UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K


(Mark
One)





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





For
the fiscal year ended December 31,
2009





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





For the
transition period from ___________ to _____________





Commission
File No.      1-14332





HOLLYWOOD
MEDIA CORP.


(Exact
name of registrant issuer as specified in its charter)





Florida
              
              65-0385686(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)2255
      Glades Road, Suite 221ABoca
      Raton, Florida
              
              33431(Address
      of principal executive offices)
              
              (Zip
      Code)





(561)
      998-8000


(Registrant’s
telephone number)





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





Title
      of each class
                Name
      of each exchange on which registeredCommon stock, par value $.01 per
      share
                NASDAQ Global
  Market





Securities
registered pursuant to Section 12(g) of the Act:  None





Common stock, par value $.01
per share


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  ̈No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes  ̈No x





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


Yes xNo  ̈





Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained therein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large accelerated filer ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  x(Do
      not check if a smaller reporting company)
              Smaller
      reporting company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.).





Yes  ̈No x





The
aggregate market value of the registrant’s common stock, $.01 par value, held by
non-affiliates as of June 30, 2009, computed by reference to the last sale price
of the common stock on June 30, 2009 as reported by Nasdaq, was $35,386,885, as
calculated under the following assumptions.  For purposes of this
computation, all executive officers, directors, and beneficial owners of 10% or
more of the registrant’s common stock known to the registrant, have been deemed
to be affiliates, but such calculation should not be deemed to be an admission
that such directors, officers or beneficial owners are, in fact, affiliates of
the registrant.





As of
March 15, 2010, there were 31,179,066 shares of the registrant’s common stock,
$.01 par value, outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE: Part III of this Form 10-K incorporates by reference
certain information from the registrant’s definitive Proxy Statement for its
2008 Annual Meeting of Shareholders filed or to be filed pursuant to Regulation
14A under the Securities Exchange Act of 1934.





HOLLYWOOD
MEDIA CORP.


FORM
10-K


FOR
THE YEAR ENDED


DECEMBER
31, 2009





Table of
Contents




Page No.CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS
                    iiiPART
      IItem 1.
                    Business
                    1-6Item 1A.
                    Risk
      Factors
                    6-13Item 1B.
                    Unresolved
      Staff Comments
                    14Item 2.
                    Properties
                    14Item 3.
                    Legal
      Proceedings
                    14Item 4.
                    Submission
      of Matters to a Vote of Shareholders
                    14-15PART IIItem 5.
                    Market
      for Common Equity, Related Stockholder Matters and Issuer Purchases of
      Equity Securities
                    16-18Item 6.
                    Selected
      Financial Data
                    19-22Item 7.
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                    22-35Item 7A.
                    Quantitative
      and Qualitative Disclosures About Market Risk
                    35-36Item 8.
                    Financial
      Statements and Supplementary Data
                    37-75Item 9.
                    Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                    76Item 9A.
                    Controls
      and Procedures
                    76-77Item 9B.
                    Other
      Information
                    77PART IIIItem 10.
                    Directors,
      Executive Officers and Corporate Governance
                    78Item 11.
                    Executive
      Compensation
                    78
  i
  Item 12.
                      Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                      78Item 13.
                      Certain
      Relationships and Related Transactions, and Director
      Independence
                      78Item 14.
                      Principal
      Accounting Fees and Services
                      78PART IVItem 15.
                      Exhibits, Financial StatementSchedules
                      79-82


ii


CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS





Certain
statements in this Form 10-K or that are otherwise made by us or on our behalf
about our financial condition, results of operations and business constitute
“forward-looking statements,” within the meaning of federal securities laws.
Hollywood Media Corp. (“Hollywood Media”) cautions readers that certain
important factors may affect Hollywood Media’s actual results, levels of
activity, performance or achievements and could cause our actual results, levels
of activity, performance or achievements to differ materially from any future
results, levels of activity, performance or achievements anticipated, expressed
or implied by any forward-looking statements that may be deemed to have been
made in this Form 10-K or that are otherwise made by or on behalf of Hollywood
Media. Without limiting the generality of the foregoing, “forward-looking
statements” are typically phrased using words such as “may,” “will,” “should,”
“expect,” “plans,” “believe,” “anticipate,” “intend,” “could,” “estimate,” “pro
forma” or “continue” or the negative variations thereof or similar expressions
or comparable terminology. The forward-looking statements contained herein
include statements about the proposed sale of the Broadway Ticketing Division
that was announced by Hollywood Media on December 22, 2009.  Factors
that may affect Hollywood Media’s results and the market price of our common
stock include, but are not limited to:





·
            our
      continuing operating losses,




·
            negative
      cash flows and accumulated deficit,




·
            the
      need to manage our growth,




·
            our
      ability to develop and maintain strategic relationships, including but not
      limited to relationships with live theater
  venues,




·
            our
      ability to compete with other online ticketing services 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,




·
            adverse
      economic factors such as recession, war, terrorism, international
      incidents or labor strikes and
disputes,




·
            our
      ability to achieve and maintain effective internal
    controls,




·
            dependence
      on our founders, and our ability to recruit and retain key
      personnel,




·
            the
      unpredictability of our stock
price,




·
            the
      occurrence of any event, change or other circumstance that could give rise
      to the termination of the purchase agreement related to the sale of the
      Broadway Ticketing Division,




·
            the
      inability to complete the sale of the Broadway Ticketing Division due to
      the failure to satisfy the conditions to the completion of the sale of the
      Broadway Ticketing Division, including the receipt of shareholder approval
      and the absence of legal restraints from governmental
      entities,




·
            the
      failure of the sale of the Broadway Ticketing Division to close for any
      other reason, and




·
            the
      possible effect of the announcement of the sale of the Broadway Ticketing
      Division on our customer and supplier relationships, operating results,
      and business generally.




iii





Hollywood
Media is also subject to other risks detailed herein, including those risk
factors discussed in “Item 1A - Risk Factors” below, as well as those discussed
elsewhere in this Form 10-K or detailed from time to time in Hollywood Media’s
filings with the Securities and Exchange Commission.





Because
these forward-looking statements are subject to risks and uncertainties, we
caution you not to place undue reliance on these statements, which speak only as
of the date of this Form 10-K. We do not undertake any responsibility to review
or confirm analysts’ expectations or estimates or to release publicly any
revisions to these forward-looking statements to take into account events or
circumstances that occur after the date of this Form 10-K, except as required by
law. As a result of the foregoing and other factors, no assurance can be given
as to the future results, levels of activity or achievements and neither we nor
any other person assumes responsibility for the accuracy and completeness of
such statements.


iv





PART
I





Item
      1.
            Business.





Hollywood Media is comprised of various
businesses focusing primarily on online ticket sales, deriving revenue primarily
from Broadway, Off-Broadway and London’s West End ticket sales to individuals
and groups, as well as advertising and book development license fees and
royalties. Our Broadway Ticketing business includes Broadway.com,
1-800-BROADWAY, Theatre Direct and Theatre.com. Hollywood Media’s businesses
also include an intellectual property business, the U.K. based CinemasOnline
companies and a minority interest in MovieTickets.com.





Proposed
Sale of the Broadway Ticketing Division.





On
December 22, 2009, Hollywood Media entered into a stock purchase agreement (the
“Purchase Agreement”) with Key Brand Entertainment Inc., a Delaware corporation
(“Key Brand”), pursuant to which Key Brand will purchase Hollywood Media’s
Broadway Ticketing Division (the “Broadway Sale”) through the purchase of all of
the outstanding capital stock of Theatre Direct NY, Inc., a Delaware corporation
and a wholly-owned subsidiary of Hollywood Media, from Hollywood
Media.





If the
Broadway Sale is completed pursuant to the Purchase Agreement, (i) Hollywood
Media will receive $20 million in cash (subject to customary
adjustments described in the Purchase Agreement), (ii) Key Brand will issue
Hollywood Media a five year second lien secured promissory note in the initial
principal amount of $8.5 million at an interest rate of 12% per annum (the
“Promissory Note”), (iii) Theatre Direct will issue Hollywood Media a warrant to
purchase 5% of the outstanding shares of common stock of Theatre Direct as of
the closing date on a fully diluted basis at an exercise price of $.01 per share
(the “Warrant”), (iv) Hollywood Media will receive an earnout from Key Brand of
up to $14 million contingent upon reaching certain revenue targets, and (v)
Key Brand will assume $1.6 million of liabilities associated with
employment agreements with certain employees of Theatre Direct.





The
closing of the transactions contemplated by the Purchase Agreement is
conditioned upon Hollywood Media’s receipt of the approval of its shareholders
as well as the satisfaction or waiver of certain other closing conditions set
forth in the Purchase Agreement.  Hollywood Media filed a proxy
statement with the SEC relating to the transactions contemplated by the Purchase
Agreement in January 2010 and currently expects to hold a special meeting of
Hollywood Media’s shareholders to approve the transactions contemplated by the
Purchase Agreement.  If Hollywood Media’s shareholders approve the
transactions contemplated by the Purchase Agreement and other conditions
contained in the Purchase Agreement are satisfied or waived, Hollywood Media
currently expects that the transactions contemplated by the Purchase Agreement
would close within 30 days of the date such transactions are approved by
Hollywood Media’s shareholders.





Major Business Divisions of
Hollywood Media.The following summary descriptions of our continuing
operations major business divisions are followed by more detailed descriptions
of such businesses.





Broadway
Ticketing Division.





Hollywood
Media’s Broadway Ticketing Division is comprised of Broadway.com,
1-800-BROADWAY, Theatre Direct (“TDI”) and Theatre.com (collectively called
“Broadway Ticketing”). Broadway tickets are sold online through our Broadway.com
website and by telephone through our 1-800-BROADWAY number.  Broadway
Ticketing is also a live theater ticketing seller that provides groups and
individuals with access to theater tickets and knowledgeable service, covering
shows on Broadway, Off-Broadway and, through a partnership arrangement between
Theatre.com and an unrelated London-based ticket agency, in London’s West End
theater district. Broadway.com features include shows’ opening night video and
photo coverage, show reviews, celebrity interviews and theater columns, as well
as show information pages, including casting, synopses and venue
information.




1




Ad Sales
Division.





Hollywood Media’s Ad Sales Division is
comprised of the U.K. based CinemasOnline Limited, UK Theatres Online Limited,
WWW.CO.UK Limited and Spring Leisure Limited (collectively known as
“CinemasOnline”) and holds Hollywood Media’s investment in MovieTickets.com,
Inc. (“MovieTickets.com”).


CinemasOnline
maintains plasma television screens in hotels, car dealerships, cinemas and live
theaters in the U.K. and Ireland in exchange for the right to sell advertising
displayed on such plasma screens. CinemasOnline also provides other marketing
services, including advertising sales on lobby display posters, movie brochure
booklets and ticket wallets distributed in cinemas, live theater and other
entertainment venues in the U.K. and developing and maintaining websites for
cinemas and live theater venues in the U.K. and Ireland in exchange for the
right to sell advertising on such websites.  MovieTickets.com is one
of the two leading destinations for the purchase of movie tickets through the
Internet. MovieTickets.com is an online ticketing service owned by a joint
venture formed by Hollywood Media and several major movie exhibitor chains.
Hollywood Media currently owns 26.2% of the equity of
MovieTickets.com.





Intellectual
Properties Division.





Our
Intellectual Properties Division includes a book development and book licensing
business owned and operated by our 51% owned subsidiary, Tekno Books, which
develops and executes book projects, frequently with best-selling authors. Tekno
Books has worked with over 60 New York Times best-selling authors, including
Isaac Asimov, Tom Clancy, Tony Hillerman, John Jakes, Jonathan Kellerman, Dean
Koontz, Robert Ludlum, Nora Roberts and Scott Turow.  Hollywood Media
is also a 50% partner in NetCo Partners, a partnership that owns NetForce.Hollywood
Media also owns directly additional intellectual property created for it by
various best-selling authors such as Mickey Spillane, Anne McCaffrey and
others.





Other Business and Financial
Information.  The following portions of this Business section
of this Form 10-K contain more detailed information about our various business
units, and “Item 1A – Risk Factors” below contains discussions of various
related risks. Additional financial and other important information about
Hollywood Media and our businesses is also contained elsewhere in this Form
10-K, including without limitation, the following portions of this Form
10-K:  Item 7 – Management’s Discussion and Analysis of Financial
Condition and Results of Operations; and Item 8 – Financial Statements and
Supplementary Data (including the Notes to Consolidated Financial Statements
contained therein).





SEC Reports Available on
Internet.  Hollywood Media makes available free of charge
through its internet website, www.hollywoodmedia.com, its annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
to those reports, as soon as reasonably practicable after such material is
electronically filed with the Securities and Exchange Commission (SEC). Such
materials are available on the website under the caption “Company SEC Filings”
(this is a link to the Company’s “Real-Time SEC Filings” as provided by Nasdaq
on Nasdaq’s website at www.nasdaq.com). Hollywood Media is a reporting company
under the Securities Exchange Act of 1934, as amended, and files reports and
other information with the SEC. Our public electronic filings with the SEC
(including the above-referenced filings) are available at the SEC’s internet
website (www.sec.gov). Hollywood Media’s Internet website and any other website
mentioned in this Form 10-K, and the information contained or incorporated
therein, are not intended to be incorporated into this Form 10-K.





Percentage of Total Net
Revenues





2009
                  
                  
                  2008
                  
                  
                  2007Broadway
      Ticketing
                  
                  
                  96
                  %
                  
                  
                  95
                  %
                  
                  
                  95
                  %Ad
      Sales
                  
                  
                  3
                  %
                  
                  
                  4
                  %
                  
                  
                  4
                  %Intellectual
      Properties
                  
                  
                  1
                  %
                  
                  
                  1
                  %
                  
                  
                  1
                  %TOTALS
                  
                  
                  100
                  %
                  
                  
                  100
                  %
                  
                  
                  100
                  %




2




Broadway
Ticketing Division





Broadway.com and
1-800-BROADWAY.We launched the Broadway.com website on May 1,
2000. Broadway.com offers the ability to purchase Broadway, off-Broadway and,
through a partnership arrangement between Theatre.com and an
unrelated  London-based ticket agency, London’s West End theater
tickets online. In addition, the site provides a wide variety of editorial
content about the theater business, feature stories, opening nights, star
profiles, photo opportunities, and a critical roundup of reviews.  Our
1-800-BROADWAY toll-free number features the ability to purchase Broadway,
off-Broadway and London’s West End theater tickets over the phone and
complements the online ticketing and information services available through
Broadway.com.  Broadway.com also generates revenue from the sale of
sponsorships and advertisements on the Broadway.com website.





TDI.  We acquired
TDI as of September 15, 2000. Founded in 1991, TDI is a live theater ticketing
wholesaler that provides groups and individuals with access to theater tickets
and knowledgeable service, covering shows on Broadway, off-Broadway and, through
a partnership arrangement between Theatre.com and an unrelated London-based
ticket agency, in London’s West End.  TDI sells tickets directly to
group buyers including travel agents and tour groups.  On
February 1, 2007, TDI acquired the ticketing business of Showtix LLC
(“Showtix”), an established group ticketing sales agency for Broadway and
Off-Broadway performances, providing TDI with an increased customer base and
customer services for group ticketing.  TDI also manages a marketing
cooperative that represents participating Broadway shows to the travel industry
around the world. Recent Broadway shows marketed by this cooperative include
Billy Elliott, Chicago, Jersey Boys, Shrek the Musical, The Lion King, The
Little Mermaid and The Phantom of the Opera.  In addition, TDI’s
education division, Broadway Classroom, markets group tickets and educational
programs to schools across the country.





The
combined Broadway Ticketing business provides theater ticketing and related
content for over 100 venues in multiple markets to consumers and over 20,000
travel agencies, tour operators, corporations, educational institutions and
affiliated websites.  Our Broadway Ticketing division employs a
knowledgeable sales force that offers ticket buyers a concierge-style service
that includes show recommendations, hotel packages with luxury hotels and dinner
choices at fine restaurants. We obtain the tickets we sell through our
arrangements with theatre box offices and we maintain our own inventory of
tickets for sale.





Theatre.com.We launched our
U.K.-based Theatre.com website in December 2005 with editorial coverage of
London’s West End theatre and began selling ticketing to major London venues in
February 2006, based upon a similar model to selling tickets on Broadway.com.
Beginning in late September 2007, sales for events in London’s West End are
fulfilled through a partnership arrangement between Theatre.com and an unrelated
London-based ticket agency.





Ad
Sales Division





CinemasOnline. In November
2005, we acquired CinemasOnline, a group of companies based in the
U.K.  CinemasOnline’s business involves maintaining plasma television
screens in certain venues in the U.K. and Ireland, including hotels, car
dealerships, cinemas and live theaters.  These services are provided
in exchange for CinemasOnline retaining the right to sell advertising to be
displayed on such plasma screens.  CinemasOnline currently has
agreements with approximately 170 venues for the display of approximately 200
plasma screens in the U.K. and Ireland.  CinemasOnline also has over
[200] agreements with cinemas, live theater and other entertainment venues in
the U.K. to sell advertising on lobby display posters, movie brochure booklets
and ticket wallets in these venues, and agreements with approximately 165
cinemas and live theater venues in the U.K. and Ireland to develop and maintain
websites for such venues in exchange for the right to sell advertising on such
websites.





MovieTickets.com.Hollywood
Media launched the MovieTickets.com website in May 2000 with several major
theater exhibitors.MovieTickets.com is one
of the two leading website destinations for the purchase of movie tickets
through the Internet. The MovieTickets.com website allows users to purchase
movie tickets and retrieve them at “will call” windows or kiosks at theaters
and, for theaters with the capability, for users to print tickets out at their
home or office. MovieTickets.com generates revenues from service fees charged to
users for the purchase of tickets, the sale of advertising and the sale of
research data. MovieTickets.com exhibitors operate theaters located in all of
the top 20 markets and approximately 70% of the top 50 markets in the United
States and Canada, and represent approximately 50% of the top 50 and top 100
grossing theaters in North America.  Additionally, MovieTickets.com
launched MovieTickets.co.uk in the United Kingdom in July of 2003.




3





MovieTickets.com
is owned by a joint venture in which Hollywood Media owns a 26.2% equity
interest.  See “Item 7 – Management’s Discussion and Analysis of
Financial Condition and Results of Operation - Equity in Earnings of
Unconsolidated Investees” below, and Note 15 of the Notes to Consolidated
Financial Statements in Item 8 of this Form 10-K below, for additional
information about our equity interest in MovieTickets.com. MovieTickets.com
entered into an agreement with Viacom Inc. effective August 2000 whereby Viacom
Inc. acquired a 5% interest (now 4.1% after dilution) in MovieTickets.com for
$25.0 million of advertising and promotion over five
years.  MovieTickets.com is promoted through on-screen advertising in
most participating exhibitors’ theaters. In March 2001, America Online Inc.
(“AOL”) purchased a non-interest bearing convertible preferred equity voting
interest in MovieTickets.com for $8.5 million in cash, which was convertible
into approximately 3% of the common stock of MovieTickets.com and was converted
in April 2005.  The AOL interest is held by Time Warner
Inc.   As a result of this conversion, Hollywood Media’s
ownership of the equity of MovieTickets.com changed from 26.4% to 26.2%. In
connection with the 2001 transaction with AOL, MovieTickets.com’s ticket
inventory was promoted throughout AOL’s interactive properties and ticket
inventory. Through an agreement in August 2004 between MovieTickets.com and
Moviefone, MovieTickets.com acquired by assignment and assumed the ticketing
agreements that Moviefone had with its movie theater exhibitors.  The
Moviefone exhibitor agreements assumed by MovieTickets.com include agreements
with Clearview Cinemas and Landmark Theaters.





Currently,
MovieTickets.com tickets for approximately 180 exhibitors,
including:  Abingdon Cinemall, Academy 8 Theaters (P & G
Theaters), Access Digital Theatres, Alco Theaters, All Star Entertainment,
Allred 5 Theater, Ambler Theater, AMC Theatres, Aperture Cinema, Arena Grand
Theatre (Columbus Hospitality), Ashbrie Cinemas, Atlantic Theaters (Movies at
Midway), Atlas Cinemas, Aviemore Cinema (UK), Avon Theater, Ayrsley Grand
Cinemas 14, B&B Theatres, Bank Street Theater, Bowtie Cinemas, Brooklyn
Academy of Music, Bryn Mawr Movie Theatre Co., Camera Cinemas, Carolina Cinemas,
Celebrity Theatres, Channelside Cinemas, Cinéma Beloeil (Canada), Cinema
Centers, Cinema Four-Quad (Quad Cinema), Cinemagic Movies, Cinemagic Theatres
(MN), Cineplex Odeon, Cinemax Bantry (Ireland), Classic Cinemas, Classic
Listowel (Ireland), Clearview Cinemas, Cleveland Cinemas, Continental Cinemas,
Cornelius Cinemas (Act V Theatres), Dickinson Theatres, Dipson Theatres, Drexel
Theatres, Eastern Shores (O’Neil Theaters NE), Eastpoint Movies 10, Elvis
Cinema, Emagine Entertainment (Cinema Hollywood), Empire Theatres (Canada),
Entertainment Retail (Hollywood Hits), EPIC Cinemas, Eveningstar Cinema, Fabian
8 Cinema, Famous Players, Film Forum, Fine Arts Theatre – Beverly Hills,
Flagship Cinemas, Fox Bay Cinema Grill, Foxmoor Movies, Frank Theatres, Funasia
Theaters, Galaxy Cinemas (Canada), Galaxy Cinemas (GA), Galaxy Cinemas (NC),
Gateway Theater, Greenville Cinemas (Camelot Cinemas), Hawthorne Theater,
Harkins Theatres, Harrisonville Cinema, HLB Entertainment (Palace 9, Majestic
10), Hollywood Cinemas (UK), Hollywood Cinemas (UK) – Lowestoft, Hollywood
Cinema 9, Hollywood Premier Cinemas, IFC Center, Island Cinemas, Jane Pickens
Theater and Event Center, Jarvis Conservatory, Kew Gardens (and Cobble Hill),
K&G Theaters (Bloomfield 8), Kinema in the Woods (UK), Krikorian Premiere
Theatres, Lafitte Cinema 4, Landmark Theatres, Lee Neighborhood Theatres, Liebe
Entertainment Group, Lighthouse (UK) – Wolverhampton, Live Chicago Music, M Park
4 Multiplex Cinema, Marketplace Cinema, Mary Riepma Ross Media Arts Center,
Maplewood Theatre, Maiden Alley Cinema, Main Street Cinemas, Main Street
Theaters, Mall of America 14, Majestic Crest Theatre, Malco Theatres, Mann
Theatres, Marcus Theatres, Marquee Cinemas, Mega Movies at the Brunswick Square
Mall, Metropolitan Theatres, Mission Grove Theaters, Missouri Cinema 6, MJR
Theatres, MnM Theatres, Morley Theatre, Moore Family Theaters, Movie Tavern,
MovieMax Theatres, Movie World Cinemas, Muvico Theaters, My Town Cinemas, NCG
Cinemas, NAOS Entertainment, Narberth Theatre, National Amusements, Nelsonville
Movies 10, North American Cinema, Oasis Cinema, Omniplex Theatre Group, O’Neil
Theatres (Louisiana), O’Neil Cinemas (New England), Pacific Theatres, Paris
Theater, Pavilion Cinema (UK), Penistone Paramount (UK), Penn Cinema, Phoenix
Theatres (MI), Phoenix Theatres (TN), Pickwick Theatres, Plaza Cinema Café,
Premiere Cinemas, Prytania Theatre, Quarry Cinemas, Rail Road Square Cinema,
Rave Motion Pictures, Regal Theater Stowmarket (UK), Regency 8 Cinema, Republic
Theater Group, Rex Cinema Wareham (UK), Rheem Theater, Rio Entertainment,
Riviera Cinemas, Roxy Theatres, Royal Cinema, Safari Cinema, Santikos Theatres,
Sarasota Film Society, Sayville Theatre, Schulman Partners (Colleyville Cinema
Grill, City Lights Cinema), Scotiabank Theatres, Sea Turtle Cinemas, ShowBiz
Cinemas, Showplace Cinemas, Silver Screen Cinemas, Silver Screen Partners
(Rosebud Cinema Drafthouse, The Times Cinema), Southern Theatres, Southeast
Cinemas, Speciality Cinema & Grill (Bermuda), Spotlight Theatres, Starplex
Cinemas, Startime Entertainment, Star Cinema 6, Stone Theaters, Studio Movie
Grill, Sunrise Cinemas, Syracuse Stadium 6, Tango Theaters, The Cinemas (Aruba),
The Movies Curacao (Curacao), Terrace Theaters, Tower Theaters, Trans-Lux
Cinemas, Tri City Theatre, United Entertainment Corp., UltraStar Cinemas,
Village Theaters, Virginia Motion Pictures, Warren Theatres, Watson Theatre,
Wellfleet Cinemas and Westates Theatres.




4





Intellectual
Properties Business





Book Development and Book
Licensing. Our Intellectual Properties division includes a book
development and book licensing business owned and operated by our 51% owned
subsidiary, Tekno Books, which develops and executes book projects, frequently
with best-selling authors. Tekno Books has worked with more than 60 New York
Times best-selling authors, including Isaac Asimov, Tom Clancy, Tony Hillerman,
John Jakes, Jonathan Kellerman, Dean Koontz, Robert Ludlum, Nora Roberts and
Scott Turow, and numerous media celebrities, including Louis Rukeyser and
Leonard Nimoy. Our intellectual properties division has licensed books for
publication with more than 80 domestic book publishers, including Random House
(Bertelsmann), Penguin Publishing Group (Pearson), Simon & Schuster
(Viacom), HarperCollins (News Corp.), St. Martin’s Press (Holtzbrink of
Germany), Warner Books (Time Warner), and the publishing division of Barnes
& Noble. Tekno Books has also produced numerous books under license from
such entertainment companies as Universal Studios, CBS Television, DC Comics
(Time Warner), and MGM Studios. Since 1980, Tekno Books has developed over 2,080
books that have been published. Another 3,800 foreign, audio, paperback,
electronic, and other editions of these books have been sold to hundreds of
publishers around the world, and published in 33 languages. Tekno’s books have
been finalists for, or winners of, more than 200 awards, including The Edgar
Allan Poe Award, The Agatha Christie Award (Mystery), The Hugo Award (Science
Fiction), The Nebula Award (Fantasy), The International Horror Guild Award
(Horror) and The Sapphire Award (Romance). Tekno Books’ current backlog and
anticipated books for future publishing include more than 200 books under
contract or in final negotiations, including more than 40 books by New York
Times best-selling authors. The Chief Executive Partner of Tekno Books, Dr.
Martin H. Greenberg, is the owner of the remaining 49% interest in Tekno
Books.





Intellectual Properties. The
Intellectual Properties division also owns directly (separate from Tekno Books)
the exclusive rights to certain intellectual properties that are complete
stories and ideas for stories, created by best-selling authors and media
celebrities. Some examples of our intellectual properties are Neil Gaiman’s Mr. Hero, Neil
Gaiman’s Lady Justice, Anne McCaffrey’s Acorna the Unicorn Girl, Leonard Nimoy’s Primortals,
and Mickey Spillane’s Mike
Danger. We license rights to certain of our intellectual properties for
use by licensees in developing projects in various media forms. We generally
obtain the exclusive rights to the intellectual properties and the right to use
the creator’s name in the titles of the intellectual properties (e.g., Mickey Spillane’s Mike Dangerand Leonard Nimoy’s
Primortals).





NetCo Partners. In June 1995,
Hollywood Media and C.P. Group Inc. (“C.P. Group”), entered into an agreement to
form NetCo Partners. NetCo Partners owns NetForce. Hollywood Media and
C.P. Group are each 50% partners in NetCo Partners. Tom Clancy is a shareholder
of C.P. Group. At the inception of the partnership, C.P. Group contributed to
NetCo Partners all rights to NetForce, and Hollywood Media
contributed to NetCo Partners all rights to Tad Williams’ MirrorWorld,
Arthur C. Clarke’s Worlds of Alexander,
Neil Gaiman’s Lifers,
and Anne McCaffrey’s
Saraband. In 1997, NetCo Partners licensed to Putnam Berkley the rights
to publish the first six NetForce books in North
America, which books were created and published.  This agreement was
subsequently renewed in December 2001 for four more books that were created and
published.  NetForce books have so far
been published in mass market paperback format. NetCo owns all rights in all
media to the NetForce
property including film, television, video and games. The first book in the
series was adapted as a four-hour mini-series on ABC.  Through its
interest in NetCo, Hollywood Media receives distributions of its share of
proceeds generated from the rights to the NetForce series.




5





Employees




At
February 23, 2010, Hollywood Media employed approximately 118 full-time
employees and 4 part-time employees for its continuing operations, compared to
128 full-time employees and 2 part-time employees employed by Hollywood Media’s
continuing operations on February 26, 2009.  Of our 118 full-time
employees, 82 employees are engaged in our Broadway Ticketing division, 12
employees are engaged in our Ad Sales division, 4 employees are engaged in our
Intellectual Properties division and 20 are corporate, technology and
administrative employees. None of the employees are represented by a labor
union, nor have we experienced any work stoppages. We consider our relations
with our employees to be good.




Item
1A.  Risk
Factors.





Risks
of Investing in Our Shares





Investments
in our capital stock are speculative and involve a high degree of
risk.  Investors should carefully consider the following matters, as
well as the other information in this Form 10-K. If any of these risks or
uncertainties actually occur, our business, results of operations, financial
condition, or prospects could be substantially harmed, which would adversely
affect your investment. Additional risks and uncertainties that we do not
presently know or that we currently deem immaterial may also impair our
business, operating results, financial condition, and
prospects.  Unless stated otherwise, the following risk factors do not
take into account or give any effect to the impact of the proposed sale of the
Broadway Ticketing Division.





We
have a history of losses and an accumulated deficit. Our operating results could
fluctuate significantly on a quarterly and annual basis.





Hollywood
Media has incurred significant losses since it began doing business. For the
year ended December 31, 2009 we had a net loss of approximately $5.6 million and
a loss from continuing operations of approximately $6.2 million and in the year
ended December 31, 2008 we had net loss of approximately $16.9 million net of a
loss from continuing operations of approximately $10.5
million.   The net loss for 2009 was primarily attributable to a
$5.0 million impairment loss recorded in the second quarter of
2009.  The net loss for 2008 was attributable to a loss on the sale of
Hollywood Media’s subsidiaries Hollywood.com, Inc. and Totally Hollywood TV, LLC
(collectively, the “Hollywood.com Business”) to R&S Investments on August
21, 2008, as disclosed in prior filings, along with operating
losses.  As of December 31, 2009, we had an accumulated deficit of
approximately $277.3 million. We may incur additional losses while we continue
to grow our businesses. Our future success will depend on the continued growth
in our various businesses, and our ability to generate sufficient ticketing,
licensing and advertising revenues to cover our costs.





In
addition, our operating results may fluctuate significantly in the future as a
result of a variety of factors, including:





·
            seasonal,
      economic and other variations in the demand for Broadway tickets and
      resulting variations in our revenue from Broadway ticket
      sales;


·
            our
      ability to enter into or renew strategic relationships and agreements with
      live theater venues and authors;


·
            the
      amount and timing of our marketing expenditures and other costs relating
      to the expansion of our operations;


·
            new
      products, websites or 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.




6




As a result, our operating results for
any particular period may not accurately predict our future operating
results.





There
can be no assurance that any disposition or other strategic transaction will
occur or, if one is undertaken, of its potential terms or timing.





From time
to time we explore potential transactions that may help us to realize the full
value of our assets in the interest of our shareholders, including the proposed
sale of the Broadway Ticketing Division, other potential dispositions or other
strategic transactions. There can be no assurance that any transaction will
occur or, if one is undertaken, of its potential terms or timing.  For
additional information, see the discussion under “Outlook” in the “Liquidity and
Capital Resources” portion of Item 7 of this Form 10-K Report, “Management’s
Discussion and Analysis of Financial Condition and Results of Operation”
below.





We may not be able to compete
successfully.





Ticketing Businesses. The
market for ticketing services and products is intensely competitive and rapidly
changing. The number of telephone services, online services, wireless services
and websites competing for consumers’ attention and spending has proliferated
and we expect that competition will continue to intensify. We compete, directly
and indirectly, for customers, advertisers, members and content providers with
the following categories of companies:





·
            websites,
      telephone services and wireless services 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;


·
            traditional
      ticketing organizations, companies, agents and
  brokers;


·
            the
      box office at each of the venues that hold events for which we sell
      tickets; and


·
            ticket
      resellers and other participants in the secondary ticketing
      market.





Intellectual Properties and Book
Development and Licensing Businesses. Numerous companies and individuals
are engaged in the book development business. We also compete with a large
number of companies that license characters and properties into film,
television, books and merchandise. Competition in these businesses is largely
based on the number and quality of relationships that we are able to develop
with authors and celebrities. There can be no assurance that our current or
future competitors will not be successful in developing relationships with
authors and celebrities with whom we have previously had relationships. Our
revenues will decrease if we are unable to maintain these relationships or
develop new relationships.





