**U.S. SECURITIES ANDEXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-Q**

 
| **ý**                                                                                                                                | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934**  |
|-------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
| ** **                                                                                                                                | ** **                                                                                    |
| **For the Quarterly Period  Ended June 30, 2004**                                                                                         |
| ** **                                                                                                                                |
| ** **                                                                                                                                |
| **o**                                                                                                                                     | **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 MEDIANETWORKS, INC.**

(Exact Name of Registrant as Specified inIts Charter)

 
| **Delaware**                                                    | ** ** | **13-4082185**                           |
|-----------------------------------------------------------------|------------|------------------------------------------|
| (State or Other Jurisdiction of  Incorporation of Organization) |       | (I.R.S. Employer  Identification Number) |
|                                                            |       |                                     |
| **244 Madison Avenue, PMB  #358 New York, NY**                  | ** ** | **10016**                                |
| (Address of Principal Executive Offices)                        |       | (Zip Code)                               |
|                                                            |       |                                     |
| **(212) 883-0083**                                              |
| (Registrant’s Telephone Number, including  Area Code)      |

 

Checkwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or such shorter period that the registrant was required to file suchreports), and (2) has been subject to such filing requirements for the past 90days.

 

Yes   ý   No   o

 

Indicate by check mark whetherthe registrant is an accelerated filer (as defined in Rule 12b-2 of theAct).  o

 

As of July31, 2004, the registrant had 39,242,000 shares of common stock, $0.01 parvalue, issued and outstanding.

 

Documentsincorporated by reference:  None.

 

 

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YOUTHSTREAM MEDIA NETWORKS, INC. ANDSUBSIDIARIES

 

INDEX

 
| **PART I—FINANCIAL  INFORMATION**                                                                                              | **3**                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
| ** **                                                                                                                          | ** **                                                                                  |
| ITEM 1.                                                                                                                             | FINANCIAL STATEMENTS                                                                        | 3 |
|                                                                                                                                |                                                                                        |
| Condensed  Consolidated Balance Sheets—  June 30, 2004 (Unaudited) and September 30, 2003                                      | 3                                                                                           |
|                                                                                                                                |                                                                                        |
| Condensed  Consolidated Statements of Operations (Unaudited) —  Three Months and Nine Months Ended June 30, 2004 and 2003      | 4                                                                                           |
|                                                                                                                                |                                                                                        |
| Condensed  Consolidated Statement of Stockholders’ Deficiency (Unaudited)—  Nine Months Ended June 30, 2004               | 5                                                                                           |
|                                                                                                                                |                                                                                        |
| Condensed  Consolidated Statements of Cash Flows (Unaudited) —  Nine Months Ended June 30, 2004 and 2003                       | 6                                                                                           |
|                                                                                                                                |                                                                                        |
| Notes  to Condensed Consolidated Financial Statements —  Three Months and Nine Months Ended June 30, 2004 and 2003 (Unaudited) | 7                                                                                           |
|                                                                                                                                |                                                                                        |
| ITEM  2.                                                                                                                            | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 13 |
|                                                                                                                                |                                                                                        |   |
| ITEM  3.                                                                                                                            | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                 | 19 |
|                                                                                                                                |                                                                                        |   |
| ITEM 4.                                                                                                                             | CONTROLS AND  PROCEDURES                                                                    | 19 |
| ** **                                                                                                                          | ** **                                                                                  | ** ** |
| **PART II—OTHER INFORMATION**                                                                                                  | **20**                                                                                      |
| ** **                                                                                                                          | ** **                                                                                  | ** ** |
| ITEM  1.                                                                                                                            | LEGAL  PROCEEDINGS                                                                          | 20 |
|                                                                                                                                |                                                                                        |   |
| ITEM 5.                                                                                                                             | OTHER INFORMATION                                                                           | 20 |
|                                                                                                                                |                                                                                        |   |
| ITEM 6.                                                                                                                             | EXHIBITS AND  REPORTS ON FORM 8-K                                                           | 20 |
|                                                                                                                                |                                                                                        |
| SIGNATURES                                                                                                                          | 21                                                                                          |

 

2

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PART I

 

FINANCIAL INFORMATION

 

ITEM1.  FINANCIAL STATEMENTS

 

YOUTHSTREAM MEDIA NETWORKS, INC. ANDSUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 
| ** **                                                                                                                                                                                                                                                                                                     | ** ** | **June 30,  2004** | ** ** | **September 30,  2003** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-------------------------|------------|
| ** **                                                                                                                                                                                                                                                                                                     | ** ** | **(Unaudited)**    | ** ** | ** **              | ** ** |
|                                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| ASSETS                                                                                                                                                                                                                                                                                                         |       |               |       |                    |       |
| Current assets:                                                                                                                                                                                                                                                                                                |       |               |       |                    |       |
| Cash and cash equivalents                                                                                                                                                                                                                                                                                      |       | $                  | 783        |                    | $          | 531 |   |
| Prepaid expenses                                                                                                                                                                                                                                                                                               |       | 35                 |       | 188                     |       |
| Total current assets                                                                                                                                                                                                                                                                                           |       | 818                |       | 719                     |       |
|                                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| Property and equipment, net                                                                                                                                                                                                                                                                                    |       | 30                 |       | 45                      |       |
| Note receivable, including accrued interest                                                                                                                                                                                                                                                                    |       | 471                |       | —                  |       |
| Investment in KES Holdings                                                                                                                                                                                                                                                                                     |       | 125                |       | 125                     |       |
| Assets of discontinued operations                                                                                                                                                                                                                                                                              |       | —             |       | 5,190                   |       |
|                                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| Total assets                                                                                                                                                                                                                                                                                                   |       | $                  | 1,444      |                    | $          | 6,079 |   |
|                                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY                                                                                                                                                                                                                                                                  |       |               |       |                    |       |
| Current liabilities:                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| Accounts payable                                                                                                                                                                                                                                                                                               |       | $                  | 810        |                    | $          | 858 |   |
| Accrued employee compensation                                                                                                                                                                                                                                                                                  |       | 241                |       | 266                     |       |
| Accrued expenses                                                                                                                                                                                                                                                                                               |       | 628                |       | 613                     |       |
| Current liabilities of discontinued  operations                                                                                                                                                                                                                                                                |       | 2,437              |       | 4,859                   |       |
| Total current liabilities                                                                                                                                                                                                                                                                                      |       | 4,116              |       | 6,596                   |       |
|                                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| Long-term debt:                                                                                                                                                                                                                                                                                                |       | 4,914              |       | 4,913                   |       |
| Preferred stock subject to mandatory  redemption; issued and outstanding at June 30, 2004 and September 30, 2003 -  1,000 shares of Series A 4% cumulative, non-convertible, redeemable preferred  stock, mandatory redemption and liquidation value of $4.00 per share, plus  cumulative dividends, or $5,269 |       | 5,269              |       | 5,269                   |       |
| Total liabilities                                                                                                                                                                                                                                                                                              |       | 14,299             |       | 16,778                  |       |
|                                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| Commitments and contingencies                                                                                                                                                                                                                                                                                  |       |               |       |                    |       |
|                                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| Stockholders’ deficiency:                                                                                                                                                                                                                                                                                 |       |               |       |                    |       |
| Preferred stock, $0.01 par value,  authorized - 5,000 shares; issued and outstanding at June 30, 2004 and  September 30, 2003 - 1,000 shares of Series A preferred stock (classified in  long-term liabilities as preferred stock subject to mandatory redemption)                                             |       | —             |       | —                  |       |
| Common stock, $0.01 par value, 100,000  shares authorized, 39,850 shares issued and 39,242 outstanding at June 30,  2004 and September 30, 2003, respectively                                                                                                                                                  |       | 398                |       | 398                     |       |
| Additional paid-in capital                                                                                                                                                                                                                                                                                     |       | 331,200            |       | 331,200                 |       |
| Accumulated deficit                                                                                                                                                                                                                                                                                            |       | (343,624           | )          | (341,468                | )          |
| Treasury stock, 608 shares, at cost                                                                                                                                                                                                                                                                            |       | (829               | )          | (829                    | )          |
| Total stockholders’ deficiency                                                                                                                                                                                                                                                                            |       | (12,855            | )          | (10,699                 | )          |
|                                                                                                                                                                                                                                                                                                           |       |               |       |                    |       |
| Total liabilities and stockholders’  deficiency                                                                                                                                                                                                                                                           |       | $                  | 1,444      |                    | $          | 6,079 |   |

 

See accompanying notes to condensedconsolidated financial statements.

