SOURCE: Tix Corporation

Tix Corporation

July 14, 2011 09:00 ET

Tix Corporation Reports Record Second Quarter and First Six Months 2011 Results

Adjusted Earnings Is $3.1 Million for the Second Quarter 2011; Six Month Cash Flows From Operations Improves to $5.0 Million

STUDIO CITY, CA--(Marketwire - Jul 14, 2011) - Tix Corporation (the "Company") (OTCQX: TIXC) (PINKSHEETS: TIXC), a leading entertainment company providing discount ticketing services and branded event merchandising, today reported results for the second quarter and six months ended June 30, 2011.

Consolidated second quarter 2011 revenue increased 45% to a record $10.0 million compared with $6.9 million for the same period a year ago. Both of the Company's operating segments reported increased revenues in the second quarter of fiscal year 2011 as compared to 2010. Ticketing Services commissions and fees revenue increased 31% to a record $6.7 million while Exhibit Merchandising revenue increased 85% to $3.4 million. Consolidated net income for the second quarter 2011 was $1.5 million, or $0.06 per diluted common share as compared to a net loss of $1.3 million or ($0.04) per diluted common share reported for the same period a year ago.

For the first six months of 2011, revenue increased 16% to $16.5 million compared with $14.2 million in the same period a year ago. Both of the Company's operating segments reported increased revenues in the first six months of fiscal year 2011 as compared to 2010. Ticketing Services increased 19% to $11.7 million while Exhibit Merchandising increased 9% to $4.8 million. Consolidated net income for the first six months of 2011 was $1.6 million, or $0.06 per diluted common share as compared to a net loss of $1.3 million or ($0.04) per diluted common share reported for the same period a year ago.

In our letter to our shareholders, dated June 30, 2011,(1) we noted that Baker Street, a neophyte activist hedge fund, was engaged in reckless behavior that was destructive of our shareholder value. Despite our continued success in achieving record revenue and earnings, Baker Street's self-interested efforts are clearly depleting the Company resources and thereby reducing shareholder value by forcing the Company to incur significant amounts of legal and other expenses and forcing management to spend enormous amounts of time and resources on the Baker Street campaign rather than continue to further improve results.

Excluding approximately $875,000 in Baker Street-related expenses in the second quarter of 2011, total corporate expenses decreased by approximately $356,000 for the second quarter of 2011, or 31% compared to the same period a year ago and $700,000 for the first six months of 2011, or 30% as compared to the same period a year ago. Had such Baker Street-related expenses not been incurred, the Company would have reported record quarterly net income of approximately $2.4 million or $0.09 per diluted common share for the second quarter of 2011 as compared to a net loss of $1.3 million or ($0.04) per diluted common share reported for the same period a year ago and record net income for the first six months of 2011 of approximately $2.4 million or $0.10 per diluted common share as compared to a net loss of $1.3 million or ($0.04) per diluted common share reported for the same period a year ago. These wasteful expenditures, necessitated by Baker Street's reckless actions, have not only been a significant drain on the Company's financial resources but have been a severe distraction to management's ability to operate the business, all at the expense of our shareholders. The lawsuit and proxy fight initiated by Baker Street will likely cost the Company at least another $1 million.

The Company's exceptional recent success, as evidenced by the record earnings described above, has been and continues to be highly dependent on carefully cultivated close personal relationships between members of current management and the Company's significant business partners, including Las Vegas hotels, show producers, restaurants and landlords. While Tix has had outstanding growth over the past several years, during the same period several other companies have attempted and failed to compete in this market. Tix believes that one of the principal reasons that it has succeeded where others have failed is as a direct result of these close personal relationships. Baker Street's threat to take control of the Company poses a substantial risk to our shareholders' investment as it threatens to tear apart these relationships that have provided the foundation for the Company's success and are crucial for the Company's future growth.

All per share information for the three and six month periods ended June 30, 2011 above and in the summary financial information set forth below is based solely on calculations of shares of common stock of the Company outstanding for purposes of GAAP but not for any other corporate, state law or other purpose, any of which may differ as applicable. Such calculation provided herein is as of June 30, 2011.

Second Quarter 2011 Segmental Operating Results

Ticketing Services Segment

Our Ticketing Services are carried out by our wholly owned subsidiary Tix4Tonight, which sells discount show tickets and discount dinner reservations from its eleven stores in Las Vegas. Tix4Tonight obtains its inventory of discount tickets under short-term exclusive and non-exclusive agreements with nearly every Las Vegas show along with numerous attractions and tours. Ticketing Services also offers under the name Tix4Dinner, discounted dinners reservations at various restaurants surrounding the Las Vegas strip and downtown, with dining at specific times on the same day or advance in some cases.

