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Youthstream Media Networks Inc · 10-K · For 6/30/01

Filed On 8/31/01 · SEC File 333-95201 · Accession Number 950110-1-500436

  As Of                Filer                Filing    For/On/As Docs:Size              Issuer               Agent

 8/31/01  Youthstream Media Networks Inc    10-K        6/30/01    8:55                                     Scott Printing Co..01/FA

Annual Report · Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         42    265K 
 2: EX-10       Stock Option Agreement                                 4     19K 
 3: EX-10       Material Contract                                      4     20K 
 4: EX-10       Material Contract                                      1      6K 
 5: EX-10       Material Contract                                      1      7K 
 6: EX-10       Material Contract                                      1      7K 
 7: EX-21       Subsidiaries of the Registrant                         1      5K 
 8: EX-23       Consent of Auditors                                    1      5K

10-K · Annual Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Business Certain Relationships and Related Transactions Changes in and Disagreements with Accountants on Accounting and Financial Disclosure CollegeWeb CommonPlaces Executive Compensation Exhibits, Financial Statement Schedules and Reports on Form 8-K Financial Statements and Supplemental Data HelloXpress Invino Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operation Market for Common Equity and Related Stockholder Matters Out-of-Home Properties Quantitative and Qualitative Disclosures about Market Risk Report of Independent Auditors Security Ownership of Certain Beneficial Owners and Management Selected Financial Data Signatures Sixdegrees Submission of Matters to a Vote of Security Holders Teen.com Trent
1	1st Page - Filing Submission
3	Item 1. Business
5	Out-of-Home
9	Item 2. Properties
"	Item 3. Legal Proceedings
"	Item 4. Submission of Matters to a Vote of Security Holders
10	Item 5. Market for Common Equity and Related Stockholder Matters
11	Item 6. Selected Financial Data
"	Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation
14	Item 8. Quantitative and Qualitative Disclosures about Market Risk
15	Item 9. Financial Statements and Supplemental Data
"	Item 10. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
16	Item 12. Executive Compensation
"	Item 13. Security Ownership of Certain Beneficial Owners and Management
"	Item 14. Certain Relationships and Related Transactions
"	Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
22	Report of Independent Auditors
31	Trent
"	HelloXpress
"	CollegeWeb
32	Invino
"	Sixdegrees
"	CommonPlaces
33	Teen.com
41	Signatures

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================================================================================

 U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 -----------

 FORM 10-K
(Mark One)                                                            
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE   
ACT OF 1934 For the fiscal year ended June 30, 2001                   

OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        
EXCHANGE ACT OF 1934 For the transition period from ____________      
to ____________                                                       

 Commission file number: 0-27556

YOUTHSTREAM MEDIA NETWORKS, INC.
(Exact Name of Business Issuer in Its Charter)

DELAWARE                                                              13-4082185
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)                                                  

28 WEST 23RD STREET, NEW YORK, NEW YORK                                    10010
(Address of Principal Executive Offices)                              (Zip Code)

(212) 622-7300
(Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act: None             

Securities registered under Section 12(g) of the Exchange Act:                  

Common Stock, par value $.0l per share
(Title of Class)

Indicate by check mark whether the registrant (1) filed all reports   
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the past 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 there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-K contained herein, and no disclosure will 
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.                                             

 Yes [X ] No [ ]

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common   
equity was sold, or the average bid and asked price of such common equity, as of
July 17, 2001: $62 million.                                                     

    State the number of shares outstanding of each of the registrant's classes
of common equity, as of August 7, 2001: 30,091,354 shares of Common Stock.      

 DOCUMENTS INCORPORATED BY REFERENCE

  Portions of the registrant's definitive proxy statement under Regulation
14A, which statement will be filed not later than 120 days after the end of the 
fiscal year covered by this report, are incorporated by reference in Part III   
hereof.                                                                         

================================================================================

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YOUTHSTREAM MEDIA NETWORKS, INC.
ANNUAL REPORT ON FORM 10-K

 TABLE OF CONTENTS

                                                        [Enlarge/Download Table]


ITEM NO.                                                                                                           
--------                                                                                                           
                                                                                                              PAGE 
Part I                                                                                                        ---- 
                                                                                                                   
      1.   Business..........................................................................................   1  

      2.   Properties........................................................................................   7  

      3.   Legal Proceedings.................................................................................   7  

      4.   Submission of Matters to a Vote of Security Holders..............................................    7  

Part II                                                                                                            

      5.   Market for Common Equity and Related Stockholder Matters..........................................   8  

      6.   Selected Financial Data...........................................................................   9  

      7.   Management's Discussion and Analysis of Financial Condition and Results of Operations.............   9  

      8.   Quantitative and Qualitative Disclosures about Market Risk........................................  12  

      9.   Financial Statements and Supplemental Data........................................................  13  

      10.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..............  13  

Part III                                                                                                           

      11.  Directors and Executive Officers of Registrant....................................................  14  

      12.  Executive Compensation............................................................................  14  

      13.  Security Ownership of Certain Beneficial Owners and Management....................................  14  

      14.  Certain Relationships and Related Transactions....................................................  14  

      15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K...................................  14  

Index to Consolidated Financial Statements................................................................... F-1  

Signatures .................................................................................................. S-1  

Schedule II Valuation and Qualifying Accounts................................................................ S-2  


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PART I

ITEM 1. BUSINESS                                                                

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS                                 

In addition to historical information, this Annual Report on Form 10-K contains 
forward-looking statements within the meaning of Section 21E of the Securities  
Exchange Act of 1934, as amended. Any statements contained herein (including but
not limited to statements to the effect that the Company or its management      
"anticipates," "believes," "estimates," "expects," "intends," "plans" and       
similar expressions) that relate to future events or conditions should be       
considered forward-looking statements. These forward-looking statements are     
subject to certain risks and uncertainties that could cause actual results to   
differ materially from those reflected in forward-looking statements. Factors   
that might cause such differences include, but are not limited to, those        
discussed in the section entitled "Management's Discussion and Analysis of      
Financial Condition and Results of Operations" on page 9 of this Form 10-K.     
Readers of this Form 10-K are cautioned not to rely on these forward-looking    
statements, which reflect management's opinions only as of the date hereof. The 
Company undertakes no obligation to revise or publicly release the results of   
any revision to these forward-looking statements, whether as a result of new    
information, future events or otherwise.                                        

OVERVIEW                                                                        

YouthStream Media Networks, Inc., through its subsidiaries (together,           
"YouthStream" or the "Company"), is a leading cross-platform media, marketing   
services and retail company that targets teenagers and young adults ages 12 to  
24. During fiscal 2001, YouthStream reorganized its operations into two market  
segments: media and retail.                                                     

Through its media segment, YouthStream provides its clients with advertising,   
marketing and promotions solutions that are targeted, integrated and, management
believes, more efficient than mass media alternatives at reaching the youth     
audience. YouthStream's media segment operates primarily in schools and on and  
near school campuses where students congregate. YouthStream maintains more than 
22,000 proprietary "out-of-home" media distribution locations at more than 2,000
universities and colleges and 9,000 high schools and middle schools in the      
United States. YouthStream also provides clients with the ability to advertise  
online through its operation of the web site Teen.com, an award-winning Internet
destination for teenagers.                                                      

YouthStream's broad portfolio of assets and capabilities enables it to offer    
programs that serve a large and diverse client base that includes more than 250 
leading national advertisers in categories such as packaged goods, recruiting,  
automotive, fashion, financial services, health and beauty and technology. Among
YouthStream's media clients in fiscal 2001 were Proctor & Gamble, Ford Motor    
Company, AT&T, Sony/Columbia Pictures, ABC, The Coca-Cola Company, Motorola, The
Wall Street Journal, DKNY, Snapple, BMW, HBO and Seventeen Magazine.            

YouthStream also operates a youth-oriented retail business, selling decorative  
wall posters and related items through two distribution channels: on-campus     
sales events and a nationwide chain of retail stores operating under the Beyond 
the Wall(R) brand. Through these retail channels, YouthStream has become a      
leading retailer of decorative wall posters to the young adult market.          

COMPANY STRUCTURE                                                               

Founded in 1995 as Network Event Theater, Inc., the Company held its initial    
public offering ("IPO") in 1996. In February 2000, Network Event Theater, Inc.  
("NET") was reorganized and became a wholly-owned subsidiary of a               
newly-established Delaware holding company, YouthStream Media Networks, Inc.    
Headquartered in New York, New York, YouthStream's wholly-owned operating       
subsidiaries are, in addition to NET: American Passage Media, Inc. ("American   
Passage"); Trent Graphics, Inc. ("Trent"); and W3T, Inc. ("Teen.com").          

A detailed discussion of the Company's acquisition history and organization can 
be found in the footnotes to the Consolidated Financial Statements beginning on 
page F5.                                                                        

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TARGET MARKET                                                                   

Through its media segment, YouthStream targets clients seeking to reach 12 to 24
year-olds with entertainment, advertising and promotional messages.             

These teenagers and young adults represent approximately 17% of the nation's    
total population or 47.4 million individuals according to April 2000 U.S. Census
Bureau estimates, and control over $200 billion in direct purchasing power      
annually. YouthStream believes the youth market is highly desirable to          
advertisers because teens and young adults are receptive to new ideas and       
products, are in a formative stage with respect to building brand loyalties,    
have significant disposable income and are the next generation of consumers.    
Advertisers seeking to reach this young adult market spend approximately $30    
billion annually.                                                               

YouthStream targets this same audience for its retail business segment because  
of all the reasons stated above.                                                

MEDIA SEGMENT:  PRODUCTS AND SERVICES                                           

Through its comprehensive portfolio of on-campus media assets and national      
marketing services capabilities, YouthStream provides its clients with          
unparalleled access to the youth market, with substantial cost efficiencies. Its
knowledge of the young adult market enables its clients to benefit from a wide  
range of turnkey, customized and high impact programs. In fiscal 2001,          
YouthStream generated approximately 63% of its revenues from its media segment. 

Event Marketing                                                                 

YouthStream's event marketing division performs a wide range of services for    
clients. These services include developing, planning and executing custom events
and customer acquisition programs, as well as offering clients the opportunity  
to participate in proprietary events conducted through its on-campus theater    
division and other Company initiatives. During fiscal 2001, YouthStream's event 
marketing business represented over 60 clients on more than 560 college         
campuses, and reached seven million young people.                               

YouthStream's custom events are exciting programs targeted to address specific  
client needs and brand objectives. Programs range from national vehicle tours to
single campus events. Other major events are conducted annually off campuses,   
including at major student destinations during Spring Break and Mardi Gras, and 
throughout the year in urban areas, malls, and at venues such as concerts,      
beaches, and sporting events. Custom events typically feature client            
advertising, including banners, mass flyer distribution, and branded vehicle    
wraps; games to generate product awareness; and product sampling programs, which
provide a targeted and effective method of driving product trial and purchase,  
and establishing brand loyalty.                                                 

YouthStream's customer acquisition business offers clients the ability to       
intercept teenagers and young adults through sign-up programs, allowing clients 
such as financial services, telecommunications and publishing companies to      
obtain applicants for their products and services. The Company's extensive      
nationwide network of field representatives is able to efficiently administer   
sign-up events virtually anywhere young adults congregate.                      

During fiscal 2001, YouthStream also developed a number of proprietary event    
marketing programs that the Company expects to launch during fiscal 2002. These 
events provide a forum to showcase advertisers' products and services. The      
Company's ThunderDorm(SM) Experience tour, scheduled to take place on college   
campuses in Fall 2001, celebrates the latest and most interactive technology    
intersecting the college lifestyle. Other YouthStream promotions will take place
targeting teens in malls and college students at Spring Break. The Company plans
to generate revenues from these programs by selling sponsorships and other      
related media to advertisers.                                                   

YouthStream also conducts event marketing and advertising campaigns for clients 
via its proprietary network of on-campus theaters ("Theaters"), consisting of   
more than 100 major universities and colleges across the country. To generate   
revenues, YouthStream partners with the country's largest movie production      
studios, such as New Line Cinema, Warner Bros., Sony Pictures Entertainment,    
Universal Pictures, and Paramount Pictures to create on-campus advance-screening
and marketing promotions targeting the young adult market. YouthStream obtains  
revenues both from these studio partners, which contract with the Company to    
plan and supervise national collegiate field marketing activities, and from     
large national consumer                                                         

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products advertisers, which augment studio screenings with their branding,      
sampling and event marketing activities. The Company has concentrated on        
establishing its Theaters at large enrollment colleges and universities located 
in key markets that it believes enhance the Theaters' appeal to programmers,    
sponsors and advertisers. The combined enrollment of campuses where Theaters are
installed totals 2.3 million.                                                   

Forty-nine of the network schools feature closed-circuit satellite and digital  
projection technologies that allow YouthStream to simulcast movies, concerts,   
featured speakers and other live events to student audiences nationwide.        
Theaters with these satellite capabilities are installed on campuses with a     
total enrollment exceeding 1.2 million. The Company believes this is the only   
national network of digital satellite movie theaters on college and university  
campuses.                                                                       

The Company conducted 12 events at Theaters during the 2000-2001 academic year. 
Average attendance at each event totaled approximately 20,000 students.         

Media Planning and Buying                                                       

YouthStream's college newspaper network serves as a leading advertisement       
placement service network, providing clients with the ability to run advertising
in over 1,700 college and graduate school newspapers, with a combined           
circulation over 7 million, on campuses with total enrollment of 13 million     
students. YouthStream's assets in print advertising include an exclusive        
database containing information about every major college newspaper, allowing   
the Company to provide creative development, marketing and research assistance, 
and to customize programs for clients by targeting school type, student         
demographics, degree programs, and other criteria.                              

Out-of-Home                                                                     

YouthStream provides clients with unique and proprietary vehicles for delivering
advertising messages through its "Out-of-Home" media programs, directed to      
students in the campus environment. YouthStream works directly with school      
administrators and campus organizations to achieve placement of the Out-of-Home 
media vehicles. With more than 22,000 Out-of-Home media distribution locations  
at more than 2,000 universities and colleges, and 9,000 high schools and middle 
schools throughout the United States, the Company believes this to be the       
nation's largest campus-based Out-of-Home advertising network.                  

YouthStream's high school wallboards ("GymBoards(R)") allow clients to place    
advertisements on gender specific message and information centers installed in  
boys' and girls' high school and middle school locker rooms. With over 18,000   
customized message boards and information centers located inside over 9,000     
middle and high school locker rooms nationwide, YouthStream's GymBoards network 
reaches a combined total enrollment in excess of 7.5 million students. The      
Company believes GymBoards to be the nation's largest Out-of-Home media network 
located in high schools and middle schools.                                     

YouthStream's college wallboard network ("Campus Voice(R)") consists of more    
than 4,000 metal-framed, Plexiglass-enclosed wallboards installed in            
high-traffic locations on over 500 university and college campuses. In operation
for over 15 years on campuses with a combined total enrollment of over 3.7      
million students, the Company believes its college campus network is the        
nation's largest and most established. Partnering advertisers with editorial    
content provided by top publications targeting the young adult audience,        
advertising messages and editorial content are rotated monthly during the school
year.                                                                           

YouthStream's poster advertising service provides clients with a cost-effective 
method for reaching students in their own environments via bulletin boards on   
campuses nationwide, a powerful and proven direct response vehicle.             
YouthStream's national postering service has the capability to post advertising 
messages on over 2,200 campuses, with the ability to reach more than 10 million 
students nationwide. In operation for over 20 years, the Company believes it    
operates the nation's most established and experienced national campus postering
services business.                                                              

YouthStream's postcard advertising network ("HotStamp(R)") provides clients with
the opportunity to have customized advertising messages produced and placed in  
250 postcard racks at 175 colleges and universities nationwide. Postcard racks  
are strategically installed at high-visibility sites including college          
bookstores, student centers, and popular college hangouts. The Company believes 
that these racks represent the largest campus-based network of free postcard    
distribution racks nationwide.                                                  

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YouthStream's network of college newspaper advertising stands ("AdRox(R)")      
allows advertisers to place messages strategically on the headers of more than  
2,000 campus newspaper distribution racks at over 275 colleges and universities 
nationwide. Placed in the highest-traffic campus locations, this network reaches
a total enrollment of over 3.3 million students.                                

