SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   ----------

                                   FORM 10-KSB

(Mark One)
[X]               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 2003
                  OR
[ ]               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from

                         Commission File Number 0-26962

                                 A.D.A.M., INC.

             (Exact name of registrant as specified in its charter)

      Georgia                                              58-1878070
(State of incorporation)                       (IRS Employer Identification No.)

                        1600 RiverEdge Parkway, Suite 100
                             Atlanta, Georgia 30328

               (Address of Principal Executive Offices, Zip Code)

                Issuer's telephone number, including area code:
                                 (770) 980-0888

             Securities registered under Section 12(b) of the Act:
                                      None

             Securities registered under Section 12(g) of the Act:

                               Title of each class
                               -------------------
                          Common Stock, par value $.01

     Check whether the issuer (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

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB.

     The revenues for the year ended December 31, 2003, the most recent fiscal
year, were $7,889,452.

     The aggregate market value of the common equity held by non-affiliates of
the Registrant (assuming for these purposes, but without conceding, that all
executive officers and directors are "affiliates" of the Registrant) as of
February 11, 2004 (based on the closing sale price of the Registrant's common
stock, as reported on the Nasdaq SmallCap Market on such date) was $16,047,916.
As of March 1, 2004, 7,890,694 shares of common stock were outstanding.

     Transitional Small Business Disclosure Format Yes __ No _X_

================================================================================

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's proxy statement for its 2004 Annual Meeting of
Shareholders are incorporated herein by reference in response to Part III of
this Form 10-KSB.



                                       2
<PAGE>



PART I.

Disclosure Regarding Forward Looking Statements

     Certain statements made in this report, and other written or oral
statements made by or on behalf of A.D.A.M., may constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995. When
used in this report, the words "believes," "expects," "estimates," "intends,"
"will" and similar expressions are intended to identify forward-looking
statements. Statements regarding future events and developments and our future
performance, as well as our expectations, beliefs, plans, intentions, estimates
or projections relating to the future, are forward-looking statements within the
meaning of these laws. Examples of such statements in this report include
descriptions of our plans and strategies with respect to developing certain
market opportunities, our overall business plan, our plans to develop additional
strategic partnerships, our intention to develop our products and platform
technologies, our continuing growth and our ability to contain our operating
expenses. All forward-looking statements are subject to certain risks and
uncertainties that could cause actual events to differ materially from those
projected. We believe that these forward-looking statements are reasonable;
however, you should not place undue reliance on such statements. These
statements are based on current expectations and speak only as of the date of
such statements. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of future events, new information
or otherwise.

ITEM 1. BUSINESS

Overview

     We specialize in the creation and delivery of interactive health content
that can be used by a broad range of healthcare consumers - from those with low
health literacy to those who play an active and ongoing role in their personal
health management. Our products can be used for learning about general health
concerns, specific diseases and treatments, surgical procedures, drug
information, specialty health subjects such as women's health and children's
health, nutrition, alternative medicine and more.

     Our health content products meet rigorous editorial standards. We employ
two physicians and use an extensive network of physicians and specialists who
are continually reviewing and updating our information. We add to our content
library when needed such as when important health issues arise (for example, the
recent SARS outbreak) or when our customers request specific products to support
their product and service offerings. Our health information is accredited by
URAC, an industry leading accreditation organization, and we are a founding
member of Hi-Ethics, a coalition of the most widely referenced health websites
and information providers committed to developing industry standards for the
quality of consumer health information.

     We believe that our health information products and technology are unique
in the industry. One of our most valuable strengths, and competitive advantages,
is a large, proprietary content library and content management system. This
library includes:

--   More than 4,000 health reference articles on disease, conditions, symptoms,
     surgeries, nutrition and medical tests;

--   Over 40,000 catalogued medical illustrations that we have developed;

--   Thousands of web-enabled animations depicting disease states and other
     medical conditions, many of which are broadcast quality;

--   Interactive tools that enhance and complement the functionality of our
     health content products;

--   Unique technology for viewing the anatomy of the human body; and

--   Proprietary content management and delivery technology that allow us to
     publish our digital assets to a customer's specification efficiently and
     cost effectively.

     We sell our health content products primarily through annual licensing
agreements to many different types of healthcare and health-related
organizations including hospitals, managed care organizations, pharmaceutical
companies, disease management vendors, health-oriented Internet websites,
healthcare technology companies and large employers. Our products can be
incorporated into a customer's website, imbedded in healthcare applications such
as an electronic medical record or disease management applications, contained in
a printed format, or combined with other products that may be offered to a
healthcare consumer.

================================================================================

                                       3
<PAGE>


     Healthcare organizations can use our products and technology primarily in
two ways:

     --   To increase the utilization of their products and services; and

     --   To improve health outcomes and manage the appropriateness of care.

     In both of these applications, we believe that health content plays a vital
role in helping these organizations grow revenues and reduce costs, while adding
value for the healthcare consumer. We also work with some of the leading
companies in the healthcare industry to integrate our health information into
applications such as electronic medical records and disease management
applications where specific health information relating to a patient's condition
or diagnosis can be made available to them through a personalized website or
"patient portal." We believe agreements we have made with ThePort Network, Inc.
will allow us to deliver a "patient portal" directly to patients' desktops, with
secure, one-to-one communications with their healthcare provider or health plan.

     Our products also speak to the proliferation of low health literacy - the
inability to read, understand or act on health information. Low health literacy
is estimated to cost the U.S. healthcare industry approximately $58 billion a
year according to organizations that track these types of public health
concerns. It spans ethnic boundaries and social classes and is estimated to
impact nearly one in three people in the U.S. Our products allow healthcare
organizations to reach consumers at multiple reading levels and are enhanced
with pictures and animations. The use of visuals has been proven to assist in
the understanding and retention of complex information, and we have been at the
forefront of providing visually engaging, interactive health information for
over a decade. Our extensive collection of medical illustrations, graphics and
animations are carefully put into our products so that healthcare consumers can
better understand and retain the information they are reading.

     Our products can also be delivered in a variety of formats - from print
handouts to electronic delivery. Several of our products, including the Health
Illustrated Encyclopedia, are also available in Spanish, which can address both
low health literacy issues, as well as those consumers with limited English
proficiency.

     Over the past two years we have seen a significant shift in our ability to
secure new business in healthcare. We believe that the quality of our products,
the depth and breadth of the digital assets we own, and the solutions we provide
to address issues such as low health literacy, well position us for future
growth.

Markets

     We market our products to the healthcare industry, to Internet websites and
to educational institutions.

     Healthcare Industry

          Our products target a broad range of businesses in the healthcare
     industry including healthcare providers, managed care organizations,
     healthcare technology companies and pharmaceutical organizations.

          Healthcare Providers. The healthcare provider market includes
     hospitals and hospital systems and large physician practice groups that are
     providing healthcare services to consumers. We believe our primary revenue
     opportunities are with the approximately 2,000 hospital facilities that
     exceed 200 beds. There are two underlying reasons why we believe this
     market is important:

          --   Healthcare providers are seeking to enhance their websites with
               content, tools and services that can increase utilization of
               their services and support their service line efforts; and

          --   Healthcare providers are evolving their websites to offer more
               point-of-care services including the use of personalized health
               information as part of patient education, physician loyalty
               programs and risk management.

                                       4
<PAGE>


          Managed Care Organizations. This market includes a broad range of
     managed care organizations, consumer directed health plans and large
     employers who are actively looking for operational improvements through the
     effective use of health information. We believe that our products are well
     suited to assist these types of organizations in two important aspects:

          --   The recognition and identification of disease for early health
               intervention; and

          --   Demand management of health plan members and employees to seek
               health intervention when appropriate or as necessary.

          Pharmaceutical Organizations. The relaxation of pharmaceutical
     marketing regulations by the Food and Drug Administration in 1997 has led
     to the proliferation of Direct to Consumer ("DTC") advertising by the
     pharmaceutical companies. According to an ACNielson Homescan Rx/OTC
     Consumer Panel sales analysis of twelve major prescription drug brands
     DTC-advertised from July though December 2002, 17% of new prescriptions
     filled came as a direct result of patients requesting the brand. The
     effects of DTC advertising, along with the billions of dollars
     pharmaceutical companies are spending on DTC, have created new market
     opportunities for us as we leverage our ability to customize our health
     information products to support these marketing efforts. Currently, several
     leading pharmaceutical organizations license our content products, and we
     believe there is significant potential to expand these relationships.

          Healthcare Technology Companies. This market includes healthcare
     application developers such as electronic medical record vendors, medical
     device companies, and disease management application developers that can
     use our content at point-of-care or within the context of the healthcare
     consumer's specific medical condition or disease state.

     Internet

          This market includes large Internet and media-related websites that
     host a variety of consumer-oriented content and services. These websites
     generally use our health content either exclusively or as part of a larger
     health channel offering to serve as a driver for advertising revenue. While
     we still derive a portion of our revenues and continue to explore ways in
     which to expand our presence in this market, the number of license
     agreements we have completed has diminished as the larger websites continue
     to grow and the number of smaller, more specialized health sites have
     either shut down or have been acquired. We continue to view this market as
     an important component in our revenue strategy and will pursue
     opportunities as they become available. We are actively leveraging existing
     relationships to provide more content products and professional services.

     Education

          The education market includes higher education, K-12 and the allied
     health markets. Historically, we have serviced this market with our CD-ROM
     products. We continue to experience a revenue stream from the sale of these
     CD-ROM products although we have seen a decline in our education revenues
     as our CD ROM products begin to age. We are currently developing a major
     upgrade to our flagship educational product, A.D.A.M. Interactive Anatomy,
     which we expect to release in the summer of 2004. We also believe that the
     educational market is an important and complementary extension to our
     broader product strategy in healthcare.

Products and Services

     We offer a comprehensive portfolio of informative, web-enabled products
that are designed to explain complex medical issues in a way that can be easily
understood by the non-medical healthcare consumer. We have also developed a line
of CD-ROM products that are sold primarily to the K-12 and higher education
markets, including our flagship software product for higher education, A.D.A.M.
Interactive Anatomy.

