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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
  -14332
 HOLLYWOOD MEDIA CORP.
  Florida
    
    65-0385686(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)2255 Glades Road, Suite 221A
Boca Raton, Florida
    
    33431(Address of principal executive offices)
    
    (Zip Code)
 (561) 998-8000
 
  
  
    ̈ x
   ̈ x
  x  ̈
  ̈
   ̈ x  ̈
   ̈ x




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##### Table of Contents



HOLLYWOOD MEDIA CORP.
FORM 10-K
FOR THE YEAR ENDED
DECEMBER 31, 2005
 Table of Contents
 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
    
    iiPART IItem 1.
    

Business
    
    
    1Item 1A.
    

Risk
Factors
    
    
    8-16Item 1B.
    

Unresolved
Staff Comments
    
    
    16Item 2.
    

Properties
    
    
    16-17Item 3.
    

Legal
Proceedings
    
    
    17Item 4.
    

Submission
of Matters to a Vote of Shareholders
    
    
    17PART IIItem 5.
    

Market
for Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
    
    
    18-19Item 6.
    

Selected
Financial Data
    
    
    20Item 7.
    

Managements
Discussion and Analysis of Financial Condition and Results of
Operation
    
    
    21-36Item 7A.
    

Quantitative
and Qualitative Disclosures About Market Risk
    
    
    36-37Item 8.
    

Financial
Statements and Supplementary Data
    
    
    37Item 9.
    

Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    88Item 9A.
    

Controls
and Procedures
    
    
    88-89Item 9B.
    

Other
Information
    
    
    89PART IIIItem 10.
    

Directors
and Executive Officers of the Registrant
    
    
    90Item 11.
    

Executive
Compensation
    
    
    90Item 12.
    

Security
Ownership of Certain Beneficial Owners and Management
    
    
    90Item 13.
    

Certain
Relationships and Related Transactions
    
    
    90Item 14.
    

Principal
Accounting Fees and Services
    
    
    90PART IVItem 15.
    

Exhibits,
Financial Statement Schedules
    
    
    93Employment Agreement - Brett WestSubsidiariesConsent of Kaufman, Rossin & Co.Consent of Ernst & Young LLPSection 302 CEO CertificationSection 302 V.P. of Finance CertificationSection 906 CEO CertificationSection 906 V.P. of Finance Certification
 i




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##### Table of Contents



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    our continuing operating losses,
    
    negative cash flows and accumulated deficit,
    
    the need to manage our growth and integrate new businesses into Hollywood Media,
    
    our ability to develop and maintain strategic relationships,
    
    our ability to compete with other media, data and Internet companies and other competitors,
    
    our ability to maintain and obtain sufficient capital to finance our growth and operations,
    
    our ability to realize anticipated revenues and cost efficiencies,
    
    technology risks and risks of doing business over the Internet,
    
    government regulation,
    
    our ability to achieve and maintain effective internal controls,
    
    dependence on our founders, and our ability to recruit and retain key personnel, and
    
    the volatility of our stock price.
   ii




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PART I
 
 Item 1. Business .
 Overview
  Major Business Divisions of Hollywood Media.
       1




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®
    Tom Clancys NetForce.
   Other Business and Financial Information.
 SEC Reports Available on Internet. www.hollywood.com www.nasdaq.com www.sec.gov
 2




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##### Table of Contents



Data Syndication Divisions
   CinemaSource
 EventSource
 ExhibitorAds
 Baseline/StudioSystems
 3




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Broadway Ticketing Division
 Broadway Ticketing: Broadway.com, 1-800-BROADWAY, Theatre Direct International (TDI), and
Theatre.com (collectively called Broadway Ticketing).
 Broadway.com and 1-800-BROADWAY.
 TDI
  Theatre.com.
 4




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Internet Divisions
 Hollywood.com
  Broadway.com and Theatre.com ®
 CinemasOnline
 Cable TV
 Cable TV.
 5




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Intellectual Properties Business
 Book Development and Book Licensing
 Intellectual Properties Neil Gaimans Mr. Hero, Neil Gaimans Lady Justice, Anne McCaffreys
Acorna the Unicorn Girl Leonard Nimoys Primortals Mickey Spillanes Mike Danger Mickey Spillanes Mike
Danger Leonard Nimoys Primortals
 NetCo Partners Tom Clancys NetForce Tom
Clancys NetForce Tad Williams
MirrorWorld Arthur C Clarkes Worlds of Alexander Neil Gaimans Lifers Anne McCaffreys
Saraband Tom Clancys NetForce NetForce
 6




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NetForce NetForce
 MovieTickets.com, Inc.
    7




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Employees
  
 Item 1A. Risk Factors .
 Risks of Investing in Our Shares
  We have a history of losses and an accumulated deficit. Our operating results could fluctuate
significantly on a quarterly and annual basis.
   
    
    seasonal variations in the demand for Broadway tickets and resulting variations in
our revenue from Broadway ticket sales;
    
    our ability to sell advertisements to be displayed on our websites and on our cable TV networks;
    
    seasonal trends in Internet usage and Internet sales and advertising placements;
    
    our ability to enter into or renew strategic relationships and agreements with media
organizations, websites and authors;
    
    the amount and timing of our marketing expenditures and other costs relating to the
expansion of our operations;
    
    new products, websites or Internet services introduced by us or our competitors; and
    
    technical difficulties, security concerns or system downtime affecting the Internet
generally or the operation of our websites in particular.
  8




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We may not be able to compete successfully .
 Ticketing Businesses
 
    
    telephone services, wireless services and websites targeted to entertainment
enthusiasts, moviegoers, theatergoers and other eventgoers, which feature directories
of movies, shows, events, showtimes, theater and event locations and related content,
and also allow users to purchase tickets;
    
    travel agents and other traditional ticketing organizations, companies, agents and brokers; and
    
    the box office at each of the venues that hold events for which we sell tickets.
 Internet Businesses.
 
    
    online services or websites targeted to entertainment enthusiasts, particularly
moviegoers and theatergoers, such as IMDb.com;
    
    publishers and distributors of traditional off-line media, such as television, radio
and print, including those targeted to movie enthusiasts, many of which have
established or may establish websites, such as Eonline.com;
    
    traditional movie and entertainment organizations including the Walt Disney Company
and Warner Bros.;
    
    general purpose consumer online services such as AOL, Yahoo!, and MSN, each of which
provides access to movie-related information and services; and
    
    web search and retrieval and other online services, such as Google, Yahoo! and other
high-traffic websites.
   Intellectual Properties and Book Development and Licensing Businesses.
 9




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We may not be able to successfully protect our trademarks and proprietary rights.
 Internet Businesses.
   Intellectual Properties Business
   10




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We may become subject to liability for infringement of third-party intellectual property
rights.
  We must manage our growth in order to achieve the desired results.
  
    
    problems retaining key technical and managerial personnel;
    
    the availability of financing to make acquisitions;
    
    additional expenses of acquired businesses; and
    
    the inability to maintain relationships with the customers or other business
partners of acquired businesses.
  We are dependent on our ability to develop strategic relationships with media, entertainment
and Internet organizations .
   11




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Our operations could be negatively impacted by systems interruptions.
  We are subject to additional security risks by doing business over the Internet.
  We may not be able to adapt as technologies and customer expectations continue to evolve.
  If our suppliers of tickets for Broadway or Londons West End shows did not sell us all the
tickets we wish to buy, our financial results may be adversely affected.
  Government regulation of the Internet could impact our business.
  12




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We are dependent on Mitchell Rubenstein and Laurie S. Silvers, our founders.
  Our ability to attract qualified personnel and retain certain key personnel is critical to our
business.
   We may be liable for the content we make available on the Internet.
  13




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We have authorized but unissued preferred stock, which could affect rights of holders of
common stock .
  Our articles of incorporation, shareholders rights plan and Florida law may discourage
takeover attempts.
    Our stock price is volatile .
  14




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Future sales of our common stock in the public market could adversely affect our stock price
and our ability to raise funds in new stock offerings.
  We may require additional capital to finance our growth or operations and there can be no
assurance that additional financing will be available on favorable terms.
  Changes in securities laws and regulations may increase our costs.
  We have identified a material weakness in our evaluation of internal controls over financial
reporting under Section 404 of the Sarbanes-Oxley Act of 2002; failure to achieve and maintain
effective internal controls could have a material adverse effect on our business and stock price.
  15




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We are exposed to market risk related to changes in interest rates and fluctuations in
foreign currency exchange rates.
  Other economic factors may adversely affect our future results or the market price of our
stock (such as recession, war, terrorism).
  
 Item 1B. Unresolved Staff Comments .
  
 Item 2. Properties .
  16




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CurrentLocation
    
    Square Feet
    
    
    Monthly Rent
    
    
    Expiration DateCorporate Headquarters
    
    
    10,820
    
    
    $
    18,259
    
    
    October 31, 2007Boca Raton, FLCinemaSource,
    
    
    11,475
    
    
    $
    21,898
    
    
    September 30, 2010EventSource,ExhibitorAdsRidgefield, CTTheatre Direct International,
    
    
    550
    
    
    $
    1,700
    
    
    March 31, 2009Broadway.com and
    
    
    3,230
    
    
    $
    10,000
    
    
    March 31, 20091-800-BROADWAY
    
    
    3,250
    
    
    $
    8,396
    
    
    September 30, 2009New York, NY
    
    
    1,700
    
    
    $
    4,706
    
    
    March 31, 20062,500
    
    
    $
    7,375
    
    
    July 31, 20071,820
    
    
    $
    5,195
    
    
    September 30, 2007Baseline/StudioSystems
    
    
    5,765
    
    
    $
    14,413
    
    
    June 30, 2007Santa Monica, CA
    
    
    2,048
    
    
    $
    5,836
    
    
    June 30, 2007Tekno Books
    
    
    2,025
    
    
    $
    1,441
    
    
    Month to MonthGreen Bay, WI
    
    
    463
    
    
    $
    350
    
    
    Month to MonthCinemasOnline
    
    
    3,710
    
    
    $
    4,646
    
    
    November 21, 2008Lancashire, UK
 
 
 Item 3. Legal Proceedings .
  
 Item 4. Submission of Matters to a Vote of Shareholders .
  17




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PART II
 
 Item 5.Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 Market for Common Stock
  High
    
    
    Low2004First Quarter
    
    $
    3.62
    
    
    $
    2.31Second Quarter
    
    $
    4.07
    
    
    $
    3.00Third Quarter
    
    $
    3.77
    
    
    $
    3.10Fourth Quarter
    
    $
    5.09
    
    
    $
    3.142005First Quarter
    
    $
    5.69
    
    
    $
    4.34Second Quarter
    
    $
    5.00
    
    
    $
    3.90Third Quarter
    
    $
    4.62
    
    
    $
    3.88Fourth Quarter
    
    $
    4.50
    
    
    $
    3.61
 Holders of Common Stock
  Dividend Policy
  Recent Sales of Unregistered Securities
     18




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Issuer Repurchases of Equity Securities
  19




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Item 6. Selected Financial Data .
  YEARS ENDED DECEMBER 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001STATEMENT OF OPERATIONS DATA:Net revenues:Ticketing
    
    $
    78,890,718
    
    
    $
    59,689,971
    
    
    $
    52,266,539
    
    
    $
    45,333,627
    
    
    $
    36,038,031Data
    
    
    10,618,631
    
    
    
    7,990,473
    
    
    
    6,940,971
    
    
    
    6,185,290
    
    
    
    5,843,764Other
    
    
    6,105,090
    
    
    
    5,298,223
    
    
    
    5,651,452
    
    
    
    6,234,200
    
    
    
    8,273,006Total net revenues
    
    
    95,614,439
    
    
    
    72,978,667
    
    
    
    64,858,962
    
    
    
    57,753,117
    
    
    
    50,154,801Operating Expenses:Cost of revenues  ticketing
    
    
    67,515,534
    
    
    
    51,781,133
    
    
    
    44,850,254
    
    
    
    39,930,761
    
    
    
    30,686,558Editorial, production, development and
technology (exclusive of depreciation,
and amortization shown separately below)
    
    
    5,885,429
    
    
    
    5,137,458
    
    
    
    5,347,062
    
    
    
    5,587,852
    
    
    
    6,208,161Selling, general and administrative
    
    
    12,198,054
    
    
    
    11,476,024
    
    
    
    7,932,293
    
    
    
    9,394,511
    
    
    
    11,332,662Payroll & benefits
    
    
    16,485,885
    
    
    
    12,275,369
    
    
    
    10,774,386
    
    
    
    11,438,585
    
    
    
    8,217,662Amortization of CBS advertising
    
    
    
    
    
    
    38,807
    
    
    
    885,974
    
    
    
    11,251,566
    
    
    
    27,822,802Impairment Loss  CBS advertising
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,274,680
    
    
    
    Write-off prepaid trade credits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    655,500
    
    
    
    Depreciation and amortization
    
    
    2,414,413
    
    
    
    2,221,100
    
    
    
    2,624,729
    
    
    
    3,074,614
    
    
    
    8,886,350Provision for closed stores and lease
termination costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,644
    )
    
    
    (247,657
    )Total operating expenses
    
    
    104,499,315
    
    
    
    82,929,891
    
    
    
    72,414,698
    
    
    
    138,593,425
    
    
    
    92,906,538Operating loss
    
    
    (8,884,876
    )
    
    
    (9,951,224
    )
    
    
    (7,555,736
    )
    
    
    (80,840,308
    )
    
    
    (42,751,737
    )Equity in
earnings of unconsolidated investees
    
    
    533,228
    
    
    
    576,317
    
    
    
    957,681
    
    
    
    234,504
    
    
    
    1,470,392Interest  net
    
    
    (552,841
    )
    
    
    (2,611,081
    )
    
    
    (1,442,707
    )
    
    
    (1,272,879
    )
    
    
    (144,289
    )Other  net
    
    
    159,414
    
    
    
    776,572
    
    
    
    1,163,308
    
    
    
    (250,566
    )
    
    
    (94,403
    )Minority interest
    
    
    (168,107
    )
    
    
    (388,383
    )
    
    
    (564,233
    )
    
    
    (665,529
    )
    
    
    (309,868
    )Net loss
    
    $
    (8,913,182
    )
    
    $
    (11,597,799
    )
    
    $
    (7,441,687
    )
    
    $
    (82,794,778
    )
    
    $
    (41,829,905
    )Net loss per share  basic and diluted
    
    $
    (0.28
    )
    
    $
    (0.42
    )
    
    $
    (0.36
    )
    
    $
    (3.24
    )
    
    $
    (1.61
    )Weighted average common and common
equivalent shares outstanding -
basic and diluted
    
    
    31,470,307
    
    
    
    27,784,850
    
    
    
    20,829,183
    
    
    
    25,535,626
    
    
    
    26,056,911
 AS OF DECEMBER 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001BALANCE SHEET DATA:Cash and cash equivalents
    
    $
    7,058,017
    
    
    $
    6,330,394
    
    
    $
    1,867,999
    
    
    $
    2,342,238
    
    
    $
    1,980,966Working capital (deficit)
    
    
    (3,929,668
    )
    
    
    (1,951,662
    )
    
    
    (6,490,321
    )
    
    
    (1,605,147
    )
    
    
    10,307,769Total assets
    
    
    83,302,950
    
    
    
    69,811,599
    
    
    
    56,881,021
    
    
    
    61,752,923
    
    
    
    143,370,219Capital lease obligations, including current portion
    
    
    163,912
    
    
    
    234,626
    
    
    
    406,328
    
    
    
    578,629
    
    
    
    1,118,010Convertible debentures   net
    
    
    940,927
    
    
    
    799,152
    
    
    
    4,027,629
    
    
    
    3,223,988
    
    
    
    Senior Unsecured Notes
    
    
    5,402,255
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total shareholders equity
    
    $
    42,399,092
    
    
    
    47,149,270
    
    
    
    34,285,699
    
    
    
    40,047,843
    
    
    
    127,171,496
 20




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation .
  Overview
  Acquisitions since 1998
  
    
    On May 18, 1999, we purchased substantially all of the assets of CinemaSource, Inc.,
a business to business company that licenses movie showtimes and other movie-related
information to newspaper companies, Internet companies, wireless businesses and others.
    
