##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR

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

FOR THE TRANSITION PERIOD FROM __________ TO __________.

COMMISSION FILE NUMBER
0-22582

TBA ENTERTAINMENT CORPORATION

(Name of Issuer in its Charter)


|                                                                                    |  |                                                
|----------------------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(State or other jurisdiction of
incorporation or organization)             |  | 62-1535897
(I.R.S. employer
identification no.)
|                                                                                    |  |                                                
|16501 VENTURA BOULEVARD
ENCINO, CALIFORNIA
(Address of principal executive offices) |  | 91436
(Zip Code)                               

(818) 728-2600
(Issuers telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

COMMON STOCK, PAR VALUE $0.001 PER SHARE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES x
NO 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 to this Form 10-K. x

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) YES o
NO x.

The aggregate market value of the voting stock held by non-affiliates of
the registrant (based on the closing sale price of such stock as reported on
June 28, 2002 on the American Stock Exchange) was approximately
$12,716,700.

As of March 31, 2003, 7,368,100 shares of the registrants Common Stock
were outstanding.





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TABLE OF CONTENTS



|                                                   |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                            
|                                                   | ITEM 1. BUSINESS.                                                                            
|                                                   | ITEM 2. PROPERTIES.                                                                          
|                                                   | ITEM 3. LEGAL PROCEEDINGS.                                                                   
|                                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                 
|PART II                                           
|                                                   | ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.                            
|EQUITY COMPENSATION PLAN INFORMATION              
|                                                   | ITEM 6. SELECTED FINANCIAL DATA                                                              
|                                                   | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                   | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                         
|                                                   | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                         
|REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
|CONSOLIDATED BALANCE SHEETS                       
|CONSOLIDATED STATEMENTS OF OPERATIONS             
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY   
|CONSOLIDATED STATEMENTS OF CASH FLOWS             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        
|                                                   | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III                                          
|                                                   | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                                 
|                                                   | ITEM 11. EXECUTIVE COMPENSATION.                                                             
|AGGREGATED FISCAL YEAR-END OPTION VALUES          
|                                                   | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.                     
|                                                   | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                                     
|                                                   | ITEM 14. CONTROLS AND PROCEDURES                                                             
|PART IV                                           
|                                                   | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.                   
|CERTIFICATION                                     
|CERTIFICATION                                     
|SIGNATURES                                        
|EXHIBIT INDEX                                     
|EXHBIT 21                                         
|EXHIBIT 23                                        
|EXHIBIT 99.1                                      
|EXHIBIT 99.2                                      



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DOCUMENTS INCORPORATED BY REFERENCE:

None.




PART I




ITEM 1. BUSINESS.

GENERAL

TBA Entertainment Corporation (TBA or the Company) is a strategic
communications and entertainment company that creates comprehensive programs to
reach and engage audiences worldwide. TBA provides a broad range of strategic
communications and entertainment services through its four integrated business
segments. TBA believes it has a strong presence in each of these very
fragmented industries and is building an industry-leading integrated services
company. With a base of Fortune 1000 companies, fairs, festivals and recording
artists as clients, TBA links global business with popular culture, enabling
clients to maximize the impact of the message and the results achieved. TBA has
nine offices spanning from Los Angeles to London including Nashville, Chicago,
San Diego, Salt Lake City, Atlanta, Omaha and Seattle. TBAs four business
segments are as follows:



| |  |  | Corporate Communications  Develops and produces strategic
communications, entertainment and special event services to corporate
clients worldwide.                          
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Entertainment Marketing  Creates and executes innovative
entertainment marketing initiatives including music tours, television
broadcasts and special events.               
|
| |  |  | Fair and Festivals  Develops and produces a broad range of
entertainment programs, national sponsorship initiatives and seasonal
programming for fairs and festival clients.
|
| |  |  | Artist Management  Develops and implements career strategies
and corporate partnerships for some of the most successful artists in
the entertainment industry.              

The integration of TBAs four business divisions creates competitive
advantages for the Company. TBA believes that while a variety of competitors
exist with each of the Companys divisions, none offers the complete scope of
services provided by TBA. This intra-company synergy provides TBAs clients
with an expanded range of comprehensive services while creating additional
sources of revenues and profits for the Company. For example, in producing
corporate meetings and entertainment marketing programs, the Company creates
opportunities to showcase artist management clients. Providing entertainment
marketing programs for corporate clients conversely provides opportunities to
cross-sell client decision makers on other corporate communication and
entertainment events.

The Company was incorporated in Tennessee in June 1993 and reincorporated
in Delaware in September 1997.

CORPORATE COMMUNICATIONS

The Corporate Communications division is an industry leader in the
strategic development and production of innovative business communications,
entertainment and special event programs that enable corporate clients to reach
and engage targeted internal and business-to-business audiences worldwide. TBA
utilizes award-winning creative capabilities and state-of-the-art technology to
help corporate clients worldwide deliver targeted messages that educate,
inspire and motivate. The Corporate Communications division targets clients
with recurring needs for business communications and entertainment services.
The Companys client list encompasses a number of industry sectors including
telecommunications, information technology, pharmaceuticals, food service and
insurance. Representative clients include BellSouth, SAP, BEA Systems,
Motorola, Sanofi, McDonalds Corporation, and Mass Mutual. SAP
accounted for 21% and 10% of total Company revenues in 2001 and 2000,
respectively.

The Corporate Communications division specializes in the creative
development, design, production and staging of a wide range of internal and
business-to-business events including: sales conferences, business meetings and
headline entertainment, product introductions and recognition events. TBA
believes that it has benefited from the decision by an increasing number of
major corporations to outsource their business communications and entertainment
needs. TBA produced approximately 227 and 288 communication and entertainment
events in 2002 and 2001, respectively. The reduced number of events reflects a
reduction in customer demand during 2002 as a result of the continued impact of
September 11 and the global economic slowdown. However, the

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recurring nature of certain of these events serves as a source of more
predictable revenues as they occur on a more regular basis. The large number
of events also provides opportunities for the Companys other divisions,
including corporate event opportunities for TBAs artist management clients.

The Corporate Communications division serves its nationwide client base
from offices in Chicago, Nashville, Salt Lake City and San Diego. These
offices were assembled via strategic acquisitions over the past five years.
During 2002, TBA elected to close Corporate Communications offices in Atlanta,
Dallas, Phoenix and New York. The closures were instituted to consolidate
operations into larger, more profitable offices and, thus, reduce Company-wide
expenses.

Through its nationwide offices, TBA delivers a full range of strategic
communications and entertainment services to its clients. The Corporate
Communications division emphasizes the coordination and allocation of resources
and services between the divisions offices. TBA has long-standing
relationships with freelance contractors in various production, technical and
creative disciplines, and supplements its full-time staff with independent
contractors where needed.

The Company has made four strategic acquisitions over the past five years
in assembling the Corporate Communications division. The Company believes,
based on its experience, that the corporate communications industry is highly
fragmented. Further, the Company believes that many of its competitors consist
of a number of small, primarily regional companies that provide only a limited
range of services. However, the Company believes that there are other
competitors who have been in business longer and have larger staffs and whose
business, like the Companys, is full service in scope. The most important
competitive factors include creative and production capabilities, quality and
price. The Company believes that it can compete successfully in this market by
utilizing the Companys production capabilities and existing entertainment
relationships to produce an exceptional event. TBAs commitment to providing
exceptional events has developed a loyal client base. The Company also
competes with in-house corporate communications staffs of existing and
potential clients and with staffs of hotel and convention centers.

ENTERTAINMENT MARKETING

The Entertainment Marketing division links global business with popular
culture through the development, marketing and production of consumer-focused
entertainment events, music marketing initiatives, concert tours, television
broadcasts, recorded music products and brand building initiatives. This
division forges new ways for clients to reach their audiences and realize their
marketing objectives. The entertainment marketing division specializes in the
creative development, design, production and execution of a broad range of
marketing initiatives that may include: national music tours, lifestyle events,
network television broadcast specials, point of purchase campaigns,
premium/incentive programs, brand imaging campaigns, sponsorship fulfillment,
experiential branding initiatives and consumer/trade promotions.

TBA provides companies with the power to reach and engage their customers
in a fresh, contemporary manner utilizing relevant programming and experiential
branding techniques to integrate their company or brand into the lifestyle of
their consumers. The Entertainment Marketing division seeks to develop
music-marketing programs that appeal to highly focused demographic segments.
In addition, corporations are increasingly utilizing entertainment
personalities as advertising tools, having recognized the effectiveness of
concert/tour sponsorship as a cost-effective means to reach a target audience.
The Company has produced sponsored music-marketing programs for clients that
include Kelloggs, General Motors, and Nescafe. In addition, the Company has
produced major television broadcast events and specials for clients that
include Turner Sports, NASCAR, Blockbuster and Hard Rock Café. The
Entertainment Marketing division also provides unique opportunities for the
Company to show case artist management clients In addition, relationships
with corporate sponsors also create opportunities to sell corporate
communications services to an expanded client base.

The Company works with its clients to customize entertainment marketing to
the exact specifications of that particular client. Over time, TBA believes
existing clients will expand their programs, both by increasing the scope of
existing components of programs and by adding new components to programs. The
Companys Entertainment Marketing division is currently characterized by a
relatively small number of accounts with high revenues per account. As a
result, the loss or addition of any one account could have a material effect on
the Companys revenues.

Effective April 2000, the Company became a member in a limited liability
company, Earth Escapes, LLC (EELLC). One of the other members of EELLC was a
former executive of the Company, whose employment with the Company terminated
in December 2000. EELLC was formed to develop, produce and distribute a
broadcast music special entitled Music in High Places. Music in High Places
was broadcast primarily on cable and via web cast in 2000, 2001 and 2002. In
lieu of cash distributions of profits from

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EELLC, the Company was entitled to receive a percentage of the gross
revenues of EELLC. In addition, the Company generated commission income in
2000 from the solicitation of sponsorships from Radio Shack and MSN for the
Music in High Places series. In December 2002, TBA sold its interest in EELLC.

TBA has made two strategic acquisitions in the past five years, increasing
the Companys competitive position in the entertainment marketing industry,
including the February 2001 acquisition of Moore Entertainment, Inc., a
producer of music tours and corporate sponsored events. Management believes
that there are a number of companies who compete with TBA in providing
entertainment marketing services including specialty marketing companies,
advertising agencies and other media and entertainment companies. Like the
corporate communications business, the most important competitive factors
include creative and production capabilities, quality and price. The Company
believes that many of these competitors have been in business longer and have
greater resources than those of the Company.

FAIRS AND FESTIVALS

The Fairs and Festivals division engages in the strategic development and
production of a broad range of entertainment programs, national sponsorship
initiatives and seasonal programming for many of the countrys largest fairs,
festivals and rodeos. The Company provides entertainment, production and
consultation services to more than 100 fairs, festivals and rodeos across North
America, including Cheyenne Frontier Days, Greeley Stampede, Colorado and
Nebraska State Fairs, and Country Thunder Festival. Combined, these programs
reach over 17 million consumers annually. This unique platform provides a
powerful opportunity to promote consumer brand awareness, product sampling and
sales programs to corporate advertisers.

By utilizing established relationships with corporate clients, the Company
can work with fair and festival clients to participate in mutually beneficial
sponsorship programs, content development and facilities utilization strategies
to help them successfully compete against other entertainment venues. In
addition, the Company can utilize its strong entertainment background to offer
its fairs and festival clients improved pricing for entertainment, while at the
same time providing a more efficient and turnkey routing solution for its
touring artist clients.

The Companys Fairs and Festivals division was assembled through the
acquisition of Romeo Entertainment Group (Romeo) in January 2000 and EJD
Concert Services (EJD) in April 2000. The Company believes that the fairs
and festivals industry is highly fragmented and its competitors consist of
primarily small, regional Companies that, like the Company, have long standing
relationships with their clients. The most important competitive factors are
the ability to provide the fairs and festivals with quality music entertainment
at a competitive price and to produce an exceptional entertainment event. The
Company believes that it can compete successfully in this market by utilizing
the Companys extensive entertainment relationships with artists and artist
booking agencies to secure musical talent while utilizing the Companys
production capabilities to produce a high quality event.

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ARTIST MANAGEMENT

The Artist Management division develops and implements career strategies
for music industry artists, including high-profile artists in country music
(such as Brooks & Dunn, Terri Clark and Clay Walker), classic rock (such as
Styx, Foreigner and Survivor), alternative rock (such as Papa Roach) and
contemporary Christian (such as Point of Grace and Jaci Velasquez). The
Company, as a leader in the production of corporate communications and
entertainment programs, entertainment marketing initiatives, special events and
sponsorship procurement, is uniquely positioned to create opportunities for
artists. Management believes that the Companys familiarity with all facets of
the entertainment industry enables it to help artists create and capitalize on
opportunities. With its expertise in concert production and corporate
entertainment events and its relationships with venue managers, outside concert
promoters, broadcasting executives and other industry professionals, management
believes that the Company is uniquely positioned to offer services that can
significantly enhance the careers of its clients. The Company develops
long-term career strategies and represents music industry artists in the
negotiation of recording, touring, merchandising and performance contracts.
Using these integrated resources, the Artist Management team is unified around
the strategy of creating long-term, sustained success for the Companys artist
management clients.

The Company has made five strategic acquisitions over the past five years
in assembling the Artist Management division, including the July 2001
acquisition of Alliance Artists Ltd, which manages Styx, Survivor, Joe Stark
Band and others. In 2000, 2001 and 2002, the Company also added other artist
managers, representing artists such as Papa Roach, World Classic Rockers,
Foreigner and UB40, among others.

The Company believes that the artist management industry is
highly-fragmented and its competitors consist primarily of small independent
artist managers with a limited roster of clients, although there are several
participants in the industry that have capabilities and resources comparable to
and, in certain respects, greater than those of the Company. Because of the
highly fragmented nature of the artist management industry, the Company
believes that there are a number of acquisition opportunities available to the
Company, within various music genres, including country, pop and rock.

DISCONTINUED OPERATIONS

During the first quarter of 2001, the Company approved a formal plan to
discontinue its merchandising operations in order to better focus on its core
business as a strategic communications and entertainment company. The
disposition of the merchandising operations represents the disposal of a
business segment. Accordingly, this former segment is accounted for as a discontinued operation.

BUSINESS SEGMENT INFORMATION

The Company classifies its operations into the four business segments
discussed above. See Note 12 to the consolidated financial statements
contained in Item 8 of this Form 10-K for summarized financial information
concerning the Companys reportable segments.

COMPETITION

In addition to the competitive factors outlined above for each of the
Companys four business groups, the success of the Companys entertainment
operations are dependent upon numerous factors beyond the Companys control,
including economic conditions, amounts of available leisure time,
transportation costs, lifestyle trends and weather conditions.

SEASONALITY

The Company experiences quarterly fluctuations in revenue, operating
income and net income as a result of many factors, including the timing of
clients meetings and events, timing of artists tours and recording releases,
weather related issues, delays in or cancellation of clients entertainment
marketing programs, as well as changes in the Companys mix among the various
services offered.

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TRADEMARKS

The Company has obtained registered trademarks for the  TBA Entertainment
Corporation mark for television show production and programming. The Company
has also filed Intent-To-Use Trademark Applications for the TBA Entertainment
Corporation mark for the various other classes of goods and services in which
the Companys mark will be utilized. In addition, the Company has filed or
intends to file Intent-To-Use Trademark Applications for other proprietary
programs developed by the Company. There can be no assurance, however, that
these trademarks will proceed to registration, and if so registered, that the
trademarks, in any one or more classes, will not violate the proprietary rights
of others, that any registration of the trademarks or the Companys use thereof
will be upheld if challenged, or that the Company will not be prevented from
using the trademarks.

REGULATION AND LICENSES

The Company is subject to federal, state and local laws affecting its
business, including various health, sanitation and safety standards. The
Companys entertainment operations are subject to state and local government
regulation, including regulations relating to live music performances. Each
live concert performance must comply with regulations adopted by federal
agencies and with licensing and other regulations enforced by state and local
health, sanitation, safety, fire and other departments. Difficulties or
failures in obtaining the required licenses or approvals can delay and
sometimes prevent the promotion of live concerts. The failure to receive or
retain, or delay in obtaining, a license to serve alcohol and beer in a
particular location could adversely affect the Companys operations in that
location and impair the Companys ability to obtain licenses elsewhere. The
failure or inability of the Company to maintain insurance coverage materially
and adversely could affect the Company.

EMPLOYEES

As of December 31, 2002, the Company had approximately 130 full-time and
part-time employees. It is the Companys intention to manage its growth
consistent with its ability to attract and retain qualified employees to manage
its operations. Over the course of any given event or program, the Company
evaluates the production personnel requirements and determines the extent to
which it must supplement its available employee base with the use of
independent contractors or part-time employees. The Company believes that its
relationship with its employees and independent contractors is good.

The Company has no full-time employees whose employment is covered by
collective bargaining or similar agreements with unions; however, the Company
does from time to time independently contract with or hire part-time union
personnel, especially during the production of a particular corporate
communication or entertainment marketing program and, accordingly, the Company
is a party to certain agreements with unions governing the hiring and terms of
employment of such personnel.




ITEM 2. PROPERTIES.

The Company and/or its subsidiaries have entered into lease agreements
with respect to leased office space in eight cities in which the Company
operates. These leases expire at various dates through September 2006. As of
December 31, 2002, the Companys wholly-owned subsidiary, TBA Entertainment
Group Dallas, Inc., owned the building in which its offices and production
facilities were located, as well as certain vacant land adjacent to such
building. As a result of the Companys decision to close the Dallas office,
the Dallas facility was reclassified as Asset Held for Sale as of December
31, 2002. In February 2003, the Company sold the land and building, using the
proceeds to reduce the balance of its bank credit facility.

The Company has offices located in Hickory Valley, Tennessee in a building
owned by a limited partnership, the general partner of which is a corporation
owned by Thomas J. Weaver III and Frank A. McKinnie Weaver, Sr., each an
officer and director of the Company, and of which they also are limited
partners. The limited partnership does not charge the Company rent for its
Hickory Valley, Tennessee offices. The fair market rental value for this
office space is not material to the Companys consolidated results of
operations.

TBA believes that the properties and facilities it owns or leases are
suitable and adequate for the Companys current business and operations. The
Company anticipates that as it expands, it will require additional office space
to support such growth and believes that suitable space will be available as
needed on commercially reasonable terms.

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ITEM 3. LEGAL PROCEEDINGS.

In November 2001, a Complaint was filed in the Marion County Superior
Court in the State of Indiana against TBA alleging breach of contract arising
with respect to the tax indemnification provisions contained in the Stock
Purchase Agreement related to the purchase by TBA of a merchandising company,
now classified as discontinued operations. The issue is the amount, if any, that is due pursuant to
the indemnification provision. In January 2003, TBA and the plaintiff agreed
to arbitrate this dispute, which arbitration is tentatively scheduled for May
2003. Management does not believe that the outcome of this dispute will have a
material adverse effect on the consolidated financial condition or results of
operations of the Company.

In January 2003, a Petition was filed in the Civil Court of New York
against TBA alleging breach of contract arising from a real estate lease for
office space in New York City. In 2002, TBA terminated its operations in New
York and ceased paying rent in July 2002. TBA continued to try to sublease
this office space throughout the remainder of 2002. The Petition seeks unpaid
rent through the date of the filing, in the amount of approximately $140,000.
The Company is in negotiations with the plaintiff in an effort to negotiate a
buy-out of the remaining lease obligation. Management believes that it has
adequately reserved for this obligation as of December 31, 2002.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The annual meeting of stockholders of TBA Entertainment Corporation was
held on November 20, 2002.

The stockholders approved the election of seven directors to serve until
the next annual meeting of stockholders and until their respective successors
have been duly elected and qualified.

|                      |  |     |           |          |  |  |        | 
|--------------------- |  | --- | --------- | -------- |  |  | ------ | 
|Director              |  | For |           | Withheld
|                      |  |     |           |         
|Frank Bumstead        |  |     | 6,827,619 |          |  |  | 55,135 | 
|Charles Flood         |  |     | 6,827,619 |          |  |  | 55,135 | 
|Joseph C. Galante     |  |     | 6,827,619 |          |  |  | 55,135 | 
|W. Reid Sanders       |  |     | 6,827,619 |          |  |  | 55,135 | 
|Frank McKinnie Weaver |  |     | 6,827,619 |          |  |  | 55,135 | 
|Thomas J. Weaver, III |  |     | 6,827,619 |          |  |  | 55,135 | 
|Kyle Young            |  |     | 6,827,619 |          |  |  | 55,135 | 

In addition, the stockholders voted 6,825,467 shares in ratification of
BDO Seidman, LLP as the Companys independent public accountants for the year
ending December 31, 2002. Stockholders voted 51,100 shares against
ratification of BDO Seidman, LLP with 4,000 shares abstaining.

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PART II




ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.



| | (a) |  | The Common Stock is listed for trading on the American Stock
Exchange under the symbol TBA. On March 31, 2003, the last reported
sale price of the Common Stock was $0.76 per share. The following table
sets forth the range of high and low sales prices of the Common Stock as
reported on the American Stock Exchange during each quarterly period
within the two most recent fiscal years.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                |      |   |      |  |     |   |      |  | 
| | -------------- | ---- | - | ---- |  | --- | - | ---- |  | 
| |                |      |   | HIGH |  | LOW
| |                |      |   |      |  |    
| |                | 2002 |   |      |  |     |   |      |  | 
| | First Quarter  |      | $ | 4.15 |  |     | $ | 3.10 | 
| | Second Quarter |      |   | 4.00 |  |     |   | 1.60 | 
| | Third Quarter  |      |   | 2.53 |  |     |   | 1.33 | 
| | Fourth Quarter |      |   | 2.03 |  |     |   | 1.08 | 
| |                |      |   |      |  |     |   |     
| |                | 2001 |   |      |  |     |   |      |  | 
| | First Quarter  |      | $ | 4.45 |  |     | $ | 3.59 | 
| | Second Quarter |      |   | 4.00 |  |     |   | 3.65 | 
| | Third Quarter  |      |   | 4.19 |  |     |   | 2.85 | 
| | Fourth Quarter |      |   | 3.85 |  |     |   | 2.20 | 



| | (b) |  | The approximate number of holders of record of Common Stock on March
31, 2003 was 141.                                                                                                                                                                                                                                                                                                                                                                                              
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (c) |  | The Company has not paid or declared cash distributions or dividends
and does not intend to pay cash dividends on the Common Stock in the
foreseeable future. The Company currently intends to retain all
earnings to finance the development and expansion of its operations.
The declaration of cash dividends in the future will be determined by
the Board of Directors based upon the Companys earnings, financial
condition, capital requirements and other relevant factors.
|
| | (d) |  | The following table summarizes as of December 31, 2002, the shares of
Common Stock authorized for issuance under the Companys equity
compensation plans:                                                                                                                                                                                                                                                                                                                           




EQUITY COMPENSATION PLAN INFORMATION

|                                                           |  |                         |           |                      |  |                     |      |  |  |  |        | 
|---------------------------------------------------------- |  | ----------------------- | --------- | -------------------- |  | ------------------- | ---- |  |  |  | ------ | 
|                                                           |  | Number of securities    |           |                      |  |                     |      |  |  | 
|                                                           |  | to be issued upon       |           | Weighted average     |  | Number of          
|                                                           |  | exercise of outstanding |           | exercise price of    |  | securities         
|                                                           |  | options, warrants       |           | outstanding options, |  | remaining available
|Plan category                                              |  | and rights              |           | warrants and rights  |  | for future issuance
|                                                           |  |                         |           |                      |  |                    
|Equity compensation plans
approved by security holders     |  |                         | 1,314,100 |                      |  | $                   | 4.20 |  |  |  | 85,900 | 
|Equity compensation plans
not approved by security holders |  |                         | 40,000    |                      |  |                     | 4.75 |  |  |  | - -    | 
|                                                           |  |                         |           |                      |  |                     |      |  |  |  |        | 
|Total:                                                     |  |                         | 1,354,100 |                      |  | $                   | 4.22 |  |  |  | 85,900 | 
|                                                           |  |                         |           |                      |  |                     |      |  |  |  |        | 

The only equity compensation plan of the Company that was not approved by
the Companys stockholders is the 1995 Stock Option Plan. The options
outstanding under this plan were originally granted between August 1995 and
April 1996. All of such options are fully vested and expire 10 years from the
date of grant.

