What changed in this filing

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Item 1. Financial Statements

2013-10-29 compared with 2013-08-14 · 679 added, 602 removed, 1110 unchanged (54% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS:

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Common stock, $.01 par value, 100,000,000 shares authorized;

22,640,966 and

23,162,466 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively

22,640,966 and 23,162,466 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively

Additional paid-in capital

5 unchanged sentences

The accompanying notes to condensed consolidated

financial statements

are an integral part of these condensed

consolidated balance sheets.

financial statements are an integral part of these condensed consolidated balance sheets.

HOLLYWOOD MEDIA CORP.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF

Six Months Ended June 30,

Three Months Ended June 30,

Nine Months Ended September 30,

Three Months Ended September 30,

OPERATING COSTS AND EXPENSES

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Loss from operations

(LOSSES) EARNINGS OF UNCONSOLIDATED INVESTEES

OTHER INCOME (EXPENSE)

EARNINGS (LOSSES) OF UNCONSOLIDATED INVESTEES

Equity in earnings (losses) of unconsolidated investees

Impairment loss

Total equity in earnings (losses) of unconsolidated investees

Interest, net

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Total other income

Loss from continuing operations before income taxes

Income tax (expense)

Loss from continuing operations

Income (loss) from continuing operations before income taxes

Income tax (expense) benefit

Income (loss) from continuing operations

Gain on sale of discontinued operations, net of income taxes

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Income from discontinued operations

Basic and diluted (loss) income per common share

Net income (loss)

$ (1,425,101 )

Basic and diluted income (loss) per common share

Continuing operations

Discontinued operations

Total basic and diluted net loss per share

Total basic and diluted net income (loss) per share

Weighted average common and common equivalent shares outstanding –

basic and diluted

The accompanying notes to condensed consolidated financial statements are an integral part of

these condensed consolidated statements of operations.

The accompanying notes to condensed consolidated

financial statements are an integral part of these condensed consolidated statements of operations.

HOLLYWOOD MEDIA CORP.

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CONDENSED CONSOLIDATED STATEMENTS OF

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss)

$ (1,425,101 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Income from discontinued operations

Income tax benefit

Depreciation and amortization

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Gain on sale of business

Gain on prepayment of Loan and redemption of Warrant

Change in fair value of derivative liabilities

Goodwill impairment

Change in fair value of warrant

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Cash received on notes receivable

Cash received on Warrant

Net proceeds from sale of assets and businesses

Net cash provided by investing activities –

continuing operations

Net cash provided by investing activities –

discontinued operations

Net cash provided by investing activities

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Net cash used in financing activities

NET DECREASE IN CASH AND CASH EQUIVALENTS

NET INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, beginning of period

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The accompanying notes to condensed consolidated

financial statements

are an integral part of these condensed consolidated statements of cash flows.

financial statements are an integral part of these condensed consolidated statements of cash flows.

HOLLYWOOD MEDIA CORP.

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position, results of operations and cash flows.

The results of operations for the six and three months ended June 30, 2013 and

the cash flows for the six months ended June 30, 2013 are not necessarily indicative of the results of operations or cash flows

for the remainder of 2013.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction

with the audited consolidated financial statements and notes thereto included in Hollywood Media’s Annual Report on Form

10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission.

The results of operations for the nine and three months ended September 30, 2013

and the cash flows for the nine months ended September 30, 2013 are not necessarily indicative of the results of operations or

cash flows for the remainder of 2013.

The accompanying unaudited condensed consolidated financial statements should be read in

conjunction with the audited consolidated financial statements and notes thereto included in Hollywood Media’s Annual Report

on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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Partners and MovieTickets.com, respectively, are accounted for under the equity method of accounting.

Loss per Common Share

Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) Topic No.

260, “Earnings Per Share”

(ASC 260), requires

companies to present basic and diluted earnings per share (“EPS”).

Loss per common share is computed by dividing net

loss attributable to Hollywood Media Corp.

(the numerator) by the weighted average number of common shares outstanding (the denominator)

for the period presented.

Income (Loss) per Common Share

Financial Accounting

Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No.

260, “Earnings Per

(ASC 260), requires companies to present basic and diluted earnings per share (“EPS”).

Income (loss)

per common share is computed by dividing net income (loss) attributable to Hollywood Media Corp.

(the numerator) by the weighted

average number of common shares outstanding (the denominator) for the period presented.

The weighted average

number of common shares issuable upon conversion of convertible securities and upon exercise of outstanding options and warrants

totaled 75,000 shares for each of the six and three months ended June 30, 2013 and such shares were excluded from the calculation

of basic and diluted loss per share for the six and three months ended June 30, 2013 because their impact was anti-dilutive to

the loss per share from continuing operations.

Unvested shares are not included in the basic calculation until vesting occurs and

are not included in the diluted calculation because they are anti-dilutive.

There were no unvested shares as of June 30, 2013 and

2012, respectively.

For the Six Months

totaled 75,000 shares for each of the nine and three months ended September 30, 2013 and such shares were excluded from the calculation

of basic and diluted income (loss) per share for the nine and three months ended September 30, 2013 because their impact was anti-dilutive

to the income (loss) per share from continuing operations.

Unvested shares are not included in the basic calculation until vesting

occurs and are not included in the diluted calculation because they are anti-dilutive.

There were no unvested shares as of September

30, 2013 and 2012, respectively.

For the Nine Months

For the Three Months

Ended June 30,

Ended September 30,

Basic weighted average shares outstanding

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Dilutive weighted average shares outstanding

Options to purchase shares of Common Stock and other stock-based awards outstanding which are not included in the calculation of diluted income (loss) per share because their impact is anti-dilutive

Options to purchase shares of Common Stock and

other stock-based awards outstanding which are

not included in the calculation of diluted income

(loss) per share because their impact is

anti-dilutive

Segment Information

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The Company does not hold any derivative

instruments that reduce risk associated with hedging exposure, accordingly the Company has not designated any of its derivatives

instruments that reduce risk associated with hedging exposure, accordingly the Company has not designated any of its derivative

liability financial instruments as hedge instruments.

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As of October 5, 2012, pursuant to the Credit Agreement, interest

at a rate of 12% per annum and principal on the $7,000,000 portion of the Loan will be amortized over the term of the Credit Agreement

at a rate of 12% per annum and principal on the $7,000,000 portion of the Loan was amortized over the term of the Credit Agreement

in equal quarterly installments.

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the Loan, the principal amount of the Loan due Hollywood Media by Key Brand was $15,500,000 as of October 5, 2012.

Hollywood Media initially

recorded the Second $7 Million Earnout at a fair value of $4,500,000, which reflected a $2,500,000 discount.

Hollywood Media

initially recorded the Second $7 Million Earnout at a fair value of $4,500,000, which reflects a $2,500,000 discount.

Hollywood Media will amortize the $2,500,000 discount under the effective interest method.

Amortization under the

effective interest method is included in "Accretion of discount, net of allowance for uncollectability"

accompanying unaudited condensed consolidated statements of operations.

On December 31, 2012, Hollywood Media received

a scheduled payment under the Loan in the amount of $1,002,128, which included a principal payment of $538,462, an interest

payment of $203,000 on the $7,000,000 portion of the Loan and $260,666 of interest on the $8,500,000 portion of the

The principal payment of $538,462, combined with accretion of discount of $288,585, reduced the value of the

$7,000,000 portion of the Loan from $4,500,000 to $4,250,123.

Accretion of discount, net of the reversal of previously

recorded allowance for bad debt, was $1,429,315 on the $8,500,000 portion of the Loan during the three months ended December

For the six months ended June 30, 2013, Hollywood Media received scheduled payments under the Loan in the amount of

$2,248,977, which included principal payments of $1,292,308, interest payments of $401,100 on the $7,000,000 portion of the

Loan and $555,569 of interest on the $8,500,000 portion of the Loan.

The principal payments of $1,292,308, combined

with accretion of discount of $666,126, reduced the value of the $7,000,000 portion of the Loan from $4,250,123 at December

31, 2012 to $3,623,941 at June 30, 2013.

The uncollected face amount (principal) of the $7,000,000 portion of the Loan was $5,169,231 and $6,461,538

at June 30, 2013 and December 31, 2012, respectively.

For the three months

ended June 30, 2013, Hollywood Media received a scheduled payment under the Loan in the amount of $1,116,573, which included a

principal payment of $646,154, an interest payment of $191,100 on the $7,000,000 portion of the Loan and $279,319 of interest on

the $8,500,000 portion of the Loan.

The principal payment of $646,154, combined with accretion of discount of $322,800, reduced

the value of the $7,000,000 portion of the Loan from $4,250,123 at December 31, 2012 to $3,623,941 at June 30, 2013.

of discount was $584,253 and $317,094 on the $8,500,000 portion of the Loan during the six and three months ended June 30,

2013, respectively.

amortized the $2,500,000 discount under the effective interest method through August 8, 2013 at which time the Loan was paid in

full (as described below).

Amortization under the effective interest method is included in "Accretion of discount, net

of allowance for uncollectability"

in the accompanying unaudited condensed consolidated statements of operations.

On April 22, 2012,

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and conditions of such senior secured credit agreement remaining substantially the same), (iv) subject to the terms and conditions

of the Terido Intercreditor Agreement described below, the net proceeds from any indebtedness incurred by Key Brand that is not

of the Terido Intercreditor Agreement described below, the net proceeds from any indebtedness incurred by Key Brand that was not

otherwise permitted under Key Brand’s amended and restated senior secured credit agreement (other than from the proceeds

of a refinancing of such amended and restated senior secured credit agreement) will be used to prepay the Loan, (v) the prior consent

of Hollywood Media is required for any amendment to Key Brand’s amended and restated senior secured credit agreement that

would be adverse to Hollywood Media in any material respect, and (vi) Key Brand will provide Hollywood Media with additional and

more frequent financial reporting.

Except as described in this paragraph, the terms and conditions of the Credit Agreement and

the Loan remain substantially the same.

of a refinancing of such amended and restated senior secured credit agreement) was to be used to prepay the Loan, (v) the prior

consent of Hollywood Media was required for any amendment to Key Brand’s amended and restated senior secured credit agreement

that would have been adverse to Hollywood Media in any material respect, and (vi) Key Brand was to provide Hollywood Media with

additional and more frequent financial reporting.

Except as described in this paragraph, the terms and conditions of the Credit

Agreement and the Loan remained substantially the same.

In connection with

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and Key Brand entered into that certain Subordination and Intercreditor Agreement, dated December 31, 2012 (the “Terido Intercreditor

Agreement”), with Terido LLP, as administrative agent for the senior secured lenders of Key Brand, which defines the rights

Agreement”), with Terido LLP, as administrative agent for the senior secured lenders of Key Brand, which defined the rights

and obligations of the senior secured lenders and Hollywood Media as subordinated lender, including, without limitation, the rights

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The terms and conditions of the Terido Intercreditor

Agreement are substantially similar to the terms and conditions of the prior JPM Intercreditor Agreement.

Agreement were substantially similar to the terms and conditions of the prior JPM Intercreditor Agreement.

On December 31, 2012,

in connection with the Second Credit Agreement Amendment, the Warrant was amended to (i) shorten the earliest date that Hollywood

Media can put the Warrant to Theatre Direct from December 16, 2017 to June 30, 2015, (ii) increase the minimum price that Hollywood

Media can put the Warrant to Theatre Direct from $1,000,000 to $3,000,000, and (iii) increase the minimum price that Theatre Direct

can redeem the Warrant from Hollywood Media from $1,000,000 to $3,000,000.

