 18,456,524 |        |                          |   | 186 |               |  |   | 95,653                          |   |  |                    | (2,294 | ) |       |   | 276 |   |  |   | (96,829 | ) |  |   | (3,008  | )
|Comprehensive income:           |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   |         |  
|Net income                      |        |              |           |        |                          |   |    |               |  |   |                                |   |  |                    |       |   |       |   |    |   |  |   | 2,479   |   |  |   | 2,479   |  
|Translation adjustment          |        |              |           |        |                          |   |    |               |  |   |                                |   |  |                    |       |   |       |   | 137 |   |  |   |        |   |  |   | 137     |  
|                                |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   |         |  
|Total comprehensive income      |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   | 2,616   |  
|Employee stock purchase plan    |        |              | 9,747      |        |                          |   |    |               |  |   | 6                               |   |  |                    |       |   |       |   |    |   |  |   |        |   |  |   | 6       |  
|Stock-based compensation credit |        |              |           |        |                          |   |    |               |  |   | (243                            | ) |  |                    |       |   |       |   |    |   |  |   |        |   |  |   | (243    | )
|                                |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   |         |  
|BALANCEDecember 31, 2010       |        |              | 18,466,271 |        |                          | $ | 186 |               |  | $ | 95,416                          |   |  | $                  | (2,294 | ) |       | $ | 413 |   |  | $ | (94,350 | ) |  | $ | (629    | )
|                                |        |              |            |        |                          |   |     |               |  |   |                                 |   |  |                    |        |   |       |   |     |   |  |   |         |   |  |   |         |  



See notes to consolidated financial
statements.



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TRX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(In thousands)



|                                                                                         |  |      |         |   |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                         |  | 2010 |         |   | 2009 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |      |         |   |      |   |         |  
|Net income (loss)                                                                        |  | $    | 2,479   |   |      | $ | (43,999 | )
|                                                                                         |  |      |         |   |      |   |         |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |      |         |   |      |   |         |  
|Depreciation and amortization                                                            |  |      | 4,094   |   |      |   | 6,454   |  
|Impairment of goodwill, intangible assets and other long-lived assets                    |  |      | 323     |   |      |   | 43,939  |  
|Lease impairment                                                                         |  |      |        |   |      |   | 531     |  
|Provision for bad debts                                                                  |  |      | 357     |   |      |   | 67      |  
|Stock compensation credit                                                                |  |      | (243    | ) |      |   | (261    | )
|Deferred taxes                                                                           |  |      | (253    | ) |      |   | (724    | )
|Debt issuance cost amortization                                                          |  |      | 73      |   |      |   | 137     |  
|Changes in assets and liabilities, net of effects of acquisitions:                       |  |      |         |   |      |   |         |  
|Trade accounts receivable                                                                |  |      | (138    | ) |      |   | 1,537   |  
|Prepaids and other assets                                                                |  |      | (882    | ) |      |   | 344     |  
|Accounts payable and accrued liabilities                                                 |  |      | (2,260  | ) |      |   | (2,546  | )
|Customer deposits and deferred revenue                                                   |  |      | (1,802  | ) |      |   | (3,548  | )
|                                                                                         |  |      |         |   |      |   |         |  
|Net cash provided by operating activities                                                |  |      | 1,748   |   |      |   | 1,931   |  
|                                                                                         |  |      |         |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |      |         |   |      |   |         |  
|Capital expenditures                                                                     |  |      | (2,855  | ) |      |   | (2,738  | )
|Payment of contingent consideration                                                      |  |      | (325    | ) |      |   | (373    | )
|                                                                                         |  |      |         |   |      |   |         |  
|Net cash used in investing activities                                                    |  |      | (3,180  | ) |      |   | (3,111  | )
|                                                                                         |  |      |         |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |      |         |   |      |   |         |  
|Repayments of long-term debt                                                             |  |      | (1,167  | ) |      |   | (1,167  | )
|Borrowings from credit facility                                                          |  |      | 16,500  |   |      |   | 9,900   |  
|Payments on credit facility                                                              |  |      | (13,900 | ) |      |   | (11,700 | )
|Debt issue costs                                                                         |  |      | (15     | ) |      |   | (38     | )
|Proceeds from stock plans                                                                |  |      | 6       |   |      |   | 33      |  
|                                                                                         |  |      |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                                      |  |      | 1,424   |   |      |   | (2,972  | )
|                                                                                         |  |      |         |   |      |   |         |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                             |  |      | (324    | ) |      |   | 176     |  
|                                                                                         |  |      |         |   |      |   |         |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                                |  |      | (332    | ) |      |   | (3,976  | )
|                                                                                         |  |      |         |   |      |   |         |  
|CASH AND CASH EQUIVALENTSBeginning of year                                              |  |      | 2,897   |   |      |   | 6,873   |  
|                                                                                         |  |      |         |   |      |   |         |  
|CASH AND CASH EQUIVALENTSEnd of year                                                    |  | $    | 2,565   |   |      | $ | 2,897   |  
|                                                                                         |  |      |         |   |      |   |         |  

See notes to consolidated financial statements.



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##### Table of Contents

TRX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(In thousands, except
share data)

1. ORGANIZATION AND NATURE OF OPERATIONS

TRX is a travel technology and data services provider, offering more than 20 software-as-a-service utilities for online booking, reservation processing, data intelligence, and process automation. We
provide patented savings maximization solutions, extending spend management services to travel buyers all over the world. We complement all of this with a global workforce focused on travel process automation and reengineering. For the
foreseeable future, we intend to focus our efforts on the 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).

2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

The accompanying consolidated financial statements include the accounts of TRX, Inc. and its subsidiaries for the periods presented. All
intercompany accounts and transactions have been eliminated.

Cash and Cash EquivalentsWe consider all
highly liquid investments with original maturities of three months or less to be cash equivalents. Cash equivalents consisted solely of investment grade commercial paper at December 31, 2010 and 2009. Interest income during 2010 and 2009 was
$13 and $15, 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 collectability 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, 2010 and 2009.



|                             |  |      |      |   |      |   |      |  
|---------------------------- |  | ---- | ---- | - | ---- | - | ---- | -
|                             |  | 2010 |      |   | 2009 |  
|Balance, January 1           |  | $    | (422 | ) |      | $ | (486 | )
|Provision for bad debts      |  |      | (357 | ) |      |   | (67  | )
|Writeoffs, net of recoveries |  |      | 353  |   |      |   | 131  |  
|                             |  |      |      |   |      |   |      |  
|Balance, December 31         |  | $    | (426 | ) |      | $ | (422 | )
|                             |  |      |      |   |      |   |      |  

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.

We
have incurred expenditures for software used to facilitate internal data consolidation processes and to enable transaction processing services for our clients. 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.



