Tix Corporation Sends Letter to Stockholders

STUDIO CITY, Calif., June 30, 2011 /PRNewswire/ -- Tix Corporation ("Tix") (OTCQX: TIXC) (PINKSHEETS: TIXC), a leading entertainment company providing discount ticketing services and branded event merchandising, today mailed the following letter to its stockholders.

IMPORTANT INFORMATION FROM YOUR BOARD OF DIRECTORS

June 30, 2011

To our Stockholders:

You may have recently seen Baker Street Capital's "Open Letter to Tix Corporation Stockholders," which was disseminated on June 27.  In that letter, Baker Street, an activist hedge fund that has been a holder of Tix stock for approximately eight months, has made a host of self-serving and misleading statements criticizing your Board of Directors and has threatened to nominate director candidates that, if elected, would give Baker Street control of your Company.  We believe it is important to set the record straight and we urge you to read this letter in its entirety as it contains important information about the future of your Company.

The Company's exceptional recent success, as described below, 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 your Company poses a substantial risk to your entire investment as it threatens to tear apart these close personal relationships that have provided the foundation for the Company's success and are crucial for the Company's future growth.

WHO IS BAKER STREET?

• Baker Street is a neophyte activist hedge fund that has only been operating for approximately two years, with a Chief Investment Officer and Founding Partner, Vadim Perelman, who is only seven years out of school with limited business experience.

• In the short time that Baker Street has been a stockholder of the Company, Baker Street has gone from being Tix management's biggest fan to their harshest critic.  Just a few months ago, Perelman wrote nine times to Tix heaping praise on your management team.  Following are a few samples:

"Management has built a wonderful business that requires little capital and has significant pricing power."

"You would be surprised how hard it is to find a management team that thinks like owners and is really good at both operating the business and allocating the capital to highest return uses."

"Despite strong performance and astute management actions (delisting, non-core dispositions, share buybacks and Vegas.com settlement) the market fails to fully appreciate the intrinsic value of Tix Corp."

• Baker Street's sudden flip flops and contradictory statements of support call into question its motives and demonstrate a lack of understanding regarding the Company and a coherent plan for its future.

• More recently, after several attempts to extract value for Baker Street at the expense of all other Tix stockholders, Perelman has taken to reckless, juvenile actions, including publicly criticizing your Board and management in a several page rant in his June 27 letter.  Despite the length of this tantrum, Perelman did not articulate a vision for Tix regarding how he would improve on Tix's outstanding results and did not provide any clarity on the critical issue of leading Tix into the future.  Baker Street has not articulated a vision as to how it would improve on the results your Board has achieved.

We believe that if Baker Street were to move forward with a slate of hand-picked nominees as part of an ongoing effort to seize control of Tix, as Perelman has threatened, they would be incapable of continuing Tix's recent success and, if elected, could impair the value of your investment in Tix by deviating from your Board's proven strategy to build value for all Tix stockholders that has Tix poised for continued future success. Rather, Baker Street's slate, if elected, will work solely to advance Baker Street's interests and not the interests of all Tix stockholders.

YOUR BOARD IS COMMITTED TO DELIVERING VALUE TO ALL TIX STOCKHOLDERS

Led by your current Board and management team, Tix has achieved record earnings and revenues, and has become the ONLY company operating dedicated booths offering discount show tickets and discount dining reservations in Las Vegas.  In just seven years, your current management team has presided over a period of dynamic growth, in which the Company's gross annual ticket sales have increased from just $6 million in 2004 to nearly $95 million in 2010, representing 1,575% growth in seven years.  We are seeing evidence that this extraordinary growth rate is continuing for 2011.

This impressive growth has been a result of a carefully executed strategy involving 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 140 hard-working employees that work in extreme Las Vegas conditions to provide our customers with superb customer service. This is what your Board and management team work diligently on every day and we look forward to continuing to execute on this growth strategy into the future, which includes additional product lines (such as building our discount dinner reservations business line, for which we now sell approximately 43,000 reservations per month), expansion into new cities and online platforms to market discount show tickets and dinner reservations.

Your Board and management team strongly believe that Tix's results over the past year underscore the success of its strategy to deliver value to stockholders by achieving strong and consistent growth:

• Tix achieved record EBITDA and revenues in fiscal 2010 from continuing operations

• Revenues grew from $1.55 million in fiscal 2004 to approximately $30.9 million in fiscal 2010, representing nearly 2,000% growth in seven years.  We are seeing evidence that this extraordinary growth rate is continuing for 2011.

• Tix generated $6.2 million in cash flows from continuing operations

• Tix sold an unprofitable production division (to which Perelman's e-mail reaction to the Company was, "This is an absolute home run of a deal for the Company.  Congratulations!")

• Tix has aggressively cut operating expenses, resulting in savings of more than 35% year over year. Tix delisted from the NASDAQ and deregistered with the SEC, which alone will result in savings in excess of $1 million annually (to which Perelman's e-mail reaction to the Company was, "Yes, I was very pleased to see that.  Given the size of the company I thought that Echo Lake's, [Ephraim Fields], requires to burn $1mil a year with ZERO return was misguided.")

• Tix created its own proprietary ticketing software that resulted and continues to result in significant cost savings.

Tix's momentum is evident throughout all of the Company's businesses and we continue to build on this momentum in fiscal 2011 by:

• Tracking to achieve record revenues, earnings and cash flow from operations

• Expanding our core discount ticketing business by opening our tenth and eleventh Las Vegas ticketing booths, nearly doubling the number of booths in less than two years

• Considering strategic acquisitions and expansion opportunities for new product lines and new geographic markets

• Expanding complimentary product lines, including our discount dinner reservation business line, which sold 413,000 discount dinner reservations in 2010

• Settling litigation with Vegas.com and acquiring their discount ticketing division (to which Perelman's e-mail reaction to the Company was, "Congrats on the settlement. Really a wonderful accomplishment! I think you're doing a great job and have significantly increased value for everyone with the recent actions. Thank you.")

