EUNIVERSE INC, 10-Q, 2000-02-14

EUNIVERSE INC
10-Q, 2000-02-14
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As filed with the Securities and Exchange Commission on February 14, 2000
- -------------------------------------------------------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d)of the Securities Exchange Act
of 1934

For the quarterly period ended December 31, 1999

Commission file number: 0-26355
eUniverse, Inc.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
Nevada 06-1556248
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

101 North Plains Industrial Road 06492
Wallingford, Connecticut (Zip Code)
(Address of principal executive offices)
</TABLE>

203-265-6412
(Registrant's telephone number, including area code)

The registrant has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 3 months and has
been subject to such filing requirements for the past 90 days.

As of December 31, 1999, there were 16,291,744 shares of
eUniverse, Inc. common stock, $.001 par value outstanding.

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eUNIVERSE, INC.

FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 1999

INDEX
<TABLE>
<CAPTION>

Page
------
<S> <C>
PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.................................................................... 3

Balance sheets, December 31, 1999, March 31, 1999 and March 31, 1998.......................... 3

Statements of operations, for the three and nine months ended December 31, 1999 and 1998...... 4

Statements of cash flows, for the nine months ended December 31, 1999 and 1998................ 5

Statements of shareholders' equity (deficit) for December 31, 1999............................ 6

Notes to financial statements................................................................. 7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION............................................................................ 20

PART II -- OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES................................................................... 25

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................... 26

ITEM 5. OTHER INFORMATION....................................................................... 27

ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K........................................................ 29

</TABLE>

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PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

eUNIVERSE, INC.

Balance Sheets

(Unaudited)

<TABLE>
<CAPTION>
| CD Universe CD Universe
December 31, | March 31, March 31,
1999 | 1999 1998
------------ | ------------- -------------
Unaudited |
<S> <C> | <C> <C>
ASSETS |
CURRENT ASSETS |
Cash and cash equivalents................................... $ 891,305 | $ 11,335 $ 267,214
Accounts receivable, net of allowances for |
doubtful accounts of $46,800 and $0, respectively....... 602,610 | 92,938 -
Inventory.................................................. 111,412 | 22,647 23,877
Due from Officers.......................................... - | 157,569 1,000
Due from employees......................................... 158,555 | - -
Prepaid expenses and other current assets ................. 110,479 | 9,629 43,031
------------ | ------------- -------------
Total Current Assets 1,874,361 | 294,118 335,122
|
FURNITURE AND EQUIPMENT, less accumulated depreciation |
of $205,123, $83,052, and $36,900 respectively ............. 590,865 | 225,718 158,362
|
GOODWILL, net of amortization of $1,489,387...................... 25,709,813 | - -
|
OTHER INTANGIBLES, net of amortization of $107,894, |
$340, and $170, respectively................................. 708,143 | 510 680
|
Other Assets..................................................... 129,125 | - -
------------ | ------------- -------------
|
TOTAL ASSETS $ 29,012,307 | $ 520,346 $ 494,164
============ | ============= =============
|
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |
CURRENT LIABILITIES |
Accounts payable............................................ $ 1,576,222 | $ 828,718 $ 435,015
Accrued liabilities......................................... 518,059 | 113,604 99,566
Accrued Advertising......................................... 210,299 |
Due to affiliates .......................................... 2,500 | 30,000 110,395
Due to officer ............................................. - | 105,000 -
Short-term portion of lease obligations .................... 8,585 | - -
------------ | ------------- -------------
Total Current Liabilities 2,315,665 | 1,077,322 644,976
------------ | ------------- -------------
|
CURRENT LIABILITIES |
Long-term portion of lease obligations ..................... 2,596 | - -
|
MINORITY INTEREST .............................................. - | - -
|
SHAREHOLDERS' EQUITY (DEFICIT) |
Preferred stock, $.10 par value; 40,000,000 shares |
authorized; 1,795,024 and -0- shares |
issued and outstanding, respectively.................. 179,502 | - -
Common stock, $.001 par value; 250,000,000 shares |
authorized; 16,291,744 issued and outstanding............. 16,292 | 1,000 1,000
Additional paid-in capital.................................. 32,851,106 | - -
Deferred stock compensation cost............................ (41,127) | - -
Retained deficit............................................ (6,311,727) | (557,976) (151,812)
------------ | ------------- -------------
Total Shareholders' Equity 26,694,046 | (556,976) (150,812)
------------ | ------------- -------------
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 29,012,307 | $ 520,346 $ 494,164
============ | ============= =============

</TABLE>

See accompanying notes to the financial statements

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eUNIVERSE, INC.

Consolidated Statements of Operations

(Unaudited)