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ITEM 6. SELECTED FINANCIAL DATA

|                                                             |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |   | 
|------------------------------------------------------------ |  | ---- | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | - |  | - | ---------- | - | 
|STATEMENTS OF OPERATIONS DATA (1):                           |  | 2002 |            | 2001 |  | 2000 |            | 1999 |  | 1998
|                                                             |  |      |            |      |  |      |            |      |  |      |           
|Revenues                                                     |  | $    | 49,131,800 |      |  | $    | 60,404,800 |      |  | $    | 78,540,300 |   |  | $ | 38,618,700 |   |  | $ | 26,020,300 |  
|Costs related to revenues                                    |  |      | 33,010,100 |      |  |      | 40,999,200 |      |  |      | 54,971,900 |   |  |   | 25,003,600 |   |  |   | 17,448,400 |  
|                                                             |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Gross profit margin                                          |  |      | 16,121,700 |      |  |      | 19,405,600 |      |  |      | 23,568,400 |   |  |   | 13,615,100 |   |  |   | 8,571,900  |  
|Selling, general and administrative expenses                 |  |      | 16,491,000 |      |  |      | 19,764,100 |      |  |      | 19,471,900 |   |  |   | 10,578,000 |   |  |   | 6,601,100  |  
|Depreciation and amortization                                |  |      | 677,600    |      |  |      | 2,898,100  |      |  |      | 2,479,800  |   |  |   | 1,535,200  |   |  |   | 673,300    |  
|Equity in income of Joint Venture and other income           |  |      | (478,400   | )    |  |      | (335,200   | )    |  |      | (272,700   | ) |  |   | (173,000   | ) |  |   | (343,700   | )
|Net interest expense (income)                                |  |      | 466,900    |      |  |      | 548,300    |      |  |      | 164,000    |   |  |   | (262,100   | ) |  |   | (135,700   | )
|                                                             |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Income (loss) from continuing operations
before income taxes |  |      | (1,035,400 | )    |  |      | (3,469,700 | )    |  |      | 1,725,400  |   |  |   | 1,937,000  |   |  |   | 1,776,900  |  
|Benefit (provision) for income taxes                         |  |      | 860,000    |      |  |      | 189,100    |      |  |      | (1,531,600 | ) |  |   | (770,200   | ) |  |   | (98,300    | )
|                                                             |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Income (loss) from continuing operations                     |  |      | (175,400   | )    |  |      | (3,280,600 | )    |  |      | 193,800    |   |  |   | 1,166,800  |   |  |   | 1,678,600  |  
|Income (loss) from discontinued operations                   |  |      |           |      |  |      | (3,650,800 | )    |  |      | (92,500    | ) |  |   | 359,200    |   |  |   | 992,400    |  
|Cumulative effect of change in accounting principle (5)      |  |      | (1,988,600 | )    |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|                                                             |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Net income (loss)                                            |  | $    | (2,164,000 | )    |  | $    | (6,931,400 | )    |  | $    | 101,300    |   |  | $ | 1,526,000  |   |  | $ | 2,671,000  |  
|                                                             |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|EBITDA (6)                                                   |  | $    | (255,700   | )    |  | $    | (23,300    | )    |  | $    | 4,369,200  |   |  | $ | 3,210,100  |   |  | $ | 2,314,600  |  
|Income (loss) per share from continuing
operations  basic   |  | $    | (0.02      | )    |  | $    | (0.45      | )    |  | $    | 0.02       |   |  | $ | 0.14       |   |  | $ | 0.21       |  
|Income (loss) per share from continuing operations  diluted |  | $    | (0.02      | )    |  | $    | (0.45      | )    |  | $    | 0.02       |   |  | $ | 0.14       |   |  | $ | 0.20       |  
|Weighted average common stock
Outstanding  basic            |  |      | 7,364,700  |      |  |      | 7,361,900  |      |  |      | 8,055,100  |   |  |   | 8,495,200  |   |  |   | 7,851,600  |  
|Weighted average common stock
Outstanding  diluted          |  |      | 7,364,700  |      |  |      | 7,361,900  |      |  |      | 8,070,000  |   |  |   | 8,540,000  |   |  |   | 8,243,500  |  
|BALANCE SHEET DATA(1):                                       |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Working capital (2)                                          |  | $    | (3,622,000 | )    |  | $    | (2,636,000 | )    |  | $    | 189,700    |   |  | $ | 7,892,700  |   |  | $ | 12,381,900 |  
|Goodwill,
net (3)(5)                                         |  |      | 21,706,100 |      |  |      | 25,668,700 |      |  |      | 23,834,800 |   |  |   | 17,318,400 |   |  |   | 16,008,600 |  
|Net (liabilities) assets of discontinued operations          |  |      | (211,800   | )    |  |      | (228,200   | )    |  |      | 2,622,700  |   |  |   | 2,364,200  |   |  |   | 2,552,000  |  
|Total assets                                                 |  |      | 28,138,900 |      |  |      | 34,407,700 |      |  |      | 39,416,900 |   |  |   | 42,383,300 |   |  |   | 40,445,200 |  
|Long-term debt (3) (4)                                       |  |      | 3,562,300  |      |  |      | 7,340,600  |      |  |      | 4,373,600  |   |  |   | 3,596,400  |   |  |   | 4,755,700  |  
|Treasury stock                                               |  |      | (6,057,600 | )    |  |      | (6,080,500 | )    |  |      | (5,500,700 | ) |  |   | (2,062,100 | ) |  |   | (724,500   | )
|Stockholders equity                                         |  |      | 15,566,700 |      |  |      | 17,719,900 |      |  |      | 25,242,500 |   |  |   | 27,858,800 |   |  |   | 28,515,700 |  



|1) |  | Prior to 1998, the Company acquired and operated certain businesses
that were sold in 1998. In 1999, the Company acquired a business that
was discontinued in 2001. The discontinuation and sale of these
businesses has resulted in the reclassification of the operating results
and net assets and liabilities of these businesses to discontinued
operations for all periods presented.                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company has completed ten
acquisitions from 1998 to 2001. No acquisitions were made in 2002.
Results of operations of each of these acquisitions are included from
their respective acquisition dates. The accounting for these
acquisitions was in accordance with the purchase method of accounting.                                                                                                              
|  
|2) |  | Working capital represents total current assets (excluding net
short-term assets of discontinued operations) less total current
liabilities (excluding net short-term liabilities of discontinued
operations).                                                                                                                                                                                                          
|  
|3) |  | In September 2002, the Company reduced its recorded goodwill and
long-term debt by $3,518,400, representing the outstanding amount of
promissory notes that are subject to earn-out adjustments, as payment of
such amounts was no longer considered probable. See Note 5 to the
Consolidated financial Statements contained in Item 8 of this Form 10-K
for further discussion concerning the Companys long-term debt.
|  
|4) |  | Long-term debt excludes notes payable and current portion of
long-term debt totaling $1,617,200, $1,830,000, $3,049,600, $2,913,200
and $759,600 as of December 31, 2002, 2001, 2000, 1999 and 1998,
respectively.                                                                                                                                                                                                      
|  
|5) |  | Upon the 2002 adoption of
Statement of Financial Accounting Standards
No. 142, Goodwill and other Intangible Assets, the Company tested its
goodwill for impairment. Based on the estimated fair market value of
its fairs and festivals group, the Company recorded a goodwill
impairment loss in the first quarter of 2002 of $1,988,600 associated
with the fairs and festivals reporting unit.                    

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|6) |  | EBITDA is defined as earnings from continuing operations before
interest income and expense, income taxes and depreciation and
amortization. EBITDA is presented supplementally because management
believes it allows for a more complete analysis of results of
operations. This information should not be considered as an alternative
to any measure of performance or liquidity as promulgated under
accounting principles generally accepted in the United States (such as
net income or cash provided by or used in operating, investing or
financing activities), nor should it be considered as an indicator of
the overall financial performance of the Company. The Companys
calculation of EBITDA may be different from the calculation used by
other companies and, therefore, comparability may be limited.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The calculation of EBITDA is shown below:

|                                                    |  |      |            |      |  |      |            |      |  |      |           |  |  |   |           |   |  |   |           |  
|--------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | --------- |  |  | - | --------- | - |  | - | --------- | -
|                                                    |  | 2002 |            | 2001 |  | 2000 |            | 1999 |  | 1998
|                                                    |  |      |            |      |  |      |            |      |  |     
|Net (loss) income                                   |  | $    | (2,164,000 | )    |  | $    | (6,931,400 | )    |  | $    | 101,300   |  |  | $ | 1,526,000 |   |  | $ | 2,671,000 |  
|Cumulative effect of change in accounting
principle |  |      | 1,988,600  |      |  |      |           |      |  |      |          |  |  |   |          |   |  |   |          |  
|Loss (income) from discontinued operations          |  |      |           |      |  |      | 3,650,800  |      |  |      | 92,500    |  |  |   | (359,200  | ) |  |   | (992,400  | )
|Income tax (benefit) provision                      |  |      | (860,000   | )    |  |      | (189,100   | )    |  |      | 1,531,600 |  |  |   | 770,200   |   |  |   | 98,300    |  
|Net Interest expense (income)                       |  |      | 466,900    |      |  |      | 548,300    |      |  |      | 164,000   |  |  |   | (262,100  | ) |  |   | (135,700  | )
|Reversal of prior years accrued interest           |  |      | (364,800   | )    |  |      |           |      |  |      |          |  |  |   |          |   |  |   |          |  
|Depreciation and amortization                       |  |      | 677,600    |      |  |      | 2,898,100  |      |  |      | 2,479,800 |  |  |   | 1,535,200 |   |  |   | 673,300   |  
|                                                    |  |      |            |      |  |      |            |      |  |      |           |  |  |   |           |   |  |   |           |  
|EBITDA                                              |  | $    | (255,700   | )    |  | $    | (23,300    | )    |  | $    | 4,369,200 |  |  | $ | 3,210,100 |   |  |   | 2,314,500 |  
|                                                    |  |      |            |      |  |      |            |      |  |      |           |  |  |   |           |   |  |   |           |  

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

The purpose of the following discussion and analysis is to explain the
major factors and variances between periods of the Companys results of
operations. The following discussion of the Companys financial condition and
results of operations should be read in conjunction with the historical
consolidated financial statements and notes thereto included in Item 8,
beginning on page 20.

INTRODUCTION

The Company is a strategic communications and entertainment company that
creates, develops and produces comprehensive programs to reach and engage its
clients target audiences. The Company produces a broad range of innovative
business communications programs, develops and produces highly integrated
entertainment marketing programs, develops content and entertainment programs
for a nationwide network of fairs and festivals and develops and implements
career strategies and corporate partnerships for its artist clients.

The Company has built this comprehensive communications and entertainment
business model through a combination of internal growth and strategic
acquisitions. Since April 1997, the Company has completed 11 strategic
acquisitions and has built a comprehensive network of nine offices to serve its
client base. In 2000, the Company completed the acquisitions of Romeo
Entertainment Group in January and EJD Concert Services (EJD) (in March)
(collectively, the 2000 Acquisitions). In 2001, the Company completed the
acquisitions of Moore Entertainment, Inc. (Moore) in February and Alliance
Artists, Ltd. (Alliance) in July (collectively, the 2001 Acquisitions).
The results of operations of the 2000 Acquisitions and the 2001 Acquisitions
are included from the corresponding acquisition dates.

GENERAL

In accordance with SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information, the Company classifies it operations
according to four business segments. See Note 12 to the consolidated financial
statements contained in Item 8 of this Annual Report on Form 10-K for
summarized financial information concerning the Companys reportable segments.

Critical Accounting Policies

In response to the SECs Release No. 33-8040, Cautionary Advice Regarding
Disclosure About Critical Accounting Policy, the Company identified the most
critical accounting principles upon which its financial status depends. The
Company determined the critical accounting principles to be related to revenue
recognition, costs related to revenue and impairment of intangibles and other
long-lived assets.

Revenue Recognition

The Company continues to derive a majority of its revenues (61%, 70%, and
70% of total revenues for the years ended December 31, 2002, 2001 and 2000,
respectively) from the production of innovative business communications
programs to help corporate clients reach and engage their target audiences.
The Company helps businesses effectively communicate their message via a broad
range of business communications, meeting production, and entertainment
production services. The Company receives a fee for providing these services,
which may include developing creative content, providing comprehensive project
management and arranging for live entertainment and related production
services. Revenue is recognized when an event occurs. Costs of producing the
event are also deferred until the event occurs. At December 31,
2002, deferred revenue was $3,560,200 compared to $3,335,600 at
December 31, 2001.

The remainder of the Companys revenues are generated from its roster of
artist clients (10%, 6% and 4% of total revenues for the years ended December
31, 2002, 2001 and 2000, respectively), entertainment marketing clients (8%, 8%
and 15% of total revenues for the years ended December 31, 2002, 2001 and 2000,
respectively) and fairs and festivals clients (21%, 16% and 11% of total
revenues for the years ended December 31, 2002, 2001 and 2000). Commissions
received from artists earnings are recognized in the period during which the
artist earns the revenue. There are generally only minimal direct costs
associated with generating revenue from artist clients. Entertainment
marketing revenues and cost of revenues are recognized when the services are
completed for each program or, for those programs with multiple events,
apportioned to each event and recognized as each event occurs. Fairs and
festivals also recognize revenue and cost of revenues when the services are
completed for each program and when the event has occurred.

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Costs Related to Revenue

Costs related to revenue is comprised of all costs associated with the
production of an event, including talent fees, contracted services, equipment
rentals, costs associated with the production of audio-visual effects and the
cost of internal production labor. Direct out-of-pocket costs are deferred
until the event occurs. Internal production labor costs are expensed as
incurred. At December 31, 2002, deferred costs were $1,030,700
compared to $424,200 at December 31, 2001.

Impairment of Intangibles

Intangible
assets consist primarily of goodwill arising from business
combinations

Upon the 2002 adoption of Statement of Financial Accounting Standard No.
142, Goodwill and other Intangible Assets, the Company tested its goodwill
for impairment. Based on the estimated fair market value of its fairs and
festivals group, the Company recorded a goodwill impairment loss in the first
quarter of 2002 of $1,988,600 associated with the fairs and festivals reporting
unit. The Company no longer records amortization of goodwill and
performs an annual impairment test in the fourth quarter. During the
year management will also review each quarter for other factors that
may indicate impairment.

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FINANCIAL IMPACT OF SEPTEMBER 11 TERRORIST ATTACKS AND GLOBAL ECONOMIC SLOWDOWN

The September 11, 2001 terrorist attacks had a significant negative impact
on the nations economy and the Companys corporate clients businesses in
particular. As a result, the Company experienced significantly reduced
revenues in 2001, with particular impact on the third and fourth quarters. The
Company also experienced some cancellations of programs that were scheduled to
take place in early 2002. The global economic slowdown that began in 2001, and
which was exacerbated by the terrorist attacks, has continued to impact the
Companys corporate client business activity throughout 2002, with particular
impact during the first half of 2002.

In response to this reduction in revenues, the Company took aggressive
action to implement cost reductions necessary to ensure that its infrastructure
is appropriate for expected business volumes. Such reductions initiated during
the third quarter of 2001 and continuing throughout 2002 include reductions in
headcount (28% since August 31, 2001) and related compensation costs,
elimination of unprofitable offices, elimination of certain incentive
compensation costs, and a reduction in travel-related and other general and
administrative expenses. As a result of these actions, the Companys operating
results, EBITDA and cash flows improved in the second half of 2002, from the
levels the Company experienced in the second half of 2001 and first half of
2002.

Based on the Companys current sales activity, and absent major additional
external disruptions, the Company expects that consolidated revenues for 2003
will remain relatively consistent with 2002 revenues through the first half of
2003; with increasing revenues in the second half of 2003 due to new programs the
Company has already been awarded. As a result of the expected increase in
revenues and impact of reduced operating expenses, management believes that the
Companys operating results and EBITDA will improve in 2003 over the results
achieved in 2002.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

Revenues decreased $11,273,000, or 19%, to $49,131,800 for 2002 from
$60,404,800 for 2001. Revenues from the corporate client group decreased
$12,227,500, or 29%, from $42,194,200 2001 to $29,966,700 in 2002. The number
of corporate client events decreased to 227 in 2002 from 288 in 2001, due to a
reduction in customer demand during 2002 as a result of the continued impact of
September 11 and the global economic slowdown as more fully described in
Financial Impact of September 11 Terrorist Attacks and Global Economic
Slowdown above. The average revenue per event decreased to $131,300 per event
for 2002, compared to $146,500 per event for 2001 due to a reduction in the
number of large corporate events produced in 2002. In 2002, the Company
produced 32 events with revenues in excess of $250,000, versus 36 such events
in 2001. The reduction is due primarily to certain larger corporate events
that occurred in 2001, which were not repeated or were scaled back due to the
global economic slowdown.

Revenues from the entertainment marketing client group decreased $754,700,
or 15%, from $4,871,100 in 2001 to $4,116,400 in 2002. The decrease is
primarily due two larger 2001 entertainment marketing programs that did not
repeat in 2002. The decrease was partially offset by an increase in the number
of smaller entertainment marketing programs and promoted music tour dates
occurring in 2002.

Revenues from artist clients, which were not significantly impacted by the
September 11, 2001, terrorist attacks, increased $1,013,100, or 22%, to
$4,672,800 in 2002 from $3,659,700 in 2001. Of this increase, $458,400 is
attributed to a full year of operations of Alliance, which was acquired in July
2001. The remaining increase is due to revenues generated by our
TBAs expanding
roster of artist clients.

Revenues from the fairs and festivals client group increased $695,900, or
7%, to $10,375,900 in 2002 from $9,680,000 in 2001. This increase is
reflective of the 25% increase in the number of fairs and festivals programs
represented by TBA to 217 in 2002 from 174 in 2001.

Cost of revenues decreased $7,989,100, or 19%, to $33,010,100 for 2002
from $40,999,200 for 2001. The decrease is attributable to the overall
decrease in revenues for the corporate client and entertainment marketing
client groups from 2001 to 2002. Cost of revenues, as a percentage of
revenues, decreased 1%, resulting in an increase in gross profit margin to 33%
for 2002 from 32% in 2001. The increase is primarily attributable to the 22%
increase in artist client revenues, which generally have minimal direct costs
of revenues, offset by lower gross profit margins on revenues from the
corporate communications and entertainment marketing client groups. The lower
gross profit margins are a result of a more competitive corporate environment
brought about by the global economic slow down and an increase in the number of
promoted music tour dates, which generally have a lower gross profit margin.

Selling, general and administrative expenses decreased $3,323,800, or 17%,
to $16,440,300 for 2002 from $19,764,100 for 2001. The decrease results
primarily from a comparative decrease in sales expense attributable to the
reduced level of revenues and cost

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savings implemented beginning in the third quarter of 2001, including
reductions in headcount and related compensation costs, elimination of costs
attributable to unprofitable operations, elimination of certain incentive
compensation costs and a reduction in travel-related and other general and
administrative expenses. The decrease is partially offset by the impact of
incremental selling, general and administrative expenses associated with the
2001 Acquisitions, a $250,000 reserve for an account receivable from a
corporate client in bankruptcy, a $481,600 accrual for termination costs
associated with closed offices and approximately $280,000 of costs associated
with the termination of certain transactional discussions.

Excluding 2001 goodwill amortization of $2,069,800, depreciation expense
and other amortization decreased $150,800, or 8%, to $677,600 in 2002 from
$828,400 for 2001. The decrease results primarily from the retirement of
certain equipment and other equipment being fully depreciated. The Company
adopted FAS142 in 2002 and no longer amortizes goodwill.

Other income for 2002 includes $364,800 from the reversal of accrued
interest expense recorded in prior years associated with contingent promissory
notes payable related to certain of the Companys acquisitions in 1999-2001.
The Company is no longer accruing interest on this contingent purchase price
consideration because payment is not considered probable. Other income for
both years included income from an agreement with EELLC, which provided for the
Company to receive a percentage of gross revenues of EELLC. The Company received $63,000 in 2002 compared to $299,700 in 2001 under this agreement.
In December 2002, the Company sold its interest in EELLC.

Net interest expense decreased $81,400 to $466,900 for 2002, versus net
interest expense of $548,400 for 2001. The decrease is attributable primarily
to no longer accruing interest expense related to contingent purchase price
consideration and lower interest expense from repayments of other acquisition
notes payable, offset by increased interest expense associated with additional
bank borrowings.

The income tax benefit for 2002 is $860,000 or 83%, on a loss from
continuing operation before taxes of $1,035,400 compared to an income tax
benefit of $189,100, or 5%, for 2001 on a loss from continuing operations
before taxes of $3,469,700, and reflects statutory tax rates adjusted for
estimated permanent book/tax differences. The primary reason contributing to
the income tax benefit increase in the current year is the additional
recoverable federal taxes paid in prior years. At December 31,
2002, no further income tax carryback is available.

In 2002, the Company recognized a goodwill impairment loss of $1,988,600
related to the adoption of SFAS No. 142, Goodwill and Other Intangibles.
Pursuant to the transitional rules of SFAS No. 142, this loss was recorded in
the first quarter of 2002 as a cumulative effect of accounting change. There
was no tax effect of this impairment as none of the goodwill impairment loss
was deductible for tax purposes.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

For the 2001 period, results of operations of each of the 2001
Acquisitions are included from their respective acquisition dates. Results of
operations of each of the 2000 Acquisitions are included from the corresponding
acquisition dates in 2000.

Revenues decreased $18,135,500, or 23%, to $60,404,800 for 2001 from
$78,540,300 for 2000. Of the total decrease, $13,055,900 was attributable to
corporate client revenues, which decreased 24% to $42,194,200 for 2001 from
$55,250,100 for 2000. The number of corporate client events decreased to 288
for 2001 from 433 for 2000 due to a reduction in customer demand during 2001
attributable to matters discussed more fully in Financial Impact of September
11 Terrorist Attacks and Global Economic Slowdown above. Due, in part, to an
additional major event produced during the second quarter of 2001, the average
revenue per event increased to $146,500 for 2001 from $127,600 for 2000.
During 2001, the Company produced 36 corporate client events with revenues in
excess of $250,000 compared to 48 such events during 2000. For the first six
months of 2001, however, the corporate client group had experienced an increase
versus the first six months of 2000 in revenues and events with revenues in
excess of $250,000. Accordingly, the aforementioned shortfalls for the full
year of 2001 are solely attributable to a decrease in comparative activity for
the second half of the year.

