SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

OR

FOR THE TRANSITION PERIOD FROM __________ TO __________.

COMMISSION FILE NUMBER
0-22582

TBA ENTERTAINMENT CORPORATION

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

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

COMMON STOCK, PAR VALUE $0.001 PER SHARE

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

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

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

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

     The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant (based on the closing sale price of such stock as reported on March 26, 2004 on the American Stock Exchange) was approximately $2,680,900.

     As of March 26, 2004, 7,375,400 shares of the registrant’s Common Stock were outstanding.

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INTRODUCTORY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     Except for historical information, the matters discussed in this Form 10-K contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are intended to be covered by the safe harbors created by such provisions. These statements include, but are not limited to: management beliefs regarding the future operations of the Company, any projections of revenues, earnings or cash flows and the plans and objectives of management for future growth or sale of the Company.

     The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future political, economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-K will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives of the Company will be achieved.

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DOCUMENTS INCORPORATED BY REFERENCE:

None.

PART I

ITEM 1. BUSINESS.

GENERAL

     TBA Entertainment Corporation (“TBA” or the “Company”) is a strategic communications and entertainment company that creates comprehensive programs to reach and engage audiences worldwide. TBA provides a broad range of strategic communications and entertainment services through its four integrated business segments. TBA believes that its strong presence in each of these very fragmented industries has created an industry-leading integrated services company. With a base of Fortune 1,000 companies, fairs, festivals and recording artists as clients, TBA links global business with popular culture, enabling clients to maximize the impact of the message and the results achieved. TBA has offices spanning from Los Angeles to London including Nashville, Chicago, San Diego, Salt Lake City, Atlanta, and Omaha. TBA’s four business segments are as follows:

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

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

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

PROPOSED SALE OF THE COMPANY

     On April 8, 2004, the Company signed definitive merger documents for the proposed sale of 100% of the capital stock of the Company in an all cash transaction. The proposed sale of the Company, which requires shareholder approval, is likely to close in the second quarter of 2004. The proposed terms of the transaction provide for cash consideration in the amount of $6,150,000 which, after deduction of certain transaction expenses, results in net consideration of $0.67 per share of common stock and $0.70 per share of preferred stock, subject to downward adjustment based on certain of the Company’s other expenses incurred in connection with the transaction. It is anticipated that the transaction will result in the Company no longer being a publicly traded entity.

CORPORATE COMMUNICATIONS

     The Corporate Communications division is an industry leader in the strategic development and production of innovative business communications, entertainment and special event programs that enable corporate clients to reach and engage targeted internal and business-to-business audiences worldwide. TBA utilizes award-winning creative capabilities and state-of-the-art technology to help corporate clients worldwide deliver targeted messages that educate, inspire and motivate. The Corporate Communications division

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targets clients with recurring needs for business communications and entertainment services. The Company’s client list encompasses a number of industry sectors including telecommunications, information technology, pharmaceuticals, food service and insurance. Representative clients include Nortel, SAP, BEA Systems, Motorola, Bristol Myers Squibb Company, McDonald’s Corporation, and State Farm.

     The Corporate Communications division specializes in the creative development, design, production and staging of a wide range of internal and business-to-business events including: sales conferences, business meetings and headline entertainment, product introductions and recognition events. TBA believes that it has benefited from the decision by an increasing number of major corporations to outsource their business communications and entertainment needs. Through its nationwide offices, TBA delivers a full range of strategic communications and entertainment services to its clients. The Corporate Communications division emphasizes the coordination and allocation of resources and services between the division’s offices. TBA has long-standing relationships with freelance contractors in various production, technical and creative disciplines, and supplements its full-time staff with independent contractors where needed.

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

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

ENTERTAINMENT MARKETING

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

     TBA provides companies with the power to reach and engage their customers in a fresh, contemporary manner utilizing relevant programming and experiential branding techniques to integrate their company or brand into the lifestyle of their consumers. The Entertainment Marketing division seeks to develop music-marketing programs that appeal to highly focused demographic segments. In addition, corporations are increasingly utilizing entertainment personalities as advertising tools, having recognized the effectiveness of concert/tour sponsorship as a cost-effective means to reach a target audience. The Company has produced sponsored music-marketing programs for clients that include CMT, Kelloggs, General Motors, and Nescafe. In addition, the Company has produced major television broadcast events and specials for clients that include Turner Sports, NASCAR, Blockbuster and Hard Rock Café. The Company’s Entertainment Marketing division is currently characterized by a relatively small number of accounts with high revenues per account. As a result, the loss or addition of any one account could have a material effect on the Company’s revenues.