 

3

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YOUTHSTREAM MEDIA NETWORKS, INC. ANDSUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS (UNAUDITED)(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 
| ** **                                                                     | ** ** | **Three Months Ended  June 30,** | ** ** | **Nine Months Ended  June 30,** | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                                     | ** ** | **2004**                         | ** ** | **2003**                        | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                                           |       |                             |       |                            |       |   |   |   |   |
| General and administrative expenses -  corporate                               |       | $                                | 150        |                            | $          | 485 |   | $ | 850 |   | $ | 2,012 |   |
| Depreciation and amortization                                                  |       | 5                                |       | 5                               |       | 15 |   | 15 |   |
| Loss from operations                                                           |       | (155                             | )          | (490                            | )          | (865 | ) | (2,027 | ) |
| Interest income                                                                |       | 19                               |       | 1                               |       | 30 |   | 35 |   |
| Interest expense                                                               |       | (10                              | )          | —                          |       | (31 | ) | (905 | ) |
| Gain on debt settlement                                                        |       | —                           |       | —                          |       | — |   | 2,800 |   |
| Loss before provision for income taxes                                         |       | (146                             | )          | (489                            | )          | (866 | ) | (97 | ) |
| Provision (benefit) for income taxes                                           |       | (1                               | )          | 4                               |       | (14 | ) | 8 |   |
| Loss from continuing operations                                                |       | (145                             | )          | (493                            | )          | (852 | ) | (105 | ) |
| Loss from discontinued operations                                              |       | (5                               | )          | (539                            | )          | (482 | ) | (3,172 | ) |
| Loss on disposal of discontinued operations                                    |       | —                           |       | —                          |       | (822 | ) | — |   |
| Net loss attributable to common shares                                         |       | $                                | (150       | )                               | $          | (1,032 | ) | $ | (2,156 | ) | $ | (3,277 | ) |
| Per share of common stock - basic and  diluted                                 |       |                             |       |                            |       |   |   |   |   |
| From continuing operations                                                     |       | $                                | (0.00      | )                               | $          | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) |
| From discontinued operations                                                   |       | —                           |       | (0.02                           | )          | (0.01 | ) | (0.08 | ) |
| From disposal of discontinued operations                                       |       | —                           |       | —                          |       | (0.02 | ) | — |   |
| Net loss per common share - basic and  diluted                                 |       | $                                | (0.00      | )                               | $          | (0.03 | ) | $ | (0.05 | ) | $ | (0.09 | ) |
| Weighted average number of common shares  outstanding – basic and diluted |       | 39,242                           |       | 39,242                          |       | 39,242 |   | 37,564 |   |

 

See accompanying notes to condensedconsolidated financial statements.

 

4

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YOUTHSTREAM MEDIA NETWORKS, INC. ANDSUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’DEFICIENCY (UNAUDITED)

NINE MONTHS ENDED JUNE 30, 2004

(IN THOUSANDS)

 
| ** **                  | ** ** | **Common Stock** | ** ** | **Additional  Paid-in  Capital** | ** ** | **Accumulated  Deficit** | ** ** | **Treasury  Stock** | ** ** | **Total** | ** ** |
|-----------------------------|------------|------------------|------------|----------------------------------|------------|--------------------------|------------|---------------------|------------|-----------|------------|
| **Shares**                  | ** ** | **Amount**       |
|                        |       |             |       |                             |       |                     |       |                |       |      |       |   |   |
| Balances at October 1, 2003 |       | 39,850           |       | $                                | 398        |                     | $          | 331,200             |       | $         | (341,468   | ) | $ | (829 | ) | $ | (10,699 | ) |
| Net loss                    |       | —           |       | —                           |       | —                   |       | (2,156              | )          | —    |       | (2,156 | ) |
| Balances at June 30, 2004   |       | 39,850           |       | $                                | 398        |                     | $          | 331,200             |       | $         | (343,624   | ) | $ | (829 | ) | $ | (12,855 | ) |

 

See accompanying notes to condensed consolidated financial statements.

 

5

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YOUTHSTREAM MEDIA NETWORKS, INC. ANDSUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (UNAUDITED)

(IN THOUSANDS)

 
| ** **                                                                          | ** ** | **Nine Months Ended  June 30,** | ** ** |
|-------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                          | ** ** | **2004**                        | ** ** | **2003** | ** ** |
|                                                                                |       |                            |       |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                |       |                            |       |   |   |
| Net loss                                                                            |       | $                               | (2,156     | ) | $ | (3,277 | ) |
| Adjustments to reconcile net loss to net  cash used in operating activities:        |       |                            |       |   |   |
| Loss from discontinued operations                                                   |       | 482                             |       | 3,172 |   |
| Loss on disposal of discontinued operations                                         |       | 822                             |       | — |   |
| Net change in assets and liabilities of  discontinued operations                    |       | (199                            | )          | 38 |   |
| Provision for doubtful accounts                                                     |       | —                          |       | 15 |   |
| Depreciation and amortization                                                       |       | 15                              |       | 15 |   |
| Gain on disposal of fixed assets                                                    |       | —                          |       | (172 | ) |
| Gain on debt extinguishment                                                         |       | —                          |       | (2,800 | ) |
| Amortization of deferred financing costs                                            |       | —                          |       | 239 |   |
| Amortization of original issue discount on  subordinated notes                      |       | 1                               |       | 38 |   |
| Deferred rent                                                                       |       | —                          |       | (346 | ) |
| Accrued interest income from note  receivable                                       |       | (27                             | )          | 291 |   |
| Changes in operating assets and  liabilities, net of acquisitions and dispositions: |       |                            |       |   |   |
| Other current assets                                                                |       | 153                             |       | 613 |   |
| Accounts payable                                                                    |       | (49                             | )          | 279 |   |
| Accrued expenses                                                                    |       | (10                             | )          | 459 |   |
| Net cash used in operating activities                                               |       | (968                            | )          | (1,436 | ) |
|                                                                                |       |                            |       |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                |       |                            |       |   |   |
| Proceeds from sale of BTW assets                                                    |       | 820                             |       | — |   |
| Proceeds from sale of fixed assets                                                  |       | —                          |       | 106 |   |
| Principal payment on note receivable                                                |       | 400                             |       | — |   |
| Other assets                                                                        |       | —                          |       | (10 | ) |
| Net cash provided by investing activities                                           |       | 1,220                           |       | 96 |   |
|                                                                                |       |                            |       |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                |       |                            |       |   |   |
| Repayment of capitalized lease obligations                                          |       | —                          |       | (48 | ) |
| Repayment of long-term debt                                                         |       | —                          |       | (4,970 | ) |
| Net cash used in financing activities                                               |       | —                          |       | (5,018 | ) |
|                                                                                |       |                            |       |   |   |
| CASH AND CASH EQUIVALENTS                                                           |       |                            |       |   |   |
| Net increase (decrease)                                                             |       | 252                             |       | (6,358 | ) |
| Balance at beginning of period                                                      |       | 531                             |       | 6,483 |   |
| Balance at end of period                                                            |       | $                               | 783        |   | $ | 125 |   |

 

See accompanying notes to condensedconsolidated financial statements.

 

6

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YOUTHSTREAM MEDIA NETWORKS, INC. ANDSUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS (UNAUDITED)

THREE MONTHS AND NINE MONTHS ENDED JUNE 30,2004 AND 2003

 

1.  ORGANIZATION AND BASIS OF PRESENTATION

 

The accompanying condensedconsolidated financial statements include the accounts of YouthStream MediaNetworks, Inc. (“YouthStream”), and its wholly-owned inactivesubsidiaries, Network Event Theater, Inc. (“NET”), American PassageMedia, Inc. (“American Passage”), Beyond the Wall, Inc. (“Beyond theWall” or “BTW”), and W3T.com, Inc. (“Teen.com”) (collectively, the“Company”).  The condensed consolidatedfinancial statements have been prepared in accordance with generally acceptedaccounting principles in the United States of America.

 

In December 2000, theCompany discontinued the operations of CommonPlaces, LLC (“CommonPlaces”),sixdegrees, inc. (“sixdegrees”), CollegeWeb.com, Inc. (“CollegeWeb”),and Invino Corporation (“Invino”).  InAugust 2002, the Company sold substantially all of its Media assets andassigned certain liabilities of its NET and American Passage subsidiaries toAlloy, Inc. and ceased operating its Media segment.

 

In February 2004, the Companysold the assets and operations of its Beyond the Wall subsidiary.  Beyond the Wall was engaged in the sale of decorative wall postersthrough on-campus sales events, retail stores and internet sales, primarily toteenagers and young adults.  Beyond theWall operated 17 stores in 12 states, plus Washington, D.C., throughout theEast and mid-West, as well as a warehouse and distribution center inStroudsburg, Pennsylvania.

 

The Company has restated itsfinancial statements to present all such operations as discontinued operationsfor all periods presented.

 

As of June 30, 2004, theCompany did not have any revenue-generating business operations.

 

The accompanying interimcondensed consolidated financial statements are unaudited, but in the opinionof management of the Company, contain all adjustments, which include normalrecurring adjustments, necessary to present fairly the financial position atJune 30, 2004, the results of operations for the three months and nine monthsended June 30, 2004 and 2003, and cash flows for the nine months ended June 30,2004 and 2003.  The balance sheet as ofSeptember 30, 2003 is derived from the Company’s audited financial statementsincluded in the Company’s Annual Report on Form 10-K for the fiscal year endedSeptember 30, 2003, as amended.