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##### Table of Contents

The following details the components of property and equipment (and estimated useful lives)
at December 31, 2010 and 2009:



|                                                         |  |      |         |   |      |   |         |  
|-------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                         |  | 2010 |         |   | 2009 |  
|Computers, purchased software, and equipment (3-5 years) |  | $    | 22,142  |   |      | $ | 27,470  |  
|Internally-developed software costs (3 years)            |  |      | 12,723  |   |      |   | 12,411  |  
|Leasehold improvements (up to 10 years)                  |  |      | 2,009   |   |      |   | 2,157   |  
|Furniture and fixtures (7 years)                         |  |      | 1,117   |   |      |   | 1,426   |  
|                                                         |  |      |         |   |      |   |         |  
|                                                         |  |      | 37,991  |   |      |   | 43,464  |  
|Accumulated depreciation                                 |  |      | (32,248 | ) |      |   | (36,468 | )
|                                                         |  |      |         |   |      |   |         |  
|                                                         |  | $    | 5,743   |   |      | $ | 6,996   |  
|                                                         |  |      |         |   |      |   |         |  

Depreciation expense was $3,921 and $6,235 during 2010 and 2009, 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 reduces the value of a reporting unit below its carrying value. As a result of declining market
conditions from January 1, 2009 to March 31, 2009, and their related effect on current and anticipated volumes and pricing with clients, we determined that it was necessary to test goodwill for impairment as of March 31, 2009. We used
estimates of future operating results and cash flows of the reporting unit discounted using estimated discount rates ranging from 16% to 18%. The estimates of future operating results and cash flows were principally derived from an updated long-term
financial outlook in light of the first quarter of 2009 market conditions and the challenging economy. As a result of our impairment test, we determined that goodwill was fully impaired and recorded a noncash impairment charge to goodwill of $37,305
during the first quarter of 2009, which is included in "Impairment of goodwill, intangible assets and other long-lived assets" in our audited consolidated statements of operations. Subsequent to the goodwill impairment charge recorded in the first
quarter of 2009, we recorded goodwill of $347 related to earnout payments on a previous business acquisition transaction. Since there was no improvement in our financial outlook, such goodwill was also impaired in that same period. We expect to
record additional goodwill impairment charges through December 31, 2011 for future earnout payments associated with this business acquisition transaction, until our financial outlook improves thereby justifying the recording of a goodwill
asset.

The following table discloses the changes in the carrying amount of goodwill during the years ended December 31,
2010 and 2009:



|                              |  |      |         |   |      |   |         |  
|----------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                              |  | 2010 |         |   | 2009 |  
|Balance, January 1            |  | $    | 37,652  |   |      | $ | 37,305  |  
|Accumulated impairment losses |  |      | (37,652 | ) |      |   |        |  
|                              |  |      |         |   |      |   |         |  
|                              |  |      |        |   |      |   | 37,305  |  
|                              |  |      |         |   |      |   |         |  
|Earnout on Travel Analytics   |  |      | 323     |   |      |   | 347     |  
|Impairment charge             |  |      | (323    | ) |      |   | (37,652 | )
|                              |  |      |         |   |      |   |         |  
|Balance, December 31          |  |      | 37,975  |   |      |   | 37,652  |  
|Accumulated impairment losses |  |      | (37,975 | ) |      |   | (37,652 | )
|                              |  |      |         |   |      |   |         |  
|                              |  | $    |        |   |      | $ |        |  
|                              |  |      |         |   |      |   |         |  

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, 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.



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##### Table of Contents

The outcome of our goodwill impairment analysis for the first quarter of 2009 indicated that
the carrying amount of certain acquisition-related intangible assets or asset groups may not be recoverable. We assessed the recoverability of the acquisition-related intangible assets by determining whether the unamortized balances could be
recovered through undiscounted future net cash flows. We determined that certain of the acquisition-related intangible assets were impaired primarily due to the revised lower revenue forecasts associated with the products incorporating the
trademarks and patents, customer relationships and non-compete agreements. We measured the amount of impairment by calculating the amount by which the carrying value of the assets exceeded their estimated fair values, which were based on projected
discounted future net cash flows. As a result of this impairment analysis, we recorded a noncash impairment charge of approximately $1,112 during the first quarter of 2009, which is included in Impairment of goodwill, intangible assets and
other long-lived assets in our audited consolidated statements of operations.

We expect to record approximately $173 of
amortization expense related to these intangible assets in each of the next three years and $44 in the year thereafter. We recorded related amortization expense of $173 and $220 during 2010 and 2009, respectively.

Changes in other intangible assets during 2010 and 2009 were as follows:



|                                  |  |      |      |   |      |   |        |  
|--------------------------------- |  | ---- | ---- | - | ---- | - | ------ | -
|                                  |  | 2010 |      |   | 2009 |  
|Balance, January 1                |  | $    | 736  |   |      | $ | 2,068  |  
|Impairment charge                 |  |      |     |   |      |   | (1,112 | )
|Amortization of intangible assets |  |      | (173 | ) |      |   | (220   | )
|                                  |  |      |      |   |      |   |        |  
|Balance, December 31              |  | $    | 563  |   |      | $ | 736    |  
|                                  |  |      |      |   |      |   |        |  

A summary of our intangible assets as of December 31, 2010 and 2009 is as follows:



|                       |  |                    |          |  |                         |   |     |                    |  |   |                         |   |  |   |     |  |  |   |      |  
|---------------------- |  | ------------------ | -------- |  | ----------------------- | - | --- | ------------------ |  | - | ----------------------- | - |  | - | --- |  |  | - | ---- | -
|                       |  | UsefulLives        |          |  | December 31, 2010       |   |     | December 31, 2009  | 
|                       |  | GrossCarryingValue |          |  | AccumulatedAmortization |   |     | GrossCarryingValue |  |   | AccumulatedAmortization |  
|Trademarks and patents |  |                    | 10 years |  |                         | $ | 866 |                    |  | $ | (303                    | ) |  | $ | 866 |  |  | $ | (130 | )

Impairment of
Long-Lived AssetsWe regularly evaluate whether events and circumstances have occurred that indicate whether the carrying amount of property and equipment and other intangible assets may warrant revision or may not be recoverable. When
factors indicate that these long-lived assets should be evaluated for recoverability, 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. During the first quarter of 2009, we experienced a continued decline in our business that led us to revise our short-term and long-term financial forecasts that indicated that an
impairment of long-lived assets may have occurred. Accordingly, we performed an analysis comparing the undiscounted cash flows estimated to be generated by the long-lived assets to the carrying amounts of those assets. The estimates of future
operating results and cash flows are derived from our updated long-term financial forecast. The results of the comparison of our undiscounted cash flows to the carrying value of the long-lived assets indicated a requirement to move to a fair value
approach. The values of the intangible long lived assets were determined using both the cost approach and an income approach. The relief from royalty method was the specific income approach utilized. We also used an appraisal of certain long-lived
fixed assets to support our conclusions related to those assets. As a result, we recorded a long-lived asset impairment noncash charge during the first quarter of 2009 of $5,174, which is included in Impairment of goodwill, intangible assets
and other long-lived assets in our audited consolidated statement of operations. We assessed indicators to determine whether the carrying values of long-lived assets, including property and equipment and other intangible assets should be
impaired and determined no impairment was required at December 31, 2010.



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##### Table of Contents

Fair Value MeasurementsWe adopted the FASB's guidance on
Fair Value Measurements and Disclosures Topic for our financial assets and financial liabilities on January 1, 2008 and for our non-financial assets and non-financial liabilities on January 1, 2009. Under this guidance, fair value is
defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The guidance outlines a valuation framework and creates a
fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures.