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

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FAIRS AND FESTIVALS

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

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

     The Company’s Fairs and Festivals division was assembled through two acquisitions completed in 2000. The Company believes that the fairs and festivals industry is highly fragmented and its competitors consist of primarily small, regional companies that, like the Company, have long standing relationships with their clients. The most important competitive factors are the ability to provide the fairs and festivals with quality music entertainment at a competitive price and to produce an exceptional entertainment event. The Company believes that it can compete successfully in this market by utilizing the Company’s extensive entertainment relationships with artists and artist booking agencies to secure musical talent while utilizing the Company’s production capabilities to produce a high quality event.

ARTIST MANAGEMENT

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

     The Company has made five strategic acquisitions over the past six years in assembling the Artist Management division, including the July 2001 acquisition of Alliance Artists Ltd. The Company believes that the artist management industry is highly-fragmented and its competitors consist primarily of small independent artist managers with a limited roster of clients, although there are several participants in the industry that have capabilities and resources comparable to and, in certain respects, greater than those of the Company.

BUSINESS SEGMENT INFORMATION

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

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GOODWILL IMPAIRMENT

     In July 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets”, which establishes accounting and reporting for acquired goodwill and other intangible assets. SFAS No. 142 requires that goodwill and other intangible assets that have indefinite useful lives not be amortized but, instead, tested at least annually for impairment. The Company adopted SFAS No. 142 beginning in the first quarter of 2002. The Company’s only identifiable intangible asset is goodwill.

     In accordance with the provisions of SFAS No. 142, the Company uses a two-step process when performing its annual review for goodwill impairment. The first step is to determine the fair value of the reporting unit (each of the Company’s four business segments) and compare this value to its carrying amount. The fair value is determined using a discounted future cash flow methodology. If the carrying value exceeds the fair value, a second step is required to determine whether goodwill has been impaired and if so, measure the amount of the impairment. Upon the adoption of SFAS No. 142 in the first quarter of 2002, the Company determined that the goodwill of its Fairs and Festivals unit was impaired by $1,988,600, as a result of the earnings of that unit not meeting the earnings expectations set by the Company at the time the businesses were acquired. During the annual impairment review process as of November 2003, the Company determined that its goodwill was further impaired as a result of the carrying value of three of its four business segments exceeding the fair value of those units. Accordingly, for the year ended December 31, 2003, the Company recorded goodwill impairment of $6,152,700, $3,184,000 and $1,063,500, relating to its Artist Management, Fairs and Festivals and Corporate Communications business segments, respectively. The decrease in fair value from November 2002 was due to a decrease in the projected future operating profits and cash flows from these business segments. The reduction in Artist Management is due primarily to reduced revenue projections from its artist roster and an increase in the compensation structure paid to retain senior executives. The reduction in Fairs and Festivals is due primarily to the projected revenue loss from the departure of a senior account executive. The reduction in Corporate Communications is due primarily to reduced revenue projections and gross margins due to heightened competition and an increase in the compensation structure paid to retain senior executives.

COMPETITION

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

SEASONALITY

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

DISCONTINUED OPERATIONS

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

TRADEMARKS

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

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REGULATION AND LICENSES

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

EMPLOYEES

     As of December 31, 2003, the Company had approximately 116 full-time and part-time employees. It is the Company’s intention to manage its growth consistent with its ability to attract and retain qualified employees to manage its operations. Over the course of any given event or program, the Company evaluates the production personnel requirements and determines the extent to which it must supplement its available employee base with the use of independent contractors or part-time employees. The Company believes that its relationship with its employees and independent contractors is good.

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

RISK FACTORS

If the Company does not Achieve its Operating Plan for 2004, the Company may have Insufficient Cash Flow to Fund Operations and Pay its Debt.