Revenues from entertainment marketing clients decreased $ 6,521,600, or
57% from $11,392,700 in 2000 to $4,871,100 in 2001. The decrease is primarily
due to the impact of three major, low-margin entertainment marketing programs
delivered during the first and third quarters of 2000 that the Company elected
not to pursue during 2001, which were partially offset by a new major
entertainment marketing project delivered during the second quarter of 2001.

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Revenues from artist clients, which were not significantly impacted by the
September 11,2001 terrorist attacks, increased $146,500, or 4%, from $3,513,200
in 2000 to $3,659,700 in 2001. This increase is primarily attributed to the
July 2001 acquisition of Alliance, offset in part by the loss of revenue in
2001 from to the departure of an artist client.

Revenues from fairs and festivals clients increased $1,295,700 or 15%,
from $8,384,300 in 2000 to $9,680,000 in 2001, primarily due to an increase in
the number of fair and festival clients for which the Company executed buy/sell
arrangements with respect to artist performances.

Cost of revenues decreased $13,972,700, or 25%, from $54,971,900 for 2000
to $40,999,200 for 2001. The overall decrease is due to the decrease in
revenues for the corporate client and entertainment marketing client groups
from 2000 to 2001. Cost of revenues, as a percentage of revenues, decreased
from 2000 to 2001, resulting in an increase in gross profit margin to 32% for
2001 from 30% in 2000. This increase is primarily attributable to the decision
not to pursue low-margin entertainment marketing programs during 2001,
partially offset by lower gross margins on buy/sell arrangements executed with
respect to artist performances for fairs and festivals clients.

Selling, general and administrative expenses increased $292,200, or 2%, to
$19,764,100 for 2001 compared to $19,471,900 for 2000. The increase results
primarily from incremental selling, general and administrative expenses
associated with the acquisitions of EJD (in March 2000), Moore (in February
2001) and Alliance (in July 2001), increased personnel and related operating
expenses added during the second half of 2000 associated with the increased
levels of business from corporate clients during that period and increased
marketing costs to address the reduction in corporate client group revenues in
2001. These selling, general and administrative expense increases were
substantially offset by cost savings implemented during the third quarter of
2001, which included reductions in headcount and related compensation costs,
elimination of certain incentive compensation costs, and a reduction in
travel-related and other general and administrative expenses.

Depreciation and amortization expense increased $418,300, or 17%, to
$2,898,100 for 2001 from $2,479,800 for 2000. The increase results primarily
from the amortization of goodwill associated with the Moore and EJD
acquisitions. Amortization of goodwill totaled $2,069,800 in 2001, as compared
to $1,743,600 for 2000. The remainder of the increase is attributable to
increased depreciation on incremental property and equipment additions.

Other income is comprised primarily of income from an agreement with
EELLC, which provided for the Company to receive a percentage of gross
revenues, as defined, of EELLC. For the years 2001 and 2000, the Company
recognized $221,900 and $272,700 of income, respectively, from this agreement.

For 2001, net interest expense increased $384,300 to $548,300 for 2001
from $164,000 for 2000. The change is attributable primarily to increased
interest expense associated with additional outstanding debt related to the
2000 Acquisitions and 2001 Acquisitions, and additional bank borrowings, as
well as lower interest income from decreasing cash balances resulting from the
use of cash for investing and financing activities.

The income tax benefit for the 2001 period is $189,100, or 5%, on a loss
from continuing operations before income taxes of $3,469,700. This compares to
an income tax provision of $1,531,600, or 89%, for the 2000 period on income
from continuing operations before income taxes of $1,725,400. The effective
tax rates reflect statutory tax rates adjusted for estimated book/tax
differences and reflect the significant impact of nondeductible amortization of
goodwill from certain of the Companys acquisitions. Nondeductible
amortization of goodwill totaled $1,248,900 and $1,024,700 for 2001 and 2000,
respectively. In addition, the income tax benefit for 2001 has been reduced by
a valuation allowance due to the uncertainty as to the realization of the
future tax benefits related to the Companys deferred tax assets as of December
31, 2001.

DISCONTINUED OPERATIONS

In March 1999, the Company completed the acquisition of Karin Glass &
Associates Inc. and affiliated companies (collectively, KGA). KGA, along
with two smaller acquisitions completed prior to 1999, comprised the Companys
merchandising operations. During the first quarter of 2001, the Company
approved a formal plan to discontinue its merchandising operations in order to
better focus on its core business as a strategic communications and
entertainment company. The disposition of the merchandising operations
represents the disposal of a business segment under Accounting Principles Board
(APB) Opinion No. 30. Accordingly, this former segment is accounted for as a
discontinued operation. Operating results of this business segment and other
information for discontinued operations appear in the notes to consolidated
financial statements captioned Dispositions (Note 7).

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LIQUIDITY AND CAPITAL RESOURCES

The September 11, 2001 terrorist attacks had a significant negative impact
on the nations economy and the Companys corporate clients businesses in
particular. As a result, the Company experienced significantly reduced
revenues in 2001, with particular impact on the third and fourth quarters. The
Company also experienced some cancellations of programs that were scheduled to
take place in early 2002. The global economic slowdown that began in 2001, and
which was exacerbated by the terrorist attacks, has continued to impact the
Companys corporate client business activity throughout 2002, with particular
impact during the first half of 2002.

Primarily as a result of the operating losses incurred in 2002, cash and
cash equivalents at December 31, 2002 were $1,527,800, compared to $2,151,200
at December 31, 2001. In addition, the Company had a working capital deficit
of $3,622,000 at December 31, 2002 compared to a working capital deficit of
$2,636,000 at December 31, 2001. Both years exclude discontinued operations.

In order to provide additional working capital and to repay certain
maturing bank indebtedness, the Company entered into a bank credit facility in
October 2001. The credit facility provided for maximum borrowings of up to
$4,050,000. The credit facility was comprised of: (a) a $1,050,000 term loan,
repayable in monthly principal installments of $43,750 commencing November 1,
2001, with an original maturity date of September 30, 2003; and (b) a revolving
credit line of up to $3,000,000, with an original maturity date of June 30,
2003. The credit facility was initially secured by all accounts receivable and
bears interest, payable monthly, at the Companys choice of an interest rate
based upon LIBOR or the banks prime rate, plus an incremental percentage
margin, as defined in the loan agreement. Upon the October 2001 closing of the
facility, the Company borrowed $2,778,600 ($1,050,000 under the term loan and
$1,728,600 under the revolving credit line). The term loan proceeds were used
to refinance the remaining principal obligations on the Companys note payable
to a bank and mortgage payable to a bank that were outstanding in October 2001.
Of the revolving credit line proceeds, $963,000 was used to repay all
principal and interest due under the Companys three revolving lines of credit,
with the remaining $765,600 retained as working capital. In January 2002, the
Company borrowed the remaining $1,271,400 balance of the revolving credit line.

The Company was not in compliance with certain required financial ratios,
specifically a debt/EBITDA ratio, a fixed charge ratio and a minimum net worth
ratio, as of December 31, 2001. Pursuant to an April 2002 restructuring
agreement with the bank, the Company was granted a temporary waiver of the
financial covenant events of default provisions under the original loan
agreement and the banks forbearance from exercising its available remedies,
which extended through January 2, 2003. In addition, new financial covenants
were established and the Company granted the bank additional security for the
entire restructured bank credit facility in the form of a pledge of the shares
of certain of the Companys subsidiaries and a first lien deed of trust on the
Companys land and building located in Dallas, Texas, which was sold in
February 2003 with the banks consent (see Note 11). The maturity date for both
the term loan and revolving credit line was extended to April 30, 2003.

The bank also agreed to provide the Company $500,000 of additional
financing (New Bank Loan). The New Bank Loan was conditioned upon the
funding of a second loan of $500,000 (Affiliate Loan) from an entity
controlled by the Chief Executive Officer of the Company (Heritage). The New
Bank Loan and the Affiliate Loan were repaid in June 2002, upon receipt of the
Companys federal income tax refund. In addition, the Company repaid $659,400
on the revolving credit line with proceeds from the Companys federal income
tax refund.

In order to provide the Affiliate Loan, Heritage obtained a $500,000 loan
from an independent third party finance company (Pass-Through Loan). The
Pass-Through Loan was secured by 950,336 shares of common stock held by the
Chief Executive Officer (772,876 shares) and President (177,460 shares) of the
Company and a personal guaranty of the President of the Company. The
Pass-Through Loan was repaid concurrently with the repayment of the Affiliate
Loan. As a condition to obtaining the Pass-Through Loan, Heritage paid a fee
of $5,000 and interest accrued at 12% per annum. These costs were
passed-through to the Company as part of the Affiliate Loan.

Although the Company has maintained
its aggressive sales improvement efforts, the Company was in technical noncompliance with the revised financial
covenants under the restructured bank credit facility as of December 31, 2002.
In February 2003, the bank required the Company to use the proceeds from the
sale of its Dallas facility (see Note 11), to repay the outstanding balance of
the term loan ($393,700) and a portion of the revolving credit line ($92,500).
After this repayment, there was $2,248,000 outstanding under the revolving credit
line. In April 2003, the Company and the bank negotiated a further restructuring of
the bank credit facility (2003 Restructuring). Pursuant to the 2003
Restructuring, the Company was granted a new waiver of the financial covenant
events of default and the banks continued forebearance from exercising its
available remedies, which now extends through January 1, 2004. In addition,
the Company was granted the right to re-borrow up to $750,000 under the
revolving credit line through May 31, 2003, for the purpose of making scheduled
principal and interest payments and additional earn-out payments under the
acquisition notes as well as for working capital purposes. Subsequent to May
31, 2003, the then outstanding

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balance of the revolving credit line will be converted to a term loan (2003
Term Loan) and the Company will be required to make seven equal monthly
principal payments from June 30, 2003 through December 31, 2003. The total
amount to be repaid will equal the greater of the amount re-borrowed
through May 31, 2003 or that amount which will cause the Company
to be in compliance with the financial covenants contained in the
October 2001 credit agreement. Interest will continue to be paid monthly. All remaining amounts outstanding
under the 2003 Term Loan will be due April 30, 2004. The 2003 Restructuring
provided for new financial covenants and reporting requirements and included
provisions for an accelerated maturity date upon the occurrence of certain
events including, among other things, an Event of Default (as defined) or the
sale or change of control of a material amount of the Companys assets. In
consideration for entering into the 2003 Restructuring and for providing the
first $500,000 of re-borrowings, the Company will pay the bank a fee of $40,000,
payable $20,000 in August and October of 2003, and issued 177,645 warrants to
purchase shares of common stock of the Company at an exercise price of $0.75
per share. If the 2003 Term Loan is repaid on or before
December 31, 2003 and there has been no sale of the Company
within the six month period prior to repayment, the bank will return
to the Company the lessor of (i) the unexercised warrants on
such date and (ii) 88,822 warrants. If the Company
re-borrows the remaining $250,000 available through May 31, 2003, the Company
will issue additional warrants to the bank to purchase common stock of the
Company at the rate of one warrant for every two dollars borrowed and
at an
exercise price of $0.01 per share.

The Company incurred net losses during 2001 and 2002, has $3,622,000 of
negative working capital at December 31, 2002, and will experience seasonally
lower operating results for the first half of 2003. However, the Company has
significantly reduced its operating expenses and anticipates increased revenues
in the second half of 2003 due to new programs the Company has already been
awarded. Accordingly, management believes its operating results, EBITDA and
cash flows for 2003 will improve from the levels the Company experienced in
2002. The Companys liquidity needs for the foreseeable future are primarily
for repayments of indebtedness and for working capital. Capital expenditures
will be focused on equipment replacements and are not expected to be
significant. Management believes that the Companys future cash flows from
operations, its current cash reserves and availability of funds under its
revolving credit line will be sufficient to satisfy its current and future debt
service and working capital requirements through at least March 31, 2004.
However, there is no assurance that managements assumptions will correspond to
actual events.

The Company is also exploring strategic opportunities for the Company.
The Company has retained an investment-banking firm to assist the Company in
evaluating a variety of transactional and financing alternatives. However,
since this process is still on-going, no assurances can be given that any
proposed plans or actions can be effectively executed.

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Cash Flow Statement Analysis

Summarized Statements of Cash Flow

|                                |                         |   |                                  |            |      |   |            |            |   |   |            |            |  
|------------------------------- | ----------------------- | - | -------------------------------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                                |                         |   | FOR THE YEARS ENDED DECEMBER 31,
|                                |                         |   |                                 
|                                |                         |   | 2002                             |            | 2001 |   | 2000      
|                                |                         |   |                                  |            |      |   |           
|Net cash (used in) provided by: |                         |   |                                  |            |      |   |            |            |   |   |            |           
|                                | Operating activities    |   | $                                | 1,540,500  |      |   | $          | 1,646,700  |   |   | $          | 2,283,100  |  
|                                | Investing activities    |   |                                  | (1,637,100 | )    |   |            | (1,812,100 | ) |   |            | (5,351,300 | )
|                                | Financing activities    |   |                                  | (511,800   | )    |   |            | (794,100   | ) |   |            | (5,568,300 | )
|                                | Discontinued operations |   |                                  | (15,000    | )    |   |            | (640,400   | ) |   |            | (460,000   | )
|                                |                         |   |                                  |            |      |   |            |            |   |   |            |           
|                                |                         | $ | (623,400                         | )          |      | $ | (1,599,900 | )          |   | $ | (9,096,500 | )         
|                                |                         |   |                                  |            |      |   |            |            |   |   |            |           

Cash provided by continuing operations was $1,540,500, $ 1,646,700, and $
2,283,100 for 2002, 2001 and 2000, respectively. The reduction in each year is
due primarily to net losses from continuing operations incurred in 2001 and
2002, offset by the add-back of non-cash depreciation and amortization and
other items, the timing of collections of accounts receivable and payment of
accounts payable and accrued liabilities and the timing of deferred revenues
and deferred charges associated with programs occurring in the following year.

Cash used in investing activities was $1,637,100, $ 1,812,100, and
$5,351,300, in 2002, 2001 and 2000, respectively. In all years, cash was used
to fund additional earn-out payments for acquisitions made in prior years. In
2001, initial cash payments were also made to acquire Moore ($1,100,000) and
Alliance ($100,000) and in 2000, initial cash payments were also made to
acquire Romeo ($3,475,000) and EJD ($540,000). Capital expenditures were
$51,600, $376,200 and $836,900 in 2002, 2001 and 2000, respectively. Capital
expenditures were higher in 2000, corresponding to the Companys expansion
during that period. Capital expenditures in 2001 and 2002 represent primarily
replacements of computer equipment.

Cash used in financing activities was $511,800, $794,100, and $5,568,300
for 2002, 2001, and 2000, respectively, resulting primarily from the payment of
bank and acquisition debt and from the 2001 and 2000 purchases of treasury
shares pursuant to the Companys stock repurchase program.

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Commitments

Future minimum annual commitments under bank and other debt agreements and
non-cancelable operating leases as of December 31, 2002, are as follows:

|                    |  |      |           |      |  |      |           |      |  |      |         |       |  |   |         |  |  |   |        |  |  |   |           | 
|------------------- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | ------- | ----- |  | - | ------- |  |  | - | ------ |  |  | - | --------- | 
|                    |  | 2003 |           | 2004 |  | 2005 |           | 2006 |  | 2007 |         | Total
|                    |  |      |           |      |  |      |           |      |  |      |         |      
|Bank and other debt |  | $    | 1,617,200 |      |  | $    | 3,169,900 |      |  | $    | 225,100 |       |  | $ | 121,100 |  |  | $ | 46,200 |  |  | $ | 5,179,500 | 
|Operating Leases    |  |      | 669,400   |      |  |      | 545,500   |      |  |      | 266,700 |       |  |   | 169,600 |  |  |   |       |  |  |   | 1,651,200 | 
|                    |  |      |           |      |  |      |           |      |  |      |         |       |  |   |         |  |  |   |        |  |  |   |           | 
|Total               |  | $    | 2,286,600 |      |  | $    | 3,715,400 |      |  | $    | 491,800 |       |  | $ | 290,700 |  |  | $ | 46,200 |  |  | $ | 6,830,700 | 
|                    |  |      |           |      |  |      |           |      |  |      |         |       |  |   |         |  |  |   |        |  |  |   |           | 

Capital expenditures will be focused on equipment replacements and are not
expected to be significant.

Forward Looking Statements

The foregoing discussion contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Such statements are intended to be
covered by the safe harbors created by such provisions. These statements
include management beliefs regarding the future operations of the Company and
the plans and objectives of management for future growth or sale of the
Company. The forward-looking statements included herein are based on current
expectations that involve numerous risks and uncertainties. Assumptions
relating to the foregoing involve judgments with respect to, among other
things, future political, economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although
the Company believes that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking statements
included in this Form 10-K will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives of the
Company will be achieved.

Other Recently Issued Accounting Standards.

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 144, (SFAS 144), Accounting
for the Impairment or Disposal of Long-Lived Assets, which addresses the
financial accounting and reporting for the impairment of long-lived assets.
This statement supersedes Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of and the accounting and reporting provisions for the disposal
of a segment of a business of APB Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
The adoption of SFAS 144 in fiscal 2002 did not have a material impact on the
financial position or results of operations of the Company. See note for
discussion of sale of Dallas land and building.

In April 2002, the FASB issued Statement No. 145 (SFAS No. 145),
Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections effective on or after May 15, 2002. This
Statement rescinds SFAS No. 4 and an amendment of that Statement, and SFAS No.
64. This Statement also rescinds SFAS No. 44. This Statement amends SFAS No.
13, to eliminate an inconsistency between the required accounting for certain
lease modifications that have economic effects that are similar to sale
leaseback transactions. This Statement also amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. The
adoption of SFAS No. 145 did not have a material effect on the Companys
financial position or results of operations.

In June
2001, the FASB issued Statement
No. 143 (SFAS No. 143), Accounting for Asset Retirement Obligations,
effective for fiscal years beginning after June 15, 2002. The Statement
requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity capitalizes a cost by increasing
the carrying amount of the related long-lived asset. Over time, the liability
is accreted to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon settlement of the

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liability, an entity either settles the obligation for its recorded amount
or incurs a gain or loss upon settlement. The adoption of SFAS No. 143 is not
expected to have a material effect on the Companys financial position or
results of operations.

In June 2002, FASB issued Statement No. 146 (SFAS No. 146), Accounting
for Costs Associated with Exit or Disposal Activities, effective for
activities that are initiated after December 31, 2002, with early application
encouraged. This Statement addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring).  The adoption of SFAS No. 146 is not
expected to have a material effect on the Companys financial position or
results of operations.

In December 2002, FASB issued Statement No. 148 (SFAS No. 148),
Accounting for Stock Based Compensation  Transition and Disclosure  An
Amendment of FASB Statement No. 123. SFAS No. 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The Company is required to follow the prescribed format and provide
the additional disclosures required by SFAS No. 148 in its annual financial
statements for the year ended December 31, 2002 and must also provide the
disclosures in its quarterly reports containing condensed financial statements
for interim periods beginning with the quarterly period ended March 31, 2003.
The adoption of SFAS No. 148 did not have a material effect on the
Companys financial position or results of operations.

In November 2002, the
Financial Accounting Standards Board (FASB) issued
Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others, which disclosures are effective for financial
statements issued after December 15, 2002. The Company adopted
the disclosure requirements of FIN 45 as of December 31,
2002. The adoption of the measurement requirements of FIN 45 will
not have a material impact on the Companys financial position
or results of operations.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Impact of Interest Rate Changes

The Companys market risk relates to interest rate exposure on short-term
borrowings. The Company does not use financial instruments for trading or
other speculative purposes. Borrowings on the Companys bank credit facility
are at variable interest rates. All other borrowings are at fixed rates. At
December 31, 2002, the Company had $2,340,600 outstanding under a revolving
credit facility at an interest rate of 4.51% percent. Management believes that
a hypothetical adverse movement in the interest rates of ten percent of such
recent rates would not have a material effect on the Companys consolidated
financial position, results of operations or cash flows.




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following financial statements required by this item are filed
herewith:

|                                                                                                     |  |      |    | 
|---------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                     |  | PAGE
|                                                                                                     |  |     
|Reports of Independent Certified Public Accountants                                                  |  |      | 21 | 
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                         |  |      | 23 | 
|Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000           |  |      | 24 | 
|Consolidated Statements of Stockholders Equity for the years ended December 31, 2002, 2001 and 2000 |  |      | 25 | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000           |  |      | 26 | 
|Notes to Consolidated Financial Statements                                                           |  |      | 27 | 

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of TBA Entertainment Corporation:

We have audited the accompanying consolidated balance sheet of TBA
Entertainment Corporation (a Delaware corporation) and subsidiaries as of
December 31, 2002 and the related consolidated statements of operation,
stockholders equity and cash flows for the year then ended.
These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based
on our audit. The consolidated financial statements of TBA
Entertainment Corporation and subsidiaries as of December 31, 2001
and for each of the two years then ended (before revision) were audited by other
auditors, who have ceased operations. Those auditors expressed an
unqualified opinion on those financial statements in their report dated April 16, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TBA Entertainment
Corporation and subsidiaries as of December 31, 2002 and the results of their
operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in the
United States of America.

As discussed above, the financial
statements of TBA Entertainment Corporation and subsidiaries as of
December 31, 2001 and for each of the two years in the period
ended December 31, 2001, were
audited by other auditors, who have ceased operations. As described in
Note 4, these financial statements have been revised to include the
transitional disclosures required by Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets, which was adopted by the
Company as of January 1, 2002. Our audit procedures with respect
to the disclosures in Note 4 with respect to 2001 and 2000
included (i) agreeing the previously reported net income to the
previously issued financial statements and the adjustments to
reported net income representing amortization expense (including any
related tax effects) recognized in those periods related to goodwill,
to the Companys underlying records obtained from management, and
(ii) testing the mathematical accuracy of the reconciliation of
adjusted net income to reported net income, and the related earnings
per share amounts. In our opinion, the disclosures for 2001 and 2000
in Note 4 are appropriate. However, we were not engaged to
audit, review, or apply any procedures to the 2001 and 2000
consolidated financial statements of the Company other than with
respect to such disclosure and, accordingly, we do not express an
opinion or any other form of assurance on the 2001 or 2000
consolidated financial statements taken as a whole.

The quarterly financial data in
Note 13 contain information that we did not audit, and,
accordingly, we do not express an opinion on that data. We did not
review the quarterly data for the three month period ended
March 31, 2002 in accordance with standards established by the
American Institute of Certified Public Accountants because we were
not engaged to do so.

BDO SEIDMAN, LLP

Los Angeles, California
February 21, 2003, except for Notes 1 and 5, which are as of April
10, 2003.

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This report is a conformed copy of the report previously issued by Arthur
Anderson LLP and has not been reissued.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To TBA Entertainment Corporation:

We have audited the accompanying consolidated balance sheets of TBA
Entertainment Corporation (a Delaware corporation) and subsidiaries as of
December 31, 2001 and 2000, and the related consolidated statements of
operations, stockholders equity and cash flows for each of the three years in
the period ended December 31, 2001. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TBA Entertainment
Corporation and subsidiaries as of December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States.