 

Certain information andfootnote disclosures normally included in financial statements that have beenprepared in accordance with generally accepted accounting principles have beencondensed or omitted pursuant to the rules and regulations of the Securitiesand Exchange Commission, although management of the Company believes that thedisclosures contained in these financial statements are adequate to make theinformation presented therein not misleading. For further information, refer to the financial statements and the notesthereto included in the Company’s Annual Report on Form 10-K for the fiscalyear ended September 30, 2003, as amended, as filed with the Securities andExchange Commission.

 

The preparation of financialstatements in conformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities, disclosure of contingent assets and liabilities atthe date of the financial statements, and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from those estimates.

 

The results of operations forthe three months and nine months ended June 30, 2004 are not necessarilyindicative of the results of operations to be expected for the full fiscal yearending September 30, 2004.

 

GoingConcern

 

The Company has incurredrecurring operating losses since its inception. As of June 30, 2004, the Company had an accumulated deficit of$343,624,000, a stockholders’ deficiency of $12,855,000, a working capitaldeficiency of $3,298,000, and a net loss and negative cash flows from operatingactivities for the nine months ended June 30, 2004 of $2,156,000 and$968,000, respectively.  The Company alsosold its remaining operating business during the nine months ended June 30,2004.  These conditions raise substantialdoubt about the Company’s ability to continue as a going concern.  The condensed consolidated financialstatements do not include any adjustments to reflect the possible future effectof the recoverability and classification of assets or the amounts andclassifications of liabilities that may result from the outcome of thisuncertainty.  The Company’s independentauditors, in their report dated January 5, 2004, included an explanatoryparagraph stating that the Company’s recurring losses and accumulated deficit,working capital deficiency and negative cash flow, among other things, raisesubstantial doubt about the Company’s ability to continue as a going concern.

 

7

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The Company’s managementintends to continue efforts to settle the Company’s outstanding obligations andminimize operating costs.  The Companybelieves that its current cash resources will be adequate to fund itsoperations at current levels during the remainder of fiscal 2004.  However, to the extent the Company’s estimatesand assumptions are inaccurate and/or the Company is unable to successfullysettle outstanding obligations at reduced amounts, the Company may not havesufficient cash resources to fund such obligations and maintain its operations.  In such event, the Company may be required toconsider a formal or informal restructuring or reorganization.

 

As a result of the sale of the assets andoperations of Beyond the Wall in February 2004, the Company no longer has anyrevenue-generating business operations. The Company’s management is considering various strategic alternatives,including the acquisition of one or more new business opportunities, which maybe from related or unrelated parties (see “NOTE 5. KESHOLDINGS”).  However, there can beno assurances that such efforts will ultimately be successful.  The Company may finance any acquisitionsthrough a combination of debt and/or equity securities.

 

2.  DEBT RESTRUCTURING AND AMENDMENTS

 

In January 2003, the Companyreached an agreement with the holders of all of its and its Network EventTheater subsidiary’s outstanding notes (NET Notes, YSTM Notes and YSTM 2Note), in the aggregate principal amount of $18,000,000, to cancel thosenotes.  In exchange for cancellation ofthe principal due on the old notes, including accrued interest of $2,062,000,the note holders received in aggregate $4,500,000 in cash, redeemable preferredstock with a face value of $4,000,000, and 3,985,000 shares of common stock,valued at $255,000, and $4,000,000 aggregate principal amount of promissorynotes issued by the Company’s retail subsidiary, Beyond the Wall, secured bythe Company’s pledge of all of its stock in Beyond the Wall.

 

At the closing of theJanuary 2003 debt restructuring, all of the Company’s previous directorsand officers resigned, and three new directors were appointed.  Jonathan V. Diamond, who previously had beena director and interim Chief Executive Officer of the Company, was appointed asChairman of the Board of Directors, and Hal G. Byer and Robert Scott Fritz wereappointed as directors of the Company. Mr. Diamond was appointed as Chief Executive Officer and Robert N.Weingarten was appointed as Chief Financial Officer.

 

In May 2003, the Company issued optionsto the three new directors to purchase an aggregate of 700,000 shares of commonstock exercisable at the fair market value of $0.04 per share for a period ofseven years.  In addition, each of thethree new directors paid $2,500 ($0.04 per share) in cash to acquire optionsfrom the holder of the shares of preferred stock that were issued in theJanuary 2003 restructuring to purchase 62,500 shares of such holder’spreferred stock, exercisable at $0.36 per share.  In July 2004, Mr. Diamond irrevocably waivedany and all rights related to his option.

 

The terms and conditions of theJanuary 2003 debt restructuring agreement qualified as a troubled debtrestructuring for accounting purposes in accordance with SFAS No. 15,“Accounting by Debtors and Creditors for Troubled Debt Restructurings”.  In determining the proper accountingtreatment, the Company evaluated the nature of the economic consequences ofeach of the three separate transactions for purposes of determining the gain,if any, in connection with the extinguishment of the NET Notes, YSTM Notes andYSTM 2 Note in accordance with SFAS No. 15.

 

The cancellation of the NET Notes qualifiedas a full debt settlement whereby in exchange for the extinguishment of the$5,000,000 note and cancellation of accrued interest, the holders received$3,000,000 cash.  As of the settlementdate, the adjusted carrying value of the NET Notes, net of accruedinterest, unamortized original issue discount and unamortized closing costs,was $5,448,000.  The settlement resultedin a gain of $2,448,000.

 

The cancellation of the YSTMNotes was accounted for as a combination of a partial debt settlement and acontinuation of debt with modified terms. In exchange for the extinguishment of the YSTM Notes, the holderreceived cash of $1,500,000, 3,486,875 shares of common stock with a fair valueof $223,000, 1,000,000 shares of 4% redeemable preferred stock, face value of$4,000,000, including cumulative dividends, totaling $5,269,000, dueDecember 31, 2010, and a $3,000,000 promissory note bearing interest at 4%per annum with principal and cumulative interest due December 31,2010.  As of the settlement date, theadjusted carrying value of the YSTM Notes, net of accrued interest, unamortizedoriginal issue discount and unamortized closing costs, was $11,251,000.  After adjusting for the fair value of thecash and common stock exchanged, the carrying value of the YSTM Notes was$9,528,000.  For purposes of determiningthe gain on the extinguishment of the YSTM Notes, the redeemable preferredstock was accounted for as a debt instrument given the mandatory redemptionfeatures of the security.  The issuanceof the $3,000,000 promissory note and the 1,000,000 shares of redeemablepreferred stock constituted a continuation of debt with modified terms.  Given that the undiscounted future value ofthe promissory note and the redeemable preferred stock, including accruedinterest and cumulative dividends, was less than the adjusted carrying value ofthe YSTM Notes extinguished, the Company recognized a gain totaling $306,000and recorded the value of the promissory note and the redeemable preferredstock at the undiscounted future value of $3,953,000 and $5,269,000,respectively, with no interest expense or accretions in value to be recognizedover the remaining life of the promissory note and preferred stock.

 

8

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The cancellation of the YSTM 2Note was accounted for as a combination of a partial debt settlement and acontinuation of debt with modified terms. In exchange for the extinguishment of the YSTM 2 Note, the holderreceived 498,125 shares of the Company’s common stock with a fair value of$32,000 and a $1,000,000 promissory note bearing interest at 4% per annum withprincipal and accrued interest due December 31, 2010.  As of the settlement date, the adjustedcarrying value of the YSTM 2 Note, net of accrued interest, unamortizedoriginal issue discount and unamortized closing costs, was $991,000.  After adjusting for the fair value of thecommon shares exchanged, the carrying value of the YSTM 2 Note was$960,000.  The issuance of the $1,000,000promissory note constituted a continuation of debt with modified terms.  Given that the undiscounted future value ofthe promissory note, including principal and interest, was greater than theadjusted carrying value of the YSTM 2 Note extinguished, the Company recognizedno gain. The promissory note was revalued at the adjusted carrying value of theYSTM 2 Note surrendered, resulting in an imputed discount of $41,000.

 

In total, the Company recognizeda gain from the troubled debt restructuring totaling $2,754,000.  The gain was classified as part of continuingoperations in accordance with SFAS No. 145, “Rescission of SFAS Nos. 4, 44and 64, Amendment of SFAS No. 13, and Technical Corrections as of April 2000”.  The gain from the transaction resulted in anincrease in basic and diluted income per common share of $0.07 for the ninemonths ended June 30, 2003.

 

During June 2003, theCompany amended the original provisions of the $4,000,000 of promissory notesissued in conjunction with the January 24, 2003 restructuring to providefor the following:

 

1.                                       Beyondthe Wall was replaced by the Company as the issuer of the notes, and wasreleased from any liability with respect to the notes.

 

2.                                       Thenote holders agreed to convert the notes from secured to unsecured, and torelease their security interest in all of the outstanding common stock ofBeyond the Wall.

 

3.                                       Thenote holders agreed to delete all provisions in the notes requiring the issuerof the notes to make mandatory prepayments based on the occurrence of certainevents.