    On May 20, 1999, we acquired the capital stock of hollywood.com, Inc. which owns
Hollywood.com.
    
    On August 31, 1999, we purchased substantially all of the motion picture-related
data assets of Paul Kagan Associates, Inc., including Baseline, a movie and television
database website, and several movie-related professional publications.
    
    Effective January 3, 2000, we completed agreements with CBS providing for the
issuance to CBS of 6,672,031 shares of our common stock in exchange for $100 million of
stated value of CBS advertising, promotion and content over seven years across its full
range of media properties, valued at $130 million, and $5.3 million in cash. On March
28, 2000, CBS exercised a warrant to acquire 1,178,892 shares of our common stock by
delivering $5.5 million in cash plus $5.5 million in additional CBS advertising. In
August 2002, these agreements were terminated and such shares were reacquired by
Hollywood Media pursuant to an Exchange Agreement with Viacom, resulting in the
recording of a $57,274,680 impairment loss. See Amortization of CBS Advertising and
Impairment Loss Related to CBS Advertising below.
    
    On May 1, 2000, we launched Broadway.com and we acquired substantially all the
assets of BroadwayTheater.com, Inc. which sold theater tickets online predominately for
Broadway, off-Broadway and Londons West End. We simultaneously consolidated
BroadwayTheater.com into Broadway.com.
    
    Effective September 15, 2000, we acquired Theatre Direct NY Inc., d/b/a Theatre
Direct International (TDI), a ticketing wholesaler of Broadway, off-Broadway and
London theater tickets to businesses, including travel agencies and tour operators,
groups, individuals, and educational institutions.
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
    
    On July 27, 2001, we acquired the assets of Always Independent Entertainment Corp.
(AlwaysI), which offers independent films to subscribers over the Internet and
licenses films to third parties.
    
    On October 19, 2001, we acquired 1-800-BROADWAY which we use to sell Broadway
tickets by phone and as a complement to the sale of Broadway tickets on our
Broadway.com website.
    
    On January 14, 2002, Fountainhead Media Services acquired a 20% equity interest in
Baseline, Inc., a wholly owned subsidiary of Hollywood Media. Consideration consisted
of a $2 million promissory note payable to Hollywood Media and the contribution by
Fountainhead Media of its FilmTracker database, intellectual property rights, all
existing contracts and content management system with a stated value of $2 million.
Our Baseline service was integrated with FilmTracker, resulting in a combined service
incorporating Baselines data with FilmTrackers content management system and
interface. On January 7, 2004, we exchanged the $2 million promissory note for the 20%
equity interest owned by Fountainhead, and we now own 100% of our subsidiary that owns
Baseline.
    
    In January 2002, we launched ExhibitorAds as an expansion of the CinemaSource
operations. ExhibitorAds leverages the movie theater showtimes from the CinemaSource
data collection systems and our relationship with various exhibitors creating exhibitor
paid ads for insertion in newspapers around the country.
    
    In July 2002 we launched two new digital cable television channels, Totally
Hollywood TV and Totally Broadway TV, which we renamed Hollywood.com Television and
Broadway.com Television in 2004. The digital cable TV networks provide on-demand video
content and on some cable systems up-to-date showtimes for the latest box office movies
and current Broadway shows.
    
    On August 28, 2002, Hollywood Media Corp. entered into an Exchange Agreement with
Viacom Inc. pursuant to which Viacom re-conveyed to Hollywood Media an aggregate of
8,614,687 shares of Hollywood Medias common stock, and warrants held by Viacom to
purchase 262,973 shares of Hollywood Medias common stock were cancelled. Under the
Exchange Agreement, Viacom also paid Hollywood Media $2.0 million in cash, and
Hollywood Media retained $5.0 million in non-cash advertising and promotion across CBS
properties for use through December 31, 2003. This Exchange Agreement terminated
various agreements with CBS, completed in January 3, 2000 as detailed above.
    
    On July 1, 2004 , Hollywood Media consummated our acquisition by merger of
100% of the outstanding common stock of Studio Systems, Inc. (SSI), one of the
leading entertainment industry database and information service providers. As a result
of the acquisition, SSI became a subsidiary of Hollywood Media and its business was
integrated with our Baseline/FilmTracker subsidiary now known as
Baseline/StudioSystems.
    
    On November 23, 2005 Hollywood Media consummated our acquisition of 100%
of the outstanding common stock of the U.K. based CinemasOnline, a group of advertising
sales and data services companies focused primarily on selling advertising on cinema
and live theatre websites in the U.K. and Ireland. CinemasOnline became a subsidiary
of CinemaSource UK Limited, a wholly-owned subsidiary of Hollywood Media.
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RESULTS OF OPERATIONS
 Year ended December 31, 2005 (fiscal 2005) as compared to the year ended December 31, 2004
(fiscal 2004) and year ended December 31, 2003 (fiscal 2003).
 Composition of our business segments are as follows:
 
    
    Broadway Ticketing sells tickets via Broadway.com, 1-800-BROADWAY and TDI to live
theater events for Broadway, Off-Broadway and London, and hotel and restaurant packages, to
consumers, domestic and international travel professionals including travel agencies and
tour operators, and educational institutions.
    
    Data Business licenses entertainment content and data and includes CinemaSource
(which licenses movie showtimes and other movie content), EventSource (which licenses local
listings of events to media, wireless and Internet companies), ExhibitorAds (which creates
exhibitor-paid directory ads for insertion in newspapers in the U.S. and provides other
exhibitor marketing services), and Baseline/StudioSystems (generates license fees through
paid subscription database, with customers including movie studios, movie and TV production
companies and professionals in the feature film and television industry, and web portals).
    
    Internet Ad Sales sells advertising on Hollywood.com and Broadway.com, and includes
CinemasOnline which sells advertising on cinema and live theatre websites in the U.K.
    
    Intellectual Properties owns or controls the exclusive rights to certain intellectual
properties created by best-selling authors and media celebrities, which it licenses for
book and other media. This segment includes a 51% interest in Tekno Books, and a book
development business, and this segment does not include our 50% interest in NetCo Partners.
    
    Cable TV comprised of Hollywood.com Television and Broadway.com Television which
offer interactive entertainment information with on-demand video content to subscribers in
certain cable TV systems of the cable television distributors including Cablevision
Systems, Cox Communications, Comcast, Insight Communication, Mediacom, Charter and Bresnan.
    
    Other is comprised of corporate-wide expenses such as insurance, accounting,
centralized information technology, and includes consulting and other fees and costs
relating to compliance with the provisions of the Sarbanes-Oxley Act of 2002 that require
Hollywood Media to assess and report on internal control over financial reporting, and
related development of controls.
  Net Revenues Analysis
    
    Net Revenues
    
    
    2004 to
    
    
    2004 to2005
    
    
    2005 %2005
    
    
    2004
    
    
    Change
    
    
    ChangeBroadway Ticketing
    
    $
    78,890,718
    
    
    $
    59,689,971
    
    
    $
    19,200,747
    
    
    
    32
    %Data Business
    
    
    10,618,631
    
    
    
    7,990,473
    
    
    
    2,628,158
    
    
    
    33
    %Internet Ad Sales
    
    
    4,513,676
    
    
    
    2,814,921
    
    
    
    1,698,755
    
    
    
    60
    %Intellectual Properties
    
    
    1,550,580
    
    
    
    2,483,302
    
    
    
    (932,722
    )
    
    
    (38
    %)Cable TV
    
    
    40,834
    
    
    
    
    
    
    
    40,834
    
    
    
    100
    %Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TOTALS
    
    $
    95,614,439
    
    
    $
    72,978,667
    
    
    $
    22,635,772
    
    
    
    31
    %
 23




---



##### Table of Contents



Net Revenues
    
    
    2003 to
    
    
    2003 to2004
    
    
    2004 %2004
    
    

2003
    
    
    Change
    
    
    ChangeBroadway Ticketing
    
    $
    59,689,971
    
    
    $
    52,266,539
    
    
    $
    7,423,432
    
    
    
    14
    %Data Business
    
    
    7,990,473
    
    
    
    6,940,971
    
    
    
    1,049,502
    
    
    
    15
    %Internet Ad Sales
    
    
    2,814,921
    
    
    
    2,812,173
    
    
    
    2,748
    
    
    
    0
    %Intellectual Properties
    
    
    2,483,302
    
    
    
    2,836,279
    
    
    
    (352,977
    )
    
    
    (12
    %)Cable TV
    
    
    
    
    
    
    3,000
    
    
    
    (3,000
    )
    
    
    (100
    %)Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TOTALS
    
    $
    72,978,667
    
    
    $
    64,858,962
    
    
    $
    8,119,705
    
    
    
    13
    %
 Operating Expense Analysis
    
    Operating Expenses
    
    
    2004 to
    
    
    2004 to2005
    
    
    20052005
    
    
    2004
    
    
    Change
    
    
    ChangeBroadway Ticketing
    
    $
    76,092,532
    
    
    $
    58,135,785
    
    
    $
    17,956,747
    
    
    
    31
    %Data Business
    
    
    8,311,124
    
    
    
    7,452,828
    
    
    
    858,296
    
    
    
    12
    %Internet Ad Sales
    
    
    6,368,233
    
    
    
    5,234,342
    
    
    
    1,133,891
    
    
    
    22
    %Intellectual Properties
    
    
    1,170,944
    
    
    
    1,676,081
    
    
    
    (505,137
    )
    
    
    (30
    %)Cable TV
    
    
    720,766
    
    
    
    872,901
    
    
    
    (152,135
    )
    
    
    (17
    %)Other
    
    
    11,835,716
    
    
    
    9,557,954
    
    
    
    2,277,762
    
    
    
    24
    %TOTALS
    
    $
    104,499,315
    
    
    $
    82,929,891
    
    
    $
    21,569,424
    
    
    
    26
    %
 Operating Expenses
    
    
    2003 to
    
    
    2003 to2004
    
    
    20042004
    
    

2003
    
    
    Change
    
    
    ChangeBroadway Ticketing
    
    $
    58,135,785
    
    
    $
    50,838,944
    
    
    $
    7,296,841
    
    
    
    14
    %Data Business
    
    
    7,452,828
    
    
    
    6,327,818
    
    
    
    1,125,010
    
    
    
    18
    %Internet Ad Sales
    
    
    5,234,342
    
    
    
    5,876,714
    
    
    
    (642,372
    )
    
    
    (11
    %)Intellectual Properties
    
    
    1,676,081
    
    
    
    1,773,481
    
    
    
    (97,400
    )
    
    
    (5
    %)Cable TV
    
    
    872,901
    
    
    
    900,104
    
    
    
    (27,203
    )
    
    
    (3
    %)Other
    
    
    9,557,954
    
    
    
    6,697,637
    
    
    
    2,860,317
    
    
    
    43
    %TOTALS
    
    $
    82,929,891
    
    
    $
    72,414,698
    
    
    $
    10,515,193
    
    
    
    15
    %
 Comparison of Percentage Changes in Net Revenues and Operating Expenses
 2004 to 2005
    
    
    2004 to 2005
    
    
    2003 to 2004
    
    
    2003 to 2004Revenues
    
    
    Operating Expenses
    
    
    Revenues
    
    
    Operating ExpensesIncrease (decrease) in -Broadway Ticketing
    
    
    32
    %
    
    
    31
    %
    
    
    14
    %
    
    
    14
    %Data Business
    
    
    33
    %
    
    
    12
    %
    
    
    15
    %
    
    
    18
    %Internet Ad Sales
    
    
    60
    %
    
    
    22
    %
    
    
    0
    %
    
    
    (11
    %)Intellectual Properties
    
    
    (38
    %)
    
    
    (30
    %)
    
    
    (12
    %)
    
    
    (5
    %)Cable TV
    
    
    100
    %
    
    
    (17
    %)
    
    
    (100
    %)
    
    
    (3
    %)Other
    
    
    
    
    
    
    24
    %
    
    
    
    
    
    
    43
    %TOTALS
    
    
    31
    %
    
    
    26
    %
    
    
    13
    %
    
    
    15
    %
 Net Revenues
  24




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##### Table of Contents



The New York Times,
  25




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##### Table of Contents



Left Behind
 Equity
in Earnings of Unconsolidated Investees
  As of December 31,2005
    