Three Months Ended Nine Months Ended
December 31, December 31,
----------------------------- --------------------------
1999 | 1998 1999 | 1998
-------------- | ------------- ------------ | ------------
| CD Universe | CD Universe
<S> <C> | <C> <C> | <C>
REVENUE: | |
Products....................................... $ 2,591,193 | $ 2,571,898 $ 6,140,928 | $ 6,871,342
Services....................................... 479,719 | - 809,841 | -
-------------- | ------------- ------------ | ------------
| |
TOTAL REVENUE 3,070,912 | 2,571,898 6,950,769 | 6,871,342
| |
COST OF GOODS SOLD | |
Products....................................... 2,199,369 | 2,209,637 5,213,818 | 5,798,313
Services....................................... (7,689)| - 14,431 | -
-------------- | ------------- ------------ | ------------
| |
TOTAL COST OF GOODS SOLD 2,191,680 | 2,209,637 5,228,249 | 5,798,313
| |
GROSS PROFIT | |
Products....................................... 391,824 | 362,261 927,110 | 1,073,029
Services....................................... 487,408 | - 795,410 | -
-------------- | ------------- ------------ | ------------
| |
TOTAL GROSS PROFIT 879,232 | 362,261 1,722,520 | 1,073,029
| |
OPERATING EXPENSES: | |
Marketing and sales (excludes stock-based | |
compensation of $107,236, $0, $144,842 | |
and $0, respectively)........................ 1,101,004 | 373,094 2,123,186 | 897,655
Product development (excludes stock-based | |
compensation of $(30,183), $0, $13,341 | |
and $0, respectively)........................ 725,621 | 90,030 1,221,499 | 246,844
General and administrative (excludes | |
stock-based compensation of $1,710, $0, | |
$3,705 and $0 respectively................... 1,317,889 | 16,548 3,004,888 | 198,284
Amortization of goodwill | |
and other intangibles........................ 681,413 | 292 1,596,622 | 376
Stock-based compensation....................... 78,763 | - 161,888 | -
-------------- | ------------- ------------ | ------------
TOTAL OPERATING EXPENSES........................... 3,904,690 | 479,964 8,108,083 | 1,343,159
-------------- | ------------- ------------ | ------------
OPERATING LOSS (3,025,458)| (117,703) (6,385,563) | (270,130)
| |
NONOPERATING INCOME (EXPENSE) | |
Interest and dividend income................... 18,757 | 85 57,753 | 395
Interest expense............................... - | - (355) | -
Loss allocated to minority interest............ - | - 16,438 | -
-------------- | ------------- ------------ | ------------
LOSS BEFORE INCOME TAXES (3,006,701)| (117,618) (6,311,727) | (269,735)
| |
INCOME TAXES ...................................... - | - - | -
-------------- | ------------- ------------ | ------------
NET LOSS $ (3,006,701)| $ (117,618) $ (6,311,727) | $ (269,735)
============== | ============= ============ | ============
| |
| |
Basic loss per common share........................ $ (0.18)| N/A $ (0.42) | N/A
============== | ============= ============ | ============
| |
Basic weighted average common | |
shares outstanding................................ 16,272,384 | N/A 15,149,505 | N/A
============== | ============= ============ | ============
</TABLE>

See accompanying notes to the financial statements

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eUNIVERSE, INC.

Statements of Cash flows

(Unaudited)

Nine Months Ended
December 31,
--------------------------
1999 | 1998
---- | ----
| CD Universe
<S> <C> | <C>
OPERATING ACTIVITIES |
Net income (loss).............................. $(6,311,727) | $(269,735)
|
Transactions not requiring cash: |
Depreciation................................ 84,910 | 34,614
Amortization................................ 1,596,622 | 376
Bad Debt Reserve............................ 27,625 |
Common stock issued to employees ........... 161,888 |
Common stock issued to outside consultants.. 62,874 | -
Common stock issued to |
outside consultants..................... 79,872 |
Non-cash interest income.................... (5,355) |
Loss allocated to minority interest......... (16,438) |
Changes in current assets...................... (817,639) | 7,871
Changes in other assets........................ (117,900) |
Changes in current liabilities................. 1,198,519 | 68,068
----------- | ---------
NET CASH USED IN OPERATING ACTIVITIES (4,056,749) | (158,806)
----------- | ---------
INVESTING ACTIVITIES |
Acquisitions................................... (1,915,000) | -
Proceeds through acquisitions.................. 136,419 | -
Proceeds through reverse acquisition........... 858,477 |
Purchases of fixed assets...................... (321,470) | (41,364)
Repayment of advances from officers............ (105,000) | -
Advance to Officers............................ - | (118,119)
Receipt of advances to officers................ 157,769 | -
Advances made to Employees..................... (153,200) | -
----------- | ---------
NET CASH USED IN INVESTING ACTIVITIES (1,342,005) | (159,483)
----------- | ---------
FINANCING ACTIVITIES |
Proceeds from issuance of preferred stock...... 5,875,204 | -
Proceeds from issuance of common stock......... 505,000 | -
Payment to repurchase common stock............. (20,000) | -
Financing costs................................ (6,672) | -
Repayment of loan from affiliates.............. (74,808) | -
----------- | ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,278,724 | -
----------- | ---------
|
CHANGE IN CASH AND CASH EQUIVALENTS................ 879,970 | (318,289)
Cash and cash equivalents, |
beginning of period............................... 11,335 | 267,214
----------- | ---------
CASH AND CASH EQUIVALENTS |
AT END OF PERIOD............................... $ 891,305 | $ (51,075)
=========== | =========

</TABLE>

See accompanying notes to the financial statements

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eUNIVERSE, INC.

Statement of Shareholders' Equity (Deficit)

Preferred Stock Common Stock Additional Deferred
--------------------- ----------------------- Paid-in Stock Retained
Shares Par Value Shares Par Value Capital Compensation Deficit Total
--------- --------- ----------- --------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share issued to acquire option
to purchase CD Universe ....... - $ - 8,061,000 $ 8,061 $ 247,039 - $ 255,100

Shares issued for merger related
services........................ - - 1,539,000 1,539 47,145 - 48,684

Shares issued pursuant to
Rule 506 of Regulation D....... - - 250,000 250 249,750 250,000

Shares issued pursuant to
employment agreement........... - - 200,000 200 6,036 - 6,236
--------- --------- ---------- --------- ----------- ---------- -------- -----------
Balance, March 31, 1999 - - 10,050,000 10,050 549,970 - 560,020