 

4.                                       Thenote holders agreed to delete provisions in the notes prohibiting the issuerfrom:  (i) incurring anyindebtedness for borrowed money; (ii) selling, or entering into any agreementto sell, all or substantially all of the assets or all or substantially all ofthe capital stock of the issuer; or (iii) entering into any transactionwith an affiliate, other than transactions with the Company, Network EventTheater, Inc. and/or their successors, that have fair and reasonable termswhich are no less favorable to the issuer than would be obtained in acomparable arms-length transaction with a person or entity that is not anaffiliate.

 

3.  DISCONTINUED OPERATIONS

 

# **Sale of Assets and Operations of Beyond the Wall,Inc.**

# ** **

Effective February 25, 2004, the Company’swholly-owned subsidiary, Beyond the Wall, Inc. (“BTW”), sold substantiallyall of its assets and operations to a group unaffiliated with the Company(which included certain former management of BTW), for $1,920,000, consistingof a cash payment of $820,000 and a subordinated secured promissory note (the“Note”) for $1,100,000, with interest at 10% per annum, due October 31,2006.  The buyer had the right to makecertain optional principal pre-payments on the Note by June 30, 2004, whichwould result in the principal balance of the Note being adjusted downward, inexcess of such principal pre-payments, based on an agreed-upon sliding scale asset forth in the Note.

 

On April 30, 2004, the buyer made an optionalprincipal pre-payment on the Note of $400,000. Accordingly, under the provisions of the sale agreement, the buyerreceived a credit of $107,000 against the $1,100,000 note (in excess of the$400,000 payment), as well as an additional $150,000 back-end credit on theNote.

 

The Company recognized an aggregate loss onthe BTW transaction totaling $822,000. The loss on the BTW sale was reported as a loss on the disposal ofdiscontinued operations for the nine months ended June 30, 2004.  As a result of the sale, the BTW segmentoperations were discontinued during the three months ended March 31, 2004.

 

The Company recognized a loss of $565,000during the nine months ended June 30, 2004 with respect to this transactionbefore taking into consideration the effect of the $400,000 principalpre-payment made on April 30, 2004. Inclusive of such payment, the effect of the accelerated payment creditand the back-end credit resulted in an additional loss of $257,000, whichdecreased the carrying value of the note receivable from $1,100,000 to $843,000and increased the loss on the BTW sale from $565,000 to $822,000.  Management elected to recognize theadditional loss of $257,000 and to adjust the carrying value of the notereceivable resulting from the $400,000 principal pre-payment on April 30, 2004in the Company’s condensed consolidated financial statements at March 31, 2004.

 

9

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Saleof Media Assets

 

On August5, 2002, following the close of the Company’s then fiscal year-end of June 30,2002, the Company sold substantially all of its Media assets and assignedcertain liabilities to Cass Communications, Inc., a subsidiary of Alloy, Inc.,for gross proceeds of $7,000,000 plus a working capital adjustment of anadditional $283,000, resulting in a gain of approximately $246,000 at the timeof sale, which was included in the total gain on disposal of discontinuedoperations for the three months September 30, 2002.  As of June 30, 2002, the Mediasegment’s assets and liabilities were classified as held and used, as thecriteria to be held for sale under Statement of Financial Accounting Standards(“SFAS”) No. 144 were not met at June 30, 2002.  As a result of the sale, the Media segmentoperations were discontinued during the three months ended September 30, 2002.

 

The condensed consolidatedfinancial statements have been reclassified to present the Media operations andthe BTW operations as discontinued operations for all periods presented.

 

Thefollowing is a summary of the major classes of assets and liabilities thatremain from the Media and BTW operating segments as of June 30, 2004(unaudited) and September 30, 2003 (in thousands):

 
| ** **                    | ** ** | **June 30,  2004** | ** ** | **September 30,  2003** | ** ** |
|-------------------------------|------------|--------------------|------------|-------------------------|------------|
|                          |       |               |       |                    |       |
| Assets, net                   |       | $                  | 0          |                    | $          | 5,190 |   |
| Current liabilities           |       | (2,382             | )          | (4,804                  | )          |
| Capitalized lease obligations |       | (55                | )          | (55                     | )          |
| Net book value                |       | $                  | (2,437     | )                       | $          | 331 |   |

 

Netrevenues and loss from discontinued operations for the three months and ninemonths ended June 30, 2004 and 2003 (unaudited) are summarized as follows (inthousands):

 
| ** **                                  | ** ** | **Three Months Ended  June 30,** | ** ** | **Nine Months Ended  June 30,** | ** ** |
|---------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                  | ** ** | **2004**                         | ** ** | **2003**                        | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                        |       |                             |       |                            |       |   |   |   |   |
| Net revenues                                |       | $                                | —     |                            | $          | 712 |   | $ | 2,513 |   | $ | 4,032 |   |
| Loss from discontinued operations           |       | (5                               | )          | (539                            | )          | (482 | ) | (3,172 | ) |
| Loss on disposal of discontinued operations |       | —                           |       | —                          |       | (822 | ) | — |   |
| Loss from discontinued operations           |       | $                                | (5         | )                               | $          | (539 | ) | $ | (1,304 | ) | $ | (3,172 | ) |

 

As of June 30, 2004 andSeptember 30, 2003, the Company has accrued liabilities of $2,437,000 and $4,859,000,respectively, remaining from its discontinued businesses.  The accrued liabilities consist primarily ofseverance, lease payments and other miscellaneous expenses.

 

4.  STOCK-BASED COMPENSATION

 

Stock-based compensation is accounted for by using theintrinsic value-based method in accordance with the provisions of AccountingPrinciples Board (“APB”) Opinion No. 25, “Accounting for Stock Issued toEmployees”, and related interpretations, and the Company is in compliance withthe disclosure provisions of SFAS No. 123, “Accounting for Stock-BasedCompensation”.  Accordingly, the Companyonly records compensation expense for any stock options granted with anexercise price that is less than the fair market value of the underlying stockat the date of grant.  The Company doesnot record compensation expense for rights to purchase shares under its ESOPbecause it satisfies certain conditions under APB 25.

 

On June 3, 2004, the Board of Directors appointedPatrick J. Panzarella as a director of the Company and granted him an option topurchase 200,000 shares of common stock exercisable at the closing common stockprice on the date of grant of $0.14 per share for a period of seven years.  The option was fully vested upon grant.

 

10

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Thefollowing table presents the effect on net loss and net loss per share hadstock-based compensation expense been recorded based on the fair value methodunder SFAS No. 123, as amended.

 

(In Thousands, Except Per Share Amounts)

 
| ** **                                                                                                        | ** ** | **Three Months Ended June 30,** | ** ** | **Nine Months Ended June 30,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|--------------------------------|------------|
| ** **                                                                                                        | ** ** | **2004**                        | ** ** | **2003**                       | ** ** | **2004** | ** ** | **2003** | ** ** |
| Net loss attributable to common shares, as  reported                                                              |       | $                               | (150       | )                              | $          | (1,032 | ) | $ | (2,156 | ) | $ | (3,277 | ) |
| Add:   Total stock-based employee compensation expense included in reported net  loss                        |       | —                          |       | —                         |       | — |   | — |   |
| Deduct:   Total stock-based employee compensation expense determined under fair  value method for all awards |       | (25                             | )          | (632                           | )          | (28 | ) | (1,886 | ) |
| Net loss, pro forma                                                                                               |       | $                               | (175       | )                              | $          | (1,664 | ) | $ | (2,184 | ) | $ | (5,163 | ) |
| Basic and diluted net loss per common  share, as reported                                                         |       | $                               | (0.00      | )                              | $          | (0.03 | ) | $ | (0.05 | ) | $ | (0.09 | ) |
| Basic and diluted net loss per common  share, pro forma                                                           |       | $                               | (0.00      | )                              | $          | (0.04 | ) | $ | (0.05 | ) | $ | (0.14 | ) |

 

Pro forma information regarding net loss per share is required bySFAS 123, and has been determined as if the Company had accounted for itsemployee stock options under the fair value method of SFAS 123. The fairvalue for these options was estimated at the grant date using the Black-Scholesoption-pricing model with the following assumptions:

 
| ** **                                            | ** ** | **Three Months  and Nine Months  Ended  June 30, 2004** | ** ** |
|-------------------------------------------------------|------------|---------------------------------------------------------|------------|
|                                                  |       |                                                    |       |
| Weighted average of expected risk-free  interest rate |       | 4.00                                                    | %          |
| Dividend yield                                        |       | 0                                                       | %          |
| Expected stock volatility factor                      |       | 1.002                                                   |       |
| Expected years to exercise date                       |       | 7.0 years                                               |       |

 

The Black-Scholes option-pricing model was developed for use inestimating the fair value of traded options that have no vesting restrictionsand are fully transferable. In addition, option valuation models require theinput of highly subjective assumptions including the expected stock pricevolatility. Because the Company’s employee stock options have characteristicssignificantly different from those of traded options, and because changes inthe subjective input assumptions can materially affect the fair value estimate,in management’s opinion, the existing models do not necessarily provide areliable single measure of the fair value of its employee stock options.