We
may not be able to successfully protect our trademarks and proprietary
rights.





Internet
Businesses.  Our performance and ability to compete are
dependent to a significant degree on our internally developed and licensed
technology. We rely on a combination of copyright, trademark and trade secret
laws, confidentiality and nondisclosure agreements with our employees and with
third parties and contractual provisions to establish and maintain our
proprietary rights. There can be no assurance that the steps taken by us to
protect our proprietary rights will be adequate, or that third parties will not
infringe upon or misappropriate our copyrights, trademarks, service marks and
similar proprietary rights. In addition, effective copyright and trademark
protection may be unenforceable or limited in certain foreign countries. In the
future, litigation may be necessary to enforce and protect our trademarks,
service marks, trade secrets, copyrights and other intellectual property rights.
Any such litigation would be costly and could divert management’s attention from
other more productive activities. Adverse determinations in such litigation
could result in the loss of certain of our proprietary rights, subject us to
significant liabilities, require us to seek licenses from third parties, or
prevent us from selling our services.




7





We own
trademark registrations in the United States for many of the trademarks that we
use, including BROADWAY.COM, and some of our trademarks are registered in select
foreign countries. We have also filed trademark applications in select foreign
countries for the mark HOLLYWOOD MEDIA CORP. and others. There can be no
assurance that we will be able to secure adequate protection for these names or
other trademarks in the United States or in foreign countries. If we obtain
registration of those trademarks, we may not be able to prevent our competitors
from using different trademarks that contain the word “Broadway.” Many countries
have a “first-to-file” trademark registration system; and thus we may be
prevented from registering our marks in certain countries if third parties have
previously filed applications to register or have registered the same or similar
marks. It is possible that our competitors or others will adopt product or
service names similar to ours, thereby impeding our ability to build brand
identity and possibly leading to customer confusion.





Our
inability to protect our BROADWAY.COM mark and other marks adequately could
impair our ability to maintain and expand such brands and thus impair our
ability to generate revenue from these brands.





Intellectual Properties
Business. Hollywood Media has applied for trademark and copyright
protection for its major intellectual property titles. Each of Hollywood Media
and NetCo Partners currently has U.S. registered trademarks as well as pending
trademark applications in the U.S. related to its respective business, and they
also have foreign registered trademarks and pending trademark applications in
several foreign jurisdictions. As Hollywood Media’s properties are developed,
Hollywood Media intends to apply for further trademark and copyright protection
in the United States and certain foreign countries.





Copyright
protection in the United States on new publications of works for hire extend for
a term of 95 years from the date of initial publication or 120 years from the
year of creation, whichever expires first. Trademark registration in the United
States extends for a period of ten years following the date of registration. To
maintain the registration, affidavits must be filed between the fifth and sixth
years following the registration date affirming that the trademark is still in
use in commerce and providing evidence of such use. The trademark registration
must be renewed prior to theexpiration
of the ten-year period following the date of registration.





Failure
to adequately protect these intellectual property rights could result in adverse
consequences for these businesses due to the risks described above.





We
may become subject to liability for infringement of third-party intellectual
property rights.





There can
be no assurance that third parties will not bring copyright or trademark
infringement claims against us, or claim that our use of certain technology
violates a patent. Even if these claims are not meritorious, they could be
costly and could divert management’s attention from other more productive
activities. If it is determined that we have infringed upon or misappropriated a
third party’s proprietary rights, there can be no assurance that any necessary
licenses or rights could be obtained on terms satisfactory to us, if at all. The
inability to obtain any required license on satisfactory terms could force us to
incur expenses to change the way we operate our businesses. If our competitors
prepare and file applications that claim trademarks owned or registered by us,
we may oppose these applications and have to participate in administrative
proceedings to determine priority of right in the trademark, which could result
in substantial costs to us, even if the eventual outcome is favorable to us. An
adverse outcome could require us to license disputed rights from third parties
or to cease using such trademarks. In addition, inasmuch as we license a portion
of our content from third parties, our exposure to copyright infringement or
right of privacy or publicity actions may increase; because we must rely upon
such third parties for information as to the origin and ownership of such
licensed content. We generally obtain representations as to the origins,
ownership and right to use such licensed content and generally obtain
indemnification to cover any breach of any such representations; however, there
can be no assurance that such representations will be accurate or that such
indemnification will provide adequate compensation for any breach of such
representation. There can be no assurance that the outcome of any litigation
between such licensors and a third party or between us and a third party will
not lead to royalty obligations for which we are not indemnified or for which
such indemnification is insufficient, or that we will be able to obtain any
additional license on commercially reasonable terms if at all.





8





We are dependent on our ability to
develop strategic relationships with live theater venues, exhibitors and
authors.





The
success of our operations is dependent in part on our ability to enter into and
maintain strategic relationships and agreements with live theater venues and,
through MovieTickets.com, exhibitors.  There can be no assurance that
we will be able to develop and maintain these strategic relationships and, if we
are unable to do so, our financial condition and results of operations could be
adversely impacted.





In
addition, our Intellectual Property division is dependent on our ability to
identify, attract and retain best-selling authors and media celebrities who
create our intellectual properties.  Our ability to enter into
contracts with new authors or renew contracts would be impaired without the
services of Dr. Martin Greenberg.  See the risk factor “Our ability to
attract qualified personnel and retain certain key personnel is critical to our
business” below.





Our
operations could be negatively impacted by systems
interruptions.





The
hardware and software used in our ticketing operations, or that of our
affiliates, could be damaged by fire, floods, hurricanes, earthquakes, power
loss, telecommunications failures, break-ins and similar events. Our websites
could also be affected by computer viruses, electronic break-ins or other
similar disruptive problems. These system problems could negatively affect our
business. Insurance may not adequately compensate us for any losses that may
occur due to any failures or interruptions in systems. General Internet traffic
interruptions or delays could also harm our business. As with Internet websites
in general, our websites may experience slower response times or decreased
traffic for a variety of reasons. Additionally, online service providers have
experienced significant outages in the past, and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
To the extent our services are disrupted, we could lose users of our websites
and our ticketing revenues could decline.





We
are subject to additional security risks by doing business over the
Internet.





A
significant obstacle to consumer acceptance of electronic commerce over the
Internet has been the need for secure transmission of confidential information
in transaction processing. Internet usage could decline if any well-publicized
compromise of security occurred. We may incur additional costs to protect
against the threat of security breaches or to alleviate problems caused by these
breaches. If a third person were able to misappropriate our users’ personal
information or credit card information, we could be held liable for failure to
adequately protect such information and subject to monetary damages to the
extent our users suffer financial losses or other harm as a result
thereof.





We
may not be able to adapt as technologies and customer expectations continue to
evolve.





To be
successful, we must adapt to rapidly changing technologies by continually
enhancing our websites and ticketing services and introducing new services to
address our customers’ changing expectations. We must evaluate and implement new
technologies that are available in the marketplace or risk that our customers
will not continue using our services.  We could incur substantial
costs if we need to modify our services or infrastructure in order to adapt to
changes affecting providers of content and services through the Internet. Our
customer base and thus our revenues could decrease if we cannot adapt to these
changes.





If
our suppliers of tickets for Broadway shows did not sell us all the tickets we
wish to buy, our financial results may be adversely affected.





We are
one of many licensed ticket resellers that purchase and resell tickets for
Broadway shows. We obtain the tickets we sell through our arrangements with
theater box offices and we maintain our own inventory of tickets for
sale.  If the box offices changed their policies or methods of ticket
sales in a manner that resulted in our inability to buy all the tickets that we
wish to buy for resale by our Broadway Ticketing division, then Hollywood
Media’s revenues and financial results may be adversely affected. Some of our
ticket suppliers require surety bonds to be maintained. If we are not able to
maintain a sufficient level of bonding, we may be precluded from purchasing
tickets.




9





Government
regulation could impact our business.





The
application of existing laws and regulations to our business relating to issues
such as user privacy, pricing, taxation, content, sweepstakes, copyrights,
trademarks, advertising, and the characteristics and quality of our products and
services can be unclear. We also may be subject to new laws and regulations
related to our business. Although we endeavor to comply with all applicable laws
and regulations and believe that we are in compliance, because of the
uncertainty of existing laws and the possibility that new laws may be adopted,
there is a risk that we will not be in full compliance.





Several
federal laws could have an impact on our business. The Digital Millennium
Copyright Act establishes binding rules that clarify and strengthen protection
for copyrighted works in digital form, including works used via the Internet and
other computer networks. The Child Online Protection Act is intended to restrict
the distribution of certain materials deemed harmful to children. The Children’s
Online Privacy Protection Act of 1998 protects the privacy of children using the
Internet, by requiring, among other things, (1) that in certain specific
instances the operator of a website must obtain parental consent before
collecting, using or disclosing personal information from children under the age
of 13, (2) the operator of a website to make certain disclosures and notices on
the website or online service regarding the collection, use or disclosure of
such personal information, and (3) the operator of a website or online service
to establish and maintain reasonable procedures to protect the confidentiality,
security and integrity of personal information collected from children under the
age of 13. Our efforts to comply with these and other laws subject our business
to additional costs, and failure to comply could expose our business to
liability.





We
are dependent on Mitchell Rubenstein and Laurie S. Silvers, our
founders.





Mitchell
Rubenstein, our Chairman of the Board and Chief Executive Officer, and Laurie S.
Silvers, our Vice Chairman, President and Secretary, have been primarily
responsible for our organization and development. The loss of the services of
either of these individuals would hurt our business. If either of these
individuals were to leave Hollywood Media unexpectedly, we could face
substantial difficulty in hiring qualified successors and could experience a
loss in productivity while any successor obtains the necessary training and
experience. The employment agreements between Hollywood Media and each of these
individuals provide, among other things, that if we terminate either of their
agreements without “cause,” we will have also terminated the other’s agreement
without “cause.”





Our
ability to attract qualified personnel and retain certain key personnel is
critical to our business.





Our
future operating results depend substantially upon the continued service of our
executive officers and key personnel. Our future operating results will also
depend in significant part upon our ability to attract and retain qualified
management, technical, marketing, sales and support personnel. Competition for
qualified personnel in our industry is intense, and we cannot ensure success in
attracting or retaining qualified personnel.  In addition, there may
be only a limited number of persons with the requisite skills to serve in these
positions. Our business, financial condition and results of operations could be
materially adversely affected by the loss of any of our key employees, by the
failure of any key employee to perform in his or her current position, or by our
inability to attract and retain skilled employees.





Our
intellectual property business could be harmed by the loss of the services of
Dr. Martin H. Greenberg, who has been primarily responsible for developing
relationships with the best-selling authors who create our intellectual
properties. Dr. Greenberg owns the remaining 49% interest in Tekno Books through
which we operate our intellectual properties division. Many of the authors with
whom we have relationships are bound to multiple book contracts and our ability
to renew these contracts or enter into contracts with new authors would be
impaired without the services of Dr. Greenberg.




10





We
may be liable for the content we make available on the Internet.





There is
risk that we could become subject to various types of legal claims relating to
the content we make available on our websites or the downloading and
distribution of such content, or the content we license for books, including
claims such as defamation, invasion of privacy and copyright
infringement.  Although we carry liability insurance that covers some
types of claims to a limited extent, our insurance may not cover all potential
claims of this type or may not be adequate to cover all costs incurred in
defense of potential claims or to indemnify us for all liability that may be
imposed. Any costs or imposition of liability that is not covered by insurance
or in excess of insurance coverage could have a material adverse effect on our
business, results of operations and financial condition.





We have authorized but unissued
preferred stock, which could affect rights of holders of common
stock.





Our
articles of incorporation authorize the issuance of preferred stock with
designations, rights and preferences determined from time to time by our board
of directors. Accordingly, our board of directors is empowered, without
shareholder approval, to issue preferred stock with dividends, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the holders of common stock. In addition, the preferred stock
could be issued as a method of discouraging a takeover attempt. Although we do
not intend to issue any preferred stock at this time, we may do so in the
future.  Shares of preferred stock are also subject to potential
issuance under the terms of our shareholders' rights plan described
below.





Our
articles of incorporation, bylaws, shareholders’ rights plan and Florida law may
discourage takeover attempts.





Certain
provisions of our articles of incorporation, bylaws and our shareholders’ rights
plan may discourage takeover attempts and may make it more difficult to change
or remove management. Our articles of incorporation authorize the issuance of
“blank check” preferred stock with designations, rights and preferences as may
be determined from time to time by our Board of Directors.  Our bylaws
as amended in 2006 include provisions requiring shareholders to provide
specified advance notice to Hollywood Media of director nominations or proposed
business to be transacted at shareholder meetings, in order for a shareholder to
make a director nomination or propose meeting business. Under our shareholder’s
rights plan adopted in 1996 and extended in 2006, our Board of Directors
declared a dividend of one right for each share of common stock. If certain
events, such as a takeover bid not approved by our Board, occur, the rights will
then entitle most holders to purchase at a specified price, shares of a series
of our preferred stock with special voting, dividend and other
rights.





In
addition, Florida has enacted legislation that may deter or frustrate takeovers
of Florida corporations, such as our company. The Florida “control share
acquisitions” statute provides that shares acquired in a “control share
acquisition” (which excludes transactions approved by our board of directors)
will not have voting rights unless the voting rights are approved by a majority
of the corporation’s disinterested shareholders. A “control share acquisition”
is an acquisition, in whatever form, of voting power in any of the following
ranges: (a) at least 20% but less than 33-1/3% of all voting power; (b) at least
33-1/3% but less than a majority of all voting power; or (c) a majority or more
of all voting power.





The State
of Florida “affiliated transactions” statute requires approval by disinterested
directors or supermajority approval by disinterested shareholders of certain
specified transactions between a public corporation and holders of more than 10%
of the outstanding voting shares of the corporation (or their
affiliates).




11





Our stock price is
volatile.





The
trading price of our common stock has and may continue to fluctuate
significantly. During the 24 months ended December 31, 2009, the trading price
for our common stock on the Nasdaq Stock Market ranged from $0.56 to $3.07 per
share. Our stock price may fluctuate in response to a number of events and
factors, such as our quarterly operating results, announcements of new products
or services, announcements of mergers, acquisitions, strategic alliances, or
divestitures and other factors, including similar announcements by other
companies that investors may consider to be comparable to us. In addition, the
stock market in general, and the market prices for Internet-related companies in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of the companies. These broad market and industry
fluctuations may cause the market price of our stock to decrease, regardless of
our operating performance.





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.





Future
sales of substantial amounts of our common stock in the public market, or the
perception that these sales could occur, could adversely affect prevailing
market prices of our common stock and could impair our ability to raise capital
through future offerings of equity securities. We may issue additional shares of
common stock in connection with future financings, acquisitions or other
transactions, or pursuant to outstanding stock options, warrants and other
convertible securities, and we plan to issue additional stock options and stock
grants from time to time to our employees and directors.  We are
generally unable to estimate or predict the amount, timing or nature of future
issuances or public sales of our common stock. Sales of substantial amounts of
our common stock in the public market could cause the market price for our
common stock to decrease. In addition, a decline in the price of our common
stock would likely impede our ability to raise capital through the issuance of
additional shares of common stock or other equity securities.





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.





We have
required substantial financing to fund our acquisitions, growth and operations
since our inception, and we may require additional financing in the
future.  Our long-term financial success depends on our ability to
generate sufficient revenue and cash flow to offset operating expenses. To the
extent we do not generate sufficient revenues and cash flow to offset expenses
we will require further financing to fund our ongoing operations. We cannot
assure you that any additional financing will be available or if available, that
it will be on favorable terms. The terms of any financing that we enter into
will vary depending on many factors including, among other things, our then
current financial condition, the market price of our common stock, and other
characteristics and terms of our capital structure including outstanding options
and warrants. We may seek to raise additional capital through public or private
offerings of equity securities or debt financings. Our issuance of additional
equity securities could cause dilution to holders of our common stock and may
adversely affect the market price of our common stock. The incurrence of
additional debt could increase our interest expense and other debt service
obligations and could result in the imposition of covenants that restrict our
operational and financial flexibility.  See Item 7 – Management’s
Discussion and Analysis of Financial Condition and Results of
Operation.





Changes
in securities laws and regulations may increase our costs.





The
Sarbanes-Oxley Act of 2002 and the SEC rules promulgated thereunder have imposed
increased demands upon and required ongoing changes in some of our operational
systems and processes, corporate governance, and compliance and disclosure
processes, and the Nasdaq Stock Market has implemented changes in its
requirements for companies that are Nasdaq-listed. These developments have
resulted in, and future changes in such rules may result in, increases in our
expenses for information systems, auditing and consulting fees, legal compliance
and financial reporting costs. These developments could also make it more
difficult for us to attract and retain qualified members of our board of
directors or executive officers.




12





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.





As
reported in this Form 10-K under the caption “Item 9A – Controls and
Procedures”, Hollywood Media’s management has identified a material weakness in
internal controls and concluded that Hollywood Media’s internal control over
financial reporting and disclosure controls were not effective.  As
described in Item 9A of this Form 10-K, we are in the process of remediating
this weakness. Failure to achieve and maintain an effective internal control
environment could have a material adverse effect on our business and stock
price.





We
are exposed to market risk related to changes in interest rates and fluctuations
in foreign currency exchange rates.





Market
risk is the risk of loss arising from adverse changes in our assets or
liabilities that might occur due to changes in market rates and prices, such as
interest or foreign currency exchange rates, as well as other relevant market
rate or price changes.  We have an investment in a subsidiary in the
United Kingdom that sells our services and pays for products and services in
British pounds. A decrease in the British foreign currency relative to the U.S.
dollar could adversely impact our margins. As the assets, liabilities and
transactions of our United Kingdom subsidiaries are denominated in British
pounds, the results and financial condition are subject to translation
adjustments upon their conversion into U.S. dollars for our financial reporting
purposes. A large decline in this foreign currency relative to the U.S. dollar
might have a material adverse affect on Hollywood Media’s results of operations
or financial condition.  For additional discussion of market risk, see
“Item 7A — Quantitative and Qualitative Disclosures About Market Risk”
below.





Other
economic factors may adversely affect our future results or the market price of
our stock (such as recession, war, terrorism).





We
operate in a rapidly changing economic and technological environment that
presents numerous risks. Many of these risks are beyond our control and are
driven by factors that we cannot predict.  Economic recession, war,
terrorism, international incidents, labor strikes and disputes, and other
negative economic conditions may cause damage or disruption to our facilities,
information systems, vendors, employees, customers and/or website traffic, which
could adversely impact our revenues and results of operations, and stock
price.


13


Item
1B.  Unresolved
Staff Comments.





At the
time of filing of this Form 10-K, there are no unresolved comments for
disclosure under this Item 1B.





Item  2.   Properties.





Hollywood
Media leases office space in Florida, New York, Wisconsin and Lancashire, UK.
The general terms of the leases for each of these locations are as
follows:





CurrentLocation
                                      
                                      
                                      Square Feet
                                      
                                      
                                      Monthly Rent
                                      
                                      
                                      Expiration DateCorporate
      Headquarters,
                                      
                                      
                                      
                                      13,130
                                      
                                      
                                      $
                                      26,129
                                      
                                      
                                      November 30, 2012Boca
      Raton, FLTheatre
      Direct,
                                      
                                      
                                      
                                      21,600
                                      
                                      
                                      $
                                      62,029
                                      
                                      
                                      February
      28, 2017Broadway.com
      and1-800-BROADWAYNew
      York, NYTekno
      Books
                                      
                                      
                                      
                                      2,025
                                      
                                      
                                      $
                                      1,446
                                      
                                      
                                      Month
      to MonthGreen
      Bay, WI
                                      
                                      
                                      
                                      463
                                      
                                      
                                      $
                                      355
                                      
                                      
                                      Month
      to MonthCinemasOnline
                                      
                                      
                                      
                                      3,710
                                      
                                      
                                      $
                                      4,409
                                      
                                      
                                      Month
      to MonthLancashire,
      UK




Item
3.   Legal
Proceedings.





None.





Item
4.   Submission of Matters to a
Vote of Shareholders.





Hollywood
Media held its 2009 annual meeting of shareholders on December 21,
2009.  The following matters were submitted to a vote of the holders
of Hollywood Media’s common stock, and were approved by the voting results
indicated below.





Vote
On Election of Directors





All of
the following nominees were elected as directors, with the following voting
results:





Director Nominees
              
              Votes For
              
              Votes WithheldMitchell
      Rubenstein
              
              23,176,787
              
              466,152Laurie
      S. Silvers
              
              23,176,372
              
              466,567Harry
      T. Hoffman
              
              20,932,726
              
              2,710,213Robert
      D. Epstein
              
              21,376,302
              
              2,266,637Spencer
      Waxman
              
              23,176,787
              
              466,152Stephen
      Gans
              
              23,206,889
              
              436,050




14




Vote
on Ratification of Public Accounting Firm





The
proposal to ratify the selection of Kaufman, Rossin & Co. as Hollywood
Media’s independent registered public accounting firm for the year ending
December 31, 2009 was approved by the following voting results:





VotesFor
                
                23,596,618Against
                
                22,371Abstain
                
                23,950Broker
      Non-Votes
                
                -


15


PART
II





Item
      5.
            Market for Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity
      Securities.





Market
for Common Stock





Hollywood
Media’s common stock trades on The Nasdaq Stock Market (“Nasdaq”) under the
symbol HOLL.  The following table sets forth, for the periods
indicated below, the high and low sales prices for the common stock, as reported
by Nasdaq.





High
                      
                      
                      Low2008First
      Quarter
                      
                      $
                      3.07
                      
                      
                      $
                      2.29Second
      Quarter
                      
                      $
                      2.70
                      
                      
                      $
                      2.28Third
      Quarter
                      
                      $
                      2.81
                      
                      
                      $
                      1.72Fourth
      Quarter
                      
                      $
                      2.34
                      
                      
                      $
                      0.802009First
      Quarter
                      
                      $
                      1.14
                      
                      
                      $
                      0.56Second
      Quarter
                      
                      $
                      1.70
                      
                      
                      $
                      0.75Third
      Quarter
                      
                      $
                      1.76
                      
                      
                      $
                      1.38Fourth
      Quarter
                      
                      $
                      1.75
                      
                      
                      $
                      1.03





Holders
of Common Stock





As of
March 15, 2010, there were 144 record holders of Hollywood Media’s common
stock.





Dividend
Policy





Hollywood
Media has never paid cash dividends on its common stock and currently intends to
retain any future earnings to finance its operations and the expansion of its
business.  Any future determination to pay cash dividends will be at
the discretion of the Board of Directors and will be dependent upon Hollywood
Media’s earnings, capital requirements and financial condition and such other
factors deemed relevant by the Board of Directors.





Recent
Sales of Unregistered Securities




Hollywood Media did not issue any
securities during the year ended December 31, 2009, in transactions that were
not registered under the Securities Act of 1933.





Issuer
Repurchases of Equity Securities





Hollywood Media reported in its Form
8-K report filed on October 4, 2007, that its Board of Directors authorized a
stock repurchase program under which Hollywood Media may use up to $10 million
of its cash to repurchase shares of its outstanding common stock. This program
was approved by Hollywood Media’s Board of Directors on September 28, 2007 and
was initially announced via press release on October 1, 2007.




16





Pursuant to the repurchase program,
Hollywood Media is authorized to purchase shares of its common stock from time
to time on the open market or in negotiated transactions. The purchases are to
be funded from available cash and cash equivalents, and the timing and amount of
any shares repurchased will be determined by Hollywood Media’s management based
on its evaluation of financial and market conditions, legal requirements and
other factors. The repurchase program has no time limit and may be suspended for
periods or discontinued at any time, and there is no guarantee as to the number
of shares or the amount of cash to be utilized for repurchases. Repurchased
shares will become authorized but unissued shares of Hollywood Media’s common
stock.





The following table provides
information with respect to common stock purchases by Hollywood Media during the
fourth quarter of 2009. For additional information relating to the stock
repurchase program, see “Liquidity and Capital Resources” in Item 7 of this Form
10-K Report.





MaximumTotal Number of
                          
                          
                          ApproximateShares Purchased
                          
                          
                          Dollar Value of Sharesas Part of Publicly
                          
                          
                          that May Yet BeTotal Number of
                          
                          
                          Average Price
                          
                          
                          Announced Plans
                          
                          
                          Purchased Under thePeriod
                          
                          Shares Purchased
                          
                          
                          Paid Per Share
                          
                          
                          or Programs
                          
                          
                          Plans or ProgramsOctober
      1, 2009 through October 31, 2009
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          -
                          
                          
                          $
                          -November
      1, 2009 through November 30, 2009
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -December
      1, 2009 through December 31, 2009
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Total
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          -
                          
                          
                          $
                          2,697,843
                          (1)





(1)
              As
      of December 31, 2009, calculated by subtracting (i) the total price paid
      for all shares purchased under the repurchase program through December 31,
      2009 ($7,302,157), from (ii) the $10 million potential maximum dollar
      value of repurchases approved under the life of the
  plan.





17





Performance
Graph





The
following graph compares, for the five-year period from December 31, 2004 to
December 31, 2009, the cumulative total shareholder return on:





•   Hollywood
Media’s common stock;


•   The
NASDAQ Composite Index; and


•   The
Standard & Poor’s Media Industry Index











18





Item
6.    Selected Financial
Data.





The
selected financial data in the table below has been derived from the audited
Consolidated Financial Statements of Hollywood Media and should be read in
conjunction with the following statements and the notes thereto included in Item
8 of this Form 10-K report:  Consolidated Balance Sheets as of
December 31, 2009 and December 31, 2008; and Consolidated Statements of
Operations for the years ended December 31, 2009, 2008 and 2007. The
Consolidated Balance Sheets as of December 31, 2007, 2006 and 2005, and
Consolidated Statements of Operations for the years ended December 31, 2006 and
2005 are not included in this report.





Discontinued
Operations.





The
selected financial data in the table below includes application of accounting
principles to reflect the discontinued operations resulting from the sale of the
Hollywood.com Business in fiscal 2008, the Showtimes business unit in fiscal
2007 and the Baseline/Studio Systems business unit in fiscal
2006.  Those sales are described below.





Sale of Hollywood.com Business Unit
to R&S Investments, LLC.





On August 21, 2008, Hollywood Media
entered into a purchase agreement (the “Purchase Agreement”) with R&S
Investments, LLC (“Purchaser”) for the sale of the Hollywood.com
Business.  The Purchaser is owned by Mitchell Rubenstein, Hollywood
Media’s Chief Executive Officer and Chairperson of the Board, and Laurie S.
Silvers, Hollywood Media’s President and Vice-Chairperson of the
Board.  Pursuant to the Purchase Agreement, Hollywood Media sold the
Hollywood.com Business to Purchaser for a potential purchase price of $10.0
million, which includes $1.0 million in cash which was paid to Hollywood Media
at closing and potential earn-out payments totaling $9.0 million.During
2009, Hollywood Media recorded $0.7 million in earn-out income under this
agreement.  As of the filing of this Form 10-K, the earn-out
receivable was collected in full in accordance with the payment
terms.  As of December 31, 2009, there remains $8.3 million in
potential earn-out payments pursuant to this agreement.  The
Hollywood.com Business included the Hollywood.com website and related URLs and
celebrity fan websites and Hollywood.com Television, a free video on demand
service distributed pursuant to annual affiliation agreements with certain cable
operators.  Hollywood.com
Business financial results for all periods presented have been reclassified from
continuing operations and included in discontinued operations.  For
additional information about this transaction, see Note 4 “Discontinued
Operations” on the Notes to the Consolidated Financial Statements contained in
Part II, Item 8, of this Form 10-K report.





Sale
of Showtimes Business Unit to West World Media LLC





On August
24, 2007, Hollywood Media and its wholly-owned subsidiary Showtimes.com, Inc.
(“Showtimes”) entered into and simultaneously closed on a definitive asset
purchase agreement with Brett West and West World Media, LLC, (“West World
Media”), pursuant to which Hollywood Media sold substantially all of the assets
of the Showtimes business to West World Media for a cash purchase price of $23.0
million paid to Hollywood Media on the closing date.  The Showtimes
business included the CinemaSource, EventSource and ExhibitorAds operations and
constituted the remainder of Hollywood Media’s Data Business Division, which
previously included the Baseline/StudioSystems business unit until it was sold
to The New York Times Company (“The New York Times”) on August 25,
2006.  West World Media is controlled by Brett West, who founded the
Showtimes business in 1995 and sold the business to Hollywood Media in 1999.
Mr. West served as president of Hollywood Media’s Showtimes business. The
purchase price was determined in an arms’ length negotiation between Hollywood
Media and West World Media.  Showtimes financial results for all
periods presented have been reclassified from continuing operations and included
in discontinued operations.  For additional information about this
transaction, see Note 4 “Discontinued Operations” in the Notes to the
Consolidated Financial Statements contained in Part II, Item 8, of this Form
10-K Report.





19





Sale
of Baseline/StudioSystems Business Unit to The New York Times
Company





On August
25, 2006, Hollywood Media entered into and simultaneously closed on a definitive
stock purchase agreement, pursuant to which The New York Times purchased all of
the outstanding capital stock of Hollywood Media’s wholly-owned subsidiary,
Baseline Acquisitions Corp. (“BAC”), for a cash purchase price of $35.0 million.
BAC was the subsidiary of Hollywood Media which owned Hollywood Media’s
Baseline/StudioSystems business unit. Baseline/StudioSystems constituted a
portion of Hollywood Media’s Data Business
Division.  Baseline/StudioSystems financial results for all periods
presented have been reclassified from continuing operations and included in
discontinued operations.  For additional information about this
transaction, see Note 4 “Discontinued Operations” in the Notes to the
Consolidated Financial Statements contained in Part II, Item 8, of this Form
10-K Report.


20





YEARS ENDED DECEMBER 31,2009
                    
                    
                    2008
                    
                    
                    2007
                    
                    
                    2006
                    
                    
                    2005STATEMENT
      OF OPERATIONS DATA:Net
      revenuesTicketing
                    
                    $
                    98,860,362
                    
                    
                    $
                    110,918,969
                    
                    
                    $
                    111,792,068
                    
                    
                    $
                    98,661,705
                    
                    
                    $
                    79,189,987Other
                    
                    
                    4,518,548
                    
                    
                    
                    6,138,962
                    
                    
                    
                    6,369,156
                    
                    
                    
                    5,862,715
                    
                    
                    
                    2,025,776Total
      net revenues
                    
                    
                    103,378,910
                    
                    
                    
                    117,057,931
                    
                    
                    
                    118,161,224
                    
                    
                    
                    104,524,420
                    
                    
                    
                    81,215,763Operating
      Costs and ExpensesCost
      of revenues – ticketing
                    
                    
                    81,014,536
                    
                    
                    
                    92,882,066
                    
                    
                    
                    94,017,924
                    
                    
                    
                    82,496,590
                    
                    
                    
                    68,179,732Editorial,
      production, development and technology
                    
                    
                    2,569,354
                    
                    
                    
                    3,323,546
                    
                    
                    
                    3,590,192
                    
                    
                    
                    3,165,383
                    
                    
                    
                    1,022,850Selling,
      general andadministrative
                    
                    
                    10,827,719
                    
                    
                    
                    13,932,852
                    
                    
                    
                    14,269,974
                    
                    
                    
                    13,354,795
                    
                    
                    
                    9,472,084Payroll
      & benefits
                    
                    
                    10,574,375
                    
                    
                    
                    13,284,857
                    
                    
                    
                    13,368,817
                    
                    
                    
                    12,100,816
                    
                    
                    
                    11,425,999Impairment
      loss
                    
                    
                    -
                    
                    
                    
                    3,524,697
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Depreciation
      and amortization
                    
                    
                    1,590,598
                    
                    
                    
                    2,224,831
                    
                    
                    
                    1,378,492
                    
                    
                    
                    1,293,797
                    
                    
                    
                    891,540Total
      operating costs and expenses
                    
                    
                    106,576,582
                    
                    
                    
                    129,172,849
                    
                    
                    
                    126,625,399
                    
                    
                    
                    112,411,381
                    
                    
                    
                    90,992,205Loss
      from operations
                    
                    
                    (3,197,672
                    )
                    
                    
                    (12,114,918
                    )
                    
                    
                    (8,464,175
                    )
                    
                    
                    (7,886,961
                    )
                    
                    
                    (9,776,442
                    )EARNINGS
      (LOSSES) OF UNCONSOLIDATED INVESTEESEquity
      in earnings of unconsolidated investees
                    
                    
                    2,006,498
                    
                    
                    
                    1,160,623
                    
                    
                    
                    4,747
                    
                    
                    
                    12,227
                    
                    
                    
                    533,228Impairment
      loss
                    
                    
                    (5,000,000
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Total
      equity in earnings (losses) of  unconsolidated
      investees
                    
                    
                    (2,993,502
                    )
                    
                    
                    1,160,623
                    
                    
                    
                    4,747
                    
                    
                    
                    12,227
                    
                    
                    
                    533,228OTHER
      INCOME (EXPENSE)Interest,
      net
                    
                    
                    28,922
                    
                    
                    
                    425,251
                    
                    
                    
                    199,437
                    
                    
                    
                    (1,787,735
                    )
                    
                    
                    (542,935
                    )Change
      in derivative liability
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    640,536
                    
                    
                    
                    87,037Other,
      net
                    
                    
                    (75,146
                    )
                    
                    
                    44,958
                    
                    
                    
                    (50,935
                    )
                    
                    
                    9,430
                    
                    
                    
                    40,803Loss
      from continuing operations
                    
                    
                    (6,237,398
                    )
                    
                    
                    (10,484,086
                    )
                    
                    
                    (8,310,926
                    )
                    
                    
                    (9,012,503
                    )
                    
                    
                    (9,658,309
                    )Gain
      (loss) on sale of discontinued operations, net of income
    taxes
                    
                    
                    614,572
                    
                    
                    
                    (4,655,122
                    )
                    
                    
                    10,254,287
                    
                    
                    
                    16,328,241
                    
                    
                    
                    -Income
      (loss) from discontinued operations
                    
                    
                    -
                    
                    
                    
                    (1,635,750
                    )
                    
                    
                    (211,993
                    )
                    
                    
                    2,201,865
                    
                    
                    
                    913,234Income
      (loss) from discontinued operations
                    
                    
                    614,572
                    
                    
                    
                    (6,290,872
                    )
                    
                    
                    10,042,294
                    
                    
                    
                    18,530,106
                    
                    
                    
                    913,234Net
      income (loss)
                    
                    
                    (5,622,826
                    )
                    
                    
                    (16,774,958
                    )
                    
                    
                    1,731,368
                    
                    
                    
                    9,517,603
                    
                    
                    
                    (8,745,075
                    )NET
      INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST
                    
                    
                    2,409
                    
                    
                    
                    (81,365
                    )
                    
                    
                    3,241
                    
                    
                    
                    4,910
                    
                    
                    
                    (168,107
                    )Net
      income (loss) attributable to Hollywood Media Corp.
                    