     Achieving the Company’s operating plan for 2004 is critical to the future operations of the Company. Only a small portion of the Company’s expenses vary with revenue in the short term. Net income may be disproportionately affected by a reduction in revenue in 2004. Although management of the Company believes that the 2004 operating plan is achievable, if the Company does not achieve its revenue targets forecasted for 2004, it may not generate sufficient cash flows to fund future operations.

     In addition, as of December 31, 2003, the Company was in default on substantially all its long-term debt. From January 1, 2004 to April 14, 2004, the Company completed a restructuring of all debt that was in default. The Company provided its 2004 operating plan, including its 2004 cash flow projections to its debt holders. These cash flow projections were used by the debt holders in determining whether to restructure the Company’s various notes payable. Although management of the Company believes that the 2004 operating plan is achievable, if the Company does not achieve its 2004 operating plan, it may not generate sufficient cash flow to make the scheduled principal payments required pursuant to the restructured bank term loan or restructured acquisition notes payable. Failure to make scheduled principal payments would result in the Company again being in default on its long-term debt which could have a material adverse impact on the Company’s financial position and results of operations.

Key Senior Executives may Leave the Company.

     Certain of the Company’s key senior executives do not have long-term employment contracts with the Company and are not subject to any covenants prohibiting competition with the Company or solicitation of clients of the Company. In addition, the Company’s services to its customers are currently managed by a relatively small number of account executives and artist managers. Although no current key executive has informed the Company of their intent to terminate, a loss of these key senior executives and a loss of their clients could have a material adverse impact on the financial position and future operations of the Company.

Further Terrorist Attacks or Continuation of Global Economic Slowdown could Adversely Affect the Company.

     The terrorist attacks of September 11, 2001 and the global economic slowdown of 2001-2002 had a devastating impact on the operations of the Company. The Company experienced immediate program cancellations and postponements impacting greater than $15 million of revenue which management otherwise would have expected to have been realized during 2001. The economic slowdown also impacted the Company’s business activity throughout 2002. In 2003, the Company began to experience an increase in its corporate client sales activity as a result of the apparent beginning of an economic recovery. If there are further terrorist attacks or if the economic recovery does not materialize in the short term, the Company’s corporate client business may be adversely affected and, in turn, the Company’s revenue may experience another decline.

The Lengthy Sales Cycle and Increased Competition for Corporate Client Business could Adversely Affect the Company.

     The corporate communications and entertainment marketing business segments typically have a lengthy sales cycle and are subject to delays beyond the Company’s control. In addition, as a result of the tightening economy, the Company’s customers may be reluctant to purchase the Company’s services and rely instead on internally developed programs. The slowdown in the corporate client business activity in 2001 and 2002 has also created increased competition for existing business, resulting in lower gross profit margins. Whether or not within the Company’s control, delays in the sales cycle or increased competition for customers could materially affect the Company’s financial position and future operations.

The Company may Lose Customers Due to its Financial Position.

     Although the Company has experienced significant net losses for 2001-2003, the Company has successfully produced over 700 corporate communications events during that period. The Company has been able achieve these results by successfully managing its cash flow requirements, working with its vendors on payment terms and negotiating with its debt holders to restructure debt payments. However, as of December 31, 2003, the Company had a net working capital deficit of $3,947,300 and must achieve its 2004 operating plan in order to fund its operations and make scheduled principal payments on its debt. Certain of the Company’s customers may have financial requirements that the Company would be required to meet in order to become a vendor to the customer. Although no customer has indicated that the Company does not meet its financial requirements, if the Company fails to achieve its 2004 operating plan or if the financial condition of the Company worsens, such events could lead to the Company losing existing and potential customers resulting in a substantial loss of revenues.

ITEM 2. PROPERTIES.

     The Company and/or its subsidiaries have entered into lease agreements with respect to leased office space in eight cities in which the Company operates. These leases expire at various dates through December 2007. As of December 31, 2002, the Company’s wholly-owned subsidiary, TBA Entertainment Group Dallas, Inc., owned the building in which its offices and production facilities were located, as well as certain vacant land adjacent to such building. As a result of the Company’s decision to close the Dallas office, the Dallas facility was reclassified as “Asset Held for Sale” as of December 31, 2002. In February 2003, the Company sold the land and building, using the proceeds to reduce the balance of its bank credit facility.

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

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

ITEM 3. LEGAL PROCEEDINGS.