We currently do not have financial or non-financial assets and financial or non-financial liabilities that are required to be measured at fair value on a recurring basis. The FASB's guidance establishes a
valuation hierarchy for disclosure of the inputs used to measure fair value. The following table shows the fair value of our non-financial assets that were required to be measured at fair value on a non-recurring basis during the first quarter of
2009. These non-financial assets, which included our goodwill, intangible assets and our other long-lived assets, were required to be measured at fair value in connection with the interim impairment tests we performed on our goodwill, intangible
assets and other long-lived assets in the first quarter of 2009. The following table includes impairment charges for each category of assets as of December 31, 2009.



|                                            |  |                          |        |  |                                        |   |   |                                            |  |   |                                        |  |  |             |        |  |  |   |         |  
|------------------------------------------- |  | ------------------------ | ------ |  | -------------------------------------- | - | - | ------------------------------------------ |  | - | -------------------------------------- |  |  | ----------- | ------ |  |  | - | ------- | -
|                                            |  | Balance atMarch 31, 2009 |        |  | Quoted Pricesin ActiveMarkets(Level 1) |   |   | Significant OtherObservableInputs(Level 2) |  |   | SignificantUnobservableInputs(Level 3) |  |  | TotalLosses |       
|Goodwill                                    |  | $                        |       |  |                                        | $ |  |                                            |  | $ |                                       |  |  | $           |       |  |  | $ | (37,652 | )
|Property and Equipment, net:                |  |                          |        |  |                                        |   |   |                                            |  |   |                                        |  |  |             |        |  |  |   |         |  
|Leasehold improvements                      |  |                          | 514    |  |                                        |   |  |                                            |  |   |                                       |  |  |             | 514    |  |  |   | (765    | )
|Computers, purchased software and equipment |  |                          | 5,623  |  |                                        |   |  |                                            |  |   |                                       |  |  |             | 5,623  |  |  |   | (1,770  | )
|Internally-developed software               |  |                          | 2,814  |  |                                        |   |  |                                            |  |   |                                       |  |  |             | 2,814  |  |  |   | (2,639  | )
|Furniture and fixtures                      |  |                          | 373    |  |                                        |   |  |                                            |  |   |                                       |  |  |             | 373    |  |  |   |        |  
|Other Assets, net:                          |  |                          |        |  |                                        |   |   |                                            |  |   |                                        |  |  |             |        |  |  |   |         |  
|Trademarks and patents                      |  |                          | 866    |  |                                        |   |  |                                            |  |   |                                       |  |  |             | 866    |  |  |   | (714    | )
|Customer relationships                      |  |                          |       |  |                                        |   |  |                                            |  |   |                                       |  |  |             |       |  |  |   | (211    | )
|Non-compete agreements                      |  |                          |       |  |                                        |   |  |                                            |  |   |                                       |  |  |             |       |  |  |   | (188    | )
|                                            |  |                          |        |  |                                        |   |   |                                            |  |   |                                        |  |  |             |        |  |  |   |         |  
|                                            |  | $                        | 10,190 |  |                                        | $ |  |                                            |  | $ |                                       |  |  | $           | 10,190 |  |  | $ | (43,939 | )
|                                            |  |                          |        |  |                                        |   |   |                                            |  |   |                                        |  |  |             |        |  |  |   |         |  

During 2010, earnout payments of $323 related to a previous business acquisition transaction were impaired
based on Level 3 measurements.

Other Assets At December 31, 2010, other assets include $232 of
deposits related to our India operations. At December 31, 2009, other assets include $36 deferred costs associated with the issuance of our revolving credit facility and debt. 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, 2010 and 2009:



|                           |  |      |       |  |      |   |        | 
|-------------------------- |  | ---- | ----- |  | ---- | - | ------ | 
|                           |  | 2010 |       |  | 2009 |  
|Accounts payable and other |  | $    | 2,601 |  |      | $ | 2,412  | 
|Personnel-related accruals |  |      | 2,630 |  |      |   | 4,693  | 
|Client-related accruals    |  |      | 2,252 |  |      |   | 2,728  | 
|Lease termination accrual  |  |      | 249   |  |      |   | 417    | 
|Accrued interest           |  |      | 118   |  |      |   | 129    | 
|Income tax payable         |  |      | 251   |  |      |   | 534    | 
|Facility-related accruals  |  |      | 174   |  |      |   | 137    | 
|                           |  |      |       |  |      |   |        | 
|                           |  | $    | 8,275 |  |      | $ | 11,050 | 
|                           |  |      |       |  |      |   |        | 



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##### Table of Contents

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. Customer deposits and deferred revenue consist of the following at December 31, 2010 and 2009:



|                                             |  |      |       |  |      |   |       | 
|-------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | 
|                                             |  | 2010 |       |  | 2009 |  
|Customer deposits                            |  | $    | 2,387 |  |      | $ | 2,890 | 
|Deferred revenue                             |  |      | 2,237 |  |      |   | 3,537 | 
|                                             |  |      |       |  |      |   |       | 
|Total customer deposits and deferred revenue |  | $    | 4,624 |  |      | $ | 6,427 | 
|                                             |  |      |       |  |      |   |       | 

Revenue Recognition and Cost DeferralWe recognize revenue 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Client reimbursements received for direct costs paid to third parties and related expenses are 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 69% and 66% of our total revenues in 2010 and 2009, 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 44% and 42% of revenues in 2010 and 2009, respectively. American Express Travel Related Services Company, Inc. (American Express) accounted for 16% of
revenues during both 2010 and 2009. At December 31, 2010 and 2009, 5% and 16%, respectively, of our accounts receivable related to American Express.

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

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 income (loss) per share:



|                                    |           |      |       |                       |      |  |          |  |  |         |      |  |                       |   |         |          |  |  |        |  |  |   |       |  
|----------------------------------- | --------- | ---- | ----- | --------------------- | ---- |  | -------- |  |  | ------- | ---- |  | --------------------- | - | ------- | -------- |  |  | ------ |  |  | - | ----- | -
|                                    |           | 2010 |       |                       | 2009 | 
|                                    | NetIncome |      |       | WeightedAverageShares |      |  | PerShare |  |  | NetLoss |      |  | WeightedAverageShares |   |         | PerShare | 
|Basic net income (loss) per share   |           | $    | 2,479 |                       |      |  | 18,466   |  |  | $       | 0.13 |  |                       | $ | (43,999 | )        |  |  | 18,432 |  |  | $ | (2.39 | )
|Effect of dilutive securities:      |           |      |       |                       |      |  |          |  |  |         |      |  |                       |   |         |          |  |  |        |  |  |   |       |  
|Options to acquire common stock     |           |      |      |                       |      |  | 67       |  |  |         |     |  |                       |   |        |          |  |  |       |  |  |   |      |  
|                                    |           |      |       |                       |      |  |          |  |  |         |      |  |                       |   |         |          |  |  |        |  |  |   |       |  
|Diluted net income (loss) per share |           | $    | 2,479 |                       |      |  | 18,533   |  |  | $       | 0.13 |  |                       | $ | (43,999 | )        |  |  | 18,432 |  |  | $ | (2.39 | )
|                                    |           |      |       |                       |      |  |          |  |  |         |      |  |                       |   |         |          |  |  |        |  |  |   |       |  



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##### Table of Contents

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 1,694 and 2,458 for 2010 and 2009, respectively.

Stock-Based Employee CompensationWe account for stock-based employee compensation under the CompensationStock Compensation Topic of the FASB Standards Codification. The weighted
average grant-date fair value of the options granted during 2010, calculated using the Black-Scholes model, ranged from $0.41 to $0.70. The weighted average grant-date fair value of the options granted during 2009, calculated using the Black-Scholes
model, ranged from $0.20 to $0.77.

