STUDENT ADVANTAGE INC, 10-K, 2000-03-30

STUDENT ADVANTAGE INC
10-K, 2000-03-30
MEMBERSHIP ORGANIZATIONS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K
(MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 0-26074

STUDENT ADVANTAGE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 04-3263743
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
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280 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
(Address of principal executive offices, including zip code)

(617) 912-2000
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the Common Stock held by non-affiliates of
the Registrant on February 29, 2000, based upon the closing sale price of the
Common Stock on the Nasdaq National Market on that date as reported in The Wall
Street Journal, was $15.50. On that date, the number of shares of Common Stock
outstanding was 35,563,155 and no shares were held as treasury shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for its Annual
Meeting of Stockholders for the year ended December 31, 1999, which will be
filed with the Securities and Exchange Commission within 120 days after the end
of the Company's fiscal year, are incorporated by reference into Part III
hereof.

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STUDENT ADVANTAGE, INC.
FORM 10-K

TABLE OF CONTENTS

PART I

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Item 1. Business.................................................... 1
Item 2. Properties.................................................. 13
Item 3. Legal Proceedings........................................... 13
Item 4. Submission of Matters to a Vote of Securities Holders....... 13
PART II
Item 5. Market for the Registrant's Common Equity and Related 15
Stockholder Matters.........................................
Item 6. Selected Consolidated Financial Data........................ 15
Item 7. Management's Discussion and Analysis of Financial Condition 17
and Results of Operations...................................
Item 7A. Quantitative and Qualitative Disclosures About Market 33
Risk........................................................
Item 8. Financial Statements and Supplementary Data................. 34
Item 9. Changes in and Disagreements with Accountants on Accounting 54
and Financial Disclosure....................................
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 54
Item 11. Executive Compensation...................................... 54
Item 12. Security Ownership of Certain Beneficial Owners and 54
Management..................................................
Item 13. Certain Relationships and Related Transactions.............. 54
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 55
8-K.........................................................
56
Signatures..................................................
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PART I
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report on Form 10-K
contains forward-looking statements. Any statements contained herein (including
without limitation statements to the effect that the Company or its management
"believes," "expects," "anticipates," "plans," and similar expressions) that
relate to future events or conditions should be considered forward-looking
statements. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
reflected in these forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Factors That May Affect Future Results." Discussions
containing forward looking statements may be found in the materials set forth
under "Item 1. Business", "Item 2. Facilities" and incorporated by reference in
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations." Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's opinions only as of the
date hereof. The Company undertakes no obligation to revise or publicly release
the results of any revision to these forward-looking statements, whether as a
result of new information, future events or otherwise.

ITEM 1. BUSINESS

GENERAL

Student Advantage, Inc. is dedicated to serving the needs of college
students through our leading membership program and our network of web sites,
including studentadvantage.com, FANSonly.com and UWIRE.com. With our national
fee-based membership program, we have created a community of over 1,300,000
student members who receive benefits including ongoing discounts on products and
services offered by over 50 national sponsors and 15,000 participating locations
in 125 local markets. Discounts are made available to students both through our
studentadvantage.com web site and at sponsors' retail locations. Student
Advantage offers the only ongoing discount available to college students for the
products and services of many of our sponsors. We seek to enhance our brand
online and provide additional services to our members, sponsors and colleges
with the objective of becoming the leading online network of web sites for
students. Our network of web sites currently offers content, community and
e-commerce targeted to college students.

Student Advantage began operations in 1992 as a sole proprietorship,
converted to a general partnership in 1995, converted to a Delaware limited
liability company in 1996, and became a Delaware corporation in 1998. Student
Advantage's principal executive offices are located at 280 Summer Street,
Boston, Massachusetts 02210, and its telephone number is (617) 912-2000.

On April 1, 1999, Student Advantage completed its acquisitions of The
Travel Holding Group, LLC and The Campus Agency, LLC. The Campus Agency provides
media planning and strategy consulting services to the U.S. student travel
market. The Travel Holding Group is a reseller of Eurail passes. We acquired
substantially all of the assets of The Campus Agency and The Travel Holding
Group for a promissory note in the amount of $330,000.

On June 11, 1999, we acquired Transaction Service Providers, Inc., a
provider of ID card services to college students and local merchants, in a
transaction accounted for as a pooling of interests. Because the historical
results of operations and financial position of Transaction Services Providers
were immaterial to Student Advantage, prior period financial statements have not
been restated and Transaction Service Providers' results of operations have been
included in our results as of April 1, 1999. In connection with the acquisition,
we issued 195,000 shares of common stock to the stockholders of Transaction
Service Providers.

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On June 18, 1999, we acquired University Netcasting, Inc., an operator of
official athletic web sites for colleges, universities and college sports
associations, in a transaction accounted for as a pooling of interests. In
connection with the acquisition, we issued 2,425,610 shares of our common stock
and options to purchase a total of 66,634 shares of our common stock. The
historical consolidated financial statements of Student Advantage prior to the
acquisition have been restated to reflect the financial position, results of
operations and cash flows of University Netcasting.

On June 23, 1999, we completed an initial public offering of 6,000,000
shares of our common stock resulting in proceeds to us of approximately $44.6
million. On July 21, 1999, we issued an additional 900,000 shares of common
stock as a result of the full exercise of the underwriters' over-allotment
option and received additional proceeds of approximately $6.7 million.

On November 12, 1999, Student Advantage made an equity investment in
edu.com, Inc., a privately held e-commerce company. We paid approximately $4.3
million in cash for approximately 922,000 shares of Series B preferred stock of
edu.com. Additionally, we entered into a two-year marketing and distribution
agreement with edu.com. The agreement provides, among other things, that edu.com
will become Student Advantage's exclusive technology e-commerce partner and
rewards program provider, that the parties will pursue certain promotional
initiatives on each other's behalf, and that edu.com will make certain payments
to Student Advantage, including $2.0 million payable over the term of the
agreement. On January 14, 2000, we made an additional investment of
approximately $1.0 million in cash for approximately 217,000 shares of series B
preferred stock of edu.com.

"Student Advantage", "U-WIRE", "FANSonly", "Rail Connection", "Campus
Direct", "Student Advantage Cash" and "Voice FX" are trademarks and service
marks of Student Advantage. All other trademarks, service marks or trade names
referred to in this prospectus are the property of their respective owners.

INDUSTRY BACKGROUND

College students represent a large audience with needs and interests that
are specific to their group. These students are exposed, often for the first
time, to lifestyle decisions and other challenges unique to the college
experience. With so many new experiences to manage, these students seek
information and guidance from a trusted resource able to assist them in matters
such as:

- purchasing and budgeting decisions,

- selecting a major or a career, or finding a job,

- conducting academic research,

- making lifestyle and extracurricular decisions,

- finding economical travel arrangements for breaks or holidays, and

- understanding financial aid alternatives.

To meet the needs of this audience, businesses are offering an increasing
variety of products and services designed to capture their interest. College
students represent an attractive market opportunity for businesses because of
their significant spending power and their tendency to retain brand loyalties
after graduation.

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According to Student Monitor LLC, a market research company, total discretionary
spending by college students in the 1997-1998 academic year exceeded $105
billion. In the United States, there are over 15 million full-time and part-time
undergraduate and graduate students at more than 3,500 university and college
campuses. The college student population is also expected to grow as there are
currently 40 million children and young adults from ages 10 to 19.

Businesses have recognized the importance of college students and have
dedicated significant advertising and marketing expenditures towards this group.
However, college students have been difficult to reach in a targeted fashion
because:

- they are transient, frequently changing their addresses,

- the college student population has significant turnover,

- colleges are increasingly seeking to limit direct marketing to students
on campus, and

- few national advertising vehicles are directed toward the college student
population.

The internet has emerged as an attractive medium for advertisers because it
offers a level of targetability, flexibility, interactivity and measureability
not available in traditional media. College students are active users of the
internet, highly computer literate and active in e-commerce. According to
Student Monitor, 90% of students use the internet and 52% of these students use
the internet at least daily. Student Monitor estimates that in 1998, 21% of
students made online purchases representing $890 million in e-commerce.
According to Jupiter Communications, students will spend close to $2.6 billion
through e-commerce by the year 2002.

Student Advantage believes that businesses are seeking a nationally-focused
vehicle for targeting the attractive college demographic. Many businesses that
have tried to target college students have been unsuccessful, due to the
inherent difficulties in reaching this group. Marketing organizations seeking to
help businesses reach this market have had only limited success because they are
either restricted in their geographic scope or are not able to offer a wide
range of services and channels to reach students.

Furthermore, Student Advantage believes that while the internet creates an
opportunity to reach targeted audiences, it has not been used effectively to
target college students. The major internet navigational portal sites are
generally designed to appeal to a broad audience. These portals do not focus on
the issues that are relevant to college students, such as financial and
budgeting assistance, economical travel, lifestyle decisions and careers.
Student Advantage believes that there is a need for a comprehensive student
destination focused on the specific requirements of students for information,
guidance, commerce and other services.

THE STUDENT ADVANTAGE SOLUTION

Student Advantage is a leading resource and trusted advocate dedicated to
serving the needs of college students both online and offline. As a result, we
are positioned to serve as a point of access to this market. Through our
national membership program and our network of web sites, we have created a
community of over 1,300,000 college student members who receive benefits
including ongoing discounts on products and services offered by over 50 national
sponsors and 15,000 participating locations in 125 local markets.

Student Advantage has created a comprehensive online destination for
college students, studentadvantage.com, as well as additional online content
destinations focused on addressing specific needs of college students, including
the FANSonly official college and university athletic sites and the
U-WIRE college and university newspaper site.

College students can join the Student Advantage membership program:

- by obtaining, free of charge subject to credit approval by AT&T, a
co-branded card that serves as both a Student Advantage membership
identification card and an AT&T calling card;

- through programs under which certain universities, colleges or university
organizations or other sponsors purchase memberships in bulk for
distribution free of charge to their students; or

- by paying an annual membership fee of $20.

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While our primary constituency is our student members, we also enable
businesses to reach the student market and enable colleges and universities to
provide a highly useful resource to students.

Benefits to Students. Through our network of web sites, including
studentadvantage.com, we have created an attractive online destination for
students. Our web sites provide content, community and e-commerce focused on
addressing the needs of college students. Our web sites offer services and
information targeted to college students, including discount purchasing, travel
alternatives, college sporting news, career and job searches, lifestyle and
extracurricular decisions and financial aid information. Our web sites:

- enable access to approximately 500 college and university newspapers,

- offer an e-commerce marketplace,

- provide online bulletin boards, and

- include a searchable directory of sponsors that offer discounts for
Student Advantage members.

The Student Advantage Membership Program provides college students with
ongoing discounts on products and services from national sponsors including
Amtrak, Foot Locker, Greyhound, Staples, Tower Records, textbooks.com and Barnes
& Noble College Bookstores. The membership program also enables students to
receive discounts for products and services in 125 local markets.

Student Advantage members also receive a subscription to SAM, Student
Advantage Magazine. SAM includes lifestyle and practical content for students
and updates on new discounts available to Student Advantage members.

Benefits to Sponsors. We provide a platform for our sponsors to market
their products and services to a large, demographically attractive market.
Student Advantage appeals to sponsors and advertisers because it combines:

- a large and attractive demographic group,

- database marketing capabilities,

- a trusted brand,

- program usage tracking,

- quality online and offline content, and

- community interaction.

By maintaining contact with students throughout their college experience
and by establishing relationships with universities, we also benefit businesses
by allowing targeted and continued access for advertising and marketing efforts.
In addition, businesses that offer products and services through Student
Advantage benefit by being associated with the Student Advantage brand.

Sponsors also benefit from our direct marketing knowledge and the expertise
of our management team in designing and implementing effective marketing
techniques to reach college students. AT&T, for example, utilizes Student
Advantage for a variety of marketing programs, primarily to increase the number
of students carrying AT&T calling cards.

We maintain ten regional offices throughout the United States in order to
more effectively reach students and provide services in local markets. These
offices, which are managed by our headquarters in Boston, provide us with a
broad geographical presence and enable us to implement effective nationwide
marketing programs.

Benefits to Colleges and Universities. In partnership with Student
Advantage, colleges and universities can generate goodwill with students and
help reduce the cost of student life by making the Student Advantage membership
program readily available to students. Colleges, universities and university
organizations can endorse the membership program, co-market with us and share in
associated revenues. Schools can also purchase memberships in bulk and offer
them to their students free of charge.

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Colleges and universities are seeking to enhance their service offerings to
students and obtain additional revenue streams. Through growth of our existing
product and service offerings and through our recent acquisitions of University
Netcasting, Transaction Service Providers and Voice FX (Campus Direct), Student
Advantage is able to provide a college or university with revenue opportunities
and student services, including:

- operation of a college, university or college sport association's
official athletic web site, including content, community and e-commerce
offerings,

- management of a college's or university's card programs, and

- technology solutions that enable students and alumni to access or request
academic information online and by telephone from university registrars,
including grades, financial aid status and transcripts.

STRATEGY

Our objective is to be the leading online and offline resource for college
students. We intend to broaden and deepen our relationship with students by
serving the needs of our three key constituencies -- students, businesses and
schools. The key elements of our strategy include the following:

Strengthen Online Destination for Students. We believe that our existing
base of over 1,300,000 members provides a platform for building the leading
online destination for students. Our goal is to establish our network of web
sites, as the primary vehicle for delivery of products and services to students.
We believe that the internet is ideally suited for providing products and
services and is a natural extension of our current business. Our web sites
currently offer content, community and e-commerce services targeted specifically
to college students. The web sites also allow students to enroll in our
membership program, receive customer service and search our directory of
national and local sponsors that offer discounts. We intend to enhance our
online offerings by making additional content available and by expanding our
e-commerce marketplace with additional sponsors.

Continue to Build Brand. We believe that building our brand is critical to
attracting and expanding our membership and internet user base. Our market
leadership position has been driven by our membership program and by partnering
with leading national and local sponsors and universities. We believe that
aggressive brand-building will become increasingly important to sustain our
leadership position. We have started to allocate some of our branding
expenditures toward online branding through partnerships and distribution
agreements with leading internet-based companies and strategic alliances with
leading advertisers. We will also continue to enhance our offline branding both
directly and through co-marketing arrangements with our sponsors. Student
Advantage believes that it can build online brand awareness and attract traffic
by utilizing the reach of its student membership base.

Aggressively Grow Membership. We intend to continue to grow our membership
through a variety of initiatives including:

- increasing the rate of new memberships through our web site by promoting
online membership sales and by increasing the number of e-commerce
sponsors to attract web site visitors,

- increasing our number of corporate sponsors,

- expanding our on-campus tabling and marketing services,

- providing members-only premium services on our web site by introducing
new content and services and transitioning portions of our existing
services and content to members-only status,

- offering our program to high school students and college graduates, and

- selling memberships in bulk either through corporate sponsorships or
directly to universities.

Enhance Relationships with Students, Businesses and Schools. We intend to
continue to enhance our value to students by offering new products and services,
including online offerings for content, community and e-commerce. In addition to
increasing the number of national and local sponsors, Student Advantage will
provide additional services to sponsors, such as visitor tracking and membership
data which will allow Student Advantage to better target advertising, make
recommendations and provide for a more personalized and

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engaging experience. Student Advantage will continue to establish and strengthen
its relationships with colleges and universities by continuing to provide
marketing services and by enabling schools to outsource certain online services.

Continue to Pursue Strategic Acquisitions and Alliances. Since inception,
we have acquired and integrated ten complementary businesses in order to expand
and strengthen our offerings to students. We plan to continue to acquire
companies, make equity investments or enter into alliances that offer
opportunities to increase our online traffic and obtain new technologies.

PRODUCTS AND SERVICES

We provide college students with discounts on a broad range of products and
services through our Student Advantage membership program, as well as valuable
resources through our web sites and other student-focused content and services
offerings. We also offer marketing services to businesses seeking to effectively
communicate with the college student population.

Student Advantage Membership Program

Our membership program provides valuable savings opportunities, services
and information to college students. As of December 31, 1999, over 1,300,000
students at over 3,000 colleges and universities were members of the Student
Advantage Membership Program. Members typically subscribe for one-year
memberships that coincide with the academic year. Memberships are sold in three
different ways. To date, almost all of our members have received their Student
Advantage memberships at no charge from AT&T by either electing to apply for an
AT&T calling card in connection with their Student Advantage membership or by
receiving a free Student Advantage membership from AT&T. The AT&T/Student
Advantage membership cards are co-branded and serve as both a Student Advantage
membership identification card and an AT&T calling card. Memberships are also
sold to colleges, universities, university organizations and other sponsors for
distribution free of charge to students. In addition, students may purchase
memberships directly from Student Advantage for a membership fee that is
currently $20 per year.

Upon enrollment, Student Advantage members receive a Student Advantage
membership identification card and a member guide describing the program and its
benefits. By presenting the Student Advantage card at participating retail
locations, or by providing their membership number online, Student Advantage
members receive attractive discounts throughout the year for products and
services from both national and local sponsors. We receive payments from certain
of our national sponsors when Student Advantage members purchase products and
services from them. Student Advantage currently offers discounts from over 50
national sponsors and 15,000 participating locations in 125 local markets.

Student-Focused Content and Services

Our Network of Web Sites

Our network of web sites, including studentadvantage.com, FANSonly.com and
UWIRE.com, addresses the needs of college students for content, community and
e-commerce.

Content. Student Advantage's content offering includes up-to-date
information on topics of interest to students, including purchasing and
budgeting decisions, college sports, travel, career, education, health,
lifestyles and financial aid. For example, students may access articles
that provide information on studying abroad or purchasing renters'
insurance. Our content is both developed by our editors and collected from
approximately 500 college publications using our U-WIRE news feed. In
addition, our studentadvantage.com web site provides students with
information relevant for their local market or college campus and a
searchable online directory of national and local discounts offered by our
sponsors. Our web site also includes maps and directions to retail
locations that offer discounts.

Community. Our web sites offer students a number of community-building
services. Student Advantage's online bulletin boards give students the
opportunity to discuss topics such as interviewing techniques, college
sports and campus life. We allow students to set up their own e-mail
account,

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organize contact information in an online address book, store documents and
keep track of important dates on an online calendar. We also enable
students to send online greeting cards.

e-Commerce. Students can directly purchase travel-related products,
Eurail passes and official university and college athletic merchandise at
our sites. In addition, Student Advantage members can purchase a variety of
products online with a Student Advantage discount. Members can purchase
products directly from vendors through our marketplace or link to a web
page that is co-branded with a sponsor. Products offered online include
school and office supplies, books, software, music, footwear, magazines and
flowers. In order to receive discounts on the products offered through our
web site, students must join our membership program.

U-WIRE (University Wire)

U-WIRE is a daily electronic news service providing college news, sports,
opinion and entertainment content collected from approximately 500 college
publications. U-WIRE can be accessed at studentadvantage.com. U-WIRE editors
select news, sports, opinion and entertainment articles from its member
newspapers and distribute content among the college newspapers for inclusion in
their print and online editions.

SAM, Student Advantage Magazine

The Student Advantage membership includes a subscription to SAM, Student
Advantage Magazine. SAM is a magazine that is mailed directly to our members and
includes lifestyle and practical content for students, updates on new discounts
and privileges available to Student Advantage members and interactive features,
such as member surveys and contests. Articles are provided primarily by
freelance writers. We use feedback from our readers to tailor future articles
and offerings to their particular interests and needs.

Corporate Marketing Services

We provide tailored marketing services for businesses seeking to market
their products and services to college students. Our in-depth knowledge of the
college student market, our expertise in marketing to college students and our
extensive university relationships enable us to help businesses effectively and
efficiently reach college students. Our marketing services are typically offered
to businesses on a fixed-cost basis or hourly rate basis. Student Advantage
currently provides a variety of marketing services to businesses, including the
following:

- organizing and executing marketing tours that travel campus to campus,

- staffing tables at on-campus college locations, such as student unions,
to solicit potential student customers,

- developing and managing programs that recruit, train and supervise
students to represent businesses on campus,

- assisting marketers who desire to sponsor on-campus events, such as movie
screenings and concerts, and

- helping marketers place advertisements in college newspapers.

We also provide staffing for on-campus events and other activities for
businesses that have already designed a marketing program but lack
implementation resources and expertise at the campus level.

In October 1999, we expanded our corporate marketing services through our
acquisition of Voice FX Corporation, a provider of internet and interactive
voice response telephone services to colleges and universities. Voice FX has
secured a total of over 55 contracts for its services. In several cases, a
single college or university has entered into more than one contract for Voice
FX's services. Through these contractual relationships, Voice FX has secured
marketing rights that enable businesses to promote products and services, in a
targeted manner, to students. Certain corporate marketing clients of Voice FX
also use Voice FX's integrated voice response services for general consumer
marketing.

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Our marketing services group utilizes ten regional offices across the
United States. The broad geographical reach of our marketing services group
allows us to execute our services nationwide.

ALLIANCES

An important element of our strategy is to form alliances to assist us in
offering products and services to students and in offering businesses and
advertisers an effective channel for reaching college students.

AT&T

Our relationship with AT&T has enabled us to rapidly expand our membership
base and strengthen our presence on college campuses as a resource associated
with quality brand products and services.

In February 1997, Student Advantage and AT&T entered into a membership
agreement under which Student Advantage earns a fee from AT&T for each
membership issued in connection with a Student Advantage AT&T Calling Card, with
a minimum commitment by AT&T for 1.25 million Student Advantage memberships per
academic year. Student Advantage agreed that, without the consent of AT&T, it
would not enter into any promotional or marketing activities with any credit
card, telecommunications or multipurpose college student identification card
provider, other than AT&T. The agreement provides that we will not allow,
without the consent of AT&T, any third party, other than certain colleges,
universities and university organizations based on their size, to offer a
Student Advantage membership to college students free of charge.

In February 1998, we entered into a marketing agreement with AT&T under
which we agreed to promote and market AT&T's calling card services to college
students. We also agreed to provide certain marketing services focused on the
college market to AT&T. AT&T appointed Student Advantage as the exclusive
provider, at certain colleges and universities designated by AT&T, of tabling
and non-tabling activities (which require a physical presence by our employees
on the college campus) with respect to the solicitation of college students for
the AT&T calling card service. In return, AT&T agreed to pay us for the
solicitation of each application for such service. In addition, AT&T agreed to
pay for additional marketing activities and to be the exclusive sponsor of
certain online offerings. AT&T agreed to promote and market the Student
Advantage membership through television, mass media marketing or other mass
media advertising. We are also providing other marketing services to AT&T in the
college student market.

In July 1998, AT&T exercised an option to extend the original termination
dates of the membership agreement and the marketing agreement to June 1, 2001.
However, AT&T may terminate these agreements prior to such date upon 120 days
prior notice, subject to payment of a termination fee under certain
circumstances. AT&T may also terminate the agreements if Raymond V. Sozzi, Jr.
is no longer employed as President of Student Advantage, or if he no longer owns
a minimum five percent ownership interest in Student Advantage. AT&T accounted
for 50% of our total revenues in 1997, 61% of our total revenues in 1998 and 55%
of our total revenues in 1999. While we are not aware of plans by AT&T to
terminate its use of our services, the termination of our relationship with
AT&T, or a material reduction in the use of our services by AT&T, would have a
material adverse effect on our business.

Student Advantage is in discussions with AT&T with respect to the possible
restructuring of its agreements with AT&T. There can be no assurance that such
discussions will result in any restructuring.

Lycos

In July 1999, we entered into a strategic alliance with Lycos, Inc. to gain
marketing and distribution for studentadvantage.com and to sell Student
Advantage memberships. As part of the alliance, Lycos links to a co-branded
version of studentadvantage.com from lycos.com and promotes the co-branded web
site through the Lycos network. Student Advantage and Lycos share in the
advertising, e-commerce and membership sales revenue generated from the
co-branded version of studentadvantage.com.