                    $
                    (5,620,417
                    )
                    
                    $
                    (
      16,856,323
                    )
                    
                    $
                    1,734,609
                    
                    
                    $
                    9,522,513
                    
                    
                    $
                    (8,913,182
                    )Basic
      and diluted income (loss) per common shareContinuing
      operations
                    
                    $
                    (0.20
                    )
                    
                    $
                    (0.33
                    )
                    
                    $
                    (0.25
                    )
                    
                    $
                    (0.28
                    )
                    
                    $
                    (0.31
                    )Discontinued
      operations
                    
                    
                    0.02
                    
                    
                    
                    (0.20
                    )
                    
                    
                    0.30
                    
                    
                    
                    0.57
                    
                    
                    
                    0.03Total
      basic and diluted net income (loss) per share
                    
                    $
                    (0.18
                    )
                    
                    $
                    (0.53
                    )
                    
                    $
                    0.05
                    
                    
                    $
                    0.29
                    
                    
                    $
                    (0.28
                    )Weighted
      average common and common equivalent shares outstanding – basic and
      diluted
                    
                    
                    30,584,902
                    
                    
                    
                    31,793,853
                    
                    
                    
                    33,303,886
                    
                    
                    
                    32,761,848
                    
                    
                    
                    31,470,307


21





AS OF DECEMBER 31,2009
                  
                  
                  2008
                  
                  
                  2007
                  
                  
                  2006
                  
                  
                  2005CONSOLIDATED
      BALANCE SHEET DATA:Cash
      and cash equivalents
                  
                  $
                  11,764,810
                  
                  
                  $
                  12,685,946
                  
                  
                  $
                  26,758,550
                  
                  
                  $
                  27,448,649
                  
                  
                  $
                  6,926,313Working
      capital (deficit)
                  
                  
                  8,774,819
                  
                  
                  
                  8,876,128
                  
                  
                  
                  20,128,557
                  
                  
                  
                  16,380,362
                  
                  
                  
                  (3,396,040
                  )Total
      assets
                  
                  
                  57,606,179
                  
                  
                  
                  66,938,861
                  
                  
                  
                  93,978,836
                  
                  
                  
                  100,009,604
                  
                  
                  
                  83,302,950Capital
      lease obligations, including current portion
                  
                  
                  198,891
                  
                  
                  
                  407,480
                  
                  
                  
                  397,780
                  
                  
                  
                  77,588
                  
                  
                  
                  106,993Convertible
      debentures -  net
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  940,927Senior
      Unsecured Notes
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6,375,399
                  
                  
                  
                  5,402,255Total
      shareholders’ equity
                  
                  $
                  32,490,409
                  
                  
                  $
                  37,758,880
                  
                  
                  $
                  55,567,474
                  
                  
                  $
                  55,761,457
                  
                  
                  $
                  42,487,230





Item
7.     Management’s Discussion and
Analysis of Financial Condition and Results of Operation.





The
following discussion and analysis should be read in conjunction with Hollywood
Media’s Consolidated Financial Statements and the Notes to Consolidated
Financial Statements included in Item 8 of Part II of this report.





Overview





Hollywood Media’s continuing operations
are of various businesses focusing primarily on online ticket sales, deriving
revenue primarily from Broadway, Off-Broadway and London’s West End ticket sales
to individuals and groups, as well as advertising and book development license
fees and royalties. Our Broadway Ticketing business includes Broadway.com,
1-800-BROADWAY, Theatre Direct and Theatre.com. Hollywood Media’s businesses
also include an intellectual property business, the U.K. based CinemasOnline
companies and a minority interest in MovieTickets.com.


Proposed
Sale of the Broadway Ticketing Division




On
December 22, 2009, Hollywood Media entered into the Purchase Agreement with Key
Brand pursuant to which Key Brand will purchase Hollywood Media’s Broadway
Ticketing Division through the purchase of all of the outstanding capital stock
of Theatre Direct NY, Inc., a Delaware corporation and a wholly-owned subsidiary
of Hollywood Media, from Hollywood Media.  The closing of the Broadway
Sale is subject to certain customary closing conditions specified in the
Purchase Agreement, including but not limited to the approval of Hollywood
Media’s shareholders.





For
further information on the sale of the Broadway Ticketing Division, see “Item 1
– Business” above. Unless stated otherwise, all forward-looking information
contained in this Management’s Discussion and Analysis of Financial Condition
and Results of Operation do not take into account or give any effect to the
impact of the pending sale of the Broadway Ticketing Division.





RESULTS
OF OPERATIONS





Year
ended December 31, 2009 (“fiscal 2009”) as compared to the year ended December
31, 2008 (“fiscal 2008”) and year ended December 31, 2007 (“fiscal
2007”).





Composition
of our business segments are as follows:





·
            Broadway Ticketing –
      sells tickets and related hotel and restaurant packages via Broadway.com,
      1-800-BROADWAY and TDI to live theater events on Broadway, Off-Broadway
      and London’s West End, to individual consumers, groups and domestic and
      international travel professionals, including travel agencies, tour
      operators, and educational institutions.   Sales for events
      in London’s West End are fulfilled through a partnership arrangement
      between Theatre.com and an unrelated London-based ticket
      agency.  This segment also generates revenue from the sale of
      sponsorships and advertisements on
Broadway.com.





·
            Ad Sales – includes
      CinemasOnline, which sells advertising on plasma TV displays throughout
      the U.K. and Ireland, on lobby display posters, movie brochure booklets
      and ticket wallets distributed in cinemas, live theater and other
      entertainment venues in the U.K. and on cinema and theater websites in the
      U.K. and Ireland.  This segment also includes Hollywood Media’s
      investment in MovieTickets.com.


22





·
            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.





·
            Other– is comprised of
      payroll and benefits for corporate and administrative personnel as well as
      other corporate-wide expenses, such as legal fees, audit fees, proxy
      costs, insurance, 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.





Results of Discontinued
Operations





Sale of Hollywood.com Business Unit
to R&S Investments, LLC





On
August 21, 2008, Hollywood Media entered into and simultaneously closed on
a definitive purchase agreement with R&S Investments, LLC, pursuant to which
R&S Investments acquired the Hollywood.com Business for a potential purchase
price of $10.0 million, which includes $1.0 million in cash that was
paid to Hollywood Media at closing and potential earn-out payments of up to $9.0
million. During fiscal 2009, Hollywood Media recorded $0.7 million in earn-out
income under this agreement.  As of December 31, 2009, $8.3 million
remained pursuant to this agreement.  The Hollywood.com Business
included the Hollywood.com website and related URLs and celebrity fan websites
and Hollywood.com Television, a free video on demand service distributed
pursuant to annual affiliation agreements with certain cable operators. R&S
Investments is owned by Mitchell Rubenstein, Hollywood Media’s Chief Executive
Officer and Chairperson of the Board, and Laurie S. Silvers, Hollywood Media’s
President and Vice-Chairperson of the Board. The purchase price was determined
by an arms-length negotiation between a Special Committee of independent and
disinterested directors of Hollywood Media on the one hand and R&S
Investments on the other hand.





Commencing
October 1, 2009, R&S Investments is contractually obligated to make periodic
earn-out payments equal to the greater of (i) 10 percent of collected
gross revenue and (ii) 90 percent of EBITDA (as defined in the
purchase agreement) for the Hollywood.com Business until the full earn-out is
paid. If a change of control of Hollywood.com occurs before the earn-out is
fully paid, the remaining portion of the earn-out would be payable immediately
upon such a change of control, up to the amount of consideration received by
R&S Investments less related expenses. If the consideration in such a change
of control is less than the remaining balance of the earn-out, then the
surviving entity which owns the Hollywood.com Business will be obligated to pay
the difference in accordance with the same earn-out terms. In addition, if the
Hollywood.com Business is resold prior to August 21, 2011, Hollywood Media will
also receive 5 percent of any proceeds above $10.0 million. Pursuant to the
purchase agreement, Hollywood Media was required to place $2.6 million into
an escrow account to fund any negative EBITDA of the Hollywood.com Business
through August 21, 2010. There was $2.6 million disbursed to the
Hollywood.com Business through September 30, 2009, representing the entire
balance of the escrow.  In addition, as of December 31, 2009,
Hollywood Media recorded a $0.2 million related party receivable for earn-out
earned and expense reimbursement by R&S Investments.  As of the
filing of this 10-K, the receivable and expense reimbursement were collected in
full in accordance with the payment terms.





For
additional information about this transaction, see Note 4 “Discontinued
Operations” in the Notes to the Condensed Consolidated Financial Statements
contained in Part II, Item 8, of this Form 10-K Report.





Sale
of Showtimes Business Unit to West World Media





On
August 24, 2007, Hollywood Media Corp. entered into and simultaneously closed on
a definitive asset purchase agreement with West World Media and its principal, a
former employee, pursuant to which Hollywood Media sold to West World Media
substantially all of the assets of its Showtimes business for a cash purchase
price of $23.0 million subject to a working capital post-closing
adjustment.  The working capital post-closing adjustment was a price
reduction of $0.1 million, which was paid by Hollywood Media to West World Media
in January 2008.


23





Following
are components of the net results of discontinued operations for the years ended
December 31, 2009, 2008 and 2007.  The results for fiscal 2009, 2008
and fiscal 2007 in the table below include the results of the sold businesses
for only the periods up to the date on which the Hollywood.com Business and the
Showtimes business was sold (August 21, 2008 and August 24, 2007,
respectively).





2009
                  
                  
                  2008
                  
                  
                  2007(in millions)
                  
                  
                  (in millions)
                  
                  
                  (in millions)Operating
      revenue
                  
                  $
                  -
                  
                  
                  $
                  3.9
                  
                  
                  $
                  10.0Gain
      (loss) on sale of discontinued operations net of income taxes of $0.6
      million for fiscal 2007
                  
                  
                  0.6
                  
                  
                  
                  (4.7
                  )
                  
                  
                  10.2Income
      (loss) from discontinued operations
                  
                  
                  -
                  
                  
                  
                  (1.6
                  )
                  
                  
                  (0.2
                  )Income
      (loss) from discontinued operations
                  
                  $
                  0.6
                  
                  
                  $
                  (6.3
                  )
                  
                  $
                  10.0





Results of Continuing
Operations





The following tables summarize changes
in Hollywood Media’s revenue and operating expense from continuing operations by
reportable segment for the years ended December 31, 2009, 2008 and
2007.  For additional financial information regarding Hollywood
Media’s reportable segments, see Note 18 – Segment Reporting in the Notes to
Consolidated Financial Statements in Part II, Item 8 of this Form 10-K
report.





Net Revenues Analysis
                  
                  Net Revenues
                  
                  
                  2008 to
                  
                  
                  2008 to(in millions)
                  
                  
                  
                  
                  
                  
                  
                  2009
                  
                  
                  20092009
                  
                  
                  2008
                  
                  
                  Change ($)
                  
                  
                  Change (%)Broadway
      Ticketing
                  
                  $
                  98.9
                  
                  
                  $
                  110.9
                  
                  
                  $
                  (12.0
                  )
                  
                  
                  (11
                  )Ad
      Sales
                  
                  
                  3.4
                  
                  
                  
                  4.8
                  
                  
                  
                  (
      1.4
                  )
                  
                  
                  (29
                  )Intellectual
      Properties
                  
                  
                  1.1
                  
                  
                  
                  1.4
                  
                  
                  
                  (0.3
                  )
                  
                  
                  (21
                  )Other
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -TOTALS
                  
                  $
                  103.4
                  
                  
                  $
                  117.1
                  
                  
                  $
                  (13.7
                  )
                  
                  
                  (12
                  )





Net Revenues
                  
                  
                  2007 to
                  
                  
                  2007 to2008
                  
                  
                  20082008
                  
                  
                  2007
                  
                  
                  Change ($)
                  
                  
                  Change (%)Broadway
      Ticketing
                  
                  $
                  110.9
                  
                  
                  $
                  111.8
                  
                  
                  $
                  (0.9
                  )
                  
                  
                  (1
                  )Ad
      Sales
                  
                  
                  4.8
                  
                  
                  
                  5.3
                  
                  
                  
                  (0.5
                  )
                  
                  
                  (9
                  )Intellectual
      Properties
                  
                  
                  1.4
                  
                  
                  
                  1.1
                  
                  
                  
                  0.3
                  
                  
                  
                  27Other
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -TOTALS
                  
                  $
                  117.1
                  
                  
                  $
                  118.2
                  
                  
                  $
                  (1.1
                  )
                  
                  
                  ( 1
                  )


24





Operating Expense Analysis
                  
                  Operating Expenses
                  
                  
                  2008 to
                  
                  
                  2008 to(in millions)
                  
                  
                  
                  
                  
                  
                  
                  2009
                  
                  
                  20092009
                  
                  
                  2008
                  
                  
                  Change ($)
                  
                  
                  Change (%)Broadway
      Ticketing
                  
                  $
                  94.1
                  
                  
                  $
                  108.4
                  
                  
                  $
                  (14.3
                  )
                  
                  
                  (13
                  )Ad
      Sales
                  
                  
                  3.7
                  
                  
                  
                  8.8
                  
                  
                  
                  (5.1
                  )
                  
                  
                  (58
                  )Intellectual
      Properties
                  
                  
                  1.1
                  
                  
                  
                  1.4
                  
                  
                  
                  (0.3
                  )
                  
                  
                  (21
                  )Other
                  
                  
                  7.6
                  
                  
                  
                  10.6
                  
                  
                  
                  (3.0
                  )
                  
                  
                  (28
                  )TOTALS
                  
                  $
                  106.5
                  
                  
                  $
                  129.2
                  
                  
                  $
                  (22.7
                  )
                  
                  
                  (18
                  )





Operating Expenses
                    
                    
                    2007 to
                    
                    
                    2007 to2008
                    
                    
                    20082008
                    
                    
                    2007
                    
                    
                    Change ($)
                    
                    
                    Change (%)Broadway
      Ticketing
                    
                    $
                    108.4
                    
                    
                    $
                    109.1
                    
                    
                    $
                    (0.7
                    )
                    
                    
                    (1
                    )Ad
      Sales
                    
                    
                    8.8
                    
                    
                    
                    5.9
                    
                    
                    
                    2.9
                    
                    
                    
                    49Intellectual
      Properties
                    
                    
                    1.4
                    
                    
                    
                    1.1
                    
                    
                    
                    0.3
                    
                    
                    
                    27Other
                    
                    
                    10.6
                    
                    
                    
                    10.5
                    
                    
                    
                    0.1
                    
                    
                    
                    1TOTALS
                    
                    $
                    129.2
                    
                    
                    $
                    126.6
                    
                    
                    $
                    2.6
                    
                    
                    
                    2





Comparison of Percentage
Changes in Net Revenues and Operating Expenses





2008 to 2009
                    
                    
                    
                    
                    
                    2007 to 20082008 to 2009
                      Revenues (%)
                    
                    
                    Operating
                      Expenses (%)
                    
                    
                    2007 to 2008
                      Revenues (%)
                    
                    
                    Operating
                      Expenses (%)Increase
      (decrease) in -Broadway
      Ticketing
                    
                    
                    (11
                    )
                    
                    
                    (13
                    )
                    
                    
                    (1
                    )
                    
                    
                    (1
                    )Ad
      Sales
                    
                    
                    (29
                    )
                    
                    
                    (58
                    )
                    
                    
                    (9
                    )
                    
                    
                    49Intellectual
      Properties
                    
                    
                    (21
                    )
                    
                    
                    (21
                    )
                    
                    
                    27
                    
                    
                    
                    27Other
                    
                    
                    -
                    
                    
                    
                    (28
                    )
                    
                    
                    -
                    
                    
                    
                    1TOTALS
                    
                    
                    (12
                    )
                    
                    
                    (18
                    )
                    
                    
                    (1
                    )
                    
                    
                    2





Note
Regarding Impact of Broadway Strike





Results
of continuing operations for the year ended December 31, 2007 were negatively
impacted by the Broadway stagehand strike that ended on November 28, 2007
and caused 19 days of cancelled Broadway performances.  We received
refunds or credits from the show’s box offices on virtually all tickets
purchased by the Broadway Ticketing division for cancelled
performances.  We worked with customers to address orders placed for
these cancelled performances, and refunds or exchanges were provided at the
election of the customer for cancelled performances.  Any orders not
refunded or exchanged by the end of fiscal 2007 were included in “Customer
deposits” in the Consolidated Balance Sheets in Part II, Item 8 of this Form
10-K.





Note
Regarding Known Material Trends, Uncertainties and Opportunities Impacting
Hollywood Media





Hollywood
Media expects to have continuing losses in the near
term.  Notwithstanding these losses, as described below under
“Liquidity and Capital Resources,” Hollywood Media expects that it will be able
to satisfy it’s near term liquidity obligations.  Other than the
normal seasonal variance described under “Inflation and Seasonality,” Hollywood
Media does not expect that there will be a significant variance in its earnings
or its cash flows near term and accordingly does not expect its trend of losses
to accelerate.





Known
material trends, uncertainties and other factors that have had or are reasonably
likely to have a material impact on Hollywood Media’s revenues, earnings and
liquidity include the following:


25





·
            the
      United States and global economic downturn, which can adversely affect
      business and personal discretionary spending for entertainment-related
      items such as theater tickets, and has resulted in a reduction in tickets
      sold and in net revenue;





·
            increases
      in Broadway ticket prices, which can positively affect Hollywood Media’s
      revenues as the ticket service fees Hollywood Media earns are based on a
      percentage of ticket prices, but which can also result in a lower of
      volume of tickets being sold and could adversely affect Hollywood Media’s
      revenues and, accordingly, its earnings and cash flow;
  and





·
            New
      York State’s repeal of caps on ticket service fees, which has given
      Hollywood Media greater flexibility to charge increased service fees on
      tickets for high demand shows, such as Wicked and Jersey
    Boys.





Hollywood
Media is also exploring market opportunities which could have a material impact
on its revenues, earnings and liquidity, including expansion into discount
ticketing markets.  Such expansion would allow Hollywood Media to sell
tickets at variable price points, which Hollywood Media expects would attract a
greater variety of customers.  There is no assurance, however, that
Hollywood Media will ultimately pursue these opportunities or if it does, that
they will be successful.





Net
Revenues




Total net revenues for fiscal 2009 were
$103.4 million compared to $117.1 million and $118.2 million for fiscal 2008 and
fiscal 2007 respectively. Revenues decreased $13.7 million, or 12%, in fiscal
2009 from fiscal 2008, and decreased $1.1 million or 1% in fiscal 2008 from
fiscal 2007. The decrease in net revenues for fiscal 2009 as compared to fiscal
2008 is primarily the result of decreases in Broadway ticketing revenue of $12.0
million and Ad Sales revenue of $1.4 million, and a decrease in Intellectual
Properties revenue of $0.3 million.  The decrease in net revenues for
fiscal 2008 as compared to fiscal 2007 is primarily the result of decrease in
Broadway Ticketing revenue of $0.9 million and Ad Sales revenue of $0.5 million,
offset by an increase in Intellectual Properties revenue of $0.3
million.  In fiscal 2009, net revenues were derived 96% from Broadway
Ticketing, 3% from Ad Sales and 1% from Intellectual
Properties.   In fiscal 2008 and fiscal 2007, net revenues were
derived 95% from Broadway Ticketing, 4% from Ad Sales and 1% from Intellectual
Properties.





Broadway
Ticketing net revenue for fiscal 2009 was $98.9 million as compared to $110.9
million for fiscal 2008, and $111.8 million for fiscal 2007.  Broadway
Ticketing net revenue decreased $12.0 million, or 11%, for fiscal 2009 from
fiscal 2008 and decreased $0.9 million, or 1%, for fiscal 2008 from fiscal
2007.  The decrease in Broadway Ticketing net revenue in fiscal 2009
compared to fiscal 2008 is primarily attributable to the following: a decrease
in quantity of tickets sold of $13.0 million, a decrease in hotel package sales
of $0.6 million, a decrease in sales of cancellation insurance of $0.3 million,
a decrease in dinner voucher sales of $0.2 million, and a decrease in
sponsorship revenue of $0.1 million, partially offset by an increase in service
fees on individual ticket sales of $2.2 million.  The decrease in
Broadway Ticketing net revenue in fiscal 2008 compared to fiscal 2007 is
primarily attributable to a decrease in revenue of $3.6 million from
Theatre.com primarily as a result of shifting from Theatre.com handling its own
sales to an arrangement with a third party ticket agency in September
2007.  As a result of this arrangement, Theatre.com now recognizes
revenue based on net commissions instead of gross ticket price.  Such
decreased revenue was offset by an increase in revenues to consumers of $2.3
million, which includes: ticket price increases by theaters of $3.9
million, an increase in service fees on individual ticket sales of $2.0
million, offset by a decrease in revenues of $1.7 million from a decrease in
quantity of tickets sold, a decrease in hotel package sales of $0.9 million,
decrease in gift certificate revenue of $0.6 million due to a change in
expiration policy and a decrease in sales of cancellation insurance of $0.4
million.  The decline in Broadway Ticketing net revenue was further
offset by an increase in sponsorship sales of $0.4 million.


26


Ad Sales
net revenue was $3.4 million for fiscal 2009 as compared to $4.8 million for
fiscal 2008 and $5.3 million for fiscal 2007.  Ad Sales net revenue
decreased $1.4 million or 29% for fiscal 2009 from fiscal 2008 and $0.5 million,
or 9%, for fiscal 2008 from fiscal 2007.  The decrease in Ad Sales from
fiscal 2008 to fiscal 2009 is attributable to a decrease in UK advertising sales
of $1.4 million, which includes: a decrease in brochure and web advertising
revenues of $0.3 million and a decrease in plasma revenues of $1.1
million.  The decrease in Ad Sales from fiscal 2007 to fiscal 2008 is
directly attributable to a decrease in UK advertising sales of $0.5 million,
which includes: decreases in the brochure and web advertising revenues of $1.1
million, offset in part by an increase in growth of the plasma business of $0.6
million.





Intellectual
Properties net revenues were $1.1 million for fiscal 2009, compared to $1.4
million for fiscal 2008 and $1.1 million for fiscal 2007. Net revenues generated
from Intellectual Properties decreased $0.3 million, or 21% in fiscal 2009 from
fiscal 2008 and net revenues generated from Intellectual Properties increased
$0.3 million, or 27%, in fiscal 2008 from fiscal 2007. The decrease in revenues
in fiscal 2009 as compared to fiscal 2008 as well as the increase in revenues in
fiscal 2008 from fiscal 2007 were attributable to the timing of the delivery of
manuscripts.  The Intellectual Properties division generates revenues
from several different activities including book development and licensing, and
intellectual property licensing. Revenues vary quarter to quarter depending on
the timing of delivery of manuscripts to the publishers. Revenues are recognized
when the earnings process is complete and ultimate collection of such revenues
is no longer subject to contingencies.  This division does not include
NetCo Partners, which is reported separately; see “Equity in Earnings of
Unconsolidated Investees” below.





Equity
in Earnings of Unconsolidated Investees





Equity in earnings (losses) of
unconsolidated investees consists of the following:





For the years ended December 31,2009
                  
                  
                  2008
                  
                  
                  2007(in millions)
                  
                  
                  (in millions)
                  
                  
                  (in millions)NetCo
      Partners (a)
                  
                  $
                  -
                  
                  
                  $
                  (0.1
                  )
                  
                  $
                  -MovieTickets.com
      (b)
                  
                  
                  (3.0
                  )
                  
                  
                  1.3
                  
                  
                  
                  -$
                  (3.0
                  )
                  
                  $
                  1.2
                  
                  
                  $
                  -





(a)
      NetCo Partners





NetCo
Partners owns NetForce
and is primarily engaged in the development and licensing of NetForce. NetCo Partners
recognizes revenues when the earnings process has been completed based on the
terms of the various agreements, generally upon the delivery of the manuscript
to the publisher and at the point where ultimate collection is substantially
assured. When advances are received prior to completion of the earnings process,
NetCo Partners defers recognition of revenue until the earnings process has been
completed. Hollywood Media owns 50% of NetCo Partners and accounts for its
investment under the equity method. Hollywood Media’s 50% share of loss of NetCo
Partners was de minimus for fiscal 2009, a decrease of 100% or $0.1 million
compared to fiscal 2008. Our 50% share of earnings was de minimus for fiscal
2007.  The increase in earnings for fiscal 2009 as compared to fiscal
2008 was primarily because there was minimal activity and no income was
recognized in fiscal 2009.  The decrease in earnings for fiscal 2008
as compared to fiscal 2007 was primarily because all accounts receivables that
were over six months were fully reserved during fiscal 2008.  Revenues
vary year to year dependent on the timing of deliveries of manuscripts to the
publisher.  Costs related to the acquisition, development and sales of
the intellectual properties and their licensed products are expensed in
proportion to the revenues that have been recognized.


27


(b)
      MovieTickets.com





Hollywood
Media owns 26.2% of the total equity in the MovieTickets.com joint
venture.  Hollywood Media records its investment in MovieTickets.com
under the equity method of accounting, recognizing its percentage interest in
MovieTickets.com’s income or loss as equity in earnings of unconsolidated
investees.  Under applicable accounting principles, Hollywood Media
recorded $0.1 million in income from its investment in MovieTickets.com for
fiscal 2009, because accumulated net income in fiscal 2009 exceeded
MovieTickets.com’s accumulated net losses from fiscal 2008 and
prior.  During the second quarter of 2009, the Company determined that
$5.0 million of the goodwill associated with MovieTickets.com should be written
down and accordingly, recorded an impairment loss of $5.0 million.  In
fiscal 2008 and 2007, Hollywood Media did not record any income from its
investment in MovieTickets.com because accumulated losses from prior
years exceeded MovieTickets.com’s accumulated income.  The
MovieTickets.com web site generates revenues from service fees charged to users
for the purchase of movie tickets online and the sale of
advertising.  The results above include $1.9 million in dividends
received by Hollywood Media in 2009 as compared to $1.3 million received in
fiscal 2008 and none for fiscal 2007.





MovieTickets.com
is a leading destination for the purchase of movie tickets through the Internet.
Hollywood Media launched the MovieTickets.com website in May 2000 with several
major movie theater exhibitors. The MovieTickets.com website allows users to
purchase movie tickets and retrieve them at “will call” windows or kiosks at
theaters or the user can print at home for theatres with that
capacity.  The website generates revenues from service fees charged to
users for the purchase of tickets, the sale of advertising and the sale of
research data.  Service fees on ticket sales were introduced in
November 2000.  MovieTickets.com’s participating exhibitors operate
theaters located in all of the top twenty markets and approximately 70% of the
top 50 and top 100 markets in the United States and Canada and represent
approximately 50% of the top 50 and top 100 grossing theaters in North
America.  Additionally, MovieTickets.com operates in the United
Kingdom.  See Item 1 – Business, and Note 15 to Consolidated Financial
Statements for additional information about MovieTickets.com.





Operating
Expenses





Cost of Revenues - Ticketing.Cost of revenues – ticketing was $81.0 million for fiscal 2009 compared
to $92.9 million for fiscal 2008 and $94.0 million for fiscal 2007.  Cost
of revenues consists primarily of the cost of tickets and credit card fees for
the Broadway Ticketing segment, partially offset by rebates received from
certain producers based on exceeding certain ticketing sales goals and co-op
advertising.  Cost of Revenues – Ticketing decreased $11.9 million, or 13%,
for fiscal 2009 from fiscal 2008 and decreased $1.1 million, or 1%, for fiscal
2008 from fiscal 2007.   As a percentage of ticketing revenues, cost
of revenues - ticketing was 82% in fiscal 2009 and 84% in fiscal 2008 and
2007.





The
decrease in Cost of Revenues – Ticketing in fiscal 2009 compared to fiscal 2008
is primarily attributable to the following: a decrease in cost of revenues of
$12.7 million attributable to (i) a decrease of $11.4 million attributable to a
lower quantity of tickets sold, (ii) a decrease of $0.4 million due to an
increase in advertising sales sold to theaters, which are recorded as a
reduction to cost of sales, (iii) a decrease of $0.3 million in amounts charged
to inventory reserve, (iv) a decrease of $0.3 million in credit card fees, due
to lower ticket quantity, (v) a decrease of $0.1 million in editorial salaries
and wages, (vi) a decrease of $0.1 million in Broadway classroom and (vii) a
decrease of $0.1 million in shipping and postage costs associated with the lower
quantity, offset in part by an increase in cost of revenues of $0.8 million
attributable to (i) an increase in unsold inventory of $0.6 million, (ii) ticket
price increases by theaters of $0.1 million and (iii) an increase in server
hosting fees of $0.1 million.





The
decrease in Cost of Revenues – Ticketing in fiscal 2008 compared to fiscal 2007
is primarily attributable to the result of a decrease in sales to consumers of
$1.0 million, which includes decreases in number of tickets sold from
Theatre.com of $3.0 million, primarily as a result of the change to a net
revenue share business model described above, and a decrease in number of
tickets sold in our domestic Broadway business of $1.2 million, offset by ticket
price increases by theaters of $3.1 million.  In addition, the
purchase of the Showtix business in February 2007 contributed $1.8 million of
cost of revenues – ticketing directly attributable to Showtix.





Editorial, Production, Development
and Technology.Editorial, production, development and
technology costs include commissions, royalties, media buying, production
services and internet access for CinemasOnline and fees and royalties paid to
authors and co-editors for the Intellectual Properties
segment.  Editorial, production, development and technology costs for
fiscal 2009 were $2.6 million as compared to $3.3 million for fiscal 2008 and
$3.6 million for fiscal 2007.  Editorial, production, development and
technology costs decreased $0.7 million or 21% from fiscal 2008 to fiscal 2009
and decreased $0.3 million or 8% from fiscal 2007 to fiscal 2008.  As
a percentage of aggregate net revenues from our Ad Sales and Intellectual
Properties segments, these costs were 57% for fiscal 2009 and 54% and 56% for
fiscal 2008 and fiscal 2007, respectively.


28


The fiscal 2009 decrease from fiscal
2008 was mainly due in part to decreases in (i) commissions paid of $0.4
million, (ii) a decrease in media buying of $0.2 million and (iii) production
and royalties of $0.1 million.  The fiscal 2008 decrease from fiscal
2007 was mainly due to a $0.1 million increase in payments to writer/co-editors
along with an approximate $0.3 million decrease in the Ad Sales
segment.  The decrease in the Ad Sales segment was primarily due to an
approximately $0.1 million decrease in each of production services, media buying
and commissions.





Selling, General and
Administrative.   Selling, general and administrative
(“SG&A”) expenses consist of occupancy costs, professional and consulting
service fees, telecommunications costs, provision for doubtful accounts
receivable, general insurance costs, selling and marketing costs (such as
advertising, marketing, promotional, business development, public relations, and
commissions due to advertising agencies, advertising  representative firms
and other parties).  The SG&A expenses for fiscal 2009 were $10.8
million compared to $13.9 million for fiscal 2008, for a decrease of $3.1
million or 22% and $14.3 million for fiscal 2007, a decrease of $0.4 million or
3% to fiscal 2008.  As a percentage of net revenues, SG&A expenses were
10% for fiscal 2009 and 12% for fiscal 2008 and fiscal 2007,
respectively.