 

5.  KES HOLDINGS

 

In September 2003, the Companyannounced that it made a capital contribution of $125,000 for a 1.00%membership interest in KES Holdings, LLC, a Delaware limited liability company(“KES Holdings”), which was formed to acquire certain assets of KentuckyElectric Steel, Inc., a Delaware company (“KES”), consisting of a steelmini-mill located in Ashland, Kentucky.  On September 2, 2003, KESHoldings, through its subsidiary, KES Acquisition Company, LLC, a Delawarelimited liability company (“KES Acquisition”), completed the acquisition of thesteel-mini-mill pursuant to Section 363 of the United States BankruptcyCode for cash consideration of $2,650,000.  KES ceased production on orabout December 16, 2002 and filed a voluntary petition for relief underChapter 11 of the United States Bankruptcy Code on February 5, 2003.  The steel-mini-mill has been in operation forapproximately 50 years, and was refurbished by KES Acquisition subsequent toits acquisition.  The refurbished steelmini-mill has been generating revenues since early 2004.

 

In addition to the Company,investors in KES Holdings include, among others, affiliates of LibraSecurities, LLC, a Delaware limited liability company, which is a broker-dealerregistered with the Securities and Exchange Commission and an NASD member(“Libra”), consisting of Libra’s parent entity, certain employees of Libra andthe Ravich Revocable Trust of 1989 (Jess M. Ravich, Trustee) (the “RavichTrust”).  Robert Scott Fritz, a director of the Company, is also aninvestor in KES Holdings.  Jess M. Ravich, the President and ChiefExecutive Officer of Libra and the principal stockholder of Libra’s parententity, is the manager of KES Holdings, but does not have a controlling equityinterest in KES Holdings.  Hal G. Byer, a director of the Company, is aSenior Vice President of Libra, and by virtue of his employment with Libra, Mr.Byer has an economic interest in the investment in KES Holdings made by Libra’s

 

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parententity.  The contributions of the membersof KES Holdings were used in part to fund the purchase price of the steelmini-mill, with the balance used for start-up costs, working capital purposesand deferred maintenance of the steel mini-mill.

 

Effective July 18, 2004, the Company entered into a preliminary letterof intent with KES Holdings to acquire KES Acquisition.  In conjunction with the proposed acquisition,the Company will form a new subsidiary in which it will own 80.01% of theoutstanding common stock, and will capitalize that subsidiary with $500,000.  In connection with the acquisition, the new subsidiaryis expected to issue (i) $25 million of its non-convertible non-votingredeemable preferred stock with a redemption price equal to $25 million and a13% annual cumulative dividend and (ii) senior subordinated promissory notes inthe aggregate principal amount of $40 million with an annual interest rate of8% to holders of KES Holdings, excluding the Company.  The remaining 19.99% common stock interest inthe new subsidiary will be owned by KES Holdings and other persons or entitiesthat, prior to the acquisition, were investors in KES Holdings.

 

The letter of intent is subject to, amongother conditions, satisfactory completion of due diligence, negotiation,preparation and execution of definitive transaction documents, preparation ofconsolidated financial statements, compliance with state and federal securitieslaws and regulations, and receipt of requisite corporate approvals.  The transaction is expected to close in thefourth calendar quarter of 2004. However, as a result of the foregoing uncertainties, there can be noassurances that the transaction will be completed. Furthermore, even if thetransaction is completed, there can be no assurances that the future operationsof the steel mini-mill will be successful.

 

The Ravich Trust currently owns1,000,000 shares of redeemable preferred stock and 1,860,000 shares of commonstock of the Company.  The Ravich Trust also owns warrants to purchase500,000 shares of common stock of the Company exercisable through August 31,2008, 400,000 of which are exercisable at $0.11 per share and 100,000 of whichare exercisable at $0.16 per share.

 

In May 2003, the Company’sthree directors who were appointed at the closing of the January 2003 debtrestructuring each paid $2,500 ($0.04 per share) to acquire an option from theRavich Trust to purchase 62,500 shares at $0.36 per share of the Company’spreferred stock issued to the Ravich Trust in January 2003, exercisableuntil December 31, 2006 or earlier upon the occurrence of certain events.   In July 2004, Mr. Diamond irrevocably waivedany and all rights related to his option.

 

6. LEGAL

 

The Company and/or its Beyondthe Wall subsidiary are defendants in various lawsuits and claims from varioustrade creditors seeking damages aggregating approximately $225,000.  The Company evaluates its response in eachsituation based on the particular facts and circumstances of a claim.  Accordingly, the ultimate outcome of thesematters cannot be determined at this time and may ultimately result injudgments and liens against the Company or its assets.  The Company has made sufficient accruals forthe exposure related to such matters that have been deemed probable andreasonably estimable at June 30, 2004.

 

In addition, certain landlordshave commenced litigation against the Company with respect to stores which theCompany’s Beyond the Wall subsidiary had previously vacated in advance of theexpiration dates of the respective store leases and/or had failed to pay rentwhen due.  The Company intends tonegotiate with the landlords to settle the lease termination liabilities andhas sufficiently accrued for the exposure from lease termination costs.

 

As a result of the Company’s current financialsituation, the costs of defending these proceedings and diversion ofmanagement’s attention to these matters, the outcome of such proceedings couldhave a material adverse effect on the Company’s financial condition oroperating results, including its ability to restructure its debts withoutseeking bankruptcy protection or being the subject of an involuntary bankruptcypetition, or its ability to continue as a going concern.

 

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ITEM 2.  MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This QuarterlyReport on Form 10-QSB for the quarterly period ended June 30, 2004 contains“forward-looking statements” within the meaning of Section 27A of theSecurities Act of 1933, as amended, including statements that include the words“believes”, “expects”, “anticipates”, or similar expressions.  These forward-looking statements include, butare not limited to, statements concerning the Company’s expectations regardingits working capital requirements, financing requirements, business prospects,and other statements of expectations, beliefs, future plans and strategies,anticipated events or trends, and similar expressions concerning matters thatare not historical facts.  Theforward-looking statements in this Quarterly Report on Form 10-QSB for thequarterly period ended June 30, 2004 involve known and unknown risks,uncertainties and other factors that could cause the actual results,performance or achievements of the Company to differ materially from thoseexpressed in or implied by the forward-looking statements contained herein.

 

The following discussion of thefinancial condition and results of operations of the Company should be read inconjunction with the condensed consolidated financial statements and relatednotes thereto presented elsewhere in this document.  The Company undertakes no obligation topublicly release the results of any revisions to these forward-lookingstatements that may be made to reflect any future events or circumstances.

 

**GeneralOverview:**

 

In December 2000, theCompany discontinued the operations of CommonPlaces, LLC (“CommonPlaces”),sixdegrees, inc. (“sixdegrees”), CollegeWeb.com, Inc. (“CollegeWeb”),and Invino Corporation (“Invino”).  InAugust 2002, the Company sold substantially all of its Media assets andassigned certain liabilities of its NET and American Passage subsidiaries toAlloy, Inc. and ceased operating its Media segment.

 

In February 2004, the Companysold the assets and operations of its Beyond the Wall subsidiary.  Beyond the Wall was engaged in the sale of decorative wall postersthrough on-campus sales events, retail stores and internet sales, primarily toteenagers and young adults.  Beyond theWall operated 17 stores in 12 states, plus Washington, D.C., throughout theEast and mid-West, as well as a warehouse and distribution center inStroudsburg, Pennsylvania.

 

The Company has restated itsfinancial statements to present all such operations as discontinued operationsfor all periods presented.

 

As of June 30, 2004, theCompany did not have any revenue-generating business operations.

 

**GoingConcern:**

 

The Company has incurredrecurring operating losses since its inception. As of June 30, 2004, the Company had an accumulated deficit of$343,624,000, a stockholders’ deficiency of $12,855,000, a working capitaldeficiency of $3,298,000, and a net loss and negative cash flows from operatingactivities for the nine months ended June 30, 2004 of $2,156,000 and$968,000, respectively.  The Company alsosold its remaining operating business during the nine months ended June 30,2004.  These conditions raise substantialdoubt about the Company’s ability to continue as a going concern.  The financial statements do not include anyadjustments to reflect the possible future effect of the recoverability andclassification of assets or the amounts and classifications of liabilities thatmay result from the outcome of this uncertainty.  The Company’s independent auditors, in theirreport dated January 5, 2004, included an explanatory paragraph statingthat the Company’s recurring losses and accumulated deficit, working capitaldeficiency and negative cash flow, among other things, raise substantial doubtabout the Company’s ability to continue as a going concern.

 

The Company’s managementintends to continue efforts to settle the Company’s outstanding obligations andminimize operating costs.  The Companybelieves that its current cash resources will be adequate to fund itsoperations at current levels during the remainder of fiscal 2004.  However, to the extent the Company’sestimates and assumptions are inaccurate and/or the Company is unable tosuccessfully settle outstanding obligations at reduced amounts, the Company maynot have sufficient cash resources to fund such obligations and maintain itsoperations.   In such event, the Companymay be required to consider a formal or informal restructuring orreorganization.