                                       5
<PAGE>


     The following chart summarizes our primary products and the typical
customers of those products:
<TABLE>
<CAPTION>
<S>                               <C>                                          <C>
----------------------------------------------------------------------------------------------------------
PRODUCT                            CUSTOMER                                     DESCRIPTION
----------------------------------------------------------------------------------------------------------
Health Illustrated Encyclopedia    Hospitals, health plans, consumer-           A general health
                                   oriented websites, and large employers.      reference product
                                                                                containing approximately
                                                                                3,600 unique articles
                                                                                relating to diseases and
                                                                                health conditions,
                                                                                medical tests, symptoms,
                                                                                injuries, treatment
                                                                                options, surgical
                                                                                procedures and nutrition.
                                                                                The content is organized
                                                                                by topic or condition and
                                                                                is enhanced with
                                                                                graphical illustrations.
                                                                                Also, available in
                                                                                Spanish.
----------------------------------------------------------------------------------------------------------
In-Depth Disease and Condition     Hospitals, health plans, disease             Available as a library or
Reports                            management companies, physicians,            individually by topic.
                                   and medical libraries.                       Generally sold with the
                                                                                Health Illustrated
                                                                                Encyclopedia. The In-
                                                                                Depth Reports provide
                                                                                the reader a much deeper
                                                                                understanding of the
                                                                                subject. Typically
                                                                                targeted to the 8th grade
                                                                                reading level.
----------------------------------------------------------------------------------------------------------
Consumer ACCESS                    Hospitals, health plans, Internet            ACCESS provides
                                   websites catering to alternative             medically reviewed
                                   medicine, physicians, spas and health        information on the
                                   fitness organizations.                       integration of alternative
                                                                                therapies with traditional
                                                                                medicine. Includes
                                                                                approximately 170 health
                                                                                conditions, 120 herbs
                                                                                and supplements, 20
                                                                                monographs on
                                                                                complementary
                                                                                treatments, and
                                                                                1,600 drug monographs.
----------------------------------------------------------------------------------------------------------
Care Guides                        Hospitals, health plans, disease             Comprehensive patient
                                   management organizations, and                care guides on the most
                                   Internet websites.                           common chronic
                                                                                conditions: Asthma,
                                                                                Allergies, Diabetes Type
                                                                                1, High Blood Pressure
                                                                                and High Cholesterol.
                                                                                Designed for ease of use,
                                                                                each guide contains "key
                                                                                points", supplemental
                                                                                reading, and information
                                                                                to help patients make
                                                                                educated healthcare
                                                                                decisions.
----------------------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>


<TABLE>
<CAPTION>
<S>                               <C>                                          <C>
----------------------------------------------------------------------------------------------------------
Pregnancy Health Center            Hospitals supporting maternity service       Provides topical health
                                   line, health plans, employers and            information and
                                   specialty websites.                          interactive tools
                                                                                addressing pregnancy,
                                                                                from pre-conception to
                                                                                post-partum.
----------------------------------------------------------------------------------------------------------
Surgeries and Procedures           Hospitals, health plans, physician           A web-based product
                                   practices, and Internet websites.            that explains various
                                                                                surgeries and medical
                                                                                procedures using step-
                                                                                by-step, easy to
                                                                                understand language
                                                                                supplemented by medical
                                                                                illustrations, diagrams
                                                                                and imagery.
----------------------------------------------------------------------------------------------------------
A.D.A.M. Interactive Anatomy       Undergraduate and allied health              A CD-ROM product that
                                   institutions, and undergraduate              simulates human
                                   anatomy and physiology students.             anatomical dissection of
                                                                                both male and female
                                                                                bodies. More than 22,000
                                                                                anatomical structures can
                                                                                be identified.
----------------------------------------------------------------------------------------------------------
A.D.A.M. At Home Series School     K-12 teachers and students.                  A series of CD-ROM
Editions                                                                        products including
                                                                                A.D.A.M. The Inside
                                                                                Story, Nine Month
                                                                                Miracle and Life's
                                                                                Greatest Mysteries
                                                                                coupled with curriculum
                                                                                guides for teachers.
----------------------------------------------------------------------------------------------------------
</TABLE>

     We offer our customers various custom and professional services including
medical illustration, multimedia and animation development and engineering. Our
ability to provide customers with these types of professional services is an
important component to our position as a full-service solution provider. We
believe that in order to provide full-service solutions to our customers, we
must provide flexibility in the way our products are configured and delivered.

Customer Support and Client Services

     We believe that a high level of customer support is necessary to attract
and retain customers and we therefore provide several levels of customer support
for both our CD-ROM and license customers. We provide toll-free telephone
technical support for our CD-ROM customers and, through our client services team
we maintain direct and ongoing relationships with our license customers for
technical support, integration issues, content updates, and maintenance.

Platform, Product and Content Development

     Our proprietary content platform handles the management and workflow
associated with our electronic assets. The publishing components of our system
allow us to deliver products to our customers more efficiently and with more
accuracy. Our system also allows us to customize our product content offerings
with minimal development costs. We have also implemented the use of the National
Library of Medicine's Unified Medical Language System ("UMLS"). The use of the
UMLS assists in the development of systems that help healthcare organizations
integrate data across a wide variety of information systems such as electronic
medical records and other decision support applications. The UMLS allows us to
output any of our health content to any number of standard medical taxonomies
such as ICD-9, CPT, MeSH and SnoMed. We believe that providing our customers
with data in this fashion will allow them to easily integrate our content into
their own systems creating an "actionable" environment between information and
related services.

                                       7
<PAGE>


     With the capabilities of our content management system, and through the
development of additional content, products and technologies, we expect to
expand our licensing network with new customers and derive additional revenues
from our current license customers.

     We provide our products directly to our customers through File Transfer
Protocol (FTP), CD-ROM and web services. We also host content for customers
through an Application Services Provider model. Our platform technology and
servers are located in a secure data center with built-in redundancies at our
corporate offices in Atlanta, Georgia.

Editorial Excellence

     We believe that our health information products are developed and
maintained to the highest degree of completeness, relevancy and medical
accuracy. Our editorial process is divided into five areas:

     --   Development. Medical writers, health practitioners and medical
          illustrators develop our content. Previously published content is
          reviewed and internally evaluated for completeness and relevancy.
          Also, textual content is evaluated for enhancement with new and
          appropriate visuals.

     --   Review. We have developed an extensive network of reviewers that
          evaluate the accuracy of the text and visual content. Our network
          consists of physicians who are specialists in their field that provide
          input on the medical accuracy, relevancy and completeness of the
          information.

     --   Editorial. Our editorial staff reviews all content, both textual and
          visual, for grammar, style and consistency. A content quality
          assurance check is also performed.

     --   Production. The content is indexed, stored in a data management
          environment, coded and tagged for presentation. Another level of
          technical and content quality assurance checks are also performed
          during this step.

     --   Publication. This is the stage where we publish the content or product
          to our customers. Our health information is regularly updated and, in
          most cases, this update cycle is repeated quarterly.

     We are also a founding member of Hi-Ethics (Health Internet Ethics), a
non-profit organization dedicated to providing consumers the highest standards
for privacy, security, credibility and reliability of health information via the
Internet. In 2002, our chief medical officer, Dr. Alan Greene, was named
President of Hi-Ethics and serves as Chair of the Hi-Ethics Quality Work Group,
which is developing version 2.0 of the Hi-Ethics principles, which will be the
new foundation of URAC standards.

Sales and Marketing

     We market our products and services through a direct sales force, our
reseller network and consulting groups that provide professional services such
as web strategy to our target markets. We also participate in industry trade
shows and conferences.

     We have also established certain strategic relationships in order to expand
the sales and distribution of our products. For example, we have partnered with
DrTango, Inc., an organization that has translated several of our content
products into Spanish and resells them as part of a Hispanic-focused healthcare
strategy. We have several other important relationships that provide us with
increased visibility in our markets. Those relationships include resellers that
sell to the hospital market and healthcare technology companies that have
integrated certain content components from us. We believe that developing more
third-party distribution will be an important driver for future revenues.

Manufacturing

     The production of our software products includes CD-ROM pressing, assembly
of purchased product components, printing of product packaging and user manuals
and shipping of finished goods, all of which is performed by third-party vendors
in accordance with our specifications and forecasts. We believe that there are
alternate sources for each of these services that could be implemented without
material delay, if necessary.

                                       8
<PAGE>


Proprietary Rights and Licenses

     We regard our software publications and content assets as proprietary. We
rely primarily on a combination of copyright, trademark and trade secret laws,
employee and third-party nondisclosure agreements and other methods to protect
our proprietary rights. We have obtained U.S. federal registrations of the
trademarks and the logos for the "A.D.A.M." marks, as well as numerous other
trademarks, which identify our products. We have also obtained registrations of
the "A.D.A.M." trademark in Australia, Austria, Benelux, Canada, Chile, China,
Denmark, Finland, France, Germany, Ireland, Italy, New Zealand, Norway,
Portugal, South Africa, Sweden, Switzerland and Taiwan and we have a pending
application to register the mark in Malaysia. We have also acquired and are
using a number of registered and unregistered trademarks to identify our
products. We use the "A.D.A.M." mark in Japan under license with Kataken Seiko
K.K. We are also the owner of a number of domain name registrations.

     We have applied for and/or obtained numerous U.S. Copyright Registrations
for our software, publication and content products, including Health Illustrated
Encyclopedia, A.D.A.M. Interactive Anatomy, and Pregnancy Health Center. We do
not currently hold any patents or have any patent applications pending. There
can be no assurance that these protections will be adequate to protect the
intellectual property rights or that our competitors will not independently
develop technologies that are substantially equivalent or superior to our
technologies. We further believe that due to the rapid pace of innovation within
the multimedia and software industries, factors such as the technological and
creative skills of our personnel and the quality of the content of our products
are as important in establishing and maintaining a leadership position within
the industry as the various legal protections for our technology.

     We believe that our products, trademarks and other proprietary rights do
not infringe upon the proprietary rights of third parties and to date no third
party has filed an infringement claim against us. However, as the number of
products in our industry increases and the functionality of these products
overlap, content providers may become increasingly subject to infringement
claims. There can be no assurance that third parties will not assert
infringement claims against us in the future with respect to current or future
products, trademarks or other works of A.D.A.M. or that any assertion will not
require us to enter into royalty arrangements or result in costly litigation.

Competition

     The market in which we operate is highly competitive and continually
evolving. There are a number of health content service providers offering
products in various pre-packaged and customized ways, including:

     --   Online content providers and aggregators, targeting the healthcare
          industry or health conscious consumer, such as WebMD Corporation.

     --   Public sector and non-profit organizations that provide healthcare
          information without advertising or commercial sponsorships such as the
          American Medical Association, the Mayo Clinic and Healthwise, Inc.

     --   Publishers and distributors of traditional offline media, including
          those targeting healthcare professionals, many of which have
          established or may establish websites such as Health Ink & Vitality.

     --   Healthcare consulting and web development companies such as
          Greystone.net.

     Some of our competitors have greater technical, product development,
marketing, financial and other resources than we do. These organizations may
have longer operating histories, greater brand recognition and larger customer
bases. We believe other competitive factors in our markets include ease of
implementation and use, pricing, features and quality of customer support.

     We believe our principal competitive advantages in our markets are:

     --   Ownership of all our A.D.A.M.-labeled electronic assets;

     --   The size and scope of our content assets;

     --   Rigorous editorial review processes;

     --   URAC accreditation;

     --   Proprietary content management, delivery and integration technologies;
          and

     --   Unique visual content assets that require specialized knowledge and
          training to create.

                                       9
<PAGE>


Employees

     As of December 31, 2003, we had 35 employees. Of these employees, 19 were
engaged primarily in editorial management and product development, 10 in sales
and marketing and 6 in finance and administration.