Except as described in the preceding sentence, the terms

and conditions of the Warrant remain substantially the same.

The Warrant is marked to market each reporting period to reflect changes

in fair value.

The fair value of the Warrant was $750,000 and $700,000 on June 30, 2013 and December 31, 2012, respectively.

Media could put the Warrant to Theatre Direct from December 16, 2017 to June 30, 2015, (ii) increase the minimum price that Hollywood

Media could put the Warrant to Theatre Direct from $1,000,000 to $3,000,000, and (iii) increase the minimum price that Theatre

Direct could redeem the Warrant from Hollywood Media from $1,000,000 to $3,000,000.

Except as described in the preceding sentence,

the terms and conditions of the Warrant remained substantially the same.

Prior to the redemption of the Warrant (described below),

the Warrant was marked to market each reporting period to reflect changes in fair value.

The fair value of the Warrant was $700,000

on December 31, 2012.

As described below, on August 8, 2013, Hollywood Media received a total of $16,611,738 consisting of $13,861,738

from the prepayment of the Loan and $2,750,000 for the redemption in full of the Warrant.

In connection with

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costs and expenses incurred in documenting such agreements.

On August 8, 2013 Key Brand paid Hollywood Media a total of $16,611,738 consisting of $13,861,738 from

the prepayment of the Loan and $2,750,000 from the redemption of the Warrant.

For additional information about this transaction,

see Note 10 “Subsequent Events.”

On December 31, 2012,

Hollywood Media received a scheduled payment under the Loan in the amount of $1,002,128, which included a principal payment of

$538,462, an interest payment of $203,000 on the $7,000,000 portion of the Loan and $260,666 of interest on the $8,500,000 portion

The principal payment of $538,462, combined with accretion of discount of $288,585, reduced the value of the $7,000,000

portion of the Loan from $4,500,000 to $4,250,123 as of December 31, 2012.

Accretion of discount, net of the reversal of previously

recorded allowance for bad debt, was $1,429,315 on the $8,500,000 portion of the Loan during the three months ended December 31,

For the six months ended June 30, 2013, Hollywood Media received scheduled payments under the Loan in the amount of $2,248,977,

which included principal payments of $1,292,308, interest payments of $401,100 on the $7,000,000 portion of the Loan and $555,569

of interest on the $8,500,000 portion of the Loan.

The principal payments of $1,292,308, combined with accretion of discount of

$666,126, reduced the value of the $7,000,000 portion of the Loan from $4,250,123 at December 31, 2012 to $3,623,941 at June 30,

The uncollected face amount (principal) of the $7,000,000 portion of the Loan was $6,461,538 at December 31, 2012.

of discount was $702,608 and $118,361 on the $8,500,000 portion of the Loan during the nine and three months ended September 30,

2013, respectively.

On August 8, 2013,

Hollywood Media entered into the transaction agreement (the “Transaction Agreement”) by and among Key Brand, Theatre

Direct, and Hollywood Media for the prepayment by Key Brand in full of the amount owed to Hollywood Media pursuant to the Loan

under the Credit Agreement.

Pursuant to the Transaction Agreement, Key Brand paid to Hollywood Media on August 8, 2013 in cash

the amount of $13,861,738, which constituted the outstanding principal plus accrued interest through August 8, 2013 of the Loan.

The Loan was scheduled to mature on June 30, 2015.

In addition, pursuant

to the Transaction Agreement, Theatre Direct redeemed the Warrant.

The redemption price for the Warrant was $2,750,000 and was

paid on August 8, 2013 to Hollywood Media.

The Warrant provided, among other things, that Hollywood Media could sell the Warrant

to Theatre Direct for a floor amount of $3,000,000 beginning on June 30, 2015.

Accordingly, Hollywood

Media received on August 8, 2013 a total of $16,611,738 consisting of $13,861,738 from the prepayment of the Loan and $2,750,000

from the redemption of the Warrant.

The gain of $9,243,789 resulting from the Transaction Agreement is included in “Other,

in the accompanying unaudited condensed consolidated statements of operations for the nine and three months ended September

30, 2013, respectively.

Hollywood.com Business

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Media at closing and potential earnout payments totaling $9,000,000, of which $1,892,692 had been paid as of August 2012.

Media recognized $326,758 and $129,241 in earnout gain during the six and three months ended June 30, 2012, which is included in

“Gain on sale of discontinued operations, net of income taxes”

Media recognized $460,037 and $155,538 in earnout gain during the nine and three months ended September 30, 2012, which is included

in “Gain on sale of discontinued operations, net of income taxes”

in our accompanying unaudited condensed consolidated

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On August 28, 2012,

2012, (1) Hollywood Media and R&S Investments entered into an Agreement (the “R&S Agreement”) regarding

the R&S Purchase Agreement, (2) Hollywood Media, Mr.

(1) Hollywood Media and R&S Investments entered into an Agreement (the “R&S Agreement”) regarding the

R&S Purchase Agreement, (2) Hollywood Media, Mr.

Rubenstein and Ms.

Silvers entered into a letter agreement regarding the

R&S Agreement (the “Rubenstein Silvers Letter Agreement”), and (3) R&S Investments provided Hollywood Media

with a letter regarding a contingent additional payment (the “R&S Letter”).

As described below, the R&S

Agreement and the Rubenstein Silvers Letter Agreement and the transactions contemplated by the R&S Agreement and the Rubenstein

Silvers Letter Agreement were approved by a Special Committee of Hollywood Media’s Board of Directors comprised solely of

independent directors (the “Special Committee”).

Silvers entered into a letter agreement regarding the R&S

Agreement (the “Rubenstein Silvers Letter Agreement”), and (3) R&S Investments provided Hollywood Media with a

letter regarding a contingent additional payment (the “R&S Letter”).

As described below, the R&S Agreement

and the Rubenstein Silvers Letter Agreement and the transactions contemplated by the R&S Agreement and the Rubenstein Silvers

Letter Agreement were approved by a Special Committee of Hollywood Media’s Board of Directors comprised solely of independent

directors (the “Special Committee”).

Pursuant to the R&S

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Purchase Agreement

May 1, 2012, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Orchard Advertising

Limited (“Buyer”), pursuant to which the Company sold, and Buyer purchased, the entire issued share capital of Cinemasource

UK Limited (the “Purchased Shares”) which business was part of the Company’s Ad Sales division and included UK

Theatres Online Limited, Spring Leisure Limited, Cinemasonline Limited and WWW.CO.UK Limited.

of the closing of the transactions contemplated by the Share Purchase Agreement, (1) Jeffrey Spector, a director of Buyer, was

also (i) a director of all four subsidiaries of Cinemasource UK Limited (UK Theatres Online Limited, Spring Leisure Limited, Cinemasonline

Limited and WWW.CO.UK Limited) and (ii) an employee of one of the subsidiaries of Cinemasource UK Limited (UK Theatres Online)

and (2) Janette Erskine, a director of Buyer, was also (i) a director of three subsidiaries of Cinemasource UK Limited (UK Theatres

Online Limited, Spring Leisure Limited and Cinemasonline Limited) and (ii) an employee of one of the subsidiaries of Cinemasource

UK Limited (UK Theatres Online).

On May 1, 2012, the

Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Orchard Advertising Limited (“Buyer”),

pursuant to which the Company sold, and Buyer purchased, the entire issued share capital of Cinemasource UK Limited (the “Purchased

Shares”) which business was part of the Company’s Ad Sales division and included UK Theatres Online Limited, Spring

Leisure Limited, Cinemasonline Limited and WWW.CO.UK Limited.

As of the closing of

the transactions contemplated by the Share Purchase Agreement, (1) Jeffrey Spector, a director of Buyer, was also (i) a director

of all four subsidiaries of Cinemasource UK Limited (UK Theatres Online Limited, Spring Leisure Limited, Cinemasonline Limited

and WWW.CO.UK Limited) and (ii) an employee of one of the subsidiaries of Cinemasource UK Limited (UK Theatres Online) and (2)

Janette Erskine, a director of Buyer, was also (i) a director of three subsidiaries of Cinemasource UK Limited (UK Theatres Online

Limited, Spring Leisure Limited and Cinemasonline Limited) and (ii) an employee of one of the subsidiaries of Cinemasource UK Limited

(UK Theatres Online).

Pursuant to the Share

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at 16.5% per annum on this non-interest bearing loan resulting in a discounted amount of $168,014 which was included in the total

gain on sale attributable to the sale of Cinemasource UK Limited of $649,215 for the six months ended June 30, 2012.

portion of the discounted amount of the non-interest bearing loan is included in “Notes receivable, current”

long-term portion of the non-interest bearing loan is included in “Notes receivable, less current portion”

in our accompanying

unaudited condensed consolidated balance sheets.

gain on sale attributable to the sale of Cinemasource UK Limited of $649,215 for the nine months ended September 30, 2012.

current portion of the discounted amount of the non-interest bearing loan is included in “Notes receivable, current”

and the long-term portion of the non-interest bearing loan is included in “Notes receivable, less current portion”

in our accompanying unaudited condensed consolidated balance sheets.

The purchase price

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Summarized results of discontinued operations include the operating loss from the Cinemasource UK Limited Business and

through their respective dates of disposition, for the six and three months ended June 30, 2013 and 2012, respectively.

Six Months Ended June 30,

Three Months Ended June 30,

Net Revenues:

Gain on sale of discontinued operations, net of income taxes

Income from discontinued operations

through their respective dates of disposition, for the nine and three months ended September 30, 2013 and 2012, respectively.

Months Ended September 30,

Gain on sale of discontinued operations

Income tax expense

on sale of discontinued operations, net of income taxes

Income from discontinued

from discontinued operations

(4) STOCK REPURCHASE PROGRAM:

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under the repurchase program for $749,966 and $16,063, respectively.

No shares were repurchased during the first and second

quarter of 2012.

For additional information relating to the stock repurchase program, see Part II, Item 2 of this Quarterly Report

on Form 10-Q and “Liquidity and Capital Resources”

in Part I, Item 2 of this Quarterly Report on Form 10-Q.

30, 2013, the maximum approximate dollar value of shares that could be purchased under the Repurchase Program was $1,907,232 (calculated

by subtracting (i) the total paid for all shares purchased under the Repurchase Program from inception through June 30, 2013 which

was $8,092,768 from (ii) the $10,000,000 potential maximum dollar value of repurchases approved under the life of the Repurchase

No shares were repurchased during the third quarter of

No shares were repurchased during the first three quarters of 2012.

For additional information relating to the stock repurchase

program, see Part II, Item 2 of this Quarterly Report on Form 10-Q and “Liquidity and Capital Resources”

Item 2 of this Quarterly Report on Form 10-Q.

As of September 30, 2013, the maximum approximate dollar value of shares that could

be purchased under the Repurchase Program was $1,907,232 (calculated by subtracting (i) the total paid for all shares purchased

under the Repurchase Program from inception through September 30, 2013 which was $8,092,768 from (ii) the $10,000,000 potential

maximum dollar value of repurchases approved under the life of the Repurchase Program).

(5) FAIR VALUE MEASUREMENTS:

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of the derivative liability.

At June 30, 2013 and December 31, 2012, the fair value of the derivative liability was $60,000.

Warrant in Theatre Direct

At September 30, 2013 and December 31, 2012, the fair value of the derivative liability was $60,000.

Warrant in Theatre

In conjunction with

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as referenced below).

The Warrant is revalued on a recurring basis.

