<PAGE>

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

                     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, 1999

                                       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 $.0l per share
                                (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. $13,266,000

      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 16, 1999: $276,276,664

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of September 16, 1999: 16,987,421 shares of Common Stock.

      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.

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

                                TABLE OF CONTENTS

Item No.                                                                    Page
--------                                                                    ----

Part I

    1.   Business..........................................................    1
    2.   Properties........................................................   11
    3.   Legal Proceedings.................................................   11
    4.   Submission of Matters to a Vote of Security Holders...............   11

Part II

    5.   Market For Common Equity and Related Stockholder Matters..........   12
    6.   Management's Discussion and Analysis of Financial Condition
           and Results of Operations.......................................   12
    7.   Financial Statements..............................................   15
    8.   Changes In and Disagreements With Accountants on
           Accounting and Financial Disclosure.............................   15

Part III

    9.   Directors, Executive Officers, Promoters and Control Persons;
           Compliance With Section 16(a) of the Exchange Act...............   16
   10.   Executive Compensation............................................   16
   11.   Security Ownership of Certain Beneficial Owners and Management....   16
   12.   Certain Relationships and Related Transactions....................   16
   13.   Exhibits, List and Reports on Form 8-K............................   16

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

Signatures.................................................................   19

<PAGE>

                                     PART I

ITEM 1. BUSINESS

      Network Event Theater, Inc. (together with its subsidiaries, unless the
context otherwise requires, the "Company"), which does business under the name
of YouthStream Media Networks, is an integrated media and marketing services
company, which targets the young adult market, with a specific focus on the
18-24 year-old college and university segment of that market.

      The Company has developed and operates 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 and reaches a geographically dispersed
audience of college students, faculty, administrators and community residents in
each college community. In addition, 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, 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 Web sites, the placement of
posters on general and proprietary bulletin and wallboards on college campuses,
the production of sampling and promotions programs of all types on college
campuses and the distribution of free postcards at selected venues, both on and
off campuses. For example, a motion picture studio that is premiering a major
motion picture through the Network is able to 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.

      Through the Company's minority owned subsidiary, Common Places, LLC
("Common Places"), the Company also is developing, and has recently begun to
operate, mybytes.com, one of the first full-service Internet hubs designed for
and targeting the college market. The mybytes.com Web site is intended to
provide a self-evolving, personalized community with academic tools,
campus-based content and integrated advertising, e-commerce and lifestyle
services. mybytes.com also is intended to provide services, including
application and scholarship information and alumni features, that appeal to
pre-college and post-college audiences. Common Places also owns Pulsefinder.com
(www.pulsefinder.com), an online real-time research and polling service that
tracks and measures the latest trends in the college market. The Company
currently owns approximately 48% of Common Places and has agreed to a merger
that will result in ownership of the Company and Common Places by a newly formed
holding company.

                             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 the July 1999 estimates of projections based on 1990
U.S. Census Bureau data, there are approximately 26.1 million young adults in
the United States today, representing 9.5% 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 approximately 30.0 million by the
year 2010 and represent approximately 10% of the total U.S. 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 1998 Digest of
Education Statistics prepared by the United States Department of Education (the
latest available), the college market as of the Fall of 1996 consisted of more
than 3,500 colleges and universities in the United States with enrollments of
approximately 15 million students, including part-time and full-time
undergraduate and graduate students. The 1998 Digest of Education Statistics
projects that in the year 2009, there will be over 9.8 million young adults
(representing 33% of the young adult population) who will be 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 continue to expand the Network to
selected colleges and universities throughout the United States and to continue
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 41 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 the 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 the 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 it can use at no charge (except for maintenance charges for heavy use)
for educational and other non-commercial and non-competitive purposes, which
can be a cost-effective way to enhance the quality of campus life.

      As of September 9, 1999, the Company had completed theater installations
at 41 colleges and universities with a total enrollment of approximately one
million. The average Network theater has a seating capacity of approximately 450
persons. Installations are as follows:

<TABLE>
      <S>                                                  <C>
      Arizona State University                             San Diego State University
      California State University - Long Beach             SUNY College of Oneonta
      Central Michigan University                          Texas A&M University
      Clemson University                                   University of Alabama-Birmingham
      College of William and Mary                          University of California-Berkeley
      Eastern Michigan University                          University of California-Los Angeles
      Emory University                                     University of Central Florida
      Florida International University                     University of Cincinnati
      Georgia Institute of Technology                      University of Colorado-Boulder
      Georgia Southern University                          University of Houston
      Iowa State University                                University of Idaho
      Kansas State University                              University of Kansas
      Louisiana State University                           University of Minnesota
      Michigan State University                            University of Nevada-Reno
      Minnesota State University-Mankato                   University of North Carolina-Charlotte
      New Mexico State University                          University of North Texas
      New York University                                  University of Rhode Island
      Ohio State University                                University of Rochester
      Oklahoma State University                            Washington State University
      Penn State University                                Western Illinois University
      Rutgers State University - Cook College
</TABLE>

      The geographic dispersion of the Network's equipment currently enables the
Company to offer Network events in most areas of the contiguous United States.


                                       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 a state-of-the-art audio system. The cost of the equipment for
a typical installation ranges from $80,000 to $105,000, 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.

      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 was less than $50,000. At this time, the
Company has commenced upgrading the Network's projectors to digital technology.
The upgrade is scheduled to be completed in the spring of 2000. The cost of this
upgrade will be approximately $2.1 million and will be borne by the Company.

      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 to each
school for approval prior to each school semester or quarter a schedule of
programming dates. 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. During fiscal year 1999, fifteen of the Company's school contracts
came up for renewal and all were renewed for terms ranging from one to five
years. Three schools were dropped from the Network because of problems relating
to the suitability of the venue or similar problems.

Programming

      The Company commenced regular operations of the Network in the 1996-97
academic year and broadcast 11 events in the 1998-1999 academic year. It
anticipates that it will broadcast at least 14 events in the 1999-2000 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 each of the academic years 1997-98 and 1998-99 when feature films were
premiered on the Network. In the case of the three interactive broadcasts during
academic year 1998-99, 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. The Company believes that these interactive presentations
attract strong student interest and are attractive to Network advertisers.

      The Company has entered into a number of licensing and marketing services
agreements with content providers such as Miramax Films, Sony Pictures, Mandalay
Entertainment, Dreamworks SKG, HBO, Don King Productions, Mercury Records,
Warner Brothers, ABC, Polygram Films, and Universal Pictures 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, content providers pay a fee for access to the
Network's audiences.


                                       3
<PAGE>

Marketing and Event Promotion of the Network

      The Company has a field force of three 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 also may earn revenues from ticket sales to selected events,
although it did not charge admission to any events in the 1998-99 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.