     Our employees are not covered by a collective bargaining agreement and we
have experienced no work stoppages. We consider our employee relations to be
good. We believe that our future growth and success will depend upon our ability
to retain and continue to attract highly skilled and motivated personnel in all
areas of our operations.

Factors Affecting Future Performance

     You should carefully consider each of the following factors along with all
of the other information in this Report. The risks and uncertainties described
below are not the only ones we will face. Additional risks and uncertainties not
presently known to us or that we currently believe to be immaterial may also
adversely affect our business. If any of the following risks and uncertainties
develops into actual events, our business, financial condition or results of
operations could be materially adversely affected. If that happens, the trading
prices of our common stock could decline significantly.

     --   Although we reported net income for 2003, we have incurred substantial
          losses in the past. We experienced losses of $1,530,000 in 2002,
          income of $1,597,000 in 2001 and losses of $7,854,000 in 2000. We
          cannot offer any assurance that we will be able to sustain
          profitability in the future.

     --   We may be unable to obtain sufficient capital to pursue our growth and
          market development strategies, which would hurt our financial results.
          We can offer no assurance that our revenues will be sufficient to
          cover our expenses or that capital will be available to us on
          satisfactory terms or at all, to fund any shortfall in these costs and
          revenues.

     --   We may be unable to compete effectively with other providers of
          healthcare information, which could cause our growth and market
          development strategies to be unsuccessful. The market for providing
          healthcare information is intensely competitive and competition could
          increase in the future. As this market develops, we expect our
          sensitivity to competitive pressures to be especially strong as we
          continue to attract and retain customers. We may not be able to
          compete effectively against these companies and if we fail to compete
          effectively, we may suffer reduced gross margins and loss of market
          share.

     --   Some competitors have advantages over us because of their longer
          operating histories, greater name recognition, or greater financial,
          technical and marketing resources. As a result, they may be able to
          adapt more quickly to new or emerging technologies and changes in
          customer requirements. They could also devote greater resources to the
          promotion and sale of their products or services. Furthermore, mergers
          and acquisitions among other companies could intensify our existing
          competition or create new competitors.

     --   We can offer no assurance that the loss of any significant license
          customer will not materially adversely affect our business.

     --   We face technological challenges in our ability to deliver customized
          information in the rapidly changing healthcare industry, which may
          limit our ability to maintain existing customers or attract new
          customers. We believe that health information will become more
          customized to an individual's personal health management needs. As a
          result, we will need to have adequate technology infrastructure that
          will allow us to deliver in a cost effective manner portions of our
          content assets based on each customer's requirements.

     --   We may be unable to successfully identify, acquire, manage or
          integrate complementary businesses. Our long-term growth strategy may
          include acquiring businesses with complementary products, technologies
          or professional services. Moving forward, we may not be successful in
          acquiring other complementary businesses or assimilating their
          personnel and operations. These difficulties could disrupt our ongoing
          business, distract our management and employees, increase our expenses
          and adversely affect our results of operations. Future acquisitions
          may also cause us to incur expenses such as in-process research and
          development expenses, which may negatively affect our earnings. We
          cannot be certain that we will successfully overcome these risks with
          respect to any future acquisitions. In addition, we have historically
          paid a portion of the consideration for some our acquisitions by
          issuing common stock. The issuance of additional common stock or other
          securities convertible into common stock in connection with future
          acquisitions would dilute the ownership interests of our existing
          shareholders.

                                       10
<PAGE>


     --   We may be unable to attract new personnel, which would adversely
          affect implementation of our overall business strategy. In order to
          promote the development of our target markets, we will need to
          identify, attract and retain software engineers, web designers, sales
          and marketing professionals and other key personnel. We will compete
          with other companies both within and outside our markets for such
          employees and we may be unable to attract these employees. If we do
          not succeed in attracting these types of new employees, we may be
          unable to fully implement our growth and market development strategies
          and our business will suffer.

     --   Our stock price is extremely volatile and could decline significantly.
          Since our initial public offering in 1995, there has been significant
          volatility in the price of our common stock. This volatility has often
          been unrelated to our operating performance. There can be no assurance
          that the market price of our common stock will be maintained or that
          the volume of trading in our shares will not decrease. Furthermore,
          following periods of volatility in the market price of a company's
          securities, securities class action claims frequently are brought
          against the subject company. To the extent that the market price of
          our shares falls dramatically in any period of time, shareholders may
          bring claims, with or without merit, against us. Such litigation would
          be expensive to defend and would divert management attention and
          resources regardless of outcome.

     --   We have adopted certain anti-takeover provisions that may deter a
          takeover. Our articles of incorporation and bylaws contain provisions
          that may deter a takeover, including a takeover on terms that many of
          our shareholders might consider favorable, such as: the authority of
          our board of directors to issue common stock and preferred stock and
          to determine the price, rights (including voting rights), preferences,
          privileges and restrictions of each series of preferred stock, without
          any vote or action by our shareholders; the existence of large amounts
          of authorized but un-issued common stock and preferred stock;
          staggered, three-year terms for our board of directors; and advance
          notice requirements for board of directors nominations and for
          shareholder proposals. The rights and preferences of any series of
          preferred stock could include a preference over the common stock on
          the distribution of our assets upon a liquidation or sale of our
          company, preferential dividends, redemption rights, the right to elect
          one or more directors and other voting rights. The rights of the
          holders of any series of preferred stock that may be issued in the
          future may adversely affect the rights of the holders of the common
          stock. We have no current plans to issue preferred stock. In addition,
          certain provisions of Georgia law and our stock option plan may also
          discourage, delay or prevent a change in control of our company or
          unsolicited acquisition proposals.

     --   A significant number of un-issued shares are available for future sale
          and could adversely affect the market price of our common stock. If
          our shareholders, option holders, or warrant holders exercise their
          rights to sell substantial amounts of our common shares in the public
          market, the market price of our common stock could fall. Given the
          unpredictable transaction volumes for our common stock, the sale of a
          significant amount of these shares at any given time could cause the
          market price of our common stock to decline or otherwise be highly
          volatile. Such sales could also make it more difficult for us to sell
          equity or equity-related securities in the future at a time and price
          when we deem conditions to be more favorable.

     --   Our principal shareholders have substantial influence and their
          interests may differ from those of our other shareholders. As of
          December 31, 2003, our executive officers, directors and persons who
          beneficially own more than 5% of our outstanding common stock
          controlled approximately 14.8% of the combined outstanding voting
          power of our common stock. As a result, these holders exert
          substantial influence with respect to all matters submitted to a vote
          of holders of common stock, including election of our directors. If
          our remaining shareholders have interests that differ from these
          holders, their needs may not be met.

     --   Our Stock Purchase Agreement with Fusion Capital Fund II, LLC may
          result in significant dilution of our other shareholders. On May 22,
          2002, we entered into a Common Stock Purchase Agreement with Fusion
          Capital Fund II, LLC. Pursuant to this agreement, Fusion Capital has
          agreed to purchase up to an aggregate of $12,000,000 of our common
          stock. We have the right to sell up to $15,000 of common stock per
          trading day under this agreement with Fusion Capital unless our stock
          price equals or exceeds $7.00, in which case the daily amount may be
          increased at our option. Fusion Capital is not obligated to purchase
          any shares of our common stock on any trading days that the market
          price of our common stock is less than $1.00. Sales of our common
          stock under this agreement would dilute the ownership of shareholders
          other than Fusion Capital Fund II, LLC. As of December 31, 2003, we
          have sold 486,566 shares for $733,000 under this agreement.

                                       11
<PAGE>

Acquisitions

     In December 2001, we acquired Integrative Medicine Communications, Inc.
("IMC"), a leading developer and licensor of health content in the complementary
and alternative medicine ("CAM") field. The products, which include a
comprehensive, web-enabled database of condition, herbal and supplemental
monographs, are designed for use by both professional clinicians and consumers.

     In February 2002, we acquired Nidus Information Services, Inc. ("Nidus"), a
privately held provider of in-depth patient education reports on common health
conditions and diseases called WELL-CONNECTED(TM). This library of over 100
reports was originally developed by an experienced team of medical writers and
editors and is reviewed for accuracy by a board of physicians with faculty
positions at Harvard Medical School and Massachusetts General Hospital. Each
report is distinguished from other information sources by its detail of
information, quality and currency, its evidence-based approach, and rigorous
editorial review. The reports are available through print or web subscriptions
and through licensing agreements. They are sold primarily to healthcare
providers and Internet portals, health content resellers and medical libraries.

     We have included the results of these acquisitions in our consolidated
financial statements from the date of acquisition.

Corporate Information

     We were incorporated in 1990 as A.D.A.M. Software, Inc. We changed our name
to adam.com, Inc. in 1999 and to A.D.A.M., Inc. in 2001. We are headquartered in
Atlanta, Georgia.

ITEM 2. PROPERTIES

     Our headquarters are located in approximately 12,000 square feet of leased
office space in Atlanta, Georgia. This lease extends through April 2008. We
sublease approximately 500 square feet of this space to a company whose Chairman
is our Chief Executive Officer and at this time we are not collecting any lease
payments in connection with this sublease. We sublease an additional 500 square
feet of this space to a company whose Chief Executive Officer is a director of
A.D.A.M. and their monthly lease payment is $785.

     If additional facilities are required, we believe that suitable facilities
will be available at market rates.

ITEM 3. LEGAL PROCEEDINGS

     On April 25, 1996, a shareholders' class action lawsuit was filed in Fulton
County Superior Court in Atlanta, Georgia against us and certain of our then
officers and directors. The complaint alleged violations of Sections 11, 12(2)
and 15 of the Securities Act of 1933 and violations of the Georgia Securities
Act arising out of alleged disclosure deficiencies in connection with our
initial public offering of common stock, which was completed on November 10,
1995. The complaint seeks compensatory damages in an unspecified amount. The
court denied in substantial part the defendant's motion to dismiss the complaint
and certified the case as a class action for all of the claims except for the
claim under the Georgia Securities Act.

     On March 24, 2004, the Fulton County Superior Court in Atlanta, Georgia
approved the stipulation and agreement of settlement. The settlement was within
our directors' and officers' liability insurance; and accordingly, our insurance
provider has paid this settlement. There is no further obligation by us for this
matter except for certain legal costs that were denied by our insurance
carrier. As of December 31, 2003, we had accrued $4,430 of such costs.

     We are subject to other legal proceedings and claims that have arisen in
the ordinary course of our business; however, we believe that the ultimate
resolution of these matters and the shareholders' lawsuit will not have a
material adverse effect on our consolidated financial statements taken as a
whole.

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

     No matters were submitted to a vote of security holders during the last
quarter of 2003.


                                       12
<PAGE>


                                    PART II.