On December 31, 2012, in connection with

the Second Credit Agreement Amendment, the Warrant was amended to (i) shorten the earliest date that Hollywood Media can put the

Warrant to Theatre Direct from December 16, 2017 to June 30, 2015, (ii) increase the minimum price that Hollywood

Media can put the Warrant to Theatre Direct from $1,000,000 to $3,000,000, and (iii) increase the minimum price that Theatre Direct

can redeem the Warrant from Hollywood Media from $1,000,000 to $3,000,000.

After estimating future cash flows adjusted for

risk factors it was determined that the fair value of the Warrant was $750,000 and $700,000 at June 30, 2013 and December 31, 2012,

respectively.

The estimate of fair value of the Warrant employed using a multiples approach and discounted cash flow analysis and assumed the

Warrant was to be monetized as of the valuation date.

The value of the Warrant was then adjusted to reflect a range of outcomes

and assigned probability weights, and the Warrant's put and call rights of Hollywood Media and Key Brand.

The key assumptions

used to determine the fair value of the Warrant during fiscal 2013 and fiscal 2012 were:

implied multiples used in the business

enterprise value income and market approaches ranging from 3.25 to 4.0;

and a discount rate of 25%, based on the Company’s

best estimate of the equity cost of capital adjusted for risks associated with the Warrant.

Certain assets such

as long-lived assets and goodwill are measured at fair value on a nonrecurring basis;

that is, the assets and liabilities are not

measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances such as impairment

In those circumstances, fair value measurements are principally based upon unobservable inputs (Level 3 of the fair value

hierarchy) using the Company’s own assumptions in determining fair value.

Prior to the redemption of the Warrant, the Warrant was revalued on a recurring basis.

On December 31, 2012,

in connection with the Second Credit Agreement Amendment, the Warrant was amended to (i) shorten the earliest date that Hollywood

Media can put the Warrant to Theatre Direct from December 16, 2017 to June 30, 2015, (ii) increase the minimum

price that Hollywood Media can put the Warrant to Theatre Direct from $1,000,000 to $3,000,000, and (iii) increase the minimum

price that Theatre Direct can redeem the Warrant from Hollywood Media from $1,000,000 to $3,000,000.

After estimating future

cash flows adjusted for risk factors it was determined that the fair value of the Warrant was $700,000 at December 31, 2012.

On August 8, 2013,

pursuant to the Transaction Agreement, Theatre Direct redeemed the Warrant.

The redemption price for the Warrant was $2,750,000

and was paid on August 8, 2013 to Hollywood Media.

Pursuant to the Transaction Agreement, on August 8, 2013, Hollywood Media received

a total of $16,611,738 consisting of $13,861,738 from the prepayment of the Loan and $2,750,000 from the redemption in full of

For additional information about this transaction, see Note 3 “Discontinued Operations.”

The estimate of fair

value of the Warrant employed using a multiples approach and discounted cash flow analysis and assumed the Warrant was to be monetized

as of the valuation date.

The value of the Warrant was then adjusted to reflect a range of outcomes and assigned probability

weights, and the Warrant's put and call rights of Hollywood Media and Key Brand.

Prior to the redemption of the Warrant,

the key assumptions used to determine the fair value of the Warrant during fiscal 2013 and fiscal 2012 were:

implied multiples

used in the business enterprise value income and market approaches ranging from 3.25 to 4.0;

and a discount rate of 25%, based

on the Company’s best estimate of the equity cost of capital adjusted for risks associated with the Warrant.

Certain assets such as long-lived assets

and goodwill are measured at fair value on a nonrecurring basis;

that is, the assets and liabilities are not measured at fair value

on an ongoing basis but are subject to fair value adjustments in certain circumstances such as impairment review.

The Company's

goodwill is tested for impairment on an annual basis, on the first day of the fourth fiscal quarter or more often if an event occurs

or circumstances change that would indicate a potential impairment exists.

In those circumstances, fair value measurements are

principally based upon unobservable inputs (Level 3 of the fair value hierarchy) using the Company’s own assumptions in determining

The following table

presents the Company’s derivative liabilities and Warrant on a recurring basis and the Company’s goodwill on a non-recurring

basis within the fair value hierarchy utilized to measure fair value as of June 30, 2013:

presents the Company’s derivative liabilities on a recurring basis and the Company’s goodwill on a non-recurring basis

within the fair value hierarchy utilized to measure fair value as of September 30, 2013:

Derivative liabilities

There were no transfers between the levels

of the fair value hierarchy during the quarter ended June 30, 2013.

of the fair value hierarchy during the quarter ended September 30, 2013.

The following table presents a reconciliation

of the compensation derivative liabilities measured at fair value on a recurring basis using significant unobservable input (Level

3) from December 31, 2012 to June 30, 2013:

3) from December 31, 2012 to September 30, 2013:

Balance at December 31, 2012

Change in fair value included in earnings

Balance at June 30, 2013

Balance at September 30, 2013

The following table presents a reconciliation of the Warrant

measured at fair value on a recurring basis using significant unobservable input (Level 3) from December 31, 2012 to June 30, 2013:

measured at fair value on a recurring basis using significant unobservable input (Level 3) from December 31, 2012 to September

Balance at December 31, 2012

Change in fair value included in "Other, net"

Balance at June 30, 2013

On August 8, 2013 Key Brand paid Hollywood Media a total of $16,611,738 consisting of $13,861,738 from

the prepayment of the Loan and $2,750,000 from the redemption of the Warrant.

For additional information about this transaction,

see Note 10 “Subsequent Events.”

Gain on redemption of Warrant included in "Other, net"

Warrant redemption

Balance at September 30, 2013

On August 8, 2013,

the Warrant was redeemed in full for $2,750,000.

For additional information about the redemption of the Warrant, see Note 3 “Discontinued

Operations”

to these unaudited condensed consolidated financial statements.

(6) SEGMENT REPORTING:

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sale of Cinemasource UK Limited.

The Intellectual Properties segment owns or controls the exclusive rights to certain intellectual properties

created by best-selling authors and media celebrities, which it seeks to license across all media.

This segment also includes Tekno

Books, a book development business.

The Intellectual Properties

segment owns or controls the exclusive rights to certain intellectual properties created by best-selling authors and media celebrities,

which it seeks to license across all media.

This segment also includes Tekno Books, a book development business.

The Other segment is

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sales or transfers.

As of June 30,

As of September 30,

2013, the Ad Sales segment consists of the Company’s investment in MovieTickets.com.

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regarding Hollywood Media’s reportable segments.

Six Months Ended June 30,

Three Months Ended June 30,

Nine Months Ended September 30,

Three Months Ended September 30,

Net Revenues:

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Intellectual Properties

September 30,

Segment Assets:

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and AMC each own a 26.2% equity interest.

amended complaint alleges that AMC has breached and continues to breach the MovieTickets.com Joint Venture Agreement, which obligates

AMC to exclusively provide its ticket inventory to MovieTickets.com, and has breached its contractual and common law duties of

good faith, fair dealing, and loyalty with respect to the MovieTickets.com Joint Venture and its joint venturers, Hollywood Media

and National Amusements, Inc., as a result of various actions by AMC.

The amended complaint contends that when AMC’s demands

for greater control and a larger share of MovieTickets.com were not met, AMC breached and continues to breach the MovieTickets.com

Joint Venture Agreement, which obligates AMC to exclusively provide its ticket inventory to MovieTickets.com.

The amended complaint

alleges that AMC has breached and continues to breach the MovieTickets.com Joint Venture Agreement, which obligates AMC to exclusively

provide its ticket inventory to MovieTickets.com, and has breached its contractual and common law duties of good faith, fair dealing,

and loyalty with respect to the MovieTickets.com Joint Venture and its joint venturers, Hollywood Media and National Amusements,

Inc., as a result of various actions by AMC.

The amended complaint contends that when AMC’s demands for greater control and

a larger share of MovieTickets.com were not met, AMC breached and continues to breach the MovieTickets.com Joint Venture Agreement,

which obligates AMC to exclusively provide its ticket inventory to MovieTickets.com.

The amended complaint further specifies breaches

by AMC of its contractual and common law duties of good faith, fair dealing, and loyalty and violations of Florida’s Deceptive

and Unfair Trade Practices Act.

Among other things, the plaintiffs allege in the amended complaint that AMC used its inside

position with MovieTickets.com and access to MovieTickets.com’s proprietary information in order to advance AMC’s own

goals in contravention of its duty of loyalty to the joint venture and to the detriment of MovieTickets.com.

further specifies breaches by AMC of its contractual and common law duties of good faith, fair dealing, and loyalty.

other things, the plaintiffs allege in the amended complaint that AMC used its inside position with MovieTickets.com and access

to MovieTickets.com’s proprietary information in order to advance AMC’s own goals in contravention of its duty of loyalty

to the joint venture and to the detriment of MovieTickets.com.

Hollywood Media and

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(8) MOVIETICKETS.COM:

Hollywood Media owns 26.2% of the equity

in MovieTickets.com, Inc.

as of June 30, 2013 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 “Earnings of Unconsolidated Investees”

in the accompanying unaudited condensed consolidated statements of operations.

Hollywood Media owns

26.2% of the equity in MovieTickets.com, Inc.

as of September 30, 2013 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 “Earnings of Unconsolidated Investees”

in the accompanying unaudited condensed consolidated statements

of operations.

Hollywood Media recorded

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in the accompanying

unaudited condensed consolidated statement of operations for the six and three months ended June 30, 2012, respectively.

Media did not record $33,035 of its share of losses from MovieTickets.com for 2012 and $367,717 for the six months ended June 30,

2013 for a total of $400,752, because accumulated dividends and net losses from 2013 and prior years exceed the Company’s

investment in MovieTickets.com as of June 30, 2013.

There were no dividends declared or received during the six and three

months ended June 30, 2013 or during the six and three months ended June 30, 2012.

unaudited condensed consolidated statement of operations for the nine and three months ended September 30, 2012, respectively.

Hollywood Media did not record $33,035 of its share of losses from MovieTickets.com for 2012 and $482,703 for the nine months ended

September 30, 2013 for a total of $515,738, because accumulated dividends and net losses from 2013 and prior years exceed the Company’s

investment in MovieTickets.com as of September 30, 2013.

There were no dividends declared or received during the nine and

three months ended September 30, 2013 or during the nine and three months ended September 30, 2012.

(9) RELATED PARTY TRANSACTIONS:

Hollywood Media recorded

$326,758 and $129,241 in earn-out gain from R&S Investments, LLC (“R&S Investments”) during the six and three

months ended June 30, 2012, respectively, which is included in “Gain on sale of discontinued operations, net of income taxes”

$412,684 and $85,926 in earn-out gain from R&S Investments, LLC (“R&S Investments”) during the nine and three

months ended September 30, 2012, respectively, which is included in “Gain on sale of discontinued operations, net of income

in our accompanying unaudited condensed consolidated statements of operations.

As of June 30, 2013, the Company had $26,552 included

in “Related Party Receivable”

in our accompanying unaudited condensed consolidated balance sheet which primarily consisted

of expense reimbursements from R&S Investments.

As of December 31, 2012, the Company had $37,287 included in “Related

Party Receivable”

in our accompanying consolidated balance sheet which primarily consisted of expense reimbursements from

R&S Investments.

During the year ended December 31, 2012, Hollywood Media received such earn-out amounts and expense

reimbursements in accordance with the payment terms.

As of September 30, 2013, the Company

had $21,883 included in “Related Party Receivable”

in our accompanying unaudited condensed consolidated balance sheet

which primarily consisted of expense reimbursements from R&S Investments.

As of December 31, 2012, the Company had $37,287

included in “Related Party Receivable”

in our accompanying consolidated balance sheet which primarily consisted of

expense reimbursements from R&S Investments.