Internet                                                                        

The Company's Teen.com website offers clients the ability to reach teenagers    
online. During fiscal 2001, Teen.com won the Editor's Choice Award from PC      
Magazine as the "Best of The Web" teen site. Teen.com also received recognition 
as the No. 1 Information Site for 2001 from Teen People Magazine. Teen.com      
differentiates itself from the competition by featuring relevant yet responsible
content targeted to teens.                                                      

Media Strategy                                                                  

Since inception, the Company's media strategy has been to offer media and       
marketing services programs to its clients that target youth where they live, go
to school and play. After its IPO, the Company concluded a series of            
acquisitions that enabled it to quickly develop the necessary portfolio of      
properties and infrastructure to implement this strategy. The Company's initial 
focus was to utilize its assets to sell "multi-channel" programs to clients     
interested in turnkey and targeted advertising solutions. The Company plans to  
continue developing its media businesses to reach more of the nation's          
teenagers, to reach more youth off-campus, and to reach teenagers and young     
adults increasingly through larger, Company-designed proprietary events.        

First, to reach more teenagers, the Company has been executing and plans to     
conduct more events in malls and high schools where teenagers congregate, among 
other things.                                                                   

Second, to reach more youth off-campus, the Company has broadened the number and
location of venues in which it conducts business on behalf of its clients,      
particularly in the event marketing area. The Company expects to continue to    
expand its operations at social, sporting, and other events and venues          
nationwide where young people interact.                                         

Third, the Company increasingly has focused its sales force on selling more     
integrated media solutions to clients - leveraging its products and services -  
rather than selling individual products or services. The Company expects that   
this strategy will continue to increase its average revenues per sale.          

The Company also believes there may be growth opportunities in the consolidation
of companies targeting teenagers and young adults. From time to time, the       
Company may consider acquisition opportunities that leverage its existing       
strengths, broaden its customer base, reduce seasonal effects on its media      
business or increase market share.                                              

RETAIL SEGMENT:  PRODUCTS AND SERVICES                                          

YouthStream believes it operates the nation's largest retailer of decorative    
wall posters sold to teens and young adults. Currently, the Company's           
merchandise is available at on-campus sales events, in retail stores, and via   
the Internet. In fiscal 2001, the Company's retail segment generated            
approximately 37% of the Company's revenues.                                    

On-Campus College Poster Shows                                                  

The Company believes that it operates the largest network of on-campus poster   
shows ("Sales Events") in the nation's college market. In fiscal 2001, more than
five million students participated in the Company's Sales Events, on more than  
650 campuses nationwide. Student visitors to these Sales Events purchased more  
than 775,000 posters and other items, choosing from approximately 2,000 posters,
prints and other merchandise, generating approximately 60% of the Company's     
retail segment revenues for fiscal 2001.                                        

Retail Store Operations; Online Sales                                           

The Company also operates retail poster stores primarily in college towns and   
major urban areas around the country, under the Beyond the Wall(R) name         
("Stores"). As of June 30, 2001, the Company operated 31 Stores in cities       
including: Ann Arbor, MI; Athens, GA; Berkeley, CA; Bloomington, IN; Boulder,   
CO; Burlington, VT; Champaign, IL; Chicago, IL; Cincinnati; OH, East Lansing,   
MI; Ithaca, NY; Knoxville, TN; Lexington, KY; Los Angeles, CA; New York, NY;    
North Hampton, MA; Philadelphia, PA; Seattle, WA; State College, PA; and        
Washington, D.C. Stores range from 900 to 3600 square feet and each             

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typically features over 5,000 posters on a rotating basis. Approximately 40% of 
the Company's retail segment revenues were generated by Stores during fiscal    
2001.                                                                           

Through its website beyondthewall.com, the Company also offers thousands of     
posters and artwork via the Internet.                                           

Retail Strategy                                                                 

The Company's retail strategy consists of several primary initiatives. First,   
the Company plans to continue expanding the number of stores it operates, to 58 
stores by the end of fiscal 2002.                                               

Second, the Company also plans to broaden the range of locations where it       
operates stores to include more stores in regional malls and urban areas. To    
achieve this growth, the Company has installed three dedicated teams of         
employees to identify new store locations nationwide. The Company's planned     
growth in the number of stores it operates is designed to increase overall      
revenues generated by the Company's retail segment.                             

Third, the Company plans to increase the profitability of its Stores by testing 
a variety of new product lines, including inexpensive silver jewelry popular    
among teens and young adults. By expanding its merchandise, the Company hopes to
increase store traffic, sell additional merchandise to its existing customers,  
broaden its customer base, and decrease the seasonality of the Company's retail 
segment.                                                                        

Finally, the Company may expand the selling seasons or product mix of its       
on-campus Sales Events.                                                         

Discontinued Businesses                                                         

During fiscal 2001, YouthStream discontinued operations of two online           
properties, which had constituted its online business segment in fiscal 2000,   
and two offline media properties.                                               

The Company discontinued the operations of its sixdegrees.com web site in       
December 2000. In May 2001, the Company also discontinued its application       
service provider initiative to market and sublicense technology it purchased    
through the acquisition of sixdegrees, inc., Invino Corporation, CollegeWeb,    
Inc., and CommonPlaces, LLC ("CommonPlaces") in fiscal 2000.                    

The Company's postcards division operated a "cities program" which distributed  
advertising through racks installed in more than 1,900 urban venues. YouthStream
sold these racks in June 2001 and discontinued its cities program.              

The Company's Beyond the Wall division published and distributed an "Ads as Art"
catalog. The Company discontinued publication of this catalog in May 2001.      

INTELLECTUAL PROPERTY RIGHTS                                                    

The Company has registered with the United States Patent and Trademark Office   
the names "YouthStream Media Networks," "Y YouthStream Media Networks" (and the 
YouthStream logo), "NET Network Event Theater," "NET" (and the NET logo),       
"American Passage," "GymBoards," "AdRaX," "Campus Voice," "Campus Voice"        
(stylized), "Beyond the Wall," and "HotStamp" in connection with its media      
businesses.                                                                     

The Company also has pending trademark/service mark applications with the United
States Patent and Trademark Office in connection with various new businesses.   
These include: "FUND-U," "TEENSCREEN," and "THUNDERDORM."                       

Teen.com has protected its brand name by obtaining the exclusive right to the   
domain name "Teen.com" from Network Solutions, Inc., and using the service mark 
"THE PLACE FOR TEENS" in connection with the Teen.com website.                  

The Company's rights in these marks may be a significant part of its business.  
The Company is not aware of any claims of infringement or other challenges to   
its rights to use these marks, although the Company is aware of numerous other  
registrations of the mark NET. There can be no assurance the Company's marks do 
not or will not infringe the proprietary rights of others, that the Company's   
marks would be upheld if challenged, or that the Company would not be prevented 
from using its marks.                                                           

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In January 2001, the Company received a patent titled "Method and Apparatus for 
Constructing a Networking Database and System." The application for this patent 
was filed in 1997 and relates to the technology that was underlying the         
sixdegrees website.                                                             

The Company does not hold any copyright registrations.                          

The Company regards its patents, service marks, trademarks, trade dress, trade  
secrets, proprietary technology and similar intellectual property as important  
to its success, and relies on patent, trademark and copyright law, trade secret 
protection and confidentiality and/or license agreements with its employees,    
customers, independent contractors, sponsors, and others to protect its         
proprietary rights. The Company strategically pursues the registration of its   
trademarks and service marks. However, effective patent, trademark, service     
mark, copyright and trade secret protection may not be available. There can be  
no assurance that the steps taken by us to protect our proprietary rights will  
be adequate or that third parties will not infringe or misappropriate our       
patents, trademarks, trade secrets, trade dress and similar proprietary rights. 
In addition, there can be no assurance that other parties will not independently
develop substantially equivalent intellectual property. In addition, litigation 
may be necessary in the future to enforce our intellectual property rights, to  
protect our trade secrets or to determine the validity and scope of the         
proprietary rights of others. Such litigation could result in substantial costs 
and diversion of financial and managerial resources, which could have a material
adverse effect on our business.                                                 

COMPETITION                                                                     

Media                                                                           

The Company's media business faces competition for the advertising revenues of  
advertisers and sponsors from other similar companies and from other media such 
as radio, television, print media, direct mail marketing and the Internet. The  
Company also competes with a wide variety of other advertising media, the range 
and diversity of which has increased substantially over the past several years  
to include advertising displays in shopping centers and malls, airports,        
stadiums, movie theaters and supermarkets, as well as on taxis, trains, buses   
and subways. Some of the Company's competitors, principally in other media such 
as radio and television, are substantially larger, better capitalized and have  
access to greater resources than the Company. There can be no assurance that the
Company will be able to compete successfully with such other companies and      
media.                                                                          

Retail                                                                          

The retail decorative wall poster industry for teens and young adults is both   
highly competitive and fragmented. We believe that the principal bases upon     
which we compete are selection, quality, price, store location and service. We  
compete with other sellers of decorative art, some of which are more established
better capitalized or have access to greater resources than the Company.        
However, there can be no assurance that the Company will be able to compete     
successfully with such other companies.                                         

Seasonal Effects on the Company's Business                                      

The seasonality of our media and retail businesses affects our profitability.   
Since our products are most often purchased during the academic school year     
primarily from August through October, we experience substantial seasonality in 
our sales and profitability during the year.                                    

PERSONNEL                                                                       

Media                                                                           

As of July 31, 2001, the Company employed 124 full-time employees and 6         
part-time employees in connection with its media operations. None of these      
employees is represented by a collective bargaining unit, and the Company       
believes that relations with these employees are good.                          

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Retail                                                                          

As of July 31, 2001, the Company employed 100 full-time employees and 92        
part-time employees in connection with its retail operations. None of these     
employees are represented by a collective bargaining unit, and the Company      
believes that relations with these employees are good.                          

ITEM 2.  PROPERTIES                                                             

The Company's principal executive offices are located in approximately 22,000   
square feet of leased space in New York City pursuant to a lease expiring during
the fiscal year ending June 30, 2006. Annual rent payable under that lease is   
approximately $392,000. The Company also rents additional office space in       
Cambridge and Acton, Massachusetts; Seattle, Washington; Los Angeles,           
California; Chicago, Illinois; Tempe, Arizona; and Stroudsburg, Pennsylvania.   
The Company also maintains short term leases for retail stores, which range from
approximately 900 to 3,600 square feet in Ann Arbor, Michigan; Athens, Georgia; 
Berkeley, California; Bloomington, Indiana; Boulder, Colorado; Burlington,      
Vermont; Champaign, Illinois; Chicago, Illinois; Cincinnati, Ohio; Cleveland,   
Ohio; East Lansing, Michigan; Washington, D.C.; Hadley, Massachusetts;          
Harrisburg, Pennsylvania; Harrisonburg, Virginia; Holyoke, Massachusetts;       
Ithaca, New York; Knoxville, Tennessee; Lawrence, Kansas; Lexington, Kentucky;  
Los Angeles, California; Minneapolis, Minnesota; Myrtle Beach, South Carolina;  
New Hope, Pennsylvania; New York, New York; Northampton, Massachusetts;         
Philadelphia, Pennsylvania; Pittsburgh, Pennsylvania; Portland, Maine; Saint    
Louis, Missouri; Seattle, Washington; State College, Pennsylvania; Taylor,      
Michigan; and Tempe, Arizona. The Company believes it has adequate insurance to 
cover the value of its leased property and the personal property therein.       

ITEM 3.  LEGAL PROCEEDINGS                                                      

The Company is not a party to any material pending legal proceeding and is not  
aware of any contemplated proceeding that may be material.                      

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

The Company's Annual Meeting of Stockholders was held on May 18, 2001. At that  
meeting, the Company's shareholders elected three Class II Directors to the     
Board; ratified the selection of Ernst & Young LLP as the Company's Independent 
Auditors; and approved an amendment to the 2000 Stock Incentive Plan ("Plan"),  
permitting the Company to grant its non-employee directors discretionary stock  
options under the Plan.                                                         

In connection with the election of directors, the shares of common stock present
in person or by proxy were voted as follows:                                    

                              For                   Withheld
                          ----------------------------------------
Metin Negrin                    26,417,948                360,741     
Howard Klein                    26,417,948                360,741     
Sidney I. Lirtzman              26,417,948                360,741     

In connection with the proposal to ratify the selection of Ernst & Young LLP as 
the Company's independent auditors for the year ending June 30, 2000, 26,727,847
shares were voted in favor of the proposal, 32,582 shares were voted against the
proposal and there were 18,260 abstentions. In connection with the amendment to 
the 2000 incentive stock option plan, 26,172,256 shares were voted in favor of  
the proposal, 592,433 shares were voted against the proposal, and there were    
15,000 abstentions.                                                             

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 PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS              

The Company's common stock is traded on the Nasdaq National Market ("Nasdaq").  
In May 2001, the Company changed its Nasdaq symbol from NETS to YSTM. The       
following table sets forth the high and low closing bid prices for the common   
stock as furnished by Nasdaq. The quotations reflect inter-dealer prices,       
without retail mark-up, mark-down or commission, and may not represent actual   
transactions.                                                                   

                                                                High     Low
 Fiscal 2000                                                    ----     ---
        First Quarter.....................................      29.19    16.00
        Second Quarter....................................      31.25    18.81
        Third Quarter.....................................      29.00    12.13
        Fourth Quarter....................................      10.69     5.44

Fiscal 2001                                                               
        First Quarter.....................................       7.31     3.13
        Second Quarter....................................       3.78      .75
        Third Quarter.....................................       1.94      .75
        Fourth Quarter....................................       1.79      .63

As of August 1, 2001, there were approximately 182 registered holders of record 
of the Company's common stock. The Company believes thousands of other holders  
own the Company's common stock in street name. To date, the Company has not     
declared or paid any dividends on its common stock. The payment by the Company  
of dividends, if any, is within the discretion of the board of directors and    
will depend on the Company's earnings, if any, its capital requirements and     
financial condition, as well as other relevant factors. The board of directors  
does not intend to declare any dividends in the foreseeable future but instead  
intends to retain earnings for use in the Company's business operations.        

In May 2001, the Board of Directors authorized the Company to make open market  
purchases of the Company's common stock aggregating up to $2 million. As of June
30, 2001, the Company had purchased on the open market 143,000 shares at a cost 
of $239,000.                                                                    

RECENT SALES OF UNREGISTERED SECURITIES                                         

On July 27, 2000, the Company issued $1,000,000 of 11% subordinated notes due   
July 27, 2005, with an original issue discount of $35,000 and net proceeds to   
the Company of $965,000 (the "$1,000,000 Notes"). Simultaneously, the Company   
issued warrants to purchase 60,000 shares of Company common stock for $35,000 to
the purchaser of the $1,000,000 Notes. The $1,000,000 Notes were purchased by   
one purchaser, Interequity Capital Partners, L.P., an institutional investor. No
placement agent existed for the $1,000,000 Notes.                               

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ITEM 6.   SELECTED FINANCIAL DATA                                               

The selected consolidated financial data should be read in conjunction with ITEM
7. Management's Discussion and Analysis of Financial Condition and Results of   
Operation and the Company's consolidated financial statements and notes to those
consolidated financial statements included elsewhere in this Form 10-K.         