     As of December 31, 2003, the Company was in default on substantially all of its bank debt and acquisition notes payable. On March 18, 2004, a Verified Complaint was filed against the Company by Richard S. Smith in the Circuit Court of Cook County, Illinois, seeking payment in full under one of acquisition notes payable by the Company. The suit seeks payment in full of all $566,751 of outstanding principal amount due under the note, plus all accrued but unpaid interest and all costs for enforcing the note, including attorneys’ fees and expenses. On March 29, 2004, the plaintiff agreed to a modification to the payment terms of the acquisition note payable and an extension of the due date until March 31, 2005. In addition, the plantiff agreed to withdraw the Verified Complaint, without prejudice, at the request of the entity proposing to acquire the Company. As of April 14, 2004, such request had not been made and the Verified Complaint had not been withdrawn.

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

     There were no meetings of the Company’s shareholders or matters submitted to a vote of the Company’s shareholders during the fourth quarter of 2003. PART II

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

(a)

The Common Stock is listed for trading on the American Stock Exchange under the symbol “TBA.” On March 26, 2004, the last reported sale price of the Common Stock was $0.44 per share. The following table sets forth the range of high and low sales prices of the Common Stock as reported on the American Stock Exchange during each quarterly period within the two most recent fiscal years.

	(b)		The approximate number of holders of record of Common Stock on March 26, 2004 was 147.
	(c)		The Company has not paid or declared cash distributions or dividends and does not intend to pay cash dividends on the Common Stock in the foreseeable future. The Company currently intends to retain all earnings to finance the development and expansion of its operations. The declaration of cash dividends in the future will be determined by the Board of Directors based upon the Company’s earnings, financial condition, capital requirements and other relevant factors.
	(d)		The following table summarizes as of December 31, 2003, the shares of Common Stock authorized for issuance under the Company’s equity compensation plans:

EQUITY COMPENSATION PLAN INFORMATION

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

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ITEM 6. SELECTED FINANCIAL DATA

1)		In 1999, the Company acquired a business that was discontinued in 2001. The discontinuation of this business has resulted in the reclassification of the operating results and net assets and liabilities of this business to discontinued operations for all periods presented.
		The Company has completed five acquisitions from 1999 to 2001. No acquisitions were made in 2002 and 2003. Results of operations of each of these acquisitions are included from their respective acquisition dates. The accounting for these acquisitions was in accordance with purchase method of accounting.
2)		Working capital represents total current assets less total current liabilities (excluding net short-term liabilities of discontinued operations).
3)		In September 2002, the Company reduced its recorded goodwill and long-term debt by $3,518,400, representing the outstanding amount of promissory notes that were subject to earn-out adjustments at that time, as payment of such amounts were no longer considered probable. See Notes 5 and 6 to the Consolidated Financial Statements contained in Item 8 of this Form 10-K for further discussion concerning the Company’s long-term debt and acquisitions, respectively.
4)		Long-term debt excludes notes payable and current portion of long-term debt totaling $2,105,500, $1,617,200, $1,830,000, $3,049,600 and $2,913,200 as of December 31, 2003, 2002, 2001, 2000 and 1999, respectively.
5)		Upon the adoption of SFAS No. 142, “Goodwill and other Intangible Assets” in the first quarter of 2002, the Company tested its goodwill for impairment. Based on the estimated fair market value of its fairs and festivals reporting unit, the Company recorded a goodwill impairment loss in the first quarter of 2002 of $1,988,600. Based on the annual test for goodwill impairment performed as of November 2003, the Company recorded a further goodwill impairment loss for 2003 of $6,152,700, $3,184,000 and $1,063,500, associated with the artist management, fairs and festival and corporate communications reporting units. Pursuant to SFAS No. 142, the Company stopped amortizing goodwill on January 1, 2002. For the years ended December 31, 2001, 2000 and 1999, goodwill amortization was $2,105,700, $1,800,000 and $940,900, respectively.

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6)

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

     The calculation of EBITDA is shown below:

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

     The purpose of the following discussion and analysis is to explain the major factors and variances between periods of the Company’s results of operations. The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the historical consolidated financial statements and notes thereto included in Item 8, beginning on page 16.