During the year ended December 31, 2012, Hollywood Media received such earn-out

amounts and expense reimbursements in accordance with the payment terms.

Pursuant to the R&S

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Accordingly, the earnout receivable from R&S Investments, LLC was $0 as of December

31, 2012 and June 30, 2013.

31, 2012 and September 30, 2013.

See Note 3, “Discontinued Operations”

to these unaudited condensed consolidated financial

statements for more information on the R&S Agreement, the Buyout Amount and this transaction.

to these unaudited condensed consolidated

financial statements for more information on the R&S Agreement, the Buyout Amount and this transaction.

On October 27, 2011,

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Under that vesting schedule, Hollywood Media’s ownership in Project Hollywood was reduced

to 20.65% at June 30, 2012.

to 20.65% at September 30, 2012.

Distributions of $182,617

to Hollywood Media reduced Hollywood Media’s investment in Project Hollywood during the six months ended June 30, 2012.

to Hollywood Media reduced Hollywood Media’s investment in Project Hollywood during the nine months ended September 30, 2012.

On August 28, 2012,

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“Other Assets”

in the accompanying unaudited condensed consolidated balance sheets.

As described above, Hollywood Media

acquired its membership interest in Project Hollywood on October 27, 2011 for $1,250,000.

in the accompanying unaudited condensed consolidated December 31, 2012 balance sheet.

On August 8, 2013,

Hollywood Media received a total of $16,611,738 from Key Brand which included $13,861,738 for the prepayment in full of the Loan,

and, as a result, the fair value of the aforementioned waivers was $0 at September 30, 2013.

For more information about this transaction,

see Note 3, “Discontinued Operations”

to these unaudited condensed consolidated financial statements.

above, Hollywood Media acquired its membership interest in Project Hollywood on October 27, 2011 for $1,250,000.

As a result of the

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Rubenstein and Ms.

Silvers described in the preceding paragraph, after August 28, 2012, Hollywood Media will retain

Silvers described in the preceding paragraph, after August 28, 2012, Hollywood Media retained

all payments of principal and interest made by Key Brand under the Loan.

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for, among other things, the following:

For a period of ninety days after the closing of the sale of Theatre

For a period of ninety days after the closing of the sale of Theatre Direct, Mr.

Rubenstein’s and Ms.

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Rubenstein and Ms.

Silvers base salaries

were each reduced to a nominal amount of $1 per year plus each is entitled to five percent (5%) of the sum of (i) any distributions

and other proceeds Hollywood Media receives after such ninety-day period in connection with its ownership interest in MovieTickets.com,

Silvers base salaries were each reduced to a nominal amount of $1 per year plus each is entitled to five percent (5%) of the sum of (i) any distributions and other proceeds Hollywood Media receives after such ninety-day period in connection with its ownership interest in MovieTickets.com, Inc.

and (ii) certain other amounts that may be received by Hollywood Media from MovieTickets.com, Inc.

((i) and (ii) are referred

to herein as the “5% Distribution”).

Upon a sale of Hollywood Media’s interest in MovieTickets.com, Inc.,

((i) and (ii) are referred to herein as the “5% Distribution”).

Upon a sale of Hollywood Media’s interest in MovieTickets.com, Inc., Mr.

Rubenstein and Ms.

Silvers would each also receive 5% of the proceeds received by Hollywood Media in such sale.

the employment agreements be terminated by Hollywood Media without “cause”, by death or by Mr.

Should the employment agreements be terminated by Hollywood Media without “cause”, by death or by Mr.

Rubenstein and/or Ms.

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the 5% Distributions and 5% of proceeds upon sale are due to Mr.

Rubenstein and Ms.

Silvers or their heirs regardless of whether or not Mr.

Rubenstein and/or Ms.

Silvers continue in the employment of the

Silvers continue in the employment of the Company.

A deferment by Mr.

Rubenstein and Ms.

Silvers of $812,501 and $332,189, respectively otherwise due to them as change of control

payments upon the consummation of the sale of Theatre Direct (referred to herein as the “Deferred Change in Control Payments”).

Silvers of $812,501 and $332,189, respectively otherwise due to them as change of control payments upon the consummation of the sale of Theatre Direct (referred to herein as the “Deferred Change in Control Payments”).

On August 28, 2012,

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in the accompanying unaudited condensed consolidated balance sheets.

Pursuant to the

R&S Letter, R&S Investments agreed that in the event of a sale of all the assets of Hollywood.com, LLC to one person

or a group of persons not controlled, directly or indirectly, by Mr.

Pursuant to the R&S

Letter, R&S Investments agreed that in the event of a sale of all the assets of Hollywood.com, LLC to one person or a group

of persons not controlled, directly or indirectly, by Mr.

Rubenstein and Ms.

Silvers or their heirs, personal

representatives or affiliates prior to August 31, 2015, R&S Investment shall pay to Hollywood Media $3,500,000 or, if

less, the amount received by R&S Investments in connection with such transaction.

Silvers or their heirs, personal representatives or

affiliates prior to

August 31, 2015, R&S Investment shall pay to Hollywood Media $3,500,000 or, if less, the amount received by R&S Investments

in connection with such transaction.

Regardless of whether

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Silvers in the long term portion of “Other Assets”

in the accompanying unaudited condensed consolidated balance sheets.

in the accompanying unaudited condensed consolidated December 31,

2012 balance sheet.

On August 8, 2013, Hollywood Media received a total of $16,611,738 from Key Brand which included $13,861,738

for the prepayment in full of the Loan, and, as a result, the fair value of the aforementioned waivers was $0 at September 30,

For more information about this transaction, see Note 3, “Discontinued Operations”

to these unaudited condensed

consolidated financial statements.

On October 1, 2012,

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in the accompanying unaudited condensed

consolidated balance sheet at June 30, 2013.

(10) SUBSEQUENT EVENTS:

On August 8, 2013, Hollywood Media entered

into the t ransaction agreement (the "Transaction Agreement”) by and among Key Brand,

Theatre Direct, and Hollywood Media for the prepayment by Key Brand in full of the amount owed to Hollywood Media pursuant to the

Pursuant to the Transaction Agreement, Key Brand paid to Hollywood Media on August 8, 2013 in cash the amount

of $13,861,738, which constituted the outstanding principal plus accrued interest through August 8, 2013 of the Loan.

Loan was scheduled to mature on June 30, 2015.

In addition, pursuant

to the Transaction Agreement, Theatre Direct redeemed the Warrant.

The redemption price for the Warrant was $2,750,000

and was paid on August 8, 2013 to Hollywood Media.

The Warrant provided, among other things, that Hollywood Media could sell

the Warrant to Theatre Direct for a floor amount of $3,000,000 beginning on June 30, 2015.

Accordingly, Hollywood

Media received on August 8, 2013 a total of $16,611,738 consisting of $13,861,738 from the prepayment of the Loan and $2,750,000

from the redemption of the Warrant.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

consolidated balance sheet at September 30, 2013.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

Cautionary Note Regarding Forward-Looking Statements

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MovieTickets.com Inc.’s competitor;

our ability to maintain and obtain sufficient capital to finance our operations;

our ability to realize anticipated cost efficiencies;

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Intellectual Properties –

owns or controls the exclusive rights to certain intellectual properties created by best-selling

authors and media celebrities, which it seeks to license and develop for books and other media.

This segment includes our wholly-owned

subsidiary, Tekno Books, and a book development business, and this segment does not include our 50% interest in NetCo Partners,

for purposes of this discussion and analysis.

We are beginning a reorientation process of this business from print to digital e-book

distribution.

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.

Until August 28, 2012,

this segment also included Hollywood Media’s equity interest in Project Hollywood, LLC (“Project Hollywood”)

(which was reduced from 21.74% of the total equity in Project Hollywood to 20.65% of the total equity in Project Hollywood at June

30, 2012), which in turn owns Baseline.

On August 28, 2012 Hollywood Media assigned to Baseline Holdings all of Hollywood Media’s

membership interest in Project Hollywood in exchange for certain consideration.

For additional information on the assignment of

Hollywood Media’s interest in Project Hollywood and the change in Hollywood Media’s equity interest in Project Hollywood,

see Note 9, “Related Party Transactions”

in the Notes to the unaudited condensed consolidated financial statements

included in Part I, Item I of this Quarterly Report on Form 10-Q.

owns or controls the exclusive rights to certain intellectual

properties created by best-selling authors and media celebrities, which it seeks to license and develop for books and other media.

This segment includes our wholly-owned subsidiary, Tekno Books, and a book development business, and this segment does not include

our 50% interest in NetCo Partners, for purposes of this discussion and analysis.

We are beginning a reorientation process of this

business from print to digital e-book distribution.

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.

Until August 28, 2012, this segment also included Hollywood Media’s equity interest in Project Hollywood, LLC (“Project

Hollywood”) (which was reduced from 21.74% of the total equity in Project Hollywood to 20.65% of the total equity in Project

Hollywood at June 30, 2012), which in turn owned Baseline.

On August 28, 2012 Hollywood Media assigned to Baseline Holdings all

of Hollywood Media’s membership interest in Project Hollywood in exchange for certain consideration.

For additional information

on the assignment of Hollywood Media’s interest in Project Hollywood and the change in Hollywood Media’s equity interest

in Project Hollywood, see Note 9, “Related Party Transactions”

in the Notes to the unaudited condensed consolidated

financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q.

Results of Operations

The following discussion

and analysis should be read in conjunction with Hollywood Media’s unaudited condensed consolidated financial statements

and the notes thereto included in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

and analysis should be read in conjunction with Hollywood Media’s unaudited condensed consolidated financial statements and

the notes thereto included in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

The Ad Sales segment

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and amortization expense to report for the Ad Sales segment.

The following table summarizes Hollywood Media’s revenues,

operating expenses and operating income (loss) from continuing operations by reportable segment for the six months ended June

30, 2013 (“Y2-13”) and 2012 (“Y2-12”) and the three months ended June 30, 2013 (“Q2-13”) and

The following table summarizes Hollywood Media’s revenues, operating

expenses and operating income (loss) from continuing operations by reportable segment for the nine months ended September 30, 2013

(“Y3-13”) and 2012 (“Y3-12”) and the three months ended September 30, 2013 (“Q3-13”) and 2012

(“Q3-12”), respectively:

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On May 1, 2012, the

Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Orchard Advertising Limited

(“Buyer”), pursuant to which the Company sold, and Buyer purchased, the entire issued share capital of Cinemasource

UK Limited (the “Purchased Shares”) which business was part of the Company’s Ad Sales division and included

UK Theatres Online Limited, Spring Leisure Limited, Cinemasonline Limited and WWW.CO.UK Limited.

As of the closing

of the transactions contemplated by the Share Purchase Agreement, (1) Jeffrey Spector, a director of Buyer, was also (i) a director

Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Orchard Advertising Limited (“Buyer”),

pursuant to which the Company sold, and Buyer purchased, the entire issued share capital of Cinemasource UK Limited (the “Purchased

Shares”) which business was part of the Company’s Ad Sales division and included UK Theatres Online Limited, Spring

Leisure Limited, Cinemasonline Limited and WWW.CO.UK Limited.

As of the closing of

the transactions contemplated by the Share Purchase Agreement, (1) Jeffrey Spector, a director of Buyer, was also (i) a director

of all four subsidiaries of Cinemasource UK Limited (UK Theatres Online Limited, Spring Leisure Limited, Cinemasonline Limited

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Janette Erskine, a director of Buyer, was also (i) a director of three subsidiaries of Cinemasource UK Limited (UK Theatres Online

Limited, Spring Leisure Limited and Cinemasonline Limited) and (ii) an employee of one of the subsidiaries of Cinemasource UK

Limited (UK Theatres Online).