    
    2004
    
    
    2003NetCo Partners (a)
    
    $
    533,228
    
    
    $
    576,317
    
    
    $
    957,681MovieTickets.com (b)
    
    
    
    
    
    
    
    
    
    
    $
    533,228
    
    
    $
    576,317
    
    
    $
    957,681
  Tom Clancys NetForce Tom Clancys NetForce NetForce
   26




---



##### Table of Contents



Operating Expenses
 Cost of Revenues  Ticketing.
 Editorial, Production, Development and Technology.
 Selling, General and Administrative.
 27




---



##### Table of Contents



Payroll and Benefits.
      Amortization of CBS Advertising and Impairment Loss Relating to CBS Advertising.
 28




---



##### Table of Contents



Depreciation and Amortization.
  Interest, net
  Other, net
  29




---



##### Table of Contents



Net Loss and Loss Per Share
  LIQUIDITY AND CAPITAL RESOURCES
   2004 Private Placement
  Senior Unsecured Notes Issued in 2005
  30




---



##### Table of Contents



May 2002 Convertible Debentures
    Outlook
  31




---



##### Table of Contents



Contractual Obligations
  Payments Due by PeriodContractual
    
    
    
    
    
    Less than
    
    Years
    
    Years
    
    AfterObligations
    
    Total
    
    1 Year
    
    1-3
    
    4-5
    
    5 YearsShort-term debt (1)
    
    
    1,000,000
    
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    Senior unsecured notes (2)
    
    
    7,000,000
    
    
    
    
    
    
    
    7,000,000
    
    
    
    
    
    
    
    Capital lease obligations (3)
    
    
    178,003
    
    
    
    96,265
    
    
    
    77,735
    
    
    
    4,003
    
    
    
    Operating lease obligations (4)
    
    
    3,501,932
    
    
    
    1,259,975
    
    
    
    2,008,917
    
    
    
    233,040
    
    
    
    Total contractual obligations
    
    
    11,679,935
    
    
    
    2,356,240
    
    
    
    9,086,652
    
    
    
    237,043
    
    
    
    
 
 (1)
    
    Short-term debt of senior convertible debentures due May 22, 2006 exclusive of interest.
The holder has the option to convert principal into common stock at an exercise price of
$3.20 per share.(2)
    
    Senior unsecured notes due May 23, 2007 exclusive of interest.(3)
    
    Capital lease obligations are future lease payments under capital leases inclusive of
interest.(4)
    
    Operating lease obligations include leases pertaining to various leased facilities and those
classified as operating leases for financial statement purposes. Certain leases provide for
payment of real estate taxes, common area maintenance, insurance, and certain other expenses.
Lease terms expire at various dates through the year 2010. Also, certain equipment used in
Hollywood Medias operations is leased under operating leases. Off-Balance Sheet Arrangements
  32




---



##### Table of Contents



Critical Accounting Policies
  Allowance for Doubtful Accounts
  Ticketing Revenue Recognition
     33




---



##### Table of Contents



,  
 Advertising Costs
   Self-Insurance Accruals
  Stock Based Compensation
  34




---



##### Table of Contents



Impairment of Long-Lived Assets
    35




---



##### Table of Contents



Inflation and Seasonality
 ©
 
 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .
      36




---



##### Table of Contents



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReports of Independent Registered Public Accounting Firms
    
    
    38Consolidated Balance Sheets as of December 31, 2005 and December 31, 2004
    
    
    40Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003
    
    
    41Consolidated Statements of Shareholders Equity for the Years Ended December 31, 2005, 2004 and 2003
    
    
    42Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003
    
    
    43Notes to Consolidated Financial Statements
    
    
    44
 37




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       Internal
Control-Integrated Framework
 KAUFMAN, ROSSIN & CO., P.A.  
 38




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      /s/ Ernst & Young LLPCertified Public Accountants 
 39




---



##### Table of Contents



HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2005
    
    
    2004ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    7,058,017
    
    
    $
    6,330,394Receivables, net
    
    
    4,233,067
    
    
    
    1,992,478Inventories held for sale
    
    
    1,731,293
    
    
    
    1,006,491Deferred ticket costs
    
    
    11,803,999
    
    
    
    7,460,914Prepaid expenses
    
    
    2,321,091
    
    
    
    1,124,363Other receivables
    
    
    2,204,225
    
    
    
    1,205,803Other current assets
    
    
    53,772
    
    
    
    45,935Restricted cash
    
    
    
    
    
    
    255,000Total current assets
    
    
    29,405,464
    
    
    
    19,421,378AQUISITION ESCROW
    
    
    107,314
    
    
    
    750,000PROPERTY AND EQUIPMENT, net
    
    
    2,438,608
    
    
    
    2,455,040INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED INVESTEES
    
    
    546,907
    
    
    
    435,509INTANGIBLE ASSETS, net
    
    
    2,419,722
    
    
    
    1,515,985GOODWILL
    
    
    47,927,001
    
    
    
    44,977,429OTHER ASSETS
    
    
    457,934
    
    
    
    256,258TOTAL ASSETS
    
    $
    83,302,950
    
    
    $
    69,811,599LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITES:Accounts payable
    
    $
    3,893,184
    
    
    $
    4,043,098Accrued expenses and other
    
    
    6,500,198
    
    
    
    5,172,920Deferred revenue
    
    
    21,914,405
    
    
    
    12,006,919Current portion of capital lease obligations
    
    
    86,418
    
    
    
    150,103Convertible debenture, net
    
    
    940,927
    
    
    
    Total current liabilities
    
    
    33,335,132
    
    
    
    21,373,040DEFERRED REVENUE
    
    
    110,417
    
    
    
    227,000CAPITAL LEASE OBLIGATIONS, less current portion
    
    
    77,494
    
    
    
    84,523MINORITY INTEREST
    
    
    88,138
    
    
    
    74,075OTHER DEFERRED LIABILITY
    
    
    112,422
    
    
    
    104,539CONVERTIBLE DEBENTURE, net
    
    
    
    
    
    
    799,152SENIOR UNSECURED NOTES
    
    
    5,402,255
    
    
    
    DERIVATIVE LIABILITY
    
    
    1,778,000
    
    
    
    COMMITMENTS AND CONTINGENCESSHAREHOLDERS EQUITY:Preferred stock, $.01 par value, 1,000,000 shares authorized; none outstanding
    
    
    
    
    
    
    Common stock, $.01 par value, 100,000,000 shares authorized; 32,703,457 and
31,283,706 shares issued and outstanding at December 31, 2005 and
December 31, 2004 respectively
    
    
    327,035
    
    
    
    312,837Additional paid-in capital
    
    
    309,228,214
    
    
    
    305,729,408Deferred compensation
    
    
    (1,787,500
    )
    
    
    (2,437,500
    )Accumulated deficit
    
    
    (265,368,657
    )
    
    
    (256,455,475
    )Total shareholders equity
    
    
    42,399,092
    
    
    
    47,149,270TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    83,302,950
    
    
    $
    69,811,599
 
 40




---



##### Table of Contents



HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 YEAR ENDEDDECEMBER 31,2005
    
    
    2004
    
    
    2003NET REVENUESTicketing
    
    $
    78,890,718
    
    
    $
    59,689,971
    
    
    $
    52,266,539Data
    
    
    10,618,631
    
    
    
    7,990,473
    
    
    
    6,940,971Other
    
    
    6,105,090
    
    
    
    5,298,223
    
    
    
    5,651,45295,614,439
    
    
    
    72,978,667
    
    
    
    64,858,962OPERATING EXPENSESCost of revenues  ticketing
    
    
    67,515,534
    
    
    
    51,781,133
    
    
    
    44,850,254Editorial, production, development and technology (exclusive of
depreciation and amortization shown separately below)
    
    
    5,885,429
    
    
    
    5,137,458
    
    
    
    5,347,062Selling, general and administrative
    
    
    12,198,054
    
    
    
    11,476,024
    
    
    
    7,932,293Payroll and benefits
    
    
    16,485,885
    
    
    
    12,275,369
    
    
    
    10,774,386Amortization of CBS advertising
    
    
    
    
    
    
    38,807
    
    
    
    885,974Depreciation and amortization
    
    
    2,414,413
    
    
    
    2,221,100
    
    
    
    2,624,729Total operating expenses
    
    
    104,499,315
    
    
    
    82,929,891
    
    
    
    72,414,698Operating loss
    
    
    (8,884,876
    )
    
    
    (9,951,224
    )
    
    
    (7,555,736
    )EQUITY IN
EARNINGS OF UNCONSOLIDATED INVESTEES
    
    
    533,228
    
    
    
    576,317
    
    
    
    957,681.OTHER INCOME (EXPENSE):Interest, net
    
    
    (552,841
    )
    
    
    (2,611,081
    )
    
    
    (1,442,707
    )Other, net
    
    
    159,414
    
    
    
    776,572
    
    
    
    1,163,308Loss before minority interest
    
    
    (8,745,075
    )
    
    
    (11,209,416
    )
    
    
    (6,877,454
    )MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES
    
    
    (168,107
    )
    
    
    (388,383
    )
    
    
    (564,233
    )Net loss
    
    $
    (8,913,182
    )
    
    $
    (11,597,799
    )
    
    $
    (7,441,687
    )Basic and diluted loss per common share
    
    $
    (0.28
    )
    
    $
    (0.42
    )
    
    $
    (0.36
    )Weighted average common and common equivalent shares
Outstanding  basic and diluted
    
    
    31,470,307
    
    
    
    27,784,850
    
    
    
    20,829,183
 
 41




---



##### Table of Contents



HOLLYWOOD
MEDIA CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Common StockAdditional
    
    
    Deferred
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Paid-in Capital
    
    
    Compensation
    
    
    Deficit
    
    
    TotalBalance  December 31, 2002
    
    
    20,253,863
    
    
    $
    202,539
    
    
    $
    277,261,293
    
    
    $
    
    
    
    $
    (237,415,989
    )
    
    $
    40,047,843Issuance of stock, options and warrants for
services rendered
    
    
    152,500
    
    
    
    1,525
    
    
    
    143,879
    
    
    
    
    
    
    
    
    
    
    
    145,404Issuance of stock  401(k) employer match
and other
    
    
    155,783
    
    
    
    1,558
    
    
    
    154,225
    
    
    
    
    
    
    
    
    
    
    
    155,783Issuance of stock  stock option exercise
    
    
    65,000
    
    
    
    650
    
    
    
    85,850
    
    
    
    
    
    
    
    
    
    
    
    86,500Issuance of restricted common stock
    
    
    293,638
    
    
    
    2,936
    
    
    
    377,228
    
    
    
    (325,000
    )
    
    
    
    
    
    
    55,164Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162,500
    
    
    
    
    
    
    
    162,500Settlement of debt with common stock
    
    
    319,835
    
    
    
    3,198
    
    
    
    426,844
    
    
    
    
    
    
    
    
    
    
    
    430,042Settlement of employment agreement
    
    
    115,000
    
    
    
    1,150
    
    
    
    139,150
    
    
    
    
    
    
    
    
    
    
    
    140,300Settlement of guarantee with commons stock
    
    
    110,836
    
    
    
    1,108
    
    
    
    151,027
    
    
    
    
    
    
    
    
    
    
    
    152,135Interest payment to convertible debenture holders
    
    
    315,240
    
    
    
    3,153
    
    
    
    308,848
    
    
    
    
    
    
    
    
    
    
    
    312,001Purchase price adjustment
    
    
    28,571
    
    
    
    286
    
    
    
    39,428
    
    
    
    
    
    
    
    
    
    
    
    39,714Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,441,687
    )
    
    
    (7,441,687
    )Balance  December 31, 2003
    
    
    21,810,266
    
    
    
    218,103
    
    
    
    279,087,772
    
    
    
    (162,500
    )
    
    
    ( 244,857,676
    )
    
    
    34,285,699Issuance of stock options and
warrants for services rendered
    
    
    
    
    
    
    
    
    
    
    233,081
    
    
    
    
    
    
    
    
    
    
    
    233,081Issuance of compensatory stock for services
rendered
    
    
    20,000
    
    
    
    200
    
    
    
    87,064
    
    
    
    
    
    
    
    
    
    
    
    87,264Issuance of stock  401(k) employer match
    
    
    52,627
    
    
    
    526
    
    
    
    139,461
    
    
    
    
    
    
    
    
    
    
    
    139,987Acquisition costs paid with stock based
compensation
    
    
    
    
    
    
    
    
    
    
    158,000
    
    
    
    
    
    
    
    
    
    
    
    158,000Proceeds from issuance of stock to consultants
    
    
    285,211
    
    
    
    2,852
    
    
    
    667,148
    
    
    
    
    
    
    
    
    
    
    
    670,000Issuance of stock  stock option exercises
    
    
    319,500
    
    
    
    3,195
    
    
    
    447,160
    
    
    
    
    
    
    
    
    
    
    
    450,355Issuance of stock  warrant exercise, net of
placement commissions
    
    
    280,958
    
    
    
    2,810
    
    
    
    762,698
    
    
    
    
    
    
    
    
    
    
    
    765,508Issuance of stock to employees
    
    
    10,383
    
    
    
    104
    
    
    
    34,896
    
    
    
    
    
    
    
    
    
    
    
    35,000Issuance of restricted common stock
    
    
    800,000
    
    
    
    8,000
    
    
    
    2,592,000
    
    
    
    (2,600,000
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325,000
    
    
    
    
    
    
    
    325,000Issuance of stock for business acquisition
    
    
    73,249
    
    
    
    732
    
    
    
    249,268
    
    
    
    
    
    
    
    
    
    
    
    250,000Issuance of stock for acquisitions of intangible
assets
    
    
    159,567
    
    
    
    1,596
    
    
    
    523,147
    
    
    
    
    
    
    
    
    
    
    
    524,743Change in beneficial conversion feature on
convertible debentures
    
    
    
    
    
    
    
    
    
    
    707,070
    
    
    
    
    
    
    
    
    
    
    
    707,070Issuance of stock  interest on convertible
debentures
    
    
    157,605
    
    
    
    1,576
    
    
    
    356,282
    
    
    
    
    
    
    