                                                        [Enlarge/Download Table]


                                                               Year ended June 30,                         
                                        -------------------------------------------------------------------
                                            2001         2000          1999          1998         1997     
                                        -------------------------------------------------------------------
                                                      (In thousands, except per share data)                

                                                                                                           
Net sales and other income                 $ 26,892     $ 28,221       $ 13,266    $ 11,188      $  6,439  
Net loss                                                                                                   
     Loss from continuing operations        (33,244)     (10,023)       (9,190)      (7,231)       (6,157) 
     Loss from discontinued operations     (204,559)     (39,865)           --           --            --  
Net loss                                   (237,803)     (49,888)       (9,190)      (7,231)       (6,157) 
Total assets                                 48,706      276,445        30,252       15,676        17,175  
Long-term debt and capital lease                                                                           
   obligations, less current portion         18,635       18,815         6,589        3,459         5,275  

Basic and diluted                                                                                          
     Loss from continuing operations          (1.14)       (0.47)        (0.72)       (0.69)        (0.71) 
     Loss from discontinued operations        (6.97)       (1.89)           --           --            --  
Net loss                                      (8.11)       (2.36)        (0.72)       (0.69)        (0.71) 
Weighted average basic and diluted                                                                         
   common stock outstanding                  29,334       21,111        12,800       10,508         8,715  

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
RESULTS OF OPERATION                                        

The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the consolidated financial       
statements and related notes thereto. The following discussion contains certain 
forward-looking statements that involve risks and uncertainties. The Company's  
actual results could differ materially from those discussed herein. Factors that
could cause or contribute to such differences may include, but are not limited  
to, the Company's ability to execute its business plan in a timely manner, the  
Company's management of growth, its ability to negotiate retail store leases on 
favorable terms, its ability to maintain favorable relationships with the       
schools where the Company conducts business, the ability to hire, train and     
retain qualified personnel, new laws and regulations applicable to the Company's
and its clients' business including laws relating to issues such as privacy,    
data collection, advertising, content regulation, and taxation, changing        
consumer tastes and the impact of competitive products and pricing, conditions  
in the markets in which the Company conducts business including the advertising,
media and retail markets and general economic conditions. The Company undertakes
no obligation to publicly release the results of any revisions to these         
forward-looking statements that may be made to reflect any future events or     
circumstances.                                                                  

The Company's consolidated financial statements are not directly comparable from
period to period due to acquisition and discontinued activities. The following  
financial analysis compares the twelve months ended June 30, 2001 with the      
twelve months ended June 30, 2000 and compares the twelve months ended June 30, 
2000 with the twelve months ended June 30, 1999.                                

RESULTS OF OPERATION                                                            
(in thousands)                                                                  

Year Ended June 30, 2001 Compared with Year Ended June 30, 2000                 

In order to make more meaningful comparisons with fiscal 2000's full-year       
results, adjustments for "contributed media revenue," HotStamp cities program   
and Beyond the Wall have been made. Contributed media revenue was recognized    
last year as a result of the Company's acquisition of a 48 percent minority     
interest in CommonPlaces. After acquiring the remaining 52 percent in February  
2000, contributed media revenue was no longer recognized. In fiscal 2001, the   
Company                                                                         

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discontinued its HotStamp cities program and Beyond the Wall catalog and, as    
such, their revenues were excluded from the adjusted revenue. The following     
table represents revenue adjusted for contributed media, HotStamp cities program
and Beyond the Wall revenues.                                                   

(in thousands)                                                                  
                                                       ---------------------
                                                      FY 2001    FY 2000
                                                       ---------------------

    Revenues as stated in the Financial Statements    $ 26,892    $ 28,221
     Contributed Media                                      --     $ (2,890)
                                                       ---------------------
    Subtotal                                          $ 26,892    $ 25,331

     HotStamp "Cities Program" and Beyond the Wall     $ (1,794)   $ (4,136)
                                                       ---------------------

    Adjusted Revenue                                  $ 25,098    $ 21,195
                                                       =====================

For the twelve months ended June 30, 2001, adjusted net revenues were $25,098   
compared to $21,195 for the twelve months ended June 30, 2000. The revenue      
growth of $3,903 was attributable to an increase of retail of $2,366 and an     
increase in the media segment of $1,537. Revenue growth in the Company's retail 
segment was attributable to the increase in the number of stores opened by the  
Company and same store growth. Media revenue growth was attributable to the     
event marketing business.                                                       

For the twelve months ended June 30, 2001, cost of sales was $15,043 as compared
to $12,838 for the twelve months ended June 30, 2000. The increase of $2,205 was
due to an increase of $1,540 in the media segment and a $665 increase in the    
retail segment. Specifically, the acquisition of Teen.com during July 2000      
accounted for all of the increase in the media segment. The increase in the     
retail segment was a function of increased revenue.                             

For the twelve months ended June 30, 2001, selling, general and administrative  
expenses were $21,749 as compared to $14,811 for the twelve months ended June   
30, 2000. The increase of $6,938 was due to an increase of $2,738 in the media  
segment and $4,200 in the retail segment. The media segment increase was        
primarily due to the acquisition of Teen.com. The retail segment increase of    
$4,200 was due to $2,800 of one-time costs related to the acquisition of Trent  
and the remaining $1,400 due to increased expenses related to expansion of the  
retail store chain.                                                             

For the twelve months ended June 30, 2001, corporate expenses were $8,163 as    
compared to $6,041 for the twelve months ended June 30, 2000. The increase of   
$2,122 includes $1,100 related to the cost of expanding the senior management   
team, $500 related to the exploration of a venture in the People's Republic of  
China, and $522 relating to severance and moving expenses.                      

For the twelve months ended June 30, 2001, depreciation and amortization        
expenses were $5,487 ($2,299 in Cost of Sales) as compared to $3,500 ($1,648 in 
Cost of Sales) for the twelve months ended June 30, 2000. The increase of $1,987
includes $1,459 related to the amortization of Teen.com goodwill, as Teen.com   
was acquired in July 2000. The remaining increase of $528 was due to the        
increased fixed assets in the media segment as well as the additional stores in 
the retail segment.                                                             

For the twelve months ended June 30, 2001, impairment loss on assets was        
$10,680. This entailed a charge of $4,750 for the write-down of a promotional   
credit that was acquired by the Company when it purchased sixdegrees, inc., a   
write-down of $1,845 for the remaining HotStamp(R) assets, a write-down of $317 
on the remaining goodwill of Beyond the Wall(R) and a write-down of $3,768 of   
goodwill relating to Teen.com.                                                  

For the twelve months ended June 30, 2001, there was no equity loss on          
investment as compared to $2,890 for the twelve months ended June 30, 2000. The 
2000 loss represents the Company's minority interest share of the loss in       
CommonPlaces.                                                                   

For the twelve months ended June 30, 2001, interest income was $2,131 as        
compared to $1,617 for the twelve months ended June 30, 2000. The increase of   
$514 was due to interest income earned on increased cash balances resulting from
the issuance of debt and the sale of common stock.                              

For the twelve months ended June 30, 2001, interest expense was $3,169 as       
compared to $1,000 for the twelve months ended June 30, 2000. The increase of   
$2,169 was primarily related to the increase in long-term debt.                 

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For the twelve months ended June 30, 2001, loss from discontinued operations was
$40,606 as compared to $39,865 for the twelve months ended June 30, 2000. The   
twelve months ended June 30, 2001, loss from discontinued operations of $40,606 
represent operating losses for the online segment from July to the December 2000
measurement date. The twelve months ended June 30, 2000, loss from discontinued 
operations of $39,865 represent operating losses for the online segment incurred
during the period January to June 2000.                                         

For the twelve months ended June 30, 2001, loss on disposal of discontinued     
operations was $163,953. The loss on disposal primarily represents the          
write-down of net assets, including goodwill of the online segment and provision
for operating losses during the phase-out period. The final disposal occurred   
during the twelve months ended June 30, 2001.                                   

Year Ended June 30, 2000 Compared with Year Ended June 30, 1999                 

For the twelve months ended June 30, 2000, net revenues were $28,221 as compared
to $13,266 in the prior year. The increase of $14,955 was primarily due to the  
acquisition of Trent, which accounted for $7,520 of the increase. Additionally, 
contributed media revenues for CommonPlaces accounted for $2,890 of the         
increase. The remaining $4,545 was primarily due to increased sales in postcard,
event marketing, Gymboards(R), postering, campus wallboards, and theater        
operations as well as the full year impact of the HelloXpress, Inc. acquisition,
which was completed in June 1999.                                               

For the twelve months ended June 30, 2000, cost of goods sold was $12,838 as    
compared to $8,375 in the prior year. $1,765 of the cost of goods sold related  
to Trent's operations, which was acquired during 2000. The remaining increase of
$2,698 related to increased levels of revenue in the media segment.             

For the twelve months ended June 30, 2000, selling, general and administrative  
expenses were $14,811 as compared to $7,514 in the prior year. The increase of  
$7,297 was primarily due to the acquisition of Trent, which accounted for $5,835
of the increase. The remaining increase of $1,462 was due to increased level of 
sales and administrative staff to support the increase in revenues.             

For the twelve months ended June 30, 2000, corporate expenses were $6,041 as    
compared to $4,510 in the prior year. The increase of $1,531 was primarily due  
to the cost incurred in terminating an operating lease, which accounted for     
$1,666 of the increase which was offset by the net of the $425 increase of      
corporate personnel and related overhead expenses and the $560 decrease in bonus
expense.                                                                        

For the twelve months ended June 30, 2000, depreciation and amortization was    
$3,500 as compared to $2,186 in the prior year. The increase of $1,314 was      
primarily due to the additional amortization of goodwill of Trent, HelloXpress, 
Inc., and CollegeWeb, Inc.                                                      

For the twelve months ended June 30, 1999, impairment loss on equipment was     
$825. The loss was the result of determination by management that certain       
theater and location based media equipment no longer had remaining economic     
life.                                                                           

For the twelve months ended June 30, 2000, equity loss in investment was $2,890 
as compared to $51 in the prior year, representing the Company's minority       
interest share of the loss in CommonPlaces. Subsequent to the acquisition in    
February 2000 of the interests in CommonPlaces not previously owned by NET, the 
operations of CommonPlaces were included in the Company's results on a          
consolidated basis as part of the loss from discontinued operations.            

For the twelve months ended June 30, 2000, interest income was $1,617 as        
compared to $425 in the prior year. The increase of $1,192 was due to interest  
income earned on increased cash balances resulting primarily from the sale of   
additional common stock.                                                        

For the twelve months ended June 30, 2000, other income of $64 primarily        
represented licensing fees relating to CollegeWeb, Inc. and Invino Corp. due    
from CommonPlaces, prior to its merger with the Company.                        

For the twelve months ended June 30, 2000, interest expense was $1,000 as       
compared to $1,119 in the prior year. The decrease of $119 primarily related to 
a decrease in the average amount of long-term debt in 2000.                     

For the twelve months ended June 30, 2000, provision for income taxes was $493  
as compared to $185 in the prior year for taxes primarily based on net assets   
and net revenues.                                                               

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For the twelve months ended June 30, 2000, net loss was $49,888 as compared to  
$9,190 in the prior year. The increase of $40,698 primarily relates to the      
discontinued operations of its online segments. The increase was also a result  
of increased cost of goods sold, selling, general and administrative expenses,  
corporate expenses, depreciation and amortization, and interest expense,        
partially offset by increased revenues, other income, interest income and a     
reduction in impairment loss on equipment.                                      

LIQUIDITY AND CAPITAL RESOURCES                                                 

The Company used approximately $20.9 million of cash in operating activities in 
2001, primarily funding its discontinued segments as well as its operating      
losses from its continuing business. The Company funded its operations with cash
generated by the sale of investments in marketable debt securities.             

As of June 30, 2001, the Company had approximately $14.9 million in cash and    
equivalents. The Company believes that such amounts plus an additional amount of
$5.7 million, which represents investments in marketable debt securities with   
maturities of less than one year, will be sufficient to fund working capital,   
including debt service and interest expense, at least through the fiscal year   
ended June 30, 2002. In the event that the Company's plans and assumptions for  
each of its operations, with regard to the Company's ability to fund operations,
working capital, capital expenditures and debt repayments, prove to be          
inaccurate, the Company could be required to seek additional financing. The     
Company's ability to improve its operations will be subject to prevailing       
economic conditions and to legal, financial, business, regulatory, industry and 
other factors, many of which are beyond the Company's control. The Company may  
also seek additional debt or equity financing to develop or acquire additional  
media and marketing services businesses and retail expansion or to fund its     
operations. To the extent that the Company finances its requirements through the
issuance of additional equity securities, any such issuance would result in     
dilution to the interests of the Company's stockholders.                        

Additionally, to the extent that the Company incurs indebtedness or issues debt 
securities in connection with financing activities, the Company will be subject 
to all of the risks associated with incurring substantial indebtedness,         
including the risk that interest rates may fluctuate and cash flow may be       
insufficient to pay principal and interest on any such indebtedness. The Company
has no current arrangements with respect to, or sources of, additional          
financing. There can be no assurance that any additional financing will be      
available to the Company on acceptable terms, if at all.                        

The Company currently projects over thirty-five percent increase in revenues in 
fiscal year 2002 in both the media and retail segments. Growth in the media     
segment is expected to be broad based but driven primarily by event marketing   
and promotions. These projections assume improvement in the advertising market  
and continued growth in the Company's retail operations, among other things. The
retail segment revenue growth is comprised of same store year-over-year growth, 
new store openings and price increases for the campus sales events. The Company 
also projects earnings before interest, taxes, depreciation and amortization    
("EBITDA") to be positive in the first quarter of fiscal 2002 and in the full   
fiscal year 2002 due to projected increase in revenues, as well as projected    
improvements in operating margins. The projected EBITDA improvement is expected 
to reduce cash consumption below $7.0 million in fiscal year 2002 including an  
expected $3.0 million of capital investments in the business. The Company       
expects a net loss of less than $10.0 million. The Company projects that it will
sustain its revenue growth momentum through fiscal year 2003, which should      
result in improved EBITDA, sufficient to generate positive cash flow and        
positive net income in fiscal year 2003.                                        

ITEM 8.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK            

Market Risk                                                                     

Our accounts receivable are subject, in the normal course of business, to       
collection risks. We regularly assess these risks and have established policies 
on business practices to protect against the adverse effects of collection      
risks.                                                                          

Interest Rate Risk                                                              

Our investments are classified as cash and cash equivalents and debt securities 
with original maturities of three months or less. Therefore, changes in the     
market's interest rates do not affect the value of the investments as recorded  
by us.                                                                          

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ITEM 9.   FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA                            

Information with respect to this item appears as a separate section following   
Item 14 of this report. Such information is incorporated herein by reference.   

ITEM 10.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND       
FINANCIAL DISCLOSURE                                        

None.                                                                           

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PART III

ITEM 11.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                   

The information required by this Item is incorporated herein by reference to the
Company's definitive proxy statement to be filed with the Securities and        
Exchange Commission pursuant to Regulation 14A within 120 days after the end of 
the fiscal year covered by this report (the "Company's Proxy Statement").       

ITEM 12.   EXECUTIVE COMPENSATION                                               

The information required by this item is incorporated herein by reference to the
Company's Proxy Statement.                                                      

ITEM 13.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT       

The information required by this item is incorporated herein by reference to the
Company's Proxy Statement.                                                      

ITEM 14.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                       

The information required by this item is incorporated herein by reference to the
Company's Proxy Statement.                                                      

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K      

(a)     The following documents are filed as part of this report:               

     (1)     Financial Statements: Consolidated Balance Sheets at June 30,
            2001 and 2000, Consolidated Statements of Operations for the
      years ended June 30, 2001, 2000 and 1999, Consolidated
                Statements of Cash Flows for the years ended June 30, 2001, 2000
             and 1999, Consolidated Statements of Stockholders' Equity for
the years ended June 30, 2001, 2000 and 1999    

(2)     Financial Statement Schedules: Schedule II Valuation and
            Qualifying Accounts [All other financial schedules have been
       omitted because they are not applicable or the required
         information is shown in the financial statements or notes
thereto.]                                       

(b)     Reports on Form 8-K filed on August 24, 2001.                           

(c)     Exhibits:                                                               

3.1     Certificate of Incorporation (incorporated by reference to Exhibit 3.1  
      to the Company's Registration Statement on Form SB-2, Registration No.
33-80935, filed on March 6, 1996).                              

3.2     Certificate of Amendment of Certificate of Incorporation (incorporated  
      by reference to Exhibit 3.2 to the Company's Registration Statement on
Form SB-2, Registration No. 33-80935, filed on March 6, 1996).  

3.3     Certificate of Amendment of Certificate of Incorporation (incorporated  
       by reference to Exhibit 3.3 to the Company's Form 10-KSB for the fiscal
year ended June 30, 1998, filed May 27, 1998).                  