Limited, Spring Leisure Limited and Cinemasonline Limited) and (ii) an employee of one of the subsidiaries of Cinemasource UK Limited

(UK Theatres Online).

Pursuant to the Share

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bearing loan resulting in a discounted amount of $168,014 which was included in the total gain on sale attributable to the sale

of Cinemasource UK Limited of $649,215 during the six months ended June 30, 2012.

The current portion of the discounted amount

of the non-interest bearing loan is included in “Notes receivable, current”

and the long-term portion of the non-interest

bearing loan is included in “Notes receivable, less current portion”

in our accompanying unaudited condensed consolidated

balance sheets contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

of Cinemasource UK Limited of $649,215 during the nine months ended September 30, 2012.

The current portion of the discounted

amount of the non-interest bearing loan is included in “Notes receivable, current”

and the long-term portion of the

non-interest bearing loan is included in “Notes receivable, less current portion”

in our accompanying unaudited condensed

consolidated balance sheets contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The purchase price

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Sale Proceeds are less than the Balance, then Buyer will pay to the Company the amount of the Subsequent Sale Proceeds in lieu

of the Balance, unless the Company demands that the Purchased Shares are transferred back to the Company (and Buyer transfers

the Purchased Shares back to the Company) in satisfaction of the Balance.

Sale of Broadway Ticketing Business

Unit to Key Brand Entertainment, Inc.

of the Balance, unless the Company demands that the Purchased Shares are transferred back to the Company (and Buyer transfers the

Purchased Shares back to the Company) in satisfaction of the Balance.

Sale of Broadway Ticketing Business Unit

to Key Brand Entertainment, Inc.

On December 15, 2010,

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(“Theatre Direct”) to Key Brand Entertainment Inc.

Brand”), as contemplated by the Stock Purchase Agreement, dated as of December 22, 2009, entered into between Hollywood

Media and Key Brand (as amended, the “Purchase Agreement”).

There are no material relationships among Hollywood

Media and Key Brand or any of their respective affiliates other than in respect of the Purchase Agreement and the related ancillary

Brand”), as contemplated by the Stock Purchase Agreement, dated as of December 22, 2009, entered into between Hollywood Media

and Key Brand (as amended, the “Purchase Agreement”).

There are no material relationships among Hollywood Media

and Key Brand or any of their respective affiliates other than in respect of the Purchase Agreement and the related ancillary agreements.

to the Purchase Agreement, at the closing of the Broadway Sale, (a) Hollywood Media received (i) $20,530,102 in cash (including

8 unchanged sentences

of up to $14,000,000, in two $7,000,000 tranches, contingent upon

Theatre Direct and its subsidiaries achieving certain revenue targets during the period from the closing date through the end

of the 10 th full fiscal year following the closing date as set forth in the Purchase Agreement.

Theatre Direct and its subsidiaries achieving certain revenue targets during the period from the closing date through the end of

the 10 th full fiscal year following the closing date as set forth in the Purchase Agreement.

In connection with

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As part of the

Fourth Purchase Agreement Amendment, Key Brand agreed to pay the first $7,000,000 earnout amount (the “First $7 Million

Earnout”) to Hollywood Media on or before October 1, 2012 regardless of the actual revenues of Theatre Direct and its subsidiaries

for the fiscal year of Key Brand ending June 30, 2012.

The First $7 Million Earnout amount was paid by Key Brand to Hollywood

Media on October 1, 2012 and was recorded upon collection of the $7,000,000 received on October 1, 2012.

In addition, the

revenue calculation for the second $7,000,000 earnout amount (the “Second $7 Million Earnout”) was modified to exclude

“group sales”

(and the revenues of the new joint venture conducting such business) and the revenue target for the

Second $7 Million Earnout was reduced from $150,000,000 to $123,000,000 accordingly.

On October 5, 2012, Hollywood Media

received written notice from Key Brand that Theatre Direct achieved the revenue target for the Second $7 Million Earnout in Key

Brand’s fiscal year ended June 30, 2012.

Accordingly, pursuant to the Fourth Purchase Agreement Amendment, the Second

$7 Million Earnout was added as of October 5, 2012 to the principal amount of the Loan under the Credit Agreement.

As of October 5, 2012, pursuant to the Credit Agreement, interest at a rate of 12% per annum and principal on such Second

$7 Million Earnout amount was amortized over the term of the Credit Agreement in equal quarterly installments.

of the Second $7 Million Earnout being added to the principal amount of the Loan, the principal amount of the Loan due Hollywood

Media by Key Brand was $15,500,000 as of October 5, 2012.

Hollywood Media initially recorded the

Second $7 Million Earnout at a fair value of $4,500,000, which reflects a $2,500,000 discount.

Hollywood Media has been amortizing

the $2,500,000 discount under the effective interest method.

Amortization under the effective interest method is included

in "Accretion of discount, net of allowance for uncollectability"

in the accompanying unaudited condensed consolidated

statements of operations contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

For the six months ended June

30, 2013, Hollywood Media received scheduled payments under the Loan in the amount of $2,248,977, which included principal payments

of $1,292,308, interest payments of $401,100 on the $7,000,000 portion of the Loan and $555,569 of interest on the $8,500,000 portion

The principal payments of $1,292,308, combined with accretion of discount of $666,126, reduced the value of

the $7,000,000 portion of the Loan from $4,250,123 at December 31, 2012 to $3,623,941 at June 30, 2013.

For the three months ended

June 30, 2013, Hollywood Media received a scheduled payment under the Loan in the amount of $1,116,573, which included a principal

payment of $646,154, an interest payment of $191,100 on the $7,000,000 portion of the Loan and $279,319 of interest on the $8,500,000

portion of the Loan.

The principal payment of $646,154, combined with accretion of discount of $322,800, reduced the value

of the $7,000,000 portion of the Loan from $4,250,123 at December 31, 2012 to $3,623,941 at June 30, 2013.

Accretion of discount

was $584,253 and $317,094 on the $8,500,000 portion of the Loan during the six and three months ended June 30, 2013.

31, 2012, Hollywood Media received a scheduled payment under the Loan in the amount of $1,002,128, which included a principal payment

of $538,462, an interest payment of $203,000 on the $7,000,000 portion of the Loan and $260,666 of interest on the $8,500,000 portion

The principal payment of $538,462, combined with accretion of discount of $288,585, reduced the value of the

$7,000,000 portion of the Loan from $4,500,000 to $4,250,123.

Accretion of discount, net of the reversal of previously recorded

allowance for bad debt, was $1,429,315 on the $8.5 million portion of the Loan during the three months ended December 31, 2012.

The uncollected face amount (principal) of the $7,000,000 portion of the Loan was $5,169,231 and $6,461,538

at June 30, 2013 and December 31, 2012, respectively.

Fourth Purchase Agreement Amendment, Key Brand agreed to pay the first $7,000,000 earnout amount (the “First $7 Million Earnout”)

to Hollywood Media on or before October 1, 2012 regardless of the actual revenues of Theatre Direct and its subsidiaries for the

fiscal year of Key Brand ending June 30, 2012.

The First $7 Million Earnout amount was paid by Key Brand to Hollywood Media

on October 1, 2012 and was recorded upon collection of the $7,000,000 received on October 1, 2012.

In addition, the revenue

calculation for the second $7,000,000 earnout amount (the “Second $7 Million Earnout”) was modified to exclude “group

(and the revenues of the new joint venture conducting such business) and the revenue target for the Second $7 Million

Earnout was reduced from $150,000,000 to $123,000,000 accordingly.

On October 5, 2012, Hollywood Media received written notice

from Key Brand that Theatre Direct achieved the revenue target for the Second $7 Million Earnout in Key Brand’s fiscal year

ended June 30, 2012.

Accordingly, pursuant to the Fourth Purchase Agreement Amendment, the Second $7 Million Earnout was

added as of October 5, 2012 to the principal amount of the Loan under the Credit Agreement.

As of October 5, 2012,

pursuant to the Credit Agreement, interest at a rate of 12% per annum and principal on such Second $7 Million Earnout amount was

amortized over the term of the Credit Agreement in equal quarterly installments.

As a result of the Second $7 Million Earnout

being added to the principal amount of the Loan, the principal amount of the Loan due Hollywood Media by Key Brand was $15,500,000

as of October 5, 2012.

Hollywood Media initially

recorded the Second $7 Million Earnout at a fair value of $4,500,000, which reflected a $2,500,000 discount.

Hollywood Media

amortized the $2,500,000 discount under the effective interest method through August 8, 2013 at which time the Loan was paid in

full (as described below).

Amortization under the effective interest method is included in "Accretion of discount, net of

allowance for uncollectability"

in the accompanying unaudited condensed consolidated statements of operations contained in

Part I, Item 1 of this Quarterly Report on Form 10-Q.

On April 22, 2012,

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of the $7,000,000 portion of the Loan prior to the maturity of the Credit Agreement, notwithstanding that the obligations under

the Credit Agreement were subordinated to $15,000,000 of Key Brand’s obligations under Key Brand’s senior secured

credit agreement.

the Credit Agreement were subordinated to $15,000,000 of Key Brand’s obligations under Key Brand’s senior secured credit

December 2012 Amendments

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from 12% per annum to 13% per annum, (ii) the maturity date of the Loan was shortened from December 15, 2015 to June 30, 2015,

(iii) Hollywood Media consented to Key Brand amending and restating Key Brand’s senior secured credit agreement to

replace Key Brand’s prior senior lender, JPMorgan Chase Bank, N.A., with Key Brand’s new senior lender, Terido LLP

(with the terms and conditions of such senior secured credit agreement remaining substantially the same), (iv) subject to the

terms and conditions of the Terido Intercreditor Agreement described below, the net proceeds from any indebtedness incurred by

Key Brand that is not otherwise permitted under Key Brand’s amended and restated senior secured credit agreement (other

than from the proceeds of a refinancing of such amended and restated senior secured credit agreement) will be used to prepay the

Loan, (v) the prior consent of Hollywood Media is required for any amendment to Key Brand’s amended and restated senior

secured credit agreement that would be adverse to Hollywood Media in any material respect, and (vi) Key Brand will provide Hollywood

Media with additional and more frequent financial reporting.

Except as described in this paragraph, the terms and conditions

of the Credit Agreement and the Loan remain substantially the same.

(iii) Hollywood Media consented to Key Brand amending and restating Key Brand’s senior secured credit agreement to replace

Key Brand’s prior senior lender, JPMorgan Chase Bank, N.A., with Key Brand’s new senior lender, Terido LLP (with the

terms and conditions of such senior secured credit agreement remaining substantially the same), (iv) subject to the terms and conditions

of the Terido Intercreditor Agreement described below, the net proceeds from any indebtedness incurred by Key Brand that was not

otherwise permitted under Key Brand’s amended and restated senior secured credit agreement (other than from the proceeds

of a refinancing of such amended and restated senior secured credit agreement) was to be used to prepay the Loan, (v) the prior

consent of Hollywood Media was required for any amendment to Key Brand’s amended and restated senior secured credit agreement

that would have been adverse to Hollywood Media in any material respect, and (vi) Key Brand will provide Hollywood Media with additional

and more frequent financial reporting.

Except as described in this paragraph, the terms and conditions of the Credit Agreement

and the Loan remained substantially the same.