Second quarter 2011 revenues from our Ticketing Services segment increased 31% to $6.7 million compared to $5.1 million for the same period a year ago. This was an exciting milestone quarter for Tix4Tonight, as each of the three months constituted the highest grossing ticket and dinner sales results in our history. We attribute much of this increase to our recent acquisition of Vegas.com's two discount ticket booths as well as overall brand awareness. Tix4Tonight has experienced dramatic growth from $6 million in 2004, to tracking well over $100 million for 2011. Tix4Tonight currently sells approximately 150,000 show tickets per month and approximately 43,000 dinner reservations per month. Although discounts for shows and dining are offered utilizing other marketing channels, Tix4Tonight is now the only company in Las Vegas offering discount tickets and discount dinner reservations from dedicated booths and is typically able to provide the best discounts to our customers.

Second quarter 2011 operating income from Ticketing Services improved to $2.6 million, or 554%, during the quarter compared to $391,000 for the same period a year ago. Our operating income improved due to the increase in revenues, a decrease in direct costs as a percentage of revenues, offset by an increase in selling, general and administrative expenses after excluding certain unusual bad debt and litigation expenses that were incurred in the second quarter of 2010. Our improved margins reflect our focus on managing costs and leveraging our infrastructure as we continue to grow our revenues.

Exhibit Merchandising Segment

We provide branded event merchandising through our wholly owned subsidiary Exhibit Merchandising. Exhibit Merchandising provides retail specialty stores with branded merchandise for touring museum exhibitions and touring theatrical productions. Exhibit Merchandising's biggest claim to fame is that the company owns and operates the stores that tour the world with the two KING TUT exhibitions, produced by the exhibit arm of AEG. The Company owns and operates complete turnkey retail stores with commercially available and extensive custom branded products for sale and 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 Exhibit Merchandising's expertise and knowledge in the specialized retail world.

Second quarter 2011 revenues from our Exhibit Merchandising segment increased 85% to $3.4 million compared to $1.8 million for the same period a year ago. The increase in revenues was a result of increased exhibitions as well as a decrease in the number of days in which exhibitions were closed due to the relocation of exhibits as compared to the same period a year ago. Revenue is primarily derived from the four current exhibits titled, 'Tutankhamun and The Golden Age of the Pharaohs,' 'Tutankhamun the Golden King and the Great Pharaohs,' 'Real Pirates: The Untold Story of the Whydah from Slave Ship to Pirate Ship' and our exhibit 'Cleopatra: The Search for the Last Queen of Egypt.'

Second quarter 2011 operating income from Exhibit Merchandising increased to $628,000 compared to a loss of $326,000 in the same period a year ago. The improved operating income was due to the increase in revenues, an improvement in our direct costs as a percentage of revenues, offset by a slight increase in our selling, general and administrative expenses as compared to the same period of the prior year.

Conclusion

Mitch Francis, Chief Executive Officer of the Company, stated, "We are particularly pleased with the results generated in Q2 as they reflect the nearly immediate benefits and enhanced shareholder value from our series of initiatives over the past twelve months. Specifically, we deregistered the common stock from the Securities and Exchange Commission and moved our common stock listing to the OTCQX saving us approximately $1.0 million annually; we divested our underperforming division, Tix Productions, Inc.; and we completed a strategic acquisition that has significantly increased our revenues, profits and market position."

Mr. Francis continued, "This impressive growth has been the result of a carefully executed strategy which is totally dependent upon extremely close personal relationships between members of current management and the Company's business partners (including Las Vegas hotels, show producers, restaurants and landlords), a fully engaged management team and 180 hard-working employees, many of whom work in extreme Las Vegas conditions to provide our customers with superb customer service. Your Board and management team look forward to continuing to execute on this growth strategy into the future, which includes additional product lines, expansion into new cities and online marketing platforms for discount show tickets and dinner reservations. If Baker Street moves forward with their planned slate of hand-picked nominees in an effort to seize control of the Company, they would be incapable of continuing the Company's success. They could impair the value of our shareholders' investments in the Company by deviating from the current Board's proven strategy which continues to build value for all of our shareholders and has the Company poised for continued future success. Rather, any Baker Street nominee, if elected, will work solely to advance Baker Street's interests and not the interests of all of our shareholders.