The following assumptions were used for grants in 2010: dividend yield of zero, volatility
of 133.5% to 189.1%, risk-free interest rate of 0.35% to 1.96%, and an expected life of 2.00 to 4.25 years. The following assumptions were used for grants in 2009: dividend yield of zero, volatility of 115.6% to 179.8%, risk-free interest rate of
0.86% to 2.17%, and an expected life of 2.00 to 4.25 years. 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. Volatility is based on the volatility of our stock. We use an estimate for the expected life and historical data to estimate the employee termination and volatility assumptions. 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, 2010, options to purchase
198,690 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, 2010:



|                         |                 |                     |           |                               |                     |  |                               |  |  |                 |      |  |                               |  |           |  |  |   |      | 
|------------------------ | --------------- | ------------------- | --------- | ----------------------------- | ------------------- |  | ----------------------------- |  |  | --------------- | ---- |  | ----------------------------- |  | --------- |  |  | - | ---- | 
|Range of Exercise Prices |                 | Options Outstanding |           |                               | Options Exercisable | 
|                         | Number ofShares |                     |           | WeightedAverageRemaining Life |                     |  | WeightedAverageExercise Price |  |  | Number ofShares |      |  | WeightedAverageExercise Price | 
|$0.29  $2.99            |                 |                     | 1,606,000 |                               |                     |  | 7.8                           |  |  | $               | 0.88 |  |                               |  | 772,000   |  |  | $ | 0.97 | 
|$3.00  $12.24           |                 |                     | 733,000   |                               |                     |  | 5.3                           |  |  | $               | 7.78 |  |                               |  | 731,750   |  |  | $ | 7.78 | 
|                         |                 |                     |           |                               |                     |  |                               |  |  |                 |      |  |                               |  |           |  |  |   |      | 
|                         |                 |                     | 2,339,000 |                               |                     |  | 7.0                           |  |  | $               | 3.04 |  |                               |  | 1,503,750 |  |  | $ | 4.29 | 
|                         |                 |                     |           |                               |                     |  |                               |  |  |                 |      |  |                               |  |           |  |  |   |      | 

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



|                           |         |      |           |                               |      |   |         |  |  |                               |           |   |  |   |      | 
|-------------------------- | ------- | ---- | --------- | ----------------------------- | ---- | - | ------- |  |  | ----------------------------- | --------- | - |  | - | ---- | 
|                           |         | 2010 |           |                               | 2009 |  
|                           | Options |      |           | WeightedAverageExercise Price |      |   | Options |  |  | WeightedAverageExercise Price |          
|Outstanding at January 1   |         |      | 2,458,000 |                               |      | $ | 3.63    |  |  |                               | 2,440,500 |   |  | $ | 4.98 | 
|Granted                    |         |      | 140,000   |                               |      |   | 0.60    |  |  |                               | 595,000   |   |  |   | 0.44 | 
|Cancelled                  |         |      | (256,500  | )                             |      |   | 7.42    |  |  |                               | (577,500  | ) |  |   | 6.04 | 
|Exercised                  |         |      | (2,500    | )                             |      |   | 0.35    |  |  |                               |          |   |  |   |     | 
|                           |         |      |           |                               |      |   |         |  |  |                               |           |   |  |   |      | 
|Outstanding at December 31 |         |      | 2,339,000 |                               |      | $ | 3.04    |  |  |                               | 2,458,000 |   |  | $ | 3.63 | 
|                           |         |      |           |                               |      |   |         |  |  |                               |           |   |  |   |      | 

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, 2010, the aggregate intrinsic value of options outstanding was $209 with a weighted average exercise price of $3.04 and a weighted average remaining contractual term of 7.0 years; the
aggregate intrinsic value of the 1,503,750 options exercisable was $82 with a weighted average exercise price of $4.29 and a weighted average remaining contractual term of 6.4 years; and the aggregate intrinsic value of the 2,091,066 options vested
or expected to vest was $187 with a weighted average exercise price of $3.04 and a weighted average remaining contractual term of 7.0 years.



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The following table summarizes unvested stock options outstanding as of December 31,
2010 as well as activity during the year then ended:



|                           |         |                  |           |                                      |  |   |      | 
|-------------------------- | ------- | ---------------- | --------- | ------------------------------------ |  | - | ---- | 
|                           |         | Unvested Options |          
|                           | Options |                  |           | Weighted AverageGrant-Date FairValue | 
|Outstanding at January 1   |         |                  | 1,235,584 |                                      |  | $ | 1.20 | 
|Granted                    |         |                  | 140,000   |                                      |  |   | 0.60 | 
|Cancelled                  |         |                  | (37,500   | )                                    |  |   | 0.97 | 
|Vested                     |         |                  | (502,833  | )                                    |  |   | 1.65 | 
|                           |         |                  |           |                                      |  |   |      | 
|Outstanding at December 31 |         |                  | 835,251   |                                      |  | $ | 0.84 | 
|                           |         |                  |           |                                      |  |   |      | 

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, 2010, total unrecognized compensation cost related to nonvested stock options was approximately $108. Approximately half of this cost is expected to be recognized over the next year, with the
remainder primarily over the subsequent two years. For 2010 and 2009, our total stock-based compensation credit was approximately $243 and $256, 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 $625 for both 2010 and 2009, respectively. Cash paid
for income taxes net of amounts refunded was $143 in 2010 and $66 in 2009. We had accrued capital expenditures of $23 and $16 at December 31, 2010 and 2009, respectively.

Foreign Currency TranslationWe have subsidiaries operating in the United Kingdom, Germany and India at December 31, 2010. 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 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 28% and 25% of our consolidated revenues during 2010 and 2009 were associated with operations outside of the United States. At December 31, 2010, 36% of our consolidated assets were associated with operations
outside of the United States compared to 39% at December 31, 2009. 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 2010, 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 the Segments Topic of the FASB Accounting Standards Codification. The Chief Executive Officer, our chief operating decision maker,
currently operates one operating segment and the expense structure of the business is managed functionally. Our measure of segment profit is consolidated operating income.



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Our revenue, aggregated by service offering, is as follows for each of the two years ended
December 31, 2010 and 2009:



|                               |  |      |        |  |      |   |        | 
|------------------------------ |  | ---- | ------ |  | ---- | - | ------ | 
|                               |  | 2010 |        |  | 2009 |  
|Transaction processing         |  | $    | 44,764 |  |      | $ | 47,212 | 
|Data intelligence              |  |      | 11,470 |  |      |   | 11,661 | 
|                               |  |      |        |  |      |   |        | 
|Transaction and other revenues |  |      | 56,234 |  |      |   | 58,873 | 
|Client reimbursements          |  |      | 497    |  |      |   | 470    | 
|                               |  |      |        |  |      |   |        | 
|Total                          |  | $    | 56,731 |  |      | $ | 59,343 | 
|                               |  |      |        |  |      |   |        | 

The following is a geographic breakdown of revenues for the years ended December 31, 2010 and 2009, and
a geographic breakdown of long-lived assets at December 31, 2010 and 2009:



|                             |  |      |        |  |      |   |        | 
|---------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                             |  | 2010 |        |  | 2009 |  
|Revenues:                    |  |      |        |  |      |   |        | 
|United States                |  | $    | 40,850 |  |      | $ | 44,393 | 
|Germany                      |  |      | 10,960 |  |      |   | 9,662  | 
|Other International          |  |      | 4,921  |  |      |   | 5,288  | 
|                             |  |      |        |  |      |   |        | 
|                             |  | $    | 56,731 |  |      | $ | 59,343 | 
|                             |  |      |        |  |      |   |        | 
|Property and Equipment, net: |  |      |        |  |      |   |        | 
|United States                |  | $    | 5,266  |  |      | $ | 6,386  | 
|Germany                      |  |      | 277    |  |      |   | 338    | 
|Other International          |  |      | 200    |  |      |   | 272    | 
|                             |  |      |        |  |      |   |        | 
|                             |  | $    | 5,743  |  |      | $ | 6,996  | 
|                             |  |      |        |  |      |   |        | 

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 may differ from those estimates.

Recent Accounting Pronouncements

Certain Revenue Arrangements That Include Software ElementsIn October 2009, the FASB issued guidance that changed the
accounting model for revenue arrangements that include both tangible products and software elements. This guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after
June 15, 2010. Our adoption of this guidance did not have a material effect on our consolidated financial position and results of operations.