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
        ISSUER PURCHASES OF EQUITY SECURITIES

Market Price Information

     Our common stock is listed on the Nasdaq SmallCap Market, where it has
traded since it was transferred from the Nasdaq National Market on January 31,
2003. The following table sets forth the high and low sales price of our common
stock for each quarter during the last two years, as reported by the Nasdaq
Stock Market:
<TABLE>
<CAPTION>
<S>                                                                                     <C>           <C>
                                                                                          High          Low
                                                                                          -----        -----
Twelve Months Ended December 31, 2002
Quarter ended March 31, 2002........................................................      $4.80        $2.81
Quarter ended June 30, 2002.........................................................      $3.96        $1.10
Quarter ended September 30, 2002....................................................      $1.25        $0.50
Quarter ended December 31, 2002.....................................................      $1.33        $0.25

Twelve Months Ended December 31, 2003
Quarter ended March 31, 2003........................................................      $1.30        $0.35
Quarter ended June 30, 2003.........................................................      $1.74        $0.80
Quarter ended September 30, 2003....................................................      $2.19        $1.12
Quarter ended December 31, 2003.....................................................      $2.69        $1.42
</TABLE>


     At March 1, 2004 there were 160 record holders of our common stock.

     We have never paid or declared any cash dividends on our common stock and
we do not intend to pay dividends on our common stock in the near future. We
presently expect to retain any future earnings to fund continuing development
and growth of our business. Our payment of dividends in the future is subject to
the discretion of our board of directors and will depend on our earnings,
financial condition, capital requirements and other relevant factors.

                                       13
<PAGE>



ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto presented elsewhere in this
Annual Report on Form 10-KSB.

Overview

     We specialize in the creation and delivery of interactive health content
that can be used by a broad range of healthcare consumers - from those with low
health literacy to those who play an active and ongoing role in their personal
health management. Our products can be used for learning about general health
concerns, specific diseases and treatments, surgical procedures, drug
information, specialty health subjects such as women's health and children's
health, nutrition, alternative medicine and more.

     Our health content products meet rigorous editorial standards. We employ
two physicians and use an extensive network of physicians and specialists who
are continually reviewing and updating our information. We add to our content
library when needed such as when important health issues arise (for example, the
recent SARS outbreak) or when our customers request specific products to support
their product and service offerings. Our health information is accredited by
URAC, an industry leading accreditation organization, and we are a founding
member of Hi-Ethics, a coalition of the most widely referenced health websites
and information providers committed to developing industry standards for the
quality of consumer health information.

     We sell our health content products primarily through annual licensing
agreements to many different types of healthcare and health-related
organizations including hospitals, managed care organizations, pharmaceutical
companies, disease management vendors, health-oriented Internet websites,
healthcare technology companies and large employers. Our products can be
incorporated into a customer's website, imbedded in healthcare applications such
as an electronic medical record or disease management applications, contained in
a printed format, or combined with other products that may be offered to a
healthcare consumer.

                                       14
<PAGE>

     Over the past two years we have seen a significant shift in our ability to
secure new business in healthcare. We believe that the quality of our products,
the depth and breadth of the digital assets we own, and the solutions we provide
to address issues such as low health literacy, well position us for future
growth.

Critical Accounting Policies and Estimates

     Discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in the
United States. The preparation of these consolidated financial statements
requires us to make estimates and judgments that affect the amounts reported in
the consolidated financial statements and the accompanying notes. On an on-going
basis, we evaluate our estimates, including those related to product returns,
product and content development expenses, bad debts, inventories, intangible
assets, income taxes, contingencies and litigation. We base our estimates on
experience and on various assumptions that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.

     We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

--   Revenue Recognition

          We recognize revenue in accordance with SEC Staff Accounting Bulletin
     No. 101, "Revenue Recognition in Financial Statements," as amended by SAB
     101A and 101B and as revised by SAB 104, "Revenue Recognition" and
     Statement of Position No. 97-2, "Software Revenue Recognition."
     Accordingly, we recognize revenue when: (1) persuasive evidence of an
     arrangement exists; (2) delivery has occurred or services rendered; (3) the
     fee is fixed or determinable; and (4) collectibility is reasonably assured.
     Determination of criteria (3) and (4) are based on management's judgments
     regarding the fixed nature of the fee charged for services rendered and
     products delivered and the collectibility of those fees. Should changes in
     conditions cause management to determine these criteria are not met for
     certain future transactions, revenue recognized for any reporting period
     could be adversely affected.

          We generate revenues mainly in two ways - Internet-based licensing and
     product sales. Internet revenues consist primarily of license fees that
     usually consist of an annual, up-front fee that is initially recorded as
     deferred revenue. This revenue is recognized ratably over the term of the
     license agreement beginning after delivery has occurred, upon customer
     acceptance or live date and, when we have determined that the fees from the
     agreement are fixed and determinable and there are no significant return or
     acceptance provisions. For Internet revenue arrangements in which we sell
     through a reseller, we do not recognize any revenue until an agreement has
     been finalized between the customer and our authorized reseller and the
     content has been delivered to the customer by our reseller. Revenue is not
     recognized under any circumstances, unless collectibility is deemed
     probable. Revenues from product sales represent the sales of CD-ROM and
     other offline products and revenues earned under certain royalty
     agreements. Revenues from product sales are generally recognized at the
     time title passes to customers, distributors or resellers. Revenues from
     royalty agreements are recognized as earned based upon performance or
     product shipment.

                                       15
<PAGE>



--   Sales Returns Allowances and Allowance for Doubtful Accounts

          Significant management judgments and estimates must be made in
     connection with establishing the sales returns and other allowances in any
     accounting period. Management must make estimates of potential future
     product returns related to current period product revenue. Allowances for
     estimated product returns are provided at the time of sale. We evaluate the
     adequacy of allowances for returns primarily based upon our evaluation of
     historical and expected sales experience and by channel of distribution.
     The judgments and estimates of management may have a material effect on the
     amount and timing of our revenue for any given period.

          Similarly, management must make estimates of the uncollectability of
     accounts receivable. Management specifically analyzes accounts receivable
     and historical bad debts, customer concentrations, customer
     credit-worthiness, current economic trends and changes in our customer
     payment terms when evaluating the adequacy of the allowance for doubtful
     accounts. If the financial condition of our customers were to deteriorate,
     resulting in an impairment of their ability to make payments, additional
     allowances may be required.

--   Capitalized Software Product and Content Development Costs

          We capitalize software product and content development costs in
     accordance with Financial and Accounting Standards Board ("FASB") Statement
     No. 86 ("FAS 86"), "Accounting for the Costs of Computer Software to Be
     Sold, Leased, or Otherwise Marketed." This statement specifies that costs
     incurred internally in creating a computer software product shall be
     charged to expense when incurred as research and development until
     technological feasibility has been established for the product.
     Technological feasibility is established upon completion of all planning,
     designing, and testing activities that are necessary to establish that the
     product can be produced to meet its design specifications including
     functions, features, and technical performance requirements. We cease
     capitalization of internally developed software when the product is made
     available for general release to customers and thereafter, any maintenance
     and customer support is charged to expense when related revenue is
     recognized or when those costs are incurred. We amortize such capitalized
     costs as cost of sales on a product-by-product basis using the
     straight-line method over a period of two years. We continually evaluate
     the recoverability of capitalized costs and if the successes of new product
     releases are less that we anticipate then a write-down of capitalized costs
     may be made which could adversely affect our results in the reporting
     period in which the write-down occurs.

          We also capitalize software development costs in accordance with the
     American Institute of Certified Public Accountants Statement of Position
     98-1 ("SOP 98-1"), "Accounting for the Costs of Computer Software Developed
     or Obtained for Internal Use." This statement specifies that computer
     software development costs for computer software intended for internal use
     occurs in three stages: (1) the preliminary project stage, where costs are
     expensed as incurred, (2) the application development stage, where costs
     are capitalized, and (3) the post-implementation or operation stage, where
     again costs are expense as incurred. We cease capitalization of developed
     software for internal use when the software is ready for its intended use
     and placed in service. We amortize such capitalized costs as cost of sales
     on a product-by-product basis using the straight-line method over a period
     of three years. We continually evaluate the usability of the products that
     make up our capitalized costs and if certain circumstances arise such as
     the introduction of new technology in the marketplace that management
     intends to use in place of the capitalized project, then a write-down of
     capitalized costs may be made which could adversely affect our results in
     the reporting period in which the write-down occurs.

--   Inventory

          We record reserves for estimated obsolescence or unmarketable
     inventory equal to the difference between the cost of inventory and the
     estimated market value based upon assumptions about future demand and
     market conditions. If actual market conditions are less favorable than
     those projected by management, additional inventory write-downs may be
     required.

--   Legal Contingencies

          We are subject to certain legal proceedings in the normal course of
     business. Currently we do not believe that these matters will have a
     material impact on our financial results or financial position. This
     conclusion is based primarily on our insurance coverage for these matters.
     It is possible, however, that future results of operations for any
     particular quarter or annual period could be materially affected by changes
     in assumptions or other circumstances involving these legal matters.

                                       16
<PAGE>


--   Goodwill and Intangible Assets

          We have recorded goodwill in connection with our acquisition of
     Integrative Medicine Communications, Inc. ("IMC") in 2001 and Nidus
     Information Services, Inc. ("Nidus") in 2002. In July 2001, the FASB issued
     Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
     Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets."

          SFAS 141 requires the purchase method of accounting for all business
     combinations and that certain acquired intangible assets in a business
     combination be recognized as assets separate from goodwill. We have applied
     SFAS 141 in our allocation of the purchase price to the IMC acquisition and
     to the Nidus acquisition.

          SFAS 142 requires that goodwill and other intangibles that have an
     indefinite life are no longer to be amortized but are to be tested for
     impairment at least annually. In assessing impairment we must make
     judgments and assumptions regarding estimated future cash flows and other
     factors to determine the fair value of the respective net assets. Other
     factors that could cause impairment could result from a significant decline
     in our stock price for a sustained period and our market capitalization
     relative to net book value. If these estimates or their related assumptions
     change in the future, we may be required to record an impairment charge for
     the recorded goodwill. We conducted the impairment test for fiscal 2003 and
     concluded no impairment had occurred. Since we did not have any goodwill
     recorded prior to the IMC and Nidus acquisitions, the provision of SFAS 142
     requiring companies to stop amortizing goodwill will have no impact on our
     ongoing operating results or the comparability of such results with prior
     periods.

--   Income Taxes

          As part of the process of preparing our consolidated financial
     statements we are required to estimate our taxes in each of the
     jurisdictions in which we operate. This process involves management
     estimating the actual tax exposure together with assessing temporary
     differences resulting from differing treatment of items for tax and U.S.
     GAAP purposes. These differences result in deferred tax assets and
     liabilities, which are included within our consolidated balance sheet. We
     must then assess the likelihood that deferred tax assets will be recovered
     from future taxable income and to the extent we believe that recovery is
     not likely, we must establish a valuation allowance. To the extent we
     establish a valuation allowance or increases this allowance in a period, an
     expense is recorded within the tax provision in the consolidated statement
     of operations.