 

As a result of the sale of the assets andoperations of Beyond the Wall in February 2004, the Company no longer has anyrevenue-generating business operations. The Company’s management is considering various strategic alternatives,including the acquisition of one or more new business opportunities, which maybe from related or unrelated parties (see “KES Holdings”).  However, there can be no assurances that suchefforts will ultimately be successful. The Company may finance any acquisitions through a combination of debtand/or equity securities.

 

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**DebtRestructuring and Amendments:**

 

In January 2003, the Companyreached an agreement with the holders of all of its and its Network EventTheater subsidiary’s outstanding notes (NET Notes, YSTM Notes and YSTM 2Note), in the aggregate principal amount of $18,000,000, to cancel those notes.  In exchange for cancellation of the principaldue on the old notes, including accrued interest of $2,062,000, the noteholders received in aggregate $4,500,000 in cash, redeemable preferred stockwith a face value of $4,000,000, and 3,985,000 shares of common stock, valuedat $255,000, and $4,000,000 aggregate principal amount of promissory notesissued by the Company’s retail subsidiary, Beyond the Wall, secured by theCompany’s pledge of all of its stock in Beyond the Wall.

 

At the closing of theJanuary 2003 debt restructuring, all of the Company’s previous directorsand officers resigned, and three new directors were appointed.  Jonathan V. Diamond, who previously had beena director and interim Chief Executive Officer of the Company, was appointed asChairman of the Board of Directors, and Hal G. Byer and Robert Scott Fritz wereappointed as directors of the Company. Mr. Diamond was appointed as Chief Executive Officer and Robert N.Weingarten was appointed as Chief Financial Officer.

 

In May 2003, the Company issued optionsto the three new directors to purchase an aggregate of 700,000 shares of commonstock exercisable at the fair market value of $0.04 per share for a period ofseven years.  In addition, each of thethree new directors paid $2,500 ($0.04 per share) in cash to acquire optionsfrom the holder of the shares of preferred stock that were issued in theJanuary 2003 restructuring to purchase 62,500 shares of such holder’spreferred stock, exercisable at $0.36 per share.  In July 2004, Mr. Diamond irrevocably waivedany and all rights related to his option.

 

The terms and conditions of theJanuary 2003 debt restructuring agreement qualified as a troubled debtrestructuring for accounting purposes in accordance with SFAS No. 15,“Accounting by Debtors and Creditors for Troubled Debt Restructurings”.  In determining the proper accountingtreatment, the Company evaluated the nature of the economic consequences ofeach of the three separate transactions for purposes of determining the gain,if any, in connection with the extinguishment of the NET Notes, YSTM Notes andYSTM 2 Note in accordance with SFAS No. 15.

 

The cancellation of the NET Notes qualifiedas a full debt settlement whereby in exchange for the extinguishment of the$5,000,000 note and cancellation of accrued interest, the holders received$3,000,000 cash.  As of the settlementdate, the adjusted carrying value of the NET Notes, net of accruedinterest, unamortized original issue discount and unamortized closing costs,was $5,448,000.  The settlement resultedin a gain of $2,448,000.

 

The cancellation of the YSTMNotes was accounted for as a combination of a partial debt settlement and acontinuation of debt with modified terms. In exchange for the extinguishment of the YSTM Notes, the holder receivedcash of $1,500,000, 3,486,875 shares of common stock with a fair value of$223,000, 1,000,000 shares of 4% redeemable preferred stock, face value of$4,000,000, including cumulative dividends, totaling $5,269,000, dueDecember 31, 2010, and a $3,000,000 promissory note bearing interest at 4%per annum with principal and cumulative interest due December 31,2010.  As of the settlement date, theadjusted carrying value of the YSTM Notes, net of accrued interest, unamortizedoriginal issue discount and unamortized closing costs, was $11,251,000.  After adjusting for the fair value of thecash and common stock exchanged, the carrying value of the YSTM Notes was$9,528,000.  For purposes of determiningthe gain on the extinguishment of the YSTM Notes, the redeemable preferredstock was accounted for as a debt instrument given the mandatory redemptionfeatures of the security.  The issuanceof the $3,000,000 promissory note and the 1,000,000 shares of redeemablepreferred stock constituted a continuation of debt with modified terms.  Given that the undiscounted future value ofthe promissory note and the redeemable preferred stock, including accruedinterest and cumulative dividends, was less than the adjusted carrying value ofthe YSTM Notes extinguished, the Company recognized a gain totaling $306,000and recorded the value of the promissory note and the redeemable preferredstock at the undiscounted future value of $3,953,000 and $5,269,000,respectively, with no interest expense or accretions in value to be recognizedover the remaining life of the promissory note and preferred stock.

 

The cancellation of the YSTM 2Note was accounted for as a combination of a partial debt settlement and acontinuation of debt with modified terms. In exchange for the extinguishment of the YSTM 2 Note, the holderreceived 498,125 shares of the Company’s common stock with a fair value of$32,000 and a $1,000,000 promissory note bearing interest at 4% per annum withprincipal and accrued interest due December 31, 2010.  As of the settlement date, the adjustedcarrying value of the YSTM 2 Note, net of accrued interest, unamortizedoriginal issue discount and unamortized closing costs, was $991,000.  After adjusting for the fair value of thecommon shares exchanged, the carrying value of the YSTM 2 Note was$960,000.  The issuance of the $1,000,000promissory note constituted a continuation of debt with modified terms.  Given that the undiscounted future value ofthe promissory note, including principal and interest, was greater than theadjusted carrying value of the YSTM 2 Note extinguished, the Company recognizedno gain. The promissory note was revalued at the adjusted carrying value of theYSTM 2 Note surrendered, resulting in an imputed discount of $41,000.

 

In total, the Companyrecognized a gain from the troubled debt restructuring totaling$2,754,000.  The gain was classified aspart of continuing operations in accordance with SFAS No. 145, “Rescissionof SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13, and TechnicalCorrections as of April 2000”.  Thegain from the transaction resulted in an increase in basic and diluted incomeper common share of $0.07 for the nine months ended June 30, 2003.

 

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During June 2003, theCompany amended the original provisions of the $4,000,000 of promissory notesissued in conjunction with the January 24, 2003 restructuring to providefor the following:

 

1.                                       Beyondthe Wall was replaced by the Company as the issuer of the notes, and wasreleased from any liability with respect to the notes.

 

2.                                       Thenote holders agreed to convert the notes from secured to unsecured, and torelease their security interest in all of the outstanding common stock ofBeyond the Wall.

 

3.                                       Thenote holders agreed to delete all provisions in the notes requiring the issuerof the notes to make mandatory prepayments based on the occurrence of certainevents.

 

4.                                       Thenote holders agreed to delete provisions in the notes prohibiting the issuerfrom:  (i) incurring anyindebtedness for borrowed money; (ii) selling, or entering into anyagreement to sell, all or substantially all of the assets or all orsubstantially all of the capital stock of the issuer; or (iii) enteringinto any transaction with an affiliate, other than transactions with theCompany, Network Event Theater, Inc. and/or their successors, that havefair and reasonable terms which are no less favorable to the issuer than wouldbe obtained in a comparable arms-length transaction with a person or entitythat is not an affiliate.

 

# **Sale of Assets andOperations of Beyond the Wall, Inc.:**

# ** **

Effective February 25, 2004, the Company’swholly-owned subsidiary, Beyond the Wall, Inc. (“BTW”), sold substantiallyall of its assets and operations to a group unaffiliated with the Company(which included certain former management of BTW), for $1,920,000, consistingof a cash payment of $820,000 and a subordinated secured promissory note (the“Note”) for $1,100,000, with interest at 10% per annum, due October 31,2006.  The buyer had the right to makecertain optional principal pre-payments on the Note by June 30, 2004, whichwould result in the principal balance of the Note being adjusted downward, inexcess of such principal pre-payments,

 

based on an agreed-upon sliding scale as set forthin the Note.

 

On April 30, 2004, the buyer made an optionalprincipal pre-payment on the Note of $400,000. Accordingly, under the provisions of the sale agreement, the buyerreceived a credit of $107,000 against the $1,100,000 note (in excess of the$400,000 payment), as well as an additional $150,000 back-end credit on theNote.

 

The Company recognized an aggregate loss onthe BTW transaction totaling $822,000. The loss on the BTW sale was reported as a loss on the disposal ofdiscontinued operations for the nine months ended June 30, 2004.  As a result of the sale, the BTW segmentoperations were discontinued during the three months ended March 31, 2004.