"I would like to thank our Board of Directors comprised, other than myself, of Norman Feirstein, lawyer, Sam Georges, lawyer/CEO, Ben Frankel, CPA and Andy Pells, co-founder of one of the most successful travel websites. These Directors all work tirelessly and with the conviction to make sound business decisions for Tix Corporation that are in the best interests of our shareholders.

"I must also acknowledge and thank our shareholders who, for seventeen years have been amazingly supportive and have trusted us to protect and grow their hard-earned investment dollars."

Investor Conference Call

The Company does not host a conference call following its earnings release. Investors are encouraged to contact the Company's investor relations officer, Steve Handy, CFO, at (818) 761-1002 with any questions.

Non-GAAP Financial Measure

Included in this press release is a "non-GAAP financial measure," which is a measure of the Company's historical or future performance that is different from measures calculated and presented in accordance with GAAP but that Tix Corporation believes is useful to investors. The following discussion defines Adjusted Earnings and presents the reasons the Company believes it is a useful measure of the Company's performance. Tix Corporation defines Adjusted Earnings as net income plus (a) loss on discontinued operations, (b) interest expense, net, (c) income taxes, (d) depreciation and amortization charges, (e) stock based compensation expense and (f) unusual litigation and bad debt related expenses. Adjusted Earnings as calculated by the Company is not necessarily comparable to similarly titled measures by other companies. In addition, Adjusted Earnings (a) does not represent net income or cash flows from operations as defined by GAAP, (b) is not necessarily indicative of cash available to fund the Company's cash flow needs, and (c) should not be considered as an alternative to net income, operating income, cash flows from operating activities or the Company's other financial information as determined under GAAP. Management believes Adjusted Earnings is useful to an investor in evaluating the Company's operating performance because a significant portion of its assets consists of goodwill and intangible assets and property and equipment that are amortized and depreciated over their remaining useful lives in accordance with GAAP. Because amortization and depreciation are non-cash items, management believes that presentation of Adjusted Earnings is a useful measure of the Company's operating performance. Also, management believes measures such as Adjusted Earnings are widely used in the entertainment industries to measure operating performance. Therefore, the Company presents Adjusted Earnings because it may help investors to compare Tix Corporation's ongoing performance before the effect of various items that do not directly affect the Company's ongoing operating performance.

About TIX Corporation

Tix Corporation (OTCQX: TIXC) is an entertainment company providing discount ticketing services, and event and branded merchandising. It currently operates eleven discount ticket stores in Las Vegas under the Tix4Tonight marquee, which offer up to a 50 percent discount for same-day shows, concerts, attractions and sporting events, as well as discount reservations for dining. The Company is also engaged in branded merchandise development and sales activities related to museum exhibitions and other events, including the King Tutankhamun, Cleopatra and Real Pirates tours as well as selling themed souvenir memorabilia and collectors' items in specialty stores in conjunction with the specific events and venues.

Safe Harbor Statement

Except for the historical information contained herein, certain matters discussed in this press release are forward-looking statements which involve risks and uncertainties. These forward-looking statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are discussed in the Company's various filings with the Securities and Exchange Commission and the OTCQX. The Company assumes no obligation to update these forward-looking statements. A copy of the Company's report for the twelve months ended December 31, 2010 can be found on the Company website at www.tixcorp.com or at www.otcqx.com.

(1) http://markets.financialcontent.com/ir/?Module=MediaViewer&GUID=18861976&Ticker=TIXC

                     TIX CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS

                                                  June 30,    December 31,
                                                    2011          2010
                                                ------------  ------------
                                                 (Unaudited)
                             Assets
Current assets:
  Cash                                          $  9,754,000  $  8,816,000
  Accounts receivable                                155,000       251,000
  Inventory, net                                   1,558,000     1,792,000
  Prepaid expenses and other current assets          573,000       777,000
                                                ------------  ------------
    Total current assets                          12,040,000    11,636,000
                                                ------------  ------------

Property and equipment, net                        2,190,000     1,512,000
                                                ------------  ------------

Other assets:
  Intangible assets:
    Goodwill                                       4,679,000     2,879,000
    Intangibles, net                               2,933,000     2,457,000
                                                ------------  ------------
    Total intangible assets                        7,612,000     5,336,000
  Deposits and other assets                          341,000       360,000
                                                ------------  ------------
    Total other assets                             7,953,000     5,696,000
                                                ------------  ------------
      Total assets                              $ 22,183,000  $ 18,844,000
                                                ============  ============




           Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                              $  3,035,000  $  2,603,000
  Accrued expenses                                 2,029,000       900,000
  Deferred revenue                                   100,000       107,000
  Other current liabilities                          124,000       106,000
  Share repurchase obligation - net                2,297,000     1,707,000
  Note payable - net                                 584,000             -
                                                ------------  ------------
    Total current liabilities                      8,169,000     5,423,000
                                                ------------  ------------
Long term liabilities:
Share repurchase obligation - net                  1,164,000     2,313,000
Note payable - net                                 1,108,000             -
                                                ------------  ------------
    Total long term liabilities                    2,272,000     2,313,000
                                                ------------  ------------
      Total liabilities                           10,441,000     7,736,000
                                                ------------  ------------

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $.01 par value; 500,000
   shares authorized; none issued
  Common Stock, $.08 par value; 100,000,000
   shares authorized; 24,606,885 shares and
   24,856,885 shares issued and outstanding at
   June 30, 2011 and December 31, 2010,
   respectively                                    2,678,000     2,678,000
  Additional paid-in capital                      90,745,000    90,434,000
  Advances for share purchases                      (870,000)            -
  Cost of shares held in treasury                (12,459,000)  (12,084,000)
  Accumulated deficit                            (68,351,000)  (69,922,000)
  Accumulated other comprehensive gain                (1,000)        2,000
                                                ------------  ------------
    Total stockholders' equity                    11,742,000    11,108,000
                                                ------------  ------------
      Total liabilities and stockholders'
       equity                                   $ 22,183,000  $ 18,844,000
                                                ============  ============




                     TIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

                                                   Three Months Ended
                                                         June 30,
                                                --------------------------
                                                    2011          2010
                                                ------------  ------------

Revenues                                        $ 10,043,000  $  6,921,000
                                                ------------  ------------
Operating expenses:
  Direct costs of revenues                         4,349,000     3,335,000
  Selling, general and administrative expenses     3,501,000     4,012,000
  Stock based compensation expense                   165,000       202,000
  Depreciation and amortization                      522,000       467,000
                                                ------------  ------------
Total costs and expenses                           8,537,000     8,016,000
                                                ------------  ------------
    Operating income (loss)                        1,506,000    (1,095,000)
                                                ------------  ------------
Other:
  Other income (expense)                              21,000         5,000
  Interest income                                      6,000        15,000
  Interest expense                                   (32,000)       (1,000)
                                                ------------  ------------
Other income (expense), net                           (5,000)       19,000
                                                ------------  ------------
    Income (loss) from continuing operations       1,501,000    (1,076,000)
Loss from discontinued operations                          -      (255,000)
                                                ------------  ------------
Net income (loss)                                  1,501,000    (1,331,000)
  Other comprehensive income (loss)
    Foreign currency translation adjustments          13,000        (5,000)
                                                ------------  ------------
Comprehensive income (loss)                     $  1,514,000  $ (1,336,000)
                                                ============  ============
Net income per common share - continuing
 operations
  Net income per common share - continuing
   operations - basic                           $       0.06  $      (0.03)
  Net income per common share - continuing
   operations - diluted                         $       0.06  $      (0.03)

Net loss per common share - discontinued
 operations
  Net loss per common share - discontinued
   operations - basic                           $          -  $      (0.01)
  Net loss per common share - discontinued
   operations - diluted                         $          -  $      (0.01)
                                                ------------  ------------
                                                           -
Net income per common share
  Net income per common share - basic           $       0.06  $      (0.04)
                                                ============  ============
  Net income per common share - diluted         $       0.06  $      (0.04)
                                                ============  ============

Weighted average common shares outstanding -
 basic                                            24,606,833    31,123,357
                                                ============  ============
Weighted average common shares outstanding -
 diluted                                          25,149,316    31,123,357
                                                ============  ============



                     TIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

                                                 Six Months Ended June 30,
                                                --------------------------
                                                    2011          2010
                                                ------------  ------------