Trademarks

      The Company has registered with the United States Patent and Trademark
Office the names "YouthStream," "Network Event Theater" and "NET", as well as
the NET logo. 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 10, 1999, the Company had 56 full-time employees, 15
part-time employees and one intern in connection with the Network. None of these
employees is represented by a collective bargaining unit, and the Company
believes that relations with its employees are good.

                     Media and Marketing Services Companies

      In addition to operating the Network, the Company operates five media and
marketing services companies, which primarily or exclusively serve the young
adult market: American Passage Media, Inc. ("American Passage"), Campus Voice,
Inc. ("Campus Voice"), Beyond the Wall, Inc. ("Beyond the Wall"), Pik:Nik Media,
Inc. ("Pik:Nik") and Trent Graphics, Inc. ("Trent Graphics"). The Company has
integrated the operations and sales forces of these businesses, which enables
each sales person to offer a full range of products and services to the
Company's clients. The Company believes the ability of each sales person to
offer this full range of products and services should improve the sales force's
access to the 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


                                       4
<PAGE>

operations, college campus postering operations (including postering on
distribution racks called AdRaX(R) that contain college newspapers on campus),
high school focused 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. In
fiscal year 1998-1999, American Passage's national advertising customers
included, among others, Procter & Gamble, American Express, AT&T, TIAA/CREF, The
Wall Street Journal, Ernst & Young LLC and United States Marines. 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 2,300
college campuses with enrollment totaling over 12.5 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 2,000 AdRaX(R) units at prime locations at over 269 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 7,300 high
schools nationwide with more than 6.4 million students, representing about 58%
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 1.5 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, which is prepared by
American Passage on a monthly basis for insertion in selected college newspapers
and 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 Nike, Snapple, USA Network, Coca Cola, Buena Vista,
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 3,725 giant wallboards located on 480
college campuses across the United States


                                       5
<PAGE>

reaching approximately 4.0 million college students and generates 100 million
student passers-by each month. It is the oldest and largest national network of
its kind in the United States.

      There are an average of eight 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!, Interview and
ESPN. 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 have used Campus
Voice's services include, among others, Warner Lambert, Procter & Gamble, Sony
Pictures, Microsoft, AT&T, Smith Kline Beecham.

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 Web site 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,
Volkswagen of America, Ford, and DKNY.

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 a company
which distributes free postcards in the city of Chicago, and on June 11, 1999
the Company acquired another company which distributes postcards in Boston,
Washington D.C., Baltimore, Philadelphia and Atlanta. At this time, the Company
believes Pik:Nik to be the largest free postcard distribution network in the
United States with access to over 2,175 free postcard distribution racks. As of
June 30, 1999, Pik:Nik was merged into the Company.

      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, Dallas, Washington, D.C., Boston, Philadelphia,
Baltimore 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. 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.

      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


                                       6
<PAGE>

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 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 sixth and final program is the Malls Program. The Company has
installed 185 racks in 100 shopping malls located in 90 cities in 39 states.
Over 100 million shoppers pass through these malls each year. The mall managers
receive a share of the revenues generated by the sale of postcards for these
racks and mall employees periodically replenish the racks with postcards.

Trent Graphics

      On June 9, 1999, Trent Graphics, Inc. was acquired by the merger into
Trent Acquisition Co., Inc., a newly organized, wholly-owned subsidiary of the
Company, and Trent Acquisition Co., Inc.'s name was then changed to Trent
Graphics, Inc. Trent Graphics is engaged in the business of (a) selling posters
and other products (i) at sales events at junior and four-year college campuses,
high schools and other locations, (ii) at retail stores and (iii) over the
Internet and other media, and (b) selling and custom framing of wall posters (i)
at the wholesale level to other retailers and (ii) at the retail level.

      Trent Graphics is the leading on-campus seller of wall posters to students
at colleges and universities throughout the country. There are 6 million
students enrolled at the schools with which Trent Graphics has contracts. The
annual traffic to Trent Graphics's poster sales exceeds 4 million students, and
Trent Graphics's poster sales generate over 500,000 transactions each year with
an average sale of $15.

Media and Marketing Services Competition

      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.

Trademarks

      The Company has registered the names American Passage, GymBoards, AdRaX,
Campus Voice, Pulsefinder, Beyond the Wall, HotStamp, Trent Graphics 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. 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 10, 1999, the Company had 94 full-time employees, 24
part-time employees, 161 seasonal employees and one intern in connection with
the media and marketing services companies. None of these employees is
represented by a collective bargaining unit, and the Company believes that
relations with its employees are good.


                                       7
<PAGE>

               The Company's On-Line Capabilities and the Internet

      The Company believes that college students and young adults generally are
computer literate and utilize on-line resources, such as e-mail and the
Internet, more frequently 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, the Company, through Common Places, is developing, and has
begun to operate, mybytes.com, one of the first full-service Internet hubs
designed for and targeting the college market.

Common Places

      Overview

      Common Places is dedicated to serving the needs of college students,
administrators and faculty. Through promotion via its offline media channels,
the Company will seek to make mybytes.com the leading online brand of its kind.

      Products And Services

      Common Places is intended to provide college students valuable resources
through its Web site and other student-focused content and services offerings,
including:

      o     Academic Research Directories
      o     University Calendar
      o     Unified Personal Calendar
      o     Instant messaging
      o     Community-building tools
      o     Unified messaging
      o     School guide
      o     Financial aid and scholarship search
      o     Free e-mail for life
      o     Online course support capabilities
      o     Online study forums by major
      o     Online chats with leading professors
      o     E-commerce platform (including the sale of posters printed in the
            Beyond the Wall catalogs and posters sold by Trent Graphics)
      o     Search engine
      o     Student publishing services
      o     Original and third-party content

      Marketing

      Common Places intends to use the Company's multiple off-line properties
with a view to driving users to the mybytes.com Web site. The Company also
intends to use traditional marketing methods and techniques, including a
membership point system, free contests, outbound e-mail communications and press
releases.

      Technology

      The software infrastructure for Common Places' mybytes.com Web site is
custom-built and designed for maximum reliability, flexibility and scalability.
The mybytes.com personalization system, chat tools, event calendar, audio and
video management subsystem, scholarship search technology, unified shopping
basket technology, internal search and dynamic content management and authoring
system are all completely controlled by Common Places.


                                       8
<PAGE>

      Third party vendors provide some key services for mybytes.com, including
Internet-based e-mail, unified messaging, chat tools and Web-based searches.