3.4     Bylaws (incorporated by reference to Exhibit 3.3 to the Company's       
        Registration Statement on Form SB-2, Registration No. 33-80935, filed on
March 6, 1996).                                                 

3.5     Bylaws (incorporated by reference to Exhibit 4.2 to YouthStream's       
        Registration Statement on Form S-8, Registration No. 333-32022, filed on
March 9, 2000).                                                 

4.1     Warrant Agreement (incorporated by reference to Exhibit 4.1 to the      
Company's Registration Statement on Form SB-2, Registration No. 
33-80935, filed on March 6, 1996).                              

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4.2     Underwriter's Warrant (incorporated by reference to Exhibit 4.2 to the  
Company's Registration Statement on Form SB-2, Registration No. 
33-80935, filed on March 6, 1996).                              

10.1    Employment Stock Option Plan of the Company (incorporated by reference  
     to Exhibit 10.1 to the Company's Registration Statement on Form SB-2,
Registration No. 33-80935, filed on March 6, 1996).             

10.2    Employment Agreement between the Company and Harlan D. Peltz            
        (incorporated by reference to Exhibit 10.2 to the Company's Registration
    Statement on Form SB-2, Registration No. 33-80935, filed on March 6,
1996).                                                          

10.3    Employment Agreement between the Company and Don Leeds (incorporated by 
     reference to Exhibit 1 to the Company's Form 10-QSB for the quarterly
period ended June 30, 1996).                                    

10.4    Non-Incentive Stock Option Agreement dated June 17, 1996 between the    
       Company and Don Leeds (incorporated by reference to Exhibit 10.3 to the
    Company's Form 10-QSB for the quarterly period ended June 30, 1996).

10.5    Employment Agreement between the Company and Bruce L. Resnik            
        (incorporated by reference to Exhibit 2 to the Company's Form 10-QSB for
the quarterly period ended September 30, 1996).                 

10.6    NET Portfolio Investors Agreement dated December 21, 1995 between the   
       Company and NET Portfolio Investors, L.P. (incorporated by reference to
  Exhibit 10.5 to the Company's Registration Statement on Form SB-2,
Registration No. 33-80935, filed on March 6, 1996).             

10.7    Standard Form of School Contract (incorporated by reference to Exhibit  
       10.8 to the Company's Registration Statement on Form SB-2, Registration
No. 33-80935, filed on March 6, 1996).                          

10.8    Asset Purchase Agreement dated September 13, 1996 among American Passage
    Media Corporation, Gilbert Scherer, the Company and American Passage
    Media, Inc. (incorporated by reference to Exhibit 2 to the Company's
Form 8-K, filed on September 28, 1996).                         

10.9    Option Agreement between the Company and American Passage Media         
    corporation (incorporated by reference to Exhibit 5 to the Company's
Form 8-K, filed on September 28, 1996).                         

10.10   Bill of Sale and Agreement dated January 31, 1997 among SCCGS, Inc.,    
Sirrom Capital Corporation, Campus Voice, L.L.C. and the Company
        (incorporated by reference to Exhibit 10.23 to the Company's Form 10-KSB
for the fiscal year ended June 30, 1997).                       

10.11   Asset Purchase Agreement dated April 11, 1997 among Posters Preferred,  
 Inc., Dennis Roche, Brian Gordon and the Company (incorporated by
      reference to Exhibit 10.30 to the Company's Form 10-KSB for the fiscal
year ended June 30, 1997).                                      

10.12   Asset Purchase Agreement dated April 30, 1997 among the Company, Pik:Nik
      Media, LLC, Pik:Nik, LLC and Garth Holsinger, Annett Schaefer-Sell and
        Sunny Smith (incorporated by reference to Exhibit 10.31 to the Company's
Form 10-KSB for the fiscal year ended June 30, 1997).           

10.13   Stock Purchase Agreement dated June 24, 1997 among Warburg, Pincus      
      Emerging Growth Fund, Inc., Small Company Growth Portfolio of Warburg,
Pincus Institutional Fund, Inc. and the Company (incorporated by
      reference to Exhibit 10.32 to the Company's Form 10-KSB for the fiscal
year ended June 30, 1997).                                      

10.14   Registration Rights Agreement dated June 24, 1997 among Warburg, Pincus 
      Emerging Growth Fund, Inc., Small Company Growth Portfolio of Warburg,
Pincus Institution Fund, Inc., and the Company (incorporated by 
      reference to Exhibit 10.33 to the Company's Form 10-KSB for the fiscal
year ended June 30, 1997).                                      

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10.15   Stock Purchase Agreement dated December 23, 1997 between the Company and
       Dirrom Investments, Inc. (incorporated by reference to Exhibit 10.15 to
   the Company's Form 10-KSB for the fiscal year ended June 30, 1998).

10.16   Placement Manager Agreement (incorporated by reference to Exhibit 10.17 
      to the Company's Form 10-KSB for the fiscal year ended June 30, 1998).

10.17   Form of Stock Purchase Agreement (incorporated by reference to Exhibit  
    10.1 to the Company's Form 10-KSB for the fiscal year ended June 30,
1998).                                                          

10.18   Loan Agreement dated December 30, 1997 between First Union National     
    Bank, American Passage Media, Inc., Beyond the Wall, Inc. and Campus
        Voice, Inc. (incorporated by reference to Exhibit 10.18 to the Company's
Form 10-KSB for the fiscal year ended June 30, 1998).           

10.19   Unconditional Guaranty dated December 30, 1997 by the Company and       
 National Campus Media, Inc. in favor of First Union National Bank
        (incorporated by reference to Exhibit 10.19 to the Company's Form 10-KSB
for the fiscal year ended June 30, 1998).                       

10.20   Merger Agreement dated June 9, 1999 among the Company, Trent Acquisition
    Co., Inc., Trent Graphics, Inc. and Charles Sirolly, Thomas Sirolly,
        Daniel Sirolly and William Sirolly (incorporated by reference to Exhibit
2 to the Company's Form 8-K filed June 24, 1999).               

10.21   Asset Purchase Agreement dated June 10, 1999 among the Company, Pik:Nik 
 Media, Inc., HelloXpress USA, Inc., and Dalia Smith and Ron Smith
       (incorporated by reference to Exhibit 2 to the Company's Form 8-K filed
June 24, 1999).                                                 

10.22   Option Agreement dated August 3, 1999 among the Company, New CW, Inc.,  
CollegeWeb.com, Inc. and J. Alexander Chriss and Todd M. Ragaza 
        (incorporated by reference to Exhibit 10.22 to the Company's Form 10-KSB
for the fiscal year ended June 30, 1999).                       

10.23   Agreement and Plan of Merger dated August 3 1999 among the Company, New 
  CW, Inc., CollegeWeb.com, Inc. and J. Alexander Chriss and Todd M.
        Ragaza (incorporated by reference to Exhibit 10.23 to the Company's Form
10-KSB for the fiscal year ended June 30, 1999).                

10.24   Operating Agreement of Common Places, LLC (incorporated by reference to 
     Exhibit 10.1 to the Company's quarterly report on Form 10-QSB for the
quarter ended December 31, 1998).                               

10.25   Agreement and Plan of Merger dated June 28, 1999 among the Company,     
  Common Places, LLC, YouthStream Media Networks, Inc., Nunet, Inc.,
      Nucommon, Inc., a wholly owned subsidiary of New Parent, Harlan Peltz,
 Benjamin Bassi, William Townsend and Mark Palmer (incorporated by
      reference to Exhibit 10.25 to the Company's Form 10-KSB for the fiscal
year ended June 30, 1999).                                      

10.26   Restated Certificate of Incorporation of YouthStream Media Networks,    
      Inc. (incorporated by reference to Exhibit 10.26 to the Company's Form
10-KSB for the fiscal year ended June 30, 1999).                

10.27   Rights Agreement between YouthStream Media Networks, Inc. and the Rights
        Agent (unsigned and undated) (incorporated by reference to Exhibit 10.27
      to the Company's Form 10-KSB for the fiscal year ended June 30, 1999).

10.28   YouthStream Media Networks, Inc. 2000 Stock Incentive Plan (incorporated
  by reference to Exhibit 10.28 to the Company's Form 10-KSB for the
fiscal year ended June 30, 1999).                               

10.29   Voting Trust Agreement among YouthStream Media Networks, Inc., Benjamin 
 Bassi, William Townsend, Mark Palmer, Harlan Peltz and the Voting
    Trustee (incorporated by reference to Exhibit 10.29 to the Company's
Form 10-KSB for the fiscal year ended June 30, 1999).           

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10.30   Stockholders Agreement among YouthStream Media Networks, Inc., Benjamin 
       Bassi, William Townsend, Mark Palmer, Harlan Peltz individually, Harlan
      Peltz as voting trustee (incorporated by reference to Exhibit 10.30 to
   the Company's Form 10-KSB for the fiscal year ended June 30, 1999).

10.31   Employment Agreement between YouthStream Media Networks, Inc. And       
 Benjamin Bassi (incorporated by reference to Exhibit 10.31 to the
Company's Form 10-KSB for the fiscal year ended June 30, 1999). 

10.32   Employment Agreement between YouthStream Media Networks, Inc. And Harlan
       Peltz (incorporated by reference to Exhibit 10.32 to the Company's Form
10-KSB for the fiscal year ended June 30, 1999).                

10.33   Merger Agreement dated December 14, 1999 among the Company, Sixdegrees  
    Acquisition Corp. and sixdegrees, inc. (incorporated by reference to
Exhibit 10.33 to the Company's Form 8-K filed January 20, 2000).

10.34   Certificate of Designation of Series A Convertible Preferred Stock of   
        the Company (incorporated by reference to Exhibit 10.34 to the Company's
Form 8-K filed January 20, 2000).                               

10.35   1999 Stock Option Plan of the Company (incorporated by reference to     
Exhibit 10.35 to the Company's Form 8-K filed January 20, 2000).

10.36   1999 Special Stock Option Plan of the Company (incorporated by reference
   to Exhibit 10.36 to the Company's Form 8-K filed January 20, 2000).

10.37   1999 Special Incentive Stock Plan of the Company (incorporated by       
      reference to Exhibit 10.37 to the Company's Form 8-K filed January 20,
2000).                                                          

10.38   Employment Agreement dated June 20, 2000 between YouthStream Media      
  Networks, Inc. and James G. Lucchesi (incorporated by reference to
     Exhibit 10.38 to the Company's Form 10-KSB filed September 27, 2000).

10.39   Non-Qualified Stock Option Agreement of James G. Lucchesi dated June 20,
      2000 (incorporated by reference to Exhibit 10.39 to the Company's Form
10-KSB filed September 27, 2000).                               

10.40   Amendment to Employment Agreement as of June 20, 2000 between           
     YouthStream Media Networks, Inc. and Harlan D. Peltz (incorporated by
       reference to Exhibit 10.40 to the Company's Form 10-KSB filed September
27, 2000).                                                      

10.41   Employment Agreement dated July 1, 2000 between YouthStream Media       
 Networks, Inc. and Thea A. Winarsky (incorporated by reference to
     Exhibit 10.41 to the Company's Form 10-KSB filed September 27, 2000).

10.42   Merger Agreement dated July 13, 2000 among YouthStream Media Networks,  
      Inc., W3T Acquisition, Inc., a wholly-owned subsidiary of YouthStream,
    W3T.com, Inc., Gerald Croteau, Eugene Bellotti, Donald Dion, Richard
    King, James Westra, Mark Fusco, Suzanne W. Bookstein and John Genest
        (incorporated by reference to Exhibit 10.42 to the Company's Form 10-KSB
filed September 27, 2000).                                      

10.43   Consulting and Non-Competition Agreement dated July 25, 2000 between    
      YouthStream Media Networks, Inc. and Andrew P. Weinreich (incorporated
by reference to Exhibit 10.43 to the Company's Form 10-KSB filed
September 27, 2000).                                            

10.44   Amendment No. 1 dated July 28, 2000 to Stockholders Agreement dated     
  February 28, 2000 among YouthStream Media Networks, Inc., Benjamin
        Bassi, William Townsend, Mark Palmer, Harlan D. Peltz, individually, and
        Harlan D. Peltz, as voting trustee (incorporated by reference to Exhibit
10.44 to the Company's Form 10-KSB filed September 27, 2000).   

10.45   Non-Qualified Stock Option Agreement of Thea A. Winarsky dated August   
     16, 2000 (incorporated by reference to Exhibit 10.45 to the Company's
Form 10-KSB filed September 27, 2000).                          

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10.46   Non-Qualified Stock Option Agreement of James G. Lucchesi dated         
     September 26, 2000 (incorporated by reference to Exhibit 10.46 to the
Company's Form 10-KSB filed September 27, 2000).                

10.47*  Non-Qualified Stock Option Agreementof James G. Lucchesi dated July 2,  
2001.                                                           

10.48*  Non-Qualified Stock Option Agreement of James G. Lucchesi dated July 2, 
2001.                                                           

10.49*  Amendment to the Employment Agreement (dated June 20, 2000) dated June  
29, 2001 for James G. Lucchesi.                                 

10.50*  Amendment to Non-Qualified Stock Option Agreement (dated July 31, 2000) 
dated June 29, 2001 for James G. Lucchesi.                      

10.51*  Amendment to Non-Qualified Stock Option Agreement (dated June 20, 2000) 
dated June 29, 2001 for James G. Lucchesi.                      

21*     Subsidiaries of the Company.                                            

23*     Consent of Ernst & Young LLP.                                           

---------------                                                                 

*Filed herewith                                                                 

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YOUTHSTREAM MEDIA NETWORKS, INC.
 CONSOLIDATED FINANCIAL STATEMENTS

 INDEX

Report of Independent Auditors...............................................F-2

Consolidated Financial Statements:                                              

Consolidated Balance Sheets at June 30, 2001 and 2000........................F-3

Consolidated Statements of Operations for the years ended                       
June 30, 2001, 2000 and 1999.................................................F-4

Consolidated Statements of Cash Flows for the years ended                       
June 30, 2001, 2000 and 1999.................................................F-5

Consolidated Statements of Stockholders' Equity for the years ended             
June 30, 2001, 2000 and 1999.................................................F-7

Notes to Consolidated Financial Statements...................................F-8

The following consolidated financial statement schedule of YouthStream          
Media Networks, Inc. is included in Item 14(a):                                 

Schedule II: Valuation and qualifying accounts...............................S-2

All other schedules for which provision is made in the applicable accounting    
regulation of the Securities and Exchange Commission are not required under the 
related instructions or are inapplicable and therefore have been omitted.       

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REPORT OF INDEPENDENT AUDITORS

Board of Directors                                                              
YouthStream Media Networks, Inc.                                                

We have audited the accompanying consolidated balance sheets of YouthStream     
Media Networks, Inc. and subsidiaries ("the Company") as of June 30, 2001 and   
2000, and the related consolidated statements of operations, cash flows and     
changes in stockholders' equity for each of the three years in the period ended 
June 30, 2001. Our audits also included the financial statement schedule listed 
in the Index at item 14(a). These financial statements and schedule are the     
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audits.                      

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

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of        
YouthStream Media Networks, Inc. and subsidiaries at June 30, 2001 and 2000, and
the consolidated results of their operations and their cash flows for each of   
the three years in the period ended June 30, 2001 in conformity with accounting 
principles generally accepted in the United States. Also, in our opinion, the   
related financial statement schedule, when considered in relation to the basic  
financial statements taken as a whole, presents fairly, in all material         
respects, the information set forth therein.                                    