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edu.com

In November 1999, we entered into a strategic alliance with edu.com, Inc.
to provide edu.com with marketing and distribution within both the
studentadvantage.com web site and the Student Advantage membership program, and
to promote edu.com as our exclusive technology e-commerce destination and member
rewards partner. We will receive $2.0 million in cash over the two year term of
our agreement with edu.com. In addition, edu.com will promote the Student
Advantage membership at the edu.com web site and will provide exclusive benefits
to Student Advantage members for shopping at edu.com.

Sponsors

Student Advantage offers its members discounts on products and services
from over 50 national sponsors and over 15,000 participating locations in 125
local markets, including rail fares, bus fares, music, school supplies, books
and clothing. Representative national sponsors and local markets include:

REPRESENTATIVE NATIONAL SPONSORS REPRESENTATIVE LOCAL MARKETS

1-800-FLOWERS.COM Ann Arbor, Michigan
Amtrak Auburn, Alabama
Barnes & Noble Austin, Texas
College Bookstores Berkeley, California
Capsized.com Boston, Massachusetts
Champs Sports Boulder, Colorado
Choice Hotels International Chapel Hill, North Carolina
Foot Locker Chicago, Illinois
Franklin Covey Columbus, Ohio
Greyhound Lawrence, Kansas
Hostelling International Los Angeles, California
Priceline.com Madison, Wisconsin
Rockport New York, New York
Staples Philadelphia, Pennsylvania
textbooks.com San Diego, California
The Princeton Review Tallahassee, Florida
Tower Records Washington, D.C.

Some of our national sponsors, including Amtrak(R), Staples, Staples.com
and Tower Records, offer the Student Advantage discount as the only ongoing
discount offered specifically to college students. Many of our national sponsors
engage in co-marketing activities with Student Advantage. Student Advantage
seeks to identify and attract additional sponsors whose products and services
complement its offerings and who offer valuable ongoing discounts to its
members.

Advertisers

We provide advertisers with access to a large, demographically attractive
college student audience. We also provide advertisers with direct marketing
knowledge and expertise in designing and implementing effective advertising to
reach college students. Unlike many of our competitors, we are able to combine
our online and offline marketing and media capabilities to offer a comprehensive
marketing package to our corporate partners. Integrated marketing offerings
include print, on-campus and web site sponsorships.

UNIVERSITY RELATIONSHIPS

We believe that university relationships are critical to our success. An
important element of our strategy is to continue to develop relationships with
colleges, universities and university organizations to assist us in marketing
and selling our products and services. The Student Advantage membership program
has been endorsed by more than 60 colleges, universities and university
organizations. These schools and organizations typically agree to co-market the
Student Advantage membership program to their students. Co-marketing includes
sending a letter to students explaining the program with an application for
membership, and receiving a percentage of the associated membership fees.

9
<PAGE> 12

Colleges and universities, or university organizations from these schools,
that have endorsed the Student Advantage membership program include:

Arkansas State University
Auburn University
Boston College
Clemson University
Emory University
University of California -- Santa Barbara
University of Chicago
University of North Carolina -- Charlotte
University of Pennsylvania
University of Utah
University of Virginia
Yale University

In addition, a limited number of colleges and universities have purchased
Student Advantage memberships in bulk, at varying discounts depending on the
number of memberships purchased, and distributed the memberships to their
students free of charge.

Student Advantage has also established contractual relationships with many
colleges and universities whereby Student Advantage acts as a service provider
to the college or university. Service provider relationships include athletic
office web site operation, hosting and management through the FANSonly brand,
school newspaper online publishing and syndication through the U-WIRE brand,
grade and financial aid status reporting and transcript processing through the
Campus Direct brand and stored value card program operation and management under
the Student Advantage Cash brand.

SALES AND MARKETING

As of December 31, 1999, Student Advantage had a direct sales organization
consisting of 34 professionals. Twelve of these professionals are dedicated to
the AT&T relationship with an additional ten professionals dedicated primarily
to managing our other significant sponsor relationships. The remaining
professionals are engaged in a variety of sales functions, including:

- selling advertising in SAM,

- selling banner advertising and sponsorships on studentadvantage.com,

- enlisting additional national sponsors for its discount program,

- seeking opportunities for corporate-sponsored events and promotions
targeted at college students, and

- managing existing sponsor relationships

In addition, we maintain a regional sales organization of 33 professionals
in ten regional offices focused primarily on enlisting and managing local
sponsors and providing marketing services. These offices, which are managed by
our headquarters in Boston, provide us with a broad geographical presence and
enable us to implement effective nationwide marketing programs.

Student Advantage uses a variety of online and traditional marketing
programs to increase brand awareness. Our marketing goals are to create and
enhance awareness of Student Advantage as the leading resource and trusted
advocate dedicated to serving the needs of college students, to continue to be
both the most effective way for marketers and advertisers to reach students and
a trusted and effective resource for colleges and universities. Our marketing
strategy for each contains a mix of online advertising, programs which drive
members to our web site, in-store advertising in local retail locations,
on-campus direct solicitation of students, outbound e-mail, co-marketing with
colleges and universities through on-campus posters and student mailbox drops,
print advertising, new media banner campaigns and direct mail. Student Advantage
employed 11 marketing professionals as of December 31, 1999.

TECHNOLOGY

Student Advantage has implemented a broad array of site management,
advertising management, customer interaction, registration systems,
transaction-processing and fulfillment systems using a combination of its own
proprietary technologies and commercially available, licensed technologies. Our
current strategy is to license commercially available technology whenever
possible rather than seek internally developed

10
<PAGE> 13

solutions. We use contractors to develop the specialized software necessary for
our business, such as the software required to register members online.

Consistent with our preference for off-the-shelf software components, the
hardware systems that we utilize also consist of commercially available
components. Student Advantage believes that this architecture provides the
ability to increase scale quickly and reliably, and at a relatively low cost.
Although our existing infrastructure currently exceeds present demand, we have
plans for additional upgrades in anticipation of increased demand.

Our membership database is currently hosted at USWeb Corporation (doing
business as USWeb/CKS) and utilizes Microsoft SQL 7 database software. Our
production servers utilize Sun Microsystems, Inc. hardware and use Netscape web
server software. Student Advantage's system hardware is currently hosted at
USWeb/CKS, a third-party facility in New York, and Exodus, a third party
facility in Massachusetts and California. The Company currently expects to move
all of its system hardware to Exodus during the second quarter of 2000. A group
of systems administrators and network managers at USWeb/CKS and Exodus operate
our web site, network operations and transaction-processing systems and monitor
our systems 24 hours a day.

Our operations are dependent upon USWeb/CKS's and Exodus' ability to
maintain their systems in effective working order and to protect their systems
against damage from fire, natural disaster, power loss, telecommunications
failure or similar events. Student Advantage's servers are powered by an
uninterruptible power supply to provide a safeguard against unexpected power
loss. Our systems are copied to backup tapes each night and stored at an
off-site storage facility for one year. In addition, the servers are equipped
with redundant file systems, which allows for prompt replacement of defective
disks without interruption of service.

COMPETITION

The market for student members and internet services and products is
relatively new, intensely competitive and rapidly changing. With no substantial
barriers to entry in the web site market, we believe that competition will
continue to intensify. We compete, directly and indirectly, for members,
advertisers, sponsors and viewers with the following categories of companies:

- general purpose consumer online services such as America Online and
Microsoft Network, each of which provides access to student-related
content and services,

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

- web sites targeted to students generally or to students of a particular
school, such as web sites developed by Campus Pipeline, CollegeClub.com,
Student.Net Publishing and CommonPlaces,

- membership programs, such as programs offered by Memberworks and Cendant,

- publishers and distributors of traditional off-line media such as
television, radio and print, including those targeted to college
students, many of which have established or may establish web sites, and

- vendors of college student information, merchandise, products and
services distributed through other means, including retail stores, mail
and schools.

We believe that the principal competitive factors in attracting and
retaining members are:

- brand recognition,

- quality of content and service,

- critical mass of members and sponsors,

- number and type of discounts,

- relationships with universities,

- comprehensive geographic coverage,

- breadth of offerings, and

- cost of service.

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<PAGE> 14

We believe that the principal competitive factor in attracting and
retaining sponsors, merchandisers and content providers is our ability to offer
sufficient incremental revenue from online and offline sales of products and
services. We believe that the principal competitive factors in attracting
advertisers include the demographics of our membership and user base, the number
of readers of our magazine, the number of members and users of our web site,
cost of advertising and creative implementation of advertisement placements
across our products and services. There can be no assurance that we will be able
to compete favorably with respect to these factors.

We believe that the strong Student Advantage brand combined with our
ability to deliver a targeted, demographically-attractive audience to
advertisers and sponsors, our existing base of over 1,300,000 members, our
national and local sponsors and our relationships with colleges and universities
are principal competitive advantages. We are not able to reliably estimate the
number of our direct competitors. However, many of our competitors, current and
potential, have significantly greater financial, technical or marketing
resources. In addition, 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 our business.

INTELLECTUAL PROPERTY AND PROPERTY RIGHTS

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

Student Advantage has been subject to claims and expects to be subject to
legal proceedings and claims 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, Student Advantage
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 our
business.

We may be required to obtain licenses from others to refine, develop,
market and deliver new products and services. There can be no assurance that we
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.

GOVERNMENT REGULATION

Student Advantage is subject to various laws and regulations relating to
its business. Although there are currently few laws or regulations directly
governing access to or commerce on the internet, due to the increasing
popularity and use of the internet, a number of laws and regulations may be
adopted regarding user privacy, pricing, acceptable content, taxation and
quality of products and services. In addition, several telecommunications
providers have petitioned the Federal Communications Commission to regulate and

12
<PAGE> 15

impose fees on internet service providers and online service providers in a
manner similar to long distance telephone carriers. Also, stored-value card
products currently being developed by the Company, although not currently
regulated by the Federal Reserve, may be subject to state banking regulations
and/or future amendments to current Federal banking regulations. The adoption of
any such laws or regulations could adversely affect the costs of communicating
on the internet, adversely affect the growth in use of the internet, decrease
the acceptance of the internet as a communications and commercial medium or
restrict the Company's ability to introduce new products. Moreover, it may take
years to determine the extent to which existing laws relating to issues such as
property ownership, libel and personal privacy are applicable to the internet.
Any new laws or regulations relating to the internet could decrease demand for
our products and services or otherwise have a material adverse effect on our
business.

EMPLOYEES

As of December 31, 1999, Student Advantage had a total of 316 full-time
employees. Student Advantage also hires temporary employees, particularly at the
beginning of each school semester, and contract service providers as necessary.
As we continue to grow and introduce additional products and services, we expect
to hire additional employees, particularly in online product development and
sales and marketing. None of our employees is represented by a labor union or is
the subject of a collective bargaining agreement. We believe that relations with
our employees are generally good. Competition for qualified personnel in our
industry is intense, particularly among sales, online product development and
technical staff. We believe that our future success will depend in part on our
continued ability to attract, hire and retain qualified personnel.

ITEM 2. PROPERTIES

Student Advantage's principal executive offices are located at 280 Summer
Street in Boston, Massachusetts, where it presently leases an aggregate of
approximately 39,000 square feet. Our current leases for this facility expire at
various times through 2005. We also maintain regional offices and lease space in
Berkeley, California; Carlsbad, California; Los Angeles, California; Atlanta,
Georgia; Chicago, Illinois; Hanover, New Hampshire; New York, New York; Plymouth
Meeting, Pennsylvania; Dallas, Texas; and Washington, D.C.

We believe that our current facilities and other facilities that will be
available to us will be adequate to accommodate our needs for the foreseeable
future. There can be no assurance that we will be successful in obtaining
additional space, if required, or if such space is obtained that it will be on
terms acceptable to us.

ITEM 3. LEGAL PROCEEDINGS

We are not presently subject to any material legal proceedings.

On August 3, 1999, Student Advantage, Inc. filed an action in the United
States District Court for the Southern District of New York against
CollegeClub.com, alleging among other things, that CollegeClub.com has committed
false advertising, unfair competition, and tortious interference with contract
in connection with, CollegeClub.com's promotion and marketing of its services,
including but not limited to the Discount Directory in its web site. Student
Advantage sought monetary damages and equitable relief, including a preliminary
and permanent injunction. As part of its response, CollegeClub.com filed
counterclaims against Student Advantage alleging similar conduct on the part of
Student Advantage. CollegeClub.com sought monetary damages and equitable relief,
including injunctive relief. On November 30, 1999, the Court issued a
preliminary injunction requiring certain actions by CollegeClub.com. On December
27, 1999, the parties settled the case.

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

None.

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<PAGE> 16

EXECUTIVE OFFICERS OF THE COMPANY

Below is the name, age and principal occupations for the last five years of
each current executive officer of the Company. All such persons have been
elected to serve until their successors are elected and qualified or until their
earlier registration or removal:

<TABLE>
<CAPTION>
NAME AGE OFFICE(S)
---- --- ---------
<S> <C> <C>
Raymond V. Sozzi, Jr........ 31 Chairman of the Board of Directors, President and Chief
Executive Officer
Christopher B. Andrews...... 44 Vice President, Finance and Administration, and Chief
Financial Officer
G. Todd Eichler............. 32 Executive Vice President, Business Services
Mason L. Myers.............. 29 Executive Vice President, Student and University Services
Ronald J. Kos............... 58 Chief Operating Officer
Andrea K. Abegglen.......... 33 Vice President, Marketing Communications
Daniel G. Siegel............ 31 Vice President, Product Development
</TABLE>

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

Raymond V. Sozzi, Jr. founded Student Advantage in 1992 and has served as
Chairman of the Board of Directors, President and Chief Executive Officer of
Student Advantage since its inception. Before founding Student Advantage, Mr.
Sozzi was employed by Bain & Company, a consulting company, as an associate
consultant.

Christopher B. Andrews has served as Vice President and Chief Financial
Officer of Student Advantage since September 1998 and as Vice President, Finance
and Administration, of Student Advantage since January 1999. From January 1992
to August 1998, Mr. Andrews served as Vice President, Finance and
Administration, and from July 1996 to December 1996 also served as interim
President and Chief Executive Officer of Advanced Visual Systems Inc., a
visualization software company.

G. Todd Eichler has served as Executive Vice President, Business Services
of Student Advantage since December 1999, and served as Executive Vice
President, Member Management of Student Advantage from January 1997 to December
1999 and as Vice President, Marketing of Student Advantage from January 1995 to
December 1996. From 1989 to 1991 Mr. Eichler was employed by Bain & Company as
an associate consultant.

Mason L. Myers has served as Executive Vice President, Student and
University Services of Student Advantage since December 1999, as Vice President,
Business Development of Student Advantage from January 1999 to December 1999 and
as Senior Director, New Media of Student Advantage from December 1997 to
December 1998. Mr. Myers co-founded The Main Quad, Inc., a student-focused
internet site, in May 1995 and served as its Co-President from May 1995 to
December 1997. From August 1994 to May 1995, Mr. Myers was employed as a project
manager by Smart Valley, Inc., a non-profit organization using the internet to
improve the community of Silicon Valley.

Ronald J. Kos has served as Chief Operating Officer of Student Advantage
since May 1999. From February 1998 to May 1999, Mr. Kos was Senior Vice
President, Marketing and Operations, of iVillage, Inc., an online women's
network. From September 1994 to February 1998, Mr. Kos was President of the
Signal Ridge Group, a national consulting practice that he founded.

Andrea K. Abegglen has served as Vice President, Marketing Communications
of Student Advantage since May 1998. From November 1997 to April 1998, Ms.
Abegglen served as Vice President, Strategic Partnerships of Student Advantage.
From May 1996 to October 1997, Ms. Abegglen served as Chief Operating Officer of
Student Advantage. From June 1993 to April 1996, Ms. Abegglen served as
President of Crimson & Brown Associates, a recruiting firm for minority students
and professionals, and as its Vice President from June 1991 to June 1993.

Daniel G. Siegel has served as Vice President, Product Development of
Student Advantage since May 1997, and served as Director of Marketing of Student
Advantage from November 1992 to July 1995. From May 1996 to August 1996, Mr.
Siegel was employed by Microsoft Corporation, a software company, to conduct a
worldwide original equipment manufacturer market study.

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<PAGE> 17

PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Student Advantage's common stock began trading on the Nasdaq National
Market on June 18, 1999 under the symbol "STAD." Prior to that time there had
been no market for our common stock. The table below sets forth the high and low
closing sales prices per share for our common stock on the Nasdaq National
Market for the periods indicated:

Fiscal Year Ended December 31, 1999

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Second quarter (beginning June 18, 1999).................... $ 9 1/2 $ 7 1/2
Third quarter............................................... 13 15/16 10 1/16
Fourth quarter.............................................. 28 12 1/8
</TABLE>

As of February 29, 2000, there were 161 holders of record of the common
stock. Because many of such shares are held by brokers and other institutions on
behalf of stockholders, the Company is unable to estimate the total number of
stockholders represented by these record holders.

Student Advantage has never paid or declared any cash dividends on its
Common Stock. Student Advantage currently intends to retain any earnings for
future growth and, therefore, does not expect to pay cash dividends in the
foreseeable future.

The effective date of the Company's first registration statement, filed on
Form S-1 under the Securities Act of 1933 (File No. 333-75807) relating to
Company's initial public offering of its Common Stock, was June 17, 1999. From
the date of receipt through December 31, 1999, approximately $2.0 million of the
net proceeds of the Company's initial public offering was used to lease and
build out facilities in New York, New York, Boston, Massachusetts and Plymouth
Meeting, Pennsylvania, $2.5 million was used to pay off our line of credit, $1.3
million was used to pay acquisition expenses related to the University
Netcasting acquisition and other expenses related to the registration statement
filed on behalf of the University Netcasting stockholders, $1.1 million was used
to purchase Voice FX, and $4.3 million was used to make an investment in
edu.com. None of the net proceeds of the offering were paid by the Company,
directly or indirectly, to any director, officer or general partner of the
Company or any of their associates, or to any persons owning ten percent or more
of any class of the Company's equity securities, or any affiliates of the
Company.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data are derived from the
financial statements of Student Advantage, Inc. The historical results presented
are not necessarily indicative of future results. The selected consolidated
financial data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Student Advantage's Consolidated Financial Statements and the related Notes. All
amounts for all periods presented have been restated to reflect the acquisition
of University Netcasting, Inc. in June 1999, which was accounted for as a
pooling of interests.

Effective June 18, 1999, University Netcasting, Inc.'s fiscal year end was
changed from March 31 to December 31 to conform to Student Advantage's fiscal
year end. University Netcasting, Inc.'s results of operations for the years
ended March 31, 1996, 1997, 1998 and 1999 have been included in Student
Advantage's results of operations for the years ended December 31, 1995, 1996,
1997 and 1998, respectively. University Netcasting's results of operations for
the twelve months ended December 31, 1999 have been included in Student
Advantage's twelve months ended December 31, 1999. Accordingly, University
Netcasting's results of operations for the three months ended March 31, 1999
have been included in Student Advantage's results for both the years ended
December 31, 1998 and 1999. Total revenue and net loss for University Netcasting
for the three months ended March 31, 1999 were $682,000 and $1.6 million,
respectively. This net loss amount has been reported as an adjustment to the
consolidated accumulated deficit.

15
<PAGE> 18

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1996 1997 1998 1999
----------- ------- ------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenue
Subscription............................ $ 420 $ 1,093 $ 2,971 $ 7,174 $ 7,838
Other................................... 349 745 1,844 12,186 19,806
------- ------- ------- -------- --------
Total revenue........................ 769 1,838 4,815 19,360 27,644
------- ------- ------- -------- --------
Costs and expenses
Cost of subscription revenue............ 160 543 2,628 2,442 2,365
Cost of other revenue................... 135 570 702 7,867 13,178
Product development..................... 1,151 1,516 3,253 4,948 9,654
Sales and marketing..................... 671 536 1,905 7,313 11,704
General and administrative.............. 864 1,208 2,727 5,484 8,543
Depreciation and amortization........... 1 107 351 1,155 1,994
Stock-based compensation................ -- -- -- 808 1,119
------- ------- ------- -------- --------
Total costs and expenses............. 2,982 4,480 11,566 30,017 48,557
------- ------- ------- -------- --------
Loss from operations.................... (2,213) (2,642) (6,751) (10,657) (20,913)
Interest income (expense), net.......... (3) 4 (77) 121 1,358
------- ------- ------- -------- --------
Net loss................................ $(2,216) $(2,638) $(6,828) $(10,536) $(19,555)
======= ======= ======= ======== ========
Basic and diluted net loss per share.... $ (0.16) $ (0.18) $ (0.41) $ (0.59) $ (0.71)
======= ======= ======= ======== ========
Shares used in computing basic and
diluted net loss per share........... 14,184 14,384 16,588 17,710 27,410
======= ======= ======= ======== ========
Unaudited pro forma basic and diluted
net loss per share................... $ (0.46) $ (0.63)
======== ========
Shares used in computing unaudited pro
forma basic and diluted net loss per
share................................ 22,772 31,226
======== ========
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1995 1996 1997 1998 1999
----------- ------ ------- -------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Cash and cash equivalents.................. $ 47 $ 702 $ 5,806 $ 6,140 $15,370
Marketable securities...................... -- -- -- -- 20,546
Working capital (deficit).................. (928) (114) (1,670) (2,355) 24,139
Total assets............................... 338 1,118 7,217 11,704 60,796
Deferred revenue........................... 183 276 5,970 7,064 9,576
Redeemable convertible preferred stock..... -- 54 111 10,196 --
Stockholders' equity (deficit)............. (1,065) (70) (1,024) (10,548) 41,694
</TABLE>

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<PAGE> 19

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

OVERVIEW

Student Advantage is dedicated to serving the needs of college students
through its leading membership program and network of web sites. Our revenue is
generated from subscription revenue and other revenue.

Subscription revenue is derived from membership sales. Memberships are sold
in three different ways. Almost all are sold to AT&T and distributed in
conjunction with an AT&T calling card. The membership cards associated with
these membership sales are co-branded and serve as both the Student Advantage
membership identification card and an AT&T calling card. In certain cases,
renewal of a co-branded membership card is subject to a minimum level of usage
of AT&T services during the prior twelve months. We earn a fee from AT&T for
each of these memberships, with a current minimum commitment by AT&T of 1.25
million memberships per academic year. During 1997, 1998 and 1999, AT&T
accounted for approximately 77%, 95% and 94% of subscription revenue.
Memberships are also sold by Student Advantage to colleges, universities and
university organizations for distribution free of charge to students. In the
1998-1999 academic year, five colleges, universities and university
organizations purchased memberships for distribution free of charge to students.
In addition, Student Advantage sells memberships directly to students for a
membership fee that is currently $20 per year. Subscription revenue is
recognized ratably from the date of subscription to the end of the annual
membership period, which ends on August 31 of each year.

Other revenue includes commerce, marketing services and advertising
revenue. Commerce revenue includes primarily transaction-based fees earned for
reselling products and services and acquiring customers on behalf of other
businesses. To date, commerce revenue has included primarily fees that we
receive from AT&T and one other customer for obtaining completed applications on
their behalf and the resale of Eurail passes. In connection with each
application accepted by AT&T, we also earn membership fees that are included in
subscription revenue. Marketing services revenue is derived primarily from
providing tailored marketing services to businesses seeking to market their
products and services to college students. These services include organizing and
executing marketing tours that travel to college campuses, staffing tables in
college locations to solicit potential student customers on behalf of businesses
and providing media planning and placement. Advertising revenue consists
primarily of fees for banner advertisements and sponsorships on our web sites,
and advertisements placed in SAM, Student Advantage Magazine.

