UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K




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





For the
Fiscal Year Ended December 31, 2009,





o  TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
transition period from _____________ to _____________





Commission
File Number: 0-24592





Tix
Corporation


(Exact
name of registrant in its charter)





Delaware
              
              95-4417467(State
      or other jurisdiction of
              
              (I.R.S.
      Employer Identification Numberincorporation
      or organization)





12001
Ventura Place, Suite 340,


Studio
City, California 91604


(Address
of principal executive offices, including zip code)





(818)
761-1002


(Registrant’s
telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act:
                      
                      NASDAQ
      Capital MarketCommon
      Stock $0.08 Par Value
                        (Title
      of Class)
                      
                      (Name
      of
Exchange)





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


None





Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.


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





Indicate
by check mark whether the registrant is (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities 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 o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes  o No o ‪





Indicate
by check mark if disclosure of delinquent filers 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 of this
Form 10-K.  o




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





Large
      accelerated filer o
                
                Accelerated
      filer xNon-accelerated
      filer o
                
                Smaller
      reporting companyo





The
aggregate market value of the issuer’s common stock held by non-affiliates of
the issuer as of June 30, 2009, based on the closing market price of $2.45 per
share, was $50,225,858.





As of
February 27, 2010, the issuer had 31,123,357, shares of common stock issued and
outstanding, net of treasury shares.




Documents incorporated by
reference: None.














TABLE OF
CONTENTS





PagePART
      IITEM
      1.
                BUSINESS
                
                3ITEM
      1A
                RISK
      FACTORS
                
                8ITEM
      1B
                UNRESOLVED
      STAFF COMMENTS
                
                12ITEM
      2.
                PROPERTIES
                
                12ITEM
      3.
                LEGAL
      PROCEEDINGS
                
                13ITEM
      4.
                RESERVED
                
                14PART
      IIITEM
      5.
                MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
      AND  ISSUER PURCHASES OF EQUITY SECURITIES
                
                15ITEM
      6.
                SELECTED
      FINANCIAL DATA
                
                17ITEM
      7
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                
                19ITEM
      7A.
                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                
                39ITEM
      8
                FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                
                39ITEM
      9.
                CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                
                39ITEM
      9A.
                CONTROLS
      AND PROCEDURES
                
                39ITEM
      9B.
                OTHER
      INFORMATION
                
                39PART
      IIIITEM
      10.
                DIRECTORS,
      EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
                
                40ITEM
      11
                EXECUTIVE
      COMPENSATION
                
                42ITEM
      12.
                SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                
                51ITEM
      13.
                CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                
                53ITEM
      14.
                PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                
                53ITEM
      15
                EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES
                
                54SIGNATURES
                
                
                54


2


PART
I.





“Tix Corporation” (which may
be referred to as “Tix”, the “Company”, “we”, “us” or “our”) means Tix
Corporation and its subsidiaries, or one of our segments or subsidiaries, as the
context requires.





Special
Note about Forward-Looking Statements





Certain
statements contained in this Form 10-K (or otherwise made by us or on our behalf
from time to time in other reports, filings with the Securities and Exchange
Commission, news releases conferences, internet postings or otherwise) that are
not statement of historical facts constitute "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, not withstanding
that such statements are not specifically identified.  Forward-looking
statements include, but are not limited to statements about our financial
position, business strategy, competitive position, potential growth
opportunities, and potential operating performance improvements, the effects of
competition, the effects of future legislation or regulations and plans and
objectives or our management for future operations.  We have based our
forward looking statements on our beliefs and assumptions based on information
available to us at the time the statements are made.  Use of the words
“anticipates”, “believes”, “expects”, “estimates” “intends”, “may”, “outlook”,
“plans”,  “potential”, “project”, “predict”, “should”, “will” or
similar expressions that are intended to identify forward-looking statements. In
addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. These forward-looking statements
may include, among others, statements concerning the Company's expectations
regarding its business, growth prospects, revenue trends, operating costs,
working capital requirements, facility expansion plans, competition, results of
operations and other statements of expectations, beliefs, future plans and
strategies, anticipated events or trends, and similar expressions concerning
matters that are not historical facts. The forward-looking statements in this
Annual Report on Form 10-K for the fiscal year ended December 31, 2009 involve
known and unknown risks, uncertainties and other factors that could cause actual
results, performance or achievements of the Company to differ materially from
those expressed in or implied by the forward-looking statements contained
herein.





Each
forward-looking statement should be read in context with, and with an
understanding of, the various disclosures concerning the Company and its
business made elsewhere in this Annual Report on Form 10-K for the fiscal year
ended December 31, 2009, as well as other public reports filed with the United
States Securities and Exchange Commission. Investors should not place undue
reliance on any forward-looking statement as a prediction of actual results or
developments. Except as required by applicable law or regulation, the Company
undertakes no obligation to update or revise any forward-looking statement
contained in this Annual Report on Form 10-K for the fiscal year ended December
31, 2009, whether as a result of new information, future events or
otherwise.





ITEM
1. BUSINESS





Tix
Corporation is a diversified integrated entertainment company providing
ticketing services, event merchandising, and the production and promotion of
live entertainment. The Company was incorporated in the State of Delaware in
April 1993. Its principal executive offices are located at 12001 Ventura Place,
Suite 340, Studio City, California 91604. Its principal website is
www.tixcorp.com. Tix Corporation is listed on The NASDAQ Capital Markets,
trading under the symbol “TIXC.”





Our
Business Strategy





Tix
Corporation is an integrated entertainment company focusing on ticketing
services, event merchandising, and the production and promotion of live
entertainment. We operate three complementary business units: Tix4Tonight,
Exhibit Merchandising (EM), and Tix Productions Inc. (TPI).  TPI was
formed by combining Magic Arts & Entertainment, LLC (Magic) and NewSpace
Entertainment, Inc. (NewSpace), which were acquired at the beginning of 2008.
Our broad strategic goals are to be the leading discount ticket and group ticket
seller in the US, a leading exhibition and event merchandising company, and a
major presenter and producer of live entertainment in the US and Canada. We are
pursuing these strategic goals through both internal and external means.
Internally we are looking at opportunities to enhance both revenue and
operating income by increasing market share, focusing on internal cost control
and streamlining our operating procedures. Externally we are looking for
accretive growth opportunities through the acquisition of complementary
businesses and exploitation of new and existing market opportunities. We are
executing these strategies utilizing tactical approaches as outlined
below:





·
            Improve the
      profitability of our existing businesses.


o
            Tix4Tonight, our Las Vegas last
      minute discount ticket operation, is working to increase market
      penetration and product offerings, such as our discount dinners program,
      called Tix4Dinners;


o
            Tix4Tonight
      is expanding its premium ticket distribution offerings through inclusion
      of Tix Productions produced and presented events as well as third party
      events identified by TPI’s respected industry
    professionals;


o
            Event
      Merchandising is increasing revenues by identifying new projects
      internally through Tix Productions and externally through add-on
      opportunities created from relationships with existing
      clients;


3


o
            Tix
      Productions is expanding its live entertainment offerings through
      development of presenting relationships with new presenters, expanding its
      existing relationship with several major show producers, and more focused
      exploitation of internally produced
shows.




·
            Focus on
      acquiring and developing intellectual property.We are always seeking to expand
      the opportunities inherent in owning the creative content of live
      entertainment productions. Tix Productions is aggressively pursuing
      producing opportunities that can provide add-onopportunitiesacrossour complementary
      businesses of presenting, ticket distribution and merchandising. When we
      take an equity position in a touring production, we are sharing the
      financial risk of the tour with the other equity holders, which makes it
      easier to assure that we have complementary opportunities to present those
      shows in our markets, sell the merchandise, and handle discount and
      premium ticketing
opportunities.





·
            Extend our
      network of relationships with producers, promoters and venue
      managers.Recognizing the value inherent in strong relationships, TPI is pursuing
      promoting and producing opportunities with a group of leading producers
      and promoters of live entertainment and with leading venues in major
      markets in the US and Canada.  In a difficult economic time, the
      multiple revenue streams that we can offer a producer allows for novel
      partnerships and deal-making, thus increasing our business
      opportunities.




In order
to achieve our objectives and successfully implement our strategies, we have
made and expect to continue to pursue investments and acquisitions that
contribute to the above goals where the valuations, returns, and growth
potential are consistent with our long-term goal of increasing shareholder
value.





Our History





Prior to
December 31, 2003, we were in an unrelated business. From January 2004
until March 2007, our principal business activity was the sale of tickets for
Las Vegas shows at a discount from the original box office price on the day of
the performance, through our wholly-owned subsidiary, Tix4Tonight, LLC
(Tix4Tonight). In March 2007, we acquired the assets of John’s Tickets, LLC,
which was a premium ticket reseller of live theatre, concerts and sporting
events.  In March 2010, Tix4Tonight acquired certain assets and assumed the
responsibility of certain leases of All Access Entertainment, LLC (All Access).
All Access was a competitor of Tix4Tonight in the Las Vegas last minute discount
ticket market and operated five locations with the main location located in
Circus-Circus. The acquisition of these assets and the assumption of the leases
provide us with greater coverage of the Las Vegas area in which to sell our
discount tickets. In August 2008, we acquired the assets of Exhibit
Merchandising, LLC (Ohio). The assets of Exhibit Merchandising, LLC (Ohio) were
assigned to Exhibit Merchandising, LLC (Nevada) (EM) which owns and operates
complete turnkey retail stores that are leased in conjunction with the exhibits
that they are supporting, stocked with commercially-available and extensive
custom-branded products for sale in addition to professional management that
complements the exhibition or theatrical production it represents. The major
exhibit currently operated by EM is “Tutankhamun and The Golden Age of the
Pharaohs.” EM has agreements to operate stores for three exhibitions in 2010. In
January 2008, we acquired two live theatrical and concert production companies:
Magic Arts & Entertainment, LLC (Magic) and NewSpace Entertainment, Inc.
(NewSpace).





Our
Business





We
operate in three reportable segments: ticketing services, event and branded
merchandising, and with our formation of Tix Productions, Inc. (TPI) in 2008,
live entertainment.





Operating
Segments





Ticketing
Services




Our
ticketing services are carried out by our wholly owned subsidiary Tix4Tonight,
which offers for sale discount and premium tickets, and provides group sale
services. Discounted tickets are sold byTix4Tonight, while premium tickets are
offered through Tix4AnyEvent, and group sales are handled through
Tix4Members.com. When selling last minute discounted tickets, Tix4Tonight sells
them under short-term, exclusive and non-exclusive agreements with approximately
85 Las Vegas shows and attractions, out of a total of approximately 110 Las
Vegas shows and attractions running at any one time.  Tix4Tonight
typically does not know exactly what shows it will be able to offer tickets for
until the same day of the show. There are usually many more tickets available
each day than are sold, although it is not uncommon for Tix4Tonight to sell out
its supply of tickets for individual shows. The shows are paid on a weekly basis
only for the tickets that Tix4Tonight actually sells to customers. Tix4Tonight
has no financial risk with respect to unsold tickets and revenues are recorded
at net of cost, that is, we record only the commissions and service fees as
revenues.





We
conduct the operations of Tix4Tonight at twelve leased locations in Las Vegas,
Nevada:





The South
Strip ticketing locations are at:


1.
            Tahiti
      Village at the southern end of the Las Vegas strip, south of McCarran
      International Airport (former All Access
  location);


2.
            Town
      Square Shopping Center near McCarran International Airport (opened
      December 2009);


3.
            Showcase
      Mall at the base of the world famous giant glass Coke bottle, across from
      New York, New York.


4


The
Mid-South Strip ticketing location is at:


4.
            The
      Hawaiian Marketplace Shopping
Center.


At the
heart of the strip, our ticketing location is at:


5.
            Bill’s
      Gamblin Hall at the intersection of “Flamingo” and the “Strip”(opened
      November 2008).


The
Mid-North Strip ticketing locations are at:


6.
            The
      Fashion Show Mall Strip entrance in front
      of  Neiman-Marcus;


7.
            Casino
      Royale Hotel between the Venetian Hotel and Harrah’s
  Hotel.


North
Strip ticketing locations are at:


8.
            Slots-A-Fun
      Casino (former All Access
location);


9.
            Two
      locations in Circus Circus Hotel and Casino (both are former All Access
      locations);


10.
            Blue
      booth in front of the Peppermill Restaurant between the Riviera Hotel and
      Denny’s;


Non-Strip
ticketing locations are at:


11.
            Downtown
      Fremont Street Experience is at the Four Queens
  Hotel;


12.
            Tuscany
      Suites & Casino east of the Las Vegas
Strip.





Tix4Tonight
also maintains leased administrative offices for Tix4Tonight in Las Vegas,
Nevada.





Effective
March 14, 2007, we acquired substantially all the assets of John’s Tickets, LLC,
an Ohio limited liability company dba Tix4AnyEvent (“AnyEvent”).  AnyEvent
is a national event ticket broker that sells premium tickets for sporting
events, concerts, tours and theatre. AnyEvent operations are located in the
administrative offices of Tix Corporation in Studio City,
California.





Beginning
August 10, 2006, as an adjunct to its Las Vegas show ticketing business, we
launched our Tix4Dinner operations from the same leased locations as the sale of
show tickets. Tix4Dinner offers reservations for discounted dinners at various
restaurants on the Las Vegas strip, usually sold in conjunction with show
tickets at T4T.





In
February 2009, we launched our internet based ticketing operation,
Tix4Members.com in conjunction with Costco Wholesale Corporation (Costco).
However, revenues from the Costco arrangement were minimal. As a result, we
terminated the Costco arrangement effective October 2009. The Company believes
in this strategy of selling discount tickets to concerts, live theater, and
sporting events to membership group members through co-branded websites, and
continues to seek additional partners. As with our Tix4Tonight operation in Las
Vegas, Tix4Members.com offers a marketing channel for producers, presenters,
artists, arenas and theaters nationwide to take advantage of our strong position
in the discount ticket sales and live entertainment industry. Tix4Members.com
operates in a manner similar to Tix4Tonight with a few key differences. Instead
of relying on physical ticket booth facilities for direct sales, Tix4Members
uses the internet as its customer interface, and instead of offering only
discounted day of show tickets, it has expanded the date range of its ticket
availability of discount tickets to concerts, theatre shows and sporting
events.





In March
2010, Tix4Tonight acquired certain assets and assumed the responsibility of
certain leases of All Access Entertainment, LLC (All Access). All Access was a
competitor of Tix4Tonight in the Las Vegas last minute discount ticket market
and operated five locations with the main location located in Circus-Circus. The
acquisition of these assets and the assumption of the leases provide us with
greater coverage of the Las Vegas area in which to sell our discount
tickets.





Because
of the seasonal nature of tourism and convention attendance in Las Vegas,
attendance patterns at Las Vegas shows may vary accordingly. The nature and
degree of this seasonality varies among Las Vegas shows depending on the time of
year, as well as the nature of entertainment alternatives available to
audiences. Tix4Tonight’s revenues are more dependent on the type of shows being
offered for sale than seasonality.





Exhibit
and Event Merchandising




We
provide exhibit and event merchandising through our wholly owned subsidiary
Exhibit Merchandising, LLC Nevada (EM). EM provides retail specialty stores with
branded merchandise for touring museum exhibitions and touring theatrical
productions. EM owns and operates complete turnkey retail stores with
commercially-available and extensive custom-branded products for sale. We
operate the stores in spaces rented in conjunction with the exhibit. To date,
revenues from the management of retail outlets associated with the sale of
merchandise related to touring exhibits have been primarily derived from
“Tutankhamun and The Golden Age of the Pharaohs” and “Tutankhamun the Golden
King and the Great Pharaohs.”




EM offers
exhibit and theatrical producers the opportunity for additional revenue streams
without adding the retail expertise required to manage the operations, thereby
leveraging the use of EM’s expertise and knowledge in the specialized retail
world. Producers receive a royalty payment based upon gross sales that occur in
each period with no other expense to the producer.





EM
develops custom pieces that fit the specific exhibition branding in consultation
with each event producer. EM strives to run an efficient operation, focused on
providing superior customer service and quality products on the front end, and
efficient management on the back end.


5


EM will
be providing and operating the retail specialty stores for the next museum
exhibition tour by Arts and Exhibitions International, LLC (AEI), a subsidiary
of AEG, “Cleopatra: The Search for the Last Queen of Egypt”, when it makes its
worldwide debut in Philadelphia at The Franklin Institute. The tour runs from
June 5, 2010 to January 2, 2011, before moving on to four other cities that are
currently scheduled.




Live
Entertainment




In early
2008, we acquired two live theatrical and concert production companies: Magic
Arts & Entertainment, LLC (Magic) and NewSpace Entertainment, Inc.
(NewSpace). Magic and NewSpace were both independent presenters and
producers of live theater and concerts with a history of working together. In
May 2008, we combined the operations of these two entertainment companies into
our newly-formed, wholly-owned subsidiary Tix Productions Inc. We believe that
by combining the operations of these two companies into a single entity, we have
been better able to leverage resources, gain operating efficiencies,
and more fully utilize their combined experience with venues, producers and
promoters. NewSpace and Magic continue to operate under their previous names as
a reflection of the marketplace recognition of these entities.




As
presenters, we generally contract for entertainment properties from producers to
present in markets in the US and Canada. We have worked in most major North
American cities and can negotiate terms that are unavailable to presenters in
individual markets. In eleven markets, we have substantial subscriber-based
operations operating as “Broadway in (city name)” series which greatly reduces
the risk associated with individual presentations and provides additional
opportunities to generate sponsorship and other ancillary revenue streams. These
markets are Salt Lake City, Eugene, Kalamazoo, Akron, Albuquerque, Colorado
Springs, Detroit, Fresno, Boise, Birmingham, and Milwaukee. In Canada, we have a
presenting relationship that operates under the name Canada Theatricals Live
which is now the second largest presenter of theater-based events in Canada. We
use a wide variety of marketing channels to sell tickets to these programs
including our Salt Lake City based group sales team, traditional marketing tools
including print, radio, television, outdoor, internet-focused marketing tools,
and internet social networking groups. In addition, we may invest in shows or
productions in advance of their initial tours to obtain favorable presentation
and merchandising rights.





Net
revenues from live entertainment are a function of tickets sold times ticket
prices plus ancillary revenue streams including sponsorships and revenues
generated through premium ticketing opportunities.  Expenses that would be
characterized as Cost of Goods Sold include the guarantees, profit sharing and
royalties paid directly to the touring productions, direct expenses of the
theater which include staffing, rent and box office charges, marketing costs and
production costs which include equipment rentals, stagehands and the cost of our
production and settlement manager to attend the production. Live entertainment
productions typically have substantial artist sharing relationships with the
productions involved, and as a result, significant increases in presentation
revenue do not typically result in comparable increases in operating income as
much of that goes to the production or artist. On the other hand, significant
decreases in presentation revenue do have a comparably large impact on operating
income as the largest burden of risk in these presentations lies with the
promoter.




The
Company has invested in carious nonconsolidated affiliates that are primarily
related to live shows.  The Company owns a 40% interest in an LLC
which was formed in 2009 to develop, produce and promote a traveling musical of
Mr. Dodie Smith’s story “101 Dalmatians.”  This investment is not
consolidated, but is accounted for using the equity method of accounting,
whereby the Company records its investments in these entities in the balance
sheet as investments in nonconsolidated affiliates.  The Company’s
proportional interest in its operating results is recorded in the consolidated
statement of operations and comprehensive loss as equity in losses of
nonconsolidated affiliates.




Revenue
Concentrations





During
2009, 47% of our Ticketing Service segment’s revenues were derived from two
separate producers that we sell discount tickets for multiple shows, of which
32% was related to one producer and 15% was related to the other producer. The
shows appear at different venues, hotels or theatres; however no single show,
venue or theatre was greater than 10% of revenues. During the year ended
December 31, 2008, 37% of our Ticketing Service segment’s revenues were derived
from two producers of shows, of which 24% was related to one producer and 13%
was related to the other producer. The multiple shows appeared at different
venues, hotels or theaters; however, no single show, venue or theatre was
greater than 10% of revenues. During the year ended December 31, 2007, there
were no showrooms or other ticket sources which accounted for 10% or more of
ticketing services revenues.





Substantially
all of Exhibit Merchandising’s revenues since its acquisition on August 8, 2007
have been derived from the exhibits, “Tutankhamun and The Golden Age of the
Pharaohs” and “Tutankhamun the Golden King and the Great
Pharaohs.”


6


During
2009 and 2008, our Live Entertainment segment had several shows that were in
excess of 10% of its revenues. In 2009, we had two shows that represented 39% of
our Live Entertainment segment’s revenues, of which one show represented 28% of
revenues and a second show represented 11% of revenues. In 2008, we had four
shows that represented 45% of our Live Entertainment segment’s revenues with
each show representing slightly more than 10% of revenues. At the end of 2009
and 2008, we owed one show approximately $2.8 million and $1.3 million,
respectively.





Competition





The
following is a discussion of the competitive landscape of each of our operating
segments.





Ticketing
Services





Tix4Tonight
sells unsold tickets on the same day of the performance, generally at 25% to 50%
off the box office price. Producers provide such tickets to the Company both on
an exclusive and non-exclusive basis. Therefore, new ticket brokers can enter
into competition with the Company to offer the same or similar
ticketing services to non-exclusive shows and customers. Tix4Tonight, after
its acquisition of All Access, currently has one stand-alone discount ticket
competitor in the Las Vegas market and faces competition from venues and
producers selling discount tickets direct to customers, and the possibility
exists for other competitors to compete both there and in other markets targeted
by the Company. Additionally, with the Company’s launch of its third ticketing
platform, Tix4Members.com in 2009, the Company has entered the national group
sales market.  The first affiliate member group to launch was Costco
Wholesale Corporation whose co-branded website operated from February 2009 until
October 2009, at which time the Company elected to provide notice to terminate
the agreement, as it resulted in minimal revenues. The Company believes in this
strategy and continues to seek additional partners. As with our Tix4Tonight
operation in Las Vegas, Tix4Members.com offers a marketing channel for
producers, presenters, artists, arenas and theaters nationwide to take advantage
of our strong position in the discounted ticket sales and live entertainment
industry. Tix4Members.com operates in a manner similar to Tix4Tonight with a few
key differences. Instead of relying on physical ticket booth facilities for
direct sales, Tix4Members.com uses the internet as its customer interface, and
has expanded the date range of ticket availability instead of offering only day
of show tickets. Other competitors may possess longer operating histories,
larger customer bases, longer relationships with producers, and significantly
greater financial, technical, marketing, and public relations resources than the
Company. Accordingly, we may not be able to compete successfully and competitive
pressures may adversely affect our business, results of operations and financial
condition.





Exhibit
and Event Merchandising





Our main
competitor is Event Network, whose business model is to manage smaller permanent
location retail gift shops at museums, zoos, historical and other like
attractions that are more of a permanent nature, with a small number of touring
exhibits. We differ in our operations by focusing on large touring exhibitions
with higher volume of sales.  We believe our background and experience in
the entertainment industry allows us to be able to react quickly to changes in
schedules, volume of sales, and other business perspectives related to
touring events and exhibitions. Further, our experience operating in
foreign market places including Canada, Australia, United Kingdom
and Austria, provide us significant opportunities.




Live
Entertainment





Competition
in the live entertainment industry is intense. We believe that we compete
primarily on the basis of our ability to deliver quality entertainment products
and enhanced revenues to promoters, producers and live entertainment venues. We
are able to do this through our ability to provide complementary revenue
opportunities in our markets, sell the merchandise, and handle discount and
premium group sales ticketing opportunities. We believe that our primary
strengths include:





·
            The quality of service provided
      to the producer, promoter and
venues.


·
            Our management’s track record
      promoting and producing live entertainment events and tours both in the
      United States and internationally;
and


·
            The scope and effectiveness of
      our expertise in event
marketing.





Although
we believe that our entertainment products and services currently compete
favorably with respect to such factors, we cannot provide any assurance that we
can maintain our competitive position against current and potential competitors,
especially those with significantly greater brand recognition, financial,
marketing, service support, technical and other resources.




Our main
competitors in the global theatrical industry include Nederlander Producing
Company of America, Mirvish Productions, The Shubert Organization, The Walt
Disney Company, Jujamcym Theatres in North America, Key Brands and Jam
Productions. Some of the competitors in the theatrical industry have more
Broadway show investments, from which most North America theatrical touring
productions originate. In addition, these competitors may have significantly
greater brand recognition and greater financial and other resources, which could
enable them to strengthen their competitive positions in comparison to
us.


7


Government Regulations:





From time
to time, state and federal government bodies have proposed legislation that
could have an effect on our business. For example, some legislatures have
proposed laws in the past that would impose potential liability on us and other
promoters and producers of live entertainment events for entertainment taxes and
for incidents that occur at our events, particularly relating to drugs and
alcohol.




Intellectual
Property:





We create
and own intellectual property. It is our practice to protect our trademarks,
brands, copyrights, patents and other original and acquired works, ancillary
goods and services. Our trademarks include, among others, “Tix4”, “Tix4Tonight”,
“Tix4Dinners”, “Tix4Members.com”,  “Tix4Members.net”, and through
acquisition of Magic Arts and Entertainment, we acquired the “Broadway”
theatrical rights to “101 Dalmatians.” Additionally, the United States Patent
and Trademark Office has awarded and issued the Company a United States patent
on a "Ticket Distribution System." The new patent covers a number of the key
aspects of discount ticketing brokerage operations and technological systems
related to the sale and distribution of unused tickets. We believe the patent
broadly covers the way our Tix4Tonight subsidiary distributes discount tickets
and encompasses our distribution methods. We believe that our patent, trademarks
and other proprietary rights have significant value and are important to our
brand-building efforts and the marketing of our services. We cannot predict
however whether steps taken by us to protect our proprietary rights will be
adequate to prevent misappropriation of these rights.





Insurance:





We
maintain insurance coverage that we believe provides adequate coverage for all
of our current operations. We maintain $1,000,000 of "key-man" life insurance on
the life of Mitch Francis, our President and Chief Executive Officer, as to
which we are the sole beneficiary.





Employees:





As of
January 30, 2010, we had 172 employees. At Tix corporate operations, we had
eleven full-time employees; 105 employees at our Las Vegas operations; 27
employees at Exhibit Merchandising, of which eleven were in San Francisco,
California, three are at Norfolk, Virginia, and one in Toronto, Canada.
Additionally we have two employees touring with our live theatrical productions.
Tix Productions has 29 employees. Employees at the Las Vegas operation consist
of both full-time and part-time employees. Our employees are not represented by
any unions. We believe that our relations with our employees are
satisfactory.





Available Information:





Our
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments to those reports are available without charge on our
website, www.tixcorp.com, as soon as reasonably practicable after they are filed
electronically with the SEC.  We are providing the address to our
Internet site solely for the information of investors.  We do not
intend the address to be an active link or to otherwise incorporate the contents
of the website into the report.





Item
1A. RISK FACTORS





We are
subject to various risks that may materially affect our business, financial
condition and results of operations. An investor should carefully consider the
risks and uncertainties described below and the other information in this filing
before deciding to purchase the Company’s common stock. If any of these risks or
uncertainties actually occurs, our business, financial condition or operating
results could be materially harmed. In that case, the trading price of our
common stock could decline and an investor could lose all or part of his
investment.





WE MAY BE
ADVERSELY AFFECTED BY A GENERAL DETERIORATION IN ECONOMIC CONDITIONS, WHICH
COULD AFFECT CONSUMER AND CORPORATE SPENDING, AND THEREFORE SIGNIFICANTLY
ADVERSELY IMPACT OUR OPERATING RESULTS.





Recent
turmoil in the financial markets has adversely affected economic activity in the
United States and other regions of the world in which we do
business.  The impact of slowdowns on our businesses is difficult to
predict, but it may result in reductions in ticket sales and our ability to
generate revenue. The risks associated with our businesses become more acute in
periods of a slowing economy or recession, which may be accompanied by a
decrease in attendance at events that we are involved in the ticket sales,
merchandising, or production and promotion.There is evidence that
this is affecting demand for some of our products and services, and a continued
decline in economic activity could adversely affect demand for any of our
businesses, thus reducing our revenue and earnings.  A sustained
decline in economic conditions could result in a decline in attendance at or
reduction in the number of live entertainment events, which would have an
adverse effect on our revenue and operating income.





Our
business depends on discretionary consumer and corporate spending. Many factors
related to discretionary consumer spending and corporate spending, including
economic conditions affecting disposable consumer income such as employment,
fuel prices, interest, tax rates and inflation, can significantly impact our
operating results.


8


WE HAVE
INCURRED NET LOSSES AND MAY EXPERIENCE FUTURE NET LOSSES.





Our
operating results have been adversely affected by among other things, goodwill
and intangible asset impairments and increased stock compensation expense
related to obtaining access to the distribution rights of tickets to sporting,
theatre and concert events. We incurred net losses of approximately $518,000,
$34.7 million and $16.3 million in 2009, 2008, and 2007, respectively. We may
face reduced demand for our entertainment offerings and other factors that could
adversely affect our results of operations in the future. We cannot predict
whether we will achieve profitability in future periods.





CHANGES
IN OUR BUSINESS STRATEGY OR RESTRUCTURING OF OUR BUSINESSES MAY INCREASE OUR
COSTS OR OTHERWISE AFFECT PROFITABILITY OF OUR BUSINESSES.





As
changes to our business environment occur, we may need to adjust our business
strategy to meet these changes, or we may otherwise find it necessary to
restructure our operations or particular business assets.  In
addition, external events including acceptance of our theatrical offerings, our
merchandise, and changes in macro-economic conditions may impair the value of
our assets.  When these changes or events occur, we may incur costs to
change our business strategy and may need to write down the value of
assets.  We may also need to invest in businesses that have short-term
returns that are negative or low, and whose ultimate business prospects are
uncertain.  In any of these events, our costs may increase, and we may
have significant charges associated with the write-down of assets, or returns on
new investments may be lower than prior to the change in strategy or
restructuring.





CHANGES
IN PUBLIC AND CONSUMER TASTES AND PREFERENCES FOR ENTERTAINMENT AND CONSUMER
PRODUCTS COULD REDUCE DEMAND FOR OUR ENTERTAINMENT OFFERINGS AND PRODUCTS AND
ADVERSELY AFFECT THE PROFITABILITY OF OUR BUSINESSES.





Our live
entertainment and merchandising businesses create entertainment or consumer
products whose success depends substantially on consumer tastes and preferences
that change in often unpredictable ways. The success of our businesses depends
on our ability to consistently create, purchase, present, promote, and
distribute live entertainment and related consumer products that meet the
changing preferences of the broad consumer market. Our live entertainment and
merchandising businesses are dependent on our ability to successfully predict
and adapt to changing consumer tastes and preferences inside the United States,
as well as in foreign countries. Moreover, we must often invest substantial
amounts in live productions before we learn the extent to which these shows will
earn consumer acceptance. If our live entertainment offerings and products do
not achieve sufficient consumer acceptance, our revenue from subscription series
and touring shows and related consumer products may decline and adversely affect
the profitability of one or more of our businesses.





OUR
FUTURE CAPITAL NEEDS MAY NOT BE MET AND WE MAY BE FORCED TO ABANDON OR CURTAIL
OUR BUSINESS PLANS.





Our
growth and expansion could be impaired by limitations on our access to capital
markets. We may require additional capital to continue to expand the operations
of Tix4Tonight, Exhibit Merchandising, and our live entertainment subsidiary Tix
Productions Inc. To the extent that we are unable to secure the capital
necessary to fund our future growth on a timely basis and/or under acceptable
terms and conditions, we may not have sufficient cash resources to continue to
expand our operations. Additionally, if the market for entertainment offerings
were to weaken for an extended period of time, our ability to raise capital
would be substantially reduced. There can be no assurances that capital from
outside sources will be available; and if such financing is available, it may
involve issuing securities senior to the common stock or equity financings which
would be dilutive to holders of common stock.




THERE IS
A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK AND THE COMPANY’S STOCKHOLDERS MAY
BE UNABLE TO LIQUIDATE THEIR SHARES OR COULD BE SUBJECT TO EXTREME
VOLATILITY.





Our
common stock is listed on the The NASDAQ Capital Market and is quoted under the
symbol “TIXC.”  The NASDAQ Capital Market exists for securities of
smaller, less-capitalized companies that do not qualify for inclusion in The
NASDAQ National Market. There is limited volume of sales in our stock, thus
providing limited liquidity into the market for the Company’s shares. As a
result of the foregoing, stockholders may be unable to liquidate their shares or
if a large volume of stock is being sold into the market at any one time, the
price of our stock could rapidly decline.





LOSS OF
OUR KEY PROMOTERS, MANAGEMENT AND OTHER PERSONNEL COULD RESULT IN THE LOSS OF
KEY TOURS AND NEGATIVELY IMPACT OUR BUSINESS.





The
entertainment industry is uniquely dependent upon personal relationships. As
promoters and executives within the entertainment industry, we leverage our
existing network of relationships with producers, promoters, and venue managers
in order to secure the rights to distribute tickets, sell merchandise and secure
the other resources that are critical to our success. Due to the importance of
those industry contacts to our business, the loss of any of our producers,
promoters, officers or other key personnel could adversely affect our
operations. Although we have entered into long-term agreements with many of
those individuals to protect our interests in those relationships, we can give
no assurance that all or any of these key employees will remain with us or will
retain their associations with key contacts.


9


OUR
OPERATIONS ARE SUBJECT TO INTENSE COMPETITION AND COMPETITIVE PRESSURES THAT
COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS, RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.




Our three
business segments operate in highly competitive market environments and we may
not be able to maintain or increase our current share of entertainment
revenues.  We compete in the ticketing services, exhibit and branded
merchandising, and live entertainment segments of the entertainment
industry.  In addition, our competitors compete with us for key employees
who have relationships with the artists, theatre managers, promoters and
producers we rely upon.  These competitors may engage in more extensive
development efforts, undertake more extensive marketing campaigns, adopt more
aggressive pricing policies, and make more attractive offers to theatre
managers, producers and promoters with whom we presently have relationships. Our
competitors may develop services, advertising strategies and opportunities with
entertainment venues that are equal or superior to those we provide and/or
utilize or that achieve greater market acceptance and brand recognition than we
are able to achieve.  Other variables that could adversely affect our
financial performance by, among other things, leading to decreases in overall
revenue, event attendance, ticket prices or profit margins include:




·
            Unfavorable fluctuations in
      operating costs, including increased guarantees to producers, promoters
      and venues, which we may be unwilling or unable to pass through to our
      customers.


·
            Our competitors may offer more
      favorable terms than we do in order to obtain agreements for new venues or
      to obtain events from venues they
  operate.


·
            Other entertainment options
      available to our audiences may reduce our share of the overall
      entertainment market.


·
            Competition in the specialized
      labor market we operate within may require us to spend more to retain key
      employees.


·
            Unfavorable changes in the
      macro-economic environment may affect the ability of patrons to buy
      tickets and merchandise.


·
            New competitors may enter our
      business segments as the barriers to entry are
  low.





We
believe that barriers to entry into the business segments that we compete are
low and that certain local ticket brokers, promoters and producers are
increasingly expanding the geographic scope of their operations.




WE MAY BE
UNABLE TO MANAGE GROWTH WHICH COULD ADVERSELY AFFECT OUR BUSINESS.





Successful
implementation of the Company’s business strategy requires the Company to manage
its growth. Growth could place an increasing strain on the Company’s management
and financial resources. To manage growth effectively, the Company will need to
establish definitive business strategies, goals and objectives, install and
maintain a system of management controls, and attract and retain qualified
personnel, as well as develop, train and manage management-level and other
employees. If the Company fails to manage its growth effectively, the Company’s
business, financial condition and/or operating results could be materially
adversely affected, and the Company’s stock price may decline accordingly.





THE
SUCCESS OF OUR TICKETING OPERATIONS DEPENDS IN PART ON THE INTEGRITY OF OUR
SYSTEMS AND INFRASTRUCTURE. SYSTEM INTERRUPTION AND LACK OF INTEGRATION AND
REDUNDANCY IN THESE SYSTEMS AND INFRASTRUCTURE MAY HAVE AN ADVERSE IMPACT ON OUR
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





The
success of our ticketing operations depends in part on our ability to maintain
the integrity of our system and infrastructure, including websites, information
and related systems, and distribution facilities. System interruption and the
lack of integration and redundancy in the information systems and
infrastructures of our ticketing operations may adversely affect our ability to
process and fulfill transactions, respond to customer inquiries and generally
maintain cost-efficient operations. We may experience occasional system
interruptions that make some or all systems or data unavailable, or prevent us
from efficiently providing services or fulfilling orders. We also rely on
affiliate and third-party computer systems, broadband and other communications
systems and service providers in connection with the provision of services
generally, as well as to facilitate, process and fulfill transactions. Any
interruptions, outages or delays in the systems and infrastructures of our
business, our affiliates and/or third parties, or deterioration in the
performance of these systems and infrastructures, could impair the ability of
our business to provide services, fulfill orders and/or process transactions.
Fire, flood, power loss, telecommunications failure, acts of war or terrorism,
acts of God and similar events, or disruptions may damage or interrupt computer,
broadband or other communications systems and infrastructures at any time. Any
of these events could cause system interruption, delays and loss of critical
data, and could prevent us from providing services, fulfilling orders and/or
processing transactions. While we have backup systems for certain aspects of our
operations, these systems are not fully redundant and disaster recovery planning
is not sufficient for all eventualities. In addition, we may not have adequate
insurance coverage to compensate for losses from a major interruption. If any of
these adverse events were to occur, it could adversely affect our business,
financial condition and results of operations.





THE
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.





In the
processing of consumer transactions, we receive, transmit and store a large
volume of personally identifiable information and other user data. The sharing,
use, disclosure and protection of this information are governed by the
respective privacy and data security policies maintained by our business.
Moreover, there are federal, state and international laws regarding privacy and
the storing, sharing, use, disclosure and protection of personally identifiable
information and user data. Specifically, personally identifiable information is
increasingly subject to legislation and regulations in numerous jurisdictions
around the world, the intent of which is to protect the privacy of personal
information that is collected, processed and transmitted in or from the
governing jurisdiction. We could be adversely affected if legislation or
regulations are expanded to require changes in business practices or privacy
policies, or if governing jurisdictions interpret or implement their legislation
or regulations in ways that negatively affect our business, financial condition
and results of operations.


10


We may
also become exposed to potential liabilities as a result of differing views on
the privacy of the consumer and other user data collected by our business. The
failure by us and/or the various third-party vendors and service providers with
which we do business, to comply with applicable privacy policies or federal,
state or similar international laws and regulations, or any compromise of
security that results in the unauthorized release of personally identifiable
information or other user data could damage the reputation of our business,
discourage potential users from trying the products and services that we offer,
and/or result in fines and/or proceedings by governmental agencies and/or
consumers, one or all of which could adversely affect our business, financial
condition and results of operations.





THE
COMPANY DOES NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.





We have
not declared or paid, and we do not anticipate declaring or paying in the
foreseeable future, any cash dividends on our common stock. Our ability to pay
dividends is dependent upon, among other things, our future earnings, if any, as
well as our operating and financial condition, capital requirements, general
business conditions and other pertinent factors. Furthermore, any payment of
dividends by the Company is subject to the discretion of our board of directors.
Accordingly, there is no assurance that any dividends will ever be paid on our
common stock.





DOING
BUSINESS IN FOREIGN COUNTRIES CREATES RISKS NOT FOUND IN DOING BUSINESS IN THE
UNITED STATES.





Our
international operations accounted for approximately 1% of our revenues in 2009
and are expected to account for between 5% and 10% of our revenues in 2010. The
risks involved in foreign operations that could result in losses, which we are
not insured against include:





·
            exposure to local economic
      conditions;


·
            potential adverse changes in
      diplomatic relationships with the United States of
      America;


·
            risks of renegotiations or
      modifications of existing agreements with governmental
      authorities;


·
            diminished ability to legally
      enforce our contractual rights in foreign
  countries;


·
            withholding and other taxes on
      remittances and other payments by subsidiaries;
  and


·
            changes in foreign taxation
      structures.





In
addition, we may incur substantial tax liabilities when we repatriate any of the
cash generated by our international operations back to the United States due to
our current inability to recognize any foreign tax credits that would be
associated with repatriation of the funds. We currently expect to repatriate
substantially all of the cash generated by our international operations. We are
not currently in a position to recognize any tax assets in the United States
that are the results of payment of income taxes or withholding taxes in foreign
jurisdictions.





WE MAY BE
UNSUCCESSFUL IN OUR FUTURE ACQUISITIONS, IF ANY, WHICH MAY HAVE AN ADVERSE
EFFECT ON OUR BUSINESSES.





Our
future growth rate depends in part on our acquisitions of additional businesses.
A significant portion of our recent and projected growth is expected to be
growth attributable to acquisitions including Exhibit Merchandising, LLC, Magic
Arts & Entertainment, LLC, and NewSpace Entertainment, Inc. We may be unable
to identify suitable acquisition targets or make further acquisitions at
favorable prices. If we identify a suitable acquisition candidate, our ability
to successfully implement the acquisition would depend on a variety of factors,
including our ability to obtain financing on acceptable terms and requisite
government approvals. Acquisitions involve risks, including those associated
with:





·
            integrating the operations,
      financial reporting, technologies and personnel of acquired
      companies;


·
            managing geographically dispersed
      operations;


·
            the diversion of management’s
      attention from other business
concerns;


·
            the inherent risks in entering
      markets or lines of business in which we have limited or no direct
      experience; and


·
            the potential loss of key
      employees, customers and strategic partners of acquired
      companies.





We may
not successfully integrate any businesses or technologies we may acquire in the
future and may not achieve anticipated revenue and cost benefits. Acquisitions
may be expensive, time consuming and may strain our resources. Acquisitions may
not be accretive to our earnings and may negatively impact our results of
operation, as a result of, among other things, the incurrence of debt, one-time
write-offs of goodwill and amortization expenses of intangible assets. In
addition, future acquisitions that we may pursue could result in dilutive
issuances of equity securities.