                           /s/ Ernst & Young LLP

New York, New York                                                              
August 2, 2001                                                                  

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YOUTHSTREAM MEDIA NETWORKS, INC.
 CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

                                                        [Enlarge/Download Table]


                                                                                    June 30,    June 30, 
                                                                                      2001       2000    
                                                                                   ---------   --------- 
                                                                                                         
Assets                                                                                                   
Current assets:                                                                                          
   Cash and equivalents .......................................................... $  14,927   $  18,232 
   Marketable debt securities, at amortized cost .................................     5,655      25,189 
   Accounts receivable, net of allowance for doubtful                                                    
       accounts of $191 and $404 at June 30, 2001 and 2000, respectively .........     2,585       4,631 
   Inventories, net of allowance of $146 and $0 at June 30, 2001 and 2000,                               
       Respectively ..............................................................     2,606       1,471 
   Prepaid expenses ..............................................................       387       5,372 
   Deposits and other current assets .............................................       241       2,905 
                                                                                   ---------   --------- 
Total current assets .............................................................    26,401      57,800 

Property and equipment, net ......................................................     6,817       8,165 
Deferred financing costs, net ....................................................     3,375       3,963 
Intangible assets, net ...........................................................    10,785      13,709 
Restricted cash ..................................................................     1,328       1,328 
Net non-current assets of discontinued operations ................................        --     191,091 
Other assets .....................................................................        --         389 
                                                                                   ---------   --------- 
Total assets ..................................................................... $  48,706   $ 276,445 
                                                                                   =========   ========= 
Liabilities and stockholders' equity Current liabilities:                                                
   Accounts payable .............................................................. $   2,820   $   1,589 
   Accrued employee compensation .................................................     2,018         895 
   Other accrued expenses ........................................................     3,253       2,424 
   Net current liabilities of discontinued operations ............................     3,078       2,187 
   Deferred revenues .............................................................     1,751         665 
   Current portion of deferred purchase price ....................................     1,500          45 
   Current portion of capitalized lease obligations ..............................        46          83 
   Current portion of long-term debt .............................................     1,169       1,275 
                                                                                   ---------   --------- 
Total current liabilities ........................................................    15,635       9,163 
Net non-current liabilities of discontinued operations ...........................       185          -- 
Capitalized lease obligations ....................................................         5         106 
Long-term debt ...................................................................    18,630      18,709 
Deferred rent ....................................................................       366         353 
Deferred purchase price ..........................................................       375       3,700 

Commitments and contingencies ....................................................        --          -- 

Stockholders' equity:                                                                                    
   Preferred stock, $.01 par value, 5,000 shares authorized,                                             
      no shares issued and outstanding ...........................................        --          -- 
   Common stock, $.01 par value, 100,000 shares authorized,                                              
      30,091 shares issued at June 30, 2001                                                              
      and 28,031 issued and outstanding at June 30, 2000 .........................       301         280 
   Additional paid-in capital ....................................................   329,097     321,980 
   Accumulated deficit ...........................................................  (315,649)    (77,846)
   Treasury stock, 143 shares at June 30, 2001 ...................................      (239)         -- 
                                                                                   ---------   --------- 
Total stockholders' equity .......................................................    13,510     244,414 
                                                                                   ---------   --------- 
Total liabilities and stockholders' equity ....................................... $  48,706   $ 276,445 
                                                                                   =========   ========= 

 See notes to consolidated financial statements.

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YOUTHSTREAM MEDIA NETWORKS, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (IN THOUSANDS, EXCEPT PER SHARE AMOUNT)

                                                        [Enlarge/Download Table]


                                                                                      Year ended June 30,          
                                                                            -------------------------------------- 
                                                                               2001          2000          1999    
                                                                            ----------    ----------    ---------- 
                                                                                                                   
Net revenues .............................................................. $   26,892    $   28,221    $   13,266 
Operating expenses:                                                                                                
   Cost of sales, including depreciation of $2,299, $1,648 and $1,884,                                             
       in 2001, 2000 and 1999, respectively ...............................     15,043        12,838         8,375 
   Selling, general and administrative expenses ...........................     21,749        14,811         7,514 
   Corporate expenses .....................................................      8,163         6,041         4,510 
   Depreciation and amortization ..........................................      3,188         1,852           302 
   Loss on impairment of assets ...........................................     10,680            --           825 
                                                                            ----------    ----------    ---------- 
Total operating expenses ..................................................     58,823        35,542        21,526 
                                                                            ----------    ----------    ---------- 

Loss from operations ......................................................    (31,931)       (7,321)       (8,260)

Equity loss in investment .................................................         --        (2,890)          (51)
Interest income ...........................................................      2,131         1,617           425 
Other income ..............................................................         --            64            -- 
Interest expense ..........................................................     (3,169)       (1,000)       (1,119)
                                                                            ----------    ----------    ---------- 
Loss before provision for income taxes ....................................    (32,969)       (9,530)       (9,005)
Provision for income taxes ................................................        275           493           185 
                                                                            ----------    ----------    ---------- 
Loss from continuing operations ...........................................    (33,244)      (10,023)       (9,190)
Loss from discontinued operations .........................................    (40,606)      (39,865)           -- 
Loss on disposal of discontinued operations ...............................   (163,953)           --            -- 
                                                                            ----------    ----------    ---------- 
Net loss .................................................................. $ (237,803)   $  (49,888)   $   (9,190)
                                                                            ==========    ==========    ========== 

Per share of common stock basic and diluted                                                                        
   Loss from continuing operations ........................................ $    (1.14)   $    (0.47)   $    (0.72)
   Loss from operation of discontinued operations ......................... $    (1.38)   $    (1.89)           -- 
   Loss on disposal of discontinued operations ............................ $    (5.59)           --            -- 
                                                                            ----------    ----------    ---------- 
   Net loss ............................................................... $    (8.11)   $    (2.36)   $    (0.72)
                                                                            ==========    ==========    ========== 

Weighted average basic and diluted common shares outstanding ..............     29,334        21,111        12,800 
                                                                            ==========    ==========    ========== 

 See notes to consolidated financial statements.

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YOUTHSTREAM MEDIA NETWORKS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                       Year ended June 30,          
                                                                             -------------------------------------- 
                                                                                2001          2000          1999    
                                                                             ----------    ----------    ---------- 
                                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES                                                                                
Net loss ..................................................................  $ (237,803)   $  (49,888)   $   (9,190)
Adjustments to reconcile net loss to net cash used                                                                  
in operating activities:                                                                                            
     Loss from discontinued operations ....................................      40,606        39,865            -- 
     Loss on disposal of discontinued operations ..........................     163,953                             
     Net change in assets and liabilities of discontinued operations ......     (12,716)      (17,440)              
     Bad debt expense .....................................................          --           246            21 
     Depreciation and amortization ........................................       5,487         3,500         2,186 
     Loss on impairment of assets .........................................      10,680                         825 
     Loss on disposal of equipment ........................................          24                             
     Non-cash compensation ................................................                       126            -- 
     Amortization of deferred financing costs .............................         750           181           174 
     Amortization of original issue discount on Subordinated Notes ........          84            38            38 
     Deferred rent ........................................................          13           106            -- 
Changes in assets and liabilities, net of acquisitions:                                                             
     Accounts receivable ..................................................       2,296        (1,562)       (1,096)
     Inventory ............................................................      (1,135)         (619)          (56)
     Prepaid expenses .....................................................         236           806          (298)
     Deposits and other current assets ....................................       2,663        (2,774)          (33)
     Accounts payable .....................................................       1,231          (999)         (265)
     Accrued employee compensation ........................................         860           334             2 
     Other accrued expenses ...............................................         784          (399)          276 
     Deferred revenues ....................................................       1,086           106          (168)
                                                                             ----------    ----------    ---------- 
Net cash used in operating activities .....................................     (20,901)      (28,373)       (7,584)

CASH FLOWS FROM INVESTING ACTIVITIES                                                                                
Capital expenditures ......................................................      (1,795)       (3,238)       (1,697)
Proceeds from sale of equipment ...........................................         167            --            -- 
Sale (purchase) of investments in marketable debt securities ..............      19,534       (25,189)           -- 
Other assets ..............................................................         390          (181)           -- 
Payment for business acquisitions, net of cash acquired ...................        (100)           --        (3,782)
Additions to deferred financing costs .....................................          --          (494)         (314)
                                                                             ----------    ----------    ---------- 
Net cash provided by (used in) investing activities                              18,196       (29,102)       (5,793)

CASH FLOWS FROM FINANCING ACTIVITIES                                                                                
Net proceeds from sale of common stock and exercise of warrants and options         127        56,027        15,358 
Repurchase of common stock ................................................        (239)           --            -- 
Net proceeds from issuance of warrants in connection with long-term debt ..          35            --           188 
Repayment of capitalized lease obligations ................................        (254)          (41)           -- 
Proceeds from long-term debt ..............................................         965        13,551         4,812 
Repayment of long-term debt ...............................................      (1,234)         (876)       (2,206)
                                                                             ----------    ----------    ---------- 
Net cash (used in) provided by financing activities .......................        (600)       68,661        18,152 

Net (decrease) increase in cash and equivalents ...........................      (3,305)       11,186         4,775 
Cash and equivalents at beginning of year .................................      18,232         7,046         2,271 
                                                                             ----------    ----------    ---------- 
Cash and equivalents at end of year .......................................  $   14,927    $   18,232    $    7,046 
                                                                             ==========    ==========    ========== 

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YOUTHSTREAM MEDIA NETWORKS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                      Year ended June 30,         
                                                                            --------------------------------------
                                                                               2001          2000          1999   
                                                                            ----------    ----------    ----------
                                                                                                                  
SUPPLEMENTAL CASH FLOW INFORMATION                                                                                
Cash paid for interest ....................................................  $ 1,506       $  1,163      $   871  
Cash paid for income taxes ................................................  $   252       $    184      $   148  

NONCASH FINANCING ACTIVITIES:                                                                                     
Issuance of warrants in connection with long-term debt ....................  $   162       $  2,926      $   552  
Issuance of common stock in connection with acquisitions ..................  $ 6,814       $197,183      $ 3,783  
Deferred purchase price in connection with acquisition of Invino ..........       --       $  3,500      $    --  
Issuance of warrants in connection with acquisitions ......................       --       $ 18,512      $    --  

 See notes to consolidated financial statements.

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YOUTHSTREAM MEDIA NETWORKS, INC.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                          Common Stock    Additional                                     
                                                         ---------------    Paid-in   Accumulated  Treasury              
                                                         Shares   Amount    Capital     Deficit      Stock       Total   
                                                         ------   ------   ---------  -----------  ---------   --------- 
                                                                                                                         
Balances at June 30, 1998 .............................  11,347   $  113   $  27,198  $ (18,768)        --     $   8,543 
Issuance of warrants in connection with long-term debt     --       --           740       --           --           740 
Issuance of common stock upon exercise of warrants ....   3,063       31      14,988       --           --        15,019 
Issuance of common stock upon exercise of stock options     221        2         337       --           --           339 
Issuance of common stock in connection with                                                                              
   acquisition of Beyond the Wall .....................       7     --            33       --           --            33 
Issuance of common stock in connection with                                                                              
   acquisition of Trent ...............................     242        3       3,497       --           --         3,500 
Issuance of common stock in connection with                                                                              
   acquisition of HelloXpress .........................      17     --           250       --           --           250 
Net loss ..............................................    --       --          --       (9,190)        --        (9,190)
                                                         ------   ------   ---------  ---------    ---------   --------- 
Balances at June 30, 1999 .............................  14,897      149      47,043    (27,958)        --        19,234 

Issuance of common stock, net of issuance costs .......   2,477       25      52,950       --           --        52,975 
Issuance of common stock upon exercise of warrants ....     736        7         289       --           --           296 
Issuance of common stock upon exercise of stock options     969       10       2,746       --           --         2,756 
Issuance of common stock in connection with                                                                              
   acquisition of CollegeWeb ..........................     109        1       2,528       --           --         2,529 
Issuance of common stock in connection with                                                                              
   acquisition of Invino ..............................     295        3       4,876       --           --         4,879 
Additional stock options issued in connection with                                                                       
   acquisition of American Passage ....................    --       --         1,062       --           --         1,062 
Issuance of common stock in connection with                                                                              
   acquisition of sixdegrees ..........................   3,742       37     110,678       --           --       110,715 
Issuance of warrants and stock options in connection                                                                     
   with acquisition of sixdegrees .....................    --       --        12,850       --           --        12,850 
Issuance of common stock in connection with                                                                              
   acquisition of CommonPlaces ........................   4,793       48      78,886       --           --        78,934 
Issuance of stock options in connection with                                                                             
   acquisition of CommonPlaces ........................    --       --         4,600       --           --         4,600 
Issuance of common stock in connection with                                                                              
   acquisition of Beyond the Wall .....................      13     --           126       --           --           126 
Issuance of warrants in connection with long-term debt     --       --         3,346       --           --         3,346 
Net loss ..............................................    --       --          --      (49,888)        --       (49,888)
                                                         ------   ------   ---------  ---------    ---------   --------- 
Balances at June 30, 2000 .............................  28,031      280     321,980    (77,846)        --       244,414 
Issuance of warrants in connection with long-term debt     --       --           197       --           --           197 
Issuance of common stock upon exercise ................      45     --           127       --           --           127 
   of stock options                                                                                                      
Stock repurchase ......................................    --       --          --         --           (239)       (239)
Issuance of common stock in connection with                                                                              
   acquisition of Teen.com ............................     944        9       5,210       --           --         5,219 
Issuance of common stock in connection with                                                                              
   acquisition of HelloXpress .........................      53        1         293       --           --           294 
Issuance of common stock in connection with                                                                              
   acquisition of Invino ..............................     958       10       1,245       --           --         1,255 
Issuance of common stock in connection with                                                                              
   acquisition of sixdegrees ..........................      60        1          45       --           --            46 
Net loss ..............................................    --       --          --     (237,803)        --      (237,803)
                                                         ------   ------   ---------  ---------    ---------   --------- 
Balances at June 30, 2001 .............................  30,091   $  301   $ 329,097  $(315,649)   $    (239)  $  13,510 
                                                         ======   ======   =========  =========    =========   ========= 

See notes to consolidated financial statements. 

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YOUTHSTREAM MEDIA NETWORKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2001

1.  ORGANIZATION AND BASIS OF PRESENTATION                                      

The accompanying consolidated financial statements include the accounts of      
YouthStream Media Networks, Inc. ("YouthStream"), and its wholly-owned          
subsidiaries, (collectively, the "Company"). The Company's operations consist of
Network Event Theater, Inc. ("NET"), American Passage Media, Inc. ("American    
Passage"), Campus Voice, Inc. ("Campus Voice"), Beyond the Wall, Inc. ("Beyond  
the Wall"), Trent Graphics, Inc. ("Trent") and W3T.com, Inc. ("Teen.com"). In   
December 2000, the Company discontinued the operations of CommonPlaces, LLC     
("CommonPlaces"), sixdegrees, inc., ("sixdegrees"), CollegeWeb.com, Inc.        
("CollegeWeb") and Invino Corporation ("Invino") See Note 3. - Discontinued     
Operations.                                                                     

YouthStream Media Networks, Inc. through its subsidiaries, is a leading         
cross-platform media, marketing services and retail company that targets        
teenagers and young adult ages 12 to 24. During fiscal 2001, YouthStream        
reorganized into two market segments: media and retail.                         

2.  SIGNIFICANT ACCOUNTING POLICIES                                             

PRINCIPLES OF CONSOLIDATION                                                     

The accompanying consolidated financial statements include the accounts of the  
Company and its wholly-owned subsidiaries. All material intercompany items and  
transactions have been eliminated.                                              

CASH AND EQUIVALENTS AND MARKETABLE DEBT SECURITIES                             

Cash and equivalents include all cash, demand deposits, money market accounts,  
and debt instruments purchased with an original maturity of three months or     
less. Marketable debt securities are debt instruments purchased with maturities 
of between three and nine months. The Company's investment in debt securities,  
including those held in cash equivalents, are classified as securities          
held-to-maturity and are carried at amortized cost.                             

RESTRICTED CASH                                                                 

Restricted cash includes money market accounts that are used as collateral for  
letters of credit. The letters of credit are issued for security deposits on    
property and equipment leases.                                                  

RECLASSIFICATIONS                                                               

Certain expenses of the media business segment previously included in selling,  
general and administrative expenses and in depreciation and amortization have   
been reclassified as cost of sales. Such reclassifications were $12,613,000,    
$11,073,000, and $8,375,000 for the years ended June 30, 2001, 2000 and 1999,   
respectively.                                                                   

INVENTORIES                                                                     

Inventories are stated at the lower of cost or market. Cost is determined on a  
first-in, first-out basis. Inventories consist primarily of posters and related 
products.                                                                       

DEFERRED FINANCING COSTS                                                        

Deferred financing costs are being amortized over the term of the related debt. 
Accumulated amortization of deferred financing costs at June 30, 2001 and 2000  
are approximately $1,105,000 and $355,000, respectively.                        