    
    
    
    
    357,858Issuance of stock  conversion of convertible
debentures
    
    
    1,540,985
    
    
    
    15,410
    
    
    
    4,684,590
    
    
    
    
    
    
    
    
    
    
    
    4,700,000Private placement, net of expenses
    
    
    5,773,355
    
    
    
    57,733
    
    
    
    14,999,771
    
    
    
    
    
    
    
    
    
    
    
    15,057,504Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,597,799
    )
    
    
    (11,597,799
    )Balance  December 31, 2004
    
    
    31,283,706
    
    
    
    312,837
    
    
    
    305,729,408
    
    
    
    (2,437,500
    )
    
    
    (256,455,475
    )
    
    
    47,149,270Issuance of compensatory stock for services
rendered
    
    
    22,237
    
    
    
    222
    
    
    
    103,738
    
    
    
    
    
    
    
    
    
    
    
    103,960Issuance of stock  stock option exercises
    
    
    606,714
    
    
    
    6,067
    
    
    
    1,320,223
    
    
    
    
    
    
    
    
    
    
    
    1,326,290Issuance of stock to employees
    
    
    22,655
    
    
    
    227
    
    
    
    101,102
    
    
    
    
    
    
    
    
    
    
    
    101,329Issuance of stock  interest on convertible
debenture
    
    
    13,620
    
    
    
    136
    
    
    
    59,863
    
    
    
    
    
    
    
    
    
    
    
    59,999Issuance of stock  warrant exercise, net of
placement commissions
    
    
    514,574
    
    
    
    5,146
    
    
    
    798,518
    
    
    
    
    
    
    
    
    
    
    
    803,664Issuance of stock  401(k) employer match
    
    
    39,951
    
    
    
    400
    
    
    
    193,362
    
    
    
    
    
    
    
    
    
    
    
    193,762Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    650,000
    
    
    
    
    
    
    
    650,000Acquisition costs paid with common stock
    
    
    
    
    
    
    
    
    
    
    144,000
    
    
    
    
    
    
    
    
    
    
    
    144,000Proceeds from issuance of stock to consultants
    
    
    200,000
    
    
    
    2,000
    
    
    
    778,000
    
    
    
    
    
    
    
    
    
    
    
    780,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,913,182
    )
    
    
    (8,913,182
    )Balance  December 31, 2005
    
    
    32,703,457
    
    
    $
    327,035
    
    
    $
    309,228,214
    
    
    $
    (1,787,500
    )
    
    
    (265,368,657
    )
    
    $
    42,399,092
  42




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##### Table of Contents



HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (8,913,182
    )
    
    $
    (11,597,799
    )
    
    $
    (7,441,687
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    2,414,413
    
    
    
    2,221,100
    
    
    
    2,624,729Interest paid in stock
    
    
    59,999
    
    
    
    357,858
    
    
    
    312,001Amortization of discount and beneficial conversion feature on convertible debentures
    
    
    141,775
    
    
    
    2,131,525
    
    
    
    803,641Change in derivative liability
    
    
    (87,037
    )
    
    
    
    
    
    
    Amortization of debt issuance costs
    
    
    40,870
    
    
    
    
    
    
    
    Amortization of discount on senior unsecured notes
    
    
    267,292
    
    
    
    
    
    
    
    Amortization of deferred financing costs
    
    
    10,885
    
    
    
    168,321
    
    
    
    129,696Equity in earnings of unconsolidated investees, net of return of invested capital
    
    
    (111,398
    )
    
    
    (271,304
    )
    
    
    130,233Compensation expense on stock options and warrants
    
    
    
    
    
    
    233,081
    
    
    
    Compensation expense on employee stock issuances
    
    
    101,329
    
    
    
    35,000
    
    
    
    Amortization of deferred compensation costs
    
    
    650,000
    
    
    
    325,000
    
    
    
    217,664Provision for bad debts
    
    
    111,170
    
    
    
    174,034
    
    
    
    134,061Amortization of CBS advertising
    
    
    
    
    
    
    38,807
    
    
    
    885,974Issuance of compensatory stock for services rendered
    
    
    103,960
    
    
    
    87,264
    
    
    
    145,404Minority interest in earnings of subsidiaries, net of distributions to
minority owners
    
    
    14,063
    
    
    
    52,180
    
    
    
    100,605Amortization of put/call option
    
    
    
    
    
    
    (719,250
    )
    
    
    (1,534,820
    )Changes in assets and liabilities:Receivables
    
    
    (783,782
    )
    
    
    (135,586
    )
    
    
    214,068Inventories held for sale
    
    
    (724,802
    )
    
    
    (2,697,116
    )
    
    
    1,225,849Deferred ticket costs
    
    
    (4,343,085
    )
    
    
    
    
    
    
    Prepaid expenses
    
    
    (83,464
    )
    
    
    35,327
    
    
    
    84,488Other receivables
    
    
    (551,434
    )
    
    
    (518,718
    )
    
    
    (143,609
    )Other current assets
    
    
    (7,837
    )
    
    
    (26,044
    )
    
    
    237,236Restricted cash
    
    
    
    
    
    
    850,000
    
    
    
    (850,000
    )Other assets
    
    
    27,879
    
    
    
    7,232
    
    
    
    175,724Accounts payable
    
    
    (194,530
    )
    
    
    1,809,946
    
    
    
    846,768Accrued expenses and other
    
    
    1,100,145
    
    
    
    (593,049
    )
    
    
    1,626,954Deferred revenue
    
    
    6,795,944
    
    
    
    2,338,857
    
    
    
    (332,402
    )Other deferred liability
    
    
    7,883
    
    
    
    (79,403
    )
    
    
    56,149Net cash used in operating activities
    
    
    (3,952,944
    )
    
    
    (5,772,737
    )
    
    
    (351,274
    )CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (1,123,360
    )
    
    
    (1,431,037
    )
    
    
    (376,419
    )Acquisition of businesses, net of cash acquired  SSI
    
    
    116,987
    
    
    
    (3,208,758
    )
    
    
    Acquisition of CinemasOnline
    
    
    (3,647,437
    )
    
    
    
    
    
    
    Acquisition escrow
    
    
    
    
    
    
    (750,000
    )
    
    
    Acquisition of intangible assets
    
    
    
    
    
    
    (218,421
    )
    
    
    Net cash used in investing activities
    
    
    (4,653,810
    )
    
    
    (5,608,216
    )
    
    
    (376,419
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds
from shareholder/officer loan
    
    
    
    
    
    
    
    
    
    
    700,000Payments of shareholder/officer loan
    
    
    
    
    
    
    (600,000
    )
    
    
    (100,000
    )Proceeds from issuance of shares to consultants
    
    
    780,000
    
    
    
    670,000
    
    
    
    150,000Net repayments to factor
    
    
    
    
    
    
    (196,056
    )
    
    
    (141,421
    )Proceeds received from exercise of stock options
    
    
    1,326,290
    
    
    
    450,355
    
    
    
    Proceeds received from exercise of warrants, net
    
    
    803,664
    
    
    
    765,508
    
    
    
    Net proceeds from issuance of common stock in private placement
    
    
    
    
    
    
    15,057,504
    
    
    
    Payments under capital lease obligations
    
    
    (171,267
    )
    
    
    (303,963
    )
    
    
    (355,125
    )Proceeds from issuance of senior unsecured notes, net of issuance costs
    
    
    6,595,690
    
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    9,334,377
    
    
    
    15,843,348
    
    
    
    253,454Net increase (decrease) in cash and cash equivalents
    
    
    727,623
    
    
    
    4,462,395
    
    
    
    (474,239
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    6,330,394
    
    
    
    1,867,999
    
    
    
    2,342,238CASH AND CASH EQUIVALENTS, end of period
    
    
    7,058,017
    
    
    $
    6,330,394
    
    
    $
    1,867,999SUPPLEMENTAL SCHEDULE OF CASH RELATED ACTIVITIES:Interest paid
    
    $
    38,989
    
    
    $
    55,411
    
    
    $
    126,734
  43




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##### Table of Contents



HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2005, 2004 AND 2003
 BACKGROUND:
     44




---



##### Table of Contents



45




---



##### Table of Contents



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
  Accounting Estimates
  Cash and Cash Equivalents
  Receivables
  46




---



##### Table of Contents



Allowance for Doubtful Accounts
  Additions (Deductions)Balance at
    
    
    Charges to
    
    
    Charged
    
    
    
    
    
    
    Balance atBeginning
    
    
    costs and
    
    
    to other
    
    
    
    
    
    
    end ofof period
    
    
    expenses
    
    
    accounts
    
    
    Write Offs
    
    
    periodAllowance for
doubtful accounts:2005
    
    $
    394,183
    
    
    $
    111,170
    
    
    $
    1,473,541
    (A)
    
    $
    (86,898
    )(B)
    
    $
    1,891,9962004
    
    $
    259,109
    
    
    $
    174,034
    
    
    $
    49,014
    (A)
    
    $
    (87,974
    )(B)
    
    $
    394,1832003
    
    $
    307,398
    
    
    $
    134,061
    
    
    $
    7,715
    (A)
    
    $
    (190,065
    )(B)
    
    $
    259,109
 Notes:
    
    (A) Principally increases to the allowance due to
acquired businesses and collections on accounts previously written off.
(B) Uncollectible accounts written off.
 Inventories Held for Sale and Deferred Ticket Costs
   Property and Equipment
  47




---



##### Table of Contents



Furniture and fixtures
    
    5 yearsEquipment and software
    
    3 yearsWebsite development
    
    3 yearsEquipment under capital leases
    
    Term of leaseLeasehold improvements
    
    Term of leaseInternally developed software
    
    3 years upon implementation
  Website Development Costs and Internally Developed Software
   Goodwill and Intangible Assets
  Impairment of Long-Lived Assets
  48




---



##### Table of Contents



Revenue Recognition
  Ticketing
     Shipping and Handling.
 Syndication and Royalties
 49




---



##### Table of Contents



Advertising
 Book Packaging and Licenses
  Barter Transactions
   Segment Information
  Loss Per Common Share
   Stock-Based Compensation Expense for Stock Options
  50




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003Reported net loss
    
    $
    (8,913,182
    )
    
    $
    (11,597,799
    )
    
    $
    (7,441,687
    )Non-cash compensation expense under intrinsic value method
    
    
    
    
    
    
    9,141
    
    
    
    Stock-based employee compensation expense under the fair
value method
    
    
    (2,121,210
    )
    
    
    (1,521,644
    )
    
    
    (2,617,896
    )Adjusted net loss
    
    $
    (11,034,392
    )
    
    $
    (13,110,302
    )
    
    $
    (10,059,583
    )Reported net loss per share
    
    $
    (0.28
    )
    
    $
    (0.42
    )
    
    $
    (0.36
    )Adjusted net loss per share
    
    $
    (0.35
    )
    
    $
    (0.47
    )
    
    $
    (0.48
    )Weighted average common and common equivalent shares
Outstanding  basic and diluted
    
    
    31,470,307
    
    
    
    27,784,850
    
    
    
    20,829,183
  2005
    
    
    2004
    
    
    2003Average risk free interest rate
    
    
    4.33
    %
    
    
    3.88
    %
    
    
    3.00
    %Expected lives of options (years):Two year options
    
    
    2
    
    
    
    2
    
    
    
    2Three year options
    
    
    3
    
    
    
    3
    
    
    
    3Five and Ten year options
    
    
    5
    
    
    
    5
    
    
    
    5Expected volatility range
    
    
    66.9% - 78.2
    %
    
    
    74.1% - 84.2
    %
    
    
    78.6% - 89.9
    %
  Advertising Costs
  51




---



##### Table of Contents



Self-Insurance Accruals
  401(K) Plan
  Reclassifications
   STOCK OPTION PLANS; WARRANTS; AND EMPLOYEE STOCK BASED COMPENSATION:
 Shareholder-Approved Plans
  52




---



##### Table of Contents



Warrants
  1993 Stock Option Plan
    2000 Stock Incentive Plan
   53




---



##### Table of Contents



2004 Stock Incentive Plan
    54




---



##### Table of Contents



Directors Stock Option Plan
   Table of Stock Option and Warrant Activity
  Stock Options
    
    
    WarrantsWeighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at December 31, 2002
    
    
    2,278,796
    
    
    $
    7.92
    
    
    
    2,627,054
    
    
    $
    7.33Granted
    
    
    861,000
    
    
    
    1.39
    
    
    
    97,500
    
    
    
    1.01Exercised
    
    
    (65,000
    )
    
    
    1.33
    
    
    
    
    
    
    
    Cancelled
    
    
    (222,440
    )
    
    
    9.46
    
    
    
    
    
    
    
    Expired
    
    
    (82,853
    )
    
    
    5.37
    
    
    
    (455,282
    )
    
    
    8.18Outstanding at December 31, 2003
    
    
    2,769,503
    
    
    
    6.00
    
    
    
    2,269,272
    
    
    
    6.88Granted
    
    
    260,000
    
    
    
    3.12
    
    
    
    1,828,466
    
    
    
    2.84Exercised
    
    
    (319,500
    )
    
    
    1.41
    
    
    
    (288,750
    )
    
    
    2.85Cancelled
    
    
    (104,020
    )
    
    
    7.99
    
    
    
    (96,460
    )
    
    
    2.84Expired
    
    
    (373,782
    )
    
    
    13.88
    
    
    
    (591,663
    )
    
    
    12.73Outstanding at December 31, 2004
    
    
    2,232,201
    
    
    
    4.50
    
    
    
    3,120,865
    
    
    
    3.95Granted
    
    
    515,500
    
    
    
    4.29
    
    
    
    700,000
    
    
    
    4.29Exercised
    
    
    (606,714
    )
    
    
    2.19
    
    
    
    (644,771
    )
    
    
    2.22Cancelled
    
    
    (52,922
    )
    
    
    4.28
    
    
    
    
    
    
    
    Expired
    
    
    (244,622
    )
    
    
    9.51
    
    
    
    (22,433
    )
    
    
    8.69Outstanding at December 31, 2005
    
    
    1,843,443
    
    
    $
    4.56
    
    
    