OUR
EXISTING DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL SHAREHOLDERS HOLD A
SUBSTANTIAL AMOUNT OF THE COMPANY’S COMMON STOCK AND MAY BE ABLE TO PREVENT
OTHER STOCKHOLDERS FROM INFLUENCING SIGNIFICANT CORPORATE
DECISIONS.




As of
February 15, 2010, our directors and executive officers and principal
shareholders beneficially owned or have the right to vote approximately 50% of
our outstanding common stock. These stockholders, if they act together, will be
able to direct the outcome of matters, including the election of our directors
and other corporate actions, such as a merger with or into another company, a
sale of substantially all of the Company’s assets, and amendments to the
Company’s certificate of incorporation. The decisions of these stockholders may
conflict with the Company’s interests or the interests of the Company’s other
stockholders.


11


INCREASED
COSTS ASSOCIATED WITH CORPORATE GOVERNANCE COMPLIANCE MAY SIGNIFICANTLY AFFECT
OUR RESULTS OF OPERATIONS.





The
Sarbanes-Oxley Act of 2002 and the Securities Exchange Act of 1934, as amended,
requires compliance with the corporate governance and securities disclosure
requirements, and requires an ongoing review of our internal control
procedures.  These requirements could make it more difficult for us to
attract and retain qualified members of the board of directors, or qualified
executives officers.  In addition, director and officer liability
insurance for public companies like us has become more difficult and more
expensive to obtain, and we may be required to accept reduced coverage or incur
higher costs to obtain coverage that is satisfactory to us and our officers and
directors.  We continue to evaluate and monitor regulatory
developments and cannot estimate the timing and magnitude of additional costs we
may incur as a result.





If in any
year we are unable to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002 and our internal control over financial reporting is
not effective, the reliability of our financial statements may be questioned and
our stock price may suffer.





IF
DETERIORATION OF THE ECONOMY CONTINUES, THIS COULD CAUSE ADDITIONAL FINANCIAL
AND STOCK MARKET DECLINES, WHICH COULD LEAD TO REDUCED EARNINGS AND COULD RESULT
IN FUTURE GOODWILL AND INTANGIBLE ASSET IMPAIRMENTS.





In the
fourth quarter of fiscal year 2008, we recorded an impairment charge related to
goodwill and intangible assets of $33.1 million related to our acquisition of
EM.  As of December 31, 2009, we have remaining goodwill and
intangible assets related to our acquisitions of John’s Tickets, LLC, EM, Magic
and NewSpace of $10.4 million. Factors we consider important that could trigger
an impairment review include significant underperformance relative to historical
or projected future operating results, significant changes in the manner of the
use of our assets or the strategy for our overall business, and significant
negative industry or economic trends.  If current economic conditions
worsen causing decreased revenues and increased costs, we may have further
goodwill impairments.  For additional information, see Item 7
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”





ITEM
1B. UNRESOLVED STAFF COMMENTS





None.





ITEM
2. PROPERTIES





Corporate
Offices:





We lease
office space at 12001 Ventura Place, Suite 340, Studio City, California 91604 as
our corporate headquarters, pursuant to a lease for a period of five years
expiring June 2010, with an option to extend the term of the lease for one
additional five-year period.





Las Vegas
Operations:





We
conduct the operations of Tix4Tonight at twelve leased locations in Las Vegas,
Nevada:





The South
Strip ticketing locations are at:


1.
            Tahiti
      Village at the southern end of the Las Vegas strip, south of McCarran
      International Airport (former All Access
  location);


2.
            Town
      Square Shopping Center near McCarran International Airport (opened
      December 2009);


3.
            Showcase
      Mall at the base of the world famous giant glass Coke bottle, across from
      New York, New York.


The
Mid-South Strip ticketing location is at:


4.
            The
      Hawaiian Marketplace Shopping
Center.


At the
heart of the strip, our ticketing location is at:


5.
            Bill’s
      Gamblin Hall at the intersection of “Flamingo” and the “Strip”(opened
      November 2008).


The
Mid-North Strip ticketing locations are at:


6.
            The
      Fashion Show Mall Strip entrance in front
      of  Neiman-Marcus;


7.
            Casino
      Royale Hotel between the Venetian Hotel and Harrah’s
  Hotel.


North
Strip ticketing locations are at:


8.
            Slots-A-Fun
      Casino (former All Access
location);


9.
            Two
      locations in Circus Circus Hotel and Casino (both are former All Access
      locations);


10.
            Blue
      booth in front of the Peppermill Restaurant between the Riviera Hotel and
      Denny’s;


Non-Strip
ticketing locations are at:


11.
            Downtown
      Fremont Street Experience is at the Four Queens
  Hotel;


12.
            Tuscany
      Suites & Casino east of the Las Vegas
Strip.


12


Tix4Tonight
also maintains administrative offices in Las Vegas, Nevada, pursuant to a lease
that terminates on August 31, 2011, with an option to extend the term of the
lease for one additional five-year period.





Exhibit
Merchandising:





EM leases
its administrative offices which it shares with Tix Productions and a warehouse
facility in Streetsboro, Ohio under a non-cancelable operating lease. EM also
leases additional storage space and housing at the locations of its exhibits,
typically through the duration of the exhibit. Presently, we have leased
additional retail space, storage space and housing in San Francisco, California;
Norfolk, Virginia; Cairo, Egypt; and Toronto, Canada.





Live
Entertainment:




Live
Entertainment has two facilities: one facility houses the producing operations,
while the other facility contains the subscription series operations. The
producing operations leases a 782 square foot facility that expires in August
2011 and is connected to Exhibit Merchandising’s facility located in
Streetsboro, Ohio. The subscription series offices are in Salt Lake City, Utah,
pursuant to a lease that terminates on June 1, 2011, with an option to extend
the term of the lease for one additional five-year period.




Minimum
future rental payments:





The
aggregate minimum future rental payments under non-cancelable operating leases
for facilities in operation at December 31, 2009, excluding operating expenses,
annual rent escalation provisions, and contingent rental payments based on
achieving certain pre-determined sales levels, are as follows:





Years Ending December 31,2010
                  
                  $
                  3,506,0002011
                  
                  
                  3,030,0002012
                  
                  
                  2,582,0002013
                  
                  
                  1,512,0002014
      and beyond
                  
                  
                  1,570,000Total
      payments
                  
                  $
                  12,200,000





Included
in the minimum future rental payments above are the leases associated with the
acquisition of All Access in March 2010.




ITEM 3. LEGAL
PROCEEDINGS





As of
December 31, 2009, the end of the period covered by this report, the Company was
subject to various legal proceedings and claims discussed below, as well as
certain other legal proceedings and claims that have not been fully resolved and
that have arisen in the ordinary course of business. Other than as discussed
below, in the opinion of management, the Company does not have a potential
liability related to any current legal proceedings and claims that would
individually or in the aggregate have a material adverse effect on its financial
condition or operating results. However, the results of legal proceedings
cannot be predicted with certainty. The Company intends to contest each
lawsuit vigorously but should the Company fail to prevail in any of these legal
matters or should several of these legal matters be resolved against the Company
in the same reporting period, the operating results of a particular reporting
period could be materially adversely affected. Management continues to
evaluate the lawsuits discussed below and based on the stage of these
proceedings, management is unable to reasonably estimate the likelihood of any
loss or the amount or range of any potential loss that could result from the
litigation. Therefore, no accrual has been established for any potential
loss in connection with these lawsuits.





Vegas.Com Trademark
Litigation





On
October 23, 2009, the Company and Tix4Tonight filed a complaint against
Vegas.com ("Vegas.com")and Vegas
Tix4Less(“VT4L”) in
the United States District Court for the Central District of California for
federal trademark infringement, federal trade dress infringement and unfair
competition, and common law unfair competition. Specifically, the complaint
alleges that Vegas.com and VT4L are intentionally confusing consumers by using
the Company's and Tix4Tonight's trademarks and trade dress. The complaint
seeks damages, an injunction, declaratory relief, and attorneys' fees and
costs. On December 4, 2009, Vegas.com and VT4L filed a motion to dismiss
and/or transfer the litigation to Nevada, arguing that the court lacked personal
jurisdiction over the defendants and that venue was either improper or
inconvenient. The Company and Tix4Tonight filed its opposition on January
29, 2010 and the hearing on the motion is currently scheduled for March 15,
2010. To stop Vegas.com and VT4L's infringement during the pendency of the
litigation, the Company and Tix4Tonight filed a motion for preliminary
injunction on February 22, 2010. Vegas.com and VT4L have not yet responded
to the preliminary injunction motion and the hearing is currently set for March
29, 2010.


13


Vegas.Com Antitrust
Litigation





On
December 14, 2009, Vegas.com and VT4L filed a complaint in the United States
District Court for the District of Nevada alleging violations by the Company and
its wholly owned subsidiary Tix4Tonight of 15 U.S.C. §1, 15 U.S.C. §2, 15 U.S.C.
§14, and Nevada state law. The Complaint specifically alleges that the
Company and Tix4Tonight entered into exclusive deals with venues and producers
with the effect of unreasonably restricting trade and commerce, prevented actual
and prospective competitors such as Vegas.com and VT4L from entering the market
or obtaining a non-trivial share of the market, interfered with existing or
prospective contractual arrangements between Vegas.com and VT4L and venues and
producers, and asserted an invalid patent to prevent competition. In their
demand, Vegas.com and VT4L seek compensatory, consequential, incidental, treble
and punitive damages in an amount to be determined at trial, in addition to
attorneys' fees and costs and injunctive relief. On December 23, 2009,
Vegas.com and VT4L filed an Amended Complaint to add requests for declaratory
judgment of non-infringement and invalidity related to the Company's ticket
systems patent and also a claim for unfair trade practices under the Lanham Act
related to the assertion of that patent. On February 3, 2010, Vegas.com and
VT4L filed their Second Amended Complaint, to add allegations that the Company
and Tix4tonight helped organize a group boycott among venues and producers
against VT4L. The Company and Tix4Tonight's response to the Second Amended
Complaint was filed on March 4, 2010.





ITEM
4. RESERVED


14




PART
II.





ITEM 5.
            MARKET FOR REGISTRANT’S COMMON
      EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES





(a)
Market Information





Our
common stock trades on the NASDAQ Capital Market under the symbol “TIXC”. The
following table sets forth the high and low sale prices for our common stock for
the periods indicated as reported by The NASDAQ Capital Market:





Low
                      
                      
                      HighFiscal Year Ended December 31,
      2008:Three
      Months Ended -March
      31, 2008
                      
                      $
                      4.45
                      
                      
                      $
                      5.65June
      30, 2008
                      
                      $
                      4.05
                      
                      
                      $
                      5.44September
      30, 2008
                      
                      $
                      2.33
                      
                      
                      $
                      4.75December
      31, 2008
                      
                      $
                      1.89
                      
                      
                      $
                      4.70Fiscal Year Ended December 31,
      2009:Three
      Months Ended -March
      31, 2009
                      
                      $
                      0.81
                      
                      
                      $
                      2.22June
      30, 2009
                      
                      $
                      0.95
                      
                      
                      $
                      2.45September
      30, 2009
                      
                      $
                      2.15
                      
                      
                      $
                      4.04December
      31, 2009
                      
                      $
                      1.49
                      
                      
                      $
                      4.18





(b)
Holders





As of
December 31, 2009, we had 278 common shareholders of record, excluding
19,063,203 shares held in "street name" by brokerage firms and other nominees
who hold shares for multiple investors. We estimate that we had approximately
1,700 beneficial common shareholders as of December 31, 2009.





(c)
Dividends





Holders
of common stock are entitled to receive dividends if, as and when declared by
the Board of Directors out of funds legally available for distribution, subject
to the dividend and liquidation rights of any preferred stock that may be issued
and outstanding. We have not paid cash dividends on our common stock and have no
present intention of paying cash dividends in the foreseeable future. It is the
present policy of the Board of Directors to retain all earnings to provide for
the future growth and development of our business operations.





(d)
Repurchases of common stock





The
following table sets forth the common shares repurchased during the quarter
ended December 31, 2009:





2009 Repurchase ProgramMaximum numberTotal number of
                        
                        
                        of shares that mayshares purchased as
                        
                        
                        yet be purchasedpart of publicly
                        
                        
                        under a publiclyTotal number of
                        
                        
                        Average price
                        
                        
                        announced plan or
                        
                        
                        announced plan orPeriod
                        
                        shares purchased
                        
                        
                        paid per share
                        
                        
                        program
                        
                        
                        programOctober
      2009
                        
                        
                        -
                        
                        
                        $
                        0.00
                        
                        
                        
                        14,000
                        
                        
                        
                        986,000November
      2009
                        
                        
                        56,103
                        
                        
                        $
                        2.57
                        
                        
                        
                        70,103
                        (1)
                        
                        
                        929,897December
      2009
                        
                        
                        1,270,000
                        
                        
                        $
                        1.50
                        
                        
                        
                        1,340,103
                        
                        
                        
                        3,659,897Q4
      2009
                        
                        
                        1,326,103
                        
                        
                        
                        1.55
                        
                        
                        
                        1,340,103
                        
                        
                        
                        3,659,897Total
                        
                        
                        1,326,103
                        
                        
                        $
                        1.55
                        
                        
                        
                        1,340,103
                        
                        
                        
                        3,659,897


15


(1)
            The
      Board of Directors of Tix Corporation on December 4, 2009 amended the
      Company’s share repurchase authorization from its originally authorized 1
      million shares to 5 million shares.





Comparison of Cumulative Total
Returns





The
following line graph presentation compares cumulative total stockholder returns
of Tix with The NASDAQ Stock Market Index and the NASDAQ Peer Index for the
five-year period from December 31, 2004 to December 31, 2009. The
graph and table assume that $100 was invested in each of Tix’s common stock, the
NASDAQ Stock Market Index and the Peer Index on December 31, 2004. No
dividends were paid during the measurement period. This data was furnished by
Zacks Investment Research, Inc. Copyright© 2008, NASDAQ, Inc.  All
rights reserved. Used with permission.





Comparison
of 5 Year Cumulative Total Return


Assumes
Initial Investment of $100


December
2009








16


Equity Compensation Plan





The
securities authorized for issuance under the Company's equity compensation plans
at December 31, 2009 are summarized as follows:





Number of
                  securities to be
                  issued upon
                  exercise of
                  outstanding
                  options, warrants
                  and rights
                
                
                Weighted-average exercise
                  price of
                  outstanding
                  options, warrants
                  and rights
                
                
                Number of
                  securities
                  remaining
                  available for
                  future issuance
                  under equity
                  compensation
                  plans (excluding
                  securities
                  reflected in
                  column (a))Plan
      CategoryEquity
      compensation plans approved by our security holders2009
      Equity incentive plan
                
                
                365,000
                
                
                $
                6.63
                
                
                
                2,635,0002004
      Directors stock option plan
                
                
                170,000
                
                
                
                2.18
                
                
                
                830,0002004
      Stock option plan
                
                
                716,000
                
                
                
                5.26
                
                
                
                144,0002003
      Consultant stock plan
                
                
                -
                
                
                
                -
                
                
                
                409,243Subtotal
                
                
                1,251,000
                
                
                $
                3.71
                
                
                
                4,018,243Equity
      compensation plans not approved by security holdersOutstanding
      warrants (1)
                
                
                950,000
                
                
                $
                3.70
                
                
                
                N/ATotal
                
                
                2,201,000
                
                
                $
                3.71
                
                
                
                4,018,243


(1)
            The
      warrants shown were issued from time to time as compensation for services
      rendered by consultants, advisors or other third parties, and do not
      include warrants sold in private placement transactions. The material
      terms of such warrants were determined based upon arm’s-length
      negotiations with the service providers. The warrant exercise prices
      approximated the market price of our common stock at or about the date of
      grant, and the warrant terms range from five to ten years from the grant
      date. The warrants contain customary anti-dilution adjustments in the
      event of a stock split, reverse stock split, reclassification or
      combination of our outstanding common stock and similar events. Certain
      warrants contain anti-dilution adjustments triggered by other corporate
      events, such as dividends and sales of equity below market
      price.




ITEM
6.   SELECTED FINANCIAL DATA




The following selected financial data is derived
from our audited financial statements. Our financial statements for 2009, 2008,
2007, 2006, and 2005 have been audited by Weinberg & Company, P.A., our
independent registered public accounting firm. These historical results do not
necessarily indicate future results. When you read this data, it is important
that you also read our financial statements and related notes, as well as the
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and “Risk Factors” sections of this Annual Report. Financial
information provided below has been rounded to the nearest
thousand.


17





Year Ended December 31, (1)2009
                            
                            
                            2008
                            
                            
                            2007
                            
                            
                            2006
                            
                            
                            2005Results
      of Operations Data:Revenue
                            
                            $
                            81,791,000
                            
                            
                            $
                            69,545,000
                            
                            
                            $
                            18,567,000
                            
                            
                            $
                            5,388,000
                            
                            
                            $
                            2,695,000Operating
      Expenses:Direct
      operating expenses
                            
                            
                            60,901,000
                            
                            
                            
                            48,752,000
                            
                            
                            
                            11,672,000
                            
                            
                            
                            2,173,000
                            
                            
                            
                            1,510,000Selling
      and marketing expense
                            
                            
                            2,520,000
                            
                            
                            
                            3,008,000
                            
                            
                            
                            13,475,000
                            (4)
                            
                            
                            467,000
                            
                            
                            
                            326,000General
      and administrative expenses
                            
                            
                            14,031,000
                            
                            
                            
                            14,931,000
                            
                            
                            
                            8,117,000
                            
                            
                            
                            3,306,000
                            
                            
                            
                            1,907,000Impairment
      of goodwill
                            
                            
                            -
                            
                            
                            
                            25,445,000
                            (2)
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Impairment
      of intangible assets
                            
                            
                            -
                            
                            
                            
                            7,687,000
                            (2)
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Depreciation
      and amortization
                            
                            
                            2,496,000
                            
                            
                            
                            4,601,000
                            
                            
                            
                            1,668,000
                            
                            
                            
                            164,000
                            
                            
                            
                            109,000Operating
      income (loss)
                            
                            
                            1,843,000
                            
                            
                            
                            (34,879,000
                            )
                            
                            
                            (16,365,000
                            )
                            
                            
                            (722,000
                            )
                            
                            
                            (1,157,000
                            )Equity
      in losses of nonconsolidated affiliates
                            
                            
                            (2,644,000
                            )
      (5)
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Interest
      expense
                            
                            
                            (13,000
                            )
                            
                            
                            (19,000
                            )
                            
                            
                            (104,000
                            )
                            
                            
                            (329,000
                            )
                            
                            
                            (677,000
                            )Interest
      income
                            
                            
                            40,000
                            
                            
                            
                            59,000
                            
                            
                            
                            96,000
                            
                            
                            
                            15,000
                            
                            
                            
                            -Gain
      on settlement of debt, net
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,033,000
                            (3)
                            
                            
                            -Other
      income
                            
                            
                            296,000
                            
                            
                            
                            175,000
                            
                            
                            
                            28,000
                            
                            
                            
                            37,000
                            
                            
                            
                            68,000Income
      (loss) from continuing operations
                            
                            
                            (478,000
                            )
                            
                            
                            (34,664,000
                            )
                            
                            
                            (16,345,000
                            )
                            
                            
                            34,000
                            
                            
                            
                            (1,766,000
                            )Income
      from discontinued operations
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            5,000
                            
                            
                            
                            743,000Income
      tax expense
                            
                            
                            40,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Net
      income (loss)
                            
                            
                            (518,000
                            )
                            
                            
                            (34,664,000
                            )
                            
                            
                            (16,345,000
                            )
                            
                            
                            39,000
                            
                            
                            
                            (1,023,000
                            )Other
      comprehensive income (loss):Foreign
      currency translation adjustments
                            
                            
                            36,000
                            
                            
                            
                            (29,000
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Comprehensive
      income (loss)
                            
                            $
                            (482,000
                            )
                            
                            $
                            (34,693,000
                            )
                            
                            $
                            (16,345,000
                            )
                            
                            $
                            39,000
                            
                            
                            $
                            (1,023,000
                            )Basic
      net income (loss) per common share:From
      continuing operations
                            
                            $
                            (0.02
                            )
                            
                            $
                            (1.09
                            )
                            
                            $
                            (0.70
                            )
                            
                            $
                            -
                            
                            
                            $
                            (0.17
                            )From
      discontinued operations
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            0.07Combined
      net income (loss) per common share- basic
                            
                            $
                            (0.02
                            )
                            
                            $
                            (1.09
                            )
                            
                            $
                            (0.70
                            )
                            
                            $
                            -
                            
                            
                            $
                            (0.10
                            )Diluted
      net income (loss) per common share:From
      continuing operations
                            
                            $
                            (0.02
                            )
                            
                            $
                            (1.09
                            )
                            
                            $
                            (0.70
                            )
                            
                            $
                            -
                            
                            
                            $
                            (0.17
                            )From
      discontinued operations
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            0.07Combined
      net income (loss) per common share-diluted
                            
                            $
                            (0.02
                            )
                            
                            $
                            (1.09
                            )
                            
                            $
                            (0.70
                            )
                            
                            $
                            -
                            
                            
                            $
                            (0.10
                            )Year Ended December 31, (1),
      (2)2009
                            
                            
                            2008
                            
                            
                            2007
                            
                            
                            2006
                            
                            
                            2005Balance
      Sheet Data:Total
      assets
                            
                            $
                            29,562,000
                            
                            
                            $
                            28,848,000
                            
                            
                            $
                            55,168,000
                            
                            
                            $
                            2,632,000
                            
                            
                            $
                            1,042,000Long-term
      debt; including current maturities
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,379,000Shareholders'
      equity (deficiency)
                            
                            $
                            21,128,000
                            
                            
                            $
                            22,197,000
                            
                            
                            $
                            51,746,000
                            
                            
                            $
                            378,000
                            
                            
                            $
                            (2,400,000
                            )




1.
            Acquisitions
      significantly impact the comparability of the historical consolidated
      financial data reflected in the schedule of Selected Financial
      Data.  The following is a list of acquisitions that we have made
      in the last five years and the effective date of each
      acquisition:




·
              John’s
      Tickets, LLC
              March
      14, 2007·
              Exhibit
      Merchandising, LLC
              August
      7, 2007·
              NewSpace
      Entertainment, Inc.
              January
      2, 2008·
              Magic
      Arts & Entertainment, LLC
              January
      2, 2008




2.
            The
      Company performed its 2008 annual impairment testing of goodwill and
      intangibles as of December 31, 2008. Based on a combination of factors,
      including the economic environment, decreased revenues and increased
      decline in margins, management determined that an impairment of goodwill
      and intangible assets had occurred, thus  recording impairment
      charges to goodwill and intangible assets of $25.4 million and $7.7
      million, respectively. There were no impairments of goodwill or intangible
      assets in 2009 and 2007, or in years prior to
  2007.




3.
            On
      September 13, 2006, the Company repaid in full its obligation to the
      lender of $1,180,000 (including accrued interest of $298,000) by making a
      final payment of $101,000. As a result, the Company recognized a non-cash
      gain on settlement of debt of $1,079,000 during the year ended December
      31, 2006. Netted against the gain on settlement of debt is $58,000 of
      deferred offering costs and an additional $12,000 gain from a separate
      settlement with other lenders.


18




4.
              During
      the year ended December 31, 2007, the Company issued its common stock and
      warrants to purchase its common stock to outside consultants as
      compensation for services provided that had a fair market value
      of $10.9 million at the time of grant. These services were
      primarily attributable to our efforts to enter into strategic
      alliances with producers, presenters and venues.  The Selected
      Financial Data should be read in conjunction with Item 7. Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations.


5.
            The
      Company in 2008 acquired the rights from the estate of Dodie Smith to
      develop, promote and tour the production “101 Dalmatians the Musical,” for
      $400,000. These rights were estimated to have a seven year life.
      Separately, the company invested $2.2 million, resulting in a 40% interest
      in the limited liability company that was formed to produce, promote and
      tour “101 Dalmatians the Musical.” Further, as part of an amendment to the
      original rights with the estate of Dodie Smith, future rights to the show
      “101 Dalmatians the Musical” would vest for a twenty-four year period once
      the show was performed sixteen times in New York. In addition, the Company
      advanced $820,000 to the limited liability company during the development
      period of the show, of which $766,000 remains outstanding. The advance
      earns interest at 15% per annum and is expected to be repaid from the
      projected future licensing revenues of the show over a four year or five
      year period.





The
touring event associated with the affiliate is expected to end in June 2010,
which includes a sixteen performance run in New York. During 2009, the Company’s
share of losses from the tour including advertising costs that were expensed
when incurred or first performed was $1.3 million. In addition, the Company has
recorded a $1.3 million charge to write off its investment and the estimated
expenses related to its proportionate share of losses that are expected to be
incurred in 2010 to secure the future rights to the show. The rights to the show
will be extended significantly to 24 years if the show has a minimum run on
Broadway. The remaining balance of the note receivable and the intangible asset
totaling $1,052,000 related to the show are to be recovered from show royalties.
The Company expects future recoveries from royalties will exceed the note and
intangible values.




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





Please
read the following discussion of our financial condition and results of
operations together with the audited consolidated financial statements and notes
to the financial statements included elsewhere in this Annual Report. This
discussion contains forward-looking statements that involve risks and
uncertainties. The forward-looking statements are not historical facts, but
rather are based on current expectations, estimates, assumptions and projections
about our industry, business and future economic results. Our actual results
could differ materially from the results contemplated by these forward looking
statements due to a number of factors, including those discussed under Item 1A.
Risk Factors and other sections of this Annual Report.





During
2009, we continued to execute our strategy to improve and build our operations
comprised of Tix4Tonight, Exhibit Merchandising (EM), and Tix Productions Inc.
(TPI). The key developments for each of our segments for 2009 were:





Tix4Tonight


·
            For the year ended December 31,
      2009, the value of the discount tickets sold increased by $23.8 million or
      44% to $77.7 million.





·
            For the year ended December 31,
      2009, the number of the discount tickets sold increased by 307,000 tickets
      or 29% to 1,366,000 tickets.





·
            For the year ended December 31,
      2009, the number of dinner reservations sold increased by 110,000 or 42%
      to 371,000 dinner
reservations.




·
            In September and December, we
      opened our seventh and eighth leased ticket locations in Las Vegas. The
      ticket booths are located at Casino Royale on the Las Vegas Strip, between
      the Venetian Hotel and Harrah’s Hotel and at the Town Square Shopping
      Center near McCarran International
  Airport.





Exhibit
Merchandising


·
            Was
      profitable for the year ended December 31,
2009.





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


·
            EM will be providing and
      operating the retail specialty stores for the next museum exhibition tour
      by Arts and Exhibitions International, LLC (AEI), a subsidiary of AEG,
      “Cleopatra: The Search for the Last Queen of Egypt”, when it makes its
      worldwide debut in Philadelphia at The Franklin Institute, and runs from
      June 5, 2010 to January 2, 2011, before moving on to four other cities
      that are currently
scheduled.





Live
Entertainment


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


19


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




·
            TPI
      invested in live shows such as “101 Dalmatians, The Musical”, which
      debuted in Minneapolis in October
2009.





Basis
of Presentation





The
consolidated financial statements include the accounts of Tix together with
those of its wholly-owned subsidiaries, Tix4Tonight, EM, and TPI. Investments in
business entities the Company does not control, but has the ability to exercise
significant influence over operating and financial policies, are accounted for
using the equity method and the Company’s proportionate share of the income or
loss is recorded as a single line item in the income statement, “Equity in
losses of nonconsolidated affiliates”, an example of this is “101 Dalmatians,
the Musical.”  All intercompany transactions and accounts have been
eliminated in consolidation.





Segment
Overview





Ticketing
Services




Our
ticketing services are carried out by our wholly owned subsidiary Tix4Tonight.
Tix4Tonight offers both the sale of discount and premium tickets to live shows
and events, and provides membership group sales services. Additionally,
Tix4Tonight also offers discounts on meals. Tix4Tonight sells its offerings from
thirteen leased locations in Las Vegas, Nevada. Through these same thirteen
leased locations, Tix4Tonight also sells discount dinner reservations to various
restaurants through Tix4Dinners.





Tix4Tonight
also sells premium tickets through Tix4AnyEvent (AnyEvent). AnyEvent is a
national event ticket broker that sells premium tickets for sporting events,
concerts, tours and theatre.  AnyEvent operations are located in the leased
administrative offices of Tix Corporation in Studio City,
California.





In
December 2008, Tix4Tonight announced its new ticket distribution channel
Tix4Members.com (Tix4Members).  Tix4Members sells discount tickets to
concerts, live theater and sporting events to membership group members through
co-branded websites. To this end Tix4Tonight entered into an agreement to
provide Costco Wholesale Corporation (Costco) members with event and ticketing
services. In February 2009, Tix4Members launched its first co-branded discount
website with Costco Event Ticket Services; however, revenues from the Costco
arrangement were minimal. As a result, we terminated the Costco arrangement
effective October 2009. The Company believes in this strategy of selling
discount tickets to concerts, live theater and sporting events to members of
membership groups through co-branded websites and continues to seek additional
partners. As with our Tix4Tonight operation in Las Vegas, Tix4Members.com offers
a marketing channel for producers, presenters, artists, arenas and theaters
nationwide to take advantage of our strong position in the discounted ticket
sales and live entertainment industry. Tix4Members.com operates in a manner
similar to Tix4Tonight with a few key differences. Instead of relying on
physical ticket booth facilities for direct sales, Tix4Members uses the internet
as its customer interface, and instead of offering only discounted day of show
tickets, it has expanded the date range of its ticket availability of discount
tickets to concerts, theatre shows and sporting events. Tix4Members is currently
looking at partnering opportunities.





In March
2010, Tix4Tonight acquired certain assets and assumed the responsibility of
certain leases of All Access Entertainment, LLC (All Access). All Access was a
competitor of Tix4Tonight in the Las Vegas last minute discount ticket market
and operated five locations with the main location located in Circus-Circus. The
acquisition of these assets and the assumption of the leases provide us with
greater coverage of the Las Vegas area in which to sell our discount
tickets.





The
Company also maintains leased administrative offices for Tix4Tonight in Las
Vegas, Nevada.





See
further discussion of our Ticketing Services segment in Item 1. Business -
Operating Segments.





Exhibit
and Event Merchandising




The
Company provides exhibit and event merchandising services through its wholly
owned subsidiary Exhibit Merchandising LLC (EM). EM provides a complete turnkey
retail store with commercially-available and extensive custom-branded product
for touring museum exhibitions and touring theatrical productions.




See
further discussion of our Exhibit and Event Merchandising segment in Item 1.
Business - Operating Segments.





Live Entertainment





In
January 2008, the Company acquired two live theatrical and concert production
companies: Magic Arts & Entertainment, LLC (Magic) and NewSpace
Entertainment, Inc. (NewSpace). Both Magic and NewSpace were independent
presenters and producers of live theater and concerts with a history of working
together. The Company combined the operations of Magic and NewSpace to form its
wholly-owned subsidiary Tix Productions Inc. We believe the combination of the
two companies has allowed us to better leverage our resources, gain operating
efficiencies, and more fully utilize the combined network of producers and
promoters. NewSpace and Magic will continue to operate under their current names
for the foreseeable future as a reflection of the marketplace recognition of
these entities.


20


See
further discussion of our Live Entertainment segment in Item 1. Business -
Operating Segments.




Critical
Accounting Policies and Estimates





The
preparation of our consolidated financial statements is in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenues and expenses during the
reporting period. Management periodically evaluates the estimates and judgments
made. Management bases its estimates and judgments on historical experience and
on various factors that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates as a result of different
assumptions or conditions.





The following narrative describes the critical accounting
policies that affect the more significant judgments and estimates used in the
preparation of the Company's consolidated financial statements.





Revenue
Recognition and Presentation





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





The
Company’s Las Vegas discount show ticketing business recognizes as revenue the
commissions and related transaction fees earned from the sale of Las Vegas show
tickets at the time the tickets are paid for by and delivered to the customers.
The Company’s commissions are calculated based on the face value of the show
tickets sold. The Company’s transaction fees are charged on a per-ticket basis.
With certain exceptions, ticket sales are generally non-refundable, although
same-day exchanges of previously sold tickets are permitted. Claims for ticket
refunds, which are generally received and paid the day after the show date, are
charged back to the respective shows and are recorded as a reduction to the
Company’s commissions and fees at the time that such refunds are processed. The
Company does not have accounts receivable associated with its sales
transactions, as payment is collected at the time of sale.





The
Company’s Tix4Members.com recognizes as revenues the commissions and related
transaction fees from the sale of tickets when the related event has
occurred.  Refunds are only issued if the event is canceled or
postponed.  Payments for such ticket sales received prior to the event
are recorded as deferred revenue.  Claims for ticket refunds, which
will be generally received and paid the day after the show date, are charged
back to the respective shows and recorded as a reduction to the Company’s
commissions and fees at the time that such refunds are
processed.  Tix4Members does not have any accounts receivable
associated with sales transactions to individual customers because payment is
collected at the time of sale.





Tix4Dinner
offers reservations for discounted dinners at various restaurants surrounding
the Las Vegas strip and downtown, with dining at specific times on the same day
or in some cases the day after the sale. Tix4Dinner recognizes as revenue the
transaction fees earned from the purchaser of the dinner reservations at the
time the reservations are made and a subsequent nominal fee from the restaurant
at the time the reservation is used. At this time, the Company has immaterial
amounts of accounts receivable and does not have any accounts payable associated
with the Tix4Dinner operations, as the Company collects the transaction fee at
the time that the reservation is made, and the dinner payment is collected
directly by the restaurant.





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





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




On
January 2, 2008, the Company began its live entertainment business. Revenue from
the presentation and production of an event is recognized after the performance
occurs. Revenue from our producing and presenting activities are reported in
accordance with the authoritative guidance issued by the Financial Accounting
Standards Board, which advises that the following items are indicators as to
whether something should be recorded at gross or net:


21


·
            Acts as principal in the
      transaction


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


o
            Takes title to the
      products


o
            Selects the
      supplier


o
            Flexibility in
      pricing


o
            Assumes credit
      risk


·
            Actsas an agent or broker (including
      performing services, in substance, as an agent or broker) with
      compensation on a commission or fee basis. If the Company performs as an
      agent or broker without assuming the risks and rewards of ownership of the
      goods, sales should be reported on a net
  basis.





TPI’s
operating units, Magic Arts & Entertainment and NewSpace, act as both
presenter and promoters of productions, as well as agent. TPI’s revenues from
live entertainment where it is acting as the producer or promoter are a function
of a number of elements; revenue is a direct reflection of tickets sold times
ticket prices plus ancillary revenue streams including sponsorships and revenues
generated through premium ticketing opportunities.  In instances where the
Company acts as the presenter or promoter, it:





·
            selects the suppliers or approves
      the selection of the
supplier,


·
            is the primary obligor with
      suppliers,


·
            assumes credit
      risk,


·
            directs the pricing of the
      tickets, and


·
            purchases the
      advertising.





The above
are indicators of ownership and would be evidence that revenues and related
expenses should be recorded at gross. As the Company is acting as the principal
in the transaction, i.e., it has the risks and rewards of ownership and has
recorded the related revenues and expenses at gross. In other instances where we
only receive a fee and are not the principal obligors to vendors, we record
these revenues at net.


TPI
revenue collected in advance of the event is recorded as deferred revenue until
the event occurs. Revenue collected from sponsorship and other revenue, which is
not related to any single event, is classified as deferred revenue and generally
amortized over the tour’s season or the term of the contract. We account for
taxes that are externally imposed on revenue producing transactions on a net
basis, as a reduction to revenue.





Stock-Based Compensation





Our
share-based employee compensation plans are described in Note 10 of the Notes to
our Financial Statements. The Company periodically issues stock options and
warrants to employees and non-employees in non-capital raising transactions for
services and for financing costs. The Company accounts for stock option and
warrant grants issued and vesting to employees based on the authoritative
guidance provided by the Financial Accounting Standards Board. The Company
accounts for stock option and warrant grants issued and vesting to non-employees
in accordance with the authoritative guidance of the Financial Accounting
Standards Board whereas the value of the stock compensation is based upon the
measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to
earn the equity instruments is complete. Non-employee share-based compensation
charges generally are amortized over the vesting period on a straight-line
basis. In certain circumstances where there are no future performance
requirements by the non-employee, option grants are immediately vested and the
total share-based compensation charge is recorded in the period of the
measurement date.





The fair
value of Tix’s common stock option grant is estimated using the Black-Scholes
option pricing model, which uses certain assumptions related to risk-free
interest rates, expected volatility, expected life of the common stock options,
and future dividends. Compensation expense is recorded based upon the value
derived from the Black-Scholes option pricing model, and based on actual
experience. The assumptions used in the Black-Scholes option pricing model could
materially affect compensation expense recorded in future periods.




Impairment
of Long-Lived Assets, Goodwill and Intangible Assets





We review
long-lived assets whenever events or changes in circumstances indicate the
carrying amount of an asset may not be recoverable in accordance with the
authoritative guidance provided by the Financial Accounting Standards
Board. Our long-lived assets, such as property and equipment, are reviewed
for impairment when events and circumstances indicate that depreciable or
amortizable long lived assets might be impaired and the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amount of
those assets. When specific assets are determined to be unrecoverable, the cost
basis of the asset is reduced to reflect the current value.





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


22


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





Valuation
of Intangible Assets





The
Company has acquired and continues to acquire significant intangible assets that
Tix records at fair value. The authoritative guidance provided by the Financial
Accounting Standards Board requires Tix to make assumptions regarding inputs
into the discounted cash flow model about the timing and amount of future net
cash flows, risk, cost of capital, terminal values and market participants. Each
of these factors can significantly affect the value of the intangible asset. Tix
engages independent valuation experts who review Tix's critical assumptions and
calculations for acquisitions of significant intangibles. Tix’s management
reviews intangible assets for impairment annually using an undiscounted net cash
flows approach. If the undiscounted cash flows of an intangible asset are less
than the carrying value of an intangible asset, the intangible asset is written
down to its fair value, which is usually the discounted cash flow amount. Where
cash flows cannot be identified for an individual asset, the review is applied
at the lowest group level for which cash flows are identifiable. Goodwill and
intangible assets are reviewed for impairment annually or when an event that
could result in an impairment of goodwill occurs. At December 31, 2009, goodwill
and intangibles amounted to $5.9 million and $4.5 million, respectively, and
amortization expense for intangible assets amounted to $2.0 million in 2009.
During 2008, Tix recorded impairment charges to goodwill and intangible assets
of $25.4 million and $7.7 million, respectively.  There were no
impairments of goodwill in 2009 or 2007. Once an impairment of goodwill or other
intangible assets has been recorded, it cannot be reversed. There can be no
assurance that future goodwill impairments will not occur.





Inventory
Valuation




Inventories
are stated at the lower of cost or market. Market is defined as current
replacement cost, except that market should not exceed the net realizable value
and should not be less than net realizable value reduced by an allowance for an
approximately normal profit margin. The cost of inventories is determined by
using the first-in, first-out method. We perform a monthly analysis of our
inventory balances to determine if the carrying amount of inventories exceeds
their net realizable value. Our determination of estimated net realizable value
is based on customer orders, market trends and historical pricing. If the
carrying amount exceeds the estimated net realizable value, the carrying amount
is reduced to the estimated net realizable value. We estimate a reserve for
obsolescence and excess of our supplies inventory. Inventory is stated net of
the reserve.





Recent
Accounting Pronouncements





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





In
October 2009, the FASB issued authoritative guidance on revenue recognition that
will become effective for the Company beginning July 1, 2010, with earlier
adoption permitted. Under the new guidance on arrangements that include software
elements, tangible products that have software components that are essential to
the functionality of the tangible product will no longer be within the scope of
the software revenue recognition guidance, and software-enabled products will
now be subject to other relevant revenue recognition guidance. We believe
adoption of this new guidance will not have a material impact on our financial
statements.





On July
1, 2009, the Company adopted authoritative guidance issued by the Financial
Accounting Standards Board (“FASB”) on business combinations. The guidance
retains the fundamental requirements that the acquisition method of accounting
(previously referred to as the purchase method of accounting) be used for all
business combinations, but requires a number of changes, including changes in
the way assets and liabilities are recognized and measured as a result of
business combinations. It also requires the capitalization of in-process
research and development at fair value and requires the expensing of
acquisition-related costs as incurred. We have applied this guidance to business
combinations completed since July 1, 2009. Adoption of the new guidance did not
have a material impact on our financial statements.





In June
2009, the FASB amended its guidance on accounting for variable interest entities
("VIE"). Among other things, the new guidance requires a qualitative rather than
a quantitative analysis to determine the primary beneficiary of a VIE; requires
continuous assessments of whether an enterprise is the primary beneficiary of a
VIE; enhances disclosures about an enterprise's involvement with a VIE; and
amends certain guidance for determining whether an entity is a VIE. Under the
new guidance, a VIE must be consolidated if the enterprise has both (a) the
power to direct the activities of the VIE that most significantly impact the
entity's economic performance, and (b) the obligation to absorb losses or
the right to receive benefits from the VIE that could potentially be significant
to the VIE. The Company is evaluating the impact that this change in accounting
policy will have on our consolidated financial statements. Based on our initial
assessment, we anticipate that certain entities that are consolidated under our
current accounting policy may not be consolidated subsequent to the effective
date of the new guidance. The Company does not expect this change in accounting
policy to have a material impact on our consolidated financial
statements.