 

The Company recognized a loss of $565,000during the nine months ended June 30, 2004 with respect to this transactionbefore taking into consideration the effect of the $400,000 principalpre-payment made on April 30, 2004. Inclusive of such payment, the effect of the accelerated payment creditand the back-end credit resulted in an additional loss of $257,000, which decreasedthe carrying value of the note receivable from $1,100,000 to $843,000 andincreased the loss on the BTW sale from $565,000 to $822,000.  Management elected to recognize theadditional loss of $257,000 and to adjust the carrying value of the note receivableresulting from the $400,000 principal pre-payment on April 30, 2004 in theCompany’s condensed consolidated financial statements at March 31, 2004.

 

**KESHoldings:**

 

In September 2003, the Companyannounced that it made a capital contribution of $125,000 for a 1.00%membership interest in KES Holdings, LLC, a Delaware limited liability company(“KES Holdings”), which was formed to acquire certain assets of KentuckyElectric Steel, Inc., a Delaware company (“KES”), consisting of a steelmini-mill located in Ashland, Kentucky.  On September 2, 2003, KESHoldings, through its subsidiary, KES Acquisition Company, LLC, a Delawarelimited liability company (“KES Acquisition”), completed the acquisition of thesteel-mini-mill pursuant to Section 363 of the United States BankruptcyCode for cash consideration of $2,650,000.  KES ceased production on orabout December 16, 2002 and filed a voluntary petition for relief underChapter 11 of the United States Bankruptcy Code on February 5, 2003.  The steel-mini-mill has been in operation forapproximately 50 years, and was refurbished by KES Acquisition subsequent toits acquisition.  The refurbished steelmini-mill has been generating revenues since early 2004.

 

In addition to the Company,investors in KES Holdings include, among others, affiliates of LibraSecurities, LLC, a Delaware limited liability company, which is a broker-dealerregistered with the Securities and Exchange Commission and an NASD member(“Libra”), consisting of Libra’s parent entity, certain employees of Libra andthe Ravich Revocable Trust of 1989 (Jess M. Ravich, Trustee) (the “RavichTrust”).  Robert Scott Fritz, a director of the Company, is also aninvestor in KES Holdings.  Jess M. Ravich, the President and ChiefExecutive Officer of Libra and the principal stockholder of Libra’s parententity, is the manager of KES Holdings, but does not have a controlling equityinterest in KES Holdings.  Hal G. Byer, a director of the Company, is aSenior Vice President of Libra,

 

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andby virtue of his employment with Libra, Mr. Byer has an economic interest inthe investment in KES Holdings made by Libra’s parent entity.  The contributions of the members of KESHoldings were used in part to fund the purchase price of the steel mini-mill,with the balance used for start-up costs, working capital purposes and deferredmaintenance of the steel mini-mill.

 

Effective July 18, 2004, the Company entered into a preliminary letterof intent with KES Holdings to acquire KES Acquisition.  In conjunction with the proposed acquisition,the Company will form a new subsidiary in which it will own 80.01% of theoutstanding common stock, and will capitalize that subsidiary with $500,000.  In connection with the acquisition, the newsubsidiary is expected to issue (i) $25 million of its non-convertiblenon-voting redeemable preferred stock with a redemption price equal to $25million and a 13% annual cumulative dividend and (ii) senior subordinatedpromissory notes in the aggregate principal amount of $40 million with anannual interest rate of 8% to holders of KES Holdings, excluding theCompany.  The remaining 19.99% commonstock interest in the new subsidiary will be owned by KES Holdings and otherpersons or entities that, prior to the acquisition, were investors in KESHoldings.

 

The letter of intent is subject to, amongother conditions, satisfactory completion of due diligence, negotiation,preparation and execution of definitive transaction documents, preparation of consolidatedfinancial statements, compliance with state and federal securities laws andregulations, and receipt of requisite corporate approvals.  The transaction is expected to close in thefourth calendar quarter of 2004. However, as a result of the foregoing uncertainties, there can be noassurances that the transaction will be completed. Furthermore, even if thetransaction is completed, there can be no assurances that the future operationsof the steel mini-mill will be successful.

 

The Ravich Trust currently owns1,000,000 shares of redeemable preferred stock and 1,860,000 shares of commonstock of the Company.  The Ravich Trust also owns warrants to purchase500,000 shares of common stock of the Company exercisable through August 31,2008, 400,000 of which are exercisable at $0.11 per share and 100,000 of whichare exercisable at $0.16 per share.

 

In May 2003, the Company’sthree directors who were appointed at the closing of the January 2003 debtrestructuring each paid $2,500 ($0.04 per share) to acquire an option from theRavich Trust to purchase 62,500 shares at $0.36 per share of the Company’spreferred stock issued to the Ravich Trust in January 2003, exercisableuntil December 31, 2006 or earlier upon the occurrence of certain events.   In July 2004, Mr. Diamond irrevocably waivedany and all rights related to his option.

 

**CriticalAccounting Policies:**

 

The Company prepared itsfinancial statements in accordance with accounting principles generallyaccepted in the United States.  Thepreparation of these financial statements requires the use of estimates andassumptions that affect the reported amounts of assets and liabilities and thedisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amount of revenues and expenses during thereporting period.  Managementperiodically evaluates the estimates and judgments made. Management bases itsestimates and judgments on historical experience and on various factors thatare believed to be reasonable under the circumstances.  Actual results may differ from theseestimates as a result of different assumptions or conditions.

 

The following criticalaccounting policies affect the more significant judgments and estimates used inthe preparation of the Company’s financial statements.

 

Impairmentof Assets:

 

The Company periodicallyevaluates its non-current assets for potential impairment indicators.  The Company’s judgments regarding thepotential impairment are based on legal factors, market conditions and operationalperformance indicators, among others. Future events could cause us to conclude that impairment indicatorsexist and that such assets (primarily investments and fixed assets) areimpaired.

 

**IncomeTaxes:**

 

The Company records a valuationallowance to reduce its deferred tax assets to the amount that is more likelythan not to be realized. In the event the Company was to determine that itwould be able to realize its deferred tax assets in the future in excess of itsrecorded amount, an adjustment to the deferred tax assets would be credited tooperations in the period such determination was made.  Likewise, should the Company determine thatit would not be able to realize all or part of its deferred tax assets in thefuture, an adjustment to the deferred tax assets would be charged to operationsin the period such determination was made.

 

## **Results ofOperations – Three Months and Nine Months Ended June 30, 2004 and 2003:**

## ** **

The Company’s only businessoperations for the nine months ended June 30, 2004 and the three months andnine months ended June 30, 2003 consisted of the operations of Beyond the Wall,which are presented as discontinued operations in the accompanying condensedconsolidated financial statements.  As aresult of the sale of the assets and operations of Beyond the Wall in February2004, the operating categories related to Beyond the Wall as discussed belowdid not continue after the three months ended March 31, 2004.

 

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For the three months ended June30, 2004, corporate general and administrative expenses were $150,000 ascompared to $485,000 for the three months ended June 30, 2003.  The decrease of $335,000 was due to variouscost reductions, including reduced corporate personnel, in 2004 as compared to2003.

 

For the nine months ended June30, 2004, corporate expenses were $850,000 as compared to $2,012,000 for thenine months ended June 30, 2003.  Thedecrease of $1,162,000 was due to various cost reductions, including reducedcorporate personnel, in 2004 as compared to 2003.

 

For the three months endedJune 30, 2004 and 2003, depreciation and amortization expense was $5,000.

 

For the nine months endedJune 30, 2004 and 2003, depreciation and amortization expense was $15,000.

 

For the three months endedJune 30, 2004, interest income was $19,000, as compared to $1,000 for thethree months ended June 30, 2003.

 

For the nine months endedJune 30, 2004, interest income was $30,000, as compared to $35,000 for thenine months ended June 30, 2003.

 

For the three months ended June30, 2004, interest expense was $10,000. The Company did not have an interest expense for the three months endedJune 30, 2003.

 

For the nine months endedJune 30, 2004, interest expense was $31,000, as compared to $905,000 forthe nine months ended June 30, 2003. The decrease of $874,000 was primarily related to the decrease inlong-term debt as a result of the debt restructuring in January 2003.

 

For the three months endedJune 30, 2004, loss from discontinued operations was $5,000, as comparedto a loss of $539,000 for the three months ended June 30, 2003.  The decrease was attributable primarily tothe net operating results of BTW, which were reported as a discontinued operationas a result of the sale of its assets and operations in February 2004.

 

For the nine months endedJune 30, 2004, loss from discontinued operations was $482,000, as comparedto a loss of $3,172,000 for the nine months ended June 30, 2003.  The decrease was attributable primarily tothe net operating results of BTW, which were reported as a discontinuedoperation as a result of the sale of its assets and operations in February2004.   The decrease of $2,690,000 wasprimarily due to savings from payroll-related expenses in connection with theclosing of retail stores in fiscal 2003, a decrease in one-time charges inconnection with the closing of retail stores during the nine months ended June30, 2003, and a gain recognized from the reversal of an accrual for leasetermination costs during the three months ended December 31, 2003, offset inpart by a decrease in net revenues and an increase in insurance costs for thenine months ended June 30, 2004.

 

For the nine months endedJune 30, 2004, loss on disposal of discontinued operations was$822,000.  This loss represents the netloss on the sale of the BTW assets and operations completed in February 2004.