    3,153,661
    
    
    $
    4.35
 Shares Available for Future Grant under Stock Plans
  55




---



##### Table of Contents



Tables on Values, Prices and Outstanding Options and Warrants
  2005
    
    
    2004
    
    
    2003Exercise
Price Equals Market PriceWeighted average exercise price
    
    $
    4.32
    
    
    $
    3.55
    
    
    $
    1.41Weighted average fair value
    
    
    2.75
    
    
    
    2.47
    
    
    
    .93Exercise
Price Exceeds Market PriceWeighted average exercise price
    
    
    4.06
    
    
    
    
    
    
    
    Weighted average fair value
    
    
    2.52
    
    
    
    
    
    
    
    Exercise
Price is Less Than Market PriceWeighted average exercise price
    
    
    
    
    
    
    3.46
    
    
    
    Weighted average fair value
    
    $
    
    
    
    $
    2.52
    
    
    $
    
  OPTIONS AND WARRANTS OUTSTANDING
    
    EXERCISABLEWeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedRange of
    
    
    
    
    
    Remaining
    
    Average
    
    
    
    
    
    AverageExercise
    
    Number
    
    Contractual
    
    Exercise
    
    Number
    
    ExercisePrice
    
    Outstanding
    
    Life (Years)
    
    Price
    
    Exercisable
    
    Price$    .01-$  2.90
    
    
    1,537,206
    
    
    
    3.17
    
    
    $
    2.51
    
    
    
    1,451,144
    
    
    $
    2.573.00-    5.99
    
    
    2,811,336
    
    
    
    2.98
    
    
    
    4.28
    
    
    
    2,700,586
    
    
    
    4.306.00-    6.50
    
    
    467,562
    
    
    
    .34
    
    
    
    6.39
    
    
    
    467,062
    
    
    
    6.396.51-    9.75
    
    
    36,000
    
    
    
    4.41
    
    
    
    9.75
    
    
    
    36,000
    
    
    
    9.759.76-  16.50
    
    
    45,000
    
    
    
    3.95
    
    
    
    16.50
    
    
    
    45,000
    
    
    
    16.50$16.51-$21.42
    
    
    100,000
    
    
    
    3.58
    
    
    
    21.42
    
    
    
    100,000
    
    
    
    21.424,997,104
    
    
    
    2.82
    
    
    $
    4.43
    
    
    
    4,799,792
    
    
    $
    4.50
 Employee Stock Based Compensation
  ACQUISITIONS AND OTHER CAPITAL TRANSACTIONS:
 BroadwayTheater.com Acquisition
  56




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##### Table of Contents



Filmtracker Acquisition
  
    
    an issuance of a five year option on Baseline stock with a $2 million exercise price; and
    
    the issuance of a put and call option on Hollywood Media common stock.
   Studio Systems Acquisition
  57




---



##### Table of Contents



Purchase consideration
    
    $
    4,867,372Cash acquired
    
    $
    265,601Accounts receivable
    
    
    524,992Other current assets
    
    
    45,601Property, plant and equipment, net
    
    
    133,585Intangible assets
    
    
    670,199Total assets
    
    $
    1,639,978Current liabilities
    
    $
    (328,374
    )Obligations under capital leases
    
    
    (45,019
    )Deferred revenue
    
    
    (638,683
    )Total liabilities
    
    $
    (1,102,076
    )NET ASSETS ACQUIRED
    
    $
    627,902Excess of the purchase consideration over fair value
of net assets acquired
    
    $
    4,239,470
   Year Ended December 31,
    
    
    Year Ended December 31,2004
    
    
    2003Proforma Net Sales
    
    $
    74,334,794
    
    
    $
    67,461,944Proforma Net Loss
    
    $
    (11,310,094
    )
    
    $
    (8,297,187
    )Proforma Net loss per share
    
    $
    (0.41
    )
    
    $
    (0.40
    )Proforma Weighted average common and
common equivalent shares
    
    
    27,821,275
    
    
    
    20,902,432
 58




---



##### Table of Contents



CinemasOnline Acquisition
  Purchase consideration
    
    $
    3,895,657Less cash in escrow
    
    
    (107,314
    )Adjusted purchase consideration
    
    $
    3,788,343Accounts receivable
    
    
    2,023,965Other current assets
    
    
    1,113,264Property, plant and equipment, net
    
    
    218,509Intangible assets
    
    
    1,250,000Total assets
    
    $
    4,605,738Current liabilities
    
    $
    (1,087,779
    )Deferred revenue
    
    
    (2,603,466
    )Total liabilities
    
    $
    (3,691,245
    )NET ASSETS
    
    $
    914,493Excess of the purchase consideration over fair value
of net assets acquired (included in Internet advertising
segment
    
    $
    2,873,850
   Year Ended December 31,
    
    
    Year Ended December 31,2005
    
    
    2004(unaudited)
    
    
    (unaudited)Proforma Net Sales
    
    $
    99,691,707
    
    
    $
    78,803,482Proforma Net Loss
    
    $
    (8,706,150
    )
    
    $
    (10,912,779
    )Proforma Net loss per share
    
    $
    (0.28
    )
    
    $
    (0.39
    )Proforma weighted average common and
common equivalent shares
    
    $
    31,470,307
    
    
    $
    27,821,275
 59




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FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK:
      RECENTLY ISSUED ACCOUNTING STANDARDS:
 Inventory Costs
 Share-Based Payment (SFAS
123R) Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees.
 60




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Exchanges of Nonmonetary Assetsan amendment
of APB Opinion No. 29 Accounting for
Nonmonetary Transactions
 Reporting Accounting Changes in Interim Financial
Statements Accounting Changes Reporting Accounting Changes in Interim Financial Statements,
 Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock Accounting for Derivative Instruments and Hedging Activities
 The Meaning of Conventional
Convertible Debt Instrument in Issue No. 00-19 Accounting
for Derivative Instruments and Hedging Activities
 Determining the Amortization
period for Leasehold Improvements Purchased After Lease Inception or Acquired in a Business
Combination
 61




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PROPERTY AND EQUIPMENT, NET:
  December 31,2005
    
    
    2004Furniture and fixtures
    
    $
    879,654
    
    
    $
    817,793Equipment and software
    
    
    7,471,994
    
    
    
    6,495,325Website development
    
    
    878,112
    
    
    
    568,380Equipment under capital leases
    
    
    1,562,075
    
    
    
    1,475,667Leasehold improvements
    
    
    444,608
    
    
    
    347,841Internally developed software project in
progress
    
    
    3,350
    
    
    
    171,36411,239,793
    
    
    
    9,876,370Less: Accumulated depreciation andamortization
    
    
    (8,801,185
    )
    
    
    (7,421,330
    )$
    2,438,608
    
    
    $
    2,455,040
   GOODWILL AND INTANGIBLE ASSETS:
  Balance at
    
    
    
    
    
    
    Balance at
    
    
    
    
    
    
    Balance atDecember 31,
    
    
    Acquisition
    
    
    December 31,
    
    
    
    
    
    
    December 31,2005
    
    
    and Other
    
    
    2004
    
    
    Acquisition
    
    
    2003Broadway Ticketing
    
    $
    3,523,856
    
    
    $
    
    
    
    $
    3,523,856
    
    
    $
    
    
    
    $
    3,523,856Data Business
    
    
    20,092,446
    
    
    
    75,723
    
    
    
    20,016,723
    
    
    
    4,163,747
    
    
    
    15,852,976Internet Ad Sales and Other
    
    
    24,062,642
    
    
    
    2,873,849
    
    
    
    21,188,793
    
    
    
    
    
    
    
    21,188,793Intellectual Properties
    
    
    248,057
    
    
    
    
    
    
    
    248,057
    
    
    
    
    
    
    
    248,057Total
    
    $
    47,927,001
    
    
    $
    2,949,572
    
    
    $
    44,977,429
    
    
    $
    4,163,747
    
    
    $
    40,813,682
 62




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Balance at December 31,2005
    
    
    2004Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    NetPatents and trademarks
    
    $
    697,057
    
    
    $
    (232,724
    )
    
    $
    464,333
    
    
    $
    203,368
    
    
    $
    (123,891
    )
    
    $
    79,477Web addresses
    
    
    2,492,243
    
    
    
    (2,226,164
    )
    
    
    266,079
    
    
    
    2,492,243
    
    
    
    (1,967,219
    )
    
    
    525,024Baseline technology
    
    
    1,182,070
    
    
    
    (938,016
    )
    
    
    244,054
    
    
    
    1,182,070
    
    
    
    (701,602
    )
    
    
    480,468Other
    
    
    1,963,250
    
    
    
    (517,994
    )
    
    
    1,445,256
    
    
    
    536,740
    
    
    
    (105,724
    )
    
    
    431,016Total
    
    $
    6,334,620
    
    
    $
    (3,914,898
    )
    
    $
    2,419,722
    
    
    $
    4,414,421
    
    
    $
    (2,898,436
    )
    
    $
    1,515,985
  Year
    
    Amount2006
    
    $
    1,146,6862007
    
    
    684,5412008
    
    
    515,3682009
    
    
    53,5892010
    
    
    11,988Thereafter
    
    
    7,550Total
    
    $
    2,419,722
     63




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CAPITAL LEASE OBLIGATIONS:
  Year
    
    Amount2006
    
    $
    96,2652007
    
    
    59,9522008
    
    
    13,4172009
    
    
    4,3672010
    
    
    4,002Minimum lease payments
    
    
    178,003Less amount representing imputed interest
    
    
    (14,091
    )Present value of net minimum lease payments
    
    
    163,912Less: current portion
    
    
    (86,418
    )$
    77,494
 DEBT:
 TDI Promissory Note
  64




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CEO Commitments
   Senior Unsecured Notes
   65




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May 2002 Convertible Debentures
    66




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##### Table of Contents



CinemaSource Guaranty
  ACCRUED EXPENSES AND OTHER:
  December 31,2005
    
    
    2004Compensation and benefits
    
    $
    2,076,731
    
    
    $
    1,440,671Professional fees
    
    
    1,033,642
    
    
    
    968,076Customer deposits
    
    
    625,087
    
    
    
    248,702Accrued hotel package expense
    
    
    577,871
    
    
    
    579,365Accrued ticket costs
    
    
    545,483
    
    
    
    548,573Accrued sales tax
    
    
    281,384
    
    
    
    15,561Accrued credit card fees
    
    
    257,515
    
    
    
    224,254Accrued insurance
    
    
    255,108
    
    
    
    152,235Liability for non-compete
clause-acquisition
    
    
    
    
    
    
    255,000Other
    
    
    847,377
    
    
    
    740,483$
    6,500,198
    
    
    $
    5,172,920
 67




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OFFERINGS OF SECURITIES:
               68




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69




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70




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71




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Year Ended December 31,2005
    
    
    2004
    
    
    2003Selling,
general and administrative expensesConsulting services (a)
    
    $
    103,960
    
    
    $
    223,940
    
    
    $
    145,404Employee stock bonus
    
    
    
    
    
    
    9,141
    
    
    
    55,164Stock incentive program
    
    
    
    
    
    
    
    
    
    
    162,500$
    103,960
    
    
    $
    233,081
    
    
    $
    363,068
 
 (a)
    
    Consulting services include payments to third parties for investor relation services and
investment banking services. 72




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INCOME TAXES:
   2008
    
    $
    528,2852009
    
    
    5,064,6082010
    
    
    7,989,6002011
    
    
    6,202,2672017
    
    
    5,771,1962018
    
    
    7,949,7572019
    
    
    18,526,9892020
    
    
    43,159,6232021
    
    
    37,552,3592022
    
    
    76,867,2122023
    
    
    9,728,0582024
    
    
    8,719,1192025
    
    
    7,740,727$
    235,799,800
  2005
    
    
    2004Net tax basis in excess of book basis for certain assets
and liabilities
    
    $
    3,630,318
    
    
    $
    2,963,399Net operating loss carryforwards
    
    
    89,368,124
    
    
    
    86,078,35492,998,442
    
    
    
    89,041,753Valuation allowance
    
    
    (92,998,442
    )
    
    
    (89,041,753
    )Net deferred tax asset/liability
    
    $
    
    
    
    $
    
  73




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For the Year Ended December 31,2005
    
    
    2004
    
    
    2003Income tax benefit at Federal statutory tax rate
    
    $
    (3,119,614
    )
    
    $
    (4,059,230
    )
    
    $
    (2,604,590
    )State income tax benefit (net of Federal benefit)
    
    
    (251,027
    )
    
    
    (336,336
    )
    
    
    (215,809
    )Change in valuation allowance
    
    
    3,956,689
    
    
    
    3,508,431
    
    
    
    4,098,792Non deductible expense
    
    
    25,284
    
    
    
    746,000
    
    
    
    517,000Other
    
    
    (611,332
    )
    
    
    141,135
    
    
    
    (1,795,393
    )Provision for income taxes
    
    $
    
    
    
    $
    
    
    
    $
    
 INVESTMENTS IN AND ADVANCES TO EQUITY METHOD UNCONSOLIDATED INVESTEES:
  December 31,2005
    
    
    2004NetCo Partners (a)
    
    $
    551,882
    
    
    $
    440,484MovieTickets.com (b)
    
    
    (4,975
    )
    
    
    (4,975
    )$
    546,907
    
    
    $
    435,509
   Tom Clancys NetForce
 Tom Clancys NetForce Tad Williams MirrorWorld Arthur C. Clarkes Worlds of Alexander Neil
Gaimans Lifers Anne McCaffreys Saraband
   74




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Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    $
    1,429,783
    
    
    $
    1,449,129
    
    
    $
    2,707,010Gross Profit
    
    
    1,225,703
    
    
    
    1,236,325
    
    
    
    2,274,568Net Income
    
    
    1,066,469
    
    
    
    1,152,634
    
    
    
    1,915,362Companys Share
of Net Income
    
    $
    533,234
    
    
    $
    576,317
    
    
    $
    957,681
        75




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##### Table of Contents



Year Ended December 31,2005
    
    
    2004
    
    
    2003(unaudited)
    
    
    (unaudited)Revenues
    
    $
    8,697,654
    
    
    $
    6,609,014
    
    
    $
    5,713,059Cost and Expenses
    
    
    10,945,241
    
    
    
    8,231,045
    
    
    