      Mybytes.com's technological infrastructure is built and maintained for
reliability, security and flexibility, including a load-balanced scalable Web
server architecture. This infrastructure is hosted at an off-site facilitt which
is operated by a commercial web site hosting facility. This facility is equipped
with an uninterruptible power supply. Common Places' operations are dependent on
its ability and that of its hosting facilitiy to protect the hardware systems
against damage from fire, natural disasters, power loss, telecommunications
failure, break-ins, computer viruses and hacker attacks.

      Online Competition

      The market for Internet services and products targeted at college students
is relatively new, intensely competitive and rapidly changing, but is not
dominated by any single Web site. Because mybytes.com is intended to provide a
full-service Internet hub, Common Places' business will compete, directly or
indirectly, with a wide variety of Web site operators, companies that provide
Internet products and services to colleges and universities, companies that
provide software products to the higher education market, general interest
portals that may offer student-related content and services, and Web sites and
services operated by colleges and universities. These include the following:

      o     Student interest Web sites, which offer a broad range of content and
            services for students, such as free e-mail, Web pages, chat groups,
            contests, news, sports and campus issues. Some of these sites
            specialize in a particular area, such as online auctions or discount
            e-commerce. Many of these sites have online partners helping to
            provide content and services. They include www.collegeclub.com,
            sites operated by Student Advantage, www.collegestudent.com,
            www.student.com, and others.

      o     Informational Web Services are Web sites that focus on providing a
            particular service that is of special interest to students, such as
            scholarship searches. Some of these sites are now in the process of
            expanding from their original core expertise to offer a more
            broad-based service similar to the range of services offered by
            mybytes.com. These include: CollegeEdge, FastWeb, XAP and others.

      o     Software products geared towards the higher education market whose
            functionality could be considered competitive to services provided
            through mybytes.com. These include Blackboard, eCollege, and others.

      o     College and university Web sites which may provide services and
            functionality similar to those offered by mybytes.com.

      o     General purpose consumer online services such as AOL and MSN, each
            of which provide access to student-related content and services.

      o     Web search and retrieval services such as AltaVista, Excite,
            Infoseek, Lycos, Yahoo!, and other high-traffic Web sites.

      o     Publishers and distributors of traditional offline media targeted to
            college students, many of which have established or may establish
            Web sites.

      o     Vendors of college student information, merchandise, products and
            services distributed through other means, including retails stores,
            mail and schools.

      Because there are few barriers to entry in many of these areas, Common
Places expects competition will continue to intensify.


                                       9
<PAGE>

      Common Places believes that the principal competitive factors in
attracting and retaining members are:

      o     brand recognition,
      o     quality of the Web site's content and service,
      o     critical mass of members and sponsors,
      o     relationships with universities,
      o     comprehensive geographic coverage,
      o     breadth of offerings, and
      o     cost of service.

      Common Places believes that the principal competitive factor in attracting
and retaining sponsors, merchandisers and content providers is the ability to
offer sufficient incremental revenue from online sales of products and services.
Common Places believes that the principal competitive factors in attracting
advertisers include the demographics of the user base, the number of users of
the mybytes.com Web site, cost of advertising and creative implementation of
advertisement placements across the products and services. There can be no
assurance that mybytes.com will be able to compete favorably with respect to
these factors.

      The Company believes the brand recognition of mybytes.com, together with
the Company's ability to deliver a targeted, demographically-attractive audience
to advertisers and sponsors and the Company's relationships with colleges and
universities, are Common Places' principal competitive advantages. Providers of
Internet tools and services may be acquired by, receive investments from, or
enter into other commercial relationships with larger, well-established and
well-financed companies, such as Microsoft or America Online. Greater
competition resulting from such relationships could have a material adverse
effect on Common Places' business.

      Intellectual Property Rights

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

      Common Places may be subject to claims and legal proceedings from time to
time in the ordinary course of its business, including claims of alleged
infringement of the trademarks and other intellectual property rights of third
parties. Such claims, even if not meritorious, could result in the expenditure
of significant financial and managerial resources. Further, if such claims are
successful, Common Places may be required to change its trademarks, alter its
content and pay financial damages. There can be no assurance that such changes
of trademarks, alteration of content or payment of financial damages will not
adversely affect its business.

      Common Places may be required to obtain licenses from others to refine,
develop, market and deliver new products and services. There can be no assurance
that Common Places will be able to obtain any such license on commercially
reasonable terms or at all or that rights granted pursuant to any licenses will
be valid and enforceable.


                                       10
<PAGE>

      Employees

      As of September 10, 1999, Common Places had 50 full-time employees, 15
interns and 10 temporary employees. Common Places also intends to hire
additional temporary employees and contract service providers as necessary. As
it continues to grow and introduce additional products and services, Common
Places expects to hire additional employees. None of Common Places' employees is
represented by a labor union or is the subject of a collective bargaining
agreement. Common Places believes that relations with its employees are
generally good. Competition for qualified personnel in Common Places' industry
is intense, particularly among sales, online product development and technical
staff. Common Places believes that success will depend in part on its continued
ability to attract, hire and retain qualified personnel.

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, Tempe, Arizona, Stroudsburg,
Pennsylvania, and Falls Church, Virginia. The Company also maintains short term
leases for retail stores which sell posters and related items and which range
from approximately 1,500 square feet to 3,000 in Chicago, IL, Berkley, CA,
Philadelphia, PA, Seattle, WA, Champaign, IL, Ithaca, NY, Pittsburgh, PA. 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 legal proceeding and is not
aware of any contemplated proceeding that may be material.

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

      No matters were submitted to a vote of the Company's security holders
during the quarter ended June 30, 1999.


                                       11
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company's common stock is traded on the Nasdaq National Market
("Nasdaq") 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 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

      Fiscal 1999
          First Quarter.............................        $ 4 3/4      $ 2 3/4
          Second Quarter............................         19 1/3        2 1/2
          Third Quarter.............................         22 3/4       11 1/2
          Fourth Quarter............................         17 1/2       11 1/2

      As of September 16, 1999, there were approximately 107 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 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.

      In August 1999, the Company, through Allen & Company Incorporated
("Allen"), as private placement agent, sold a total of 1,219,512 shares of its
common stock to Seligman Communications and Information Fund, Inc. (731,708
shares), Seligman New Technologies Fund, Inc. (439,024 shares) and Seligman
Investment Opportunities (Master) Fund - NTV Portfolio (48,780 shares) for an
aggregate consideration of $25 million. From that amount, Allen was paid a cash
placement fee of $1.5 million and a warrant to purchase 36,585 shares of common
stock at a purchase price of $23.50 exercisable over a five year period from the
closing date. 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 OPERATION

The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the consolidated financial
statements and related notes thereto. The following discussion contains certain
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed herein. Factors that
could cause or contribute to such differences include, but are not limited to,
the ability to obtain financing, integration of recently completed 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.


