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

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

                                   ----------

                                   FORM 10-KSB

      (Mark One)

      [X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
            ACT OF 1934 (NO FEE  REQUIRED). 

            For the fiscal  year ended June 30, 1998

                                       OR

      [ ]   TRANSITION  REPORT  UNDER  SECTION  13  OR  15(d) OF  THE SECURITIES
            EXCHANGE ACT OF 1934 (NO FEE REQUIRED).

            For the transition period from ___________ to ___________

                        Commission file number: 0-27556

                           NETWORK EVENT THEATER, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

           Delaware                                     13-3864111
(State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
Incorporation or Organization)

             529 Fifth Avenue
            New York, New York                            10017
 (Address of Principal Executive Offices)               (Zip Code)

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

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

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

                     Common Stock, par value $.01 per share
                                (Title of Class)

              Warrants, each to purchase one share of Common Stock
                                (Title of Class)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                           Yes  ___X__      No ______

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year. $11,188,000

     State the aggregate market value of the voting and non-voting common equity
held by  non-affiliates  computed by  reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
September 23, 1998: $23,982,252

     State the number of shares  outstanding of each of the issuer's  classes of
common  equity,  as of September  23, 1998:  11,346,880  shares of Common Stock,
2,645,000 Warrants

     Transitional Small Business Disclosure Format (check one):

                           Yes  _____      No ___X___

                       DOCUMENTS INCORPORATED BY REFERENCE

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

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

<PAGE>

                           NETWORK EVENT THEATER, INC.
                          ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS

Item No.                                                                    Page
--------                                                                    ----
Part I

    1.  Business............................................................   1

    2.  Properties..........................................................   9

    3.  Legal Proceedings...................................................   9

    4.  Submission of Matters to a Vote of Security Holders.................   9

Part II

    5.  Market For Common Equity and Related Stockholder Matters............  10

    6.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations........................................  10

    7.  Financial Statements................................................  12

    8.  Changes in and Disagreements With Accountants on
           Accounting and Financial Disclosure..............................  12

Part III

    9.  Directors, Executive Officers, Promoters and Control Persons;
           Compliance With Section 16(a) of the Exchange Act................  13

   10.  Executive Compensation..............................................  13

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

   12.  Certain Relationships and Related Transactions......................  13

   13.  Exhibits, List and Reports on Form 8-K..............................  13

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

Signatures .................................................................  15

<PAGE>

                                     PART I

ITEM 1. BUSINESS

     Network Event Theater,  Inc.  (together with its  subsidiaries,  unless the
context otherwise  requires,  the "Company") was incorporated  under the laws of
the State of Delaware in December  1995 to be the  successor  to the business of
Universal Access Network, LP (the "Partnership"), a Delaware limited partnership
organized  in  August  1993.  In  April  1996,   the   Partnership   effected  a
reorganization pursuant to which it assigned all of its assets to the Company in
exchange for  6,354,440  shares of the  Company's  common stock and  distributed
those  shares to its  partners.  On April 9, 1996,  the Company sold 2.3 million
shares of its common  stock and  2,645,000  warrants to  purchase  shares of its
common stock in an initial public  offering (the "Initial  Public  Offering") in
which the Company received approximately $9.7 million of net proceeds.

     The  Company  was  organized  to  develop,  own and  operate a  proprietary
national network of theaters on college  campuses (the  "Network").  The Network
delivers  entertainment and educational events via satellite for display through
high-resolution  video  projectors on movie  theater  sized  screens  reaching a
geographically dispersed audience of college students,  faculty,  administrators
and community residents in each college community.  Additionally, the Company is
engaged in developing  and acquiring  media and  marketing  services  businesses
which, using both on-line and off-line capabilities,  target the young adult and
college markets and complement and enhance the reach of its Network.

     The Company  provides a  comprehensive  marketing  service to  advertisers,
sponsors  and  entertainment  companies  by helping them target young adults and
college audiences through a variety of media, both on-line and off-line, some of
which are  proprietary  to the  Company,  including  the  sponsorship  of events
presented on the Network, the placement of advertisements in college newspapers,
the placement of advertisements  and advertising  banners on Internet  websites,
the placement of posters on general and  proprietary  bulletin and wallboards on
college  campuses,  and the  distribution of free postcards at selected  venues,
both on and off  campuses.  For  example,  a  motion  picture  studio  which  is
premiering  a  major  motion   picture   through  the  Network  could  launch  a
simultaneous and comprehensive  marketing  program  including  advertisements or
inserts  in  college  newspapers,   Campus  Voice(R)  wallboard  advertisements,
on-campus  postering and free postcard  distribution both on and off campus, far
beyond the Company's installed Network of campus theaters.  The Company believes
that its broad array of targeted  media and marketing  services both on-line and
off-line will enable it to build more  lucrative  long-term  relationships  with
sponsors, advertisers and entertainment companies in the future.

                             The Young Adult Market

     The  Company  defines  the Young  Adult  Market as 18-24  years  old.  This
demographic  group  is one of  the  fastest  growing  segments  of the  American
population.  According to  projections  based on 1990 U.S.  Census  Bureau data,
there are  approximately  25 million  young adults in the United  States  today,
representing  9.2% of the total national  population.  According to the Resident
Population  Projections (Middle Series) prepared by the U.S. Census Bureau, this
number will rise to over 30 million by the year 2010 and represent over 10.1% of
the population.

     The Company believes that advertisers  consider the most important  segment
of the  young  adult  market  to be  college  students  because  they are  still
developing  brand  loyalties and their future incomes are generally  higher than
those of young adults who do not attend college. According to the 1995 Digest of
Education  Statistics prepared by the United States Department of Education (the
latest  available),  the college market consists of more than 3,600 colleges and
universities in the United States with  enrollments of  approximately 14 million
students, including part-time and full-time undergraduate and graduate students.
The American Council on Education  estimates that in 1997 over 8.4 million young
adults   (representing  34%  of  the  young  adult  population)  were  full-time
undergraduate  college  students in the United States.  This represents a target
market which the Company  believes has significant  personal  spending power. In
addition,  growth in  enrollment  at colleges  and  universities  is expected to
continue  into the next  century  because (i) the  children of baby  boomers are
reaching college age and beginning to attend college,  (ii) a higher  percentage
of young adults are  attending  college after  completing  high school and (iii)
more adults are returning to college for advanced degrees.


                                       1
<PAGE>

     The Company  believes the young adult  market,  both on and off campus,  is
particularly  attractive  to  a  significant  segment  of  advertisers  such  as
entertainment  companies,  telecommunications  companies,  computer and software
companies,  automobile  manufacturers,  drug  companies,  fashion  and  athletic
equipment  companies and financial  services  companies because young adults are
receptive to new ideas and  products,  are in a formative  stage with respect to
building brand  loyalties,  are conversant  and  comfortable  with computers and
networking,  including  Internet  usage,  and,  as  a  whole,  have  significant
disposable income.

                                   The Network

     The  Company  has built and  intends  to expand  its  Network  to  selected
colleges and universities throughout the United States and to create and develop
a steady stream of programming and events for the Network.

Network Installations and School Contracts

     The Company is focusing  its  marketing  efforts to expand the Network from
its  present  size of 39 schools  by  concentrating  on  schools  located in key
Designated Market Areas (television market areas defined by A. C. Nielsen,  Co.)
which it believes will enhance the Network's appeal to programmers, sponsors and
advertisers.  The Company  markets its Network  principally  by  contacting  and
making  presentations  to  school   administrators  and  student   organizations
responsible  for promoting and  coordinating  campus events and by attending key
college conferences. The Company's marketing efforts relating to its Network are
currently  made  through its  full-time  campus  operations  department  and the
Company's executive officers.

     The  Company  believes  that  installing  a  Network  theater  on campus is
attractive to school administrators  because, in addition to providing a vehicle
for  entertainment,  it provides  the college  with a  state-of-the-art  digital
satellite signal receiving system and a high resolution  audio/video  projection
system which it can use at no charge (except for  maintenance  charges for heavy
use) for educational and other non-commercial and non-competitive purposes. This
can be a cost-effective way to enhance the quality of campus life.

     As of September  23, 1998,  the Company had completed  installations  at 39
colleges and universities with a total enrollment of approximately  825,000. The
average Network  theater has a seating  capacity of  approximately  475 persons.
Installations are as follows:

Arizona State University
California State University - Long Beach
Central Michigan University
Clemson University
College of William and Mary
Connecticut College
Eastern Michigan University
Emory University Georgia
Institute of Technology
Georgia Southern University
Iowa State University
Kansas State University
Louisiana State University
Mankato State University
Michigan State University
New Mexico State University
New York University
Ohio State University
Oklahoma State University
Rutgers State University - Cook College
Southeast Missouri State
University SUNY College of Oneonta
University  of Alabama-Birmingham    
University of California-Berkeley
University   of California-Los  Angeles 
University of Central Florida  
University of Cincinnati
University of Colorado-Boulder
University of Houston
University of Idaho
University of Kansas
University  of  Minnesota  
University of Nevada, Reno
University of North Carolina-Charlotte
University of North Texas 
University of Rhode Island
University of Rochester
University of Southern Mississippi
Washington State University

     The geographic  dispersion of the Network's equipment currently enables the
Company to offer Network events to most areas of the  contiguous  United States.
Additionally, the Company has a signed contract with Western Illinois University
and expects to have the equipment installed by November 1998.


                                       2
<PAGE>

     The  typical  Network  installation  package  consists  of an  all  digital
satellite  dish  and  attendant   satellite   signal  receiving   equipment,   a
high-resolution  video projection  system with commercial  quality movie theater
sized screen and state-of-the-art  audio system. The cost of the equipment for a
typical  installation  ranges from $65,000 to $95,000,  depending on the size of
the theater,  and is generally  declining over time as a result of technological
advances. The Company typically installs and maintains this equipment at its own
expense.  However, the Company is actively exploring giving certain colleges and
universities  the option of  purchasing  the  equipment  at their own expense in
order to  accelerate  the time in which  they  will be able to  receive  Network
broadcasts. This may become a significant method of expanding the Network in the
future.  The  Company  may also seek to lease all or a portion of its  presently
installed and newly acquired equipment to reduce its up-front capital costs.