We began operations in 1992 as a sole proprietorship, converted to a
general partnership in 1995, converted to a limited liability company in 1996
and became a C Corporation in 1998. From inception through December 1997, our
revenue was derived primarily from annual membership fees. Since that time, we
have expanded our product and service offerings through internal growth as well
as acquisitions.

In December 1997, we completed our acquisition of The Main Quad, Inc. which
owned and operated web sites focused on providing content for students. We
acquired substantially all the assets of The Main Quad for $272,000 and the
issuance of 1,417,720 shares of common stock. In January 1998, we completed our
acquisition of Collegiate Advantage, Inc. a provider of marketing and
promotional services to businesses targeting college students. The acquisition
of Collegiate Advantage marked our entrance into the marketing services
business. We acquired substantially all the assets of Collegiate Advantage for
$651,000 and the assumption of $275,000 in liabilities. We also agreed to make
payments totaling $715,000 to Collegiate Advantage in three installments ending
on January 31, 2001. As of December 31, 1999, $355,000 remains outstanding.
These acquisitions were accounted for under the purchase method of accounting,
and the results of operations of each of the acquired companies have been
included in our financial statements since their respective dates of
acquisition. Goodwill and other intangible assets in the aggregate amount of
$1.4 million were recorded in connection with these and other acquisitions and
are being amortized over the economic lives of the related assets, ranging from
two to five years.

17
<PAGE> 20

the amount of $330,000. These acquisitions have been accounted for under the
purchase method of accounting, and the results of operations of each company
have been included in our results beginning on the acquisition date. Goodwill
and other intangible assets in the aggregate amount of $305,000 were recorded in
connection with these acquisitions and are being amortized over three years.

On May 27, 1999, we acquired substantially all of the assets of Mentor
Interactive Corp., a provider of internet-based research tools and related
materials, in exchange for 18,056 shares of common stock and a warrant to
purchase 24,000 shares of common stock at a purchase price of $11.08 per share
with an aggregate estimated fair value of approximately $300,000. This
acquisition has been accounted for under the purchase method of accounting and
the results of operations of Mentor Interactive Corp. have been included in our
results of operations beginning on the acquisition date. Goodwill and other
intangible assets in the aggregate amount of $312,000 were recorded in
connection with the acquisition and are being amortized over a three year
period.

On October 7, 1999, we acquired Voice FX Corporation, a provider of
internet and interactive voice response services to colleges and universities.
In connection with the acquisition, we paid approximately $1.1 million in cash,
issued 430,082 shares of our common stock and assumed options to purchase a
total of 59,687 shares of our common stock. The acquisition has been accounted
for under the purchase method of accounting and the results of operations have
been included in our results of operations beginning on the acquisition date.
Goodwill and other intangible assets in the aggregate amount of $6.3 million
have been recorded in connection with the acquisition and are being amortized on
a straight-line basis over expected useful lives of between three and five
years.

In the future we may pursue additional acquisitions to obtain complementary
products, services and technologies. There are no assurances that the
acquisitions we already have completed, or any acquisitions that we may complete
in the future, will produce the anticipated revenue, earnings or business
synergies.

On June 23, 1999, we completed an initial public offering of 6,000,000
shares of our common stock resulting in proceeds to us of approximately $44.6
million. Upon the closing of the initial public offering, each outstanding share
of our redeemable convertible preferred stock converted into shares of common
stock on a three-for-one basis. On July 21, 1999, we issued an additional
900,000 shares of common stock as a result of the full exercise of the
underwriters' over-allotment option and received additional proceeds of
approximately $6.7 million.

In July 1999, we entered into a marketing agreement with Lycos, Inc. In
connection with the transaction, Lycos was granted a warrant to purchase 550,000
shares of our common stock at a price of $10.875 per share. The Lycos warrant
terminates on July 21, 2002 and is exercisable on or after July 21, 2000. We
valued the Lycos warrant at $2.2 million, which is being recognized as a sales
and marketing expense on a straight-line basis over the thirty-month term of the
marketing agreement.

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<PAGE> 21

market basis of accounting. Additionally, we entered into a two-year marketing
and distribution agreement with edu.com. The agreement provides, among other
things, that edu.com will become Student Advantage's exclusive technology
e-commerce partner and rewards program provider, that the parties will pursue
certain promotional initiatives on each other's behalf, and that edu.com will
make certain payments to Student Advantage, including $2.0 million payable over
the term of the agreement. On January 14, 2000 we made an additional investment
of approximately $1.0 million in cash for approximately 217,000 shares of series
B preferred stock of edu.com.

We recorded deferred compensation of $4.2 million in the year ended
December 31, 1998 and $228,000 in the first quarter of 1999, representing the
difference between the exercise price of stock options granted and the fair
market value of the underlying common stock at the date of grant. The difference
is recorded as a reduction of stockholders' equity and is being amortized over
the vesting period of the applicable options, typically four years. Of the total
deferred compensation amount, $808,000 had been amortized during 1998 and an
additional $1.1 million has been amortized during 1999. During 1999, we reduced
the amount of deferred compensation by approximately $259,000 as a result of
cancellation of certain options due to the termination of the employment with
Student Advantage of certain employees. The amortization of deferred
compensation is recorded as an operating expense. We currently expect to
amortize the following remaining amounts of deferred compensation as of December
31, 1999 in the periods indicated:

<TABLE>
<S> <C>
January 1, 2000 -- December 31, 2000........................ $973,000
January 1, 2001 -- December 31, 2001........................ 915,000
January 1, 2002 -- December 31, 2002........................ 319,000
January 1, 2003 -- December 31, 2003........................ 6,000
</TABLE>

Student Advantage has experienced substantial net losses since its
inception and as of December 31, 1999, Student Advantage had an accumulated
deficit of $44.1 million. Student Advantage expects to increase its expenditures
in all areas in order to execute its business plan. As a result, Student
Advantage believes that it will continue to incur operating losses and negative
cash flows from operations for the foreseeable future and that the rate at which
such losses will be incurred may increase from current levels.

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<PAGE> 22

RESULTS OF OPERATIONS

Comparison of the Year Ended December 31, 1999 with the Year Ended December
31, 1998

Revenue. Total revenues increased to $27.6 million in 1999 from $19.4
million in 1998. Almost all of this increase was due to an increase in other
revenue to $19.8 million in 1999, from $12.2 million in 1998. Other revenue
increased primarily due to increases in commerce revenue related to (1) the
acquisitions in 1999 of Voice FX and The Travel Holding Group, (2) revenues
under the AT&T marketing agreement, which was not in effect until the third
quarter of 1998, under which Student Advantage visits college campuses to
acquire calling card customers for AT&T and (3) other transaction-based commerce
revenues. Other revenue increased to a lesser extent as a result of increases in
marketing services revenue primarily as a result of management and execution of
AT&T's on-campus marketing initiatives in 1999, media placement for our
corporate partners in college newspapers, and the acquisition of The Campus
Agency, LLC. Other revenue also increased due to growth in web advertising and
sponsorship revenue.

AT&T accounted for approximately 55% and 61% of total revenue in 1999 and
1998, respectively. Additionally, AT&T accounted for approximately 94% and 95%
of subscription revenue and 40% and 41% of other revenue in 1999 and 1998,
respectively. No other single customer accounted for 10% or more of total
revenues in 1999 or 1998.

Cost of Subscription Revenue. Cost of subscription revenue consists of the
costs associated with the fulfillment of membership subscriptions and customer
service. Cost of subscription revenue remained unchanged at $2.4 million in 1999
and 1998. Cost of subscription revenue as a percentage of subscription revenue
decreased to 30.2% in 1999 from 34.0% in 1998 as a result of increased cost
efficiencies in the fulfillment of membership subscriptions on a per member
basis.

Cost of Other Revenue. Cost of other revenue consists of the cost of
commerce, marketing services and advertising. Commerce costs include primarily
personnel-related costs associated with acquiring customers for AT&T and other
businesses, and costs associated with the sale of Eurail passes. Marketing
services costs primarily consist of the direct and indirect costs associated
with planning and implementing events and promotions, media placement and other
marketing services. Advertising costs primarily consist of production and
mailing costs for the magazine and includes royalties paid to organizations,
primarily colleges, universities and athletic associations for the use of
organizational names and logos, and for supplying sports activity content for
Student Advantage to include in the FANSonly.com web sites. Cost of other
revenue increased to $13.2 million in 1999 from $7.9 million in 1998. This
increase is due in large part to the acquisitions of The Travel Holding Group,
Campus Agency, and Voice FX businesses during 1999 which contributed $2.4
million in expense. The increase is also due in part to an increase of $1.1
million in costs associated with SAM, Student Advantage Magazine, of which four
issues were distributed during 1999 and only two issues were distributed during
1998. Additionally, costs associated with providing services relating to an AT&T
on-campus marketing program, first incurred in 1999, and the AT&T marketing
agreement, which was first incurred in the third quarter of 1998, contributed to
the increase.

Cost of other revenue as a percentage of other revenue increased to 66.5%
in 1999 from 64.6% in 1998. This increase was due primarily to a larger portion
of other revenue consisting of lower margin activities associated with the
marketing services business, the services delivered under both the AT&T
marketing agreement and the AT&T on-campus marketing program, and the Travel
Holding Group and Campus Agency businesses. The increase in cost of other
revenues as a percentage of other revenue is also due to costs associated with
the production of SAM, Student Advantage Magazine, which exceeded revenue from
the production of SAM. This increase was partially offset by higher margin
revenues from the Voice FX business, which we acquired in the fourth quarter of
1999, from web advertising and sponsorship, and from commerce revenues.

Product Development. Product development expenses consist primarily of
personnel-related and consulting costs associated with the development and
enhancement of our suite of products, which includes the Student Advantage
membership card, SAM, Student Advantage Magazine, and our network of web sites.
Product development expenses increased to $9.7 million in 1999 from $4.9 million
in 1998. The increase is

20
<PAGE> 23

primarily due to $2.3 million incurred in connection with the re-launch of
studentadvantage.com in 1999, and the development of our customer database, as
well as additional personnel related costs.

Sales and Marketing. Sales and marketing expenses consist primarily of
personnel and other costs related to our sales and marketing programs. Sales and
marketing expenses increased to $11.7 million in 1999 from $7.3 million in 1998.
The increase in sales and marketing expenses was due, in large part, to
increased expenditures related to building brand awareness, expanding and
servicing the customer base of partners, selling more online advertising, and
supporting the marketing services business. In addition, in connection with the
Lycos, Inc. marketing agreement entered into in the third quarter of 1999, we
recorded a warrant valued at approximately $2.2 million. Of this amount,
$444,000 was amortized to sales and marketing expense in 1999. The remainder is
being amortized on a straight line basis over the remaining term of the
agreement.

General and Administrative. General and administrative expenses consist
primarily of costs related to general corporate functions, including executive
management, human resources, facilities, accounting and legal. General and
administrative expenses increased to $8.5 million in 1999 from $5.5 million in
1998. The increase in general and administrative expenses is primarily due to
acquisition costs of $1.3 million related to the acquisitions of University
Netcasting, Inc. and Transaction Service Providers, Inc., and increases in
facilities, legal, accounting and personnel related costs.

Depreciation and Amortization. Depreciation and amortization expenses
increased to $2.0 million in 1999 from $1.2 million in 1998. Increases in
amortization related to goodwill and intangible assets were recorded as a result
of the purchases of Voice FX Corporation, The Travel Holding Group, LLC, The
Campus Agency, LLC, and increased depreciation expense as a result of fixed
asset purchases during 1999. These increases were partially offset by decreases
in amortization expense as a result of certain intangible assets becoming
completely amortized during 1999.

Stock-Based Compensation. We recorded deferred compensation of $4.2
million in 1998 and an additional $228,000 in 1999, offset by a reduction of
$259,000 due to option cancellations as a result of employee terminations in
1999. Of this amount, $1.9 million has been amortized to expense to date, of
which $1.1 million was recorded as an expense during 1999. The remainder is
being amortized over the remaining vesting period of the individual options.

Interest Income (Expense), Net. Interest income (expense), net includes
interest income from cash balances and interest expense related to Student
Advantage's financing obligations. Interest income (expense), net increased to
$1.4 million in 1999 from $121,000 in 1998. The increase is a result of interest
income earned on higher average cash, cash equivalents and marketable securities
balances during 1999 compared to 1998.

Comparison of the Year Ended December 31, 1998 with the Year Ended December
31, 1997

Revenue. Total revenue increased from $4.8 million in 1997 to $19.4
million in 1998. The increase in revenue was due in part to the significant
increase in subscription revenue from $3.0 million in 1997 to $7.2 million in
1998, mostly due to memberships purchased by AT&T. The increase in other revenue
from $1.8 million in 1997 to $12.2 million in 1998 was attributable primarily to
both: (1) the addition of Student Advantage's marketing services business, which
was acquired from Collegiate Advantage on January 1, 1998, and (2) an increase
in commerce revenue due primarily to fees for obtaining calling card
applications for AT&T, which began in the third quarter of 1998. The increase in
other revenue was attributable to a lesser extent to increased advertising
revenues related to SAM, Student Advantage Magazine and the Student Advantage
web site. The first two issues of SAM, Student Advantage Magazine shipped in the
fourth quarter of 1998.

AT&T accounted for approximately 50% and 61% of total revenue for 1997 and
1998. Additionally, AT&T accounted for approximately 77% and 95% of subscription
revenue for 1997 and 1998, and 4% and 41% of other revenue for 1997 and 1998. No
other single customer accounted for 10% or more of total revenues for 1997 or
1998.

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<PAGE> 24

Cost of Subscription Revenue. Cost of subscription revenue decreased from
$2.6 million in 1997 to $2.4 million in 1998, due primarily to decreased costs
associated with fulfilling membership subscriptions.

Cost of subscription revenue as a percentage of subscription revenue
decreased from 88.5% in 1997 to 34.0% in 1998. This decrease was due primarily
to the timing of the recognition of revenue and expenses associated with the
commencement of activities under the AT&T membership agreement in 1997.
Membership fulfillment costs, which are recorded when the membership is
fulfilled, increased significantly as the volume of memberships increased in the
Fall of 1997. However, because the revenue associated with these memberships is
recognized over the remaining term of the memberships, much of the revenue
associated with the memberships fulfilled in the Fall of 1997 was not recognized
until 1998.

Cost of Other Revenue. Cost of other revenue increased from $702,000 in
1997 to $7.9 million in 1998. The increase in cost of other revenue was due
primarily to the addition of Collegiate Advantage and its marketing services
business in 1998 and the commencement of activities under the AT&T marketing
agreement, entered into in the third quarter of 1998, under which Student
Advantage visits college campuses to acquire calling card customers for AT&T.
Costs associated with the production of SAM, Student Advantage Magazine, which
shipped for the first time in the fourth quarter of 1998, also contributed to
the increase.

Cost of other revenue as a percentage of other revenue increased from 38.1%
in 1997 to 64.6% in 1998. This increase was due primarily to a larger portion of
other revenue consisting of lower margin activities associated with the
marketing services business acquired from Collegiate Advantage and the services
delivered under the AT&T marketing agreement. The increase in cost of other
revenues as a percentage of total revenue is also due to costs associated with
the production of SAM, Student Advantage Magazine, which exceeded revenue from
the production of SAM.

Product Development. Product development expenses increased from $3.3
million in 1997 to $4.9 million in 1998. The increase was primarily due to
increased investment in enhancing and improving the functionality of our web
site and other related costs.

Sales and Marketing. Sales and marketing expenses increased from $1.9
million in 1997 to $7.3 million in 1998. The increase in sales and marketing
expenses was due, in large part, to increased expenditures related to building
brand awareness, expanding and servicing the customer base of sponsors, selling
more online advertising, and supporting the marketing services business. In
1998, we incurred additional sales and marketing expenses as a result of the
acquisition of the Collegiate Advantage business.

General and Administrative. General and administrative expenses increased
from $2.7 million in 1997 to $5.5 million in 1998. The increase in general and
administrative expenses was primarily due to facilities and personnel-related
costs.

Depreciation and Amortization. Depreciation and amortization expenses
increased from $351,000 in 1997 to $1.2 million in 1998. Amortization expense
increased as a result of the amortization over five years of goodwill and other
intangible assets related to the acquisitions of Collegiate Advantage and The
Main Quad. Depreciation expense increased primarily as a result of fixed asset
purchases in 1998.

Stock-Based Compensation. We recorded deferred compensation of $4.2
million in 1998. Of this amount, $808,000 was recorded as an expense in 1998.
The remainder is being amortized over the remaining vesting period of the
individual options.

Interest Income (Expense), Net. Interest income, net increased from an
expense of $77,000 in 1997 to income of $121,000 in 1998. The increase was a
result of interest income earned on cash balances as a result of the conversion
of the notes payable to convertible preferred stock and the issuance of
convertible preferred stock in February, April and October of 1998, as well as
interest from a promissory note to a stockholder, which were offset by interest
due on borrowings under our line of credit and notes payable to stockholders.
Additionally, Student Advantage incurred interest expense related to loans from
its chief executive officer, which were repaid in full in 1998.

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<PAGE> 25

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, Student Advantage has financed its operations
primarily through the private placement and public offering of securities, cash
from operations, borrowings under its credit facilities and loans from LLC
members. In October 1998, Student Advantage completed a private placement of
equity securities to new investors and received $9.9 million in net proceeds. In
June 1999, we completed our initial public offering selling 6.0 million shares
of common stock and raising proceeds to the Company of $44.6 million. On July
21, 1999, an additional 900,000 shares were issued by Student Advantage as a
result of the full exercise of the underwriters' over-allotment option,
resulting in additional proceeds of $6.7 million. As of December 31, 1999,
Student Advantage had $35.9 million in cash, cash equivalents and marketable
securities.

Net cash used for operating activities was $12.9 million in 1999. Net cash
used in 1999 was primarily a result of a net loss of $19.6 million an increase
in accounts receivable of $776,000, an increase in prepaid, other current assets
and other assets of $2.4 million. These increases were partially offset by an
increase in deferred revenue of $2.1 million and an increase in accounts payable
and accrued expenses of $3.9 million. Net cash used for operations for 1998 of
$7.2 million resulted primarily from an increase in accounts receivable of $2.7
million and a net loss of $10.5 million. The increase was partially offset by
the timing of payments of accounts payable and accrued expenses and increased
depreciation and amortization expense. Net cash provided by operations was
$852,000 in 1997 which was affected by an increase in deferred revenue of $5.7
million. Deferred revenue represents primarily payments for membership fees not
yet recognized as revenue and advance payments for purchases of memberships and
other services.

Net cash used for investing activities was $786,000 in 1997, $2.0 million
in 1998 and $30.4 million in 1999. The net cash used for investing activities in
1999 was primarily due to $20.5 million used for purchases of marketable
securities, net of proceeds from the sale of marketable securities, and to a
lesser extent the purchase of fixed assets and the acquisitions of The Travel
Holding Group, Campus Agency and VoiceFX businesses and $4.3 million related to
the equity investment in edu.com. Net cash used for investing activities in 1998
was due primarily to the purchase of fixed assets and the acquisition of
Collegiate Advantage in 1998. In 1997, Student Advantage used cash for investing
activities to purchase fixed assets and for its acquisition of The Main Quad.

Net cash provided by financing activities was $5.0 million in 1997, $9.5
million in 1998, and $50.9 million in 1999. The net cash provided by financing
activities in 1999 was primarily the result of the net proceeds of $49.9 million
in connection with sales of the Student Advantage's common stock and to a lesser
extent cash received from the proceeds from the exercise of employee stock
options and the employee stock purchase plan. Cash provided by financing
activities in 1998 was primarily due to net cash proceeds of $11.9 million from
the sale of shares of Student Advantage common and preferred stock, partially
offset by a distribution of $2.3 million to LLC members. In 1997, Student
Advantage generated cash from financing activities through the sale of common
and preferred stock for net proceeds of $4.7 million offset by the repurchase of
a member's LLC interest for $630,000.

Student Advantage has a $2.75 million bank line of credit and equipment
lease credit facility, which expires on June 30, 2000. The line of credit bears
interest at a rate of LIBOR plus 2% or the bank's base rate. The line of credit
and equipment lease credit facility is secured by all of the assets of Student
Advantage. As of December 31, 1999, no amounts were outstanding under either the
line of credit or the equipment lease credit facility.

Student Advantage has experienced a substantial increase in its
expenditures consistent with growth in operations and staffing, and anticipates
that this will continue for the foreseeable future. Additionally, Student
Advantage will continue to evaluate possible investments in businesses, products
and technologies, and plans to expand its web infrastructure, sales and
marketing programs and aggressively promote its brand. Student Advantage
currently anticipates that its available cash resources will be sufficient to
meet its anticipated needs for working capital and capital expenditures for at
least 12 months.

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<PAGE> 26

YEAR 2000 ISSUES

Student Advantage does not internally develop a significant amount of
software, and to date, has not experienced significant disruptions to its
operating or administrative systems. Student Advantage believes that its
significant vendors and service providers are Year 2000 compliant and has not,
to date, been made aware that any of its significant vendors or service
providers have suffered Year 2000 disruptions in their systems.

Accordingly, Student Advantage does not anticipate incurring material
expenses or experiencing any material operational disruptions as a result of any
Year 2000 problems. Student Advantage spent an immaterial amount on Year 2000
testing and compliance during the year ended December 31, 1999. Most of Student
Advantage's expenses related to the operating costs associated with time spent
by its employees in the evaluation and planning process and Year 2000 compliance
matters.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities" ("SFAS No. 133"). The new
standard establishes accounting and reporting standards for derivative
instruments, including derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. SFAS No.
133 is effective for all fiscal quarters of fiscal years beginning after June
15, 1999 and is effective for Student Advantage's fiscal year ending December
31, 2000. Student Advantage does not expect the adoption of SFAS No. 133 to have
a material effect on its financial position or results of operations. On July 7,
1999, the FASB issued SFAS 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 -
an amendment to FASB Statement No. 133." SFAS 133, as amended, by SFAS 137, is
effective for Student Advantage's fiscal year ending December 31, 2001.

In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements." This
bulletin summarizes certain views of the staff on applying generally accepted
accounting principles to revenue recognition in financial statements. The staff
believes that revenue is realized or realizable and earned when all of the
following criteria are met: persuasive evidence of an arrangement exists;
delivery has occurred or services have been rendered; the seller's price to the
buyer is fixed or determinable; and collectibility is reasonably assured. The
Company does not expect the application of this bulletin to have a material
impact on the Company's financial positions or results of operation.

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<PAGE> 27

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

WE HAVE EXPERIENCED LOSSES IN THE PAST AND EXPECT FUTURE LOSSES

We have not achieved profitability and expect to continue to incur
operating losses for the foreseeable future. We incurred net losses of $6.8
million in 1997, $10.5 million in 1998 and $19.6 million in 1999. As of December
31, 1999, our accumulated deficit was $44.1 million. We expect to continue to
incur significant operating and capital expenditures and, as a result, we will
need to generate significant revenue to achieve and maintain profitability.

We cannot assure you that we will achieve sufficient revenue for
profitability. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenue grows more slowly than we anticipate, or if operating
expenses exceed our expectations or cannot be adjusted accordingly, our
business, results of operations and financial condition will be materially and
adversely affected.

WE ARE DEPENDENT UPON AT&T FOR A LARGE PERCENTAGE OF OUR REVENUE AND A DECLINE
IN REVENUE FROM AT&T WOULD ADVERSELY AFFECT OUR RESULTS

We have a relationship with AT&T as our exclusive telecommunications
partner through which AT&T pays us for a variety of goods and services,
including:

- memberships provided free to students with an AT&T calling card, and

- marketing services.