                                       12
<PAGE>

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, 1999 ("1999") to the twelve months
ended June 30, 1998 ("1998").

Results of Operations

In 1999, net revenues were $13,266,000 as compared to $11,188,000 in 1998. The
increase of $2,078,000 was primarily due to increased sales in postcard,
gymboard, postering, event marketing, campus wall boards, and theater operations
as well as the full year impact of the On The House acquisition which was
completed in May 1998.

In 1999, selling, general and administrative expenses were $14,005,000 as
compared to $12,953,000 in 1998. The increase of $1,052,000 was primarily due to
an increase of $1,465,000 in the cost of sales and administrative staff in 1999
to support the increase in net revenues offset by $413,000 resulting from a
termination of a consulting agreement during 1998.

In 1999, corporate expenses were $4,510,000 as compared to $3,088,000 in 1998.
The increase of $1,422,000 was primarily due to increased corporate personnel
and related overhead expenses required to support the Company's growth, which
accounted for $882,000 of the increase. The $540,000 remainder of the increase
related to bonuses granted to senior management.

In 1999, depreciation and amortization was $2,186,000 as compared to $1,779,000
in 1998. The increase of $407,000 was primarily due to the purchase of
additional property and equipment of $1,697,000 and an increase in intangible
assets.

In 1999, the impairment loss on equipment was $825,000. The loss was the result
of the determination by management that certain theater and location based media
equipment no longer had remaining economic useful life.

In 1999, total operating expenses were $21,526,000 as compared to $17,820,000 in
1998. The increase of $3,706,000 was primarily due to increased personnel costs
and depreciation expense relating to additional purchases of revenue-
generating assets during the period October 1997 through June 1999, bonuses
granted to senior management, and the determination by management that certain
assets had no remaining economic useful life, offset by a decrease in consulting
fees.

In 1999, equity loss in investment was $51,000 representing the Company's
minority interest share of the loss in Common Places, LLC. Recognition of such
loss was limited to the Company's investment in Common Places, LLC.

In 1999, interest income was $425,000 as compared to $156,000 in 1998. The
increase of $269,000 was due to interest income earned on increased cash
balances from the redemption and exercise of warrants.

In 1999, interest expense was $1,119,000 as compared to $564,000 in 1998. The
increase of $555,000 primarily related to the issuance of $5,000,000 of
subordinated notes in July 1998.

In 1999, the provision for income taxes was $185,000 as compared to $191,000 in
1998.

In 1999, net loss was $9,190,000 as compared to $7,231,000 in 1998. The increase
of $1,959,000 was a result of increased selling, general and administrative
expenses, corporate expenses, depreciation and amortization, and impairment loss
on equipment and interest expense, offset by increased revenues.

Liquidity and Capital Resources

In July 1998, the Company realized net proceeds of approximately $4.8 million
from the sale of $5,000,000 of 11% Subordinated Notes and 375,000 of warrants.

During the period December 1998 through February 1999, the Company realized net
proceeds of approximately $13.2 million from the exercise of publicly traded
warrants and $1,850,000 million from the exercise of underwriter's warrants.

The Company used approximately $7.6 million in operating activities in 1999 as
compared to $4.4 million in 1998. The increase of approximately $3.2 million
represents the decrease in short-term liabilities and the increase in accounts
receivable offset


                                       13
<PAGE>

by depreciation and amortization and impairment loss on equipment. Cash used in
investing activities in 1999 of approximately $5.8 million is composed primarily
of payment for business acquisitions and capital expenditures. Cash provided by
financing activities in 1999 of approximately $18.2 million is primarily
attributable to proceeds from issuance of long-term debt and related warrants
and the proceeds from the exercise of the underwriter's warrants, stock options
and publicly traded warrants.

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

As of June 30, 1999, the Company had approximately $7 million in cash and cash
equivalents. In August 1999, the Company raised $23.5 million in a private sale
of the Company's common stock. The Company believes that such amounts will be
sufficient to fund working capital, including debt service and interest
requirements, at least through the fiscal year ending June 30, 2000. 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, any such issuance would result in dilution to the interests of the
Company's shareholders.

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. If the proposed merger
involving Common Places is consummated, the Company will require additional
funds to finance development of the mybytes.com web site until expected revenues
from that site exceed the costs of development.

Impact of Year 2000

During fiscal year 1998, the Company conducted an extensive review of its
computer systems and operations to identify the areas that could be affected by
the Year 2000 issue. A plan was developed which focused on the Company's
information systems and third-party relationships.

With respect to its own information systems, the Company adopted a five-phase
Year 2000 program consisting of: Phase I - identification of the Company's
systems that may be vulnerable to Year 2000 problems; Phase II - assessment of
items identified in Phase I; Phase III - remediation or replacement of
non-compliant systems and components; Phase IV - testing of systems and
components following remediation; and Phase V - developing contingency plans to
address the most reasonably likely worst case Year 2000 scenarios. The Company
has completed all phases of this program.

With respect to its third-party relationships, the Company reviewed its list of
large suppliers, vendors and service suppliers and is contacting them to assess
their state of Year 2000 readiness. This process is near completion and the
Company has commenced contingency planning to address the most reasonably likely
worst case Year 2000 scenarios with respect to its third-party relationships,
including developing alternate third-party relationships, if necessary.
Potential sources of risk include the inability of printers to print posters,
catalogs and postcards for distribution by the Company and the inability of
college newspapers to accept print advertisements from the Company on behalf of
the Company's clients. In addition, there is the potential risk that the Company
will not be able to broadcast events to its network of theaters on college
campuses.

The results to date indicate that, based on the diversity of the Company's
suppliers and the availability of other suppliers, the Year 2000 issue should
not have a material adverse effect on the Company's financial condition, results
of operations or cash flows. The


                                       14
<PAGE>

Company's costs incurred to date associated with the Year 2000 issue are not
material. The Company estimates that the costs to complete its five phase
program, excluding any costs that may be incurred by the Company as a result of
the failure of any third parties to become Year 2000 compliant, will also not be
material. The Company has or can obtain alternate suppliers in printing,
distribution and satellite broadcasting if, by chance, the Company's normal
supplier cannot provide goods and or services due to Year 2000 difficulties.

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.


                                       15
<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)   On June 24, 1999, the Company filed a report on Form 8-K in
            connection with the acquisitions of Trent Graphics and HelloXpress.

Item 13(a) Exhibits

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

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

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

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

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).


                                       16
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       17
<PAGE>

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

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

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

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

10.22*      Option Agreement dated August 3, 1999 among the Company, New CW,
            Inc., CollegeWeb.com, Inc. and J. Alexander Chriss and Todd M.
            Ragaza.