     The Company believes that satellite  technology is the most  cost-effective
technology  for achieving  rapid and complete  market  coverage in that a single
up-link  signal  can  be  broadcast  simultaneously  at  a  fixed  cost  to  all
installations.  Satellite  transmission is also able to provide the Company with
the  flexibility  to deliver  programming to a single school or group of schools
depending upon the time, day or program offered.  In September 1997, the Company
upgraded,  at its own  expense,  all Network  theater  installations  to receive
digital rather than analog satellite transmission signals, which has resulted in
improved  performance at basically the same transmission cost. The total cost of
this upgrade of the entire Network did not exceed $50,000.

     The schools  listed above have granted the Company the  exclusive  right to
exhibit,  promote and sell commercial  programming  and promotional  merchandise
through the Network, as well as the exclusive use of school venues for a minimum
number of dates per  month.  Under the  terms of such  agreements,  schools  are
generally  responsible for public access and security  staffing and are required
to use their best  efforts to provide  the  Company  with  reasonable  access to
on-campus  media  and key  campus  locations  for  promotional  purposes  and to
otherwise  assist in the promotion,  coordination and staffing of Network events
(including printing and selling tickets, disseminating promotional materials and
providing technical support).

     The  Company's  school  contracts  provide  for the  Company  to  present a
schedule of  programming  dates  prior to each school  semester or quarter to be
agreed upon by the school.  Schools  are  required to use their best  efforts to
reserve campus  theaters for additional  dates to accommodate  special events or
replays. Schools are permitted to use the Company's  high-resolution  projection
equipment  for  non-commercial,  educational  and  academic  purposes at no cost
(except for maintenance  charges for heavy use). School contracts generally have
terms ranging from two to five years and provide for automatic  renewals  unless
terminated  by either  party by notice  prior to the end of the initial  renewal
term.  Most contracts  provide that in the event of  termination  for any reason
other than a material  breach by the  Company,  the school may not enter into an
agreement  with a  competitor  of the  Company  for a period of two years  after
termination.

Programming

     The  Company  commenced  regular  operations  of the Network in the 1996-97
academic  year and  broadcast  14  events in the  1997-1998  academic  year.  It
anticipates  that it will broadcast at least two to four events per month in the
1998-99  academic  year.  The  Network  can be used to  broadcast  both live and
pre-recorded  events.  In  addition,  the  Network has  audio/video  interactive
capabilities  which allow audiences to interact with performers and participants
before,  during and after live  performances.  This  capability  was used by the
Company in three broadcasts during academic year 1997-98 when feature films were
premiered on the Network. In the case of the premiere presentations of the films
I Know What You Did Last Summer and Wild Things,  members of the cast as well as
the  director  of the films were  present  at one of the  Network  theaters  and
participated  in a one-hour  question and answer period during which students at
other  Network  theaters  could call in  questions.  At the premiere of the film
U-Turn,  the  director  of the film,  Oliver  Stone,  participated  in a similar
question  and answer  session.  The  Company  believes  that  these  interactive
presentations  attract  strong  student  interest and are  attractive to Network
advertisers.

     Since  January  1996,  the Company has entered  into a number of  licensing
agreements with content providers such as Miramax Films, Sony Pictures, Mandalay
Entertainment,  Dreamworks  SKG,  HBO, Don King  Productions,  Mercury  Records,
Warner Brothers and ABC for individual  programs and has broadcast both live and
pre-recorded  events including  concerts,  motion pictures and sneak previews of
yet to be  released  motion  pictures,  comedy  shows,  documentaries,  sporting
events,  special  pay-per-view  events  and  educational  seminars.   Typically,
programmers pay a fee for access to the Network's audiences.


                                       3
<PAGE>

     The Company  believes that there are  significant  opportunities  for it to
preview  movies  for film  studios  on  campuses  and to show  feature  films of
independent  and  foreign  filmmakers  which  appeal to college  audiences.  The
Company  also  believes  that  recording  artists and record  companies  will be
attracted  to the  Network  and  may  seek  to use it to  establish  an  initial
following among college students,  who are generally  receptive to many forms of
popular music, including rock, country and alternative. Furthermore, the Company
believes  that  promoters  of a  wide  variety  of  sporting  events,  including
football,  basketball,   baseball  and  other  sports,  will  find  the  Network
attractive,  as many televised  sporting events are available only in particular
regions or in sports bars, which may not be accessible to college  students.  In
its efforts to make a variety of sporting events available over its Network, the
Company  will seek to  capitalize  on the  popularity  of sporting  events among
college  students.  However,  there can be no  assurance  that the Company  will
attract and retain a  sufficient  number of schools  and obtain the  programming
necessary to generate meaningful revenues or achieve profitable  operations from
its Network.

Marketing and Event Promotion of the Network

     The Company  has a field force of two  full-time  campus  operations  staff
members who work with local college  personnel  and students to  facilitate  the
promotion and the  presentation  of Network events on each campus.  Students are
generally informed of Network events through advertisements in school newspapers
and by posters, flyers and other promotional activities.

     The Company  anticipates that the Network's  principal  sources of revenues
will be from  sponsorship of Network events and fees paid by content  providers.
The  Company  may also earn  revenues  from  ticket  sales to  selected  events,
although it did not charge admission to any events in the 1997-98 academic year.
If students are charged for  admission to events,  ticket  prices are set by the
Company and ticket receipts are collected by student  organizations and remitted
to the Company  after the  deduction of small  amounts to reimburse the costs of
collection.

Network Competition

     The Company believes that the Network is the only one of its kind currently
installed  on  college   campuses.   The  Company  believes  that  its  existing
installations  are an  important  competitive  factor  in the  marketing  of its
Network to prospective  colleges and  universities and its value to sponsors and
content providers.  The Network faces competition for its share of discretionary
student  spending from numerous other media and businesses in the  entertainment
industry.  The Company also competes with various forms of  entertainment  which
provide  similar value,  both on and off campus,  such as music groups and other
entertainers  which  tour  colleges  and  universities,  movie  videos and audio
cassettes, broadcast television, cable programming, special pay-per-view events,
sporting events and other forms of entertainment  which may be less expensive or
provide  other  advantages  to college  students.  The Company also competes for
advertising  dollars with traditional  media. If the Network is successful,  the
Company  expects that other companies may seek to enter or capitalize on college
markets and compete  directly with the Company.  The Network is not dependent on
any single school, advertiser, sponsor or program provider.

                     Media and Marketing Services Companies

     In addition to operating  the Network,  the Company  purchased and operates
four media and marketing services companies which primarily or exclusively serve
the young adult market.  In the order of acquisition  they are American  Passage
Media, Inc. ("American  Passage"),  Campus Voice, Inc. ("Campus Voice"),  Beyond
the Wall,  Inc.  ("Beyond the Wall") and Pik:Nik Media,  Inc.  ("Pik:Nik").  The
Company has integrated the operations and sales forces of these businesses. Such
integration  has enabled each sales person to offer a full range of products and
services to the Company's  clients.  The Company believes that such ability will
allow its sales force to gain greater  access to its clients'  senior  marketing
personnel.

American Passage

     On September 13, 1996,  American Passage,  a newly organized,  wholly-owned
subsidiary  of the Company,  acquired from  American  Passage Media  Corporation
("APMC")  substantially  all of APMC's  assets  relating to its college and high
school media and marketing services business.  The acquired  businesses included
APMC's college  newspaper  print  advertisement  placement  operations,  college
campus postering  operations  (including  postering on distribution racks called
AdRaX(R)  that  contain  college  newspapers  on campus),  high  school  focused


                                       4
<PAGE>

GymBoards(R)  operations  and various  other  advertiser  and event  sponsorship
related activities. APMC had been involved in the young adult marketing business
since 1976.

     American  Passage  represents  on a  non-exclusive  basis  virtually  every
college newspaper in the country that accepts national advertising.  The college
newspapers that American Passage represents have a combined  circulation of over
six million and  enrollment at these schools  totals over ten million  students.
American  Passage's  national  advertising  customers  include,   among  others,
American Express, AT&T, TIAA/CREF,  The Wall Street Journal, Nike and Microsoft.
American  Passage's  resources  include a  proprietary  database  of every major
college  newspaper  and  demographic  and consumer data that enable it to create
customized  targeted media programs for its advertising  clients. In addition to
providing  marketing and research  assistance to advertisers,  American  Passage
assists in the development and  distribution of advertising  material to college
newspapers.  In the  past,  American  Passage's  revenues  have  been  generated
principally from sales of advertisements to be run in college newspapers.

     American  Passage's  campus  postering  service  places  posters  and other
advertising  messages  on bulletin  boards on college  campuses  throughout  the
country.   Through  a  network  of  approximately   250  full-time  and  student
representatives,  American  Passage's  postering  service covers more than 1,250
college campuses with enrollment totaling over ten million students. Advertisers
pay American  Passage a fee for these  postering  services.  American  Passage's
AdRaX(R)  location  media are college  newspaper  distribution  racks with large
advertising  display spaces above the newspaper bin. American Passage has placed
over 1,350  AdRaX(R)  units at prime  locations  at over 200  college  campuses.
Revenues  are  generated  from  monthly  advertisements  appearing on each unit.
GymBoards(R)  are gender  specific  message  and  information  centers  that are
installed in boys' and girls' high school  locker rooms at no cost to the school
and are  customized  with each  school's  colors  and mascot or  nickname.  Each
GymBoard(R) consists of a coach's message board and two advertising panels which
are protected by acrylic  covers.  GymBoards(R)  are posted in almost 5,000 high
schools  nationwide  with more than four million  students,  representing  about
one-third  of the total high  school  market.  Advertising  is sold on a monthly
basis from September through May.

     In connection  with its acquisition of assets from APMC,  American  Passage
entered into an agreement to serve as the exclusive  representative for the sale
of national advertising for APMC's Directory of Classes  publication.  Directory
of Classes is the official class guide and registration  manual at approximately
eighty college  campuses with a total  enrollment of over 1.3 million  students.
This  agreement,  under which  American  Passage  will receive  specified  sales
commissions for as long as it achieves certain minimum sales levels, has enabled
American  Passage  to retain  the  right to sell  national  advertising  for the
Directory of Classes without  assuming  responsibility  for publishing it. Other
American Passage  activities  include event marketing and sampling  services for
clients and marketing and executing  spring break programs and promotions at the
six resort  properties  operated by Paradise  Found Resorts & Hotels  located in
Panama City Beach, Florida.

     As part of its print  media  services,  American  Passage  can also  supply
clients with  newspaper  inserts and can assist  clients by  providing  creative
input.  An example of this is the Nike  SportsPage  insert  prepared by American
Passage on a monthly  basis for  insertion in selected  college  newspapers.  It
contains a monthly  calendar of sports events at selected  campuses,  a personal
profile of an  intramural  athlete from each school and a summary of  intramural
activities on campus.  The insert is both an information source for students and
an  opportunity  for Nike to reinforce  its  presence on campus.  Inserts can be
provided in color and in black and white and are often used for client's special
offers to the campus community.