Non-GAAP
Measurement Used by Management to Evaluate Results





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


23


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





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





Year ended
                  
                  
                  
                  
                  
                  Year endedDecember 31, 2009
                  
                  
                  
                  
                  
                  December 31, 2008Net
      loss
                  
                  
                  
                  
                  $
                  (518,000
                  )
                  
                  
                  
                  
                  $
                  (34,664,000
                  )Interest
      income
                  
                  $
                  40,000
                  
                  
                  
                  
                  
                  
                  $
                  59,000Interest
      expense
                  
                  
                  (13,000
                  )
                  
                  
                  
                  
                  
                  
                  (19,000
                  )Net
      interest income
                  
                  $
                  27,000
                  
                  
                  
                  (27,000
                  )
                  
                  $
                  40,000
                  
                  
                  
                  (40,000
                  )Depreciation
                  
                  
                  
                  
                  
                  
                  530,000
                  
                  
                  
                  
                  
                  
                  
                  491,000Amortization
                  
                  
                  
                  
                  
                  
                  1,966,000
                  
                  
                  
                  
                  
                  
                  
                  4,110,000Income
      taxes
                  
                  
                  
                  
                  
                  
                  40,000
                  
                  
                  
                  
                  
                  
                  
                  -EBITDA
                  
                  
                  
                  
                  
                  $
                  1,991,000
                  
                  
                  
                  
                  
                  
                  $
                  (30,103,000
                  )




Liquidity and Capital
Resources





At
December 31, 2009, we had cash and cash equivalents of $9.9 million
and total assets of $29.6 million compared to $9.2 million and
$28.8 million, respectively, at December 31, 2008. Working capital at
December 31, 2009 and 2008 was $7.9 million and $8.0 million, respectively. We
had no debt for the years ending December 31, 2009 and 2008.





Our
working capital requirements and capital for general corporate purposes,
including acquisitions and capital expenditures, are funded from operations or
from the selling of equity securities, and to a much lesser extent upon proceeds
received upon the exercise of options and warrants, as well as borrowings from
related and unrelated parties. Prior to 2008, our primary sources of liquidity
and funding for operations and acquisitions were from loans from shareholders
and proceeds from the sale of equity securities. We may need to incur debt or
issue equity to make other strategic acquisitions. We currently do not have any
lines of credit available to us. We have no commitments from third parties to
provide us with any additional future financing, and may not be able to obtain
future financing on favorable terms.





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


24





Our
revenues and cash fluctuate based upon the seasonality of our various
businesses. Examples of seasonality of our businesses include Ticketing
Services, which reports slightly greater revenues in the third and fourth
quarters than those reported in the first half of the year. Our Live
Entertainment segment records the majority of its revenues in the first and
fourth quarters. Exhibit Merchandising and AnyEvent revenues are not subject to
seasonal fluctuation, but their revenues are affected by other factors including
special events, additional tours, and tour cancellations. Exhibit Merchandising
is less subject to seasonal fluctuations in revenues than our other businesses.
EM is however, subject to revenue fluctuations as a result of exhibits that it
represents moving from one location to another. Moving an exhibit from one
location to another generally results in the exhibit being closed from four to
six weeks. The length of time an exhibit is closed is dependent upon the type of
exhibit, the distance the exhibit is to be shipped, as well as any special needs
that may be required in re-setting the exhibit. We expect cash flows from
operations and other financing alternatives to satisfy working capital and
capital expenditures for at least the succeeding year in the absence of any
significant cash requirements resulting from future acquisitions.





Sources
of Cash





For the
years ended December 31, 2009, 2008, and 2007, the Company generated $6.2
million, $7.6 million, and $144,000 from operating activities
respectively.  During the years ended December 31, 2009 and 2008, the
Company did not undertake any capital fund raising activities. During the year
ended December 31, 2007, the Company raised gross proceeds of $18.0 million,
$17.8 million of which were the result of the Company’s sale of common stock and
warrants. The Company for the years ended December 31, 2009, 2008, and 2007
received net proceeds of $23,000, $54,000, and $229,000, respectively from the
exercise of options and warrants.





On
September 24, 2007, the Company completed the closing of a private placement. At
the closing, the Company sold to institutional and accredited investors
3,744,000 shares of its common stock for a price of $4.75 per share, or an
aggregate of approximately $17.8 million. In addition, the Company also issued
to the investors two-year warrants to purchase 1,870,000 shares of common stock
at an exercise price of $5.50 per share. In conjunction with this offering, the
Company paid fees of $75,000 and issued a total of 147,000 shares of its common
stock to finders in connection with the financing.





On April
24, 2007, the Company borrowed $2,000,000 from Joseph Marsh, a stockholder of
the Company, pursuant to an unsecured short-term note, with interest at 8%, per
annum payable monthly. The note was due on or before April 1, 2008. During the
term of the loan, Mr. Marsh had the right to convert the loan into an investment
in any subsequent private placement the Company may conduct. On September 29,
2007, the Company repaid the loan in full. During the term of the loan the
Company paid $76,000 in interest.





Uses
of Cash





During
the years ended December 31, 2009, 2008, and 2007, we used $3.0 million, $3.7
million, and $12.6 million related to investing activities.





Investments:





The
Company in 2008 acquired the rights from the estate of Dodie Smith to develop,
promote and tour  the production “101 Dalmatians the Musical,” for
$400,000. These rights were estimated to have a seven year life. Separately, the
company invested $2.2 million, resulting in a 40% interest in the limited
liability company that was formed to produce, promote and tour “101 Dalmatians
the Musical.” Further, as part of an amendment to the original rights with the
estate of Dodie Smith, future rights to the show “101 Dalmatians the Musical”
would vest for a twenty-four year period once the show was performed sixteen
times in New York. In addition, the Company advanced $820,000 to the limited
liability company during the development period of the show, of which $766,000
remains outstanding. The advance earns interest at 15% per annum and is expected
to be repaid from the projected future licensing revenues of the show over a
four year or five year period.





The
touring event associated with the affiliate is expected to end in June 2010,
which includes a sixteen performance run in New York. During 2009, the Company’s
share of losses from the tour including advertising costs that were expensed
when incurred or first performed was $1.3 million. In addition, the Company has
recorded a $1.3 million charge to expense related to its proportionate share of
losses that are expected to be incurred in 2010 to secure the future rights to
the show.





Acquisitions:





Effective
January 2, 2008, we acquired through merger Magic and NewSpace. As consideration
for the acquisition of Magic, the Company paid $2.0 million, net of cash
acquired and issued 476,190 shares of stock that had a market value of $2.3
million, which approximated the fair market value of the shares at the time of
issuance. As consideration for the acquisition of NewSpace, the Company paid
$1.3 million, net of cash acquired and issued 571,428 shares of stock that had a
market value of $2.6 million, which approximated the fair market value of the
shares at the time of issuance.





Effective
March 14, 2007, pursuant to an Asset Purchase Agreement (the “Agreement”) with
John’s Tickets, LLC, dba AnyEvent Tickets (“AnyEvent”) we acquired the assets of
AnyEvent. Pursuant to the Agreement, we purchased the domain name
“http://anyevent.com,” the contents of the website “http://anyevent.com,” the
inventory of sporting events, concerts and tours, and theatre tickets
outstanding as of the date of the Agreement, the phone number 1-800-ANYEVENT,
and all existing contracts between Any Event and other existing box offices,
theatres and brokers, pursuant to which AnyEvent acquires its ticket inventory.
In consideration for the assets purchased under the Agreement, we paid $300,000
in cash and issued 137,500 shares of restricted common stock valued at $4.00 per
share (aggregate value $550,000), which approximated the fair market value on
the date of issuance, for total purchase consideration of $850,000.
Additionally, the Company paid $96,000 for the actual costs of the ticket
inventory based on a post-closing audit.


25





On August
7, 2007, pursuant to an Asset Purchase Agreement with Exhibit Merchandising LLC,
and the members of EM, the Company purchased substantially all of the assets of
EM. Prior to the Company’s acquisition of EM, EM was owned by Mr. Marsh and Mr.
Marshall, the former owners of Magic. The purchase price for the assets was
$11.5 million in cash and 5,000,000 restricted shares of the Company’s Common
Stock with a market value of $35.0 million. We also assumed $120,000 in
liabilities, primarily related to inventory of EM.





Other:





During
2009, 2008, and 2007, the Company purchased $405,000, $454,000, and $678,000 of
fixed assets. Further, in 2007, the Company acquired certain website domain
names for an additional $132,000.





Summary





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





Results
of Operations





Consolidated
Results of Operations





%
                                                            change
                                                          
                                                          
                                                          %
                                                            changeTwelve Months Ended December 31,
                                                          
                                                          
                                                          2009v
                                                          
                                                          
                                                          2008v2009
                                                          
                                                          
                                                          2008
                                                          
                                                          
                                                          2007
                                                          
                                                          
                                                          2008
                                                          
                                                          
                                                          2007Revenue
                                                          
                                                          $
                                                          81,791,000
                                                          
                                                          
                                                          $
                                                          69,545,000
                                                          
                                                          
                                                          $
                                                          18,567,000
                                                          
                                                          
                                                          
                                                          18
                                                          %
                                                          
                                                          
                                                          275
                                                          %Operating
      expenses:Direct
      operating expenses
                                                          
                                                          
                                                          60,901,000
                                                          
                                                          
                                                          
                                                          48,752,000
                                                          
                                                          
                                                          
                                                          11,672,000
                                                          
                                                          
                                                          
                                                          25
                                                          %
                                                          
                                                          
                                                          318
                                                          %Selling,
      general and administrative expenses
                                                          
                                                          
                                                          10,918,000
                                                          
                                                          
                                                          
                                                          12,285,000
                                                          
                                                          
                                                          
                                                          15,934,000
                                                          
                                                          
                                                          
                                                          -11
                                                          %
                                                          
                                                          
                                                          -23
                                                          %Depreciation
      and amortization
                                                          
                                                          
                                                          2,496,000
                                                          
                                                          
                                                          
                                                          4,601,000
                                                          
                                                          
                                                          
                                                          1,668,000
                                                          
                                                          
                                                          
                                                          -46
                                                          %
                                                          
                                                          
                                                          176
                                                          %Impairment
      of goodwill
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          25,445,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          N/A
                                                          
                                                          
                                                          
                                                          N/AImpairment
      of intangible assets
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          7,687,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          N/A
                                                          
                                                          
                                                          
                                                          N/ACorporate
      expenses
                                                          
                                                          
                                                          5,633,000
                                                          
                                                          
                                                          
                                                          5,654,000
                                                          
                                                          
                                                          
                                                          5,658,000
                                                          
                                                          
                                                          
                                                          0
                                                          %
                                                          
                                                          
                                                          0
                                                          %Operating
      income (loss)
                                                          
                                                          
                                                          1,843,000
                                                          
                                                          
                                                          
                                                          (34,879,000
                                                          )
                                                          
                                                          
                                                          (16,365,000
                                                          )
                                                          
                                                          
                                                          105
                                                          %
                                                          
                                                          
                                                          -113
                                                          %Operating
      margin
                                                          
                                                          
                                                          2
                                                          %
                                                          
                                                          
                                                          -50
                                                          %
                                                          
                                                          
                                                          -88
                                                          %Equity
      in losses of nonconsolidated affiliates
                                                          
                                                          
                                                          (2,644,000
                                                          )
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -Interest
      expense
                                                          
                                                          
                                                          (13,000
                                                          )
                                                          
                                                          
                                                          (19,000
                                                          )
                                                          
                                                          
                                                          (104,000
                                                          )Interest
      income
                                                          
                                                          
                                                          40,000
                                                          
                                                          
                                                          
                                                          59,000
                                                          
                                                          
                                                          
                                                          96,000Other
      income - net
                                                          
                                                          
                                                          296,000
                                                          
                                                          
                                                          
                                                          175,000
                                                          
                                                          
                                                          
                                                          28,000Loss
      before income taxes
                                                          
                                                          
                                                          (478,000
                                                          )
                                                          
                                                          
                                                          (34,664,000
                                                          )
                                                          
                                                          
                                                          (16,345,000
                                                          )Income
      tax expense
                                                          
                                                          
                                                          40,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -Net
      loss
                                                          
                                                          $
                                                          (518,000
                                                          )
                                                          
                                                          $
                                                          (34,664,000
                                                          )
                                                          
                                                          $
                                                          (16,345,000
                                                          )


26





Revenues





The
Company earns fee revenues from the sales of discounted tickets from purchasers
of the tickets and commissions from the entertainment supplier, as well as
revenues from the sale of premium tickets to sporting and other entertainment
events. Through our discounted ticket venues, we also offer discount dinner
reservations. From Exhibit Merchandising, LLC (Ohio), we earn revenues from the
management of retail outlets associated with the sale of merchandise related to
touring exhibits, such as “Tutankhamun and The Golden Age of the Pharaohs.”
Further, through our live entertainment segment, we earn revenues from the
presentation and production of events, as well as sponsorship and ancillary
revenues. Our revenues for the years ended December 31, 2009 and 2008 were $81.8
million and $69.5 million, respectively. Our revenues increased $12.3 million,
or 18%, during the year ended December 31, 2009 as compared to the same period
of the prior year.  The increase in revenues is due to a $9.9 million
increase in Live Entertainment revenues and a $4.3 million increase in Ticketing
Services revenues, which were offset in part by a $1.9 million decline in
revenues from our Exhibit Merchandising segment.





Our
revenues for the years ended December 31, 2008 and 2007 were $69.5 million and
$18.6 million, respectively. Our revenues increased $50.9 million, or 275%,
during the year ended December 31, 2008 as compared to the same period of the
prior year. The increase in revenues is due to the acquisitions of Magic,
NewSpace and Exhibit Merchandising and the organic growth of our existing
Ticketing Services. During the twelve months ended December 31, 2008, the
Company realized $44.6 million of revenues from Tix Productions whose operating
units Magic Arts & Entertainment and NewSpace Entertainment were acquired
effective January 2, 2008, and therefore there are no corresponding revenues in
2007.





More
detailed explanations for the changes in the years ended December 31, 2009, and
2008 are included in the applicable segment discussions following.





Direct
Operating Expenses





Direct
operating expenses include payroll and related costs, rents, cost of tickets and
goods sold, artist fees, show related marketing costs, and advertising expenses
along with other related costs of promoting and producing live entertainment.
Direct Costs of Revenues were $60.9 million for the year ended December 31, 2009
as compared to $48.7 million for the year ended December 31, 2008. Our operating
expenses increased $12.2 million or 25% during the year ended December 31, 2009
as compared to the same period of the prior year. The increase in direct
operating expenses is reflective of the 18% higher overall revenues earned and
the 22% higher revenues earned in our Live Entertainment segment, which has
higher direct cost of goods and services than our other operating segments.
Direct cost of goods and services at our Live Entertainment segment was 89% and
81% of revenues in 2009 and 2008 respectively, and increased 34% for the
year ended December 31, 2009 as compared to the year ended December 31,
2008.





Direct
Costs of Revenues were $48.7 million for the year ended December 31, 2008 as
compared to $11.7 million for the year ended December 31, 2007. Our operating
expenses increased $37.0 million or 318% during the year ended December 31, 2008
as compared to the same period of the prior year primarily as a result of a 275%
increase in revenues. Additionally, the live entertainment companies that we
acquired have higher direct cost of goods and services than our Ticketing
Services and Exhibit Merchandising businesses, which were our primary sources of
revenue in 2007.





More
detailed explanations of the changes in the years ended December 31, 2009 and
2008 are included in the applicable segment discussions following.





Operating
Segment Selling, Marketing and Administrative Expenses





Operating
segment selling, marketing and administrative expenses include advertising and
promotional costs related to the Company’s business activities, as well as the
segment cost of management. Our operating segment selling, marketing and
administrative expenses were $10.9 million for the year ended December 31, 2009,
as compared to $12.3 million for the year ended December 31, 2008. Our selling,
general and administrative expenses decreased $1.4 million, or 11%, during the
year ended December 31, 2009 as compared to the same period of the prior
year.  The decrease in operating segments’ selling, marketing and
administrative expenses is the result of a $1.3 million and $936,000 decline in
selling and administrative expenses at our Exhibit Merchandising segment and
Live Entertainment segment, respectively. These decreases were offset in part by
an $828,000 increase in selling and administrative expenses at our Ticketing
Services segment.





Our
operating segment selling, marketing and administrative expenses were $12.3
million for the year ended December 31, 2008, as compared to $15.9 million for
the year ended December 31, 2007. Our selling, general and administrative
expenses decreased $3.6 million or 23%, during the year ended December 31,
2008 as compared to the same period of the prior year.  The decrease in
operating segments’ selling, marketing and administrative expenses was a result
of a $12.3 million decline in selling and administrative expenses at our
Ticketing Services segment, which was offset in part by a $2.8 million increase
in selling and administrative expenses at Exhibit Merchandising and a $5.9
million increase in selling and administrative expenses due to the operations of
our Live Entertainment segment that was formed in January 2008 from the merged
assets of Magic and NewSpace.





More
detailed explanations of changes in the years ended December 31, 2009 and 2008
are included in the applicable segment discussions
following.


27





Corporate
Expenses





Corporate
expenses are expenses that relate to activities directed by our executive
offices. Significant components of corporate expenses consist of corporate
personnel and personnel-related costs, insurance, legal and accounting fees,
consulting and advisory fees, merchant fees and corporate occupancy costs.
Corporate expenses were relatively unchanged for the year ended December 31,
2009, as compared to the same period of the prior year. Corporate expenses were
$5.6 million for the year ended December 31, 2009 and represented 7% of revenues
as compared to $5.7 million for the year ended December 31, 2008 and 8% of
revenues. During the year ended December 31, 2009, corporate employee-related
costs declined $110,000 due to the departure of employees. This was offset in
part by a $67,000 increase in board of director expenses.





Corporate
expenses were relatively unchanged for the year ended December 31, 2008, as
compared to the same period of the prior year. Corporate expenses were $5.7
million for the twelve months ended December 31, 2008 and represented 8% of
revenues as compared to $5.7 million for the year ended December 31, 2007 and
31% of revenues.  During the twelve months ended December 31, 2008,
corporate consulting expenses related to marketing services and public relations
declined $900,000 to $1.4 million, as compared to $2.3 million during
2007.  This was offset by an increase in the corporate payroll and related
expenses of $600,000 during 2008, as well as an additional $200,000 in other
corporate expenses, including $100,000 related to our NASDAQ listing. The
increase in payroll and related benefits was attributable to additional
administrative personnel being added to the payroll during 2008 due to our
growth and employees added in 2007 being employed for the entire
year.





Goodwill
and Intangible Asset Impairment




The
Company has acquired and continues to acquire significant intangible assets that
Tix records at fair value. Tix’s management makes assumptions regarding inputs
into the discounted cash flow model about the timing and amount of future net
cash flows, risk, cost of capital, terminal values and market participants. Each
of these factors can significantly affect the value of the intangible asset. Tix
engages independent valuation experts who review Tix's critical assumptions and
calculations for acquisitions of significant intangibles. Tix’s management
reviews intangible assets for impairment annually using an undiscounted net cash
flows approach. If the undiscounted cash flows of an intangible asset are less
than the carrying value of an intangible asset, the intangible asset is written
down to its fair value, which is usually the discounted cash flow amount. Where
cash flows cannot be identified for an individual asset, the review is applied
at the lowest group level for which cash flows are identifiable. Goodwill and
intangible assets are reviewed for impairment annually or when an event that
could result in an impairment of goodwill occurs. Changes in forecasted
operations can materially affect these estimates.  Once an impairment of
goodwill or other intangible assets has been recorded, it cannot be reversed.
There can be no assurance that future goodwill impairments will not
occur.





There
were no impairments of goodwill or intangible assets in 2009 or 2007. In 2008,
management believed that impairment occurred in the Company’s Exhibit
Merchandising segment due to events and financial performance in 2008. In the
first nine months of 2008, the King Tutankhamun exhibit, which is the Company’s
Exhibit Merchandising Segment’s primary source of revenue, was in Europe where
it performed below Management’s expectations due to less than expected
attendance, higher cost of doing business in Europe than in the United States,
and a difference in buying patterns of consumers in Europe as compared to the
United States. It was believed that revenues would improve when the Exhibit
returned to the United States in November 2008. However, revenues in the fourth
quarter of 2008 continued to be lower than projected as consumers were forced to
reduce their non-essential spending due to deteriorating economic conditions.
These conditions led management to believe that an economic impairment had
occurred. As a result, in 2008, with the assistance of an independent study,
Tix’s management performed a study of the goodwill and intangible assets related
to the acquisition of Exhibit Merchandising, and recorded impairment charges to
goodwill and intangible assets of $25.4 million and $7.7 million,
respectively.





Depreciation
and Amortization





Our
depreciation and amortization expense was $2.5 million and $4.6 million for the
years ended December 31, 2009 and 2008, respectively. The decline of $2.1
million in depreciation and amortization expense in 2009 reflects a $2.1 million
decrease in amortization expense. The decrease in amortization expense is the
result of the $7.7 million impairment of intangible assets we recorded at
December 31, 2008, which reduced future amortization expense by $500,000 a
quarter.





Our
depreciation and amortization was $4.6 million and $1.7 million for the years
ended December 31, 2008 and 2007 respectively. The approximate increase of $2.9
million in depreciation and amortization expense in 2008 reflects a $1.8 million
increase in amortization expense associated with EM and $900,000 associated with
our acquisitions of Magic and NewSpace in January 2008, for which there are no
corresponding charges in 2007.  The increase in amortization expense
associated with EM reflects twelve months of amortization in 2008, whereas 2007
reflects the five months of expense following its acquisition in August
2007.  For the year ended December 31, 2008, depreciation expense increased
$200,000 as compared to the same period in the prior year. The increase reflects
$175,000 in depreciation expense resulting from the EM fixed assets acquired in
August 2007 being depreciated for twelve months in 2008 versus five months of
depreciation expense in 2007.  Additionally, the remaining amount of the
increase in depreciation expense was related to the fixed assets acquired in our
acquisitions of Magic and NewSpace in January 2008, for which there is no
corresponding expense in 2007.  We expect that our future depreciation of
expenses will be consistent with our past amounts recorded.


28





Equity
in Losses of Nonconsolidated Affiliates





The
Company in 2008 acquired the rights from the estate of Dodie Smith to develop,
promote and tour the production “101 Dalmatians the Musical,” for $400,000.
These rights were estimated to have a seven year life. Separately, the company
invested $2.2 million, resulting in a 40% interest in the limited liability
company that was formed to produce, promote and tour “101 Dalmatians the
Musical.” Further, as part of an amendment to the original rights with the
estate of Dodie Smith, future rights to the show “101 Dalmatians the Musical”
would vest for a twenty-four year period once the show was performed sixteen
times in New York. In addition, the Company advanced $820,000 to the limited
liability company during the development period of the show, of which $766,000
remains outstanding. The advance earns interest at 15% per annum and is expected
to be repaid from the projected future licensing revenues of the show over a
four year or five year period.





The
touring event associated with the affiliate is expected to end in June 2010,
which includes a sixteen performance run in New York. During 2009, the Company’s
share of losses from the tour including advertising costs that were expensed
when incurred or first performed was $1.3 million. In addition, the Company has
recorded a $1.3 million charge to write off its investment and the estimated
expenses related to its proportionate share of losses that are expected to be
incurred in 2010 to secure the future rights to the show. The rights to the show
will be extended significantly to 24 years if the show has a minimum run on
Broadway. The remaining balance of the note receivable and the intangible asset
totaling $1,052,000 related to the show are to be recovered from show royalties.
The Company expects future recoveries from royalties will exceed the note and
intangible values.





Other
Income and (Expense)





Other
Income and Expense was $296,000 for the year ended December 31, 2009, and was
the result of miscellaneous box office revenues, such as patron club income and
season handling fees, earned by our Live Entertainment segment Tix
Productions.





Interest
Income




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




Interest
Expense





Interest
expense was $13,000, $19,000, and $104,000 for the years ended December 31,
2009, 2008, and 2007. Interest expense in 2009 and 2008 was primarily the result
of interest associated with capital leases. Interest Expense of $76,000 incurred
in 2007 was related to a $2.0 million note payable with a related party and an
additional $28,000 incurred was a result of capital leased assets.





Cash Flows





For The Year Ended December 31,2009
                                    
                                    
                                    2008
                                    
                                    
                                    2007Cash
      flows from operating activities:Net
      loss
                                    
                                    $
                                    (518,000
                                    )
                                    
                                    $
                                    (34,664,000
                                    )
                                    
                                    $
                                    (16,345,000
                                    )Non-cash
      charges, net
                                    
                                    
                                    6,810,000
                                    
                                    
                                    
                                    39,996,000
                                    
                                    
                                    
                                    15,819,000Change
      in cash from working capital changes
                                    
                                    
                                    (45,000
                                    )
                                    
                                    
                                    2,238,000
                                    
                                    
                                    
                                    670,000Cash
      flows from operating activities
                                    
                                    $
                                    6,247,000
                                    
                                    
                                    $
                                    7,570,000
                                    
                                    
                                    $
                                    144,000Cash
      flows from investing activities:Investment
      in nonconsolidated affiliate
                                    
                                    $
                                    (2,644,000
                                    )
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -Purchase
      of domain name
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (132,000
                                    )Purchases
      of property, plant and equipment
                                    
                                    
                                    (405,000
                                    )
                                    
                                    
                                    (454,000
                                    )
                                    
                                    
                                    (678,000
                                    )Acquisitions
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (3,225,000
                                    )
                                    
                                    
                                    (11,832,000
                                    )Cash
      flows from investing activities
                                    
                                    $
                                    (3,049,000
                                    )
                                    
                                    $
                                    (3,679,000
                                    )
                                    
                                    $
                                    (12,642,000
                                    )Cash
      flows from financing activities:Capital
      fund raising
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    17,784,000Cost
      of treasury stock
                                    
                                    
                                    (2,512,000
                                    )
                                    
                                    
                                    (2,098,000
                                    )
                                    
                                    
                                    -Payments
      on capital lease obligations
                                    
                                    
                                    (52,000
                                    )
                                    
                                    
                                    (46,000
                                    )
                                    
                                    
                                    (41,000
                                    )Net
      proceeds from exercise of options and warrants
                                    
                                    
                                    23,000
                                    
                                    
                                    
                                    54,000
                                    
                                    
                                    
                                    229,000Cash
      flows from financing activities
                                    
                                    $
                                    (2,541,000
                                    )
                                    
                                    $
                                    (2,090,000
                                    )
                                    
                                    $
                                    17,972,000


29





Operating
Activities





Our
primary short-term liquidity needs are to fund general working capital
requirements while our long-term liquidity needs are primarily acquisition
related. Our primary source of funds for our short-term needs is cash flows from
operations, while our long-term sources of funds will be from operations and
debt or equity financing.  During the last few years, we have relied on the
proceeds from loans from both unrelated and related parties and the sale of
our debt and equity securities to provide the resources necessary to execute our
business strategy.





Year
Ended 2009 Compared to Year Ended 2008





Cash
flows provided from operating activities were $6.2 million for the year ended
December 31, 2009, compared to cash flows provided from operations of $7.6
million for the year ended December 31, 2008. The $1.4 million decline in cash
provided from operating activities was the result of a $33.2 million decrease in
non-cash charges and a $2.3 million decrease in working capital charges, which
were offset by a $34.1 million increase in net income net of tax. The decline in
non-cash charges was due to a $33.1 million impairment charge to goodwill and
intangible assets in 2008 for which there was no corresponding charge in 2009,
$2.1 million less amortization expense in 2009 than 2008, which was a result of
the impairment of intangible assets in 2008, and a $592,000 decline in non-cash
compensation to employees, directors, and consultants for services; offset in
part by $2.6 million equity in the losses of nonconsolidated affiliates. Items
contributing to the decline in working capital were a $780,000 increase in
advances to vendors, $766,000 in advances to nonconsolidated affiliates, a
$399,000 increase in accounts receivable, and a $400,000 decrease in income
taxes payable.




Year
Ended 2008 Compared to Year Ended 2007





Cash
flows provided from operating activities were $7.6 million for the year ended
December 31, 2008, compared to cash provided from operations of $144,000 for the
year ended December 31, 2007. The $7.5 million increase in cash flows provided
from operating activities were the result of a $33.1 million impairment charge
to goodwill and intangible assets, for which there is no corresponding charge in
2007; and $2.9 million higher amortization expense in 2008 than 2007. This was
partially was offset by an $18.4 million larger net operating loss in 2008 as
compared to 2007; and  a reduction of $11.8 million in non-cash consulting
and payroll expenses from the issuance of  common stock for payment of
services in 2008 compared to 2007. The remaining amounts relate to operating
accounts that are reflective of the level and timing of activity that occurred
during the period, i.e., accounts receivable, accounts payable and accrued
liabilities.





Year
Ended 2007 Compared to Year Ended 2006





Cash
flows from operations were $144,000 for the year ended December 31, 2007,
compared to cash provided from operations of $1.2 million for the year ended
December 31, 2006. The $1.0 million decrease in cash flows provided from
operations were the result of a net operating loss in 2007, as compared to an
operating profit in 2006, and adjustments for non-cash items and changes in
accounts reflecting non-operating activities. Net loss in 2007 was $16.3 million
as compared to a $39,000 profit in 2006. Items that offset the additional $16.3
million loss in 2007 were $13.0 million more in consulting and payroll expenses
from the issuance of our common stock for payment of services in 2007 than in
2006, as well as $1.5 million more in amortization and depreciation expense
being recognized in 2007 than in 2006. Also, during 2006, we settled our
outstanding debt with a lender; the transaction resulted in us recognizing a
$1.1 million gain on the transaction and there was no comparable transaction in
2007. The remaining amounts relate to operating accounts that are reflective of
the level and timing of activity that occurred during the period, i.e., accounts
receivable, accounts payable and accrued liabilities.





Investing
Activities





Year
Ended 2009 Compared to 2008





Cash used
in investing activities was $3.0 million for the year ended December 31, 2009
compared to $3.7 million in 2008. For the year ended December 31, 2009, the
Company invested $2.6 million, for a 40% interest in a company which was formed
in 2009 to develop, produce and promote a traveling musical of Mr. Dodie Smith’s
story “101 Dalmatians”. Net purchases of property, plant and equipment accounted
for minor cash outlays in 2009. We expect purchase of property, plant, and
equipment to be an insignificant portion of our cash flow activities. During the
year ended December 31, 2008, we used $3.2 million in cash to fund the
acquisitions of Magic Arts & Entertainment and NewSpace Entertainment, for
which there is no corresponding transaction in 2009.





Year
Ended 2008 Compared to 2007





Cash used
in investing activities was $3.7 million for the year ended December 31, 2008
compared to $12.6 million in 2007. During 2008, Tix acquired through merger
Magic Arts & Entertainment, LLC and NewSpace Entertainment, Inc for $2.0
million and $1.3 million respectively, as compared to 2007 when Tix acquired the
assets of Exhibit Merchandising, LLC (Ohio) for $11.4 million and AnyEvent, LLC
for $396,000. Additionally, in 2008 and 2007, we made investments in our
infrastructure (e.g., telephone system and intellectual property) of $454,000
and $703,000 respectively.  We expect to continue to consider acquisition
opportunities; however there is no assurance that we can find such opportunities
in the future, or if identified that we can come to an agreement with their
owners.  The Company expects to make similar levels of investment in its
infrastructure in future years.


30





Year
Ended 2007 Compared to 2006





Cash used
in investing activities was $12.6 million for the year ended December 31, 2007
compared to $41,000 in 2006. The increase in cash used in investing activities
is reflective of our acquiring the assets of Exhibit Merchandising, LLC (Ohio)
for $11.4 million and AnyEvent, LLC for $396,000. There were no comparable
events in 2006. Additionally, in 2007 we made investments in our infrastructure
(e.g., telephone system and intellectual property) of $703,000.





Financing
Activities





Year
Ended 2009 Compared to 2008





Cash used
in financing activities for the year ended December 31, 2009, were $2.5 million,
as compared to $2.1 million during the year ended December 31, 2008. The
$451,000 increase in cash used in financing activities during the year ended
December 31, 2009 primarily reflects an additional $414,000 used in our stock
buy-back program. Amounts paid related to capital lease obligations or amounts
received related to options and warrants exercised were immaterial.





Year
Ended 2008 Compared to 2007





Cash used
in financing activities for the twelve months ended December 31, 2008, were $2.1
million, as compared to $18.0 million generated from financing activities during
the year ended December 31, 2007. The $20.1 million decrease in cash provided
from financing activities during the year ended December 31, 2008, primarily
reflects $2.1 million used in our buy-back program, while in the year ended
December 31, 2007 we received $17.8 million of net proceeds from the sale of
common stock and warrants. Net proceeds from the exercise of options and
warrants in 2008 and 2007 were $54,000 and $229,000 respectively. Partially
offsetting these increases was the repayment in 2008 and 2007 of long term
capital lease obligations of $46,000 and $41,000 respectively.





Year
Ended 2007 Compared to 2006





Cash flow
from financing activities was $18.0 million for the year ended December 31,
2007, compared to $499,000 in 2006. The $17.5 million increase in cash provided
from financing activities during the year ended December 31, 2007, primarily
reflects a $16.8 million increase in net proceeds received from the sale of
common stock and warrants in 2007, as compared to 2006. We received comparable
amounts of net proceeds from the exercise of options and warrants in 2007 and
2006. Net proceeds from the exercise of options and warrants in 2007 and 2006
were $229,000 and $211,000 respectively. Partially offsetting these increases
was the repayment in 2007 and 2006 of long term capital lease obligations and
convertible debentures of $41,000 and $582,000 respectively.





In April
24, 2007, we borrowed $2,000,000 from a stockholder of the Company, pursuant to
an unsecured short-term note, with interest at 8%, per annum payable monthly. On
September 29, 2007 the Company repaid the loan in full.





Discussion
of Segment Results





We
operate in three reportable segments: ticketing services, event and branded
merchandising, and Tix Productions, Inc. (TPI).





Revenue
and expenses earned and charged between segments are eliminated in
consolidation. Corporate expenses, interest income, interest expense and income
taxes are managed on a total company basis.


31





Information
related to our operating segments is as follows:





Ticketing
                                            
                                            
                                            Exhibit
                                            
                                            
                                            Live
                                            
                                            
                                            
                                            
                                            
                                            ConsolidatedServices
                                            
                                            
                                            Merchandising
                                            
                                            
                                            Entertainment
                                            
                                            
                                            Corporate
                                            
                                            
                                            and Combined2009Revenue
                                            
                                            $
                                            18,257,000
                                            
                                            
                                            $
                                            9,079,000
                                            
                                            
                                            $
                                            54,455,000
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            81,791,000Direct
      cost of revenues
                                            
                                            
                                            6,964,000
                                            
                                            
                                            
                                            5,462,000
                                            
                                            
                                            
                                            48,475,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            60,901,000Selling,
      general and administrative expenses
                                            
                                            
                                            3,548,000
                                            
                                            
                                            
                                            2,422,000
                                            
                                            
                                            
                                            4,948,000
                                            
                                            
                                            
                                            5,633,000
                                            
                                            
                                            
                                            16,551,000Depreciation
      and amortization
                                            
                                            
                                            515,000
                                            
                                            
                                            
                                            1,179,000
                                            
                                            
                                            
                                            790,000
                                            
                                            
                                            
                                            12,000
                                            
                                            
                                            
                                            2,496,000Operating
      income (loss)
                                            
                                            $
                                            7,230,000
                                            
                                            
                                            $
                                            16,000
                                            
                                            
                                            $
                                            242,000
                                            
                                            
                                            $
                                            (5,645,000
                                            )
                                            
                                            $
                                            1,843,000Current
      assets
                                            
                                            $
                                            3,073,000
                                            
                                            
                                            $
                                            3,127,000
                                            
                                            
                                            $
                                            5,349,000
                                            
                                            
                                            $
                                            4,733,000
                                            
                                            
                                            $
                                            16,282,000Fixed
      assets
                                            
                                            
                                            670,000
                                            
                                            
                                            
                                            478,000
                                            
                                            
                                            
                                            82,000
                                            
                                            
                                            
                                            78,000
                                            
                                            
                                            
                                            1,308,000Intangible
      assets and goodwill
                                            
                                            
                                            232,000
                                            
                                            
                                            
                                            3,851,000
                                            
                                            
                                            
                                            6,311,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            10,394,000Other
      non-current assets
                                            
                                            
                                            180,000
                                            
                                            
                                            
                                            21,000
                                            
                                            
                                            
                                            1,371,000
                                            
                                            
                                            
                                            6,000
                                            
                                            
                                            
                                            1,578,000Total
      assets
                                            
                                            $
                                            4,155,000
                                            
                                            
                                            $
                                            7,477,000
                                            
                                            
                                            $
                                            13,113,000
                                            
                                            
                                            $
                                            4,817,000
                                            
                                            
                                            $
                                            29,562,0002008Revenue
                                            
                                            $
                                            13,952,000
                                            
                                            
                                            $
                                            11,030,000
                                            
                                            
                                            $
                                            44,563,000
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            69,545,000Direct
      cost of revenues
                                            
                                            
                                            5,725,000
                                            
                                            
                                            
                                            6,877,000
                                            
                                            
                                            
                                            36,150,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            48,752,000Selling,
      general and administrative expenses
                                            
                                            
                                            2,720,000
                                            
                                            
                                            
                                            3,681,000
                                            
                                            
                                            
                                            5,884,000
                                            
                                            
                                            
                                            5,654,000
                                            
                                            
                                            
                                            17,939,000Impairment
      of goodwill
                                            
                                            
                                            -
                                            
                                            
                                            
                                            25,445,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            25,445,000Impairment
      of intangible assets
                                            
                                            
                                            -
                                            
                                            
                                            
                                            7,687,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            7,687,000Depreciation
      and amortization
                                            
                                            
                                            501,000
                                            
                                            
                                            
                                            3,173,000
                                            
                                            
                                            
                                            916,000
                                            
                                            
                                            
                                            11,000
                                            
                                            
                                            
                                            4,601,000Operating
      income (loss)
                                            
                                            $
                                            5,006,000
                                            
                                            
                                            $
                                            (35,833,000
                                            )
                                            
                                            $
                                            1,613,000
                                            
                                            
                                            $
                                            (5,665,000
                                            )
                                            
                                            $
                                            (34,879,000
                                            )Current
      assets
                                            
                                            $
                                            2,960,000
                                            
                                            
                                            $
                                            4,969,000
                                            
                                            
                                            $
                                            2,784,000
                                            
                                            
                                            $
                                            3,770,000
                                            
                                            
                                            $
                                            14,483,000Fixed
      assets
                                            
                                            
                                            583,000
                                            
                                            
                                            
                                            711,000
                                            
                                            
                                            
                                            109,000
                                            
                                            
                                            
                                            30,000
                                            
                                            
                                            
                                            1,433,000Intangible
      assets and goodwill
                                            
                                            
                                            523,000
                                            
                                            
                                            
                                            4,769,000
                                            
                                            
                                            
                                            6,755,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            12,047,000Other
      non-current assets
                                            
                                            
                                            65,000
                                            
                                            
                                            
                                            13,000
                                            
                                            
                                            
                                            801,000
                                            
                                            
                                            
                                            6,000
                                            
                                            
                                            
                                            885,000Total
      assets
                                            
                                            $
                                            4,131,000
                                            
                                            
                                            $
                                            10,462,000
                                            
                                            
                                            $
                                            10,449,000
                                            
                                            
                                            $
                                            3,806,000
                                            
                                            
                                            $
                                            28,848,0002007Revenue
                                            
                                            $
                                            14,284,000
                                            
                                            
                                            $
                                            4,283,000
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            18,567,000Direct
      operating expenses
                                            
                                            
                                            8,829,000
                                            
                                            
                                            
                                            2,843,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            11,672,000Selling,
      general and administrative expenses
                                            
                                            
                                            15,029,000
                                            
                                            
                                            
                                            905,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            5,658,000
                                            
                                            
                                            
                                            21,592,000Depreciation
      and amortization
                                            
                                            
                                            415,000
                                            
                                            
                                            
                                            1,229,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            24,000
                                            
                                            
                                            
                                            1,668,000Operating
      income (loss)
                                            
                                            $
                                            (9,989,000
                                            )
                                            
                                            $
                                            (694,000
                                            )
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            (5,682,000
                                            )
                                            
                                            $
                                            (16,365,000
                                            )Current
      assets
                                            
                                            $
                                            2,133,000
                                            
                                            
                                            $
                                            5,623,000
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            4,251,000
                                            
                                            
                                            $
                                            12,007,000Fixed
      assets
                                            
                                            
                                            668,000
                                            
                                            
                                            
                                            759,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            21,000
                                            
                                            
                                            
                                            1,448,000Intangible
      assets and goodwill
                                            
                                            
                                            819,000
                                            
                                            
                                            
                                            40,820,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            41,639,000Other
      non-current assets
                                            
                                            
                                            46,000
                                            
                                            
                                            
                                            22,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            6,000
                                            
                                            
                                            
                                            74,000Total
      assets
                                            
                                            $
                                            3,666,000
                                            
                                            
                                            $
                                            47,224,000
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            4,278,000
                                            
                                            
                                            $
                                            55,168,000





Balances
have been changed for consistency and comparability of assets and
expenses.





The
following is a summary of the operating results of our operating
segments.





Ticketing
Services:





Our
Ticketing Services segment operating results were as follows:




Segment
Reporting – Ticketing Services (T4T, AE, Tix4Members)





%
                                    Change
                                  
                                  
                                  %
                                    ChangeYear Ended December 31,
                                  
                                  
                                  2009 vs.
                                  