10.23*      Agreement and Plan of Merger dated August 3 1999 among the Company,
            New CW, Inc., CollegeWeb.com, Inc. and J. Alexander Chriss and Todd
            M. Ragaza.

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

10.25*      Agreement and Plan of Merger dated June 28, 1999 among the Company,
            Common Places, LLC, YouthStream Media Networks, Inc., Nunet, Inc.,
            Nucommon, Inc., Harlan Peltz, Benjamin Bassi, William Townsend and
            Mark Palmer.

10.26*      Restated Certificate of Incorporation of YouthStream Media Networks,
            Inc.

10.27*      Rights Agreement between YouthStream Media Networks, Inc. and the
            Rights Agent (unsigned and undated).

10.28*      YouthStream Media Networks, Inc. 1999 Stock Incentive Plan.

10.29*      Voting Trust Agreement among YouthStream Media Networks, Inc.,
            Benjamin Bassi, William Townsend, Mark Palmer, Harlan Peltz and the
            Voting Trustee.

10.30*      Stockholders Agreement among YouthStream Media Networks, Inc.,
            Benjamin Bassi, William Townsend, Mark Palmer, Harlan Peltz
            individually, Harlan Peltz as voting trustee.

10.31*      Employment Agreement between YouthStream Media Networks, Inc. and
            Benjamin Bassi.

10.32*      Employment Agreement between YouthStream Media Networks, Inc. and
            Harlan Peltz.

21*         Subsidiaries of the Company.

23*         Consent of Ernst & Young LLP.

27*         Financial Data Schedule.

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


                                       18
<PAGE>

                           Network Event Theater, Inc.
                        Consolidated Financial Statements

                                      Index

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

Consolidated Financial Statements:

Consolidated Balance Sheet at June 30, 1999................................  F-3

Consolidated Statements of Operations for the years ended
   June 30, 1999 and 1998..................................................  F-4

Consolidated Statements of Cash Flows for the years ended
   June 30, 1999 and 1998..................................................  F-5

Consolidated Statements of Stockholders' Equity for the years ended
   June 30, 1999 and 1998..................................................  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, 1999, 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, 1999. 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, 1999, and the consolidated results of their
operations and their cash flows for each of the two years in the period ended
June 30, 1999, in conformity with generally accepted accounting principles.


                                                  Ernst & Young LLP

New York, New York
August 30, 1999


                                      F-2
<PAGE>

                           Network Event Theater, Inc.

                           Consolidated Balance Sheet

                                 (In thousands)

                                  June 30, 1999

<TABLE>
<S>                                                                      <C>
Assets
Current assets:
   Cash and cash equivalents                                             $  7,046
   Accounts receivable, net of allowance for doubtful accounts of $158      2,653
   Inventories                                                                852
   Prepaid expenses                                                           691
   Deposits and other current assets                                          263
                                                                         --------
Total current assets                                                       11,505

Property and equipment, net                                                 4,360
Deferred financing costs, net of accumulated amortization of $174             724
Intangible assets, net of accumulated amortization of $1,370               13,663
                                                                         --------
Total assets                                                             $ 30,252
                                                                         ========

Liabilities and stockholders' equity
Current liabilities:
   Accounts payable                                                      $  1,442
   Accrued employee compensation                                              561
   Other accrued expenses                                                   1,048
   Deferred revenues                                                          521
   Current portion of long-term debt                                          857
                                                                         --------
Total current liabilities                                                   4,429

Long-term debt                                                              6,589

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,
       14,897 shares issued and outstanding                                   149
   Additional paid-in capital                                              47,043
   Accumulated deficit                                                    (27,958)
                                                                         --------
Total stockholders' equity                                                 19,234
                                                                         ========
Total liabilities and stockholders' equity                               $ 30,252
                                                                         ========
</TABLE>

                 See notes to consolidated financial statements


                                      F-3
<PAGE>

                           Network Event Theater, Inc.

                      Consolidated Statements of Operations

                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                Year ended June 30,
                                                                  1999        1998
                                                               --------------------
<S>                                                            <C>         <C>
Net revenues                                                   $ 13,266    $ 11,188
Operating expenses:
   Selling, general and administrative expenses                  14,005      12,953
   Corporate expenses                                             4,510       3,088
   Depreciation and amortization                                  2,186       1,779
   Impairment loss on equipment                                     825          --
                                                               --------------------
Total operating expenses                                         21,526      17,820
                                                               --------------------

Loss from operations                                             (8,260)     (6,632)

Equity loss in investment                                           (51)         --
Interest income                                                     425         156
Interest expense                                                 (1,119)       (564)
                                                               --------------------
Loss before provision for income taxes                           (9,005)     (7,040)
Provision for income taxes                                          185         191
                                                               --------------------
Net loss                                                       $ (9,190)   $ (7,231)
                                                               ====================

Net loss per basic and diluted common share                    $  (0.72)   $  (0.69)
                                                               ====================

Weighted average basic and diluted common shares outstanding     12,800      10,508
                                                               ====================
</TABLE>

                 See notes to consolidated financial statements


                                      F-4
<PAGE>

                           Network Event Theater, Inc.
                      Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                         Year Ended June 30
                                                                          1999        1998
                                                                       --------------------
<S>                                                                    <C>         <C>
Cash flows from operating activities
Net loss                                                               $ (9,190)   $ (7,231)
Adjustments to reconcile net loss to net cash used
   in operating activities:
     Provision for bad debts                                                 21          64
     Depreciation and amortization                                        2,186       1,779
     Impairment loss on equipment                                           825          85
     Amortization of deferred financing costs                               174          --
     Amortization of original issue discount on Subordinated Notes           38          --
     Issuance of options for consulting services                             --          53
     Changes in assets and liabilities:
       Increase in accounts receivable                                   (1,096)       (164)
       (Increase) decrease in prepaid expenses                             (298)         45
       Increase in inventory                                                (56)         --
       Increase in deposits and other current assets                        (33)        (61)
       (Decrease) increase in accounts payable                             (265)        372
       Increase in accrued employee compensation                              2         199
       Increase in other accrued expenses                                   276          38
       (Decrease) increase in deferred revenues                            (168)        388
                                                                       --------------------
Net cash used in operating activities                                    (7,584)     (4,433)

Cash flows from investing activities
Capital expenditures                                                     (1,697)     (1,682)
Proceeds from sale of equipment                                              --          64
Notes receivable                                                             --          33
Payment for business acquisitions, net of cash acquired                  (3,782)       (532)
Additions to deferred financing costs                                      (314)         --
                                                                       --------------------
Net cash used in investing activities                                    (5,793)     (2,117)