     American  Passage also provides event marketing and promotional  assistance
on  campus  to  clients  who want to use the  techniques  of  tabling  and other
face-to-face  contact with students.  Typically,  this service has been used for
food and beverage sampling, credit card solicitation and long distance telephone
service  solicitation.  Some examples of past sampling programs include programs
for companies  such as  Tropicana,  Kraft  General  Foods,  Barq's Root Beer and
Microsoft.

Campus Voice

     On February 21,  1997,  the Company,  through its newly  organized,  wholly
owned  subsidiary,  Campus  Voice,  acquired  from a wholly owned  subsidiary of
Sirrom  Capital  Corporation  substantially  all of  the  assets  relating  to a
business of operating a national network of proprietary, giant, metal-framed and
plexi-glass  enclosed  wallboards on college  campuses.  The network,  which was
started in 1981, today consists of almost 3,400 giant wallboards  located on 404
college  campuses  across the United States reaching  approximately  4.0 million
college  students.  It is the oldest and largest national network of its kind in
the United States.


                                       5
<PAGE>

     There are an average of nine wallboards on each of the campuses that Campus
Voice serves,  located in high traffic areas such as student unions,  libraries,
vending areas,  bookstores,  residence  halls,  laundry rooms,  dining halls and
athletic  facilities.  Each  month,  posters  containing  editorial  content  of
interest to college students and paid advertisements are placed in the wallboard
units.

     After its  acquisition,  Campus Voice's  operating and publishing model was
completely revamped.  Campus Voice's sales efforts, which had been provided on a
contract basis by a third party, were brought in-house.  In addition,  editorial
content,  which was supplied by freelance  writers under contract,  was obtained
instead from popular magazines such as In Style, Discover, Yahoo! and Interview.
Finally,  the Campus  Voice  network was divided  into three  parts,  permitting
advertisers  to  purchase a portion of the  network  on a regional  or  targeted
basis.  Such  division has made this medium more  attractive to  advertisers  by
reducing their out-of-pocket costs.  Advertising clients that use Campus Voice's
services include, among others, Warner Lambert,  Procter & Gamble, Sony Pictures
and Microsoft.

Beyond the Wall

     On April 11, 1997, the Company acquired the assets and certain  liabilities
of  Posters  Preferred,   Inc.  relating  to  its  business  of  publishing  and
distributing  a twice-yearly  catalog to college  students  entitled  Beyond the
Wall(R). The business was originally started in 1993. Each year, Beyond the Wall
distributes  over four  million of its  catalogs  to over 600  college  campuses
making  it,  the  Company  believes,   the  largest  and  broadest   publication
specifically targeting college students. The catalog contains advertising images
which are available in poster-size reproductions, which students can purchase by
mail order as posters to be hung on the walls of their  rooms.  The  Company has
also entered into  distribution  agreements  with  on-campus  poster vendors for
direct  distribution  of these  catalog  posters.  In addition,  Beyond the Wall
maintains a website at which  students can download a screen saver with the same
images that are found on the posters.

     The Company  believes the catalog is  attractive to image and brand focused
advertisers who want to reach young adults.  Beyond the Wall's clients  include,
among others,  VISA, J. Crew, Sara Lee, BMW, Calvin Klein,  Procter & Gamble and
Volkswagen of America.

Pik:Nik Media, Inc.

     On April 30, 1997,  Pik:Nik, a newly organized,  wholly owned subsidiary of
the  Company,  acquired  from  Pik:Nik,  LLC the assets and certain  liabilities
relating to its business of producing, marketing and distributing free postcards
containing  advertising  images. As of May 1, 1998, the Company acquired another
company which  distributes free postcards in the city of Chicago.  At this time,
the  Company  believes  Pik:Nik to be the  largest  free  postcard  distribution
network  in  the  United   States  with  access  to  over  1,850  free  postcard
distribution racks.

     Pik:Nik's  postcards  are  marketed  under the  HotStamp(TM)  brand and are
available for distribution through five separate programs.  The first program is
called the Cities  Program in which free  postcards are  distributed  using more
than 1,400 of Pik:Nik's  proprietary racks installed in major markets throughout
the country at restaurants, bars, cafes and clubs. Pik:Nik currently distributes
free postcards  through its proprietary  racks located in New York, Los Angeles,
San Francisco, Chicago, Seattle and Dallas, and through contract distributors in
Washington,  D.C.,  Boston and  Philadelphia.  The Company is planning to expand
Pik:Nik's  network of proprietary  racks to other markets,  including  Miami and
Atlanta.  Pik:Nik also distributes  postcards in over 50 secondary cities in the
United States through a customized  distribution  operation utilizing disposable
postcard holders located at high traffic and point of sale locations.

     Pik:Nik's second program is its College  Program.  As part of that program,
the Company  installed  racks at over 125 bars (which  have been  designated  as
America's Top 100 College Bars(TM))  located near college  campuses.  These bars
have  received  national  publicity  with regard to this  program,  including an
article in Playboy  magazine,  and  distribute  tee shirts with their bar's name
prominently displayed. Through an exclusive arrangement,  another 125 racks have
been  installed on college  campuses in college  bookstores  managed by Barnes &
Noble (the largest  private  manager of campus  bookstores in the United States)
and in student unions.


                                       6
<PAGE>

     A third program,  called the Cinema Program,  is the result of an exclusive
arrangement with General Cinemas.  Pursuant to that program,  Pik:Nik  installed
postcard racks at 100 of the largest  General  Cinema movie theaters  across the
country.  General Cinema receives a share of the revenues  generated by the sale
of postcards  for these racks and has its employees  periodically  replenish the
racks with postcards.

     The fourth program  conducted by Pik:Nik is the  Conventions  Program.  The
Company  supplies  fixed racks and  manually  distributes  postcards  at various
conventions held throughout the United States. The cards are generally topically
related to each  convention.  The fifth and final program  offered by Pik:Nik is
the  Independent  Music Store  program  whereby  free  postcard  racks have been
installed  at over 100 large  independent  music  stores  throughout  the United
States.  The  coalition  representing  these music stores and the  participating
stores earn a share of the revenues generated by the sale of postcards for these
racks,  and  music  store  employees   periodically  replenish  the  racks  with
postcards.

               The Company's On-Line Capabilities and the Internet

     The Company  believes  that college  students and young adults are computer
literate and utilize on-line resources such as E-mail and the Internet on a more
frequent  basis  than the  general  population.  As a result,  students  can now
increasingly  be reached by advertisers  using a combination of both on-line and
off-line media  capabilities.  As described  above,  the Company has significant
off-line media  capabilities  aimed  specifically at college  students and young
adults. In addition,  at this time, the Company's four websites  described below
generate  approximately  six to eight million page views per academic  year. The
Company  intends  to  increase  its  on-line  media  capabilities  and  presence
significantly  in the  future,  either  through  internal  development  of  such
capabilities or by acquisitions,  joint ventures or mergers with other companies
which have on-line media capabilities.

     Presently,  the Company's on-line  resources consist of four websites.  The
first is  Beyondthewall.com,  which is a retail oriented  website where students
can order posters from the Beyond the Wall(R) catalog. In addition, students can
download a free screen saver and can play trivia  games.  The Company  estimates
that this  website  receives  approximately  six million page views per academic
year. The Company also maintains a website called Pulsefinder.com.  This website
is used as an on-line  polling  center  for  college  students  and is part of a
market research venture with Greenfield Online,  Inc. The Company estimates that
this website  receives  approximately  two million page views per academic year.
The Company  believes  that it may earn  significant  revenues from this website
through the sale of contract research by Greenfield Online, Inc.

     The Company also maintains a site called  Americanpassage.com which it uses
to deliver information to potential and current clients about American Passage's
media capabilities and the Company's other business activities. American Passage
clients can get certain information about college media resources which they can
use in developing  media plans and advertising  campaigns.  The site can also be
used for the electronic  transfer of advertising copy and images from clients to
American Passage and, in certain  circumstances,  from American Passage directly
to college  newspapers.  In addition,  American Passage earns some revenues from
the  sale  of  advertising  banners  on the  websites  maintained  by  over  110
participating college newspapers.

     Finally, the Company maintains a website called NETcrawl.com, which it uses
exclusively  for colleges  which are part of the Network to report on attendance
and other information to the Company.

                                   Competition

     The  Company's  combination  of the Network  with its  media and  marketing
services  businesses enables it to provide  comprehensive  marketing,  media and
promotional  services  to  advertisers,  sponsors  and  entertainment  companies
seeking to target the young adult and college  markets.  The Company's media and
marketing services businesses face competition for limited advertising  revenues
from advertisers and sponsors, from other similar companies and from other media
such as radio, television,  print media, direct mail marketing and the Internet.
The Company also competes with a wide variety of other  advertising  media,  the
range and diversity of which has increased  substantially  over the past several
years to include advertising  displays in shopping centers and malls,  airports,
stadiums,  movie  theaters and  supermarkets,  and on taxis,  trains,  buses and
subways. Some of the Company's  competitors,  principally in other media such as
radio and television,  are  substantially  larger,  better  capitalized and have
access to greater resources than the Company. There can be no assurance that the
Company  will be able to  compete  successfully  with such other  companies  and
media.


                                       7
<PAGE>

                            Corporate Reorganization

     Effective  as  of  July  1,  1997,   the  Company   completed  an  internal
organizational  restructuring  which  resulted in (i) the business and assets of
the Network being owned by a newly organized subsidiary of the Company,  Network
Event Theater  Development,  Inc.,  (ii) the business and assets of Campus Voice
being owned by a newly organized subsidiary of the Company,  Campus Voice, Inc.,
and (iii) the  business  and  assets of  American  Passage,  Beyond the Wall and
Pik:Nik being owned,  respectively,  by American Passage Media, Inc., Beyond The
Wall,  Inc. and Pik:Nik  Media,  Inc.,  each of which is a subsidiary of a newly
organized subsidiary of the Company,  National Campus Media, Inc.  Additionally,
the Company  organized a  subsidiary  which it intends to use for the purpose of
printing, or contracting for printing,  and distribution of printed materials in
connection with the publishing  activities of the Company's other  subsidiaries.
The  purpose  of  the   restructuring  was  to  achieve  certain  tax  reporting
efficiencies for the Company.