In 1997, we derived $2.4 million, or 50%, of our total revenue from AT&T.
In 1998, we derived $11.8 million, or 61%, of our total revenue from AT&T. In
1999, we derived $15.2 million, or 55%, of our total revenue from AT&T. To date,
almost all of our members have received their Student Advantage memberships at
no charge from AT&T by either electing to apply for an AT&T calling card in
connection with their Student Advantage membership or by receiving a free
Student Advantage membership from AT&T. We obtain these members as a result of
AT&T's distribution of free Student Advantage memberships to students who enroll
for an AT&T telecommunications service. In addition, most of our commerce
revenue is currently attributable to fees that we earn from AT&T for obtaining
completed calling card applications from students. There can be no assurance
that we will be successful in expanding our membership base independent of our
relationship with AT&T.

The termination dates of our current agreements with AT&T have been
extended until June 2001. However, AT&T may terminate these agreements upon 120
days' prior notice, subject to payment of a termination fee in certain cases. In
addition, AT&T can terminate the current agreements if Raymond V. Sozzi, Jr. is
no longer employed as our president, or if he no longer owns at least five
percent of our capital stock. The termination of our relationship with AT&T
would have a material adverse effect on our business.

We are in discussions with AT&T with respect to the possible restructuring
of our agreements with AT&T. There can be no assurance that such discussions
will result in any restructuring.

WE HAVE A LIMITED OPERATING HISTORY AND MAY FACE DIFFICULTIES ENCOUNTERED BY
EARLY STAGE COMPANIES IMPLEMENTING AN INTERNET STRATEGY

We have a limited operating history on which an investor can evaluate our
business. Our operations began in 1992. An investor in our common stock must
consider the risks and difficulties frequently encountered by early stage
companies implementing an internet strategy. These risks include our possible
inability to:

- sustain historical revenue growth rates,

- generate sufficient revenue to achieve and maintain profitability,

- implement our business model,

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<PAGE> 28

- maintain the satisfaction of our members,

- introduce new and enhanced web and offline content, products and
services, and

- respond to competitive developments.

If we do not successfully manage these risks, our business, results of
operations and financial condition will be materially adversely affected. We
cannot assure you that we will successfully address these risks or that our
business strategy will be successful.

OUR BUSINESS IS HIGHLY DEPENDENT UPON OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER

We are highly dependent on our president and chief executive officer,
Raymond V. Sozzi, Jr., the loss of whom would adversely affect our future
success. If Mr. Sozzi is no longer employed as our president, AT&T can terminate
its agreements with us.

OUR RELATIONSHIP WITH AT&T COULD HINDER OUR ABILITY TO ATTRACT ADDITIONAL
SPONSORS

Our agreement with AT&T prevents us from providing our goods and services
to other telecommunications companies. Our agreement with AT&T also precludes
us, without the consent of AT&T, from entering into a relationship with another
sponsor that will distribute our memberships free to students as an incentive or
through any promotion. Our relationship with AT&T could hinder our ability to
attract additional national sponsors, in particular sponsors who may be
interested in purchasing memberships for distribution to students.

WE MAY NOT SUCCESSFULLY IMPLEMENT OUR INTERNET STRATEGY

In order to successfully implement our internet strategy, we must:

- establish our network of web sites as the primary vehicle for delivery of
our products and services, including member registration and renewal,
information regarding national and local sponsors, and customer service,

- expand our web sites to include more content and services for students
and encourage our members to use the sites so that they become more
attractive for advertisers, and

- establish our network of web sites as an effective e-commerce platform.

Our failure to successfully implement our internet strategy could have a
material adverse effect on our business.

OUR ABILITY TO GENERATE SIGNIFICANT REVENUES FROM ONLINE ACTIVITIES AND INTERNET
ADVERTISING IS UNCERTAIN

It is unclear whether companies implementing an internet community business
model will generate sufficient revenues to achieve and maintain profitability.
Our ability to generate significant revenues from advertisers, sponsors and
other businesses in connection with online activities will depend, in part, on
our ability to generate sufficient user traffic with demographic characteristics
attractive to our advertisers. The intense competition among web sites that sell
online advertising has led to the creation of a number of pricing alternatives
for online advertising. These alternatives make it difficult for us to project
future levels of advertising and other internet-related revenue and applicable
gross margins related to our online offerings that can be sustained by us or the
online advertising industry in general. Our business model depends in part on
increasing the amount of revenue derived from internet advertising and other
internet-related activities.

OUR BUSINESS IS SUBJECT TO SEASONAL FLUCTUATIONS, WHICH MAY AFFECT OUR REVENUES
AND OPERATING RESULTS

Our operating results are dependent upon the college student market and we
expect them to vary seasonally based upon the typical school year. We tend to
sell most of our memberships in the beginning of the fall and winter academic
terms. All of these memberships expire on August 31 of each year. Because the
aggregate number of memberships within a school year increases as new members
are added beginning on September 1, and we recognize revenue from memberships
ratably over the period from the time of

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<PAGE> 29

subscription until the end of our membership year, our subscription revenue will
typically be higher in the first and second quarters than in the fourth quarter
of each fiscal year. It is difficult to determine how the third quarter will
typically compare, since it includes two calendar months from the end of a
membership year and the first month of the subsequent membership year.

Our limited operating history and rapid growth make it difficult for us to
more fully assess the impact of seasonal factors on our business. Nevertheless,
because our business is dependent upon the student market, we expect that our
other revenue may be subject to seasonal fluctuations associated with the
typical school year. In particular, other revenue can be expected to be higher
during the third and fourth quarters due to increased activity associated with
the commencement of the school year. Conversely, the second quarter may have the
least amount of other revenue since it includes the months at the end of a
school year.

A LIMITED NUMBER OF CUSTOMERS REPRESENT A SIGNIFICANT PERCENTAGE OF OUR REVENUE

A limited number of customers currently account for a significant
percentage of our total revenues. We expect a limited number of customers to
continue to account for a significant percentage of total revenues in the future
and we believe that we must continue to acquire additional customers to be
successful. The loss of any one of these customers could have a material adverse
effect on our business.

While we anticipate that revenues from these limited number of customers
will decline as a percentage of total revenues, we expect that a limited number
of customers will continue to represent a significant percentage of our total
revenues.

OUR QUARTERLY REVENUES AND OPERATING RESULTS ARE NOT INDICATIVE OF FUTURE
PERFORMANCE AND ARE DIFFICULT TO FORECAST

In addition to the seasonal fluctuations described above, our revenues and
operating results may vary from quarter to quarter for a variety of other
reasons, such as the timing of revenues from corporate sponsors or non-recurring
charges incurred in connection with acquisitions.

You should not rely on quarter-to-quarter comparisons of our operating
results or our operating results for any particular quarter as indicative of our
future performance. It is possible that in some future periods our operating
results may be below the expectations of public market analysts and investors.
In this event, the price of our common stock might fall.

OUR OPERATING RESULTS DEPEND ON SELLING NEW MEMBERSHIPS EVERY YEAR

A significant portion of our revenue is derived from membership fees.
Members must join our program each year. A significant percentage of our members
graduate each year and, therefore, do not renew their memberships. Our revenue
growth is highly dependent upon our ability to market the value of our
membership to college students and to retain members on a yearly basis. To date,
we have not maintained sufficient data to determine the specific number of
members who renew on a yearly basis. A failure to acquire new members or renew
current members could have a material adverse effect on our business.

OUR OPERATING RESULTS DEPEND ON OUR ABILITY TO MAINTAIN AND INCREASE BUSINESS
ALLIANCES AND UNIVERSITY RELATIONSHIPS

We are dependent upon our sponsors, both national and local, to provide our
members with discounts on their products and services. We are also dependent on
maintaining college and university relationships to market and sell our products
and services. Our ability to maintain these alliances and relationships and to
develop new alliances and relationships is critical to our ability to maintain
our members. A failure to acquire or maintain alliances and relationships with
colleges and universities could have a material adverse effect on our business.
In addition, our agreements with a number of our sponsors preclude us from
entering into similar arrangements with their competitors. This restriction may
prevent us in some cases from offering attractive additional discounts to our
members.

27
<PAGE> 30

COLLEGES AND UNIVERSITIES ARE INCREASINGLY RELUCTANT TO PERMIT BUSINESSES TO
MARKET PRODUCTS AND SERVICES ON CAMPUS

Colleges and universities are becoming increasingly wary of businesses
which market products and services to their students. Many colleges and
universities are seeking to decrease or eliminate such marketing. In particular,
colleges and universities are concerned that many students have incurred
substantial levels of credit card debt. As a result, colleges and universities
often attempt to prevent credit card companies and other companies that offer
credit from marketing to their students. We are sometimes mistaken for a credit
card company because we give students a plastic card and a unique identification
number to represent their membership. This sometimes makes it difficult for us
to gain access to college and university students, and we have been denied
access to certain college and university campuses. To date, we have not
maintained sufficient data to determine the specific number of colleges and
universities which have denied us access to their campuses. Any inability to
directly contact students on campus could have a material adverse effect on our
business.

WE FACE SIGNIFICANT COMPETITION ON THE INTERNET, WHICH COULD ADVERSELY AFFECT
OUR BUSINESS

Many web sites compete for consumers' and advertisers' attention and
spending. We believe that our ability to compete depends upon many factors,
including the following:

- the market acceptance of our web sites and online services,

- the success of our brand building and sales and marketing efforts,

- the performance, price and reliability of services developed by us or our
competitors,

- the effectiveness of our customer service efforts,

- the ability of our competitors to maintain or establish cooperative
relationships among themselves or with strategically aligned third
parties, and

- the emergence of new competitors.

We compete for members and advertisers online with the following types of
companies:

- online services or web sites targeted at college students, and

- web search and retrieval and other online service companies, commonly
referred to as portals, such as AltaVista, Excite, Infoseek, Lycos and
Yahoo!.

The number of web sites competing for the attention and spending of
advertisers and consumers, including college students, has increased and we
expect it to continue to increase. This market is rapidly evolving and barriers
to entry are low, enabling newcomers to launch competing sites at relatively low
cost.

Increased competition could result in price reductions, reduced margins or
loss of market share, any of which could adversely affect our business.

OUR MEMBERSHIP PROGRAM EXPERIENCES SIGNIFICANT COMPETITION FROM OTHER MARKETING
ACTIVITIES

We compete for client marketing budget dollars with other marketing
activities and, in particular, other forms of direct marketing activities, such
as direct mail. In recent years, there have been significant advances in new
forms of direct marketing, such as the development of interactive shopping and
data collection through television, the internet and other media. Many industry
experts predict that electronic interactive commerce, such as shopping and
information exchange via the internet, will proliferate significantly in the
foreseeable future. To the extent such proliferation occurs, it could have a
material adverse effect on the demand for membership programs.

28
<PAGE> 31

WE MAY BE UNABLE TO MAKE ATTRACTIVE ACQUISITIONS OR INTEGRATE ACQUIRED COMPANIES

As part of our business strategy, we plan to continue to acquire or make
investments in complementary businesses, products, services or technologies to
increase our online traffic and obtain new technologies. However, we cannot
assure you that we will be able to identify suitable acquisition or investment
candidates. Even if we do identify suitable candidates, we cannot assure you
that we will be able to make such acquisitions or investments on commercially
acceptable terms. If we buy a business, we could have difficulty in assimilating
that company's personnel, operations, products, services or technologies into
our operations. These difficulties could disrupt our ongoing business, distract
our management and employees, increase our expenses and adversely affect our
results of operations.

We recently acquired several businesses. Achieving the anticipated benefits
of these acquisitions will depend in part upon whether the integration of these
businesses is accomplished in an efficient, effective and timely manner. In some
cases, the difficulty associated with integrating these businesses may be
increased by the necessity of coordinating geographically separated
organizations. There can be no assurance that the anticipated benefits of these
acquisitions will be achieved. If we are unable to successfully develop and
market products and product enhancements as a result of these acquisitions, we
may not achieve our new enhanced revenue.

WE MAY BE UNABLE TO SUCCESSFULLY MANAGE CHANGES IN OUR BUSINESS

We have experienced a period of significant growth. This growth has placed
significant demands on our management and strains on our resources. Revenue
increased from approximately $1.8 million in 1996 to $4.8 million in 1997 to
$19.4 million in 1998 to $27.6 million in 1999. During that same time period we
increased from fewer than 50 to more than 310 employees.

Our ability to manage changes in our business will depend on our ability to
continue to enhance our operating, financial and management information systems.
We cannot assure you that our personnel, systems and controls will be adequate
to support our growth, if any. If we are unable to manage change effectively,
maintain the quality of our products and services and retain key personnel, our
operating results and financial condition could be significantly affected.

OUR CURRENT FINANCIAL AND MANAGEMENT INFORMATION SYSTEMS MAY BE INADEQUATE TO
SUPPORT FUTURE OPERATIONS

We do not expect our current financial and management information systems
to be adequate to support our operations in the future. We are in the process of
replacing our accounting system and expect to complete this process within the
next three months. If we incur delays or difficulties in implementing an
accounting system, our business could be adversely affected.

OUR MANAGEMENT TEAM HAS LIMITED EXPERIENCE IN RUNNING A PUBLIC COMPANY

Our management team has had limited significant experience in a leadership
role in a public company. We cannot assure you that the management team as
currently configured will be able to continue to successfully lead a public
company. The failure of the management team to continue to adequately handle
this challenge could have a material adverse effect on our business.

WE MUST ATTRACT AND RETAIN HIGHLY-QUALIFIED PERSONNEL IN A COMPETITIVE LABOR
MARKET

We need to hire additional members of our management team and other key
employees. Competition for such personnel is intense. We have experienced, and
we expect to continue to experience in the future, difficulty in hiring highly
skilled employees with the appropriate qualifications. If we do not succeed in
attracting new personnel or retaining and motivating our current personnel, our
business could be adversely affected.

29
<PAGE> 32

TO EXPAND OUR BUSINESS, WE MAY NEED ADDITIONAL CAPITAL, AND THE FUTURE FUNDING
OF THESE CAPITAL NEEDS IS UNCERTAIN

We require substantial working capital to fund our business. We may require
additional financing if capital requirements vary materially from those
currently planned.

Additional funds raised through the issuance of equity securities may have
the following negative effects on the then current common stockholders:

- dilution in percentage of ownership in Student Advantage, and

- the rights, preferences or privileges of the new security holders may be
senior to those of the common stockholders.

Additional financing may not be available when needed on terms favorable to
us or at all. Our failure to raise additional funds, if needed, may result in
our inability to:

- develop or enhance our services,

- take advantage of future opportunities, or

- respond to competitive pressures.

OUR SYSTEMS MAY FAIL OR EXPERIENCE A SLOWDOWN

Substantially all of our communications hardware and certain of our other
computer hardware operations are located at USWeb Corporation's facilities in
New York and Exodus Communications, Inc. in Waltham, Massachusetts. Fire,
floods, earthquakes, power loss, telecommunications failures, break-ins and
similar events could damage these systems. Computer viruses, electronic
break-ins or other similar disruptive problems could also adversely affect our
web site. Our business could be adversely affected if our systems were affected
by any of these occurrences. Our insurance policies may not adequately
compensate us for any losses that may occur due to any failures or interruptions
in our systems. We do not presently have any secondary "off-site" systems or a
formal disaster recovery plan, however we are developing a formal disaster
recovery program.

Our network of web sites must accommodate a high volume of traffic and
deliver frequently updated information. Our web sites have in the past and may
in the future experience slower response times or decreased traffic for a
variety of reasons. These types of occurrences could cause users to perceive our
web sites as not functioning properly and therefore cause them to use another
web site or other methods to obtain information.

In addition, our users depend on internet service providers, online service
providers and other web site operators for access to our network of web sites.
Many of them have experienced significant outages in the past, and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems.

WE ARE DEPENDENT ON THIRD PARTIES FOR SOFTWARE, SYSTEMS AND RELATED SERVICES

We are dependent on various third parties for software, systems and related
services. For example, a third party provides warehousing, distribution,
fulfillment, mail and data processing services for us. As a result, our ability
to deliver various services to our users may be adversely affected by the
failure of these third parties to provide reliable software, systems and related
services to us.

We have in the past and may in the future experience slower response times
or delays in the processing of applications for students and the delivery of
membership identification cards to our members. Many of these delays have been
caused by third parties upon which we rely for fulfillment services. If we are
unsuccessful in providing our members with membership identification cards or
delivering products and services on a timely basis, our business may be
adversely affected.

30
<PAGE> 33

WE MAY BE SUED FOR INFORMATION RETRIEVED FROM THE INTERNET

We may be subjected to claims for defamation, negligence, copyright or
trademark infringement, personal injury or other legal theories relating to the
information we publish on our web sites or in our magazine. These types of
claims have been brought, sometimes successfully, against online services as
well as other print publications in the past. We could also be subjected to
claims based upon the content that is accessible from our web sites through
links to other web sites or through content and materials that may be posted by
members in chat rooms or bulletin boards. We also offer e-mail services, which
may subject us to potential risks, such as liabilities or claims resulting from
unsolicited e-mail, lost or misdirected messages, illegal or fraudulent use of
e-mail or interruptions or delays in e-mail service. Our insurance may not
adequately protect us against these types of claims.

CONSUMER PROTECTION PRIVACY CONCERNS AND REGULATIONS COULD IMPAIR OUR ABILITY TO
OBTAIN AND USE INFORMATION ABOUT OUR USERS AND MAY SUBJECT US TO LITIGATION.

Our network of web sites captures information regarding our members in
order to tailor content to them and assist advertisers in targeting their
advertising campaigns to particular demographic groups. However, privacy
concerns may cause users to resist providing the personal data necessary to
support this tailoring capability. Even the perception of security and privacy
concerns, whether or not valid, may indirectly inhibit market acceptance of our
network of web sites.

Our network of web sites currently uses cookies to track demographic
information and user preferences. A cookie is information keyed to a specific
server, file pathway or directory location that is stored on a user's hard
drive, possibly without the user's knowledge, but is generally removable by the
user. Germany has imposed laws limiting the use of cookies, and a number of
internet commentators, advocates and governmental bodies in the United States
and other countries have urged the passage of laws limiting or abolishing the
use of cookies. If these laws are passed, our business, financial condition and
results of operations could be materially harmed.

Legislative or regulatory requirements may heighten privacy concerns if
businesses must notify internet users that the data may be used by marketing
entities to direct product promotion and advertising to the user. The Federal
Trade Commission and state agencies have been investigating various internet
companies regarding their use of personal information. In 1998, the United
States Congress enacted the Children's Online Privacy Protection Act of 1998. We
depend upon collecting personal information from our customers and the
regulations promulgated under this act have made it more difficult for us to
collect personal information from some of our customers. We may be liable for
claims based on unauthorized purchases with credit card information,
impersonation or other similar fraud claims. We could incur additional expenses
if new regulations regarding the use of personal information are introduced or
if our privacy practices are investigated. Other countries are political
entities, such as the European Economic Community, have adopted such legislation
or regulatory requirements. If consumer privacy concerns are not adequately
addressed, our business, financial condition and results of operations could be
materially harmed.

WE MAY BE SUBJECT TO LITIGATION WHICH COULD HAVE A MATERIAL ADVERSE EFFECT UPON
OUR BUSINESS

Our industry has been the subject of substantial amounts of litigation
regarding intellectual property and contractual rights. Consequently, there can
be no assurance that third parties will not allege claims against the Company
with respect to current or future trademarks, advertising or marketing
strategies, business processes or other proprietary rights, or that the Company
will counterclaim against any such parties in such actions. Any such claims or
counterclaims could be time-consuming, result in costly litigation, diversion of
management's attention, require the Company to redesign its products or
advertising/marketing strategies or require the Company to enter into royalty or
licensing agreements, any of which could have a material adverse effect upon the
Company's business, results of operations and financial condition. Such royalty
or licensing agreements, if required, may not be available on terms acceptable
to the Company or at all.

31
<PAGE> 34

WE MAY BE UNABLE TO RESPOND TO THE RAPID TECHNOLOGICAL CHANGE IN OUR INDUSTRY

Our market is characterized by rapidly changing technologies, frequent new
product and service introductions and evolving industry standards. The recent
growth of the internet and intense competition in our industry exacerbates these
market characteristics. To achieve our goals, we need to effectively integrate
the various software programs and tools required to enhance and improve our
product offerings and manage our business. Our future success will depend on our
ability to adapt to rapidly changing technologies by continually improving the
performance features and reliability of our services. We may experience
difficulties that could delay or prevent the successful development,
introduction or marketing of new products and services. In addition, our new
enhancements must meet the requirements of our current and prospective members
and must achieve significant market acceptance. We could also incur substantial
costs if we need to modify our service or infrastructures to adapt to these
changes.

OUR INTELLECTUAL PROPERTY RIGHTS MAY BE VIOLATED OR SUBJECT TO LITIGATION AND WE
MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS

We believe that protection of our patent, copyrights, service marks,
trademarks, trade secrets, proprietary technology and similar intellectual
property is important to the success of some of our services. We rely on the
following mechanisms to protect such intellectual property:

- patent, trademark and copyright law,

- trade secret protection, and

- confidentiality agreements with employees, customers, independent
contractors, sponsors and others.

Despite our best efforts, we cannot assure you that our intellectual
property rights will not be infringed, violated or legally imitated. Failure to
protect our intellectual property could have a material adverse effect on our
business.

We have been, and may be, sued or named as a defendant in the future for
infringement of the trademark and other intellectual property rights of third
parties. Any such proceedings or claims could have a material adverse effect on
our business, financial condition and results of operations.

THE FAILURE OF COMPUTER SYSTEMS AND SOFTWARE PROGRAMS TO BE YEAR 2000 COMPLIANT
COULD NEGATIVELY IMPACT OUR BUSINESS

We have made an assessment of the Year 2000 readiness of our operating,
financial and administrative systems, including the hardware and software that
support our systems. Since third parties developed and currently support many of
the systems that we use, a significant part of this effort was to confirm that
these third-party systems are Year 2000 compliant. We have confirmed this
compliance solely through a combination of the representation by these third
parties of their products' Year 2000 compliance as well as reviews of Year 2000
readiness documentation from our vendors. Despite this effort, we cannot be
certain that none of the third party software, hardware or services incorporated
in our material systems need to be revised or replaced. To date, we are not
aware of any Year 2000 compliance problems impacting our business. We cannot be
certain that there will be no Year 2000 disruptions in the coming months. The
failure of systems maintained by third parties to be Year 2000 compliant could
cause us to incur significant expense to remedy any problems, reduce our
revenues from such third parties or otherwise seriously damage our business. A
significant Year 2000-related disruption of the network services or equipment
that third-party vendors provide to us could also cause our members or other
users to consider seeking alternate providers or cause an unmanageable burden on
our customer service and technical support.

Our failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, some of our normal business activities or
operations.

32
<PAGE> 35

CERTAIN CURRENT STOCKHOLDERS OWN A LARGE PERCENTAGE OF OUR VOTING STOCK

Our executive officers, directors and affiliated entities, based on the
number of shares of outstanding common stock as of February 29, 2000, together
own approximately 63.5% of our outstanding common stock. Therefore, these
stockholders are able to control all matters requiring stockholder approval and,
thereby, our management and affairs. Matters that typically require stockholder
approval include:

- election of directors,

- merger or consolidation, and

- sale of substantially all of our assets.

This concentration of ownership may delay, deter or prevent acts that would
result in a change of control, which in turn could reduce the market price of
our common stock.

OUR STOCK PRICE COULD BE EXTREMELY VOLATILE AND MAY RESULT IN LITIGATION AGAINST
US

The stock market has experienced significant price and volume fluctuations,
and our market price could be volatile. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted. Litigation could result in
substantial costs and a diversion of management's attention and resources.

OUR CHARTER DOCUMENTS MAY INHIBIT A TAKEOVER

Provisions in our charter and bylaws may have the effect of delaying or
preventing a change of control or changes in our management that a stockholder
might consider favorable. These provisions include, among others:

- the division of the Board of Directors into three separate classes,

- the right of the Board to elect a director to fill a vacancy created by
the expansion of the Board, and

- the requirement that a special meeting of stockholders be called by the
Chairman of the Board, President or Board of Directors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Student Advantage does not believe that it has any material market risk
exposure with respect to derivative or other financial instruments.