Cash flows from financing activities
Net proceeds from sale of common stock and exercise of warrants and
   options                                                               15,358       4,581
Net proceeds from issuance of warrants in connection with long-term
   debt                                                                     188          --
Proceeds from long-term debt, net of original issue discount of $188      4,812       5,125
Repayment of long-term debt                                              (2,206)     (5,070)
                                                                       --------------------
Net cash provided by financing activities                                18,152       4,636

Net increase (decrease) in cash and cash equivalents                      4,775      (1,914)
Cash and cash equivalents at beginning of year                            2,271       4,185
                                                                       --------------------
Cash and cash equivalents at end of year                               $  7,046    $  2,271
                                                                       ====================

Supplemental cash flow information
Cash paid for interest                                                 $    871    $    538
                                                                       ====================
Cash paid for income taxes                                             $    148    $    143
                                                                       ====================

Noncash Financing Activities:
Issuance of warrants in connection with long-term debt                 $    552    $     --
                                                                       ====================
Issuance of common stock in connection with acquisition of
   Beyond the Wall                                                     $     33    $     --
                                                                       ====================
Issuance of common stock in connection with debt repayment             $     --    $  2,144
                                                                       ====================
Issuance of common stock in connection with acquisition of
   Trent and HelloXpress                                               $  3,750    $     --
                                                                       ====================
</TABLE>

                 See notes to consolidated financial statements


                                      F-5
<PAGE>

                           Network Event Theater, Inc.

                 Consolidated Statements of Stockholders' Equity

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                  Common Stock           Additional
                                                            -----------------------       Paid-in       Accumulated
                                                               Shares        Amount       Capital         Deficit       Total
                                                            -------------------------------------------------------------------
<S>                                                             <C>        <C>           <C>            <C>            <C>
Balance 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                                        1,061            10         4,511             --          4,521
Issuance of common stock upon exercise of warrants                 12            --            60             --             60
Issuance of options for consulting services                        --            --           105             --            105
Adjustment 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        27,198        (18,768)         8,543
Issuance of warrants in connection with long-term debt             --            --           740             --            740
Issuance of common stock upon exercise of warrants              3,063            31        14,988             --         15,019
Issuance of common stock upon exercise of stock options           221             2           337             --            339
Issuance of common stock in connection with acquisition
   of Beyond the Wall                                               7            --            33             --             33
Issuance of common stock in connection with acquisition
   of Trent                                                       242             3         3,497             --          3,500
Issuance of common stock in connection with acquisition
   of HelloXpress                                                  17            --           250             --            250
Net loss                                                           --            --            --         (9,190)        (9,190)
                                                            -------------------------------------------------------------------
Balances at June 30, 1999                                      14,897      $    149      $ 47,043       $(27,958)      $ 19,234
                                                            ===================================================================
</TABLE>

                 See notes to consolidated financial statements


                                      F-6
<PAGE>

1. Organization and Basis of Presentation

The accompanying consolidated financial statements include the accounts of
Network Event Theater, Inc. ("NET"), which does business under the name of
YouthStream Media Networks, and its wholly-owned subsidiaries Network Event
Theater Development, Inc., American Passage Media, Inc. ("American Passage"),
Campus Voice, Inc. ("Campus Voice"), Beyond the Wall, Inc. ("Beyond the Wall"),
Pik:Nik Media, Inc. ("Pik:Nik") and Trent Graphics, Inc. ("Trent"),
(collectively, the "Company"). In June 1999, Network Event Theater Development,
Inc. and Pik:Nik were merged into NET.

The Company is an integrated media and marketing services company, which targets
the young adult market, with a specific focus on the 18 to 24 year-old college
and university segment of that market. The Company owns and operates a
proprietary national network of theaters on college campuses (the "Network")
that 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. The
Company operates in one industry segment, which provides media and marketing
services to advertisers who want to reach young adults.

2. Significant Accounting Policies

Principles of Consolidation

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

Cash Equivalents

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

Inventories

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

Deferred Financing Costs

Deferred financing costs are being amortized over the term of the related debt.

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.

In accordance with FASB Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets to be Disposed Of", the Company records impairment losses on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amount of those assets.
During 1999, events and circumstances indicated that certain Network theater
equipment and location-based media equipment were impaired. As such, the Company
wrote down the value of such assets by approximately $825,000 to their fair
value. Fair value was based on estimated future undiscounted cash flows to be
generated by the aforementioned assets.

                                      F-7
<PAGE>

Intangible Assets

Intangible assets represent acquisition costs in excess of the fair value of
businesses acquired and a covenant not-to-compete which are amortized on the
straight-line basis principally over 5 to 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 amortized
over the remainder of such goodwill's useful life.

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, 1999 and 1998 was approximately $459,000 and $529,000,
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.

Net Loss Per Share

The Company calculates net loss per share as required by SFAS No. 128, "Earnings
per Share". Basic earnings per share excludes any dilution for common stock
equivalents and is computed on the basis of net loss divided by the weighted
average number of common shares outstanding during the 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 effect would
be antidilutive.

Stock-Based Compensation

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

                                      F-8
<PAGE>

based compensation in accordance with APB Opinion No. 25 and has elected the pro
forma disclosure alternative of SFAS No. 123 (see Note 9).

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 accounts receivable. 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. 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.

Recent Pronouncements

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", the effective date of which has been
deferred for all fiscal quarters of fiscal years beginning after June 15, 2000
by FASB No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of Effective Date of FASB Statement No. 133". SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including derivative instruments embedded in other contracts and for hedging
activities. This statement is not expected to have a significant impact on the
Company's financial position or results of operations.

3. Acquisitions

On The House

In May 1998, the Company, through its Pik:Nik subsidiary, 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, which conditions were subsequently not met.
The aggregate purchase price of $200,000, including acquisition costs, was
recorded as excess of cost over net assets acquired.

Trent

In June, 1999, the Company acquired Trent Graphics, Inc. ("Trent") pursuant to a
Merger Agreement (the "Merger Agreement"). Trent sells posters and other
products at sales events at junior and four-year colleges, high schools, at
retail stores and other locations and over the Internet. The purchase price
consisted of $3.5 million in cash and 242,003 shares of the Company's common
stock valued at $3.5 million, or $14.46 per share, the then current market
price. In addition, if Trent's EBITDA (as defined in the Merger Agreement) for
the two years ending June 30, 2001 exceeds certain targets, the Company will pay
to the former Trent stockholders up to an additional $600,000 in cash and
additional shares of the Company's common stock valued at $600,000. The
aggregate purchase price of $7,045,000, including acquisition costs, was
recorded as excess of cost over net assets acquired.