ARTHUR ANDERSEN LLP

Los Angeles, California
April 16, 2002

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TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2002 AND 2001

|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |            |            |       |            | 
|------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------- | ------------------------------------------ | ---------- | ----- | ---------- | ---------- | ---------- | ----- | ---------- | 
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            | 2002  |            | 2001      
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|Current assets:                                               |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              | Cash and cash equivalents                                                                          |                                                                                                                                                              | $                                                                       | 1,527,800                                  |            |       | $          | 2,151,200  |           
|                                                              | Accounts receivable, net of allowance for doubtful
accounts of $378,900 and $398,400, respectively |                                                                                                                                                              |                                                                         | 1,993,800                                  |            |       |            | 1,574,300  |           
|                                                              | Asset held for sale, net                                                                           |                                                                                                                                                              |                                                                         | 548,700                                    |            |       |            |           |           
|                                                              | Deferred charges and other current assets                                                          |                                                                                                                                                              |                                                                         | 1,105,800                                  |            |       |            | 2,709,500  |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         | Total current assets                       |            |       | 5,176,100  |            |            |       | 6,435,000  | 
|Property and equipment, net                                   |                                                                                                    |                                                                                                                                                              | 653,600                                                                 |                                            |            |       | 2,006,100  |           
|Other assets, net:                                            |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              | Goodwill                                                                                           |                                                                                                                                                              |                                                                         | 21,706,100                                 |            |       |            | 25,668,700 |           
|                                                              | Other                                                                                              |                                                                                                                                                              |                                                                         | 603,100                                    |            |       |            | 249,900    |           
|Net long-term assets of discontinued operations               |                                                                                                    |                                                                                                                                                              |                                                                        |                                            |            |       | 48,000     |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         | Total assets                               |            | $     | 28,138,900 |            |            | $     | 34,407,700 | 
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         | LIABILITIES AND STOCKHOLDERS EQUITY       |            |       |            |            |            |       |            | 
|Current liabilities:                                          |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    | Accounts payable and accrued liabilities                                                                                                                     |                                                                         | $                                          | 3,620,700  |       |            | $          | 3,905,400  |      
|                                                              |                                                                                                    | Deferred revenue                                                                                                                                             |                                                                         |                                            | 3,560,200  |       |            |            | 3,335,600  |      
|                                                              |                                                                                                    | Notes payable and current portion of long-term debt                                                                                                          |                                                                         |                                            | 1,617,200  |       |            |            | 1,830,000  |      
|                                                              |                                                                                                    | Net short-term liabilities from discontinued operations                                                                                                      |                                                                         |                                            | 211,800    |       |            |            | 276,200    |      
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         | Total current liabilities                  |            |       | 9,009,900  |            |            |       | 9,347,200  | 
|Long-term debt, net of current portion                        |                                                                                                    |                                                                                                                                                              | 3,562,300                                                               |                                            |            |       | 7,340,600  |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         | Total liabilities                          |            |       | 12,572,200 |            |            |       | 16,687,800 | 
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|Commitments
and contingencies (Note 10)
Stockholders equity: |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    | Preferred stock, $.001 par value, authorized 1,000,000 shares,
2,000 shares of Series A convertible preferred stock
outstanding, liquidation preference $100 |                                                                         |                                            | 100        |       |            |            | 100        |      
|                                                              |                                                                                                    | Common stock, $.001 par value, authorized 20,000,000 shares, 8,857,200                                                                                       |                                                                         |                                            |            |       |            |            |            |      
|                                                              |                                                                                                    |                                                                                                                                                              | shares issued, 7,368,100 and 7,362,400 shares outstanding, respectively |                                            |            | 8,900 |            |            |            | 8,900 |           
|                                                              |                                                                                                    | Additional paid-in capital                                                                                                                                   |                                                                         |                                            | 30,577,200 |       |            |            | 30,589,300 |      
|                                                              |                                                                                                    | Retained deficit                                                                                                                                             |                                                                         |                                            | (8,961,900 | )     |            |            | (6,797,900 | )    
|                                                              |                                                                                                    | Less treasury stock, at cost, 1,489,200 and 1,494,800
shares, respectively                                                                                   |                                                                         |                                            | (6,057,600 | )     |            |            | (6,080,500 | )    
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         | Total stockholders equity                 |            |       | 15,566,700 |            |            |       | 17,719,900 | 
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         | Total liabilities and stockholders equity |            | $     | 28,138,900 |            |            | $     | 34,407,700 | 
|                                                              |                                                                                                    |                                                                                                                                                              |                                                                         |                                            |            |       |            |           

The accompanying notes are an integral part of these consolidated balance sheets.

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TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |         |   |            | 
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | - | ------------------- | ----- | -------------------------------- | ---------- | ---------- | ---------- | ---- | ---------- | ---------- | ------- | - | ---------- | 
|                                                                                                                     |                                                                                             |   |                     |       | FOR THE YEARS ENDED DECEMBER 31,
|                                                                                                                     |                                                                                             |   |                     |       |                                 
|                                                                                                                     |                                                                                             |   |                     |       | 2002                             |            | 2001       |            | 2000
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |     
|Revenues                                                                                                             |                                                                                             | $ | 49,131,800          |       |                                  | $          | 60,404,800 |            |      | $          | 78,540,300 |        
|Costs related to revenues                                                                                            |                                                                                             |   | 33,010,100          |       |                                  |            | 40,999,200 |            |      |            | 54,971,900 |        
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|                                                                                                                     |                                                                                             |   | Gross profit margin |       |                                  | 16,121,700 |            |            |      | 19,405,600 |            |         |   | 23,568,400 | 
|Selling, general and administrative expenses                                                                         |                                                                                             |   | 16,491,000          |       |                                  |            | 19,764,100 |            |      |            | 19,471,900 |        
|Depreciation and amortization expense                                                                                |                                                                                             |   | 677,600             |       |                                  |            | 2,898,100  |            |      |            | 2,479,800  |        
|Other income, net                                                                                                    |                                                                                             |   | (478,400            | )     |                                  |            | (335,200   | )          |      |            | (272,700   | )      
|Interest expense, net                                                                                                |                                                                                             |   | 466,900             |       |                                  |            | 548,300    |            |      |            | 164,000    |        
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|(Loss)
income from continuing operations before income taxes and cumulative effect of change in
accounting principle |                                                                                             |   | (1,035,400          | )     |                                  |            | (3,469,700 | )          |      |            | 1,725,400  |        
|Benefit (provision) for income taxes                                                                                 |                                                                                             |   | 860,000             |       |                                  |            | 189,100    |            |      |            | (1,531,600 | )      
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|(Loss) income from continuing operations before
cumulative effect of change in accounting principle                  |                                                                                             |   | (175,400            | )     |                                  |            | (3,280,600 | )          |      |            | 193,800    |        
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|Discontinued operations (Notes 2 and 7):                                                                             |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|                                                                                                                     | Loss from operations, net of income tax
benefit of $321,900 for 2001, and $731,600
for 2000 |   |                     |      |                                  |            |            | (1,260,000 | )    |            |            | (92,500 | )
|Loss on disposition of discontinued operations,
net of income tax benefit of $42,100                                 |                                                                                             |   |                    |       |                                  |            | (2,390,800 | )          |      |            |           |        
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|Loss from discontinued operations                                                                                    |                                                                                             |   |                    |       |                                  |            | (3,650,800 | )          |      |            | (92,500    | )      
|Cumulative effect of change in accounting principle                                                                  |                                                                                             |   | (1,988,600          | )     |                                  |            |           |            |      |            |           |        
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|Net (loss) income                                                                                                    |                                                                                             | $ | (2,164,000          | )     |                                  | $          | (6,931,400 | )          |      | $          | 101,300    |        
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|(Loss) earnings per common share  basic:                                                                            |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|                                                                                                                     | (Loss) income from continuing operations                                                    |   | $                   | (0.02 | )                                |            | $          | (0.45      | )    |            | $          | 0.02    |  
|                                                                                                                     | Loss from discontinued operations                                                           |   |                     |      |                                  |            |            | (0.49      | )    |            |            | (0.01   | )
|                                                                                                                     | Cumulative effect of change in accounting principle                                         |   |                     | (0.27 | )                                |            |            |           |      |            |            |        |  
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|Net (loss) income per common share  basic                                                                           |                                                                                             | $ | (0.29               | )     |                                  | $          | (0.94      | )          |      | $          | 0.01       |        
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|(Loss) earnings per common share  diluted:                                                                          |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|                                                                                                                     | (Loss) income from continuing operations                                                    |   | $                   | (0.02 | )                                |            | $          | (0.45      | )    |            | $          | 0.02    |  
|                                                                                                                     | Loss from discontinued operations                                                           |   |                     |      |                                  |            |            | (0.49      | )    |            |            | (0.01   | )
|                                                                                                                     | Cumulative effect of change in accounting principle                                         |   |                     | (0.27 | )                                |            |            |           |      |            |            |        |  
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        
|Net (loss) income per common share  diluted                                                                         |                                                                                             | $ | (0.29               | )     |                                  | $          | (0.94      | )          |      | $          | 0.01       |        
|                                                                                                                     |                                                                                             |   |                     |       |                                  |            |            |            |      |            |            |        

The accompanying notes are an integral part of these consolidated statements.

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TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

|                            |                                                             |  |                 |      |              |   |            |   |          |  |                |         |               |   |        |     |        |   |            |         |   |   |            |            |   |  |           |         |   |   |            |            |   |   |            |            |  
|--------------------------- | ----------------------------------------------------------- |  | --------------- | ---- | ------------ | - | ---------- | - | -------- |  | -------------- | ------- | ------------- | - | ------ | --- | ------ | - | ---------- | ------- | - | - | ---------- | ---------- | - |  | --------- | ------- | - | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                            |                                                             |  |                 |      |              |   |            |   |          |  |                |         |               |   |        |     |        |   |            |         |   |   |            |            |   |  |           |         |   |   |           
|                            |                                                             |  | PREFERRED STOCK |      | COMMON STOCK |   | ADDITIONAL |   | RETAINED |  | TREASURY STOCK |         | TOTAL        
|                            |                                                             |  |                 |      |              |   | PAID-IN    |   | EARNINGS |  |                |         | STOCKHOLDERS
|                            |                                                             |  | SHARES          |      | AMOUNT       |   | SHARES     |   | AMOUNT   |  | CAPITAL        |         | (DEFICIT)     |   | SHARES |     | AMOUNT |   | EQUITY    
|                            |                                                             |  |                 |      |              |   |            |   |          |  |                |         |               |   |        |     |        |   |           
|BALANCES, January 1, 2000   |                                                             |  | 2,600           |      |              | $ | 100        |   |          |  | 8,714,300      |         |               | $ | 8,700  |     |        | $ | 29,859,900 |         |   | $ | 32,200     |            |   |  | 495,500   |         |   | $ | (2,062,100 | )          |   | $ | 27,838,800 |           
|                            | Issuance of common stock upon
acquisition                   |  |                 |     |              |   |            |  |          |  |                | 142,400 |               |   |        | 200 |        |   |            | 749,800 |   |   |            |           |   |  |           |        |   |   |            |           |   |   |            | 750,000    |  
|                            | Issuance of treasury stock for
employee stock purchase plan |  |                 |     |              |   |            |  |          |  |                |        |               |   |        |    |        |   |            | (9,000  | ) |   |            |           |   |  |           | (15,100 | ) |   |            | 62,400     |   |   |            | 53,400     |  
|                            | Repurchase of common stock                                  |  |                 |     |              |   |            |  |          |  |                |        |               |   |        |    |        |   |            |        |   |   |            |           |   |  |           | 869,100 |   |   |            | (3,501,000 | ) |   |            | (3,501,000 | )
|                            | Conversion of preferred
stock into common stock             |  |                 | (400 | )            |   |            |  |          |  |                | 400     |               |   |        |    |        |   |            |        |   |   |            |           |   |  |           |        |   |   |            |           |   |   |            |           |  
|                            | Net income                                                  |  |                 |     |              |   |            |  |          |  |                |        |               |   |        |    |        |   |            |        |   |   |            | 101,300    |   |  |           |        |   |   |            |           |   |   |            | 101,300    |  
|                            |                                                             |  |                 |      |              |   |            |   |          |  |                |         |               |   |        |     |        |   |            |         |   |   |            |            |   |  |           |         |   |   |            |            |   |   |            |           
|BALANCES, December 31, 2000 |                                                             |  | 2,200           |      |              |   | 100        |   |          |  | 8,857,100      |         |               |   | 8,900  |     |        |   | 30,600,700 |         |   |   | 133,500    |            |   |  | 1,349,500 |         |   |   | (5,500,700 | )          |   |   | 25,242,500 |           
|                            | Issuance of treasury stock for
employee stock purchase plan |  |                 |     |              |   |            |  |          |  |                |        |               |   |        |    |        |   |            | (11,400 | ) |   |            |           |   |  |           | (10,000 | ) |   |            | 40,800     |   |   |            | 29,400     |  
|                            | Repurchase of common stock                                  |  |                 |     |              |   |            |  |          |  |                |        |               |   |        |    |        |   |            |        |   |   |            |           |   |  |           | 155,300 |   |   |            | (620,600   | ) |   |            | (620,600   | )
|                            | Conversion of preferred
stock into common stock             |  |                 | (200 | )            |   |            |  |          |  |                | 100     |               |   |        |    |        |   |            |        |   |   |            |           |   |  |           |        |   |   |            |           |   |   |            |           |  
|                            | Net loss                                                    |  |                 |     |              |   |            |  |          |  |                |        |               |   |        |    |        |   |            |        |   |   |            | (6,931,400 | ) |  |           |        |   |   |            |           |   |   |            | (6,931,400 | )
|                            |                                                             |  |                 |      |              |   |            |   |          |  |                |         |               |   |        |     |        |   |            |         |   |   |            |            |   |  |           |         |   |   |            |            |   |   |            |           
|BALANCES, December 31, 2001 |                                                             |  | 2,000           |      |              |   | 100        |   |          |  | 8,857,200      |         |               |   | 8,900  |     |        |   | 30,589,300 |         |   |   | (6,797,900 | )          |   |  | 1,494,800 |         |   |   | (6,080,500 | )          |   |   | 17,719,900 |           
|                            | Issuance of treasury stock for
employee stock purchase plan |  |                 |     |              |   |            |  |          |  |                |        |               |   |        |    |        |   |            | (12,100 | ) |   |            |           |   |  |           | (5,600  | ) |   |            | 22,900     |   |   |            | 10,800     |  
|                            | Net loss                                                    |  |                 |     |              |   |            |  |          |  |                |        |               |   |        |    |        |   |            |        |   |   |            | (2,164,000 | ) |  |           |        |   |   |            |           |   |   |            | (2,164,000 | )
|                            |                                                             |  |                 |      |              |   |            |   |          |  |                |         |               |   |        |     |        |   |            |         |   |   |            |            |   |  |           |         |   |   |            |            |   |   |            |           
|BALANCES, December 31, 2002 |                                                             |  | 2,000           |      |              | $ | 100        |   |          |  | 8,857,200      |         |               | $ | 8,900  |     |        | $ | 30,577,200 |         |   | $ | (8,961,900 | )          |   |  | 1,489,200 |         |   | $ | (6,057,600 | )          |   | $ | 15,566,700 |           
|                            |                                                             |  |                 |      |              |   |            |   |          |  |                |         |               |   |        |     |        |   |            |         |   |   |            |            |   |  |           |         |   |   |            |            |   |   |            |           

The accompanying notes are an integral part of these consolidated statements.

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TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |            |   |            |            |  
|----------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------- | ---------------------------------------------------------------------- | - | -------------------------------- | ---------- | ---------- | - | -------- | ---------- | ---------- | - | ---------- | ---------- | -
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   | FOR THE YEARS ENDED DECEMBER 31,
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                 
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   | 2002                             |            | 2001       |   | 2000    
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |         
|Cash flows from operating activities:                                               |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|                                                                                    | Net (loss) income                                                 |                                                                                           | $                                     | (2,164,000                                                             | ) |                                  | $          | (6,931,400 | ) |          | $          | 101,300    |  
|                                                                                    |                                                                   | Adjustments to reconcile net (loss) income to net cash
provided
by continuing operations: |                                       |                                                                        |   |                                  |            |            |   |          |            |            |   |           
|                                                                                    |                                                                   |                                                                                           |                                       | Cumulative effect of change in accounting principle                    |   |                                  | 1,988,600  |            |   |          |           |            |   |            |           |  
|                                                                                    |                                                                   |                                                                                           |                                       | Loss from discontinued operations                                      |   |                                  |           |            |   |          | 3,650,800  |            |   |            | 92,500     |  
|                                                                                    |                                                                   |                                                                                           |                                       | Depreciation and amortization                                          |   |                                  | 677,600    |            |   |          | 2,898,100  |            |   |            | 2,479,800  |  
|                                                                                    |                                                                   |                                                                                           |                                       | Loss on disposal of assets                                             |   |                                  | 176,200    |            |   |          | 300        |            |   |            | 93,400     |  
|                                                                                    |                                                                   |                                                                                           |                                       | Bad debt expense                                                       |   |                                  | 250,000    |            |   |          | 216,000    |            |   |            | 154,600    |  
|                                                                                    |                                                                   |                                                                                           |                                       | Reversal of interest expense related
to reduction of acquisition notes |   |                                  | (591,400   | )          |   |          |           |            |   |            |           |  
|                                                                                    |                                                                   |                                                                                           |                                       | Deferred tax provision                                                 |   |                                  |           |            |   |          |           |            |   |            | 113,900    |  
|                                                                                    |                                                                   |                                                                                           |                                       | Changes in operating assets and liabilities,
net of acquisitions:      |   |                                  |            |            |   |          |            |            |   |            |            |  
|                                                                                    |                                                                   |                                                                                           |                                       | (Increase) decrease in accounts receivable                             |   |                                  | (669,500   | )          |   |          | 2,376,600  |            |   |            | (758,900   | )
|                                                                                    |                                                                   |                                                                                           |                                       | Decrease (increase) in deferred charges and
other current assets       |   |                                  | 1,721,500  |            |   |          | (242,200   | )          |   |            | 236,900    |  
|                                                                                    |                                                                   |                                                                                           |                                       | (Increase) decrease in other assets                                    |   |                                  | (373,100   | )          |   |          | (144,000   | )          |   |            | 35,900     |  
|                                                                                    |                                                                   |                                                                                           |                                       | Increase (decrease) in accounts payable
and accrued liabilities        |   |                                  | 298,900    |            |   |          | (1,195,800 | )          |   |            | 1,913,900  |  
|                                                                                    |                                                                   |                                                                                           |                                       | Increase (decrease) in deferred revenue                                |   |                                  | 225,700    |            |   |          | 1,018,300  |            |   |            | (2,180,200 | )
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|                                                                                    |                                                                   |                                                                                           |                                       | Net cash provided by continuing operations                             |   |                                  | 1,540,500  |            |   |          | 1,646,700  |            |   |            | 2,283,100  |  
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|Cash flows from investing activities:                                               |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|                                                                                    | Acquisition of and investment in businesses, net of cash
acquired |                                                                                           |                                       | (1,585,500                                                             | ) |                                  |            | (1,435,900 | ) |          |            | (4,514,400 | )
|                                                                                    | Expenditures for property and equipment                           |                                                                                           |                                       | (51,600                                                                | ) |                                  |            | (376,200   | ) |          |            | (836,900   | )
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|                                                                                    |                                                                   |                                                                                           |                                       | Net cash used in investing activities                                  |   |                                  | (1,637,100 | )          |   |          | (1,812,100 | )          |   |            | (5,351,300 | )
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|Cash flows from financing activities:                                               |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|                                                                                    | Net borrowings on credit lines                                    |                                                                                           |                                       | 612,000                                                                |   |                                  |            | 629,500    |   |          |            | 59,000     |  
|                                                                                    | Proceeds from long-term debt                                      |                                                                                           |                                       | 1,000,000                                                              |   |                                  |            | 1,050,000  |   |          |            |           |  
|                                                                                    | Repayments of long-term debt                                      |                                                                                           |                                       | (2,134,600                                                             | ) |                                  |            | (1,882,500 | ) |          |            | (2,179,700 | )
|                                                                                    | Repurchase of common stock                                        |                                                                                           |                                       |                                                                       |   |                                  |            | (620,500   | ) |          |            | (3,500,600 | )
|                                                                                    | Issuance of treasury stock for employee stock
purchase plan       |                                                                                           |                                       | 10,800                                                                 |   |                                  |            | 29,400     |   |          |            | 53,000     |  
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|                                                                                    |                                                                   |                                                                                           | Net cash used in financing activities |                                                                        |   | (511,800                         | )          |            |   | (794,100 | )          |            |   | (5,568,300 | )         
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|Net cash used in discontinued operations                                            |                                                                   |                                                                                           | (15,000                               | )                                                                      |   |                                  | (640,400   | )          |   |          | (460,000   | )         
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|Net decrease in cash and cash equivalents                                           |                                                                   |                                                                                           | (623,400                              | )                                                                      |   |                                  | (1,599,900 | )          |   |          | (9,096,500 | )         
|Cash and cash equivalents  beginning of year                                       |                                                                   |                                                                                           | 2,151,200                             |                                                                        |   |                                  | 3,751,100  |            |   |          | 12,847,600 |           
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|Cash and cash equivalents  end of year                                             |                                                                   | $                                                                                         | 1,527,800                             |                                                                        |   | $                                | 2,151,200  |            |   | $        | 3,751,100  |           
|                                                                                    |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|Supplemental cash flow information for continuing operations:                       |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|                                                                                    | Cash paid during the year for interest                            |                                                                                           | $                                     | 433,200                                                                |   |                                  | $          | 693,600    |   |          | $          | 289,800    |  
|                                                                                    | Cash paid during the year for income taxes                        |                                                                                           |                                       | 58,200                                                                 |   |                                  |            | 344,500    |   |          |            | 930,000    |  
|                                                                                    | Cash refunds received during the year for income taxes            |                                                                                           |                                       | 2,114,400                                                              |   |                                  |            |           |   |          |            |           |  
|Supplemental non-cash investing and financing activities for
continuing operations: |                                                                   |                                                                                           |                                       |                                                                        |   |                                  |            |            |   |          |            |           
|                                                                                    | Reversal of goodwill related to reduction of acquisition notes    |                                                                                           | $                                     | 3,518,400                                                              |   |                                  | $          |           |   |          | $          |           |  

The accompanying notes are an integral part of these consolidated statements.

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##### Table of Contents



TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002

1.     The Company and Business Conditions

TBA Entertainment Corporation and subsidiaries (the Company) is a
diversified communications and entertainment company that produces a broad
range of business communications, meeting productions and entertainment
services for corporate meetings, develops and produces integrated music
marketing programs, manages music industry artists and develops content and
entertainment programs for its nationwide network of fairs and festivals.
The Company was incorporated in Tennessee in June 1993 and reincorporated in
Delaware in September 1997. The Company primarily operates within the United
States.

2.     Basis of Financial Presentation

Principles of Consolidation

The consolidated financial statements include the accounts of the
Company and its wholly owned and majority owned subsidiaries. All
significant inter-company accounts and transactions have been eliminated in
consolidation.

Discontinued Operations

During the first quarter of 2001, the Company approved a formal plan to
discontinue its merchandising operations in order to better focus on its core
business as a strategic communications and entertainment company. The
disposition of the merchandising operations represents the disposal of a
business segment under Accounting Principles Board (APB) Opinion No. 30.
Accordingly, this former segment is accounted for as a discontinued
operation.

3.     Significant Accounting Policies

Revenue Recognition

The Company recognizes revenue when an event occurs. For those projects
that provide for multiple events, the contract revenue and costs are
apportioned and revenue and profit are recognized as each event occurs.
Deferred revenue represents customer deposits on future events. Deferred
charges represent Company direct expenditures related to future events.