--   Variable Stock Options

          In March 2000, the FASB issued Financial Interpretations No. 44
     ("FIN 44"), "Accounting for Certain Transactions involving Stock
     Compensation (an interpretation of APB Opinion No. 25)." This opinion
     provides guidance on the accounting for certain stock option transactions
     and subsequent amendments to stock option transactions. FIN 44 was
     effective July 1, 2000, but certain conclusions cover specific events that
     occur after either December 15, 1998 or January 12, 2000. We have from time
     to time since 1991 granted stock options to our employees to purchase
     shares of our common stock. Certain of these options were canceled at the
     option of their holders on January 14, 1999, and then replaced that day on
     a one-for-one basis with new options with an exercise price equal to the
     closing market price that day.

          The adoption of FIN 44 did not have a material impact on our financial
     position or results of operations. This interpretation requires variable
     accounting treatment for options that have been modified from their
     original terms. Accordingly, compensation cost shall be adjusted for
     increases or decreases in the intrinsic value of the modified awards in
     subsequent periods and until the awards have been exercised, forfeited, or
     expired. As of December 31, 2003, we have 231,400 outstanding options with
     an exercise price of $5.25 that are considered variable under this
     interpretation. Because the stock price since the effective date of July 1,
     2000 has been below $5.25, we have not recorded any compensation cost
     related to the re-priced options issued on January 14, 1999. Should our
     stock price climb above $5.25 our operating results will be affected until
     the stock options are either exercised or forfeited and could adversely
     affect any reporting period in which the variable accounting is required.
     Any charges that result from these variable options would be non-cash
     operating expenses and will be reported on a separate line item.

                                       17
<PAGE>


Recent Accounting Pronouncements

     In January 2003, the FASB issued SFAS Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 expands upon existing
accounting guidance that addresses when a company should include in its
financial statements the assets, liabilities, and activities of a variable
interest entity. The consolidation requirements of FIN 46 apply immediately to
variable interest entities created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim period
beginning after December 15, 2003. We do not expect the adoption of FIN 46 to
have a significant effect on our financial position, results of operations or
cash flows.

     In December 2003, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104"). SAB 104's
primary purpose is to rescind accounting guidance contained in SAB 101, "Revenue
Recognition in Financial Statements" related to multiple element revenue
arrangements, superceded as a result of the issuance of EITF 00-21, "Accounting
for Revenue Arrangements with Multiple Deliverables." We have assessed the
impact of SAB 104 and concluded that the adoption of SAB 104 by us did not have
a material impact on our financial statements.


                                       18

<PAGE>


     The following selected financial data should be read in conjunction with
the Consolidated Financial Statements and Notes thereto.

<TABLE>
<CAPTION>
<S>                                                                           <C>        <C>    <C>     <C>   <C>
                                                                                        Twelve Months Ended      Nine
                                                                                             December 31,       Months
                                                                                                                 Ended
                                                                                                                December
                                                                                                                   31,
                                                                                   2003    2002   2001    2000    1999
                                                                                  (In thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
   Net revenues...........................................................        $7,889  $8,924 $8,946  $8,621  $3,144
   Costs and expenses:
   Costs of revenues......................................................         1,668   1,478  1,588     742     551
   General and administrative.............................................         1,774   2,451  2,156   3,323   2,997
   Product and content development........................................         1,375   2,476  2,243   4,091   5,015
   Sales and marketing....................................................         1,743   2,782  1,961   2,958   2,680
   Depreciation and amortization..........................................           767     909    820   2,410     764
   Restructuring..........................................................            --      --     --     733   1,049
   Total costs and expenses...............................................         7,327  10,096  8,768  14,257  13,056
   Operating income (loss)................................................           562  (1,172)   178  (5,636) (9,912)
   Interest income (expense), net.........................................            46      66     99    (987)    158
   Realized loss and impairment of investment securities..................            --    (176)  (146) (1,105)     --
   Realized gain on sale of assets, net...................................            --      --  1,808      --      --
   Income (loss) before income taxes, minority interest and
    equity in net losses of affiliate.....................................          $608 $(1,282)$1,939 $(7,728)$(9,754)
   Income taxes...........................................................            --      --     --      --      --
   Income (loss) before minority interest and equity in net
    losses of affiliate...................................................          $608 $(1,282)$1,939 $(7,728)$(9,754)
   Minority interest in consolidated subsidiary...........................            --      --     --      --     175
   Equity in net losses of affiliate......................................            --    (248)  (342)   (126)     --

   Net income (loss)......................................................          $608 $(1,530)$1,597 $(7,854)$(9,579)

   Basic net income (loss) per share......................................         $0.08  $(0.22) $0.25  $(1.42) $(2.04)

   Weighted average number of common shares and share
    equivalents outstanding, basic........................................         7,306   7,107  6,453   5,536   4,707

   Diluted net income (loss) per share....................................         $0.07  $(0.22) $0.24  $(1.42) $(2.04)

   Weighted average number of common shares and share
    equivalents outstanding, diluted......................................         8,169   7,107  6,555   5,536   4,707


                                                                                                December 31,

                                                                                   2003    2002   2001    2000    1999
                                                                                             (In thousands)
BALANCE SHEET DATA:
   Cash and short-term investments........................................        $4,554  $2,220 $2,878  $1,666  $1,477
   Accounts receivable-net................................................         1,407   1,288  1,949   1,046     828
   Total current assets...................................................         6,355   3,838  5,436   3,259   3,544
   Goodwill...............................................................         2,043   2,043  1,474      --      --
   Total assets...........................................................        10,496   8,691  9,861   6,817   7,736
   Deferred revenue.......................................................         2,295   1,916  1,621   2,479     731
   Short-term debt........................................................            11      19     34     188     733
   Total liabilities......................................................         2,976   2,679  2,688   4,162   4,359
   Total shareholders' equity.............................................         7,520   6,012  7,173   2,655   3,377
   Working capital (deficiency)...........................................         3,415   1,206  2,756    (903)   (815)
</TABLE>

                                       19
<PAGE>


<PAGE>


Quarterly Financial Information

     The following tables set forth summary earnings data for each quarter of
the last two years:

                                                    2003
                                             Three Months Ended
                              March 31    June 30    September 30    December 31
                                   (In thousands, except per share data)

Operating revenues              $2,344     $1,934          $1,873        $1,738
Operating income                   288        113              76            85
Net income                         299        126              86            97
Earning per share basic          $0.04      $0.02           $0.01         $0.01
Earning per share diluted        $0.04      $0.02           $0.01         $0.01


                                                    2002
                                             Three Months Ended
                              March 31    June 30    September 30    December 31
                                   (In thousands, except per share data)

Operating revenues              $2,108     $2,153          $2,283        $2,380
Operating income                  (199)      (570)           (318)          (85)
Net income                        (230)      (563)           (419)         (318)
Earning per share basic and
 diluted                        $(0.03)    $(0.08)         $(0.06)       $(0.05)


Results of Operations

     The following table sets forth for the periods indicated the percentages of
our net revenues represented by each line item:
<TABLE>
<CAPTION>
<S>                                       <C>                    <C>                    <C>
                                             Twelve Months          Twelve Months         Twelve Months
                                                 ended                  ended                 ended
                                           December 31, 2003      December 31, 2002      December 31, 2001
                                           ---------------------------------------------------------------

Net revenues.............................               100%                   100%                   100%
Cost and expenses:
 Cost of revenues........................               21.1                   16.6                   17.8
 General and administrative..............               22.5                   27.5                   24.1
 Product and content development.........               17.4                   27.7                   25.1
 Sales and marketing.....................               22.1                   31.2                   21.9
 Depreciation and amortization...........                9.7                   10.2                    9.1
                                           ---------------------------------------------------------------

 Total costs and expenses................               92.8                  113.2                   98.0
                                           ---------------------------------------------------------------


Operating income (loss)..................               7.2%                (13.2%)                   2.0%
</TABLE>


Twelve months ended December 31, 2003 compared to twelve months ended December
31, 2002

     Total net revenues decreased $1,035,000, or 11.6%, to $7,889,000 for 2003
compared to $8,924,000 for 2002.

     Revenues from the healthcare industry increased $1,317,000, or 45.2%, to
$4,231,000 for 2003 compared to $2,914,000 for 2002. Our products for the
healthcare industry target a broad range of businesses including hospitals and
hospital systems, managed care organizations, healthcare technology companies,
and pharmaceutical companies. We believe we are well positioned to grow our
business in healthcare as the demand for health information grows and as content
becomes an increasingly important business driver within the healthcare
industry. We have also undertaken technological initiatives to enable our
content products to be used in broader applications within the healthcare
industry such as electronic medical records and other point-of-care
applications. These initiatives as well as our continuing efforts to expand our
presence in the healthcare industry contributed to the increase in healthcare
industry revenues during 2003. As a percent of total revenues, revenues from the
healthcare industry increased to 53.6% for 2003 compared to 32.7% for 2002.

                                       20
<PAGE>


     Revenues from the Internet market decreased $1,770,000, or 44.7%, to
$2,186,000 for 2003 compared to $3,956,000 for 2002. The Internet market
includes Internet portals and large media-related websites that host a variety
of consumer-oriented content and services. The decrease in our Internet revenues
was primarily due to the expiration of a license agreement we had with WebMD
Corp. during the first quarter of 2003, which accounted for approximately 7% of
our revenues during 2003 and 26% of our revenues during 2002. As a percent of
total revenues, revenues from the Internet market decreased to 27.7% during 2003
compared to 44.3% for 2002.

     Revenues from the education market decreased $585,000, or 29.1%, to
$1,425,000 for 2003 compared to $2,010,000 for 2002. Education market revenues
consist primarily of CD ROM-based product sales. The decrease in our education
market revenues was primarily associated with a $338,000 decrease in sales of
our online subscription products due to expense reductions within our customers'
budgets, net of a $9,000 increase in revenue from license agreements. Also,
attributable to this decrease was a $261,000 decrease in sales of our CD
ROM-based product, attributable primarily to an aging product line. We are
currently in development for a major upgrade to our flagship product for
education, A.D.A.M. Interactive Anatomy, which we expect to release in the
summer of 2004. This decrease in education revenue also includes the recognition
of $136,000 of revenue from the IMC Consult newsletter during 2003. During the
fourth quarter of 2002, we transferred to a company that publishes another
newsletter all of our rights under subscription agreements relating to the IMC
newsletter commencing with the January 2003 issue. As of December 31, 2003, we
do not have any deferred revenue related to the IMC Consult newsletter, and we
no longer have any obligations in relationship to the IMC Consult newsletter. As
a percent of total net revenues, net revenues from the education market
decreased to 18.1% for 2003 compared to 22.5% for 2002.