The
decrease in SG&A expenses in fiscal 2009 as compared to fiscal 2008 was due
to primarily decreases in the following expenses: $0.6 million in occupancy
expenses, $0.6 million in legal expenses, $0.2 million in marketing expenses,
$0.3 million in travel expenses, $0.3 million in accounting fees, $0.3 million
in consulting fees related to operations, $0.2 million in consulting fees
relating to Sarbanes Oxley compliance, $0.2 million in telephone expenses and
$0.1 million in each of the following categories, recruitment, office supplies,
temporary services, moving, insurance, repairs and maintenance  and
server security.  These decreases are offset by $0.2 million increase
in Board of Directors’ fees associated with a change of compensation structure
to cash from warrants along with a $0.1 million increase in bad debt
expenses.  The decrease in SG&A expenses in fiscal 2008 as
compared to fiscal 2007 was due in large part to decreases in marketing expenses
of $0.6 million,  a $0.1 million decrease in travel and occupancy
expenses,  a $0.3 million reduction in bad debt expense and a $0.3
million decrease in accounting fees, offset by an increase in consulting fees of
$0.3 million and legal fees of $0.6 million.




Payroll
and Benefits.





Payroll
and benefits expenses consist of payroll and benefits including any other types
of compensation benefits as well as human resources and administrative
functions.





Payroll
and benefits expenses for fiscal 2009 were $10.6 million as compared to $13.3
million for 2008, a decrease of $2.7 million or 20%, and $13.4 million for
fiscal 2007.  Payroll and benefits expenses decreased $0.1 million, or
1%, in fiscal 2008 as compared to fiscal 2007. As a percentage of net revenues,
payroll and benefits expenses were approximately 10% in fiscal 2009 and 11% in
fiscal 2008 and fiscal 2007.





The
decrease in payroll and benefits in fiscal 2009 as compared to fiscal 2008 was
due to the following: (i) a decrease of $1.1 million in corporate overhead
payroll, primarily because of the divestment of the Hollywood.com Business; (ii)
a decrease of $1.3 million in the Broadway Ticketing segment due to payroll
related reduction and (iii) a $0.3 million reduction in payroll in the Ad Sales
segment.  The decrease in payroll and benefits in fiscal 2008 as
compared to fiscal 2007 was due to severance payments made following the
divestment of the Hollywood.com Business of approximately $0.4 million for
Hollywood Media employees at the Corporate headquarters, offset by reduction in
costs in the Ad Sales segment of $0.2 million and the corporate office of $0.2
million, respectively.


29


Depreciation and
Amortization.





Depreciation
and amortization expense consists of depreciation of property and equipment,
furniture and fixtures, web site development, leasehold improvements, equipment
under capital leases and amortization of intangibles. Depreciation and
amortization expense was $1.6 million for fiscal 2009 as compared to $2.2
million for fiscal 2008 and $1.4 million for fiscal 2007. Depreciation and
amortization decreased $0.6 million or 27% in fiscal 2009 from fiscal 2008 and
increased $0.8 million or 57% in fiscal 2008 from fiscal 2007.  The
decrease in depreciation and amortization expense from fiscal 2008 to fiscal
2009 is due to a decrease in the amortization of intangible assets in Q4-08 due
to a write off of certain intangible assets of the CinemasOnline companies,
assets becoming fully depreciated during fiscal 2009 and a retirement of leased
equipment.  This decrease is offset by an increase in depreciation due
to the launching of a new Broadway.com website in September 2009.  The
increase in depreciation and amortization expense from fiscal 2007 to fiscal
2008 is primarily due to investments in computer equipment and new office space
leasehold improvements in New York City for our Broadway Ticketing segment, as
well as a write-off  in amortization of intangible assets due to an
external evaluation of the UK Ad Sales segment and also intangible assets
purchased as part of the acquisition of Showtix.





Interest,
net.





Interest,
net was de minimus income for fiscal 2009 as compared to income of $0.4 million
for fiscal 2008 and income of $0.2 million for fiscal 2007.  The
decrease of $0.4 million or 100%, in interest, net in fiscal 2009 as compared to
2008 was primarily attributable to less income earned from cash on
hand.  The increase of $0.2 million, or 100%, in interest, net in
fiscal 2008 as compared to fiscal 2007 was primarily attributable to the payoff
of $7.0 million principal amount of Senior Unsecured Notes in May 2007,
accretion of debit discount, and increased income from interest bearing
accounts.





Other, net





Other,
net was an expense of $0.1 million as compared to a de minimus income for fiscal
2008 and a de minimus expense for fiscal 2007.  The expense for fiscal
2009 was primarily due to the write-off of the old Broadway.com website due to
the launching of the new Broadway.com website in September 2009.





Net
Income (Loss).





Hollywood
Media’s net loss for fiscal 2009 was $5.6 million as compared to a net loss for
fiscal 2008 of $16.9 million and a net income for fiscal 2007 of $1.7 million.
The net loss for fiscal 2009 was primarily due to a $5.0 million impairment loss
recorded in the second quarter of 2009.  The net loss increased in
fiscal 2008 as compared to the income in fiscal 2007 by $18.6 million, or 1094%,
primarily due to the loss on sale of the Hollywood.com Business in 2008 and a
non-cash one-time impairment charge of $3.5 million related to our Ad Sales and
Intellectual Property Segments, compared to the gain on the sale of the
Showtimes business in 2007.





LIQUIDITY
AND CAPITAL RESOURCES





Cash Balance at Year End; Sources and
Uses of Cash





Hollywood Media’s cash and cash
equivalents were $11.8 million at December 31, 2009 as compared to $12.7 million
at December 31, 2008.  Our net working capital (defined as current
assets less current liabilities) was $8.8 million at December 31, 2009 and
2008.





Net cash provided by operating
activities from continuing operations during fiscal 2009 was $0.1 million, a
change of 102% compared to net cash used in operating activities from continuing
operations during 2008 of $4.5 million.  Cash usage included $1.2
million to secure a bond for Broadway ticketing purchases while cash provided
included inventory levels being reduced and accounts payable increasing from
fiscal 2008 to fiscal 2009.


30


Net cash
used in investing activities from continuing operations during fiscal 2009 was
$0.7 million, which net cash was used primarily for capital expenditures
associated with the development of the new Broadway.com website.  Net
cash used in investing activities from continuing operations during fiscal 2008
was $1.4 million, which net cash was used to, among other things, make $1.3
million in capital expenditures.  Net cash provided by investing
activities from continuing operations during fiscal 2007 was $19.4 million,
which net cash included, among other things, $25.4 million in cash proceeds from
the sale of assets (including sale of the Showtimes business, discussed below),
and cash outlays which included, among other things, $3.4 million for capital
expenditures (including $2.5 million for leasehold improvements for the new
Broadway offices in New York City) and $2.7 million for the acquisition of the
Showtix business.





Net cash
used in financing activities from continuing operations during fiscal 2009 was
$0.3 million, which cash usage included payments under capital lease
obligations, outstanding note payable and payments for repurchase of Company
stock.  Net cash used in financing activities from continuing
operations during fiscal 2008 was $2.2 million, which cash usage included, among
other things, $2.1 million to repurchase common stock.  Net cash used
in financing activities from continuing operations during fiscal 2007 was $11.8
million, which cash usage included, among other things, $7.0 million for
repayment in full of all outstanding Senior Unsecured Notes (discussed below),
and approximately $5.1 million for the repurchase of common stock of Hollywood
Media under the previously announced stock repurchase program (discussed
below).





Sale of Hollywood.com Business Unit
to R&S Investments LLC





On
August 21, 2008, Hollywood Media entered into and simultaneously closed on
a definitive purchase agreement with R&S Investments, LLC, pursuant to which
R&S Investments acquired the Hollywood.com Business for a potential purchase
price of $10.0 million, which includes $1.0 million in cash that was
paid to Hollywood Media at closing and potential earn-out payments of up to $9.0
million. Hollywood Media recorded $0.7 million in earn-out income pursuant to
this earn-out arrangement during fiscal 2009.  As of the filing of
this Form 10-K, the earn-out receivable was collected in full in accordance with
the payment terms.  As of December 31, 2009, there was $8.3 million in
potential earn-out payments pursuant to this agreement.  The
Hollywood.com Business includes the Hollywood.com website and related URLs and
celebrity fan websites and Hollywood.com Television, a free video on demand
service distributed pursuant to annual affiliation agreements with certain cable
operators. R&S Investments is owned by Mitchell Rubenstein, Hollywood
Media’s Chief Executive Officer and Chairperson of the Board, and Laurie S.
Silvers, Hollywood Media’s President and Vice-Chairperson of the Board. The
purchase price was determined by an arms-length negotiation between a Special
Committee of independent and disinterested directors of Hollywood Media on the
one hand and R&S Investments on the other hand.





Commencing
October 1, 2009, R&S Investments became contractually obligated to make
periodic earn-out payments equal to the greater of (i) 10 percent of
gross revenue and (ii) 90 percent of EBITDA (as defined in the
purchase agreement) for the Hollywood.com Business until the full earn-out is
paid. If a change of control of Hollywood.com occurs before the earn-out is
fully paid, the remaining portion of the earn-out would be payable immediately
upon such a change of control, up to the amount of consideration received by
R&S Investments less related expenses. If the consideration in such a change
of control is less than the remaining balance of the earn-out, then the
subsequent buyer will be obligated to pay the difference in accordance with the
same earn-out terms. In addition, if Hollywood.com is resold within three years,
Hollywood Media will also receive 5 percent of any proceeds above
$10.0 million. Pursuant to the purchase agreement, Hollywood Media was
required to place $2.6 million into an escrow account to fund any negative
EBITDA of the Hollywood.com Business through August 21, 2010.  As
of December 31, 2009, the entire balance of the escrow account was
expended.





For
additional information about this transaction, see Note 4 “Discontinued
Operations” in the Notes to the Condensed Consolidated Financial Statements
contained in Part II, Item 8, of this Form 10-K
Report.


31


Sale of Showtimes Business Unit to West
World Media LLC





On
August 24, 2007, Hollywood Media and its wholly-owned subsidiary Showtimes,
entered into and simultaneously closed on a definitive asset purchase agreement
with Brett West and West World Media, pursuant to which Hollywood Media sold
substantially all of the assets of the Showtimes business to West World Media
for a cash purchase price of $23.0 million paid to Hollywood Media on the
closing date.  The Showtimes business included the CinemaSource,
EventSource and ExhibitorAds operations and constituted the remainder of
Hollywood Media’s Data Business Division, which previously included the
Baseline/StudioSystems business unit until it was sold to The New York Times on
August 25, 2006.  West World Media is controlled by Brett West, who
founded the Showtimes business in 1995 and sold the business to Hollywood Media
in 1999. Mr. West served as president of Hollywood Media’s Showtimes
business. The purchase price was determined in an arms’ length negotiation
between Hollywood Media and West World Media.  The purchase price
decreased due to a post-closing adjustment of $0.1 million paid by Hollywood
Media to West World Media in January 2008.  Hollywood Media’s
expenditures relating to the sale include approximately $0.6 million in
estimated state and federal income taxes and approximately $1.7 million in
fees and expenses payable to Hollywood Media’s financial and legal advisors. For
additional information about this transaction, see Note 4 “Discontinued
Operations” in the Notes to the Consolidated Financial Statements contained in
Part II, Item 8, of this Form 10-K Report.





Acquisition of Showtix
Business





On
February 1, 2007, TDI paid approximately $2.7 million in cash to consummate its
acquisition of the Broadway ticketing business of Showtix.  See Note 5
“Acquisitions and Other Capital Transactions” in the Notes to the Consolidated
Financial Statements contained in Part II, Item 8 of this Form 10-K
report.





Capital Expenditures





Our capital expenditures during 2009
were $1.2 million. We currently anticipate capital expenditures in 2010 of
approximately $1.0 million, including various systems and equipment
upgrades.  These anticipated 2010 capital expenditures do not include
any estimates for potential business acquisitions.





Outlook





Our cash and cash equivalents generated
from the sales of our Baseline/StudioSystems and Showtimes businesses in fiscal
2006 and fiscal 2007, respectively, have provided substantial additional working
capital for Hollywood Media, and we have utilized portions of such working
capital for various corporate purposes and business activities including, among
other things, the repayment of debt and the purchase of the Showtix business
referenced above, improvements and investments in various aspects of our
Broadway Ticketing  division, and for the repurchase of shares of
Hollywood Media's common stock pursuant to our previously announced stock
repurchase program (discussed below). Our businesses have required substantial
financing, and may require additional capital to fund our growth plans and for
working capital, which capital requirements we contemplate will be satisfied
from our unrestricted cash and cash equivalents on hand. Based on our current
plans and assumptions for operations and investment and financing activities, we
estimate that our cash and cash equivalents on hand and anticipated cash flow
from operations will be sufficient to meet our working capital and investment
requirements at least through December 31, 2010.  If our plans change
or our assumptions prove to be inaccurate, we may need to seek further financing
or curtail our growth and/or operations. We believe that our long-term financial
success ultimately depends on our ability to generate enough revenue to more
than offset operating expenses.





While we
continue to develop our businesses, we have resumed our strategic review process
which may help us realize the full value of our assets in the interest of our
shareholders. In prior years, our strategic review process resulted in the sales
of our Baseline/StudioSystems and Showtimes businesses in fiscal 2006 and 2007,
respectively.  We continue to explore opportunities for generating
returns for Hollywood Media's shareholders, including the proposed sale of the
Broadway Ticketing Division, other potential dispositions or other strategic
transactions.  Prior to resuming our strategic review process, we had,
as stated in our press release dated October 1, 2007, temporarily suspended such
process when our Board of Directors approved the stock repurchase program
referenced below.  We cannot make assurances as to the timing or
occurrence of any future strategic transactions or further stock
repurchases.


32


Authorization of Stock Repurchase
Program





Hollywood
Media previously reported in its current report on Form 8-K filed with the SEC
on October 4, 2007, that its Board of Directors authorized a stock repurchase
program under which Hollywood Media may use up to $10 million of its cash to
repurchase shares of its outstanding common stock.  See Part II, Item
5, of this Form 10-K report for information about stock repurchases by Hollywood
Media during the fourth quarter of fiscal 2009.





Pursuant
to the repurchase program, Hollywood Media is authorized to purchase shares of
its common stock from time to time on the open market or in negotiated
transactions. The purchases are to be funded from available cash and cash
equivalents, and the timing and amount of any shares repurchased will be
determined by Hollywood Media’s management based on its evaluation of financial
and market conditions, legal requirements and other factors. The repurchase
program has no time limit and may be suspended for periods or discontinued at
any time, and there is no guarantee as to the number of shares or the amount of
cash to be utilized for repurchases. Repurchased shares will become authorized
but unissued shares of Hollywood Media’s common stock.





Contractual Obligations




The following table sets forth
information regarding certain types of our contractual obligations specified
below as of December 31, 2009.




Payments Due by PeriodLess than
                      
                      
                      Years
                      
                      
                      Years
                      
                      
                      AfterContractual Obligations
                      
                      Total
                      
                      
                      1 Year
                      
                      
                      1-3
                      
                      
                      4-5
                      
                      
                      5 Years(in
      millions)Capital
      lease obligations (1)
                      
                      $
                      0.2
                      
                      
                      $
                      0.1
                      
                      
                      $
                      0.1
                      
                      
                      $
                      -
                      
                      
                      $
                      -Operating
      lease obligations (2)
                      
                      
                      7.1
                      
                      
                      
                      1.1
                      
                      
                      
                      3.1
                      
                      
                      
                      1.8
                      
                      
                      
                      1.1Total
      contractual obligations
                      
                      $
                      7.3
                      
                      
                      $
                      1.2
                      
                      
                      $
                      3.2
                      
                      
                      $
                      1.8
                      
                      
                      $
                      1.1




(1)
            Capital
      lease obligations are future lease payments under capital leases inclusive
      of interest.




(2)
            Operating
      lease obligations include leases pertaining to various leased offices and
      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
      2017.  Also, certain equipment used in Hollywood Media’s
      operations is leased under operating
leases.




Off-Balance Sheet
Arrangements




As of December 31, 2009 and December
31, 2008, we did not have any relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as structured finance
or special purpose entities, which were established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes of the sort contemplated by paragraph 4 of Item 303 of SEC
Regulation S-K.  As such, management believes that we currently do not
have any disclosures to make of the sort contemplated by paragraph 4 of Item 303
regarding “off-balance sheet arrangements.”


33


Critical Accounting
Estimates





In
response to the SEC’s Release Number 33-8040 “Cautionary Advice Regarding
Disclosure About Critical Accounting Policies” and SEC Release Number 33-8056,
“Commission Statement about Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” we have identified the following critical
accounting policies that affect the more significant judgments and estimates
used in the preparation of our consolidated financial statements. The
preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires that we make estimates and judgments that affect the reported amounts
of assets and liabilities, revenues and expenses, and related disclosures of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to asset impairment, accruals for
compensation and related benefits, revenue recognition, allowance for doubtful
accounts, and contingencies and litigation. These estimates are based on the
information that is currently available to us and on various other assumptions
that we believe to be reasonable under the circumstances. Actual results could
vary from those estimates under different assumptions or conditions. For
additional information about our significant accounting policies, including the
critical accounting policies discussed below, see Note 2 – Summary of
Significant Accounting Policies in the Notes to Consolidated Financial
Statements in Item 8 of this Form 10-K.





Allowance
for Doubtful Accounts





Hollywood
Media maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. The
Company’s accounting for doubtful accounts contains uncertainty because
management must use judgment to assess the collectibility of these accounts.
When preparing these estimates, management considers a number of factors,
including the aging of a customer’s account, past transactions with customers,
creditworthiness of specific customers, historical trends and other information.
The allowance for doubtful accounts was $0.5 million and $0.6 million at
December 31, 2009 and 2008, respectively.  The allowance is primarily
attributable to receivables due from customers of
CinemasOnline.  Although the Company believes its allowance is
sufficient, if the financial condition of the Company’s customers were to
unexpectedly deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required that could materially impact the
Company’s consolidated financial statements. Concentrations of credit risk with
respect to accounts receivable are limited due to the large number of customers
comprising the Company’s customer base and their dispersion across many
different geographic regions.





Impairment
of Goodwill





Under
FASB Accounting Standard Codification Topic No. 350, “Intangibles – Goodwill and
Other” (ASC 350), beginning January 1, 2002, goodwill and certain
intangibles are no longer amortized; however, they are subject to evaluation for
impairment at least annually using a fair value based test. The fair value based
test is a two-step test. The first step involves comparing the fair value of
each of our reporting units to the carrying value of those reporting units. If
the carrying value of a reporting unit exceeds the fair value of the reporting
unit, we are required to proceed to the second step. In the second step, the
fair value of the reporting unit would be allocated to the assets (including
unrecognized intangibles) and liabilities of the reporting unit, with any
residual representing the implied fair value of goodwill. An impairment loss
would be recognized if and to the extent that the carrying value of goodwill
exceeds the implied value.


34


As
prescribed by ASC 350, we completed the transitional goodwill impairment test by
the second quarter of fiscal 2002 which did not result in an impairment
charge.  Additionally, Hollywood Media established October 1, as its
annual impairment test date and conducted required testing on that date during
fiscal 2009 and 2008.  As part of our fiscal 2008 annual impairment
evaluation, the Company determined that the goodwill associated with its
CinemasOnline business should be written off, and, accordingly, the Company
recorded an impairment loss of $2.8 million.  In addition, the Company
recorded $0.7 million in additional impairment to goodwill recorded after our
2001 acquisition of Always Independent Entertainment Corp. and our Intellectual
Properties segment.  During the second quarter of 2009 the Company
determined that $5.0 million of the goodwill associated with its
MovieTickets.com business should be written down based on discounted cash flow
being below carrying value and accordingly recorded an impairment loss of $5.0
million.  For additional information see Note 15 – Investments in and
Advances to Equity Method Unconsolidated Investees in the Notes to Consolidated
Financial Statements included in Item 8 of this Form 10-K.  As
December 31, 2009, we are not aware of any additional items or events that would
cause us to adjust the recorded value of Hollywood Media’s goodwill for
impairment further.  The goodwill recorded in the accompanying
Consolidated Balance Sheets as of December 31, 2009 and 2008 was $20.2 million
and $25.2 million, respectively.  At December 31, 2009 and December
31, 2008 goodwill represented 35% and 38%, respectively, of total
assets.  The Ad Sales reporting unit had $14.6 million of goodwill
allocated as of the test date.  The fair value of the Ad Sales
reporting unit exceeded the carrying value as of the test date by approximately
20%.  Future changes in estimates used to conduct the impairment
review, including revenue projections, market values and low discount rates
could cause the analysis to indicate that Hollywood Media’s goodwill is impaired
in subsequent periods and result in a write-off of a portion or all of the
goodwill. In order to evaluate the sensitivity of the fair value calculations of
our reporting units on the impairment calculation, we applied a hypothetical
decrease to the fair values of each reporting unit.





During
the period from November 21, 2008 to May 21, 2009, the Company’s market
capitalization periodically fell below the book value of its equity. The Company
believes that the disparity between the book value of its assets as compared to
the market capitalization of its business is in large part a consequence of
market conditions, including perceived risks in the debt markets, the Company’s
industry and the broader economy. While the Company believes that some of these
risks are unique to specific companies, some represent global industry
risks. The Company believes that there is no fundamental change in our
underlying business model or prospects for our Company.   We
considered the periodic decline in our market capitalization to be
temporary and based on general economic conditions and a decline in general
investor confidence throughout the market and not based on any events or
conditions specific to us.  The Company has evaluated the impairment of its
goodwill, giving consideration to these risks, and their impact upon the
respective reporting units’ fair values, and has reported impairments where it
deems appropriate. The Company believes that the fair value of its remaining
reporting units that contain goodwill at December 31, 2009 and 2008
exceeded the book value of those units.





Inflation and Seasonality





Although
we cannot accurately determine the precise effects of inflation, we do not
believe inflation has a material effect on revenue or results of operations. We
consider our business to be somewhat seasonal and expect net revenues to be
generally higher during the second and fourth quarters of each fiscal year for
our Tekno Books book licensing business as a result of the general publishing
industry practice of paying royalties semi-annually.  The Broadway
Ticketing Business is also influenced by seasonal variations with net revenues
generally higher in the second quarter as a result of increased sales volumes
due to the Tony Awards© and in the fourth quarter due to increased levels during
the holiday period. In addition, although not seasonal, our Intellectual
Properties division and NetCo Partners both experience fluctuations in their
respective revenue streams, earnings and cash flow as a result of the amount of
time that is expended in the creation and development of the intellectual
properties and their respective licensing agreements. The recognition of
licensing revenue is typically triggered by specific contractual events which
occur at different points in time rather than on a regular periodic
basis.





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





Market
risk is the risk of loss arising from adverse changes in our assets or
liabilities that might occur due to changes in market rates and prices, such as
interest or foreign currency exchange rates, as well as other relevant market
rate or price changes.





Interest
rates charged on Hollywood Media’s debt instruments are primarily fixed in
nature.  We therefore do not believe that the risk of loss relating to
the effect of changes in market interest rates is material.


35


We have
investments in subsidiaries in the United Kingdom and sell our services into
this foreign market.  Our foreign net asset/exposures (defined as
assets denominated in foreign currency less liabilities denominated in foreign
currency) for the United Kingdom at December 31, 2009 of U.S. dollar
equivalents was a net liability of $1.6 million and $1.8 million at December 31,
2008.





Our
United Kingdom subsidiaries sell services and pay for products and services in
British pounds. A decrease in the British foreign currency relative to the U.S.
dollar could adversely impact our margins. An assumed 10% depreciation of these
foreign currencies relative to the U.S. dollar over the course of fiscal 2009
and 2008 (i.e., in addition to actual exchange experience) would have resulted
in a translation decrease of our revenue by $0.3 million for fiscal 2009 and
translation reduction of our revenue by $0.5 million for fiscal
2008.





As
the assets, liabilities and transactions of our United Kingdom subsidiaries are
denominated in British pounds, the results and financial condition are subject
to translation adjustments upon their conversion into U.S. dollars for our
financial reporting purposes. A 10% decline in this foreign currency relative to
the U.S. dollar at year-end (i.e., in addition to actual exchange experience)
would have resulted in a de minimus decrease in our translation loss for fiscal
2009 and $0.1 million decrease in translation loss for fiscal
2008.


36




Item
8.   FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





PageReport
      of Independent Registered Public Accounting Firm
              38Consolidated
      Balance Sheets as of December 31, 2009 and December 31,
    2008
              39Consolidated
      Statements of Operations for the Years Ended December 31, 2009, 2008 and
      2007
              40Consolidated
      Statements of Shareholders’ Equity for the Years Ended December 31, 2009,
      2008 and 2007
              41Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and
      2007
              42Notes
      to Consolidated Financial Statements
              43-75


37


REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Shareholders




Hollywood
Media Corp.




Boca
Raton, Florida




We have
audited the accompanying consolidated balance sheets of Hollywood Media Corp.
and Subsidiaries as of December 31, 2009 and 2008, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 2009.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.




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




In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Hollywood Media Corp. and
Subsidiaries as of December 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2009, in conformity with accounting principles generally accepted
in the United States of America.




KAUFMAN,
ROSSIN & CO., P.A.




Miami,
Florida




March 19,
2010


38


HOLLYWOOD
MEDIA CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





December 31,
                
                
                December 31,2009
                
                
                2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                
                $
                11,764,810
                
                
                $
                12,685,946Receivables,
      net
                
                
                897,503
                
                
                
                1,433,797Inventories
      held for sale
                
                
                3,735,691
                
                
                
                4,491,841Deferred
      ticket costs
                
                
                10,985,160
                
                
                
                12,085,237Prepaid
      expenses
                
                
                1,896,237
                
                
                
                1,418,563Other
      receivables
                
                
                1,125,263
                
                
                
                1,287,752Other
      current assets
                
                
                436,675
                
                
                
                99,945Related
      party receivable
                
                
                335,245
                
                
                
                143,464Restricted
      cash
                
                
                1,221,000
                
                
                
                2,600,000Total
      current assets
                
                
                32,397,584
                
                
                
                36,246,545PROPERTY
      AND EQUIPMENT, net
                
                
                4,369,085
                
                
                
                4,649,202INVESTMENTS
      IN AND ADVANCES TO UNCONSOLIDATED INVESTEES
                
                
                230,097
                
                
                
                132,800INTANGIBLE
      ASSETS, net
                
                
                390,818
                
                
                
                682,896GOODWILL
                
                
                20,197,513
                
                
                
                25,154,292OTHER
      ASSETS
                
                
                21,082
                
                
                
                73,126TOTAL
      ASSETS
                
                $
                57,606,179
                
                
                $
                66,938,861LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
                
                $
                1,632,351
                
                
                $
                1,329,949Accrued
      expenses and other
                
                
                3,074,549
                
                
                
                3,708,652Deferred
      revenue
                
                
                14,012,178
                
                
                
                15,196,455Gift
      certificate liability
                
                
                3,794,899
                
                
                
                3,434,359Customer
      deposits
                
                
                948,273
                
                
                
                831,838Current
      portion of capital lease obligations
                
                
                123,061
                
                
                
                203,579Current
      portion of notes payable
                
                
                37,454
                
                
                
                43,147Related
      party payable
                
                
                -
                
                
                
                2,622,438Total
      current liabilities
                
                
                23,622,765
                
                
                
                27,370,417DEFERRED
      REVENUE
                
                
                309,190
                
                
                
                401,309CAPITAL
      LEASE OBLIGATIONS, less current portion
                
                
                75,830
                
                
                
                203,901OTHER
      DEFERRED LIABILITY
                
                
                1,105,553
                
                
                
                1,168,096NOTES
      PAYABLE, less current portion
                
                
                2,432
                
                
                
                36,258COMMITMENTS
      AND CONTINGENCESSHAREHOLDERS’
      EQUITYPreferred
      stock, $.01 par value, 1,000,000 shares authorized; none
      outstanding
                
                
                -
                
                
                
                -Common
      stock, $.01 par value, 100,000,000 shares authorized; 31,037,656 and
      30,883,913 shares issued and outstanding at December 31, 2009 and December
      31, 2008, respectively
                
                
                310,377
                
                
                
                308,839Additional
      paid-in capital
                
                
                309,480,331
                
                
                
                309,100,760Accumulated
      deficit
                
                
                (277,315,848
                )
                
                
                (271,695,431
                )Total
      Hollywood Media Corp. shareholders’ equity
                
                
                32,474,860
                
                
                
                37,714,168Non-controlling
      interest
                
                
                15,549
                
                
                
                44,712Total
      shareholders’ equity
                
                
                32,490,409
                
                
                
                37,758,880TOTAL
      LIABILITIES AND SHAREHOLDERS’ EQUITY
                
                $
                57,606,179
                
                
                $
                66,938,861





The
accompanying notes to consolidated financial statements


are an
integral part of these consolidated balance sheets.


39


HOLLYWOOD
MEDIA CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





YEAR ENDED DECEMBER 31,2009
                
                
                2008
                
                
                2007NET
      REVENUESTicketing
                
                $
                98,860,362
                
                
                $
                110,918,969
                
                
                $
                111,792,068Other
                
                
                4,518,548
                
                
                
                6,138,962
                
                
                
                6,369,156103,378,910
                
                
                
                117,057,931
                
                
                
                118,161,224OPERATING
      COSTS AND EXPENSESCost
      of revenues - ticketing
                
                
                81,014,536
                
                
                
                92,882,066
                
                
                
                94,017,924Editorial,
      production, development and technology
                
                
                2,569,354
                
                
                
                3,323,546
                
                
                
                3,590,192Selling,
      general and administrative
                
                
                10,827,719
                
                
                
                13,932,852
                
                
                
                14,269,974Payroll
      and benefits
                
                
                10,574,375
                
                
                
                13,284,857
                
                
                
                13,368,817Impairment
      loss
                
                
                -
                
                
                
                3,524,697
                
                
                
                -Depreciation
      and amortization
                
                
                1,590,598
                
                
                
                2,224,831
                
                
                
                1,378,492Total
      operating costs and expenses
                
                
                106,576,582
                
                
                
                129,172,849
                
                
                
                126,625,399Loss
      from operations
                
                
                (3,197,672
                )
                
                
                (12,114,918
                )
                
                
                (8,464,175
                )EARNINGS
      (LOSSES) OF UNCONSOLIDATED INVESTEESEquity
      in earnings of unconsolidated investees
                
                
                2,006,498
                
                
                
                1,160,623
                
                
                
                4,747Impairment
      loss
                
                
                (5,000,000
                )
                
                
                -
                
                
                
                -Total
      equity in earnings (losses) of unconsolidated investees
                
                
                (2,993,502
                )
                
                
                1,160,623
                
                
                
                4,747OTHER
      INCOME (EXPENSE):Interest,
      net
                
                
                28,922
                
                
                
                425,251
                
                
                
                199,437Other,
      net
                
                
                (75,146
                )
                
                
                44,958
                
                
                
                (50,935
                )Loss
      from continuing operations
                
                
                (6,237,398
                )
                
                
                (10,484,086
                )
                
                
                (8,310,926
                )Gain
      (loss) on sale of discontinued operations, net of income
    taxes
                
                
                614,572
                
                
                
                (4,655,122
                )
                
                
                10,254,287Loss
      from discontinued operations
                
                
                -
                
                
                
                (1,635,750
                )
                
                
                (211,993
                )Income
      (loss) from discontinued operations
                
                
                614,572
                
                
                
                (6,290,872
                )
                
                
                10,042,294Net
      income (loss)
                
                
                (5,622,826
                )
                
                
                (16,774,958
                )
                
                
                1,731,368NET
      (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
                
                
                2,409
                
                
                
                (81,365
                )
                
                
                3,241Net
      income (loss) attributable to Hollywood Media Corp.
                
                $
                (5,620,417
                )
                
                $
                (16,856,323
                )
                
                $
                1,734,609Basic
      and diluted income (loss) per common shareContinuing
      operations
                
                $
                (0.20
                )
                
                $
                (0.33
                )
                
                $
                (0.25
                )Discontinued
      operations
                
                
                0.02
                
                
                
                (0.20
                )
                
                
                0.30Total
      basic and diluted net income (loss) per share
                
                $
                (0.18
                )
                
                $
                (0.53
                )
                
                $
                0.05Weighted
      average common and common equivalent shares outstanding – basic and
      diluted
                
                
                30,584,902
                
                
                
                31,793,853
                
                
                
                33,303,886





The
accompanying notes to consolidated financial statements


are an
integral part of these consolidated statements of operations.