                                  
                                  2009 vs.2009
                                  
                                  
                                  2008
                                  
                                  
                                  2007
                                  
                                  
                                  2008
                                  
                                  
                                  2008Revenue
                                  
                                  $
                                  18,257,000
                                  
                                  
                                  $
                                  13,952,000
                                  
                                  
                                  $
                                  14,284,000
                                  
                                  
                                  
                                  31
                                  %
                                  
                                  
                                  -2
                                  %Operating
      Expenses:Direct
      operating expenses
                                  
                                  
                                  6,964,000
                                  
                                  
                                  
                                  5,725,000
                                  
                                  
                                  
                                  8,829,000
                                  
                                  
                                  
                                  22
                                  %
                                  
                                  
                                  -35
                                  %Selling,
      general and administrative expenses
                                  
                                  
                                  3,548,000
                                  
                                  
                                  
                                  2,720,000
                                  
                                  
                                  
                                  15,029,000
                                  
                                  
                                  
                                  30
                                  %
                                  
                                  
                                  -82
                                  %Depreciation
      and amortization
                                  
                                  
                                  515,000
                                  
                                  
                                  
                                  501,000
                                  
                                  
                                  
                                  415,000
                                  
                                  
                                  
                                  3
                                  %
                                  
                                  
                                  21
                                  %Operating
      income (loss)
                                  
                                  $
                                  7,230,000
                                  
                                  
                                  $
                                  5,006,000
                                  
                                  
                                  $
                                  (9,989,000
                                  )
                                  
                                  
                                  44
                                  %
                                  
                                  
                                  150
                                  %Operating
      margin
                                  
                                  
                                  40
                                  %
                                  
                                  
                                  36
                                  %
                                  
                                  
                                  -70
                                  %
                                  
                                  
                                  10
                                  %
                                  
                                  
                                  151
                                  %


32





Revenues





The
Ticketing Services operations are performed by our Tix4Tonight subsidiary.
Tix4Tonight has three operating units: Tix4Tonight, our discount ticket seller,
Tix4AnyEvent (AnyEvent), our premium ticketing operation, and Tix4Members, our
membership group ticket sales program. The Ticketing Service segment earns fee
revenues from the sales of discounted tickets to purchasers of the tickets and
commissions from the entertainment supplier, as well as revenues from the sale
of premium tickets to sporting and other entertainment events. Through our
discounted ticket venues, we also offer discount dinner reservations.
Ticketing Services revenues were $18.3 million for the year ended December 31,
2009 as compared to $14.0 million for the year ended December 31, 2008. Our
revenues increased $4.3 million, or 31%, during the year ended December 31, 2009
as compared to the same period of the prior year. The increase in Ticketing
Service revenues is the result of a $4.8 million increase in Tix4Tonight
revenues and a $365,000 increase in ancillary revenues i.e. the sale of dinner
reservations and tee times, offset by an $841,000 decline in premium ticket
revenues. The decline in premium ticket revenues is primarily the result of
lower demand for premium concert tickets and sporting event tickets due to
overall weak economic conditions across the United States. Revenues earned
through Tix4Members were not meaningful. Tix4Tonight revenues for the year ended
December 31, 2009 and 2008 were $16.6 million and $11.8 million, which is an
increase of $4.8 million, or 40% in 2009 as compared to the same period in 2008.
The increase reflects both higher demand for discount tickets as well as a
higher average selling ticket price in 2009. Sales of Tix4Tonight discount show
tickets increased by 306,000 tickets or 29%, to 1,366,000 discount show tickets
for the year ended December 31, 2009. The gross sales value of show tickets sold
to customers plus commissions and fees earned were $77.7 million for the year
ended December 31, 2009, as compared to $53.9 million for the year ended
December 31, 2008, or a 44% increase. The average selling price per ticket in
2009 was $56.86 per ticket, which represented an increase of $5.98 per ticket or
12% as compared to $50.88 per ticket in 2008.





Ticketing
Services revenues were $14.0 million for the year ended December 31, 2008 as
compared to $14.3 million for the year ended December 31, 2007. Our revenues
were relatively unchanged during the year ended December 31, 2008 as compared to
the same period of the prior year. The stability in our Ticket Service segment
revenues is the result of two factors. The first factor is that we have changed
our strategy with regards to premium tickets.  AnyEvent’s customer changed
from the general public to national retail ticket brokers. As a result of this
change, we are assuming less risk. The effect of this change in strategy was
that our premium ticket revenues declined $5.1 million to $1.2 million for the
year ended December 31, 2008.  The second factor is Tix4Tonight’s revenues
increased $4.7 million or 59% in 2008, as compared to the same period in 2007.
The increase reflects both higher demand for discount tickets as well as a
higher average selling ticket price in 2008. Tix4Tonight discount tickets sold
increased 346,000 tickets or 48% to 1,060,000 discounted show tickets for the
year ended December 31, 2008. This increase in revenues in 2008 as compared to
2007 reflects an increased customer demand for tickets, and higher revenues at
our dinner reservation operations. Tix4Tonight earned commissions and fees
related to the sale of $53.9 million of tickets to Las Vegas shows and events
for the year ended December 31, 2008, as compared to $33.2 million for
the year ended December 31, 2007. The average ticket price increased to $50.88
during the year-ended December 31, 2008, as compared to $46.56 for the
comparable period in 2007.





Ticketing
Services revenues were $14.3 million for the year ended December 31, 2007 as
compared to $5.4 million for the year ended December 31, 2006. Our revenues
increased $8.9 million, or 165%, during the year ended December 31, 2007 as
compared to the same period of the prior year. The increase in Ticket Service
segment revenues is the result of two factors. The first factor is AnyEvent was
acquired in March 2007 and its results are reflected in this segment. During the
approximately 10 months that we owned AnyEvent, it generated $6.2 million in
revenues. The second factor is Tix4Tonight’s revenues increased $2.6 million or
49% in 2007 as compared to the same period in 2006. The increase reflects both
higher demand for discount tickets as well as an average higher selling price
per ticket in 2007. Tix4Tonight discount tickets sold increased 141,000 tickets
or 27% to 714,000 discounted show tickets for the year ended December 31, 2007.
This increase in revenues in 2007 as compared to 2006 reflects an increased
customer demand for tickets, and new sources of revenue, including discount
dinner reservations. Commissions and fees were earned on the gross sales value
of show tickets sold to customers of $33.2 million for the year ended
December 31, 2007, as compared to $23.0 million for the year ended
December 31, 2006. The average ticket price increased to $48.39 in 2007, as
compared to $36.38 in 2006.





During
2009 and 2008, two producers of shows accounted for 47% and 37% of revenues,
respectively. The first producer’s shows represented 32% and 24% of our
Ticketing Services segment’s revenues during 2009 and 2008, respectively. The
second producer’s shows represented 15% and 13% of our Ticketing Services
segment’s revenues during 2009 and 2008, respectively. Each producer’s shows
appear at a different venue, hotel or theatre; however, no single show, venue or
theatre was greater than 10% of revenues. During the year ended December 31,
2007, there was no single producer of shows that accounted for 10% or more of
ticketing services revenues.


33





Direct
Operating Expenses





Ticketing
Services direct operating expenses include payroll and related costs, rents, and
cost of tickets sold. Direct operating expenses were $6.9 million for the year
ended December 31, 2009 as compared to $5.7 million for the year ended December
31, 2008. Our direct operating expenses increased $1.2 million or 22%. The
increase in direct operating expenses was the result of a $949,000 increase in
rent expense and a $718,000 increase in employee related expense, which were
offset in part by a $473,000 decline in direct operating costs associated with
our premium ticket business. The increase in rent expense was due to a $127,000
increase as a result of new ticket outlets, $282,000 annual rent increases,
$186,000 increase in bonus rents, and a $354,000 increase associated with a full
year of rent expense in 2009 as compared to three months rent expense on a
location that opened in October 2008. Employee related expenses increased 32% to
$718,000 which is consistent with the 29% increase in discount show tickets
sold. Offsetting the increase in direct operating expenses at our discount
ticketing operations was a $473,000 decline in direct operating expenses at our
premium tickets operations, which is consistent with the $841,000 or 72% decline
in its revenue. The direct operating expenses for the years ended December 31,
2009 and 2008, as a percentage of revenues were 38% and 41%, respectively. The
decline in direct operating expenses as a percentage of revenues in 2009 as
compared to 2008 is reflective of the fixed nature of the operating
expenses.





Direct
operating expenses were $5.7 million for the year ended December 31, 2008 as
compared to $8.8 million for the year ended December 31, 2007. Our direct
operating expenses declined $3.1 million or 35%. The decline in direct operating
expenses is reflective of our change in strategy regarding the sale of premium
tickets. During the year ended December 31, 2008, our premium ticket direct
operating cost declined $4.5 million to $1.0 million, as a result of a
corresponding decline in premium ticket revenues. The decline in direct
operating costs associated with our premium ticket business was offset in part
by higher costs associated with the higher revenues from our discount ticket
operations.  Direct operating cost expenses associated with our discount
ticket operations increased 40%, which is consistent with our 59% increase in
revenues associated with our discount tickets operations.





Direct
Costs of Revenues were $8.8 million for the year ended December 31, 2007 as
compared to $2.2 million for the year ended December 31, 2006. Our operating
expenses increased $6.6 million or 306%. The higher operating expenses were
reflective of the higher revenues from our existing discount ticket operations,
as well as the acquisition of AnyEvent.





Direct
operating expense of same day discount ticket sales were $3.4 million for the
year ended December 31, 2007, as compared to $2.2 million for the year ended
December 31, 2006, an increase $1.2 million or 50%. The increase in direct
operating costs is consistent with the 49% increase in discount ticket revenues.
Direct costs of revenues increased to 42% of revenues for the year ended
December 31, 2006, as compared to 40% of revenues for the year ended December
31, 2006. The slightly higher increase in direct operating expense as a
percentage of revenues as compared to 2006, is primarily due to the start up
cost related to opening our fifth leased ticket outlet in November
2007.


34





Direct
operating expense for our premium ticket operation, AnyEvent, were $5.4 million,
from the date of acquisition on March 14, 2007 to December 31, 2007. Direct
operating expenses represented 87% of revenues earned.





Selling,
Marketing and Administrative Expenses





Ticketing
Services selling, marketing and administrative expenses include advertising and
promotional costs related to its business activities, as well as the segment
cost of management. Selling, general, and administrative expenses for the years
ended December 31, 2009 and 2008 were $3.5 million and $2.7 million,
respectively. Our selling, marketing, and administrative expenses increased
$828,000 or 30% during the year ended December 31, 2009 as compared to 2008. The
increase in selling, general, and administrative expenses is reflective of the
31% increase in revenue activity at the Ticketing Services segment. Selling,
marketing and administrative expenses were 19% of revenues during the years
ended December 31, 2009 and 2008.





Tix4Tonight’s
selling, marketing and administrative expenses were $2.7 million for the year
ended December 31, 2008, as compared to $15.0 million for the year ended
December 31, 2007. Our selling, marketing and administrative expenses decreased
$12.3 million or 82%, during the year ended December 31, 2008. The $12.3 million
decrease in selling, marketing and administrative expenses is the result of the
Company issuing $12.6 million of common stock in 2007 as a payment for certain
consulting services provided in conjunction with the development of strategic
relationships with producers, presenters and venues for which there was no
corresponding expense in 2008. This was partially offset by a $300,000 increase
in Tix4Tonight’s selling, marketing, and administrative expense due to
additional selling, and administrative expense associated with an increase
in revenues.





Tix4Tonight’s
selling, marketing and administrative expenses were $15.0 million for the year
ended December 31, 2007, as compared to $1.2 million for the year ended December
31, 2006. Our selling, marketing and general and administrative expenses
increased $13.8 million or 1,138%, during the year ended December 31, 2007. The
$13.8 million increase in selling, general and administrative expenses includes
$12.6 million related to consulting expenses. We issue our common stock as a
payment for certain consulting services provided in conjunction with the
development of strategic relationships with producers, presenters and venues.
These agreements are reviewed and approved by our Board of Directors prior to
their being entered and have durations that vary from two to four years. Due to
the nature of the work being performed by the service provider there are no
performance requirements included in these agreements, as a result the fair
value of the common stock is expensed at the time the agreement is entered into
by us. During 2007, we paid $1.7 million and issued common stock and warrants,
which at the time of issuance had a fair market value of $10.9 million. The
remaining $1.2 million increase is due to additional selling, and
administrative expense associated with an increase in revenues and our
acquisition of John's Tickets.




Exhibit
Merchandising:





Our
Exhibit Merchandising segment operating results were as follows:





Segment
Reporting - Exhibit Merchandising





%
                                  Change
                                
                                
                                %
                                  ChangeYear Ended December 31,
                                
                                
                                2009 vs.
                                
                                
                                2009 vs.2009
                                
                                
                                2008
                                
                                
                                2007
                                
                                
                                2008
                                
                                
                                2008Revenue
                                
                                $
                                9,079,000
                                
                                
                                $
                                11,030,000
                                
                                
                                $
                                4,283,000
                                
                                
                                
                                -18
                                %
                                
                                
                                158
                                %Operating
      Expenses:Direct
      operating expenses
                                
                                
                                5,462,000
                                
                                
                                
                                6,877,000
                                
                                
                                
                                2,843,000
                                
                                
                                
                                -21
                                %
                                
                                
                                142
                                %Selling,
      general and administrative expenses
                                
                                
                                2,422,000
                                
                                
                                
                                3,681,000
                                
                                
                                
                                905,000
                                
                                
                                
                                -34
                                %
                                
                                
                                307
                                %Impairment
      of goodwill
                                
                                
                                -
                                
                                
                                
                                25,445,000
                                
                                
                                
                                -
                                
                                
                                
                                -100
                                %
                                
                                
                                N/AImpairment
      of intangible assets
                                
                                
                                -
                                
                                
                                
                                7,687,000
                                
                                
                                
                                -
                                
                                
                                
                                -100
                                %
                                
                                
                                N/ADepreciation
      and amortization
                                
                                
                                1,179,000
                                
                                
                                
                                3,173,000
                                
                                
                                
                                1,229,000
                                
                                
                                
                                -63
                                %
                                
                                
                                158
                                %Operating
      income (loss)
                                
                                $
                                16,000
                                
                                
                                $
                                (35,833,000
                                )
                                
                                $
                                (694,000
                                )
                                
                                
                                100
                                %
                                
                                
                                -5063
                                %Operating
      margin
                                
                                
                                0
                                %
                                
                                
                                -325
                                %
                                
                                
                                -16
                                %
                                
                                
                                100
                                %
                                
                                
                                -1905
                                %





Exhibit
Merchandising offers exhibit and theatrical producers the opportunity for
additional revenue streams while adding the retail expertise required to manage
the operations, thereby leveraging the use of EM’s expertise and knowledge in
the specialized retail world. Exhibitors receive a simple royalty payment each
period with no other expense to the producer.


35





Revenues





EM
provides retail specialty stores for touring museum exhibitions and touring
theatrical productions. EM provides a complete turnkey retail store with
commercially-available and extensive custom-branded product for sale. It
operates the stores in spaced rented in conjunction with the exhibit. EM earns
its revenues from the management of retail outlets associated with the sale of
merchandise related to touring exhibits, which is primarily derived from
“Tutankhamun and The Golden Age of the Pharaohs” and “Tutankhamun the Golden
King and the Great Pharaohs.” EM is subject to revenue fluctuations as a result
of the exhibits that it represents moving from one location to another. Moving
an exhibit from one location to another generally results in the exhibit being
closed from four to six weeks. The length of time an exhibit is closed is
dependent upon the type of exhibit, the distance the exhibit is to be shipped,
as well as any special needs that may be required in re-setting the exhibit.
“Tutankhamun and The Golden Age of the Pharaohs” and “Tutankhamun the Golden
King and the Great Pharaohs” are currently booked in museums through July 2011
and December 2012, respectively. During the years ended December 31, 2009 and
2008, EM generated $9.1 million and $11.0 million in revenues, respectively. The
$1.9 million decline in revenues during the year ended December 31, 2009 is due
to three reasons. The first reason is that despite an overall 6% increase in
visitor attendance at the exhibits supported by EM, there was a 22% decline in
revenues per attendee as revenues per attendee in 2009 declined to $4.95 per
attendee from $6.36 per attendee in 2008. Management believes this decline in
revenues per attendee is due to the generally poor economic conditions in the
United States. The second reason is the exhibit, “Tutankhamun and The Golden Age
of the Pharaohs” taking 45 days to move from Dallas to San Francisco which
caused the exhibit to be closed for approximately 15 additional days as compared
to 2008. Lastly, a competing store was established at one of the exhibit
locations. For the year ended December 31, 2008 revenues from our Exhibit
Merchandising operation were $11.0 million or $917,000 per month as compared to
$4.3 million or $860,000 per month for the five months of operation from August
8, 2007, the acquisition date, to December 31, 2007.




Direct Operating
Expenses





EM’s
operating expenses include payroll and related costs, rents, and cost of goods
sold. Direct operating expenses for the years ended December 31, 2009, 2008, and
2007 were $5.5 million or 60% of revenues, $6.9 million or 62% of revenues, and
$2.8 million or 66% of revenues, respectively.


36





Selling,
Marketing and Administrative Expenses





EM’s
selling, marketing and administrative expenses include advertising and
promotional costs related to its business activities, as well as the segment
cost of management. EM’s selling, marketing and administrative expenses for the
twelve months ended December 31, 2009, 2008, and 2007 were $2.4 million or 27%
of revenues, $3.7 million or 33% of revenues, and $905,000 or 21% of
revenues.  The higher selling, marketing and administrative expenses
incurred during 2008 are reflective of legal fees associated with the
establishment of the foreign subsidiaries and the associated cost of housing,
travel and transportation. In the first three quarters of 2009, the exhibits for
which EM provided merchandising services were all domestic shows, whereas in
2008, all of the shows were located abroad.





Goodwill
and Intangible Asset Impairment





There
were no impairments of goodwill or intangible assets for the years ended
December 31, 2009 and 2007. At December 31, 2008, as part of the annual review
of goodwill and intangible assets, management determined an impairment of
goodwill and intangible assets had occurred. As a result, in 2008, Tix’s
management recorded impairment charges to goodwill and intangible assets of
$25.4 million and $7.7 million, respectively. Once an impairment of goodwill or
other intangible assets has been recorded, it cannot be reversed. There can be
no assurance that future goodwill impairments will not occur.





Live
Entertainment:





Our
Live Entertainment segment operating results were as follows:





Segment
Reporting – Live Entertainment





% Change
                                                
                                                
                                                % ChangeYear Ended December 31,
                                                
                                                
                                                2009 vs.
                                                
                                                
                                                2009 vs.2009
                                                
                                                
                                                2008
                                                
                                                
                                                2007
                                                
                                                
                                                2008
                                                
                                                
                                                2008Revenue
                                                
                                                $
                                                54,455,000
                                                
                                                
                                                $
                                                44,563,000
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                
                                                22
                                                %
                                                
                                                
                                                N/AOperating
      Expenses:Direct
      operating expenses
                                                
                                                
                                                48,475,000
                                                
                                                
                                                
                                                36,150,000
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                34
                                                %
                                                
                                                
                                                N/ASelling,
      general and administrative expenses
                                                
                                                
                                                4,948,000
                                                
                                                
                                                
                                                5,884,000
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -16
                                                %
                                                
                                                
                                                N/ADepreciation
      and amortization
                                                
                                                
                                                790,000
                                                
                                                
                                                
                                                916,000
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -14
                                                %
                                                
                                                
                                                N/AOperating
      income
                                                
                                                
                                                242,000
                                                
                                                
                                                
                                                1,613,000
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -85
                                                %
                                                
                                                
                                                N/AOperating
      margin
                                                
                                                
                                                0
                                                %
                                                
                                                
                                                4
                                                %
                                                
                                                
                                                N/A
                                                
                                                
                                                
                                                -88
                                                %
                                                
                                                
                                                N/A





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





Revenues





During
the years ended December 31, 2009 and 2008, revenues from our Live Entertainment
operations were $54.5 million and $44.6 million, respectively. The $9.9 million
increase in revenues was due to several shows being presented in arenas where
ticket prices and number of attendees are greater than the community theaters,
where many of our shows generally play. Although the overall number of show
performances decreased in 2009 to 1,045 as compared to 1,076 show performances
in 2008, there was an increase in show dates for the shows that played in the
arenas. These shows that played in arenas had 112 show performances in 2009 as
compared to 33 show performances in 2008, which led to a $9.9 million increase
in revenues.


37


Revenues
from live entertainment are a function of a number of elements: revenue is a
direct reflection of tickets sold times ticket prices plus ancillary revenue
streams including sponsorships and revenues generated through premium ticketing
opportunities.  In instances where the Company acts as the primary obligor
with suppliers, assumes credit risk, directs the pricing of the tickets and
purchases the advertising, the Company records these revenues at gross. In other
instances where we only receive a fee and are not the principal obligors to
vendors, we record these revenues at net. It is management’s belief that this is
consistent with the authoritative guidance provided by the Financial Accounting
Standards Board. Revenues from our Live Entertainment operations are seasonal
with the first and fourth quarters being traditionally the
strongest.




During
2009, our Live Entertainment segment had several shows that represented
approximately 10% of its revenues. Shows that represented approximately 10% of
our revenues were “Walking with Dinosaurs,” and “Mannheim
Steamroller.”





Direct
Operating Expenses





During
the years ended December 31, 2009 and 2008, direct operating expense was $48.5
million or 89% of revenues and $36.1 million or 81% of revenues, respectively.
The higher direct operating cost as a percentage of revenues reflects the
greater number of tickets that have been discounted in 2009 as compared to 2008
as a strategic response to lower demand resulting from the poor economic
climate. Expenses that would be characterized as direct operating expenses
include the guarantees, profit sharing and royalties paid directly to the
touring productions, direct expenses of the theater which include staffing, rent
and box office charges, marketing costs and production costs which include
equipment rentals, stagehands and the cost of our production and settlement
manager to attend the production. Live Entertainment productions typically have
sharing arrangements whereby the artist receives an increasingly higher share of
the operating income as revenues increase, therefore, significant increases in
presentation revenue do not typically result in comparable increases in
operating income as much of that goes to the production at hand. On the other
hand, significant decreases in presentation revenue do have a comparable impact
on operating income as the largest burden of risk in these presentations lies
with the promoter. In instances where the Company acts as the primary obligor
with suppliers, assumes credit risk, directs the pricing of the tickets and
purchases the advertising, the Company records these expenses at
gross.





Selling,
Marketing and Administrative Expenses





Live
Entertainment’s selling, marketing and administrative expenses include
advertising and promotional costs related to its business activities, as well as
the segment cost of management. Live Entertainment’s administrative expenses for
the years ended December 31, 2009 and 2008, were $4.9 million or 9% of revenues,
and $5.9 million or 13% of revenues, respectively. The decline in selling,
marketing, and administrative expenses was due to Management’s decision to
reduce costs to maximize profitability.





Depreciation
and Amortization





Depreciation
and amortization expense incurred during the years ended December 31, 2009 and
2008 was $790,000 and $916,000, respectively, and primarily relates to
amortization of the intangible assets that resulted from the acquisitions of
Magic and NewSpace. We expect to incur a similar level of depreciation and
amortization for 2010.




Contractual
Obligations and Commitments





At
December 31, 2009, the Company did not have any material commitments for capital
expenditures. The Company’s principal commitments for the next five fiscal years
consisted of contractual commitments as summarized below.





Payments due by Fiscal Years Ending December 31,Total
                            
                            
                            2010
                            
                            
                            2011
                            
                            
                            2012
                            
                            
                            2013
                            
                            
                            2014Debt
      obligations (1)
                            
                            $
                            1,000,000
                            
                            
                            $
                            1,000,000
                            
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -Capital
      lease obligations
                            
                            
                            87,000
                            
                            
                            
                            67,000
                            
                            
                            
                            9,000
                            
                            
                            
                            8,000
                            
                            
                            
                            3,000
                            
                            
                            
                            -Operating
      lease obligations (2)
                            
                            
                            12,200,000
                            
                            
                            
                            3,506,000
                            
                            
                            
                            3,030,000
                            
                            
                            
                            2,582,000
                            
                            
                            
                            1,512,000
                            
                            
                            
                            1,570,000Total
      contractual cash obligations
                            
                            $
                            13,287,000
                            
                            
                            $
                            4,573,000
                            
                            
                            $
                            3,039,000
                            
                            
                            $
                            2,590,000
                            
                            
                            $
                            1,515,000
                            
                            
                            $
                            1,570,000





(1)
            Includes
      a $1.0 million promissory note related to the acquisition of All Access in
      March 2010.


(2)
            Includes
      $2.9 million in operating lease obligations assumed related to the
      acquisition of All Access in March
2010.





Off-Balance
Sheet Arrangements:





At
December 31, 2009, the Company did not have any transactions, obligations or
relationships that could be considered off-balance sheet
arrangements.


38





ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Our
exposure to market risk is limited primarily to interest income sensitivity,
which is affected by changes in the general level of U.S. interest rates,
particularly because a significant portion of our investments are in short-term
debt securities issued by the U.S. government and institutional money market
funds. The primary objective of our investment activities is to preserve
principal. Due to the nature of our short-term investments, we believe that we
are not subject to any material market risk exposure. We do not have any
derivative financial instruments or foreign currency instruments. If interest
rates had varied by 10% in the year ended December 31, 2009, it would not have
had a material effect on our results of operations or cash flows for that
period.




ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The
consolidated financial statements are listed at the "Index to Consolidated
Financial Statements" elsewhere in this document.




ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





Not
applicable.




Item 9A.  CONTROLS AND
PROCEDURES





Disclosure Controls and
Procedures





We
maintain disclosure controls and procedures that are designed to ensure that the
information disclosed in the reports we file with the Securities and Exchange
Commission under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.





Management,
including our Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our disclosure controls and procedures, as of December 31,
2009, in accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act
to ensure the information required to be disclosed by us in the reports that we
file or submit under the Exchange Act, as amended is recorded, processed,
summarized and reported within the time period specified in SEC rules and
forms.





Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls, and procedures or internal
controls will prevent all possible error and fraud.  Our disclosure
controls and procedures are, however, designed to provide reasonable assurance
of achieving their objectives, and our Chief Executive Officer and Chief
Financial Officer have concluded that our financial controls and procedures are
effective at that reasonable assurance level.





Management’s
Report on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the Exchange
Act. Our management conducted an evaluation of the effectiveness of our internal
controls over financial reporting based on the framework in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). Based on its evaluation, our management
concluded that our internal control over financial reporting was effective as of
December 31, 2009.





Our
independent registered public accounting firm, Weinberg & Company, P.A., who
also audited our consolidated financial statements, independently assessed the
effectiveness of our internal control over financial reporting as of December
31, 2009, as stated in their report which is included in this Annual
Report.





Changes
in Internal Control Over Financial Reporting




There has
been no change in our internal control over financial reporting during the
fourth quarter of 2009 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





ITEM
9B. OTHER INFORMATION





None.


39





PART
III.





ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE





The
following table and text set forth the names and ages of all directors and
executive officers of the Company as of February 15, 2010. The Board of
Directors is comprised of only one class. All of the directors will serve until
the next annual meeting of stockholders and until their successors are elected
and qualified, or until their earlier death, retirement, resignation or removal.
There are no family relationships among directors and executive officers. There
are no arrangements or understandings between any two or more of the Company's
directors or executive officers.





As a
condition to the Closing, of the Company’s acquisition of Exhibit Merchandising,
LLC (EM) the Company entered into a Voting Agreement with Joseph Marsh, a former
owner of EM pursuant to which, for a period of four years, Mr. Marsh
granted the Company, through its board of directors, the right to vote all of
his shares, including the shares acquired pursuant to the Asset Purchase
Agreement. As of the date hereof, such shares total 4,555,000.





Also
provided herein is a brief description of the business experience of each
director and executive officer during the past five years and an indication of
directorships held by each director in other companies subject to the reporting
requirements under the Federal securities laws.





Name
                      
                      Age
                      
                      Position(s)Mitch
      Francis
                      
                      54
                      
                      Chairman
      of the Board of Directors, President, Chief Executive
    OfficerKimberly
      Simon
                      
                      42
                      
                      Chief
      Operating OfficerMatthew
      Natalizio
                      
                      54
                      
                      Chief
      Financial OfficerJoseph
      Marsh
                      
                      57
                      
                      Director,
      Co-CEO of Tix Productions, Inc.Benjamin
      Frankel
                      
                      73
                      
                      DirectorNorman
      Feirstein
                      
                      60
                      
                      DirectorSam
      Georges
                      
                      63
                      
                      DirectorAndrew
      Pells
                      
                      53
                      
                      Director





None of
the Company's directors or executive officers has, during the past ten years,
(1) had any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time; (2) been convicted in a
criminal proceeding or subject to a pending criminal proceeding; (3) been
subject to any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities, futures, commodities or banking activities; or (4) been
found by a court of competent jurisdiction (in a civil action), the Securities
and Exchange Commission or the Commodity Futures Trading Commission, to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated.





Biographies
of Directors and Executive Officers:





Mitch
Francis founded Tix Corporation in 1993 and has been the Chairman of the Board
of Directors and Chief Executive Officer since its inception. Mr. Francis is an
innovative leader whose inventions have yielded two United States patents with
another three inventions patent- pending. All of these inventions have
contributed to the unique businesses and success of Tix Corporation. Mr. Francis
was one of the first real estate majors in the United States at the University
of Colorado and developed numerous shopping centers, office buildings and
condominium projects. His real estate expertise has been a valuable asset to the
Company in identifying and negotiating its retail facilities which have been a
significant element of Tix Corporation’s success.





Kimberly
Simon has been employed by the Company for over twelve years. Ms. Simon started
her career with the Company in September 1997 as the general manager of the
Company's Las Vegas ride simulator facility. Effective March 1, 2007, Ms. Simon
was promoted to Chief Operating Officer and is responsible for all day-to-day
operations. Prior to joining the Company, Ms. Simon gained managerial experience
with several national companies. Ms. Simon graduated from Northern Illinois
University with a Bachelor’s Degree.





Matthew
Natalizio has been Chief Financial Officer of the Company since September 2007.
Prior to joining us, Mr. Natalizio was the CFO of CytRx Corporation from July
2004 to September 2007, and from November 2002 to December 2003, he was
President and General Manager of a privately held furniture manufacturing
company. Prior to that, from January 2000 to October 2002, he was Chief
Financial Officer of Qualstar Corporation, a publicly traded designer and
manufacturer of data storage devices. Mr. Natalizio was Vice President of
Finance and Treasurer from 1993 until 1998, and as Vice President, Operations
from 1998 through 1999, of Superior National Insurance Group, Inc., a publicly
traded insurance company. Mr. Natalizio is a CPA (inactive) and was a Senior
Manager at KPMG. He earned his Bachelor of Arts degree in Economics from the
University of California, Los Angeles.


40





Joseph
Marsh was elected as a director of the Company effective July 8, 2009. Mr. Marsh
has produced and promoted concerts, theatricals and family shows worldwide for
the last 20 years. Currently, Mr. Marsh is an investor in the exhibits
of “King Tutankhamun” and  “Diana: a Celebration”, a showcase of the life
and works of Diana, Princess of Wales. Mr. Marsh continues to produce
David Copperfield worldwide and is active in the national tour of Lord of the Dance. Mr.
Marsh is currently involved in the production of shows throughout North America
including The Magic of David Copperfield, Michael Flatley’s Lord of the Dance,
Jesus Christ Superstar, Bob the Builder Live, Mannheim Steamroller, and 101
Dalmatians The Musical. Mr. Marsh is also a partner in the Stonebridge
project in Cleveland, Ohio, and his management company owns and manages over
200,000 square feet of commercial property, 1,000 acres of developable land and
two large housing developments.





Benjamin
Frankel has been a director of the Company since March 17, 1995. Mr. Frankel is
a certified public accountant and was a partner in the accounting firm of
Frankel, Lodgen, Lacher, Golditch, Sardi & Howard and its predecessors from
1965 through 2005. In 2006, Mr. Frankel left his former firm and formed Frankel,
LoPresti & Co., an accountancy corporation.





Norman
Feirstein has been a director of the Company since March 17, 1995. Mr. Feirstein
practiced law as a sole practitioner from 1978 until July 1993. Mr. Feirstein
currently practices law as the Law Offices of Norman Feirstein.





Sam
Georges joined the Company as a director in February 2007. Mr. Georges is the
Chief Executive Officer and President of various entities affiliated with
Anthony Robbins, and has worked with Mr. Robbins since 1993. Mr. Georges also
serves as a director of many of the same privately-held companies affiliated
with Anthony Robbins.




Andrew
Pells was elected as a Director of the Company effective July 2, 2007. From 1990
to December 2003, Mr. Pells served as an executive of Hotels.com and its
predecessors in various management capacities. From January 1, 2004 to the
present, Mr. Pells has been an independent consultant to the Internet/Travel
Industry.




Compliance
with Section 16(a) of the Securities Exchange Act of 1934, as
amended:





Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's
directors, executive officers, and persons who own more than 10% of a registered
class of the Company's equity securities to file various reports with the
Securities and Exchange Commission concerning their holdings of, and
transactions in, securities of the Company. Copies of these filings must be
furnished to the Company.




To the
Company’s knowledge based solely on its review of the copies of the Section
16(a) reports furnished to the Company and written representations to the
Company that no other reports were required, the Company believes that all
individual filing requirements applicable to the Company's directors, executive
officers, and persons who own more than 10% of a registered class of the
Company’s equity securities complied with Section 16(a) during
2009.





Family
Relationships among Directors and Executive Officers:





There
were no family relationships among directors and executive officers during the
years ended December 31, 2009, 2008, and 2007.





Indebtedness
of Directors and Executive Officers:





None of
the Company's directors or executive officers or their respective associates or
affiliates is indebted to the Company.





Legal
Proceedings with Affiliates:





The
Company is not involved in any legal proceedings with any director, officer,
affiliate or stockholder of the Company.





Code of
Ethics:





The
Company has adopted a written Code of Ethics that applies to its senior
management. A copy of the Company's Code of Ethics, executed by the Company's
Chief Executive Officer and Chief Financial Officer, has been filed as an
amended exhibit to this Annual Report on Form 10-K. A copy of the Company's Code
of Ethics is available on the Company’s website http://www.tixcorp.com
or alternatively to any shareholder by addressing a request to the attention of
the Secretary of the Company and mailing such request to the Company's corporate
offices. Any amendment to the Code of Ethics or any waiver of the Code of Ethics
will be disclosed promptly following the date of such amendment or waiver
pursuant to a filing under a Current Report on Form 8-K with the Securities and
Exchange Commission.





Changes
in Procedures to Nominate Directors:





Since the
date of the Company's last disclosures pursuant to Item 7(d)(s)(ii)(G) of
Schedule 14A of the Securities Exchange Act of 1934, as amended, there have been
no material changes to the procedures by which security holders may recommend
nominees to the Company's Board of Directors.


41





Meetings
and Committees of the Board of Directors:





During
the year ended December 31, 2009, the Company’s Board of Directors met on three
occasions. Additional board actions were taken by unanimous written
consent.





The
Company has a Nomination and Governance Committee of the Board of Directors. The
purpose of the Nomination and Governance Committee of the Board of Directors of
Tix Corporation is to assist the Board in discharging its duties relating to
corporate governance and the composition and evaluation of the Board.  The
members of the Committee are Messrs. Pells, Feirstein and Georges, none of
whom is an employee of the Company. Mr. Pells serves as the Chairman of the
Committee. Each of the members is an “independent director” under the NASDAQ and
Exchange Act rules.





The
Compensation Committee of the Board of Directors consists of three directors of
the Company, Andy Pells, Norman Feirstein and Sam Georges, none of whom is an
employee of the Company. Mr. Feirstein serves as the Chairman of the Committee.
The Compensation Committee reviews the performance of the executive officers of
the Company and reviews the compensation programs and agreements for key
employees, including salary and bonus levels.  Each of the members is an
“independent director” under the NASDAQ rules.





The Audit
Committee of the Board of Directors consists of Andy Pells, Norman Feirstein and
Sam Georges, none of whom is an employee of the Company. Mr. Georges serves as
the Chairman of the Committee. The audit committee reviews, acts on, and reports
to the Board of Directors with respect to various auditing and accounting
matters, including the selection of the Company's independent public
accountants, the scope of the annual audits, the nature of non-audit services,
the fees to be paid to the independent public accountants, the performance of
the independent public accountants, and the accounting practices of the
Company.  Each of the members is an “independent director” under the NASDAQ
rules.  The Board of Directors has determined that Mr. Georges is an
audit committee financial expert as that term is defined in Item 407(d)(5)
of the Exchange Act.





ITEM
11. EXECUTIVE COMPENSATION





Overview of
Executive Compensation Program





The
Compensation Committee of our board of directors has responsibility for
establishing, implementing and monitoring our executive compensation program
philosophy and practices. The Compensation Committee seeks to ensure that the
total compensation paid to our named executive officers is fair, reasonable and
competitive. Generally, the types of compensation and benefits provided to the
named executive officers are similar to those provided to our other
officers.





Throughout
this Annual Report, the individuals included in the Summary Compensation Table
are referred to as the “named executive officers.”





Compensation
Philosophy and Objectives





The
components of our executive compensation consist of salary, annual cash bonuses
awarded based on the Compensation Committee’s subjective assessment of each
individual executive’s job performance during the past year, stock option grants
to provide executives with longer-term incentives, and occasional special
compensation awards (either cash or stock options) to reward extraordinary
efforts or results.





The
Compensation Committee believes that an effective executive compensation program
should provide base annual compensation that is reasonable in relation to an
individual executive’s job responsibilities and reward the achievement of both
annual and long-term strategic goals of our Company. The Compensation Committee
uses annual and other periodic cash bonuses to reward an officer’s achievement
of specific goals and employee stock options as a retention tool and as a means
to align the executive’s long-term interests with those of our stockholders,
with the ultimate objective of improving stockholder value. The Compensation
Committee evaluates both performance and compensation to maintain our company’s
ability to attract and retain excellent employees in key positions and to assure
that compensation provided to key employees remains competitive relative to the
compensation paid to similarly situated executives of comparable companies. To
that end, the Compensation Committee believes executive compensation packages
provided by us to our named executive officers should include both cash
compensation and stock options.





Because
of the size of our Company, the small number of executive officers in our
Company, and our company’s financial priorities, the Compensation Committee has
decided not to implement or offer any pension benefits, deferred compensation
plans, or other similar plans for our named executive officers.





Role of Executive
Officers in Compensation Decisions





The
Compensation Committee makes all compensation decisions for the named executive
officers and approves recommendations regarding equity awards to all of our
officers. Decisions regarding the non-equity compensation of our other officers
are made by our President and Chief Executive Officer.


42





The
Compensation Committee and the President and Chief Executive Officer annually
review the performance of each named executive officer (other than the President
and Chief Executive Officer, whose performance is reviewed only by the
Compensation Committee). The conclusions reached and recommendations based on
these reviews with respect to salary adjustments and annual award amounts, are
presented to the Compensation Committee. The Compensation Committee can exercise
its discretion in modifying any recommended adjustments or awards to
executives.





Setting Executive
Compensation





Based on
the foregoing objectives, the Compensation Committee has structured the
Company’s annual cash and incentive-based cash and non-cash executive
compensation to motivate our named executives to achieve the business goals set
by the Company, to reward the executives for achieving such goals, and to retain
the executives. In doing so, the Compensation Committee historically has not
employed outside compensation consultants. The Compensation Committee utilizes
data to set compensation for our executive officers at levels targeted at or
around a range of compensation amounts provided to executives at comparable
companies considering, for each individual, their individual experience level
related to their position with us. There is no pre-established policy or target
for the allocation between cash and non-cash incentive
compensation.


2009 Executive
Compensation Components
 
 For 2009,
the principal components of compensation for the named executive officers
were:
 
 •
              base
      salary;
 
 •
              annual
      bonuses; and
 
 •
              equity
      incentive compensation.




Base
Salary





The
Company provides named executive officers and other employees with base salary
to compensate them for services rendered during the year. Base salary ranges for
the named executive officers and are determined for each named executive officer
based on his position and responsibility.





During
its review of base salaries for executives, the Compensation Committee primarily
considers:




•
              the
      negotiated terms of each executive employment
  agreement;
 
 •
              internal
      review of the executive’s compensation, both individually and relative to
      other named executive officers; and
 
 •
              individual
      performance of the
executive.
  Salary
levels are typically considered annually as part of the Company’s performance
review process, as well as upon a change in job responsibility. Merit-based
increases to salaries are based on the Compensation Committee’s assessment of
the individual’s performance. Base salaries for the named executive officers in
2009 were increased from the base salaries in effect during the prior year by
amounts ranging from 8% to 40%.




Annual and
Special Bonuses





The
Compensation Committee has not established an incentive compensation program
with fixed performance targets. Because we do not generate significant profits,
the Compensation Committee bases its discretionary compensation awards on the
achievement of milestones, effective fund-raising efforts, and effective
management of personnel and capital resources, among other criteria. During
2009, a bonus of $50,000 was paid to each of the named Executive
Officers.





Equity Incentive
Compensation





As
indicated above, the Compensation Committee also aims to encourage the Company’s
executive officers to focus on long-term company performance by allocating to
them stock options that vest over a period of several years. In 2009, the
Compensation Committee granted to Mr. Francis a non-qualified common stock
option to purchase 150,000 shares of our common stock at a price of $1.28 per
share, which equaled the closing market price on the date of grant. The common
stock option vests annually over three years, provided that Mr. Francis
continues in our employ. In 2007, the Compensation Committee granted to
Ms. Simon a nonqualified common stock option to purchase 300,000 shares of
our common stock at a price of $7.00 per share, which equaled the closing market
price on the date of grant. The common stock option vests annually over three
years, provided that Ms. Simon continues in our employ. In 2007, in
connection with the hiring of Matthew Natalizio as Chief Financial Officer, the
Compensation Committee granted to Mr. Natalizio common stock options to purchase
340,000 shares of our common stock at a price of $7.00 per share, which equaled
the closing market price on the date of grant. In addition, the Compensation
Committee also granted to other executives common stock options that had an
exercise price equal to the closing market price on the date of grant, and also
vest annually over three years, provided that such executives remain in our
employ through such annual vesting periods.