     Cost of revenues increased $190,000, or 12.9%, to $1,668,000 for 2003
compared to $1,478,000 for 2002. Cost of revenues includes shipped product
components, packaging and shipping costs, newsletter printing costs,
distribution license fees, royalties, and amortization of capitalized software
product and content development costs. This increase was the result of a
$407,000 increase in distribution license fees from the sales of our Spanish
language products and the sales of our third party licensing agreement products.
This increase was offset by a $87,000 decrease in our IMC cost of revenues due
to the transfer of subscription rights of the IMC newsletter to another
publisher, a $66,000 decrease in our cost of goods sold related to our CD ROM
products, a $60,000 decrease in software product and content development
amortization due to capitalized products and content being fully amortized, and
a $4,000 decrease in fees for updates and printing expenses relating to our
Well-Connected content. As a percent of total revenues, cost of revenues
increased to 21.1% for 2003 compared to 16.6% for 2002.

     General and administrative expenses decreased $677,000, or 27.6%, to
$1,774,000 for 2003 from $2,451,000 for 2002. This decrease was primarily
attributable to a $250,000 decrease of royalty expense and settlement charges
related to an affiliate (see "Liquidity and Capital Resources"), a $186,000
decrease in our rent expense due to the new lease for our Atlanta office, a
$166,000 decrease in legal fees pertaining to the shareholder class action
lawsuit, corporate and miscellaneous matters, securities, and trademarks. Also,
contributing to this decrease was a $102,000 decrease in administration expenses
due to the closing of our IMC office located in Boston during 2003, a $69,000
decrease in bad debt expense due to an increase in collectibility of our account
receivables, a $33,000 decrease in taxes and licenses expense pertaining to
property tax and business license reductions, a $24,000 decrease in salaries and
overall general and administration expenses due to headcount reductions during
2002 due to management's continuing cost reduction measures, and a $15,000
decrease in our accounting fees. This decrease was offset by a $71,000 increase
in fees associated with Nasdaq and investor relation expenses, a $53,000
increase in consulting fees associated with the Restricted Common Stock Purchase
Agreement, a $30,000 increase in our general insurance expenses due to higher
premium rates, and a $14,000 increase in our legal fees pertaining to our
content licensing agreements. As a percent of total revenues, general and
administrative costs decreased to 22.5% for 2003 compared to 27.5% for 2002.

     Product and content development costs decreased $1,101,000, or 44.5%, to
$1,375,000 for 2003 from $2,476,000 for 2002. This decrease was primarily
attributable to a $594,000 decrease in salary and consulting expenses and a
$145,000 decrease in overhead expenses and overall general expenses due to
reductions in headcount during 2002 and management's continuing cost reduction
measures. Also, contributing to this decrease was a $172,000 decrease in
consulting, editorial review, and salary expenses due to the transfer of
subscription rights of the IMC Consult newsletter to another publisher, as
described above, and an $81,000 decrease in content acquisition. This decrease
was offset by a $109,000 decrease in capitalized expenses of internally
developed products. As a percent of total revenues, product development costs
decreased to 17.4% for 2003 compared to 27.7% for 2002.

                                       21
<PAGE>


     Sales and marketing expenses decreased $1,039,000, or 37.3%, to $1,743,000
for 2003 from $2,782,000 for 2002. This decrease was primarily attributable to a
$314,000 decrease in salaries and consulting expenses and a $116,000 decrease in
overhead and overall general expenses due to reductions in headcount during 2002
and management's continuing cost reduction measures and a $291,000 decrease in
sales expenses due to the closing of our IMC office located in Boston during
2003. Also, attributable to this decrease was a $158,000 decrease in direct mail
campaign expenses due to the transfer of subscription rights of the IMC Consult
newsletter to another publisher, as described above, a $94,000 decrease in
advertising expenses, an $84,000 decrease in trade show expenses, and a $36,000
decrease in travel expenses. This decrease was offset by a $54,000 increase in
commissions and bonuses due to a revision of sales incentives. As a percent of
total revenues, sales and marketing expenses decreased to 22.1% for 2003
compared to 31.2% for 2002.

     Depreciation and amortization expenses decreased $142,000, or 15.6%, to
$767,000 for 2003 from $909,000 for 2002. This decrease was primarily
attributable to a $207,000 decrease in the depreciation of fixed assets. This
decrease was offset by a $65,000 increase due to the amortization of purchased
intellectual content and purchased customer contracts. As a percent of total
revenues, depreciation and amortization expenses decreased to 9.7% for 2003
compared to 10.2% for 2002.

     Interest income, net, decreased $20,000, or 30.3%, to $46,000 for 2003, as
compared to interest income of $66,000 for 2002. This decrease was primarily
attributable to a decrease in interest income of $19,000 due to a decrease in
interest earned of $17,000 from a note receivable during 2003 compared to 2002
and a $2,000 decrease in interest income due to the declining prime interest
rate. This decrease was offset by a $1,000 decrease in interest expense due to
the expiration of several of our capital leases.

     For 2003, no provision was made for income taxes, as we had sufficient net
operating loss carry forwards to offset taxable income. We currently meet the
requirements for the small corporation exemption for Alternative Minimum Tax
purposes. As of December 31, 2003, we continue to maintain a valuation allowance
against our total net deferred tax asset balance.

     We did not record any impairment charges during 2003. During 2002, we
recorded an impairment charge totaling $176,000 for our equity investment in
ThePort Network, Inc. ("ThePort") and our cost investment in BeBetter Networks,
Inc. This impairment charge was recorded due to continuing losses and our
decision to terminate our subscription fee agreement with ThePort.

     The results of operations of ThePort have been accounted for as equity
investment and accordingly, we recorded our share of ThePort's results of
operations in our consolidated financial statements for 2002. We recorded our
share of ThePort's losses of approximately $248,000 for the twelve months ended
December 31, 2002. As of December 31, 2003 and December 31, 2002, the carrying
value of this investment was $0. Since the carrying value of this investment is
$0 and we have no future obligations to fund ThePort, we did not report any of
ThePort's results of operations in our consolidated financial statements for
2003.

     As a result of the above, we had net income of $608,000, or $0.08 per
share, for 2003 compared to a net loss of $1,530,000, or $0.22 per share, for
2002.

Twelve months ended December 31, 2002 compared to twelve months ended December
31, 2001

     Total net revenues decreased $22,000, or 0.2%, to $8,924,000 for 2002
compared to $8,946,000 for 2001.

     Revenues from the healthcare industry increased $1,797,000, or 160.9%, to
$2,914,000 for 2002 compared to $1,117,000 for 2001. Our products for the
healthcare industry target a broad range of businesses including hospitals and
hospital systems, managed care organizations, healthcare technology companies
and pharmaceutical companies. Our decision to expand our presence in the
healthcare industry and the inclusion of $287,000 of revenues from sales of IMC
and Nidus licensed products contributed to the increase in healthcare industry
revenues during 2002. As a percent of total revenues, revenues from the
healthcare industry increased to 32.7% for 2002 compared to 12.5% for 2001.

     Revenues from the Internet market decreased $1,851,000, or 31.9%, to
$3,956,000 for 2002 compared to $5,807,000 for 2001. The Internet market
includes large Internet websites that host a variety of consumer-oriented
content and services. The decrease in our Internet revenues was primarily
associated with the loss of customers as a result of bankruptcy or loss of funds
including Dr. Koop Lifecare Corp. This decrease was partially offset by the
inclusion of $666,000 of revenues from sales of IMC and Nidus licensed products
during 2002. As a percent of total revenues, revenues from the Internet market
decreased to 44.3% during 2002 compared to 64.9% for 2001. We anticipate that
revenues from the Internet market will continue to decrease. One large customer,
from whom we generated $2,346,000 of revenues during 2002, did not renew its
license agreement when the agreement expired in March 2003.

                                       22
<PAGE>


     Revenues from the education market increased $31,000, or 1.6%, to
$2,010,000 for 2002 compared to $1,979,000 for 2001. The education market
revenues consist primarily of CD ROM-based product sales. The increase is
primarily attributable to the inclusion of revenues in the education market of
$351,000 from sales of IMC and Nidus licensed products during 2002. This
increase was partially offset by a decrease in revenues from the education
market due to the sale of our 50% ownership interest in the intellectual
property rights associated with the A.D.A.M./Benjamin Cummings Interactive
Physiology series of educational products to Pearson PLC during 2001. As a
percent of total net revenues, net revenues from the education market increased
to 22.5% for 2002 compared to 22.1% for 2001.

     Cost of revenues decreased $110,000, or 6.9%, to $1,478,000 for 2002
compared to $1,588,000 for 2001. Cost of revenues includes shipped product
components, packaging and shipping costs, newsletter printing costs,
distribution license fees, royalties, and amortization of capitalized software
product and content development costs. These decreases were primarily the result
of the amortization and write off during 2001 of older technology acquired in
2000 and the decreased royalties payable to third parties due to the sale of our
50% ownership interest in the intellectual property rights associated with the
A.D.A.M./Benjamin Cummings Interactive Physiology series of educational products
to Pearson PLC during 2001. These decreases were offset by an increase in our
royalty fees from the sales of our Spanish language products and costs
associated with the operations of IMC and Nidus during 2002. As a percent of
total revenues, cost of revenues decreased to 16.6% for 2002 compared to 17.8%
for 2001.

     General and administrative expenses increased $295,000, or 13.7%, to
$2,451,000 for 2002 from $2,156,000 for 2001. This increase is primarily
attributable to $250,000 of royalty expense and settlement charges related to an
affiliate (see "Liquidity and Capital Resources"), $203,000 increase in legal
and accounting expenses pertaining to an outstanding lawsuit and the
acquisitions of IMC and Nidus, an increase in bad debt expense of $115,000, and
increased general administration costs of $95,000 due to the acquisitions of IMC
and Nidus. These increases were partially offset by a $136,000 decrease in
salary expenses in the 2002 period due to a decrease in headcount in the Atlanta
office and a decrease in non-cash stock compensation charges of $143,000.
Additionally, 2001 included an $86,000 loss associated with the closing of our
San Francisco office. As a percent of total revenues, general and administrative
costs increased to 27.5% for 2002 compared to 24.1% for 2001.

     Product and content development costs increased $233,000, or 10.4%, to
$2,476,000 for 2002 from $2,243,000 for 2001. This increase is primarily
attributable to an increase of $435,000 due to additions of the product and
development costs of IMC and Nidus. This increase was partially offset by
capitalization of internally developed products of $656,000 in 2002, decreased
editorial expenses, and decreased production expenses related to the
discontinuance of operations of the DrGreene.com website in the third quarter of
2001. As a percent of total revenues, product development costs increased to
27.7% for 2002 compared to 25.1% for 2001.

     Sales and marketing expenses increased $821,000, or 41.9%, to $2,782,000
for 2002 from $1,961,000 for 2001. This increase is primarily attributable to
the acquisition of IMC and Nidus, which increased sales and marketing expenses
$600,000 during 2002. Also, this increase is partially attributable to an
increase of $223,000 resulting from increased staffing and marketing efforts in
the healthcare industry during 2002. As a percent of total revenues, sales and
marketing expenses increased to 31.2% for 2002 compared to 21.9% for 2001.