40


HOLLYWOOD
MEDIA CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY





Common Stock
                          
                          
                          Additional
                          
                          
                          AccumulatedShares
                          
                          
                          Amount
                          
                          
                          Paid-in Capital
                          
                          
                          Deficit
                          
                          
                          TotalBalance
      – December 31, 2006
                          
                          
                          33,476,530
                          
                          
                          $
                          334,765
                          
                          
                          $
                          311,210,796
                          
                          
                          $
                          (255,846,144
                          )
                          
                          $
                          55,699,417Effect
      of adoption of FSP EITF 00-19-2
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          2,151,037
                          
                          
                          
                          (727,573
                          )
                          
                          
                          1,423,464Repurchase
      of company stock
                          
                          
                          (2,003,660
                          )
                          
                          
                          (20,037
                          )
                          
                          
                          (5,084,167
                          )
                          
                          
                          -
                          
                          
                          
                          (5,104,204
                          )Issuance
      of stock – stock option exercises
                          
                          
                          69,375
                          
                          
                          
                          694
                          
                          
                          
                          203,130
                          
                          
                          
                          -
                          
                          
                          
                          203,824Issuance
      of stock to employees
                          
                          
                          145,308
                          
                          
                          
                          1,453
                          
                          
                          
                          570,806
                          
                          
                          
                          -
                          
                          
                          
                          572,259Issuance
      of stock – warrant exercise
                          
                          
                          149,181
                          
                          
                          
                          1,492
                          
                          
                          
                          (1,492
                          )
                          
                          
                          -
                          
                          
                          
                          -Issuance
      of stock – 401(k) employer match
                          
                          
                          59,257
                          
                          
                          
                          593
                          
                          
                          
                          248,283
                          
                          
                          
                          -
                          
                          
                          
                          248,876Amortization
      of deferred compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          650,000
                          
                          
                          
                          -
                          
                          
                          
                          650,000Issuance
      of stock for acquisitions of intangibleassets
                          
                          
                          1,992
                          
                          
                          
                          20
                          
                          
                          
                          7,980
                          
                          
                          
                          -
                          
                          
                          
                          8,000Compensation
      expense on employee stock options
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          164,158
                          
                          
                          
                          -
                          
                          
                          
                          164,158Net
      income
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,734,609
                          
                          
                          
                          1,734,609Balance
      – December 31, 2007
                          
                          
                          31,897,983
                          
                          
                          
                          318,980
                          
                          
                          
                          310,120,531
                          
                          
                          
                          (254,839,108
                          )
                          
                          
                          55,600,403Repurchase
      of company stock
                          
                          
                          (1,711,639
                          )
                          
                          
                          (17,117
                          )
                          
                          
                          (2,107,882
                          )
                          
                          
                          -
                          
                          
                          
                          (2,124,999
                          )Issuance
      of stock – stock option exercises
                          
                          
                          101,000
                          
                          
                          
                          1,010
                          
                          
                          
                          121,890
                          
                          
                          
                          -
                          
                          
                          
                          122,900Issuance
      of stock to officers
                          
                          
                          100,000
                          
                          
                          
                          1,000
                          
                          
                          
                          101,000
                          
                          
                          
                          -
                          
                          
                          
                          102,000Issuance
      of warrants for services rendered
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          4,429
                          
                          
                          
                          -
                          
                          
                          
                          4,429Issuance
      of stock – 401(k) employer match
                          
                          
                          96,569
                          
                          
                          
                          966
                          
                          
                          
                          279,084
                          
                          
                          
                          -
                          
                          
                          
                          280,050Amortization
      of deferred compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          487,500
                          
                          
                          
                          -
                          
                          
                          
                          487,500Issuance
      of restricted stock - officers
                          
                          
                          400,000
                          
                          
                          
                          4,000
                          
                          
                          
                          (3,069
                          )
                          
                          
                          -
                          
                          
                          
                          931Compensation
      expense on employee stock options
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          97,277
                          
                          
                          
                          -
                          
                          
                          
                          97,277Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (16,856,323
                          )
                          
                          
                          (16,856,323
                          )Balance
      – December 31, 2008
                          
                          
                          30,883,913
                          
                          
                          
                          308,839
                          
                          
                          
                          309,100,760
                          
                          
                          
                          (271,695,431
                          )
                          
                          
                          37,714,168Repurchase
      of company stock
                          
                          
                          (71,600
                          )
                          
                          
                          (716
                          )
                          
                          
                          (72,238
                          )
                          
                          
                          -
                          
                          
                          
                          (72,954
                          )Issuance
      of stock – 401(k) employer match
                          
                          
                          225,343
                          
                          
                          
                          2,254
                          
                          
                          
                          223,089
                          
                          
                          
                          -
                          
                          
                          
                          225,343Stock
      compensation expense - officers
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          204,885
                          
                          
                          
                          -
                          
                          
                          
                          204,885Stock
      compensation expense - employees
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          23,835
                          
                          
                          
                          -
                          
                          
                          
                          23,835Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (5,620,417
                          )
                          
                          
                          (5,620,417
                          )Balance
      – December 31, 2009
                          
                          
                          31,037,656
                          
                          
                          $
                          310,377
                          
                          
                          $
                          309,480,331
                          
                          
                          $
                          (277,315,848
                          )
                          
                          $
                          32,474,860




The
accompanying notes to consolidated financial statements are an integral part of
these consolidated statements of shareholders’ equity.





41




HOLLYWOOD
MEDIA CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





YEAR ENDED DECEMBER 31,2009
                
                
                2008
                
                
                2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                
                $
                (5,622,826
                )
                
                $
                (16,774,958
                )
                
                $
                1,731,368Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:(Income)
      loss from discontinued operations
                
                
                (614,572
                )
                
                
                6,290,872
                
                
                
                (10,042,294
                )Depreciation
      and amortization
                
                
                1,590,598
                
                
                
                2,224,831
                
                
                
                1,378,492Amortization
      of discount on senior unsecured notes
                
                
                -
                
                
                
                -
                
                
                
                624,601401(k)
      stock match
                
                
                141,664
                
                
                
                165,819
                
                
                
                198,753Warrants
      issued for consulting services
                
                
                -
                
                
                
                4,429
                
                
                
                -Equity
      in earnings of unconsolidated investees, net of return of invested
      capital
                
                
                (97,297
                )
                
                
                154,185
                
                
                
                (4,271
                )Stock
      compensation expense
                
                
                23,835
                
                
                
                97,277
                
                
                
                164,158Loss
      (gain) on retirement of property
                
                
                160,608
                
                
                
                (21,340
                )
                
                
                -Stock
      compensation expense - officers
                
                
                204,885
                
                
                
                102,931
                
                
                
                -Amortization
      of deferred compensation costs
                
                
                -
                
                
                
                487,500
                
                
                
                650,000Provision
      for bad debts
                
                
                387,362
                
                
                
                319,273
                
                
                
                627,197Distributions
      to minority owners
                
                
                (26,754
                )
                
                
                (3,724
                )
                
                
                (91,728
                )Impairment
      loss
                
                
                5,000,000
                
                
                
                3,524,697
                
                
                
                -Changes
      in assets and liabilities:Receivables
                
                
                148,932
                
                
                
                280,632
                
                
                
                (378,620
                )Inventories
      held for sale
                
                
                756,150
                
                
                
                (541,263
                )
                
                
                (576,451
                )Deferred
      ticket costs
                
                
                1,100,077
                
                
                
                4,396,624
                
                
                
                (1,208,537
                )Prepaid
      expenses
                
                
                (477,674
                )
                
                
                778,953
                
                
                
                (111,753
                )Other
      receivables
                
                
                162,489
                
                
                
                2,559,682
                
                
                
                (933,160
                )Related
      party receivable
                
                
                12,640
                
                
                
                (
      88,992
                )
                
                
                5,193Other
      current assets
                
                
                (336,730
                )
                
                
                529,353
                
                
                
                (543,764
                )Other
      assets
                
                
                52,044
                
                
                
                (18,133
                )
                
                
                55,685Accounts
      payable
                
                
                239,633
                
                
                
                (2,053,364
                )
                
                
                697,626Accrued
      expenses and other
                
                
                (644,141
                )
                
                
                (303,440
                )
                
                
                (2,655,186
                )Deferred
      revenue
                
                
                (915,856
                )
                
                
                (5,747,493
                )
                
                
                489,412Customer
      deposits
                
                
                116,435
                
                
                
                (1,096,519
                )
                
                
                152,644Other
      deferred liability
                
                
                (62,543
                )
                
                
                272,014
                
                
                
                613,118Restricted
      cash
                
                
                (1,221,000
                )
                
                
                -
                
                
                
                -Net
      cash provided by (used in) operating activities – continuing
      operations
                
                
                77,959
                
                
                
                (4,460,154
                )
                
                
                (9,157,517
                )Net
      cash provided by (used in) operating activities - discontinued
      operations
                
                
                -
                
                
                
                (2,717,075
                )
                
                
                1,510,881Net
      cash provided by (used in) operating activities
                
                
                77,959
                
                
                
                (7,177,229
                )
                
                
                (7,646,636
                )CASH
      FLOWS FROM INVESTING ACTIVITIES:Capital
      expenditures
                
                
                (1,190,141
                )
                
                
                (1,290,439
                )
                
                
                (3,393,426
                )Acquisition
      of businesses, net of cash acquired
                
                
                -
                
                
                
                (43,313
                )
                
                
                (2,690,659
                )Proceeds
      (expenditures) from sale of assets
                
                
                472,920
                
                
                
                (42,320
                )
                
                
                25,418,361Acquisition
      of intangible assets
                
                
                -
                
                
                
                (17,000
                )
                
                
                (59,470
                )Proceeds
      from property and equipment sales
                
                
                -
                
                
                
                -
                
                
                
                29,432Loss
      on disposition of assets
                
                
                -
                
                
                
                -
                
                
                
                (
      1,722
                )Restricted
      cash
                
                
                -
                
                
                
                -
                
                
                
                90,000Net
      cash (used in) provided by investing activities – continuing
      operations
                
                
                (717,221
                )
                
                
                (1,393,072
                )
                
                
                19,392,516Net
      cash used in investing activities – discontinued
operations
                
                
                -
                
                
                
                (3,274,868
                )
                
                
                (582,048
                )Net
      cash (used in) provided by  investing activities
                
                
                (717,221
                )
                
                
                (4,667,940
                )
                
                
                18,810,468CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      received from exercise of stock options
                
                
                -
                
                
                
                122,900
                
                
                
                203,824Payments
      under capital lease obligations
                
                
                (169,401
                )
                
                
                (157,030
                )
                
                
                (93,290
                )(Repayment
      of) proceeds from notes payable
                
                
                (39,519
                )
                
                
                (68,306
                )
                
                
                147,711Extinguishment
      of unsecured notes
                
                
                -
                
                
                
                -
                
                
                
                (7,000,000
                )Stock
      repurchase program
                
                
                (72,954
                )
                
                
                (2,124,999
                )
                
                
                (5,104,204
                )Net
      cash used in financing activities – continuing operations
                
                
                (281,874
                )
                
                
                (2,227,435
                )
                
                
                (11,845,959
                )Net
      cash used in financing activities – discontinued
operations
                
                
                -
                
                
                
                -
                
                
                
                (7,972
                )Net
      cash used in financing activities
                
                
                (281,874
                )
                
                
                (2,227,435
                )
                
                
                (11,853,931
                )Net
      decrease in cash and cash equivalents
                
                
                (921,136
                )
                
                
                (14,072,604
                )
                
                
                (690,099
                )CASH
      AND CASH EQUIVALENTS, beginning of period
                
                
                12,685,946
                
                
                
                26,758,550
                
                
                
                27,448,649CASH
      AND CASH EQUIVALENTS, end of period
                
                $
                11,764,810
                
                
                $
                12,685,946
                
                
                $
                26,758,550SUPPLEMENTAL
      SCHEDULE OF CASH RELATED ACTIVITIES:Interest
      paid
                
                $
                41,607
                
                
                $
                64,674
                
                
                $
                268,628Taxes
      paid
                
                $
                19,345
                
                
                $
                462,837
                
                
                $
                787,086





The
accompanying notes to consolidated financial statements are an integral part of
these consolidated statements of cash flows.





42





HOLLYWOOD MEDIA CORP. AND
SUBSIDIARIES





NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS





DECEMBER 31, 2009, 2008 AND
2007





(1)          BACKGROUND:





Hollywood
Media Corp. (“Hollywood Media” or “the Company”) was incorporated in the State
of Florida on January 22, 1993.   Hollywood Media is comprised of
various businesses focusing primarily on online ticket sales, deriving revenue
primarily from Broadway, Off-Broadway and London’s West End ticket sales to
individuals and groups, as well as advertising and book development license fees
and royalties.





Hollywood
Media’s main Internet website is Broadway.com.  Hollywood Media
launched the Broadway.com website on May 1, 2000. Broadway.com features the
ability to purchase Broadway, off-Broadway and London theater tickets online;
theater news; interviews with stage actors and playwrights; opening-night
coverage; theater reviews and video excerpts from selected
shows.  Hollywood Media generates revenues through the sale of live
theater tickets, hotel and restaurant packages online, gift certificates and
sponsorships on Broadway.com.





Theatre
Direct NY, Inc. (“TDI”), a wholly-owned subsidiary of Hollywood Media, is a
ticketing wholesaler to groups and individuals with access to theater tickets
and knowledgeable service covering shows on Broadway, off-Broadway and in
London’s West End. In addition, TDI is a live theater marketing and sales agency
representing Broadway shows to businesses and groups including domestic and
international travel professionals and traveling consumers. Hollywood Media also
sells Broadway tickets through 1-800-BROADWAY, and on Broadway.com.





Hollywood Media owns the U.K. based
companies CinemasOnline Limited, UK Theatres Online Limited, WWW.CO.UK Limited
and Spring Leisure Limited (collectively known as “CinemasOnline”), which were
acquired in November 2005.  CinemasOnline, included as part of
Hollywood Media’s Ad Sales Segment, maintains plasma television screens in
hotels, car dealerships, cinemas and live theaters in the U.K. and Ireland in
exchange for the right to sell advertising displayed on such plasma screens.
CinemasOnline also provides other marketing services, including advertising
sales on lobby display posters, movie brochure booklets and ticket wallets
distributed in cinemas, live theater and other entertainment venues in the U.K.
and developing and maintaining websites for cinemas and live theater venues in
the U.K. and Ireland in exchange for the right to sell advertising on such
websites.





The
intellectual properties segment owns or controls the exclusive rights to certain
original characters and concepts created by best-selling authors and media
celebrities, which it licenses across all media, including books, films and
television, multimedia software, and other products. Hollywood Media acquires
the rights to its intellectual properties pursuant to agreements that grant it
exclusive rights in the intellectual property itself as well as the right to use
the creator’s name in the title of the intellectual property. The intellectual
properties division also includes a 51%-owned book development and licensing
operation named Tekno Books which focuses on developing and executing book
projects, typically with best-selling authors, which books are then licensed for
publication to book publishers. Tekno Books generates revenues from new book
projects in the form of non-refundable advances paid by publishers and royalties
from its library of book titles.





Hollywood
Media is a 50% partner in NetCo Partners. NetCo Partners was formed in June 1995
as a joint venture between Hollywood Media and C.P. Group, Inc.  NetCo
Partners is engaged in the development and licensing of
NetForce.  NetCo Partners is not consolidated in these financial
statements, and Hollywood Media records 50% of the earnings in NetCo Partners as
“equity in earnings of unconsolidated investees” in the accompanying
consolidated financial statements.





43





Hollywood
Media owns 26.2% of the equity of MovieTickets.com Inc. (“MovieTickets.com”), a
joint venture, primarily with AMC Entertainment Inc., National Amusements, Inc.,
Viacom Inc. and America Online, Inc.  The MovieTickets.com joint
venture is not consolidated in the accompanying consolidated financial
statements. The MovieTickets.com website allows users to purchase movie tickets
online and retrieve them at “will call” windows or kiosks at the
theaters.  MovieTickets.com generates revenue from the sale of
advertising and from service fees charged to users for the purchase of tickets
and from the sale of research data, which revenues are not included in Hollywood
Media’s revenues.  Hollywood Media records its share of the earnings
or loss in MovieTickets.com as “Equity in Earnings of Unconsolidated Investees”
in the accompanying consolidated financial statements. Hollywood Media did not
record income from its investment in MovieTickets.com for 2008 because
accumulated losses from 2006 and prior years exceeded MovieTickets.com’s
accumulated net income in 2008 and 2007.  During 2009, Hollywood Media
recorded $0.1 million in income from its investment in MovieTickets.com
representing the excess of income over accumulated losses.  As of
December 31, 2009, there were no suspended losses remaining.





The
Company had an accumulated deficit totaling $277.3 million and $271.7 million at
December 31, 2009 and 2008, respectively. The success of Hollywood Media’s
operations in future years is dependent on its ability to generate adequate
revenues and cash flows to offset operating expenses. Hollywood Media expects to
incur additional losses while it continues to grow its businesses. There can be
no assurances that Hollywood Media will be able to generate sufficient revenues
from these activities to cover its costs and therefore, Hollywood Media may
continue to incur losses and negative cash flows from operations. To the extent
that Hollywood Media does not generate sufficient revenues to offset expenses
Hollywood Media may require further financing beyond cash on hand to fund
ongoing operations.  Hollywood Media estimates, based on operating
plans and assumptions, that existing cash and cash equivalents and anticipated
cash flows will be sufficient to meet working capital requirements for the year
2010.





In August
2008, Hollywood Media entered into a purchase agreement with R&S
Investments, LLC (“Purchaser”) for the sale of Hollywood Media’s subsidiaries
Hollywood.com, Inc. and Totally Hollywood TV, LLC (collectively, the
“Hollywood.com Business”).  The Purchaser is owned by Mitchell
Rubenstein, Hollywood Media’s Chief Executive Officer and Chairperson of the
Board, and Laurie S. Silvers, Hollywood Media’s President and Vice-Chairperson
of the Board.  Pursuant to the purchase agreement, Hollywood Media
sold the Hollywood.com Business to Purchaser for a potential purchase price of
$10.0 million, which includes $1.0 million in cash which was paid to Hollywood
Media at closing and potential earn-out payments totaling $9.0
million.  During 2009, Hollywood Media recorded $0.7 million in income
under this arrangement.  The Hollywood.com Business includes the
Hollywood.com website and related URLs and celebrity fan websites and
Hollywood.com Television, a free video on demand service distributed pursuant to
annual affiliation agreements with certain cable operators (see Notes 4 and
20).





In August
2007, Hollywood Media and its wholly-owned subsidiary Showtimes.com, Inc.
(“Showtimes”) entered into and simultaneously closed on a definitive asset
purchase agreement with Brett West and West World Media, LLC (“West World
Media”), pursuant to which Hollywood Media sold substantially all of the assets
of the Showtimes business to West World Media for a cash purchase price of $23.0
million paid to Hollywood Media on the closing date.  The Showtimes
business included the CinemaSource, EventSource and ExhibitorAds operations and
constituted the remainder of Hollywood Media’s Data Business Segment, which
previously included the Baseline/StudioSystems business unit until it was sold
to The New York Times Company (“The New York Times”) in August
2006.  West World Media is controlled by Brett West, who founded the
Showtimes business in 1995 and sold the business to Hollywood Media in 1999.
Mr. West served as president of Hollywood Media’s Showtimes
business.





In
February 2007, TDI entered into and simultaneously closed on a definitive
asset purchase agreement with Showtix LLC (“Showtix”) and each of its members
pursuant to which TDI purchased substantially all of the assets of Showtix
related to its group ticketing sales business. The aggregate purchase price paid
by TDI for the assets of Showtix was $2.7 million in cash. In addition, Showtix
was also entitled to receive up to $0.4 million in cash earn-outs based on the
gross profits earned by TDI’s group ticketing business for the 2007 through 2011
fiscal years.  See Note 5 for additional discussion of this
transaction.





44




In August
2006, Hollywood Media, entered into and simultaneously closed on a definitive
stock purchase agreement with The New York Times, pursuant to which The New York
Times purchased all of the outstanding capital stock of Hollywood Media’s
wholly-owned subsidiary, Baseline Acquisitions Corp. (“BAC”), for a cash
purchase price of $35.0 million. BAC was a subsidiary of Hollywood Media which
constituted a portion of Hollywood Media’s Data Business
Segment.  $3.5 million of the purchase price was held in escrow for
twelve months following the closing to cover potential indemnification claims,
if any, made by The New York Times.  During 2007, Hollywood Media
received $2.8 million, representing the full amount of the escrow net of costs
of $0.7 million for certain contractual bonuses due to the former division heads
of BAC.  See Note 4 for additional discussion of this
transaction.





(2)          SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:





Principles of
Consolidation





Hollywood
Media’s consolidated financial statements include the accounts of Hollywood
Media, its wholly owned subsidiaries, and its 51% owned subsidiary, Tekno Books
which is a partnership. All significant intercompany balances and transactions
have been eliminated in consolidation and a non-controlling interest has been
established to reflect the outside ownership of Tekno Books. Hollywood Media’s
50% and 26.2% ownership interests in NetCo Partners and MovieTickets.com,
respectively, are accounted for under the equity method of
accounting.





Accounting
Estimates





The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires that the
Company make estimates and judgments that affect the reported amounts of assets
and liabilities, revenues and expenses, and related disclosures of contingent
assets and liabilities.  These estimates are based on the information
that is currently available and on various other assumptions that the Company
believes to be reasonable under the circumstances. Actual results could vary
from those estimates under different assumptions or conditions. Significant
estimates and assumptions embodied in the accompanying consolidated financial
statements, which are evaluated on an ongoing basis, include the deferred tax
asset valuation allowance, the adequacy of reserves for accounts receivables and
inventory, accruals for compensation, contingencies and litigation, as well as
Hollywood Media’s ability to realize the carrying value of goodwill, intangible
assets, investments in less than 50% owned companies and other long-lived
assets.





Cash and Cash
Equivalents





Hollywood
Media considers all highly liquid investments with original maturities of three
months or less to be cash and cash equivalents. Interest bearing amounts
included in cash and cash equivalents were $14,008,426 and $13,759,707 at
December 31, 2009 and 2008, respectively.  The Company maintains cash
balances with financial institutions in excess of federally insured
limits.





Receivables





Receivables
consist of amounts due from customers who have advertised on plasma TV displays,
posters, brochures and websites in our UK business, purchased live theater
tickets, amounts due from box offices for commission on live theater tickets
sold to groups and refunds for performances that did not occur and amounts due
from publishers relating to signed contracts, to the extent that the earnings
process is complete and amounts are realizable.





45





Allowance for Doubtful
Accounts





Hollywood
Media maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of its customers to make required
payments.  The Company’s accounting for doubtful accounts contains
uncertainty because management must use judgment to estimate the collectibility
of these accounts. When preparing these estimates, management considers a number
of factors, including the age of a customer’s account, past transactions with
customers, creditworthiness of specific customers, historical trends and other
information. The allowance for doubtful accounts was $473,686 and $645,177 at
December 31, 2009 and 2008, respectively.  The allowance is primarily
attributable to receivables due from customers of
CinemasOnline.  Although the Company believes its allowance is
sufficient, if the financial condition of the Company’s customers were to
unexpectedly deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required that could materially impact the
Company’s consolidated financial statements. Concentrations of credit risk with
respect to accounts receivable are limited due to the large number of customers
comprising the Company’s customer base and their dispersion across many
different geographical regions.  Changes in the allowance for doubtful
accounts consisted of:





Additions (Deductions)Balance
      at
                  
                  
                  Charges
      to
                  
                  
                  Charged
                  
                  
                  
                  
                  
                  
                  
                  Balance
      atBeginning
                  
                  
                  costs
      and
                  
                  
                  to
      other
                  
                  
                  
                  
                  
                  
                  
                  end
      ofof period
                  
                  
                  expenses
                  
                  
                  accounts
                  
                  
                  
                  Write-offs
                  
                  
                  
                  periodAllowance
      for doubtful accounts:2009
                  
                  $
                  645,177
                  
                  
                  $
                  141,310
                  
                  
                  
                  -
                  
                  
                  
                  $
                  (312,801
                  )
                  (B)
                  
                  $
                  473,6862008
                  
                  $
                  1,146,536
                  
                  
                  $
                  319,273
                  
                  
                  $
                  5,000
                  
                  (A)
                  
                  $
                  (825,632
                  )
                  (B)
                  
                  $
                  645,1772007
                  
                  $
                  1,144,700
                  
                  
                  $
                  627,197
                  
                  
                  $
                  48,360
                  
                  (A)
                  
                  $
                  (673,721
                  )
                  (B)
                  
                  $
                  1,146,536





Notes:
            (A)
      Collections on accounts previously written off and acquisitions of
      subsidiaries.


(B)
      Uncollectible accounts written off.





Inventories Held for Sale
and Deferred Ticket Costs





Inventories
held for sale consist of Broadway tickets or other live theater tickets
available for sale.  Deferred ticket costs consist of tickets sold
(subject to the performance occurring) to groups, individuals, and travel
agencies for future performances which have been delivered to the customer or
held by the Company as “will call.”  Both are carried at cost using
the specific identification method.  Ticket inventory does not include
movie tickets.





The
portion of receivable and inventory balances that relate to the sales of tickets
to groups, individuals and travel agencies for Broadway and other live theatre
shows are, with isolated exceptions, for shows or performances that take place
at venues in New York, New York, a major metropolitan area reported as subject
to the threat of terrorist acts from time to time by relevant United States
Government agencies.  Hollywood Media recognizes that the occurrence
of such a terrorist act, a labor strike or dispute, or any other significant
civil disturbance in New York City could lead to closures of available
performance venues for which Hollywood Media may not receive reimbursement of
ticket costs and/or payment on outstanding receivables, and could adversely
impact the normal conduct of its operations within New York City for an
indefinite period of time.





Property and
Equipment





Property
and equipment are carried at cost and are classified in six categories. The
categories and estimated service lives are as follows:





Furniture
      and fixtures
                5
      yearsEquipment
      and software
                3
      to 5 yearsWebsite
      development
                Up
      to 3 yearsEquipment
      under capital leases
                Shorter
      of term of lease or 3 to 5 yearsLeasehold
      improvements
                Term
      of leaseInternally
      developed software
                3
      years upon
implementation





46





Depreciation
is provided in amounts sufficient to allocate the cost of depreciable assets to
operations over their estimated service lives, which range from three to five
years, on a straight-line basis. Leasehold improvements are amortized over the
terms of the respective leases.   Maintenance and repairs are
charged to expense when incurred.





Website Development Costs
and Internally Developed Software





FASB
Accounting Standards Codification (“ASC”) Topic No. 350, “Intangibles-Goodwill and Other”Subtopic No. 50 “Website Development Costs”
(ASC 350-50) is the authoritative guidance for accounting for website
costs.  Under ASC 350-50 all costs relating to software used to
operate a website should be accounted for under ASC 350-40, “Internal Use Software”
unless a plan exists or is being developed to market the software
externally.  Website development costs capitalized, net of transfers
in and out, during the years ended December 31, 2009, 2008 and 2007 were
$493,493, $28,624 and $0, respectively.  Website development costs are
amortized using the straight-line method over the lesser of three years or the
estimated useful life of the related software.





Certain
software development costs for internally developed software have been
capitalized in accordance with the provisions of ASC 350-40.  These
capitalized costs include purchased software for internal use, consulting
services and costs for personnel associated with programming, coding and testing
such software during the application development stage and are included in
“Property and Equipment” in the accompanying consolidated balance
sheets.  Amortization of capitalized software costs begins when the
software is placed into service and is included in “depreciation and
amortization expense” in the accompanying consolidated statements of
operations.  Software development costs are being amortized using the
straight-line method over three years.  Internally developed software
costs capitalized, net of transfers in and out, during the years ended December
31, 2009, 2008 and 2007 were $163,931, $100,562 and $26,274,
respectively.





Goodwill and Intangible
Assets





Under ASC
Topic No. 350, “Intangibles –
Goodwill and Other” (ASC 350), goodwill and certain intangibles are no
longer amortized; however, they are subject to evaluation for
impairment  annually, or more frequently if indicators
arise,  using a fair value based test. The fair value based test is a
two-step test. The first step involves comparing the fair value of each of our
reporting units to the carrying value of those reporting units. If the carrying
value of a reporting unit exceeds the fair value of the reporting unit, we are
required to proceed to the second step. In the second step, the fair value of
the reporting unit would be allocated to the assets (including unrecognized
intangibles) and liabilities of the reporting unit, with any residual
representing the implied fair value of goodwill. An impairment loss would be
recognized if and to the extent that the carrying value of goodwill exceeds the
implied value.




Hollywood
Media established October 1, as its annual impairment test date and conducted
required testing on that date during fiscal 2009, 2008 and
2007.    Although the Company’s annual impairment analyses
in 2009 and 2007 did not result in any impairment charges, during the second
quarter of 2009 the Company determined the $5.0 million of the goodwill
associated with its MovieTickets.com business should be written down based on
the discounted cash flow not exceeding carrying value and accordingly recorded
an impairment loss of $5.0 million.  For additional information see
Note 15 – “Investments in and Advances to Equity Method Unconsolidated
Investees” in these Notes to the Consolidated Financial
Statements.  As part of our fiscal 2008 annual impairment evaluation,
the Company determined that the goodwill associated with its CinemasOnline
business should be written off, and, accordingly, the Company recorded an
impairment loss of $2.8 million.  In addition, the Company recorded
$0.7 million in additional impairment to goodwill recorded after our 2001
acquisition of Always Independent Entertainment Corp. and our Intellectual
Properties segment in 2008.





As
of December 31, 2009, we are not aware of any items or events that would cause
us to adjust the recorded value of Hollywood Media’s goodwill for impairment
further.  Future changes in estimates used to conduct the impairment
review, including revenue projections or market values could cause the analysis
to indicate that Hollywood Media’s goodwill is impaired in subsequent periods
and result in a write-off of a portion or all of the goodwill. In order to
evaluate the sensitivity of the fair value calculations of our reporting units
on the impairment calculation, we applied a hypothetical decrease to the fair
values of each reporting unit.





47





During
the period from November 21, 2008 to May 21, 2009, the Company’s market
capitalization periodically fell below the book value of its equity. The Company
believes that the disparity between the book value of its assets as compared to
the market capitalization of its business was in large part a consequence of
market conditions, including perceived risks in the debt markets, the Company’s
industry and the broader economy. While the Company believes that some of these
risks are unique to specific companies, some represent global industry
risks. The Company believes that there is no fundamental change in our
underlying business model or prospects for our Company.   We
considered the periodic decline in our market capitalization to be
temporary and based on general economic conditions and a decline in general
investor confidence throughout the market and not based on any events or
conditions specific to us.  The Company has evaluated the impairment of its
goodwill, giving consideration to these risks, and their impact upon the
respective reporting units’ fair values, and has reported impairments where it
deems appropriate. The Company believes that the fair value of its remaining
reporting units that contain goodwill at December 31, 2009 and 2008
exceeded the book value of those units.





Impairment of Long-Lived
Assets





ASC Topic
No. 360-10 requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets’
carrying amount.  If an indicator of impairment is present, Hollywood
Media evaluates the recoverability of long-lived assets not held for sale by
comparing the carrying amount of the assets to the estimated undiscounted future
cash flows associated with them. At the time such evaluations indicate that the
future undiscounted cash flows of certain long-lived assets are not sufficient
to recover the carrying values of such assets, the assets are adjusted to their
fair values if such fair values are lower than their carrying value. Hollywood
Media determines fair value as the net present value of future cash flows. There
were no adjustments to the carrying value of long-lived assets for any of the
years ended December 31, 2009, 2008, and 2007.





Revenue
Recognition





Revenue
recognition policies for ticketing, shipping and handling, advertising and book
packaging and licensing, are set forth below.





Ticketing.  Ticket
revenue is derived from the sale of live theater tickets for Broadway,
off-Broadway and London shows to individuals, groups, travel agencies, tour
groups and educational organizations.  Proceeds from these sales
received in advance of the corresponding performance activity are included in
“Deferred Revenue” in our accompanying consolidated balance sheets, at the time
of receipt.  The Company is the primary obligor and recognizes revenue
on a gross basis in the period the performance of the show occurs.





Gift
certificate revenue is derived from the sale of gift certificates, for Broadway,
off-Broadway, London shows and dinner and show sales to individuals, groups,
travel agencies, tour groups and corporate programs.  Proceeds from
these sales are included in “Gift Certificate Liability” in our accompanying
consolidated balance sheets, at the time of receipt, and if redeemed, are
recognized on a gross basis as ticketing revenue in the period the performance
of the show occurs.  Gift certificates do not expire.





Hotel
package revenue is derived from the sale of exclusive allocation rooms provided
by New York City hotels to individuals and groups.  Proceeds from
these sales are included in “Customer Deposits” in our accompanying consolidated
balance sheets, at the time of receipt, and are recognized as revenue on a net
basis on the day of departure from the hotel.





Dinner
voucher revenue is derived from the sale of dinner vouchers for meals at upscale
restaurants in New York City to individuals and groups.  Proceeds from
these sales are included in “Customer Deposits” in our accompanying consolidated
balance sheets, at the time of receipt, and are recognized as revenue on a net
basis on the date the voucher is presented, or upon expiration of the
voucher.