    7,756,711Depreciation and Amortization
    
    
    3,290,498
    
    
    
    3,606,364
    
    
    
    3,458,273Net Loss
    
    $
    (2,243,108
    )
    
    $
    (1,621,254
    )
    
    $
    (2,022,142
    )
  Year Ended December 31,2005
    
    
    2004(unaudited)
    
    
    (unaudited)Cash
    
    $
    4,110,862
    
    
    $
    4,023,660Accounts Receivable, Net
    
    
    4,386,585
    
    
    
    2,092,365Accrued Expenses and
Other Liabilities
    
    $
    3,488,613
    
    
    $
    2,088,283
  COMMITMENTS AND CONTINGENCIES:
 Operating Leases 
  Year
    
    Amount2006
    
    $
    1,259,9752007
    
    
    1,043,3502008
    
    
    592,7832009
    
    
    372,7842010
    
    
    233,040Thereafter
    
    
    Total
    
    $
    3,501,932
 76




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Placement Agent Commissions 
  Self Insurance Medical 
  Employment Agreements: Chief Executive Officer and President 
     77




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Packaging Agreement 
  78




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Litigation 
       79




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80




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##### Table of Contents



2005
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    2003CASH
FLOWS FROM OPERATING ACTIVITIES:Interest paid in stock
    
    $
    (59,999
    )
    
    (1)
    
    
    
    $
    (357,858
    )
    
    
    (8
    )
    
    $
    (461,136
    )
    
    
    (18
    )(22)Additional beneficial conversion feature
resulting from change in warrant
exercise price
    
    
    
    
    
    
    
    
    
    
    (707,070
    )
    
    
    (13
    )
    
    
    Issuance of compensatory stock options and
warrants for services rendered
    
    
    
    
    
    
    
    
    
    
    (233,081
    )
    
    
    (14
    )
    
    
    (248,281
    )
    
    
    (25
    )Issuance of compensatory stock for
services rendered
    
    
    (103,960
    )
    
    (2)
    
    
    
    
    (87,264
    )
    
    
    (4
    )
    
    
    (145,404
    )
    
    
    (19
    )Issuance of shares to employees as
compensation
    
    
    (101,329
    )
    
    (5)
    
    
    
    
    (35,000
    )
    
    
    (10
    )
    
    
    Changes in assets and liabilities:Prepaid expenses
    
    
    
    
    
    
    
    
    
    
    (158,000
    )
    
    
    (11
    )
    
    
    Other accrued expenses
    
    
    (193,762
    )
    
    (3)
    
    
    
    
    (139,987
    )
    
    
    (7
    )
    
    
    (296,083
    )
    
    
    (24
    )Total non-cash operating activities
    
    $
    (459,050
    )
    
    
    
    
    
    $
    (1,718,260
    )
    
    
    
    
    
    $
    (1,150,904
    )CASH FLOWS FROM INVESTING ACTIVITIES:Acquisition of assets in acquired companies
    
    $
    (144,000
    )
    
    (4)
    
    
    
    $
    (300,000
    )
    
    
    (6
    )
    
    $
    Acquisition of property and equipment
under capital leases
    
    
    (110,408
    )
    
    
    
    
    
    
    (53,053
    )
    
    
    
    
    
    
    (158,212
    )Acquisition of intangible asset
    
    
    
    
    
    
    
    
    
    
    (224,743
    )
    
    
    (9
    )
    
    
    Acquisition cost paid with common stock
    
    
    
    
    
    
    
    
    
    
    (250,000
    )
    
    
    (12
    )
    
    
    (39,714
    )
    
    
    (20
    )Acquisition cost financed with note payable
    
    
    
    
    
    
    
    
    
    
    (510,000
    )
    
    
    (16
    )
    
    
    Total non-cash investing activities
    
    $
    (254,408
    )
    
    
    
    
    
    $
    (1,337,796
    )
    
    
    
    
    
    $
    (197,926
    )CASH FLOWS FROM FINANCING ACTIVITIES:Conversion of convertible debentures to
    
    $
    
    
    
    
    
    
    
    $
    (4,700,000
    )
    
    
    (15
    )
    
    $
    common stock
Payment of debt in connection with the
acquisition of TDI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (430,041
    )
    
    
    (23
    )Obligations acquired under capital leases
    
    
    110,408
    
    
    
    
    
    
    
    53,053
    
    
    
    
    
    
    
    158,212Acquisition cost financed with note payable
    
    
    
    
    
    
    
    
    
    
    510,000
    
    
    
    (16
    )
    
    
    Stock options issued for compensation and
payments for services rendered
    
    
    
    
    
    
    
    
    
    
    233,081
    
    
    
    (14
    )
    
    
    393,685
    
    
    
    (25
    )Acquisition costs paid with stock-based
compensation
    
    
    144,000
    
    
    (4)
    
    
    
    
    
    
    
    
    
    
    Stock warrants issued for a prepaid asset
    
    
    
    
    
    
    
    
    
    
    158,000
    
    
    
    (11
    )
    
    
    Common stock issued for compensation to an
employee
    
    
    101,329
    
    
    (5)
    
    
    
    
    35,000
    
    
    
    (10
    )
    
    
    Common stock issued to consultants in
return for services rendered
    
    
    103,960
    
    
    (2)
    
    
    
    
    87,264
    
    
    
    (9
    )
    
    
    Common stock issued for services rendered
in acquiring an intangible asset
    
    
    
    
    
    
    
    
    
    
    224,743
    
    
    
    (9
    )
    
    
    Common stock issued in lieu of interest
payments on convertible debentures
    
    
    59,999
    
    
    
    
    
    
    
    357,858
    
    
    
    (8
    )
    
    
    312,001Common stock issued for contributions to
Company 401(k) Plan
    
    
    193,762
    
    
    (3)
    
    
    
    
    139,987
    
    
    
    (7
    )
    
    
    155,783Common stock issued for assets
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    (6
    )
    
    
    Common stock issued as part of purchase
price for Studio Systems, Inc.
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    (12
    )
    
    
    Common stock issued as part of an earn out
provision in connection with the acquisition
of BroadwayTheater.com
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,714
    
    
    
    (20
    )Common stock issued pursuant to a guaranty
on a CinemaSource note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    149,135
    
    
    
    (22
    )Common stock issued to satisfy debt in
connection with the acquisition of TDI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    430,041
    
    
    
    (23
    )Common Stock issued pursuant to a guaranty
on a promissory note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common tock issued as part of a
settlement of an employment agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140,300
    
    
    
    (24
    )Common stock issued for exercise of
warrants attached to Convertible Debentures
    
    
    
    
    
    
    
    
    
    
    4,700,000
    
    
    
    (15
    )
    
    
    Additional interest expense for change in
warrant exercise price
    
    
    
    
    
    
    
    
    
    
    707,070
    
    
    
    (13
    )
    
    
    Total non-cash financing activities
    
    $
    713,458
    
    
    
    
    
    
    $
    3,056,056
    
    
    
    
    
    
    $
    1,348,830
 
 (1)
    
    Hollywood Media issued 13,620 shares of common stock valued at $59,999, for
interest due to holders of Convertible Debentures of the Company (the Convertible
Debentures) (See Note 10).(2)
    
    Hollywood Media issued 22,237 shares of common stock valued at $103,960 in connection
with utilization of a third partys services for consulting work.(3)
    
    Hollywood Media issued 39,951 shares of common stock valued at $193,762, for payment of
Hollywood Medias 401(k) employer match for calendar year 2004 (See Note 2).(4)
    
    Pursuant to a consulting agreement with an independent third party, the third party
provided services to the Company relating to the CinemasOnline acquisition in exchange for
options to acquire 200,000 shares of the Companys common stock at $3.90 per share. During
2005, the third party paid $780,000 in cash and exercised its options to acquire the 200,000
shares of the Companys common stock. The options were valued at $144,000 and were recorded
as goodwill relating to the CinemasOnline acquisition.(5)
    
    Hollywood Media issued 22,655 shares of common stock valued at $101,329 to employees for
services rendered.(6)
    
    Hollywood Media issued 91,463 shares of common stock, valued at $300,000, for the assets
of Front Row Marketing (see Note 8). 81




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##### Table of Contents



(7)
    
    Hollywood Media issued 52,627 shares of common stock valued at $139,987, for payment of
Hollywood Medias 401(k) employer match for calendar year 2003 (see Note 2).(8)
    
    Hollywood Media issued 157,605 shares of common stock, valued at $357,858, for interest
due to holders of its Convertible Debentures (see Note 10).(9)
    
    Hollywood Media issued 68,104 shares of common stock, valued at $224,743, in connection
with utilization of a third partys services to obtain certain intangible assets for the
Broadway Ticketing division (see Note 4). On November 30, 2004, Hollywood Media issued
20,000 shares of common stock valued at $87,264 for services rendered by consultants.(10)
    
    Hollywood Media issued 2,857 shares of common stock valued at $10,000, to an employee
as additional compensation. On September 8, 2004, Hollywood Media issued 7,526 shares of
common stock valued at $25,000, to an employee as additional compensation pursuant to an
employment agreement.(11)
    
    Hollywood Media issued 200,000 shares of common stock to an independent third party,
pursuant to a consulting agreement providing an option to purchase the shares for $500,000,
for services rendered in connection with a proposed accretive acquisition for the Broadway
Ticketing division (see Note 4). This agreement included $158,000 of stock based
compensation, which was recorded to prepaid acquisition costs.(12)
    
    Hollywood Media issued 73,249 shares of common stock, valued at $250,000, as part of
the purchase price to acquire Studio Systems, Inc. (see Note 4).(13)
    
    As a result of the reduction of the conversion price on warrants attached to the
Convertible Debentures, a total of $707,070 was recorded as additional beneficial conversion
costs (see Note 10).(14)
    
    Stock options and warrants of Hollywood Media, valued at $233,081, were issued during
2004 for services rendered to the Company.(15)
    
    The principal amount of $4.7 million in the Convertible Debentures was converted to
1,540,985 shares of Hollywood Media common stock (see Note 10).(16)
    
    As part of the purchase price to acquire Studio Systems Inc., Hollywood Media agreed to
tender 12 monthly payments of $42,500, commencing July 2004.(17)
    
    155,783 shares of Hollywood Media common stock valued at $155,783 were issued as
payment of Hollywood Medias 401(k) employer match for calendar year 2002 (see Note 2).(18)
    
    Hollywood Media issued 315,240 shares of common stock, valued at $312,001 for interest
due to the holders of the Convertible Debentures (see Note 12).(19)
    
    Options and warrants valued at $145,404 were granted for services rendered.(20)
    
    Hollywood Media issued 28,571 shares of common stock valued at $39,714 under terms of
an earn-out provision in connection with the acquisition of BroadwayTheater.com (see Note
4).(21)
    
    Hollywood Media issued 358,638 shares of common stock, valued at $304,164, of which
$162,500 is deferred compensation, pursuant to employment agreements with Hollywood Media
executives (see Note 15). 82




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##### Table of Contents



(22)
    
    Hollywood Media issued 107,836 shares of common stock, valued at $149,135 pursuant to a
guaranty agreement entered into with the purchaser of a CinemaSource note sold by Hollywood
Media.(23)
    
    Hollywood Media issued 319,835 shares of common stock, valued at $430,041, as payment
for debt in connection with the acquisition of Theatre Direct NY Inc., d/b/a Theatre Direct
International (TDI) and a related guaranty granted to the former owner of TDI on Hollywood
Media shares held by the former owner.(24)
    
    Hollywood Media issued 115,000 shares of common stock, valued at $140,300 to a former
employee in connection with settlement of such persons employment agreement.(25)
    
    Hollywood Media issued 152,500 shares of common stock, valued at $248,281, in
accordance with third party consulting agreements. Of this amount, $150,000 was received in
cash during 2003. SEGMENT REPORTING:
   83




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Year Ended December 31,2005
    
    
    2004
    
    
    2003Net Revenues:Broadway Ticketing
    
    $
    78,890,718
    
    
    $
    59,689,971
    
    
    $
    52,266,539Data Business
    
    
    10,618,631
    
    
    
    7,990,473
    
    
    
    6,940,971Internet Ad Sales
    
    
    4,513,676
    
    
    
    2,814,921
    
    
    
    2,812,173Intellectual Properties
    
    
    1,550,580
    
    
    
    2,483,302
    
    
    
    2,836,279Cable TV
    
    
    40,834
    
    
    
    
    
    
    
    3,000Other
    
    
    
    
    
    
    
    
    
    
    $
    95,614,439
    
    
    $
    72,978,667
    
    
    $
    64,858,962Operating Income (Loss):Broadway Ticketing
    
    $
    2,798,186
    
    
    $
    1,554,186
    
    
    $
    1,427,595Data Business
    
    
    2,307,507
    
    
    
    537,645
    
    
    
    613,153Internet Ad Sales (a)
    
    
    (1,854,557
    )
    
    
    (2,419,421
    )
    
    
    (3,064,541
    )Intellectual Properties
    
    
    379,636
    
    
    
    807,221
    
    
    
    1,062,798Cable TV
    
    
    (679,932
    )
    
    
    (872,901
    )
    
    
    (897,104
    )Other
    
    
    (11,835,716
    )
    
    
    (9,557,954
    )
    
    
    (6,697,637
    )$
    (8,884,876
    )
    
    $
    (9,951,224
    )
    
    $
    (7,555,736
    )Capital Expenditures (b)Broadway Ticketing
    
    $
    83,373
    
    
    $
    135,364
    
    
    $
    143,525Data Business
    
    
    241,197
    
    
    
    229,052
    
    
    
    121,450Internet Ad Sales
    
    
    252,803
    
    
    
    561,515
    
    
    
    21,872Intellectual Properties
    
    
    
    
    
    
    
    
    
    
    Cable TV
    
    
    1,948
    
    
    
    11,156
    
    
    
    8,640Other
    
    
    544,039
    
    
    
    493,950
    
    
    
    80,932$
    1,123,360
    
    
    $
    1,431,037
    
    
    $
    376,419Depreciation andAmortization Expense:Broadway Ticketing
    
    $
    288,690
    
    
    $
    236,720
    
    
    $
    388,046Data Business
    
    
    1,145,267
    
    
    