INTRODUCTION

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

     The Company has built this comprehensive communications and entertainment business model through a combination of internal growth and strategic acquisitions. Since April 1997, the Company has completed 11 strategic acquisitions and has built a comprehensive network of eight offices to serve its client base. In 2001, the Company completed the acquisitions of Moore Entertainment, Inc. (“Moore”) in February and Alliance Artists, Ltd. (“Alliance”) in July (collectively, the “2001 Acquisitions”). The results of operations of the 2001 Acquisitions are included from the corresponding acquisition dates. There were no acquisitions in 2003 or 2002.

GENERAL

Business Segments

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

Critical Accounting Policies

     In response to the SEC’s Release No. 33-8040, “Cautionary Advice Regarding Disclosure About Critical Accounting Policy”, the Company identified the most critical accounting principles upon which its financial status depends. The Company determined the critical accounting principles to be related to revenue recognition, costs related to revenue and impairment of goodwill.

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Revenue Recognition

     The Company continues to derive a majority of its revenues (63%, 61%, and 70% of total revenues for the years ended December 31, 2003, 2002 and 2001, respectively) from the production of innovative business communications programs to help corporate clients reach and engage their target audiences. The Company helps businesses effectively communicate their message via a broad range of business communications, meeting production, and entertainment production services. The Company receives a fee for providing these services, which may include developing creative content, providing comprehensive project management and arranging for live entertainment and related production services. Revenue is recognized when an event occurs. Costs of producing the event are also deferred until the event occurs. At December 31, 2003, deferred revenue was $5,366,800 compared to $3,560,200 at December 31, 2002. The increase is due primarily to deferred revenue having been received by December 31, 2003 on several new programs to be produced in the first and second quarters of 2004.

     The remainder of the Company’s revenues are generated from its roster of artist clients (10%, 10% and 6% of total revenues for the years ended December 31, 2003, 2002 and 2001, respectively), entertainment marketing clients (6%, 8% and 8% of total revenues for the years ended December 31, 2003, 2002 and 2001, respectively) and fairs and festivals clients (21%, 21% and 16% of total revenues for the years ended December 31, 2003, 2002 and 2001). Commissions received from artists’ earnings are recognized in the period during which the artist earns the revenue. There are generally only minimal direct costs associated with generating revenue from artist clients. Entertainment marketing revenues and cost of revenues are recognized when the services are completed for each program or, for those programs with multiple events, apportioned to each event and recognized as each event occurs. Fairs and festivals also recognize revenue and cost of revenues when the services are completed for each program and when the event has occurred.

Costs Related to Revenue

     Costs related to revenue is comprised of all costs associated with the production of an event, including talent fees, contracted services, equipment rentals, costs associated with the production of audio-visual effects and the cost of internal production labor. Direct out-of-pocket costs are deferred until the event occurs. Internal production labor costs are expensed as incurred. At December 31, 2003, deferred costs were $999,800 compared to $1,030,700 at December 31, 2002.

Goodwill and Other Intangible Assets

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

     In accordance with the provisions of SFAS No. 142, the Company performs its annual review of impairment of goodwill in accordance with the provisions of SFAS No. 141 by comparing the carrying value of the applicable reporting unit to the fair value of the reporting unit. If the fair value is less than the carrying value, then the Company measures potential impairment by assigning the assets and liabilities of the Company to the reporting unit and comparing the implied value of goodwill to its carrying value.

     Upon the adoption of SFAS No. 142 in the first quarter of 2002, the Company determined that the goodwill of its Fairs and Festivals unit was impaired by $1,988,600, as a result of the earnings of that unit not meeting the earnings expectations set by the Company at the time the businesses were acquired. During the annual impairment review process as of November 2003, the Company determined that its goodwill was further impaired as a result of the carrying value of three of its four business segments exceeding the fair value of those units. Accordingly, for the year ended December 31, 2003, the Company recorded goodwill impairment of $6,152,700, $3,184,000 and $1,063,500, relating to its Artist Management, Fairs and Festivals and Corporate Communications business segments, respectively.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

     Revenues decreased $1,199,600, or 2%, to $47,932,200 for 2003 from $49,131,800 for 2002. Revenues from corporate clients increased 1% to $30,389,100 for 2003 from $29,966,700 for 2002. In late 2002, the Company closed corporate client group offices in New York, Dallas and Atlanta to consolidate operations into larger, more profitable offices. These closed offices accounted for $2,949,100 of revenues and 32 corporate client events in 2002. Excluding the impact from these closed offices, corporate client revenues for the remaining offices increased $3,371,500 or 12%, and the number of corporate client events remained relatively unchanged at 188. The average revenue per event in the remaining offices increased to $161,600 per event for 2003, composed to $135,900 per event for 2002. The increase in revenues and in average revenue per event in the remaining offices resulted primarily from two, new large events in the 2003 period with revenue in excess of $2 million.