     Depreciation and amortization expenses increased $89,000, or 10.9%, to
$909,000 for 2002 from $820,000 for 2001. This increase is primarily
attributable to a $536,000 increase due to the amortization of purchased
intellectual content and purchased customer contracts in connection with the
acquisitions of IMC and Nidus. This increase is offset by a $447,000 decrease in
the depreciation of fixed assets and a decrease in amortization expenses in 2002
due to the 2001 write-off of the Informational Medical Systems, Inc. ("IMS")
assets, a collection of patient consent forms for surgical procedures purchased
in 1999. As a percent of total revenues, depreciation and amortization expenses
increased to 10.2% for 2002 compared to 9.1% for 2001.

     Interest income, net, decreased $33,000, or 33.3%, to $66,000 for 2002, as
compared to interest income of $99,000 for 2001. This decrease was primarily
attributable to a decrease in interest income of $19,500 due to the maturing of
Certificates of Deposits and a decrease in interest earned of $8,500 from a
notes payable during 2002 compared to 2001.

     During 2001, we sold our 50% ownership interest in the intellectual
property rights associated with the A.D.A.M./Benjamin Cummings Interactive
Physiology Series to Pearson Education, Inc. for $1,950,000 in cash resulting in
a net gain of $1,808,000 after expenses. There were no gains on the sale of
assets during 2002.

                                       23
<PAGE>


     No provision for income taxes was reflected for 2002 as we had net losses
during the period. During 2002, we did meet the requirements for the small
corporation exemption for Alternative Minimum Tax purposes. For 2001, no
provision was estimated for income taxes, as we had sufficient net operating
loss carry forwards to offset taxable income. As of December 31, 2002, we
continued to maintain a valuation allowance against our total net deferred tax
asset balance.

     We recorded an impairment charge totaling $176,000 during 2002 for our
equity investment in ThePort Network, Inc. ("ThePort") and our cost investment
in BeBetter Networks, Inc. This impairment charge was recorded due to continuing
losses and our decision to terminate our subscription fee agreement with
ThePort. Please see "Liquidity and Capital Resources" below. During 2001, we
recorded an investment loss of $146,000 due to the difference in the book value
of investment securities held at the end of 2000 and the amount realized from
their sale in 2001.

     The results of operations of ThePort have been accounted as an equity
investment and accordingly, we recorded our share of ThePort's results of
operations in our consolidated financial statements for 2002 and 2001. We
recorded our share of ThePort's losses of approximately $248,000 for the twelve
months ended December 31, 2002 and our share of ThePort's losses of
approximately $342,000 for the twelve months ended December 31, 2001. At
December 31, 2002, the carrying value of this investment was approximately $0.

     As a result of the above, we had net loss of $1,530,000 for 2002 compared
to a net income of $1,597,000 for 2001.

Liquidity and Capital Resources

     As of December 31, 2003, we had cash and cash equivalents of $4,554,000 and
working capital of $3,415,000.

     For 2003, we had net income as a result of decreased operating expenses.
Operating expense levels, excluding potential non-recurring, non-cash charges,
have been decreasing as reflected in the results of operations for the twelve
months ended December 31, 2003. We expect costs to remain relatively constant in
relation to the current levels of revenues for the foreseeable future due to our
cost control measures that were implemented in the later half of 2002. We
anticipate continued current levels of investment for product and content
development, improvement of existing and development of new technologies,
infrastructure development and product marketing and sales efforts. However, we
will also continue to evaluate opportunities that create efficiencies,
consolidate operating costs and reduce overhead such that overall operating
expense levels remain controlled.

     Cash provided by operating activities increased to $2,130,000 during 2003
as compared to cash provided by operating activities of $1,022,000 during 2002.
As a result of net income and a decrease in accounts payable and accrued
liabilities and a decrease in inventory, we recognized benefits of our cost
control measures implemented in the later half of 2002 as it relates to cash
flows. The benefits were offset by an increase in deferred revenues and accounts
receivable primarily due to an increase in the number of healthcare industry
license agreements during 2003 and a net decrease in non-cash expenses such as
depreciation and amortization.

     Cash used in investing activities was $624,000 during 2003 as compared to
cash used in investing activities of $923,000 during 2002. Cash used by
investing activities in 2003 was due primarily to the costs associated with
software product and content development. Cash used by investing activities in
2002 was due primarily to the equity investment in ThePort, the acquisition of
IMC and Nidus, and costs associated with software product and content
development. During 2003, our purchases of property and equipment increased
$35,000 as compared to 2002.

     Cash provided by financing activities increased to $828,000 during 2003 as
compared to cash used in financing activities of $757,000 during 2002. The
primary financing activities impacting cash flows in 2003 related to additional
common stock sales under the Common Stock Purchase Agreement entered into in
2002 with Fusion Capital Fund (described below) and common stock sales under the
Restricted Common Stock Purchase Agreement entered into in 2003 with James T.
Atenhan and Victor P. Thompson (also described below), which resulted in
$833,000 of cash. In 2002, the primary financing activity affecting cash flows
related to the repurchase of common stock from one shareholder in a private
transaction that resulted in a use of $717,000 of cash.

     On February 15, 2003, we entered into a Restricted Common Stock Purchase
Agreement with James T. Atenhan and Victor P. Thompson (each a "Purchaser") in
connection with a consulting agreement with a financial services firm controlled
by the Purchasers. Each Purchaser purchased 37,500 shares of our common stock at
a purchase price of $.40 per share. The purchase price of our common stock was
discounted from the $.78 market price on the date we entered into the agreement.
In connection with the sale, we recorded deferred compensation expense for
services of $28,500. This deferred compensation was expensed over the six-month
service period.

                                       24
<PAGE>

     On August 1, 2003, we entered into a second Restricted Common Stock
Purchase Agreement with the Purchasers in connection with a twelve-month
extension of the consulting contract. Each Purchaser purchased 38,889 shares of
our common stock at a purchase price of $.90 per share. The purchase price was
discounted from the $1.86 market price on the date we entered into the
agreement. In connection with the sale, we recorded deferred compensation
expense for services of $74,667. This deferred compensation expense is being
expensed over the twelve-month service period which began September 1, 2003. As
of December 31, 2003, the remaining deferred compensation expense for services
was approximately $50,000.

     On May 22, 2002, we entered into a Common Stock Purchase Agreement with
Fusion Capital Fund II, LLC. Pursuant to this agreement, Fusion Capital agreed
to purchase up to an aggregate of $12,000,000 of our common stock. We have the
right to sell up to $15,000 of our common stock per trading day under this
agreement unless our stock price equals or exceeds $7.00, in which case the
daily amount may be increased at our option. Fusion Capital is not obligated to
purchase any shares of our common stock on any trading days that the market
price of our common stock is less than $1.00. Since we registered 3,500,000
shares for sale to Fusion Capital pursuant to the agreement, the selling price
of our common stock to Fusion Capital will have to average at least $3.43 per
share for us to receive the maximum proceeds of $12,000,000 without registering
additional shares of common stock, which we have the right but not the
obligation to do. Assuming a purchase price of $1.00 per share and the purchase
by Fusion Capital of the full 3,500,000 shares under the agreement, proceeds to
us would be $3,500,000. If we sell more than the 1,352,100 shares to Fusion
Capital (19.99% of our outstanding shares as of May 22, 2002, the date of the
agreement, exclusive of the 160,000 shares issued to Fusion Capital as a
commitment fee), we would first be required to seek shareholder approval of the
agreement under Nasdaq rules. We may, but are under no obligation to, request
our shareholders to approve the agreement. We may terminate the agreement at any
time, and Fusion Capital may terminate the agreement at any time after
approximately 40 months following the date the purchase obligation under the
agreement became effective. During 2003, we sold 486,566 shares for $733,000,
under this agreement.

     On December 31, 1999, we issued two notes, in exchange for $500,000 each,
from one of our officer-directors and a commercial bank. These notes accrued
interest at 10% per annum with principal and interest due initially on December
31, 2000. The terms of these notes allowed for an extension of nine months, to
September 30, 2001 at the option of the holders. We issued warrants to purchase
85,000 shares of common stock to the lenders in conjunction with the issuance of
the notes and the related extensions pursuant to the original terms of the
notes. The warrants are exercisable at any time at the option of the holders
through December 31, 2005 and entitled the holders to purchase an equal number
of common shares at a weighted-average price of $7.63 per share. We paid the
note and interest earned in full to the commercial bank in 2000 and paid the
note and interest in full to our Chief Executive Officer in 2001.

     During 2002 and 2001, we acquired additional preferred stock interests in
ThePort, for $250,000 and $275,000 in cash, respectively. During 2002, we also
accepted 196,616 shares of common stock of ThePort valued at approximately
$49,000 pursuant to the sublease agreement ThePort signed with us (see paragraph
below). As of December 31, 2003, we have an approximate 34% voting interest in
ThePort. Our voting interest increased from December 31, 2002 due to our Series
B preferred stock investment being converted into common stock at a one-to-five
conversion rate. As of December 31, 2003 and December 31, 2002, the carrying
value of this investment was $0. We have no future obligations to fund ThePort.

     In connection with this preferred stock investment in 2001, we entered into
a five-year agreement that provided us exclusive distribution rights to
ThePort's products within the healthcare industry. As of December 31, 2001, we
had pre-paid $125,000 of the contract fee to be applied against future
subscription fees. We had committed to generate $1,500,000 in subscription fees
during the initial term of the agreement. The initial term of the agreement
commenced on August 20, 2001 and was to continue for five years from that date.
On February 14, 2003, ThePort agreed to accept an additional payment of $125,000
from us, which released us from the minimum guarantee in its entirety. ThePort
is entitled to retain the $125,000 pre-payment previously made and we are
granted non-exclusive rights to ThePort's products within the healthcare
industry.

     On April 10, 2002, for a term beginning on November 1, 2001, we signed an
8-month sublease agreement with ThePort. We received 14,044 shares of ThePort's
common stock monthly over the term of the agreement, which rate was determined
based upon the fair market value of the leased space and ThePort common stock as
of April 10, 2002. After the expiration of the sublease on June 30, 2002, we
continued to sublease this space to ThePort on a month-to-month basis for the
same monthly consideration until December 31, 2002. Since then, we have not
received any type of consideration as lease payments.

     On May 30, 2001, we received a full-recourse promissory note from our Chief
Executive Officer for approximately $341,000 (the "Exercise Note") for the
exercise of 150,000 options at $1.94 per share and a $50,000 promissory note
(the "Tax Note") in connection with a loan to our Chief Executive Officer to pay
taxes related to the stock exercise. The notes accrue interest of 6.25% per
annum and are due in full on or before May 29, 2006. Part of the Exercise Note,
$291,000, is secured by 150,000 shares of our common stock and is recorded in
shareholders' equity. As of December 31, 2003, all of the approximately $55,000
of interest accrued on both notes had been paid and $11,000 of principal had
been paid with respect to the Tax Note, leaving a remaining balance of $39,000
(see paragraph below).