Costs Related to Revenue

Costs related to revenue is comprised of all costs associated with the
production of an event, including talent fees, contracted services, equipment
rentals, costs associated with the production of audio-visual effects and the
cost of internal production labor. Direct out-of-pocket costs are deferred
until the event occurs. Internal production labor costs are expensed as
incurred.

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##### Table of Contents



Cash and Cash Equivalents



Cash and cash equivalents consist primarily of cash in banks and highly
liquid investments purchased with an original maturity of three months or
less. Cash and cash equivalents carrying amounts approximate fair value.
The Company holds its investments in highly qualified financial institutions.

Property and Equipment



Property and equipment consists of the following as of December 31, 2002
and 2001:

|                                                 |  |      |            |      |  |   |            |  
|------------------------------------------------ |  | ---- | ---------- | ---- |  | - | ---------- | -
|                                                 |  | 2002 |            | 2001
|                                                 |  |      |            |     
|Land                                             |  | $    |           |      |  | $ | 388,000    |  
|Buildings and leasehold improvements             |  |      | 208,100    |      |  |   | 485,800    |  
|Furniture, fixtures and equipment                |  |      | 2,867,300  |      |  |   | 3,402,500  |  
|                                                 |  |      |            |      |  |   |            |  
|                                                 |  |      | 3,075,400  |      |  |   | 4,276,300  |  
|Less  accumulated depreciation and amortization |  |      | (2,421,800 | )    |  |   | (2,270,200 | )
|                                                 |  |      |            |      |  |   |            |  
|Property and equipment, net                      |  | $    | 653,600    |      |  | $ | 2,006,100  |  
|                                                 |  |      |            |      |  |   |            |  



Property and equipment are recorded at cost and are depreciated or
amortized using the straight-line method, over the following estimated useful
lives:

|                                    |  |            |  | 
|----------------------------------- |  | ---------- |  | 
|Building and leasehold improvements |  | 3-25 years
|Furniture, fixtures and equipment   |  | 3-5 years 



The Company follows the policy of capitalizing expenditures that
materially increase asset lives and charges ordinary maintenance and repairs
to operations as incurred. No depreciation or amortization is included in
Cost Related to Revenue in the accompanying Consolidated Statements of
Operations.

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Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consists of the following at
December 31, 2002 and 2001:

|                                      |  |      |           |      |  |   |           | 
|------------------------------------- |  | ---- | --------- | ---- |  | - | --------- | 
|                                      |  | 2002 |           | 2001
|                                      |  |      |           |     
|Accounts payable                      |  | $    | 1,575,800 |      |  | $ | 1,672,600 | 
|Accrued payroll and related taxes     |  |      | 801,800   |      |  |   | 1,065,400 | 
|Due to sellers of acquired businesses |  |      | 557,600   |      |  |   | 585,300   | 
|Accrued interest expense              |  |      | 28,700    |      |  |   | 510,400   | 
|Other accrued expenses                |  |      | 656,800   |      |  |   | 71,700    | 
|                                      |  |      |           |      |  |   |           | 
|                                      |  | $    | 3,620,700 |      |  | $ | 3,905,400 | 
|                                      |  |      |           |      |  |   |           | 

Accounting for Stock Options

The
Company has adopted the intrinsic value method of accounting for
employee stock options as permitted by Statement of Financial
Accounting Standards No. 123, Accounting for Stock-based
Compensation (SFAS No. 123) and discloses the pro forma
effect on net loss and loss per share as if the fair value based
method had been applied. For equity instruments, including stock
options, issued to non-employees, the fair value of the equity
instruments or the fair value of the consideration received,
whichever is more readily determinable, is used to determine the
value of services or goods received and the corresponding charge to
operations.

The
following table illustrates the effect on net loss and loss per share
as if the Company had applied the fair value recognition provision of
SFAS No. 123 to stock-based employee compensation.

|                                                                                                       |  |      |            |      |  |   |            |  
|------------------------------------------------------------------------------------------------------ |  | ---- | ---------- | ---- |  | - | ---------- | -
|                                                                                                       |  | 2002 |            | 2001
|                                                                                                       |  |      |            |     
|Net
loss: as reported                                                                                  |  | $    | (2,164,000 | )    |  | $ | (6,931,400 | )
|Add:
total stock based employee compensation expense determined under fair
value method for all awards |  |      | (148,400   | )    |  |   | (211,400)  |  
|                                                                                                       |  |      |            |      |  |   |            |  
|Pro
forma net loss                                                                                     |  | $    | (2,312,400 | )    |  | $ | (7,142,800 | )
|                                                                                                       |  |      |            |      |  |   |            |  
|Loss
per share  basic and diluted:                                                                    |  |      |            |      |  |   |            |  
|As
reported                                                                                            |  | $    | (0.29      | )    |  | $ | (0.94      | )
|Pro
forma                                                                                              |  | $    | (0.31      | )    |  | $ | (0.97      | )
|                                                                                                       |  |      |            |      |  |   |            |  

As
required by SFAS 123, the Company provides the following
disclosure of estimated values for these awards. The weighted-average
grant-date fair value of options granted during, 2001 and 2000 was
estimated to be $1.65 and $2.12, respectively. No options were
granted in 2002.

The fair
value of each option grant was estimated on the date of grant using a
Black-Scholes option-pricing model with the following weighted
average assumptions for 2001 and 2000, respectively; risk free
interest rates of 4.64 and 6.19 percent, expected lives of 3 and
5 years; volatility of 47 percent and 45 percent and no
assumed dividends.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. Deferred income tax assets and liabilities
are recognized based on enacted tax laws for any temporary differences
between financial reporting and tax bases of assets, liabilities and carry
forwards. Deferred tax assets are reduced by a valuation allowance if it is
more likely than not that some or all of the deferred tax asset will not be
realized (see Note 9).

Concentration of Risk

One of the Companys customers, SAP, accounted for 21% and 11% of
revenues in 2001 and 2000, respectively. No customers accounted for more than
ten percent of revenues in 2002. The Company did not have any customers who
accounted for more than ten percent of accounts receivable at December 31,
2002 and 2001.

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##### Table of Contents



Earnings per Common Share

The following table sets forth the computation of basic and diluted
earnings per common share from continuing operations for the years ended
December 31, 2002, 2001 and 2000:

|                                                                                                                        |                            |   |           |   |      |   |            |   |  |   |           |        | 
|----------------------------------------------------------------------------------------------------------------------- | -------------------------- | - | --------- | - | ---- | - | ---------- | - |  | - | --------- | ------ | 
|                                                                                                                        |                            |   | 2002      |   | 2001 |   | 2000      
|                                                                                                                        |                            |   |           |   |      |   |           
|Basic Earnings Per Common Share:                                                                                        |                            |   |           |   |      |   |            |   |  |   |           |       
|Net (loss) income from continuing operations before cumulative
effect of change in accounting principle                 |                            | $ | (175,400  | ) |      | $ | (3,280,600 | ) |  | $ | 193,800   |       
|Weighted average common stock outstanding                                                                               |                            |   | 7,364,700 |   |      |   | 7,361,900  |   |  |   | 8,055,100 |       
|                                                                                                                        |                            |   |           |   |      |   |            |   |  |   |           |       
|Basic
earnings per common share from continuing operations before cumulative effect of
change in accounting principle   |                            | $ | (0.02     | ) |      | $ | (0.45      | ) |  | $ | 0.02      |       
|                                                                                                                        |                            |   |           |   |      |   |            |   |  |   |           |       
|Diluted Earnings Per Common Share:                                                                                      |                            |   |           |   |      |   |            |   |  |   |           |       
|Net (loss) income from continuing operations before cumulative effect of
change in accounting principle                 |                            | $ | (175,400  | ) |      | $ | (3,280,600 | ) |  | $ | 193,800   |       
|                                                                                                                        |                            |   |           |   |      |   |            |   |  |   |           |       
|Weighted average common stock outstanding                                                                               |                            |   | 7,364,700 |   |      |   | 7,361,900  |   |  |   | 8,055,100 |       
|Additional common stock resulting from
dilutive securities:                                                             |                            |   |           |   |      |   |            |   |  |   |           |       
|                                                                                                                        | Preferred stock            |   |           |  |      |   |            |  |  |   |           | 2,200  | 
|                                                                                                                        | Stock options and warrants |   |           |  |      |   |            |  |  |   |           | 12,700 | 
|                                                                                                                        |                            |   |           |   |      |   |            |   |  |   |           |       
|Weighted average common stock and dilutive
securities outstanding                                                       |                            |   | 7,364,700 |   |      |   | 7,361,900  |   |  |   | 8,070,000 |       
|                                                                                                                        |                            |   |           |   |      |   |            |   |  |   |           |       
|Diluted
earnings per common share from continuing operations before cumulative effect of
change in accounting principle |                            | $ | (0.02     | ) |      | $ | (0.45      | ) |  | $ | 0.02      |       
|                                                                                                                        |                            |   |           |   |      |   |            |   |  |   |           |       

Options and warrants to purchase 1,354,100, 1,485,800 and 3,064,700
shares of common stock in 2002, 2001 and 2000, respectively, were not
considered in calculating diluted earnings per share as their inclusion would
have been anti-dilutive.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 reported period. Actual results could differ from those
estimates.

Other Recently Issued Accounting Standards.

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 144, (SFAS 144), Accounting
for the Impairment or Disposal of Long-Lived Assets, which addresses the
financial accounting and reporting for the impairment of long-lived assets.
This statement supersedes Statement of Financial Accounting Standards No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of and the accounting and reporting provisions for the
disposal of a segment of a business of APB Opinion No. 30, Reporting the
Results of Operations  Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions. The adoption of SFAS 144 in fiscal 2002 did not have a
material impact on the financial position or results of operations of the
Company (see Note 11).

In April 2002, the FASB issued Statement No. 145 (SFAS No. 145),
Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections effective on or after May 15, 2002. This
Statement rescinds SFAS No. 4 and an amendment of that Statement, and SFAS
No. 64. This Statement also rescinds SFAS No. 44. This Statement amends
SFAS No. 13, to eliminate an inconsistency between the required accounting
for certain lease modifications that have economic effects that are similar
to sale leaseback transactions. This Statement also amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. The
adoption of SFAS No. 145 did not have a material effect on the Companys
financial position or results of operations.

In June
2001, the FASB issued
Statement No. 143 (SFAS No. 143), Accounting for Asset Retirement
Obligations, effective for fiscal years beginning after June 15, 2002. The
Statement requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity capitalizes a cost by increasing
the carrying amount of the related long-lived asset. Over time, the
liability is accreted to its present value each period, and the capitalized
cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement.

The adoption of SFAS No. 143 is not expected to have a material effect
on the Companys financial position or results of operations.

In June 2002, FASB issued Statement No. 146 (SFAS No. 146), Accounting
for Costs Associated with Exit or Disposal Activities, effective for
activities that are initiated after December 31, 2002, with early application
encouraged. This Statement addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies Emerging
Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring).  The adoption of SFAS No. 146
is not expected to have a material effect on the Companys financial position
or results of operations.

In December 2002, FASB issued Statement No. 148 (SFAS No. 148),
Accounting for Stock Based Compensation  Transition and Disclosure  An
Amendment of FASB Statement No. 123. SFAS No. 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method
of accounting for stock-based employee compensation and the effect of the
method used on reported results. The Company is required to follow the
prescribed format and provide the additional disclosures required by SFAS No.
148 in its annual financial statements for the year ended December 31, 2002
and must also provide the disclosures in its quarterly reports containing
condensed financial statements for interim periods beginning with the
quarterly period ended March 31, 2003. The adoption of SFAS
No. 148 did not have a material effect on the Companys financial position or
results of operations.

In
November 2002, the Financial Accounting Standards Board
(FASB) issued Interpretation No. 45
(FIN 45), Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others, which disclosures are effective for
financial statements issued after December 15, 2002. The Company
adopted the disclosure requirements of FIN 45 as of
December 31, 2002. The adoption of the measurement requirements
of FIN 45 will not have a material impact on the Companys
financial position or results of operations.

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4.     Goodwill and Other Intangible Assets  Adoption of SFAS 142

In July 2001, the FASB issued SFAS No. 142 Goodwill and Other
Intangible Assets, which establishes financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, "Intangible Assets." The Company adopted SFAS No. 142 beginning with the
first quarter of 2002. SFAS No. 142 requires that goodwill and intangible
assets that have indefinite useful lives not be amortized but, instead,
tested at least annually for impairment while intangible assets that have
finite useful lives continue to be amortized over their respective useful
lives. Accordingly, the Company ceased amortization of all goodwill, which is
its only intangible asset with an indefinite useful life, on January 1, 2002.
The Company has no other identified intangible assets.

SFAS No. 142 requires that goodwill and other intangibles be tested
annually for impairment using a two-step process. The first step is to
determine the fair value of the reporting unit and compare this value to its
carrying value. If the fair value exceeds the carrying value, no further work
is required and no impairment loss would be recognized. If the carrying value
exceeds the fair value, a second step is required to determine
whether goodwill has been impaired and if so, measure the amount of
the impairment. The second step is an allocation of the fair value of the
reporting unit to all of the reporting units assets and liabilities under a
hypothetical purchase price allocation. At the time of adoption, based on the
first step evaluation performed to adopt SFAS No. 142, using a discounted
cash flow methodology, the Company did not identify any potential goodwill impairment,
except for goodwill associated with its fairs and festivals group. The
Company completed the step two process analysis in the third quarter of 2002.
Based on the estimated fair market value of the reporting unit, the Company
recorded a goodwill impairment loss in the first quarter of 2002 of
$1,988,600 associated with the fairs and festivals reporting unit, which has
been recorded as a cumulative effect of change in accounting principle in the
accompanying Consolidated Statements of Operations. The impairment is the
result of the businesses included in the fairs and festivals reporting unit
not meeting the earnings expectations set by the Company at the time the
businesses were acquired.

The Company has elected to perform its annual impairment testing in
November of each year. Based on the first step evaluation process performed
as of November 2002, the Company did not identify any further goodwill
impairment.

The carrying amount of goodwill for the entertainment marketing, artist
and fairs and festivals client groups was also reduced in the third quarter
of 2002 by $1,100,000, $750,000 and $1,668,400, respectively, to reflect
reduction in purchase price associated with certain acquisitions that
included previously recorded contingent purchase price consideration (see
Note 5). Artist client group goodwill and entertainment marketing client
group goodwill were increased in the year ended December 31, 2002 by
$1,312,200 and $77,000, respectively, reflecting additional contingent
purchase price associated with certain prior year acquisitions (see Note 6).

The following table presents the carrying amount of goodwill by reporting
unit as of December 31, 2002 and 2001:

|                                     |                |   |            |            |      |   |            |            | 
|------------------------------------ | -------------- | - | ---------- | ---------- | ---- | - | ---------- | ---------- | 
|                                     |                |   | 2002       |            | 2001
|                                     |                |   |            |            |     
|Corporate Client Group               |                | $ | 10,767,900 |            |      | $ | 10,767,900 |           
|Entertainment Marketing Client Group |                |   | 1,952,000  |            |      |   | 2,975,000  |           
|Artist Client Group                  |                |   | 5,808,600  |            |      |   | 5,246,400  |           
|Fairs and Festivals Client Group     |                |   | 3,177,600  |            |      |   | 6,679,400  |           
|                                     |                |   |            |            |      |   |            |           
|                                     | Total Goodwill |   | $          | 21,706,100 |      |   | $          | 25,668,700 | 
|                                     |                |   |            |            |      |   |            |           

The following table reflects the Companys comparative net income (loss)
before goodwill amortization under SFAS No. 142 for the years ended December
31, 2001 and 2000:

|                                          |                                                   |  |      |            |      |  |   |           | 
|----------------------------------------- | ------------------------------------------------- |  | ---- | ---------- | ---- |  | - | --------- | 
|                                          |                                                   |  | 2001 |            | 2000
|                                          |                                                   |  |      |            |     
|Income (loss) from continuing operations: |                                                   |  |      |            |      |  |   |          
|                                          | Reported (loss) income from continuing operations |  | $    | (3,280,600 | )    |  | $ | 193,800   | 
|                                          | Amortization of goodwill, net of tax              |  |      | 2,551,400  |      |  |   | 2,151,400 | 
|                                          |                                                   |  |      |            |      |  |   |           | 
|                                          | Adjusted (loss) income from continuing operations |  | $    | (729,000   | )    |  | $ | 2,345,200 | 
|                                          |                                                   |  |      |            |      |  |   |           | 
|Net income (loss):                        |                                                   |  |      |            |      |  |   |          
|                                          | Reported net (loss) income                        |  | $    | (6,931,400 | )    |  | $ | 101,300   | 
|                                          | Amortization of goodwill, net of tax              |  |      | 2,551,400  |      |  |   | 2,151,400 | 
|                                          |                                                   |  |      |            |      |  |   |           | 
|                                          | Adjusted net (loss) income                        |  | $    | (4,380,000 | )    |  | $ | 2,252,700 | 
|                                          |                                                   |  |      |            |      |  |   |           | 
|Basic and diluted earnings per share:     |                                                   |  |      |            |      |  |   |          
|                                          | Reported net (loss) income per common share       |  | $    | (0.94      | )    |  | $ | 0.01      | 
|                                          | Amortization of goodwill, net of tax              |  |      | 0.35       |      |  |   | 0.27      | 
|                                          |                                                   |  |      |            |      |  |   |           | 
|                                          | Adjusted net (loss) income per common share       |  | $    | (0.59      | )    |  | $ | 0.28      | 
|                                          |                                                   |  |      |            |      |  |   |           | 

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5.     Debt

Long-term debt of the Company consists of the following as of December 31,
2002 and 2001:

|                                                                                                                                                                                                                     |  |      |            |      |  |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | - | ---------- | -
|                                                                                                                                                                                                                     |  | 2002 |            | 2001
|                                                                                                                                                                                                                     |  |      |            |     
|Acquisition notes payable, interest at 8% and 10% due in periodic
installments through 2007, $1,531,400 secured by a pledge of the
common stock acquired, remaining $913,800 unsecured                               |  | $    | 2,445,200  |      |  | $ | 6,479,500  |  
|Note payable to a bank, interest at the banks prime rate or the 30, 60,
or 90 day LIBOR plus 2.00% (4.51% at December 31, 2002), due
in monthly installments of $43,750 through April 2003, repaid
in February 2003 |  |      | 393,700    |      |  |   | 962,500    |  
|Revolving
credit line, interest at banks prime rate or the 30, 60 or
90 day LIBOR plus 2.00% (4.51% at December 31, 2002)                                                                                           |  |      | 2,340,600  |      |  |   | 1,728,600  |  
|                                                                                                                                                                                                                     |  |      |            |      |  |   |            |  
|                                                                                                                                                                                                                     |  |      | 5,179,500  |      |  |   | 9,170,600  |  
|Less-current portion                                                                                                                                                                                                 |  |      | (1,617,200 | )    |  |   | (1,830,000 | )
|                                                                                                                                                                                                                     |  |      |            |      |  |   |            |  
|                                                                                                                                                                                                                     |  | $    | 3,562,300  |      |  | $ | 7,340,600  |  
|                                                                                                                                                                                                                     |  |      |            |      |  |   |            |  

Future annual maturities of long-term debt consist of the following as of
December 31, 2002:

|             |  |  |   |          
|------------ |  |  | - | ---------
|YEAR ENDING  |  |  |   |          
|DECEMBER 31, |  |  |   |          
|             |  |  |   |          
|2003         |  |  | $ | 1,617,200
|2004         |  |  |   | 3,169,900
|2005         |  |  |   | 225,100  
|2006         |  |  |   | 121,100  
|2007         |  |  |   | 46,200   
|             |  |  |   |          
|             |  |  | $ | 5,179,500
|             |  |  |   |          

Bank Credit Facilities

Through October 2001, three of the Companys subsidiaries had entered
into revolving credit facilities with different banks. Two lines provided
for maximum borrowings of $500,000 each, while the third provided for maximum
borrowings of $75,000. Borrowings on each credit facility accrued interest
at the respective banks prime rate, prime + .75%, or prime + 1% and were all
secured by the business assets of the respective subsidiary. Each of the
credit facilities was repaid in October 2001, with proceeds from a new bank
credit facility.

In October 2001, the Company entered into a bank credit facility, which
provided for maximum borrowings of up to $4,050,000. The credit
facility was
comprised of: (a) a $1,050,000 term loan, repayable in monthly principal
installments of $43,750 commencing November 1, 2001, with an original
maturity date of September 30, 2003; and (b) a revolving credit line of up to
$3,000,000, with an original maturity date of June 30, 2003. The credit
facility was initially secured by all accounts receivable (see below) and
bears interest, payable monthly, at the Companys choice of an interest rate
based upon LIBOR or the banks prime rate, plus an incremental percentage
margin, as defined in the loan agreement. Upon the October 2001 closing of
the facility, the Company borrowed $2,778,600 ($1,050,000 under the term loan
and $1,728,600 under the revolving credit line). The term loan proceeds were
used to refinance the remaining principal obligations on the Companys note
payable to a bank and mortgage payable to a bank, which were outstanding in
October 2001. Of the revolving credit line proceeds, $963,000 was used to
repay all principal and interest due under the Companys three revolving
lines of credit, with the remaining $765,600 retained as working capital. In
January 2002, the Company borrowed the remaining $1,271,400 balance of the
revolving credit line. At December 31, 2002, $2,340,600 of the revolving
line of credit was outstanding, of which $92,500 was classified under notes
payable and current portion of long-term debt.

The Company was not in compliance with certain required financial
ratios, specifically a debt/EBITDA ratio, a fixed charge ratio and a minimum
net worth ratio, as of December 31, 2001. Pursuant to an April 2002
restructuring agreement with the bank, the Company was granted a temporary
waiver of the financial covenant events of default provisions under the
original loan agreement and the banks forbearance from exercising its
available remedies, which extended through January 2, 2003. In addition, new
financial covenants were established and the Company granted the bank
additional security for the entire restructured bank credit facility in the
form of a pledge of the shares of certain of the Companys subsidiaries and a
first lien deed

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of trust on the Companys land and building located in Dallas, Texas,
which was sold in February 2003 with the banks consent (see Note 11). The
maturity date for both the term loan and revolving credit line was
extended to
April 30, 2003.

The bank also agreed to provide the Company $500,000 of additional
financing (New Bank Loan). The New Bank Loan was conditioned upon the
funding of a second loan of $500,000 (Affiliate Loan) from an entity
controlled by the Chief Executive Officer of the Company (Heritage). The
New Bank Loan and the Affiliate Loan were repaid in June 2002, upon receipt
of the Companys federal income tax refund. In addition, the Company repaid
$659,400 on the revolving credit line with proceeds from the Companys
federal income tax refund.

In order to provide the Affiliate Loan, Heritage obtained a $500,000
loan from an independent third party finance company (Pass-Through Loan).
The Pass-Through Loan was secured by 950,336 shares of common stock held by
the Chief Executive Officer (772,876 shares) and President (177,460 shares)
of the Company and a personal guaranty of the President of the Company. The
Pass-Through Loan was repaid concurrently with the repayment of the Affiliate
Loan. As a condition to obtaining the Pass-Through Loan, Heritage paid a fee
of $5,000 and interest accrued at 12% per annum. These costs were
passed-through to the Company as part of the Affiliate Loan.