33
<PAGE> 36

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... 35
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... 36
Consolidated Statement of Operations for the years ended
December 31, 1997, 1998 and 1999.......................... 37
Consolidated Statement of Changes in Redeemable Convertible
Preferred Stock and Stockholders' Equity (Deficit) for the
years ended December 31, 1997, 1998 and 1999.............. 38
Consolidated Statement of Cash Flows for the years ended
December 31, 1997, 1998 and 1999.......................... 39
</TABLE>

34
<PAGE> 37

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Student Advantage, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in redeemable
convertible preferred stock and stockholders' equity (deficit) and of cash flows
present fairly, in all material respects, the financial position of Student
Advantage, Inc. and its subsidiaries at December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with accounting principals
generally accepted in the United States. 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 conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts
February 11, 2000

35
<PAGE> 38

STUDENT ADVANTAGE, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 6,140 $ 15,370
Marketable securities..................................... -- 20,546
Accounts receivable (net of allowance for doubtful
accounts of $70 and $250 at December 31, 1998 and 1999,
respectively).......................................... 3,209 4,527
Prepaid expenses and other current assets................. 352 2,698
-------- --------
Total current assets................................... 9,701 43,141
Property and equipment, net................................. 1,386 4,038
Investment.................................................. -- 4,262
Intangible and other assets, net............................ 617 9,355
-------- --------
Total assets........................................... $ 11,704 $ 60,796
======== ========

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable.......................................... $ 1,985 $ 3,329
Accrued compensation...................................... 1,095 1,523
Other accrued expenses.................................... 1,912 4,574
Deferred revenue.......................................... 7,064 9,576
-------- --------
Total current liabilities.............................. 12,056 19,002
-------- --------
Notes payable............................................... -- 100
-------- --------
Total liabilities...................................... 12,056 19,102
-------- --------
Series A redeemable convertible preferred stock; $1 par
value; Authorized:
4,000,000 shares; Issued: 2,952,568 and 0 shares at
December 31, 1998 and 1999 , respectively; Outstanding:
2,747,036 and 0 shares at December 31, 1998 and 1999,
respectively.............................................. 10,196 --
Commitments and contingencies (Note 12)
Stockholders' equity (deficit)
Preferred Stock, $0.01 par value, 5,000,000 shares
authorized, 0 shares issued and outstanding
Common stock, $0.01 par value; Authorized: 150,000,000
shares; Issued:
20,746,255 and 35,435,398 at December 31, 1998 and 1999,
respectively; Outstanding: 18,531,190 and 35,435,398 at
December 31, 1998 and 1999, respectively.................. 207 354
Additional paid-in capital................................ 18,944 87,690
Accumulated deficit....................................... (25,706) (44,058)
Notes receivable from stockholders........................ -- (79)
Treasury stock (at cost).................................. (630) --
Deferred compensation..................................... (3,363) (2,213)
-------- --------
Total stockholders' equity (deficit)................... (10,548) 41,694
-------- --------
Total liabilities, redeemable convertible preferred
stock and stockholders' equity (deficit).............. $ 11,704 $ 60,796
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
36
<PAGE> 39

STUDENT ADVANTAGE, INC.

CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1998 1999
------- -------- --------
<S> <C> <C> <C>
Revenue
Subscription.............................................. $ 2,971 $ 7,174 $ 7,838
Other..................................................... 1,844 12,186 19,806
------- -------- --------
Total revenue.......................................... 4,815 19,360 27,644
------- -------- --------
Costs and expenses
Cost of subscription revenue.............................. 2,628 2,442 2,365
Cost of other revenue (excluding stock-based compensation
of $0, $70 and $91 for the years ended 1997, 1998 and
1999, respectively).................................... 702 7,867 13,178
Product development (excluding stock-based compensation of
$0, $221 and $320 for the years ended 1997, 1998 and
1999, respectively).................................... 3,253 4,948 9,654
Sales and marketing (excluding stock-based compensation of
$0, $446 and $547 for the years ended 1997, 1998 and
1999, respectively).................................... 1,905 7,313 11,704
General and administrative (excluding stock-based
compensation of $0, $71 and $161 for the years ended
1997, 1998 and 1999, respectively)..................... 2,727 5,484 8,543
Depreciation and amortization............................. 351 1,155 1,994
Stock-based compensation.................................. -- 808 1,119
------- -------- --------
Total costs and expenses............................... 11,566 30,017 48,557
------- -------- --------
Loss from operations........................................ (6,751) (10,657) (20,913)
Interest income (expense), net.............................. (77) 121 1,358
------- -------- --------
Net loss.................................................... $(6,828) $(10,536) $(19,555)
======= ======== ========
Basic and diluted net loss per share........................ $ (0.41) $ (0.59) $ (0.71)
======= ======== ========
Shares used in computing basic and diluted net loss per
share..................................................... 16,588 17,710 27,410
======= ======== ========
Unaudited pro forma basic and diluted net loss per share.... $ (0.46) $ (0.63)
======== ========
Shares used in computing unaudited pro forma basic and
diluted net loss per share................................ 22,772 31,226
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
37
<PAGE> 40

STUDENT ADVANTAGE, INC.

CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
REDEEMABLE
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------- ---------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES PAR VALUE CAPITAL DEFICIT
---------- -------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997.................... 1,372,043 $ 54 15,978,627 $160 $ 5,708 $ (5,938)
Issuance of preferred and common stock, net
of issuance costs.......................... 119,368 19 1,988,149 20 4,657
Issuance of common stock for services....... 84,040 1 677
Issuance of preferred and common stock upon
cancellation of notes payable.............. 27,440 5 407,181 4 836
Issuance of preferred and common stock in
satisfaction of obligation to
stockholder................................ 32,792 9 353,405 3 30
Repurchase of 205,532 shares of preferred
stock and 2,215,065 shares of common
stock......................................
Issuance of preferred and common stock in
connection with the acquisition of The Main
Quad....................................... 37,045 24 399,244 4 78
Issuance of common stock warrant............ 194
Net loss.................................... (6,828)
---------- -------- ---------- ---- -------- --------
Balance, December 31, 1997.................. 1,588,688 111 19,210,646 192 12,180 (12,766)
---------- -------- ---------- ---- -------- --------
Issuance of preferred and common stock, net
of issuance costs.......................... 1,250,000 10,000 271,441 3 1,997 (84)
Issuance of preferred and common stock in
connection with the acquisition of The Main
Quad....................................... 65,858 49 709,768 7 169
Issuance of preferred and common stock upon
cancellation of notes payable.............. 48,022 36 517,536 5 124
Issuance of common stock for services....... 36,864 -- 297
Exercise of common stock options............ -- -- 6
Distributions to stockholders............... (2,320)
Deferred compensation relating to grants of
stock options.............................. 4,171
Compensation relating to grants of stock
options....................................
Net loss.................................... (10,536)
---------- -------- ---------- ---- -------- --------
Balance, December 31, 1998.................. 2,952,568 10,196 20,746,255 207 18,944 (25,706)
---------- -------- ---------- ---- -------- --------
Exercise of common stock options and
warrants................................... 1,075,046 11 665
Sale of common stock under employee stock
purchase plan.............................. 36,258 -- 246
Issuance of common stock and common stock
warrants in connection with the acquisition
of Mentor Interactive, Inc................. 18,056 -- 299
Issuance of common stock in connection with
the acquisition of Transaction Service
Providers.................................. 195,000 2 268 (444)
Issuance of common stock in initial public
offering, net of issuance costs............ 6,900,000 69 49,823
Conversion of preferred stock to common
stock in connection with the initial public
offering................................... (2,952,568) (10,196) 6,026,043 61 9,505
Issuance of common stock for services....... 8,658 -- 108
Issuance of common stock warrant............ 2,221
Deferred compensation relating to grants of
stock options.............................. 228
Deferred compensation related to
cancellation of stock options for
terminated employees....................... (259)
Compensation relating to grants of stock
options....................................
Issuance of common stock in connection with
the acquisition of VoiceFX................. 430,082 4 5,642
Adjustment to conform fiscal periods for
University Netcasting, Inc................. 1,647
Net loss.................................... (19,555)
---------- -------- ---------- ---- -------- --------
Balance December 31, 1999................... -- $ -- 35,435,398 $354 $ 87,690 $(44,058)
========== ======== ========== ==== ======== ========

NOTES TOTAL
RECEIVABLE STOCKHOLDERS'
FROM TREASURY DEFERRED EQUITY
STOCKHOLDERS STOCK COMPENSATION (DEFICIT)
------------ -------- ------------ -------------
<S> <C> <C> <C> <C>
Balance, January 1, 1997.................... $ -- $ -- $ -- $ (70)
Issuance of preferred and common stock, net
of issuance costs.......................... 4,677
Issuance of common stock for services....... 678
Issuance of preferred and common stock upon
cancellation of notes payable.............. 840
Issuance of preferred and common stock in
satisfaction of obligation to
stockholder................................ 33
Repurchase of 205,532 shares of preferred
stock and 2,215,065 shares of common
stock...................................... (630) (630)
Issuance of preferred and common stock in
connection with the acquisition of The Main
Quad....................................... 82
Issuance of common stock warrant............ 194
Net loss.................................... (6,828)
---- ----- ------- --------
Balance, December 31, 1997.................. -- (630) -- (1,024)
---- ----- ------- --------
Issuance of preferred and common stock, net
of issuance costs.......................... 1,916
Issuance of preferred and common stock in
connection with the acquisition of The Main
Quad....................................... 176
Issuance of preferred and common stock upon
cancellation of notes payable.............. 129
Issuance of common stock for services....... 297
Exercise of common stock options............ 6
Distributions to stockholders............... (2,320)
Deferred compensation relating to grants of
stock options.............................. (4,171) --
Compensation relating to grants of stock
options.................................... 808 808
Net loss.................................... (10,536)
---- ----- ------- --------
Balance, December 31, 1998.................. -- (630) (3,363) (10,548)
---- ----- ------- --------
Exercise of common stock options and
warrants................................... (79) 597
Sale of common stock under employee stock
purchase plan.............................. 246
Issuance of common stock and common stock
warrants in connection with the acquisition
of Mentor Interactive, Inc................. 299
Issuance of common stock in connection with
the acquisition of Transaction Service
Providers.................................. (174)
Issuance of common stock in initial public
offering, net of issuance costs............ 49,892
Conversion of preferred stock to common
stock in connection with the initial public
offering................................... 630 10,196
Issuance of common stock for services....... 108
Issuance of common stock warrant............ 2,221
Deferred compensation relating to grants of
stock options.............................. (228) --
Deferred compensation related to
cancellation of stock options for
terminated employees....................... 259 --
Compensation relating to grants of stock
options.................................... 1,119 1,119
Issuance of common stock in connection with
the acquisition of VoiceFX................. 5,646
Adjustment to conform fiscal periods for
University Netcasting, Inc................. 1,647
Net loss.................................... (19,555)
---- ----- ------- --------
Balance December 31, 1999................... $(79) $ -- $(2,213) $ 41,694
==== ===== ======= ========
</TABLE>

See Note 1 for information on stock split.
The accompanying notes are an integral part of these consolidated financial
statements.

38
<PAGE> 41

STUDENT ADVANTAGE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1997 1998 1999
------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(6,828) $(10,536) $(19,555)
Adjustments to reconcile net loss to net cash provided by
(used for) operating activities:
Depreciation and amortization.......................... 351 1,155 1,994
Reserve for bad debts.................................. 70 -- 180
Amortization of discount on notes payable to
stockholders.......................................... 121 -- --
Compensation expense relating to issuance of equity.... -- 808 1,119
Interest expense on notes payable to stockholders
exchanged for stock................................... 11 -- --
Issuance of stock in exchange for services............. 678 297 108
Amortization of marketing expense associated with
common stock warrant.................................. -- -- 444
(Gain) loss on disposal of assets...................... -- -- (16)
Changes in assets and liabilities, net of effects of
acquisitions:
Accounts receivable.................................. (354) (2,728) (776)
Prepaid expenses, other current assets and other
assets.............................................. (128) (169) (2,375)
Accounts payable..................................... 316 1,271 1,003
Accrued compensation................................. 273 733 386
Accrued expenses..................................... 648 854 2,472
Deferred revenue..................................... 5,694 1,094 2,095
------- -------- --------
Net cash provided by (used for) operating
activities.......................................... 852 (7,221) (12,921)
======= ======== ========
Cash flows from investing activities:
Purchases of fixed assets................................. (357) (1,332) (3,137)
Acquisitions of businesses for cash and common stock...... (429) (655) (2,485)
Purchases of marketable securities........................ -- -- (47,223)
Proceeds from sale of marketable securities............... -- -- 26,677
Purchase of investment.................................... -- -- (4,262)
Proceeds from sale of fixed assets........................ -- -- 20
------- -------- --------
Net cash used for investing activities............... (786) (1,987) (30,410)
======= ======== ========
Cash flows from financing activities:
Proceeds from sale of preferred and common stock, net of
issuance costs......................................... 4,696 11,916 49,892
Repayment of note from stockholder........................ -- 165 --
Proceeds from exercise of common stock options, warrants
and employee stock purchase plan....................... -- 6 922
Proceeds from issuance of common stock warrants........... 194 -- --
Note payable.............................................. -- -- 100
Proceeds from long-term debt.............................. 39 -- --
Proceeds from short-term debt -- related party............ 989 1,410 --
Repayment of short-term debt -- related party............. (250) (1,635) --
Repurchase of common and preferred stock.................. (630) -- --
Distributions to stockholders............................. -- (2,320) --
------- -------- --------
Net cash provided by financing activities............ 5,038 9,542 50,914
======= ======== ========
Adjustment to conform fiscal period of University
Netcasting, Inc........................................... -- -- 1,647
Net increase in cash and cash equivalents................... 5,104 334 9,230
Cash and cash equivalents, beginning of year................ 702 5,806 6,140
------- -------- --------
Cash and cash equivalents, end of year...................... $ 5,806 $ 6,140 $ 15,370
======= ======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest...................... $ 28 $ 87 $ --
======= ======== ========
Cash paid during the year for taxes......................... $ 1 $ 1 $ --
======= ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

39
<PAGE> 42

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION, NATURE OF BUSINESS AND BASIS OF PRESENTATION

Student Advantage, Inc. (the "Company") provides college students with
discounts on a broad range of products and services nationwide through the
Student Advantage membership program, as well as its Web sites and magazine.
Student Advantage also offers marketing services to corporations seeking to
communicate effectively with the college student market.

Student Advantage, Inc. is the surviving entity of a reorganization of
Student Advantage LLC, a limited liability company. In October 1998, Student
Advantage LLC effected a recapitalization pursuant to which each of the 10,911
outstanding Members' Interests converted into 137 Preferred Members' Interests
and 1,479 Common Members' Interests, (or an aggregate of 1,497,036 Preferred
Members' Interests and 16,133,892 Common Members' Interests). Each Member
received the proportion of Preferred and Common Members' Interests that
corresponded to such Member's proportion of the 10,911 Members' Interests that
existed immediately prior to the recapitalization. Immediately following such
recapitalization, certain Members sold an aggregate of 1,250,000 Preferred
Members' Interests to two investors for aggregate consideration of $10 million.
Immediately following such transaction, the Company was reorganized from an
"LLC" to a "C" corporation, and as part of such reorganization, each Member
received the number of shares of common stock and of preferred stock of the
Company that was equal to the number of common and preferred Members' Interests
that such Member held immediately prior to the reorganization. The assets and
liabilities of the limited liability company were transferred to Student
Advantage at historical cost. The recapitalization and reorganization have been
accounted for retroactively in the accompanying financial statements.

Student Advantage operates in one segment and is subject to the risks and
uncertainties common to growing companies, including reliance on certain
customers, growth and commercial acceptance of the Internet, dependence on
principal products and services and third-party technology, activities of
competitors, dependence on key personnel such as Raymond V. Sozzi, Jr., Student
Advantage's Chief Executive Officer, and limited operating history.

Student Advantage has also experienced substantial net losses since its
inception and, as of December 31, 1999, had an accumulated deficit of $44.1
million. Such losses and accumulated deficit resulted primarily from significant
costs incurred in the development of the Company's products and services and the
preliminary establishment of the Company's infrastructure. For the foreseeable
future, the Company expects to continue to experience growth in its operating
expenses in order to execute its current business plan.

In May 1999, the Company increased the number of authorized shares of
common stock to 50,000,000. On April 5, 1999, the Company declared a 3-for-1
stock split in the form of a stock dividend, which was effective on May 21,
1999. On June 23, 1999, the Company increased the number of total authorized
shares of common stock to 150,000,000. All periods presented have been restated
to reflect the stock dividend.

In June 1999, the Company acquired University Netcasting, Inc. ("UNI").
This acquisition was accounted for using the pooling of interests method;
accordingly, the historic consolidated financial statements of Student Advantage
prior to the acquisition have been restated to reflect the financial position,
results of operations and cash flows of UNI.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Student
Advantage, Inc. and its wholly-owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Student Advantage considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Student
Advantage invests its excess cash in money markets and certificates of deposit,
which are subject to minimal credit and market risk. Student Advantage's cash
equivalents are classified as

40
<PAGE> 43
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

"available for sale" and are recorded at cost which approximates fair value. As
of December 31, 1999, the Company had cash equivalents of $10,200,000, included
in cash and cash equivalents. As of December 31, 1998, the Company had no cash
equivalents.

Marketable Securities

Marketable securities consist of certificates of deposit, commercial paper
and other equity securities. The Company classifies its marketable securities as
"available for sale" and reports them at fair value, with unrealized gains and
losses excluded from earnings and reported as an adjustment in stockholders'
equity. As of December 31, 1999, the cost of the marketable securities
approximates fair value. All marketable securities held at December 31, 1999
mature within one year. Gross realized and unrealized gains and losses which are
calculated on a specific identification basis, for the year ended December 31,
1999 were immaterial.

Investment

On November 12, 1999, Student Advantage made an equity investment in
edu.com, a privately held e-commerce company. Student Advantage paid
approximately $4.3 million in exchange for approximately 922,000 shares of
Series B preferred stock of edu.com. This investment is being recorded at the
lower of cost or market. In January 2000, Student Advantage invested an
additional $1.0 million in exchange for approximately 217,000 shares of Series B
preferred stock.

Revenue Recognition

The Company derives subscription revenue from membership fees related to
enrolling students in the Student Advantage Membership program. Subscription
revenue is recognized ratably over the remaining term of the membership
agreements. Other revenue includes advertising, marketing services, and
commerce. The Company derives revenue from advertisements placed in SAM, Student
Advantage Magazine, and on its web sites. Revenue from fees related to
advertisements placed in SAM are recognized when the magazine is shipped to
members. Web site advertising revenue is recognized as the related impressions
are displayed, provided that no significant obligations remain and collection of
the related receivable is probable. Certain advertising arrangements include
guarantees of a minimum number of impressions. For arrangements with guarantees,
revenue is recognized based upon the lesser of: 1) ratable recognition over the
period the advertising is displayed, provided that no significant Company
obligations remain and collection of the receivable is probable, or 2) a
pro-rata portion of contract revenue based upon impressions delivered relative
to minimum guaranteed impressions to be delivered. Marketing services revenue is
derived from providing tailored marketing services to corporations seeking to
market their products and services to college students. Fees from marketing
services are recognized as the related services are rendered, provided that no
significant obligations remain and collection of the related receivable is
probable. Commerce revenue is derived primarily from transaction-based fees
earned from reselling products and services, and acquiring customers, on behalf
of other businesses. This revenue is recognized upon the completion of the
related contractual obligations. Payments received in advance of revenue being
earned are recorded as deferred revenue.

Fair Value of Financial Instruments

The carrying amounts of Student Advantage's financial instruments, which
include cash equivalents, marketable securities, investment, accounts payable,
accrued expenses and notes payable, approximate their fair values at December
31, 1998 and 1999.

Concentrations of Credit Risk and Significant Customers

Financial instruments which potentially expose the Company to concentration
of credit risk are comprised primarily of cash, cash equivalents, marketable
securities and trade accounts receivable. The Company places its cash, cash
equivalents and marketable securities with financial institutions that have high
credit ratings. Management believes its credit policies are prudent and reflect
normal industry terms and business risk. The Company does not anticipate
non-performance by the counterparties and, accordingly, does not require
collateral. The Company maintains reserves for potential credit losses and such
losses, in the aggregate, have not exceeded management's

41
<PAGE> 44
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

expectations. For the years ended December 31, 1997, 1998 and 1999, one customer
accounted for 50%, 61% and 55% of total revenue, respectively. At December 31,
1998, one customer accounted for 60% of accounts receivable and at December 31,
1999, two customers accounted for 56% of accounts receivable.

Product Development

Costs incurred in product development by Student Advantage are expensed as
incurred.

Property and Equipment

Fixed assets are recorded at cost and depreciated over their estimated
useful lives, generally three to five years, using the straight-line method.
Repair and maintenance costs are expensed as incurred.

Intangible and Other Assets

Intangible assets include the excess of the purchase price over
identifiable net assets acquired in acquisitions. Such assets include goodwill,
completed technology, workforce, customer lists and non-compete agreements, web
sites and other intangible assets, which are being amortized on a straight-line
basis over their estimated economic lives ranging from two to five years.
Accumulated amortization was $871,000 and $1.8 million at December 31, 1998 and
1999, respectively. The Company periodically evaluates its intangible assets for
potential impairment, and to date no impairment losses have been recorded.

Accounting for Stock-Based Compensation

Student Advantage accounts for stock-based awards to employees using the
intrinsic value method as prescribed by Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Accordingly, no compensation expense is recorded for options
issued to employees in fixed amounts and with fixed exercise prices at least
equal to the fair market value of Student Advantage's common stock at the date
of grant. Student Advantage has adopted the provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," through disclosure only (Note 8). All
stock-based awards to non-employees are accounted for at their fair value in
accordance with SFAS No. 123.

Income Taxes

Prior to its reorganization as a C Corporation in 1998 (Note 1), Student
Advantage was treated as a limited liability company for federal and state
income tax purposes. Accordingly, no provision for corporate income taxes was
recorded during this period and all losses were passed through to Student
Advantage LLC's members. At the time of its reorganization, Student Advantage
adopted the liability method of accounting for income taxes as set forth in SFAS
No. 109, "Accounting for Income Taxes."

Advertising Expense

Student Advantage recognizes advertising expense as incurred. Advertising
expense was approximately $468,000, $824,000 and $1.2 million for the years
ended December 31, 1997, 1998 and 1999, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash Flow Information

During 1997, the Company issued 37,045 shares of Preferred Stock and
399,244 shares of Common Stock in connection with the acquisition of a company.

42
<PAGE> 45
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

During 1997, the Company issued 27,440 shares of Preferred Stock and
295,736 shares of Common Stock in exchange for the cancellation of a $24,000
note payable.

During 1997, the Company issued 32,792 shares of Preferred Stock and
353,404 shares of Common Stock in satisfaction of an obligation to a
stockholder.

During 1998, the Company issued 65,858 shares of Preferred Stock and
709,768 shares of Common Stock in connection with a contingent payment relating
to a 1997 acquisition of a company.

During 1998, the Company issued 48,022 shares of Preferred Stock and
517,538 shares of Common Stock in exchange for a note receivable of $165,000.

During 1999, the Company issued 448,138 shares of Common Stock and a
warrant to purchase 24,000 shares of Common Stock, in connection with the
acquisitions of companies.