Business CombinationsIn December 2010, the FASB issued ASU No. 2010-29, which updates the guidance in ASC Topic 805, Business Combinations. The objective of ASU
2010-29 is to address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The amendments in ASU 2010-29 specify that if a public entity presents comparative
financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period
only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro
forma revenue and earnings. The amendments affect any public entity as defined by ASC 805 that enters into business combinations that are material on an individual or aggregate basis. This guidance will become effective prospectively for business
combinations for which the



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acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. We do not expect the adoption of this
guidance will have a material effect on our financial position and results of operations.

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, 2010 are as
follows:



|           |  |       |        |  |                 |   |     |     |  |   |        | 
|---------- |  | ----- | ------ |  | --------------- | - | --- | --- |  | - | ------ | 
|           |  | Gross |        |  | Sub-leaseincome |   |     | Net | 
|2011       |  | $     | 2,443  |  |                 | $ | 377 |     |  | $ | 2,066  | 
|2012       |  |       | 2,149  |  |                 |   |    |     |  |   | 2,149  | 
|2013       |  |       | 1,566  |  |                 |   |    |     |  |   | 1,566  | 
|2014       |  |       | 940    |  |                 |   |    |     |  |   | 940    | 
|2015       |  |       | 962    |  |                 |   |    |     |  |   | 962    | 
|Thereafter |  |       | 3,888  |  |                 |   |    |     |  |   | 3,888  | 
|           |  |       |        |  |                 |   |     |     |  |   |        | 
|Total      |  | $     | 11,948 |  |                 | $ | 377 |     |  | $ | 11,571 | 
|           |  |       |        |  |                 |   |     |     |  |   |        | 

Rental expense for 2010 and 2009 was $1,884 and $2,240, respectively. The decrease in rent expense is
primarily related to closing offices in Virginia and the United Kingdom.

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 $1.6 million and $0.3 million for 2011 and 2012, respectively.

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 $297 for 2010. In 2009, as part of a program to reduce our cost structure, we decided not
to provide funding for the 401K program in the U.S. The reversal of the 2008 amounts accrued for the 401(k) program funding resulted in a credit to employee related expenses of $294 for 2009. In the United Kingdom, Germany and India, we participate
in defined-contribution plans. Total expense recognized under these plans was $124 and $120 in 2010 and 2009, respectively.

4. DEBT

Debt consists of the following as of December 31, 2010 and 2009:



|                        |  |              |            |  |      |   |       |      |  |   |       | 
|----------------------- |  | ------------ | ---------- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                        |  | MaturityDate |            |  | 2010 |   |       | 2009 | 
|Note payable            |  |              | April 2011 |  |      | $ | 583   |      |  | $ | 1,750 | 
|Revolver                |  |              | June 2012  |  |      |   | 4,200 |      |  |   | 1,600 | 
|                        |  |              |            |  |      |   |       |      |  |   |       | 
|Total                   |  |              |            |  |      |   | 4,783 |      |  |   | 3,350 | 
|Less current maturities |  |              |            |  |      |   | 583   |      |  |   | 1,167 | 
|                        |  |              |            |  |      |   |       |      |  |   |       | 
|Long-term debt          |  |              |            |  |      | $ | 4,200 |      |  | $ | 2,183 | 
|                        |  |              |            |  |      |   |       |      |  |   |       | 



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Our note payable relates to the acquisition of certain assets and the assumption of certain
liabilities of Hi-Mark, LLC. Hi-Mark is principally owned by Kevin Austin, our Executive Vice President of TRAVELTRAX. Our quarterly principal payments are approximately $300 plus interest at a fixed annual rate of 8.0%. This note matures in April
2011, but all remaining amounts would become immediately due and payable upon a change in control (as defined in the Note Amendment) of TRX. During 2010, we made principal and interest payments of $1,167 and $105, respectively, compared to $1,168
and $198, respectively, during 2009.

Our credit agreement with ACB provides for a senior secured revolving credit facility
with aggregate principal commitments not to exceed $10,000, which includes a $2,000 letter of credit subfacility limit. 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 1.75% for Base Rate loans and 3.00% for LIBOR loans) for the revolving credit facility, with a minimum borrowing rate of 4.25%. 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 is amortized as interest expense over the specific terms of the facility and letter of credit.

The
Credit Agreement requires us to maintain (i) a ratio of consolidated funded indebtedness to consolidated EBITDA (as defined in the credit agreement, which may not be comparable to consolidated total debt or measures of GAAP profitability
presented elsewhere in this document) of not more than 1.75 to 1.00 and (ii) a ratio of the remainder of consolidated EBITDA minus capital expenditures to the sum of interest expense for the period and debt principal payments required to be
made in the next twelve months of not more than 1.40 to 1.00. 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, (v) dispose of property, or (vi) pay dividends.

BCD Holdings N.V. (BCD Holdings), the parent of our majority shareholder, is the guarantor to our credit agreement. We pay
BCD Holdings a guarantee fee of 250-350 basis points, depending on borrowing levels under the Credit Agreement.

Our financial
statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our ability to
continue as a going concern is dependent on having sufficient liquidity for our operations. We are currently in compliance with all financial covenants in the Credit Agreement. As of December 31, 2010, we have borrowed $4,200 against the
facility and there was a $1,500 letter of credit against this facility relating to the lease of our Atlanta office, leaving $4,300 that is currently available for borrowing. As of December 31, 2010, the interest rate on our outstanding
borrowings was 4.25%. We expect to remain in compliance with all financial covenants over the remaining term of our revolving credit facility with ACB, however, we acknowledge that market conditions remain uncertain, and, as such, can provide no
assurances that we will remain in compliance. We monitor our expected debt compliance and believe we would have time to further reduce our expenses and/or capital expenditures if needed to remain in compliance. If we are not successful in
maintaining our debt compliance, ACB as lender is entitled to enforce the guarantee under our credit facility. Management believes that the existing cash on hand, availability under the Credit Agreement and cash flow from operations will provide the
needed liquidity to fund operations sufficient to continue as a going concern.



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The maturities for our debt are as follows:



|               |  |   |       | 
|-------------- |  | - | ----- | 
|2011           |  |   | 583   | 
|2012           |  |   | 4,200 | 
|               |  |   |       | 
|Long-term debt |  | $ | 4,783 | 
|               |  |   |       | 

5. INCOME TAXES

Our domestic and foreign income before income taxes for 2010 was $264 and $1,816, respectively. Our domestic and foreign (loss) income before income taxes for 2009 was $(46,300) and $2,278, respectively.