43





Retirement Plans,
Perquisites and Other Personal Benefits





We have
adopted a tax-qualified employee savings and retirement plan, the 401(k) Plan,
for eligible United States employees, including our named executive officers.
Eligible employees may elect to defer a percentage of their eligible
compensation in the 401(k) Plan, subject to the statutorily prescribed annual
limit. We may make matching contributions on behalf of all participants in the
401(k) Plan in an amount determined by our board of directors. Matching and
profit-sharing contributions, if any, as well as all other contributions are at
all times fully vested. We intend the 401(k) Plan, and the accompanying trust,
to qualify under Sections 401(k) and 501 of the Internal Revenue Code so that
contributions by employees to the 401(k) Plan, and income earned (if any) on
plan contributions, are not taxable to employees until withdrawn from the 401(k)
Plan, and so that we will be able to deduct our contributions, if any, when
made. The trustee under the 401(k) Plan, at the direction of each participant,
may invest the assets of the 401(k) Plan in any of a number of investment
options.





We do not
provide any of our executive officers with any other perquisites or personal
benefits (what about reimbursement to Mitch and Kim for tax payments on
perquisites, does this need to be disclosed?- it’s not mentioned in the
employment agreements), other than benefits that we offer Mr. Francis and
Ms. Simon in their employment agreements. As required by Mr. Francis’ employment
agreement, during 2009 we paid insurance premiums with respect to life insurance
policies for Mr. Francis which had a face value of approximately
$5.3 million as of December 31, 2009 and under which Mr. Francis’
designee is the beneficiary. In addition, Mr. Francis receives a car allowance,
car insurance, tax preparation, long term disability and health insurance for
his spouse. As required by Ms. Simon’s employment agreement, during 2009, we
paid a car allowance, car insurance, tax preparation, and medical insurance
premiums.





Ownership
Guidelines





The
Compensation Committee has no requirement that each named executive officer
maintains a minimum ownership interest in our company.


Our
long-term incentive compensation consists solely of periodic grants of stock
options to our named executive officers. The stock option program:





•
              links
      the creation of stockholder value with executive
    compensation;





•
              provides
      increased equity ownership by
executives;





•
              functions
      as a retention tool, because of the vesting features included in all
      options granted by the Compensation Committee;
  and





•
              maintains
      competitive levels of total
compensation.





We
normally grant stock options to new executive officers when they join our
company based upon their position with us and their relevant prior experience.
The options granted by the Compensation Committee generally vest annually over
the first three years of the ten-year option term. Vesting and exercise rights
cease upon termination of employment (or, in the case of exercise rights,
90 days thereafter), except in the case of death (subject to a one-year
limitation), disability or retirement. Prior to the exercise of an option, the
holder has no rights as a stockholder with respect to the shares subject to such
option, including voting rights and the right to receive dividends or dividend
equivalents. In addition to the initial option grants, our Compensation
Committee may grant additional options to retain our executives, and reward or
provide incentive for the achievement of corporate goals and strong individual
performance. Options are granted based on a combination of individual
contributions to our company and on general corporate achievements, which may
include the attainment of product development milestones and attainment of other
annual corporate goals and objectives. On an annual basis, the Compensation
Committee assesses the appropriate individual and corporate goals for our new
executives and provides additional option grants based upon the achievement by
the new executives of both individual and corporate goals. We expect that we
will continue to provide new employees with initial option grants in the future
to provide long-term compensation incentives and will continue to rely on
performance-based and retention grants to provide additional incentives for
current employees. Additionally, in the future, the Compensation Committee may
consider awarding additional or alternative forms of equity incentives, such as
grants of restricted stock, restricted stock units and other performance-based
awards.





It is our
policy to award stock options at an exercise price equal to The NASDAQ Capital
Market’s closing price of our common stock on the date of the grant. In certain
limited circumstances, the Compensation Committee may grant options to an
executive at an exercise price in excess of the closing price of the common
stock on the grant date. The Compensation Committee has never granted options
with an exercise price that is less than the closing price of our common stock
on the grant date, nor has it granted options which are priced on a date other
than the grant date. For purposes of determining the exercise price of stock
options, the grant date is deemed to be the first day of employment for newly
hired employees, or the date on which the Compensation Committee or the Chief
Executive Officer, as applicable, approves the stock option grant to existing
employees.





We have
no program, practice or plan to grant stock options to our executive officers,
including new executive officers, in coordination with the release of material
nonpublic information. We also have not timed the release of material nonpublic
information for the purpose of affecting the value of stock options or other
compensation to our executive officers, and we have no plan to do so. We have no
policy regarding the adjustment or recovery of stock option awards in connection
with the restatement of our financial statements, as our stock option awards
have not been tied to the achievement of specific financial
goals.


44





Tax and
Accounting Implications





Deductibility of Executive
Compensation





As part
of its role, the Compensation Committee reviews and considers the deductibility
of executive compensation under Section 162(m) of the Internal Revenue Code,
which provides that corporations may not deduct compensation of more than
$1,000,000 that is paid to certain individuals. We believe that compensation
paid to our executive officers generally is fully deductible for federal income
tax purposes.





Accounting for Share-Based
Compensation





Beginning
on January 1, 2006, we began accounting for share-based compensation in
accordance with the authoritative guidance of the Financial Accounting Standards
Board. This accounting treatment has not significantly affected our compensation
decisions. The Compensation Committee takes into consideration the tax
consequences of compensation to the named executive officers, but tax
considerations are not a significant part of the company’s compensation
policy.





Compensation Committee Interlocks and
Insider Participation in Compensation Decisions





There are
no “interlocks,” as defined by the SEC, with respect to any member of the
Compensation Committee. Messrs. Feirstein, Georges, and Pells served as the
members of the Compensation Committee during 2009.





Compensation Committee
Report





The
Compensation Committee has reviewed and discussed with management the
“Compensation Discussion and Analysis” required by Item 402(b) of
Regulation S-K and, based on such review and discussions, has recommended
to our board of directors that the foregoing “Compensation Discussion and
Analysis” be included in this Annual Report. Norman Feirstein, Sam Georges, and
Andy Pells served as the members of the Compensation Committee during
2009.





The
following table and text sets forth information with respect to the compensation
paid to the Company’s senior executive officers during the years ended
December 31, 2009, 2008, and 2007. Except as listed below, there are no
bonuses, other annual compensation, restricted stock awards or stock
options/SAR’s, or any other compensation paid to the named executive
officers.





SUMMARY COMPENSATION
TABLE





Year
                                                            Ended
                                                          
                                                          Base
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          Stock
                                                          
                                                          
                                                          Option
                                                          
                                                          
                                                          Other
                                                          
                                                          
                                                          TotalDecember
                                                          
                                                          Salary
                                                          
                                                          
                                                          Bonus
                                                          
                                                          
                                                          Awards
                                                          
                                                          
                                                          Awards
                                                          
                                                          
                                                          Compensation
                                                          
                                                          
                                                          CompensationName and Principal Position
                                                          
                                                          31,
                                                          
                                                          $
                                                          
                                                          
                                                          $
                                                          
                                                          
                                                          $
                                                          
                                                          
                                                          $
                                                          
                                                          
                                                          $
                                                          
                                                          
                                                          $Mitch
      Francis
                                                          
                                                          2009
                                                          
                                                          
                                                          425,000
                                                          
                                                          
                                                          
                                                          50,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          158,000
                                                          (1)
                                                          
                                                          
                                                          81,000
                                                          (2)
                                                          
                                                          
                                                          714,000Chief
      Executive Officer,
                                                          
                                                          2008
                                                          
                                                          
                                                          297,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          54,000
                                                          (2)
                                                          
                                                          
                                                          351,000Chairman
      of the Board
                                                          
                                                          2007
                                                          
                                                          
                                                          297,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          39,000
                                                          (2)
                                                          
                                                          
                                                          336,000Kimberly
      Simon
                                                          
                                                          2009
                                                          
                                                          
                                                          249,000
                                                          
                                                          
                                                          
                                                          50,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          28,000
                                                          (4)
                                                          
                                                          
                                                          327,000Chief
      Operating Officer
                                                          
                                                          2008
                                                          
                                                          
                                                          243,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          17,000
                                                          (4)
                                                          
                                                          
                                                          260,0002007
                                                          
                                                          
                                                          225,000
                                                          
                                                          
                                                          
                                                          21,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,600,000
                                                          (3)
                                                          
                                                          
                                                          10,000
                                                          (4)
                                                          
                                                          
                                                          1,856,000Matthew
      Natalizio
                                                          
                                                          2009
                                                          
                                                          
                                                          238,000
                                                          
                                                          
                                                          
                                                          50,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          288,000Chief
      Financial Officer
                                                          
                                                          2008
                                                          
                                                          
                                                          215,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          215,0002007
                                                          
                                                          
                                                          62,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,600,000
                                                          (5)
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,662,000Lee
      Marshall
                                                          
                                                          2009
                                                          (6)
                                                          
                                                          321,000
                                                          
                                                          
                                                          
                                                          25,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          346,000Co-CEO
      Tix Productions Inc (TPI)
                                                          
                                                          2008
                                                          (7)
                                                          
                                                          250,000
                                                          
                                                          
                                                          
                                                          102,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          352,000Steve
      Boulay
                                                          
                                                          2009
                                                          (7)
                                                          
                                                          189,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          3,000
                                                          (7)
                                                          
                                                          
                                                          192,000Vice
      President, Marketing (TPI)
                                                          
                                                          2008
                                                          (7)
                                                          
                                                          149,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          3,000
                                                          (7)
                                                          
                                                          
                                                          152,000John
      Ballard
                                                          
                                                          2009
                                                          (7)
                                                          
                                                          189,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          5,000
                                                          (7)
                                                          
                                                          
                                                          194,000President,
      Tix Productions (TPI)
                                                          
                                                          2008
                                                          (7)
                                                          
                                                          149,000
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          4,000
                                                          (7)
                                                          
                                                          
                                                          153,000





45





(1) 
On March 1, 2009, the Company entered into a new written employment agreement
with Mr. Francis, in conjunction with the agreement the Compensation Committee
of the Company’s board of directors granted Mr. Francis a ten-year, nonqualified
stock option to purchase 150,000 shares of our common stock at a price of $1.28
per share. The options vest in three installments of 50,000 shares each on March
1, 2010, 2011 and 2012, subject to Mr. Francis remaining in the continuous
employ of the Company through such vesting dates. Upon termination of Mr.
Francis’ employment agreement for any reason other than “cause” (as defined),
any options not previously vested will immediately vest and be exercisable
for a period of one year from the date of termination. The aggregate fair value
of this common stock option at the grant date was $158,000, and was calculated
using the Black Scholes option pricing model. For a discussion on the
assumptions made in the valuation, refer to the Summary of Significant
Accounting Policies in the Notes to Consolidated Financial
Statements.





(2) 
In 2009, other compensation includes $4,000 of disability insurance premiums,
$20,000 of automobile expense, $12,000 of life insurance premiums, $2,000 for
personal tax consultation paid on behalf of Mr. Francis, $14,000 of company 401
(k) matching funds, and $29,000 in reimbursements for the payment of taxes. In
2008 this amount includes $8,000 of disability insurance premiums, $17,000 of
automobile expense, $11,000 of life insurance premiums, $4,000 for personal tax
consultation paid to or on behalf of Mr. Francis, and $11,000 of company 401(K)
matching funds. In 2007 this amount includes $11,000 of disability insurance
premiums, $18,000 of automobile expense, $7,000 of life insurance premiums and
$4,000 for personal tax consultation paid to or on behalf of Mr.
Francis.





(3) 
On September 27, 2007, the Company entered into a written employment agreement
with Kimberly Simon, in conjunction with the agreement the Compensation
Committee of the Company’s board of directors granted Ms. Simon a ten-year,
nonqualified stock option to purchase 300,000 shares of our common stock at a
price of $7.00 per share. The options vest in three installments of 100,000
shares each on September 1, 2008, 2009 and 2010, subject to Ms. Simon remaining
in the continuous employ of the Company through such vesting dates.  Upon
termination of Ms. Simon’s employment agreement for any reason other than
“cause” (as defined), any options not previously vested will immediately
vest and be exercisable for a period of one year from the date of termination.
The aggregate fair value of this common stock option at the grant date was $1.6
million, and was calculated using the Black Scholes option pricing model. For a
discussion on the assumptions made in the valuation, refer to the Summary of
Significant Accounting Policies in the Notes to Consolidated Financial
Statements.





(4) 
For 2009, other compensation includes $7,000 of automobile expense, $1,000 for
personal tax consultation paid on behalf of Ms. Simon, $12,000 of company 401
(k) matching funds, and $8,000 in reimbursements for the payment of taxes. For
2008, this amount includes $7,000 of automobile expense, $2,000 of medical
insurance premiums and $8,000 of Company 401(k) matching funds. For 2007, this
amount includes $7,000 of automobile expense, $2,000 of medical insurance
premiums and $1,000 for personal tax consultation paid to or on behalf of Ms.
Simon.





(5) In
conjunction with his employment in September 2007, Mr. Natalizio was granted a
ten-year, nonqualified option to purchase 340,000 shares of our common stock at
a price of $7.00 per share, which equaled the closing market price of our common
stock on the date Mr. Natalizio commenced service. The first 40,000 options
vested immediately and the remaining 300,000 stock options vest annually over a
three-year period, provided that Mr. Natalizio remains in our employ. The
aggregate fair value of this common stock option at the grant date was $1.8
million, and was calculated using the Black Scholes option pricing model. For a
discussion on the assumptions made in the valuation, refer to the Summary of
Significant Accounting Policies in the Notes to Consolidated Financial
Statements.





(6) 
In conjunction with the completion of the Merger with Magic Arts and
Entertainment, we entered into an employment agreement with Lee D. Marshall, a
founder of Magic, under which he will serve as the Co-Chief Executive Officer of
TPI. The employment agreement commenced on February 29, 2008 and will expire on
February 28, 2011, unless sooner terminated in accordance with the applicable
provisions of the employment agreement. Under the employment agreement, Mr.
Marshall is entitled to an annual salary of $300,000 that will increase by
$25,000 each year during the term of the agreement. Mr. Marshall also is
eligible to receive annual bonuses based upon TPI exceeding performance
milestones specified in his employment agreement. For 2009 and 2008, the Company
recorded $25,000 and $102,000, respectively, which was charged to operations as
general and administrative expense.




(7) In conjunction with the completion of
the Merger with NewSpace Entertainment, we entered into written employment
agreements with John Ballard and Steve Boulay, pursuant to which they serve as
Chief Operating Officer and Vice President - Marketing, respectively, at TPI.
The term of each of the employment agreements commenced on March 11, 2008, and
will expire on the third anniversary of such date, unless sooner terminated in
accordance with applicable provisions of the employment
agreements.




Mr.
Ballard and Mr. Boulay are entitled under their respective employment agreements
to an annual salary of $185,000. Each of Messrs. Ballard and Boulay are entitled
to increases in their annual salaries of at least 3% per annum. For 2008 the
salary amount represents salary from March 11, 2008 through December 31,
2008.  Other compensation represents the Company’s 401(K) contribution
match.





Grants of
Plan-Based Awards for Fiscal Year 2009:


46


The
following table details grants to our named executive officers during
2009:





Estimated Future Payouts
                                  
                                  
                                  All OtherUnder Non-Equity
                                  
                                  
                                  Option Awards:Incentive Plan Awards
                                  
                                  
                                  Number of
                                  
                                  
                                  Exercise
                                  
                                  
                                  Grant DateTarget
                                  
                                  
                                  Maximum
                                  
                                  
                                  Securities
                                  
                                  
                                  Price of
                                  
                                  
                                  Fair ValueGrant
                                  
                                  Bonus
                                  
                                  
                                  Bonus
                                  
                                  
                                  Underlying
                                  
                                  
                                  Option
                                  
                                  
                                  of OptionDate
                                  
                                  Payments
                                  
                                  
                                  Payments
                                  
                                  
                                  Options (1)
                                  
                                  
                                  Awards
                                  
                                  
                                  Awards (2)Mitch
      Francis
                                  
                                  4/3/2009
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  150,000
                                  
                                  
                                  $
                                  1.28
                                  
                                  
                                  $
                                  158,000





(1)
            The
      options vest in three installments of 50,000 shares each on March 1, 2010,
      2011 and 2012, subject to continued employment through such vesting
      dates.


(2)
            The
      aggregate fair value of this common stock option at the grant date was
      calculated using the Black Scholes option pricing model. For a discussion
      on the assumptions made in the valuation, refer to the Summary of
      Significant Accounting Policies in the Notes to Consolidated Financial
      Statements.





Stock
Option and Warrant Grants:




The
following table sets forth information as of December 31, 2009 concerning
unexercised options and warrants, unvested stock and equity incentive plan
awards for the executive officers named in the Summary Compensation Table. For
additional information related to stock options and the valuation of stock
options, see footnote 11 to the consolidated financial statements.




OUTSTANDING
EQUITY AWARDS AT YEAR ENDED DECEMBER 31, 2009




Option and Warrant Awards
                                                                                  
                                                                                  
                                                                                  Stock AwardsEquityEquity
                                                                                  
                                                                                  
                                                                                  IncentiveIncentive
                                                                                  
                                                                                  
                                                                                  PlanEquity
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  Plan
                                                                                  
                                                                                  
                                                                                  Awards:Incentive
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  Awards:
                                                                                  
                                                                                  
                                                                                  MarketPlan
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  Number
                                                                                  
                                                                                  
                                                                                  or PayoutAwards:
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  of
                                                                                  
                                                                                  
                                                                                  Value ofNumber of
                                                                                  
                                                                                  
                                                                                  Number of
                                                                                  
                                                                                  
                                                                                  Number of
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  Market
                                                                                  
                                                                                  
                                                                                  Unearned
                                                                                  
                                                                                  
                                                                                  UnearnedSecurities
                                                                                  
                                                                                  
                                                                                  Securities
                                                                                  
                                                                                  
                                                                                  Securities
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  Number
                                                                                  
                                                                                  
                                                                                  Value of
                                                                                  
                                                                                  
                                                                                  Shares,
                                                                                  
                                                                                  
                                                                                  Shares,Underlying
                                                                                  
                                                                                  
                                                                                  Underlying
                                                                                  
                                                                                  
                                                                                  Underlying
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  of Shares
                                                                                  
                                                                                  
                                                                                  Shares or
                                                                                  
                                                                                  
                                                                                  Units or
                                                                                  
                                                                                  
                                                                                  Units orUnexercised
                                                                                  
                                                                                  
                                                                                  Unexercised
                                                                                  
                                                                                  
                                                                                  Unexercised
                                                                                  
                                                                                  
                                                                                  Option
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  or Units
                                                                                  
                                                                                  
                                                                                  Units of
                                                                                  
                                                                                  
                                                                                  Other
                                                                                  
                                                                                  
                                                                                  OtherOptions
                                                                                  
                                                                                  
                                                                                  Options
                                                                                  
                                                                                  
                                                                                  Unearned
                                                                                  
                                                                                  
                                                                                  and
                                                                                  
                                                                                  
                                                                                  Option
                                                                                  
                                                                                  
                                                                                  of Stock
                                                                                  
                                                                                  
                                                                                  Stock
                                                                                  
                                                                                  
                                                                                  Rights
                                                                                  
                                                                                  
                                                                                  Rightsand
                                                                                  
                                                                                  
                                                                                  and
                                                                                  
                                                                                  
                                                                                  Options
                                                                                  
                                                                                  
                                                                                  Warrant
                                                                                  
                                                                                  
                                                                                  and
                                                                                  
                                                                                  
                                                                                  That
                                                                                  
                                                                                  
                                                                                  That
                                                                                  
                                                                                  
                                                                                  That
                                                                                  
                                                                                  
                                                                                  ThatWarrants
                                                                                  
                                                                                  
                                                                                  Warrants
                                                                                  
                                                                                  
                                                                                  and
                                                                                  
                                                                                  
                                                                                  Exercise
                                                                                  
                                                                                  
                                                                                  Warrant
                                                                                  
                                                                                  
                                                                                  Have Not
                                                                                  
                                                                                  
                                                                                  Have Not
                                                                                  
                                                                                  
                                                                                  Have Not
                                                                                  
                                                                                  
                                                                                  Have Not(#)
                                                                                  
                                                                                  
                                                                                  (#)
                                                                                  
                                                                                  
                                                                                  Warrants
                                                                                  
                                                                                  
                                                                                  Price
                                                                                  
                                                                                  
                                                                                  Expiration
                                                                                  
                                                                                  
                                                                                  Vested
                                                                                  
                                                                                  
                                                                                  Vested
                                                                                  
                                                                                  
                                                                                  Vested
                                                                                  
                                                                                  
                                                                                  VestedName
                                                                                  
                                                                                  Exercisable
                                                                                  
                                                                                  
                                                                                  Unexercisable
                                                                                  
                                                                                  
                                                                                  (#)
                                                                                  
                                                                                  
                                                                                  ($)
                                                                                  
                                                                                  
                                                                                  Date
                                                                                  
                                                                                  
                                                                                  (#)
                                                                                  
                                                                                  
                                                                                  ($)
                                                                                  
                                                                                  
                                                                                  (#)
                                                                                  
                                                                                  
                                                                                  ($)Mitch
      Francis
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  150,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  1.28
                                                                                  
                                                                                  
                                                                                  
                                                                                  4-3-2019Chief
      Executive
      OfficerKim
      Simon
                                                                                  
                                                                                  
                                                                                  200,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  100,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  7.00
                                                                                  
                                                                                  
                                                                                  
                                                                                  9-27-2017Chief
      Operating Officer100,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  0.36
                                                                                  
                                                                                  
                                                                                  
                                                                                  2-27-2012Matthew
      Natalizio
                                                                                  
                                                                                  
                                                                                  240,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  100,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  7.00
                                                                                  
                                                                                  
                                                                                  
                                                                                  9-10-2017Chief
      Financial
      Officer




47





Option
and Warrant Exercises and Stock Vested:





The
following table provides information regarding exercise of stock options and
warrants by each of our named executive officers during 2009:





2009 EXERCISES OF PLAN-BASED AWARDSNumber of
                      
                      
                      Value RealizedShares Acquired
                      
                      
                      on Exercise (1)Name
                      
                      on Exercise
                      
                      
                      ($)Kimberly
      Simon
                      
                      
                      150,000
                      
                      
                      $
                      214,500Chief
      Operating Officer





1.
            Represents
      the difference between the exercise price and the fair market value of the
      common stock on the date of exercise of common stock
    options.





Quantification
of Termination Payments and Benefits




The table
below reflects the amount of compensation to each of our named executive
officers in the event of termination of such executive’s employment without
“cause” or his resignation for “good reason,” termination following a change in
control, and termination upon the executive’s death or permanent disability. The
named executive officers are not entitled to any payments other than accrued
compensation and benefits in the event of their voluntary resignation. The
amounts shown in the table below assume that such termination was effective as
of December 31, 2009, and thus includes amounts earned through such time, and
are estimates only of the amounts that would be payable to the executives. The
actual amounts to be paid will be determined upon the occurrence of the events
indicated.




TERMINATION PAYMENTS AND BENEFITS


Termination Without Causeor for Good ReasonBefore Change
                                                                            
                                                                            
                                                                            After Change
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            Change inName
                                                                            
                                                                            Benefit
                                                                            
                                                                            in Control ($)
                                                                            
                                                                            
                                                                            in Control ($)
                                                                            
                                                                            
                                                                            Death ($)
                                                                            
                                                                            
                                                                            Disability ($)
                                                                            
                                                                            
                                                                            Control ($)Mitch
      Francis
                                                                            
                                                                            Severance
      Payment (3)
                                                                            
                                                                            
                                                                            975,000
                                                                            
                                                                            
                                                                            
                                                                            2,250,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Chief
      Executive Officer,
                                                                            
                                                                            Stock
      Options (4)
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            69,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Chairman
      of the Board
                                                                            
                                                                            Health
      Insurance (1)
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            15,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Life
      Insurance (1)
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            18,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Disability
      Insurance (1)
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            6,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Automobile
      (2)
                                                                            
                                                                            
                                                                            44,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Kimberly
      Simon
                                                                            
                                                                            Severance
      Payment (3)
                                                                            
                                                                            
                                                                            175,000
                                                                            
                                                                            
                                                                            
                                                                            1,312,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Chief
      Operating Officer
                                                                            
                                                                            Stock
      Options
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Health
      Insurance (1)
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            16,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Automobile
      (2)
                                                                            
                                                                            
                                                                            15,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Matthew
      Natalizio
                                                                            
                                                                            Severance
      Payment (5)
                                                                            
                                                                            
                                                                            125,000
                                                                            
                                                                            
                                                                            
                                                                            125,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Chief
      Financial OfficerLee
      Marshall
                                                                            
                                                                            Severance
      Payment (5)
                                                                            
                                                                            
                                                                            163,000
                                                                            
                                                                            
                                                                            
                                                                            163,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Co-CEO
      Tix ProductionsSteve
      Boulay
                                                                            
                                                                            Severance
      Payment (5)
                                                                            
                                                                            
                                                                            95,000
                                                                            
                                                                            
                                                                            
                                                                            95,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Chief
      Operating Officer,Tix
      ProductionsJohn
      Ballard
                                                                            
                                                                            Severance
      Payment (5)
                                                                            
                                                                            
                                                                            95,000
                                                                            
                                                                            
                                                                            
                                                                            95,000
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -President,
      Tix Productions


48





(1)
            Represents
      the cost as of December 31, 2009 for a period of eighteen
      months.





(2)
            Represents
      the cost as of December 31, 2009 for the remaining term of the employment
      agreement. For Mitch Francis, the contract term ends February 28, 2012.
      For Kimberly Simon, the contract term ends August 31,
  2010.





(3)
            The
      Severance Payment in the Before Change in Control column represents salary
      paid through the end of the employment contract term. For Mitch Francis,
      the contract term ends February 28, 2012. For Kimberly Simon, the contract
      term ends August 31, 2010. The Severance Payment in the After Change in
      Control Payment column represents five times the annual base salary as of
      December 31, 2009, and is a lump sum payment no later than 30 days after
      employee’s date of termination.





(4)
            Represents
      the aggregate value of stock options that vest and become exercisable
      immediately upon the triggering event, as if such event took place on
      December 31, 2009. The amount was determined as the aggregate difference
      between the stock price as of December 31, 2009 and the exercise price of
      the underlying options.





(5)
            Amount
      is paid over a six month period in accordance with the Company's normal
      payroll practices.





Directors
Compensation:





Beginning
in July 2008, members of the Board of Directors who are not employees of the
Company receive quarterly payments totaling $25,000 annually and reimbursement
for any expenses incurred in attending the meetings. Also, beginning in April
2009, the Chairman of the Audit Committee receives an additional $20,000
annually and the Corporate Secretary receives an additional $6,000
annually.  Further, in 2009, Messer Pells, Georges, Frankel, and Feirstein
each received 25,000 common stock options with an exercise price of $1.25. In
2008 and 2007, Messrs Pells and Georges each received 25,000 common stock
options and 10,000 common stock options, respectively. Directors who are
employees of the Company receive no additional compensation for serving on the
Board of Directors. The non-employee directors are eligible to participate in
the 2004 Directors Option Plan.





Prior to
July 2008, members of the Board of Directors who were not employees of the
Company received $2,000 for each meeting they attended of the Board of
Directors, and reimbursement for any expenses incurred in attending the
meetings.





DIRECTOR
COMPENSATION TABLE




All OtherStock Awards
                                              
                                              
                                              Compensation
                                              
                                              
                                              TotalName and Principal Position
                                              
                                              Year
                                              
                                              ($)
                                              
                                              
                                              ($) (1) (2) (3)
                                              
                                              
                                              ($)Andrew
      Pells - Director
                                              
                                              2009
                                              
                                              
                                              -
                                              
                                              
                                              
                                              45,000
                                              
                                              
                                              
                                              45,0002008
                                              
                                              
                                              -
                                              
                                              
                                              
                                              55,500
                                              
                                              
                                              
                                              55,5002007
                                              
                                              
                                              -
                                              
                                              
                                              
                                              48,000
                                              
                                              
                                              
                                              48,000Benjamin
      Frankel - Director
                                              
                                              2009
                                              
                                              
                                              -
                                              
                                              
                                              
                                              45,000
                                              
                                              
                                              
                                              45,0002008
                                              
                                              
                                              -
                                              
                                              
                                              
                                              12,500
                                              
                                              
                                              
                                              12,5002007
                                              
                                              
                                              -
                                              
                                              
                                              
                                              8,000
                                              
                                              
                                              
                                              8,000Norman
      Feirstein - Director
                                              
                                              2009
                                              
                                              
                                              -
                                              
                                              
                                              
                                              49,500
                                              
                                              
                                              
                                              49,5002008
                                              
                                              
                                              -
                                              
                                              
                                              
                                              12,500
                                              
                                              
                                              
                                              12,5002007
                                              
                                              
                                              -
                                              
                                              
                                              
                                              8,000
                                              
                                              
                                              
                                              8,000Sam
      Georges - Director
                                              
                                              2009
                                              
                                              
                                              -
                                              
                                              
                                              
                                              62,500
                                              
                                              
                                              
                                              62,5002008
                                              
                                              
                                              -
                                              
                                              
                                              
                                              58,000
                                              
                                              
                                              
                                              58,0002007
                                              
                                              
                                              -
                                              
                                              
                                              
                                              48,000
                                              
                                              
                                              
                                              48,000




(1)
            During
      the year ended December 31, 2009, the Company’s Board of Directors met on
      three occasions, of which two were telephonic and one was through video
      conference. Messrs. Georges and Feirstein attended all three meetings.
      Messrs. Pells and Frankel attended two meetings, of which one was
      telephonic and one was video conference. Non-employee directors of the
      Company received $6,250 per quarter. In addition, Mr. Georges received an
      additional $2,500 per quarter for chairing the audit committee until April
      2009. Beginning in April 2009, Mr. Georges received an increase in
      compensation to $5,000 per quarter for chairing the audit committee and
      Mr. Feirstein received an additional $1,500 per quarter for performing the
      Corporate Secretary responsibilities. Messrs Pells, Georges, Frankel and
      Feirstein each received options to purchase 25,000 shares of our common
      stock, which management estimated the value to be $20,000 each using the
      Black-Scholes Model. For a discussion on the assumptions made in the
      valuation, refer to the Summary of Significant Accounting Policies in the
      Notes to Consolidated Financial
Statements.




49





(2)
            During the year ended December
      31, 2008, the Company’s Board of Directors met on three occasions. Messrs.
      Frankel, Feirstein, Georges and Pells attended all three meetings.
      Directors received $2,000 per each meeting until July 2008, when their
      compensation was increased to $6,250 per quarter.  In addition
      Sam Georges receives an additional $2,500 per quarter for chairing the
      audit committee. Andrew Pells and Sam Georges each received options to
      purchase 25,000 shares of our common stock, and management estimated the
      option value to be $43,000 using the Black-Scholes
      Model.


(3)
            During the year ended December
      31, 2007, the Company’s Board of Directors met on four occasions. Messrs.
      Frankel, Feirstein, and Georges attended all four meetings and received
      $2,000 for each meeting they attended. Mr. Pells attended one meeting and
      received $2,000 for his attendance and participation. During the year
      ended December 31, 2007 Messrs. Pells and Georges each received options to
      purchase 10,000 shares of our common stock. The stock options granted to
      Messrs. Pells and Georges had estimated value, using the Black-Scholes
      Model, of $46,000 and $40,000,
  respectively.





Long-Term
Incentive Plans:




2009
Equity Incentive Plan:





On July
8, 2009, the 2009 Equity Incentive Plan (the “2009 Equity Plan”) for officers,
employees and consultants of the Company was approved pursuant to a Joint
Written Consent of the Board of Directors and Majority Stockholders of the
Company. The 2009 Equity Plan authorized the granting of not more than 3,000,000
restricted shares, stock appreciation rights (“SAR’s”), and incentive and
non-qualified stock options to purchase shares of the Company’s common stock.
The 2009 Equity Plan provides that stock options or SAR’s granted can be
exercisable immediately as of the effective date of the applicable agreement, or
in accordance with a schedule or performance criteria as may be set in the
applicable agreement. The exercise price for non-qualified stock options or
SAR’s would be the amount specified in the agreement, but shall not be less than
the fair value of the Company’s common stock at the date of the grant. The
exercise price for incentive stock options cannot be less than the fair market
value of the Company’s common stock on the date of grant (110% of the fair
market value of the Company’s common stock on the date of grant for a
stockholder owning in excess of 10% of the Company’s common stock).





During
2009, the Company’s board of directors granted options to purchase 25,000 shares
of common stock under the 2009 Equity Plan. Further, options granted to Mr.
Natalizio to purchase 340,000 shares of our common stock that were previously
not under a Company Plan were transitioned and deemed to be grants under the
newly adopted 2009 Equity Plan.





As of
December 31, 2009, options to purchase 2,635,000 shares of common stock are
reserved for issuance under the 2009 Equity Plan.





2004
Option Plan:





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





During
the year ended December 31, 2009, the Company issued options to purchase 150,000
shares of common stock under the 2004 Option Plan. During the year ended
December 31, 2008, the Company issued options to purchase 25,000 shares of
common stock under the 2004 Option Plan. During the year ended December 31,
2007, the Company issued options to purchase 507,000 shares of common stock
under the 2004 Option Plan. The Company issued 300,000 options under the 2004
Option Plan in 2006.


As of
December 31, 2009, options to purchase 144,000 shares of common stock were
reserved for issuance under the 2004 Option Plan.





2004
Directors Option Plan:





On March
3, 2005, the Company adopted the Directors Stock Option Plan (the “2004
Directors Option Plan”) for non-employee directors of the Company. The 2004
Directors Option Plan was approved pursuant to a Joint Written Consent of the
Board of Directors and Majority Stockholders of the Company dated September 22,
2004. The 2004 Directors Option Plan authorized the granting of non-qualified
stock options to purchase an aggregate of not more than 100,000 shares of the
Company’s common stock. The 2004 Directors Option Plan provided that options
granted would be exercisable for a period not to exceed ten years and vest
one-third in each of the three years following the grant. The exercise price for
non-qualified stock options would be the fair value of the Company’s common
stock at the date of the grant. No option may be exercised during the first six
months of its term except in the case of death. On May 30, 2007, an amendment to
the 2004 Directors Option Plan was approved through a Corporate Resolution by
the Company’s Board of Directors, and adjusts the vesting period of options
granted from vesting one-third annually over three years to vesting immediately.
On July 8, 2009, an additional amendment to the 2004 Directors Option Plan (“The
Amendment”) was approved pursuant to a Joint Written Consent of the Board of
Directors and Majority Stockholders of the Company. The Amendment increased the
authorized amount of option grants to purchase shares of our common stock to
1,000,000 shares.


50





During
2009, the Company’s board of directors granted 25,000 options each to Messrs.
Pells, Georges, Frankel, and Feirstein. The grant date fair value of the options
granted to Messrs. Pells, Georges, Frankel, and Feirstein in 2009, as calculated
using the Black Scholes Model, was $20,000 each. During 2008, the Company’s
board of directors granted 25,000 options each to Messrs. Pells and Georges. The
value of the options granted to Messrs. Pells and Georges in 2008, as calculated
using the Black Scholes Model, was $43,000 each. During 2007, the Company’s
board of directors granted 10,000 options to purchase our common stock to each
of Messrs. Pells and Georges in conjunction with them becoming directors of Tix
Corporation. The value of the options granted, as calculated using the Black
Scholes Model, was $46,000 and $40,000, respectively. Prior to the above
issuance, the Company had not granted any options under the 2004 Directors
Option Plan.




A summary of stock options and warrants
issued to officers, directors and employees as of December 31, 2009 is presented
below:





Stock Option and Warrant Value TableValue of UnexercisedNumber of Shares of
                          
                          
                          Weighted
                          
                          
                          in-the-Money Stock OptionsCommon Stock Underlying
                          
                          
                          Average
                          
                          
                          and Warrants atStock Options and Warrants
                          
                          
                          Exercise
                          
                          
                          Fiscal Year-End (1)Unvested
                          
                          
                          Vested
                          
                          
                          Price
                          
                          
                          Unvested
                          
                          
                          VestedOption
      Plans:Directors
                          
                          
                          -
                          
                          
                          
                          170,000
                          
                          
                          $
                          2.18
                          
                          
                          $
                          -
                          
                          
                          $
                          49,000Mitch
      Francis
                          
                          
                          150,000
                          
                          
                          
                          -
                          
                          
                          $
                          1.28
                          
                          
                          $
                          69,000
                          
                          
                          $
                          -Kimberly
      Simon
                          
                          
                          100,000
                          
                          
                          
                          200,000
                          
                          
                          $
                          7.00
                          
                          
                          $
                          
                          
                          
                          $Matthew
      Natalizio
                          
                          
                          100,000
                          
                          
                          
                          240,000
                          
                          
                          $
                          7.00
                          
                          
                          $
                          -
                          
                          
                          $
                          -Curt
      Bechdel
                          
                          
                          50,000
                          
                          
                          
                          75,000
                          
                          
                          $
                          6.09
                          
                          
                          $
                          2,250
                          
                          
                          $Employees
                          
                          
                          22,000
                          
                          
                          
                          44,000
                          
                          
                          $
                          6.85
                          
                          
                          $
                          -
                          
                          
                          $
                          -Non-Plan
      Stock Options and Warrants:Kimberly
      Simon - Warrants
                          
                          
                          
                          
                          
                          
                          100,000
                          
                          
                          $
                          0.36
                          
                          
                          $
                          
                          
                          
                          $
                          138,000







(1) The
dollar values are calculated by determining the difference between the weighted
average exercise price of the stock options and warrants and the market price
for the common stock of $1.74 per share at December 31, 2009.





ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS





As used
in this section, the term beneficial ownership with respect to a security is
defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as
consisting of sole or shared voting power (including the power to vote or direct
the vote) and/or sole or shared investment power (including the power to dispose
of or direct the disposition of) with respect to the security through any
contract, arrangement, understanding, relationship or otherwise, subject to
community property laws where applicable.




As of
February 15, 2010, the Company had a total of 31,123,357 shares of common stock
issued and outstanding, which is the only issued and outstanding voting equity
security of the Company.


51





The
following table sets forth, as of February 15, 2010: (a) the names and addresses
of each beneficial owner of more than five percent (5%) of the Company's common
stock known to the Company, the number of shares of common stock beneficially
owned by each such person, and the percent of the Company's common stock so
owned; and (b) the names and addresses of each director and executive officer,
the number of shares of common stock beneficially owned, and the percentage of
the Company's common stock so owned, by each such person, and by all directors
and executive officers of the Company as a group. Each person has sole voting
and investment power with respect to the shares of common stock, except as
otherwise indicated. Beneficial ownership consists of a direct interest in the
shares of common stock, except as otherwise indicated.





Percent ofAmount and
                      
                      
                      Shares ofNature of
                      
                      
                      Common StockBeneficial
                      
                      
                      OutstandingName and Address of Beneficial Owner
                      
                      Ownership
                      
                      
                      (2)Mitch
      Francis (1)
                      
                      
                      3,589,474
                      (3)
                      
                      
                      11.2
                      %Kimberly
      Simon (1)
                      
                      
                      968,109
                      (4)
                      
                      
                      2.8
                      %Matthew
      Natalizio (1)
                      
                      
                      340,000
                      (6)
                      
                      
                      0.8
                      %Benjamin
      Frankel (1)
                      
                      
                      324,000
                      (7)
                      
                      
                      1.0
                      %Norman
      Feirstein (1)
                      
                      
                      455,000
                      (8)
                      
                      
                      1.5
                      %Sam
      Georges (1)
                      
                      
                      70,000
                      (6)
                      
                      
                      0.2
                      %Andy
      Pells (1)
                      
                      
                      60,000
                      (6)
                      
                      
                      0.2
                      %Joe
      Marsh (1), (10)
                      
                      
                      4,650,301
                      
                      
                      
                      14.9
                      %Lee
      Marshall (1)
                      
                      
                      1,758,298
                      
                      
                      
                      5.6
                      %All
      directors and officers as a group (9 persons)
                      
                      
                      12,215,182
                      (5)
                      
                      
                      38.3
                      %Christopher
      Maggiore (9)
                      
                      
                      1,810,625
                      
                      
                      
                      5.8
                      %







(1)  
The address of each such person is c/o the Company, 12001 Ventura Place, Suite
340, Studio City, California 91604.





(2)  
The calculation is based on the number of shares of common stock outstanding on
February 15, 2010, plus, with respect to each named person, the number of shares
of common stock which the stockholder has the right to acquire upon exercise of
stock options and warrants exercisable within 60 days of February 15,
2010.





(3)  
Includes 3,439,000 shares of common stock owned by Mr. Francis. Also includes an
option to purchase 150,000 shares of the Company’s common stock. The balance
excludes 255,000 shares of common stock owned by Sandra Francis, the wife of Mr.
Francis, as to which Mr. Francis disclaims beneficial ownership.





(4)  
Includes 568,000 shares of common stock owned by Ms. Simon and 400,000 shares of
common stock issuable upon exercise of stock options and warrants.




(5)  
Includes 11,188,000 shares of common stock owned by officers and directors, and
1,060,000 shares of common stock issuable upon exercise of stock options and
warrants granted to officers and directors. Also excludes 255,000 shares of
common stock owned by Sandra Francis, the wife of Mr. Francis, as to which Mr.
Francis disclaims beneficial ownership.




(6)   Messrs Pells and Georges were each granted options to purchase
35,000 shares of the Company’s common stock as a result of their directorships.
In addition, Messrs Pells and Georges were each granted options to purchase
25,000 shares of the Company’s common stock in 2009. Mr. Georges separately
purchased 10,000 shares of Tix common stock in the open market.  Mr.
Natalizio was granted 340,000 shares as a result of his appointment as Chief
Financial Officer.