<S> <C>
Liabilities assumed in connection with these acquisitions
were as follows (in thousands):
Fair value of tangible and intangible assets and goodwill
acquired............................................... $ 8,626
Common stock, common stock options and warrants issued.... (6,189)
Cash paid................................................. (1,462)
-------
Liabilities assumed....................................... $ 975
=======
</TABLE>

During 1999, the Company issued 8,658 shares of Common Stock in exchange
for services received.

During 1999, the Company issued 237,000 shares of Common Stock in exchange
for notes receivable of $79,000.

During 1999 the Company issued a warrant to purchase 550,000 shares of
Common Stock to Lycos, Inc. in connection with a marketing agreement (Note 7).

Net Loss Per Share and Unaudited Pro Forma Net Loss Per Share

Net loss per share is computed under SFAS No. 128, "Earnings Per Share."
Basic net loss per share is computed using the weighted average number of
shares. Diluted loss per share does not differ from basic loss per share since
potential common shares from conversion of preferred stock (in 1997 and 1998)
and exercise of stock options and warrants are anti-dilutive for all periods
presented. Pro forma basic and diluted net loss per share have been calculated
assuming the conversion of all outstanding shares of Series A preferred stock
into common shares, as if the shares had converted immediately upon their
issuance (see note 11).

Reclassification

Certain prior year amounts have been reclassified to conform to current
year presentation.

Recently Issued Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The new standard establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999 and is effective
for Student Advantage's fiscal year ending December 31, 2000. Student Advantage
does not expect the adoption of SFAS No. 133 to have a material effect on its
financial position or results of operations. On July 7, 1999, the FASB issued
SFAS 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133 - an
amendment to FASB Statement No. 133." SFAS 133, as amended by SFAS 137, is
effective for Student Advantage's fiscal year ending December 31, 2001.

43
<PAGE> 46
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

generally accepted accounting principles to revenue recognition in financial
statements. The staff believes that revenue is realized or realizable and earned
when all of the following criteria are met: persuasive evidence of an
arrangement exists; delivery has occurred or services have been rendered; the
seller's price to the buyer is fixed or determinable; and collectibility is
reasonably assured. The Company does not expect the application of this bulletin
to have a material impact on the Company's financial positions or results of
operation.

3. ACQUISITIONS

For acquisitions accounted for under the purchase method, the purchase
price of each transaction has been allocated to the assets acquired and
liabilities assumed based on the fair value of such assets and liabilities at
the respective acquisition dates.

In December 1997, Student Advantage completed its acquisition of The Main
Quad, Inc. ("Main Quad"), a company that owned and operated web sites focused on
students. Student Advantage paid $272,000 in cash and issued 399,244 shares of
common stock and 37,045 shares of preferred stock with an aggregate estimated
fair value of $106,000 in exchange for the net assets of The Main Quad, which
consisted of certain office equipment as well as Web sites, customer lists,
non-compete agreements and other intangible assets. Student Advantage amortized
these tangible and intangible assets on a straight-line basis over a two-year
period. The agreement also provided for the payment of additional consideration
by Student Advantage upon the resolution of certain contingencies. In 1998, the
agreement was amended to eliminate the contingency provisions, and Student
Advantage agreed to issue an additional 709,768 shares of common stock and
65,858 shares of preferred stock with an aggregate fair value of $225,000, which
has been recorded as additional cost of the assets acquired. This acquisition
was accounted for under the purchase method of accounting; accordingly, the
operating results of The Main Quad have been included in Student Advantage's
financial statements since the date of acquisition.

In December 1997, Student Advantage completed its acquisition of Loci, Inc.
("Loci"), a company that owned and operated a Web site focused on students.
Student Advantage paid approximately $100,000 in cash in exchange for the net
assets of Loci, which consisted of the Web site, customer lists, non-compete
agreements and other intangible assets. This acquisition has been accounted for
under the purchase method of accounting; accordingly, the operating results of
Loci have been included in Student Advantage's financial statements since the
date of acquisition. Student Advantage is amortizing these intangible assets on
a straight-line basis over a three-year period.

Student Advantage entered into an agreement effective January 1, 1998 for
the purchase of Collegiate Advantage, Inc., a provider of marketing and
promotional services to the college community. The cost of the acquisition
consisted of $601,000 in cash (including transaction costs) and the assumption
of liabilities of $275,000. During 1998, the Company paid additional contingent
consideration of $50,000. During 1999, the Company agreed to make additional
payments totaling $715,000 in three installments ending on January 31, 2001. As
of December 31, 1999, $355,000 remains outstanding. These additional payments
have been recorded as an additional cost of the assets acquired. This
acquisition was accounted for under the purchase method of accounting;
accordingly, the operating results of Collegiate Advantage have been included in
Student Advantage's financial statements since January 1, 1998. The following
unaudited pro forma data summarizes the results of operations for the year ended
December 31, 1997 as if the acquisition of Collegiate Advantage had been
completed on January 1, 1997. The pro forma data gives effect to actual
operating results prior to the acquisition and adjustments to interest income
and amortization of goodwill and other intangible assets. These pro forma
amounts do not purport to be indicative of the results that would have actually
been obtained if the acquisition had occurred on January 1, 1997 or that may be
obtained in the future.

44
<PAGE> 47
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1997
-------------------------
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C>
Net revenue............................................... $ 9,664
Net loss.................................................. $(6,971)
Net loss per common share:
Basic and diluted....................................... $ (0.42)
</TABLE>

On April 1, 1999, Student Advantage completed its acquisitions of The
Travel Holding Group, LLC and The Campus Agency, LLC in exchange for a
promissory note in the amount of $330,000. The Campus Agency provides media
planning and strategy consulting services to the U.S. student travel market. The
Travel Holding Group is a reseller of Eurail passes. The acquisitions have been
accounted for under the purchase method of accounting; accordingly, the results
of operations of each company have been included in Student Advantage's results
beginning on the acquisition date. Goodwill and other intangible assets in the
aggregate amount of $305,000 were recorded in connection with these acquisitions
and are being amortized over three years.

On May 27, 1999, Student Advantage acquired substantially all of the assets
of Mentor Interactive Corp., a provider of Internet-based research tools and
related materials, in exchange for 18,056 shares of common stock and a warrant
to purchase 24,000 shares of common stock at a purchase price of $11.08 per
share with an aggregate estimated fair value of approximately $300,000. This
acquisition has been accounted for under the purchase method of accounting;
accordingly, the results of Mentor Interactive Corp. have been included in
Student Advantage's results beginning on the acquisition date. Goodwill and
other intangible assets in the aggregate of $312,000 were recorded with the
acquisition and are being amortized over three years.

On June 11, 1999, Student Advantage acquired Transaction Service Providers,
Inc., a provider of debit card services to college students and local merchants.
This acquisition has been accounted for using the pooling of interests method;
because the historical results of operations and financial position of
Transaction Service Providers were immaterial to Student Advantage, prior period
financial statements have not been restated. Accordingly, Transaction Service
Providers' results of operations have been included in Student Advantage's
results as of April 1, 1999. In connection with the acquisition, Student
Advantage issued 195,000 shares of common stock to the stockholders of
Transaction Service Providers.

On June 18, 1999, Student Advantage acquired all of the outstanding stock
of University Netcastings, Inc. ("UNI") in exchange for 2,425,610 shares of
Student Advantage common stock and the conversion of all UNI outstanding common
stock options for options to purchase 66,634 shares of Student Advantage common
stock. UNI is a leading operator of official athletic web sites for colleges,
universities and college sports associations. Through its FANSonly Network, UNI
provides sports fans with comprehensive online information and analysis on
college sports. This acquisition was accounted for using the pooling of
interests method; accordingly, the historic consolidated financial statements of
Student Advantage prior to the acquisition have been restated to reflect the
financial position, results of operations and cash flows of UNI.

Effective June 18, 1999, UNI's fiscal year end changed from March 31 to
December 31 to conform to Student Advantage's year end. UNI's results of
operations for the years ended March 31, 1997, 1998 and 1999 have been included
in Student Advantage's December 31, 1996, 1997 and 1998 results, respectively.
UNI's results for year ended December 31, 1999 have been included in Student
Advantage's year ended December 31, 1999 results. Accordingly, UNI's operations
for the three months ended March 31, 1999 have been included in Student
Advantage's results for both the years ended December 31, 1998 and 1999. Revenue
and net loss for UNI for the three months ended March 31, 1999 were $682,000 and
$1.6 million, respectively. This net loss has been reported as an adjustment to
the consolidated accumulated deficit.

45
<PAGE> 48
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following is a reconciliation of revenues and net loss previously
reported by Student Advantage for the years ended December 31, 1997 and 1998,
with the combined amounts currently presented in the consolidated financial
statements for those periods (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------
12/31/97 3/31/98 12/31/97 12/31/98 3/31/99 12/31/98
SA UNI COMBINED SA UNI COMBINED
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues............. $ 3,792 $ 1,023 $ 4,815 $ 17,443 $ 1,917 $ 19,360
Net loss............. $ (3,152) $(3,676) $(6,828) $ (5,115) $(5,421) $(10,536)
</TABLE>

On October 7, 1999, Student Advantage acquired Voice FX Corporation ("Voice
FX"), a leading provider of internet and interactive voice response services to
college and university registrars. In connection with the acquisition, Student
Advantage paid approximately $1.1 million in cash, issued 430,082 shares of
Student Advantage common stock, valued at approximately $5.0 million, and agreed
to assume all outstanding options to purchase Voice FX common stock through
issuing 59,687 options to purchase common stock valued at approximately $0.7
million. Student Advantage also incurred approximately $150,000 in professional
and other fees associated with this acquisition. The acquisition has been
accounted for under the purchase method of accounting; accordingly, Voice FX's
results of operations have been included in Student Advantage's results of
operations beginning on the acquisition date. Goodwill and other intangible
assets in the aggregate amount of $6.3 million have been recorded in connection
with the acquisition and are being amortized on a straight-line basis over
expected useful lives of between three and five years.

The acquired assets and assumed liabilities associated with the purchase of
Voice FX have been allocated as follows (in thousands):

<TABLE>
<S> <C>
Working capital, net........................................ $ 21
Fixed assets................................................ 564
Completed technology........................................ 1,230
In-place workforce.......................................... 470
Goodwill.................................................... 4,644
------
Total purchase price...................................... $6,929
======
</TABLE>

The following unaudited pro forma data summarizes the results of operations
for the years ended December 31, 1998 and 1999 as if the acquisition of Voice FX
had been completed on the first day of each respective period. The pro forma
data gives effect to actual operating results prior to the acquisition and
adjustments to reflect amortization of goodwill and other intangible assets.
These pro forma amounts do not purport to be indicative of the results that
would have actually been obtained if the acquisition had occurred on January 1,
1998 and 1999, respectively or that may be obtained in the future.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1999
----------- -----------
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Net revenue............................................. $ 21,395 $ 31,571
Net loss................................................ $(13,328) $(21,781)
Net loss per common share:
Basic and diluted..................................... $ (0.73) $ (0.79)
</TABLE>

46
<PAGE> 49
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. PROPERTY AND EQUIPMENT

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

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1999
------ ------
<S> <C> <C>
Furniture and fixtures...................................... $ 73 $ 246
Computer equipment and software............................. 1,097 5,607
Equipment................................................... 238 298
Leasehold improvements...................................... 412 699
------ ------
1,820 6,850
Less: Accumulated depreciation and amortization............. 434 2,812
------ ------
$1,386 $4,038
====== ======
</TABLE>

Depreciation and amortization expense with respect to property and
equipment for the years ended December 31, 1997, 1998 and 1999 was $132,000,
$351,000 and $867,000, respectively.

5. BORROWINGS

During 1998, the Company entered into a $1.25 million line of credit
agreement with a bank expiring in April of 1999. The agreement is subject to
certain financial covenants as defined in the agreement, and the assets of the
Company collateralize the related obligation. Borrowings under the agreement
bear interest at the bank's rate, which at December 31, 1998 was 9.25%. During
1998, the Company borrowed $1.25 million under the agreement. There were no
borrowings outstanding at December 31, 1998.

In April 1999, this line of credit agreement was replaced with and
superseded by a new line of credit agreement which provides for borrowings of up
to $2.75 million, including a $250,000 equipment line of credit. The terms of
this line of credit agreement require the maintenance of certain minimum
financial ratios and conditions and includes other covenants similar to those in
the initial agreement. A termination of the Company's agreements with AT&T would
give the bank the right to terminate the credit agreement. All borrowings under
this line of credit agreement bear interest at a rate of LIBOR plus 2% or at the
bank's rate (8.0% at December 31, 1999), and expires in June 2000. There were no
borrowings outstanding at December 31, 1999.

6. PREFERRED STOCK

Prior to the conversion of the Series A preferred stock upon the closing of
the Company's initial public offering ("IPO") (see Note 7), the Series A
preferred stockholders had the following rights and privileges:

Voting Rights

Each holder of the Series A preferred stock was entitled to a number of
votes equal to the number of shares of common stock into which each share of
such stock was then convertible. With respect to the election of directors, the
Series A preferred stockholders, voting as a single class, could have elected
two directors.

Conversion

Each share of Series A preferred stock was convertible, at the option of
the holder, into three shares of common stock, subject to certain anti-dilution
adjustments. Each share of the Series A preferred stock automatically converted
into three shares of common stock upon the closing of the Company's IPO on June
23, 1999 (see note 7).

Dividend Rights

The Series A preferred stockholders were not entitled to receive any
dividends unless declared by Student Advantage's Board of Directors. In the
event that dividends were paid on the common stock, the Series A preferred
stockholders were entitled to receive dividends at the same rate and at the same
time as the common stockholders,

47
<PAGE> 50
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

with each share of Series A preferred stock being treated as equal to the number
of shares of common stock into which each share of such stock was convertible.

Liquidation Preferences

In the event of any liquidation, dissolution or winding up of Student
Advantage, the Series A preferred stockholders were entitled to receive, in
preference to the holders of the common stock, an amount equal to the greater of
$8.00 per share, subject to certain anti-dilutive adjustments, or such amount as
were payable had such shares been converted to common stock just prior to
liquidation. Any assets remaining following the initial distribution to the
preferred stockholders would have been available for distribution ratably among
the common stockholders only.

Redemption

On October 16, 2003, at the request of at least one-third of the holders of
the Series A preferred stock, Student Advantage would have redeemed the then
outstanding shares of Series A preferred stock from each holder that requested
redemption. Upon redemption, each holder of the Series A would have been
entitled to receive a cash payment equal to $8.00 per share plus any declared
but unpaid dividends.

Undesignated Preferred Stock

On April 5, 1999, Student Advantage's Board of Directors approved, which
the stockholders approved in May 1999, 5,000,000 shares of undesignated
preferred stock. Issuances of the undesignated preferred stock may be made at
the discretion of the Board of Directors (without stockholder approval), in one
or more series and with such designations, rights and preferences as determined
by the Board. As a result, the undesignated preferred stock may have dividend,
liquidation, conversion, redemption, voting or other rights which may be more
expansive than the rights of holders of common stock.

7. STOCKHOLDERS' EQUITY (DEFICIT)

Warrants issued to Lycos

In July 1999, Student Advantage entered into a marketing agreement with
Lycos, Inc. In connection with the transaction, Lycos was granted a warrant (the
"Lycos warrant") to purchase 550,000 shares of Student Advantage common stock at
a price of $10.875 per share. The Lycos warrant terminates on July 21, 2002 and
is exercisable on or after July 21, 2000. The Company has valued the Lycos
warrant at $2.2 million, which is included in other assets, and which is being
recognized as a sales and marketing expense on a straight-line basis over the
thirty-month term of the marketing agreement. During 1999, $444,000 of the
warrants value was recognized as sales and marketing expense.

In May 1999, Student Advantage issued a warrant for the purchase of 24,000
shares of common stock at a purchase price of $11.08 per share in connection
with its acquisition of Mentor Interactive Corp (see Note 3). This warrant was
exercisable upon issue and expires on May 27, 2000.

Initial Public Offering ("IPO")

On June 23, 1999, the Company completed an IPO of 6,000,000 shares of
common stock resulting in proceeds of approximately $44.6 million. Upon closing
of the IPO, each outstanding share of redeemable convertible preferred stock
converted into shares of common stock at a three to one ratio. On July 21, 1999,
an additional 900,000 shares of common stock were issued by the Company as a
result of the full exercise of the underwriters' over-allotment option. The
Company received additional proceeds of $6.7 million as a result of the
exercise.

48
<PAGE> 51
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCK AWARD PLANS

1995 Stock Option Plan

In 1995, the Board of Directors of UNI adopted the 1995 Stock Option Plan
(the "1995 Plan") authorizing the issuance of incentive and non-qualified
options and UNI common stock to select employees and non-employees. Options
granted under the 1995 Plan expire in ten years or less. The vesting terms were
set by the 1995 Plan's administrator, and were generally established with
monthly vesting over periods of four years, including cliff vesting at the end
of the first year of 25%. Stock option activity under this plan is reflected in
the table below.

1996 Stock Option Plan

In 1996, the Board of Directors of UNI adopted the 1996 Stock Option Plan
(the "1996 Plan") authorizing the issuance of incentive and non-qualified stock
to eligible employees. Options granted under the 1996 Plan expire in ten years
or less. The vesting terms were set by the 1996 Plan's administrator, and were
generally established with monthly vesting over a four-year period and cliff
vesting at the end of the first year of 25%. Stock option activity under this
plan is reflected in the table below.

1998 Stock Incentive Plan

Under the 1998 Incentive Stock Plan, the Board of Directors may award
options and restricted stock or other stock-based awards. Incentive stock
options may not be granted at less than the fair market value of Student
Advantage's common stock at the date of grant, for a term not to exceed ten
years and generally vesting over a four-year period. The exercise price under
each non-qualified stock option shall be specified by the Board of Directors.
Awards made under the 1998 Stock Plan may be made at the discretion of the Board
of Directors with terms to be defined therein.

On April 5, 1999, the Board approved, which the stockholders approved in
May 1999, an amendment to the 1998 Stock Plan providing for the issuance of up
to an aggregate 7,500,000 shares of Student Advantage common stock to eligible
employees, officers, directors, consultants and advisors of Student Advantage.

Prior to 1998, there was no compensation expense recognized for stock
option grants made by Student Advantage under APB Opinion No. 25. For the year
ended December 31, 1998 and 1999, compensation expense recognized for stock
option grants totaled $808,000 and $1.1 million. Had compensation cost for the
Company's option grants been determined based on the fair value at the date of
grant consistent with the method prescribed by SFAS No. 123, Student Advantage's
net loss and net loss per share would have increased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1998 1999
--------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net loss:
As reported............................................ $(6,828) $(10,536) $(19,555)
Pro forma.............................................. (6,834) (10,574) (21,766)
Basic and diluted net loss per share:
As reported............................................ (0.41) (0.59) (0.71)
Pro forma.............................................. (0.41) (0.60) (0.79)
</TABLE>

Because additional option grants are expected to be made subsequent to
December 31, 1999, and because most options vest over several years, the pro
forma effects of applying the fair value method may be material to the results
of operations in future years.

Under SFAS No. 123, the fair value of each employee option grant is
estimated on the date of grant using the Black-Scholes option pricing model to
apply the Black-Scholes option pricing model with the following weighted-
average assumptions used for grants made during the years ended December 31,
1997, 1998 and 1999: no dividend

49
<PAGE> 52
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

yield; risk free interest rates of 5.5%, 4.54% and 5.25%, respectively; no
volatility in 1997 and 1998, 97% in 1999; and an expected option term of 7.9, 4
and 6 years, respectively.

Stock option activity under the Company's option plans since January 1,
1997 is as follows:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
----------------------------------------------------------------------
1997 1998 1999
--------------------- --------------------- ----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
NUMBER EXERCISE NUMBER EXERCISE NUMBER EXERCISE
OF SHARES PRICE OF SHARES PRICE OF SHARES PRICE
--------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding -- beginning of
year.......................... 30,320 $1.05 39,842 $2.50 2,375,073 $ 0.41
Granted, at fair value........ 13,373 5.70 37,206 4.27 2,842,299 $10.05
Granted, at below fair
value...................... -- -- 2,313,000 0.33 47,550 $ 1.87
Exercised..................... -- -- (1,124) 5.70 (1,053,005) $ 0.44
Canceled...................... (3,851) 2.24 (13,851) 3.94 (328,472) $ 4.99
------ --------- ----------
Outstanding December 31,........ 39,842 $2.50 2,375,073 $0.41 3,883,445 $ 7.09
====== ========= ==========
Exercisable at December 31,..... 24,222 $1.91 485,951 $0.49 495,443 $ 4.11
====== ========= ==========
</TABLE>

As of December 31, 1999, 2,689,869 shares were available for grant under
the 1998 Stock Plan.

The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------- ------------------------------------
NUMBER NUMBER OF
OUTSTANDING WEIGHTED SHARES
AS OF AVERAGE EXERCISABLE AS OF
DECEMBER 31, REMAINING WEIGHTED AVERAGE DECEMBER 31, WEIGHTED AVERAGE
1999 LIFE (YEARS) EXERCISE PRICE 1999 EXERCISE PRICE
------------ ------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
$0.33 -$0.33 140,062 8.94 $ 0.33 1,312 $ 0.33
$0.33 -$0.54 1,064,257 8.93 $ 0.34 262,676 $ 0.35
$0.54 -$5.70 73,281 8.34 $ 2.76 51,660 $ 3.14
$8.00 -$8.00 581,250 9.46 $ 8.00 0 $ 0.00
$8.25 -$9.50 100,050 9.52 $ 8.33 0 $ 0.00
$9.90 -$9.90 1,116,001 9.37 $ 9.90 176,501 $ 9.90
$10.63-$12.25 468,794 9.75 $12.07 3,294 $10.83
$12.38-$21.75 339,250 9.81 $13.88 0 $ 0.00
$22.25-$22.25 500 9.93 $22.25 0 $ 0.00
--------- -------
3,883,445 9.32 $ 7.09 495,443 $ 4.11
========= =======
</TABLE>

1999 Employee Stock Purchase Plan

On April 5, 1999, the Board of Directors authorized, which the stockholders
approved in May 1999, the 1999 Employee Stock Purchase Plan (the "Purchase
Plan"). The Purchase Plan provides for the issuance of up to 450,000 shares of
Student Advantage's common stock to eligible employees. Under the Purchase Plan,
Student Advantage is authorized to make one or more offerings during which
employees may purchase shares of common stock through payroll deductions made
over the term of the offering. The per-share purchase price at the end of each
offering is equal to 85% of the closing price of the common stock at the
beginning or end of the offering period (as defined by the Purchase Plan),
whichever is lower. During 1999, 36,258 shares of the Company's common stock
were purchased under the Purchase Plan at $6.80 per share.

50
<PAGE> 53
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Deferred Compensation

During 1998, Student Advantage granted stock options to purchase 2,313,000
shares of its common stock with an exercise price of $0.33 per share. During
1999, Student Advantage granted stock options to purchase 47,550 shares of its
common stock with an exercise price of $1.87 per share. During 1998 and 1999,
Student Advantage recorded compensation expense relating to these options
totaling $808,000 and $1.1 million, respectively. During 1998 and 1999, Student
Advantage recorded deferred compensation of $4.2 million and $228,000,
respectively, representing the differences between the estimated fair market
value of the common stock on the date of grant and the exercise price.
Compensation relating to options which vested immediately upon grant was
expensed in full at the date of grant, while compensation related to options
which vest over time was recorded as a component of stockholders' equity
(deficit) and is being amortized over the vesting periods of the related
options. In 1999, as a result of employee terminations deferred compensation
related to certain of these options was reduced by approximately $259,000.