    744,665
    
    
    
    758,209Internet Ad Sales
    
    
    490,558
    
    
    
    705,735
    
    
    
    1,007,758Intellectual Properties
    
    
    1,955
    
    
    
    2,340
    
    
    
    2,340Cable TV
    
    
    120,761
    
    
    
    223,361
    
    
    
    219,221Other
    
    
    367,182
    
    
    
    308,279
    
    
    
    249,155$
    2,414,413
    
    
    $
    2,221,100
    
    
    $
    2,624,729
 December 31,2005
    
    
    2004Segment Assets:Broadway Ticketing
    
    $
    23,765,601
    
    
    $
    18,882,386Data Business
    
    
    22,795,552
    
    
    
    22,793,500Internet Ad Sales
    
    
    30,117,191
    
    
    
    23,479,910Intellectual Properties
    
    
    738,430
    
    
    
    720,371Cable TV
    
    
    58,553
    
    
    
    149,246Other
    
    
    5,827,623
    
    
    
    3,786,186$
    83,302,950
    
    
    $
    69,811,599
 
 (a)
    
    Includes $0, $38,807 and $885,974 in amortization of CBS advertising for the years
ended December 31, 2005, 2004 and 2003, respectively.(b)
    
    Capital expenditures does not include property and equipment acquired under
capital lease obligations or through acquisitions. 84




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UNAUDITED QUARTERLY FINANCIAL INFORMATION:
 For the quarter ended March 31, 2005
 As previously
    
    
    Restatementreported
    
    
    adjustments
    
    
    RestatedNet revenues
    
    $
    21,885,512
    
    
    $
    (1,634,507
    )
    
    $
    20,251,005Operating loss
    
    
    (2,947,723
    )
    
    
    
    
    
    
    (2,947,723
    )Net loss
    
    
    (2,970,981
    )
    
    
    
    
    
    
    (2,970,981
    )Weighted average shares
    
    
    30,655,878
    
    
    
    
    
    
    
    30,655,878Net loss per share (1)
    
    $
    (.10
    )
    
    $
    
    
    
    $
    (.10
    )
 For the quarter ended June 30, 2005
 As previously
    
    
    Restatementreported
    
    
    adjustments
    
    
    RestatedNet revenues
    
    $
    27,924,483
    
    
    $
    (2,002,100
    )
    
    $
    25,922,383Operating loss
    
    
    (2,386,487
    )
    
    
    
    
    
    
    (2,386,487
    )Net loss
    
    
    (2,006,263
    )
    
    
    
    
    
    
    (2,006,263
    )Weighted average shares
    
    
    31,218,660
    
    
    
    
    
    
    
    31,218,660Net loss per share (1)
    
    $
    (0.06
    )
    
    $
    
    
    
    $
    (0.06
    )
 For the quarter ended September 30, 2005
 As previously
    
    
    Restatementreported
    
    
    adjustments
    
    
    RestatedNet revenues
    
    $
    22,966,293
    
    
    $
    (2,050,876
    )
    
    $
    20,915,417Operating loss
    
    
    (2,473,274
    )
    
    
    
    
    
    
    (2,473,274
    )Net loss
    
    
    (2,514,571
    )
    
    
    
    
    
    
    (2,514,571
    )Weighted average shares
    
    
    31,956,277
    
    
    
    
    
    
    
    31,956,277Net loss per share (1)
    
    $
    (0.08
    )
    
    $
    
    
    
    $
    (0.08
    )
 For the quarter ended December 31, 2005
 ReportedNet revenues
    
    $
    28,525,634Operating loss
    
    
    (1,077,392
    )Net loss
    
    
    (1,421,367
    )Weighted average shares
    
    
    32,029,974Net loss per share (1)
    
    $
    (0.04
    )
 For the quarter ended March 31, 2004
 ReportedNet revenues
    
    $
    14,784,720Operating loss
    
    
    (1,863,271
    )Net loss
    
    
    (1,656,463Weighted average shares
    
    
    24,916,531Net loss per share (1)
    
    $
    (0.07
    )
 85




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##### Table of Contents



For the quarter ended June 30, 2004
 ReportedNet revenues
    
    $
    19,384,310Operating loss
    
    
    (1,321,549
    )Net loss
    
    
    (1,234,091
    )Weighted average shares
    
    
    27,717,948Net loss per share (1)
    
    $
    (0.04
    )
 For the quarter ended September 30, 2004
 ReportedNet revenues
    
    $
    15,102,827Operating loss
    
    
    (2,998,529
    )Net loss
    
    
    (4,791,941
    )Weighted average shares
    
    
    28,336,820Net loss per share (1)
    
    $
    (0.17
    )
 For the quarter ended December 31, 2004
 ReportedNet revenues
    
    $
    23,706,810Operating loss
    
    
    (3,767,875
    )Net loss
    
    
    (3,915,304
    )Weighted average shares
    
    
    30,154,256Net loss per share (1)
    
    $
    (0.13
    )
 
 (1)
    
    Quarterly earnings per share are calculated on an individual basis and, because of
roundings and changes in the weighted average shares outstanding during the year, the summation of
each quarter may not equal the amount calculated for the year as a whole.    86




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##### Table of Contents



RELATED PARTY TRANSACTIONS:
 Lines of Credit from CEO and President
   Performance Bonds for Broadway Ticketing Division
  Joint Venture Transactions
  SUBSEQUENT EVENTS:
  87




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##### Table of Contents



Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 Item 9A. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
   88




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##### Table of Contents




    
    implementing a new general ledger system on October 1, 2005 for Hollywood Media and its
wholly-owned subsidiaries which automates several processes that were previously being
performed manually by the Companys accounting staff, such as cash reconciliations, fixed
asset management and inter-company accounting;
    
    hiring additional skilled accountants, including a Controller for the Broadway Ticketing
Division, to strengthen its existing accounting department in order to better manage the
Companys growth and increased technical complexity of its accounting transactions;
    
    utilizing an outside consulting firm with technical accounting expertise to assist the
accounting department with technical accounting transactions;
    
    appointing an Executive Vice President of Compliance who, with the assistance of outside
consultants with auditing expertise, developed and implemented policies and procedures over
the initiation, authorization, review and approval of transactions;
    
    establishing an Internal Audit department;
    
    holding bi-weekly risk assessment meetings with our executive officers, division heads
and representatives of our human resources, information systems, ad sales, business
development and legal departments to identify and discuss any known business or financial
risks that may affect the Company and develop timely responses to such risks; and
    
    establishing a whistleblower hotline that allows any employee of the Company to
anonymously report to a third party any complaints or concerns regarding accounting
matters, internal accounting controls or auditing matters, and establishing procedures for
the audit committee and senior management to address such complaints or concerns in a
timely manner.
     Managements Report on Internal Control Over Financial Reporting
   89




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##### Table of Contents



Managements Plan to Address Material Weakness
   
    
    The Companys management has licensed a more robust ticketing software system to replace
its existing system and is working with the licensor on the installation process. The
Company anticipates that the implementation of the new ticketing system will be completed
as expeditiously as reasonably possible.
    
    The Company is in the process of restructuring and expanding the Broadway Ticketing
Divisions accounting department which will enable the Division to continue instituting
compensating manual controls during the implementation period for the new ticketing
software system discussed above.
 90




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##### Table of Contents




    
    The Company will utilize the purchase order and receiving functionality within its new
accounts payable system that will introduce additional controls over the timely and
accurate recording of transactions.




Report of Independent Registered Public Accounting Firm





Internal Control  Integrated Framework
















.












ITEM 9B. OTHER INFORMATION .


Entry Into Material Definitive Agreement:


Management Compensation Arrangements.


Employment Agreement with Manager of Hollywood Medias Source Business.






























89



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PART III
 
 Item 10. DIRECTORS AND EXECUTIVE OFFICERS .
  
 Item 11. EXECUTIVE COMPENSATION .
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT .
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .
  
 Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES .
  92




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##### Table of Contents



PART IV
 
 Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
 (a) The following documents are filed as a part of this Annual Report on Form 10-K:
 1. Financial Statements
  
    
    Reports of Independent Registered Public Accounting Firms
    
    Consolidated Balance Sheets as of December 31, 2005 and December 31, 2004
    
    Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003
    
    Consolidated Statements of Shareholders Equity for the Years Ended December 31,
2005, 2004 and 2003
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003
    
    Notes to Consolidated Financial Statements
 2. Financial Statement Schedules
  3. Exhibits
  Exhibit No.
    
    Description
    
    Location of Exhibit3.1
    
    Third Amended and Restated Articles of Incorporation
    
    
    (1
    )3.2
    
    Articles of Amendment to Articles of Incorporation of Hollywood Media Corp. for
Designation of Preferences, Rights and Limitations of Series E Junior Preferred Stock
    
    
    (25
    )3.3
    
    Bylaws
    
    
    (2
    )4.1
    
    Form of Common Stock Certificate
    
    
    (3
    )4.2
    
    Amended and Restated Rights Agreement dated as of August 23, 1996 between
Hollywood Media Corp. (f/k/a Big Entertainment, Inc.) and American Stock
Transfer & Trust Company, as Rights Agent
    
    
    (4
    )4.3
    
    Amendment No. 1, dated as of December 9, 2002, to Amended and Restated Rights Amendment dated as
of August 23, 1996 between Hollywood Media Corp. and American Stock Transfer & Trust Company.
    
    
    (5
    )
 93




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##### Table of Contents



10.1
    
    Compensatory Plans, Contracts and Arrangements
 (a)
    
    Employment Agreement between Hollywood Media Corp. and
Mitchell Rubenstein dated as of July 1, 1993
    
    
    (3
    )(b)
    
    Extension and Amendment Agreement between Hollywood Media Corp. and
Mitchell Rubenstein entered into as of July 1, 1998
    
    
    (6
    )(c)
    
    Employment Agreement between Hollywood Media Corp. and Laurie S. Silvers dated as of July
1, 1993
    
    
    (3
    )(d)
    
    Extension and Amendment Agreement between Hollywood Media Corp. and
Laurie S. Silvers entered into as of July 1, 1998
    
    
    (6
    )(e)
    
    1993 Stock Option Plan, as amended effective October 1, 1999
    
    
    (7
    )(f)
    
    Directors Stock Option Plan, as amended effective May 1, 2003
    
    
    (16
    )(g)
    
    Form of Indemnification Agreement between Hollywood Media and each of
its Directors and Officers
    
    
    (3
    )(h)
    
    2000 Stock Incentive Plan, as amended October 30, 2003
    
    
    (17
    )(i)
    
    Exchange Agreement dated as of December 14, 2001 between Hollywood Media Corp.
and Laurie S. Silvers
    
    
    (8
    )(j)
    
    Exchange Agreement dated as of December 14, 2001 between Hollywood Media Corp.
and Mitchell Rubenstein
    
    
    (8
    )(k)
    
    Extension and Amendment Agreement dated as of May 31, 2004 between Hollywood Media Corp.
and Mitchell Rubenstein
    
    
    (22
    )(l)
    
    Extension and Amendment Agreement dated as of May 31, 2004 between Hollywood Media Corp.
and Laurie S. Silvers
    
    
    (22
    )(m)
    
    Extension and Amendment Agreement dated as of July 1, 2003 between Hollywood Media Corp.
and Mitchell Rubenstein
    
    
    (22
    )(n)
    
    Extension and Amendment Agreement dated as of July 1, 2003 between Hollywood Media Corp.
and Laurie S. Silvers
    
    
    (22
    )(o)
    
    Hollywood Media Corp. 401(k) Retirement Savings Plan, dated as of (2
September 16, 2004 (the Plan); Amendment to the Plan, dated as of September 16, 2004;
related Volume Submitter (Cross-Tested Defined Contribution Plan and Trust);
EGTRRA Amendment to the Plan and Post-EGTRRA Amendment to the Plan,
dated as of September 16, 2004
    
    
    (23
    )(p)
    
    2004 Stock Incentive Plan
    
    
    (24
    )(q)
    
    Amendment Agreement, dated as of November 15, 2004, to Employment Agreement between
Hollywood Media Corp. and Mitchell Rubenstein.
    
    
    (25
    )(r)
    
    Amendment Agreement, dated as of November 15, 2004, to Employment Agreement between
Hollywood Media Corp. and Laurie S. Silvers.
    
    
    (25
    )(s)
    
    Employment Agreement, dated May 19, 2005, by and between Hollywood
Media Corp. and Scott Gomez.
    
    
    (27
    )(t)
    
    Employment Agreement dated
May 24, 2005, by and between Theatre
Direct NY, Inc., Broadway.com, Inc., Hollywood Media Corp. and Mr. Matthew
Kupchin
    
    
    (27
    )(u)
    
    Amendment to Hollywood Media Corp. 401(k) Retirement Savings Plan,
Dated June 16, 2005.
    
    
    (28
    )(v)
    
    Employment Agreement dated as of July 1, 2005, by and between Hollywood
Media Corp. and Nicholas Hall.
    
    
    (28
    )(w)
    
    Employment Agreement dated as of August 8, 2005, by and among
Baseline, Inc., Studio Systems Inc., Hollywood Media Corp. and Rafi Gordon
    
    
    (28
    )(x)
    
    Employment Agreement, dated as of August 8, 2005, by and among
Baseline, Inc., Studio Systems Inc., Hollywood Media Corp. and Alex Amin.
    
    
    (28
    )(y)
    
    Employment Agreement dated January 18, 2006, by and among Hollywood
Fan Sites, Inc. and Mr. Rajiv Doshi.
    
    
    (31
    )(z)
    
    Employment Agreement, dated as of
March 30, 2006, by and among Hollywood Media Corp.,
Showtimes.com, Inc. and Mr. Brett West.
    
    
    *
 94




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##### Table of Contents



10.2
    
    Common Stock Investment Agreement dated as of August 22, 2000 among
Hollywood Media, Elliott Associates, L.P. and Westgate International, L.P.
    
    
    (9
    )10.3
    
    Registration Rights Agreement dated August 22, 2000 among Hollywood Media,
Elliott Associates, L.P. and Westgate International, L.P.
    
    
    (9
    )10.4
    
    Common Stock Adjustment Warrant dated August 22, 2000 between
Hollywood Media and Elliott Associates, L.P.
    