Although the Company has maintained
its sales improvement efforts, the Company was in technical noncompliance with the revised financial
covenants under the restructured bank credit facility as of December 31, 2002.
In February 2003, the bank required the Company to use the proceeds from the
sale of its Dallas facility (see Note 11), to repay the outstanding balance of
the term loan ($393,700) and a portion of the revolving credit line ($92,500).
After this repayment, there was $2,248,000 outstanding under the revolving credit
line. In April 2003, the Company and the bank negotiated a further restructuring of
the bank credit facility (2003 Restructuring). Pursuant to the 2003
Restructuring, the Company was granted a new waiver of the financial covenant
events of default and the banks continued forebearance from exercising its
available remedies, which now extends through January 1, 2004. In addition,
the Company was granted the right to re-borrow up to $750,000 under the
revolving credit line through May 31, 2003, for the purpose of making scheduled
principal and interest payments and additional earn-out payments under the
acquisition notes as well as for working capital purposes. Subsequent to May
31, 2003, the then outstanding balance of the revolving credit line will be converted to a term loan (2003
Term Loan) and the Company will be required to make seven equal monthly
principal payments from June 30, 2003 through December 31, 2003. The total
amount to be repaid will equal the greater of the amount re-borrowed
through May 31, 2003 or that amount which will cause the Company
to be in compliance with the financial covenants contained in the
October 2001 credit agreement. Interest will continue to be paid monthly. All remaining amounts outstanding
under the 2003 Term Loan will be due April 30, 2004. The 2003 Restructuring
provided for new financial covenants and reporting requirements and included
provisions for an accelerated maturity date upon the occurrence of certain
events including, among other things, an Event of Default (as defined) or the
sale or change of control of a material amount of the Companys assets. In
consideration for entering into the 2003 Restructuring and for providing the
first $500,000 of re-borrowings, the Company will pay the bank a fee of $40,000,
payable $20,000 in August and October of 2003, and issued 177,645 warrants to
purchase shares of common stock of the Company at an exercise price of $0.75
per share. If the 2003 Term Loan is repaid on or before
December 31, 2003 and there has been no sale of the Company
within the six month period prior to repayment, the bank will return
to the Company the lessor of (i) the unexercised warrants on
such date and (ii) 88,822 warrants. If the Company
re-borrows the remaining $250,000 available through May 31, 2003, the Company
will issue additional warrants to the bank to purchase common stock of the
Company at the rate of one warrant for every two dollars borrowed and
at an
exercise price of $0.01 per share.

Acquisition Notes

In order to better manage the Companys current cash position, the
Company also restructured the payment terms of certain of the Companys
acquisition notes payable, totaling $1,378,400. The restructured notes
provide for interest only payments through December 2002 and monthly
principal and interest payments beginning January 2003 and continuing through
August 2004. The interest rate on certain of these acquisition notes was
increased from 8% to 10%.

During the years 1999-2001, the Company acquired four companies pursuant
to agreements whereby the sellers of those businesses would receive payments
under promissory notes that were subject to principal reduction should the
post-acquisition annual earnings of the acquired businesses be less than
designated earnings targets set forth in the notes (see Note 6). At the time
of the acquisitions, the Company recorded the promissory notes, totaling
$4,225,000, as a liability and corresponding increase in purchase price, as
it believed that payment of the promissory notes was probable beyond a
reasonable doubt. In addition, the Company accrued interest expense on the
promissory notes at 8%, calculated from the respective acquisition dates.
From the date of acquisition, scheduled principle payments on certain of the
promissory notes have been reduced to reflect post-acquisition earn-out
adjustments. As a result, payment of the entire principal balance of these
promissory notes is no longer considered probable, although it is anticipated
that some portion of the principal amount of the notes will, in fact, be
paid. Pursuant to SFAS

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No. 141, Business Combinations, contingent consideration should not be
recorded as a liability unless payment of the contingent consideration is
determinable beyond a reasonable doubt. Accordingly, in September 2002, the
Company reduced its recorded debt and corresponding purchase price (see Note
4) by $3,518,400, representing the remaining principal amount outstanding on
the promissory notes issued in connection with these four acquisitions. In
addition, the Company reversed $591,400 of accrued interest payable on these
promissory notes, which amounts are reflected first as a reduction of the
related Interest Expense recorded in 2002 and then as Other Income in the
accompanying Consolidated Statements of Operations. Any future payments of
principal and interest under these promissory notes, as a result of those
businesses achieving their respective target earnings, will be recorded as
additional purchase price at the time the payment is determined.

6.     Acquisitions

The Company did not make any new acquisitions in 2002. During 2001 and
2000, the Company completed the following acquisitions:

|                   |                                           |               |               |               |   |           |      |  | 
|------------------ | ----------------------------------------- | ------------- | ------------- | ------------- | - | --------- | ---- |  | 
|                   |                                           |               |               |               |   |           | CASH
|COMPANY            |                                           | DATE ACQUIRED |               | CONSIDERATION
|                   |                                           |               |               |              
|2001 Acquisitions: |                                           |               |               |               |   |           |      | 
|                   | Moore Entertainment, Inc.                 |               | February 2001 |               | $ | 1,100,000 |     
|                   | Alliance Artists, Ltd.                    |               | July 2001     |               |   | 400,000   |     
|2000 Acquisitions: |                                           |               |               |               |   |           |      | 
|                   | Romeo Entertainment Group, Inc. (Romeo) |               | January 2000  |               |   | 3,475,000 |     
|                   | EJD Concert Services, Inc.                |               | March 2000    |               |   | 540,000   |     

The two companies acquired in 2001, along with Romeo and three other
companies acquired in years prior to 2000, provide for additional sales price
consideration based on the earnings of those businesses during each
respective earn-out period. The following table lists, for each acquired
company, the date of acquisition, the applicable earn-out period, the maximum
additional sales price consideration available and the total additional sales
price consideration, excluding any related interest expense, recorded as of
December 31, 2002:

|                                          |  |                     |  |                               |  |                     |           |                   |   |             
|----------------------------------------- |  | ------------------- |  | ----------------------------- |  | ------------------- | --------- | ----------------- | - | ------------
|                                          |  |                     |  |                               |  | Additional Sales   
|                                          |  |                     |  |                               |  | Price Consideration
|                                          |  |                     |  |                               |  |                    
|                                          |  |                     |  |                               |  |                     |           |                   |   | Earned as of
|Company                                   |  | Date of Acquisition |  | Earn-out Period               |  | Maximum             |           | December 31, 2002
|Alliance Artists, Ltd. (Alliance)       |  | July 2001           |  | August 2001  July 2006       |  | $                   | 400,000   |                   | $ |            
|Moore Entertainment, Inc. (Moore)       |  | February 2001       |  | January 2003  December 2006  |  |                     | 550,000   |                   |   |            
|Romeo Entertainment Group, Inc.           |  | January 2000        |  | January 2000  December 2003  |  |                     | 2,025,000 |                   |   | 481,900     
|Mike Atkins Management Company
(Atkins) |  | December 1999       |  | December 1999  November 2003 |  |                     | 700,000   |                   |   | 525,000     
|TKS Marketing, Inc. (TKS)               |  | December 1998       |  | December 1998  November 2003 |  |                     | 625,000   |                   |   | 610,900     
|Titley Spalding & Associates, LLC
(TS)  |  | June 1998           |  | July 1998  June 2003         |  |                     | 5,755,000 |                   |   | 2,899,400   

The maximum additional sales price consideration for the Moore,
Alliance, Romeo and Atkins acquisitions is in the form of promissory notes,
each requiring annual payments of principal over the term of the earn-out
period, plus 8% interest from the date of acquisition until paid (see Note
5). The amount of the annual principal payment is subject to reduction based
on the earnings of those businesses during each respective earn-out period.
These reductions in principal payments can be recovered over the remaining
term of the earn-out period if the operations of these businesses achieve
specified levels. For each company, the applicable principal payment is
calculated at the end of each calendar year in the earn-out period, with
payment to be made in the following year.

For TS and TKS, subsequent to 1998, the additional purchase price was to
be paid 60% in cash and 40% in notes payable in semi-annual installments
(April and October) with 8% interest over a 5-year period. Pursuant to the
terms of the TS and TKS notes payable, totaling approximately $766,800 as of
December 31, 2002, the Company is required to secure these notes payable with
a certificate of deposit, letter of credit or such other mutually agreed upon
form of cash equivalent. In July 2002, the Company entered into an agreement
with the sellers of the TS and TKS businesses, whereby, in recognition that
the Company has not satisfied the cash collateral requirement, the
additional sales price consideration payable for 2002 and 2003 will be paid
100% in cash to the sellers on a quarterly basis. From July to December of
2002, the Company paid the sellers additional sales

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price consideration of $1,000,200 under the revised agreement. In
February and March 2003, additional payments of $184,400, were paid under the
revised agreement.

As of December 31, 2002 and 2001, the accrued and unpaid cash portion of
the additional sales price consideration payable to the sellers of all these
businesses totaled $484,700 and $795,900 respectively, and is included in
Accounts Payable and Accrued Liabilities and in Notes Payable and current
portion of Long-term Debt on the accompanying Consolidated Balance Sheets.

At the January 2001 acquisition date of Moore, the maximum additional
sales price consideration was $1,100,000 and the earn-out period commenced
January 2001 and extended through December 2004. In 2002, the maximum
additional sales price consideration was reduced to $550,000 and the earn-out
was amended to commence January 2003 and extend through December 2006.

The accounting for the above-mentioned acquisitions is in accordance
with the purchase method of accounting. The operations of the acquired
businesses are included in the accompanying consolidated statements of
operations from their respective acquisition dates. The purchase price,
including the additional sales price consideration, for each acquisition has
been allocated to the assets acquired and liabilities assumed based on their
estimated fair values on the respective acquisition date. Substantially the
entire purchase price has been allocated to goodwill, as the net tangible
assets of the companies acquired were not significant at the date of the
acquisition (see Note 4).

7.     Dispositions

During the first quarter of 2001, the Company approved a formal plan to
sell its merchandising operations in order to better focus on its core
business as a strategic communications and entertainment company. The
disposition of the merchandising operations represents the disposal of a
business segment under Accounting Principles Board (APB) Opinion No. 30.
Accordingly, this segment is accounted for as a discontinued operation and
amounts in the financial statements and related notes for all periods shown
have been reclassified to reflect discontinued operations accounting. There
were no discontinued operations for 2002.

The following is a summary of the operating results of the discontinued
merchandising operations:

|                                                          |  |              |            |      |  |   |            |  
|--------------------------------------------------------- |  | ------------ | ---------- | ---- |  | - | ---------- | -
|                                                          |  | DECEMBER 31,
|                                                          |  |             
|                                                          |  | 2001         |            | 2000
|                                                          |  |              |            |     
|Revenues                                                  |  | $            | 3,924,600  |      |  | $ | 10,491,600 |  
|Net loss from discontinued operations before
income taxes |  |              | (4,014,700 | )    |  |   | (824,100   | )
|Income tax benefit                                        |  |              | 410,000    |      |  |   | 731,600    |  
|                                                          |  |              |            |      |  |   |            |  
|Net loss from discontinued operations                     |  | $            | (3,604,700 | )    |  | $ | (92,500    | )
|                                                          |  |              |            |      |  |   |            |  

The following is a summary of the components of assets and liabilities
of the discontinued merchandising operations:

|                        |                                          |   |              |          |      |   |          |          |  
|----------------------- | ---------------------------------------- | - | ------------ | -------- | ---- | - | -------- | -------- | -
|                        |                                          |   | DECEMBER 31,
|                        |                                          |   |             
|                        |                                          |   | 2002         |          | 2001
|                        |                                          |   |              |          |     
|Current assets:         |                                          |   |              |          |      |   |          |         
|                        | Cash and cash equivalents                |   | $            | 147,200  |      |   | $        | 37,100   |  
|                        | Accounts receivable                      |   |              |         |      |   |          | 85,500   |  
|                        | Inventories                              |   |              |         |      |   |          | 7,500    |  
|                        | Other current assets                     |   |              |         |      |   |          | 55,200   |  
|Current liabilities:    |                                          |   |              |          |      |   |          |         
|                        | Accounts payable and accrued liabilities |   |              | (359,000 | )    |   |          | (461,500 | )
|                        |                                          |   |              |          |      |   |          |          |  
|Net current liabilities |                                          | $ | (211,800     | )        |      | $ | (276,200 | )       
|                        |                                          |   |              |          |      |   |          |          |  
|Long-term assets:       |                                          |   |              |          |      |   |          |         
|                        | Property and equipment, net              |   | $            |         |      |   | $        | 48,000   |  
|                        |                                          |   |              |          |      |   |          |          |  
|Net long-term assets    |                                          | $ |             |          |      | $ | 48,000   |         
|                        |                                          |   |              |          |      |   |          |          |  

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8.     Stockholders Equity

Preferred Stock

The Company is authorized to issue 1,000,000 shares of $.001 par value
preferred stock. The Company has designated 557,100 shares of the authorized
preferred stock as Series A Convertible Preferred Stock (Series A Preferred
Stock), of which 334,300 shares were previously issued and are non-voting.
The shares are convertible into common stock on a one-for-one basis. In 2001
and 2000, 100 and 400 shares, respectively, of Series A Preferred Stock were
converted into shares of common stock. As of December 31, 2002, 2,000 shares
of Series A Preferred Stock remain outstanding. Series A
Preferred Stock has a liquidation preference of $0.03 per share
and has no preference in payment of dividends.

Common Stock Repurchase Program

In August 1998, the board of directors authorized the repurchase, at
managements discretion, of up to 1,000,000 shares of the Companys common
stock until August 1999, which was later extended to December 31, 1999. In
2000, the board of directors increased the number of shares authorized to be
purchased to 2,000,000 and extended the stock repurchase program until
December 31, 2000. As of December 31, 2001, the Company had repurchased
1,729,900 shares of common stock pursuant to the stock repurchase program for
a total consideration of $7,145,700. No common stock repurchases were made
in 2002. The Companys repurchases of shares of common stock are recorded as
treasury stock and result in a reduction of stockholders equity.

Stock Options

In 1995 and 1996, the Company granted 80,000 non-qualified options to
key employees and directors of which 40,000 remain outstanding as of December
31, 2002. In 1997, 1998, and 2000 the Company established three stock option
plans that provide for the granting of either incentive stock options or
non-qualified stock options to key employees, officers and directors of the
Company. Under the three plans, the Company may grant a total of 1,400,000
stock options at prices not less than the fair market value on the date of
grant, with expiration dates not exceeding ten years. As of December 31,
2002, the Company has 1,314,100 outstanding incentive stock options pursuant
to the three plans.

Information relating to stock options is as follows:

|                                         |           |  |              |         |                  |  |      |      | 
|---------------------------------------- | --------- |  | ------------ | ------- | ---------------- |  | ---- | ---- | 
|                                         |           |  | SHARES UNDER |         | WEIGHTED-AVERAGE
|                                         |           |  | OPTIONS      |         | EXERCISE PRICE  
|                                         |           |  |              |         |                 
|Options outstanding at December 31, 1999 |           |  | 805,800      |         |                  |  | 4.22 |     
|                                         | Cancelled |  |              | (60,000 | )                |  |      | 4.61 | 
|                                         | Granted   |  |              | 610,000 |                  |  |      | 4.38 | 
|                                         |           |  |              |         |                  |  |      |     
|Options outstanding at December 31, 2000 |           |  | 1,355,800    |         |                  |  | 4.28 |     
|                                         | Cancelled |  |              | (75,000 | )                |  |      | 4.44 | 
|                                         | Granted   |  |              | 93,300  |                  |  |      | 3.57 | 
|                                         |           |  |              |         |                  |  |      |     
|Options outstanding at December 31, 2001 |           |  | 1,374,100    |         |                  |  | 4.14 |     
|                                         | Cancelled |  |              | (20,000 | )                |  |      | 3.85 | 
|                                         |           |  |              |         |                  |  |      |     
|Options outstanding at December 31, 2002 |           |  | 1,354,100    |         |                  |  | 4.20 |     
|                                         |           |  |              |         |                  |  |      |     
|Options exercisable at December 31, 2002 |           |  | 1,197,800    |         |                  |  | 3.71 |     
|                                         |           |  |              |         |                  |  |      |     
|Options exercisable at December 31, 2001 |           |  | 1,106,200    |         |                  |  | 4.16 |     
|                                         |           |  |              |         |                  |  |      |     
|Options exercisable at December 31, 2000 |           |  | 996,600      |         |                  |  | 4.24 |     
|                                         |           |  |              |         |                  |  |      |     

As of December 31, 2002, the exercise price of options outstanding
ranged from $2.50 to $5.50 and the weighted average remaining contractual
life of the options was 4.3 years.

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9.     Income Taxes

The (benefit) provision for income taxes consists of the following:

|         |         |   |                                  |          |      |   |          |          |   |   |         |         | 
|-------- | ------- | - | -------------------------------- | -------- | ---- | - | -------- | -------- | - | - | ------- | ------- | 
|         |         |   | FOR THE YEARS ENDED DECEMBER 31,
|         |         |   |                                 
|         |         |   | 2002                             |          | 2001 |   | 2000    
|         |         |   |                                  |          |      |   |         
|Current  |         |   |                                  |          |      |   |          |          |   |   |         |        
|         | Federal |   | $                                | (875,800 | )    |   | $        | (886,800 | ) |   | $       | 583,200 | 
|         | State   |   |                                  | 15,800   |      |   |          | (156,500 | ) |   |         | 102,900 | 
|Deferred |         |   |                                  |          |      |   |          |          |   |   |         |        
|         | Federal |   |                                  |         |      |   |          | 416,800  |   |   |         | 96,800  | 
|         | State   |   |                                  |         |      |   |          | 73,500   |   |   |         | 17,100  | 
|         |         |   |                                  |          |      |   |          |          |   |   |         |         | 
|Total    |         | $ | (860,000                         | )        |      | $ | (553,000 | )        |   | $ | 800,000 |        
|         |         |   |                                  |          |      |   |          |          |   |   |         |         | 

A reconciliation of the difference between the statutory federal tax
rate and the Companys effective tax rate is as follows:

|                                             |  |                                  |            |      |  |      |            |   |  |   |         | 
|-------------------------------------------- |  | -------------------------------- | ---------- | ---- |  | ---- | ---------- | - |  | - | ------- | 
|                                             |  | FOR THE YEARS ENDED DECEMBER 31,
|                                             |  |                                 
|                                             |  | 2002                             |            | 2001 |  | 2000
|                                             |  |                                  |            |      |  |     
|Income taxes at statutory federal rate       |  | $                                | (1,028,000 | )    |  | $    | (2,544,700 | ) |  | $ | 306,400 | 
|State income tax, net of federal tax benefit |  |                                  | (192,000   | )    |  |      | (449,000   | ) |  |   | 52,600  | 
|Non-deductible goodwill amortization         |  |                                  | 802,600    |      |  |      | 511,900    |   |  |   | 429,800 | 
|Change in valuation allowance                |  |                                  | (421,000   | )    |  |      | 1,881,400  |   |  |   |        | 
|Other                                        |  |                                  | (21,600    | )    |  |      | 47,400     |   |  |   | 11,200  | 
|                                             |  |                                  |            |      |  |      |            |   |  |   |         | 
|Income tax provision                         |  | $                                | (860,000   | )    |  | $    | (553,000   | ) |  | $ | 800,000 | 
|                                             |  |                                  |            |      |  |      |            |   |  |   |         | 

The
Company has federal and state operating loss carryforwards of approximately
$1,828,000 and $7,177,000, respectively. These net operating losses expire
from 2004 to 2022.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Realization of the future tax benefits related to the deferred tax assets is
dependent on many factors, including the Companys ability to generate
taxable income within the net operating loss carryforward period. Management
has considered these factors in reaching its conclusion as to the valuation
allowance for financial reporting purposes. The income tax effect of
temporary differences comprising the deferred tax assets and liabilities as
of December 31, 2002 and 2001 are as follows:

|                          |                                  |   |            |           |      |   |            |           | 
|------------------------- | -------------------------------- | - | ---------- | --------- | ---- | - | ---------- | --------- | 
|                          |                                  |   | 2002       |           | 2001
|                          |                                  |   |            |           |     
|Deferred tax assets:      |                                  |   |            |           |      |   |            |          
|                          | Net operating loss carryforwards |   | $          | 1,042,000 |      |   | $          | 1,413,200 | 
|                          | Accrued payroll related costs    |   |            | 182,600   |      |   |            | 194,400   | 
|                          | Accelerated depreciation for tax |   |            | (6,100    | )    |   |            | 115,400   | 
|                          | Other                            |   |            | 181,200   |      |   |            | 198,400   | 
|                          |                                  |   |            |           |      |   |            |           | 
|                          |                                  |   | 1,399,700  |           |      |   | 1,921,400  |          
|Deferred tax liabilities: |                                  |   |            |           |      |   |            |          
|                          | Accrued professional fees        |   |            | 100,700   |      |   |            |          | 
|                          |                                  |   |            |           |      |   |            |           | 
|Net deferred tax asset    |                                  |   | 1,500,400  |           |      |   | 1,921,400  |          
|Valuation allowance       |                                  |   | (1,500,400 | )         |      |   | (1,921,400 | )        
|                          |                                  |   |            |           |      |   |            |           | 
|                          |                                  | $ |           |           |      | $ |           |          
|                          |                                  |   |            |           |      |   |            |           | 

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10.     Commitments and Contingencies

Operating Leases

The Company leases office space under non-cancelable operating lease
agreements expiring in various years through 2006.

Commitments for operating leases:

|     |  |  |   |          
|---- |  |  | - | ---------
|2003 |  |  | $ | 669,400  
|2004 |  |  |   | 545,500  
|2005 |  |  |   | 266,700  
|2006 |  |  |   | 169,600  
|     |  |  |   |          
|     |  |  | $ | 1,651,200
|     |  |  |   |          

The Company incurred rent expense of approximately $1,365,800,
$1,079,500 and $956,800 and for the years ended December 31, 2002, 2001 and
2000, respectively.

Contingencies

The Company, from time to time, is a party to legal proceedings
incidental to its business. Management believes that there are no
proceedings, including the following two proceedings, that could
have a material adverse effect on its financial position or results of
operations pending at this time.

In November 2001, a Complaint was filed in the Marion County Superior
Court in the State of Indiana against TBA alleging breach of contract arising
with respect to the tax indemnification provisions contained in the Stock
Purchase Agreement related to the purchase by TBA of a merchandising company,
now classified as discontinued operations. The issue is the amount, if any, that is due
pursuant to the indemnification provision. In January 2003, TBA and the
plaintiff agreed to arbitrate this dispute, which arbitration is tentatively
scheduled for May 2003. Management does not believe that the outcome of this
dispute will have a material adverse effect on the consolidated financial
condition or results of operations of the Company.

In January 2003, a Petition was filed in the Civil Court of New York
against TBA alleging breach of contract arising from a real estate lease for
office space in New York City. In 2002, TBA terminated its operations in New
York and ceased paying rent in July 2002. TBA continued to try to sublease
this office space throughout the remainder of 2002. The Petition seeks
unpaid rent through the date of the filing, in the amount of approximately
$140,000. The Company is in negotiations with the plaintiff in an effort to
negotiate a buy-out of the remaining lease obligation. Management believes
that it has adequately reserved for this obligation as of December 31, 2002.