Revenues                                        $ 16,492,000  $ 14,209,000
                                                ------------  ------------
Operating expenses:
  Direct costs of revenues                         7,652,000     6,762,000
  Selling, general and administrative expenses     5,970,000     7,161,000
  Stock based compensation expense                   311,000       237,000
  Depreciation and amortization                      954,000       888,000
                                                ------------  ------------ 
Total costs and expenses                          14,887,000    15,048,000
                                                ------------  ------------
    Operating income                               1,605,000      (839,000)
                                                ------------  ------------
Other:
  Other income (expense)                              53,000       (10,000)
  Interest income                                      9,000        20,000
  Interest expense                                   (48,000)       (3,000)
                                                ------------  ------------
Other income (expense), net                           14,000         7,000
                                                ------------  ------------
    Income (loss) from continuing operations       1,619,000      (832,000)
Loss from discontinued operations                    (48,000)     (422,000)
                                                ------------  ------------
Net income (loss)                                  1,571,000    (1,254,000)
  Other comprehensive income (loss)
    Foreign currency translation adjustments          (3,000)       16,000
                                                ------------  ------------
Comprehensive income (loss)                     $  1,568,000  $ (1,238,000)
                                                ============  ============
Net income per common share - continuing
 operations
  Net income per common share - continuing
   operations - basic                           $       0.07  $      (0.03)
  Net income per common share - continuing
   operations - diluted                         $       0.06  $      (0.03)

Net loss per common share - discontinued
 operations
  Net loss per common share - discontinued
   operations - basic                           $      (0.00) $      (0.01)
  Net loss per common share - discontinued
   operations - diluted                         $      (0.00) $      (0.01)
                                                ------------  ------------

Net income per common share
  Net income per common share - basic           $       0.06  $      (0.04)
                                                ============  ============
  Net income per common share - diluted         $       0.06  $      (0.04)
                                                ============  ============

Weighted average common shares outstanding -
 basic                                            24,702,137    31,123,357
                                                ============  ============
Weighted average common shares outstanding -
 diluted                                          25,244,620    31,123,357
                                                ============  ============




                     TIX CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                 Six Months Ended June 30,
                                                --------------------------
                                                    2011          2010
                                                ------------  ------------
Cash flows from operating activities:
  Net income (loss):                            $  1,571,000  $ (1,254,000)
    Adjustments to reconcile net income to cash
     provided by operating activities:
    Loss from discontinued operations                 48,000       422,000
    Depreciation                                     428,000       272,000
    Amortization of intangible assets                524,000       617,000
    Non-cash imputed interest expense                 48,000             -
    Fair value of options issued to employee and
     directors                                       311,000       237,000
    Loss on advance to vendors                             -       991,000
    Change in allowance of inventory                 (14,000)        2,000
    (Increase) decrease in:
      Accounts receivable                             96,000        76,000
      Advances to vendors                                  -       (27,000)
      Inventory                                      248,000       243,000
      Prepaid expenses and other current assets      223,000       193,000
    Increase (decrease) in:
      Accounts payable and accrued expenses        1,561,000     2,092,000
      Deferred revenue                                (7,000)        2,000
      Other current liabilities                       18,000        18,000
                                                ------------  ------------
        Net cash provided by operating
         activities from continuing operations     5,055,000     3,884,000
        Net cash used in discontinued
         operations                                  (48,000)   (3,442,000)
                                                ------------  ------------
        Net cash provided by operating
         activities                                5,007,000       442,000
                                                ------------  ------------

Cash flows from investing activities:
  Purchases of property and equipment               (106,000)     (390,000)
    Cash used for acquisitions                    (2,000,000)   (1,500,000)
                                                ------------  ------------
        Net cash used in investing activities
         from continuing operations               (2,106,000)   (1,890,000)
                                                ------------  ------------
        Net cash used in investing activities     (2,106,000)   (1,890,000)
                                                ------------  ------------

Cash flows from financing activities:
  Cost of Treasury Stock                            (965,000)            -
  Repayment of acquisition note                     (125,000)
  Advances for share purchases                      (870,000)            -
                                                ------------  ------------
        Net cash used in financing activities
         from continuing operations               (1,960,000)            -
                                                ------------  ------------
        Net cash used in financing activities     (1,960,000)            -
                                                ------------  ------------

Effect of exchange rate changes on cash               (3,000)       16,000

Change in Cash:
  Net (decrease) increase                            938,000    (1,432,000)
  Balance at beginning of period                   8,816,000     9,885,000
                                                ------------  ------------
  Balance at end of period                      $  9,754,000  $  8,453,000
                                                ============  ============