For the years ended December 31, 2010 and 2009, income tax benefit is comprised of the following:



|         |  |      |      |   |      |   |      |  
|-------- |  | ---- | ---- | - | ---- | - | ---- | -
|         |  | 2010 |      |   | 2009 |  
|Current  |  | $    | (216 | ) |      | $ | 701  |  
|Deferred |  |      | (183 | ) |      |   | (724 | )
|         |  |      |      |   |      |   |      |  
|Total    |  | $    | (399 | ) |      | $ | (23  | )
|         |  |      |      |   |      |   |      |  

Deferred taxes are as follows at December 31, 2010 and 2009:



|                                                    |  |      |         |   |      |   |         |  
|--------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                    |  | 2010 |         |   | 2009 |  
|Current deferred tax assets:                        |  |      |         |   |      |   |         |  
|Accruals                                            |  | $    | 643     |   |      | $ | 706     |  
|Allowance for doubtful accounts                     |  |      | 150     |   |      |   | 147     |  
|Deferred revenue                                    |  |      | 232     |   |      |   | 329     |  
|Effect of uncertain tax positions on deferred items |  |      | 37      |   |      |   |        |  
|                                                    |  |      |         |   |      |   |         |  
|Total current deferred tax assets                   |  |      | 1,062   |   |      |   | 1,182   |  
|Noncurrent deferred tax assets:                     |  |      |         |   |      |   |         |  
|Net operating loss carryforwardsU.S.               |  |      | 15,885  |   |      |   | 15,725  |  
|Net operating loss carryforwardsforeign            |  |      | 1,996   |   |      |   | 2,822   |  
|Intangible assets                                   |  |      | 4,782   |   |      |   | 5,052   |  
|Property and equipment                              |  |      | 483     |   |      |   | 337     |  
|Stock compensation                                  |  |      | 354     |   |      |   | 366     |  
|Charitable contribution carryforward                |  |      | 5       |   |      |   | 3       |  
|Indian adjustment                                   |  |      | 7       |   |      |   | 7       |  
|Indian MAT credit carryforward                      |  |      | 300     |   |      |   | 159     |  
|Alternative minimum tax credit (AMT) carryforward |  |      | 168     |   |      |   | 168     |  
|                                                    |  |      |         |   |      |   |         |  
|Total noncurrent deferred tax assets                |  |      | 23,980  |   |      |   | 24,639  |  
|                                                    |  |      |         |   |      |   |         |  
|Deferred tax liabilities:                           |  |      |         |   |      |   |         |  
|Outside basis difference Germany                   |  |      | (618    | ) |      |   |        |  
|                                                    |  |      |         |   |      |   |         |  
|Total deferred tax liabilities                      |  |      | (618    | ) |      |   |        |  
|                                                    |  |      |         |   |      |   |         |  
|Net deferred tax assets                             |  |      | 24,424  |   |      |   | 25,821  |  
|Valuation allowance                                 |  |      | (24,152 | ) |      |   | (25,802 | )
|                                                    |  |      |         |   |      |   |         |  
|Net deferred tax assets                             |  | $    | 272     |   |      | $ | 19      |  
|                                                    |  |      |         |   |      |   |         |  



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At December 31, 2010 and 2009, U.S. federal net operating losses of $44,562 and
$43,219, respectively, are available to offset future taxable income, and expire beginning in 2021 and continuing through 2030. At December 31, 2010 and 2009, U.S. state net operating losses of $64,202 and $62,427 are available to offset future
state taxable income, and expire beginning in 2020 and continuing through 2030. We have not performed a study to determine if these net operating losses could be partially limited by Internal Revenue Code Section 382 as there is a full
valuation allowance applied to these amounts. Foreign net operating losses of $9,979 and $10,516 are available to offset future taxable income, and these losses are in jurisdictions with no expiration date on usage. At both December 31, 2010
and 2009, AMT credit carryforwards of $168 are available and can be carried forward indefinitely. At December 31, 2010 and 2009, Indian Minimum Alternative Tax (MAT) credit carryforwards of $300 and $159, respectively, are available
and can be carried forward for either 7 years (credits generated prior to April 11, 2010) or 10 years (credits generated after March 31, 2010). 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. With the exception of our German
subsidiary, it is our intent to reinvest the earnings of our non-US subsidiaries in those operations, and we are not required to provide deferred taxes on any excess. During the fourth quarter of 2010, we determined that it is no longer our intent
to permanently reinvest the German earnings in our German subsidiary. This decision was reached based on the conclusion of contract renegotiations with a major customer in that jurisdiction during the fourth quarter of 2010. We have established a
deferred tax liability for the estimated outside basis difference in the German subsidiary as of December 31, 2010. A reconciliation of income taxes at the federal statutory rate to the tax provision recorded by us for 2010 and 2009 is as
follows:



|                                                   |  |      |       |    |      |  |       |   
|-------------------------------------------------- |  | ---- | ----- | -- | ---- |  | ----- | --
|                                                   |  | 2010 |       |    | 2009 | 
|Federal income tax benefit at statutory rate       |  |      | 34.0  | %  |      |  | 34.0  | % 
|State income taxesnet of federal benefit          |  |      | 0.2   |    |      |  | 0.9   |   
|Impairment of goodwill                             |  |      |      |    |      |  | (16.8 | ) 
|Domestic permanent differences                     |  |      | (1.7  | )  |      |  | (0.1  | ) 
|International permanent differences                |  |      | (12.3 | )  |      |  | 0.4   |   
|Indian MAT tax                                     |  |      | 5.6   |    |      |  | (0.2  | ) 
|Indian MAT credit                                  |  |      | (4.6  | )  |      |  | 0.2   |   
|Deferred rate true-up                              |  |      | 43.4  |    |      |  |      |   
|Outside basis differenceGerman Subsidiary         |  |      | 29.7  |    |      |  |      |   
|ASC 740-10 liability                               |  |      | (23.3 | )  |      |  | (0.4  | ) 
|Difference in foreign rates from federal statutory |  |      | (3.7  | )  |      |  | 0.5   |   
|Other                                              |  |      | (12.3 | )  |      |  | (0.9  | ) 
|Change in deferred tax asset valuation allowance   |  |      | (74.2 | )  |      |  | (17.7 | ) 
|                                                   |  |      |       |    |      |  |       |   
|                                                   |  |      | (19.2 | )% |      |  | (0.1  | )%
|                                                   |  |      |       |    |      |  |       |   

The valuation allowance was recorded because management is unable to conclude that it is more likely than
not that our U.S. net deferred tax assets will be realized and that our U.K. and Indian net deferred tax assets will be realized in their entirety.

India has a tax holiday arrangement that exempts it from the 30% standard income tax rate until March 31, 2011. The aggregate dollar effect of the tax holiday as of December 31, 2010 and
2009 is $609 and $369, respectively. We are, however, subject to the minimum tax regime in the country.

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, 2010 were $605.



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A reconciliation of unrecognized tax benefits for 2010 and 2009 is presented in the table
below.



|                                                                  |  |      |       |   |      |   |       |  
|----------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                                                  |  | 2010 |       |   | 2009 |  
|Unrecognized tax benefits, January 1                              |  | $    | 1,107 |   |      | $ | 424   |  
|Increase related to prior years unrecognized income tax benefits |  |      | 332   |   |      |   | 694   |  
|Cumulative translation adjustment                                 |  |      | (83   | ) |      |   | (11   | )
|Decreases for tax positions related to settlements                |  |      | (751  | ) |      |   |      |  
|                                                                  |  |      |       |   |      |   |       |  
|Unrecognized tax benefits, December 31                            |  | $    | 605   |   |      | $ | 1,107 |  
|                                                                  |  |      |       |   |      |   |       |  

Of this amount, $44 would impact the effective income tax rate if we were to recognize the benefit of such
positions.

We expect that $605 of the unrecognized tax benefits will be settled during the next twelve months due to the
completion of an audit in one of the jurisdictions associated with the unrecognized tax benefits and the completion of accounting method change requirements in the other jurisdictions.

We recognize potential interest and penalties related to unrecognized tax benefits within income tax expense. At December 31, 2010
and 2009, we had accrued interest of $8 and $9, respectively. We had no accrued penalties recorded at December 31, 2010 and 2009.