 

**Liquidityand Capital Resources – June 30, 2004:**

 

To date, the Company hasfinanced its operations primarily through the sale of equity securities anddebt.  As of June 30, 2004, theCompany had $783,000 in cash, an increase of $252,000 from September 30,2003, and had no revenue-generating operations.

 

The Company’s managementintends to continue efforts to settle the Company’s outstanding obligations andminimize operating costs.  The Companybelieves that its current cash resources will be adequate to fund itsoperations at current levels during the remainder of fiscal 2004.  However, to the extent the Company’sestimates and assumptions are inaccurate and/or the Company is unable tosuccessfully settle outstanding obligations at reduced amounts, the Company maynot have sufficient cash resources to fund such obligations and maintain itsoperations.  In such event, the Companymay be required to consider a formal or informal restructuring orreorganization.  The Company is alsoconsidering a wide range of business opportunities, which may requireadditional capital to acquire and/or operate.

 

During the nine months endedJune 30, 2004, excluding discontinued operations, the Company used$968,000 of cash in operating activities, as compared to $1,436,000 of cashused in operating activities for the nine months ended June 30, 2003.  The reduction in cash utilized in operatingactivities in 2004 as compared to 2003 was primarily a result of a reduction incorporate general and administrative expenses.

 

During the nine months endedJune 30, 2004, the Company generated $1,220,000 from investing activities,as a result of proceeds from the sale of the BTW assets and operations and a$400,000 principal reduction payment received on April 30, 2004 from the

 

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holderof the promissory note issued as part of the BTW sale transaction.  During the nine months ended June 30, 2003,the Company generated $96,000 from investing activities relating primarily toproceeds from the sale of fixed assets.

 

During the nine months endedJune 30, 2003, the Company used $5,018,000 in financing activities,relating primarily to the $470,000 payment to settle the Wells Fargo EquipmentNote and the aggregate $4,500,000 payment as part of the debt restructuringcompleted in January 2003.

 

As a result of the sale of theBTW assets and operations in February 2004, the Company does not have anymaterial principal commitments relating to operating leases at June 30, 2004.

 

The Company does not have anymaterial commitments for capital expenditures at June 30, 2004.

 

**PrincipalCommitments:**

 

A summary of the Company’s contractual cash obligations as of June 30,2004 is as follows: 

 
| ** **                                                                       | ** ** | **Payments Due by Period** | ** ** |
|----------------------------------------------------------------------------------|------------|----------------------------|------------|
| **Contractual  cash obligations**                                                | ** ** | **Total**                  | ** ** | **Less than   1 year** | ** ** | **Between  2-3 years** | ** ** | **Between  4-5 years** | ** ** | **After  5 years** | ** ** |
| Promissory notes ($4 million face value),  including accrued interest(a)         |       | $                          | 5,010,000  |   | $ | — |   | $ | — |   | $ | — |   | $ | 5,010,000 |   |
| Redeemable preferred stock ($4 million face  value), including accrued dividends |       | 5,269,000                  |       | — |   | — |   | — |   | 5,269,000 |   |
| Total contractual cash obligations                                               |       | $                          | 10,279,000 |   | $ | — |   | $ | — |   | $ | — |   | $ | 10,279,000 |   |

 

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(a)The contractual cash obligation for the promissory notes of $5,010,000 differsfrom the amount presented on the balance sheet of $4,913,000 because thebalance sheet amount includes an original issue discount of $40,000 andexcludes accrued interest of $57,000, which is classified as part of accruedexpenses on the balance sheet at June 30, 2004.

 

Off-BalanceSheet Arrangements:

 

The Company does not have anytransactions, obligations or relationships that could be considered off-balancesheet arrangements at June 30, 2004.

 

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ITEM 3.      QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK

 

MarketRisk:

 

The Company does not have anymarket risk with respect to such factors as commodity prices, equity prices,and other market changes that affect market risk sensitive investments.

 

The Company does not have anyforeign currency risk, as its operating expenses, as well as its debtobligations, are denominated and settled in United States dollars.

 

InterestRate Risk:

 

The Company’s investments areclassified as cash and cash equivalents and debt securities with originalmaturities of three months or less. Therefore, changes in the market’s interest rates do not affect thevalue of the investments as recorded by the Company.

 

ITEM4.      CONTROLS AND PROCEDURES

 

(a) Evaluation of DisclosureControls and Procedures

 

Disclosure controls andprocedures are designed to ensure that information required to be disclosed inthe reports filed or submitted under the Exchange Act of 1934 is recorded,processed, summarized and reported, within the time periods specified in therules and forms of the Securities and Exchange Commission.  Disclosure controls and procedures include,without limitation, controls and procedures designed to ensure that informationrequired to be disclosed in the reports filed under the Exchange Act of 1934 isaccumulated and communicated to management, including its principal executiveand financial officers, as appropriate, to allow timely decisions regardingrequired disclosure.

 

The Company carried out anevaluation, under the supervision and with the participation of the Company’smanagement, including its principal executive and financial officers, of theeffectiveness of the design and operation of the Company’s disclosure controlsand procedures as of the end of the period covered by this report.  Based upon and as of the date of thatevaluation, the Company’s principal executive and financial officers concludedthat the Company’s disclosure controls and procedures are effective to ensurethat information required to be disclosed in the reports the Company files andsubmits under the Exchange Act of 1934 is recorded, processed, summarized andreported within the time periods specified in the Securities and ExchangeCommission’s rules and forms.

 

(b) Changes in InternalControls

 

There were no changes in theCompany’s internal controls or in other factors that could have significantlyaffected those controls subsequent to the date of the Company’s most recentevaluation.

 

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PARTII.  OTHER INFORMATION

 

ITEM1. LEGALPROCEEDINGS

 

The Company and/or its Beyondthe Wall subsidiary are defendants in various lawsuits and claims from varioustrade creditors seeking damages aggregating approximately $225,000.  The Company evaluates its response in eachsituation based on the particular facts and circumstances of a claim.  Accordingly, the ultimate outcome of thesematters cannot be determined at this time and may ultimately result injudgments and liens against the Company or its assets.  The Company has made sufficient accruals forthe exposure related to such matters that have been deemed probable andreasonably estimable at June 30, 2004.

 

In addition, certain landlordshave commenced litigation against the Company with respect to stores which theCompany’s Beyond the Wall subsidiary had previously vacated in advance of theexpiration dates of the respective store leases and/or had failed to pay rentwhen due.  The Company intends tonegotiate with the landlords to settle the lease termination liabilities andhas sufficiently accrued for the exposure from lease termination costs.

 

As a result of the Company’scurrent financial situation, the costs of defending these proceedings anddiversion of management’s attention to these matters, the outcome of suchproceedings could have a material adverse effect on the Company’s financialcondition or operating results, including its ability to restructure its debtswithout seeking bankruptcy protection or being the subject of an involuntarybankruptcy petition, or its ability to continue as a going concern.

 

ITEM 5.  OTHERINFORMATION

 

On June 3, 2004, the Board of Directorsappointed Patrick J. Panzarella as a director of the Company and granted him anoption to purchase 200,000 shares of common stock exercisable at the closingcommon stock price on the date of grant of $0.14 per share for a period ofseven years.  The option was fully vestedupon grant.

 

ITEM 6. EXHIBITSAND REPORTS ON FORM 8-K

 

(a)          Exhibits

 

A list of exhibits required to be filed as part ofthis report is set forth in the Index to Exhibits, which immediately precedessuch exhibits, and is incorporated herein by reference.

 

(b)         Reports on Form 8-K:

 

On July 20, 2004, theCompany filed a Current Report on Form 8-K to report that it had entered into apreliminary letter of intent with KES Holdings, LLC to acquire KES AcquisitionCompany, LLC.

 

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SIGNATURES

 

Inaccordance with the requirements of the Securities Exchange Act of 1934, theregistrant has caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 

 
|                        | YOUTHSTREAM  MEDIA NETWORKS, INC. |
|-----------------------------|-----------------------------------|
|                        |                              |
|                        |                              |
| DATE:  August 12, 2004 | BY:                               |
|                        |  /s/ Jonathan  V. Diamond    |   |
|                        | Jonathan  V. Diamond              |
|                        | Chief  Executive Officer          |
|                        |                              |
|                        |                              |
|                        | BY:                               |
| DATE:  August 12, 2004 | /s/ Robert N.  Weingarten         |   |
|                        | Robert  N. Weingarten             |
|                        | Chief  Financial Officer          |

 

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INDEX TO EXHIBITS

 
| 3.8    |   | Amendment to By-Laws dated July 9, 2004                                                         |
|--------|--------|-------------------------------------------------------------------------------------------------|
|   |   |                                                                                            |
| 31.1   |   | Certification pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 - Jonathan V. Diamond  |
|   |   |                                                                                            |
| 31.2   |   | Certification pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 - Robert N. Weingarten |
|   |   |                                                                                            |
| 32     |   | Certification pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002                        |

 

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