                                   Trademarks

     The Company has  registered  with the United  States  Patent and  Trademark
Office the names "Network Event Theater" and "NET", as well as the NET logo. The
Company has also registered the names American Passage, GymBoards, AdRaX, Campus
Voice,  Pulsefinder,  Beyond the Wall, HotStamp and Pik:Nik Free Postcards.  The
Company's rights in these marks may be a significant  part of its business.  The
Company is not aware of any claims of  infringement  or other  challenges to its
rights to use these  marks,  although  the  Company is aware of  numerous  other
registrations  of the mark NET. There can be no assurance the Company's marks do
not or will not infringe the  proprietary  rights of others,  that the Company's
marks would be upheld if challenged,  or that the Company would not be prevented
from using its marks. The Company does not hold any patents or copyrights.

                                    Employees

     As of September  23, 1998,  the Company had 81 full-time  employees  and 15
part-time  employees.  None  of the  Company's  employees  is  represented  by a
collective  bargaining  unit,  and the Company  believes that relations with its
employees are good.


                                       8
<PAGE>

ITEM 2. PROPERTIES

     The  Company's  principal  executive  offices are located in  approximately
16,800 square feet of leased space in New York City pursuant to a lease expiring
on October 31,  2000.  Annual  rent  payable  under that lease is  approximately
$392,000.  The  Company  also rents  office  space in Seattle,  Washington,  Los
Angeles, California,  Chicago, Illinois and Tempe, Arizona. The Company believes
it has  adequate  insurance  to cover the value of its leased  property  and the
personal property therein.

ITEM 3. LEGAL PROCEEDINGS

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

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

     On May 19, 1998, a special  meeting of stockholders of the Company was held
for the purpose of voting upon an  amendment  to the  Company's  certificate  of
incorporation  to increase the number of shares of common stock,  par value $.01
per share,  that the Company is authorized to issue from 17 million shares to 32
million  shares.  In voting for the proposal,  9,377,646  shares of common stock
were cast in favor of the  amendment and 65,159 shares of common stock were cast
in opposition thereto. Holders of 3,900 shares abstained.


                                        9
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's common stock is traded in the over-the-counter  market and is
quoted on the NASDAQ SmallCap  Market  ("Nasdaq")  under the symbol "NETS".  The
following  table sets forth the high and low  closing  bid prices for the common
stock as furnished by Nasdaq. The quotations reflect inter-dealer prices without
retail  mark-up,   mark-down  or  commission,   and  may  not  represent  actual
transactions.

                                                      High             Low
                                                      ----             ---
      Fiscal 1997
         First Quarter............................  $ 4 1/8        $ 1 27/32
         Second Quarter...........................   5 7/16            2 3/4
         Third Quarter............................    6 1/8            4 1/2
         Fourth Quarter...........................    5 3/8            3 1/2

      Fiscal 1998
         First Quarter............................    7 1/8            4 5/8   
         Second Quarter...........................    6 1/2            3 7/8   
         Third Quarter............................    5 3/8            4 1/4   
         Fourth Quarter...........................  4 11/16            3 5/8   
                                                  
     As of September 23, 1998, there were  approximately 36 holders of record of
the Company's common stock.

     To date,  the Company has not declared or paid any  dividends on its common
stock. The payment by the Company of dividends, if any, is within the discretion
of the Board of Directors and will depend on the Company's earnings, if any, its
capital requirements and financial condition, as well as other relevant factors.
The  Board  of  Directors  does not  intend  to  declare  any  dividends  in the
foreseeable future, but, instead,  intends to retain any earnings for use in the
Company's business operations.

Recent Sales of Unregistered Securities

     In January and February 1998, the Company, through Sunrise Securities Corp.
("Sunrise"),  as private placement manager,  sold a total of 1,055,600 shares of
its common stock to Warburg Pincus Emerging Growth Fund Inc.  (888,889  shares),
Far West Capital Partners L.P. (111,111 shares) and Larry Miller (55,600 shares)
for an aggregate  consideration of $4,750,200.  Sunrise received 5,560 shares of
common stock and incidental expenses for its services. The Company relied on the
exemption provided by Section 4(2) of the Securities Act of 1933, as amended, in
making such sales.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
        RESULTS OF OPERATIONS

     The  following  discussion  of  the  financial  condition  and  results  of
operations of the Company  should be read in conjunction  with the  consolidated
financial  statements  and  related  notes  thereto.  The  following  discussion
contains   certain   forward-looking   statements   that   involve   risks   and
uncertainties.  The Company's actual results could differ  materially from those
discussed  herein.  Factors that could cause or contribute  to such  differences
include, but are not limited to, the ability to obtain financing, integration of
acquisitions,  the management of growth,  changing  consumer  tastes and general
economic  conditions.  The Company  undertakes no obligation to publicly release
the results of any  revisions to these  forward-looking  statements  that may be
made to reflect any future events or circumstances.

     The Company's consolidated financial statements are not directly comparable
from  period to period due to  acquisition  activity.  The  following  financial
analysis  compares the twelve  months ended June 30, 1998 ("1998") to the twelve
months ended June 30, 1997 ("1997").


                                       10
<PAGE>

Results of Operations

     In 1998,  net revenues were  $11,188,000 as compared to $6,439,000 in 1997.
The increase of  $4,749,000  is primarily due to the reporting in 1998 of a full
year's operating results of American Passage, Campus Voice, Beyond the Wall, and
Pik:Nik  (which  were  all  acquired  during  1997),  which,  in the  aggregate,
accounted for $4,510,000 of this increase.  The remaining $239,000 was generated
by revenues received from screening events on the Network.

     In 1998, selling,  general and administrative  expenses were $12,953,000 as
compared to $9,006,000 in 1997.  The increase of $3,947,000 was primarily due to
the inclusion in 1998 of a full year of operations of American  Passage,  Campus
Voice, Beyond the Wall and Pik:Nik, which accounted for approximately  $431,000,
$340,000, $1,377,000 and $2,070,000 of this increase,  respectively.  The offset
of  $271,000  was due to  decreased  costs of the  Network  associated  with the
termination of a programming services agreement with a director of the Company.

     In 1998,  corporate  expenses were  $3,088,000 as compared to $2,078,000 in
1997.  The increase of  $1,010,000 is due to increased  corporate  personnel and
related overhead expenses required to support the Company's growth.

     In 1998,  depreciation  and  amortization  was  $1,779,000  as  compared to
$1,253,000 in 1997.  The increase of $526,000 was primarily due to the inclusion
in 1998  of a full  year of  operations  of the  media  and  marketing  services
businesses  acquired during 1997,  which accounted for $430,000 of the increase.
The  remainder  of  $96,000  was  the  result  of  additional   Network  theater
installations.

     In  1998,  total  operating   expenses  were  $17,820,000  as  compared  to
$12,337,000  in 1997.  The  increase  of  $5,483,000  was  primarily  due to the
inclusion  in 1998 of a full year of  operations  of  American  Passage,  Campus
Voice, Beyond the Wall and Pik:Nik, which accounted for approximately  $610,000,
$460,000,  $1,396,000  and  $2,182,000,   respectively,  of  the  increase.  The
remainder  of  $835,000  was the result of the  expansion  of the Network and an
increase in the number of sales, management and support staff.

     In 1998,  interest income was $156,000 as compared to $274,000 in 1997. The
decrease of $118,000 was due to reduced  interest  income on lower  average cash
balances.

     In 1998, interest expense was $564,000 as compared to $390,000 in 1997. The
increase of $174,000 was due to increased  average debt balances and  additional
financings undertaken during 1998.

     In 1998, provision for income taxes was $191,000 as compared to $166,000 in
1997.  The increase of $25,000 was due to increased  state taxes on revenues and
net assets.

     In 1998,  net loss was  $7,231,000 as compared to  $6,157,000 in 1997.  The
increase of  $1,074,000  was a result of increased  operating  expenses from the
inclusion of a full year of operations of the businesses  acquired  during 1997,
an increase in the number of management,  sales and support staff resulting from
such acquisitions and the costs of further expansion of the Network.

Impact of Year 2000

     The Company  believes that its computer  programs and systems are year 2000
compliant.

Liquidity and Capital Resources

     The  Company  consummated  the  Initial  Public  Offering on April 9, 1996,
pursuant to which it raised net proceeds of approximately $9.7 million, of which
$500,000 was used to repay previously existing Company  indebtedness.  Since the
Initial Public Offering, the Company has purchased approximately $1.6 million of
Network  theater  equipment  and  invested  approximately  $1.5  million  in the
acquisitions of American Passage, Campus Voice, Beyond the Wall and Pik:Nik (the
remainder of the cash portion of the purchase prices having been borrowed).  The
balance  of the  proceeds  have  otherwise  been  used  to  fund  the  Company's
operations.

     On June 24, 1997, the Company sold an aggregate of 1,015,873  shares of its
common  stock in a  private  placement.  The net  proceeds  of that sale of $3.8
million were used to fund the Company's operations.

     In January and  February  1998,  the Company sold an aggregate of 1,055,600
shares of its common  stock in a private  placement.  The net  proceeds  of $4.6
million were used to fund the Company's operations.


                                       11
<PAGE>

     The Company used approximately $4.4 million in operating activities in 1998
as compared to $5.3 million in 1997. The decrease of approximately  $0.9 million
represents the increase in short-term  liabilities  and the decrease in accounts
receivable,  offset  substantially  by the increase in net loss and depreciation
and  amortization.  Cash used in investing  activities in 1998 of  approximately
$2.1 million is composed  primarily of capital  expenditures.  Cash  provided by
financing  activities  in  1998  of  approximately  $4.6  million  is  primarily
attributable to the sale of the Company's common stock.

     The Company's  primary capital  requirements with respect to its operations
have been to fund  corporate  overhead,  the  operation  of its  Network and the
operations  of Pik:Nik.  In the event that the Company's  plans and  assumptions
with respect to its Network change or prove to be inaccurate, if its assumptions
with  respect to American  Passage,  Campus  Voice,  Beyond the Wall and Pik:Nik
being able to fund their  operations  and to make debt  service  payments out of
their own cash flows in the future  prove to be  inaccurate,  or if the  working
capital or capital expenditure  requirements of American Passage,  Campus Voice,
Beyond the Wall or Pik:Nik  prove to be greater  than  anticipated,  the Company
could  be  required  to seek  additional  financing.  The  inability  to  obtain
additional  financing  could  have a  material  adverse  effect on the  Company,
including possibly  requiring the Company to significantly  curtail or cease its
operations.