PROPERTY AND EQUIPMENT                                                          

Property and equipment are stated at cost. Depreciation of property and         
equipment is provided for by the straight-line method over the estimated useful 
lives of the assets. These lives are estimated to be three to five years for    
network theater equipment; six years for location-based media equipment, and    
three to five years for furniture and office equipment. Leasehold improvements  
are amortized on a straight-line basis over the shorter of the term of the      
related lease or the lives of the related improvements. Expenditures for        
maintenance and repairs are charged to operations as incurred.                  

In accordance with Financial Accounting and Standards Board ("FASB") Statement  
No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of,"
the Company records impairment losses on long-lived assets used in              

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operations when events and circumstances indicate that the assets might be      
impaired and the undiscounted cash flows estimated to be generated by those     
assets are less than the carrying amount of those assets. During 1999, events   
and circumstances indicated that certain network theater equipment and          
location-based media equipment were impaired. As such, the Company wrote down   
the value of such assets by approximately $825,000 to their fair value. Fair    
value was based on estimated future undiscounted cash flows to be generated by  
the aforementioned assets.                                                      

INTANGIBLE ASSETS                                                               

Intangible assets represent acquisition costs in excess of the net assets of    
businesses acquired and a covenant not-to-compete, which are amortized on a     
straight-line basis ranging from 3 to 15 years. Accumulated amortization of     
intangible assets at June 30, 2001 and 2000 is approximately $2,861,000 and     
$2,351,000, respectively.                                                       

It is the Company's policy to account for intangible assets at the lower of     
amortized cost or estimated realizable value. As part of an ongoing review of   
the valuation and amortization of intangible assets of the Company and its      
subsidiaries, management assesses the carrying value of the intangible assets   
periodically in relation to the operating performance and future undiscounted   
cash flows of the underlying businesses.                                        

LOSS ON IMPAIRMENT OF ASSETS                                                    

As of June 30, 2001, the Company determined that the fair market values of the  
goodwill and certain other long-lived assets for Beyond the Wall, HotStamp, and 
Teen.com were below their carrying values. As a result, the Company recorded an 
impairment charge of approximately $5,930,000. Additionally, the Company        
determined that it was unlikely that $4,750,000 of a prepaid marketing asset    
would ever be utilized. Such amount was also recorded as a charge as of June 30,
2001. The aforementioned charges have been recorded as a loss on impairment of  
assets in the statement of operations for the year ended June 30, 2001.         

REVENUE RECOGNITION                                                             

The Company's primary source of revenue is derived from the sale of advertising 
space in media, which is owned either by the Company or by third parties and by 
the sale of marketing services. Revenue is generally recognized in the month of 
media publication and in the case of marketing services, the month such services
are provided. Retail revenue is derived from the sale of merchandise to         
consumers on college campuses and stores. Retail revenue is recognized at the   
time of sale to the consumer.                                                   

ADVERTISING AND PROMOTION COSTS                                                 

The Company expenses advertising costs as incurred. Advertising expense from    
continuing operations for the years ended June 30, 2001, 2000 and 1999 were     
approximately $851,000, $263,000 and $459,000, respectively.                    

INCOME TAXES                                                                    

The Company accounts for income taxes in accordance with FASB Statement No. 109,
"Accounting for Income Taxes. Under this method, deferred income taxes are      
provided for differences between the carrying amounts of the Company's assets   
and liabilities for financial reporting purposes and the amounts used for income
tax purposes.                                                                   

NET LOSS PER SHARE                                                              

The Company calculates net loss per share as required by SFAS No. 128, "Earnings
per Share." Basic earnings per share excludes any dilution for common stock     
equivalents and is computed on the basis of net loss divided by the weighted    
average number of common shares outstanding during the period. Diluted earnings 
per share reflects the potential dilution that could occur if options or other  
securities or contracts entitling the holder to acquire shares of common stock  
were exercised or converted, resulting in the issuance of additional shares of  
common stock that would then share in earnings. However, diluted earnings per   
share does not consider such dilution if its effect would be antidilutive.      
Certain options and warrants that are currently antidilutive may be dilutive in 
the future.                                                                     

STOCK-BASED COMPENSATION                                                        

The Company generally grants stock options to employees for a fixed number of   
shares with an exercise price equal to or greater than the fair value of the    
shares at the date of grant. The Company accounts for stock option grants in    
accordance with Accounting Principles Board ("APB") Opinion No. 25, "Accounting 
for Stock Issued to Employees", and, accordingly, recognizes compensation       
expense only if the fair value of the underlying common stock exceeds the       
exercise price of the stock option on the date of grant. The Company believes   
the alternative fair value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123") requires the use of  
option valuation models that were not developed for use in valuing employee     
stock options. As permitted by SFAS No. 123, the Company                        

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continues to account for stock-based compensation in accordance with APB Opinion
No. 25 and has elected the pro forma disclosure alternative of SFAS No. 123.    

USE OF ESTIMATES                                                                

The preparation of the financial statements in conformity with accounting       
principles generally accepted in the United States requires management to make  
estimates and assumptions that affect the amounts reported in the financial     
statements and accompanying notes. Actual results could differ from those       
estimates.                                                                      

RISKS AND UNCERTAINTIES                                                         

Financial instruments that potentially subject the Company to concentrations of 
credit risk consist primarily of accounts receivable. The Company routinely     
assesses the financial strength of its customers and requires collateral or     
other security to support customer receivables when necessary. Credit losses are
provided for in the consolidated financial statements in the form of an         
allowance for doubtful accounts. Management believes the Company has ample      
coverage for bad debt and will continue to review the collectibility of its     
receivables.                                                                    

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS                                  

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"), effective for fiscal years 
beginning after December 15, 2001, with early adoptions permitted for companies 
with fiscal years beginning after March 15, 2001. Under the new rules, goodwill 
and intangible assets deemed to have indefinite lives will no longer be         
amortized but will be subject to annual impairment tests in accordance with the 
Statements. Other intangible assets will continue to be amortized over their    
useful lives.                                                                   

The Company is currently evaluating its goodwill and other intangible assets in 
relation to the provisions of SFAS 142 to determine the impact, if any, the     
adoption of SFAS 142 will have on its results of operations. The Company will   
perform the first of the required impairment tests of goodwill and other        
intangible assets, and has not yet determined what the effect of these tests    
will be on the earnings and financial position of the Company.                  

3.  DISCONTINUED OPERATIONS                                                     

In December 2000, the Company announced its decision to discontinue the online  
segment, including the operations of its sixdegrees subsidiary and exit its     
Application Service Provider ("ASP") business. The ASP business included the    
technology that was acquired and further developed by CommonPlaces, CollegeWeb  
and Invino. The Company determined that the ASP business was not aligned with   
its long-term vision and strategy. The Company shut down its sixdegrees website 
on December 30, 2000, and final disposal of the ASP business occurred prior to  
June 30, 2001. In connection with the discontinuance of these businesses, the   
Company incurred a one-time charge of $164 million, related primarily to the    
write-off of goodwill, and also including other net assets and an accrual for   
estimated losses during the phase-out period. The discontinuation of sixdegrees 
and the disposal of the ASP business represent the disposal of a business       
segment under Accounting Principles Board ("APB") Opinion No. 30. Accordingly,  
results of these operations have been classified as discontinued and prior      
periods have been restated.                                                     

Net revenues and losses from discontinued operations are as follows (in         
thousands):                                                                     

                                                Year ended      Year ended
                                                 June 30, 2001   June 30, 2000
                                                 -------------   -------------
Net revenues .....................................   $     398       $    818   
                                                  =========       ========
Loss from discontinued operations ................   $ (40,606)      $(39,865)  
Loss on disposal of discontinued operations ......    (163,953)            --   
                                                  ---------       --------
Net loss from discontinued operations ............   $(204,559)      $(39,865)  
                                                  =========       ========

As of June 30, 2001, the Company has accrued $3,263,000 for the liabilities     
remaining from its online businesses. The accrual covers severance, lease       
payments and other miscellaneous expenses.                                      

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4.  CASH AND EQUIVALENTS, MARKETABLE DEBT SECURITIES AND RESTRICTED CASH        

The following is a summary of the Company's cash and held-to-maturity securities
at June 30, 2001, which are classified as either cash equivalents or marketable 
debt securities based on a maturity of less than or more than three months,     
respectively, or restricted cash (in thousands):                                

                                                        [Enlarge/Download Table]

                                                                     Gross       Gross     Estimated
                                                                   Unrealized  Unrealized   Market  
                                                           Cost      Gains      Losses       Value  
                                                          -------  ----------  ----------  ---------
                                                                                                    
Cash and Equivalents:                                                                               
Cash .................................................... $12,065       --         --       $12,065 
Mortgage backed securities ..............................   2,862     $ 11         --         2,873 
                                                          -------     ----        ----      ------- 
Total Cash and Equivalents .............................. $14,927     $ 11                  $14,938 
                                                          =======     ====        ====      ======= 

Marketable Debt Securities:                                                                         
Government obligations .................................. $ 1,532     $ 10         --       $ 1,542 
Corporate obligations ...................................   4,117       --         --         4,117 
Commercial paper ........................................       6       --         --             6 
                                                          -------     ----        ----      ------- 
Total Marketable Debt Securities ........................ $ 5,655     $ 10         --       $ 5,665 
                                                          =======     ====        ====      ======= 

Restricted Cash (Restriction Expiring August 2002) ...... $ 1,328       --         --       $ 1,328 
                                                          =======     ====        ====      ======= 
Total ................................................... $21,910     $ 21         --       $21,931 
                                                          =======     ====        ====      ======= 

5.  ACQUISITIONS                                                                

TRENT                                                                           

In June 1999, the Company acquired Trent pursuant to a merger agreement (the    
"Merger Agreement"). Trent sells posters and other products at sales events at  
junior and four-year colleges, high schools, at retail stores and other         
locations and over the Internet. The purchase price consisted of $3.5 million in
cash and 242,003 shares of the Company's common stock valued at $3.5 million, or
$14.46 per share, the then current market price. In addition, if Trent's EBITDA 
(as defined in the Merger Agreement) for the two years ending June 30, 2001     
exceeded certain targets, the Company was obligated to pay to the former Trent  
stockholders up to an additional $600,000 in cash and additional shares of the  
Company's common stock valued at $600,000. In December 2000, the Company amended
its agreement with the previous owners of Trent to modify the targets related to
the aforementioned earnouts. The modified earnouts were treated as compensation 
expense rather than additional purchase price due to the nature of the          
modifications. As of June 30, 2001, the Company has accrued an additional       
$991,000 relating to the modified earnouts. The aggregate purchase price of     
$7,060,000, including acquisition costs, was recorded as excess of cost over net
assets acquired.                                                                

HELLOXPRESS                                                                     

In June 1999, the Company acquired certain assets and liabilities of HelloXpress
USA, Inc. ("HelloXpress"). The purchase price consisted of $300,000 in cash,    
17,242 shares of the Company's common stock valued at $250,000, or $14.50 per   
share, the then current market price, and the forgiveness of amounts due to the 
Company of $125,000. In addition, the former stockholders of HelloXpress        
received an additional $45,000 in cash and shares of the Company's common stock 
valued at $200,000 in September 2000. The aggregate purchase price of $936,000, 
including acquisition costs, was recorded as excess of cost over net assets     
acquired and a portion was allocated to a covenant not-to-compete.              

COLLEGEWEB                                                                      

In August 1999, the Company acquired CollegeWeb pursuant to a merger agreement  
between the Company and CollegeWeb. The purchase price consisted of 108,971     
shares of the Company's common stock, valued at $2,529,000, or approximately    
$23.22 per share, the then current market price. The Company licensed           
CollegeWeb's technology to CommonPlaces. The aggregate purchase price of        
$2,738,000, including acquisition costs, was recorded as excess of cost over net
assets acquired. Effective December 2000, the Company discontinued the          
CollegeWeb operations. (See Note 3. Discontinued Operations)                    

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INVINO                                                                          

In October 1999, the Company acquired Invino pursuant to a merger agreement     
between the Company and Invino. The purchase price aggregating $9,000,000 is    
payable in the Company's common stock, of which $3,486,000 (167,358 shares) was 
paid at closing, based on the 30-day average share price prior to the payment   
date. The balance of the purchase price is payable in the Company's common stock
in quarterly installments of $500,000 through September 30, 2000 and quarterly  
installments of $375,000 from December 31, 2000 through December 31, 2002.      
Through June 30, 2001, the Company issued an additional 1,085,731 shares valued 
at approximately $2,648,000 in connection with the quarterly installments. The  
aggregate purchase price was recorded in October 1999, and the deferred purchase
price included in the accompanying balance sheet represents the unpaid portion. 
For accounting purposes, the value of the shares issued and to be issued has    
been and will be determined on the three-day average trading price one day      
before and one day after the date of issuance. Any differences between the use  
of the 30-day and three-day average trading prices will be accounted for as an  
adjustment to the purchase price. The aggregate purchase price of $8,594,000,   
including acquisition costs, was recorded as excess of cost over net assets     
acquired. Effective December 2000, the Company discontinued the Invino          
operations. (See Note 3. Discontinued Operations)                               

SIXDEGREES                                                                      

In January 2000, the Company acquired sixdegrees pursuant to a merger agreement 
between the Company and sixdegrees. The Company issued 2,742,536 shares of      
common stock and 999,957 shares of convertible preferred stock valued at        
$110,715,000, or approximately $29.583 per share, the current three-day average 
price per share when the merger was announced in December 1999. The convertible 
preferred stock was converted into common stock in March 2000. The Company also 
exchanged 640,979 of its options and warrants for 7,722,643 of sixdegrees'      
options and warrants valued at approximately $12,850,000. The aggregate purchase
price of $125,369,000, including acquisition costs, exceeded the net assets     
acquired by $114,727,000, which was recorded as excess of cost over net assets  
acquired. Effective December 2000, the Company discontinued the operations of   
sixdegrees. (See Note 3. Discontinued Operations).                              

COMMONPLACES                                                                    

In November 1998, the Company acquired 5,000,000 common units in CommonPlaces in
exchange for providing media and marketing services having an aggregate value of
$15,000,000 over a four year period commencing upon the initial public launch   
campaign promoting CommonPlaces' business, but not later than August 31, 1999.  
Twenty-five percent of the common units initially acquired by the Company, or   
1,250,000 common units, were not subject to vesting and no additional           
performance of services by the Company was necessary with respect to those      
units.                                                                          

The Company did not assign a value to the initial 1,250,000 common units that   
vested immediately because of the start-up nature of CommonPlaces' business and 
the related uncertainty surrounding it. It was the Company's intention to record
an investment proportionate to the cost of media and marketing services provided
on an ongoing basis related to its $15,000,000 four-year commitment. This       
investment in CommonPlaces was accounted for using the equity method, under     
which the Company's share of losses of CommonPlaces was reflected in the        
accompanying statement of operations as on equity loss in investment.           