Sale of Preferred Stock........... 1,795,024 179,502 6,282,584 6,462,086

Cost of offerings and issuance.... - - (1,950,110) (1,950,110)

Shares issued in acquisition of
eUniverse.com Website.......... - - 15,000 15 59,985 60,000

Shares issued in acquisition of CD
Universe, Inc.................. - - 2,425,000 2,425 7,272,575 7,275,000

Shares issued for services........ - - 339,000 339 169,161 169,500

Additional shares issued for
services....................... - - 9,129 9 52,865 52,874

Shares retained by former MCA
Shareholders................... - - 1,200,993 1,201 857,276 858,477

Shares issued in acquisition of
Mega DVD....................... - - 4,605 5 52,495 52,500

Shares issued in acquisition of
Cases Ladder, Inc.............. - - 700,000 700 6,999,300 7,000,000

Stock options issued in connection
with acquisition of Cases
Ladder, Inc.................... - - - - 1,111,100 1,111,100

Stock options issued in connection
with services performed........ - - - - 1,000 1,000

New stock options issued in
connection with services
performed...................... - - - - 79,872 79,872

Fair Value of the warrants issued. - - - - 1,214,567 1,214,567

Shares issued in acquisition of
Gamers Alliance, Inc........... - - 78,125 78 999,922 1,000,000

Additional Shares issued in
acquisition of Gamers
Alliance, Inc.................. - - 8,789 9 112,490 112,499

Shares issued to employees of CD
Universe as compensation
expense........................ - - 25,000 25 237,475 (237,500) -

Shares issued and cancelled to
employees of CD Universe as
compensation expense........... - - (12,630) (13) (119,972) 119,985 -

Amortization of deferred stock
compensation................... - - - - - 76,388 76,388

Shares issued in acquisition of
The Big Network, Inc........... - 1,440,000 1,440 8,818,560 8,820,000

Shares issued in acquisition of
FunOne.com..................... - - 8,733 9 49,991 50,000

Net loss for the nine months ended
December 31, 1999............... - - - - - (6,311,727) (6,311,727)

--------- --------- ----------- --------- ----------- ---------- ---------- -----------
BALANCE, December 31, 1999 1,795,024 $ 179,502 16,291,744 $ 16,292 $32,851,106 $ (41,127) $(6,311,727 $26,694,046
========= ========= =========== ========= =========== ========== ========== ===========

</TABLE>

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eUNIVERSE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999

(1) ORGANIZATION AND LINE OF BUSINESS

eUniverse, Inc. ('the Company') is a Nevada Corporation engaged in
developing and operating a network of web sites providing entertainment-oriented
products and services. At present the Company is engaged in sales of audio CDs,
videotapes, and digital videodisks ('DVDs') over the Internet, and providing
online computer gaming. The financial statements being presented include the
accounts of eUniverse, Inc. and its wholly owned subsidiaries. These
subsidiaries are Entertainment Universe, Inc. acquired on April 14, 1999,
CD Universe, Inc. acquired on April 14, 1999, Cases Ladder, Inc. acquired
May 31, 1999, Gamer's Alliance, Inc. acquired June 30, 1999. These financial
statements also include the accounts of The Big Network, Inc., 80% of which was
acquired as of August 31, 1999. All significant inter-company transactions and
balances have been eliminated.

(2) BUSINESS DEVELOPMENTS

The Company was founded in February 1999 and incorporated as Entertainment
Universe, Inc. ('EUI'). EUI was formed as a holding company to acquire various
operating companies. On April 14, 1999, EUI acquired Motorcycle Centers of
America, Inc. ('MCA'), a publicly traded company through a reverse acquisition.
In connection with that acquisition, EUI shareholders exchanged all of EUI's
common stock for 12,829,000 shares of MCA's $.001 par value restricted common
stock. EUI shareholders also exchanged all of their preferred shares for
1,795,024 shares of MCA's Series A 6% Convertible Preferred Stock. As a result,
EUI (the accounting acquirer) became a wholly owned subsidiary of MCA (the legal
acquirer). The former shareholders of EUI own approximately 91.6 percent of MCA.
Subsequent to this, MCA changed its name to eUniverse, Inc.

(3) ACCOUNTING POLICIES

UNAUDITED INTERIM FINANCIAL STATEMENTS

The interim consolidated financial statements as of December 31, 1999 have
been prepared by eUniverse pursuant to the rules and regulations of the
Securities and Exchange Commission. These statements are unaudited and reflect
all adjustments that are, in the opinion of management, necessary for a fair
presentation of the consolidated balance sheet, consolidated operating results,
and consolidated cash flows for the interim periods. These adjustments,
consisting of normal recurring adjustments and accruals, are made on a basis
consistent with the annual audited financial statements and generally accepted
accounting principles. The results of operation for the nine months ended
December 31, 1999 are not necessarily indicative of the results for any other
period.

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, liabilities, and
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

REVENUE RECOGNITION

The Company recognizes revenue upon shipment of its products. Revenue
includes shipping and handling charges. The Company also maintains a partner
program whereby partners provide links on their web-sites that bring customers
to the CD Universe web-site. Revenue generated from these linked sites is

<PAGE>

recognized upon shipment of the products. The partner receives a commission of
5% to 15% of sales of the Company's products that originate from the site,
recognized as a selling expense concurrent with the sale. Barter transactions
are recorded at the lower of the estimated fair value of advertisements received
or the estimated fair value of the advertisements given. Barter revenue and the
related advertising is recorded based on impressions delivered and received with
the difference recorded as an advance or prepaid. Additionally, the Company
derives revenue from the sale of advertisements. Advertising, membership and
sponsorship revenues are recognized as earned. Returns are provided for based
on reasonable estimates of future returns.