11.     Asset Held for Sale

In the third quarter of 2002, the Company decided to close its Dallas
office and to sell the land and building in which the Dallas office operated.
The land and building sold in February 2003 with the banks consent and the
net proceeds totaling $503,300 were used to repay the outstanding term loan
from the bank and a portion of the revolving credit line (see Note 5).

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##### Table of Contents



12. Business Segment and Geographic Information



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Segment information has been prepared in accordance with SFAS No. 131,
Disclosure about Segments of an Enterprise and Related Information. The
Company classifies its continuing operations according to four major client
segments within the entertainment services industry: corporate clients,
entertainment marketing clients, artist clients and fairs & festivals
clients. For corporate clients, the Company creates innovative business
communications programs delivered via a broad range of business
communications, meeting production, entertainment and event production
services. For entertainment marketing clients, the Company develops and
executes integrated entertainment marketing and special event initiatives
including music tours, television broadcasts and syndicated radio specials.
For artist clients, the Company manages the negotiation of recording,
touring, merchandising and performance contracts, and the development of
long-term career strategies for music industry artists. For fairs and
festivals clients, the Company develops content and entertainment programs
for its nationwide network of fairs and festivals. Substantially all
revenues and long-lived assets of the Company for 2002, 2001, and 2000 were
derived from United States based companies.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company does not internally report separate identifiable assets by
client group. The Company evaluates performance of each segment based on
several factors, of which the primary financial measure is EBITDA, including
other income. EBITDA is defined as earnings before interest, taxes,
depreciation, and amortization. Unaudited summarized financial information
concerning the Companys reportable segments (and excluding discontinued
operations discussed in Note 7) is shown in the following table for 2002,
2001, and 2000.

|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |   | 
|--------------------------------------------------------------------------------------------------------------------------- |  | - | --------- | - | --------- | - | ------------- | - | --------- | - | --------- | - | ------- | - | ------ | - |  | - | ------ | - |  | - | ------ | - | 
|                                                                                                                            |  |   |           |   |           |   | ENTERTAINMENT |   |           |   |           |   | FAIRS & |   |        |   |  |   |        |   | 
|                                                                                                                            |  |   | CORPORATE |   | MARKETING |   | ARTIST        |   | FESTIVALS |   |           |   |         |   |        |   | 
|                                                                                                                            |  |   | CLIENTS   |   | CLIENTS   |   | CLIENTS       |   | CLIENTS   |   | CORPORATE |   | TOTAL  
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |        
|2002:                                                                                                                       |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|Revenues                                                                                                                    |  | $ | 29,967    |   |           | $ | 4,116         |   |           | $ | 4,673     |   |         | $ | 10,376 |   |  | $ |       |   |  | $ | 49,132 |  
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|EBITDA, including equity in
earnings of joint ventures                                                                      |  | $ | 361       |   |           | $ | (554          | ) |           | $ | 1,546     |   |         | $ | 684    |   |  | $ | (2,293 | ) |  | $ | (256   | )
|Reversal of accrued interest
included in other income                                                                       |  |   |          |   |           |   |              |   |           |   |          |   |         |   |       |   |  |   | 365    |   |  |   | 365    |  
|Net depreciation and
amortization                                                                                           |  |   | (442      | ) |           |   | (49           | ) |           |   | (46       | ) |         |   | (20    | ) |  |   | (120   | ) |  |   | (677   | )
|Net interest income (expense)                                                                                               |  |   | 3         |   |           |   | 3             |   |           |   |          |   |         |   | 1      |   |  |   | (474   | ) |  |   | (467   | )
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|Income (loss) from continuing
operations before income
taxes and before cumulative
effect of change in
accounting principle |  | $ | (78       | ) |           | $ | (600          | ) |           | $ | 1,500     |   |         | $ | 665    |   |  | $ | (2,522 | ) |  | $ | (1,035 | )
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|2001:                                                                                                                       |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|Revenues                                                                                                                    |  | $ | 42,194    |   |           | $ | 4,871         |   |           | $ | 3,660     |   |         | $ | 9,680  |   |  | $ |       |   |  | $ | 60,405 |  
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|EBITDA, including equity in
earnings of joint ventures                                                                      |  | $ | 2,893     |   |           | $ | (564          | ) |           | $ | 693       |   |         | $ | 466    |   |  | $ | (3,512 | ) |  | $ | (24    | )
|Depreciation and amortization                                                                                               |  |   | (1,137    | ) |           |   | (357          | ) |           |   | (642      | ) |         |   | (422   | ) |  |   | (340   | ) |  |   | (2,898 | )
|Net interest income (expense)                                                                                               |  |   | 5         |   |           |   | 24            |   |           |   | (4        | ) |         |   | (18    | ) |  |   | (555   | ) |  |   | (548   | )
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|Income (loss) from continuing
operations before
income taxes                                                                |  | $ | 1,761     |   |           | $ | (897          | ) |           | $ | 47        |   |         | $ | 26     |   |  | $ | (4,407 | ) |  | $ | (3,470 | )
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|2000:                                                                                                                       |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|Revenues                                                                                                                    |  | $ | 55,250    |   |           | $ | 11,393        |   |           | $ | 3,513     |   |         | $ | 8,384  |   |  | $ |       |   |  | $ | 78,540 |  
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|EBITDA, including equity in
earnings of joint ventures                                                                      |  | $ | 6,289     |   |           | $ | (978          | ) |           | $ | 1,500     |   |         | $ | 992    |   |  | $ | (3,434 | ) |  | $ | 4,369  |  
|Depreciation and amortization                                                                                               |  |   | (1,207    | ) |           |   | (153          | ) |           |   | (548      | ) |         |   | (405   | ) |  |   | (167   | ) |  |   | (2,480 | )
|Net interest income (expense)                                                                                               |  |   | 226       |   |           |   | 164           |   |           |   | (16       | ) |         |   | (6     | ) |  |   | (532   | ) |  |   | (164   | )
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  
|Income (loss) from continuing
operations before
Income taxes                                                                |  | $ | 5,308     |   |           | $ | (967          | ) |           | $ | 936       |   |         | $ | 581    |   |  | $ | (4,133 | ) |  | $ | 1,725  |  
|                                                                                                                            |  |   |           |   |           |   |               |   |           |   |           |   |         |   |        |   |  |   |        |   |  |   |        |  

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13. Quarterly Financial Data (unaudited)



| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | Summary data relating to the results of continuing operations for each
quarter of the years ended December 31, 2002 and 2001 follows:

|                   |                                                                                                           |         |   |                                           |       |         |   |         |      |         |   |        |       |   |   |        |       |   |   |        |       |  
|------------------ | --------------------------------------------------------------------------------------------------------- | ------- | - | ----------------------------------------- | ----- | ------- | - | ------- | ---- | ------- | - | ------ | ----- | - | - | ------ | ----- | - | - | ------ | ----- | -
|                   |                                                                                                           |         |   | First                                     |       | Second  |   | Third   |      | Fourth  |   | Total 
|                   |                                                                                                           |         |   | Quarter                                   |       | Quarter |   | Quarter |      | Quarter |   | Year  
|                   |                                                                                                           |         |   |                                           |       |         |   |         |      |         |   |       
|                   |                                                                                                           |         |   | (in thousands - except per share amounts)
|December 31, 2002: |                                                                                                           |         |   |                                           |       |         |   |         |      |         |   |        |       |   |   |        |       |   |   |       
|                   | Revenues                                                                                                  |         | $ | 7,971                                     |       |         | $ | 12,844  |      |         | $ | 18,923 |       |   | $ | 9,394  |       |   | $ | 49,132 |      
|                   | Gross profit margin                                                                                       |         |   | 2,799                                     |       |         |   | 4,774   |      |         |   | 6,019  |       |   |   | 2,530  |       |   |   | 16,122 |      
|                   | Net
(loss) income from continuing operations before cumulative effect of
change in accounting principle   |         |   | (1,333                                    | )     |         |   | 243     |      |         |   | 1,626  |       |   |   | (711   | )     |   |   | (175   | )    
|                   | Earnings
from continuing operations before cumulative effect of change in
accounting principle per share: |         |   |                                           |       |         |   |         |      |         |   |        |       |   |   |        |       |   |   |        |      
|                   |                                                                                                           | Basic   |   |                                           | (0.18 | )       |   |         | 0.03 |         |   |        | 0.22  |   |   |        | (0.10 | ) |   |        | (0.02 | )
|                   |                                                                                                           | Diluted |   |                                           | (0.18 | )       |   |         | 0.03 |         |   |        | 0.22  |   |   |        | (0.10 | ) |   |        | (0.02 | )
|                   | Net (loss) income                                                                                         |         |   | (3,321                                    | )     |         |   | 243     |      |         |   | 1,626  |       |   |   | (712   | )     |   |   | (2,164 | )    
|                   | Earnings per share:                                                                                       |         |   |                                           |       |         |   |         |      |         |   |        |       |   |   |        |       |   |   |        |      
|                   |                                                                                                           | Basic   |   |                                           | (0.45 | )       |   |         | 0.03 |         |   |        | 0.22  |   |   |        | (0.10 | ) |   |        | (0.29 | )
|                   |                                                                                                           | Diluted |   |                                           | (0.45 | )       |   |         | 0.03 |         |   |        | 0.22  |   |   |        | (0.10 | ) |   |        | (0.29 | )
|December 31, 2001: |                                                                                                           |         |   |                                           |       |         |   |         |      |         |   |        |       |   |   |        |       |   |   |       
|                   | Revenues                                                                                                  |         | $ | 13,900                                    |       |         | $ | 22,330  |      |         | $ | 15,883 |       |   | $ | 8,292  |       |   | $ | 60,405 |      
|                   | Gross profit margin                                                                                       |         |   | 4,443                                     |       |         |   | 7,632   |      |         |   | 4,359  |       |   |   | 2,972  |       |   |   | 19,406 |      
|                   | Net
(loss) income from continuing operations                                                              |         |   | (1,101                                    | )     |         |   | 644     |      |         |   | 71     |       |   |   | (2,941 | )     |   |   | (3,327 | )    
|                   | Earnings
from continuing operations per share:                                                            |         |   |                                           |       |         |   |         |      |         |   |        |       |   |   |        |       |   |   |        |      
|                   |                                                                                                           | Basic   |   |                                           | (0.15 | )       |   |         | 0.09 |         |   |        | 0.01  |   |   |        | (0.40 | ) |   |        | (0.45 | )
|                   |                                                                                                           | Diluted |   |                                           | (0.15 | )       |   |         | 0.09 |         |   |        | 0.01  |   |   |        | (0.40 | ) |   |        | (0.45 | )
|                   | Net (loss) income                                                                                         |         |   | (1,241                                    | )     |         |   | 168     |      |         |   | (197   | )     |   |   | (5,661 | )     |   |   | (6,931 | )    
|                   | Earnings per share:                                                                                       |         |   |                                           |       |         |   |         |      |         |   |        |       |   |   |        |       |   |   |        |      
|                   |                                                                                                           | Basic   |   |                                           | (0.17 | )       |   |         | 0.02 |         |   |        | (0.03 | ) |   |        | (0.77 | ) |   |        | (0.94 | )
|                   |                                                                                                           | Diluted |   |                                           | (0.17 | )       |   |         | 0.02 |         |   |        | (0.03 | ) |   |        | (0.77 | ) |   |        | (0.94 | )

Beginning in the
first quarter of 2002, the Company ceased amortizing goodwill, in
accordance with the provisions of SFAS No. 142,
Goodwill and Other Intangible Assets. Goodwill
amortization recognized in the four quarters of 2001 was $489,600,
$547,500, $528,800 and $539,800, respectively.

During the first
quarter of 2002, the Company recorded a goodwill impairment loss of
$1,988,600 upon the adoption of SFAS No. 142,
Goodwill and Other Intangible Assets. This loss was
recorded as a Cumulative Effect of Change in Accounting Principle.

During the third
quarter of 2002, in accordance with the provisions of
SFAS No. 141, Business Combinations, the Company
reduced its recorded debt and corresponding purchase price (goodwill)
by $3,518,400 related to contingent purchase price consideration for
certain acquisitions made in prior years. In addition, the Company
reversed $591,400 of accrued interest payable previously recorded,
with $226,600 reflected as a reduction of Interest Expense recorded
in 2002, and the remaining $364,800 reflected in Other Income.

During the third
quarter of 2002, the Company increased its allowance for doubtful
accounts by $250,000 to reflect an account receivable from a customer
in bankruptcy proceedings.

During the third
quarter of 2002, the Company expensed $280,000 of costs associated
with the termination of certain transactional discussions.

During the fourth
quarter of 2002, the Company recorded a $481,600 accrual for
termination costs associated with closed offices.

During the third
quarter of 2001, the Company recorded a reversal of approximately
$800,000 of certain incentive compensation costs recorded in the
first and second quarters of 2001. This was due to expense reductions
implemented in the third quarter of 2001 in response to the reduction
in revenues resulting from the September 11 terrorist attacks and global
economic slowdown.

During the fourth
quarter of 2001, the Company recorded a loss of $2,390,400, net of
income tax benefit, to reflect the write-down of its investment in
the merchandising operations, which were discontinued in the first
quarter of 2001.

As
required by SFAS 123, the Company provides the following
disclosure of estimated values for these awards. The weighted-average
grant-date fair value of options granted during, 2001 and 2000 was
estimated to be $1.66 and $2.12, respectively. No options were
granted in 2002.

The fair
value of each option grant was estimated on the date of grant using a
Black-Scholes option-pricing model with the following
weighted-average assumptions for 2001 and 2000, respectively, risk
free interest rates of 4.64 and 6.19 percent, expected lives of 3 and
5 years; volatility of 47 percent and 45 percent and no assumed
dividends.




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

On August 6, 2002, the Company dismissed its independent certified public
accountants, Arthur Andersen LLP (the Former Accountants). The decision to
change accountants was recommended and approved by the Companys Board of
Directors.

During the Companys two most recent fiscal years and through August 6,
2002, there were no disagreements with the Former Accountants on any matter of
accounting principle or practice, financial statement disclosure or auditing
scope of procedure, which disagreements, if not resolved to their satisfaction,
would have caused them to make reference in connection with their opinion to
the subject matter of the disagreement. None of the Former Accountants reports
on the Companys financial statements for the Companys two most recent fiscal
years and through August 6, 2002 contained an adverse opinion or disclaimer of
opinion or qualification or modification as to uncertainty, audit scope or
accounting principles.

On August 16, 2002, the Company engaged BDO Seidman, LLP (BDO), as its
independent certified public accountants. During the two (2) most recent
fiscal years and the period of January 1, 2002 through August 16, 2002, neither
the Company (nor anyone on behalf of the Company) consulted BDO regarding the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Companys financial statements, or any matter that was the subject of a
disagreement or a reportable event; and such matters were not an important
factor in reaching a decision to engage BDO as the Companys independent
certified public accountants.

The Company has not been able to obtain Arthur Andersens consent to
incorporate by reference the audited financial statements for the fiscal years
ended December 31, 2001 and 2000 into the Companys existing registration
statements.

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##### Table of Contents






PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table sets forth certain information regarding the directors
and executive officers of the Company:

|                              |  |     |    |          |  |                                                                 |  |  |            | 
|----------------------------- |  | --- | -- | -------- |  | --------------------------------------------------------------- |  |  | ---------- | 
|Name                          |  | Age |    | Position |  | Held Since                                                     
|                              |  |     |    |          |  |                                                                
|Thomas J. Weaver III          |  |     | 45 |          |  | Chairman of the Board, Chief Executive Officer                  |  |  | 1993       | 
|Frank Bumstead                |  |     | 61 |          |  | Director                                                        |  |  | 1993       | 
|Charles Flood                 |  |     | 58 |          |  | Director                                                        |  |  | 1995       | 
|Joseph C. Galante             |  |     | 53 |          |  | Director                                                        |  |  | 1998       | 
|W. Reid Sanders               |  |     | 53 |          |  | Director                                                        |  |  | 2000       | 
|Frank A. McKinnie
Weaver, Sr. |  |     | 42 |          |  | Director, Secretary                                             |  |  | 1993       | 
|Kyle Young                    |  |     | 47 |          |  | Director                                                        |  |  | 1996       | 
|Greg Janese                   |  |     | 44 |          |  | President                                                       |  |  | 2001       | 
|Bryan J. Cusworth             |  |     | 43 |          |  | Executive Vice President, Chief Financial
Officer and Treasurer |  |  | 1996, 1999 | 

Thomas J. Weaver III has served as Chairman of the Board and Chief
Executive Officer of the Company since its inception. Mr. Weaver also served
as President until January 2001. From 1986 to 1988, Mr. Weaver served as
president of Hard Rock International plc, an English public company whose
securities traded on the London Stock Exchange and the American Stock Exchange.
Since 1988 he has been the President of Heritage Trust Company, a corporation
with investments in numerous public and private companies. Mr. Weaver devotes
his full-time efforts to the business operations of the Company. Mr. Weaver is
the brother of Frank A. McKinnie Weaver, Sr.

Frank Bumstead has been Chairman of the Board or President and a principal
stockholder of Flood, Bumstead, McCready & McCarthy, Inc., a business
management firm which represents the financial interests of artists, song
writers and producers in the music industry since 1989. From 1993 until 1999,
he served as Chairman and Chief Executive Officer, and was a principal
stockholder, of FBMS Financial, Inc., a registered investment advisor under the
Investment Company Act of 1940. From 1986 to December 1990, Mr. Bumstead was
President of Bumstead Co., a financial consulting company. He is also a
director of American Retirement Corp. and Syntroleum, Inc.

Charles Flood has been the Treasurer or Chairman of the Board and a
principal stockholder of Flood, Bumstead, McCready & McCarthy, Inc., a business
management firm which represents the financial interests of artists, song
writers and producers in the music industry since 1989. Prior to that time,
Mr. Flood worked at Capitol Records in Nashville as the Director of Artist
Relations and later as Director of Talent Acquisition.

Joseph C. Galante has been the Chairman of RCA Label GroupRLG/Nashville
since 1995. From 1990 to 1994, Mr. Galante served as President of the RCA
Records Label/US. From 1982 through 1991, Mr. Galante served as President of
RCA Records/Nashville. Mr. Galante is a director of First American National
Bank Advisory Board, Leadership Music and the Country Music Association. He is
also Chairman of the T.J. Martell Foundation.

Mr. Sanders has served as Executive Vice President of Southeastern Asset
Management and President of Longleaf Partners Funds since 1976. Mr. Sanders is
a Director of Harbor Global Company, Ltd and a member of the Advisory Board of
SSM Venture Partners. Mr. Sanders serves on the Board of Trustees of Rhodes
College, the Hugo Dixon Foundation and the Dixon Gallery and Gardens. Mr.
Sanders is Chairman of the Regional Selection Committee for the Jefferson
Scholarship at the University of Virginia and a member of its National Advisory
Board. Mr. Sanders is also a member of the Advisory Board of the University of
Tennessee at Memphis and Vice Chairman of the Board of The Hutchinson School.

Frank A. McKinnie Weaver, Sr. has served as Vice President, Correspondent
Banking, of First Tennessee Bank, N.A., since 1999. Prior to joining First
Tennessee Bank, Mr. Weaver served as Vice President, Correspondent Banking at
National Bank of Commerce (NBC), Memphis, Tennessee. Mr. Weaver served at
NBC for five (5) years prior to joining First Tennessee Bank. Prior to NBC,
Mr. Weaver served The Whiteville Bank from 1985 to 1994, leaving that
institution as Vice President and Director to join NBC in Memphis, Tennessee.
Mr. Weaver is also a Director of Heritage Trust Company and is President of
Heritage Farms of Hickory Valley, Inc. Mr. Weaver is the brother of Thomas J.
Weaver III.

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##### Table of Contents



Kyle Young has been the Deputy Director of the Country Music Foundation
(the CMF) since 1985. From 1975 to 1985, Mr. Young was employed by the CMF
in various capacities, including involvement in the development and licensing
of television shows, radio programs and music festivals produced by the CMF.
Mr. Young is involved in the Country Music Association, the National Academy of
the Recording Arts and Sciences, the National Association of Independent Record
Distributors, the Nashville Entertainment Association, the Inter-Museum Council
of Nashville, the Nashville Institute for the Arts and Vanderbilt University
Press.

Greg M. Janese currently serves as President of the Company and served as
an Executive Vice President from April 1997 until January 2001. He has led the
Companys Corporate Communications and Entertainment division since April 1997,
when the Company acquired Avalon Entertainment Group, Inc. (AEG). Mr. Janese
has over 20 years of experience in the entertainment industry. From 1993 to
1997, he served as President of AEG. He co-founded The Entertainment Group, a
Nashville based concert promotion and production company and the predecessor to
AEG, in 1989. In 1987, Mr. Janese founded World Class Productions, a corporate
production firm partnered with Barbara Mandrell. Prior to that, Mr. Janese was
involved in various capacities with artist promotions, public relations, and
booking and producing talent for corporate meeting and special events.

Bryan J. Cusworth has served as Executive Vice President and Chief
Financial Officer of the Company since 1996 and Treasurer since 1999. Prior to
joining the Company, Mr. Cusworth was employed by Arthur Andersen LLP from July
1982 to September 1996, where he specialized in the resort, real estate and
entertainment industries. Mr. Cusworth is a certified public accountant.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that Company directors, executive officers and persons who own more than 10% of
the outstanding Common Stock file initial reports of ownership and reports of
changes in ownership of Common Stock with the Securities and Exchange
Commission (the SEC). Officers, directors and stockholders who own more than
10% of the outstanding Common Stock are required by the SEC to furnish the
Company with copies of all Section 16(a) reports they file.

Based on a review of such forms, the Company believes that all Section
16(a) filing requirements applicable to its executive officers, directors and
10% stockholders were complied with for the year ended December 31, 2002.




ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth the total compensation paid or accrued by
the Company for the three years ended December 31, 2001 on behalf of each of
the named executive officers of the Company.

Summary Compensation Table

|                            |                          |      |      |        |  |       |                     |             |              |   |         |        |  |  |           |         | 
|--------------------------- | ------------------------ | ---- | ---- | ------ |  | ----- | ------------------- | ----------- | ------------ | - | ------- | ------ |  |  | --------- | ------- | 
|                            |                          |      |      |        |  |       |                     |             |              |   |         |        |  |  | Long Term
|                            |                          |      |      |        |  |       | Annual Compensation |             | Compensation
|                            |                          |      |      |        |  |       |                     |             |             
|Name and Principle Position |                          | Year |      | Salary |  | Bonus |                     | Options (#)
|                            |                          |      |      |        |  |       |                     |            
|Thomas J. Weaver, III       |                          |      | 2002 |        |  | $     | 350,000             |             |              | $ | -0-     |        |  |  | -0-       |        
|                            | Chairman of the Board,   |      |      | 2001   |  |       |                     | 350,000     |              |   |         | -0-    |  |  |           | -0-     | 
|                            | Chief Executive Officer  |      |      | 2000   |  |       |                     | 350,000     |              |   |         | -0-    |  |  |           | 175,000 | 
|Greg M. Janese              |                          |      | 2002 |        |  |       | 200,000             |             |              |   | 50,000- |        |  |  | -0-       |        
|                            | President                |      |      | 2001   |  |       |                     | 200,000     |              |   |         | -0-    |  |  |           | -0-     | 
|                            | Chief Operating Officer  |      |      | 2000   |  |       |                     | 200,000     |              |   |         | 50,000 |  |  |           | 75,000  | 
|Bryan J. Cusworth           |                          |      | 2002 |        |  |       | 200,000             |             |              |   | -0-     |        |  |  | -0-       |        
|                            | Executive Vice President |      |      | 2001   |  |       |                     | 200,000     |              |   |         | -0-    |  |  |           | -0-     | 
|                            | Chief Financial Officer  |      |      | 2000   |  |       |                     | 200,000     |              |   |         | -0-    |  |  |           | 75,000  | 
|                            | and Treasurer            |      |      |        |  |       |                     |             |              |   |         |        |  |  |           |         | 

42



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##### Table of Contents



The following table sets forth information with respect to stock options
held by the named executive officers of the Company on December 31, 2002. The
closing price for the Companys Common Stock on December 31, 2002 (the last
trading day of the year) was $1.36. None of the executive officers exercised
any stock options during 2002.