For the period November 1998 through February 28, 2000, the Company provided    
$2,941,000 in media and marketing services to CommonPlaces. The Company's share 
of CommonPlaces' losses for the period from November 1998 through June 30, 1999 
and July 1, 1999 through February 28, 2000 was approximately $2,300,000 and     
$7,488,000, respectively. The Company has limited the recognition of            
CommonPlaces' losses in its statement of operations for the period from July 1, 
1999 through February 28, 2000 and the period from November 1998 to June 30,    
1999 to $2,890,000 and $51,000, respectively, because it was not required to    
fund CommonPlaces' losses or to make additional capital contributions. For the  
period from July 1, 1999 through February 28, 2000, the Company recognized      
approximately $1,741,000 in license fee income and CommonPlaces recognized      
$1,741,000 in license fee expense.                                              

In February 2000, CommonPlaces unit holders, excluding the Company, received    
4,792,867 shares of the Company's common stock, valued at $78,934,000, or       
approximately $16.47 per share, the current three-day average price per share   
when the merger was first announced in June 1999. The Company issued 1,158,223  
of its common stock options in exchange for 1,301,374 options in CommonPlaces'  
units valued at approximately $4,600,000. The aggregate purchase price of       
$92,276,000, including acquisition costs and the funding of CommonPlaces        
operating expenses of $7,463,000 through the date of the merger, exceeded the   
net assets acquired by $92,373,000 which was recorded as excess of cost over net
assets acquired. Effective December 2000, the Company discontinued the          
operations of CommonPlaces. (See Note 3. Discontinued Operations)               

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TEEN.COM                                                                        

In July 2000, the Company acquired Teen.com pursuant to a merger agreement among
the Company, a wholly-owned subsidiary of the Company, and Teen.com. Teen.com is
a family-friendly Web destination for teens and is ranked as one of the top     
websites visited by 13 to 19 year-olds. The purchase price consisted of 944,000 
shares of the Company's common stock, including 50,000 shares issued to the     
broker, valued at approximately $5,200,000 or approximately $5.53 per share, the
then current market price.                                                      

The aforementioned acquisitions have been accounted for using the purchase      
method of accounting. Accordingly, the purchase price of each of the            
acquisitions has been allocated to the assets acquired and the liabilities      
assumed based on their fair values at the respective date of each acquisition.  
Included in intangible assets is the excess of cost over the fair value of      
assets acquired and liabilities assumed. The results of operations of the       
businesses acquired are included in the Company's consolidated results of       
operations from the respective dates of acquisition.                            

The following unaudited pro forma information is presented as if the Company had
completed the acquisition of Teen.com as of July 1, 2001 and 2000, respectively,
and excludes those acquisitions that were discontinued (in thousands):          

                                                        [Enlarge/Download Table]

                                                                             Year ended June 30    
                                                                          ------------------------ 
                                                                           2001             2000   
                                                                          --------        -------- 
                                                                                                   
Net revenue ............................................................. $ 26,962        $ 29,584 
Loss from continuing operations ......................................... $(33,273)       $(11,752)
Loss from continuing operations per basic and diluted common share ...... $  (1.13)       $  (0.53)

Weighted average common shares outstanding - basic and diluted ..........   29,368          22,055 

The pro forma information above is not necessarily indicative of the results of 
operations that would have occurred had the acquisition been made at the        
beginning of the respective periods.                                            

In connection with the acquisitions of Invino and sixdegrees, the Company issued
additional shares of common stock during the twelve months ended June 30, 2001. 

6.  LONG-TERM DEBT                                                              

Long-term debt consists of the following (in thousands):                        

                                                        [Enlarge/Download Table]

                                                                                   Year ended June 30   
                                                                                 -----------------------
                                                                                  2001            2000  
                                                                                 -------         -------
                                                                                                        
Note Payable to Bank  (A) ...................................................... $ 1,072        $  1,739
Subordinated Notes - Private Placement (B) .....................................   5,000           5,000
Note Payable to Finance Company (C) ............................................   1,169           1,768
Subordinated Notes - Private Placement (D) .....................................  12,000          12,000
Subordinated Notes - Private Placement (E) .....................................   1,000               -
Other ..........................................................................       6               9
                                                                                 -------         -------
                                                                                  20,247          20,516
Less unamortized original issue discount attributed to subordinated notes ......     448             532
                                                                                 -------         -------
                                                                                  19,799          19,984
Less current portion ...........................................................   1,169           1,275
                                                                                 -------         -------
                                                                                 $18,630         $18,709
                                                                                 =======         =======

(A) This loan is secured by all of the assets of Campus Voice, Beyond the Wall  
and American Passage (the "Borrowers") and is guaranteed by the Company. This   
loan is payable in equal monthly installments, commencing in February 1998, over
a maximum of six years. Interest is payable monthly at a rate of interest of 275
basis points above LIBOR for U.S. dollar deposits of one-month maturity.        

The Borrowers are also party to an interest rate exchange agreement originally  
converting $3.0 million of the aforementioned floating rate debt to a fixed     
rate. The balance of the interest rate agreement at June 30, 2001 was $722,222. 
Under the interest rate exchange agreement, the Borrowers are required to pay   
interest at a fixed rate of 9.11% on the notional amount covered by the interest
rate exchange agreement. In return, the Company receives interest payments on   
the same notional amount at the prevailing LIBOR rate plus 275 basis points. The
interest rate exchange agreement terminates in June 2002. The fair value of the 
interest rate exchange agreement at June 30, 2001 was immaterial.               

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The Company was in violation of certain of its covenants as of June 30, 2001.   
The Company has obtained a waiver from the bank through March 31, 2002, and     
management believes that the Company will be in compliance after March 31, 2002.

(B) In July 1998, the Company issued subordinated notes to accredited investors 
in the aggregate amount of $5,000,000 less an original discount of $188,000.    
These notes bear interest at 11% per annum and are due in July 2003. In         
connection with the issuance of the subordinated notes, the Company issued      
375,000 warrants to the accredited investors for $188,000, and 150,000 warrants 
to the placement agent. Each warrant, which expires in July 2003, entitles the  
holder to purchase one share of the Company's common stock for $4.125, the      
market price of the Company's common stock at the date of issuance. Based on an 
independent appraisal, the 525,000 warrants were valued at $740,000. The value  
of the warrants and closing costs of $314,000 have been recorded as deferred    
financing costs and are being amortized over the term of the subordinated notes.
The original issue discount of $188,000 is also being amortized over the term of
the related debt.                                                               

(C) In March 2000, the Company issued a note to a finance company in the amount 
of $1,971,000. The note bears interest at the rate of 11.95% per annum and is   
payable in 36 equal monthly payments commencing in March 2000. The note is      
secured by certain equipment owned by the Company.                              

(D) In June 2000, the Company issued a subordinated note to an accredited       
investor in the amount of $12,000,000, less an original issue discount of       
$420,000. The note bears interest at 11% per annum and is due in June 2005. In  
connection with the issuance of the subordinated note, the Company issued       
1,020,000 warrants to an accredited investor in exchange for $420,000. Each     
warrant, which expires in June 2005, entitles the holder to purchase one share  
of the Company's common stock for $5.9375, the market price of the Company's    
common stock at the date of issuance. Based on an independent appraisal, the    
1,020,000 warrants were valued at $3,346,000. The value of the warrants and     
closing costs of $494,000 were recorded as deferred financing costs and are     
being amortized over the term of the subordinated note. The original issue      
discount of $420,000 is being amortized over the term of the related debt.      

(E) In July 2000, the Company issued a subordinated note to an accredited       
investor in the amount of $1,000,000, less an original issue discount of        
$35,000. The note bears interest at 11% per annum and is due in July 2005. In   
connection with the issuance of the subordinated note, the Company issued 60,000
warrants to an accredited investor in exchange for $35,000. Each warrant, which 
expires in July 2005, entitles the holder to purchase one share of the Company's
common stock for $3.75, the market price of the Company's common stock at the   
date of issuance. Based on an independent appraisal, the 60,000 warrants were   
valued at $197,000. The value of the warrants was recorded as deferred financing
costs and is being amortized over the term of the subordinated note. The        
original issue discount of $35,000 is being amortized over the term of the      
related debt.                                                                   

At June 30, 2000, the aggregate amounts of long-term debt due during the next   
five years are as follows (in thousands):                                       

Year ending June 30                                         
-------------------                                         
2002 ................  $ 1,169                  
2003 ................      904                  
2004 ................    5,174                  
2005 ................   13,000                  
     -------
     $20,247
     =======

PROPERTY AND EQUIPMENT                                                          

Property and equipment consists of the following (in thousands):                

                                                         June 30
                                                      ----------------------
                                                       2001           2000
                                                      -------        -------
Network theater equipment ............................  $ 4,051         $4,486  
Location based media equipment .......................      882            210  
Furniture and office equipment .......................    6,278          6,099  
Leasehold improvements ...............................      775            346  
Building .............................................      488            488  
Land .................................................      130            130  
                                                      -------        -------
                                                       12,604         11,759
Less accumulated amortization and depreciation .......   (5,787)        (3,594) 
                                                      -------        -------
                                                      $ 6,817        $ 8,165
                                                      =======        =======

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Property and equipment include assets under capital leases aggregating          
approximately $189,000 at June 30, 2001 and 2000. The accumulated amortization  
related to assets under capital leases is approximately $96,000 and $33,000 at  
June 30, 2001 and 2000, respectively.                                           

8.  INCOME TAXES                                                                

At June 30, 2001, the Company had a net operating loss carryforward for income  
tax purposes of approximately $82,347,000 that expires from 2013 through 2021.  
The use of this net operating loss in future years may be restricted under      
Section 382 of the Internal Revenue Code. For financial reporting purposes, a   
valuation allowance of approximately $30,701,000 has been recognized to offset  
the net deferred tax asset principally related to this carryforward. The        
valuation allowance increased by approximately $9,803,000 and $11,674,000 for   
the years ended June 30, 2001 and 2000, respectively.                           

Deferred income taxes reflect the net tax effects of temporary differences      
between the carrying amounts of assets and liabilities for financial reporting  
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets as of June 30, 2001 are as follows: (in       
thousands)                                                                      

                                                     June 30
                                                    ----------------------
                                                     2001           2000
                                                    -------        -------
  Net operating loss carryforwards ...............  $32,856        $20,492
  Other ..........................................   (2,155)           406
                                                    -------        -------
  Total deferred tax assets ......................   30,701         20,898
   Valuation allowance ............................  (30,701)       (20,898)
                                                    -------        -------
  Net deferred tax asset .........................  $    --        $    --
                                                    =======        =======

No federal tax provision has been provided for the years ended at June 30, 2001 
and 2000 due to the significant losses incurred to date. A current state tax    
provision has been provided for at June 30, 2001 and 2000 in the amount of      
$275,000 and $493,000 respectively. These taxes are primarily based on net      
assets and net revenues.                                                        

9.  STOCKHOLDERS' EQUITY                                                        

In December 1995, the Company granted to certain consultants an option to       
purchase 552,560 shares of common stock at an exercise price of $1.58 per share,
which expires in December 2005. The Company, in years ended June 30, 2000 and   
1999 respectively, issued 460,280 and 92,000 shares of the common stock in      
connection with the exercise of such options.                                   

The Company issued 2,645,000 warrants at the time of its initial public offering
in April 1996. Each of the warrants entitled the registered holder to purchase  
one share of the Company's common stock for $5.00, subject to adjustment in     
certain circumstances, at any time until April 2, 2001. In December 1997, the   
Company issued 12,000 shares of common stock upon exercise of warrants. In      
January 1999, the remaining 2,633,000 warrants were exercised resulting in net  
proceeds to the Company of approximately $13,200,000.                           

In connection with the Company's initial public offering in April 1996, the     
Company issued 230,000 warrants to the underwriter. Each warrant entitled the   
holder to purchase one share of the Company's stock for $8.25 and an additional 
warrant for $.165. Each additional warrant entitled the holder to purchase one  
share of the Company's common stock for $8.25. All warrants expire in April     
2002. Through June 30, 2000, 228,088 warrants and 227,088 additional warrants   
were exercised resulting in net proceeds to the Company of $2,146,000.          
Approximately 198,000 of the additional warrants were exercised in cashless     
transactions.                                                                   

In connection with the sale of 1,015,873 shares of the Company's common stock in
June 1997, the Company issued 150,000 warrants to an investment bank. Such      
warrants have an exercise price of $4.50 and expired in December 2000. In       
January and February 1999, the Company issued 112,562 shares of its common stock
in exchange for these warrants in cashless transactions.                        

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In December 1997 and 1998, the Company granted to a public relations firm, an   
aggregate of 400,000 warrants to purchase shares of the Company's common stock  
at an exercise price of $5.00 per share. In January 1999, the Company issued    
71,193 shares of its common stock upon the cashless exercise of 100,000         
warrants. In December 1999, the Company issued 249,791 shares of its common     
stock upon cashless exercise of 300,000 warrants.                               

In connection with certain earnout contingencies related to the American Passage
acquisition in September 1996, the Company issued 75,000 options, each of which 
entitled the holder to purchase one share of the Company's common stock for     
$2.627. The value of such options of $1,062,000 was recorded as additional      
purchase price. In November 1999, the Company issued 75,000 shares of its common
stock in connection with the exercise of such options.                          

In connection with the issuance of Subordinated Notes in July 1998, the Company 
issued 525,000 warrants to accredited investors and the placement agent. Each   
warrant, which expires in July 2003, entitles the holder to purchase one share  
of the Company's common stock for $4.125. During July and September 1999, the   
warrants were exercised in a cashless transaction resulting in the issuance of  
450,568 shares of the Company's common stock.                                   

In August 1999, the Company sold 1,219,521 shares of its common stock for       
$25,000,000 in a private placement. In conjunction with the private placement,  
the Company issued to the placement agent a warrant to purchase 36,585 shares of
the Company's common stock at $23.50 per share, the then current market price.  
The Company incurred approximately $1,500,000 of fees and related expenses in   
this transaction.                                                               

In December 1999, the Company sold 1,257,400 shares of its common stock for     
$31,435,000 in a private placement. In conjunction with the private placement,  
the Company issued to the placement agent a warrant to purchase 37,722 shares of
the Company's common stock at $25.00 per share, the then current market price.  
The Company incurred approximately $1,900,000 of fees and related expenses in   
this transaction.                                                               

In connection with an acquisition, the Company issued 13,332 shares of the      
Company's common stock, in April 2000, to the former owners of Beyond the Wall  
valued at approximately $126,000.                                               

In connection with the issuance of Subordinated Notes in June 2000, the Company 
issued 1,020,000 warrants to accredited investors and the placement agent. Each 
warrant, which expires in June 2005, entitles the holder to purchase one share  
of the Company's common stock for $5.9375.                                      

For the twelve months ended June 30, 2001, options were exercised resulting in  
the issuance of 45,848 shares of common stock and net proceeds to the Company of
$127,000.                                                                       

In May 2001, the Board of Directors authorized the Company to make open market  
purchases of the Company's common stock aggregating up to $2 million. As of June
30, 2001, the Company purchased, on the open market, 143,000 shares at a cost of
$239,000.                                                                       

Securities for issuance of common stock excluded from diluted earnings per share
due to their antidilutive effect are as follows:                                

                                       As of June 30
                                     -------------------------------------
                                     2001           2000          1999
                                     ---------      ---------    ---------
Stock options ......................... 3,942,021      3,595,547    1,249,000   
Common stock purchase warrants ........ 1,462,000      1,402,000      890,000   

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10.  STOCK OPTION PLANS                                                         

In February 2000, the Company adopted the YouthStream 2000 Stock Option Plan    
(the "2000 Plan") in order to grant employees providing services to the Company 
incentive stock options. The 2000 Plan allows for the granting of options to    
purchase up to 5,000,000 shares of the Company's common stock. All option plans 
of the Company in existence at the formation of the 2000 Plan were merged into  
the 2000 Plan. The terms of the options were not changed upon merging the Plans.
The exercise price of the options granted was at fair market value on the date  
of the grant. Options generally vest over three years.                          

In October 2000, the Company granted a certain executive of the Company a       
non-qualified option to purchase up to 100,000 shares of the Company's common   
stock. The exercise price of the options granted was at fair market value on the
date of the grant. The option vests over two years.                             

The following table summarizes the Option Plan.                               