ROYALTY PAYMENTS

The Company has agreements to share revenue with individuals independent of
the Company. The Company is required to pay royalties for the use of computer
games based on a percentage of advertising revenue generated from the Company's
usage of the games on its web-sites. As the Company generates advertising
revenue, a corresponding liability is accrued as a royalty expense, which is
recorded as a cost of revenue (see note 11).

COMPARATIVE PERIODS

Since EUI, the accounting acquirer, has no operating history, financial
statements are presented using CD Universe's historical data, as EUI's
predecessor.

CONCENTRATION OF CREDIT RISK

The Company places its cash in what it believes to be credit-worthy
financial institutions. However, cash balances exceeded FDIC insured levels at
various times during the year.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.

INVENTORY

Inventory consists of compact discs, videos and packaging materials.
Inventory is valued at the lower of cost or market using the first-in, first-out
method.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation is computed using
the straight-line method based upon the estimated useful lives of the assets.
Maintenance and repairs are charged to expense as incurred.

Estimated useful lives are as follows:

Leasehold improvements...................................... 3 years
Computer equipment.......................................... 5 years
Telephone equipment......................................... 5 years
Furniture, fixtures and other............................... 10 years

INTANGIBLE ASSETS

Intangible assets consist of goodwill, customer lists, and domain names.
Excess cost over the fair value of net assets acquired (or goodwill) generally
is amortized on a straight-line basis over 10 years. Customer lists and domain
names are being amortized on a straight-line basis over a period of 3 and 10
years, respectively. The carrying values of intangible assets are reviewed if

<PAGE>

the facts and circumstances suggest that they may be impaired. Negative
operating results and negative cash flows from operations, among other factors,
could be indicative of the impairment of intangible assets. If this review
indicates that intangible assets will not be recoverable, the Company's carrying
value of intangible assets would be reduced.

ORGANIZATION COSTS

In accordance with American Institutes of Certified Public Accountants'
Statement of Position 98-5 'Reporting on the Costs of Start-Up Activities', the
Company expenses, as incurred, costs related to organizational and start-up
activities.

INCOME TAXES

Provisions for income taxes are based on taxes payable or refundable for
the current year and deferred taxes on temporary differences between the amount
of taxable income and pretax financial income and between the tax bases of
assets and liabilities and their reported amounts in the financial statements.
Deferred tax assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled as
prescribed by Statement of Financial Accounting Standards ('SFAS') No. 109,
'Accounting for Income Taxes.' As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the provision for
income taxes.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, accounts receivable,
receivable from employees, accounts payable and accrued expenses approximate
fair value due to the relatively short maturity of these instruments.

LONG-LIVED ASSETS

Long-lived assets and certain identifiable intangibles to be held and used
are reviewed for impairment whenever events or changes in circumstances indicate
that the related carrying amount may not be recoverable. When required,
impairment losses on assets to be held and used are recognized based on the fair
value of the assets and long-lived assets to be disposed of are reported at the
lower of carrying amount or fair value less cost to sell.

STOCK-BASED COMPENSATION

The Company has adopted the intrinsic value method of accounting for
stock-based compensation in accordance with Accounting Principles Board Opinion
('APB') No. 25, 'Accounting for Stock Issued to Employees' and related
interpretations.

ADVERTISING COSTS

Advertising costs, except for costs associated with direct-response
advertising, are charged to operations when incurred. The costs of
direct-response advertising, if any, are capitalized and amortized over the
period during which future benefits are expected to be received.

EARNINGS PER SHARE

The computation of basic earnings per share ('EPS') is computed by dividing
income available to common stockholders by the weighted average number of
outstanding common shares during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period. The computation
of diluted EPS does not assume conversion, exercise or contingent exercise of
securities that would have an anti-dilutive effect.

(4) BUSINESS COMBINATIONS AND INVESTMENTS

<PAGE>

During the nine months ended December 31, 1999, the Company completed the
following acquisitions: CD Universe, Inc., Cases Ladder, Inc., Gamers Alliance,
Inc. and The Big Network, Inc. All four acquisitions were recorded using the
purchase method of accounting under the provisions of APB Opinion No. 16.

On April 14, 1999, the Company completed its acquisition of CD Universe,
Inc., a company engaged primarily in selling compact audio disks, video disks,
and video tapes to retail purchasers over the internet. According to the terms
of this acquisition, the Company acquired all of the capital stock of CD
Universe, Inc. for a total consideration of $1,915,000 in cash plus 2,425,000
shares of common stock of the company valued at $3.00 per share (fair value on
acquisition date). This was an arm's length transaction between independent and
unrelated parties. The Company also incurred direct costs related to the
acquisition totaling $60,215, which has been added to the acquisition price.

On May 31, 1999, the Company completed its Acquisition of Cases Ladder,
Inc., a company primarily engaged in providing online computer gaming with
competitive rankings, tournaments and leagues among its more than 1.1 million
registered members. The purchase price of this acquisition was 700,000 shares of
the Company's common stock, valued at $10.00 per share (market price on
acquisition date), issued in exchange for all the issued and outstanding shares
of Cases Ladder, Inc. This was an arm's length transaction between independent
and unrelated parties. The Company also incurred direct costs related to the
acquisition totaling $1,112,150, which have been added to the acquisition price.
Of this amount, $1,111,100 is attributable to 400,000 options issued
(subsequently repriced) for services rendered. The options vest quarterly over
three years and had an exercise price of $9.50 per share. These options were
cancelled on September 15, 1999 and options were reissued for 340,000 shares at
exercise price of $6.00 per share. These options vest as follows, 113,333 vest
on September 16, 2000 and 28,333 vest each 3 months thereafter. The
Black-Scholes option-pricing model with a risk free interest rate of 5.86%, an
annualized volatility of 78%, no expected dividend yield and an exercise term of
three years was used to estimate the fair value of these options ($1,111,100).

