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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

or

Commission file number: 000-26393

Jupitermedia Corporation

(Exact name of Registrant as specified in its charter)

(203) 662-2800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

The number of outstanding shares the Registrant’s common stock, par value $.01 per share, as of May 6, 2004 was 26,250,846.

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Jupitermedia Corporation

Index

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Jupitermedia Corporation

Consolidated Condensed Balance Sheets

December 31, 2003 and March 31, 2004

(unaudited)

(in thousands, except share and per share amounts)

See notes to consolidated financial statements.

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Jupitermedia Corporation

Unaudited Consolidated Condensed Statements of Operations

For the Three Months Ended March 31, 2003 and 2004

(in thousands, except per share amounts)

See notes to consolidated financial statements.

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Jupitermedia Corporation

Unaudited Consolidated Condensed Statements of Cash Flows

For the Three Months Ended March 31, 2003 and 2004

(in thousands)

See notes to consolidated financial statements.

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Jupitermedia Corporation

Notes to Consolidated Condensed Financial Statements

March 31, 2004

(unaudited)

Jupitermedia is a global provider of original online information, images, research and events for information technology (“IT”), business and creative professionals. JupiterWeb, the online business of Jupitermedia, operates four distinct online networks: internet.com and EarthWeb.com for IT and business professionals; DevX.com for software and Web developers and ClickZ.com for interactive marketers. JupiterImages, formerly ArtToday, Inc. (“ArtToday”), is a Web-based image resource serving creative professionals with products like Photos.com, ClipArt.com and FlashComponents.com. Jupitermedia also includes JupiterResearch, an international market research and advisory business specializing in business and technology market research. In addition, JupiterEvents produces offline conferences and trade shows focused on IT and business-specific topics.

The accompanying unaudited consolidated financial statements have been prepared from the books and records of Jupitermedia in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The consolidated statement of operations for the three months ended March 31, 2004 is not necessarily indicative of the results to be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2003 included in Jupitermedia’s Annual Report on Form 10-K for the year ended December 31, 2003. In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the interim periods presented have been reflected in such consolidated financial statements.

The consolidated financial statements include the accounts of Jupitermedia and its majority-owned and wholly-owned subsidiaries. All intercompany transactions have been eliminated.

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3. STOCK BASED COMPENSATION

Jupitermedia grants stock options with an exercise price equal to the fair value of the shares at the date of grant. Jupitermedia accounts for stock option grants in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”, and accordingly, recognizes no compensation expense for such grants. If Jupitermedia determined compensation cost for its stock options based on the fair value at the date of grant under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation”, its pro forma net income (loss) and net income (loss) per share would be as follows (in thousands, except per share amounts):

Those pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period and additional options may be granted in future years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used for grants during the three months ended March 31, 2003 and 2004: risk-free interest rates of 1.96% and 2.17%, respectively; expected lives of three years; expected dividend rate of zero; and expected volatility of 125% and 123%, respectively.

Intangible assets and goodwill include the preliminary allocation of the purchase prices relating to the acquisition of ArtToday, which took place on June 30, 2003, and the acquisition of the assets of DevX.com, Inc., which took place on July 11, 2003. Jupitermedia is in the process of obtaining final third party valuations of certain intangible assets, thus the allocation of the purchase prices relating to these acquisitions is subject to refinement.

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Intangible Assets

The following table sets forth the intangible assets that are subject to amortization, including the related accumulated amortization (in thousands):

Intangibles that are subject to amortization are amortized on a straight-line basis over their expected useful lives. The image library is amortized over fifteen years, customer lists are amortized over periods ranging from three to eight years, Web site development costs are amortized over three or five years and trademarks are amortized over three years. Non-compete agreements are amortized over the period of the agreements. Estimated amortization expense for intangible assets subject to amortization is as follows (in thousands):

Unamortized Intangible Assets

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Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, 2004, are as follows (in thousands):

Purchase accounting adjustments pertain primarily to adjustments made to the fair value of certain assets purchased in conjunction with the acquisition of ArtToday.

Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of the incremental common shares issuable upon the exercise of stock options. Common equivalent shares are excluded from the calculation if their effect is anti-dilutive.

Computations of basic and diluted net income (loss) per share for the three months ended March 31, 2003 and 2004 are as follows (in thousands, except per share amounts):

For the three months ended March 31, 2003 and 2004, outstanding options to purchase 5,521,169 and 1,415,301 shares of common stock, respectively, were excluded from the calculation of diluted earnings per share for those periods, as the result would have been anti-dilutive.

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Jupitermedia has four reportable segments: Online media, Online images, Research and Events. Online media consist of the JupiterWeb business that includes the internet.com, EarthWeb.com, DevX.com and ClickZ.com Networks. Due to the acquisition of ArtToday on June 30, 2003, Jupitermedia added an additional reportable segment titled Online images. Online images consists of the JupiterImages business (formerly the ArtToday.com network). Research represents the JupiterResearch business. Events represents the JupiterEvents business. Jupitermedia evaluates segment performance based on income or loss from operations. Other includes corporate overhead, depreciation, amortization and venture fund related activities. With the exception of goodwill, Jupitermedia does not identify or allocate assets by operating segment. See Note 5 for the allocation of goodwill to Jupitermedia’s reportable segments.

Summary information by segment for the three months ended March 31, 2003 and 2004 is as follows (in thousands):

A complaint was filed in Delaware Chancery Court on June 16, 1999 by a former stockholder of Mecklermedia Corporation, or Mecklermedia, alleging that Messrs. Alan M. Meckler and Christopher S. Cardell, each an executive officer and director of Jupitermedia, as well as the other former directors of Mecklermedia, breached their fiduciary duties of care, candor and loyalty in connection with the approval of both the sale of Mecklermedia to Penton Media, Inc., or Penton Media, in November 1998 and the related sale of 80.1% of the Internet business of Mecklermedia to Mr. Meckler. Jupitermedia was also named as a defendant. The action was brought as a class action on behalf of a class of all stockholders of Mecklermedia (other than any defendant) whose shares were acquired by Penton Media, and seeks damages from all defendants and the imposition of a constructive trust on the benefits obtained by any defendant, including Mr. Meckler’s holdings of Jupitermedia.

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On or about November 7, 2000, defendants were served with an amended complaint, which named three additional plaintiffs. As with the original complaint, the amended complaint asserted that the former directors of Mecklermedia breached their fiduciary duties of care, candor, loyalty and good faith to the Mecklermedia stockholders in connection with approving the Penton Media transaction and the related sale of 80.1% of the Internet business of Mecklermedia to Mr. Meckler. The amended complaint asserted claims for damages, and also named Jupitermedia as a defendant seeking that a constructive trust be established consisting of any benefits derived by the defendants in respect of the alleged breaches but not seeking damages against us.

On or about October 9, 2001, plaintiffs filed a Second Amended Class Action Complaint (the “SAC”). The SAC adds allegations concerning defendants’ alleged failure to disclose certain facts concerning Mr. Meckler’s role in the transactions, his role in negotiations with a third party, and the valuation of the assets at issue. Defendants filed a motion to dismiss the SAC on April 1, 2002. On November 6, 2002, the Chancery Court issued an opinion denying defendants’ motion to dismiss the SAC. On December 13, 2002, all of the defendants, including Jupitermedia, served an answer to the SAC generally denying the allegations therein, denying that the directors of Mecklermedia breached any fiduciary duties, and asserting certain affirmative defenses.

In early April 2004, the parties entered into an agreement to settle this case as well as a related case in which Penton Media is the sole defendant. Under the settlement, Jupitermedia will not be making any cash or non-cash payments or incurring any further obligations. The settlement is subject to the approval of the United States District Court for the Southern District of New York, before which the Penton Media action is pending, after notice of the terms of the proposed settlement has been made to the former stockholders of Mecklermedia, and dismissal of the Delaware Chancery Court action by the Chancery Court. A settlement fairness hearing has been scheduled for July 19, 2004.