The following summarizes the open tax years by jurisdiction as of December 31, 2010:



|               |  |                |           | 
|-------------- |  | -------------- | --------- | 
|Jurisdiction   |  | Open Tax Years |          
|Federal        |  |                | 2007-2010 | 
|Georgia        |  |                | 2007-2010 | 
|Florida        |  |                | 2007-2010 | 
|South Carolina |  |                | 2007      | 
|Texas          |  |                | 2006-2010 | 
|Virginia       |  |                | 2007-2010 | 
|West Virginia  |  |                | 2007-2010 | 
|United Kingdom |  |                | 2009-2010 | 
|Germany        |  |                | 2004-2010 | 
|India          |  |                | 2007-2010 | 

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, 2010. We are currently under audit in Germany for the 2004-2006 tax years, but this audit is expected to conclude in
early 2011. We are not under audit for any other international jurisdictions as of December 31, 2010. The state of Texas is reviewing our Texas Margin Tax returns for the years ended December 31, 2008 and 2009 as part of a previously
scheduled sales and use tax audit with the state. We believe that we have appropriately accrued for any material uncertain tax positions inherent in these examinations.

6. SHAREHOLDERS (DEFICIT) EQUITY

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 1,300,000 to 3,300,000 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



46



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##### Table of Contents

change of control (as defined in the Stock Plan). In addition our Employee Stock Purchase Plan (ESPP) has 500,000 shares reserved for issuance. As of December 31, 2010, 226,819
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, 2010 and 2009, no preferred stock was outstanding.

7. RELATED-PARTY TRANSACTIONS

BCD Travel is majority-owned by the parent
of our majority shareholder, BCD Holdings. Effective January 1, 2009, the agreement between TRX Technology Services, L.P. (TRX Technology) and BCD Travel was extended for the period January 1, 2009 through August 31, 2009
for reservation processing services only. A separate three year agreement (the Agreement) with an effective date of January 1, 2009 was entered into between the parties for online booking services. Effective January 1, 2011,
the Agreement was extended to January 1, 2015 and updated certain pricing and other terms under the Agreement. During 2010 and 2009, we recognized transaction and other revenues from BCD Travel, totaling $1,424 and $3,338, respectively. At
December 31, 2010 and 2009, respectively, $107 and $202 was receivable from BCD Travel.

Airtrade International, Inc.
(Vayama) is majority-owned by the parent of our majority shareholder, BCD Holdings. The agreement between TRX Technologies India PVT Ltd. and Vayama, dated February 15, 2009 and amended on February 17, 2010, was entered into
between the parties for travel management services and was effective January 28, 2010 through November 19, 2010 with automatic renewal for successive one-year terms. During 2010 and 2009, we recognized transaction and other revenues from
Vayama totaling $1,154 and $599, respectively. At December 31, 2010 and 2009, respectively, $278 and $70 was receivable from Vayama.



47



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##### Table of Contents

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

None.



|Item 9A. | Disclosure 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, 2010. 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. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuers
management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on our evaluation, as of December 31, 2010,
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 have been
changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15(d)-15(f) of the Exchange Act, identified in connection with the evaluation that occurred during the period covered by this report that have materially
affected our internal control over financial reporting.

On January 1, 2010, we implemented a new General Ledger system.
We have taken the necessary steps to monitor internal controls during this period of change and will continue to evaluate the operating effectiveness of related key controls during subsequent periods. This implementation was not undertaken in
response to any identified deficiency or weakness to our internal controls over financial reporting.

With the exception of
the implementation noted above, there were no changes to internal controls in the fourth quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Managements Annual Report on Internal Control over Financial Reporting

This annual report does not include an attestation report of the companys independent 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 the 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, 2010.



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

None.



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##### Table of Contents

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 2011 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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##### Table of Contents

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.



50



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##### Table of Contents

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:    March 1, 2011


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, 2010, 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)                   |  | March 1, 2011
|                                                                        |  |                                                                                   
|/s/    DAVID D.
CATHCART David D. Cathcart                              |  | Chief Financial Officer and Treasurer (principal financial and accounting officer) |  | March 1, 2011
|                                                                        |  |                                                                                   
|/s/    NORWOOD H. (TRIP) 
DAVIS, III Norwood H. (Trip) Davis,
III   |  | Chairman of the Board and Director                                                 |  | March 1, 2011
|                                                                        |  |                                                                                   
|/s/    JOHAN G. (JOOP)
DRECHSEL Johan G. Drechsel                     |  | Director                                                                           |  | March 1, 2011
|                                                                        |  |                                                                                   
|/s/    MARK R.
BELL Mark R. Bell                                        |  | Director                                                                           |  | March 1, 2011
|                                                                        |  |                                                                                   
|/s/    JOHN F. DAVIS,
III John F. Davis, III                            |  | Director                                                                           |  | March 1, 2011
|                                                                        |  |                                                                                   
|/s/    JOHN A. FENTENER 
VAN VLISSINGEN John A. Fentener van
Vlissingen |  | Director                                                                           |  | March 1, 2011
|                                                                        |  |                                                                                   
|/s/    WILLIAM A. CLEMENT,
JR. William A. Clement, Jr.                  |  | Director                                                                           |  | March 1, 2011



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##### Table of Contents

TRX, INC.

FORM 10-K



|            |  |                                                                                                                                                                                                                                                                                                                                                                     
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 (filed as Exhibit 10.3 to our Annual Report on Form 10-K, filed on
February 23, 2009 and incorporated herein by reference).                                                                                                                      
|            | 
|10.4        |  | Second Amendment to Credit Agreement by and between TRX, Inc. and Atlantic Capital Bank, effective October 19, 2009 (filed as Exhibit 10.4 to our Annual Report on Form 10-K, filed
on March 9, 2010 and incorporated herein by reference).                                                                                                                         
|            | 
|10.5        |  | Third Amendment to Credit Agreement by and between TRX, Inc. and Atlantic Capital Bank, effective November 5, 2010.                                                                                                                                                                                                                                                
|            | 
|10.6        |  | 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).                                                                                                                                                      
|            | 
|10.7        |  | First Amendment to the Promissory Note made by TRX, Inc. in favor of Hi-Mark, LLC, dated as of November 7, 2008 (filed as Exhibit 10.5 to our Annual Report on Form 10-K, filed on
February 23, 2009 and incorporated herein by reference).                                                                                                                         
|            | 
|10.8        |  | 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).*                                                                                          
|            | 
|10.9        |  | 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).*                                                                                                              
|            | 
|10.10       |  | 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).*                                                                                                        
|            | 
|10.11       |  | Amended and Restated Master Service Agreement for Application Service Provider including Statements of Work #1-#3 and #6 between TRX, Inc and American Express Travel Related
Services Company, Inc., entered into as of December 3, 2009 (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q, filed on May 13, 2010 and incorporated herein by
reference).*