                                       25
<PAGE>


     On October 1, 2002, we entered into an amended and restated employment
agreement with our Chief Executive Officer, which was corrected on March 17,
2004. The employment agreement as amended provides for a base salary and bonuses
of approximately $289,000 in the event that our Chief Executive Officer remains
in our employment as of the bonus payment dates through May 2006. During the
year ended December 31, 2003, our Chief Executive Officer earned and received
bonus payments totaling $78,866, which were applied towards accrued interest and
the outstanding note receivable balance.

     We have also entered into certain agreements to license content for our
services from various unrelated third parties. We also have contractual
obligations at December 31, 2003, relating to real estate, capital and operating
lease arrangements.

     Total payments due and estimated under license payments and real estate,
operating and capital leases and total bonus amounts due under an employment
agreement are listed below:
<TABLE>
<CAPTION>
<S>                            <C>             <C>           <C>             <C>                 <C>              <C>
                                 License         Annual       Real Estate
           Year                 Agreements       Bonus           Leases       Operating Leases     Capital Leases    Total
--------------------------      ----------     ----------     -----------     ----------------     --------------  ---------

   2004..................        $210,000              0        225,000               33,000             15,000     483,000
   2005..................        $100,000       $105,000        229,000                3,000             15,000     452,000
   2006..................               0       $105,000        234,000                    0             15,000     354,000
   2007..................               0              0        239,000                    0             11,000     250,000
   2008..................               0              0        182,000                    0                  0     182,000
</TABLE>

     We believe that cash on hand, together with anticipated cash flow from
operations and the proceeds already realized from the Common Stock Purchase
Agreement described above will be sufficient to meet our working capital needs
through December 31, 2004. However, we may be required to raise additional funds
in order to accelerate development of new and existing services and products, to
respond to competitive pressures or to possibly acquire complementary products,
businesses or technologies. There can be no assurance that any required
additional financing will be available on terms favorable to us, or at all. If
additional funds are raised by the issuance of equity securities, our
shareholders may experience dilution of their ownership interest and these
securities may have rights senior to those of the holders of the common stock.
If additional funds are raised by the issuance of debt securities, we may be
subject to certain limitations on our operations, including limitations on the
payment of dividends. If adequate funds are not available or not available on
acceptable terms, we may be unable to take advantage of acquisition
opportunities, develop or enhance services or respond to competitive pressures,
any of which could have a material adverse effect on our business, financial
condition and results of operations.

Off Balance Sheet Arrangements

     We do not have any off balance sheet arrangements as of December 31, 2003.

Recent Developments

On January 3, 2003, the Compensation/Stock Option Committee of our Board granted
a total of 1,245,000 stock options to our employees and non-employee directors
under our 2002 Incentive Stock Option Plan. The options have an exercise price
of $.41. Of this total, 656,664, net of forfeitures, became exercisable on
January 2, 2004 and by March 1, 2004, 179,966 of these options had been
exercised. Of the remaining options granted on January 3, 2003, net of
forfeitures, 253,332 options will become exercisable on January 2, 2005 and the
balance of the options will become exercisable on January 2, 2006.

                                       26
<PAGE>


ITEM 7. FINANCIAL STATEMENTS

     The following financial statements are included as Exhibit 99.1 of this
Report and are incorporated by reference in response to this item.

(1) Financial Statements:
Report of Independent Auditors

Consolidated Balance Sheets at December 31, 2003 and 2002

Consolidated Statements of Operations for the years ended December 31, 2003,
2002, and 2001

Consolidated  Statements of Changes in Shareholders' Equity for the years ended
December 31, 2003, 2002, and 2001

Consolidated Statements of Cash Flows for the years ended December 31, 2003,
2002, and 2001

Notes to Consolidated Financial Statements


(2) Consolidated Financial Statement Schedule:
For the twelve months ended December 31, 2003, 2002, and 2001
Schedule II-Valuation and Qualifying Accounts


     All other schedules have been omitted because they are not applicable or
are not required or the information required to be set forth therein is included
in the Consolidated Financial Statements or Notes thereto.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

     Not applicable.

ITEM 8A. CONTROLS AND PROCEDURES

     An evaluation was performed under the supervision and with the
participation of our management, including our Chief Executive Officer, or CEO,
and Chief Operating Officer (our acting Chief Financial Officer), or COO, of the
effectiveness of our disclosure controls and procedures as of December 31, 2003.
Based on that evaluation, our management, including the CEO and COO, concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the Securities Exchange Act is recorded, processed, summarized and
reported as specified in the SEC's rules and forms.




                                       27
<PAGE>


                                    PART III.

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item is incorporated herein by reference
to our proxy statement for our 2004 Annual Meeting of Shareholders.

ITEM 10. EXECUTIVE COMPENSATION

     The information required by this Item is incorporated herein by reference
to our proxy statement for our 2004 Annual Meeting of Shareholders.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

     The information required by this Item is incorporated herein by reference
to our proxy statement for our 2004 Annual Meeting of Shareholders.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item is incorporated herein by reference
to our proxy statement for our 2004 Annual Meeting of Shareholders.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits. The list of exhibits filed with this report appears immediately
     following the signature page of this report and is incorporated herein by
     reference.

(b)  Reports on Form 8-K. During the quarter ended December 31, 2003, we filed a
     Form 8-K on October 29, 2003 regarding our press release to announce third
     quarter results for 2003.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

     During 2003, we were billed $39,000 by our principal accountants for the
review of our quarterly financials that were included in our Form 10-QSBs.
During 2002, we were billed $34,500 by our principal accountants for the review
of our quarterly financials that were included in our Form 10-Qs.

     During 2003, we were billed $35,000 and we accrued $52,000 for the audit of
our annual financial statements that are included in this Form 10-KSB. We were
billed $72,000 during 2002 for the audit of our annual financial statements that
were included in our Form 10-K for 2002.

Audit-Related Fees

     We did not have any billings from our principal accountants for
audit-related fees during 2002 or 2003.

Tax Fees

     During 2003, we accrued $28,000 for professional tax services to be
rendered by our principal accountants for tax compliance, tax advice, and tax
planning in relation to 2003 tax services.

     We were billed $16,909 during 2002 for professional tax services rendered
by our principal accountants for 2002 tax services. This amount included $1,320
for services rendered in connection with the preparation of Federal and state
extensions, $8,500 for services rendered in connection with the preparation of
Federal and Georgia income tax returns for the 2002 tax year, $5,250 for
services rendered in connection with the preparation of state and local income
tax returns for the states of Connecticut, California, Colorado, Illinois,
Massachusetts, New York State and the city of New York, and $1,839 for the
allocation of certain overhead expenses including computer software, telephone,
and reproduction costs.

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<PAGE>

All Other Fees

     During 2003, we did not accrue and we were not billed any other fees by our
principal accountants.

     For 2002, we were billed $17,500 by our principal accountants for services
in connection with our filing of a Form S-3 and a Form S-1.



                                       29
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: March 26, 2004        A.D.A.M., INC.
                            (Registrant)
                         By:  /s/ Robert S. Cramer, Jr.
                            ----------------------------------------------------
                            Robert S. Cramer, Jr.
                            Chairman of the Board and
                            Chief Executive Officer
                            (principal executive officer)

                         By: /s/ Kevin S. Noland
                            ----------------------------------------------------
                            Kevin S. Noland
                            President, Chief Operating Officer and
                            Corporate Secretary
                            (acting principal financial and accounting officer)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on March 26, 2004.

        Signature                                  Title
--------------------------------------------------------------------------------


 /s/ Robert S. Cramer, Jr.     Chairman of the Board and Chief Executive Officer
------------------------------
    Robert S. Cramer, Jr.


    /s/ Daniel S. Howe         Director
------------------------------
      Daniel S. Howe


   /s/ John W. McClaugherty     Director
------------------------------
      John W. McClaugherty


 /s/ Francis J. Tedesco, M.D.  Director
------------------------------
    Francis J. Tedesco, M.D.


   /s/ Mark Kishel, M.D.       Director
------------------------------
      Mark Kishel, M.D.


                                       30
<PAGE>

                                  EXHIBIT INDEX

     The following exhibits are filed as part of, or are incorporated by
reference into, this report on Form 10-KSB:

Exhibit No.                       Description

          3.1  Articles of Incorporation (incorporated by reference to Exhibit
               3.1 of the Company's Quarterly Report on Form 10-Q for the
               quarter ended September 30, 1999)

          3.2  Amendment to the Articles of Incorporation (incorporated by
               reference to Exhibit 3.2 of the Company's Quarterly Report on
               Form 10-Q for the quarter ended September 30, 1999)

          3.3  Amended and Restated By-Laws (incorporated by reference to the
               Company's Registration Statement on Form S-1, File No. 33-96864,
               dated September 12, 1995, as amended)

          10.1 Amended and Restated 1992 Stock Option Plan (incorporated by
               reference to the Company's Registration Statement on Form S-1,
               File No. 33-96864, dated September 12, 1995, as amended)

          10.2 401(k) Adoption Agreement and Trust (incorporated by reference to
               the Company's Registration Statement on Form S-1, File No.
               33-96864, dated September 12, 1995, as amended)

          10.3 Amended and Restated Employment Agreement between the Company and
               Robert S. Cramer, dated October 1, 2002 (the "Cramer Employment
               Agreement") (incorporated by reference to the Company's Annual
               Report on Form 10-KSB for the fiscal year ended December 31,
               2002)

          10.4 Letter agreement regarding calculation of bonus payments under
               the Cramer Employment Agreement (filed herewith)

          10.5 Employment Agreement between the Company and Kevin S. Noland,
               dated December 21, 2001 (incorporated by reference to the
               Company's Annual Report on Form 10-K for the fiscal year ended
               December 31, 2001)

          10.7 Bridge Note and Warrant Purchase Agreement between Union Street
               Partners, L.P and Robert S. Cramer, Jr. and the Company dated
               December 31, 1999 (incorporated by reference to the Company's
               Annual Report on Form 10-K for the year ended December 31, 1999)

          10.8 Registration Rights Agreement between Union Street Partners, L.P
               and Robert S. Cramer, Jr. and the Company dated December 31, 1999
               (incorporated by reference to the Company's Annual Report on Form
               10-K for the year ended December 31, 1999)

          10.9 Common Stock Purchase Agreement dated May 22, 2003 between the
               Company and Fusion Capital Fund II, LLC (incorporated by
               reference to the Company's Registration Statement of Form S-3,
               File No. 333-45294, dated September 7, 2000, as amended)

          10.10 2002 Stock Incentive Plan (incorporated by reference to the
               Company's definitive proxy statement filed on May 24, 2002 in
               connection with its 2002 Annual Meeting of Shareholders)

          14.1 Code of Ethics (filed herewith)

          21.1 Subsidiaries of the Company (filed herewith)

          23.1 Consent of PricewaterhouseCoopers LLP (filed herewith)

          31.1 Certification of Principal Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

          31.2 Certification of Principal Financial Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

          32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act
               of 2002 (filed herewith)

          99.1 Financial Statements (filed herewith)



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