                                      F-9
<PAGE>

HelloXpress

In June 1999, the Company through its Pik:Nik subsidiary acquired certain
assets and liabilities of HelloXpress USA, Inc. ("HelloXpress"), an entity that
produces, markets and distributes free postcards containing advertising images
in the Washington DC, Philadelphia, Boston, Baltimore and Atlanta areas. The
purchase price consisted of $300,000 in cash, 17,242 shares of the Company's
common stock valued at $250,000, or $14.50 per share, the then current market
price, and the foregiveness of amounts due to the Company of $125,000. In
addition, former stockholders of HelloXpress may receive an additional $50,000
in cash and shares of the Company's common stock valued at $200,000 in September
2000, subject to certain conditions contained in the purchase agreement. The
aggregate purchase price of $691,000, including acquisition costs, was recorded
as excess of cost over net assets acquired and a portion was allocated to a
covenant not-to-compete.

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

The following unaudited pro forma information is presented as if the Company had
completed the acquisitions as of July 1, 1998 and 1997, respectively:

<TABLE>
<CAPTION>
                                                                     Year ended June 30
                                                                    1999           1998
                                                               ----------------------------
<S>                                                            <C>             <C>
      Net revenue                                              $ 20,739,000    $ 18,153,000
      Net loss                                                   (9,429,000)     (7,698,000)
      Net loss per basic and diluted common share                      (.72)           (.71)
      Weighted average common shares outstanding - basic and
         diluted                                                 13,046,000      10,767,000
</TABLE>

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, 1999 consists of the following (in thousands):

<TABLE>
<S>                                                                             <C>
      Note Payable to Bank (A)                                                  $2,406
      Subordinated Notes - Private Placement (B)                                 5,000
      Other                                                                        190
                                                                                ------
                                                                                 7,596
      Less unamortized original issue discount attributed to subordinated
      Notes                                                                        150
                                                                                ------
                                                                                 7,446
      Less current portion                                                         857
                                                                                ======
                                                                                $6,589
                                                                                ======
</TABLE>

(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 February 2, 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.

                                      F-10
<PAGE>

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, 1999 was $2,056,000. 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 2000. The Company's
estimated credit exposure related to the interest rate agreement, as of June 30,
1999, is approximately $20,000. 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, 1999 was approximately $2,076,000, 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 by July 30, 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. Borrowing 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, 1999, the
Borrowers have not borrowed any amounts under this facility. The line of credit
expired in July 1999.

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

At June 30, 1999, the aggregate amounts of long-term debt, net of amortized
original issue discount, due during the next five years are as follows (in
thousands):

      Year ending June 30:
        2000                                                            $   857
        2001                                                                667
        2002                                                                667
        2003                                                                405
        2004                                                              5,000
                                                                        -------
                                                                        $ 7,596
                                                                        =======

5. Property and Equipment

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

      Network theater equipment                                         $ 3,524
      Location-based media equipment                                      2,715
      Furniture and office equipment                                      1,751
      Leasehold improvements                                                130
                                                                        -------
                                                                          8,120
      Less accumulated amortization and depreciation                     (3,760)
                                                                        -------
                                                                        $ 4,360
                                                                        =======

                                      F-11
<PAGE>

6. Income Taxes

At June 30, 1999, the Company had a net operating loss carry forward for income
tax purposes of approximately $23,400,000 that expires from 2013 through 2019.
For financial reporting purposes, a valuation allowance of $9,224,000 has been
recognized to offset the deferred tax asset principally related to this carry
forward. The net operating loss carry forward 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. The valuation allownace increased by approximately
$3,590,000 for the year ended June 30, 1999.

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, 1999 are as follows:

      Deferred tax assets:
        Net operating loss carryforwards                            $ 9,347,000
        Other                                                          (123,000)
                                                                    -----------
      Total Deferred tax assets                                       9,224,000
      Valuation allowance                                             9,224,000
                                                                    -----------
      Net deferred tax asset                                        $        --
                                                                    ===========

No federal tax provision has been provided for the years ended June 30, 1999 and
1998 due to the significant losses incurred to date. A current state tax
provision has been provided for the years ended June 30, 1999 and 1998 in the
amount of $185,000 and $191,000 respectively. These taxes are primarily based on
net revenues and net assets.

7. Stockholders' Equity

The Company issued 2,645,000 warrants at the time of its initial public offering
in April 1996. The warrants entitled the registered holder to purchase one share
of the Company's common stock for $5.00, subject to adjustment in certain
circumstances, at any time until April 2, 2001. In December 1997, the Company
issued 12,000 shares of common stock upon exercise of warrants at $5.00 per
share or $60,000. In January 1999, the remaining 2,633,000 warrants were
exercised resulting in net proceeds to the Company of approximately $13,200,000.

In connection with the initial public offering, the Company also issued 230,000
warrants to the underwriter. Each warrant entitled the holder to purchase one
share of the Company's common stock for $8.25 and an additional warrant for
$.165 each. Each additional warrant entitled the holder to purchase one share of
the Company's common stock for $8.25. All warrants expire in April 2002.
Beginning in January through June 30, 1999, 211,041 warrants and 184,339
additional warrants were exercised resulting in net proceeds to the Company of
approximately $1,850,000. Approximately 173,000 of these warrants were exercised
in cashless transactions.

In June 1997, the Company sold an aggregate of 1,015,873 shares of its common
stock and realized net proceeds of $3.8 million. 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 December 2000. In January and February
1999, the Company issued 112,562 shares of its common stock in exchange for
these warrants in cashless transactions.

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 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 $105,000, which is
being amortized over the term of the public relations agreement. Amortization
expense for the years ended June 30, 1999 and 1998 was $52,000 and $53,000,
respectively. In January 1999, the Company issued 74,193 shares of its common
stock in exchange for these options in a cashless transaction. As a result of
reaching certain milestones in the price of its common stock in  December 1998,
the Company granted an

                                      F-12
<PAGE>

additional 300,000 options to purchase shares of the Company's common stock at
an exercise price of $5.00 per share to the same public relations firm. All
options vest over one year from date of grant and expire four years from date of
grant.

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:

                                                         1999             1998
                                                      ---------        ---------
Stock options                                         1,549,000        1,128,560
Common stock purchase warrants                          590,000        3,243,000

8. 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. Under the terms of the agreement, no such royalties were due in
fiscal 1999 or 1998.

F&H received an annual fee for its services. For the year ended June 30, 1998
such fees totaled $275,000. There were no such fees for the year ended June 30,
1999.

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
during 1998. The annual overhead fee for the year ended June 30, 1998 of
$138,000 was fully expensed. There were no such fees for the year ended June 30,
1999. 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. During the year ended June
30, 1999, 92,000 options were exercised.

9. Stock Option Plans

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 fair market value on the date of
grant. Options generally vest over 3 years.