52



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|            |  |                                                                                                                                                                                                                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                  
|10.12       |  | Statement of Work #5 to Amended and Restated Master Service Agreement for Application Service Provider between TRX, Inc. and American Express Travel Related Services Company, Inc.,
effective August 1, 2010 (filed as Exhibit 10.5 to our Quarterly Report on Form 10-Q, filed on November 15, 2010 and incorporated herein by reference).*
|            | 
|10.13       |  | Amendment to Statement of Work #3 to Amended and Restated Master Service Agreement for Application Service Provider between TRX, Inc. and American Express Travel Related Services
Company, Inc., dated November 29, 2010.                                                                                                                  
|            | 
|10.14       |  | Statement of Work #4 to Amended and Restated Master Service Agreement for Application Service Provider between TRX, Inc. and American Express Travel Related Services Company, Inc.,
effective December 1, 2010.*                                                                                                                           
|            | 
|10.15       |  | 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).*                                       
|            | 
|10.16       |  | 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).*                        
|            | 
|10.17       |  | 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
(filed as Exhibit 10.11 to our Annual Report on Form 10-K, filed on February 23, 2009 and incorporated herein by reference).*                           
|            | 
|10.18       |  | 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
(filed as Exhibit 10.12 to our Annual Report on Form 10-K, filed on February 23, 2009 and incorporated herein by reference).*                           
|            | 
|10.19       |  | Amendment #4 to Amended and Restated Agreement for Provision of Services between TRX, Inc. and American Express Travel Related Services Company, Inc., effective September 1, 2008
(filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q, filed on May 20, 2009 and incorporated herein by reference).*                                
|            | 
|10.20       |  | 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).*                                                                                                                           
|            | 
|10.21       |  | 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).*                                                                                                             
|            | 
|10.22       |  | Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective March 3, 2009 (filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q,
filed on May 20, 2009 and incorporated herein by reference).*                                                                                                 
|            | 
|10.23       |  | Second Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective January 1, 2010 (filed as Exhibit 10.18 to our Annual Report on Form 10-K,
filed on March 9, 2010 and incorporated herein by reference).*                                                                                         
|            | 
|10.24       |  | Amendment to Second Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective June 1, 2010 (filed as Exhibit 10.1 to our Quarterly Report
on Form 10-Q, filed on August 13, 2010 and incorporated herein by reference).*                                                                           



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|            |  |                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                          
|10.25       |  | Amendment 2 to Second Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective July 30, 2010 (filed as Exhibit 10.1 to our Quarterly
Report on Form 10-Q, filed on November 12, 2010 and incorporated herein by reference).                                                                               
|            | 
|10.26       |  | Amendment 3 to Second Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective August 30, 2010 (filed as Exhibit 10.2 to our Quarterly
Report on Form 10-Q, filed on November 12, 2010 and incorporated herein by reference).                                                                             
|            | 
|10.27       |  | Amendment 4 to Second Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective September 30, 2010 (filed as Exhibit 10.3 to our Quarterly
Report on Form 10-Q, filed on November 12, 2010 and incorporated herein by reference).                                                                          
|            | 
|10.28       |  | Amendment 5 to Second Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective October 20, 2010.                                                                                                                                                                                                         
|            | 
|10.29       |  | Third Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective October 15, 2010.*                                                                                                                                                                                                                        
|            | 
|10.30       |  | Fourth Letter of Amendment to the Master Services Agreement between TRX, Inc. and Expedia, Inc., effective January 1, 2011.*                                                                                                                                                                                                                        
|            | 
|10.31       |  | CORREX Services Agreement between Hogg Robinson Plc and TRX Europe Ltd., dated April 1, 2006 (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q, filed on May 20, 2009 and
incorporated herein by reference).*                                                                                                                              
|            | 
|10.32       |  | Amendment to CORREX Services Agreement between Hogg Robinson Plc and TRX Europe Ltd., effective January 1, 2009 (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q, filed on
May 20, 2009 and incorporated herein by reference).*                                                                                                           
|            | 
|10.33       |  | Amended and Restated Master Agreement dated January 1, 2006 by and between TRX Technology Services, L.P. and World Travel Partners I, LLC (filed as Exhibit 10.1 to our
Quarterly Report on Form 10-Q, filed on May 4, 2006 and incorporated herein by reference).*                                                                                  
|            | 
|10.34       |  | Amendment 3 to the Amended and Restated Master Agreement between TRX Technology Services, L.P. and BCD Travel USA LLC (formerly known as WorldTravel Partners I, LLC), effective as
of January 1, 2009 (filed as Exhibit 10.1 to Amendment #1 to our Quarterly Report on Form 10-Q/A, filed on April 15, 2010 and incorporated herein by reference).*
|            | 
|10.35       |  | Software and Services Agreement between TRX, Inc. and BCD Travel USA LLC, effective as of January 1, 2009 (filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q, filed on
November 12, 2010 and incorporated herein by reference).*                                                                                                            
|            | 
|10.36       |  | Employment Contract between Norwood H. Davis, III and TRX, Inc., dated December 31, 2004 (filed as Exhibit 10.24 to our Registration Statement on Form S-1, filed on May 9,
2005 and incorporated herein by reference).                                                                                                                              
|            | 
|10.37       |  | First Amendment to Employment Contract between Norwood H. Davis, III and TRX, Inc., dated August 26, 2005 (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).                                                                                    
|            | 
|10.38       |  | Second Amendment to Employment Contract between Norwood H. Davis, III and TRX, Inc., dated June 30, 2006 (filed as Exhibit 10.1 to our Current Report on Form 8-K, filed
June 30, 2006 and incorporated herein by reference).                                                                                                                        
|            | 
|10.39       |  | Third Amendment to Employment Contract between Norwood H. Davis, III and TRX, Inc., dated April 5, 2007 (filed as Exhibit 10.1 to our Current Report on Form 8-K, filed
April 5, 2007 and incorporated herein by reference).                                                                                                                         



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|            |  |                                                                                                                                                                                                                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                  
|10.40       |  | Fourth Amendment to Employment Contract between Norwood H. Davis, III and TRX, Inc., dated January 10, 2008 (filed as Exhibit 10.1 to our Current Report on Form 8-K, filed
January 11, 2008 and incorporated herein by reference).                                                                                                          
|            | 
|10.41       |  | Fifth Amendment to Employment Contract between Norwood H. Davis, III and TRX, Inc., dated December 10, 2008 (filed as Exhibit 10.26 to our Annual Report on Form 10-K, filed on
February 23, 2009 and incorporated herein by reference).                                                                                                     
|            | 
|10.42       |  | Employment Contract between H. Shane Hammond and TRX, Inc., dated December 10, 2008 (filed as Exhibit 10.32 to our Annual Report on Form 10-K, filed on February 23, 2009 and
incorporated herein by reference).                                                                                                                             
|            | 
|10.43       |  | First Amendment to Employment Contract between H. Shane Hammond and TRX, Inc., effective as of December 6, 2010.                                                                                                                                                                                                                            
|            | 
|10.44       |  | 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).                                                                                                                                    
|            | 
|10.45       |  | 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).                                                                                                            
|            | 
|10.46       |  | Employment Contract between Kevin Austin and TRX, Inc., dated December 7, 2006 (filed as Exhibit 10.5 to our Quarterly Report on Form 10-Q, filed on May 20, 2009 and incorporated
herein by reference).                                                                                                                                     
|            | 
|10.47       |  | First Amendment to Employment Contract between Kevin Austin and TRX, Inc., dated December 31, 2008 (filed as Exhibit 10.6 to our Quarterly Report on Form 10-Q, filed on May 20,
2009 and incorporated herein by reference).                                                                                                                 
|            | 
|10.48       |  | Second Amendment to Employment Contract between Kevin Austin and TRX, Inc., dated January 1, 2010 (filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q filed on May 13,
2010).                                                                                                                                                        
|            | 
|10.49       |  | 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).                                                                                                                   
|            | 
|10.50       |  | Lease Deed, dated September 29, 2010, by and between TRX Technologies India Private Limited and Mr. Azeez Mohammed, M/s Kay Arr & Company, et. al.*                                                                                                                                                                                         
|            | 
|10.51       |  | 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).                                                                                                                                                                                   
|            | 
|10.52       |  | 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).                                                                                                                                                  
|            | 
|10.53       |  | 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).                                                                                                                                                                          
|            | 
|10.54       |  | 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).*                  
|            | 
|10.55       |  | First Amendment to 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 January 11, 2010 (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q/A, filed August 6, 2010 and incorporated herein by reference).*



55



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|            |  |                                                                                                                                                                                                                                                                       
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                           
|10.56       |  | 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).*
|            | 
|21.1        |  | 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.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



56