On February 28, 2003, Jupitermedia filed a lawsuit in the United States District Court for the District of Colorado alleging that the defendants, Michael Anderson, Prime Directive, Inc. and Part-15 Corporation, are knowingly and willfully using the name “WISPCON” to advertise, promote and conduct a variety of Internet / information technology trade shows, where such name is deliberately and confusingly similar to the plaintiffs’ pre-existing use in connection with their own Internet / information technology trade shows of the trademarked, service marked and branded name “ISPCON.” Jupitermedia owns 49.9% of the ISPCON joint venture, through which it provides marketing, sales and other event support for the ISPCON trade shows. Jupitermedia is seeking injunctive relief and damages under a variety of legal theories, including trademark infringement, unfair competition, trademark dilution, deceptive trade practices, interference with contract and unjust enrichment. Defendants filed a motion to dismiss for lack of personal jurisdiction, which is pending, but also have filed an Answer and Counterclaim. Defendants seek injunctive relief and damages on their counterclaim for what they allege is the plaintiffs’ wrongful use of the name “WISPCON.” The amount of monetary damages sought by each party has not been quantified, but is to be fixed by the Court in its discretion. Defendants are seeking three times the amount of actual damages determined by the Court to have been suffered, if any, as well as exemplary damages. Discovery has commenced in the case. Jupitermedia intends to vigorously defend itself against the defendants’ counterclaim.

Jupitermedia is subject to legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial statements of Jupitermedia.

On March 5, 2004, Jupitermedia announced that it had filed a registration statement with the Securities and Exchange Commission relating to a proposed follow-on public offering of common stock. Of the 4,200,000 shares to be sold in the offering, 3,200,000 shares will be sold by Jupitermedia and 1,000,000 shares will be sold by certain stockholders of Jupitermedia. The underwriters will be granted an option for a period of 30 days to purchase up to 630,000 additional shares of common stock from Jupitermedia to cover over-allotments, if any. The registration statement has not yet been declared effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

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On April 1, 2004, Jupitermedia acquired substantially all of the assets and certain liabilities of Comstock, Inc. (“Comstock Images”) for approximately $20.85 million in cash. Comstock Images will be integrated into Jupitermedia’s online images segment. The acquisition was financed with cash on hand and through $13 million of borrowings from Jupitermedia’s credit facilities. (See below.)

On April 1, 2004, Jupitermedia obtained secured revolving credit facilities from HSBC Bank USA (“HSBC”), which provide for aggregate borrowings of up to $12 million. These credit facilities consist of an $8 million revolving credit facility, borrowings under which are capped at the lesser of $8 million and 80% of Jupitermedia’s eligible accounts receivable, and a $4 million revolving credit facility. Jupitermedia pays a commitment fee of 0.5% per annum on the daily average unused amount of available borrowings under the $8 million credit facility. Both the $8 million credit facility and the $4 million credit facility are secured by all of Jupitermedia’s assets. At Jupitermedia’s option, borrowings under these credit facilities bear interest either at a rate equal to HSBC’s prime rate or at a rate equal to LIBOR plus 2.0%. All borrowings under these revolving credit facilities are due and payable on March 31, 2005.

On April 8, 2004, Jupitermedia obtained an additional secured revolving credit facility from HSBC which provides for additional borrowings of up to $11 million. Borrowings under this $11 million credit facility bear interest at a rate equal to LIBOR plus 1.35% and are secured by all of Jupitermedia’s assets. All borrowings under this facility are due and payable on March 31, 2005.

All of Jupitermedia’s credit facilities contain customary covenants including, among others, restrictions on Jupitermedia’s ability to pay dividends, incur additional indebtedness or liens on Jupitermedia’s assets, make investments in excess of $1 million or make acquisitions in excess of $25 million in the aggregate or in excess of $5 million for any single transaction. Jupitermedia’s credit facilities also require Jupitermedia to meet certain financial tests, including a stockholders’ equity test, a quarterly net income test, an interest coverage ratio test and a fixed charge coverage ratio test.

Up to $5 million of Jupitermedia’s obligations arising under Jupitermedia’s $8 million and $4 million credit facilities are guaranteed by Alan M. Meckler, Jupitermedia’s Chairman and CEO, and his wife. The obligations arising under Jupitermedia’s $11 million credit facility are also guaranteed by Mr. and Mrs. Meckler and are secured by certain of Mr. and Mrs. Meckler’s personal assets.

As of April 30, 2004, there was $13 million outstanding under Jupitermedia’s credit facilities with HSBC bearing interest at rates ranging from 2.5% to 3.1%.

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The following discussion should be read in conjunction with our unaudited financial statements and the accompanying notes, which appear elsewhere in this filing. Statements in this Form 10-Q, which are not historical facts, are “forward-looking statements” that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The potential risks and uncertainties address a variety of subjects including, for example: the competitive environment in which Jupitermedia competes; the unpredictability of Jupitermedia’s future revenues, expenses, cash flows and stock price; Jupitermedia’s ability to integrate acquired businesses, products and personnel into its existing businesses; Jupitermedia’s dependence on a limited number of advertisers; and Jupitermedia’s ability to protect its intellectual property. For a more detailed discussion of such risks and uncertainties, refer to Jupitermedia’s reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934. The forward-looking statements included herein are made as of the date of this Form 10-Q, and we are under no obligation to update the forward-looking statements after the date hereof.

Overview

We are a global provider of original online information, images, research and events for information technology (“IT”), business and creative professionals. Our operations are classified into four principal segments: Online media, Online images, Research and Events.

Online media. Online media includes JupiterWeb, which consists of our internet.com, EarthWeb.com, DevX.com and ClickZ.com networks of over 150 websites and over 150 e-mail newsletters that generated over 210 million page views during the month of March 2004.

We generate our Online media revenues from:

The principal costs of our Online media business relate to payroll for our editorial, technology and sales personnel as well as technology related costs for facilities and equipment.

Online images. Online images includes our JupiterImages network, which is a Web-based paid subscription image resource serving creative professionals.

We generate our Online images revenues primarily from paid subscriptions that provide access to our image libraries. Customers may purchase subscriptions, which are offered based on a variety of prices and terms, to access our image libraries. Once a customer becomes a subscriber, they have the ability to obtain copies of images within our image libraries.

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The principal costs of our Online images business relate to production and marketing personnel, technology infrastructure, royalties for images that we license, lead generation fees for sales referrals and credit card processing fees.

Research. Research includes our Jupiter Research business, which provides clients with original and proprietary information to better understand how the Internet and new technologies impact marketing and commerce.

We generate our Research revenues primarily from the sale of our syndicated research products. These products deliver data and analysis via written research reports and analyst inquiry. Our syndicated research is typically sold on an annual subscription basis. We also generate revenue through the sale of our custom research product, which delivers specific research based on the needs of our customers.

The principal costs of our Research business relate to analyst and sales personnel and costs to acquire third party research data.

Events. Events include our JupiterEvents business that produces offline events focused on IT and business-specific topics that are of interest to our users.

We generate our Events revenues from attendee registrations, the purchase of exhibition space by exhibitors who pay a fixed price per square foot of booth space and advertiser and vendor sponsorships. The results of our Events business vary with the topics, frequency and timing of the events we produce.

The principal costs of our Events business relate to operations and sales personnel, venue and speaker costs and advertising expenses to attract attendees to our events.

Results of Operations

Revenues

The following table sets forth, for the periods indicated, a comparison of our revenues by segment (dollars in thousands):

Online media. During 2001, we began to experience a reduction in advertising revenues due to the general downturn in the U.S. economy, particularly related to technology spending. This decrease continued through 2002 and the first quarter of 2003. Beginning with the second quarter of 2003 and throughout the remainder of 2003 and into 2004, we experienced increases in revenues as conditions in the U.S. economy improved and advertisers, particularly technology companies, began to increase their advertising spending. The increase in revenues during the three months ended March 31, 2004 was due primarily to an increase in the average amount of advertising purchased by our customers.

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The following table sets forth, for the periods indicated, a comparison of our Online media revenues including barter (dollars in thousands):

The following table sets forth a quarter-by-quarter comparison of the number of our Online media advertisers and the average revenue derived from each advertiser (dollars in thousands):

Barter revenues vary in correlation to the number of barter transactions into which we enter.

We acquired the assets of DevX.com, Inc. on July 11, 2003 and this acquisition contributed $910,000 to revenues during the three months ended March 31, 2004.

Online images. We acquired ArtToday on June 30, 2003, and therefore there are no financial results for the Online images business prior to this date.

The following table sets forth, as of the last day in the periods indicated, a quarter-by-quarter comparison of our Online images revenues and subscription bookings (dollars in thousands):

Revenues and subscription bookings have increased due primarily to an increase in the number of subscribers and an increase in average selling price of the mix of products purchased by our customers.

Research. Following the acquisition of our JupiterResearch business on July 31, 2002, we began to see an increase in the renewal rates for our syndicated research contracts as renewing customers were informed of our acquisition and our plans to support and further develop the JupiterResearch business. In addition, we saw continued increases in renewal rates in 2003 as conditions in the U.S. economy improved, as we launched several new research coverage areas and as companies once again began investing in market research. We also saw an increase in the amount of custom research projects completed for our customers.

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The following table sets forth, for the periods indicated, a quarter-by-quarter comparison of the JupiterResearch syndicated renewal rates for 2003 through the first quarter of 2004:

The amounts above reflect renewal activity to date. The ultimate results regarding renewals for the quarter ended March 31, 2004 will not be known until a future date due to the timing of the renewal of certain contracts. We expect the percentage of contract value renewed and the percentage of the number of contracts renewed to be greater than the results presented above for the quarter ended March 31, 2004.

The following table sets forth, as of the last day in the periods indicated, a quarter-by-quarter comparison of the JupiterResearch active contracts (dollars in thousands):

Active contract value is defined as the total value of all active syndicated research contracts without taking into account the amount of revenue recognized to date or the amount of revenue available to be recognized in the future. During 2003, we saw an increase in the number of customers and, beginning with the fourth quarter of 2003 and continuing into the first quarter of 2004, we began to see an increase in total value of our active contracts.

Events. The results of our Events business vary with the topics, frequency and timing of the events that we produce. We have made investments in events focused on specific vertical content areas that align with our other properties and, depending upon their success, we may or may not produce the events in the future. The following table sets forth, for the three months ended March 31, 2003 and 2004, a comparison of the number of events we produced and the amount of our revenues relating to paid attendance, sponsor and exhibitor and barter revenues during the periods shown (dollars in thousands):

Barter revenues vary in correlation to the number of barter transactions into which we enter.

Other. Other revenues represent management fees from our management of the internet.com venture funds. The quarter-over-quarter reduction in revenues from 2003 to 2004 was due to the liquidation and pending

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dissolution of internet.com Venture Fund II LLC and internet.com Venture Partners III LLC. These revenues will continue to be negligible in the future.

Cost of revenues and gross profit

The following table sets forth, for the periods indicated, a comparison of our cost of revenues and gross profit by segment (dollars in thousands):

Cost of revenues

Gross profit

Gross profit %

Online media. Cost of revenues primarily consists of payroll for editorial personnel, freelance costs, communications infrastructure and Web site hosting. The quarter-over-quarter increase in cost of revenues from 2003 to 2004 was due primarily to increased costs resulting from the acquisition of the assets of DevX.com, Inc. that added an additional $449,000 to cost of revenues for the three months ended March 31, 2004. This was partially offset by reduced payroll related costs of $88,000.

The quarter-over-quarter increase in gross profit was due primarily to the quarter-over-quarter increase in revenues from 2003 to 2004.

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We intend to make investments through internal development and, where appropriate opportunities arise, acquisitions to continue to expand our content offerings. We may need to increase our spending in order to create additional content related to new topics or offerings.

Online images. Cost of revenues primarily consists of payroll costs for production personnel, communications infrastructure, Web site hosting, storage for our image library and royalties. We license a portion of our image library from third parties and pay them a portion of the revenues we receive from our customers as royalties. During the three months ended March 31, 2004, royalty expense was $324,000. The amount we will pay in future royalties will vary in correlation to our revenues and the mix in the ownership of the images within our image library.

We intend to make investments through internal development and, where appropriate opportunities arise, acquisitions to continue to expand our image library and to substitute licensed images with images that we own that will result in reduced royalty expenses in the future. As we continue to make investments to increase the size of our image library, we may need to increase our spending for Web site hosting and storage costs.

Research. Cost of revenues primarily consists of payroll costs related to research analysts and costs to acquire third party research data. Cost of revenues decreased in the three months ended March 31, 2004 in comparison to the three months ended March 31, 2003 due primarily to lower payroll related costs totaling $250,000.

We intend to make investments in new research coverage areas where appropriate and this may result in increased costs related to hiring personnel and acquiring data to produce our research.

Events. Cost of revenues primarily consists of payroll costs related to operations employees and event production costs such as venue and speaker costs. Costs of revenues have increased during the three months ended March 31, 2004 in comparison to the three-month period ended March 31, 2003 due primarily to the growth in the size of certain of our events.

Gross profit percentage may vary with the topics, frequency and timing of the events we produce in addition to the impact of launching first-time events.

We intend to continue to make investments to launch new events that align with our other properties. In addition, depending upon the success of certain events, we may increase the frequency of the number of times we run an event relating to a specific topic.

Advertising, promotion and selling

The following table sets forth, for the periods indicated, a comparison of our advertising, promotion and selling expenses by segment (dollars in thousands):

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Online media. Advertising, promotion and selling expenses primarily consists of payroll costs for sales and marketing personnel. In addition, it includes costs related to marketing activities including barter. The quarter-over-quarter increase in advertising, promotion and selling expenses relates primarily to the acquisition of the assets of DevX.com, Inc. that added an additional $237,000 to advertising, promotion and selling expenses for the three months ended March 31, 2004. The remaining increase relates primarily to increased sales commissions and other payroll related costs paid to sales personnel totaling $108,000. Barter expense was $12,000 and $5,000 for the three months ended March 31, 2003 and 2004, respectively. Barter expenses vary in correlation to the number of barter transactions into which we enter.

Online images. Advertising, promotion and selling expenses primarily consists of payroll for marketing personnel, commissions to third parties for referrals, credit card transaction fees and advertising. During the three months ended March 31, 2004, we paid $77,000 in commissions to third parties for referrals of customers to JupiterImages that resulted in sales. In addition, we paid $95,000 in credit card transaction fees for the sale of our JupiterImages products. The amount we will pay in the future for commissions to third parties for referrals and credit card transaction fees will vary in correlation to our revenues.

We incurred $73,000 in expenses during the three months ended March 31, 2004 to advertise our JupiterImages products in various publications and to attend various trade shows. We will continue to advertise for these products in the future provided the return on the investment of such spending, as determined by the resulting sales, is justified.

Research. Advertising, promotion and selling expenses primarily consists of payroll for sales and marketing personnel.

Events. Advertising, promotion and selling expenses primarily consists of sales and marketing personnel and advertising expense. Advertising, promotion and selling expenses have increased quarter-over-quarter from 2003 to 2004 due to increased advertising for our events. Barter expense was $22,000 and $70,000 for the three months ended March 31, 2003 and 2004, respectively. Barter expenses vary in correlation to the number of barter transactions into which we enter.

General and administrative