48





ASC Topic
No. 605, “Revenue Recognition”Subtopic No. 45,
“Principal Agent Considerations” (ASC 605-45) provides guidance
concerning under what circumstances a company should report revenue based on (a)
the gross amount billed to a customer because it has earned revenue from the
sale of goods or services or (b) the net amount retained (that is, the amount
billed to the customer less the amount paid to a supplier) because it has earned
a commission or fee. Hollywood Media’s existing accounting policies conform to
ASC 605-45.   Ticket revenue and cost of revenue-ticketing are
recorded on a gross basis in our accompanying consolidated statements of
operations.  Revenues on hotel packages and dinner vouchers sold for
New York restaurants are reported on a net basis in our accompanying
consolidated statements of operations.




Shipping
and Handling.The Company includes
shipping and handling revenues and costs in ticketing revenues and cost of
revenues-ticketing, respectively. Shipping and handling revenues amounted to
$261,077, $267,883 and $341,769 for the years ended December 31, 2009, 2008 and
2007, respectively. Shipping and handling costs amounted to $194,020, $270,011
and $294,147 for the years ended December 31, 2009, 2008 and 2007,
respectively.





Advertising.  Advertising
revenue is derived from the sale, by CinemasOnline, of advertising on plasma TV
displays throughout the U.K. and Ireland, on lobby display posters, movie
brochure booklets and ticket wallets distributed in cinemas, live theater and
other entertainment venues in the U.K. and on cinema and theater websites in the
U.K. and Ireland.  Advertising revenue is recognized over the period
that the advertisement is displayed, provided that no significant obligations of
Hollywood Media remain and collection is reasonably assured. Hollywood Media’s
obligations typically are based on maintaining plasma TV displays, posters,
brochures and websites where the advertisements are displayed.





Book
Packaging and Licenses.  Licensing revenues in the form of
non-refundable advances and other guaranteed royalty payments are recognized
when the earnings process has been completed, which is generally upon the
delivery of a completed manuscript and acceptance by the publisher.
Non-guaranteed royalties based on sales of licensed products and on sales of
books published directly by Hollywood Media are recognized as revenues when
earned based on royalty statements or other notification of such amounts from
the publishers.





Revenue
relating to Hollywood Media’s book licensing business is recognized when the
earnings process is complete, typically when a publisher accepts a book for
publishing. Advances received from publishers are recorded as “Deferred Revenue”
in the accompanying consolidated balance sheets until the book is accepted by
the publisher.  In the book licensing division, expenditures for
co-editors and permission payments are also deferred and recorded as “Prepaid
expenses” in the accompanying consolidated balance sheet until the book is
accepted by the publisher, at which time such costs are expensed.





Segment
Information





ASC Topic
No. 280, “Segment
Reporting” establishes standards for reporting of selected information
about operating segments in interim financial reports issued to shareholders. It
also establishes standards for related disclosures about products and services,
geographic areas and major customers (see Note 18).





Earnings Per Common
Share





FASB Accounting Standard Codification
No. 260,“Earnings per
Share” requires companies
to present basic and diluted earnings per share.  Earnings per common
share is computed by dividing net income or loss by the weighted average number
of common shares outstanding during the period presented.





Common
shares issuable upon conversion of convertible securities and upon exercise of
outstanding options and warrants of 1,328,443, 2,581,928 and 2,736,428 were
excluded from the calculation of diluted earnings per share for the years ended
December 31, 2009, 2008 and 2007, respectively, because their impact was
anti-dilutive to the loss from continuing operations.  Non-vested
shares are not included in the basic calculation until vesting occurs. There
were 233,334, 400,000 and 150,000 unvested shares as of December 31, 2009,
2008, and 2007, respectively.





49





Advertising
Costs





Hollywood
Media expenses the cost of advertising as incurred.  Advertising costs
for the years ended December 31, 2009, 2008 and 2007 were $3,874,479, $4,066,839
and $4,703,407, respectively, and are included in “Selling, general and
administrative” expenses in the accompanying consolidated statements of
operations.





401(k)
Plan





Hollywood
Media maintains a 401(k) Plan (“the Plan”) covering all employees who meet
certain eligibility requirements. The Plan provides that each participant may
contribute up to 15% of his or her pre-tax gross compensation (not to exceed a
statutorily prescribed annual limit). All amounts contributed by employee
participants in conformity with Plan requirements and earnings on such
contributions are fully vested at all times. With respect to the year ended
December 31, 2009, Hollywood Media accrued $141,664, or a match of 50% of the
first 8% of the employees’ compensation contributions, for those participants
employed in excess of 1,000 hours during the year and employed on the last day
of the year.  The matches paid for the years ended December 31, 2008
and 2007 were 165,819 and 80,547 shares of Hollywood Media common stock, valued
at $165,819 and $233,586, respectively, at a share price of $1.00 and $2.90,
respectively.  The Plan had investments in Company stock of 439,874
shares valued at a share price of $1.40 or $615,824 and 227,520 shares valued at
a share price of $1.00 or $227,520, as of December 31, 2009 and 2008,
respectively.





Income
Taxes





Income taxes are accounted for under
the liability method pursuant to FASB Accounting Standards Codification No. 740,
“Income Taxes” (ASC
740). Under ASC 740, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. A valuation allowance is recorded to reduce
deferred income tax assets to an amount that is more likely than not to be
realized.  Pursuant to the provisions of ASC 740 uncertain tax
positions must meet a “more-likely-than-not” recognition threshold.





Variable Interest
Entities





ASC Topic No. 810, “Consolidation” Subtopic No.
10-25 “Recognition”
(ASC 810-10-25), requires a variable interest entity (“VIE”) to be consolidated
by its primary beneficiary.   Hollywood Media determined that
Hollywood.com, LLC met the definition of a VIE based on one of the criteria
described in ASC 810-10-25, which states the total equity investment at risk is
not sufficient to permit the entity to finance its activities without additional
subordinated financial support provided by any parties, including equity
holders.  The initial investment provided by R&S Investments of
$1.0 million is not sufficient to fund the ongoing losses without additional
subordinated financial support.  The Company has made the
determination that it is not the primary beneficiary of Hollywood.com, LLC, as
it is not expected to absorb a majority of the loss.  Accordingly,
Hollywood.com LLC is not consolidated into the Company’s consolidated financial
statements.





50





(3)          STOCK OPTION PLANS;
WARRANTS; AND EMPLOYEE STOCK BASED COMPENSATION:





Shareholder-Approved
Plans





Hollywood Media has four
shareholder-approved equity compensation plans: the 2004 Stock Incentive Plan,
the 2000 Stock Incentive Plan, the 1993 Stock Option Plan, and the Directors
Stock Option Plan (the “Plans”).  In addition to stock options, the
2004 and 2000 Plans permit the granting of stock awards and other forms of
equity compensation for key personnel and non-employee
directors.  There were an aggregate of 524,313, 512,370, and 951,370
shares remaining available for issuance under Hollywood Media’s equity
compensation plans at December 31, 2009, 2008 and 2007,
respectively.  The options may be either qualified incentive stock
options or nonqualified stock options.  Stock options granted to date
generally have had an exercise price per share equal to the market value per
share of the common stock on the date prior to grant and generally expire five
years or ten years from the date of grant.  Options awarded to
Hollywood Media’s employees generally become exercisable in annual increments
over a four-year period beginning one year from the grant date, although some
are immediately exercisable and some vest based on other terms as specified in
the option grants.  Options awarded to directors become exercisable
six months after date of grant.  The Plans are registered with the SEC
on Form S-8.  Shares issued under the Plans are issued from the
Company’s unissued shares authorized under its articles of
incorporation.





Warrants





Equity compensation not approved by
shareholders consists primarily of warrants or other equity purchase rights
granted to non-employees of Hollywood Media in exchange for
services.  Additional information about such equity compensation is
included in the paragraphs and tables below.





1993 Stock Option
Plan





Under Hollywood Media’s
shareholder-approved 1993 Stock Option Plan, as amended (the “1993 Plan”),
3,000,000 shares of Hollywood Media’s common stock were reserved for issuance
upon exercise of options.  The 1993 Plan is designed to serve as an
incentive for retaining qualified and competent consultants and
employees.  The Stock Option Committee of Hollywood Media’s Board of
Directors (the “Stock Option Committee”) administers and interprets the 1993
Plan and, prior to July 1, 2003, was authorized to grant options thereunder to
all eligible consultants, employees and officers of Hollywood
Media.





The 1993 Plan provided for the granting
of both “incentive stock options” (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended) and nonqualified stock
options.  Options were granted under the 1993 Plan on such terms and
at such prices as determined by the Stock Option Committee.  Each
option is exercisable after the period or periods specified in the option
agreement, but no option can be exercised until six months after the date of
grant, or after the expiration of 10 years from the date of
grant.  Options granted under the 1993 Plan are not transferable other
than by will or by the laws of descent and distribution.  The 1993
Plan also authorizes Hollywood Media to make loans to employees to enable them
to exercise their options.  Such loans must (i) provide for recourse
to the optionee, (ii) bear interest at a rate no less that the rate of interest
payable by Hollywood Media to its principal lender at the time the loan is made,
and (iii) be secured by the shares of common stock purchased.  No such
loans were made during the years ended December 31, 2009, 2008 or
2007.





As of December 31, 2009, options to
purchase 36,000 shares of common stock were outstanding under the 1993 Plan and
no options granted under the 1993 Plan were exercised in 2009.  The
ability to grant more options under the 1993 Plan expired on July 1,
2003.  As such, no further grants are permitted under the 1993
Plan.





2000 Stock Incentive
Plan





In December 2000, the Board of
Directors and Hollywood Media’s shareholders approved Hollywood Media’s 2000
Stock Incentive Plan (the “2000 Plan”), and the 2000 Plan was amended during the
year ended December 31, 2003.  The purpose of the 2000 Plan is to
advance the interests of Hollywood Media by providing an additional incentive to
attract, retain and motivate highly competent persons as officers and key
employees of, and consultants to, Hollywood Media and its
subsidiaries  and affiliates and to encourage stock ownership in
Hollywood Media by such persons by providing them opportunities to acquire
shares of Hollywood Media’s common stock, or to receive monetary payments based
on the value of such shares pursuant to the benefits described
therein.  Additionally, the 2000 Plan is intended to assist in further
aligning the interests of Hollywood Media’s officers, key employees and
consultants to those of its other stockholders.





51





Under the 2000 Plan, as amended,
2,765,287 shares of common stock are reserved for issuance upon exercise of
benefits granted under the 2000 Plan.  The maximum number of shares of
Common Stock with respect to which benefits may be granted or measured to any
individual participant under the 2000 Plan during the term of the 2000 Plan
shall not exceed 1,000,000 subject to certain potential adjustments as provided
in the plan.  If any benefit granted pursuant to the 2000 Plan
terminates, expires or is canceled or surrendered, in whole or in part, shares
subject to the unexercised portion may again be issued pursuant to the 2000
Plan.  The shares acquired upon exercise of benefits granted under the
2000 Plan will be authorized and issued shares of common
stock.  Hollywood Media’s shareholders do not have any preemptive
rights to purchase or subscribe for the shares reserved for issuance under the
2000 Plan.





The 2000 Plan is administered by the
Stock Option Committee or the Compensation Committee of the Board of Directors
for grants to executive officers, which has the right to determine, among other
things, the persons to whom options, restricted stock, or other benefits are
granted, the number of shares of common stock subject to options and other
benefits, the exercise price of options and the other terms and conditions
thereof.  The 2000 Plan provides for the issuance of Incentive Stock
Options and Nonqualified Stock Options.  In addition, the Benefits
under the 2000 Plan may be granted in any one or a combination of Options, Stock
Appreciation Rights, Stock Awards, Performance Awards and Stock
Units.  Upon receiving grants of benefits, each holder of benefits
must enter into a benefit agreement with Hollywood Media that contains the
appropriate terms and conditions as determined by the Stock Option
Committee.





As of December 31, 2009, there were no
options outstanding to purchase shares of common stock under the 2000
Plan.  During the year ended December 31, 2009, no options were
granted, exercised, cancelled or expired under the 2000 Plan.





2004 Stock Incentive
Plan





During the year ended December 31,
2004, Hollywood Media’s Board of Directors and shareholders approved Hollywood
Media’s 2004 Stock Incentive Plan (the “2004 Plan”).  The purpose of
the 2004 Plan is to advance the interests of Hollywood Media by providing an
additional incentive to attract, retain and motivate highly competent persons as
officers and key employees of, and consultants to, Hollywood Media and its
subsidiaries and affiliates and to encourage stock ownership in Hollywood Media
by such persons by providing them opportunities to acquire shares of Hollywood
Media’s common stock, or to receive monetary payments based on the value of such
shares pursuant to the benefits described therein.  Additionally, the
2004 Plan is intended to assist in further aligning the interest of Hollywood
Media’s officers, key employees and consultants to those of its other
stockholders.





Under the 2004 Plan, 1,500,000 shares
of common stock are reserved for issuance upon exercise of benefits granted
under the 2004 Plan.  The maximum number of shares of Common stock
with respect to which benefits may be granted or measured to any individual
participant under the 2004 Plan during the term of the 2004 Plan shall not
exceed 500,000 subject to certain potential adjustments as provided in the
plan.  If any benefit granted pursuant to the 2004 Plan terminates,
expires, or is canceled or surrendered, in whole or in part, shares subject to
the unexercised portion may again be issued pursuant to the 2004
Plan.  The shares acquired upon exercise of benefits granted under the
2004 Plan will be authorized and issued shares of common
stock.  Hollywood Media’s shareholders do not have any preemptive
rights to purchase or subscribe for the shares reserved for issuance under the
2004 Plan.





52





The 2004 Plan is administered by the
Stock Option Committee or the Compensation Committee of the Board of Directors
for grants to executive officers, which has the right to determine, among other
things, the persons to whom options, restricted stock, or other benefits are
granted, the number of shares of common stock subject to options and other
benefits, the exercise price of options and the other terms and conditions
thereof.  The 2004 Plan provides for the issuance of Incentive Stock
Options and Nonqualified Stock Options.  An Incentive Stock Option is
an option to purchase common stock that meets the definition of “incentive stock
option” set forth in Section 422 of the Internal Revenue Code of
1986.  A Nonqualified Stock Option is an option to purchase common
stock that meets certain requirements in the 2004 Plan but does not meet the
definition of an “incentive stock option” set forth in Section 422 of the
Code.  In addition, the benefits under the 2004 Plan may be granted in
any one or a combination of options, stock appreciation rights, stock awards,
performance awards and stock units.  Upon receiving Grants of
benefits, each holder of benefits must enter into a benefit agreement with
Hollywood Media that contains the appropriate terms and conditions as determined
by the Stock Option Committee.





As of December 31, 2009, options to
purchase 204,000 shares of common stock were outstanding under the 2004
Plan.  During the year ended December 31, 2009, no options were
granted or exercised, and 1,000 and 15,000 shares were cancelled and expired,
respectively, under the 2004 Plan.





Directors Stock Option
Plan





Hollywood Media has established the
shareholder-approved Directors Stock Option Plan for non-employee directors,
which provides for grants to each non-employee director of options to purchase
15,000 shares of Hollywood Media’s common stock upon election or
re-election.  In December 2007, the Board of Directors of Hollywood
Media elected to temporarily suspend such annual option issuances until such
time that the Board determines to reserve additional shares of common stock for
issuance upon exercise of options granted under the Directors Stock Option
Plan.  The ability to grant more options under the Directors Stock
Option Plan expired on July 1, 2008.  As such, no further grants are
permitted under the Directors Stock Option Plan.  A total of 300,000
shares of common stock have been reserved for issuance upon exercise of options
granted under the Directors Stock Option Plan.





As of December 31, 2009, options to
purchase 280,943 shares of common stock were outstanding under Directors Stock
Option Plan.  During the year ended December 31, 2009, no options were
granted, exercised, cancelled or expired under the Directors Stock Option
Plan.





Shares Available for Future
Grant under Stock Plans





At December 31, 2009, options to
purchase 4,057 shares were available for future grant under the Directors Stock
Option Plan.  At December 31, 2009 there were 226,052 shares available
for future grant under the 2000 Plan for options, stock and other awards, and
298,261 shares available for future grant under the 2004 Plan for options, stock
and other awards.  No options were available for future grant under
the 1993 Plan.





Accounting for Share-Based
Compensation





Pursuant to ASC Topic No. 718,
“Compensation-Stock Compensation” (ASC 718) the Company uses the modified
prospective transition method and recognizes compensation cost for (i)
share-based awards granted prior to but not yet vested as of January 1, 2006,
based on the fair value calculated on the grant date, and (ii) share-based
awards granted subsequent to January 1, 2006, also based on the fair value
calculated on the grant date.





During the year ended December 31,
2009, Hollywood Media recorded $228,720 of stock-based compensation expense
which caused the loss from continuing operations to increase by $228,720 and
basic and diluted loss per share from continuing operations to increase by $0.01
per share.




53




Table of Stock Option and
Warrant Activity





A summary of all stock option and
warrant activities for the year ended December 31, 2009:





Stock Options
                    
                    
                    WarrantsWeighted
                    
                    
                    
                    
                    
                    WeightedAverage
                    
                    
                    
                    
                    
                    AverageExercise
                    
                    
                    
                    
                    
                    ExerciseShares
                    
                    
                    Price
                    
                    
                    Shares
                    
                    
                    PriceOutstanding
      at December 31, 2008
                    
                    
                    591,943
                    
                    
                    $
                    5.24
                    
                    
                    
                    1,989,985
                    
                    
                    $
                    4.35Granted
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Cancelled
                    
                    
                    (1,000
                    )
                    
                    
                    4.28
                    
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    (70,000
                    )
                    
                    
                    11.73
                    
                    
                    
                    (1,182,485
                    )
                    
                    
                    4.41Outstanding
      at December 31, 2009
                    
                    
                    520,943
                    
                    
                    $
                    4.37
                    
                    
                    
                    807,500
                    
                    
                    $
                    4.27




Stock
Options





The
following table summarizes the activity with respect to the stock options of
Hollywood Media for the year ended December 31, 2009.





Number
      of
                            
                            
                            Exercise
      PriceShares
                            
                            
                            Per ShareOutstanding
      at December 31, 2008
                            
                            
                            591,943
                            
                            
                            $
                            2.03
      - $16.50Granted
                            
                            
                            -
                            
                            
                            
                            -Exercised
                            
                            
                            -
                            
                            
                            
                            -Cancelled
                            
                            
                            (1,000
                            )
                            
                            $
                            4.28Expired
                            
                            
                            (70,000
                            )
                            
                            $
                            2.55
      - $16.50Outstanding
      at December 31, 2009
                            
                            
                            520,943
                            
                            
                            $
                            2.03
      - $9.75





Data on Outstanding Options
at December 31, 2009:





WeightedAverageNumber
      of
                            
                            
                            Weighted
                            
                            
                            RemainingOptions
                            
                            
                            Average
      Exercise
                            
                            
                            Contractual
                            
                            
                            AggregateOutstanding
                            
                            
                            Price Per Share
                            
                            
                            Term (years)
                            
                            
                            Intrinsic Value (1)Vested
      Options
                            
                            
                            517,193
                            
                            
                            $
                            4.37
                            
                            
                            
                            3.04
                            
                            
                            $
                            -Non-vested
      Options
                            
                            
                            3,750
                            
                            
                            $
                            4.19
                            
                            
                            
                            1.77
                            
                            
                            
                            -Total
      Outstanding Stock Options
                            
                            
                            520,943
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            $
                            -





(1)
              The
      aggregate intrinsic value is computed based on the closing price of
      Hollywood Media’s stock on   December 31, 2009, which is a
      price per share of $1.40.





54





As of
December 31, 2009, there was $21,676 of unrecognized compensation cost related
to non-vested stock option awards.  The cost is expected to be
recognized over a weighted-average period of 0.33 years.





Stock
options exercises during the years ended December 31, 2008 and 2007 resulted in
the receipt of cash proceeds of $122,900 and $203,824,
respectively.  There were no stock option exercises during
2009.  The intrinsic values of the stock options exercised during the
years ended 2008 and 2007 were $115,020 and $74,673,
respectively.  There were no tax benefits realized from stock option
exercises during the years ended December 31, 2008 and 2007, as a result of
available net operating losses and the related valuation allowance.





The
following table summarizes the activity with respect to the non-vested stock
options of Hollywood Media for the year ended December 31, 2009.





Weighted -Average
      GrantNumber
      of
                  
                  
                  Date
      Fair ValueShares
                  
                  
                  Per ShareNon-vested
      at December 31, 2008
                  
                  
                  7,500
                  
                  
                  $
                  2.42Granted
                  
                  
                  -
                  
                  
                  
                  -Vested
                  
                  
                  (3,750
                  )
                  
                  $
                  2.32Forfeited
                  
                  
                  -
                  
                  
                  
                  -Non-vested
      at December 31, 2009
                  
                  
                  3,750
                  
                  
                  $
                  2.39





The fair value of each option award is
estimated as of the date of grant using the Black-Scholes option valuation
model, which uses various assumptions in the calculation of the fair
value.  There were no options granted during the years ended December
31, 2009 and 2008.





The fair
value of each option grant is estimated on the date of the grant using an option
pricing model with the following weighted average assumptions used for grants
during the years ended December 31, 2009, 2008 and 2007:





2009
                  
                  
                  2008
                  
                  
                  2007Average
      risk free interest rate
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4.14
                  %Expected
      lives of options (years):Two
      year options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Three
      year options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Five
      and Ten year options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10Expected
      volatility
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  72.1
                  %





The
following table summarizes weighted average exercise prices and fair value of
options and warrants granted whose exercise price equals, exceeds or is less
than the market price of the stock on the grant date.





2009
                    
                    
                    2008
                    
                    
                    2007Exercise
      Price Equals Market PriceWeighted
      average exercise price
                    
                    $
                    -
                    
                    
                    $
                    2.34
                    
                    
                    $
                    2.50Weighted
      average fair value
                    
                    $
                    -
                    
                    
                    $
                    0.59
                    
                    
                    $
                    1.99Exercise
      Price Exceeds Market PriceWeighted
      average exercise price
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Weighted
      average fair value
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Exercise
      Price is Less Than Market PriceWeighted
      average exercise price
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Weighted
      average fair value
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -





55





The
following is a summary of stock options and warrants outstanding and exercisable
as of December 31, 2009:




Options and Warrants Outstanding
                          
                          
                          ExercisableWeighted
                          
                          
                          Weighted
                          
                          
                          
                          
                          
                          WeightedAverage
                          
                          
                          Average
                          
                          
                          
                          
                          
                          AverageRemaining
                          
                          
                          Exercise
                          
                          
                          
                          
                          
                          ExerciseRange
      of
                          
                          Number
      of
                          
                          
                          Contractual
                          
                          
                          Price
                          
                          
                          Number
      of
                          
                          
                          PriceExercise
      Prices
                          
                          Shares
                          
                          
                          Life
                          
                          
                          Per
      Share
                          
                          
                          Shares
                          
                          
                          Per
      Share$
      2.03
      - $  2.50
                          
                          
                          97,500
                          
                          
                          
                          4.31
                          
                          
                          $
                          2.13
                          
                          
                          
                          97,500
                          
                          
                          $
                          2.13$
      4.06
      - $  5.19
                          
                          
                          1,194,943
                          
                          
                          
                          1.56
                          
                          
                          $
                          4.32
                          
                          
                          
                          1,191,193
                          
                          
                          $
                          4.32$
      9.75
                          
                          
                          36,000
                          
                          
                          
                          .41
                          
                          
                          $
                          9.75
                          
                          
                          
                          36,000
                          
                          
                          $
                          9.751,328,443
                          
                          
                          
                          1.73
                          
                          
                          $
                          4.31
                          
                          
                          
                          1,324,693
                          
                          
                          $
                          4.31





Non-vested Stock
Awards





On
December 22, 2008, Hollywood Media issued 250,000 and 150,000 restricted shares
to the Chairman of the Board and President, respectively, in accordance with and
pursuant to Hollywood Media’s 2004 Stock Incentive Plan with an aggregate value
of $408,000, the fair market value on the date of issuance.





The
restricted shares will vest as follows, provided that the respective executive
remains employed by Hollywood Media on such vesting dates:





(a)
            One-third
      of the issued shares vest at the rate of 25% per year on each of the first
      through fourth anniversaries of the date of grant, such that these shares
      will be fully vested on the fourth anniversary of the date of grant,
      assuming continued employment of the executives by Hollywood
      Media.





(b)
            One-third
      of the issued shares will vest if, at any time prior to the fourth
      anniversary of the date of grant, Hollywood Media achieves EBITDA greater
      than zero for either (A) each of two consecutive fiscal quarters or
      (B) any three quarters in any 15-month period, in each case beginning
      with the fourth fiscal quarter of
2008.





(c)
            One-third
      of the issued shares will vest if, at any time prior to the fourth
      anniversary of the date of grant, the closing price of Hollywood Media’s
      Common Stock exceeds $2.00 per share for at least 10 consecutive trading
      days after the date of grant.





Hollywood Media recorded $204,885 as
compensation expense for the year ended December 31, 2009 relating to this
issuance.  At December 31, 2009 unrecognized potential compensation
expense for the non-vested shares amounted to $202,184.  As of
December 31, 2009 there were 233,334 shares of non-vested common
stock.





During the year ended December 31,
2004, Hollywood Media issued 400,000 shares to each of the President and the
Chairman of the Board pursuant to employment agreements with an aggregate value
of $2,600,000, the fair market value on the date of issuance, which vest at a
rate of 6.25% per quarter beginning on October 1, 2004.  Hollywood
Media recorded $487,500, and $650,000 as compensation expense for the years
ended December 31, 2008 and 2007, respectively, under these non-vested stock
awards.   There was no compensation expense recorded during 2009
under these stock awards.  At December 31, 2007, unrecognized
compensation expense for the non-vested shares amounted to
$487,500.  As of December 31, 2009 and 2008, there were no unvested
shares or unrecognized compensation expense remaining under this
issuance.  As of December 31, 2007, there were 150,000 shares of
non-vested common stock.  During the years ended December 31, 2008 and
2007, 150,000 and 200,000 shares of common stock vested,
respectively.





56





In
accordance with ASC Topic No. 718, Compensation – Stock Compensation, unearned
deferred compensation amounts of $1,787,500 previously classified as a
contra-equity were eliminated against additional paid-in capital, commencing
January 1, 2006, as the stock is not deemed to be issued until vesting
requirements are satisfied.





(4)          DISCONTINUED
OPERATIONS





Hollywood.com
Business





On August
21, 2008, Hollywood Media entered into a purchase agreement with the Purchaser
for the sale of the Hollywood.com Business.  The Purchaser is owned by
Mitchell Rubenstein, Hollywood Media’s Chief Executive Officer and Chairperson
of the Board, and Laurie S. Silvers, Hollywood Media’s President and
Vice-Chairperson of the Board.  Pursuant to the purchase agreement,
Hollywood Media sold the Hollywood.com Business to Purchaser for a potential
purchase price of $10,000,000, which includes $1,000,000, which was paid to
Hollywood Media at closing, and potential earn-out payments totaling $9,000,000.
Hollywood Media does not have a significant continuing involvement in the
Hollywood.com Business operations.





The earn-out payments will equal the
greater of 10 percent of gross revenue and 90 percent of EBITDA (as
defined in the purchase agreement) for the Hollywood.com Business until the
earn-out is fully paid.   The Company considers the $9,000,000 in
potential earn-out payments to be contingent consideration and
non-recourse.  Thus, the Company will not record a receivable and any
corresponding gain until the contingencies have been
met.    During 2009, Hollywood Media recorded $677,342 in
income under this arrangement.  In addition, $61,543 of
indemnification expenses related to claims by former employees relating to the
period of their employment with Hollywood Media and a $1,227 tax expense offset
the overall gain on sale of discontinued operations recorded in the accompanying
consolidated statement of operations for the year ended December 31,
2009.  As of the filing of this Form 10-K, the Company has collected
the entire amount recorded in income in accordance with the payment
terms.  As of December 31, 2009, there remains $8,322,658 in potential
earn-out payments.    The Company will estimate an
appropriate reserve for at-risk amounts, if necessary, at the time that any
accounts receivable are recorded.   If a subsequent change of
control of the Hollywood.com Business, or a portion thereof, occurs before the
earn-out is fully paid, the remaining portion of the earn-out would be paid to
the Company immediately upon such an event, up to the amount of the
consideration received less related expenses. If the aggregate proceeds received
by the Company in such a change of control are less than the remaining balance
of the earn-out, then the surviving entity which owns the Hollywood.com Business
will be obligated to pay the difference in accordance with the same earn-out
terms. If the Hollywood.com Business, or a portion thereof, is resold prior to
August 21, 2011, Hollywood Media established an escrow account to fund negative
EBITDA of the sold business as necessary, up to a total of $2,600,000, the
maximum amount of negative EBITDA required to be funded per the purchase
agreement.  During 2009, Hollywood Media distributed the full balance
of the escrow to fund operating losses.  In addition, Hollywood Media
paid $400,000 to the Purchaser for working capital adjustments at
closing.  The $2,600,000 and the $400,000 were included in “Gain
(loss) on sale of discontinued operations” in 2008 in our accompanying
consolidated statements of operations.  Pursuant to Staff Accounting
Bulletin (“SAB”) Topic 5-E, the Company must consider if it has transferred
risks of ownership, which the Company has considered and concluded that the
risks of ownership have been transferred.





The
Hollywood.com Business included:





(i)           Hollywood
Media’s Hollywood.com, Inc. subsidiary, which owned the Hollywood.com website
and related URLs and celebrity fan websites.  Hollywood.com features
in-depth movie information including movie showtimes listings, celebrity
biographical data, and celebrity photos primarily obtained by Hollywood.com
through licenses with third party licensors which are made available on the
Hollywood.com website and mobile platform.  Hollywood.com also has
celebrity fan sites and a library of feature stories and interviews which
incorporate photos and multimedia videos taken at entertainment events including
movie premiers and award shows; and





57





(ii)           Hollywood
Media’s Totally Hollywood TV, LLC subsidiary, which owned Hollywood.com
Television, a free video on demand service distributed pursuant to annual
affiliation agreements with certain cable operators for the distribution of
movie trailers to subscribers of those cable systems.





Showtimes.com,
Inc.





On
August 24, 2007, Hollywood Media Corp. entered into and simultaneously closed on
a definitive asset purchase agreement with West World Media and its principal, a
former employee, pursuant to which Hollywood Media sold to West World Media
substantially all of the assets of its Showtimes business, for a cash purchase
price of $23,000,000, subject to a working capital post-closing
adjustment.  The working capital post-closing adjustment was a price
reduction of $114,454, which was paid by Hollywood Media to West World Media in
January 2008.





The
Showtimes business included the CinemaSource, EventSource and ExhibitorAds
operations and constituted the remainder of Hollywood Media’s Data Business
Division, which previously included the Baseline/StudioSystems business unit
until it was sold to The New York Times in August 2006.  West World
Media is controlled by Brett West, who founded the Showtimes business in 1995
and sold the business to Hollywood Media in 1999. Mr. West served as
president of Hollywood Media’s Showtimes business.





Results from Discontinued
Operations





The net
income (loss) from discontinued operations has been classified in the
accompanying consolidated statement of operations as “Income (loss) from
discontinued operations” and  include the gain from the sale of
Showtimes.com and the loss on sale of the Hollywood.com
Business.  Summarized results of discontinued operations include the
operating income from Showtimes.com and the operating loss from the
Hollywood.com Business through their respective dates of disposition, for the
years ended December 31, 2009, 2008 and 2007:




2009
                  
                  
                  2008
                  
                  
                  2007Operating
      revenue
                  
                  $
                  -
                  
                  
                  $
                  3,948,495
                  
                  
                  $
                  4,322,810Gain
      (loss) on sale of discontinued operations net of income taxes of $569,298
      for 2007
                  
                  
                  614,572
                  
                  
                  
                  (4,655,122
                  )
                  
                  
                  10,254,287Loss
      from discontinued operations
                  
                  
                  -
                  
                  
                  
                  (1,635,750
                  )
                  
                  
                  (211,993
                  )Income
      (loss) from discontinued operations
                  
                  $
                  614,572
                  
                  
                  $
                  (6,290,872
                  )
                  
                  $
                  10,042,294





(5) ACQUISITIONS AND OTHER
CAPITAL TRANSACTIONS:





Showtix
Acquisition





On February 1, 2007, Hollywood Media
through its wholly-owned subsidiary TDI entered into a definitive asset purchase
agreement with Showtix and each of its members for the acquisition by TDI of
substantially all of the assets of Showtix.  Showtix was a full
service, licensed group ticketing sales agency that sells tickets for Broadway
and Off-Broadway theatrical performances.  The acquisition was
completed and closed on February 1, 2007.  The acquisition allowed TDI
to increase its presence in the Broadway ticketing industry.  The
aggregate purchase consideration was $2,839,194, including $2,600,000 in cash
and $138,796 of acquisition costs.  In addition, Showtix is also
entitled to receive up to $370,000 in potential periodic cash earn-outs as
defined in the agreement.  During the first quarter of 2008, Hollywood
Media paid Showtix $43,313 pursuant to the first annual earn-out then due, and
$57,177 was paid in fiscal year 2009 pursuant to the second annual earn-out
due.  In fiscal 2009, $43,321 was accrued pursuant to the third annual
earn-out due in 2010.  During the first quarter of 2008, Hollywood
Media completed its evaluation of the acquired assets.  The fair
market value of these intangible assets on the date of acquisition was $470,760
and the reconciliation of the purchase price has been adjusted to reflect this
value.  A reconciliation of the purchase price is provided
below:





58





Purchase
      consideration (including contingent consideration recorded through
      December 31, 2009)
                          
                          $
                          2,839,194Cash
      acquired
                          
                          
                          4,824Accounts
      receivable
                          
                          
                          368,319Prepaid
                          
                          
                          11,584Intangibles
                          
                          
                          470,760Total
      assets
                          
                          $
                          855,487Current
      liabilities
                          
                          $
                          (94,167
                          )Total
      liabilities
                          
                          $
                          (94,167
                          )Net
      assets
                          
                          $
                          761,320Excess
      of the purchase consideration over fair value of net assets acquired
      (included in BroadwayTicketing
      segment)
                          
                          $
                          2,077,874





The excess of the purchase
consideration over the fair value of net assets has been classified
as  “Goodwill” in the accompanying consolidated balance
sheets.