We, and apparently, Perelman, believe that these accomplishments demonstrate that our strategic operating plan is working and will deliver exceptional value to all of our stockholders. We have built the Company piece by piece over the past 10 years through a patient, consistent and disciplined approach to both internal growth and external acquisitions.  Some of our businesses have suffered from the downturn in the economy, but we have QUICKLY moved to solve such problems including the sale of the production division.  Your Board and management are committed to continuing to take all appropriate and necessary actions to build value for all Tix stockholders.

On the other hand, Baker Street has not articulated a vision, much less a strategy, for Tix regarding how it would continue, let alone improve on these results and it has provided no clarity on the critical issue of leading Tix into the future. Instead, Baker Street's self-serving agenda, which only puts him in control of your Company without any plans or operational expertise, stands to take away from the value of your investment. Your Board and management team are confident that we can better serve our stockholders by continuing to execute our strategic business plan, and the acquisition of effective control by Baker Street would eviscerate that plan. To protect and to realize the value of your Tix investment, Baker Street's self-serving agenda must be stopped.  Don't gamble your investment on an inexperienced hedge fund manager.

BAKER STREET'S RECKLESS BEHAVIOR AND DESTRUCTION OF STOCKHOLDER VALUE

• On March 10, 2011, Perelman suggested that Tix repurchase some of its owns shares, which evolved into a discussion that Baker Street and management jointly make a bid for all of Tix's outstanding shares. When management decided that they were unwilling to pursue such a partnership with Perelman, he said to the Chief Executive Officer and Chief Financial Officer that Tix can purchase all of his shares at $3.00 per share.  The Company rejected this demand. Only 2 days later, on March 30, 2011, Baker Street publicly announced a highly speculative, non-binding offer to purchase the entire Company for $2.10 per share. This absurd "offer" contained unspecified contingencies, no adequate source of financing and was entirely illusory.

• Consistent with the fiduciary duties owed to all Tix stockholders, your Board of Directors established a special committee of independent directors, which in turn engaged independent legal counsel and an independent financial advisor to analyze Baker Street's non-binding, conditional "expression of interest."  The special committee unanimously determined, based on the advice of its independent financial and legal advisors, that pursuing further discussions with Baker Street at this time was not in the best interests of Tix stockholders and would only result in further waste of company funds and employee time.

• Baker Street's aggressive and reckless behavior has and continues to cost stockholders a significant amount of money in legal and other expenses.  Baker Street's attempt to force the Company to buy its shares for $3.00 per share and subsequent hostile 1 1/2 page non-binding highly conditional expression of interest prompted the Company to incur significant expenses in excess of $250,000.  Subsequent actions by Baker Street, including commencing unnecessary and costly legal proceedings in Delaware against your Company, have forced Tix to continue to incur additional significant expenses. In a particular instance of petulant behavior, Perelman resorted to litigation against your Company to procure a stockholder list even though Perelman had already been told that the Company would provide such a list on the same day of his filing of the lawsuit.  These wasteful expenditures, necessitated by Baker Street's reckless actions, have not only been a significant drain on Tix's financial resources but have been a severe distraction to management's ability to operate the business, all at the expense of the Tix stockholders and your investment. This lawsuit and proxy fight initiated by Baker Street will likely cost Tix at least another $1 million dollars. Perelman's efforts to establish himself as being interested in enhancing stockholder value for all stockholders is a transparent sham!

• Not only has Baker Street been abusive of your Company's resources, but it has also risked damaging Tix's relationships and reputation within its marketplace.  Certain of your Company's trade partners and even competitors have reported to Tix management that Baker Street or its representatives have contacted them on "fishing expeditions" to elicit information to use against Tix management.  This juvenile behavior is dangerous and reprehensible and exhibits a total disregard for stockholder value.

Baker Street's self-serving agenda represents a clear and present threat to your investment in Tix and must be rejected.  Tix's core discount ticketing business is almost entirely based on long-standing relationships in the Las Vegas community between current members of management and the Company's business partners (including Las Vegas hotels, show producers, restaurants and landlords). Your current Board and management team have cultivated these relationships for over a decade, resulting in dynamic growth for the Company to your benefit as stockholders.  If these relationships are severed by Baker Street's hostile takeover of your Company, there is a significant risk that your entire investment will be lost. Moreover, Baker Street lacks the relevant industry expertise and yet seeks to interfere in Tix's strategy and management, which risks derailing the Company's proven growth strategy to build value for all Tix stockholders.

WE URGE YOU TO DISCARD ANY MATERIALS YOU MAY RECEIVE FROM BAKER STREET AND TO NOT RESPOND TO ANY OF BAKER STREET'S SOLICITATION CONTACTS OR MATERIALS.

We thank you for your careful attention to these issues and your continued support of the Company.  If you would like to contact your management to discuss these issues or any other matters concerning your investment, please feel free to contact Mitch Francis, the Tix Chief Executive Officer at: [email protected] or Steve Handy, the Tix Chief Financial Officer at: [email protected], or call (818) 761-1002.

Sincerely,

The Board of Directors of Tix Corporation

About Tix Corporation

Tix Corporation is an entertainment company providing discount ticketing services and branded event 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. Certain of these risks and uncertainties are discussed in the Company's various filings with the OTCQX. The Company assumes no obligation to update these forward-looking statements.

Contact: Mitch Francis, Steve Handy, PH: 818-761-1002

SOURCE Tix Corporation