Aggregated Fiscal Year-End Option Values

|                                                                                  |  |                           |                  |                           |  |   |           | 
|--------------------------------------------------------------------------------- |  | ------------------------- | ---------------- | ------------------------- |  | - | --------- | 
|                                                                                  |  | Number of                 |                  |                           |  |  
|                                                                                  |  | Securities                |                  |                           |  |  
|                                                                                  |  | Underlying                |                  | Value of Unexercised     
|                                                                                  |  | Unexercised Options       |                  | In-the-Money             
|                                                                                  |  | at FY-End                 |                  | Options at FY-End        
|Name and Principal Position                                                       |  | Exercisable/Unexercisable |                  | Exercisable/Unexercisable
|                                                                                  |  |                           |                  |                          
|Thomas J. Weaver III
Chairman of the Board, Chief Executive Officer               |  |                           | 750,000 / -0-    |                           |  | $ | -0- /$-0- | 
|Greg M. Janese
President
Chief Operating Officer                                  |  |                           | 50,000 / 25,000  |                           |  |   | -0- /-0-  | 
|Bryan J. Cusworth
Executive Vice President, Chief Financial
Officer and Treasurer |  |                           | 206,000 / 39,000 |                           |  |   | -0- /-0-  | 

Employment Agreements

The Company has entered into an employment agreement with Thomas J. Weaver
III for a term of five years, commencing January 1, 1994. The agreement
provided for an initial annual base salary of $125,000, with increases at the
discretion of the Board of Directors. Pursuant to action taken by the Board of
Directors, Mr. Weavers current annual base salary is $350,000. The agreement
also provides for an annual bonus as determined by the Board of Directors based
on the operating results of the Company. The agreement is automatically
renewed on each anniversary date for an additional five-year term unless it is
terminated by either party prior to the anniversary date. The agreement
provides that Mr. Weaver is entitled to payment for the unexpired portion of
the current term in the event his employment is terminated without cause by the
Company. Under the agreement, cause is defined to include failure to perform
the duties of his office, breach of fiduciary duty to the Company and willful
violation of the confidentiality or non-competition provisions of the
agreement.

The Company has entered into an employment agreement with Greg M. Janese,
for an original term commencing on April 21, 1997 and continuing through
December 31, 2002. The term of the agreement was extended to May 31, 2005
pursuant to a modification agreement entered into with Mr. Janese in May 2002.
The agreement provides for an annual base salary of $275,000, with increases at
the discretion of the Board of Directors. In addition, Mr. Janese is entitled
to participate in applicable incentive plans established by the Company. If
the Company terminates the employment of Mr. Janese without cause, or if Mr.
Janese terminates his employment for good reason, he will be entitled to the
greater of $400,000 or Mr. Janeses base salary for the remaining term of the
agreement, plus incentive compensation for the portion of the year in which he
was employed. Cause is defined to include failure to perform his duties to
the Company, breach of the agreement, fraud, embezzlement, conviction of
certain serious crimes, conduct harmful to the Company and failure of Mr.
Janese to achieve certain performance objectives. Good reason is defined to
include a material breach of the agreement by the Company, which remains
uncured for 30 days after receipt of written notice of breach. The agreements
contain certain covenants by Mr. Janese not to compete with the business of the
Company both during the term of employment and for a period of two years
following the termination of employment.

43



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##### Table of Contents



Compensation of Directors

Directors who are officers and employees of the Company receive no
compensation, as such, for serving as members of the Board. Directors who are
not officers or employees of the Company are entitled to receive $100 for each
Board meeting personally attended, and all Directors are reimbursed for their
out-of-pocket expenses incurred in attending Board and Committee meetings.

Compensation Committee Interlocks and Insider Participation

No person who served as a member of the Companys Compensation Committee
during 2002 (i) was an officer or employee of the Company during such year,
(ii) was formerly an officer of the Company or (iii) was a party to any
material transaction set forth under Certain Relationships and Related
Transactions.

No executive officer of the Company served as a member of the compensation
or similar committee or board of directors of any other entity one of whose
executive officers served on the Compensation Committee or Board of Directors
of the Company.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The
following table sets forth as of April 15, 2003 certain information
with respect to the beneficial ownership of the Companys Common Stock by (i)
each person who is known by the Company to be the beneficial owner of more than
5% of the outstanding shares of Common Stock of the Company, (ii) each of the
Companys directors, (iii) each of the Companys executive officers and (iv)
all directors and executive officers of the Company as a group. Unless
otherwise indicated, each of the stockholders listed below has sole voting and
investment power with respect to the shares of Common Stock beneficially owned.
In each case, the number of shares includes the beneficial ownership of Common
Stock issuable upon the exercise of options that are exercisable within 60
days. Any shares not outstanding which are subject to such options and
beneficially owned by a person in the table below are deemed to be outstanding
for the purpose of computing the percentage of outstanding securities of the
class owned by such person but are not deemed to be outstanding for the purpose
of computing the percentage of the class beneficially owned by any other
person. None of the stockholders listed below beneficially owns any shares of
the Companys Series A Preferred Stock.

For a summary of Common Stock authorized for issuance under the Companys
equity compensation plans, see Market for Common Equity and Related
Stockholder Matters.

44



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|                                                                            |  |                    |              |                  |  |  |      |  
|--------------------------------------------------------------------------- |  | ------------------ | ------------ | ---------------- |  |  | ---- | -
|                                                                            |  | Common Stock      
|                                                                            |  |                   
|                                                                            |  | Number of Shares   |              |                  |  | 
|Name and Address (1)                                                        |  | Beneficially Owned |              | Percent of Total
|                                                                            |  |                    |              |                 
|Thomas Jackson Weaver III                                                   |  |                    | 1,232,839(2) |                  |  |  | 15.5 | %
|Frank Bumstead                                                              |  |                    | 24,958       |                  |  |  | *    |  
|Charles Flood                                                               |  |                    | 24,958       |                  |  |  | *    |  
|Joseph C. Galante                                                           |  |                    | 30,000(3)    |                  |  |  | *    |  
|W. Reid Sanders                                                             |  |                    | 110,000(3)   |                  |  |  | 1.4  | %
|Frank A. McKinnie Weaver, Sr.                                               |  |                    | 54,000       |                  |  |  | *    |  
|Kyle Young                                                                  |  |                    |              |                  |  |  | *    |  
|Greg M. Janese                                                              |  |                    | 227,460(4)   |                  |  |  | 2.9  | %
|Bryan J. Cusworth                                                           |  |                    | 206,000(5)   |                  |  |  | 2.6  | %
|Dimensional Fund Advisors, Inc.(6)                                          |  |                    | 583,700      |                  |  |  | 7.3  | %
|Wellington Management Company, LLP(7)                                       |  |                    | 374,300      |                  |  |  | 4.7  | %
|All executive officers and directors
a group (nine (9) persons)(2)(3)(4)(5) |  |                    | 1,910,215    |                  |  |  | 24.0 | %



---

|*   |  | Less than 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | The address for Mr. Thomas J.
Weaver III is 402 Heritage Plantation Way,
Hickory Valley, Tennessee 38042; the address for Messrs. Bumstead and
Flood is 1700 Hayes Street, Suite 304, Nashville, Tennessee 37203; the
address for Mr. Galante is 1400 18th Avenue South, Nashville, Tennessee
37212; the address for Mr. Sanders is 5100 Wheelis Drive, Suite 206,
Memphis, Tennessee 38117; the address for Mr. Frank A. McKinnie Weaver,
Sr. is 402 Heritage Plantation Way, Hickory Valley, Tennessee
38042; the address for Mr. Young is 4 Music Square East, Nashville, Tennessee 37203; the address for
Mr. Cusworth is 16501 Ventura Blvd., Suite 601, Encino, California 91436;
the address for Mr. Janese is 300 Tenth Avenue South, Nashville, Tennessee
37203; the address for Dimensional Fund Advisors, Inc. is 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401; and the address for
Wellington Management Company, LLP is 75 State Street, Boston,
Massachusetts 02109.
|   
|(2) |  | Includes (a) 300,000 shares issuable to Mr. Weaver upon the exercise of
outstanding stock options and (b) 250,000 shares held by the Katherine
McKinnie Weaver Trust IV, of which Mr. Weaver is trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(3) |  | Includes 25,000 shares issuable upon the exercise of outstanding stock
options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(4) |  | Includes 50,000 shares issuable to Mr. Janese upon the exercise of
existing stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(5) |  | Includes 206,000 shares issuable to Mr. Cusworth upon the exercise of
outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(6) |  | Dimensional Fund Advisors Inc. (Dimensional), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manger to
certain other commingled group trusts and separate accounts. (These
investment companies, trusts and accounts are the Funds.) In its role
as investment advisor or manager, Dimensional possessed voting and/or
investment power over 583,700 shares of Common Stock as of February 12,
2003. The Funds own all securities reported in this table, and
Dimensional disclaims beneficial ownership of such securities.                                                                                                                                                                                                                                                                                
|   
|(7) |  | Information derived from the Form 13G filed with the Securities and
Exchange Commission on February 12, 2003 by Wellington Management Company,
LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

45



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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

$500,000 Affiliate Loan

In connection with the restructuring of the Companys bank credit facility
in April 2002 (See Note 5 to the consolidated financial statements included in
Item 8 of this Annual Report on Form 10K), an entity controlled by the Chief
Executive Officer of the Company (Heritage), loaned the Company $500,000
(Affiliate Loan). Conditioned upon the funding of the Affiliate Loan, which
occurred on April 15, 2002, the bank agreed to loan the Company an additional
$500,000 (New Bank Loan). The proceeds from both loans were used to make
required payments pursuant to the Companys acquisition notes payable and for
working capital purposes. The New Bank Loan and the Affiliate Loan were repaid
in June 2002, upon receipt of the Companys federal income tax refund.

In order to provide the Affiliate Loan, Heritage obtained a $500,000 loan
from an independent third party finance company (Pass-Through Loan). The
Pass-Through Loan was secured by 950,336 shares of TBA common stock held by the
Chief Executive Officer (772,876 shares) and President (177,460 shares) of the
Company and a personal guarantee by the President of the Company. The
Pass-Through Loan was repaid concurrently with the repayment of the Affiliate
Loan. As a condition to obtaining the Pass-Through Loan, Heritage paid a fee
of $5,000 and interest accrued at 12% per annum. These costs were
passed-through to the Company as part of the Affiliate Loan.




ITEM 14. CONTROLS AND PROCEDURES

The Companys Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer have concluded, based on their evaluation as of a date within
90 days prior to the filing of this report, that the Companys disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms, and include controls and procedures designed to
ensure that information required to be disclosed by the Company in such reports
is accumulated and communicated to the Companys management, including the
Chief Executive Officer, Chief Operating Officer and the Chief Financial
Officer, as appropriate to allow timely decisions regarding required
disclosure.

There were no significant changes in the Companys internal controls or in
other factors that could significantly affect these controls subsequent to the
date of such evaluation, and there were no corrective actions required with
regard to significant deficiencies or material weaknesses.

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PART IV




ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

|    |  |  |  |     |  |                                                   
|--- |  |  |  | --- |  | --------------------------------------------------
|(a) |  |  |  | (1) |  | Financial Statements
 See page 20 of this Report.
|    |  |  |  | (2) |  | Financial Statement Schedules  None.             
|    |  |  |  | (3) |  | Exhibits.                                         

|          |  |                                                                                                                                                                                                                                                                               
|--------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT   |  |                                                                                                                                                                                                                                                                               
|NUMBER    |  | DESCRIPTION OF DOCUMENT                                                                                                                                                                                                                                                       
|          |  |                                                                                                                                                                                                                                                                               
|2.1(1)    |  |  Purchase Agreement among TBA Entertainment Corporation, TBA Entertainment Holding
Corporation, Robert R. Titley and Clarence Spalding dated June 18, 1998.                                                                                                                  
|2.2(2)    |  |  Stock Purchase Agreement among TBA Entertainment Corporation, Karin Glass&
Associates, Inc., Ink Up, Inc., KGA, Inc., Karin Glass and Kenneth Glass dated March 18,
1999.                                                                                                   
|2.3(3)    |  |  Stock Purchase Agreement among TBA Entertainment Corporation , Robert Romeo and Romeo
Entertainment Group, Inc. dated November 26,1999                                                                                                                                      
|2.4(4)    |  |  Stock Purchase Agreement among TBA Entertainment Corporation, Mike Atkins and Mike
Atkins Management, Inc. dated December 6, 1999.                                                                                                                                          
|2.5(5)    |  |  Stock Purchase Agreement by and among TBA Entertainment Corporation, Edward James
Dougherty, Janet L. Dougherty, John F. Dougherty, John F. Dougherty, Eva Dougherty, The
Ed & Jan Dougherty Charitable Remainder Trust and EJD Concert Services, Inc. dated March
31, 2000.
|2.6(6)    |  |  Stock Purchase Agreement among TBA Entertainment Corporation, Moore Entertainment,
Inc. and Stephen F. Moore dated February 6, 2001.                                                                                                                                        
|3.1(7)    |  |  Certificate of Incorporation of the Company.                                                                                                                                                                                                                                
|3.2(8)    |  |  Bylaws of the Company.                                                                                                                                                                                                                                                      
|4.1(9)    |  |  Specimen Common Stock Certificate.                                                                                                                                                                                                                                          
|4.2       |  |  Article IX of the Certificate of Incorporation of the Company (included in Exhibit
3.1).                                                                                                                                                                                    
|4.3(10)   |  |  Certificate of Designation of Series A Convertible Preferred Stock of the Company.                                                                                                                                                                                          
|10.1(11)  |  |  Employment Agreement dated as of January 1, 1994 between the Company and Thomas
Jackson Weaver III.                                                                                                                                                                         
|10.2(12)  |  |  Form of Indemnification Agreement between the Company and each of the directors and
executive officers.                                                                                                                                                                     
|10.3(13)  |  |  TBA Entertainment Corporation 1995 Stock Option Plan.                                                                                                                                                                                                                       
|10.4(14)  |  |  Form of Stock Option Agreement for options granted under the 1995 Stock Option Plan.                                                                                                                                                                                        
|10.5(15)  |  |  TBA Entertainment Corporation 1997 Stock Option Plan.                                                                                                                                                                                                                       
|10.6(16)  |  |  Form of Stock Option Agreement for options granted under the 1997 Stock Option Plan.                                                                                                                                                                                        
|10.7(17)  |  |  Registration Rights Agreement between the Company, Robert E. Geddes, Greg M. Janese,
Thomas Miserendino, Brian K. Murphy and Marc W. Oswald.                                                                                                                                
|10.8(18)  |  |  Employment Agreement between Avalon Entertainment Group, Inc. and Greg M. Janese.                                                                                                                                                                                           
|10.9(19)  |  |  TBA Entertainment Corporation Employee Stock Purchase Plan                                                                                                                                                                                                                  
|10.10(20) |  |  Loan and Security Agreement among AmSouth Bank and TBA Entertainment Corporation and
its subsidiaries dated October 10, 2001.                                                                                                                                               
|21*       |  |  Subsidiaries of the Company.                                                                                                                                                                                                                                                
|23*       |  |  Consent of Independent Certified Public Accountants.                                                                                                                                                                                                                        
|99.1*     |  |  Certification of Chief Executive Officer.                                                                                                                                                                                                                                   
|99.2*     |  |  Certification of Chief Financial Officer.                                                                                                                                                                                                                                   



---

|* |  | Filed herewith.
|- |  | ---------------

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|(1)  |  | Incorporated herein by reference to Exhibit 2.1 to the Companys Current
Report on Form 8-K dated on June 18, 1998.                                      
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  |  | Incorporated herein by reference to Exhibit 2.7 to the Companys Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1998.               
|    
|(3)  |  | Incorporated herein by reference to Exhibit 10.18 to the Companys Annual
Report on Form 10-K, as amended for the fiscal year ended December 31,
1999.   
|    
|(4)  |  | Incorporated herein by reference to Exhibit 10.19 to the Companys Annual
Report on Form 10-K, as amended for the fiscal year ended December 31,
1999.   
|    
|(5)  |  | Incorporated herein by reference to Exhibit 10.20 to the Companys
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.                   
|    
|(6)  |  | Incorporated herein by reference to Exhibit 10.21 to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 2000.               
|    
|(7)  |  | Incorporated herein by reference to Exhibit 3.1 to the Companys Current
Report on Form 8-K dated September 8, 1997.                                     
|    
|(8)  |  | Incorporated herein by reference to Exhibit 3.2 to the Companys Current
Report on Form 8-K dated September 8, 1997.                                     
|    
|(9)  |  | Incorporated herein by reference to Exhibit 4.1 to the Companys Current
Report on Form 8-K dated September 8, 1997.                                     
|    
|(10) |  | Incorporated herein by reference to Exhibit 4.3 to the Companys Current
Report on Form 8-K dated September 8, 1997.                                     
|    
|(11) |  | Incorporated herein by reference to Exhibit 10.2 to the Companys
Registration Statement on Form SB-2 (Registration No. 33-69944) dated
December 8, 1993.
|    
|(12) |  | Incorporated herein by reference to Exhibit 10.9 to the Companys Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1995.              
|    
|(13) |  | Incorporated herein by reference to Exhibit 10.10 to the Companys Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1995.             
|    
|(14) |  | Incorporated herein by reference to Exhibit 10.11 to the Companys Annual
Report on Form 10-KSB, as amended, for the fiscal year ended December 29,
1996.
|    
|(15) |  | Incorporated herein by reference to Exhibit 10.12 to the Companys Annual
Report on Form 10-KSB, as amended, for the fiscal year ended December 29,
1996.
|    
|(16) |  | Incorporated herein by reference to Exhibit 10.13 to the Companys Annual
Report on Form 10-KSB, as amended, for the fiscal year ended December 29,
1996.
|    
|(17) |  | Incorporated herein by reference to Exhibit 10.16 to the Companys Annual
Report on Form 10-KSB, as amended, for the fiscal year ended December 29,
1996.
|    
|(18) |  | Incorporated herein by reference to Exhibit 10.20 to the Companys
Current Report on Form 8-K dated June 20, 1997.                                       
|    
|(19) |  | Incorporated by reference to Exhibit 10.1 to the Companys Registration
Statement on Form S-8 (Registration No. 333-62284) dated June 5, 2001.           
|    
|(20) |  | Incorporated herein by reference to Exhibit 4.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.                 
|    
|(b)  |  | Reports on Form 8-K.                                                                                                                                     

48



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No reports on Form 8-K were filed during the quarterly period ended December 31, 2002.

49



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CERTIFICATION

I, Thomas Jackson Weaver III, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K of TBA Entertainment
Corporation.                                                                                                                                                                                                                                       
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made,
not misleading with respect to the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;                   
|
| | 4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                               



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the
period in which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants
auditors and the audit committee of registrants board of directors (or
persons performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any
material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



| | 6. |  | The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|               |  |                                                   
|-------------- |  | --------------------------------------------------
|April 15, 2003 |  | By: /s/ Thomas Jackson Weaver III                 
|               |  | Thomas Jackson Weaver III                         
|               |  | Chairman of the Board and Chief Executive Officer.

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CERTIFICATION

I, Bryan J. Cusworth, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K of TBA Entertainment
Corporation.                                                                                                                                                                                                                                       
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made,
not misleading with respect to the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;                   
|
| | 4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                               



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the
period in which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants
auditors and the audit committee of registrants board of directors (or
persons performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any
material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        
|

| | 6. |  | The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|               |  |                                                       
|-------------- |  | ------------------------------------------------------
|April 15, 2003 |  | By: /s/ Bryan J. Cusworth                             
|               |  | Bryan J. Cusworth                                     
|               |  | Executive Vice President, Chief Financial Officer and 
|               |  | Treasurer (Principal Accounting and Financial Officer)

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SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized in the city of Hickory Valley,
Tennessee, on the 15th day of April 2003.

| |  |                               |  |                              
| |  | ----------------------------- |  | -----------------------------
| |  | TBA ENTERTAINMENT CORPORATION
| |  |                               |  |                              
| |  | By:                           |  | /s/ THOMAS JACKSON WEAVER III
| |  |                               |  |                              
| |  |                               |  | Thomas Jackson Weaver III    
| |  |                               |  | Chairman of the Board and    
| |  |                               |  | Chief Executive Officer      

In accordance with the requirements of the Securities Exchange Act of
1934, this report has been signed on behalf of the registrant and by the
following persons in the capacities and on the dates stated.

|                                  |  |                               |  |               
|--------------------------------- |  | ----------------------------- |  | --------------
|SIGNATURE                         |  | TITLE                         |  | DATE          
|                                  |  |                               |  |               
|/s/ THOMAS JACKSON WEAVER III     |  | Chairman of the Board,        |  | April 15, 2003
|                                  |  | Chief Executive Officer       |  |               
|Thomas Jackson Weaver III         |  | (Principal Executive Officer) |  |               
|                                  |  |                               |  |               
|/s/ JOSEPH C. GALANTE             |  | Director                      |  | April 15, 2003
|                                  |  |                               |  |               
|Joseph C. Galante                 |  |                               |  |               
|                                  |  |                               |  |               
|/s/ FRANK BUMSTEAD                |  | Director                      |  | April 15, 2003
|                                  |  |                               |  |               
|Frank Bumstead                    |  |                               |  |               
|                                  |  |                               |  |               
|/s/ CHARLES FLOOD                 |  | Director                      |  | April 15, 2003
|                                  |  |                               |  |               
|Charles Flood                     |  |                               |  |               
|                                  |  |                               |  |               
|/s/ W. REID SANDERS               |  | Director                      |  | April 15, 2003
|                                  |  |                               |  |               
|W. Reid Sanders                   |  |                               |  |               
|                                  |  |                               |  |               
|/s/ FRANK A. McKINNIE WEAVER, SR. |  | Director                      |  | April 15, 2003
|                                  |  |                               |  |               
|Frank A. McKinnie Weaver, Sr.     |  |                               |  |               
|                                  |  |                               |  |               
|/s/ KYLE YOUNG                    |  | Director                      |  | April 15, 2003
|                                  |  |                               |  |               
|Kyle Young                        |  |                               |  |               
|                                  |  |                               |  |               
|/s/ BRYAN J. CUSWORTH             |  | Chief Financial Officer       |  | April 15, 2003
|                                  |  | (Principal Accounting and     |  |               
|Bryan J. Cusworth                 |  | Financial Officer)            |  |               

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EXHIBIT INDEX

|            |  |                                                       
|----------- |  | ------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                           
|            |  |                                                       
|21          |  |  Subsidiaries of the Company.                        
|23          |  |  Consent of Independent Certified Public Accountants.
|            |  |                                                       
|99.1        |  |  Certification of Chief Executive
Officer.           
|            |  |                                                       
|99.2        |  |  Certification of Chief Financial
Officer.           

53