The
results of operations of the Showtix business have been included in Hollywood
Media’s results of operations since the date of acquisition (February 1,
2007).  The following are Hollywood Media’s pro forma results for the
year ended December 31, 2007, to show results of operations if the Showtix
business had been acquired on January 1, 2007:





December
      31, 2007(unaudited)Proforma
      net revenues
                    
                    $
                    118,897,529Proforma
      loss from continuing operations
                    
                    $
                    (8,482,476
                    )Proforma
      net income
                    
                    $
                    1,716,308Proforma
      loss per share from continuing operations
                    
                    $
                    (0.25
                    )Proforma
      net income per share
                    
                    $
                    0.05Proforma
      weighted average common and common equivalent shares
                    
                    
                    33,303,886





(6)          FAIR VALUE OF FINANCIAL
INSTRUMENTS AND CONCENTRATION OF CREDIT RISK:





The
carrying amounts of cash and cash equivalents, receivables and accounts payable,
approximate fair value due to the short maturity of the
instruments.  The carrying value of notes payable approximates fair
value because the interest rates approximate the market rate.





Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist primarily of cash and cash equivalents and accounts
receivable.  The Company’s cash management and investment policies
restrict investments to low risk, highly-liquid securities, and the Company
performs periodic evaluations of the credit standing of the financial
institutions with which it deals.  The Company generally does not
require collateral when granting credit.  The Company performs ongoing
credit evaluations and maintains an allowance for doubtful accounts for accounts
which management believes may have become impaired and, to date, losses have not
been significant.  See Note 2 for a further discussion on allowance
for doubtful accounts.





59





The
Company has three primary suppliers of tickets for the Broadway Ticketing
division. Purchases from these three suppliers comprised approximately 88%, 84%
and 86% of all purchases made during each of the years ended December 31, 2009,
2008, and 2007, respectively.  Loss of one or more of these suppliers
could have a significant adverse effect on the operations of the
Company.





(7)          RECENTLY ISSUED ACCOUNTING
STANDARDS:





In
January 2010, the FASB issued Accounting Standards Update 2010-06,
“Improving Disclosures about Fair Value Measurements,” (ASU 2010-06) which
amends ASC 820, “Fair Value Measurements and Disclosures.”  This amendment
requires new disclosures, including the reasons for and amounts of significant
transfers in and out of Levels 1 and 2 fair value measurements and separate
presentation of purchases, sales, issuances and settlements in the
reconciliation of activity for Level 3 fair value measurements.  It also
clarified guidance related to determining the appropriate classes of assets and
liabilities and the information to be provided for valuation techniques used to
measure fair value.  This guidance will be effective for us in our interim
and annual reporting periods beginning after December 15, 2010. 
We are evaluating the adoption of this guidance, but we do not expect that it
will have a significant impact on our consolidated financial position or results
of operations.





(8)          PROPERTY AND EQUIPMENT,
NET:





Property
and equipment, net consists of:





December 31,2009
                        
                        
                        2008Equipment
      and software
                        
                        $
                        4,691,921
                        
                        
                        $
                        4,328,556Leasehold
      improvements
                        
                        
                        2,878,332
                        
                        
                        
                        2,869,874Equipment
      under capital leases
                        
                        
                        1,059,560
                        
                        
                        
                        1,200,737Furniture
      and fixtures
                        
                        
                        850,704
                        
                        
                        
                        860,132Website
      development
                        
                        
                        781,717
                        
                        
                        
                        288,224Internally
      developed software projectIn
      progress
                        
                        
                        591,329
                        
                        
                        
                        427,39810,853,563
                        
                        
                        
                        9,974,921Less:  Accumulated
      depreciation and amortization
                        
                        
                        (6,484,478
                        )
                        
                        
                        (5,325,719
                        )$
                        4,369,085
                        
                        
                        $
                        4,649,202





Depreciation
and amortization expense of property and equipment was $1,590,598, $1,353,497
and $977,598 for the years ended December 31, 2009, 2008 and 2007, respectively.
Included in these amounts is depreciation and amortization expense for equipment
under capital leases of $153,386, $164,986 and $108,048 for the years ended
December 31, 2009, 2008 and 2007, respectively.





60





(9) GOODWILL AND INTANGIBLE
ASSETS:




The following table reflects the
changes in the net carrying amount of goodwill relating to continuing operations
by operating segment (see Note 18) for the years ended December 31, 2009 and
2008:





Balance at
                
                
                
                
                
                
                
                
                Balance at
                
                
                
                
                
                
                
                
                Balance atDecember 31,
                
                
                Acquisition
                
                
                
                
                
                December 31,
                
                
                Acquisition
                
                
                
                
                
                December 31,2009
                
                
                and Other
                
                
                Impairment
                
                
                2008
                
                
                and Other
                
                
                Impairment
                
                
                2007Broadway
      Ticketing
                
                $
                5,601,730
                
                
                $
                43,221
                
                
                $
                -
                
                
                $
                5,558,509
                
                
                $
                (370,270
                )
                
                $
                -
                
                
                $
                5,928,779Ad
      Sales and Other
                
                
                14,595,783
                
                
                
                -
                
                
                
                (5,000,000
                )
                
                
                19,595,783
                
                
                
                -
                
                
                
                (3,276,640
                )
                
                
                22,872,423Intellectual
      Properties
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (248,057
                )
                
                
                248,057Total
                
                $
                20,197,513
                
                
                $
                43,221
                
                
                $
                (5,000,000
                )
                
                $
                25,154,292
                
                
                $
                (370,270
                )
                
                $
                (3,524,697
                )
                
                $
                29,049,259





The
intangible assets of continuing operations, other than goodwill, consist of the
following at December 31, 2009 and 2008:





Balance at December 31,2009
                
                
                2008Gross
                
                
                
                
                
                
                
                
                GrossCarrying
                
                
                Accumulated
                
                
                
                
                
                Carrying
                
                
                AccumulatedAmount
                
                
                Amortization
                
                
                Net
                
                
                Amount
                
                
                Amortization
                
                
                NetPatents
      and trademarks
                
                $
                203,368
                
                
                $
                (183,831
                )
                
                $
                19,537
                
                
                $
                203,368
                
                
                $
                (171,843
                )
                
                $
                31,525Web
      addresses
                
                
                2,061,089
                
                
                
                (2,044,128
                )
                
                
                16,961
                
                
                
                2,061,089
                
                
                
                (1,999,604
                )
                
                
                61,485Other
                
                
                2,112,852
                
                
                
                (1,758,532
                )
                
                
                354,320
                
                
                
                2,112,852
                
                
                
                (1,522,966
                )
                
                
                589,886Total
                
                $
                4,377,309
                
                
                $
                (3,986,491
                )
                
                $
                390,818
                
                
                $
                4,377,309
                
                
                $
                (3,694,413
                )
                
                $
                682,896





Amortization
expense was $292,078, $871,334 and $400,893 for the years ended December 31,
2009, 2008 and 2007, respectively.  Future amortization expense of the
net carrying amount of intangible assets is as follows:





Year
                    
                    Amount2010
                    
                    $
                    232,4042011
                    
                    
                    90,5052012
                    
                    
                    62,8202013
                    
                    
                    5,0892014
                    
                    
                    -Total
                    
                    $
                    390,818





Patents and trademarks are being
amortized on a straight-line basis over 3 to 17 years. Web addresses and Other
are amortized over 3 to 5 years.





61





(10)       
CAPITAL LEASE
OBLIGATIONS:





Future
minimum lease payments under capital leases, which contain bargain purchase
options, together with the present value of the net minimum lease payments as of
December 31, 2009 are as follows:





Year
                      
                      Amount2010
                      
                      $
                      135,7152011
                      
                      
                      68,4582012
                      
                      
                      11,1352013
                      
                      
                      3552014
                      
                      
                      -Minimum
      lease payments
                      
                      
                      215,663Less:
      amount representing imputed interest
                      
                      
                      (16,772
                      )Present
      value of net minimum lease payments
                      
                      
                      198,891Less:
      current portion
                      
                      
                      (123,061
                      )$
                      75,830





(11)        DEBT:





Senior
Unsecured Notes





On
November 23, 2005, Hollywood Media issued and sold $7,000,000 aggregate
principal amount of its Senior Unsecured Notes (the “Senior Notes”) for
aggregate gross cash proceeds of $7,000,000. The notes carried an 8% interest
rate and an initial 12 month term, on which interest was payable in quarterly
installments commencing December 31, 2005. The principal was payable in cash or,
at Hollywood Media’s option, in shares of Hollywood Media’s common stock valued
on a per share basis at a 5% discount from the 20-day volume-weighted average
market price per share of the common stock as of the payment date, subject to
certain conditions to such option including but not limited to the requirement
that the shares be registered for resale. Hollywood Media’s proceeds related to
the issuance, net of issuance costs, were $6,595,690. The holders of the Senior
Notes also received warrants (the “Warrants”) to purchase 700,000 shares of
Hollywood Media’s common stock at an exercise price of $4.29 per share. In March
2006, Hollywood Media exercised its option under the terms of the Senior Notes
to extend the maturity date of the Senior Notes to May 23, 2007 in exchange for
the delivery of additional five-year Warrants to purchase an aggregate of
100,000 shares of Hollywood Media’s common stock with an exercise price per
share at $4.29.  The Senior Notes were not convertible at the option
of the holders.





On May
18, 2007, the $7,000,000 principal amount of the Senior Notes, together with all
accrued and unpaid interest thereon, was paid in full in accordance with the
provisions of the Senior Notes.





Upon
issuance, Hollywood Media recognized the value attributable to the 700,000
issued Warrants in the amount of $1,865,037 as a discount against the Senior
Notes.  The Company valued the Warrants using the Black-Scholes
pricing model assuming a risk-free rate of 4.45%, an expected volatility of
69.4% and a five year life; the fair value of the Warrants was determined to be
$2.66 per share.  Additional discount of $286,000 was recorded in
conjunction with the 100,000 extension Warrants issued in March of
2006.  The Company valued the additional Warrants using the
Black-Scholes pricing model assuming a risk-free rate of 4.73%, an expected
volatility of 64.2% and an approximate five year life; the fair value of the
Warrants was determined to be $2.86 per share.    The debt
discount attributed to the value of the Warrants issued was amortized over the
life of the Senior Notes as interest expense using the effective yield
method.  The Company amortized the Senior Notes debt discount
attributed to the value of the Warrants of $624,601 for the year ended December
31, 2007.





During
the year ended December 31, 2007, $220,889 in interest expense was recorded for
stated interest on the Company’s consolidated statement of operations in
connection with the Senior Unsecured Notes.





62





Registration
Payment Arrangement





In
connection with Hollywood Media’s issuance in November 2005 of $7.0 million
aggregate principal amount of senior unsecured notes (the “Senior Notes”), the
holders of the Senior Notes also received warrants to purchase an aggregate of
800,000 shares of Hollywood Media’s common stock at an exercise price of $4.29
per share (the “Warrants”).  In May 2007, the full principal amount of
the Senior Notes, together with all accrued and unpaid interest thereon, was
paid in full in accordance with the provisions of the Senior
Notes.  As required by the registration rights agreement entered into
in connection with the Warrants, Hollywood Media filed a registration statement
for the resale of the shares of common stock issuable upon the exercise of the
Warrants that was declared effective by the SEC on March 3, 2006, and must
maintain the effectiveness of such registration statement through the earlier of
(a) the fifth anniversary of the effective date or (b) the date on which the
holders of Warrant shares are able to resell such Warrant shares under Rule
144(k) of the Securities Act.  If the registration statement ceases to
be effective for any reason for more than 30 trading days during any 12-month
period (the “Grace Period”) in violation of the agreement, and if there are no
applicable defenses or limitations under the agreement or at law or otherwise,
Hollywood Media would be required to pay to the holders of Warrant shares, in
addition to any other rights such holders may have, an aggregate cash amount
equal to $25,000 for each of the first three 30-day periods following the date
that the Grace Period is exceeded, increasing to $70,000 for each succeeding
30-day period.  As of December 31, 2009, none of the Warrants have
been exercised, no Warrant shares have been issued, and the registration
statement continues to be effective.





In
accordance with FASB Accounting Standard Codification Topic No. 815, “Derivatives and Hedging”,Subtopic No, 40, “Contracts in Entity’s Own
Equity” (ASC 815-40), Hollywood Media is required to calculate the
maximum potential amount of consideration payable pursuant to registration
payment arrangements, even if the likelihood of payments under such arrangements
is remote.  ASC 815-40 is applicable to financial statements issued
for fiscal years beginning after December 15, 2006 and any interim periods
therein.  Assuming for purposes of this calculation that (i) all of
the Warrants were exercised on December 31, 2009, (ii) the Warrant shares issued
upon such exercise are available for resale under Rule 144(k) on June 30, 2010,
(iii) the registration statement ceased to be effective in violation of the
agreement on December 31, 2009 and does not become effective again before June
30, 2010, the remainder of the required registration period, and (iv) that there
are no applicable defenses or limitations under the agreement or at law or
otherwise, the maximum potential amount of consideration payable by Hollywood
Media to the holders of Warrant shares would be $215,000.  Management
does not believe that any significant material payments are likely under this
registration payment arrangement.





(12) 
     OFFERINGS OF
SECURITIES:





On January 4, 2007, Hollywood Media
issued 20,101 shares of common stock valued at $4.20 per share, which was the
closing price of Hollywood Media common stock on the trading date prior to the
January 1, 2007 date of grant, in payment of $84,422 of additional compensation
to a non-executive employee pursuant to an employment agreement.





On January 22, 2007, Hollywood Media
issued 1,000 shares of common stock valued at $1,490 pursuant to the exercise of
an employee stock option with an exercise price of $1.49 per share.





On January 29, 2007, Hollywood Media
issued 500 shares of common stock valued at $750 pursuant to the exercise of an
employee stock option with an exercise price of $1.50 per share.





On
January 30, 2007, Hollywood Media issued 8,300 shares of common stock valued at
$4.13 per share, which was the average of the closing price of Hollywood Media
common stock on the five consecutive business days ending on and including the
third business day immediately preceding the January 10, 2007 date of grant, in
payment of $34,275 of additional compensation to a non-executive employee
pursuant to an employment agreement.





On February 9, 2007, Hollywood Media
issued 31,250 shares of common stock valued at $108,125 pursuant to the exercise
of an employee stock option with an exercise price of $3.46 per
share.





63




On February 9, 2007, Hollywood Media
issued 59,257 shares of common stock valued as of the December 29, 2006 closing
share price of $4.20, or $248,876, for payment of Hollywood Media’s 401(k)
employer match for the calendar year 2006.





On
February 21, 2007, Hollywood Media issued 1,992 shares of common stock valued as
of the average of the ten days closing prices prior to the issuance date, or
$4.02 per share, in payment of the $8,000 purchase price for the acquisition of
intangible assets.





On March 19, 2007, Hollywood Media
issued 15,625 shares of common stock valued at $63,438 pursuant to the exercise
of an employee stock option with an exercise price of $4.06 per
share.





On April 25, 2007, Hollywood Media
issued 8,174 shares of common stock pursuant to cashless net exercises of
warrants with an exercise price of $2.84 per share. The warrant was issued in
connection with a private placement completed in 2004.





On May 2,
2007, Hollywood Media issued 5,937 shares of common stock valued at $4.33 per
share, which was the average of the closing price of Hollywood Media common
stock on the five consecutive business days ending on and including the third
business day immediately preceding the April 10, 2007 date of grant, in payment
of $25,706 of additional compensation to a non-executive employee pursuant to an
employment agreement.





On May 14, 2007, Hollywood Media issued
22,766 shares of common stock pursuant to the cashless net exercise of a warrant
with an exercise price of $3.34 per share. The warrant was issued in connection
with a debt offering completed in 2002.





On May 16, 2007, Hollywood Media issued
67,202 shares of common stock pursuant to the cashless net exercise of a warrant
with an exercise price of $3.34 per share. The warrant was issued in connection
with a debt offering completed in 2002.





On May 17, 2007, Hollywood Media issued
4,698 shares of common stock pursuant to the cashless net exercise of a warrant
with an exercise price of $3.34 per share. The warrant was issued in connection
with a debt offering completed in 2002.





On May 17, 2007, Hollywood Media issued
12,014 shares of common stock pursuant to the cashless net exercise of a warrant
with an exercise price of $4.00 per share. The warrant was issued in connection
with a debt offering completed in 2001.





On May 18, 2007, Hollywood Media issued
11,743 shares of common stock pursuant to the cashless net exercise of a warrant
with an exercise price of $3.34 per share. The warrant was issued in connection
with a debt offering completed in 2002.





On May 21, 2007, Hollywood Media issued
22,584 shares of common stock pursuant to the cashless net exercise of a warrant
with an exercise price of $3.34 per share. The warrant was issued in connection
with a debt offering completed in 2002.





On July 16, 2007, Hollywood Media
issued 1,000 shares of common stock valued at $1,021 pursuant to the exercise of
an employee stock option with an exercise price of $1.02 per share.





On July
19, 2007, Hollywood Media issued 5,970 shares of common stock valued at $4.31
per share, which was the average of the closing price of Hollywood Media common
stock on the five consecutive business days ending on and including the third
business day immediately preceding the July 10, 2007 date of grant, in payment
of $25,707 of additional compensation to a non-executive employee pursuant to an
employment agreement.





64




On August 13, 2007, Hollywood Media
issued 20,000 shares of common stock valued at $29,000 pursuant to the exercise
of an employee stock option with an exercise price of $1.45 per
share.





On
September 7, 2007, Hollywood Media issued 105,000 shares of the common stock
valued at $3.83 per share, which was the closing share price of Hollywood Media
common stock on the August 30, 2007 date of grant, in payment of $402,150 in
compensatory bonuses to certain officers of Hollywood Media associated with the
August 24, 2007 sale of the Showtimes business.





On February 8, 2008, Hollywood
Media issued 96,569 shares of common stock valued at the December 31, 2007
closing share price of $2.90, or $280,050, for payment of Hollywood Media’s
401(k) employer match for the calendar year 2007.





On April 28, 2008, Hollywood Media
issued 20,000 shares of common stock valued at $17,600 pursuant to the exercise
by the Chief Accounting Officer of Hollywood Media of an employee stock option
with an exercise price of $0.88 per share.





On June 24, 2008, Hollywood Media
issued 81,000 shares of common stock valued at $105,300, pursuant to the
exercise by the Chief Executive Officer of Hollywood Media of an employee stock
option with an exercise price of $1.30 per share.





On December 22, 2008, Hollywood Media
issued 50,000 shares of unrestricted common stock to each of the Chief Executive
Officer and President of Hollywood Media, valued at $102,000 in the aggregate
based on the $1.02 closing share price as of the date of grant.  Such
100,000 shares were issued as payment of annual stock bonuses granted by the
Compensation Committee of the Board of Directors.  See Note 3 –
“Accounting for Share-Based Compensation” for additional
information.





On December 22, 2008, Hollywood Media
issued 250,000 shares and 150,000 shares, respectively, of restricted common
stock to the Chief Executive Officer and President of Hollywood Media, valued at
$408,000 in the aggregate based on the $1.02 closing share price as of the date
of grant.  Such 400,000 shares were issued as payment of restricted
stock bonuses granted by the Compensation Committee of the Board of
Directors.  See Note 3 – “Accounting for Share-Based Compensation” for
additional information.





On March 30, 2009, Hollywood Media
issued 225,343 shares of common stock valued at the December 31, 2008 closing
share price of $1.00 or $225,363, for payment of Hollywood Media’s 401(k)
employer match for the calendar year 2008.





(13)
            STOCK REPURCHASE
      PROGRAM:





Hollywood
Media reported in its Form 8-K report filed on October 4, 2007, that its Board
of Directors authorized a stock repurchase program under which Hollywood Media
may use up to $10 million of its cash and cash equivalents to repurchase shares
of its outstanding common stock.  Pursuant to the repurchase program,
Hollywood Media purchased an aggregate of 71,600, 1,711,639 and 2,003,660 shares
of its common stock during the years ended December 31, 2009, 2008 and 2007,
respectively.  The shares were purchased for $72,954, $2,124,999 and
$5,104,204 for the years ended December 31, 2009, 2008 and 2007, respectively,
reflecting an approximate average price per share of $1.02, $1.24 and $2.55 for
the years ended December 31, 2009, 2008 and 2007, respectively.





(14)
            INCOME
      TAXES:





The Company adopted the provisions of
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes on
January 1, 2007, which was later codified under FASB Accounting Standards
Codification No. 740, “Income
Taxes.”  The adoption had no impact on the Company’s
consolidated financial statements as of that date.  There are no
unrecognized tax benefits in the consolidated financial statements as of
December 31, 2009 and December 31, 2008.




65




Hollywood
Media is in a cumulative net loss position for both financial and tax reporting
purposes.  The primary item giving rise to the Company’s net deferred
tax asset is a net operating loss carryforward of $225,847,306 as a result of
losses incurred during the period from inception (January 22, 1993) to December
31, 2009. However, due to the uncertainty of Hollywood Media’s ability to
generate taxable income in the future, and, to the extent taxable income is
generated in the future, the uncertainty as to Hollywood Media’s ability to
utilize its loss carryforwards subject to the “ownership change” provisions of
Section 382 of the U.S. Internal Revenue Code, Hollywood Media has established a
valuation allowance for the full amount of the deferred tax asset.





The net
operating loss carryforwards expire as follows:





Year
                          
                          Amount2018
                          
                          $
                          5,804,8642019
                          
                          
                          18,526,9892020
                          
                          
                          43,159,6232021
                          
                          
                          37,552,3592022
                          
                          
                          76,867,2122023
                          
                          
                          9,728,0582024
                          
                          
                          8,719,1192025
                          
                          
                          9,543,7852028
                          
                          
                          10,876,4362029
                          
                          
                          5,068,861$
                          225,847,306





The
components of Hollywood Media’s deferred tax assets and liabilities consist of
the following at December 31:





2009
                    
                    
                    2008Net
      difference in tax basis and book basis for certainassets
      and liabilities
                    
                    $
                    324,483
                    
                    
                    $
                    1,997,251Net
      operating loss and tax credit carryforwards
                    
                    
                    86,144,320
                    
                    
                    
                    84,102,70586,468,803
                    
                    
                    
                    86,099,956Valuation
      allowance
                    
                    
                    (86,468,803
                    )
                    
                    
                    (86,099,956
                    )Net
      deferred tax asset
                    
                    $
                    -
                    
                    
                    $
                    -





The
provision for income taxes from continuing operations is different from that
which would be obtained by applying the statutory Federal income tax rate of 35%
as a result of the following:





66





For the Year Ended December 31,2009
                          
                          
                          2008
                          
                          
                          2007Income
      tax benefit at Federal statutory tax rate
                          
                          $
                          (1,967,989
                          )
                          
                          $
                          (3,697,908
                          )
                          
                          $
                          (2,907,690
                          )State
      income tax benefit (net of federal benefit)
                          
                          
                          (163,062
                          )
                          
                          
                          (306,398
                          )
                          
                          
                          (240,923
                          )Change
      in valuation allowance
                          
                          
                          694,919
                          
                          
                          
                          4,938,841
                          
                          
                          
                          (1,170,750
                          )Change
      in valuation allowance resulting from change incumulative
      temporary differences
                          
                          
                          (326,072
                          )
                          
                          
                          -
                          
                          
                          
                          1,943,628Impairment
      of goodwill
                          
                          
                          1,895,000
                          
                          
                          
                          1,182,315
                          
                          
                          
                          -Dividends
      received deduction
                          
                          
                          (580,386
                          )
                          
                          
                          (397,526
                          )
                          
                          
                          -Change
      in cumulative temporary differences
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (1,943,628
                          )Sale
      of subsidiaries – basis difference
                          
                          
                          326,072
                          
                          
                          
                          450,206
                          
                          
                          
                          -Non
      deductible expenses
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Loss
      of foreign subsidiaries
                          
                          
                          -
                          
                          
                          
                          271,973
                          
                          
                          
                          418,802Tax
      effect of income (loss) from discontinued operations
                          
                          
                          152,351
                          
                          
                          
                          (2,384,240
                          )
                          
                          
                          3,900,561Other
                          
                          
                          (30,833
                          )
                          
                          
                          (57,263
                          )
                          
                          
                          -$
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -




During
2009 and 2007, the Company reassessed the amounts of certain prior year deferred
tax assets and the corresponding effect of the valuation thereon.  As
a result of this reassessment, deferred tax assets and the related valuation
allowance were decreased in 2009 in the amount of $326,072 and increased in 2007
in the amount of $1,943,628, resulting in zero net change to net deferred tax
assets.





The
Company is currently open to audit under the statute of limitations by the
Internal Revenue Service and certain state income taxing authorities for all
years due to the net operating loss carryovers from those years.





(15)
            INVESTMENTS IN AND
      ADVANCES TO EQUITY METHOD UNCONSOLIDATED
  INVESTEES:





Investments
in and advances to equity method unconsolidated investees consist of the
following:





December 31,2009
                      
                      
                      2008NetCo
      Partners (a)
                      
                      $
                      139,789
                      
                      
                      $
                      137,775MovieTickets.com
      (b)
                      
                      
                      90,308
                      
                      
                      
                      (4,975
                      )$
                      230,097
                      
                      
                      $
                      132,800




(a)      Netco
Partners:





In June
1995, Hollywood Media and C.P. Group, Inc. (“C.P. Group”), entered into an
agreement to form NetCo Partners (the “Netco Joint Venture Agreement”). NetCo
Partners is engaged in the development and licensing of NetForce.





Hollywood
Media and C.P. Group are each 50% partners in NetCo Partners. C.P. Group
contributed to NetCo Partners all rights to NetForce, and Hollywood Media
contributed to NetCo Partners all rights to Tad Williams’ MirrorWorld,
Arthur C. Clarke’s Worlds of
Alexander, Neil
Gaiman’s Lifers, and Anne McCaffrey’s
Saraband.





Pursuant
to the terms of the NetCo Partners Joint Venture Agreement, Hollywood Media is
responsible for developing, producing, manufacturing, advertising, promoting,
marketing and distributing NetCo Partners’ illustrated novels and related
products and for advancing all costs incurred in connection therewith. All
amounts advanced by Hollywood Media to fund NetCo Partners’ operations are
treated as capital contributions from Hollywood Media and Hollywood Media is
entitled to a return of such capital contributions before distributions of
profits are split equally between Hollywood Media and C.P. Group.




67




Hollywood
Media accounts for its investment in NetCo Partners under the equity method of
accounting, recognizing 50% of NetCo Partners’ income or loss as Equity in
Earnings of Unconsolidated Investees. Since NetCo Partners is a partnership, any
income tax payable is passed through to the partners.  The revenues,
gross profit and net income of NetCo Partners for the years ended December 31,
2009, 2008 and 2007 are presented below:





Year Ended December 31,2009
                      
                      
                      2008
                      
                      
                      2007(unaudited)
                      
                      
                      (unaudited)
                      
                      
                      (unaudited)Revenues
                      
                      $
                      -
                      
                      
                      $
                      9,508
                      
                      
                      $
                      1,138Gross
      profit
                      
                      
                      -
                      
                      
                      
                      7,416
                      
                      
                      
                      887Net
      income (loss)
                      
                      
                      (5,973
                      )
                      
                      
                      (300,954
                      )
                      
                      
                      9,494Company’s
      shareof
      net income (loss)
                      
                      $
                      (2,987
                      )
                      
                      $
                      (150,477
                      )
                      
                      $
                      4,747




The
current assets and current liabilities of NetCo Partners of December 31, 2009
and 2008, which are not included in Hollywood Media’s consolidated balance
sheets, are presented below:





As of December 31,2009
                      
                      
                      2008(unaudited)
                      
                      
                      (unaudited)Current
      assets
                      
                      $
                      1,546
                      
                      
                      $
                      771Current
      liabilities
                      
                      $
                      49,025
                      
                      
                      $
                      48,700




(b)      MovieTickets.com.





Hollywood
Media entered into a joint venture agreement on February 29, 2000 with the movie
theater chains AMC Entertainment Inc. and National Amusements, Inc. to form
MovieTickets.com.  In August 2000, the joint venture entered into an
agreement with Viacom Inc. to acquire a five percent interest in the joint
venture for $25 million of advertising over 5 years. In addition to the Viacom
advertising and promotion, MovieTickets.com is promoted through on-screen
advertising on most participating exhibitors’ movie screens. In March 2001,
America Online Inc. (“AOL”) purchased a non-interest bearing convertible
preferred voting equity interest in MovieTickets.com for $8.5 million in cash,
convertible into approximately 3% of the common stock of
MovieTickets.com.  AOL converted its preferred shares into common
stock during the year ended December 31, 2005.  Those shares are now
held by Time Warner Inc.





Hollywood
Media owns 26.2% of the equity in MovieTickets.com, Inc. at December 31, 2009
and shares in 26.2% of the income or losses generated by the joint
venture.  This investment is recorded under the equity method of
accounting, recognizing 26.2% of ownership of MovieTickets.com income or loss as
“Equity in Earnings of Unconsolidated Investees” in the accompanying
consolidated balance sheets.  Under applicable accounting principles,
Hollywood Media had not recorded income from MovieTickets.com operating results
for 2008 and 2007 because accumulated losses from 2006 and prior years exceeded
MovieTickets.com’s accumulated net income in 2008 and 2007.  Dividends
of $1,914,202 and $1,311,100 are included in “Equity in Earnings of
Unconsolidated Investees” in our accompanying consolidated statement of
operations for the years ended December 31, 2009 and 2008,
respectively.  Receivables from MovieTickets.com of $112,789 and
$143,464 were recorded as “Related Party Receivables” as of December 31, 2009
and 2008, respectively.  During 2009, Hollywood Media recorded $95,283
of income because accumulated income surpassed accumulated losses.




68




The
revenues, cost and expenses, depreciation and amortization and net income of
MovieTickets.com for the years ended December 31, 2009, 2008 and 2007, which are
not included in Hollywood Media’s consolidated statements of operations, are
presented below:





Year Ended December 31,2009
                      
                      
                      2008
                      
                      
                      2007(unaudited)
                      
                      
                      (unaudited)
                      
                      
                      (unaudited)Revenues
                      
                      $
                      18,643,342
                      
                      
                      $
                      18,062,438
                      
                      
                      $
                      13,130,977Cost
      and expenses
                      
                      $
                      13,471,941
                      
                      
                      $
                      12,345,771
                      
                      
                      $
                      10,045,326Depreciation
      and amortization
                      
                      $
                      594,120
                      
                      
                      $
                      502,950
                      
                      
                      $
                      532,495Net
      income
                      
                      $
                      4,842,476
                      
                      
                      $
                      5,764,290
                      
                      
                      $
                      3,318,818




The cash,
accounts receivable and accrued expenses and other liabilities balances of
MovieTickets.com as of December 31, 2009 and 2008, which are not included in
Hollywood Media’s consolidated balance sheets, are presented below:





As of December 31,2009
                        
                        
                        2008(unaudited)
                        
                        
                        (unaudited)Cash
                        
                        $
                        5,128,137
                        
                        
                        $
                        3,183,806Accounts
      receivable, net
                        
                        $
                        5,822,591
                        
                        
                        $
                        5,651,847Accrued
      expenses and current liabilities
                        
                        $
                        2,090,816
                        
                        
                        $
                        3,451,147




(16)
            COMMITMENTS AND
      CONTINGENCIES:





Operating
Leases





Hollywood
Media conducts its operations in various leased facilities, under leases that
are 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 may include escalating rent
provisions and rent holidays which are expensed on a straight-line basis over
the term of the lease, and expire at various dates through the year 2017. Also,
certain equipment used in Hollywood Media’s operations is leased under operating
leases. Operating lease commitments at December 31, 2009 are as
follows:





Year
                  
                  Amount2010
                  
                  $
                  1,081,6132011
                  
                  
                  1,087,2382012
                  
                  
                  1,141,4142013
                  
                  
                  865,6642014
                  
                  
                  886,083Thereafter
                  
                  
                  1,994,967Total
                  
                  $
                  7,056,979




69




The fixed
operating lease commitments detailed above assume that Hollywood Media continues
the leases through their initial lease terms. Rent expense, including equipment
rentals, was $943,376, $1,419,410 and $1,638,350 during the years ended December
31, 2009, 2008 and 2007, respectively, and is included in “Selling, general and
administrative” expense in the accompanying consolidated statements of
operations.