     Revenues from entertainment marketing clients decreased $1,129,800 or 27% from $4,116,400 in 2002 to $2,986,600 in 2003. The decrease is due primarily to the loss of programs formerly produced by an employee who terminated his employment with the

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Company in early 2003. Revenues from artist clients were $4,634,600 for 2003, which is relatively unchanged from 2002. There were no significant changes in the Company’s artist roster between periods. Revenues from fairs and festivals clients decreased $454,000 or 4%, from $10,375,900 in 2002 to $9,921,900 in 2003, primarily due to both a decrease in the number of fair and festival clients for which the Company executed buy/sell arrangements with respect to artist performances and to a decrease in average revenue per such arrangement.

     Cost of revenues decreased $32,600 from $33,010,100 for 2002 to $32,977,500 for 2003. Cost of revenues, as a percentage of revenues, increased from 2002 to 2003, resulting in a decrease in gross profit margin to 31.2% for 2003 from 32.8% in 2002. The decrease in the total gross margin percentage is due primarily to lower gross margins on corporate client events in the 2003 period due to increased competitive pricing to secure new corporate events. This decrease was partially offset by an increase in gross margins on entertainment marketing programs as more programs were produced for a flat fee, with minimal cost of revenues.

     Selling, general and administrative expenses decreased $2,867,800, or 17%, to $13,623,200 for 2003 compared to $16,491,000 for 2002. The decrease results primarily from cost savings in the corporate client group, including reduced expenses from the closure of the New York, Dallas and Atlanta offices in late 2002, reductions in overall headcount and related compensation costs, and a reduction in travel related and other general and administrative costs. The reduction was partially offset by increased compensation costs incurred in 2003 in the artist client group due to the addition of new artist managers and the restructuring of compensation agreements to retain certain existing artist managers.

     Depreciation expense decreased $353,500, or 52%, to $324,100 for 2003 from $677,600 for 2002. The decrease resulted primarily from the disposal of equipment from three offices, which were closed in 2002, and full depreciation of other fixed assets.

     In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangibles”, the Company performs its annual review for goodwill impairment in November of each year. Based on the results of the November 2003 test, the Company determined the carrying value for three of its four business segments exceeded the fair value of those business segments. Accordingly, the Company recorded a goodwill impairment charge of $10,400,200 in the fourth quarter of 2003. No annual goodwill impairment charge was recorded in 2002.

     Other income includes proceeds from the sale of the Company’s interest in a joint venture, formed to produce an entertainment marketing program in 2000 and 2001. For the years 2003 and 2002, the Company recognized $70,700 and $63,000 of income, respectively, from this sale. Other income for the 2002 period also included $364,800 from the reversal of accrued interest expense recorded in prior years associated with contingent promissory notes payable related to certain of the Company’s acquisitions in 1999-2001. The Company is no longer accruing interest on this contingent purchase price consideration until the actual payment is determined.

     Net interest expense increased $99,100, or 21% to $566,000 for 2003 from $466,900 for 2002. The change is attributable primarily to increased interest expense associated with additional bank borrowings in 2003, an increase in the interest rate paid on certain acquisition notes payable due to the Company being in default in 2003 and the amortization to interest expense of the fair market value of warrants issued in May 2003 in connection with the restructuring of the Company’s bank term loan.

     The income tax benefit for the 2003 period is $56,800, or 0.6%, on a loss from continuing operations before income taxes of $9,870,400. This compares to an income tax benefit of $860,000, or 83%, for the 2002 period on a loss from continuing operations before income taxes of $1,035,400. The effective tax rates reflect statutory tax rates adjusted for estimated book/tax differences. The primary reason contributing to the large income tax benefit in the prior year was the recoverable federal taxes paid in years prior to 2002. As of December 31, 2002, the Company had utilized the majority of its income tax carrybacks. As of December 31, 2003, the Company had a net deferred tax asset of $5,253,200, related primarily to net operating loss carryforwards and the timing of deductibility of goodwill amortization and impairment charges. The Company has recorded a valuation allowance equal to the net deferred tax asset. Realization of the future tax benefits related to this deferred tax asset is dependent upon many factors, including the ability to generate taxable income within the Company’s net operating loss carry forward period. Until the Company recognizes net income, no further tax benefit will be recognized.