52





(7)  
Includes 299,000 shares of common stock owned by Mr. Frankel and 25,000 shares
of common stock issuable upon exercise of stock options granted to Mr.
Frankel.





(8)  
Includes 430,000 shares of common stock owned by Mr. Feirstein and 25,000 shares
of common stock issuable upon exercise of stock options granted to Mr.
Feirstein.





(9)  
Theaddress of this person
is 6860 Chillingsworth Circle, Canton, Ohio 44718.





(10) In
connection with the acquisition of Exhibit Merchandising, the Company entered
into a Voting Agreement with Joseph Marsh pursuant to which, for a period of
four years, Mr. Marsh granted the Company, through its board of directors,
the right to vote all of his shares, including the shares acquired pursuant to
the Asset Purchase Agreement. As of the date hereof, such shares totaled
4,650,301.





Changes
in Control:





The
Company is unaware of any contract or other arrangement, the operation of which
may at a subsequent date result in a change in control of the
Company.





Information
with respect to securities authorized for issuance under equity compensation
plans is provided at "ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS - Securities Authorized for Issuance Under Equity Compensation
Plans".





ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





During
2007, Benjamin Frankel, a director of the Company, was a principal in Frankel,
LoPresti & Co., an accountancy corporation. During the years ended December
31, 2009, 2008, and 2007, the Company incurred fees to such accounting firms for
accounting and tax services of $55,000, $33,000, and $53,000,
respectively.





Review,
Approval or Ratification of Transactions with Related Persons





As
provided in our audit committee charter, all related party transactions must be
reviewed and approved by our audit committee.  As such, we conduct a
review of all related party transactions for potential conflicts of interest on
an ongoing basis.  All such transactions relating to executive
officers and directors must be approved by our audit committee.





Director
Independence





Our board
of directors reviewed our directors’ responses to a questionnaire inquiring
about their transactions, relationships and arrangements with us, as well as
those of their immediate family members.  The questionnaire also
inquired as to other potential conflicts of interest.  After reviewing
this information, our board of directors determined that it is comprised of a
majority of “independent directors,” as such term is defined in the NASDAQ rules
and Rule 10A-3 of the Exchange Act.  Among our six directors, Andy
Pells, Norman Feirstein, Benjamin Frankel and Sam Georges meet the NASDAQ and
the Exchange Act standards for independent directors except that Mr. Frankel
does not meet the independence standards under the Exchange Act for members of
the Audit Committee and is not a member of such Committee.  The
remaining directors, Mitch Francis and Joseph Marsh do not qualify as an
independent director.  Our independent directors did not engage in any
transaction, or otherwise have relationship or arrangement with us that would
compromise their independency as defined by the NASDAQ rules or Rule 10A-3 of
the Exchange Act.  Our Audit Committee is comprised of three
independent directors, Messrs. Pells, Feirstein and Georges.  Our
Compensation Committee is comprised of three independent directors, Messrs.
Pells, Feirstein and Georges.  Our Nominating and Governance Committee
is comprised of three independent directors, Messrs. Pells, Feirstein and
Georges.





Additional
information with respect to securities issued to the Company’s officers and
directors in 2009, 2008, and 2007 is provided at “ITEM 11. EXECUTIVE
COMPENSATION”.





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





Audit and
Audit Related Fees:





Weinberg
& Company, P.A. ("Weinberg") was the Company's independent registered public
accounting firm for the years ended December 31, 2009, 2008, and 2007. Services
provided to the Company by Weinberg with respect to such periods consisted of
the audits of the Company's consolidated financial statements and limited
reviews of the condensed consolidated financial statements included in Quarterly
Reports on Form 10-Q. Weinberg & Co. also provided audit services with
respect to our 2009 and 2008 Sarbanes-Oxley compliance, acquisition audits of
Magic Arts & Entertainment, LLC and Exhibit Merchandising, LLC, and the
subsequent filing of their financial statements on Form 8-K. Charges by Weinberg
with respect to these matters aggregated $420,000, and $343,000, respectively,
for the years ended December 31, 2009 and 2008.


53


Tax Fees:





Weinberg
did not provide any services to the Company with respect to the preparation of
corporate income tax returns or tax planning matters.





All Other
Fees:





Weinberg
did not provide any services with respect to any matters other than those
related to audit and audit-related matters.





Pre-Approval
Policies and Procedures:





The Audit
Committee meets telephonically to periodically review and approve the scope of
the services to be provided to the Company by its independent accountant, as
well as to review and discuss any issues that may arise during an engagement.
The Audit Committee considers various issues with respect to the services to be
provided by the Company’s independent accountant, including the complexity of
any engagement, its expected cost, the knowledge and expertise of the
independent accountant's staff, any complex accounting or disclosure issues, new
accounting pronouncements, and the capability of the Company's financial
staff.




ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





(a)
            Financial
      Statements





(1)
            Consolidated
      Financial Statements and Supplementary Data at
  Item 8





(2)
            Financial
      Statement Schedules at Schedule II – Valuation and Qualifying
      Accounts.





(b)
            Exhibits





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





SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.





TIX
      CORPORATION(Registrant)Date:
      March  16, 2010
                    By:
                    /s/
      MITCH FRANCISMitch
      FrancisChief
      Executive Officer, President,and
      Chairman of the Board of
Directors





In
accordance with the Exchange Act, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.





Date:
      March 16, 2010
                            By:
                            /s/
      MATTHEW NATALIZIOMatthew
      NatalizioChief
      Financial Officer(Principal
      Financial and Accounting Officer)Date:
      March 16, 2010
                            By:
                            /s/
      BENJAMIN FRANKELBenjamin
      FrankelDirectorDate: March 16, 2010
                            By:
                            /s/
      NORMAN FEIRSTEINNorman
      FeirsteinDirectorDate:
      March 16, 2010
                            By:
                            /s/
      SAM GEORGESSam
      GeorgesDirectorDate:
      March 16, 2010
                            By:
                            /s/
      ANDREW PELLSAndrew
      PellsDirectorDate:
      March 16, 2010
                            By:
                            /s/
      JOSEPH MARSHJoseph
      MarshDirector


54





TIX
CORPORATION AND SUBSIDIARIES





INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS





PAGEReport
      of Independent Registered Public Accounting Firm
                        
                        F-2Consolidated
      Financial Statements:Consolidated
      Balance Sheets as of December 31, 2009 and 2008
                        
                        F-3Consolidated
      Statements of Operations and Comprehensive Loss for the Years Ended
      December 31, 2009, 2008 and 2007
                        
                        F-4Consolidated
      Statements of Stockholders’ Equity for the Years Ended December 31, 2009,
      2008, and 2007
                        
                        F-5Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2009, 2008, and
      2007
                        
                        F-6Notes
      to Consolidated Financial Statements
                        
                        F-7


F-1





Report
of Independent Registered Public Accounting Firm





To the
Board of Directors


Tix
Corporation





We have
audited the accompanying consolidated balance sheets of Tix Corporation and
Subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related
consolidated statements of operations and comprehensive loss, stockholders’
equity and cash flows for each of the three years in the period ended December
31, 2009.  Our audits also included the financial statement schedules
on pages F-28 and F-29.  We have also audited the Company’s internal
control over financial reporting as of December 31, 2009, based on criteria
established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring
Organization of the Treadway Commission.  The Company’s management is
responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of
the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial
Reporting.  Our responsibility is to express an opinion on these
consolidated financial statements and the financial statement schedules and an
opinion on the Company’s internal control over financial reporting 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 audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement and
whether effective internal control over financial reporting was maintained in
all material respects.  An audit of the consolidated financial
statements includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  Our audit of
internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk.  Our
audits also included performing such other procedures as we considered necessary
in the circumstances.  We believe that our audits provide a reasonable
basis for our opinions.





A
company’s internal control over financial reporting is a process designed by, or
under the supervision of, the company’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company’s board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.  A company’s internal
control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with  generally
accepted accounting principles and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company’s assets that could have a material effect on the financial
statements.





Because
of the inherent limitations of internal control over financial reporting,
including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may not be detected on a
timely basis.   Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Tix Corporation and
Subsidiaries as of December 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2009, in conformity with accounting principles generally accepted
in the United States of America.  Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.  Also in our
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2009, based on criteria
established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.





Weinberg
& Company, P.A.


Los
Angeles, California





March 12,
2010


F-2





TIX CORPORATION AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





December 31,
                                                    
                                                    
                                                    December 31,2009
                                                    
                                                    
                                                    2008AssetsCurrent
      assets:Cash
                                                    
                                                    $
                                                    9,885,000
                                                    
                                                    
                                                    $
                                                    9,192,000Accounts
      receivable, including show revenues earned but not billed
                                                    
                                                    
                                                    1,911,000
                                                    
                                                    
                                                    
                                                    1,104,000Advances
      to vendors
                                                    
                                                    
                                                    964,000
                                                    
                                                    
                                                    
                                                    118,000Inventory,
      net
                                                    
                                                    
                                                    2,172,000
                                                    
                                                    
                                                    
                                                    3,320,000Prepaid
      expenses and other current assets
                                                    
                                                    
                                                    1,350,000
                                                    
                                                    
                                                    
                                                    749,000Total
      current assets
                                                    
                                                    
                                                    16,282,000
                                                    
                                                    
                                                    
                                                    14,483,000Property
      and equipment:Office
      equipment and furniture
                                                    
                                                    
                                                    2,191,000
                                                    
                                                    
                                                    
                                                    1,816,000Equipment
      under capital lease
                                                    
                                                    
                                                    408,000
                                                    
                                                    
                                                    
                                                    408,000Leasehold
      improvements
                                                    
                                                    
                                                    394,000
                                                    
                                                    
                                                    
                                                    364,000Property
      and equipment
                                                    
                                                    
                                                    2,993,000
                                                    
                                                    
                                                    
                                                    2,588,000Less
      accumulated depreciation
                                                    
                                                    
                                                    (1,685,000
                                                    )
                                                    
                                                    
                                                    (1,155,000
                                                    )Total
      property and equipment, net
                                                    
                                                    
                                                    1,308,000
                                                    
                                                    
                                                    
                                                    1,433,000Other
      assets:Intangible
      assets:Goodwill
                                                    
                                                    
                                                    5,895,000
                                                    
                                                    
                                                    
                                                    5,639,000Intangibles,
      net
                                                    
                                                    
                                                    4,499,000
                                                    
                                                    
                                                    
                                                    6,408,000Total
      intangible assets
                                                    
                                                    
                                                    10,394,000
                                                    
                                                    
                                                    
                                                    12,047,000Investments
      in and advances to nonconsolidated affiliates
                                                    
                                                    
                                                    1,052,000
                                                    
                                                    
                                                    
                                                    343,000Capitalized
      theatrical costs
                                                    
                                                    
                                                    368,000
                                                    
                                                    
                                                    
                                                    459,000Deposits
      and other assets
                                                    
                                                    
                                                    158,000
                                                    
                                                    
                                                    
                                                    83,000Total
      other assets
                                                    
                                                    
                                                    11,972,000
                                                    
                                                    
                                                    
                                                    12,932,000Total
      assets
                                                    
                                                    $
                                                    29,562,000
                                                    
                                                    
                                                    $
                                                    28,848,000Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Accounts
      payable
                                                    
                                                    $
                                                    6,357,000
                                                    
                                                    
                                                    $
                                                    4,822,000Accrued
      expenses
                                                    
                                                    
                                                    1,797,000
                                                    
                                                    
                                                    
                                                    1,315,000Current
      portion of capital lease obligations
                                                    
                                                    
                                                    60,000
                                                    
                                                    
                                                    
                                                    51,000Deferred
      revenue
                                                    
                                                    
                                                    160,000
                                                    
                                                    
                                                    
                                                    100,000Income
      taxes payable
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    200,000Total
      current liabilities
                                                    
                                                    
                                                    8,374,000
                                                    
                                                    
                                                    
                                                    6,488,000Non-current
      liabilities:Capital
      lease obligations, less current portion
                                                    
                                                    
                                                    17,000
                                                    
                                                    
                                                    
                                                    78,000Deferred
      rent
                                                    
                                                    
                                                    43,000
                                                    
                                                    
                                                    
                                                    85,000Total
      non-current liabilities
                                                    
                                                    
                                                    60,000
                                                    
                                                    
                                                    
                                                    163,000Commitments
      and contingenciesStockholders’
      equity:Preferred
      stock, $.01 par value; 500,000 shares authorized; none
    issuedCommon
      Stock, $.08 par value; 100,000,000 shares authorized; 31,123,357 shares
      net of 2,340,103 treasury shares, and 32,345,863 shares net of 732,370
      treasury shares issued at December 31, 2009 and December 31, 2008
      respectively
                                                    
                                                    
                                                    2,678,000
                                                    
                                                    
                                                    
                                                    2,646,000Additional
      paid-in capital
                                                    
                                                    
                                                    89,955,000
                                                    
                                                    
                                                    
                                                    88,062,000Cost
      of shares held in treasury
                                                    
                                                    
                                                    (4,610,000
                                                    )
                                                    
                                                    
                                                    (2,098,000
                                                    )Accumulated
      deficit
                                                    
                                                    
                                                    (66,902,000
                                                    )
                                                    
                                                    
                                                    (66,384,000
                                                    )Accumulated
      other comprehensive loss
                                                    
                                                    
                                                    7,000
                                                    
                                                    
                                                    
                                                    (29,000
                                                    )Total
      stockholders’ equity
                                                    
                                                    
                                                    21,128,000
                                                    
                                                    
                                                    
                                                    22,197,000Total
      liabilities and stockholders’ equity
                                                    
                                                    $
                                                    29,562,000
                                                    
                                                    
                                                    $
                                                    28,848,000





See
accompanying notes to the consolidated financial statements.


F-3





TIX
CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS





Years
      Ended December 31,2009
                                            
                                            
                                            2008
                                            
                                            
                                            2007Revenues
                                            
                                            $
                                            81,791,000
                                            
                                            
                                            $
                                            69,545,000
                                            
                                            
                                            $
                                            18,567,000Operating
      expenses:Direct
      costs of revenues
                                            
                                            
                                            60,901,000
                                            
                                            
                                            
                                            48,752,000
                                            
                                            
                                            
                                            11,672,000Selling
      and marketing expenses
                                            
                                            
                                            2,520,000
                                            
                                            
                                            
                                            3,008,000
                                            
                                            
                                            
                                            13,475,000General
      and administrative expenses, including non-cash equity-based costs of
      $1,715,000, $2,336,000, and $3,284,000 in 2009, 2008, and 2007,
      respectively (including $1,371,000, $1,753,000, and $682,000 for officers,
      directors and employees in 2009, 2008, and 2007,
    respectively)
                                            
                                            
                                            14,031,000
                                            
                                            
                                            
                                            14,931,000
                                            
                                            
                                            
                                            8,117,000Impairment
      of goodwill
                                            
                                            
                                            -
                                            
                                            
                                            
                                            25,445,000
                                            
                                            
                                            
                                            -Impairment
      of intangible assets
                                            
                                            
                                            -
                                            
                                            
                                            
                                            7,687,000
                                            
                                            
                                            
                                            -Depreciation
      and amortization
                                            
                                            
                                            2,496,000
                                            
                                            
                                            
                                            4,601,000
                                            
                                            
                                            
                                            1,668,000Total
      costs and expenses
                                            
                                            
                                            79,948,000
                                            
                                            
                                            
                                            104,424,000
                                            
                                            
                                            
                                            34,932,000Income
      (loss) from operations
                                            
                                            
                                            1,843,000
                                            
                                            
                                            
                                            (34,879,000
                                            )
                                            
                                            
                                            (16,365,000
                                            )Other
      income (expense):Equity
      in losses of nonconsolidated affiliates
                                            
                                            
                                            (2,644,000
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Other
      income
                                            
                                            
                                            296,000
                                            
                                            
                                            
                                            175,000
                                            
                                            
                                            
                                            28,000Interest
      income
                                            
                                            
                                            40,000
                                            
                                            
                                            
                                            59,000
                                            
                                            
                                            
                                            96,000Interest
      expense
                                            
                                            
                                            (13,000
                                            )
                                            
                                            
                                            (19,000
                                            )
                                            
                                            
                                            (104,000
                                            )Other
      income, net
                                            
                                            
                                            (2,321,000
                                            )
                                            
                                            
                                            215,000
                                            
                                            
                                            
                                            20,000Loss
      before income tax expense
                                            
                                            
                                            (478,000
                                            )
                                            
                                            
                                            (34,664,000
                                            )
                                            
                                            
                                            (16,345,000
                                            )Income
      tax expense
                                            
                                            
                                            40,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Net
      loss
                                            
                                            
                                            (518,000
                                            )
                                            
                                            
                                            (34,664,000
                                            )
                                            
                                            
                                            (16,345,000
                                            )Other
      comprehensive income (loss):Foreign
      currency translation adjustments
                                            
                                            
                                            36,000
                                            
                                            
                                            
                                            (29,000
                                            )
                                            
                                            
                                            -Comprehensive
      loss
                                            
                                            $
                                            (482,000
                                            )
                                            
                                            $
                                            (34,693,000
                                            )
                                            
                                            $
                                            (16,345,000
                                            )Net
      loss per common share – basic and diluted
                                            
                                            $
                                            (0.02
                                            )
                                            
                                            $
                                            (1.08
                                            )
                                            
                                            $
                                            (0.70
                                            )Weighted
      average common shares outstanding – basic and diluted
                                            
                                            
                                            32,388,829
                                            
                                            
                                            
                                            31,962,375
                                            
                                            
                                            
                                            23,446,349





See
accompanying notes to the consolidated financial statements.


F-4





TIX
CORPORATION AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY





YEARS
ENDED DECEMBER 31, 2009, 2008, AND 2007





AccumulatedAdditional
                              
                              
                              
                              
                              
                              
                              
                              
                              Other
                              
                              
                              TotalCommon Stock
                              
                              
                              Paid In
                              
                              
                              Accumulated
                              
                              
                              Treasury
                              
                              
                              Comprehensive
                              
                              
                              Stockholders’Shares
                              
                              
                              Amount
                              
                              
                              Capital
                              
                              
                              Deficit
                              
                              
                              Stock
                              
                              
                              Loss
                              
                              
                              EquityBalance,
      January 1, 2007
                              
                              
                              18,440,305
                              
                              
                              $
                              1,475,000
                              
                              
                              $
                              14,278,000
                              
                              
                              $
                              (15,375,000
                              )
                              
                              $
                              -
                              
                              
                              $
                              -
                              
                              
                              $
                              378,000Issuance of
      common stock to consultants
                              
                              
                              1,601,924
                              
                              
                              
                              128,000
                              
                              
                              
                              8,764,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              8,892,000Issuance
      of common stock to officers and employees
                              
                              
                              316,668
                              
                              
                              
                              25,000
                              
                              
                              
                              657,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              682,000Issuance
      of common stock upon exercise of warrants and options
                              
                              
                              1,161,912
                              
                              
                              
                              93,000
                              
                              
                              
                              136,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              229,000Issuance
      of common stock for acquisition of Any Event
                              
                              
                              137,500
                              
                              
                              
                              11,000
                              
                              
                              
                              539,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              550,000Issuance
      of common stock for acquisition of Exhibit Merchandising
                              
                              
                              5,000,000
                              
                              
                              
                              400,000
                              
                              
                              
                              34,600,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              35,000,000Fair
      value of options issued to employees
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,136,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              1,136,000Fair
      value of options and warrants issued to consultants
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              3,440,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              3,440,000Sale
      of common stock
                              
                              
                              3,744,016
                              
                              
                              
                              300,000
                              
                              
                              
                              17,484,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              17,784,000Net
      loss
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (16,345,000
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (16,345,000
                              )Balance,
      December 31, 2007
                              
                              
                              30,402,325
                              
                              
                              
                              2,432,000
                              
                              
                              
                              81,034,000
                              
                              
                              
                              (31,720,000
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              51,746,000Issuance of
      common stock to consultants
                              
                              
                              85,564
                              
                              
                              
                              7,000
                              
                              
                              
                              417,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              424,000Issuance
      of common stock to officers and employees
                              
                              
                              216,667
                              
                              
                              
                              17,000
                              
                              
                              
                              30,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              47,000Issuance
      of common stock upon exercise of warrants and options
                              
                              
                              1,326,059
                              
                              
                              
                              106,000
                              
                              
                              
                              (52,000
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              54,000Fair
      value of options issued to employees and directors
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,706,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              1,706,000Issuance
      of common stock for acquisition of Magic Arts &
      Entertainment
                              
                              
                              476,190
                              
                              
                              
                              38,000
                              
                              
                              
                              2,219,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              2,257,000Issuance
      of common stock for acquisition of NewSpace Entertainment
                              
                              
                              571,428
                              
                              
                              
                              46,000
                              
                              
                              
                              2,549,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              2,595,000Fair
      value of warrants issued to outside consultants
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              159,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              159,000Net
      Loss
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (34,664,000
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (34,664,000
                              )Foreign
      currency translation adjustment
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (29,000
                              )
                              
                              
                              (29,000
                              )Cost
      of Treasury Stock
                              
                              
                              (732,370
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (2,098,000
                              )
                              
                              
                              
                              
                              
                              
                              (2,098,000
                              )Balance,
      December 31, 2008
                              
                              
                              32,345,863
                              
                              
                              
                              2,646,000
                              
                              
                              
                              88,062,000
                              
                              
                              
                              (66,384,000
                              )
                              
                              
                              (2,098,000
                              )
                              
                              
                              (29,000
                              )
                              
                              
                              22,197,000Issuance of
      common stock to consultants
                              
                              
                              50,000
                              
                              
                              
                              5,000
                              
                              
                              
                              114,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              119,000Issuance
      of common stock to officers and employees
                              
                              
                              38,194
                              
                              
                              
                              3,000
                              
                              
                              
                              5,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              8,000Issuance
      of common stock upon exercise of warrants and options
                              
                              
                              106,557
                              
                              
                              
                              9,000
                              
                              
                              
                              (55,000
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (46,000
                              )Fair
      value of options issued to employees and directors
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              1,363,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              1,363,000Issuance
      of common stock related to acquisition of Magic Arts &
      Entertainment
                              
                              
                              190,476
                              
                              
                              
                              15,000
                              
                              
                              
                              241,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              256,000Fair
      value of warrants issued to outside consultants
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              225,000
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              225,000Net
      loss
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (518,000
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (518,000
                              )Foreign
      currency translation adjustment
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              36,000
                              
                              
                              
                              36,000Cost
      of Treasury Stock
                              
                              
                              (1,607,733
                              )
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (2,512,000
                              )
                              
                              
                              
                              
                              
                              
                              (2,512,000
                              )Balance,
      December 31, 2009
                              
                              
                              31,123,357
                              
                              
                              $
                              2,678,000
                              
                              
                              $
                              89,955,000
                              
                              
                              $
                              (66,902,000
                              )
                              
                              $
                              (4,610,000
                              )
                              
                              $
                              7,000
                              
                              
                              $
                              21,128,000





See
accompanying notes to the consolidated financial statements.


F-5





TIX CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOW





Years
      Ended December 31,2009
                                              
                                              
                                              2008
                                              
                                              
                                              2007Cash
      flows from operating activities:Net
      loss
                                              
                                              $
                                              (518,000
                                              )
                                              
                                              $
                                              (34,664,000
                                              )
                                              
                                              $
                                              (16,345,000
                                              )Adjustments
      to reconcile net loss to cash provided by operating
      activities:Depreciation
                                              
                                              
                                              530,000
                                              
                                              
                                              
                                              491,000
                                              
                                              
                                              
                                              294,000Impairment
      of goodwill
                                              
                                              
                                              -
                                              
                                              
                                              
                                              25,445,000
                                              
                                              
                                              
                                              -Impairment
      of intangible assets
                                              
                                              
                                              -
                                              
                                              
                                              
                                              7,687,000
                                              
                                              
                                              
                                              -Amortization
      of intangible assets
                                              
                                              
                                              1,966,000
                                              
                                              
                                              
                                              4,110,000
                                              
                                              
                                              
                                              1,375,000Fair
      valued common stock issued for services to employees
                                              
                                              
                                              8,000
                                              
                                              
                                              
                                              47,000
                                              
                                              
                                              
                                              682,000Fair
      valued common stock issued for services to consultants
                                              
                                              
                                              119,000
                                              
                                              
                                              
                                              395,000
                                              
                                              
                                              
                                              8,892,000Fair
      value of options issued to employees and directors
                                              
                                              
                                              1,363,000
                                              
                                              
                                              
                                              1,706,000
                                              
                                              
                                              
                                              1,136,000Fair
      value of warrants issued to consultants
                                              
                                              
                                              225,000
                                              
                                              
                                              
                                              159,000
                                              
                                              
                                              
                                              3,440,000Change
      in allowance of inventory
                                              
                                              
                                              (45,000
                                              )
                                              
                                              
                                              (44,000
                                              )
                                              
                                              
                                              -Equity
      in losses of nonconsolidated affiliates
                                              
                                              
                                              2,644,000
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -(Increase)
      decrease in:Accounts
      receivable
                                              
                                              
                                              (807,000
                                              )
                                              
                                              
                                              (456,000
                                              )
                                              
                                              
                                              (408,000
                                              )Advances
      to vendors
                                              
                                              
                                              (846,000
                                              )
                                              
                                              
                                              (66,000
                                              )
                                              
                                              
                                              (52,000
                                              )Advances
      to nonconsolidated affiliates
                                              
                                              
                                              (766,000
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Inventory
                                              
                                              
                                              1,193,000
                                              
                                              
                                              
                                              1,077,000
                                              
                                              
                                              
                                              (56,000
                                              )Prepaid
      expenses and other current assets
                                              
                                              
                                              (601,000
                                              )
                                              
                                              
                                              (202,000
                                              )
                                              
                                              
                                              107,000Capitalized
      theatrical costs, deposits and other assets
                                              
                                              
                                              16,000
                                              
                                              
                                              
                                              (469,000
                                              )
                                              
                                              
                                              (7,000
                                              )Increase
      (decrease) in:Accounts
      payable and accrued expenses
                                              
                                              
                                              1,948,000
                                              
                                              
                                              
                                              2,219,000
                                              
                                              
                                              
                                              1,019,000Income
      taxes payable
                                              
                                              
                                              (200,000
                                              )
                                              
                                              
                                              200,000
                                              
                                              
                                              
                                              -Deferred
      revenue
                                              
                                              
                                              60,000
                                              
                                              
                                              
                                              38,000
                                              
                                              
                                              
                                              53,000Deferred
      rent
                                              
                                              
                                              (42,000
                                              )
                                              
                                              
                                              (103,000
                                              )
                                              
                                              
                                              14,000Net
      cash provided by operating activities
                                              
                                              
                                              6,247,000
                                              
                                              
                                              
                                              7,570,000
                                              
                                              
                                              
                                              144,000Cash
      flows from investing activities:Investment
      in nonconsolidated affiliates
                                              
                                              
                                              (2,644,000
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Purchases
      of Domain Names
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (132,000
                                              )Purchases
      of property and equipment
                                              
                                              
                                              (405,000
                                              )
                                              
                                              
                                              (454,000
                                              )
                                              
                                              
                                              (678,000
                                              )Purchase
      of Exhibit Merchandising
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (11,436,000
                                              )Purchase
      of Magic Arts & Entertainment, net of cash acquired
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (1,971,000
                                              )
                                              
                                              
                                              -Purchase
      of NewSpace Entertainment, net of cash acquired
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (1,254,000
                                              )
                                              
                                              
                                              -Purchase
      of ticket inventory from AnyEvent
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (96,000
                                              )Purchase
      of AnyEvent
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (300,000
                                              )Net
      cash used in investing activities
                                              
                                              
                                              (3,049,000
                                              )
                                              
                                              
                                              (3,679,000
                                              )
                                              
                                              
                                              (12,642,000
                                              )Cash
      flows from financing activities:Proceeds
      from note payable, stockholder
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              2,000,000Repayment
      of note payable, stockholder
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (2,000,000
                                              )Proceeds
      from common stock subscription
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              17,784,000Cost
      of Treasury Stock
                                              
                                              
                                              (2,512,000
                                              )
                                              
                                              
                                              (2,098,000
                                              )
                                              
                                              
                                              -Payments
      on capital lease obligations
                                              
                                              
                                              (52,000
                                              )
                                              
                                              
                                              (46,000
                                              )
                                              
                                              
                                              (41,000
                                              )Net
      proceeds from exercise of options and warrants
                                              
                                              
                                              23,000
                                              
                                              
                                              
                                              54,000
                                              
                                              
                                              
                                              229,000Net
      cash (used in) provided by financing activities
                                              
                                              
                                              (2,541,000
                                              )
                                              
                                              
                                              (2,090,000
                                              )
                                              
                                              
                                              17,972,000Effect
      of exchange rate changes on cash
                                              
                                              
                                              36,000
                                              
                                              
                                              
                                              (26,000
                                              )
                                              
                                              
                                              -Change
      in Cash:Net
      increase
                                              
                                              
                                              693,000
                                              
                                              
                                              
                                              1,775,000
                                              
                                              
                                              
                                              5,474,000Balance
      at beginning of period
                                              
                                              
                                              9,192,000
                                              
                                              
                                              
                                              7,417,000
                                              
                                              
                                              
                                              1,943,000Balance
      at end of period
                                              
                                              $
                                              9,885,000
                                              
                                              
                                              $
                                              9,192,000
                                              
                                              
                                              $
                                              7,417,000Supplemental
      disclosures of cash flow information:Cash
      paid for:Income
      taxes
                                              
                                              $
                                              604,000
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -Interest
                                              
                                              $
                                              13,000
                                              
                                              
                                              $
                                              19,000
                                              
                                              
                                              $
                                              104,000Non-cash
      investing activities:Issuance
      of earn-out shares of 190,476 and originally issued 476,190 shares of
      common stock in conjunction with the acquisition of Magic Arts &
      Entertainment – Florida, Inc. in 2009 and 2008
respectively
                                              
                                              $
                                              256,000
                                              
                                              
                                              $
                                              2,257,000
                                              
                                              
                                              $
                                              -Issuance
      of 571,428 shares of common stock in conjunction with the acquisition of
      NewSpace Entertainment, Inc.
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              2,595,000
                                              
                                              
                                              $
                                              -Issuance
      of 137,500 shares of common stock in conjunction with acquisition of
      John’s Tickets, LLC
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              550,000Issuance
      of 5 million shares of common stock in conjunction with the acquisition of
      Exhibit Merchandising, LLC
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              35,000,000Non-cash
      financing activities:Issuance
      of common stock to officers
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              671,000Issuance
      of common stock as payment for accrued bonus
                                              
                                              
                                              -
                                              
                                              
                                              
                                              29,000
                                              
                                              
                                              
                                              -Equipment
      acquired through capital lease
                                              
                                              
                                              -
                                              
                                              
                                              
                                              22,000
                                              
                                              
                                              
                                              -Exercise
      of options
                                              
                                              $
                                              69,000
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -





See
accompanying notes to the consolidated financial statements.


F-6





TIX CORPORATION AND
SUBSIDIARIES





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





YEARS
ENDED DECEMBER 31, 2009, 2008, and 2007





1.
            Organization
      and Basis of Presentation





Tix
Corporation (the “Company”) was incorporated in Delaware in April 1993 under the
name Cinema Ride, Inc. The Company changed its name from Cinema Ride, Inc. to
Tix Corporation (Tix), effective March 3, 2005. Tix is an integrated
entertainment company focusing on ticketing services, event merchandising, and
the production and promotion of live entertainment. We operate three
complementary business units: Tix4Tonight, Exhibit Merchandising (EM), and Tix
Productions Inc. (TPI).




Operating
Segments





Ticketing
Services




Our
ticketing services are carried out by our wholly owned subsidiary Tix4Tonight,
which offers for sale discount and premium tickets, and provides membership
group sales services. Discounted tickets are sold byTix4Tonight, while premium
tickets are offered through Tix4AnyEvent, and membership group sales are handled
through Tix4Members.com. When selling last minute discounted tickets,
Tix4Tonight sells them under short-term, exclusive and non-exclusive agreements
with approximately 85 Las Vegas shows and attractions, out of a total of
approximately 110 Las Vegas shows and attractions running at any one time.
Tix4Tonight typically does not know exactly what shows it will be able to offer
tickets for until the same day of the show. There are usually many more tickets
available each day than are sold, although it is not uncommon for Tix4Tonight to
sell out its supply of tickets for individual shows. The shows are paid on a
weekly basis only for the tickets that Tix4Tonight actually sells to customers.
Tix4Tonight has no financial risk with respect to unsold tickets and revenues
are recorded at net of our cost.




Tix4Tonight
dba AnyEvent, a national event ticket broker, sells premium tickets for sporting
events, concerts, tours, and theatre. Any Event operations are located in the
administrative offices of Tix4Tonight.





Tix4Tonight
expanded our market reach through the development of a new targeted marketing
channel which includes a national, online, branded discount ticket portal called
Tix4Members.com. In February 2009, Tix4Members launched its first co-branded
discount website with Costco Event Ticket Services. However, revenues from the
Costco arrangement had been minimal. As a result, we terminated the Costco
arrangement effective October 2009. The Company believes in this strategy of
selling discount tickets to concerts, live theater, and sporting events to
membership group members through co-branded websites and continues to seek
additional partners. As with our Tix4Tonight operation in Las Vegas,
Tix4Members.com offers a marketing channel for producers, presenters, artists,
arenas and theaters nationwide to take advantage of our strong position in the
discounted ticket sales and live entertainment industry. Tix4Members.com
operates in a manner similar to Tix4Tonight with a few key differences. Instead
of relying on physical ticket booth facilities for direct sales, Tix4Members
uses the internet as its customer interface, and instead of offering only
discounted day of show tickets, it has expanded the date range of its discount
ticket availability to concerts, theatre shows and sporting events. Tix4Members’
revenues are dependent in part on sporting events and special concerts
occurring, such as boxing matches and reunion tours, as well as our ability to
obtain tickets to these events.




Exhibit
and Event Merchandising





The
Company provides exhibit and event merchandising through its wholly owned
subsidiary Exhibit Merchandising LLC (EM). EM provides retail specialty stores
for touring museum exhibitions and touring theatrical productions. EM provides a
complete turnkey retail store with commercially-available and extensive
custom-branded product for sale in addition to professional management that
complements the exhibition or theatrical production it represents. It operates
the stores in space rented in conjunction with the exhibit. To date, revenues
from the management of retail outlets associated with the sale of merchandise
related to touring exhibits have been primarily derived from “Tutankhamun and
The Golden Age of the Pharaohs” and “Tutankhamun the Golden King and the Great
Pharaohs.”




Live
Entertainment




In
December 2007, we announced that we had entered into letters of intent to
acquire two live theatrical and concert production companies: Magic Arts &
Entertainment, LLC (Magic) and NewSpace Entertainment, Inc. (NewSpace). As part
of the letters of intent, the managements of Magic and NewSpace agreed to manage
the operations of their respective companies for the benefit of Tix Corporation
from January 2, 2008 until the transactions were finalized. The managements of
Magic and NewSpace were required to consult and obtain the approval of the
management of Tix Corporation prior to entering into any long term arrangements
or transactions that were outside the normal course of business. Further, Tix
Corporation assumed all responsibility for any profits or losses that might be
incurred during this period by both Magic and NewSpace. The acquisition of Magic
was completed on February 29, 2008 and the acquisition of NewSpace was completed
on March 12, 2008.  In May of 2008, we combined the operations of
these two entertainment companies into our newly-formed, wholly-owned subsidiary
Tix Productions Inc. We believe that by combining the operations of these two
companies into a single entity, we have been better able to leverage resources,
gain operating efficiencies, and more fully utilize their combined
experience with venues, producers and promoters. NewSpace and Magic continue to
operate under their previous names and will for the foreseeable future as a
reflection of the equity and marketplace recognition those entities
have.


F-7





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




2.
            Summary
      of Significant Accounting Policies





Revenue
Recognition, Presentation and Concentrations





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





The
Company’s Las Vegas discount show ticketing business recognizes as revenue the
commissions and related transaction fees earned from the sale of Las Vegas show
tickets at the time the tickets are paid for by and delivered to the customers.
The Company’s commissions are calculated based on the face value of the show
tickets sold. The Company’s transaction fees are charged on a per-ticket basis.
With certain exceptions, ticket sales are generally non-refundable, although
same-day exchanges of previously sold tickets are permitted. Claims for ticket
refunds, which are generally received and paid the day after the show date, are
charged back to the respective shows and are recorded as a reduction to the
Company’s commissions and fees at the time that such refunds are processed. The
Company does not have accounts receivable associated with its sales
transactions, as payment is collected at the time of sale.





Tix4Dinner
offers reservations for discounted dinners at various restaurants surrounding
the Las Vegas strip and downtown with dining at specific times on the same day
or in some cases the day after the sale. Tix4Dinner recognizes as revenue the
transaction fees earned from the booking of dinner reservations at the time that
the reservations are made and a subsequent nominal fee from the restaurant at
the time the reservation is used. At this time, the Company has immaterial
amounts of accounts receivable and does not have any accounts payable associated
with the Tix4Dinner operations, as the Company collects the transaction fee at
the time that the reservation is made, and the dinner payment is collected
directly by the restaurant.





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





Tix4Members.com
recognizes as revenues the commissions and related transaction fees from the
sale of tickets when the related event has occurred.  Refunds are only
issued if the event is canceled or postponed.  Payments for such
ticket sales received prior to the event are recorded as deferred
revenue.  Claims for ticket refunds, which will be generally received
and paid the day after the show date, are charged back to the respective shows
and recorded as a reduction to the Company’s commissions and fees at the time
that such refunds are processed.  Tix4Members does not have any
accounts receivable associated with sales transactions to individual customers
because payment is collected at the time of sale.





During
2009, 47% of our Ticketing Service segment’s revenues were derived from two
separate producers that we sell discount tickets for multiple shows, of which
32% was related to one producer and 15% was related to the other producer. The
shows appear at different venues, hotels or theatres; however no single show,
venue or theatre was greater than 10% of revenues. During the year ended
December 31, 2008, 37% of our Ticketing Service segment’s revenues were derived
from two producers of shows, of which 24% was related to one producer and 13%
was related to the other producer. The multiple shows appeared at different
venues, hotels or theaters; however, no single show, venue or theatre was
greater than 10% of revenues. During the year ended December 31, 2007, there
were no showrooms or other ticket sources which accounted for 10% or more of
ticketing services revenues.





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


F-8





Substantially
all of Exhibit Merchandising’s revenues since its acquisition on August 8, 2007
have been derived from the exhibits, “Tutankhamun and The Golden Age of the
Pharaohs” and “Tutankhamun the Golden King and the Great Pharaohs.”





On
January 2, 2008, the Company began its live entertainment business. Revenue from
the presentation and production of an event is recognized after the performance
occurs. Revenue from our producing and presenting activities are reported in
accordance with the authoritative guidance of the Financial Accounting Standards
Board, which provides guidance that the following items are indicators as to
whether something should be recorded at gross or net:





·
            Acts as principal in the
      transaction


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


o
            Takes title to the
      products


o
            Selects the
      supplier


o
            Flexibility in
      pricing


o
            Assumes credit
      risk


·
            Acts as an agent or broker
      (including performing services, in substance, as an agent or broker) with
      compensation on a commission or fee basis. If the Company performs as an
      agent or broker without assuming the risks and rewards of ownership of the
      goods, sales should be reported on a net
  basis.





Tix
Productions Inc.’s (TPI) operating units Magic Arts & Entertainment and
NewSpace act as both presenter and promoters of productions, as well as agent.
TPI’s revenues from live entertainment where it is acting as the producer or
promoter are a function of a number of elements; revenue is a direct reflection
of tickets sold times ticket prices plus ancillary revenue streams including
sponsorships and revenues generated through premium ticketing
opportunities.  In instances where the Company acts as the presenter or
promoter, it:





·
            selects the suppliers or approves
      the selection of the
supplier,


·
            is the primary obligor with
      suppliers,


·
            assumes credit
      risk,


·
            directs the pricing of the
      tickets, and


·
            purchases the
      advertising.





The above
are indicators of ownership and would be evidence that revenues and related
expenses should be recorded at gross. As the Company is acting as the principal
in the transaction, i.e., it has the risks and rewards of ownership and has
recorded the related revenues and expenses at gross. In other instances where we
only receive a fee and are not the principal obligors to vendors, we record
these revenues at net.





TPI
revenues collected in advance of an event are recorded as deferred revenues
until the event occurs. Revenue collected from sponsorship and other revenue,
which is not related to any single event, is classified as deferred revenue and
generally amortized over the tour’s season or the term of the contract. We
account for taxes that are externally imposed on revenue producing transactions
on a net basis, as a reduction to revenue.





During
2009 and 2008, our Live Entertainment segment had several shows that were in
excess of 10% of its revenues. In 2009, we had two shows that represented 39% of
our Live Entertainment segment’s revenues, of which one show represented 28% of
revenues and a second show represented 11% of revenues. In 2008, we had four
shows that represented 45% of our Live Entertainment segment’s revenues with
each show representing slightly more than 10% of revenues. At the end of 2009
and 2008, we owed one show approximately $2.8 million and $1.3 million,
respectively.




Consolidation





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





Inventory





We record
inventories at the lower of cost (FIFO basis) or market value. We assess the
value of our inventories periodically based upon numerous factors including
expected product or material demand, current market conditions, current cost and
net realizable value. If necessary, we write down our inventory for estimated
obsolescence, potential shrinkage, or unmarketable inventory equal to the
difference between the cost of inventory and the estimated market value based
upon assumptions about future demand and market conditions.