On June 30, 1999, the Company completed its purchase of Gamers'. Alliance,
Inc. Gamers' Alliance operates and maintains one of the largest networks of
computer gaming related sites on the Internet with more than 50 gaming related
wed sites. The purchase price of this acquisition was 78,125 shares of the
Company's common stock, valued at $12.80 per share (market price on acquisition
date), issued in exchange for all the issued and outstanding shares of Gamers'
Alliance, Inc. Pursuant to the term of the agreement, the purchase price may
increase to 175,781 shares of common stock based on achievement of earnings
performance targets through June 30, 2000. On December 17, 1999, an additional
8,789 of such shares valued at $12.80 per share (the market price on acquisition
date) were issued. The Company also incurred direct costs related to the
acquisition totaling $26,887, which have been added to the acquisition price.

Effective as of August 31, 1999, the Company completed its acquisition of
80 percent of the outstanding capital stock of The Big Network, Inc. (83.5% of
the common and 70.7% of the preferred), a company providing a suite of classic
board and card games, such as spades, checkers, chess, and backgammon, allowing
simultaneous play by its members. The Big Network has also developed LivePlace,
a Java applet that provides users with an overview of activities around the
site, allows them to follow public conversation, send private messages to other
users, and co-navigate the web. The purchase price of this acquisition was
1,440,000 shares of the Company's common stock, valued at $6.125 per share (the
market price on the acquisition date), issued in exchange for 80 percent of the
issued and outstanding shares of The Big Network, Inc. This was an arm's length
transaction between independent and unrelated parties. The Company also incurred
direct costs related to the acquisition totaling $87,124, which have been added
to the acquisition price.

The Company expects to complete its acquisition of the remaining 20 percent
of capital stock of The Big Network, Inc. by issuing an additional 360,000
shares of its common stock valued at $6.125 (market price at the original
acquisition date).

<PAGE>

The estimated fair value of assets acquired and liabilities assumed is
summarized as follows:
<TABLE>
<CAPTION>

CD CASES GAMER'S THE BIG
UNIVERSE LADDER ALLIANCE NETWORK
-------- ------ -------- -------
<S> <C> <C> <C> <C>
Cash.................................. $ 11,335 $ 20,286 $ 5,503 $ 99,204
Accounts receivable................... 92,938 59,218 52,664 17,000
Inventory............................. 22,647 -- -- --
Fixed assets.......................... 225,718 33,916 20,240 71,685
Receivable, related party............. 157,569 -- -- --
Customer list......................... 250,000 100,000 -- --
Domain names.......................... 100,000 75,000 90,000 24,000
Other assets.......................... 10,139 10,254 -- 13,075
Accounts payable...................... (942,321) (75,379) (35,284) (82,403)
Other liabilities..................... (30,000) -- (29,528) (36,373)
Notes payable, officers............... (105,000) -- -- --
Minority interest..................... -- -- -- (16,438)
Goodwill.............................. 9,457,190 7,888,855 1,035,791 8,817,374
---------- ---------- ---------- ----------
$9,250,215 $8,112,150 $1,139,386 $8,907,124
========== ========== ========== ==========
</TABLE>

Total goodwill recorded through the acquisitions is $27,199,210 and is
being amortized on a straight-line basis over ten years.

The operations of the acquired entities have been included in the statement
of operations from the date of acquisition, with the exception of CD Universe,
which is included from the beginning of the period.

PRO FORMA INFORMATION

Pro forma information as if the acquisitions had occurred at the beginning
of the periods presented is as follows:

<TABLE>
<CAPTION>
PRO FORMA
NINE MONTHS ENDING
DECEMBER 31,
--------------------------
1999 1998
---- ----
<S> <C> <C>
Revenue............................................ $ 7,150,063 $ 7,023,389
Net loss........................................... (7,270,495) (2,008,724)
Loss per share..................................... (.48) (.13)
</TABLE>

(5) OTHER NON-CASH FINANCIAL ACTIVITIES

Stock issued in connection with acquisitions:
Acquisition of The Big Network......................... $8,820,000
Acquisition of CD Universe............................. 7,275,000
Acquisition Cases Ladder............................... 7,000,000
Stock options issued in connection with the acquisition
of Cases Ladder shares................................ 1,111,100
Acquisition Gamer's Alliance........................... 1,112,499
Acquisition of eUniverse.com website(1)................ 60,000
Acquisition of MegaDVD(1).............................. 52,500
Acquisition of FunOne.com(1)........................... 50,000
Stock options issued in connection with services
performed................................................. 80,872
Stock issued in connection with the preferred stock
offering, 319,000 shares(2)............................... 159,500

<PAGE>

Stock issued in connection with services performed, 20,000
shares(2)................................................. 10,000
Stock issued in connection with services performed, 9,129
shares(2)................................................. 52,874
Stock issued to employees of CD Universe 12,370 shares...... 117,515

(1) The purchase of eUniverse.com website was accomplished through issuance of
15,000 shares of common stock priced at $4.00 per share for a total of
$60,000 (fair value of the site at the date of purchase). Acquisition of
megaDVD website was accomplished through issuance of 4,605 shares of common
stock priced at $11.40 per share (market price of the stock on issue date).
Acquisition of FunOne.com website was accomplished on October 1, 1999,
through issuance of 8,733 shares of common stock valued at $5.73 per
share(market price onclosing date). The Company also incurred direct costs
related to this acquisition totaling $3,564, which have been added to the
acquisition price. Additional payments of up to $300,000 in stock may be
payable upon achievement of targeted numbers of unique visitors to
FunOne.com during the seven consecutive months following the Closing Date.
These additional payments will be recorded as stock based compensation by
the Company.