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

     Revenues decreased $11,273,000, or 19%, to $49,131,800 for 2002 from $60,404,800 for 2001. Revenues from the corporate client group decreased $12,227,500, or 29%, from $42,194,200 in 2001 to $29,966,700 in 2002. The number of corporate client events decreased to 227 in 2002 from 288 in 2001, due to a reduction in customer demand during 2002 as a result of the continued impact of the September 11, 2001, terrorist attacks and the global economic slowdown which began in 2001 and continued throughout 2002.

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The average revenue per event decreased to $131,300 per event for 2002, compared to $146,500 per event for 2001 due to a reduction in the number of large corporate events produced in 2002. In 2002, the Company produced 32 events with revenues in excess of $250,000, versus 36 such events in 2001. The reduction is due primarily to certain larger corporate events that occurred in 2001, which were not repeated or were scaled back due to the global economic slowdown.

     Revenues from the entertainment marketing client group decreased $754,900, or 15%, from $4,871,100 in 2001 to $4,116,400 in 2002. The decrease is primarily due to two larger 2001 entertainment marketing programs that did not repeat in 2002. The decrease was partially offset by an increase in the number of smaller entertainment marketing programs and promoted music tour dates occurring in 2002. Revenues from artist clients, which were not significantly impacted by the September 11, 2001, terrorist attacks, increased $1,013,100, or 28%, to $4,672,800 in 2002 from $3,659,700 in 2001. Of this increase, $458,400 is attributed to a full year of operations of Alliance, which was acquired in July 2001. The remaining increase is due to revenues generated by TBA’s expanding roster of artist clients. Revenues from the fairs and festivals client group increased $695,900, or 7%, to $10,375,900 in 2002 from $9,680,000 in 2001. This increase is reflective of the 25% increase in the number of fairs and festivals programs represented by TBA to 217 in 2002 from 174 in 2001.

     Cost of revenues decreased $7,989,100, or 19%, to $33,010,100 for 2002 from $40,999,200 for 2001. The decrease is attributable to the overall decrease in revenues for the corporate client and entertainment marketing client groups from 2001 to 2002. Cost of revenues, as a percentage of revenues, decreased 1%, resulting in an increase in gross profit margin to 33% for 2002 from 32% in 2001. The increase is primarily attributable to the 28% increase in artist client revenues, which generally have minimal direct costs of revenues, offset by lower gross profit margins on revenues from the corporate communications and entertainment marketing client groups. The lower gross profit margins are a result of a more competitive corporate environment brought about by the global economic slowdown and an increase in the number of promoted music tour dates, which generally have a lower gross profit margin.

     Selling, general and administrative expenses decreased $3,273,100, or 17%, to $16,491,000 for 2002 from $19,764,100 for 2001. The decrease results primarily from a comparative decrease in sales expense attributable to the reduced level of revenues and cost savings implemented beginning in the third quarter of 2001, including reductions in headcount and related compensation costs, elimination of costs attributable to unprofitable operations, elimination of certain incentive compensation costs and a reduction in travel-related and other general and administrative expenses. The decrease is partially offset by the impact of incremental selling, general and administrative expenses associated with the 2001 Acquisitions, a $250,000 reserve for an account receivable from a corporate client in bankruptcy, a $481,600 accrual for termination costs associated with closed offices and approximately $280,000 of costs associated with the termination of certain transactional discussions.

     Excluding 2001 goodwill amortization of $2,069,800, depreciation expense and other amortization decreased $150,700, or 18%, to $677,600 in 2002 from $828,300 for 2001. The decrease results primarily from the retirement of certain equipment and other equipment being fully depreciated. The Company adopted SFAS No. 142 in 2002 and no longer amortizes goodwill.