F-9





Business
Combinations





We
allocate the purchase price of acquired companies to the tangible assets
acquired, liabilities assumed, and intangible assets acquired based on their
estimated fair values. The excess of the purchase price over these fair values
is recorded as goodwill. We engage independent third-party appraisal firms to
assist us in determining the fair values of assets acquired and liabilities
assumed. Such valuations require management to make significant estimates and
assumptions, especially with respect to intangible assets. The significant
purchased intangible assets recorded by Tix include customer contracts and trade
names.





Critical
estimates in valuing certain intangible assets include but are not limited to:
future expected cash flows from customer contracts, customer lists, distribution
agreements, and intellectual property; estimating cash flows from projects when
completed, and discount rates. Management's estimates of fair value are based
upon assumptions believed to be reasonable, but which are inherently uncertain
and unpredictable and, as a result, actual results may differ from
estimates.





Property
and Equipment





Property
and equipment are stated at cost or fair value at date of acquisition.
Depreciation which is recorded for both owned assets and assets under capital
leases, at the time property and equipment is placed in service using the
straight-line method over the estimated useful lives of the related assets,
which range from four to ten years. Leasehold improvements are amortized over
the shorter of the expected useful lives of the related assets or the lease
term.




Stock-Based
Compensation





The
Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and for financing
costs. The Company accounts for stock option and warrant grants issued and
vesting to employees based on the authoritative guidance provided by the
Financial Accounting Standards Board. The Company accounts for stock option and
warrant grants issued and vesting to non-employees in accordance with the
authoritative guidance provided by the Financial Accounting Standards Board
whereas the value of the stock compensation is based upon the measurement date
as determined at either a) the date at which a performance commitment is
reached, or b) at the date at which the necessary performance to earn the equity
instruments is complete.




We
estimate volatility and forfeitures based upon historical data.  As
permitted by the authoritative guidance issued by the Financial Accounting
Standards Board, we use the “simplified” method to determine the expected life
of an option grant due to the Company’s lack of sufficient historical exercise
data to provide a reasonable basis, which is a result of the relative high
turnover rates experienced in the past for positions granted options. All of
these variables have an effect on the estimated fair value of our share-based
awards.





Intangible
Assets and Goodwill





The
Company accounts for intangible assets and goodwill in accordance with the
authoritative guidance issued by the Financial Accounting Standards Board.
Intangibles are valued at their fair market value and are amortized taking into
account the character of the acquired intangible asset and the expected period
of benefit. The Company evaluates intangible assets and goodwill for impairment,
at a minimum, on an annual basis and whenever events or changes in circumstances
indicate that the carrying value may not be recoverable from its estimated
undiscounted future cash flows. Recoverability of intangible assets is measured
by comparing their net book value to the related projected undiscounted cash
flows from these assets, considering a number of factors, including past
operating results, budgets, economic projections, market trends and product
development cycles. If the net book value of the asset exceeds the related
undiscounted cash flows, the asset is considered impaired, and a second test is
performed to measure the amount of impairment loss.  During the year ended
December 31, 2008, we recorded an impairment charge of $33.1 million related to
goodwill and intangible assets related to the assets acquired from our
acquisition of Exhibit Merchandising, LLC. There were no indications of
impairment based on managements’ assessment at December 31, 2009 or 2007.
Factors we consider important that could trigger an impairment review include
significant underperformance relative to historical or projected future
operating results, significant changes in the manner of the use of our assets or
the strategy for our overall business, and significant negative industry or
economic trends. If current economic conditions worsen causing decreased
revenues and increased costs, we may have further goodwill
impairments.




Income
Taxes





Current
income tax expense is the amount of income taxes expected to be payable for the
current year. A deferred income tax asset or liability is established for the
expected future consequences of temporary differences in the financial reporting
and tax basis of assets and liabilities. The Company considers future taxable
income and ongoing, prudent and feasible tax planning strategies, in assessing
the value of its deferred tax assets. If the Company determines that it is more
likely than not that these assets will not be realized, the Company will reduce
the value of these assets to their expected realizable value, thereby decreasing
net income. Evaluating the value of these assets is necessarily based on the
Company’s judgment. If the Company subsequently determined that the deferred tax
assets, which had been written down, would be realized in the future, the value
of the deferred tax assets would be increased, thereby increasing net income in
the period when that determination was made.


F-10





The
Company prescribes a recognition threshold and a measurement attributable for
the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax
position must be more likely than not to be sustained upon examination by taxing
authorities. The amount recognized is measured as the largest amount of benefit
that is greater than 50% likely of being realized.





Fair
Value Measurements





The
Company uses various inputs in determining the fair value of its investments and
measures these assets on a recurring basis. Financial assets recorded at fair
value in the consolidated balance sheets are categorized by the level of
objectivity associated with the inputs used to measure their fair value.
Authoritative guidance provided by the FASB defines the following levels
directly related to the amount of subjectivity associated with the inputs to
fair valuation of these financial assets:





Level 1—Quoted
prices in active markets for identical assets or liabilities.


Level 2—Inputs,
other than the quoted prices in active markets, that are observable either
directly or indirectly.


Level 3—Unobservable
inputs based on the Company's assumptions.





Cash
Concentrations





The
Company's cash balances on deposit with banks in the United States (US) are
guaranteed up to $250,000 by the Federal Deposit Insurance Corporation (the
“FDIC”). The Company may periodically be exposed to risk for the amount of funds
held in one bank in excess of the insurance limit. In order to control the risk,
the Company's policy is to maintain cash balances with high quality financial
institutions. The Company had cash balances with a bank in excess of the
insurance limit as of December 31, 2009, 2008, and 2007. At December 31, 2009,
the Company’s aggregate cash in excess of the FDIC insured amount was $8.3
million. In addition, the Company had aggregate cash balances in Canada of
$286,000, which is $194,000 in excess of this country’s equivalent of the US
FDIC guarantee.





Foreign
Currency





Results
of foreign operations are translated into U.S. dollars using the average
exchange rates during the year. The assets and liabilities of those operations
are translated into U.S. dollars using the exchange rates at the balance sheet
date. Exchange gains and losses were minor in 2009, 2008, and 2007. The Company
began operating in the United Kingdom in November 2007, with the opening of its
exhibit shop at the O2 for “Tutankhamun and The Golden Age of the Pharaohs.”
Additionally, in March 2008, the Company opened a second exhibit shop in Vienna,
Austria for “Tutankhamun and the World of the Pharaohs.” In November 2009, the
Company opened an exhibit shop in Toronto, Canada. Foreign currency gains and
losses are included in operations.





Net
Income (Loss) Per Common Share





Basic net
income per common share is computed by dividing the net income (loss) available
to common stockholders by the weighted average number of common shares
outstanding during the period. The diluted earnings per share calculation gives
effect to all potentially dilutive common shares outstanding during the period
using the treasury stock method. These potentially dilutive securities were not
included in the calculation of loss per share for the years ended December 31,
2009, 2008 and 2007, because the Company incurred a loss during those periods
and thus their effect would have been anti-dilutive. Accordingly, basic and
diluted loss per share is the same for the years ended December 31, 2009, 2008
and 2007. At December 31, 2009, 2008 and 2007, potentially dilutive securities
consisted of outstanding warrants and stock options to acquire an aggregate of
2,201,000, 3,935,000 and 5,261,000 shares, respectively.




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





Comprehensive
Income (Loss)





The
Company reports comprehensive income, its components and accumulated balances in
a full set of general purpose financial statements. This include all changes in
equity except those resulting from investments by owners and distributions to
owners, including adjustments to minimum pension liabilities, accumulated
foreign currency translation, and unrealized gains or losses on marketable
securities. During the years ended December 31, 2009 and 2008, the Company had a
comprehensive gain of $36,000 and comprehensive loss of $29,000, respectively.
The Company did not have items of comprehensive income (loss) for the year ended
December 31, 2007.




Accounting
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.


F-11


Advertising
Costs





Advertising
costs are charged to operations as selling and marketing expenses at the time
the costs are incurred. Advertising costs for the years ended December 31, 2009,
2008, and 2007 were $1.8 million, $4.4 million, and $823,000,
respectively.





Impairment
of Long-Lived Assets





Authoritative
guidance issued by the Financial Accounting Standards Board established
guidelines regarding when impairment losses on long-lived assets, which include
property and equipment, should be recognized, and how impairment losses should
be measured. Authoritative guidance from the Financial Accounting Standards
Board also provided a single accounting model for long-lived assets to be
disposed of and significantly changed the criteria that would have to be met to
classify an asset as held-for-sale.





Management
regularly reviews property, equipment and other long-lived assets for possible
impairment. This review occurs quarterly, or more frequently if events or
changes in circumstances indicate the carrying amount of the asset may not be
recoverable. If there is indication of impairment, then management prepares an
estimate of future cash flows (undiscounted and without interest charges)
expected to result from the use of the asset and its eventual disposition. If
these cash flows are less than the carrying amount of the asset, an impairment
loss is recognized to write down the asset to its estimated fair value.
Management believes that the accounting estimate related to impairment of its
property and equipment is a “critical accounting estimate” because: (1) it
is highly susceptible to change from period to period because it requires
management to estimate fair value, which is based on assumptions about cash
flows and discount rates; and (2) the impact that recognizing an impairment
would have on the assets reported on the Company’s balance sheet, as well as net
income, could be material. Management’s assumptions about cash flows and
discount rates require significant judgment because actual revenues and expenses
have fluctuated in the past and are expected to continue to do so. There were no
indications of impairment based on management’s assessment at December 31, 2009.
At December 31, 2008, Tix’s management recorded impairment charges to goodwill
and intangible assets of $25.4 million and $7.7 million, respectively. There can
be no assurance that future goodwill impairments will not occur. There were no
impairments of goodwill or intangible assets in 2007.





Changes
in forecasted operations can materially affect these estimates.  Once
an impairment of goodwill or other intangible assets has been recorded, it
cannot be reversed.





Investments in Nonconsolidated
Affiliates





The
Company has investments in various nonconsolidated affiliates. Investments in
nonconsolidated affiliates in which the Company owns between 20% to 50% of the
voting common stock or otherwise exercises significant influence over the
operating and financial policies of the nonconsolidated affiliate are accounted
for using the equity method. Under this method, the Company records its
investments in these entities on the balance sheet based upon its investments
and contributions, and adjusts its basis for the Company’s pro rata share of
earnings or losses, which is reflected in its consolidated statement of
operations. Investments in nonconsolidated affiliates in which the Company owns
less than 20% of the voting common stock are accounted for using the cost method
of accounting.




Reclassifications


In
presenting the Company’s consolidated balance sheet at December 31, 2008, the
Company has presented $343,000 of investments in nonconsolidated affiliates that
were previously included with intangible assets.
  Recent
Accounting Pronouncements





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





In
October 2009, the FASB issued authoritative guidance on revenue recognition that
will become effective for the Company beginning July 1, 2010, with earlier
adoption permitted. Under the new guidance on arrangements that include software
elements, tangible products that have software components that are essential to
the functionality of the tangible product will no longer be within the scope of
the software revenue recognition guidance, and software-enabled products will
now be subject to other relevant revenue recognition guidance. We believe
adoption of this new guidance will not have a material impact on our financial
statements.





On July
1, 2009, the Company adopted authoritative guidance issued by the Financial
Accounting Standards Board (“FASB”) on business combinations. The guidance
retains the fundamental requirements that the acquisition method of accounting
(previously referred to as the purchase method of accounting) be used for all
business combinations, but requires a number of changes, including changes in
the way assets and liabilities are recognized and measured as a result of
business combinations. It also requires the capitalization of in-process
research and development at fair value and requires the expensing of
acquisition-related costs as incurred. We have applied this guidance to business
combinations completed since July 1, 2009. Adoption of the new guidance did not
have a material impact on our financial statements.





In June
2009, the Financial Accounting Standards Board ("FASB") amended its guidance on
accounting for variable interest entities ("VIE"). Among other things, the new
guidance requires a qualitative rather than a quantitative analysis to determine
the primary beneficiary of a VIE; requires continuous assessments of whether an
enterprise is the primary beneficiary of a VIE; enhances disclosures about an
enterprise's involvement with a VIE; and amends certain guidance for determining
whether an entity is a VIE. Under the new guidance, a VIE must be consolidated
if the enterprise has both (a) the power to direct the activities of the
VIE that most significantly impact the entity's economic performance, and
(b) the obligation to absorb losses or the right to receive benefits from
the VIE that could potentially be significant to the VIE. The Company is
evaluating the impact that this change in accounting policy will have on our
consolidated financial statements. Based on our initial assessment, we
anticipate that certain entities that are consolidated under our current
accounting policy may not be consolidated subsequent to the effective date of
the new guidance. The Company does not expect this change in accounting policy
to have a material impact on our consolidated financial
statements.


F-12





3.
            Investments





The
Company in 2008 acquired the rights from the estate of Dodie Smith to develop,
promote and tour the production “101 Dalmatians the Musical,” for $400,000.
These rights were estimated to have a seven year life. Separately, the company
invested $2.2 million, resulting in a 40% interest in the limited liability
company that was formed to produce, promote and tour “101 Dalmatians the
Musical.” Further, as part of an amendment to the original rights with the
estate of Dodie Smith, future rights to the show “101 Dalmatians the Musical”
would vest for a twenty-four year period once the show was performed sixteen
times in New York. In addition, the Company advanced $820,000 to the limited
liability company during the development period of the show, of which $766,000
remains outstanding. The advance earns interest at 15% per annum and is expected
to be repaid from the projected future licensing revenues of the show over a
four year or five year period.





The
touring event associated with the affiliate is expected to end in June 2010,
which includes a sixteen performance run in New York. During 2009, the Company’s
share of losses from the tour including advertising costs that were expensed
when incurred or first performed was $1.3 million. In addition, the Company has
recorded a $1.3 million charge to write off its investment and the estimated
expenses related to its proportionate share of losses that are expected to be
incurred in 2010 to secure the future rights to the show. The rights to the show
will be extended significantly to 24 years if the show has a minimum run on
Broadway. The remaining balance of the note receivable and the intangible asset
totaling $1,052,000 related to the show are to be recovered from show royalties.
The Company expects future recoveries from royalties will exceed the note and
intangible values.





4.
            Acquisitions





On
January 2, 2008, the Company entered into separate letters of intent to acquire
Magic Arts and Entertainment, LLC (Magic) and NewSpace Entertainment, LLC
(NewSpace). As part of the letters of intent, the managements of Magic and
NewSpace agreed to manage the operations of their respective companies for the
benefit of the Company from January 2, 2008 until the transactions could be
finalized. The managements of Magic and NewSpace were required to consult and
obtain the approval of the management of the Company prior to entering into any
long term arrangements or transactions that were outside the normal course of
business. Further, the Company assumed all responsibility for any losses or
profits that might be incurred or earned during this period by both Magic and
NewSpace. As such, the Company has included the results of operation of Magic
and NewSpace in its consolidated operations as of January 2, 2008, the date the
company acquired effective control. The acquisition of Magic was completed on
February 29, 2008 and the acquisition of NewSpace was completed on
March 12, 2008.




Magic
Arts and Entertainment




Pursuant
to the Merger Agreement and Plan of Merger, we paid the two stockholders of
Magic, Joseph Marsh and Lee Marshall, a total of $2.1 million in cash and issued
to them a total of 476,190 restricted shares of our common stock with a market
value of $2.3 million. Messrs Marsh and Marshall were the former owners of
Exhibit Merchandising. Mr. Marsh, as a result of the two transactions and open
market purchases, owns approximately 15% of the Company and Mr. Marshall owns
approximately 6% of the Company. Further, at February 28, 2009, we issued an
additional 190,476 shares of our common stock with a fair market value of
$256,000 to the former owners of Magic Arts and Entertainment as they achieved
the pre-determined EBITDA threshold. We will be required to issue to the former
Magic stockholders an additional 190,476 shares of our common stock if certain
EBITDA milestones are achieved during the next twelve months. These milestones
are based upon the results achieved by Tix Productions, Inc. (“TPI”),
a wholly owned subsidiary of the Company that focuses on providing live
entertainment.




The
assets of Magic consist primarily of agreements, copyrights and licenses to
theatres, productions, and touring acts. We carry on Magic’s business through
TPI.




The
acquisition of Magic has been accounted for as a purchase and the operations of
the company have been consolidated since January 2, 2008, the effective date of
the acquisition.  The $4.4 million purchase price was allocated based
upon the fair value of the acquired assets, as determined by management with the
assistance of an independent valuation firm. As a result of the additional
shares issued with a fair market value of $256,000, the adjusted purchase price
of Magic is $4.7 million.





Allocation
of the Purchase Price of Magic Arts & Entertainment:





Tangible
      assets, net of liabilities assumed:
                    
                    $
                    143,000Intangible
      assets:Employment
      Agreement
                    
                    
                    1,775,000Technology-based
                    
                    
                    5,000Contract
                    
                    
                    476,000Goodwill
                    
                    
                    2,273,000Purchase
      price
                    
                    $
                    4,672,000


F-13





In
conjunction with the completion of the Merger, we entered into written
employment agreements with Joseph B. Marsh and Lee D. Marshall, the co-founders
of Magic, under which they serve as the Co-Chief Executive Officers of TPI. The
term of each of the employment agreements commenced on February 29, 2008 and
will expire on February 28, 2011, unless sooner terminated in accordance with
the applicable provisions of the employment agreement. Under the employment
agreements, Mr. Marsh is entitled to an annual salary of $100,000 and Mr.
Marshall is entitled to an annual salary of $300,000 that will increase by
$25,000 each year during the term of the agreement. Mr. Marshall also is
eligible to receive annual bonuses based upon TPI exceeding performance
milestones specified in his employment agreement.




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




Under
their employment agreements, each of Messrs. Marsh and Marshall agrees not to
compete with us during the period from the date on which their employment with
the Company is terminated for any reason through the fifth anniversary of such
date.  Mr. Marsh was a shareholder of Tix prior to its acquisition of Magic
and presently owns approximately 15% of Tix's common stock.





NewSpace
Entertainment




Pursuant
to the merger agreement, we paid to the three stockholders of NewSpace $1.4
million in cash and issued to them a total of 571,428 restricted shares of our
common stock with a market value of $2.6 million.




The
assets of NewSpace consist primarily of agreements, copyrights and licenses to
theatres, productions, and touring acts. We carry on the business of NewSpace
through TPI.





The
acquisition of NewSpace has been accounted for as a purchase and the operations
of the company have been consolidated since January 2, 2008, the effective date
of the acquisition. The $4.0 million purchase price was allocated and based upon
the fair value of the acquired assets, as determined by management with the
assistance of an independent valuation firm.





Allocation
of the Purchase Price of NewSpace Entertainment:





Tangible
      assets, net of liabilities assumed:
                    
                    $
                    293,000Intangible
      assets:Licensing
      Contracts
                    
                    
                    64,000Employment
      Agreements
                    
                    
                    1,698,000Technology-based
                    
                    
                    5,000Goodwill
                    
                    
                    1,953,000Purchase
      price
                    
                    $
                    4,013,000





In
conjunction with the completion of the Merger, we entered into written
employment agreements with John Ballard, Steve Boulay and Bruce Granath, the
three stockholders of NewSpace, pursuant to which they serve as President, Chief
Operating Officer and Vice President - Marketing, respectively, at TPI. The term
of each of the employment agreements commenced on March 11, 2008, and will
expire on the third anniversary of such date, unless sooner terminated in
accordance with applicable provisions of the employment agreements.




Mr.
Ballard and Mr. Boulay are entitled under their respective employment agreements
to an annual salary of $185,000. Under his employment agreement, Mr. Granath is
entitled to an annual salary of $115,000. Each of Messrs. Ballard, Boulay and
Granath are entitled to increases in their annual salaries of at least 3% per
annum.




If
Messrs. Ballard, Boulay or Granath are terminated “for cause” as defined in
their employment agreements or the employment agreements expire upon their
respective terms, each agrees not to compete with us during the period from the
date of termination or expiration through the fifth anniversary of such
date.




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





During
the year ended December 31, 2007 the Company acquired Exhibit Merchandising,
LLC.


F-14


Exhibit
Merchandising


On August
8, 2007, Tix Corporation purchased substantially all of the assets of Exhibit
Merchandising LLC; an Ohio limited liability company (“EM”). EM was owned by Mr.
Marsh and Mr. Marshall, the former owners of Magic. In exchange for the assets
of EM, we paid $11,450,000 in cash and issued 5,000,000 shares of the Company’s
restricted common stock with a market value of $35.0 million and assumed
$120,000 accounts payable and accrued expenses, primarily related to inventory
purchases of EM. EM is based in Streesboro, Ohio, and is engaged in the business
of product merchandise development and sales related to museum exhibits,
including the King Tutankhamen and Pirates of the Caribbean tours. EM sells
themed merchandise, memorabilia and collector’s items in specialty stores that
operate for the duration of the tours’ presence at a particular museum. EM is
the sole operating unit in our Event and Exhibit Merchandising
segment.





In
connection with the Asset Purchase Agreement, the Company entered into an
employment agreement with Mr. Curtis Bechdel (the “Employment Agreement”)
pursuant to which he will serve as Vice President, Operations, of EM Nevada for
a three year term, subject to extension. In addition, the Company also entered
into a two-year Consulting Agreement with Lee Marshall (the “Consulting
Agreement”) pursuant to which Mr. Marshall agreed to act as a member of the
Company’s transition, assimilation and operating team relating to the assets of
EM and the operation of the business relating to the Purchased Assets. For his
services, the Company agreed to pay Mr. Marshall 100,000 restricted shares
of the Company’s Common Stock.




As a
condition to the Closing, the Company entered into a Voting Agreement with
Joseph Marsh pursuant to which, for a period of four years, Mr. Marsh
granted the Company, through its board of directors, the right to vote all of
his shares, including the shares acquired pursuant to the Asset Purchase
Agreement. As of the date hereof, such shares totaled 4,401,599.





The
acquisition of Exhibit Merchandising has been accounted for as a purchase and
the operations of the company have been consolidated commencing with the closing
of the transaction. The $46.6 million purchase price was allocated based upon
the fair value of the acquired assets, as determined by management with the
assistance of an independent valuation firm.





Allocation
of the Purchase Price of Exhibit Merchandising:





Tangible
      assets:
                
                $
                4,597,000Intangible
      assets:Licensing
      Contracts
                
                
                12,202,000Employment
      Agreements
                
                
                2,538,000Miscellaneous
                
                
                118,000Goodwill
                
                
                27,115,000Purchase
      price
                
                $
                46,570,000





For the
year ended December 31, 2008, the Company’s management performed its annual
impairment testing of goodwill and intangibles based on a combination of
factors, including the economic environment, decreased revenues and increased
costs, and determined that a noncash goodwill and intangible impairment charge
associated with the intangible assets of EM was required. With the assistance of
an independent study, the Company’s management performed a study of the goodwill
and intangible assets acquired related to EM, and recorded charges to goodwill
and intangible assets of $25.4 million and $7.7 million, respectively for the
year ended December 31, 2008. There were no impairments of goodwill or
intangible assets in 2009 and 2007. Once an impairment of goodwill or other
intangible assets has been recorded, it cannot be reversed. There can be no
assurance that future goodwill impairments will not occur.





The
unaudited pro forma condensed consolidated statement of operations for the year
ended December 31, 2007 presented below gives effect to the acquisitions as
if the transaction had occurred at the beginning of such period and includes
certain adjustments that are directly attributable to the transaction, which are
expected to have a continuing impact on the Company. No pro forma information is
necessary for 2009 and 2008 as the companies acquired were included for the
entire year.




Pro forma
data:





Pro Forma(unaudited)Year EndedDecember 31, 2007Revenues
                
                $
                44,384,000Net
      loss
                
                $
                (16,417,000
                )Pro
      forma net loss per weighted average share, basic and
    diluted
                
                $
                (0.60
                )


F-15





5.
            Intangible
      Assets





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





Estimated
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    NetUseful
                    
                    
                    Original
                    
                    
                    Accumulated
                    
                    
                    Impairment
                    
                    
                    
                    
                    
                    CarryingLives
                    
                    
                    Cost
                    
                    
                    Amortization
                    
                    
                    Adjustment
                    
                    
                    Adjustment
                    
                    
                    AmountMarketing
      Based
                    
                    3-6
      years
                    
                    
                    $
                    12,277,000
                    
                    
                    $
                    (3,456,000
                    )
                    
                    $
                    (6,852,000
                    )
                    
                    $
                    -
                    
                    
                    $
                    1,969,000Contract
      commitments (1)
                    
                    3-7
      years
                    
                    
                    
                    6,794,000
                    
                    
                    
                    (3,298,000
                    )
                    
                    
                    (835,000
                    )
                    
                    
                    -
                    
                    
                    
                    2,661,000Customer
      relationships
                    
                    3
      years
                    
                    
                    
                    612,000
                    
                    
                    
                    (574,000
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    38,000Technology
      Based
                    
                    3
      years
                    
                    
                    
                    111,000
                    
                    
                    
                    (100,000
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    11,000Intellectual
      property (e.g. domain names)
                    
                    5
      years
                    
                    
                    
                    130,000
                    
                    
                    
                    (24,000
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    106,000Goodwill
                    
                    indefinite
                    
                    
                    
                    31,084,000
                    
                    
                    
                    -
                    
                    
                    
                    (25,445,000
                    )
                    
                    
                    256,000
                    
                    
                    
                    5,895,000Total
                    
                    
                    
                    
                    $
                    51,008,000
                    
                    
                    $
                    (7,452,000
                    )
                    
                    $
                    (33,132,000
                    )
                    
                    $
                    256,000
                    
                    
                    $
                    10,680,000





Ticketing ServicesAssigned
                              
                              
                              Accumulated
                              
                              
                              
                              
                              
                              CarryingValue
                              
                              
                              Amortization
                              
                              
                              Adjustment
                              
                              
                              AmountMarketing
      Based
                              
                              $
                              75,000
                              
                              
                              $
                              (70,000
                              )
                              
                              $
                              -
                              
                              
                              $
                              5,000Contract
      commitments
                              
                              
                              124,000
                              
                              
                              
                              (49,000
                              )
                              
                              
                              -
                              
                              
                              
                              75,000Customer
      relationships
                              
                              
                              612,000
                              
                              
                              
                              (574,000
                              )
                              
                              
                              -
                              
                              
                              
                              38,000Technology
      Based
                              
                              
                              100,000
                              
                              
                              
                              (93,000
                              )
                              
                              
                              -
                              
                              
                              
                              7,000Intellectual
      property (e.g. domain names)
                              
                              
                              130,000
                              
                              
                              
                              (24,000
                              )
                              
                              
                              -
                              
                              
                              
                              106,000Total
                              
                              $
                              1,041,000
                              
                              
                              $
                              (810,000
                              )
                              
                              $
                              -
                              
                              
                              $
                              231,000MerchandisingAssigned
                              
                              
                              Accumulated
                              
                              
                              
                              
                              
                              
                              CarryingValue
                              
                              
                              Amortization
                              
                              
                              Adjustment
                              
                              
                              AmountMarketing
      Based
                              
                              $
                              12,202,000
                              
                              
                              $
                              (3,386,000
                              )
                              
                              $
                              (6,852,000
                              )
                              
                              $
                              1,964,000Contract
      commitments
                              
                              
                              2,657,000
                              
                              
                              
                              (1,606,000
                              )
                              
                              
                              (835,000
                              )
                              
                              
                              216,000Goodwill
                              
                              
                              27,115,000
                              
                              
                              
                              -
                              
                              
                              
                              (25,445,000
                              )
                              
                              
                              1,670,000Total
                              
                              $
                              41,974,000
                              
                              
                              $
                              (4,992,000
                              )
                              
                              $
                              (33,132,000
                              )
                              
                              $
                              3,850,000Live
      EntertainmentAssigned
                              
                              
                              Accumulated
                              
                              
                              
                              
                              
                              
                              CarryingValue
                              
                              
                              Amortization
                              
                              
                              Adjustment
                              
                              
                              AmountContract
      commitments (1)
                              
                              $
                              4,013,000
                              
                              
                              $
                              (1,643,000
                              )
                              
                              $
                              -
                              
                              
                              $
                              2,370,000Technology
      Based
                              
                              
                              11,000
                              
                              
                              
                              (7,000
                              )
                              
                              
                              -
                              
                              
                              
                              4,000Goodwill
                              
                              
                              3,969,000
                              
                              
                              
                              -
                              
                              
                              
                              256,000
                              
                              
                              
                              4,225,000Total
                              
                              $
                              7,993,000
                              
                              
                              $
                              (1,650,000
                              )
                              
                              $
                              256,000
                              
                              
                              $
                              6,599,000





(1)           Balance
includes $400,000 of assigned contract value and $114,000 accumulated
amortization related to the rights to develop, produce, and promote “101
Dalmatians the Musical” for a seven year period. The net value of these rights
is included in the balance sheet in the amount classified as “Investments in and
advances to nonconsolidated affiliates”.





During
2009, the Company recorded an adjustment to goodwill as a result of the issuance
of 190,000 shares of common stock with a fair market value on the date of
issuance of $256,000 to the former shareholders of Magic pursuant to an earn-out
provision of the Magic Arts and Entertainment merger agreement.


F-16





During
2008, Tix’s management recorded impairment charges to goodwill and intangible
assets related to the acquisition of Exhibit Merchandising of $25.4 million and
$7.7 million, respectively. At December 31, 2008, Management did its review and
believed that impairment may have occurred in the Company’s Exhibit
Merchandising segment due to economic events and financial performance in 2008.
In the first nine months of 2008, the King Tutankhamun exhibit, which is the
Company’s Exhibit Merchandising Segment’s primary source of revenue, was in
Europe where it performed below Management’s expectations due to less than
expected attendance, higher cost of doing business in Europe than in the United
States, and a difference in buying patterns of consumers in Europe as compared
to the United States. It was believed that revenues would improve when the
Exhibit returned to the United States in November 2008, however, revenues in the
fourth quarter of 2008 continued to be lower than projected as consumers were
forced to reduce their non-essential spending due to deteriorating economic
conditions. As a result, Management recorded the impairment charge. On the
contrary, Management did its review and did not believe that an economic
impairment had occurred in the Company’s Ticketing Services segment or Live
Entertainment Segment. Ticketing Services revenues are primarily derived from
the sale of Las Vegas discount show tickets and there was no economic slowdown
in our Ticketing Services segment. Live Entertainment revenues were minimally
impacted by the economic slowdown as a portion of Live Entertainment’s revenues
is derived from subscriptions which are subscribed to a year in advance and the
other portion is derived from brand name entertainment which was minimally
impacted by the economic slowdown.





Total
amortization expense related to intangible assets in 2009, 2008, and 2007 was
$1,966,000, $4,110,000, and $1,375,000, respectively. Total estimated
amortization expense with respect to intangible assets for 2010 though 2014 is
as follows:





Years Ending December 31,2010
                
                $
                (1,596,000
                )2011
                
                
                (1,326,000
                )2012
                
                
                (1,326,000
                )2013
                
                
                (403,000
                )2014
                
                
                (59,000
                )Beyond
      2014
                
                
                (75,000
                )Total
                
                $
                (4,785,000
                )





6.
            Obligations
      Under Capital Leases





The
Company has entered into various capital leases for equipment with monthly
payments ranging from $26 to $1,767 per month, including interest, at interest
rates ranging from 9.8% to 19.7% per annum. At December 31, 2009, monthly
payments under these leases aggregated $4,900. The leases expire at various
dates through 2013.





At
December 31, 2009, 2008 and 2007, property and equipment included assets under
capital leases of $408,000, $408,000 and $386,000, less accumulated amortization
of $312,000, $279,000 and $237,000, respectively.




Minimum
future payments under capital lease obligations are as follows:





Years Ending December 31,2010
                  
                  $
                  67,0002011
                  
                  
                  9,0002012
                  
                  
                  8,0002013
                  
                  
                  3,0002014
                  
                  
                  -Total
      payments
                  
                  
                  87,000Less:
      amount representing interest
                  
                  
                  (10,000
                  )Present
      value of minimum lease payments
                  
                  
                  77,000Less:
      current portion
                  
                  
                  (60,000
                  )Non-current
      portion
                  
                  $
                  17,000





7.
            Related
      Party Transactions





Note
Payable, Stockholder:





On April
24, 2007, the Company borrowed $2,000,000 from Joseph Marsh, a greater than 10%
stockholder of the Company, pursuant to an unsecured short-term note, with
interest at 8%, per annum payable monthly. The note was due on or before April
1, 2008. During the term of the loan, Mr. Marsh had the right to convert the
loan into an investment in any subsequent private placement that the Company may
conduct. On September 29, 2007 the Company repaid the loan in full. During the
term of the loan the Company paid $76,000 in interest. On March 1, 2008, as a
result of Tix acquisition of Magic Arts & Entertainment, Mr. Marsh became an
employee of Tix.


F-17





Member of
the Board of Directors:





During
2009, 2008, and 2007, Benjamin Frankel, a director of the Company, was a
principal in Frankel, LoPresti & Co., an accountancy corporation. For the
years ended December 31, 2009, 2008, 2007, we paid Mr. Frankel or his firm
for accounting and tax services $55,000, $33,000, and $53,000.




8.
            Income
      Taxes





At
December 31, 2009, the Company had Federal net operating loss carryforwards of
approximately $17.8 million expiring in 2010 in varying amounts through 2027.
The Company also had California state net operating loss carryforwards of
approximately $1.5 million of California state net operating loss carryforwards
expiring in 2013 in varying amounts through 2016.





Income
tax expense (benefit for the year ended December 31, 2009 is shown as
follows:





Years ended December 31,
                    
                    2009
                    
                    
                    2008
                    
                    
                    2007Current
                    
                    $
                    167,762
                    
                    
                    $
                    -
                    
                    
                    $
                    -Deferred
                    
                    
                    (131,261
                    )
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    36,501
                    
                    
                    $
                    -
                    
                    
                    $
                    -





The
effects of temporary differences between the financial reporting and income tax
bases of assets and liabilities which give rise to the deferred tax assets and
liabilities at December 31, 2009 are presented below:





Years ended December 31,
                  
                  2009
                  
                  
                  2008
                  
                  
                  2007Inventory
      of deferred items:Net
      operating loss
                  
                  $
                  6,060,000
                  
                  
                  $
                  9,481,000
                  
                  
                  $
                  9,190,000Accrued
      compensation
                  
                  
                  48,000
                  
                  
                  
                  -
                  
                  
                  
                  -Bad
      debt reserve
                  
                  
                  1,000
                  
                  
                  
                  1,000
                  
                  
                  
                  -Deferred
      revenue
                  
                  
                  58,000
                  
                  
                  
                  51,000
                  
                  
                  
                  -Inventory
      reserve
                  
                  
                  31,000
                  
                  
                  
                  14,000
                  
                  
                  
                  -Deferred
      rent
                  
                  
                  15,000
                  
                  
                  
                  30,000
                  
                  
                  
                  66,000Depreciation
                  
                  
                  32,000
                  
                  
                  
                  -
                  
                  
                  
                  -Amortization
                  
                  
                  8,957,000
                  
                  
                  
                  1,974,000
                  
                  
                  
                  9,174,000UNICAP
                  
                  
                  512,000
                  
                  
                  
                  -
                  
                  
                  
                  -Stock
      options
                  
                  
                  1,248,000
                  
                  
                  
                  -
                  
                  
                  
                  -Accrued
      loss on "101 Dalmatians"
                  
                  
                  489,000
                  
                  
                  
                  -
                  
                  
                  
                  -Other
                  
                  
                  (7,000
                  )
                  
                  
                  -
                  
                  
                  
                  27,000Total
      deferred tax assets
                  
                  $
                  17,444,000
                  
                  
                  $
                  11,551,000
                  
                  
                  $
                  18,457,000Valuation
      allowance
                  
                  
                  (17,444,000
                  )
                  
                  
                  (11,551,000
                  )
                  
                  
                  (18,457,000
                  )Net
      deferred tax assets
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -





In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over the
periods in which the deferred tax assets are deductible, management believes it
is more likely than not that the Company will not realize the benefits of these
deductible differences. Therefore, a full valuation allowance has been
provided.


F-18





9.
            Stockholders’
      equity





The
Company from time to time issues its common stock, options and warrants as
non-cash compensation for services rendered, often in conjunction with an
agreement that requires the service provider to assist the Company for a period
of two to four years in obtaining strategic alliances and discount and premium
ticket opportunities. Issued stock is valued at the closing stock price and the
entire value of the contract is expensed on the date of grant since success is
not assured in these types of arrangements and there are no performance
requirements. The expense is recorded in marketing and general administrative
expenses commensurate with the services provided. During the year ended December
31, 2009, the Company issued 50,000 shares of common stock to consultants with a
fair market value of $119,000 on the date of issuance and 38,000 shares of
common stock to officers and employees with a fair market value of $8,000 on the
date of issuance. Additionally, the Company issued 107,000 shares of common
stock, net of 43,000 shares withheld related to income taxes as a result of an
employee option exercise. The Company also issued 190,000 shares of common stock
during the year ended December 31, 2009 with a fair market value on the date of
issuance of $256,000 pursuant to an earn-out provision of the Magic Arts and
Entertainment merger agreement.





In the
third quarter of 2008, the Company’s board of directors authorized a share
repurchase program.  As of December 31, 2009, the Company has
repurchased 1,000,000 shares for $2,532,000. The shares were repurchased at
prices that range from $1.20 per share to $4.13 per share.





In the
second quarter of 2009, the Company’s board of directors authorized an
additional share repurchase program (“the 2009 Repurchase Program”) as the
1,000,000 shares authorized to be repurchased under the program authorized in
the third quarter of 2008 had been purchased. In December 2009, the Company’s
board of directors amended the 2009 Repurchase Program to increase the
authorized number of shares repurchased from 1,000,000 to 5,000,000 shares, and
to extend the repurchase period from one year to three years. Under the 2009
Repurchase Program, the Company had repurchased 1,340,000 shares for $2,078,000,
as of December 31, 2009. The shares were repurchased at prices that range from
$1.50 per share to $3.13 per share.





Service
Providers and Vendors





During
the years ended December 31, 2009, 2008, and 2007, the Company incurred
$119,000, $424,000, and $6.1 million of consulting expense as a result of the
issuance of 50,000, 86,000, and 1.1 million shares of its common stock,
respectively. The fair market value of the shares issued during the year ended
December 31, 2009 was between $1.17 and $3.40 at the time the stock was issued.
The fair market value of the shares issued during the year ended December 31,
2008 was between $4.58 and $5.20 per share at the time the stock was issued. The
fair market value of the shares issued during the year ended December 31, 2007
was between $3.75 and $7.20.




On May
31, 2007, in conjunction with a three year consulting agreement to assist us
with developing strategic relationships with sporting event promoters and
presenters, we issued to Centaurus One, LLC (Centaurus) 250,000 shares of our
common stock which had a fair market value at the time of issuance of $1.4
million and we issued a three year warrant to purchase 1,000,000 shares of our
common stock for $5.35 which had a fair market value of  $3.4
million as calculated using the Black Scholes option pricing model. On
November 27, 2007, we entered into a mutual termination agreement with
Centaurus whereby the services provided to Tix by Centaurus have earned all
the granted stock, but only half of the warrants to purchase 1,000,000 shares of
our common stock, therefore the number of shares the warrant can purchase were
reduced to 500,000 shares. As the agreement did not have any performance
requirements included in it, the fair market value of the warrants and shares
were expensed at the time of issuance.




On July
20, 2007, in conjunction with a four year consulting agreement to assist us in
establishing strategic relationships with producers, promoters and venues, we
issued a private consultant 250,000 share of our common stock with a fair market
value of $1.4 million. As the agreement did not have any performance
requirements included in it, the fair market value of the shares was expensed at
the time of issuance.




Related
Parties and Employees




During
the year ended December 31, 2007, the Company issued a total of 100,000 shares
of common stock to a non-officer employee for services rendered. The shares of
common stock were recorded at their fair market value on the date of issuance of
$635,000 and were charged to operations as general and administrative expense
during the year ended December 31, 2007.





During
March 2006, the Company issued 500,000 shares of common stock pursuant to a
three-year employment agreement with its President and Chief Executive Officer.
The 500,000 shares of common stock had a fair market value on the date of
issuance of $110,000 ($0.22 per share) and were charged to operations as general
and administrative expense over the three-year period commencing March 1, 2006.
During the years ended December 31, 2009, 2008, and 2007, 28,000, 167,000, and
167,000 shares of common stock had vested, and were recorded at their
approximate fair market values of $6,000, $37,000, and $37,000, respectively,
which were charged to operations as general and administrative
expenses.





On March
13, 2006, the Company issued 150,000 shares of common stock to Kimberly Simon,
its Chief Operating Officer. The shares of common stock are subject to pro rata
forfeiture over a three-year period if Ms. Simon ceases to be employed by the
Company. The 150,000 shares of common stock had a fair market value on the date
of issuance of $33,000 ($0.22 per share) and were charged to operations as
general and administrative expense over the three-year period commencing March
13, 2006. During the years ended December 31, 2009, 2008, and 2007, 10,000,
50,000, and 50,000 shares of common stock had vested and were recorded at their
approximate fair market values of $3,000, $11,000, and $11,000, respectively,
which were charged to operations as general and administrative
expenses.


F-19




Private
Placement





On
September 24, 2007, the Company completed the closing of a private investment in
public equity financing. At the closing, the Company sold to institutional and
accredited investors 3,744,000 shares of its common stock for a price of $4.75
per share, or an aggregate of approximately $17.8 million. In addition, the
Company also issued to the investors two-year warrants to purchase 1,870,000
shares of its common stock at an exercise price of $5.50 per share. In
conjunction with this offering, the Company paid fees of $75,000 and issued a
total of 147,000 shares of its common stock to finders in connection with the
financing. The offer and sale of the shares sold were not registered under the
Securities Act of 1933 in reliance upon the exemption from registration
contained in Section 4(2) of the Securities Act and Regulation D
promulgated thereunder. The shares sold in this offering may not be reoffered or
sold in the United States by the holders in the absence of an effective
registration statement, or exemption from the registration requirements, under
the Securities Act.