     As of June 30, 1998, the Company had approximately $2.3 million in cash and
cash  equivalents.  The Company  believes that such amounts,  plus an additional
$4.7 million of net proceeds which has been raised  through a private  debenture
offering in July 1998,  will be  sufficient to fund working  capital,  including
debt service and interest  requirements,  at least through the fiscal year ended
June 30, 1999. The Company's  ability to improve its operations  will be subject
to prevailing economic conditions and to legal, financial, business, regulatory,
industry and other factors, many of which are beyond the Company's control.

     The Company may also seek additional  debt or equity  financing to fund the
cost of  additional  expansion  of its  Network  and the cost of  developing  or
acquiring additional media and marketing services businesses. To the extent that
the Company finances its requirements  through the issuance of additional equity
securities,  including  the  exercise of warrants  issued in the Initial  Public
Offering,  any such  issuance  would result in dilution of the  interests of the
Company's stockholders.

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

ITEM 7. FINANCIAL STATEMENTS

     Information  with  respect  to this  item  appears  as a  separate  section
following Item 13 of this report.  Such  information is  incorporated  herein by
reference.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
        FINANCIAL DISCLOSURE

     None.


                                       12
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

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

ITEM 10. EXECUTIVE COMPENSATION

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

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

     (a) Exhibits. See below.

     (b) The  Company  did not file any  reports  on Form 8-K  during the fourth
quarter of fiscal 1998.

Item 13(a) Exhibits.

Exhibit No.
-----------

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

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

3.3*   Certificate of Amendment of Certificate  of  Incorporation,  as filed May
       27, 1998.

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

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

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

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

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

10.3   Employment  Agreement between the Company and Don Leeds  (incorporated by
       reference  to Exhibit 1 to the  Company's  Form 10-QSB for the  quarterly
       period ended June 30, 1996).  10.4  Non-Incentive  Stock Option Agreement
       dated June 17, 1996  between the Company and Don Leeds  (incorporated  by
       reference to Exhibit 10.3 to the Company's  Form 10-QSB for the quarterly
       period ended June 30, 1996).

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


                                       13
<PAGE>

Exhibit No.
-----------

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

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

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

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

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

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

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

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

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

10.15* Stock Purchase  Agreement dated December 23, 1997 between the Company and
       Sirrom Investments, Inc.

10.16* Placement  Manager  Agreement dated December 24, 1997 between the Company
       and Sunrise Securities Corp.

10.17* Form of Stock Purchase Agreement.

10.18* Loan Agreement dated December 30, 1997 between First Union National Bank,
       American  Passage Media,  Inc.,  Beyond the Wall,  Inc. and Campus Voice,
       Inc.

10.19* Unconditional  Guaranty  dated  December  30,  1997  by the  Company  and
       National Campus Media, Inc. in favor of First Union National Bank.

21*    Subsidiaries of the Company.

23*    Consent of Ernst & Young LLP.

27*    Financial Data Schedule.

----------
*    Filed herewith.


                                       14
<PAGE>

                           NETWORK EVENT THEATER, INC.
                        CONSOLIDATED FINANCIAL STATEMENTS

                                      Index

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

Consolidated Financial Statements:

Consolidated Balance Sheet at June 30, 1998 ..............................   F-3

Consolidated Statements of Operations for the years ended June 30,
  1998 and 1997 ..........................................................   F-4

Consolidated Statements of Cash Flows for the years ended
   June 30, 1998 and 1997 ................................................   F-5

Consolidated Statements of Stockholders' Equity for the  years ended
   June 30, 1998 and 1997 ................................................   F-6

Notes to Consolidated Financial Statements ...............................   F-7


                                      F-1
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors
Network Event Theater, Inc.

We have audited the  accompanying  consolidated  balance  sheet of Network Event
Theater,  Inc. as of June 30, 1998, and the related  consolidated  statements of
operations,  changes in stockholders'  equity and cash flows for each of the two
years in the period  ended June 30, 1998.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Network
Event  Theater,  Inc. at June 30, 1998,  and the  consolidated  results of their
operations  and their  cash  flows  for the each of the two years in the  period
ended  June  30,  1998,  in  conformity  with  generally   accepted   accounting
principles.

                                                  Ernst & Young LLP

New York, New York
August 21, 1998


                                      F-2
<PAGE>

                           NETWORK EVENT THEATER, INC.

                           CONSOLIDATED BALANCE SHEET
                                 (In thousands)
                                  June 30, 1998

ASSETS
Current Assets:
   Cash and cash equivalents ......................................... $  2,271
   Accounts receivable, net of allowance for doubtful accounts
     of $137 .........................................................    1,539
   Prepaid expenses ..................................................      348
   Deposits and other current assets .................................      181
                                                                       --------
Total current assets .................................................    4,339

Property and equipment, net ..........................................    4,861
Intangible assets, net of accumulated amortization of $867 ...........    6,476
                                                                       --------
Total assets ......................................................... $ 15,676
                                                                       ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable .................................................. $    914
   Accrued employee compensation .....................................      520
   Accrued professional fees .........................................      225
   Other accrued expenses ............................................      537
   Deferred revenues .................................................      689
   Current portion of long-term debt .................................      789
                                                                       --------
Total current liabilities ............................................    3,674

Long-term debt .......................................................    3,459
Commitments and contingencies 

Stockholders' Equity:
   Preferred stock, $.01 par value, 1,000 shares authorized, no shares
     issued and outstanding ..........................................     --
   Common stock, $.01 par value, 32,000 shares authorized, 11,347
      shares issued and outstanding ..................................      113
   Additional paid-in capital ........................................   27,198
   Accumulated deficit ...............................................  (18,768)
                                                                       --------
Total stockholders' equity ...........................................    8,543
                                                                       --------

Total liabilities and stockholders' equity ........................... $ 15,676
                                                                       ========

                 See notes to consolidated financial statements


                                      F-3
<PAGE>

                           NETWORK EVENT THEATER, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)

                                                             Year ended June 30,
                                                          ----------------------
                                                            1998         1997
                                                          --------     --------

Net Revenues .........................................    $ 11,188     $  6,439

Operating Expenses:
   Selling, general and administrative expense .......      12,953        9,006
   Corporate expenses ................................       3,088        2,078
   Depreciation and amortization .....................       1,779        1,253
                                                          --------     --------
Total operating expenses .............................      17,820       12,337
                                                          --------     --------
Loss from operations .................................      (6,632)      (5,898)
Interest income ......................................         156          274
Interest expense .....................................        (564)        (390)
Other income .........................................        --             23
                                                          --------     --------
Loss before provision for income taxes ...............      (7,040)      (5,991)
Provision for income taxes ...........................         191          166
                                                          --------     --------
Net loss .............................................    $ (7,231)    $ (6,157)
                                                          ========     ========
Net loss per basic and diluted common share ..........    $  (0.69)    $  (0.71)
                                                          ========     ========
Weighted average basic and diluted common shares
  tstanding ..........................................      10,508        8,715
                                                          ========     ========

                 See notes to consolidated financial statements


                                      F-4
<PAGE>

                          NETWORK EVENT THEATER, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

                                                            Year ended June 30,
                                                           ---------------------
                                                              1998        1997
                                                           ----------   --------
Cash Flows From Operating Activities
Net loss ..................................................  $(7,231)   $(6,157)
   Adjustments to reconcile net loss to
      net cash used in operating activities:
      Provision for bad debts .............................       64         73
      Depreciation and amortization .......................    1,779      1,253
      Loss on disposal of equipment .......................       85       --
      Issuance of options for consulting services .........       53       --
      Changes in assets and liabilities:
         Increase in accounts receivable ..................     (164)    (1,512)
         Increase (decrease) in prepaid expenses ..........       45       (341)
         Increase in deposits and other current assets ....      (61)       (94)
         Increase in accounts payable .....................      372        128
         Increase in accrued employee compensation ........      199        321
         (Decrease) increase in accrued professional
           fees ...........................................      (95)       320
         Increase in deferred revenues ....................      388        301
         Increase in other accrued expenses ...............      133        436
                                                             -------    -------
Net cash used in operating activities .....................   (4,433)    (5,272)

Cash Flows From Investing Activities
   Capital expenditures ...................................   (1,682)    (1,194)
   Proceeds from the sale of equipment ....................       64       --
   Notes receivable .......................................       33        (33)
   Payment for business acquisitions ......................     (532)    (4,842)
   Sale of investments ....................................     --        7,913
                                                             -------    -------
Net cash provided by investing activities .................   (2,117)     1,844

Cash Flows From Financing Activities
   Net proceeds from sale of common stock and
      exercise of warrants ................................    4,581      3,783
   Proceeds from long-term debt ...........................    5,125      3,860
   Repayment of long-term debt ............................   (5,070)      (297)
                                                             -------    -------
Net cash provided by financing activities .................    4,636      7,346
Net (decrease) increase in cash and cash equivalents ......   (1,914)     3,918
Cash and cash equivalents at beginning of period ..........    4,185        267
                                                             -------    -------

Cash and cash equivalents at end of period ................  $ 2,271    $ 4,185
                                                             =======    =======
Supplemental cash flow information:
   Cash paid for interest .................................  $   538    $   279
                                                             =======    =======
   Cash paid for income taxes .............................  $   143    $   207
                                                             =======    =======
   Issuance of Common Stock in connection
     with acquisitions ....................................  $  --      $   473
                                                             =======    =======
   Debt assumed in connection with acquisitions ...........  $  --      $ 2,553
                                                             =======    =======
   Issuance of Common Stock in connection with
     debt repayment .......................................  $ 2,144    $  --
                                                             =======    =======

                 See notes to consolidated financial statements


                                      F-5
<PAGE>

                           NETWORK EVENT THEATER, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                        Unrealized
                                 Common Stock  Additional               Appreciation
                                --------------  paid-in  Accumulated   On Marketable
                                Shares  Amount  Capital     Deficit  Equity Securities   Total
                                ------  ------  -------     -------  -----------------   -----
<S>                             <C>     <C>    <C>         <C>             <C>         <C>     
Balances at
  June 30, 1996 ............    8,654   $ 87   $ 16,177    $ (5,380)       $(30)       $ 10,854
                                                                                      
Issuance of  common                                                                   
  stock for acquisitions ...      191      2        471        --           --              473
                                                                                      
Sale of common stock .......    1,016     10      3,773        --           --            3,783
                                                                                      
Unrealized appreciation on                                                            
  marketable securities ....     --      --        --          --            30              30
                                                                                      