                     TIX CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                FINANCIAL INFORMATION BY SEGMENT (UNAUDITED)
                          SIX MONTHS ENDED JUNE 30,

                     Ticketing      Exhibit
                     Services    Merchandising    Corporate   Consolidated
                   ------------- -------------  ------------  ------------
2011
Revenue            $  11,739,000 $   4,753,000  $          -  $ 16,492,000
Direct cost of
 revenues              4,918,000     2,734,000             -     7,652,000
Selling, general
 and
 administrative
 expenses              2,295,000     1,477,000     2,198,000     5,970,000
Stock based
 compensation
 expense                       -             -       311,000       311,000
Depreciation and
 amortization            533,000       402,000        19,000       954,000
                   ------------- -------------  ------------  ------------
Operating income
 (loss)            $   3,993,000 $     140,000  $ (2,528,000) $  1,605,000
                   ============= =============  ============  ============


2010
Revenue            $   9,841,000     4,368,000             -    14,209,000
Direct cost of
 revenues              4,182,000     2,580,000             -     6,762,000
Selling, general
 and
 administrative
 expenses              3,692,000     1,368,000     2,100,000     7,160,000
Stock based
 compensation
 expense                       -             -       237,000       237,000
Depreciation and
 amortization            296,000       577,000        16,000       888,000
                   ------------- -------------  ------------  ------------
Operating income
 (loss)            $   1,671,000      (157,000)   (2,353,000)     (839,000)
                   ============= =============  ============  ============


                     TIX CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                FINANCIAL INFORMATION BY SEGMENT (UNAUDITED)
                         THREE MONTHS ENDED JUNE 30,


                     Ticketing      Exhibit                   Consolidated
                     Services    Merchandising    Corporate   and Combined
                   ------------- -------------  ------------  ------------
2011
Revenue            $   6,673,000 $   3,370,000  $          -  $ 10,043,000
Direct cost of
 revenues              2,569,000     1,780,000             -     4,349,000
Selling, general
 and
 administrative
 expenses              1,236,000       761,000     1,504,000     3,501,000
Stock based
 compensation
 expense                       -             -       165,000       165,000
Depreciation and
 amortization            311,000       201,000        10,000       522,000
                   ------------- -------------  ------------  ------------
Operating income
 (loss)            $   2,557,000 $     628,000  $ (1,679,000) $  1,506,000
                   ============= =============  ============  ============

2010
Revenue            $   5,098,000 $   1,823,000  $          -  $  6,921,000
Direct cost of
 revenues              2,202,000     1,133,000             -     3,335,000
Selling, general
 and
 administrative
 expenses              2,332,000       731,000       949,000     4,012,000
Stock based
 compensation
 expense                       -             -       202,000       202,000
Depreciation and
 amortization            173,000       285,000         9,000       467,000
                   ------------- -------------  ------------  ------------
Operating income
 (loss)            $     391,000 $    (326,000) $ (1,160,000) $ (1,095,000)
                   ============= =============  ============  ============




                  RECONCILIATION OF NET INCOME TO ADJUSTED EARNINGS
                                    (UNAUDITED)


The following table set forth a reconciliation of consolidated net income
to consolidated Adjusted Earnings:


                                     Three months ended Three months ended
                                       June 30, 2011      June 30, 2010
                                     ------------------ ------------------
Net income (loss)                    $        1,501,000 $       (1,331,000)
Loss from discontinued operations                     -            255,000
Interest expense, net                            26,000            (14,000)
Litigation expense                              875,000            385,000
Loss on advance to vendor                             -            991,000
Stock based compensation expense                165,000            202,000
Depreciation & amortization                     522,000            467,000
                                     ------------------ ------------------

Adjusted Earnings                    $        3,089,000 $          955,000
                                     ================== ==================


                                      Six months ended   Six months ended
                                        June 30, 2011      June 30, 2010
                                     ------------------ ------------------

Net income (loss)                    $        1,571,000 $       (1,254,000)
Loss from discontinued operations                48,000            422,000
Interest expense, net                            39,000            (17,000)
Litigation expense                              875,000            944,000
Loss on advance to vendor                             -            991,000
Stock based compensation expense                311,000            237,000
Depreciation & amortization                     954,000            888,000
                                     ------------------ ------------------

Adjusted Earnings                    $        3,798,000 $        2,211,000
                                     ================== ==================

Contact Information

  • Contact:
    Steve Handy
    CFO
    818-761-1002