In connection with

the Second Credit Agreement Amendment and Key Brand’s amended and restated senior secured credit agreement, Hollywood Media

and Key Brand entered into that certain Subordination and Intercreditor Agreement, dated December 31, 2012 (the “Terido

Intercreditor Agreement ”), with Terido LLP, as administrative agent for the senior secured lenders of Key Brand, which

defines the rights and obligations of the senior secured lenders and Hollywood Media as subordinated lender, including, without

limitation, the rights of payment and the subordination of the security interests of Hollywood Media.

The terms and conditions

of the Terido Intercreditor Agreement are substantially similar to the terms and conditions of the prior JPM Intercreditor Agreement.

and Key Brand entered into that certain Subordination and Intercreditor Agreement, dated December 31, 2012 (the “Terido Intercreditor

Agreement ”), with Terido LLP, as administrative agent for the senior secured lenders of Key Brand, which defined the rights

and obligations of the senior secured lenders and Hollywood Media as subordinated lender, including, without limitation, the rights

of payment and the subordination of the security interests of Hollywood Media.

The terms and conditions of the Terido Intercreditor

Agreement were substantially similar to the terms and conditions of the prior JPM Intercreditor Agreement.

On December 31, 2012,

in connection with the Second Credit Agreement Amendment, the Warrant was amended to (i) shorten the earliest date that Hollywood

Media can put the Warrant to Theatre Direct from December 16, 2017 to June 30, 2015, (ii) increase the minimum

price that Hollywood Media can put the Warrant to Theatre Direct from $1,000,000 to $3,000,000, and (iii) increase the minimum

price that Theatre Direct can redeem the Warrant from Hollywood Media from $1,000,000 to $3,000,000.

Media could put the Warrant to Theatre Direct from December 16, 2017 to June 30, 2015, (ii) increase the minimum

price that Hollywood Media could put the Warrant to Theatre Direct from $1,000,000 to $3,000,000, and (iii) increase the minimum

price that Theatre Direct could redeem the Warrant from Hollywood Media from $1,000,000 to $3,000,000.

Except as described

in the preceding sentence, the terms and conditions of the Warrant remain substantially the same.

The Warrant is marked

to market each reporting period to reflect changes in fair value.

The fair value of the Warrant was $750,000 and $700,000

at June 30, 2013 and December 31, 2012, respectively.

in the preceding sentence, the terms and conditions of the Warrant remained substantially the same.

Prior to the redemption

of the Warrant (described below) the Warrant was marked to market each reporting period to reflect changes in fair value.

The fair value of the Warrant was $700,000 at December 31, 2012.

As described below, on August 8, 2013, Hollywood Media received

a total of $16,611,738 from Key Brand consisting of $13,861,738 from the prepayment of the Loan and $2,750,000 for the redemption

in full of the Warrant.

In connection with

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costs and expenses incurred in documenting such agreements.

On December 31, 2012,

Hollywood Media received a scheduled payment under the Loan in the amount of $1,002,128, which included a principal payment of

$538,462, an interest payment of $203,000 on the $7,000,000 portion of the Loan and $260,666 of interest on the $8,500,000 portion

The principal payment of $538,462, combined with accretion of discount of $288,585, reduced the value of the $7,000,000

portion of the Loan from $4,500,000 to $4,250,123 as of December 31, 2012.

Accretion of discount, net of the reversal of previously

recorded allowance for bad debt, was $1,429,315 on the $8,500,000 portion of the Loan during the three months ended December 31,

For the six months ended June 30, 2013, Hollywood Media received scheduled payments under the Loan in the amount of $2,248,977,

which included principal payments of $1,292,308, interest payments of $401,100 on the $7,000,000 portion of the Loan and $555,569

of interest on the $8,500,000 portion of the Loan.

The principal payments of $1,292,308, combined with accretion of discount of

$666,126, reduced the value of the $7,000,000 portion of the Loan from $4,250,123 at December 31, 2012 to $3,623,941 at June 30,

The uncollected face amount (principal) of the $7,000,000 portion of the Loan was $6,461,538 at December 31, 2012.

of discount was $702,608 and $118,361 on the $8,500,000 portion of the Loan during the nine and three months ended September 30,

2013, respectively.

On August 8, 2013,

Hollywood Media entered into the transaction agreement (the “Transaction Agreement”) by and among Key Brand, Theatre

Direct, and Hollywood Media for the prepayment by Key Brand in full of the amount owed to Hollywood Media pursuant to the Loan

under the Credit Agreement.

Pursuant to the Transaction Agreement, Key Brand paid to Hollywood Media on August 8, 2013 in cash,

the amount of $13,861,738, which constituted the outstanding principal plus accrued interest through August 8, 2013 of the Loan.

The Loan was scheduled to mature on June 30, 2015.

In addition, pursuant

to the Transaction Agreement, Theatre Direct redeemed the Warrant.

The redemption price for the Warrant was $2,750,000 and was

paid on August 8, 2013 to Hollywood Media.

The Warrant provided, among other things, that Hollywood Media could sell the Warrant

to Theatre Direct for a floor amount of $3,000,000 beginning on June 30, 2015.

Accordingly, Hollywood

Media received on August 8, 2013 a total of $16,611,738 consisting of $13,861,738 from the prepayment of the Loan and $2,750,000

from the redemption of the Warrant.

The gain of $9,243,789 resulting from the Transaction Agreement is included in “Other,

in the accompanying unaudited condensed consolidated statements of operations for the nine and three months ended September

30, 2013, respectively.

For additional information

about this transaction, see Note 3 “Discontinued Operations”

in the Notes to the unaudited condensed consolidated

financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

On August 8, 2013 Key Brand paid Hollywood

Media a total of $16,611,738 consisting of $13,861,738 from the prepayment of the Loan and $2,750,000 from the redemption of the

For additional information about this transaction, see Note 10 “Subsequent Events”

in the Notes to the unaudited

condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

in the Notes to the unaudited condensed consolidated financial

statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Sale of Hollywood.com

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Hollywood Media at closing and potential earnout payments totaling $9,000,000, of which $1,892,692 had been paid as of August 2012.

Hollywood Media recognized $326,758 and $129,241 in earnout gain during the six and three months ended June 30, 2012, respectively,

Hollywood Media recognized $460,037 and $155,538 in earnout gain during the nine and three months ended September 30, 2012, respectively,

which is included in “Gain on sale of discontinued operations, net of income taxes”

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Rubenstein and Ms.

Silvers entered into a letter agreement regarding the

R&S Agreement (the “Rubenstein Silvers Letter Agreement”), and (3) R&S Investments provided Hollywood Media

with a letter regarding a contingent additional payment (the “R&S Letter”).

As described below, the

R&S Agreement and the Rubenstein Silvers Letter Agreement and the transactions contemplated by the R&S Agreement and the

Rubenstein Silvers Letter Agreement were approved by a Special Committee of Hollywood Media’s Board of Directors comprised

solely of independent directors (the “Special Committee”).

Silvers entered into a letter agreement regarding the R&S

Agreement (the “Rubenstein Silvers Letter Agreement”), and (3) R&S Investments provided Hollywood Media with a

letter regarding a contingent additional payment (the “R&S Letter”).

As described below, the R&S

Agreement and the Rubenstein Silvers Letter Agreement and the transactions contemplated by the R&S Agreement and the Rubenstein

Silvers Letter Agreement were approved by a Special Committee of Hollywood Media’s Board of Directors comprised solely of

independent directors (the “Special Committee”).

Pursuant to the R&S

Agreement, in exchange for R&S Investments paying Hollywood Media $2,950,000 in cash (the “Buyout Amount”), which

payment has been made to Hollywood Media, R&S Investments fully satisfied all of its obligation to pay the purchase price

under Section 3.1 of the R&S Purchase Agreement and any additional consideration or earnout payment under Section 3.3 of the

R&S Purchase Agreement, and R&S Investments shall have no further obligations and/or liabilities (and Hollywood Media

shall have no further rights and/or remedies) under Article III of the R&S Purchase Agreement or otherwise.

payment has been made to Hollywood Media, R&S Investments fully satisfied all of its obligation to pay the purchase price under

Section 3.1 of the R&S Purchase Agreement and any additional consideration or earnout payment under Section 3.3 of the R&S

Purchase Agreement, and R&S Investments shall have no further obligations and/or liabilities (and Hollywood Media shall have

no further rights and/or remedies) under Article III of the R&S Purchase Agreement or otherwise.

Pursuant to the Rubenstein

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to the Rubenstein Silvers Letter Agreement, Ms.

Silvers agreed that, in connection with the transaction consummated under the

R&S Agreement and in addition to the Buyout Amount, the next $280,000 of the MovieTickets.com 5% Interest (as defined in the

Amended and Restated Employment Agreement dated as of December 22, 2008, between Hollywood Media and Ms.

Silvers, as amended (the

“Silvers Employment Agreement”)) that would be distributed by Hollywood Media to Ms.

Silvers pursuant to the Silvers

Employment Agreement will be retained by Hollywood Media (and not paid to Ms.

Silvers) and is a reduction to “Derivative

Liabilities”

in the accompanying unaudited condensed consolidated balance sheets contained in Part I, Item 1 of this Quarterly

Report on Form 10-Q.

Silvers agreed that, in connection with the transaction consummated under the R&S

Agreement and in addition to the Buyout Amount, the next $280,000 of the MovieTickets.com 5% Interest (as defined in the Amended

and Restated Employment Agreement dated as of December 22, 2008, between Hollywood Media and Ms.

Silvers, as amended (the “Silvers

Employment Agreement”)) that would be distributed by Hollywood Media to Ms.

Silvers pursuant to the Silvers Employment Agreement

will be retained by Hollywood Media (and not paid to Ms.

Silvers) and is a reduction to “Derivative Liabilities”

the accompanying unaudited condensed consolidated balance sheets contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Pursuant to the R&S

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Rubenstein and Ms.

Silvers or their heirs, personal representatives

or affiliates prior to August 31, 2015, R&S Investments shall pay to Hollywood Media $3,500,000 or, if less, the amount received

Silvers or their heirs, personal representatives or

affiliates prior to August 31, 2015, R&S Investments shall pay to Hollywood Media $3,500,000 or, if less, the amount received

by R&S Investments in connection with such transaction.

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about this transaction, see Note 3 “Discontinued Operations”

in the Notes to the unaudited condensed consolidated

financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

net revenues were $183,461 for Y2-13 as compared to $333,047 for Y2-12, a decrease of $149,586 or 45% and $102,402 for Q2-13 as

compared to $156,213 for Q2-12, a decrease of $53,811 or 34%.

The decrease in net revenue in Y2-13 as compared to Y2-12 and in

Q2-13 as compared to Q2-12 is the result of a decrease in Intellectual Property revenue.

The decrease in Intellectual

in the Notes to the unaudited condensed consolidated financial

statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

net revenues were $323,445 for Y3-13 as compared to $429,082 for Y3-12, a decrease of $105,637 or 24.6% and $139,984 for Q3-13

as compared to $96,035 for Q3-12, an increase of $43,949 or 45.8%.

The decrease in net revenue in Y3-13 as compared to Y3-12 and

the increase in Q3-13 as compared to Q3-12 is the result of changes in Intellectual Property revenue.

The changes in Intellectual

Properties net revenues in Y3-13 as compared to Y3-12 and in Q3-13 as compared to Q3-12 was attributable to the timing of the delivery

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consisted of the following:

Six Months Ended

Nine Months Ended

Three Months Ended

September 30,

NetCo Partners (a)

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Project Hollywood (c)

$ (3,741,851 )

$ (3,759,665 )

NetCo Partners

Hollywood Media owns

50% of NetCo Partners as of June 30, 2013 and accounts for its investment under the equity method.