Net loss ...................     --      --        --        (6,157)        --           (6,157)
                               ------   ----    -------    --------        ----        --------
Balances at                                                                           
  June 30, 1997 ............    9,861     99     20,421     (11,537)        --            8,983
                                                                                      
Issuance of common                                                                    
  stock for debt ...........      413      4      2,140        --           --            2,144
                                                                                      
Issuance of common                                                                    
  stock ....................    1,016     10      4,511        --           --            4,521
                                                                                      
Issuance of common stock                                                              
   upon exercise of warrants       12    --          60        --           --               60
                                                                                      
Issuance of options for                                                               
  consulting services ......     --      --         105        --           --              105
                                                                                      
Ajustment to common stock                                                             
  issued for acquisition                                                              
  of Beyond the Wall .......     --      --         (39)       --           --              (39)
                                                                                      
Net loss ...................     --      --        --        (7,231)        --           (7,231)
                               ------   ----    -------    --------        ----        --------
Balances at                                                                           
  June 30, 1998 ............   11,347   $113    $ 27198    $(18,768)       $--         $  8,543
                               ======   ====    =======    ========        ====        ========
</TABLE>
                 See notes to consolidated financial statements


                                      F-6
<PAGE>

                          NETWORK EVENT THEATER, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 1998

1.   Organization and Basis of Presentation

     Network Event  Theater,  Inc.  ("NET") and its  subsidiaries  (collectively
referred to as the "Company") owns and operates a proprietary  national  network
of theaters on college  campuses (the "Network")  located  throughout the United
States. The Network delivers  entertainment and educational events via satellite
for display  through high  resolution  video  projectors  on movie theater sized
screens.  Additionally,  the  Company  owns and  operates  collegiate  media and
marketing  service  businesses  which  complement  and  enhance the reach of its
Network.

     In April 1996,  the Company sold 2.3 million shares of its common stock and
2,645,000  warrants to purchase  shares of its common stock in a public offering
(the "Initial Public Offering") in which the Company received approximately $9.7
million of net proceeds, of which $500,000 was used to repay Company debt.

     In connection with the Initial Public Offering,  the Company issued 460,000
warrants to the  Underwriter.  Each warrant  entitles the holder to purchase one
share of the Company's common stock for $8.25 and expire in April 2002.

2.   Significant Accounting Policies

Principles of Consolidation

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

Cash Equivalents

     Highly  liquid  investments  with a maturity  of three  months or less when
purchased are generally considered to be cash equivalents.

Investments in Marketable Securities

     The Company  records its investment in marketable  securities in accordance
with Financial  Accounting  Standards Board  Statement No. 115,  "Accounting for
Certain  Investments in Debt and Equity  Securities"  ("SFAS No. 115"). SFAS No.
115  requires   management  to  determine  the  appropriate   classification  of
investment in debt  securities  at the time of purchase and to  reevaluate  such
designation as of each balance sheet date.

     The  Company's  securities  are  classified as  available-for-sale  and are
carried  at fair  value,  with the  unrealized  gains  and  losses,  net of tax,
reported as a separate  component of  stockholders'  equity.  Realized  gains or
losses on sales of investments are reflected in the  consolidated  statements of
operations.  The cost of securities sold is based on the specific identification
method.

Property and Equipment

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

Intangible Assets

     Intangible  assets represent  acquisition costs in excess of the fair value
of businesses  acquired and are amortized on the straight-line basis principally
over 15 years.  The agreements  pursuant to which the Company  acquired  certain
companies include  provisions that would require the Company to issue additional
shares of common stock, if the acquired  company meets certain goals.  The value
of any such shares issued, as of the date issued,  will be added to the goodwill
related to such  acquisition  and will be amortized  over the  remainder of such
goodwill's useful life.


                                      F-7
<PAGE>

                          NETWORK EVENT THEATER, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 June 30, 1998

     It is the Company's policy to account for intangible assets at the lower of
amortized cost or estimated  realizable  value.  As part of an ongoing review of
the  valuation  and  amortization  of  intangible  assets of the Company and its
subsidiaries, management assesses the carrying value of the intangible assets if
facts and  circumstances  suggest that there may be  impairment.  If this review
indicates that the intangible  assets will not be recoverable as determined by a
nondiscounted  cash flow  analysis of the  operating  results over the remaining
amortization  period,  the  carrying  value of the  intangible  assets  would be
reduced to estimated realizable value.

Revenue Recognition

     The  Company's  primary  source  of  revenue  is  derived  from the sale of
advertising  space in media  which are owned  either by the  Company or by third
parties and by the sale of marketing services.  Revenue is generally  recognized
in the month of media  publication  and in the case of marketing  services,  the
month such services are provided.

Advertising and Promotion Costs

     The Company expenses advertising costs as incurred. Advertising expense for
the years ended June 30, 1998 and 1997 were approximately $529,000 and $564,000,
respectively.

Income Taxes

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

Recapitalization

     In May 1998, the Company  increased its authorized common stock of $.01 par
value to 32,000,000 shares.

Earnings Per Share

     The Company  adopted the provisions of SFAS No. 128,  "Earnings Per Share,"
effective  July 1, 1997. In accordance  with the  requirements  of SFAS No. 128,
earnings  per  share  amounts  for  prior  periods  have  been  restated;   such
restatement had no effect on the previously reported amounts.

     Under SFAS No. 128,  basic  earnings  per share  excludes  any dilution for
common stock  equivalents  and is computed on the basis of net income divided by
the weighted  average  number of common shares  outstanding  during the relevant
period.  Diluted  earnings per share reflects the potential  dilution that could
occur if  options  or other  securities  or  contracts  entitling  the holder to
acquire  shares of common stock were  exercised or  converted,  resulting in the
issuance of additional shares of common stock that would then share in earnings.
However,  diluted  earnings  per share does not  consider  such  dilution if its
affect would be to reduce the loss per share ("antidilutive").

Use of Estimates

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

Risks and Uncertainties

     Financial   instruments   which   potentially   subject   the   Company  to
concentrations  of credit  risk  consist  primarily  of trade  receivables.  The
Company's revenue is principally derived from the sale of advertising space, the
placement of advertising in various media and the provision of media services to
advertisers, sponsors and entertainment companies.


                                      F-8
<PAGE>

                          NETWORK EVENT THEATER, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 June 30, 1998

     The Company routinely  assesses the financial strength of its customers and
does not require  collateral or other security to support customer  receivables.
Credit losses are provided for in the consolidated  financial  statements in the
form of an allowance for doubtful accounts.

New Accounting Pronouncements

     In June 1997, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards ("SFAS") No. 131, "Disclosure About Segments of
an Enterprise and Related  Information,"  which is effective for years beginning
after December 15, 1997. SFAS 131 establishes  standards for the way that public
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports.  It also establishes  standards
for related disclosures about products and services, geographic areas, and major
customers.  SFAS 131 is  effective  for  financial  statements  for fiscal years
beginning after December 15, 1997 and, therefore, the Company will adopt the new
requirements  retroactively  in fiscal 1999.  Management  has not  completed its
review of SFAS 131, but does not anticipate  that the adoption of this statement
will have a significant effect on the Company.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting  for Derivative  Instruments and Hedging  Activities."  SFAS No. 133
must first be applied in the first quarter of fiscal years that begin after June
15, 1999,  and in general,  requires  that  entities  recognize  all  derivative
financial  instruments  as assets or  liabilities,  measured at fair value,  and
include  in  earnings  the  changes  in  the  fair  value  of  such  assets  and
liabilities.  SFAS 133 also provides that changes in the fair value of assets or
liabilities  being hedged with recognized  derivative  instruments be recognized
and included in earnings.  Management  has not  completed its review of SFAS No.
133 but  does  not  anticipate  that  it  will  have a  material  affect  on its
consolidated financial statements.

3.   Acquisitions

American Passage Acquisition

     In September 1996, the Company,  through its newly organized,  wholly owned
subsidiary,   American  Passage  Media,  Inc.  ("American  Passage"),   acquired
substantially  all of the assets relating to a college and high school media and
marketing  services  business.  The  businesses  acquired  included the seller's
college  newspaper  print  advertisement  placement  operations,  college campus
postering  operations  including  postering on  distribution  racks that contain
college  newspapers,  high school  focused  GymBoards(R)  operations and various
other advertiser and event sponsorship related activities.  As consideration for
the assets,  the Company:  (1) paid  $4,423,000 in cash,  including  acquisition
costs, (2) issued a two-year  subordinated  promissory note for $750,000,  which
was fully repaid in December 1997, (3) issued a contingent option to purchase up
to 100,000 shares of the Company's common stock pursuant to an option agreement,
(4) entered into a two-year consulting agreement aggregating $273,600, which was
terminated in June 1997, and (5) assumed certain of the contractual  obligations
of the seller.  The  aggregate  purchase  price of  $5,173,000,  which  includes
acquisition  costs,  exceeded  the fair  value  of the net  assets  acquired  by
approximately $4,839,000.

Campus Voice Acquisition

     In February 1997, the Company,  through its newly  organized,  wholly owned
subsidiary,  Campus Voice, LLC ("Campus Voice"),  acquired  substantially all of
the assets  relating to a business  operating a national  network of proprietary
giant wallboards on college campuses.  As consideration  for the assets,  Campus
Voice  issued  junior  secured  promissory  notes  in the  aggregate  amount  of
approximately $1,563,000, which were fully repaid in December 1997 (See Note 4).
The seller also  agreed to advance up to  $660,000 of working  capital to Campus
Voice  from the date of the  acquisition  until  January  1,  1998 on a  senior,
secured basis,  as defined.  In December 1997,  the working  capital  advance of
$385,000 plus accrued  interest was fully repaid.  The final  purchase  price of
$1,728,000, which includes acquisition costs, exceeded the fair value of the net
assets acquired by approximately  $684,000.  As a result of the determination of
the final purchase price and an adjustment to the fair value of certain assets


                                      F-9
<PAGE>

                          NETWORK EVENT THEATER, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 June 30, 1998

acquired in connection with this acquisition, the equipment value was decreased,
and goodwill increased by approximately $111,000 during 1998.