Litigation





Hollywood
Media is from time to time party to various legal proceedings, including matters
arising in the ordinary course of business.





(17)
            SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING
      ACTIVITIES:





2009
                                          
                                          
                                          2008
                                          
                                          
                                          2007INVESTING
      ACTIVITIES:Acquisition
      of property and equipment under capital leases
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          (456,587
                                          )
                                          
                                          $
                                          (441,026
                                          )Total
      non-cash investing activities
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          (456,587
                                          )
                                          
                                          $
                                          (441,026
                                          )FINANCING
      ACTIVITIES:Obligations
      acquired under capital leases
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          176,918
                                          
                                          
                                          $
                                          441,026Common
      stock issued and vesting for compensationto
      officers
                                          
                                          
                                          204,885
                                          (2)
                                          
                                          
                                          102,931
                                          (2),
      (3)
                                          
                                          
                                          -Common
      stock issued for contributions to Company 401(k)Plan
                                          
                                          
                                          225,343
                                          (1)
                                          
                                          
                                          280,050
                                          (4)
                                          
                                          
                                          248,876
                                          (5)Common
      stock issued as compensation as part of sale
                                          
                                          
                                          
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          402,150
                                          (6)Total
      non-cash financing activities
                                          
                                          $
                                          430,228
                                          
                                          
                                          $
                                          559,899
                                          
                                          
                                          $
                                          1,092,052




(1)  On
March 30, 2009, Hollywood Media issued 225,343 shares of common stock valued at
the December 31, 2008 closing share price of $1.00 or $225,363 for payment of
Hollywood Media’s 401(k) employer match for 2008.





(2)  On
December 22, 2008, Hollywood Media issued 250,000 shares and 150,000 shares,
respectively, of restricted common stock to the Chief Executive Officer and
President of Hollywood Media, valued at $408,000 in the aggregate based on the
$1.02 closing share price as of the date of grant.  Such 400,000
shares were issued as payment of restricted stock bonuses granted by the
Compensation Committee of the Board of Directors.  Compensation expense is
recognized quarterly on one-third of the shares, or $136,000, over a 4-year
period beginning on the date of grant. The shares are based on a service
condition, of which Hollywood Media recorded compensation expense of $33,977 and
$931 in the consolidated statement of operations for the twelve months ended
December 31, 2009 and 2008, respectively.   One-third of the
shares, or $136,000 of value was recorded as compensation expense in fiscal 2009
since Hollywood Media achieved three quarters of positive EBITDA in a 15-month
period.  The remaining one-third of shares, or $136,000 of value, is
recorded to compensation expense pro-rata over a 4-year period beginning on the
date of grant.  However, the vesting of the shares does not occur
until Hollywood Media’s share price exceeds $2.00 for ten consecutive trading
days.  Hollywood Media recorded compensation expense of $34,908 and $0
for the twelve months ended December 31, 2009 and 2008,
respectively.  See Note 3 – “Accounting for Share-Based Compensation”
for additional information.





(3)  On
December 22, 2008, Hollywood Media issued 50,000 shares of unrestricted common
stock to each of the Chief Executive Officer and President of Hollywood Media,
valued at $102,000 in the aggregate based on the $1.02 closing share price as of
the date of grant.  Such 100,000 shares were issued as payment of
annual stock bonuses granted by the Compensation Committee of the Board of
Directors.  See Note 3 – “Accounting for Share-Based Compensation” for
additional information.




70




(4)  On
February 8, 2008, Hollywood Media issued 96,569 shares of common stock
valued at the December 31, 2007 closing share price of $2.90, or $280,050,
for payment of Hollywood Media’s 401(k) employer match for the calendar year
2007 (see Note 2).





(5)  On
February 9, 2007, Hollywood Media issued 59,257 shares of common stock valued at
$248,876, based on the December 29, 2006 closing share price of $4.20, for
payment of Hollywood Media’s 401(k) employer match for calendar year 2006 (see
Note 2).





(6)  On
September 7, 2007, Hollywood Media issued 105,000 shares of common stock valued
at $3.83 per share, which was the closing share price, on the August 30, 2007
date of grant, in payment of $402,150 in compensatory bonuses to certain
officers of Hollywood Media associated with the August 24, 2007 sale of the
Showtimes business.







(18)
            SEGMENT
      REPORTING:





Hollywood
Media’s reportable segments are Broadway Ticketing, Ad Sales, Intellectual
Properties, and Other. The Broadway Ticketing segment sells tickets and related
hotel and restaurant packages for live theater events on Broadway, Off-Broadway
and London’s West End, both online and offline, to individual consumers, groups
and domestic and international travel professionals, including travel agencies,
tour operators and educational institutions.  This segment also
generates revenue from the sale of sponsorships and advertisements on
Broadway.com.  The Ad Sales segment sells advertising on plasma TV
displays throughout the U.K. and Ireland, on lobby display posters, movie
brochure booklets and ticket wallets distributed in cinemas, live theater and
other entertainment venues in the U.K. and on cinema and theater websites in the
U.K. and Ireland.  This segment also includes Hollywood Media’s
investment in MovieTickets.com.  The Intellectual Properties segment
owns or controls the exclusive rights to certain intellectual properties created
by best-selling authors and media celebrities, which it licenses across all
media. This segment also includes a 51% interest in Tekno Books, a book
development business.  The Other segment is comprised of payroll and
benefits for corporate and administrative personnel as well as other
corporate-wide expenses such as legal fees, audit fees, proxy costs, insurance,
centralized information technology, and includes consulting fees and other fees
and costs relating to compliance with the provisions of the Sarbanes-Oxley Act
of 2002 that require Hollywood Media to make an assessment of and report on
internal control over financial reporting.





There are
no intersegment sales or transfers.





The
following table illustrates the financial information regarding Hollywood
Media’s reportable segments.  Discontinued operations (see Note 4)
were previously included in the Data Business and Ad Sales segments and have
been removed from the table below, to illustrate financial information from
continuing operations.




71




Year Ended December 31,2009
                              
                              
                              2008
                              
                              
                              2007Net
      Revenues:Broadway
      Ticketing
                              
                              $
                              98,860,362
                              
                              
                              $
                              110,918,969
                              
                              
                              $
                              111,792,068Ad
      Sales
                              
                              
                              3,391,714
                              
                              
                              
                              4,830,760
                              
                              
                              
                              5,308,038Intellectual
      Properties
                              
                              
                              1,126,834
                              
                              
                              
                              1,308,202
                              
                              
                              
                              1,061,118Other
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -$
                              103,378,910
                              
                              
                              $
                              117,057,931
                              
                              
                              $
                              118,161,224Operating
      Income (Loss):Broadway
      Ticketing
                              
                              $
                              4,809,588
                              
                              
                              $
                              2,533,682
                              
                              
                              $
                              2,652,352Ad
      Sales
                              
                              
                              (355,892
                              )
                              
                              
                              (3,977,171
                              )
                              
                              
                              (571,818
                              )Intellectual
      Properties
                              
                              
                              (4,816
                              )
                              
                              
                              (71,372
                              )
                              
                              
                              (8,918
                              )Other
                              
                              
                              (7,646,552
                              )
                              
                              
                              (10,600,057
                              )
                              
                              
                              (10,535,791
                              )$
                              (3,197,672
                              )
                              
                              $
                              (12,114,918
                              )
                              
                              $
                              (8,464,175
                              )Capital
      Expenditures (a)Broadway
      Ticketing
                              
                              $
                              1,088,501
                              
                              
                              $
                              791,356
                              
                              
                              $
                              2,725,762Ad
      Sales
                              
                              
                              31,694
                              
                              
                              
                              208,577
                              
                              
                              
                              438,572Intellectual
      Properties
                              
                              
                              -
                              
                              
                              
                              897
                              
                              
                              
                              -Other
                              
                              
                              69,946
                              
                              
                              
                              289,609
                              
                              
                              
                              229,092$
                              1,190,141
                              
                              
                              $
                              1,290,439
                              
                              
                              $
                              3,393,426Depreciation
      andAmortization
      Expense:Broadway
      Ticketing
                              
                              $
                              846,603
                              
                              
                              $
                              876,049
                              
                              
                              $
                              351,310Ad
      Sales
                              
                              
                              354,932
                              
                              
                              
                              901,351
                              
                              
                              
                              553,237Intellectual
      Properties
                              
                              
                              299
                              
                              
                              
                              150
                              
                              
                              
                              -Other
                              
                              
                              388,764
                              
                              
                              
                              447,281
                              
                              
                              
                              473,945$
                              1,590,598
                              
                              
                              $
                              2,224,831
                              
                              
                              $
                              1,378,492





December 31,2009
                          
                          
                          2008Segment
      Assets:Broadway
      Ticketing
                          
                          $
                          30,386,157
                          
                          
                          $
                          34,958,642Ad
      Sales
                          
                          
                          16,376,839
                          
                          
                          
                          21,989,086Intellectual
      Properties
                          
                          
                          475,140
                          
                          
                          
                          543,989Other
                          
                          
                          10,368,043
                          
                          
                          
                          9,447,144$
                          57,606,179
                          
                          
                          $
                          66,938,861





(a)
            Capital
      expenditures do not include property and equipment acquired under capital
      lease obligations or through
acquisitions.




(19)
            UNAUDITED QUARTERLY
      FINANCIAL INFORMATION:




For
the quarter ended March 31, 2009


ReportedNet
      revenues
                          
                          $
                          21,313,897Loss
      from continuing operations
                          
                          $
                          (95,020
                          )Loss
      from discontinued operations
                          
                          $
                          -Net
      loss attributable to Hollywood Media Corp.
                          
                          $
                          (91,853
                          )Weighted
      average shares
                          
                          
                          30,418,516Loss
      per share - continuing operations
                          
                          $
                          -Loss
      per share  - discontinued operations
                          
                          $
                          -Net
      loss per share (1)
                          
                          $
                          -




72




For
      the quarter ended June 30, 2009ReportedNet
      revenues
                      
                      $
                      30,252,255Loss
      from continuing operations
                      
                      $
                      (4,792,490
                      )Loss
      from discontinued operations
                      
                      $
                      -Net
      loss attributable to Hollywood Media Corp.
                      
                      $
                      (4,794,716
                      )Weighted
      average shares
                      
                      
                      30,637,658Loss
      per share - continuing operations
                      
                      $
                      (0.16
                      )Income
      per share  - discontinued operations
                      
                      $
                      -Net
      loss per share (1)
                      
                      $
                      (0.16
                      )





For
      the quarter ended September 30, 2009ReportedNet
      revenues
                    
                    $
                    21,854,666Loss
      from continuing operations
                    
                    $
                    (787,718
                    )Gain
      from discontinued operations
                    
                    $
                    472,487Net
      loss attributable to Hollywood Media Corp.
                    
                    $
                    (348,993
                    )Weighted
      average shares
                    
                    
                    30,637,658Loss
      per share - continuing operations
                    
                    $
                    (0.03
                    )Income
      per share  - discontinued operations
                    
                    $
                    0.02Net
      loss per share (1)
                    
                    $
                    (0.01
                    )





For
      the quarter ended December 31, 2009ReportedNet
      revenues
                    
                    $
                    29,958,092Loss
      from continuing operations
                    
                    $
                    (562,170
                    )Gain
      from discontinued operations
                    
                    $
                    142,085Net
      loss attributable to Hollywood Media Corp.
                    
                    $
                    (384,855
                    )Weighted
      average shares
                    
                    
                    30,642,730Loss
      per share - continuing operations
                    
                    $
                    (0.02
                    )Income
      per share  - discontinued operations
                    
                    $
                    -Net
      loss per share (1)
                    
                    $
                    (0.02
                    )





For
      the quarter ended March 31, 2008ReportedNet
      revenues
                      
                      $
                      26,973,670Loss
      from continuing operations
                      
                      $
                      (2,279,303
                      )Loss
      from discontinued operations
                      
                      $
                      (845,973
                      )Net
      loss attributable to Hollywood Media Corp.
                      
                      $
                      (3,149,038
                      )Weighted
      average shares
                      
                      
                      31,854,228Loss
      per share – continuing operations
                      
                      $
                      (0.07
                      )Loss
      per share – discontinued operations
                      
                      $
                      (0.03
                      )Net
      loss per share (1)
                      
                      $
                      (0.10
                      )





For
      the quarter ended June 30, 2008ReportedNet
      revenues
                      
                      $
                      35,543,314Loss
      from continuing operations
                      
                      $
                      (17,500
                      )Loss
      from discontinued operations
                      
                      $
                      (674,802
                      )Net
      loss attributable to Hollywood Media Corp.
                      
                      $
                      (734,362
                      )Weighted
      average shares
                      
                      
                      31,964,851Loss
      per share - continuing operations
                      
                      $
                      -Loss
      per share  - discontinued operations
                      
                      $
                      (0.02
                      )Net
      loss per share (1)
                      
                      $
                      (0.02
                      )




73




For
      the quarter ended September 30, 2008ReportedNet
      revenues
                      
                      $
                      25,522,782Loss
      from continuing operations
                      
                      $
                      (1,899,156
                      )Loss
      from discontinued operations
                      
                      $
                      (4,418,692
                      )Net
      loss attributable to Hollywood Media Corp.
                      
                      $
                      (6,349,599
                      )Weighted
      average shares
                      
                      
                      32,095,554Loss
      per share - continuing operations
                      
                      $
                      (0.06
                      )Loss
      per share  - discontinued operations
                      
                      $
                      (0.14
                      )Net
      loss per share (1)
                      
                      $
                      (0.20
                      )





For
      the quarter ended December 31, 2008ReportedNet
      revenues
                    
                    $
                    29,018,165Loss
      from continuing operations
                    
                    $
                    (6,288,127
                    )Loss
      from discontinued operations
                    
                    $
                    (351,405
                    )Net
      loss attributable to Hollywood Media Corp.
                    
                    $
                    (6,623,324
                    )Weighted
      average shares
                    
                    
                    31,263,293Loss
      per share - continuing operations
                    
                    $
                    (0.20
                    )Loss
      per share  - discontinued operations
                    
                    $
                    (0.01
                    )Net
      loss per share (1)
                    
                    $
                    (0.21
                    )





(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.





(20)
            RELATED PARTY
      TRANSACTIONS:





Hollywood Media entered into a purchase
agreement with R&S Investments, LLC, an entity owned by Hollywood Media’s
Chief Executive Officer and President for the sale of the Hollywood.com
Business, effective August 21, 2008.  For additional information about
this transaction, see Note 3 “Discontinued Operations” in these Notes to the
Consolidated Financial Statements.  In connection with this sale,
Hollywood Media and the Hollywood.com Business entered into a Transition
Services Agreement (“TSA”) to provide certain temporary administrative services,
which Hollywood Media did solely to provide for an efficient and orderly
transition. Hollywood Media was reimbursed by the Hollywood.com Business for out
of pocket costs and incremental expenses incurred in providing services under
the TSA, including, but not limited to, payments of any pro rata portions of any
applicable employee salaries and benefits.  The term of the TSA was
through November 21, 2009, but Hollywood Media substantially completed the
transfer of all functions covered by such agreement by December 31,
2008.





The
related party payable at December 31, 2008 was the balance for estimated losses
to be funded by Hollywood Media pursuant to the purchase
agreement.  The funding of losses pursuant to the purchase agreement
is capped at $2,600,000, which was placed in an escrow account by Hollywood
Media at closing and is included in “Restricted cash” in our accompanying
condensed consolidated balance sheet at December 31, 2008.  The
related party payable was zero at December 31, 2009 and $2,622,438 at December
31, 2008.  As of December 31, 2009, the escrow amounts were fully
distributed and $204,422 of the earn-out gain was recorded in “Related Party
Receivable” in our accompanying consolidated balance sheets.  During
2009, Hollywood Media overall recorded $677,342 in earn-out gain.  In
addition, $61,543 of indemnification expenses related to claims by former
employees relating to the period of their employment with Hollywood Media and a
$1,227 tax expense offset the overall gain on sale of discontinued operations
recorded in the accompanying consolidated statement of operations for the year
ended December 31, 2009.  As of December 31, 2009, the Company has
$335,245 included in “Related party receivables” in our accompanying condensed
consolidated balance sheet which consisted of the $204,422 earn-out receivable
mentioned above and $18,034 of monies owed for reimbursement, as well as a
$112,789 receivable from MovieTickets.com.  As of the filing of this
Form 10-K, all earn-out and receivable amounts included in “Related Party
Receivable” were collected.




74




(21)
              PROPOSED SALE OF THE
      BROADWAY TICKETING
DIVISION





On
December 22, 2009, Hollywood Media entered into a stock purchase agreement (the
“Purchase Agreement”) with Key Brand Entertainment Inc., a Delaware corporation
(“Key Brand”), pursuant to which Key Brand will purchase Hollywood Media’s
Broadway Ticketing Division (the “Broadway Sale”) through the purchase of all of
the outstanding capital stock of Theatre Direct NY, Inc., a Delaware corporation
and a wholly-owned subsidiary of Hollywood Media, from Hollywood
Media.  The closing of the Broadway Sale is subject to certain
customary closing conditions specified in the Purchase Agreement, including but
not limited to the approval of Hollywood Media’s shareholders.





75




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





Not
applicable.





Item 9A.CONTROLS
AND PROCEDURES.





Evaluation of Disclosure Controls and
Procedures





An
evaluation was performed under the supervision and with the participation of
Hollywood Media’s management, including the Chief Executive Officer and the
Chief Accounting Officer, on the effectiveness of Hollywood Media’s disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) as of the end of the period covered by this Form 10-K. Based on that
evaluation and the material weakness described below, Hollywood Media’s
management, including the Chief Executive Officer and Chief Accounting Officer,
have concluded that Hollywood Media’s disclosure controls and procedures were
not effective, as of December 31, 2009, to ensure that information required
to be disclosed by the Company in reports the Company files or submits under the
Exchange Act is (i) recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange
Commission and (ii) accumulated and communicated to Hollywood Media’s
management, including the Chief Executive Officer and the Chief Accounting
Officer, to allow timely decisions regarding required disclosure.





Changes in Internal Control Over
Financial Reporting





In
the Company’s prior year assessment of internal control over financial reporting
as of December 31, 2008, management concluded that certain deficiencies in
Hollywood Media’s Broadway Ticketing business constituted a material weakness in
Hollywood Media’s internal control over financial reporting. During 2009,
management implemented a number of remediations to address this material
weakness, including:





•
            Continued
      to strengthen the manual processes and controls related to the support,
      review and summarization of financial information produced from the
      existing ticketing system, specifically the cash receipts, purchase and
      pay and gift certificate processes.





•
            Continued
      to develop modifications to the existing ticketing systems to automate
      certain processes related to the affiliate and groups processes necessary
      for the support, review and summarization of financial
      information.





•
            The
      Company began developing a transaction processing engine (“TPE”) to act as
      the foundation and middle-ware to the next generation ticketing system due
      to the limitations in the licensed ticketing system discussed
      below.  The TPE was designed to plug-in to a variety of software
      components, thus allowing management to license various product line
      specific packages, thereby minimizing development time on future product
      lines.  The first phase was completed in July of
      2008.  The second phase has been rolled out throughout 2009 as
      described below.




Other than as described above, there
have not been any other changes in the Company’s internal control over financial
reporting during the year ended December 31, 2009 that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.





Management’s Report on Internal
Control Over Financial Reporting





The
Company is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision
and with the participation of management, including our Chief Executive Officer
and Chief Accounting Officer, the Company conducted an evaluation of the
effectiveness of internal control over financial reporting based on the
framework in Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”).




76




All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation.





A
material weakness in internal control over financial reporting is a control
deficiency (within the meaning of the Public Company Accounting Oversight Board
(“PCAOB”) Auditing Standard No. 5), or a combination of control
deficiencies, such that there is a reasonable possibility that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. As a result of the Company’s assessment, management has determined
that the following deficiencies in the Company’s Broadway Ticketing business
constitute a material weakness in the Company’s internal control over financial
reporting as of December 31, 2009:





Insufficient
internal controls over the ticketing process of its Broadway Ticketing Division,
including inadequate systems to allow for timely processing of ticketing and
hotel and dinner voucher revenues; inadequate recording and reporting of
ticketing-related financial information; and insufficient internal controls
over ticketing inventory.





Based on
our evaluation under the framework set forth by COSO in Internal Control —
Integrated Framework, our management concluded that our internal control over
financial reporting was not effective as of December 31, 2009.





Management’s Plan to Address Material
Weakness





Management
is firmly committed to addressing the material weakness. Accordingly, the
following are the actions that the Company’s management has taken and will
continue to take in order to remediate the material weakness described
above:





During
the implementation phase of a new ticketing system, the Company identified gaps
between the design of the ticketing software and its functionality with our
Broadway Ticketing business model.  The Company developed a
transaction processing engine, as mentioned above, to address these gaps, as
well as plug-in to various product line specific packages.  Phase One
of the TPE implementation, completed in July of 2008, launched the content
management system, transaction pages and a new call center
application.  Phase Two required the bridging of various product line
specific applications to the TPE and the integration with the Company’s
accounting software package. Phase Two was rolled out on a staggered basis by
Management throughout 2009.





On
December 22, 2009, Hollywood Media entered into a stock purchase agreement (the
“Purchase Agreement”) with Key Brand Entertainment Inc., a Delaware corporation
(“Key Brand”), pursuant to which Key Brand will purchase the Broadway Ticketing
Division through the purchase of all of the outstanding capital stock of Theatre
Direct NY, Inc., a Delaware corporation and a wholly-owned subsidiary of
Hollywood Media.  If the sale of the Broadway Ticketing Division is
consummated, the Company will no longer be responsible for the remediation of
the material weakness as a result of its assessment of the effectiveness of its
internal control over financial reporting in 2009.





ITEM
9B.  OTHER
INFORMATION.





None.




77


PART
III





Item
10.  DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE.





The
information called for by this Item 10 is incorporated by reference from the
applicable portions of Hollywood Media’s Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, including from
the following portions: (i) “Election of Directors,"(ii) "Corporate
Governance,”  and (iii) “Executive Officers.”





Item
11.  EXECUTIVE
COMPENSATION.





The
information called for by this Item 11 is incorporated by reference from the
following section(s) of Hollywood Media’s Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation
14A:  “Executive Compensation.”





Item 12.SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.





The
information called for by this Item 12 is incorporated by reference from the
applicable portions of Hollywood Media’s Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, including from
the following portions:  “Security Ownership of Certain Beneficial
Owners and Management” and “Equity Compensation Plan Information.”





Item
13.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.





The
information called for by this Item 13 is incorporated by reference from the
applicable portions of Hollywood Media’s Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, including from
the following portions:  (i) “Transactions with Related Persons,” (ii)
“Review, Approval or Ratification of Transactions with Related Persons,” and
(iii) the disclosures in the "Corporate Governance" section regarding director
independence.





Item
14.  PRINCIPAL ACCOUNTING FEES
AND SERVICES.





The
information called for by this Item 14 is incorporated by reference from the
applicable portions of Hollywood Media’s Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, including from
the following portions:  “Independent Registered Public Accounting
Firm's Fees and Services” and “Audit Committee Pre-Approval Policies and
Procedures.”





78




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





The
following financial statements are included in Part II, Item 8 of this Annual
Report on Form 10-K:





·
            Report
      of Independent Registered Public Accounting
Firm





·
            Consolidated
      Balance Sheets as of December 31, 2009 and December 31,
    2008





·
              Consolidated
      Statements of Operations for the Years Ended December 31, 2009, 2008 and
      2007


·
            Consolidated
      Statements of Shareholders’ Equity for the Years Ended December 31, 2009,
      2008 and 2007





·
            Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and
      2007





·
            Notes
      to Consolidated Financial
Statements





2.
Financial Statement Schedules





Financial
statement schedules are omitted because they are not required or are not
applicable, or the required information is provided in the consolidated
financial statements or notes thereto described in Item 15(a)(1)
above.





3.
Exhibits





The
Exhibits listed below are filed as part of this Annual Report on Form
10-K.





Exhibit No.
                          
                          Description
                          
                          Location
      ofExhibit2.1
                          
                          Stock
      Purchase Agreement dated as of December 22, 2009, by and
      between
                          
                          (23)Hollywood
      Media Corp. and Key Brand Entertainment Inc.3.1
                          
                          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.
                          
                          (2)3.3
                          
                          Amended
      and Restated Bylaws of Hollywood Media Corp., dated as of September 1,
      2006.
                          
                          (3)4.1
                          
                          Form
      of Common Stock Certificate.
                          
                          (4)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.
                          
                          (5)




79




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.
                  
                  (6)4.4
                  
                  Amendment
      No. 2, dated as of September 1, 2006, to the Amended and Restated Rights
      Agreement dated as of August 23, 1996, as amended December 9, 2002,
      between Hollywood Media Corp. and American Stock Transfer & Trust
      Company.
                  
                  (3)10.1
                  
                  Compensatory
      Plans, Contracts and Arrangements:(a)  
      1993 Stock Option Plan, as amended effective October 1,
    1999.
                  
                  (7)(b)  
      Directors Stock Option Plan, as amended effective May 1,
    2003.
                  
                  (8)(c)  
      2000 Stock Incentive Plan, as amended October 30, 2003.
                  
                  (9)(d)  
      2004 Stock Incentive Plan.
                  
                  (10)(e)  Hollywood
      Media Corp. 401(k) Retirement Savings Plan, dated as
      of  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.
                  
                  (11)(f)  
      Amendment to Hollywood Media Corp. 401(k) Retirement Savings Plan, dated
      June 16, 2005.
                  
                  (12)(g)  
      Amended and Restated Employment Agreement, dated as of December 22, 2008,
      by and between Hollywood Media Corp. and Mitchell
    Rubenstein.
                  
                  (13)(h)  
      Amended and Restated Employment Agreement, dated as of December 22, 2008,
      by and between Hollywood Media Corp. and Laurie S.
Silvers.
                  
                  (13)(i)   
      Amended and Restated Employment Agreement, dated as of August 9, 2006, by
      and between Hollywood Media Corp. and Scott Gomez.
                  
                  (14)(j) 
        Amendment to Amended and Restated Employment Agreement, dated as
      of
                  
                  (23)December 23, 2009, by and between Hollywood Media Corp.
andMitchell Rubenstein.(k)  
      Amendment to Amended and Restated Employment Agreement, dated as
      of
                  
                  (23)December 23, 2009, by and between Hollywood Media Corp.
andLaurie S. Silvers.10.2
                  
                  Amended
      and Restated Partnership Agreement dated as of November 21, 2002 between
      Hollywood Media Corp. and Dr. Martin H. Greenberg.
                  
                  (15)10.3
                  
                  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.
                  
                  (16)




80




10.4
                    
                    Agreement
      for the Sale and Purchase of CinemasOnline Limited, dated November 22,
      2005, by and between Mitchell Clifford Cartwright and Cinemasource UK
      Limited.
                    
                    (16)10.5
                    
                    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.
                    
                    (16)10.6
                    
                    Registration
      Rights Agreement dated November 23, 2005 by and among Hollywood Media
      Corp. and the investors signatory thereto.
                    
                    (17)10.7
                    
                    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.
                    
                    (18)10.8
                    
                    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.
                    
                    (18)10.9
                    
                    Stock
      Purchase Agreement, dated as of August 25, 2006, by and between The New
      York Times Company and Hollywood Media Corp.
                    
                    (19)10.10
                    
                    Asset
      Purchase Agreement, dated as of February 1, 2007, by and among Theatre
      Direct NY, Inc., Showtix LLC and each of the members of Showtix
      LLC.
                    
                    (20)10.11
                    
                    Asset
      Purchase Agreement, dated as of August 24, 2007, by and among Hollywood
      Media Corp., Showtimes.com, Inc. Brett West and West World Media,
      LLC.
                    
                    (21)10.12
                    
                    Purchase
      Agreement dated as of August 21, 2008, between Hollywood Media Corp.
      and R&S Investments, LLC.
                    
                    (22)10.13
                    
                    Transition
      Services Agreement dated as of August 21, 2008 between Hollywood
      Media Corp., Hollywood.com, LLC and Totally Hollywood TV,
    LLC.
                    
                    (22)10.14
                    
                    Amendment
      to Purchase Agreement dated September 30, 2009 between
                    
                    (24)Hollywood
      Media Corp. and R&S Investments, LLC.10.15
                    
                    Escrow
      Agreement, dated as of December 22, 2009, by and between
                    
                    (23)Hollywood
      Media Corp., Key Brand Entertainment Inc. andThe
      Bank of New York Mellon.21.1
                    
                    Subsidiaries
      of Hollywood Media.
                    
                    (25)23.1
                    
                    Consent
      of Kaufman, Rossin & Co., P.A. Independent Registered Public
      Accounting Firm.
                    
                    *31.1
                    
                    Certification
      of Chief Executive Officer (Section 302).
                    
                    *31.2
                    
                    Certification
      of Chief Accounting Officer (Principal financial and accounting officer)
      (Section 302).
                    
                    *32.1
                    
                    Certification
      of Chief Executive Officer (Section 906).
                    
                    *





81





32.2
                
                Certification
      of Chief Accounting Officer (Principal financial and accounting officer)
      (Section 906).
                
                *







*Filed as
an exhibit to this Form 10-K





(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 Quarterly
      Report on Form 10-Q for the quarter ended September 30,
    2004.(3)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Current Report
      on Form 8-K filed on September 5, 2006.(4)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Registration
      Statement on Form SB-2 (No. 33-69294).(5)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Current Report
      on Form 8-K filed on October 20, 1999.(6)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Current Report
      on Form 8-K filed on December 10, 2002.(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 Appendix B to Hollywood Media’s Proxy Statement filed on
      November 13, 2003 for its 2003 Annual Meeting of
    Shareholders.(9)
                Incorporated
      by reference from Appendix C to Hollywood Media’s Proxy Statement filed on
      November 13, 2003 for its 2003 Annual Meeting of
    Shareholders.(10)
                Incorporated
      by reference from Appendix B to Hollywood Media’s Proxy Statement filed on
      November 4, 2004 for its 2004 Annual Meeting of
    Shareholders.(11)
                Incorporated
      by reference from the exhibits filed with Hollywood Media’s Current Report
      on Form 8-K filed on September 17, 2004.(12)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Quarterly
      Report on Form 10-Q for the quarter ended June 30,
2005.(13)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Current Report
      on Form 8-K filed on December 22, 2008.(14)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Quarterly
      Report on Form10-Q for the quarter ended June 30, 2006.(15)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Annual Report
      on Form 10-K for the year ended December 31, 2002.(16)
                Incorporated
      by reference from the exhibits filed with Hollywood Media’s Current Report
      on Form 8-K filed on November 28, 2005.(17)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Registration
      Statement on Form S-3 (No. 333-130903).(18)
                Incorporated
      by reference from the exhibits filed with Hollywood Media’s Current Report
      on Form 8-K filed on March 16, 2006.(19)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Current Report
      on Form 8-K filed on August 28, 2006.(20)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Current Report
      on Form 8-K filed on February 6, 2007.(21)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Form 8-K filed
      on August 30, 2007.(22)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Form 8-K filed
      on August 27, 2008.(23)
                Incorporated
      by reference from the exhibit filed with Hollywood Media Corp’s Form 8-K
      filed on December
      29, 2009.(24)
                Incorporated
      by reference from the exhibit filed with Hollywood Media Corp’s Form 8-K
      filed on October
      5, 2009.(25)
                Incorporated
      by reference from the exhibit filed with Hollywood Media’s Annual Report
      on Form 10-K for the year ended December 31,
  2008.




82




SIGNATURES





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





HOLLYWOOD
      MEDIA CORP.Date:  March
      19, 2010
                By:
                /s/ Mitchell RubensteinMitchell
      Rubenstein, Chairman of the Boardand
      Chief Executive Officer





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





Date:
      March 19, 2010
              
              /s/ Mitchell RubensteinMitchell
      Rubenstein, Chairman of the Board and
                Chief
      Executive Officer (Principal executiveofficer)Date:
      March 19, 2010
              
              /s/ Laurie S. SilversLaurie
      S. Silvers, Vice Chairman of the Board,President
      and SecretaryDate:
      March 19, 2010
              
              /s/ Scott GomezScott
      Gomez, Chief Accounting Officer (Principalfinancial and accounting
      officer)Date:
      March 19, 2010
              
              /s/ Harry T. HoffmanHarry
      T. Hoffman, DirectorDate:
      March 19, 2010
              
              /s/ Robert EpsteinRobert
      Epstein, DirectorDate:
      March 19, 2010
              
              /s/ Stephen GansStephen
      Gans, DirectorDate:
      March 19, 2010
              
              /s/ Spencer WaxmanSpencer
      Waxman, Director




83