(2) Issuance of 339,000 share of common stock valued at $.50 per share (fair
value of the services performed) for various consulting services such as
financial and legal services performed during March and April of 1999 in
relation to the Company's stock offering completed in April 1999, and public
relations services performed subsequent to the reorganization in April 1999.
Moreover, 9,129 shares were issued in the third quarter, 1999 for various
public relations consulting services.

Additionally, 12,370 shares of common stock are issued to key employees of
CD Universe, Inc. currently employed by the company for their involvement in the
Company's activities. These shares were issued on June 15, 1999 and were valued
at $9.50 per share (market price on issue date) and will vest on April 14, 2000.
The compensation expense is being amortized over this period.

Moreover, warrants were issued to purchase a total of 671,865 shares of
common stock of the company as part compensation to its exclusive placement
agent, Gerard Klauer Mattison & Co., Inc. ('GKM'). 400,000 of these warrants
have the exercise price of $2.74 per share and became exercisable on April 14,
1999 and expire on April 14, 2004. The remaining 271,865 have an exercise price
of $2.75 per share will become exercisable on April 14, 2000 and expire on April
14, 2004. These warrants have been recorded in the financial statement valued at
$1,214,567. The Black-Scholes option-pricing model with a risk free interest
rate of 4.5%, an annualized volatility of 81%, no expected dividend yield, and
an exercise term of five years was used to estimate the fair value of the
warrants issued.

(6) DUE FROM EMPLOYEES

Due from employees consists of three 6% interest-bearing notes in the
amounts of $85,000, $25,000, and $40,000 due from two former vice presidents of
Cases Ladder, Inc. and former principal of Green Willow (MegaDVD). All three
individuals are currently employees of eUniverse, Inc.

(7) FIXED ASSETS

Fixed assets, at cost, consist of the following
<TABLE>
<CAPTION>

December 31, 1999 MARCH 31, 1999
----------------- --------------
<S> <C> <C>
Furniture and fixture................................. $ 40,993 $ 29,069
Computers and equipment............................... 646,829 238,622
Purchased Software.................................... 59,623 1,079
Leasehold Improvements................................ 48,543 40,000
-------- --------
795,988 308,770
Less accumulated depreciation and amortization........ 205,123 83,052
-------- --------
Fixed assets, Net................................ $590,865 $225,718
======== ========
</TABLE>

<PAGE>

Depreciation expense for the reporting period were as follows:

Three Months Nine Monhts
Ended Ended
December 31, December 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Depreciation expense............ .............. $34,631 $11,538 $84,909 $34,614
</TABLE>

(8) OTHER INTANGIBLES

Other Intangibles primarily consists of purchase price of web sites
acquired:
<TABLE>
<CAPTION>

December 31, 1999 MARCH 31, 1999
----------------- --------------
<S> <C> <C>
Domain Name -- eUniverse.Com.......................... $ 60,000 $--
Domain Names -- CD Universe, Inc...................... 100,000
Domain Names -- Cases Ladder, Inc. ................... 75,000
Domain Names -- Gamer's Alliance, Inc. ............... 90,000
Domain Names -- The Big Network, Inc. ................ 24,000
MegaDVD.com........................................... 52,500
FunOne.com............................................ 53,564
Customer list -- CD Universe, Inc. ................... 250,000
Customer list -- Cases Ladder, Inc. .................. 100,000
Other................................................. 10,973 850
-------- ----
816,037 850
Less accumulated amortization......................... 107,894 340
-------- ----
Other Intangible, Net................................. $697,356 $510
======== ====
</TABLE>

The above Web sites and customer lists are valued at their fair value based
on management's judgment and are being amortized on a straight-line basis over
the period of ten years and three years, respectively. Amortization expense for
goodwill and intangible assets for the reporting period ending December 31, 1999
was $1,596,622.

(9) INCOME TAXES

The components of the provision for income taxes for the nine months period
ended December 31, 1999 and 1998 are as follows:

1999 1998
---- ----
Current tax expense
U.S. Federal....................................... $ -- $ --
State and local.................................... -- --
-------- --------
Total current........................................... -- --
-------- --------
Deferred tax expense
U.S. Federal....................................... -- --
State and local.................................... -- --
-------- --------
Total deferred.......................................... -- --
-------- --------
Total tax provision from continuing operations.......... $ -- $ --
======== ========

<PAGE>

The reconciliation of the effective income tax rate to the Federal
statutory rate is as follows:

1999 1998
---- ----
Federal income tax rate..................................... 34.0% 34.0%
Deferred tax charge (credit)................................ -- --
---- ----
Effect on valuation allowance............................... 34.0% 34.0%
State income tax, net of Federal benefit.................... -- --
---- ----
Effective income tax rate................................... 0.0% 0.0%
==== ====

(10) MAJOR VENDOR

Traditionally, the Company have purchased approximately 90% of its
merchandise from one vendor. The Company is in process of diversifying its
sources for product procurement. As of December 31, 1999, three major vendors
were owed a total of $977,000, distributed almost evenly, which are being paid
through February 2000.