Beyond the Wall Acquisition

     In April 1997, the Company  acquired the assets and certain  liabilities of
Posters  Preferred,  Inc., an entity that  distributes  twice yearly catalogs of
posters  available  for sale to  college  students.  As  consideration  for this
purchase, the Company issued to the seller 70,000 shares of the Company's common
stock valued at  $350,000;  assumed  certain  trade  accounts  payable and other
obligations  of the  seller;  is  obligated  to issue up to 6,666 of  additional
shares of the Company's  common stock in each of 1998,  1999 and 2000 subject to
the  satisfaction  of certain  conditions.  Such  conditions  were met for 1998,
therefore the 6,666  additional  shares are issuable but have not been issued as
of June 30, 1998. A liability was recorded to reflect such future  issuance.  In
addition,  the Company  agreed to pay to the seller  cash  amounts to the extent
that the market price of shares of the Company's common stock would be less than
$5.00 per share on the first  anniversary of the date of each issuance of shares
pursuant to the purchase agreement.  The aggregate purchase price, including the
additional consideration, of $427,000, including acquisition costs, exceeded the
fair value of the net assets acquired by approximately $433,000.

Pik:Nik Acquisition

     In April 1997, a newly  organized  wholly owned  subsidiary of the Company,
Pik:Nik Media, LLC,  acquired the assets and liabilities  relating to a business
producing,  marketing and distributing  free post cards  containing  advertising
images. As consideration for the purchase,  Pik:Nik paid the seller an aggregate
amount of  $69,000;  paid to certain  creditors  $20,000 and agreed to pay those
creditors an additional $240,000, plus interest, in installments over 36 months.
The Company also issued to the principals of the seller and certain creditors an
aggregate of 29,118 shares of the Company's common stock valued at approximately
$124,000;  and the Company agreed to pay additional amounts of cash and to issue
additional shares to the principals of the seller subject to the satisfaction of
certain  conditions  during each of the four successive  fiscal years commencing
July 1, 1997. In January 1998,  the purchase  agreement was amended  whereby the
Company is  obligated  to pay  $155,000,  and cancel a note  receivable,  in the
amount of $34,000, from the seller. In exchange, the Company was relieved of all
future contingent  purchase  payments of cash and stock. The aggregate  purchase
price of $778,000,  including  acquisition costs, exceeded the fair value of the
net assets acquired by  approximately  $982,000.  The increase in purchase price
resulting from the amendment has been recorded as additional goodwill.

On The House Acquisition

     In May 1998,  the Company,  through its  subsidiary,  Pik:Nik  Media,  Inc.
(formerly,  Pik:Nik Media, LLC), acquired  substantially all of the assets of On
The House Postads,  Inc., an entity that produces,  markets and distributes free
postcards  containing  advertising  images in the Chicago area. The Company paid
$142,500  in cash and  agreed  to pay an  additional  $71,250  in cash and issue
$71,250  worth of the  Company's  common stock in July 1999,  subject to certain
conditions.  The aggregate  purchase  price of $200,000,  including  acquisition
costs, was recorded as goodwill.

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


                                      F-10
<PAGE>

                          NETWORK EVENT THEATER, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 June 30, 1998

     The  following  unaudited  pro forma  information  is  presented  as if the
Company  had  completed  the   acquisitions   as  of  July  1,  1997  and  1996,
respectively:

                                                         Year ended June 30
                                                    ----------------------------
                                                        1998            1997
                                                      --------        -------
Net revenue .....................................   $ 11,511,000    $ 9,457,000
Net loss applicable to common stock .............     (7,268,000)    (6,780,000)
Net loss per basic and diluted common share .....           (.69)          (.78)
Weighted  average common shares 
   outstanding - basic and diluted ...............     10,508,000      8,715,000

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

4. Long-Term Debt

      Long-term debt as of June 30, 1998 consists of the following:

      Note Payable to Bank (A) ...................................  $ 3,072,000
      Note Payable to Finance Company (B) ........................    1,000,000
      Other ......................................................      176,000
                                                                    -----------
                                                                      4,248,000
      Less current portion .......................................     (789,000)
                                                                    -----------
                                                                    $ 3,459,000
                                                                    ===========


     (A) In December 1997, in conjunction  with the  refinancing of certain debt
owed by American Passage to a bank,  Campus Voice,  Beyond the Wall and American
Passage (the "Borrowers") entered into a loan agreement with another bank. Under
the  terms of this loan  agreement,  the bank  advanced  to the  Borrowers  $4.0
million that was used to repay all existing  long-term  indebtedness of American
Passage in the amount of $3.8 million.  The balance of the proceeds was used for
working  capital.  The loan is secured by all of the assets of the Borrowers and
is  guaranteed  by NET.  The  loan is  payable  in equal  monthly  installments,
commencing in February 1998, over a maximum of six years (as defined).  Interest
is payable  monthly at a rate of  interest of 275 basis  points  above LIBOR for
U.S. dollar deposits of one month maturity.

     The  Borrowers  also  entered  into an  interest  rate  exchange  agreement
converting  $3.0  million of the  aforementioned  floating  rate debt to a fixed
rate.  The  balance  of the  interest  rate  agreement  at  June  30,  1998  was
$2,722,000.  Under the interest  rate  exchange  agreement,  the  Borrowers  are
required to pay interest at a fixed rate of 9.11% on the notional amount covered
by the  interest  rate  exchange  agreement.  In return,  the  Company  receives
interest  payments on the same notional amount at the prevailing LIBOR rate plus
275 basis points. The interest rate exchange agreement  terminates in June 2002.
The Company's  estimated  credit exposure  related to the interest rate exchange
agreement as of June 30, 1998 is approximately  $24,000.  The notional amount of
the derivative  does not represent the amount  exchanged by the parties,  and is
not a measure of the exposure of the Company through its use of derivatives. The
amounts  exchanged are  calculated on the basis of the notional  amounts and the
other terms of the derivative, which relate to interest rates. The fair value of
the  interest  rate  agreement  at June 30,  1998 was  approximately  $2,746,000
determined  on the basis of  valuation  pricing  models  which take into account
current market and contractual prices, giving effect to the time value and yield
curve underlying the position.

     In  conjunction  with this loan,  the bank has also made  available  to the
Borrowers a revolving  line of credit  with a maximum  principal  amount of $1.0
million.  All amounts  borrowed under this facility must be repaid in July 1999.
The revolving  line of credit  facility bears interest at the rate of the bank's
prime rate plus 25 basis points and interest is due  monthly.  Borrowings  under
the revolving  line of credit are secured by the  Borrower's  eligible  accounts
receivable (as defined) and is also  guaranteed by NET. As of June 30, 1998, the
Borrowers have not borrowed any amounts under this facility.


                                      F-11
<PAGE>

                          NETWORK EVENT THEATER, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 June 30, 1998

     (B) In December 1997,  Pik:Nik borrowed $1.0 million from a finance company
which is due in June 2000.  Interest on the note is payable monthly at a rate of
12% per  annum.  The note is  secured  by all of the  assets of  Pik:Nik  and is
guaranteed by NET. The proceeds may be used for working  capital for Pik:Nik and
NET.

     At June 30, 1998,  the aggregate  amounts of long-term  debt due during the
next five years are as follows:

       Year ending June 30:
           1999 ..................................................   $  789,000
           2000 ..................................................    1,720,000
           2001 ..................................................      667,000
           2002 ..................................................      667,000
           2003 and thereafter ...................................      405,000
                                                                     ----------
                                                                     $4,248,000
                                                                     ==========

     The fair value of the long-term debt approximates net book value 

5. Property and Equipment

     Property and equipment consists of the following:

     Network theater equipment ..................................   $ 4,225,000
     Location based media equipment .............................     1,935,000
     Furniture and office equipment .............................     1,247,000
     Leasehold improvements .....................................       118,000
                                                                    -----------
                                                                      7,525,000
     Less accumulated amortization and depreciation ............     (2,664,000)
                                                                    -----------
                                                                    $ 4,861,000
                                                                    ===========

6. Income Taxes

     At June 30, 1998,  the Company had a net operating  loss  carryforward  for
income tax purposes of approximately  $14,300,000 that expires through 2013. For
financial  reporting  purposes,  a valuation  allowance of  $5,634,000  has been
recognized  to  offset  the  deferred  tax  asset  principally  related  to this
carryforward.  The  net  operating  loss  carryforward  at  June  30,  1996,  of
approximately  $1,104,000, is subject to annual limitations brought about by the
Company's change of its tax year end.

     Deferred income taxes reflect the net tax effects of temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets as of June 30, 1998 are as follows:

     Deferred tax assets:
        Net operating loss carryforwards ...............        $5,711,000
     Other .............................................           (77,000)
                                                                ----------
     Total deferred tax assets .........................         5,634,000
     Valuation allowance ...............................        (5,634,000)
                                                                ----------
     Net deferred tax assets............................         $   --
                                                                ==========

     No federal tax  provision  has been  provided for at June 30, 1998 and 1997
due to the  significant  losses  incurred to date.  State tax provision has been
provided for at June 30, 1998 and 1997 in the amount of $191,000  and  $166,000,
respectively. These taxes are primarily based on net revenues and net assets.


                                      F-12
<PAGE>

                          NETWORK EVENT THEATER, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 June 30, 1998

7.   Related Party Transactions

Programming Services Agreement

     In 1995,  the Company  entered into a consulting  agreement  with an entity
owned by Freddie  Fields and Jerome  Hellman  ("F&H")  pursuant to which Messrs.
Fields and  Hellman  served as  Chairman  and  President,  respectively,  of the
Company's  programming division. In May 1997, the Company entered into a revised
agreement  which  relieved  Messrs.  Fields and Hellman of their  obligation  to
devote a substantial portion of their business time to the Company, but provided
that each would continue to be available to perform consulting  services for the
Company  and that Mr.  Fields,  at his  election,  would  continue to serve as a
director  of the  Company.  This  agreement  expired in  December  1997.  F&H is
entitled to receive  royalties of 10% of the pre-tax income of the Company until
December 1999.

     F&H received an annual fee for its  services.  For the years ended June 30,
1998 and 1997, such fees totaled $275,000 and $500,000, respectively.

     Additionally,  F&H received an annual fee for overhead  (primarily relating
to the  Company's  office  in Los  Angeles,  California)  paid in equal  monthly
installments. The annual overhead fee for the years ended June 30, 1998 and 1997
of $138,000 and $269,000, respectively, was fully expensed. The Company believes
that these  overhead fees are comparable to terms which could have been obtained
from an unrelated third party.

     In  December  1995,  the  Company  also  granted  F&H an option to purchase
552,560  shares of common  stock at an  exercise  price of $1.58 per share which
expires in December 2005 if not exercised prior to that date.