10.
            Stock-Based
      Compensation Plans





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





Consultant
Stock Plan




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





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





On March
3, 2004, the Company filed with the Securities and Exchange Commission a
registration statement on Form S-8 for the purpose of registering 1,600,000
common shares issuable under the Consultant Stock Plan under the Securities Act
of 1933. As of December 31, 2009, 715,000 shares of common stock were reserved
for issuance under the Consultant Stock Plan.





2009
Equity Incentive Plan





On July
8, 2009, the 2009 Equity Incentive Plan (the “2009 Equity Plan”) for officers,
employees and consultants of the Company was approved pursuant to a Joint
Written Consent of the Board of Directors and Majority Stockholders of the
Company. The 2009 Equity Plan authorized the granting of not more than 3,000,000
restricted shares, stock appreciation rights (“SAR’s”), and incentive and
non-qualified stock options to purchase shares of the Company’s common stock.
The 2009 Equity Plan provided that stock options or SAR’s granted can be
exercisable immediately as of the effective date of the applicable agreement, or
in accordance with a schedule or performance criteria as may be set in the
applicable agreement. The exercise price for non-qualified stock options or
SAR’s would be the amount specified in the agreement, but shall not be less than
the fair value of the Company’s common stock at the date of the grant. The
exercise price for incentive stock options cannot be less than the fair market
value of the Company’s common stock on the date of grant (110% of the fair
market value of the Company’s common stock on the date of grant for a
stockholder owning in excess of 10% of the Company’s common stock).





During
the year ended December 31, 2009, the Company issued options to purchase 25,000
shares of common stock under the 2009 Equity Plan. Further, options previously
granted to purchase 340,000 shares of common stock that were not under a Company
Plan were transitioned and deemed to be grants under the newly adopted 2009
Equity Plan. As of December 31, 2009, options to purchase 2,635,000 shares of
common stock remain reserved for issuance under the 2009 Equity
Plan.





2004
Option Plan





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


F-20





During
the year ended December 31, 2009, the Company issued 150,000 options to
purchase shares of its common stock under the 2004 Option Plan. As of December
31, 2009, options to purchase 144,000 shares of common stock were reserved for
issuance under the 2004 Option Plan.




2004
Directors Option Plan




On March
3, 2005, the Company adopted the Directors Stock Option Plan (the “2004
Directors Option Plan”) for non-employee directors of the Company. The 2004
Directors Option Plan was approved pursuant to a Joint Written Consent of the
Board of Directors and Majority Stockholders of the Company dated September 22,
2004. The 2004 Directors Option Plan authorized the granting of non-qualified
stock options to purchase an aggregate of not more than 100,000 shares of the
Company’s common stock. The 2004 Directors Option Plan provided that options
granted would be exercisable for a period not to exceed ten years and would vest
on a cumulative basis as to one-third of the total number of shares covered
thereby at any time after one year from the date the option was granted and an
additional one-third of such total number of shares at any time after the end of
each consecutive one-year period thereafter until the option had become
exercisable as to all of such total number of shares. The exercise price for
non-qualified stock options would be the fair value of the Company’s common
stock at the date of the grant. No option may be exercised during the first six
months of its term except in the case of death. On May 30, 2007, an amendment to
the 2004 Directors Option Plan was approved through a Corporate Resolution by
the Company’s Board of Directors, and adjusts the vesting period of options
granted from vesting one-third annually over three years to vesting immediately.
On July 8, 2009, an additional amendment to the 2004 Directors Option Plan (“The
Amendment”) was approved pursuant to a Joint Written Consent of the Board of
Directors and Majority Stockholders of the Company. The Amendment increased the
authorized amount of option grants to purchase shares of our common stock to
1,000,000.





During
the year ended December 31, 2009, the Company issued 100,000 options
to purchase shares of its common stock under the 2004 Directors Option Plan. As
of December 31, 2009, options to purchase 830,000 shares of common stock remain
reserved for issuance under the 2004 Directors Option Plan.





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





2009
                  
                  
                  2008
                  
                  
                  2007Risk
      free rate of return
                  
                  
                  1.36% - 3.34
                  %
                  
                  
                  2.12% - 2.82
                  %
                  
                  
                  4
                  %Option lives in years
                  
                  
                  3 - 6.5
                  
                  
                  
                  3
                  
                  
                  
                  6Annual volatility of stock price
                  
                  
                  100.6% - 432.8
                  %
                  
                  
                  81.5% - 82.3
                  %
                  
                  
                  112.5
                  %Dividend yield
                  
                  
                  0
                  %
                  
                  
                  0
                  %
                  
                  
                  0
                  %





Summary
of Stock Options





A summary
of the combined stock options for the year ended December 31, 2009 for the four
plans discussed above is as follows:





WeightedNumber
                  
                  
                  averageof
                  
                  
                  exerciseoptions
                  
                  
                  priceBalance
      outstanding, January 1, 2007
                  
                  
                  451,500
                  
                  
                  $
                  2.05Options
      granted
                  
                  
                  847,000
                  
                  
                  
                  6.94Options
      exercised
                  
                  
                  (1,000
                  )
                  
                  
                  0.39Options
      expired or forfeited
                  
                  
                  (9,000
                  )
                  
                  
                  6.85Balance
      outstanding, December 31, 2007
                  
                  
                  1,288,500
                  
                  
                  
                  5.24Options
      granted
                  
                  
                  75,000
                  
                  
                  
                  3.70Options
      exercised
                  
                  
                  (100,500
                  )
                  
                  
                  2.01Options
      expired or forfeited
                  
                  
                  -
                  
                  
                  
                  -Balance
      outstanding, December 31, 2008
                  
                  
                  1,263,000
                  
                  
                  
                  5.41Options
      granted
                  
                  
                  275,000
                  
                  
                  
                  1.30Options
      exercised
                  
                  
                  (150,000
                  )
                  
                  
                  0.15Options
      expired or forfeited
                  
                  
                  (137,000
                  )
                  
                  
                  4.38Balance
      outstanding, December 31, 2009
                  
                  
                  1,251,000
                  
                  
                  $
                  5.24Balance
      exercisable, December 31, 2009
                  
                  
                  829,000
                  
                  
                  $
                  5.54


F-21




Information
relating to outstanding stock options at December 31, 2009, summarized by
exercise price, is as follows:





Outstanding
                
                
                ExercisableWeighted
                
                
                
                
                
                WeightedLife
                
                
                Average
                
                
                
                
                
                AverageExercise Price Per Share
                
                Shares
                
                
                (Years)
                
                
                Exercise Price
                
                
                Shares
                
                
                Exercise Price$6.00
      - $7.20
                
                
                806,000
                
                
                
                6.80
                
                
                $
                7.01
                
                
                
                559,000
                
                
                $
                7.02$4.00
      - $5.99
                
                
                20,000
                
                
                
                2.21
                
                
                $
                4.30
                
                
                
                20,000
                
                
                $
                4.30$2.00
      - $3.99
                
                
                150,000
                
                
                
                3.28
                
                
                $
                3.07
                
                
                
                150,000
                
                
                $
                3.07$0.22
      - $1.99
                
                
                275,000
                
                
                
                7.50
                
                
                $
                1.30
                
                
                
                100,000
                
                
                $
                1.251,251,000
                
                
                
                6.46
                
                
                $
                5.24
                
                
                
                829,000
                
                
                $
                5.54




The
Company recorded compensation expense pursuant to authoritative guidance
provided by the Financial Accounting Standards Board for the years ended
December 31, 2009 and 2008 of $1.4 million and $1.7 million, respectively. As of
December 31, 2009, the Company has outstanding unvested options with future
compensation costs of $1.1 million, which will be recorded as compensation cost
as the options vest over their remaining average life of 6.46
years.





The
intrinsic value of outstanding stock options at December 31, 2009
was $120,000, as compared to $290,000 at December 31, 2008. The intrinsic
value of exercisable stock options at December 31, 2009 was $49,000, as compared
to $290,000 at December 31, 2008.





In
conjunction with an investor relations consulting agreement in 2009, the Company
issued 150,000 warrants, of which 75,000 vested immediately. The remaining
75,000 vested over six months, which was the term of the consulting agreement.
As the consulting agreement could be terminated at any time and the consulting
arrangement did not contain any performance measurements or sufficiently large
disincentives for non-performance, the related consulting expense of these
75,000 warrants was recognized over the term of the contract. In the year ended
December 31, 2009, we recorded an expense of $207,000 related to warrants issued
in conjunction with this consulting agreement. During the year-ended December
31, 2008, in conjunction with a consulting agreement, the Company issued 150,000
warrants, of which 50,000 vested immediately. The remaining 100,000 warrants
vested over six months, which was the term of the consulting agreement. As the
consulting agreement may be terminated at any time and the consulting
arrangement did not contain any performance measurements or sufficiently large
disincentives for non-performance, the related consulting expense on these
100,000 warrants was recognized over the term of the contract. In the year ended
December 31, 2009, the remaining 33,000 warrants vested, and we recorded an
expense of $18,000 related to the 2008 contract.


F-22





A summary
of warrant activity for the year ended December 31, 2009 is as
follows:





WeightedNumber
                  
                  
                  averageof
                  
                  
                  exercisewarrants
                  
                  
                  priceBalance
      outstanding, January 1, 2007
                  
                  
                  2,829,796
                  
                  
                  $
                  0.52Warrants
      granted
                  
                  
                  2,372,007
                  
                  
                  
                  5.47Warrants
      exercised
                  
                  
                  (1,229,796
                  )
                  
                  
                  0.48Warrants
      expired
                  
                  
                  -
                  
                  
                  
                  -Balance
      outstanding, December 31, 2007
                  
                  
                  3,972,007
                  
                  
                  
                  3.47Warrants
      granted
                  
                  
                  150,000
                  
                  
                  
                  4.00Warrants
      exercised
                  
                  
                  (1,400,000
                  )
                  
                  
                  0.50Warrants
      expired
                  
                  
                  (50,000
                  )
                  
                  
                  0.50Balance
      outstanding, December 31, 2008
                  
                  
                  2,672,007
                  
                  
                  
                  5.11Warrants
      granted
                  
                  
                  150,000
                  
                  
                  
                  1.14Warrants
      exercised
                  
                  
                  -
                  
                  
                  
                  -Warrants
      expired
                  
                  
                  (1,872,007
                  )
                  
                  
                  5.50Balance
      outstanding, December 31, 2009
                  
                  
                  950,000
                  
                  
                  $
                  3.70Balance
      exercisable, December 31, 2009
                  
                  
                  950,000
                  
                  
                  $
                  3.70





The
intrinsic value of outstanding warrants at December 31, 2009 was $278,000, as
compared to $249,000 at December 31, 2008. Information relating to outstanding
warrants at December 31, 2009, summarized by exercise price, is as
follows:





Outstanding
                
                
                ExercisableWeighted
                
                
                
                
                
                WeightedLife
                
                
                Average
                
                
                
                
                
                AverageExercise Price Per Share
                
                Shares
                
                
                (Years)
                
                
                Exercise Price
                
                
                Shares
                
                
                Exercise Price$2.00
      - $5.50
                
                
                650,000
                
                
                
                0.64
                
                
                $
                5.04
                
                
                
                650,000
                
                
                $
                5.04$0.36
      - $1.99
                
                
                300,000
                
                
                
                2.12
                
                
                $
                0.82
                
                
                
                300,000
                
                
                $
                0.82950,000
                
                
                
                1.11
                
                
                $
                3.70
                
                
                
                950,000
                
                
                $
                3.70




11.
            Commitments





Lease
Commitments:





The
Company leases office space for its corporate headquarters in Studio City,
California. Additionally, the Company’s wholly-owned subsidiary, Tix4Tonight,
LLC, leases space for its thirteen ticket facilities and its administrative
offices in Las Vegas, Nevada, for various periods ranging from one year to five
years.




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





The
aggregate minimum future rental payments under non-cancelable operating leases
for facilities in operation at December 31, 2009, excluding operating expenses,
annual rent escalation provisions, and contingent rental payments based on
achieving certain pre-determined sales levels, are as follows:





Years Ending December 31,2010
                  
                  $
                  3,506,0002011
                  
                  
                  3,030,0002012
                  
                  
                  2,582,0002013
                  
                  
                  1,512,0002014
      and beyond
                  
                  
                  1,570,000Total
      payments
                  
                  $
                  12,200,000


F-23





Included
in the minimum future rental payments above are the leases associated with the
acquisition of All Access in March 2010. Please refer to Note 15 of the
footnotes to the consolidated financial statements.




Retirement
Plan:





The
Company has a 401(k) retirement plan which covers substantially all employees.
Under the plan, participants may defer the receipt of up to 12% percent of their
annual compensation, but not to exceed the maximum amount as determined by the
Internal Revenue Code. The amount of the employer matching contribution is equal
to the sum of 25% of each dollar deferred, limited to 1% of the participant’s
compensation. The Company may make additional matching contributions as
determined and approved by the Board of Directors. Total 401(k) retirement plan
expense amounted to $141,000, $119,000, and $8,000 for the years ended December
31, 2009, 2008, and 2007, respectively.





12.
            Legal
      Proceedings





As of
December 31, 2009, the end of the period covered by this report, the Company was
subject to various legal proceedings and claims discussed below, as well as
certain other legal proceedings and claims that have not been fully resolved and
that have arisen in the ordinary course of business. Other than as discussed
below, in the opinion of management, the Company does not have a potential
liability related to any current legal proceedings and claims that would
individually or in the aggregate have a material adverse effect on its financial
condition or operating results. However, the results of legal proceedings
cannot be predicted with certainty. The Company intends to contest each
lawsuit vigorously but should the Company fail to prevail in any of these legal
matters or should several of these legal matters be resolved against the Company
in the same reporting period, the operating results of a particular reporting
period could be materially adversely affected. Management continues to
evaluate the lawsuits discussed below and based on the stage of these
proceedings, management is unable to reasonably estimate the likelihood of any
loss or the amount or range of any potential loss that could result from the
litigation. Therefore, no accrual has been established for any potential
loss in connection with these lawsuits.





Vegas.Com Trademark
Litigation





On
October 23, 2009, the Company and Tix4Tonight filed a complaint against
Vegas.com ("Vegas.com")and Vegas
Tix4Less(“VT4L”) in
the United States District Court for the Central District of California for
federal trademark infringement, federal trade dress infringement and unfair
competition, and common law unfair competition. Specifically, the complaint
alleges that Vegas.com and VT4L are intentionally confusing consumers by using
the Company's and Tix4Tonight's trademarks and trade dress. The complaint
seeks damages, an injunction, declaratory relief, and attorneys' fees and
costs. On December 4, 2009, Vegas.com and VT4L filed a motion to dismiss
and/or transfer the litigation to Nevada, arguing that the court lacked personal
jurisdiction over the defendants and that venue was either improper or
inconvenient. The Company and Tix4Tonight filed its opposition on January
29, 2010 and the hearing on the motion is currently scheduled for March 15,
2010. To stop Vegas.com and VT4L's infringement during the pendency of the
litigation, the Company and Tix4Tonight filed a motion for preliminary
injunction on February 22, 2010. Vegas.com and VT4L have not yet responded
to the preliminary injunction motion and the hearing is currently set for March
29, 2010.





Vegas.Com Antitrust
Litigation





On
December 14, 2009, Vegas.com and VT4L filed a complaint in the United States
District Court for the District of Nevada alleging violations by the Company and
its wholly owned subsidiary Tix4Tonight of 15 U.S.C. §1, 15 U.S.C. §2, 15 U.S.C.
§14, and Nevada state law. The Complaint specifically alleges that the
Company and Tix4Tonight entered into exclusive deals with venues and producers
with the effect of unreasonably restricting trade and commerce, prevented actual
and prospective competitors such as Vegas.com and VT4L from entering the market
or obtaining a non-trivial share of the market, interfered with existing or
prospective contractual arrangements between Vegas.com and VT4L and venues and
producers, and asserted an invalid patent to prevent competition. In their
demand, Vegas.com and VT4L seek compensatory, consequential, incidental, treble
and punitive damages in an amount to be determined at trial, in addition to
attorneys' fees and costs and injunctive relief. On December 23, 2009,
Vegas.com and VT4L filed an Amended Complaint to add requests for declaratory
judgment of non-infringement and invalidity related to the Company's ticket
systems patent and also a claim for unfair trade practices under the Lanham Act
related to the assertion of that patent. On February 3, 2010, Vegas.com and
VT4L filed their Second Amended Complaint, to add allegations that the Company
and Tix4tonight helped organize a group boycott among venues and producers
against VT4L. The Company and Tix4Tonight's response to the Second Amended
Complaint was filed on March 4, 2010.





13.
            Segment
      Reporting





We
operate in three reportable segments: ticketing services, event and branded
merchandising, and Tix Productions, Inc. (TPI).





Our
ticketing services are carried out by our wholly owned subsidiary Tix4Tonight,
which offers for sale discount and premium tickets, and provides membership
group sales services. Discounted tickets are sold byTix4Tonight, while premium
tickets are offered through Tix4AnyEvent. When selling last minute discounted
tickets, Tix4Tonight sells them under short-term, exclusive and non-exclusive
agreements with approximately 85 Las Vegas shows and attractions, out of a total
of approximately 110 Las Vegas shows and attractions running at any one time.
Tix4Tonight typically does not know exactly what shows it will be able to offer
tickets for until the same day of the show. There are usually many more tickets
available each day than are sold, although it is not uncommon for Tix4Tonight to
sell out its supply of tickets for individual shows. The shows are paid on a
weekly basis only for the tickets that Tix4Tonight actually sells to customers.
Tix4Tonight has no financial risk with respect to unsold tickets and revenues
are recorded at net of cost. In February 2009, we launched our internet based
ticketing operation, Tix4Members.com in conjunction with Costco Wholesale
Corporation (Costco). However, revenues from the Costco arrangement had been
minimal. As a result, we terminated the Costco arrangement effective October
2009. The Company believes in this strategy of selling discount tickets to
concerts, live theater and sporting events to membership group members through
co-branded websites and continues to seek additional partners. As with our
Tix4Tonight operation in Las Vegas, Tix4Members.com offers a marketing channel
for producers, presenters, artists, arenas and theaters nationwide to take
advantage of our strong position in the discounted ticket sales and live
entertainment industry. Tix4Members.com operates in a manner similar to
Tix4Tonight with a few key differences. Instead of relying on physical ticket
booth facilities for direct sales, Tix4Members uses the internet as its customer
interface, and instead of offering only discounted day of show tickets, it has
expanded the date range of its ticket availability of discount tickets to
concerts, theatre shows and sporting events.


F-24




The
Company provides exhibit and event merchandising through its wholly owned
subsidiary Exhibit Merchandising LLC (EM), which was acquired August 8, 2007. EM
provides retail specialty stores with branded merchandise for touring museum
exhibitions and touring theatrical productions. EM owns and operates complete
turnkey retail stores with commercially-available and extensive custom-branded
products for sale in addition to professional management that complements the
exhibition or theatrical production it represents. It operates the stores in
spaces rented in conjunction with the exhibit. To date, revenues from the
management of retail outlets associated with the sale of merchandise related to
touring exhibits have been primarily derived from “Tutankhamun and The Golden
Age of the Pharaohs.”




In
December 2007, the Company announced that it had entered into letters of intent
to acquire two live theatrical and concert production companies: Magic Arts
& Entertainment, LLC (Magic) and NewSpace Entertainment, Inc. (NewSpace). As
part of the letters of intent, the managements of Magic and NewSpace would
manage the operations of their respective companies for the benefit of Tix
Corporation from January 2, 2008 until the transactions could be finalized. The
managements of Magic and NewSpace were required to consult and obtain the
approval of the management of Tix Corporation prior to entering into any long
term arrangements or transactions that were outside the normal course of
business. Further, Tix Corporation assumed all responsibility for any losses or
profits that might be incurred or earned during this period by both Magic and
NewSpace. The acquisition of Magic was completed on February 29, 2008 and the
acquisition of NewSpace was completed on March 12, 2008.  Both Magic
and NewSpace were independent presenters and producers of live theater and
concerts with a history of working together. The Company combined the operations
of the two entertainment companies into its newly-formed wholly-owned
subsidiary, Tix Productions Inc. We believe that by combining the operations of
the two companies into a single entity, we will be able to better leverage
resources, gain operating efficiencies, and more fully utilize the combined
network of producers and promoters. NewSpace and Magic will continue to operate
under their current names as a reflection of the equity and marketplace
recognition of these entities.





Revenue
and expenses earned and charged between segments are eliminated in
consolidation. Corporate expenses, interest income, interest expense and income
taxes are managed on a total company basis.





Information
related to these operating segments is as follows:





Ticketing
                
                
                Exhibit
                
                
                Live
                
                
                
                
                
                ConsolidatedServices
                
                
                Merchandising
                
                
                Entertainment
                
                
                Corporate
                
                
                and Combined2009Revenue
                
                $
                18,257,000
                
                
                $
                9,079,000
                
                
                $
                54,455,000
                
                
                $
                -
                
                
                $
                81,791,000Direct
      cost of revenues
                
                
                6,964,000
                
                
                
                5,462,000
                
                
                
                48,475,000
                
                
                
                -
                
                
                
                60,901,000Selling,
      general and administrative expenses
                
                
                3,548,000
                
                
                
                2,422,000
                
                
                
                4,948,000
                
                
                
                5,633,000
                
                
                
                16,551,000Depreciation
      and amortization
                
                
                515,000
                
                
                
                1,179,000
                
                
                
                790,000
                
                
                
                12,000
                
                
                
                2,496,000Operating
      income (loss)
                
                $
                7,230,000
                
                
                $
                16,000
                
                
                $
                242,000
                
                
                $
                (5,645,000
                )
                
                $
                1,843,000Current
      assets
                
                $
                3,073,000
                
                
                $
                3,127,000
                
                
                $
                5,349,000
                
                
                $
                4,733,000
                
                
                $
                16,282,000Fixed
      assets
                
                
                670,000
                
                
                
                478,000
                
                
                
                82,000
                
                
                
                78,000
                
                
                
                1,308,000Intangible
      assets and goodwill
                
                
                232,000
                
                
                
                3,851,000
                
                
                
                6,311,000
                
                
                
                -
                
                
                
                10,394,000Other
      non-current assets
                
                
                180,000
                
                
                
                21,000
                
                
                
                1,371,000
                
                
                
                6,000
                
                
                
                1,578,000Total
      assets
                
                $
                4,155,000
                
                
                $
                7,477,000
                
                
                $
                13,113,000
                
                
                $
                4,817,000
                
                
                $
                29,562,0002008Revenue
                
                $
                13,952,000
                
                
                $
                11,030,000
                
                
                $
                44,563,000
                
                
                $
                -
                
                
                $
                69,545,000Direct
      cost of revenues
                
                
                5,725,000
                
                
                
                6,877,000
                
                
                
                36,150,000
                
                
                
                -
                
                
                
                48,752,000Selling,
      general and administrative expenses
                
                
                2,720,000
                
                
                
                3,681,000
                
                
                
                5,884,000
                
                
                
                5,654,000
                
                
                
                17,939,000Impairment
      of goodwill
                
                
                -
                
                
                
                25,445,000
                
                
                
                -
                
                
                
                -
                
                
                
                25,445,000Impairment
      of intangible assets
                
                
                -
                
                
                
                7,687,000
                
                
                
                -
                
                
                
                -
                
                
                
                7,687,000Depreciation
      and amortization
                
                
                501,000
                
                
                
                3,173,000
                
                
                
                916,000
                
                
                
                11,000
                
                
                
                4,601,000Operating
      income (loss)
                
                $
                5,006,000
                
                
                $
                (35,833,000
                )
                
                $
                1,613,000
                
                
                $
                (5,665,000
                )
                
                $
                (34,879,000
                )Current
      assets
                
                $
                2,960,000
                
                
                $
                4,969,000
                
                
                $
                2,784,000
                
                
                $
                3,770,000
                
                
                $
                14,483,000Fixed
      assets
                
                
                583,000
                
                
                
                711,000
                
                
                
                109,000
                
                
                
                30,000
                
                
                
                1,433,000Intangible
      assets and goodwill
                
                
                523,000
                
                
                
                4,769,000
                
                
                
                6,755,000
                
                
                
                -
                
                
                
                12,047,000Other
      non-current assets
                
                
                65,000
                
                
                
                13,000
                
                
                
                801,000
                
                
                
                6,000
                
                
                
                885,000Total
      assets
                
                $
                4,131,000
                
                
                $
                10,462,000
                
                
                $
                10,449,000
                
                
                $
                3,806,000
                
                
                $
                28,848,0002007Revenue
                
                $
                14,284,000
                
                
                $
                4,283,000
                
                
                $
                -
                
                
                $
                -
                
                
                $
                18,567,000Direct
      operating expenses
                
                
                8,829,000
                
                
                
                2,843,000
                
                
                
                -
                
                
                
                -
                
                
                
                11,672,000Selling,
      general and administrative expenses
                
                
                15,029,000
                
                
                
                905,000
                
                
                
                -
                
                
                
                5,658,000
                
                
                
                21,592,000Depreciation
      and amortization
                
                
                415,000
                
                
                
                1,229,000
                
                
                
                -
                
                
                
                24,000
                
                
                
                1,668,000Operating
      income (loss)
                
                $
                (9,989,000
                )
                
                $
                (694,000
                )
                
                $
                -
                
                
                $
                (5,682,000
                )
                
                $
                (16,365,000
                )Current
      assets
                
                $
                2,133,000
                
                
                $
                5,623,000
                
                
                $
                -
                
                
                $
                4,251,000
                
                
                $
                12,007,000Fixed
      assets
                
                
                668,000
                
                
                
                759,000
                
                
                
                -
                
                
                
                21,000
                
                
                
                1,448,000Intangible
      assets and goodwill
                
                
                819,000
                
                
                
                40,820,000
                
                
                
                -
                
                
                
                -
                
                
                
                41,639,000Other
      non-current assets
                
                
                46,000
                
                
                
                22,000
                
                
                
                -
                
                
                
                6,000
                
                
                
                74,000Total
      assets
                
                $
                3,666,000
                
                
                $
                47,224,000
                
                
                $
                -
                
                
                $
                4,278,000
                
                
                $
                55,168,000





Balances
have been changed for consistency and comparability of assets and
expenses.


F-25





Information
related to these operating segments is as follows.





14.
            Quarterly
      Financial Information (Unaudited)





Summarized
unaudited quarterly financial information for the year-ended December 31, 2009
and fiscal year 2008 are noted below:




Year Ended December 31, 2009First
                          
                          
                          Second
                          
                          
                          Third
                          
                          
                          FourthQuarter
                          
                          
                          Quarter
                          
                          
                          Quarter
                          
                          
                          QuarterRevenues
                          
                          $
                          20,170,000
                          
                          
                          $
                          26,584,000
                          
                          
                          $
                          9,362,000
                          
                          
                          $
                          25,675,000Depreciation
      and amortization
                          
                          
                          621,000
                          
                          
                          
                          626,000
                          
                          
                          
                          625,000
                          
                          
                          
                          624,000Income
      (loss) from operations
                          
                          
                          261,000
                          
                          
                          
                          630,000
                          
                          
                          
                          (231,000
                          )
                          
                          
                          1,183,000Equity
      in losses of nonconsolidated affiliates
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (2,644,000
                          )(2)Net
      income (loss)
                          
                          $
                          295,000
                          
                          
                          $
                          659,000
                          
                          
                          $
                          (161,000
                          )
                          
                          $
                          (1,311,000
                          )(2)Basic
      earnings per share
                          
                          $
                          0.01
                          
                          
                          $
                          0.02
                          
                          
                          $
                          0.00
                          
                          
                          $
                          (0.04
                          )Diluted
      earnings per share
                          
                          $
                          0.01
                          
                          
                          $
                          0.02
                          
                          
                          $
                          0.00
                          
                          
                          $
                          (0.04
                          )Shares
      used in computation of earnings per share:Basic
                          
                          
                          32,304,286
                          
                          
                          
                          32,361,325
                          
                          
                          
                          32,439,015
                          
                          
                          
                          32,080,099Diluted
                          
                          
                          32,429,891
                          
                          
                          
                          32,645,364
                          
                          
                          
                          32,439,015
                          
                          
                          
                          32,080,099Year Ended December 31, 2008First
                          
                          
                          Second
                          
                          
                          Third
                          
                          
                          FourthQuarter
                          
                          
                          Quarter
                          
                          
                          Quarter
                          
                          
                          Quarter (1)Revenues
                          
                          $
                          23,163,000
                          
                          
                          $
                          16,864,000
                          
                          
                          $
                          8,839,000
                          
                          
                          $
                          20,679,000Impairment
      charge of goodwill and intangible assets
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          33,132,000Depreciation
      and amortization
                          
                          
                          1,122,000
                          
                          
                          
                          1,102,000
                          
                          
                          
                          1,151,000
                          
                          
                          
                          1,226,000Income
      (loss) from operations
                          
                          
                          472,000
                          
                          
                          
                          (1,419,000
                          )
                          
                          
                          (1,065,000
                          )
                          
                          
                          (32,867,000
                          )(1)Net
      income (loss)
                          
                          $
                          462,000
                          
                          
                          $
                          (1,166,000
                          )
                          
                          $
                          (986,000
                          )
                          
                          $
                          (32,974,000
                          )(1)Basic
      earnings per share
                          
                          $
                          0.02
                          
                          
                          $
                          (0.04
                          )
                          
                          $
                          (0.03
                          )
                          
                          $
                          (1.02
                          )Diluted
      earnings per share
                          
                          $
                          0.01
                          
                          
                          $
                          (0.04
                          )
                          
                          $
                          (0.03
                          )
                          
                          $
                          (1.02
                          )Shares
      used in computation of earnings per share:Basic
                          
                          
                          30,642,823
                          
                          
                          
                          31,805,228
                          
                          
                          
                          32,912,630
                          
                          
                          
                          32,386,209Diluted
                          
                          
                          32,493,343
                          
                          
                          
                          31,805,228
                          
                          
                          
                          32,912,630
                          
                          
                          
                          32,386,209


F-26





1.
            The
      Company performed its 2008 annual impairment testing of goodwill and
      intangibles as of December 31, 2008. Based on a combination of factors,
      including the current economic environment, decreased revenues and
      increased decline in margins management determined an impairment of
      goodwill and intangible assets had occurred, thus  recorded
      impairment charges to goodwill and intangible assets of $25.4 million and
      $7.7 million, respectively. There were no impairments of goodwill or
      intangible assets in 2009.




2.
            The
      Company in 2008 acquired the rights from the estate of Dodie Smith to
      develop, promote and tour the production “101 Dalmatians the Musical,” for
      $400,000. These rights were estimated to have a seven year life.
      Separately, the company invested $2.2 million, resulting in a 40% interest
      in the limited liability company that was formed to produce, promote and
      tour “101 Dalmatians the Musical.” Further, as part of an amendment to the
      original rights with the estate of Dodie Smith, future rights to the show
      “101 Dalmatians the Musical” would vest for a twenty-four year period once
      the show was performed sixteen times in New York. In addition, the Company
      advanced $820,000 to the limited liability company during the development
      period of the show, of which $766,000 remains outstanding. The advance
      earns interest at 15% per annum and is expected to be repaid from the
      projected future licensing revenues of the show over a four year or five
      year period.





The
touring event associated with the affiliate is expected to end in June 2010,
which includes a sixteen performance run in New York. During 2009, the Company’s
share of losses from the tour including advertising costs that were expensed
when incurred or first performed was $1.3 million. In addition, the Company has
recorded a $1.3 million charge to write off its investment and the estimated
expenses related to its proportionate share of losses that are expected to be
incurred in 2010 to secure the future rights to the show. The rights to the show
will be extended significantly to 24 years if the show has a minimum run on
Broadway. The remaining balance of the note receivable and the intangible asset
totaling $1,052,000 related to the show are to be recovered from show royalties.
The Company expects future recoveries from royalties will exceed the note and
intangible values.





15.
            Subsequent
      Event





In March
2010, Tix4Tonight acquired certain assets and assumed the responsibility of
certain leases of All Access Entertainment, LLC (All Access). All Access was a
competitor of Tix4Tonight in the Las Vegas last minute discount ticket market
and operated five locations with the main location located in Circus-Circus. The
acquisition of these assets and the assumption of the leases provide us with
greater coverage of the Las Vegas area in which to sell our discount tickets.
Related to the acquisition of certain assets, Tix4Tonightassumed the
responsibility of certain leases of All Access Entertainment, LLC for $2.5
million, of which $1.0 million is a secured convertible note. At the option of
the holder, the Note is convertible into shares of the Company’s Common Stock at
a conversion price per share equal to the daily average closing sale price of
the Company’s Common Stock for the thirty day period prior to the date of
conversion, but in no event less than $3.00. The Note was not, and any
shares of Common Stock issuable upon conversion of the Note will not be,
registered under the Securities Act of 1933 as amended.


F-27





TIX
CORPORATION


SCHEDULE
II


VALUATION
AND QUALIFYING ACCOUNTS


Deferred
Tax Asset Valuation Allowance


ChargesBalance
                
                
                to costs,
                
                
                
                
                
                
                
                
                Balanceat beginning
                
                
                expenses
                
                
                
                
                
                
                
                
                at endDescription
                
                of period
                
                
                and other
                
                
                Deletions
                
                
                Other
                
                
                of periodYear
      ended December 31, 2007
                
                $
                3,500,000
                
                
                $
                -
                
                
                $
                -
                
                
                $
                14,957,000
                
                
                $
                18,457,000Year
      ended December 31, 2008
                
                $
                18,457,000
                
                
                $
                -
                
                
                $
                -
                
                
                $
                (6,906,000
                )
                
                $
                11,551,000Year
      ended December 31, 2009
                
                $
                11,551,000
                
                
                $
                -
                
                
                $
                -
                
                
                $
                5,893,000
                
                
                $
                17,444,000


F-28





TIX
CORPORATION


SCHEDULE
II


VALUATION
AND QUALIFYING ACCOUNTS


Inventory
Valuation Allowance


ChargesBalance
                  
                  
                  to costs,
                  
                  
                  
                  
                  
                  
                  
                  
                  Balanceat beginning
                  
                  
                  expenses
                  
                  
                  
                  
                  
                  Other
                  
                  
                  at endDescription
                  
                  of period
                  
                  
                  and other
                  
                  
                  Deletions
                  
                  
                  (1)
                  
                  
                  of periodYear
      ended December 31, 2007
                  
                  $
                  -
                  
                  
                  $
                  45,000
                  
                  
                  $
                  -
                  
                  
                  $
                  311,000
                  
                  
                  $
                  356,000Year
      ended December 31, 2008
                  
                  $
                  356,000
                  
                  
                  $
                  44,000
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  400,000Year
      ended December 31, 2009
                  
                  $
                  400,000
                  
                  
                  $
                  45,000
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  445,000





(1)
Resulted from the acquisition of Exhibit Merchandising in August of
2007.


F-29





INDEX TO
EXHIBITS




ExhibitNumber
                      
                      Description of Document3.1
                      
                      Certificate
      of Incorporation, as filed with the State of Delaware on April 6, 1993
      (1)3.2
                      
                      Certificate
      of Amendment to Certificate of Incorporation of Cinema Ride, Inc., as
      filed with the State of Delaware on August 31, 1993 (1)3.3
                      
                      Certificate
      of Amendment to Certificate of Incorporation of Cinema Ride, Inc., as
      filed with the State of Delaware on September 16, 1996
  (1)3.4
                      
                      Fourth
      Amendment to Certificate of Incorporation of Cinema Ride, Inc., as filed
      with the State of Delaware, effective March 3, 2005 (6)3.5
                      
                      Bylaws
      of the Company (1)4
                      
                      Voting
      agreement between Mitch Francis and Iqbal Ashraf dated as of July 12, 2006
      (4)10.5
                      
                      Warrant
      Holder Rights Agreement between the Company and Finova Capital Corporation
      (2)10.8
                      
                      2003
      Consultant Stock Plan (3) (C)10.9
                      
                      2004
      Stock Option Plan (5) (C)10.10
                      
                      2004
      Directors Stock Option Plan as amended (7) (C)10.12
                      
                      2009
      Equity Incentive Plan (7) (C)10.25
                      
                      Third
      Amendment to Lease between the Company and 12001 Ventura Corporation
      (9)10.26
                      
                      Employment
      Agreement between Tix Corporation and Mitch Francis effective April 2,
      2009 (11) (C)10.27
                      
                      Asset
      Purchase Agreement between Tix Corporation and John’s Tickets, LLC, dba
      AnyEvent Tickets, effective March 14, 2007 (13)10.28
                      
                      Employment
      Agreement between Tix Corporation and John Pirample effective March 14,
      2007 (13) (C)10.29
                      
                      Asset
      Purchase Agreement dated as of August 6, 2007 among the Company, EM and
      the Members (14)10.30
                      
                      Employment
      Agreement dated as of August 8, 2007 with Curt A. Bechdel
    (14)10.31
                      
                      Voting
      Agreement dated as of August 8, 2007 between the Company and Joseph B.
      Marsh (14)10.32
                      
                      Consulting
      Agreement dated as of August 8, 2007 between Lee D. Marshall and the
      Company (14)10.33
                      
                      Non-Competition
      and Confidentiality Agreement dated as of August 8, 2007 among EM, Joseph
      Marsh, Lee Marshall, John T. Norman and the Company
(14)10.34
                      
                      Mutual
      Termination Agreement dated November 5, 2007 between Tix Corporation and
      Centaurus One, LLC (15)10.35
                      
                      Agreement
      and Plan of Merger By and Among Tix Corporation, a Delaware Corporation,
      on the one hand, and Magic Arts & Entertainment - Florida, Inc., a
      Florida Corporation, Joseph B. Marsh, and Lee D. Marshall on the other
      hand, dated as of February 29, 2008 (16)10.36
                      
                      Employment
      Agreement dated as of February 29, 2008 with Joseph B. Marsh
      (16)10.37
                      
                      Employment
      Agreement dated as of February 29, 2008 with Lee Marshall
    (16)10.38
                      
                      Agreement
      and Plan of Merger by and among Tix Corporation and Newspace Acquisition,
      Inc., on the one hand, and Newspace Entertainment Inc., John Ballard,
      Steve Boulay and Bruce Granath, on the other hand, dated as of March 11,
      2008
(17)








10.39
              
              Employment
      Agreement dated as of March 11, 2008, between Tix Corporation and John
      Ballard (17)10.40
              
              Employment
      Agreement dated as of March 11, 2008, between Tix Corporation and Steve
      Boulay (17)10.41
              
              Employment
      Agreement dated as of March 11, 2008, between Tix Corporation and Bruce
      Granath (17)10.43
              
              Secured
      Convertible Note of One Million Dollars ($1,000,000), without interest,
      due August 10, 2010 (the “Maturity Date”), if not paid sooner, to Metin
      Durmas  (18)14.
              
              Code
      of Ethics (4)21
              
              Subsidiaries
      of the Registrant (18)23
              
              Consent
      of Weinberg & Company, P.A. (18)31.1
              
              Officer’s
      Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
      200231.2
              
              Officer’s
      Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
      200232.1
              
              Officer’s
      Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2
              
              Officer’s
      Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002










(1)
            Previously filed as an Exhibit to
      the Company’s Registration Statement on Form S-3, as filed with the
      Securities and Exchange Commission on June 16, 1997, and incorporated
      herein by reference.





(2)
            Previously filed as an Exhibit to
      the Company’s Quarterly Report on Form 10-QSB for the quarterly period
      ended June 30, 2001, and incorporated herein by
      reference.





(3)
            Previously filed as an Exhibit to
      the Company’s Registration Statement on Form S-8, as filed with the
      Securities and Exchange Commission on March 3, 2004, and incorporated
      herein by reference.





(4)
            Previously filed as an Exhibit to
      the Company’s Current Report on Form 8-K as filed with the Securities and
      Exchange Commission on September 11, 2006, and incorporated herein by
      reference.





(5)
            Previously filed as an Exhibit to
      the Company’s Schedule 14C Information Statement, as filed with the
      Securities and Exchange Commission on January 26, 2005, and incorporated
      herein by reference.





(6)
            Previously filed as an Exhibit to
      the Company’s Annual Report on Form 10-KSB for the fiscal year ended
      December 31, 2004, and incorporated herein by
      reference.





(7)
            Previously filed as an Appendix
      to the Company’s Schedule 14A Proxy Statement, as filed with the
      Securities and Exchange Commission on May 28, 2009, and incorporated
      herein by reference.





(8)
            Intentionally
      deleted





(9)
            Previously filed as an Exhibit to
      the Company’s Quarterly Report on Form 10-QSB for the quarterly period
      ended September 30, 2005, and incorporated herein by
      reference.





(10)
            Intentionally
      deleted





(11)
            Previously filed as an Exhibit to
      the Company’s Current Report on Form 8-K filed April 2, 2009, and
      incorporated herein by
reference.





(12)
            Intentionally
      deleted








(13)
            Previously
      filed as an Exhibit to the Company’s Current Report on Form 8-K filed
      March 20, 2007, and incorporated herein by
  reference.





(14)
            Previously
      filed as an Exhibit to the Company’s current report on Form 8- K , and
      filed August 7, 2007, and incorporated herein by
  reference.





(15)
            Previously
      filed as an Exhibit to the Company’s Current Report on Form 8-K filed
      December 03, 2007, and incorporated herein by
  reference.





(16)
            Previously
      filed as an Exhibit to the Company’s Current Report on Form 8-K filed
      March 5, 2008, and incorporated herein by
  reference.





(17)
            Previously
      filed as an Exhibit to the Company’s Current Report on Form 8-K filed
      March 17, 2008, and incorporated herein by
  reference.





(18)
              Filed
      and attached herewith.


(C)
            Indicates
      compensatory plan, agreement or
arrangement.