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

     Net interest expense decreased $81,400, or 15%, to $466,900 for 2002, versus net interest expense of $548,300 for 2001. The decrease is attributable primarily to no longer accruing interest expense related to contingent purchase price consideration and lower interest expense from repayments of other acquisition notes payable, partially offset by increased interest expense associated with additional bank borrowings.

     The income tax benefit for 2002 is $860,000 or 83%, on a loss from continuing operation before taxes of $1,035,400 compared to an income tax benefit of $189,100, or 5%, for 2001 on a loss from continuing operations before taxes of $3,469,700, and reflects statutory tax rates adjusted for estimated permanent book/tax differences. The primary reason contributing to the income tax benefit increase in the current year is the additional recoverable federal taxes paid in prior years. At December 31, 2002, the Company had utilized the majority of its tax carrybacks.

     In 2002, the Company recognized a goodwill impairment loss of $1,988,600 related to the adoption of SFAS No. 142, “Goodwill and Other Intangibles”. Pursuant to the transitional rules of SFAS No. 142, this loss was recorded in the first quarter of 2002 as a

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cumulative effect of accounting change. There was no tax effect of this impairment as none of the goodwill impairment loss was deductible for tax purposes.

DISCONTINUED OPERATIONS

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

LIQUIDITY AND CAPITAL RESOURCES

     Although the operations of the Company, excluding the impact of goodwill impairment, improved in 2003 over 2002, the Company is still recovering from the impact of the September 11, 2001 terrorist attacks and the global economic slowdown, which significantly reduced cash flows and resulted in a working capital deficit of $2,912,200, including $1,830,000 of notes payable and current portion of long-term debt, as of December 31, 2001. The Company took aggressive actions beginning in the third quarter of 2001 to reduce expenses in response to the significant continuing reduction in revenues attributable to those events. Those actions have brought the Company’s expenses in line with the lower revenues. However, in 2002 and 2003, the Company has not been successful in restructuring its bank debt and acquisition notes payable on a long-term basis. Accordingly, payment commitments under its long-term debt have prevented the Company from improving its working capital deficit. In order to better manage its ongoing cash requirements, the Company elected to forego making some of the scheduled principal payments on its bank term loan as well as scheduled principal payments on certain of its acquisition notes payable beginning in June 2003.

     As a result of the payment reductions in 2003, the Company was in default on substantially all its long-term debt as of December 31, 2003. From January 1, 2004 to April 14, 2004, the Company completed the renegotiation of the terms of all debt that was in default. The renegotiated terms extended the term of its bank term loan to March 31, 2005 and provided for a reduction in the current maturities of long-term debt due in 2004 to $2,105,500 from $4,692,200. The Company has no borrowing capabilities under any of its loan agreements as of December 31, 2003 and April 14, 2004. The Company’s liquidity needs for the foreseeable future continue to be primarily for repayment of indebtedness and for working capital. Capital expenditures will be focused on equipment replacements and are not expected to be significant. Based on current cash flow projections for 2004, management believes that the Company’s future cash flows from operations and current cash reserves will be sufficient to satisfy its current and future debt service, working capital requirements and maintain debt covenant compliance through at least March 31, 2005. However, there can be no assurance that management’s assumptions will correspond to actual events.

     The Company is also exploring strategic opportunities for the Company. The Company has retained an investment-banking firm to assist the Company in evaluating a variety of transactional and financing alternatives. On April 8, 2004, the Company signed definitive merger documents for the proposed sale of 100% of the capital stock of the Company. The proposed sale, which requires shareholder approval, is expected to close in the second quarter of 2004. Upon consummation of the transaction, it is anticipated that the Company will no longer be a publicly traded entity. Since the transaction requires shareholder approval, which has not yet been given as of April 14, 2004, and is subject to additional conditions to closing, there can be no assurances that the transaction will be consummated.

     At December 31, 2003, the Company had cash and cash equivalents of $2,620,900 and a working capital deficit of $3,947,300, which includes $2,105,500 of notes payable and the current portion of long-term debt and $211,800 of net liabilities from discontinued operations. At December 31, 2002, the Company had cash and cash equivalents of $1,527,800 and a working capital deficit of $3,502,700, which includes $1,617,200 of notes payable and current portion of long-term debt and $211,800 of net liabilities from discontinued operations.

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Cash Flow Statement Analysis

     Summarized Statements of Cash Flow