8.   Stockholders' Equity

     The Company  issued  2,645,000  warrants at the time of its Initial  Public
Offering (see Note 1). The warrants  entitle the  registered  holder to purchase
one share of the  Company's  common stock for $5.00,  subject to  adjustment  in
certain circumstances, at any time until April 2, 2001.

     The  warrants  are   redeemable  by  the  Company,   upon  consent  of  the
underwriter,  upon  notice  of not  less  than 30  days,  at a price of $.10 per
warrant,  provided  that the closing bid quotation of the common stock on all 20
trading days ending on the third day prior to the day on which the Company gives
notice has been at least $7.50, as adjusted for certain dilutive events.

     In June 1997,  the Company sold an  aggregate  of  1,015,873  shares of its
common  stock.  The net proceeds of that sale of $3.8 million are being used for
general corporate purposes. The Company is obligated to register these shares as
soon as  practicable.  In  connection  with this  issuance,  the Company  issued
150,000  warrants to an investment bank. Such warrants have an exercise price of
$4.50 and expire in November 2000.

     In December  1997,  the Company  issued  412,397  shares of common stock in
exchange for  cancellation of certain of its long-term debt issued in connection
with the acquisition of Campus Voice, net of fees and accrued  interest,  in the
amount of $2,144,000.

     In December  1997,  the Company  issued  12,000 shares of common stock upon
exercise  of  warrants at $5.00 per share.  The  Company  realized  $60,000 as a
result of this exercise of warrants.

     In December 1997, the Company granted,  to a public relations firm, 100,000
options to purchase  shares of common  stock at an  exercise  price of $5.00 per
share.  The fair  value  of such  options  was  determined  to be  approximately
$105,000,  which  is being  amortized  over  the  term of the  public  relations
agreement.  The expense recognized for the year ended June 30, 1998 was $53,000.
In addition, the Company maybe obligated to issue 100,000 and 300,000 additional
options  based on certain  equity  goals  being  reached by  September  1998 and
December 1998,  respectively.  These options will have exercise  prices of $7.50
and $5.00,  respectively.  All  options  vest over one year and  expire  after 4
years.


                                      F-13
<PAGE>

                          NETWORK EVENT THEATER, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 June 30, 1998

     In January and  February  1998,  the Company sold  1,055,600  shares of its
common  stock in a private  placement  transaction  and realized net proceeds of
approximately $4,500,000. In addition, the Company issued 5,560 shares of common
stock,  as a  commission,  in  connection  with the issuance of a portion of the
common stock issued in February 1998.

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

                                                        1998           1997
                                                      --------       ---------
      Stock options................................  1,281,560         952,560
      Common stock purchase warrants...............  3,243,000       3,105,000

9. Stock Option Plan

     In 1996, the Company adopted a Stock Option Plan (the "1996 Plan") in order
to grant employees  providing  services to the Company  incentive stock options.
The 1996 Plan  allows for the  granting  of options  to  purchase  up to 400,000
shares of the Company's  stock.  In December 1997, the Company  adopted  another
Stock  Option  Plan  (the  "1997  Plan") in order to grant  employees  providing
services to the Company  incentive  stock options.  The 1997 Plan allows for the
granting  of options to purchase up to 450,000  shares of the  Company's  common
stock.  The exercise price of the options granted  pursuant to the 1996 Plan and
the 1997 Plan, (collectively,  the "Option Plans") were at the fair market value
on the date of grant.

     The following table summarizes the Option Plans  transactions for the years
ended June 30, 1998 and 1997:

                                                                      Weighted
                                                                        Average
                                                                       Exercise
                                                           Shares       Price
                                                           ------      --------
Options outstanding at June 30, 1996 ...................   200,000      $3.88
Options granted ........................................   140,000       3.19
Options canceled or expired ............................   (40,000)      2.63
Options exercised ......................................      --         --
                                                           -------      -----
Options outstanding at June 30, 1997 ...................   300,000       3.73
Options granted ........................................   260,000       4.85
Options canceled or expired ............................   (31,000)      5.00
Options exercised ......................................      --         --
                                                           -------      -----
Options outstanding at June 30, 1998 ...................   529,000      $4.39
                                                           =======      =====
Options exercisable at June 30, 1998 ...................   233,333
                                                           =======
Options exercisable at June 30, 1997 ...................   133,333
                                                           =======
Options available for future grant at June 30, 1998 ....   321,000
                                                           =======

     The range of the exercise  prices for options  outstanding at June 30, 1998
was $2.63 to $5.00. The Company applies Accounting  Principles Board Opinion No.
25,  "Accounting for Stock Issued to Employees," and related  interpretations in
accounting  for  the  Plan.  Accordingly,   no  compensation  expense  has  been
recognized for the Option Plans to date. Had compensation cost for the Company's
Plan been determined based upon the fair value at the grant date consistent with
the methodology  prescribed under Financial Accounting Standards Board Statement
No. 123,  "Accounting for Stock-Based  Compensation," the Company's net loss and
loss per share would have been increased by approximately  $317,000, or $.03 per
share and  $232,000,  or $.03 per share for the years  ended  June 30,  1998 and
1997, respectively. The fair value of the options granted during the years ended
June 30, 1998 and 1997 is estimated using the Black-Scholes option-pricing model
with the following assumptions:



                                      F-14
<PAGE>

                          NETWORK EVENT THEATER, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 June 30, 1998

                                                                 June 30
                                                              ---------------
      Assumption                                              1998       1997
      ----------                                              ----       ----
Risk-free interest rate ................................      5.57%      5.91%
Dividend yield .........................................      0%         0%
Volatility factor of the expected market price
   of the Company's common stock .......................      .709       1.016
Average life ...........................................      3 years    3 years

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

     The weighted  average fair value of options  granted during the years ended
June 30, 1998 and 1997 was $2.41 and $2.67,  respectively.  The weighted average
exercise  price of the  exercisable  options  at June  30,  1998 is  $3.93.  The
weighted average exercisable life of the options at June 30, 1998 is 8 years.

10.  Commitments and Contingencies

Leases

     The Company has various  leases for office  space.  Rental  expense for the
years  ended June 30, 1998 and 1997 was  approximately  $771,000  and  $278,000,
respectively.

     The minimum annual rental commitments under noncancellable operating leases
are as follows:

           Year ending June 30:
               1999.................................................. $ 686,000
               2000..................................................   734,000
               2001..................................................   367,000
               2002..................................................    71,000
                                                                     ----------
                                                                     $1,858,000
                                                                     ==========
Litigation

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

11.  401(k) Plan

     During  1997,  the Company  established  a 401(k) Plan (the "Plan") for the
benefit of all eligible  employees.  Eligible  participants  under this Plan are
defined  as all  full-time  employees  with one year of  service.  All  eligible
participants may elect to contribute a portion of their compensation to the Plan
subject  to  Internal  Revenue  Service   limitations.   The  Company  may  make
discretionary  matching contributions to the Plan, subject to Board approval. In
1998 and 1997, the amount of this matching expense was approximately $30,000 and
$20,000, respectively.

12.  Subsequent Event

     In July 1998,  the Company  realized  net  proceeds of  approximately  $4.7
million from the sale of $5,000,000 of 11% Subordinated  Notes (the "Notes") and
375,000  warrants.  The Notes are due in July 2003.  Each  warrant  entitles the
holder to purchase one share of the Company's common stock for $4.125 and expire
in July 2003.

     In connection  with the sale of the Notes and warrants,  the Company issued
150,000  warrants to the placement  agent.  Each warrant  entitles the holder to
purchase one share of the  Company's  common stock for $4.125 and expire in July
2003.


                                      F-15
<PAGE>

                                   SIGNATURES

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

                                               NETWORK EVENT THEATER, INC.

                                                  By: /s/ Harlan D. Peltz
                                                     ---------------------------
                                                         Harlan D. Peltz
                                                     Chief Executive Officer and
                                                        Chairman of the Board

Date:  September 28, 1998

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

      Signature                          Title                       Date
      ---------                          ----                        ----   
                         
/s/ Harlan D. Peltz          Chief Executive Officer and     September 28, 1998
--------------------------      Chairman of the Board
    Harlan D. Peltz             (Principal Executive
                                Officer)

   /s/ Don Leeds             President and Director          September 28, 1998
--------------------------
      Don Leeds             
                            
  /s/ Bruce L. Resnik        Executive Vice President,       September 28, 1998
--------------------------      Chief Financial Officer
     Bruce L. Resnik            and Secretary (Principal
                                Financial Officer and
                                Principal Accounting
                                Officer)
                            
  /s/ Freddie Fields         Director                        September 28, 1998
--------------------------  
     Freddie Fields           
                            
    /s/ Howard Klein         Director                        September 28, 1998
--------------------------  
      Howard Klein            
                            
     /s/ Jan Miller          Director                        September 28, 1998
--------------------------  
       Jan Miller             
                            
    /s/ Metin Negrin         Director                        September 28, 1998
--------------------------  
      Metin Negrin            

 /s/ George Lindemann        Director                        September 28, 1998
--------------------------  
    George Lindemann          
                            

                                      15
<PAGE>

                                  EXHIBIT INDEX

Exhibit No.
-----------

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

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

3.3*   Certificate of Amendment of Certificate  of  Incorporation,  as filed May
       27, 1998.

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

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

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

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

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

10.3   Employment  Agreement between the Company and Don Leeds  (incorporated by
       reference  to Exhibit 1 to the  Company's  Form 10-QSB for the  quarterly
       period ended June 30, 1996).  10.4  Non-Incentive  Stock Option Agreement
       dated June 17, 1996  between the Company and Don Leeds  (incorporated  by
       reference to Exhibit 10.3 to the Company's  Form 10-QSB for the quarterly
       period ended June 30, 1996).

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

<PAGE>

Exhibit No.
-----------

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

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

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

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

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

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

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

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

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

10.15* Stock Purchase  Agreement dated December 23, 1997 between the Company and
       Sirrom Investments, Inc.

10.16* Placement  Manager  Agreement dated December 24, 1997 between the Company
       and Sunrise Securities Corp.

10.17* Form of Stock Purchase Agreement.

10.18* Loan Agreement dated December 30, 1997 between First Union National Bank,
       American  Passage Media,  Inc.,  Beyond the Wall,  Inc. and Campus Voice,
       Inc.

10.19* Unconditional  Guaranty  dated  December  30,  1997  by the  Company  and
       National Campus Media, Inc. in favor of First Union National Bank.

21*    Subsidiaries of the Company.

23*    Consent of Ernst & Young LLP.

27*    Financial Data Schedule.

----------
*    Filed herewith.