9. INCOME TAXES

Deferred tax assets are comprised of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1998 1999
------- -------
<S> <C> <C>
Deferred tax assets:
Deferred revenue..................................... $ 2,400 $ 3,366
Start up costs....................................... 154 --
Net operating loss carryforwards..................... 5,782 8,041
Non current assets................................... 200 732
Accruals............................................. 300 683
Deferred compensation................................ 300 --
Other................................................ 165 100
------- -------
Total deferred tax assets....................... 9,301 12,922
Deferred tax liability -- intangible assets............... -- (628)
------- -------
Net deferred tax asset.......................... 9,301 12,294
Deferred tax asset valuation allowance.................... (9,301) (12,294)
------- -------
$ -- $ --
======= =======
</TABLE>

The Company has provided a full valuation allowance for the deferred tax
assets since it is more likely than not that these future benefits will not be
realized. If the Company achieves future profitability, a significant portion of
these deferred tax assets could be available to offset future income taxes.

As of December 31, 1999, the Company has a net operating loss carryforward
for federal and state purposes of approximately $19.9 million, which expire at
various dates through 2019.

Under the Internal Revenue Code, certain substantial changes in the
Company's ownership could result in an annual limitation on the amount of net
operating loss and tax credit carryforwards which can be utilized in future
years.

10. EMPLOYEE SAVINGS PLAN

During 1998, Student Advantage adopted an employee retirement savings plan
under Section 401(k) of the Internal Revenue Code which covers substantially all
employees. Under the terms of the 401(k) Plan, employees may contribute a
percentage of their salary, up to a maximum of 20%. Student Advantage
contributed $61,000 and $133,000 to the 401(k) Plan on behalf of its employees
during 1998 and 1999, respectively.

51
<PAGE> 54
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMPUTATION OF NET LOSS PER SHARE AND PRO FORMA NET LOSS PER SHARE

The following table reconciles the numerator and denominator of the basic
and diluted net loss per share and the pro forma basic and diluted net loss per
share (unaudited) computations shown on the consolidated statements of
operations.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1998 1999
--------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Basic and diluted net loss per share:
Net loss.................................................... $(6,828) $(10,536) $(19,555)
======= ======== ========
Basic and diluted weighted average common shares
outstanding............................................... 16,588 17,710 27,410
======= ======== ========
Basic and diluted net loss per share:....................... $ (0.41) $ (0.59) $ (0.71)
======= ======== ========
Pro forma basic and diluted net loss per share (unaudited)
Net loss.................................................... $(10,536) $(19,555)
======== ========
Shares attributable to common stock, excluding effects of
preferred stock conversion................................ 17,710 27,410
Shares attributable to the assumed conversion of preferred
stock upon issuance....................................... 5,062 3,816
-------- --------
Pro forma basic and diluted weighted average shares
outstanding (unaudited)................................... 22,772 31,226
======== ========
Pro forma basic and diluted net loss per share
(unaudited)............................................... $ (0.46) $ (0.63)
======== ========
</TABLE>

All outstanding options and warrants to purchase common stock (totaling
4,457,445) were excluded from the calculation of diluted earnings per share for
all periods presented because their inclusion would have been anti-dilutive.

12. COMMITMENTS AND CONTINGENCIES

Student Advantage leases its operating facility and certain office
equipment under noncancelable operating lease agreements. Rent expense under
these leases for the years ended December 31, 1997, 1998 and 1999, totaled
approximately $342,000, $914,000 and $1.5 million, respectively.

Future minimum lease payments under noncancelable operating leases at
December 31, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, OPERATING LEASES
- ------------------------ ----------------
<S> <C>
2000........................................................ $1,662
2001........................................................ 1,476
2002........................................................ 1,490
2003........................................................ 984
2004........................................................ 713
Thereafter.................................................. 1,089
------
Total minimum lease payments................................ $7,414
======
</TABLE>

52
<PAGE> 55
STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Legal Proceedings

Student Advantage is from time to time subject to legal proceedings and
claims which arise in the normal course of its business. In the opinion of
management, the amount of ultimate liability with respect to these actions will
not have a material adverse effect on Student Advantage's financial position or
results of operations.

53
<PAGE> 56

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information regarding directors and compliance with Section 16(a) of
the Securities and Exchange Act of 1934, as amended, required by Item 10 is
incorporated by reference from Student Advantage's definitive proxy statement
for its Annual Meeting of Stockholders for the year ended December 31, 1999 (the
"1999 Proxy Statement"). The information regarding executive officers of the
Company is included in Part I of this Annual Report on Form 10-K under the
section captioned "Executive Officers of the Registrant".

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference from the
1999 Proxy Statement. The information specified in Item 402(k) and (1) of
Regulation S-K and set forth in the 1999 Proxy Statement is not incorporated by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by Item 12 is incorporated by reference from the
1999 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by Item 13 is incorporated herein by reference
from the 1999 Proxy Statement.

54
<PAGE> 57

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(A)(1) LIST OF FINANCIAL STATEMENTS

The following are the consolidated financial statements of Student
Advantage, Inc. and its subsidiaries appearing elsewhere herein:

<TABLE>
<S> <C> <C>
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 1998 and 1999
Consolidated Statement of Operations for the years ended
December 31, 1997, 1998 and 1999
Consolidated Statement of Changes in Redeemable Convertible
Preferred Stock and Stockholders' Equity (Deficit) for the
years ended December 31, 1997, 1998 and 1999
Consolidated Statement of Cash Flows for the years ended
December 31, 1997, 1998 and 1999

(A)(2) LIST OF SCHEDULES

All schedules to the consolidated financial statements are
omitted because they are not applicable, not required, or the
information required is included in the financial statements or
notes thereto.

(A)(3) EXHIBITS
</TABLE>

The Exhibits that are filed with this report or that are incorporated by
reference herein are set forth in the Exhibit Index hereto.

(B) REPORTS ON FORM 8-K

(i) The Company filed a Current Report on Form 8-K dated October 7, 1999
with the Securities and Exchange Commission on October 22, 1999.

(ii) The Company filed Amendment No. 1 to the Current Report on Form 8-K
dated October 7, 1999 with the Securities and Exchange Commission on
November 15, 1999.

55
<PAGE> 58

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 30, 2000.

STUDENT ADVANTAGE, INC.

By: /s/ RAYMOND V. SOZZI, JR.
---------------------------------------
Raymond V. Sozzi, Jr.
Chairman of the Board of
Directors,
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below as of March 30, 2000 by the following persons on
behalf of the registrant and in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ RAYMOND V. SOZZI, JR. Chairman of the Board of Directors, President March 30, 2000
- ------------------------------------ and Chief Executive Officer (Principal Executive
Raymond V. Sozzi, Jr. Officer)

/s/ CHRISTOPHER B. ANDREWS Vice President, Finance and Administration, March 30, 2000
- ------------------------------------ Treasurer and Secretary (Principal Financial and
Christopher B. Andrews Accounting Officer)

/s/ JOHN M. CONNOLLY Director March 30, 2000
- ------------------------------------
John M. Connolly

/s/ WILLIAM S. KAISER Director March 30, 2000
- ------------------------------------
William S. Kaiser

/s/ JOHN S. KATZMAN Director March 30, 2000
- ------------------------------------
John S. Katzman

/s/ MARC J. TURTLETAUB Director March 30, 2000
- ------------------------------------
Marc J. Turtletaub

/s/ CHARLES E. YOUNG Director March 30, 2000
- ------------------------------------
Charles E. Young
</TABLE>

56
<PAGE> 59

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
3.2 Amended and Restated By-Laws of the Registrant, as amended.
4.1(1) Specimen certificate for shares of common stock.
10.1(1) 1998 Stock Incentive Plan, including form of stock option
agreement for incentive stock option.*
10.2(1) 1999 Employee Stock Purchase Plan.*
10.3(1) Loan and Security Agreement between USTrust Bank and the
Registrant, dated March 31, 1999.
10.4(1) Form of Indemnification Agreement between the Registrant and
each of its directors and officers.*
10.5(1) Investor Rights Agreement, dated as of October 20, 1998,
among the Registrant and certain stockholders.*
10.6(1) Employment Agreement, dated March 25, 1996, between the
Registrant and Raymond V. Sozzi, Jr., as amended by First
Amendment to Employment Agreement, dated as of October 20,
1998.*
10.7(1)+ Agreement, effective as of February 1, 1997, between AT&T
Communications, Inc. and the Registrant.
10.8(1)+ Marketing Agreement, effective February 1, 1998, between
AT&T Corp. and the Registrant.
10.9(1) Notice of AT&T's Election to Extend Agreements, dated July
14, 1998.
10.10(1)+ Letter Agreement, dated May 20, 1999, between AT&T
Communications, Inc. and the Registrant.
10.11(1) Leases for premises at 280 Summer Street, Boston,
Massachusetts.
10.12(3) Sublease, dated as of May 20, 1999, between the Registrant
and Morrison, Mahoney & Miller, LLP.
10.13(1) Investment Agreement, dated March 25, 1996, between the
Registrant and Princeton Review Publishing, L.L.C.
10.14(1) Letter Agreement, dated September 8, 1997, between the
Registrant and Princeton Review Publishing.
10.15(1) Letter Agreement, dated October 20, 1998, between the
Registrant and Princeton Review Publishing, L.L.C.
10.16(1) Mailing and Fulfillment Services Agreement, dated August 8,
1996, between the Registrant and Aero Fulfillment Services.
10.17(1) Promissory Note (Equipment) to USTrust dated March 31, 1999.
10.18(1) Master Note to USTrust Bank dated March 31, 1999.
10.19(1) Letter Agreement, dated May 3, 1999, between the Registrant
and Ronald J. Kos.*
10.20(2) Common Stock Purchase Warrant, dated July 21, 1999 issued to
Lycos, Inc.
21 Subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
27 Financial Data Schedule.
</TABLE>

- ---------------
(1) Incorporated herein by reference from the Registrant's Registration
Statement on Form S-1 (File No. 333-75807).

(2) Incorporated herein by reference from the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999.

(3) Incorporated herein by reference from the Registrant's Registration
Statement on Form S-1 (File No. 333-92367).

+ Confidential treatment previously granted by the Securities and Exchange
Commission as to certain portions, which portions are omitted and filed
separately with the Securities and Exchange Commission.

* Management contract or compensatory plan or arrangement filed as an Exhibit
to this form pursuant to Items 14(a) and 14(c) of Form 10-K.

<PAGE> 1
Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

STUDENT ADVANTAGE, INC.

Student Advantage, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, does hereby
certify as follows:

1. The Corporation filed its original Certificate of Incorporation with
the Secretary of the State of Delaware on February 24, 1995.

2. At a duly called meeting of the Board of Directors of the Corporation
at which a quorum was present at all times, a resolution was duly adopted,
pursuant to Sections 242 and 245 of the General Corporation Law of the State of
Delaware, setting forth an Amended and Restated Certificate of Incorporation of
the Corporation and declaring said Amended and Restated Certificate of
Incorporation advisable. The stockholders of the Corporation duly approved said
proposed Amended and Restated Certificate of Incorporation by written consent in
accordance with Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware. The resolution setting forth the Amended and Restated
Certificate of Incorporation is as follows:

RESOLVED: That the Certificate of Incorporation of the Corporation, be and
- -------- hereby is amended and restated in its entirety so that the same shall
read as follows:

FIRST. The name of the Corporation is:

Student Advantage, Inc.

SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.

THIRD. The nature of the business or purposes to be conducted or promoted
by the Corporation is as follows:

To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.

FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 105,000,000 shares, consisting of
(i) 100,000,000 shares of Common Stock, $.01 par value per share ("Common
Stock"), and (ii) 5,000,000 shares of Preferred Stock, $.01 par value per share
("Preferred Stock").

<PAGE> 2

The following is a statement of the designations and the powers, privileges
and rights, and the qualifications, limitations or restrictions thereof in
respect of each class of capital stock of the Corporation.

A. COMMON STOCK.
-------------

1. GENERAL. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.

2. VOTING. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders. There shall be no cumulative
voting.

The number of authorized shares of Common Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the stock of the Corporation entitled to
vote, irrespective of the provisions of Section 242(b)(2) of the General
Corporation Law of Delaware.

3. DIVIDENDS. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.

4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.

B. PREFERRED STOCK.
----------------

Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.

Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares thereof, to determine and fix such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of Delaware. Without limiting
the generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank

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<PAGE> 3

equally or be junior to the Preferred Stock of any other series to the extent
permitted by law. Except as otherwise provided in this Certificate of
Incorporation, no vote of the holders of the Preferred Stock or Common Stock
shall be a prerequisite to the designation or issuance of any shares of any
series of the Preferred Stock authorized by and complying with the conditions of
this Certificate of Incorporation, the right to have such vote being expressly
waived by all present and future holders of the capital stock of the
Corporation.

FIFTH. The Corporation shall have a perpetual existence.

SIXTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided:

1. Election of directors need not be by written ballot, except as
and to the extent provided in the By-Laws of the Corporation.

2. The Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation, except as and to the extent provided in
the By-Laws of the Corporation.

SEVENTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.

EIGHTH. Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.

NINTH. 1. ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF
THE CORPORATION. The Corporation shall indemnify each person who was or is a
party or is threatened

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<PAGE> 4

to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation), by reason of the fact that he
is or was, or has agreed to become, a director or officer of the Corporation, or
is or was serving, or has agreed to serve, at the request of the Corporation, as
a director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise (including
any employee benefit plan) (all such persons being referred to hereafter as an
"Indemnitee"), or by reason of any action alleged to have been taken or omitted
in such capacity, against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
on his behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful. Notwithstanding anything to the contrary in this Article, except
as set forth in Section 7 below, the Corporation shall not indemnify an
Indemnitee seeking indemnification in connection with a proceeding (or part
thereof) initiated by the Indemnitee unless the initiation thereof was approved
by the Board of Directors of the Corporation. Notwithstanding anything to the
contrary in this Article, the Corporation shall not indemnify an Indemnitee to
the extent such Indemnitee is reimbursed from the proceeds of insurance, and in
the event the Corporation makes any indemnification payments to an Indemnitee
and such Indemnitee is subsequently reimbursed from the proceeds of insurance,
such Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.

2. Actions or Suits by or in the Right of the Corporation. The
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan), or by reason of any
action alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees) and, to the extent permitted by law,
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses (including attorneys' fees)
which the Court of Chancery of Delaware shall deem proper.

-4-

<PAGE> 5

3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the
other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, he shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith. Without limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an
adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of
guilty or NOLO CONTENDERE by the Indemnitee, (iv) an adjudication that the
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and (v) with
respect to any criminal proceeding, an adjudication that the Indemnitee had
reasonable cause to believe his conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with respect
thereto.

4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to his
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.

5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 below, in
the event that the Corporation does not assume the defense pursuant to Section 4
of this Article of any action, suit, proceeding or investigation of which the
Corporation receives notice under this Article, any expenses (including
attorneys' fees) incurred by an Indemnitee in defending a civil or criminal
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the Corporation in advance of the final disposition of such matter; PROVIDED,
HOWEVER, that the payment of such expenses incurred by an Indemnitee in advance
of the final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined that the

-5-

<PAGE> 6

Indemnitee is not entitled to be indemnified by the Corporation as authorized in
this Article; and FURTHER PROVIDED that no such advancement of expenses shall be
made if it is determined that (i) the Indemnitee did not act in good faith and
in a manner he reasonably believes to be in, or not opposed to, the best
interests of the Corporation, or (ii) with respect to any criminal action or
proceeding, the Indemnitee had reasonable cause to believe his conduct was
unlawful. Such undertaking shall be accepted without reference to the financial
ability of the Indemnitee to make such repayment.

6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee shall submit to the Corporation a written request, including in such
request such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of expenses. Any
such indemnification or advancement of expenses shall be made promptly, and in
any event within 60 days after receipt by the Corporation of the written request
of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines within such 60-day period that the Indemnitee did not
meet the applicable standard of conduct set forth in Section 1, 2 or 5, as the
case may be. Such determination shall be made in each instance (a) by a majority
vote of the directors of the Corporation consisting of persons who are not at
that time parties to the action, suit or proceeding in question ("disinterested
directors"), whether or not a quorum, (b) by a majority vote of a committee of
disinterested directors designated by majority vote of disinterested directors,
whether or not a quorum, (c), if there are no disinterested directors, or if
disinterested directors so direct, by independent legal counsel (who may, to the
extent permitted by law, be regular legal counsel to the Corporation) in a
written opinion, or (d) by the stockholders of the Corporation.

7. REMEDIES. The right to indemnification or advances as granted by this
Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. Neither the failure of the Corporation
to have made a determination prior to the commencement of such action that
indemnification is proper in the circumstances because the Indemnitee has met
the applicable standard of conduct, nor an actual determination by the
Corporation pursuant to Section 6 that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of conduct.
The Indemnitee's expenses (including attorneys' fees) incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such proceeding shall also be indemnified by the Corporation.

8. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to indemnification under the provisions hereof with respect to
any action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or repeal.

-6-

<PAGE> 7

9. OTHER RIGHTS. The indemnification and advancement of expenses provided
by this Article shall not be deemed exclusive of any other rights to which an
Indemnitee seeking indemnification or advancement of expenses may be entitled
under any law (common or statutory), agreement or vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in any other capacity while holding office for the Corporation,
and shall continue as to an Indemnitee who has ceased to be a director or
officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of the Indemnitee. Nothing contained in this Article shall be
deemed to prohibit, and the Corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
and procedures different from those set forth in this Article. In addition, the
Corporation may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other employees or agents of the
Corporation or other persons serving the Corporation and such rights may be
equivalent to, or greater or less than, those set forth in this Article.

10. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.

11. INSURANCE. The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan) against any expense, liability
or loss incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the General Corporation Law
of Delaware.

12. MERGER OR CONSOLIDATION. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or facts
occurring prior to the date of such merger or consolidation.

13. SAVINGS CLAUSE. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.

14. DEFINITIONS. Terms used herein and defined in Section 145(h) and
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).

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<PAGE> 8

15. SUBSEQUENT LEGISLATION. If the General Corporation Law of Delaware is
amended after adoption of this Article to expand further the indemnification
permitted to Indemnitees, then the Corporation shall indemnify such persons to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.

TENTH. Except as otherwise provided herein, the Corporation reserves the
right to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute and this Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation.

ELEVENTH. This Article is inserted for the management of the business and
for the conduct of the affairs of the Corporation.

1. NUMBER OF DIRECTORS. The number of directors of the Corporation shall
not be less than three. The exact number of directors within the limitations
specified in the preceding sentence shall be fixed from time to time by, or in
the manner provided in, the Corporation's By-Laws.

2. CLASSES OF DIRECTORS. The Board of Directors shall be and is divided
into three classes: Class I, Class II and Class III. No one class shall have
more than one director more than any other class. If a fraction is contained in
the quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class I, and if such fraction is two-thirds, one of the extra directors shall be
a member of Class I and one of the extra directors shall be a member of Class
II, unless otherwise provided from time to time by resolution adopted by the
Board of Directors.

3. TERMS OF OFFICE. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
director was elected; PROVIDED, that each initial director in Class I shall
serve for a term ending on the date of the annual meeting in 2000; each initial
director in Class II shall serve for a term ending on the date of the annual
meeting in 2001; and each initial director in Class III shall serve for a term
ending on the date of the annual meeting in 2002; and PROVIDED FURTHER, that the
term of each director shall be subject to the election and qualification of his
successor and to his earlier death, resignation or removal.

4. ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR
DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as a director of the class of which he is a member
and (ii) the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the Board of Directors among the
three classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent possible, consistent with the
foregoing rule, any newly created directorships shall be added to those classes
whose terms of office are to expire at the latest dates following such
allocation, and any newly eliminated directorships shall be subtracted from
those classes whose terms of offices are to expire at the earliest dates
following such allocation, unless otherwise provided from time to time by
resolution adopted by the Board of Directors.

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<PAGE> 9

5. QUORUM; ACTION AT MEETING. A majority of the directors at any time in
office shall constitute a quorum for the transaction of business. In the event
one or more of the directors shall be disqualified to vote at any meeting, then
the required quorum shall be reduced by one for each director so disqualified,
provided that in no case shall less than one-third of the number of directors
fixed pursuant to Section 1 above constitute a quorum. If at any meeting of the
Board of Directors there shall be less than such a quorum, a majority of those
present may adjourn the meeting from time to time. Every act or decision done or
made by a majority of the directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the Board of Directors unless
a greater number is required by law, by the By-Laws of the Corporation or by
this Certificate of Incorporation.

6. REMOVAL. Directors of the Corporation may be removed only for cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the votes which all the stockholders would be entitled to cast in
any annual election of directors or class of directors.

7. VACANCIES. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the board, shall be filled
only by a vote of a majority of the directors then in office, although less than
a quorum, or by a sole remaining director. A director elected to fill a vacancy
shall be elected to hold office until the next election of the class for which
such director shall have been chosen, subject to the election and qualification
of his successor and to his earlier death, resignation or removal.

8. STOCKHOLDER NOMINATIONS AND INTRODUCTION OF BUSINESS, ETC. Advance
notice of stockholder nominations for election of directors and other business
to be brought by stockholders before a meeting of stockholders shall be given in
the manner provided by the By-Laws of the Corporation.

9. AMENDMENTS TO ARTICLE. Notwithstanding any other provisions of law,
this Certificate of Incorporation or the By-Laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the votes which all the stockholders would be entitled to cast in
any annual election of directors or class of directors shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
ELEVENTH.

TWELFTH. Stockholders of the Corporation may not take any action by written
consent in lieu of a meeting. Notwithstanding any other provisions of law, the
Certificate of Incorporation or the By-Laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the votes which all the stockholders would be entitled to cast in
any annual election of directors or class of directors shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
TWELFTH.

THIRTEENTH. Special meetings of stockholders may be called at any time by
only the Chairman of the Board of Directors, the President or the Board of
Directors. Business transacted at any special meeting of stockholders shall be
limited to matters relating to the purpose or purposes stated in the notice of
meeting. Notwithstanding any other provision of law, this

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<PAGE> 10
Certificate of Incorporation or the By-Laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the votes which all the stockholders would be entitled to cast in
any annual election of directors or class of directors shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
THIRTEENTH.

IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Incorporation to be signed by its
Chairman of the Board, President and Chief Executive Officer this 23rd day of
June, 1999.

STUDENT ADVANTAGE, INC.

By: /s/ Raymond V. Sozzi, Jr.
--------------------------
Raymond V. Sozzi, Jr.
Chairman of the Board, President
Chief Executive Officer

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<PAGE> 1
Exhibit 3.2

AMENDED AND RESTATED BY-LAWS

STUDENT ADVANTAGE, INC.

(as amended through March 15, 2000)

ARTICLE I. - Stockholders
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1. PLACE OF MEETINGS. All meetings of stockholders shall be held at such
place within or without the State of Delaware as may be designated from time to
time by the Board of Directors, the Chairman of the Board or the President or,
if not so designated, at the registered office of the corporation.

2. ANNUAL MEETING. The annual meeting of stockholders for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting shall be held on a date to be fixed by the Board of
Directors, the Chairman of the Board or the President (which date shall not be a
legal holiday in the place where the meeting is to be held) at the time and
place to be fixed by the Board of Directors, the Chairman of the Board or the
President and stated in the notice of the meeting. If no annual meeting is held
in accordance with the foregoing provisions, the Board of Directors shall cause
the meeting to be held as soon thereafter as is convenient. If no annual meeting
is held in accordance with the foregoing provisions, a special meeting may be
held in lieu of the annual meeting, and any action taken at that special meeting
shall have the same effect as if it had been taken at the annual meeting, and in
such case all references in these By-Laws to the annual meeting of the
stockholders shall be deemed to refer to such special meeting.

3. SPECIAL MEETINGS. Special meetings of stockholders may be called at
any time only by the Chairman of the Board, the President or the Board of
Directors. Business transacted at any special meeting of stockholders shall be
limited to matters relating to the purpose or purposes stated in the notice of
meeting.