50% of NetCo Partners as of September 30, 2013 and accounts for its investment under the equity method.

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.

Media’s 50% share of income of NetCo Partners was essentially $0 for Y2-13 and Y2-12 as well as Q2-13 and Q1-12.

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’s 50%

share of income of NetCo Partners was essentially $0 for Y3-13 and Y3-12 as well as Q3-13 and Q3-12.

(b) MovieTickets.com

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26.2% of the equity in MovieTickets.com, Inc.

(“MovieTickets.com”) as of June 30, 2013 and shares in 26.2% of the

income or losses generated by the joint venture.

(“MovieTickets.com”) as of September 30, 2013 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

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unaudited condensed consolidated statements of operations.

Media recorded $72,115 and $121,034 in loss from its investment in MovieTickets.com for the six and three months ended June 30,

2012, respectively.

Hollywood Media did not record $33,035 of its share of losses from MovieTickets.com for 2012 and $367,717

for the six months ended June 30, 2013 for a total of $400,752, because accumulated dividends and net losses from 2013 and prior

years exceed the Company’s investment in MovieTickets.com as of June 30, 2013.

The MovieTickets.com web site generates

revenues primarily from service fees charged to users for the purchase of movie tickets online, the sale of advertising and research

There were no dividends declared or received during the six months ended June 30, 2012 and June 30, 2013, respectively.

Hollywood Media recorded $252,855 and $180,740 in loss from its

investment in MovieTickets.com for the nine and three months ended September 30, 2012, respectively.

Hollywood Media did not record

$33,035 of its share of losses from MovieTickets.com for 2012 and $482,703 for the nine months ended September 30, 2013 for a total

of $515,738, because accumulated dividends and net losses from 2013 and prior years exceed the Company’s investment in MovieTickets.com

as of September 30, 2013.

The MovieTickets.com web site generates revenues primarily from service fees charged to users for

the purchase of movie tickets online, the sale of advertising and research fees.

There were no dividends declared or received during

the nine months ended September 30, 2012 and September 30, 2013, respectively.

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Hollywood Media’s equity ownership in Project Hollywood was reduced from 21.74% of the total equity in Project

Hollywood to 20.65% of the total equity in Project Hollywood at June 30, 2012.

Hollywood Media did not own any equity in

Project Hollywood as of June 30, 2013.

Hollywood to 20.65% of the total equity in Project Hollywood at September 30, 2012.

Hollywood Media did not own any equity

in Project Hollywood as of September 30, 2013.

Hollywood Media’s initial interest in Project Hollywood was acquired on October

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Under applicable accounting

principles, Hollywood Media recorded $90,213 and $67,094 in income from its investment in Project Hollywood for the six and three

months ended June 30, 2012, respectively.

There were $177,182 and $46,499 of distributions during the six and three months

ended June 30, 2012, respectively.

For additional information about Hollywood Media’s assignment of its membership interest

in Project Hollywood and the change in Hollywood Media’s equity interest in Project Hollywood, see Note 9, “Related

principles, Hollywood Media recorded $111,440 and $21,227 in income from its investment in Project Hollywood for the nine and three

months ended September 30, 2012, respectively.

There were $182,617 and $5,435 of distributions during the nine and three

months ended September 30, 2012, respectively.

For additional information about Hollywood Media’s assignment of its membership

interest in Project Hollywood and the change in Hollywood Media’s equity interest in Project Hollywood, see Note 9, “Related

Party Transactions”

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Development and Technology.

Editorial, production, development and technology costs include fees and royalties paid to authors and

co-editors for the Intellectual Properties segment.

Editorial, production, development and technology costs were $113,322 for Y2-13

as compared to $282,776 for Y2-12, a decrease of $169,454 or 60% and were $55,824 for Q2-13 as compared to $157,672 for Q2-12,

a decrease of $101,848 or 65%.

The decrease in Y2-13 as compared to Y2-12 and the decrease in Q2-13 as compared to Q2-12 was due

primarily to a decrease in payments to writers and co-editors and fewer projects.

Editorial, production,

development and technology costs include fees and royalties paid to authors and co-editors for the Intellectual Properties segment.

Editorial, production, development and technology costs were $181,734 for Y3-13 as compared to $391,503 for Y3-12, a decrease of

$209,769 or 53.6% and were $68,412 for Q3-13 as compared to $108,727 for Q3-12, a decrease of $40,315 or 37.1%.

The decrease in

Y3-13 as compared to Y3-12 and the decrease in Q3-13 as compared to Q3-12 was due primarily to a decrease in payments to writers

and co-editors and fewer projects.

Selling, General

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The increase in SG&A

expense in Y2-13 as compared to Y2-12 was due to an increase in legal fees and related professional fees of $523,000.

expense in Y3-13 as compared to Y3-12 was due primarily to an increase in legal fees and related professional fees of $798,000.

The increase in SG&A expense in Q3-13 as compared to Q3-12 was primarily due to an increase in legal and related professional

fees of $275,000.

Payroll and Benefits.

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Payroll and Benefits expenses were $1,338,777 for Y3-13 compared to $1,619,487 for Y3-12, a decrease of $280,710 or 17.3%.

and benefits expenses for Q2-13 were $467,541 compared to $851,862 for Q2-12, a decrease of $384,321 or 45%.

and benefits expenses for Q3-13 were $439,990 compared to $368,904 for Q3-12, an increase of $71,086 or 19.3%.

Included in payroll

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The decrease in payroll

and benefits expense in Y2-13 as compared to Y2-12 as well as in Q2-13 as compared to Q2-12 was primarily due to a decrease in

executive payroll partially offset by an increase in payroll in the Intellectual Properties segment as the Intellectual Properties

segment shifts to digital e-book distribution.

and benefits expense in Y3-13 as compared to Y3-12 was primarily due to a decrease in executive payroll, partially offset by an

increase in payroll in the Intellectual Properties segment, and the increase in payroll and benefits expense in Q3-13 as compared

to Q3-12 was primarily due to an increase in payroll in the Intellectual Properties segment, as the Intellectual Properties segment

shifts to digital e-book distribution.

Depreciation and

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The decrease in depreciation and amortization expense of $54,133 or

44% in Y2-13 from Y2-12 and the decrease in depreciation and amortization expense of $16,617 or 44% in Q2-13 from Q2-12 was primarily

due to assets becoming fully depreciated.

47.9% in Y3-13 from Y3-12 and the decrease in depreciation and amortization expense of $21,057 or 55.6% in Q3-13 from Q3-12 was

primarily due to assets becoming fully depreciated.

Interest, net.

Interest, net was $973,847 of income for

Y2-13 as compared to $513,009 of income for Y2-12.

Interest, net was $480,547 of income for Q2-13 as compared to $259,972 of income

Interest, net primarily relates to the interest accrued on the Loan due Hollywood Media from Key Brand Entertainment,

the purchaser of the Broadway Ticketing Division.

On October 5, 2012 the Loan was increased by $7,000,000 for the Second $7 Million

On December 31, 2012 the interest rate on the Loan was increased to 13% per annum from 12% per annum and the maturity

date was moved up to June 30, 2015 from December 15, 2015.

Interest, net was $1,175,044

of income for Y3-13 as compared to $777,411 of income for Y3-12.

Interest, net was $201,197 of income for Q3-13 as compared to

$264,400 of income for Q3-12.

Interest, net primarily relates to the interest accrued on the Loan due Hollywood Media from Key

Brand Entertainment, the purchaser of the Broadway Ticketing Division.

On October 5, 2012 the Loan was increased by $7,000,000

for the Second $7 Million Earnout.

On December 31, 2012 the interest rate on the Loan was increased to 13% per annum from 12% per

annum and the maturity date was moved up to June 30, 2015 from December 15, 2015.

On August 8, 2013, pursuant to the Transaction

Agreement, the Loan was prepaid in full and Hollywood Media received a total of $16,611,738 consisting of $13,861,738 for the prepayment

of the Loan and $2,750,000 for the redemption of the Warrant.

For additional information, see Note 3 –

“Discontinued Operations”

in the Notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on

“Discontinued

Operations”

in the Notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this

Quarterly Report on Form 10-Q.

Accretion of Discount,

net of allowance for uncollectability

Accretion of discount,

net was $1,250,373 for Y2-13 and $639,894 for Q2-13.

The Accretion of Discount in Y2-13 and Q2-13 was primarily attributable

to the accretion of the discount on the Loan from the Broadway Sale.

Accretion of discount, net was $1,468,757

for Y3-13 and $218,384 for Q3-13.

The Accretion of Discount in Y3-13 and Q3-13 was primarily attributable to the accretion

of the discount on the Loan from the Broadway Sale.

Other, net was $9,297,426

for Y3-13 and $9,245,302 for Q3-13.

Other, net was primarily attributable to the gain resulting from Hollywood Media receiving

a total of $16,611,738 from Key Brand on August 8, 2013, consisting of $13,861,738 from the repayment of the Loan and $2,750,000

from the redemption of the Warrant under the Transaction Agreement.

LIQUIDITY AND CAPITAL RESOURCES

Hollywood Media’s

cash and cash equivalents were $9,669,277 at June 30, 2013 as compared to $11,378,519 at December 31, 2012.

Our net working capital

(defined as current assets less current liabilities) was $11,355,882 at June 30, 2013 as compared to $12,047,536 at December 31,

cash and cash equivalents were $24,867,007 at September 30, 2013 as compared to $11,378,519 at December 31, 2012.

Our net working

capital (defined as current assets less current liabilities) was $24,993,373 at September 30, 2013 as compared to $12,047,536 at

December 31, 2012.

Net cash used in operating

1 unchanged sentence

Net cash used in operating activities during Y3-13 was primarily attributable to the following:

(1) $1,250,373 accretion of discount on the Loan from Key Brand (which is a non-cash item), (2) $819,000 in connection with advertising

of Hollywood Media’s digital books, (3) $423,613 paid for income taxes, and (4) legal and related professional fees of $887,100.

These items were partially offset by (1) cash received from Key Brand which included total interest received of $956,669 under

the Loan due Hollywood Media, (2) $215,000 non-cash amortization expense of deferred compensation costs, and (3) $42,088 in depreciation

and amortization.

(1) a $9,243,789 gain resulting from Hollywood Media receiving a total of $16,611,738 from Key Brand on August 8, 2013, consisting

of $13,861,738 from the repayment of the Loan and $2,750,000 from the redemption of the Warrant under the Transaction Agreement,

(2) $1,468,757 accretion of discount on the Loan from Key Brand (which is a non-cash item), (3) legal and professional fees of

$1,314,673, (4) $819,000 in connection with advertising of Hollywood Media’s digital books, and (5) $423,613 paid for income

These items were partially offset by (1) net income of $7,879,380, (2) cash received from Key Brand which included total

interest received of $959,669 under the Loan, (3) $322,500 non-cash amortization expense of deferred compensation costs and, (4)

$58,899 in depreciation and amortization.

By comparison, net cash used in operating activities during Y3-12 was $2,006,196.

As described in Note 3, “Discontinued Operations”

in the Notes to the unaudited condensed

consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, on October 1, 2012, following

the end of the third quarter period, Hollywood Media received from Key Brand in connection with the Broadway Sale the First $7

Million Earnout payment in cash.

Further, an additional $7,000,000 representing the Second $7 Million Earnout payment was

added to the Loan due Hollywood Media by Key Brand under the Credit Agreement as of October 5, 2012, which $7,000,000 is to be

amortized with interest at 12% per annum over the period October 5, 2012 through December 15, 2015 in equal quarter-annual installments.