    
    (9
    )10.5
    
    Common Stock Adjustment Warrant dated August 22, 2000 between
Hollywood Media and Westgate International, L.P.
    
    
    (9
    )10.6
    
    Common Stock Purchase Warrant dated August 22, 2000 between
Hollywood Media and Elliott Associates, L.P.
    
    
    (9
    )10.7
    
    Common Stock Purchase Warrant dated August 22, 2000 between
Hollywood Media and Westgate International, L.P.
    
    
    (9
    )10.8
    
    Purchase Agreement effective as of September 29, 2000 among
Hollywood.com, Inc. and the Purchasers named therein
    
    
    (10
    )10.9
    
    Services Agreement dated as of February 9, 2001 between
Hollywood Media Corp., and Lakeside Ventures, LLC
    
    
    (11
    )10.10
    
    Securities Purchase Agreement dated as of April 25, 2001 between
Hollywood Media Corp., Societe Generale and Velocity Investment
Partners, Ltd.
    
    
    (11
    )10.11
    
    Registration Rights Agreement dated as of April 25, 2001 between
Hollywood Media Corp., Societe Generale and Velocity Investment Partners, Ltd.
    
    
    (11
    )10.12
    
    A Warrant issued to Societe Generale
    
    
    (11
    )10.13
    
    B Warrant issued to Societe Generale
    
    
    (11
    )10.14
    
    Investment and Subscription Agreement made and entered into as of
September 17, 2001, between Hollywood Media Corp. and Zeke, L.P., a
Delaware limited partnership.
    
    
    (12
    )10.15
    
    Purchase Agreement made as of October 12, 2001, between Broadway.com, Inc.,
Robert DeVivio and Peter Falconello
    
    
    (12
    )10.16
    
    Transfer and Shareholders Agreement dated January 14, 2002 by and among
Baseline Acquisitions Corp., Baseline, Inc., Hollywood Media Corp. and
Fountainhead Media Services, Inc.
    
    
    (13
    )10.17
    
    Management Services Agreement as of January 14, 2002 between
Hollywood Services, Inc. and Baseline, Inc.
    
    
    (13
    )10.18
    
    Exchange Agreement dated August 28, 2002, among Hollywood Media Corp.,
Hollywood.com, Inc., Broadway.com, Inc. and Viacom Inc.
    
    
    (14
    )
 95




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##### Table of Contents



10.19
    
    Securities Purchase Agreement for 6% Senior Convertible Debentures, dated as of May 22, 2002,
among Hollywood Media Corp., Federated Kaufman Fund, Portside Growth & Opportunity Fund Ltd.,
Leonardo, L.P., Carpe Diem Long Short Fund, LLC and Mitchell Rubenstein
    
    
    (15
    )10.20
    
    6% Senior Convertible Debenture Due May 2005 issued by Hollywood Media Corp. as of May 22, 2002
    
    
    (15
    )10.21
    
    Registration Rights Agreement, dated as of May 22, 2002, among Hollywood Media Corp., Federated
Kaufman Fund, Portside Growth & Opportunity Fund Ltd., Leonardo, L.P., Carpe Diem Long Short
Fund, LLC and Mitchell Rubenstein
    
    
    (15
    )10.22
    
    Warrant issued by Hollywood Media Corp. to purchasers of 6% Senior Convertible Debentures, dated
as of May 22, 2002
    
    
    (15
    )10.23
    
    Amended and Restated Partnership
Agreement dated as of November 21, 2002 between Hollywood Media Corp. and Dr. Martin H. Greenberg
    
    
    (18
    )10.24
    
    Indemnification Agreement for Surety Bonds dated as of May 7, 2003, by and
between Hollywood Media Corp., and Mitchell Rubenstein and Laurie Silvers.
    
    
    (19
    )10.25
    
    Securities Purchase Agreement dated as of February 9, 2004, among Hollywood
Media Corp. and the investors signatory thereto
    
    
    (20
    )10.26
    
    Registration Rights Agreement dated as of February 9, 2004, among Hollywood
Media Corp. and the investors signatory thereto
    
    
    (20
    )10.27
    
    Form of Warrant issued to purchasers pursuant to Securities Purchase Agreement
dated February 9, 2004.
    
    
    (20
    )10.28
    
    Warrant issued to placement agent in connection with Securities Purchase
Agreement dated February 9, 2004.
    
    
    (20
    )10.29
    
    Agreement dated as of January 7, 2004 between Fountainhead Media Services, Inc. and Hollywood
Media Corp., providing for the satisfaction of Fountainheads promissory note to Hollywood Media
in exchange for Fountainheads shares of common stock of Baseline Acquisitions Corp.
    
    
    (21
    )10.30
    
    Agreement and Plan of Merger dated as of June 14, 2004, by and among Studio
Systems, Inc., Hollywood Media Corp., SSI Acquisition Sub, Inc. and SSI
Investments LLC
    
    
    (22
    )10.31
    
    Asset Purchase Agreement dated as of June 15, 2004, by and between Merchant Internet Group,
Inc., Showtimes.Com, Inc., and Hollywood Media Corp.
    
    
    (22
    )10.32
    
    Amendment to Debenture Agreement, dated as of September 29, 2004, by and between
Hollywood Media Corp. and Portside Growth & Opportunity Fund Ltd.
    
    
    (25
    )10.33
    
    Amended and Restated 6% Senior Convertible Debenture Due May 22, 2006 issued by Hollywood Media
Corp. to Portside Growth & Opportunity Fund Ltd., dated October 15, 2004.
    
    
    (25
    )
 96




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##### Table of Contents



10.34
    
    Warrant No. W-A-5 dated as of August 31, 2004 issued to CD Investment Partners, Ltd. in
replacement of Warrant No. W-A-4.
    
    
    (25
    )10.35
    
    Agreement to Convert Debenture, dated as of August 30, 2004, by and between Hollywood Media
Corp. and Leonardo, L.P.
    
    
    (25
    )10.36
    
    Conversion Notice, dated September 28, 2004, for 6% Senior Convertible Debenture
due May 22, 2005 held by Leonardo, L.P.
    
    
    (25
    )10.37
    
    Agreement to Convert Debenture, dated as of August 31, 2004, by and between Hollywood
Media Corp. and CD Investment Partners, Ltd.
    
    
    (25
    )10.38
    
    Conversion Notice, dated September 30, 2004, for 6% Senior Convertible Debenture due May 22,
2005 held by CD Investment Partners, Ltd.
    
    
    (25
    )10.39
    
    Conversion Notice, dated August 20, 2004, for 6% Senior Convertible Debenture due May 22,
2005 held by Federated Kaufmann Fund
    
    
    (25
    )10.40
    
    Conversion Notice, dated August 20, 2004, for 6% Senior Convertible Debenture due May 22, 2005
held by Mitchell Rubenstein and Laurie Silvers
    
    
    (25
    )10.41
    
    Financial commitment letter dated March 28, 2005 made by Mitchell Rubenstein and Laurie Silvers
in favor of Hollywood Media Corp.
    
    
    (26
    )10.42
    
    Letter agreement dated August 5, 2005 extending term of Financial Commitment
Letter dated March 28, 2005 made by Mitchell Rubenstein and Laurie Silvers in
Favor of Hollywood Media Corp.
    
    
    (28
    )10.44
    
    Agreement for the Sale and Purchase of UK Theatres Online Limited and other
Companies, dated November 22, 2005, by and among Cinemasource UK Limited,
Jeffrey Spector and the other shareholders party thereto.
    
    
    (35
    )10.45
    
    Agreement for the Sale and Purchase of Cinemasonline Limited, dated
November 22, 2005, by and between Mitchell Clifford Cartwright and
Cinemasource UK Limited.
    
    
    (29
    )10.46
    
    Note Purchase Agreement, dated as of November 22, 2005, by and among
Hollywood Media and each of the Purchasers, including the forms of Notes and
Warrants issued to the Purchasers and the form of registration rights agreement.
    
    
    (29
    )10.47
    
    Registration Rights Agreement dated November 23, 2005 by and among Hollywood
Media Corp. and the investors signatory thereto.
    
    
    (30
    )10.48
    
    Letter Agreements, dated
March 15, 2006, by and between Hollywood Media Corp. and each of
the holders of its 8% Senior Unsecured Notes dated November 23,
2005.
    
    
    (31
    )10.49
    
    Form of Common Stock Purchase
Warrants, dated March 15, 2006, issued to the holders of
Hollywood Media Corp.s 8% Senior Unsecured Notes dated
November 23, 2005.
    
    
    (31
    )10.50
    
    Asset Purchase Agreement, dated January 18, 2006, by and among Hollywood
Media Corp., Hollywood Fan Sites, Inc., eFanGuide, Inc. and each of the shareholders of eFanGuide, Inc.
    
    
    (32
    )
 97




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##### Table of Contents



10.51
    
    Asset Purchase Agreement, dated January 31, 2006, by and among Hollywood
Media Corp., Hollywood Fan Sites, Inc., Prosperity Plus, Inc. and the sole shareholder of
Prosperity Plus, Inc.
    
    
    (31
    )21
    
    Subsidiaries of Hollywood Media
    
    
    *23.1
    
    Consent of Kaufman, Rossin &
Co., P.A., Independent Registered Public Accounting Firm
    
    
    *23.2
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
    
    
    *31.1
    
    Certification of Chief Executive Officer (Section 302)
    
    
    *31.2
    
    Certification of Vice President of Finance and Accounting (Principal financial and accounting
officer) (Section 302)
    
    
    *32.1
    
    Certification of Chief Executive Officer (Section 906)
    
    
    *32.2
    
    Certification of Vice President of Finance and Accounting (Principal financial and accounting
officer) (Section 906)
    
    
    *
 
 *
    
    Filed as an exhibit to this Form 10-K 98




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##### Table of Contents



(1)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Annual Report on
Form 10-K for the year ended December 31, 2000.(2)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Registration Statement on
Form S-3 (No. 333-91090).(3)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Registration Statement
on Form SB-2 (No. 33-69294).(4)
    
    Incorporated by reference from exhibit 1 to Hollywood Medias Current Report on Form 8-K
filed on October 20, 1999.(5)
    
    Incorporated by reference from the exhibit to Hollywood Medias Current Report on Form 8-K
filed on December 10, 2002.(6)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1998.(7)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Annual Report on
Form 10-K for the year ended December 31, 1999.(8)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Quarterly Report on
Form 10-Q for the quarter ended June 30, 2002.(9)
    
    Incorporated by reference from the exhibits to Hollywood Medias Current Report on Form 8-K
filed on August 29, 2000.(10)
    
    Incorporated by reference from the exhibits to Hollywood Medias Current Report on Form 8-K
filed on October 5, 2000.(11)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Quarterly Report on
Form 10-Q/A for quarter ended March 31, 2001.(12)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Quarterly Report on
Form 10-Q for the quarter ended September 30, 2001.(13)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Annual Report on Form 10-K for
the year ended December 31, 2001.(14)
    
    Incorporated by reference from the exhibit to Hollywood Medias Current Report on Form 8-K filed on
August 28, 2002(15)
    
    Incorporated by reference from the exhibit to Hollywood Medias Current Report on Form 8-K filed on May
23, 2002(16)
    
    Incorporated by reference from Appendix B to Hollywood Medias Proxy Statement filed on
November 13, 2003 for its 2003 Annual Meeting of Shareholders.(17)
    
    Incorporated by reference from Appendix C to Hollywood Medias Proxy Statement filed on
November 13, 2003 for its 2003 Annual Meeting of Shareholders.(18)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Annual Report on
Form 10-K for the year ended December 31, 2002.(19)
    
    Incorporated by reference from the exhibit filed with
Hollywood Medias Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.(20)
    
    Incorporated by reference from the exhibits to Hollywood Medias Current Report on Form 8-K
filed on February 17, 2004.(21)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Quarterly Report on
Form 10-Q for the quarter ended March 31, 2004.(22)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Quarterly Report on
Form 10-Q for the quarter ended June 30, 2004. 99




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##### Table of Contents



(23)
    
    Incorporated by reference from the exhibits to Hollywood Medias Current Report on Form 8-K
filed on September 17, 2004.(24)
    
    Incorporated by reference from Appendix B to Hollywood Medias Proxy Statement filed on
November 4, 2004 for its 2004 Annual Meeting of Shareholders.(25)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004.(26)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Annual Report on Form
10-K for the year ended December 31, 2002.(27)
    
    Incorporated by reference from the exhibits filed with Hollywood Medias Current Report on Form
8-K filed on May 25, 2005.(28)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Quarterly Report on
Form 10-Q for the quarter ended June 30, 2005.(29)
    
    Incorporated by reference from the exhibits filed with Hollywood Medias Current Report on Form
8-K filed on November 28, 2005.(30)
    
    Incorporated by reference from the exhibit filed with Hollywood Medias Registration Statement on
Form S-3 (No. 333-130903).(31)
    
    Incorporated by reference from the exhibits filed with
Hollywood Medias Current Report on Form 8-K filed on
March 16, 2006.(32)
    
    Incorporated by reference from the exhibits filed with Hollywood Medias Current Report on Form
8-K filed on February 6, 2006. 100




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##### Table of Contents



SIGNATURES
  HOLLYWOOD MEDIA CORP.Date: March 31, 2006
    By:
    /s/ Mitchell RubensteinMitchell Rubenstein, Chairman of the
Board and Chief Executive Officer  Date: March 31, 2006
    /s/ Mitchell RubensteinMitchell Rubenstein, Chairman of the Board and
Chief Executive Officer (Principal executive officer)Date: March 31, 2006
    /s/ Laurie S. SilversLaurie S. Silvers, Vice Chairman of the Board,President and SecretaryDate: March 31, 2006
    /s/ Scott GomezScott Gomez, Chief Accounting Officer (Principalfinancial and accounting officer)Date: March 31, 2006
    /s/ Harry T. HoffmanHarry T. Hoffman, DirectorDate: March 31, 2006
    /s/ Deborah J. SimonDeborah J. Simon, DirectorDate: March 31, 2006
    /s/ Robert E. McAllanRobert E. McAllan, DirectorDate: March 31, 2006
    /s/ Ira A. RosenbergIra Rosenberg, Director 101