4. NOTICE OF MEETINGS. Except as otherwise provided by law, written
notice of each meeting of stockholders, whether annual or special, shall be
given not less than 10 nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notices of all meetings
shall state the place, date and hour of the meeting. The notice of a special
meeting shall state, in addition, the purpose or purposes for which the meeting
is called. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.

5. VOTING LIST. The officer who has charge of the stock ledger of the
corporation shall prepare, at least 10 days before every meeting of
stockholders, a complete list of the

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stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting, at a
place within the city where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time of
the meeting, and may be inspected by any stockholder who is present.

6. QUORUM. Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.

7. ADJOURNMENTS. Any meeting of stockholders may be adjourned to any
other time and to any other place at which a meeting of stockholders may be held
under these By-Laws by the stockholders present or represented at the meeting
and entitled to vote, although less than a quorum, or, if no stockholder is
present, by any officer entitled to preside at or to act as Secretary of such
meeting. It shall not be necessary to notify any stockholder of any adjournment
of less than 30 days if the time and place of the adjourned meeting are
announced at the meeting at which adjournment is taken, unless after the
adjournment a new record date is fixed for the adjourned meeting. At the
adjourned meeting, the corporation may transact any business which might have
been transacted at the original meeting.

8. VOTING AND PROXIES. Each stockholder shall have one vote for each
share of stock entitled to vote held of record by such stockholder and a
proportionate vote for each fractional share so held, unless otherwise provided
by law, the Certificate of Incorporation or these By-Laws. Each stockholder of
record entitled to vote at a meeting of stockholders may vote in person or may
authorize another person or persons to vote or act for him by a proxy executed
in writing (or in such other manner permitted by the General Corporation Law of
the State of Delaware) by the stockholder or his authorized agent and delivered
or transmitted to the Secretary of the corporation. No such proxy shall be voted
or acted upon after three years from the date of its execution, unless the proxy
expressly provides for a longer period.

9. ACTION AT MEETING. When a quorum is present at any meeting, the
holders of a majority of the stock present or represented and voting on a matter
(or if there are two or more classes of stock entitled to vote as separate
classes, then in the case of each such class, the holders of a majority of the
stock of that class present or represented and voting on a matter) shall decide
any matter to be voted upon by the stockholders at such meeting, except when a
different vote is required by express provision of law, the Certificate of
Incorporation or these By-Laws. Any election by stockholders shall be determined
by a plurality of the votes cast by the stockholders entitled to vote at the
election.

10. NOMINATION OF DIRECTORS. Only persons who are nominated in accordance
with the following procedures shall be eligible for election as directors.
Nomination for election to the Board of Directors of the corporation at a
meeting of stockholders may be made (i) by or at the direction of the Board of
Directors or (ii) by any stockholder of the corporation entitled to

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vote for the election of directors at such meeting who complies with the notice
procedures set forth in this Section 10.

To be timely, a stockholder's notice must be received by the Secretary at the
principal executive offices of the corporation as follows: (a) in the case of an
election of directors at an annual meeting of stockholders, not less than 70
days nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that (i) in the event that the date of
the annual meeting is advanced by more than 20 days, or delayed by more than 70
days, from such anniversary date, to be timely, a stockholder's notice must be
so received not earlier than the ninetieth day prior to such annual meeting and
not later than the close of business on the later of the seventieth day prior to
such annual meeting or the tenth day following the day on which public
announcement of the date of such annual meeting is first made or (ii) with
respect to the annual meeting of stockholders of the corporation to be held in
the year 2000, to be timely, a stockholder's notice must be so received not
earlier than the ninetieth day prior to such annual meeting and not later than
the close of business on the tenth day following the day on which public
announcement of the date of such annual meeting is first made; or (b) in the
case of an election of directors at a special meeting of stockholders, not
earlier than the ninetieth days prior to such special meeting and not later than
the close of business on the later of the seventieth day prior to such special
meeting or the tenth day following the day on which public announcement of the
date of such special meeting is first made.

The stockholder's notice to the Secretary shall set forth (a) as to each
proposed nominee (i) the name, age, business address and, if known, residence
address of each such nominee, (ii) the principal occupation or employment of
each such nominee, (iii) the number of shares of stock of the corporation which
are beneficially owned by each such nominee, and (iv) any other information
concerning the nominee that must be disclosed as to nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including such person's written consent to be named as a
nominee and to serve as a director if elected); (b) as to the stockholder giving
the notice (i) the name and address, as they appear on the corporation's books,
of such stockholder and (ii) the class and number of shares of the corporation
which are beneficially owned by such stockholder; and (c) as to the beneficial
owner, if any, on whose behalf the nomination is being made (i) the name and
address of such beneficial owner and (ii) the class and number of shares of the
corporation which are beneficially owned by such person. In addition, to be
effective, the stockholder's notice must be accompanied by the written consent
of the proposed nominee to serve as a director if elected. The corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the corporation to determine the eligibility of such proposed
nominee to serve as a director of the corporation.

The chairman of the meeting may, if the facts warrant, determine and declare to
the meeting that a nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.

11. NOTICE OF BUSINESS AT ANNUAL MEETINGS. At any annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of

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Directors, (b) otherwise brought before the meeting by or at the direction of
the Board of Directors, or (c) otherwise properly brought before an annual
meeting by a stockholder. For business to be properly brought before an annual
meeting by a stockholder, (i) if such business relates to the election of
directors of the corporation, the procedures in Section 10 of Article I must be
complied with and (ii) if such business relates to any other matter, the
stockholder must have given timely notice thereof in writing to the Secretary in
accordance with the procedures set forth in this Section 11.

To be timely, a stockholder's notice must be received by the Secretary at the
principal executive offices of the corporation not less than 70 days nor more
than 90 days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that (i) in the event that the date of the annual
meeting is advanced by more than 20 days, or delayed by more than 70 days, from
such anniversary date, to be timely, a stockholder's notice must be so received
not earlier than the ninetieth day prior to such annual meeting and not later
than the close of business on the later of the seventieth day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such annual meeting is first made or (ii) with respect to the
annual meeting of stockholders of the corporation to be held in the year 2000,
to be timely, a stockholder's notice must be so received not earlier than the
ninetieth day prior to such annual meeting and not later than the close of
business on the later of the seventieth day prior to such annual meeting or the
tenth day following the day on which public announcement of the date of such
annual meeting is first made.

The stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address, as
they appear on the corporation's books, of the stockholder proposing such
business, and the name and address of the beneficial owner, if any, on whose
behalf the proposal is made, (c) the class and number of shares of the
corporation which are beneficially owned by the stockholder and beneficial
owner, if any, and (d) any material interest of the stockholder or such
beneficial owner, if any, in such business. Notwithstanding anything in these
By-Laws to the contrary, no business shall be conducted at any annual meeting of
stockholders except in accordance with the procedures set forth in this Section
11; provided that any stockholder proposal which complies with Rule 14a-8 of the
proxy rules (or any successor provision) promulgated under the Securities
Exchange Act of 1934, as amended, and is to be included in the corporation's
proxy statement for an annual meeting of stockholders shall be deemed to comply
with the requirements of this Section 11.

The chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that business was not properly brought before the meeting in
accordance with the provisions of this Section 11, and if he should so
determine, the chairman shall so declare to the meeting that any such business
not properly brought before the meeting shall not be transacted.

12. ACTION WITHOUT MEETING. Stockholders may not take any action by
written consent in lieu of a meeting.

13. ORGANIZATION. The Chairman of the Board, or in his absence the Vice
Chairman of the Board, or the President, in the order named, shall call meetings
of the stockholders to

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order, and shall act as chairman of such meeting, PROVIDED, however, that the
Board of Directors may appoint any stockholder to act as chairman of any meeting
in the absence of the Chairman of the Board. The Secretary of the corporation
shall act as secretary at all meetings of the stockholders; but in the absence
of the Secretary at any meeting of the stockholders, the presiding officer may
appoint any person to act as secretary of the meeting.

ARTICLE II. - Directors
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1. GENERAL POWERS. The business and affairs of the corporation shall be
managed by or under the direction of a Board of Directors, who may exercise all
of the powers of the corporation except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws. In the event of a vacancy in the
Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board until the vacancy is filled.

2. NUMBER; ELECTION AND QUALIFICATION. The number of directors which
shall constitute the whole Board of Directors shall be determined by resolution
of the Board of Directors, but in no event shall be less than three. The number
of directors may be decreased at any time and from time to time by a majority of
the directors then in office, but only to eliminate vacancies existing by reason
of the death, resignation, removal or expiration of the term of one or more
directors. The directors shall be elected at the annual meeting of stockholders
by such stockholders as have the right to vote on such election. Directors need
not be stockholders of the corporation.

3. CLASSES OF DIRECTORS. The Board of Directors shall be and is divided
into three classes: Class I, Class II and Class III. No one class shall have
more than one director more than any other class. If a fraction is contained in
the quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class I, and if such fraction is two-thirds, one of the extra directors shall be
a member of Class I and one of the extra directors shall be a member of Class
II, unless otherwise provided from time to time by resolution adopted by the
Board of Directors.

4. TERMS OF OFFICE. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
director was elected; PROVIDED, that each initial director in Class I shall
serve for a term ending on the date of the annual meeting of stockholders in
2000; each initial director in Class II shall serve for a term ending on the
date of the annual meeting of stockholders in 2001, and each initial director in
Class III shall serve for a term ending on the date of the annual meeting of
stockholders in 2002; and PROVIDED FURTHER, that the term of each director shall
be subject to the election and qualification of his successor and to his earlier
death, resignation or removal.

5. ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR
DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as a director of the class of which he or she is a
member and (ii) the newly created or eliminated directorships resulting from
such increase or decrease shall be apportioned by the Board of Directors among
the three classes of directors so as to ensure that no one class has more than
one director more

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than any other class. To the extent possible, consistent with the foregoing
rule, any newly created directorships shall be added to those classes whose
terms of office are to expire at the latest dates following such allocation, and
any newly eliminated directorships shall be subtracted from those classes whose
terms of offices are to expire at the earliest dates following such allocation,
unless otherwise provided from time to time by resolution adopted by the Board
of Directors.

6. QUORUM; ACTION AT MEETING. A majority of the directors at any time in
office shall constitute a quorum for the transaction of business. In the event
one or more of the directors shall be disqualified to vote at any meeting, then
the required quorum shall be reduced by one for each director so disqualified,
provided that in no case shall less than one-third (1/3) of the number of
directors fixed pursuant to Section 2 above constitute a quorum. If at any
meeting of the Board of Directors there shall be less than such a quorum, a
majority of those present may adjourn the meeting from time to time. Every act
or decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present shall be regarded as the act of the Board
of Directors unless a greater number is required by law, by the Certificate of
Incorporation or these By-Laws.

7. REMOVAL. Directors of the corporation may be removed only for cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the votes which all the stockholders would be entitled to cast in
any annual election of directors or class of directors.

8. VACANCIES. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board, shall be filled
only by vote of a majority of the directors then in office, although less than a
quorum, or by a sole remaining director. A director elected to fill a vacancy
shall be elected to hold office until the next election of the class for which
such director shall have been chosen, subject to the election and qualification
of his successor and to his earlier death, resignation or removal.

9. RESIGNATION. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the Chairman of the
Board or Secretary. Such resignation shall be effective upon receipt unless it
is specified to be effective at some other time or upon the happening of some
other event.

10. REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware, as shall be determined from time to time by the Board of Directors;
provided that any director who is absent when such a determination is made shall
be given notice of the determination. A regular meeting of the Board of
Directors may be held without notice immediately after and at the same place as
the annual meeting of stockholders.

11. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, two or more directors, or by
one director in the event that there is only a single director in office.

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12. NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of directors
shall be given to each director by the Secretary or by the officer or one of the
directors calling the meeting. Notice shall be duly given to each director (i)
by giving notice to such director in person or by telephone at least 24 hours in
advance of the meeting, (ii) by sending a telegram, telecopy, telex or
electronic mail, or delivering written notice by hand, to his last known
business, home or electronic mail address at least 24 hours in advance of the
meeting, or (iii) by mailing written notice to his last known business or home
address at least 72 hours in advance of the meeting. A notice or waiver of
notice of a meeting of the Board of Directors need not specify the purposes of
the meeting.

13. MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors or any members of
any committee designated by the directors may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by such means shall constitute
presence in person at such meeting.

14. ACTION BY CONSENT. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee of the Board of Directors
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent to the action in writing, and the written consents are
filed with the minutes of proceedings of the Board or committee.

15. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members of the committee present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors
and subject to the provisions of the General Corporation Law of the State of
Delaware, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Each such committee shall keep minutes and make such reports as
the Board of Directors may from time to time request. Except as the Board of
Directors may otherwise determine, any committee may make rules for the conduct
of its business, but unless otherwise provided by the directors or in such
rules, its business shall be conducted as nearly as possible in the same manner
as is provided in these By-Laws for the Board of Directors.

16. COMPENSATION OF DIRECTORS. Directors may be paid such compensation for
their services and such reimbursement for expenses of attendance at meetings as
the Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the corporation or any of its parent or
subsidiary corporations in any other capacity and receiving compensation for
such service.

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ARTICLE III. - Officers
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1. ENUMERATION. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice Chairman of the Board, and one or more Vice Presidents, Assistant
Treasurers, and Assistant Secretaries. The Board of Directors may appoint such
other officers as it may deem appropriate.

2. ELECTION. The President, Treasurer and Secretary shall be elected
annually by the Board of Directors at its first meeting following the annual
meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.

3. QUALIFICATION. No officer need be a stockholder. Any two or more
offices may be held by the same person.

4. TENURE. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.

5. RESIGNATION AND REMOVAL. Any officer may resign by delivering his or
her written resignation to the corporation at its principal office or to the
Chairman of the Board, President or Secretary. Such resignation shall be
effective upon receipt unless it is specified to be effective at some other time
or upon the happening of some other event.

Any officer may be removed at any time, with or without cause, by vote of a
majority of the entire number of directors then in office.

Except as the Board of Directors may otherwise determine, no officer who resigns
or is removed shall have any right to any compensation as an officer for any
period following his resignation or removal, or any right to damages on account
of such removal, whether his compensation be by the month or by the year or
otherwise, unless such compensation is expressly provided in a duly authorized
written agreement with the corporation.

6. VACANCIES. The Board of Directors may fill any vacancy occurring in
any office for any reason and may, in its discretion, leave unfilled for such
period as it may determine any offices other than those of President, Treasurer
and Secretary. Each such successor shall hold office for the unexpired term of
his predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.

7. CHAIRMAN OF THE BOARD AND VICE CHAIRMAN OF THE BOARD. The Board of
Directors may appoint a Chairman of the Board and may designate the Chairman of
the Board as Chief Executive Officer. If the Board of Directors appoints a
Chairman of the Board, he shall perform such duties and possess such powers as
are assigned to him by the Board of Directors. Unless otherwise provided by the
Board of Directors, he shall preside at all meetings of the stockholders, and if
he is a director, at all meetings of the Board of Directors. If the Board of
Directors appoints a Vice Chairman of the Board, he shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board

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and shall perform such other duties and possess such other powers as may from
time to time be vested in him or her by the Board of Directors. The person
designated as the Chief Executive Officer of the Company shall, subject to the
direction of the Board of Directors, have general charge and supervision of the
business of the corporation.

8. PRESIDENT. Unless the Board of Directors has designated the Chairman
of the Board or another officer as Chief Executive Officer, the President shall
be the Chief Executive Officer of the corporation. The President shall perform
such other duties and shall have such other powers as the Chief Executive
Officer or the Board of Directors may from time to time prescribe.

9. VICE PRESIDENTS. Any Vice President shall perform such duties and
possess such powers as the Board of Directors or the Chief Executive Officer may
from time to time prescribe. In the event of the absence, inability or refusal
to act of the Chief Executive Officer, then, in the order determined by the
Board of Directors, the President (if he is not the Chief Executive Officer) and
the Vice President (or if there shall be more than one, the Vice Presidents)
shall perform the duties of the Chief Executive Officer and when so performing
shall have all the powers of and be subject to all the restrictions upon the
Chief Executive Officer. The Board of Directors may assign to any Vice President
the title of Executive Vice President, Senior Vice President or any other title
selected by the Board of Directors.

10. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall perform such
duties and shall have such powers as the Board of Directors or the Chief
Executive Officer may from time to time prescribe. In addition, the Secretary
shall perform such duties and have such powers as are incident to the office of
the secretary, including without limitation the duty and power to give notices
of all meetings of stockholders and special meetings of the Board of Directors,
to attend all meetings of stockholders and the Board of Directors and keep a
record of the proceedings, to maintain a stock ledger and prepare lists of
stockholders and their addresses as required, to be custodian of corporate
records and the corporate seal and to affix and attest to the same on documents.

Any Assistant Secretary shall perform such duties and possess such powers as the
Board of Directors, the Chief Executive Officer or the Secretary may from time
to time prescribe. In the event of the absence, inability or refusal to act of
the Secretary, the Assistant Secretary (or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Secretary.

In the absence of the Secretary or any Assistant Secretary at any meeting of
stockholders or directors, the person presiding at the meeting shall designate a
temporary secretary to keep a record of the meeting.

11. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall perform such
duties and shall have such powers as may from time to time be assigned to him or
her by the Board of Directors or the Chief Executive Officer. In addition, the
Treasurer shall perform such duties and have such powers as are incident to the
office of treasurer, including without limitation the duty and power to keep and
be responsible for all funds and securities of the corporation, to deposit funds
of the corporation in depositories selected in accordance with these By-Laws, to

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disburse such funds as ordered by the Board of Directors, to make proper
accounts of such funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial condition of the
corporation.

The Assistant Treasurers shall perform such duties and possess such powers as
the Board of Directors, the Chief Executive Officer or the Treasurer may from
time to time prescribe. In the event of the absence, inability or refusal to act
of the Treasurer, the Assistant Treasurer (or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board of Directors)
shall perform the duties and exercise the powers of the Treasurer.

12. SALARIES. Officers of the corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.

Article IV. - Capital Stock
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1. ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate of Incorporation, the whole or any
part of any unissued balance of the authorized capital stock of the corporation
or the whole or any part of any unissued balance of the authorized capital stock
of the corporation held in its treasury may be issued, sold, transferred or
otherwise disposed of by vote of the Board of Directors in such manner, for such
consideration and on such terms as the Board of Directors may determine.

2. CERTIFICATES OF STOCK. Every holder of stock of the corporation shall
be entitled to have a certificate, in such form as may be prescribed by law and
by the Board of Directors, certifying the number and class of shares owned by
him or her in the corporation. Each such certificate shall be signed by, or in
the name of the corporation by, the Chairman or Vice Chairman, if any, of the
Board of Directors, or the President or a Vice President, and the Treasurer or
any Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation. Any or all of the signatures on the certificate may be a facsimile.

Each certificate for shares of stock which are subject to any restriction on
transfer pursuant to the Certificate of Incorporation, the By-Laws, applicable
securities laws or any agreement among any number of stockholders or among such
holders and the corporation shall have conspicuously noted on the face or back
of the certificate either the full text of the restriction or a statement of the
existence of such restriction.

3. TRANSFERS. Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, and with such proof of authority or the authenticity of
signature as the corporation or its transfer agent may reasonably require.
Except as may be otherwise required by law, by the Certificate of Incorporation
or by these By-Laws, the corporation shall be entitled to treat the record
holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
to such stock, regardless of any transfer, pledge or other disposition of such
stock until the shares have been

-10-

<PAGE> 11

transferred on the books of the corporation in accordance with the requirements
of these By-Laws.

4. LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation may issue a
new certificate of stock in place of any previously issued certificate alleged
to have been lost, stolen, or destroyed, upon such terms and conditions as the
Board of Directors may prescribe, including the presentation of reasonable
evidence of such loss, theft or destruction and the giving of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.

5. RECORD DATE. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action. Such record date shall not be more than 60 nor less than 10 days before
the date of such meeting, nor more than 60 days prior to any other action to
which such record date relates.

If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before the day on which
the meeting is held. The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating to such purpose.

A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.

ARTICLE V. - General Provisions
-------------------------------

1. FISCAL YEAR. Except as from time to time otherwise designated by the
Board of Directors, the fiscal year of the corporation shall begin on the first
day of January of each year and end on the last day of December in each year.

2. CORPORATE SEAL. The corporate seal shall be in such form as shall be
approved by the Board of Directors.

3. WAIVER OF NOTICE. Whenever any notice whatsoever is required to be
given by law, by the Certificate of Incorporation or by these By-Laws, a waiver
of such notice either in writing signed by the person entitled to such notice or
such person's duly authorized attorney, or by telecopy or any other available
method, whether before, at or after the time stated in such waiver, or the
appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent to such notice.

4. VOTING OF SECURITIES. Except as the directors may otherwise designate,
the Chairman of the Board or Treasurer may waive notice of, and act as, or
appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of

-11-

<PAGE> 12

substitution) at any meeting of stockholders or shareholders of any other
corporation or organization, the securities of which may be held by this
corporation.

5. EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an Assistant
Secretary, or a temporary Secretary, as to any action taken by the stockholders,
directors, a committee or any officer or representative of the corporation shall
as to all persons who rely on the certificate in good faith be conclusive
evidence of such action.

6. CERTIFICATE OF INCORPORATION. All references in these By-Laws to the
Certificate of Incorporation shall be deemed to refer to the Amended and
Restated Certificate of Incorporation of the corporation, as amended and in
effect from time to time.

7. TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction
between the corporation and one or more of the directors or officers, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of the directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or a committee of the
Board of Directors which authorizes the contract or transaction or solely
because his or their votes are counted for such purpose, if:

a. The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum;

b. The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or

c. The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the Board of Directors,
a committee of the Board of Directors, or the stockholders.

Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.

8. SEVERABILITY. Any determination that any provision of these By-Laws is
for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-Laws.

9. PRONOUNS. All pronouns used in these By-Laws shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.

ARTICLE VI. - Amendments
------------------------

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<PAGE> 13

1. BY THE BOARD OF DIRECTORS. These By-Laws may be altered, amended or
repealed or new by-laws may be adopted by the affirmative vote of a majority of
the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present.

2. BY THE STOCKHOLDERS. Subject to the following paragraph, these By-Laws
may be altered, amended or repealed or new by-laws may be adopted by the
affirmative vote of the holders of a majority of the shares of the capital stock
of the corporation issued and outstanding and entitled to vote at any regular or
special meeting of stockholders, provided notice of such alteration, amendment,
repeal or adoption of new by-laws shall have been stated in the notice of such
regular or special meeting.

-13-

<PAGE> 1

Exhibit 21

SUBSIDIARIES

NAME JURISDICTION OF INCORPORATION
---- -----------------------------

Student Advantage LLC Delaware

Student Advantage Massachusetts
Securities Corporation

<PAGE> 1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 of Student Advantage, Inc. of our report dated February
11, 2000 relating to the financial statements, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Boston, Massachusetts
March 27, 2000

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 15,370,000
<SECURITIES> 20,546,000
<RECEIVABLES> 4,777,000
<ALLOWANCES> 250,000
<INVENTORY> 0
<CURRENT-ASSETS> 43,141,000
<PP&E> 6,850,000
<DEPRECIATION> 2,812,000
<TOTAL-ASSETS> 60,796,000
<CURRENT-LIABILITIES> 19,002,000
<BONDS> 0
0
0
<COMMON> 354,000
<OTHER-SE> 41,340,000
<TOTAL-LIABILITY-AND-EQUITY> 60,796,000
<SALES> 27,644,000
<TOTAL-REVENUES> 27,644,000
<CGS> 15,543,000
<TOTAL-COSTS> 33,014,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,358,000
<INCOME-PRETAX> (19,555,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,555,000)
<EPS-BASIC> (0.71)
<EPS-DILUTED> 0

</TABLE>