As a result of the Second $7 Million Earnout being added to the $8,500,000 principal amount of the Loan, the principal amount of

the Loan due Hollywood Media by Key Brand was $15,500,000 as of October 5, 2012.

On December 31, 2012, the interest

rate on the Loan due Hollywood Media by Key Brand was increased to 13% per annum and the maturity date of the Loan due Hollywood

Media by Key Brand was moved up to June 30, 2015 from December 15, 2015.

The Loan due Hollywood Media by Key Brand is secured

on a second lien basis by all stock and assets of Theatre Direct and its subsidiaries.

Hollywood Media recorded the Second $7

Million Earnout at a fair value of $4,500,000, which reflects a $2,500,000 discount.

Hollywood Media has been amortizing

the $2,500,000 discount under the effective interest method.

Amortization under the effective interest method will be included

in "Accretion of discount, net of allowance for uncollectability"

in the accompanying unaudited condensed consolidated

statements of operations contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

For the six months ended June

30, 2013, Hollywood Media received scheduled payments under the Loan in the amount of $2,248,977, which included principal payments

of $1,292,308, interest payments of $401,100 on the $7,000,000 portion of the Loan and $555,569 of interest on the $8,500,000 portion

The principal payments of $1,292,308, combined with accretion of discount of $666,126, reduced the value of

the $7,000,000 portion of the Loan from $4,250,123 at December 31, 2012 to $3,623,941 at June 30, 2013.

The uncollected face amount (principal) of the $7,000,000 portion of the Loan was $5,169,231 and $6,461,538

at June 30, 2013 and December 31, 2012, respectively.

For the three months

ended June 30, 2013, Hollywood Media received a scheduled payment under the Loan in the amount of $1,116,573, which included a

principal payment of $646,154, an interest payment of $191,100 on the $7,000,000 portion of the Loan and $279,319 of interest on

the $8,500,000 portion of the Loan.

The principal payment of $646,154, combined with accretion of discount of $322,800, reduced

the value of the $7,000,000 portion of the Loan from $3,947,295 at March 31, 2013 to $3,623,941 at June 30, 2013.

discount, net of the reversal of previously recorded allowance for bad debt, was $584,253 and $317,094 on the $8,500,000 portion

of the Loan during the six and three months ended June 30, 2013.

have received approximately $1,700,000 of principal and interest payments during Y2-13 on the $7,000,000 portion of the Loan (from

As described in Note

3, “Discontinued Operations”

in the Notes to the unaudited condensed consolidated financial statements included in

Part I, Item 1 of this Quarterly Report on Form 10-Q, on October 1, 2012, following the end of the third quarter period, Hollywood

Media received from Key Brand in connection with the Broadway Sale the First $7 Million Earnout payment in cash.

an additional $7,000,000 representing the Second $7 Million Earnout payment was added to the Loan due Hollywood Media by Key Brand

under the Credit Agreement as of October 5, 2012, which $7,000,000 was to be amortized with interest at 12% per annum over the

period October 5, 2012 through December 15, 2015 in equal quarter-annual installments.

As a result of the Second $7 Million

Earnout being added to the $8,500,000 principal amount of the Loan, the principal amount of the Loan due Hollywood Media by Key

Brand was $15,500,000 as of October 5, 2012.

On December 31, 2012, the interest rate on the Loan due Hollywood

Media by Key Brand was increased to 13% per annum and the maturity date of the Loan due Hollywood Media by Key Brand was moved

up to June 30, 2015 from December 15, 2015.

The Loan due Hollywood Media by Key Brand was secured on a second lien basis

by all stock and assets of Theatre Direct and its subsidiaries.

Hollywood Media recorded

the Second $7 Million Earnout at a fair value of $4,500,000, which reflected a $2,500,000 discount.

Hollywood Media amortized

the $2,500,000 discount under the effective interest method through August 8, 2013, at which time the Loan was paid in full in

connection with the Transaction Agreement.

Amortization under the effective interest method is included in "Accretion

of discount, net of allowance for uncollectability"

in the accompanying unaudited condensed consolidated statements of operations

contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

On August 8, 2013 Key

Brand paid Hollywood Media a total of $16,611,738 consisting of $13,861,738 from the prepayment of the Loan and $2,750,000 from

the redemption of the Warrant.

For additional information about this transaction, see Note 3 “Discontinued Operations”

in the Notes to the unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report

on Form 10-Q.

Prior to the repayment

of the Loan and redemption of the Warrant on August 8, 2013, for the six months ended June 30, 2013, Hollywood Media received scheduled

payments under the Loan in the amount of $2,248,977, which included principal payments of $1,292,308, interest payments of $401,100

on the $7,000,000 portion of the Loan and $555,569 of interest on the $8,500,000 portion of the Loan.

The principal payments

of $1,292,308, combined with accretion of discount of $666,126, reduced the value of the $7,000,000 portion of the Loan from $4,250,123

at December 31, 2012 to $3,623,941 at June 30, 2013.

The uncollected face amount (principal) of the $7,000,000 portion of the Loan

was $6,461,538 at December 31, 2012.

On August 8, 2013, Hollywood Media received a total of $16,611,738 from Key Brand consisting

of $13,861,738 from the prepayment of the Loan and $2,750,000 for the redemption in full of the Warrant.

Accretion of discount,

net of the reversal of previously recorded allowance for bad debt, was $702,608 and $118,361 on the $8,500,000 portion of

the Loan during the nine and three months ended September 30, 2013.

We received approximately

$1,700,000 of principal and interest payments during the six months ended June 30, 2013 on the $7,000,000 portion of the Loan (from

the Second $7 Million Earnout).

In addition, we have received approximately $560,000 of interest payments during Y2-13 on the original

$8,500,000 portion of the Loan.

On August 8, 2013 Key Brand paid Hollywood

Media a total of $16,611,738 consisting of $13,861,738 from the prepayment of the Loan and $2,750,000 from the redemption of the

For additional information about this transaction, see Note 10 “Subsequent Events”

in the Notes to the unaudited

condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In addition, we received approximately $560,000 of interest payments during the six months ended

June 30, 2013 on the original $8,500,000 portion of the Loan.

Net cash provided

by investing activities during Y2-13 was $1,282,608 primarily attributable to cash received on the Loan.

By comparison, net cash

provided by investing activities during Y2-12 was $119,289 primarily attributable to the Hollywood.com earn-out payments to the

by investing activities during Y3-13 was $17,625,671 primarily attributable to Hollywood Media receiving a total of $16,611,738

from Key Brand on August 8, 2013, consisting of $13,861,738 from the repayment of the Loan and $2,750,000 from the redemption

of the Warrant under the Transaction Agreement and cash received on the Loan (prior to prepayment).

By comparison, n et

cash provided by investing activities during Y3-12 was $4,299,789 primarily attributable to:

(1) $1,230,500 cash received in connection

with the assignment and assumption of Hollywood Media’s membership interest in Project Hollywood;

(2) $2,950,000 cash received

in connection with the Buyout Amount from R&S Investments, and (3) Hollywood.com earnout payments of $155,000 paid to the

Net cash used in financing

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Hollywood Media’s

capital expenditures during the six months ended June 30, 2013 were $47,200.

We currently anticipate that additional capital expenditures

during 2013 will total approximately $30,000 including various system and equipment upgrades.

capital expenditures during the nine months ended September 30, 2013 were $135,867.

We currently anticipate that additional capital

expenditures during 2013 will total approximately $25,000 including various system and equipment upgrades.

Authorization of Stock Repurchase Program

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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 (the “Repurchase Program”) under which Hollywood Media may use up to $10.0 million of its cash

to repurchase shares of its outstanding common stock.

During the six months ended June 30, 2013, 521,500 shares of Hollywood Media’s

common stock were repurchased under the Repurchase Program for a total cost of $766,029.

repurchase program (the “Repurchase Program”) under which Hollywood Media may use up to $10.0 million of its cash to

repurchase shares of its outstanding common stock.

During the nine months ended September 30, 2013, 521,500 shares of Hollywood

Media’s common stock were repurchased under the Repurchase Program for a total cost of $766,029.

Pursuant to the Repurchase

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Off-Balance Sheet Arrangements

At June 30, 2013,

At September 30, 2013,

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 (a) (4) of Item 303 of SEC Regulation

As such, management believes that we currently do not have any disclosures to make of the sort contemplated by paragraph

(a) (4) of Item 303 of SEC Regulation S-K regarding “off-balance sheet arrangements.”

or other contractually narrow or limited purposes of the sort contemplated by paragraph (a) (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 (a) (4)

of Item 303 of SEC Regulation S-K regarding “off-balance sheet arrangements.”

Critical Accounting Estimates

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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.

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.

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The Company records

derivative instruments at fair value in our accompanying condensed consolidated balance sheet with changes in the fair values

of those instruments reported in earnings in our condensed consolidated results of operations.

derivative instruments at fair value in our accompanying condensed consolidated balance sheet with changes in the fair values of

those instruments reported in earnings in our condensed consolidated results of operations.

The Company does not hold any derivative

1 unchanged sentence

liability financial instruments as hedging instruments.

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 Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and Note

2 to the Consolidated Financial Statements included in Part II, Item 8 in our Annual Report on Form 10-K for the year ended December

Under FASB Accounting

Standard Codification Topic No.

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

Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and Note 2 to the

Consolidated Financial Statements included in Part II, Item 8 in our Annual Report on Form 10-K for the year ended December 31,

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.

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.

Company's goodwill is tested for impairment on an annual basis, on the first day of the fourth fiscal quarter or more often

if an event occurs or circumstances change that would indicate a potential impairment exists.

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.

In September 2011,

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(“ASU 2011-08”).

ASU 2011-08 allows entities to first assess qualitatively whether it is necessary to perform the two-step goodwill impairment

If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of

a reporting unit is less than its carrying amount, the quantitative two-step goodwill impairment test is required.

An entity has

the unconditional option to bypass the qualitative assessment and proceed directly to performing the first step of the goodwill

impairment test.

ASU 2011-08 is effective for fiscal years beginning after December 15, 2011 and its early adoption by the Company

during the quarter ended September 30, 2011 did not have a material effect on the Company’s consolidated financial statements.

ASU 2011-08 allows entities to first assess qualitatively whether it is necessary to perform the two-step goodwill impairment test.

If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting

unit is less than its carrying amount, the quantitative two-step goodwill impairment test is required.

An entity has the unconditional

option to bypass the qualitative assessment and proceed directly to performing the first step of the goodwill impairment test.

ASU 2011-08 is effective for fiscal years beginning after December 15, 2011 and its early adoption by the Company during the quarter

ended September 30, 2011 did not have a material effect on the Company’s consolidated financial statements.

The Company believes

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a consequence of market conditions, including perceived risks in the debt markets, the Company’s industry and the broader

While the Company believes that some of these risks are unique to specific companies, some represent global industry

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.

The Company has evaluated the impairment of its goodwill, giving consideration to these risks, and their impact upon the respective

reporting units’

has evaluated the impairment of its goodwill, giving consideration to these risks, and their impact upon the respective reporting

fair values, and has reported impairments where it deems appropriate.

The Company believes that the fair

value of its remaining reporting unit that contains goodwill at June 30, 2013 and December 31, 2012 exceeded the book value of

The Company believes that the fair value of

its remaining reporting unit that contains goodwill at September 30, 2013 and December 31, 2012 exceeded the book value of that

Inflation and Seasonality

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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 and other

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

time that is expended in the creation and development of the intellectual properties and their respective licensing and other 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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK.

Not required.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements