CHARTER OF THE AUDIT COMMITTEE OF HOLLYWOOD MEDIA CORP.

PURPOSE AND SCOPE

This Charter governs the operations of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of HOLLYWOOD MEDIA CORP., a Florida corporation (the “Company”).  The purpose of the Committee is to assist the Board in fulfilling its responsibilities to oversee:

• • the financial reports and other financial information provided by the Company to any governmental or regulatory body, the public, or any other user of such financial statements
  • the Company’s systems of internal accounting and financial controls;
  • the independence and performance of the Company’s outside auditors; and
  • compliance by the Company with any legal compliance and ethics programs as may be established by the Board and the Company’s management from time-to-time.

In fulfilling its obligations, the Committee shall maintain free and open communications between the Committee and the Company’s:

• • independent auditors,
  • internal accounting staff, and
  • management.

Ability to Investigate; Retention of Advisors; Funding.  In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company.  The Committee is authorized to retain outside or special counsel, auditors, accounting or other consultants, experts, and professionals for this or other purposes as it determines necessary or appropriate to carry out its duties.  The Committee will have funding sufficient for these purposes and the power to use such funding to compensate its counsel, experts and advisors and to pay ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties and such other funding authority as required under Nasdaq Rule 4350(d)(3).

Persons to Attend Meetings. The Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditors to attend a meeting of the Committee or to meet with any members of, or consultants or advisors to, the Committee.

Annual Review of Charter.  The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.  This Charter shall be published as an appendix to the Company’s Proxy Statement for the Company’s annual meeting of shareholders to the extent required by the rules and regulations of the Securities and Exchange Commission (the “SEC Rules”).

MEMBERS OF THE COMMITTEE

The Committee shall be composed of not less than three members of the Board.  The Committee shall comply with all requirements of the rules and regulations of The Nasdaq Stock Market, Inc., as such rules and regulations may be amended or supplemented from time-to-time (the “Nasdaq Rules”), and with the applicable SEC rules, including those related to Committee members’ qualifications and independence.

Committee Member Qualifications; Independence and Financial Understanding.  Accordingly, the Committee must satisfy the requirements of Nasdaq Rule 4350(d)(2) –Audit Committee Composition, as such rule may be amended or superceded hereafter, which Rule currently requires that the Company have an Audit Committee of at least three members, comprised solely of directors each of whom: (1) meets Nasdaq’s definition of independence contained in Nasdaq Rule 4200(a)(15); (2) meets the criteria for independence set forth in SEC Rule 10A-3(b)(1); (3) has not participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years; and (4) is able to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement. In addition, as required under Nasdaq Rule 4350(d)(2), at least one member of the Committee must have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background that results in such individual’s financial sophistication, including, but not limited to, being or having been a chief executive officer, chief financial officer, or other senior officer with financial oversight responsibilities.

Board Designation of Audit Committee. The Board shall determine the number of members constituting the Committee and shall have the authority to, at any time, remove or replace a Committee member with or without cause.  The Board shall be responsible for making all determinations regarding satisfaction of all applicable membership requirements, as described above.  Each member of the Committee shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal.

KEY RESPONSIBILITIES AND PROCESSES

The primary responsibility of the Committee is to oversee the Company’s financial reporting process on behalf of the Board of Directors.  It is recognized that the Company’s management is responsible for the Company’s financial reporting process including its system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. It is further recognized that the Company’s independent auditors are responsible for auditing the Company’s financial statements and expressing an opinion, based on the audit, as to the conformity of those audited financial statements with generally accepted accounting principles, and to review and report on the Company’s internal controls consistent with applicable SEC Rules.

The functions set forth below shall be the principal recurring activities of the Committee in carrying out its oversight function.  In carrying out its responsibilities, however, the Committee shall remain flexible in order to best react to changing conditions and circumstances.  The following functions are set forth as a guide with the understanding that the Committee may deviate from this guide and supplement these functions as the Committee deems appropriate under the circumstances, consistent with the applicable Nasdaq Rules and SEC Rules.

1. Hiring and Selection of Auditors. The Committee will directly appoint, retain and authorize compensation of the Company’s independent auditors. These independent auditors will report directly to, and be responsible to, the Committee.
2. Pre-Approval of Audit and Non-Audit Services; Prohibited Services.  As required by SEC Rules, the Committee will decide what services will be performed by the independent auditors and approve in advance all the services they provide, whether audit or non-audit services. Alternatively, as permitted by the SEC Rules, the Committee may establish pre-approval policies by which specified services can be approved, provided that the policies and procedures are detailed as to the particular services and the Committee is informed of such service.  The Committee shall not engage the Company’s independent auditors for any services to the extent prohibited under SEC Rules, which prohibited services currently include:

• • • • bookkeeping or other services related to the Company’s accounting records or financial statements, such as maintaining or preparing the Company’s accounting records, preparing financial statements or data underlying financial statements;
      • financial information systems design and implementation;
      • appraisal or valuation services, fairness opinions or contribution-in-kind reports;
      • actuarial services;
      • internal audit outsourcing services;
      • management or human resources functions;
      • broker or dealer, investment adviser or investment banking services;
      • legal services, or expert services unrelated to the audit.

1. Scope of Audit. The Committee shall discuss with management and the independent auditors the overall scope and plans for the audit, including the adequacy of staffing and the compensation to be paid to the independent auditors.
2. Internal Controls.  The Committee shall periodically review and discuss with management and the independent auditors each of (i) management’s activities and findings in connection with management’s ongoing assessment of the Company’s internal controls over financial reporting, including management’s reporting on internal controls required under SEC Rules, and (ii) the independent auditor’s attestation report on management’s assessment of internal controls required under SEC Rules and other review or activities regarding internal controls from time to time; it being understood that such reports are to include assessments of the effectiveness of, and weaknesses in, internal control over financial reporting. To the extent the Committee deems it to be necessary, the Committee may meet separately with the internal accounting staff and/or the independent auditors, with or without management present, as well as with the Company’s Chief Financial Officer and other management personnel, to discuss such matters and findings.
3. Auditor Independence.  The Committee is responsible for making sure it reviews at least annually a formal written statement explaining all relationships between the outside auditors and the Company and its subsidiaries, consistent with Independence Standards Board Standard 1. The Committee will discuss with the independent auditors any disclosed relationships or services that may impact their objectivity and independence. The Audit Committee will take, or recommend to the Board that it take, appropriate actions to oversee the independence of the outside auditors.
4. 10-Q Quarterly Reports.  Prior to the filing of the Company’s Quarterly Report on Form 10-Q the Committee (as a whole or acting through the Committee chair) shall:

• • • • review the interim financial statements with management and the independent auditors, and
      • discuss the results of the quarterly review and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards, including Statement on Auditing Standards (“SAS”) No. 100, as such may be amended or supplemented from time to time.

1. 10-K Annual Reports. The Committee shall review with management and the independent auditors the financial statements to be included in the Company’s Annual Report on Form 10-K (or the Annual Report to Shareholders, if distributed prior to the filing of the Form 10-K), including the auditors’ judgment about the quality, not just acceptability, of the Company’s accounting principles, the consistency of the Company’s accounting policies and their application, and the clarity and completeness of the Company’s financial statements and related disclosures.  The Committee also shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards, including SAS No. 61, as such may be amended or supplemented.
2. Press Release or Other Public Financial Disclosures.  Upon request of any executive officer or the Committee, the Committee shall review and discuss any earnings announcements and other public announcements regarding the Company’s financial results of operations.
3. Proxy Statement; Audit Committee Report. The Committee shall prepare its report required by the rules of the Securities and Exchange Commission to be included in the Company’s Proxy Statement to be delivered to shareholders in connection with the Company’s annual meeting of shareholders.
4. Management Letters. The Committee shall review with the independent auditors any problems or difficulties the auditors may have encountered and any management letter provided by the independent auditors and the Company’s response to that letter.
5. Accounting Principles. The Committee shall review major changes to the Company’s accounting principles and practices as suggested by the independent auditors or management.
6. Committee Approval of Related Party Transactions.  The Board recognizes that under Nasdaq Rule 4350(h), all “related party transactions” (as defined in the rule) are required to be reviewed and approved by the Committee or another independent body of the Company’s Board of Directors, and if any such transaction is submitted for Committee approval the Committee shall review such transaction and shall make its own determination as to approval thereof.
7. Complaint Procedures.  The Committee shall have responsibility for establishing procedures for:

• • • • the receipt, retention and treatment of complaints about accounting, internal accounting controls or audit matters; and
      • confidential and anonymous submissions by employees concerning questionable accounting, auditing and internal control matters.

    All such relevant complaints and submissions must be reported to the Committee as required
under such procedures.

1. Confer with General Counsel. Upon the request of the Committee, the Company’s general counsel, or any executive officer or director of the Company, the Committee shall review with the Company’s general counsel any legal matters that may have a material impact on the financial statements, the Company’s compliance policies, and any material reports or inquiries received from regulators or governmental agencies.

With respect to the foregoing responsibilities and processes, the Board recognizes that the Company’s financial and other management personnel, as well as the independent auditors, have more time, knowledge, and more detailed information regarding the Company than do Committee members. The Committee members are not full-time employees of the Company and do not perform the functions of auditors and accountants. The Committee relies on information provided to it by the Company’s management and independent auditors, including representations of management and the opinion and report of the independent auditors that such financial statements have been prepared in conformity with generally accepted accounting principles and with respect to internal controls.  The Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Committee’s considerations and discussions with management and the independent auditors do not assure that the Company’s financial statements are presented in accordance with generally accepted accounting principles or that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the Company’s internal controls are adequate.

Consequently, in discharging its oversight responsibilities, the Committee will not provide or be deemed to provide any expertise or special assurance as to the Company’s financial statements or internal controls or any professional certification as to the independent auditors’ work, nor will any member of the Committee be deemed to have accepted a greater duty of care than other directors of the Company.  While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles and applicable laws and regulations. It is NOT the Committee’s responsibility to prepare and certify the Company’s financial statements, to design and assess internal financial controls, to guarantee the independent auditors’ report, or to guarantee disclosures by the Company. These are the fundamental responsibilities of management and the independent auditors.

MEETINGS AND ACTIONS OF THE COMMITTEE

The Committee shall meet as often as circumstances dictate, but in any event prior to the Company’s filing of any 10-Q or 10-K report with the SEC.  Meetings of the Committee may be in person or telephonic, and a majority of the members shall constitute a quorum.  All actions of the Committee shall require the vote of a majority of its members present at the meeting at which a quorum is present.  Actions of the Committee may also be taken by unanimous written consent.

The Committee may designate one of its members as chair of the Committee, which designation may be changed by the Committee from time to time.

Revised: October 2004