The following table summarizes the Option Plans' transactions for the years
ended June 30, 1999 and 1998:


                                      F-13
<PAGE>

                                                                        Weighted
                                                                        Average
                                                                        Exercise
                                                            Shares       Price
                                                           -------------------

Options outstanding at June 30, 1997                        300,000     $ 3.73
Options granted                                             260,000       4.85
Options canceled                                            (31,000)      5.00
                                                           -------------------
Options outstanding at June 30, 1998                        529,000       4.39
Options granted                                             370,200      11.44
Options canceled                                            (55,833)      6.10
Options exercised                                           (55,000)      3.53
                                                           -------------------
Options outstanding at June30, 1999                         788,367     $ 7.64
                                                           ===================

Options exercisable at June 30, 1999                        349,665
                                                           ========
Options exercisable at June 30, 1998                        233,333
                                                           ========
Options available for future grant at June 30, 1999           6,633
                                                           ========

Information regarding the options outstanding under the Option Plans at June 30,
1999 is as follows:

<TABLE>
<CAPTION>
                      Number of
                       Options
 Exercise Price        Currently    Weighted-Average  Weighted-Average      Number       Weighted-Average
     Range            Outstanding   Exercise Price    Contractual Life    Exercisable    Exercise Price
---------------------------------------------------------------------------------------------------------
<S>                     <C>              <C>              <C>               <C>               <C>
    $3.00-$4.38         302,000          $4.00            7.4 years         273,333           $4.06
    $4.69-$5.00         175,667          $4.77            8.4 years          76,332           $4.81
  $11.50-$13.06         310,700         $12.80            9.8 years              --           $  --
                     ----------                                           ---------
                        788,367                                             349,665
                     ==========                                           =========
</TABLE>

Pro forma information regarding net loss per share is required by SFAS 123, and
has been determined as if the Company had accounted for its employee stock
options under the fair value method of SFAS 123. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions for June 30, 1999 and
1998:

                                                                   June 30
                   Assumption                                 1999        1998
--------------------------------------------------------------------------------

Risk-free interest rate                                        5.08%       5.57%
Dividend yield                                                    0%          0%
Volatility factor of the expected market price
   of the Company's common stock                              1.090        .709
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


                                      F-14
<PAGE>

input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of it employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the vesting period of the options. Had compensation
cost for the Company's Plans been determined based upon the fair value at the
grant date for awards under the Plans 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 $321,000, or $.03 per share and $317,000, or
$.03 per share for the years ended June 30, 1999 and 1998, respectively.

The weighted average fair value of options granted during the years ended June
30, 1999 and 1998 was $8.06 and $2.41, respectively.

10. Commitments and Contingencies

Leases

The Company has various leases for office space. Rental expense for the years
ended June 30, 1999 and 1998 was approximately $669,000 and $771,000,
respectively.

The minimum annual rental commitments under noncancellable operating leases are
as follows (in thousands):

      Year ending June 30:
         2000                                                       $   664
         2001                                                           381
         2002                                                           254
         2003                                                            78
         2004                                                            46
                                                                    -------
                                                                    $ 1,423
                                                                    =======

Litigation

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

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 of Directors approval. In
1999 and 1998, the amount of this matching expense was approximately $41,000
and $30,000, respectively.

                                      F-15
<PAGE>

12. Investment

In November 1998, the Company acquired 5,000,000 common units in Common Places,
LLC ("Common Places") in exchange for providing media and marketing services
having an aggregate value of $15,000,000 over a four year period commencing upon
the initial public launch campaign promoting Common Place's business, but not
later than August 31, 1999. Common Places was formed to develop and market an
Internet hub to college students. Twenty-five percent of the common units
initially acquired by the Company, or 1,250,000 common units, are not subject to
vesting and no additional performance of services by the Company is necessary
with respect to these units. The remaining seventy-five percent, or 3,750,000
common units, vests over a four year period based on the value of media and
marketing services the Company actually provides.

The Company did not assign a value to the initial 1,250,000 common units that
vested immediately because of the start-up nature of Common Place's Business and
the related uncertainty surrounding it. It is the Company's intention to record
an investment proportionate to the cost of media and marketing services provided
on an on-going basis related to its $15,000,000, four year commitment. This
investment in Common Places is accounted for using the equity method, under
which the Company's share of earnings or losses of Common Places is reflected in
income as earned and dividends are credited against the investment when
received.

For the year ended June 30, 1999, the Company provided $51,000 in media and
marketing services to Common Places. The Company's share of Common Place's
losses for the year ended June 30, 1999 was approximately $2,300,000. The
Company has limited the recognition of such losses in its statement of
operations to $51,000 because it is not required to fund Common Place's losses
or to make additional capital contributions.

On June 28, 1999, the Company entered into a definitive merger agreement,
subject to stockholder approval, to merge the Company and Common Places into a
newly formed holding company that will be called YouthStream Media Networks,
Inc. ("YouthStream"). Under the terms of that agreement, YouthStream will
exchange each of its shares for each of the Company's shares and 0.89 of its
shares for each common unit of Common Places. Common Places unitholders,
excluding the Company, will receive approximately 4.8 million shares of
YouthStream's common stock. Based on the June 28, 1999 price of the Company's
common stock, the excess of cost over fair value of net assets acquired is
estimated to be approximately $70 million.

13. Subsequent Events

In August 1999, the Company sold 1,219,521 shares of its common stock for $25.0
million in a private placement. The Company incurred approximately $1,500,000 of
fees and related expenses in this transaction.

In August 1999, the Company acquired CollegeWeb.com, Inc. ("CollegeWeb")
pursuant to a merger agreement among the Company, a wholly-owned subsidiary of
the Company and CollegeWeb. CollegeWeb owns and maintains a Web site aimed at
college students which, among other things, permits students to communicate with
other students using video cameras attached to their computers. The purchase
price consisted of 108,971 shares of the Company's common stock, valued at $2.5
million, or approximately $22.94 per share, the then current market price.


                                      F-16
<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 27, 1999

      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 27, 1999
-----------------------------     Chairman of the Board
      Harlan D. Peltz             (Principal Executive
                                  Officer)


      /s/ DON LEEDS             President and Director        September 27, 1999
-----------------------------
        Don Leeds


    /s/ BRUCE L. RESNIK         Executive Vice President,     September 27, 1999
-----------------------------     Chief Financial Officer
      Bruce L. Resnik             and Secretary
                                  (Principal Financial
                                  Officer and Principal
                                  Accounting Officer)


     /s/ HOWARD KLEIN           Director                      September 27, 1999
-----------------------------
        Howard Klein


     /s/ METIN NEGRIN           Director                      September 27, 1999
-----------------------------
        Metin Negrin


    /s/ GEORGE LINDEMANN        Director                      September 27, 1999
-----------------------------
      George Lindemann


                                      19