                                                        [Enlarge/Download Table]

                                                                            Weighted    
                                                                             Average    
                                                                Shares    Exercise Price
                                                             ----------   --------------
                                                                                        
Options outstanding at June 30, 1998 .......................    529,000      $  4.39    
Options granted ............................................    370,200        11.44    
Options canceled ...........................................    (55,833)        6.10    
Options exercised ..........................................    (55,000)        3.53    
                                                             ----------      -------    
Options outstanding at June 30, 1999 .......................    788,367      $  7.64    
Options granted ............................................  3,985,255        14.35    
Options canceled ...........................................   (758,389)       15.93    
Options exercised ..........................................   (419,686)        4.17    
                                                             ----------      -------    
Options outstanding at June 30, 2000 .......................  3,595,547      $ 13.70    
Options granted ............................................  2,123,820         2.35    
Options canceled ........................................... (1,731,498)       15.10    
Options exercised ..........................................    (45,848)        2.77    
                                                             ----------      -------    
Options outstanding at June 30, 2001 .......................  3,942,021      $  7.09    
                                                             ==========      =======    

Options exercisable at June 30, 2001 .......................  1,483,260                 
                                                             ==========                 
Options exercisable at June 30, 2000 .......................    629,939                 
                                                             ==========                 
Options available for future grant at June 30, 2001 ........    930,102                 
                                                             ==========                 

Information regarding the options outstanding under the Option Plan at June 30, 
2001 is as follows:                                                             

                                                                [Download Table]

               Number of   Weighted-   Weighted-                        
  Exercise      Options     Average     Average                  Average
   Price       Currently   Exercise   Contractual     Number    Exercise
   Range      Outstanding    Price       Life      Exercisable    Price 
------------  -----------  ---------  -----------  -----------   -------
                                                                        
$0.78-1.09       137,500    $ 0.93     9.7 years           --        -- 
$1.25-1.88     1,375,929    $ 1.60     9.3 years      143,575    $ 1.84 
$1.91-2.63           557    $ 1.91     7.7 years          557    $ 1.91 
$3.00-4.16       660,591    $ 3.50     8.6 years      334,620    $ 3.50 
$4.69-7.00       891,456    $ 5.87     8.5 years      494,527    $ 5.76 
$7.25-10.84       62,322    $ 9.12     8.1 years       54,470    $ 9.31 
$11.50-16.94     206,218    $13.00     7.7 years      152,522    $12.99 
$17.38-25.75     294,098    $19.84     8.3 years      147,986    $20.00 
$26.13-28.75     313,350    $28.69     8.7 years      155,003    $28.75 
               ---------                            ---------    ------ 
               3,942,021                            1,483,260    $ 9.57 
               =========                            =========    ====== 

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Pro forma information regarding net loss per share is required by SFAS 123, and 
has been determined as if the Company had accounted for its employee stock      
options under the fair value method of SFAS 123. The fair value for these       
options was estimated at the date of grant using a Black-Scholes option-pricing 
model with the following weighted-average assumptions for June 30, 2001 and     
2000:                                                                           

                                               June 30
                                              ----------------------------------
Assumption                                       2001         2000         1999 
----------------------------------------      ---------     -------      -------
Risk-free interest rate .....................     4.99%       6.41%        5.08%
Dividend yield ..............................        0%          0%           0%
Volatility factor of the expected market                                        
  price of the Company's common stock .......     1.223         .90         1.09
Average life ................................ 2.4 years     3 years      3 years

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully    
transferable. In addition, option valuation models require the input of highly  
subjective assumptions including the expected stock price volatility. Because   
the Company's employee stock options have characteristics significantly         
different from those of traded options, and because changes in the subjective   
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single       
measure of the fair value of it employee stock options.                         

For purposes of pro forma disclosures, the estimated fair value of the options  
is amortized to expense over the vesting period of the options. Had compensation
cost for the Company's Plan been determined based upon the fair value at the    
grant date for awards under the Plan consistent with the methodology prescribed 
under Financial Accounting Standards Board Statement No. 123, "Accounting for   
Stock-Based Compensation," the Company's net loss and loss per share would have 
been increased by approximately $7,890,000 or $0.27 per share and $2,659,000, or
$0.13 per share for the years ended June 30, 2001 and 2000, respectively.       

The weighted average fair value of options granted during the years ended June  
30, 2001, and 2000 was $1.49 and $8.10, respectively.                           

11.  COMMITMENTS AND CONTINGENCIES                                              

LEASES                                                                          

The Company is obligated under capital leases for certain computer and office   
equipment that expire at various dates through September 2004 with interest     
ranging from 12% to 25%. Future minimum lease payments relating to office space 
under noncancelable operating leases and future minimum capital lease payments  
as of June 30, 2001 are as follows (in thousands):                              

                                                        [Enlarge/Download Table]

                                                                         Capital  Operating
                                                                         Leases    Leases  
                                                                         ------   ---------
                                                                                           
Year ending June 30:                                                                       
   2002 ................................................................ $1,015     $2,636 
   2003 ................................................................    165      2,120 
   2004 ................................................................     35      1,436 
   2005 ................................................................      7      1,007 
   2006 ................................................................     --        586 
   Thereafter ..........................................................     --         -- 
                                                                         ------     ------ 
Total minimum lease payments ...........................................  1,222     $7,785 
                                                                                    ====== 
   Less amount representing interest ...................................   (121)           
                                                                         ------            
   Present value of net minimum capital lease payments .................  1,101            
   Less current installments of obligations under capital lease ........    911            
                                                                         ------            
   Obligations under capital leases, net of current installments ....... $  190            
                                                                         ======            

Rent expense from continuing operations was approximately $1,850,000, $1,281,000
and $669,000 for the years ended June 30, 2001, 2000 and 1999, respectively. At 
December 31, 2001, approximately $865,000 and $185,000 of short-term capital    
lease obligations and long-term capital lease obligations, respectively, were   
reclassified to current and long term liabilities of                            

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discontinued operations. These capital leases relate to obligations for which   
the Company is still liable, although the assets were written off as part of the
discontinued operations of sixdegrees.                                          

LITIGATION                                                                      

In the normal course of business, the Company is subject to certain claims and  
litigation, including unasserted claims. The Company is of the opinion that,    
based on information presently available, such legal matters will not have a    
material adverse effect on the financial position, results of the operations or 
cash flows of the Company.                                                      

12.  401(K) PLAN                                                                

During 1997, the Company established a 401(k) Plan (the "Plan") for the benefit 
of all eligible employees. Eligible participants under this Plan are defined as 
all full-time employees with one year of service. All eligible participants may 
elect to contribute a portion of their compensation to the Plan subject to      
Internal Revenue Service limitations. The Company may make discretionary        
matching contributions to the Plan, subject to board approval. For the years    
ended June 30, 2001, 2000 and 1999, the amount of this matching expense was     
approximately $163,000, $74,000 and $41,000, respectively.                      

13.  SEGMENT INFORMATION                                                        

During the second quarter of fiscal year 2001, in connection with the decision  
to discontinue the Company's online segment, the Company revised its reporting  
of the remaining businesses. The Company's segments are now media and retail.   
The media segment represents the Company's media, marketing and promotional     
services provided to advertisers by NET, American Passage, Campus Voice, Beyond 
the Wall and Teen.com. The retail segment consists of on-campus and retail store
poster sales provided by Trent. The segments for fiscal 2000 have been restated 
to reflect the Company's internal reorganization (in thousands). There was no   
retail segment in fiscal 1999.                                                  

                                                        [Enlarge/Download Table]

                                           Year ended                     Year ended                                     
                                         June 30, 2001                  June 30, 2000                                    
                                 --------------------------------------------------------------                          
                                    Media    Retail     Total      Media    Retail     Total                             
                                  --------  --------   --------  --------   -------   --------                           
                                                                                                                         
Net revenues ...................  $ 16,865  $ 10,027   $ 26,892  $ 20,560   $ 7,661   $ 28,221                           
Depreciation and amortization ..     4,804       683      5,487     2,930       570      3,500                           

Loss from operations ...........   (28,810)   (3,121)   (31,931)   (6,761)     (560)    (7,321)                          
                                  ========  ========   ========  ========   =======   ========                           
Capital expenditures ...........     1,097       698      1,795     1,968     1,270      3,238                           
                                 ==============================================================                          


                                              June 30, 2001                                  June 30, 2000               
                                ---------------------------------------        ------------------------------------------
                                  Media           Retail          Total          Media           Retail          Total   
                                --------        --------       --------        --------         -------       -----------
                                                                                                                         
Identifiable assets ..........  $ 37,879        $ 10,827       $ 48,706        $ 75,481         $ 9,873       $ 85,354(a)

(a) June 30, 2000 excludes net non-current assets of discontinued operations.   

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14.  QUARTERLY RESULTS (UNAUDITED)                                              

The following is a summary of the quarterly results of operations for the two   
years ended June 30, 2001 (in thousands except per share data):                 

                                                        [Enlarge/Download Table]

                                                              June 30,    March 31,   December   September
                                                                2001        2001      31, 2000   30, 2000 
                                                             ---------    --------   ---------   -------- 
                                                                                                          
Net revenues ............................................... $   3,269    $  5,765   $   7,291   $ 10,567 
Income (loss) from operations ..............................   (19,662)     (5,238)     (4,910)    (2,121)
Loss before provision for income taxes .....................   (20,015)     (5,641)     (5,168)    (2,145)
Loss from continuing operations ............................   (19,869)     (5,762)     (5,240)    (2,373)
Loss from discontinued operations ..........................        --          --     (15,767)   (24,839)
Income (loss) on disposal of discontinued operations .......     1,018          --    (164,971)        -- 

Net loss ................................................... $ (18,851)   $ (5,762)  $(185,978)  $(27,212)
                                                             =========    ========   =========   ======== 
Per share of common stock basic and diluted                                                               
    Loss from continuing operations ........................ $   (0.67)   $  (0.20)  $   (0.18)  $  (0.08)
    Loss from discontinued operations ......................        --          --       (0.54)     (0.86)
    Loss on disposal of discontinued operations ............      0.03          --       (5.66)        -- 
                                                             ---------    --------   ---------   -------- 
Net loss ................................................... $   (0.64)   $  (0.20)  $   (6.38)  $  (0.94)
                                                             =========    ========   =========   ======== 

Weighted average basic and diluted shares outstanding ......    29,438      29,481      29,172     28,897 
                                                             =========    ========   =========   ======== 


                                                              June 30,    March 31,   December   September
                                                                2000        2000      31, 1999   30, 1999 
                                                             ---------    --------   ---------   -------- 
                                                                                                          
Net revenues ............................................... $   4,190   $   7,069    $  6,601   $ 10,361 
Income (loss) from operations ..............................    (5,636)     (1,031)     (1,000)       346 
Loss before provision taxes ................................    (5,246)     (1,673)     (2,143)      (468)
Loss from continuing operations ............................    (5,555)     (1,765)     (2,187)      (516)
Income (loss) from discontinued operations .................   (25,235)    (14,780)         43        107 
                                                             ---------    --------   ---------   -------- 
Net loss ................................................... $ (30,790)  $ (16,545)   $ (2,144)  $   (409)
                                                             =========    ========   =========   ======== 
Per share of common stock basic and diluted                                                               
    Loss from continuing operations ........................ $   (0.20)  $   (0.08)   $  (0.12)  $  (0.04)
    Income (loss) from discontinued operations .............     (0.90)      (0.64)         --        0.01
                                                             ---------    --------   ---------   -------- 
Net loss ................................................... $   (1.10)  $   (0.72)   $  (0.12)  $  (0.03)
                                                             =========    ========   =========   ======== 

Weighted average basic and diluted shares outstanding ......    27,936      23,091      17,584     15,929 
                                                             =========    ========   =========   ======== 

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SIGNATURES

    In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, hereunto duly 
authorized.                                                                     

                YOUTHSTREAM MEDIA NETWORKS, INC.

             By: /s/ JAMES G. LUCCHESI
                          ------------------------------
                     JAMES G. LUCCHESI
                                         PRESIDENT AND CHIEF EXECUTIVE OFFICER

Date:  August 31, 2001                                                          

        In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of this registrant and in the capacities and 
on the dates indicated.                                                         

                                                        [Enlarge/Download Table]

     Signature                                Title                              Date     
     ---------                                -----                              ----     
                                                                                          
/s/ JAMES G. LUCCHESI        President, Chief Executive Officer and        August 31, 2001
---------------------------  Director (Principal Executive Officer)                       
    JAMES G. LUCCHESI                                                                     

/s/ IRWIN ENGELMAN           Executive Vice President and Chief Financial  August 31, 2001
---------------------------  Officer (Principal Financial Officer and                     
    IRWIN ENGELMAN           Principal Accounting Officer)                                

/s/ HARLAN D. PELTZ          Chairman                                      August 31, 2001
---------------------------                                                               
    HARLAN D. PELTZ                                                                       

/s/ HOWARD KLEIN             Director                                      August 31, 2001
---------------------------                                                               
    HOWARD KLEIN                                                                          

/s/ METIN NEGRIN             Director                                      August 31, 2001
---------------------------                                                               
    METIN NEGRIN                                                                          

/s/ DR. SIDNEY I. LIRTZMAN   Director                                      August 31, 2001
---------------------------                                                               
    DR. SIDNEY I. LIRTZMAN                                                                

/s/ BRUCE SLOVIN             Director                                      August 31, 2001
---------------------------                                                               
    BRUCE SLOVIN                                                                          

/s/ JONATHAN V. DIAMOND      Director                                      August 31, 2001
---------------------------                                                               
    JONATHAN V. DIAMOND                                                                   

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SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
YOUTHSTREAM MEDIA NETWORKS, INC.

                                                        [Enlarge/Download Table]

                                                                                        Additions                         
                                                                            Additions  Charged to                         
                                                              Balance at   Charged to     Other                 Balance at
                                                             Beginning of   Costs and   Accounts-  Deductions-    End of  
                         Description                            Period      Expenses    Describe     Describe     Period  
---------------------------------------------------------    ------------  ----------  ----------  -----------  ----------
                                                                                                                          
Year ended June 30, 2001                                                                                                  
    Reserves and allowances deducted from asset accounts:                                                                 
      Allowance for uncollectible accounts .................     $404          --          --          $213        $191   

Year Ended June 30, 2000                                                                                                  
    Reserves and allowances deducted from asset accounts:                                                                 
      Allowance for uncollectible accounts .................     $158         $246         --           --         $404   

Year Ended June 30, 1999                                                                                                  
    Reserves and allowances deducted from asset accounts:                                                                 
      Allowance for uncollectible accounts .................     $137         $ 21         --           --         $158   

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-K Filing	Date	First	Last	Other Filings

	12/21/95	17
	3/6/96	16	17
	6/17/96	17
	6/30/96	17
	9/13/96	17
	9/28/96	17
	9/30/96	17
	1/31/97	17
	4/11/97	17
	4/30/97	17
	6/24/97	17
	6/30/97	17
	12/23/97	18
	12/30/97	18
	5/27/98	16
	6/30/98	16	37
	12/31/98	18
	6/9/99	18
	6/10/99	18
	6/24/99	18
	6/28/99	18
	6/30/99	11	42
	7/1/99	32
	8/3/99	18
	8/31/99	32
	12/14/99	19
	1/20/00	19
	2/28/00	19	32	8-K
	3/9/00	16		S-8
	6/20/00	19	20
	6/30/00	9	42	10KSB, 10KSB/A
	7/1/00	19	33
	7/13/00	19
	7/25/00	19
	7/27/00	10
	7/28/00	19
	7/31/00	20
	8/16/00	19
	9/26/00	20
	9/27/00	19	20	10KSB
	9/30/00	32		10-Q
	12/30/00	30
	12/31/00	32		10-Q
	3/15/01	30
	4/2/01	35
	5/18/01	9		PRE 14A, DEF 14A, 10-Q/A
	6/29/01	20
For The Period Ended	6/30/01	1	42
	7/1/01	33
	7/2/01	20
	7/17/01	1
	7/31/01	8	9
	8/1/01	10
	8/2/01	22
	8/7/01	1
	8/24/01	16
Filed On / Filed As Of	8/31/01	41
	12/15/01	30
	12/31/01	38		10-Q
	3/31/02	34		10-Q
	6/30/02	14		10-K, 10-K/A
	12/31/02	32		NT 10-Q, 10-Q
	7/27/05	10
	6/30/06	9		10QSB, 10KSB

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Youthstream Media Networks Inc · 10-K · For 6/30/01

Filed On 8/31/01 · SEC File 333-95201 · Accession Number 950110-1-500436

﻿Annual Report · Form 10-KFiling Table of Contents

﻿10-K · Annual ReportDocument Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Annual Report · Form 10-K
Filing Table of Contents

10-K · Annual Report
Document Table of Contents