(11) COMMITMENTS AND CONTINGENCIES

The Company has entered into several agreements to share revenues with
individuals independent of the company. These individuals have provided the
Company with computer games, which the Company has been operating on its web
sites. The individuals have granted the Company usage of the computer games for
up to 25% royalty of advertising revenue generated from the usage of the game on
the Company's web sites. For the nine months ended December 31, 1999, the
Company has no liabilities or expenses due under these agreements.

The Company leases office space under non-cancelable operating lease
agreements that expire within the next three years. Future lease payments under
these non cancelable operating lease are as follows:

MARCH 31,
--------
2000...................................................... $ 91,500
2001...................................................... 183,900
2002...................................................... 175,050
2003...................................................... 16,950

On September 23, 1999, a former employee of The Big Network, Inc. ('TBN'),
filed suit in the Superior Court of California against The Big Network, Inc.,
the Company and various unnamed individuals seeking an unspecified amount of
compensatory and punitive damages based on (i) alleged breach of employment
agreement with TBN, (ii) alleged breach of an oral agreement among various
principals of TBN prior to its merger with the Company relating to salary and
stock options and (iii) alleged breach of an implied covenant of good faith and
fair dealing and fraud in connection with salary, stock options and proposed
terms of employment with the Company following the merger with TBN. The Company
believes the allegations in the complaint are without merit and will defend the
suit vigorously. In the event that there is any liability in connection with
this lawsuit, the Company has a right of indemnification from the former
shareholders of TBN. On December 20, 1999, the parties reached agreement in

<PAGE>

mediation providing for the former employee of TBN to receive the equivalent of
an additional 55,000 shares of TBN stock. This settlement does not affect the
aggregate number of shares to be issued by the Company (1,800,000) in exchange
for all of the outstanding stock of TBN.

On December 9, 1999, The Isosceles Fund Limited, a Bahamian corporation
('Isosceles'), filed suit in the Superior Court of California against the
Company, Brad Greenspan, Gerard Klauer Mattison & Co., Inc. ('GKM') and ten
unnamed individuals seeking damages based on (i) breach of an alleged
subscription agreement between Isosceles and the Company to purchase common
stock of eUniverse, (ii) breach of an implied covenant of good faith and fair
dealing in connection with the alleged subscription agreement, and (iii)
intentional interference with the alleged subscription agreement by GKM and ten
unnamed individuals. With respect to each count of the cause of action,
Isosceles has claimed damages of $1,750,000. Isosceles has also requested that
the court award exemplary and punitive damages, interest, costs of suit and such
other relief as the court may deem fair, just, equitable and proper. The Company
believes the allegations in the complaint are without merit and will defend the
suit vigorously.

(12) EQUITY COMPENSATION PLAN

On June 15, 1999, the Company issued 25,000 shares of common stock as
compensation to key employees of CD Universe, Inc. for their involvement in the
Company activities. These shares were issued on June 15, 1999 and were valued at
$9.50 per share (market price on issue date) and will vest on April 14, 2000.
The compensation expense is being amortized over this period. During the quarter
ended December 31, 1999, employees holding 12,630 stock certificates left the
company and their shares were cancelled. At December 31, 1999, 12,370 of these
shares remain outstanding.

Additionally shares totaling $25,500 and $60,000 are to be issued to the
principals of MegaDVD and FunOne.com as compensation for achieving performance
targets. The related compensation expense of these shares has been accrued in
the December 31, 1999 balance sheet.

The following table presents the amount of stock-based compensation that
would have been recorded under the following income statement categories if the
stock-based compensation had not been separately stated in the financial
statements.
<TABLE>
<CAPTION>

Three Months Nine Months
Ended Ended
December 31, December 31,
----------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Marketing and Sales............................. $107,236 $ -- $144,842 $ --
Product Development............................. (30,183) -- 13,341 --
General and Administrative...................... 1,710 -- 3,705 --
------- ------- ------- -------
Total stock based compensation............. $ 78,763 $ -- $161,888 $ --
======= ======= ======= =======
</TABLE>

Under the Company's 1999 Stock Award Plan, stock options may be granted to
officers, directors, employees and consultants. An aggregate of 5,000,000 shares
of common stock have been reserved for issuance under the Plan. For the nine
months ended December 31, 1999 the plan's activities were as follows:

STOCK OPTIONS:
<TABLE>
<CAPTION>

WEIGHTED
NUMBER OF EXERCISE AVERAGE
SHARES PRICE PRICE
------ ----- -----
<S> <C> <C> <C>
Outstanding at 3-31-1999.............................. -- -- --
Granted............................................... 4,659,750 $3.00-13.00 $7.00
Cancelled............................................. (2,069,450) 6.00-11.40 9.51
Reissued.............................................. 1,642,200 6.00 6.00
Exercised............................................. --
Forfeited............................................. --
---------- --------------- -----
Outstanding at 12-31-1999............................. 4,232,500 $3.00-13.00 $5.38
---------- --------------- -----
Options exercisable at 12-31-1999..................... 375,833 $3.00-13.00 $4.56
---------- --------------- -----

</TABLE>

<PAGE>

Weighted average of remaining life of the options is 31 months.

On September 15, 1999, the Company cancelled 1,932,000 options, which had
been granted to employees on June 15, 1999 with a weighted average exercise
price of $9.67 and reissued 1,642,200 (85 percent) options with a weighted
average exercise price of $6.00 to the same employees. In addition to the stock
options granted to the employees, the Company has granted 340,000 options with
exercise price of $6.00 to an outside consultant for the services performed
related to the acquisition of Cases Ladder, Inc. These options were valued
$1,111,100 using the Black-Scholes option pricing model and have been included
as part of the acquisition cost. Moreover, 95,000 options with exercise prices
ranging from $6.00 to $13.00 Have been granted to three firms for investor
relation and consulting services. These options have been recorded pursuant to
SFAS 123 based on the fair market value of the equity instrument issued.

The Company uses the intrinsic value method (APB Opinion 25) to account for
its stock options granted to officers, directors, and employees. Under this
method, compensation expense is recorded over the vesting period based on the
difference between the exercise price and quoted market price on the date the
options are granted. Since the company has granted all its stock options at an
exercise price equal to or above the quoted market value on the measurement
date, no compensation expense related to issuance of stock option to employees
has been recorded.

Had the Company chosen the fair value method of accounting for transactions
involving stock option issuance (SFAS No. 123), the Company would have recorded
an additional $1,119,805 in compensation cost for the nine months ended December
31, 1999 as presented by the pro forma statement below:

<TABLE>
<CAPTION>
Nine Months
Ended
December 31,
1999
----
<S> <C>
Net loss as reported........................................ $(6,311,727)
-----------
Pro forma net loss.......................................... $(7,431,532)
-----------
Net loss per common share................................... $ (0.42)
-----------
Pro forma loss per share.................................... $ (0.49)
-----------

</TABLE>

The Black-Scholes option-pricing model with a risk free interest rate
ranging from 4.5% to 6.125%, a weighted average volatility of 78%, zero dividend
yield and an expected life of three years for the options was used.

WARRANTS:

NUMBER
OF SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding at 3-31-1999........................ -- --
Granted......................................... 671,865 $ 2.75-2.75
Exercised....................................... --
Forfeited....................................... --
------- --------------
Outstanding at 12-31-1999........................ 671,865 $ 2.75-2.75
------- --------------
Options exercisable at 12-31-1999................ 400,000 $2.75
------- --------------

</TABLE>

<PAGE>

The Warrants were issued as part of compensation to Gerard Klauer Mattison
& Co., Inc., the Company's exclusive placement agents. 400,000 of these warrants
have the exercise price of $2.74 per share and became exercisable on April 14,
1999 and expire on April 14, 2004. The remaining 271,865 have an exercise price
of $2.75 per share will become exercisable on April 14, 2000 and expire on April
14, 2004. These warrants have been recorded in the financial statement valued at
$1,214,567. The Black-Scholes option-pricing model with a risk free interest
rate of 4.5%, an annualized volatility of 81%, no expected dividend yield, and
an exercise term of five years was used to estimate the fair value of the
warrants issued.

(13) PREFERRED STOCK

On April 14, 1999 EUI sold 1,795,024 shares of its Series A 6% Convertible
Preferred Stock in a private offering pursuant to Regulation D of the Securities
Act of 1933 for the aggregate price of $6,462,086. Holders of the company's have
the right to convert such stocks into shares of the Company's common stock at
any time after October 15, 1999 at a one-to-one ratio unless market price of the
company's common stock is below $3.60, in which case, the conversion ratio would
be adjusted accordingly.

The shares of preferred stock have a liquidation preference of $3.60 per
share, which increases at a rate of 6% per annum. Each share of preferred stock
may be converted to common stock at an initial rate of one share of common stock
for each $3.60 of liquidation preference. If the common stock's market price at
the time of conversion is less than $3.60 per share, the conversion rate is
determined by reference to such lower price. Because of the variable conversion
rate and the 6% accretion factor, each share of preferred stock may be converted
into greater than one share of common stock. Prior to any conversion, the
conversion price is adjusted to account for any increase or decrease in the
number of outstanding shares of common stock by stock split, stock dividend, or
other similar event.

The Company does not pay dividends on the preferred stock and the holders
of such stock are not entitled to receive any dividends thereon. In the event of
the liquidation or dissolution of the Company, the holders of the preferred
stock will be entitled to receive, prior in preference to any distribution to
the holders of the common stock and any other class of stock which has been
designated as junior in rank to the preferred stock, the liquidation preference
amount described above.

At any time after one year from the effective date of the registration
statement registering the common stock issued or to be issued upon conversion of
the preferred stock, if the closing bid price per share of the Company's common
stock is equal to or greater than $16.00, the company, at its option, may either
automatically convert the preferred stock to common stock or redeem the
preferred stock for cash in an amount per share equal to $3.60 plus accretion
thereon at a rate of 6% per year.

(14) INTERIM SEGMENTED DISCLOSURES

The following table represents segmented reporting for the reporting period
ending December 31, 1999. There were no identifiable reportable segments during
the similar period last year.

<PAGE>

<TABLE>
<CAPTION>
PRODUCT SERVICES CORPORATE TOTAL
------- -------- --------- -----
(000'S)
<S> <C> <C> <C> <C>
Revenue................................................. $ 6,141 $ 810 $ -- $ 6,951
Operating loss.......................................... (2,365) (1,829) (2,191) (6,385)
Interest income......................................... 57 57
Minority interest....................................... 16 16
------- ------- ------- -------
Pre tax loss............................................ (2,365) (1,813) (2,134) (6,312)
Net loss................................................ (2,365) (1,813) (2,134) (6,312)
Assets.................................................. 10,029 17,903 1,080 29,012
Depreciation and amortization........................... 801 869 11 966
Fixed assets additions.................................. 220 90 12 322
</TABLE>

Significant reconciling items in the corporate columns are as follows:

Operating loss: Professional fees $660; Compensation $449; Consulting $227;
Investor and public relations $508.

Assets: Cash $680; Loans $156; Prepaid Expense $58; and Deposits $116.

Management has chosen to organize the enterprise around differences in
products and services. Products include audio CDs, videotapes, and digital
videodisks. Services include advertising, membership and sponsorship revenue.
All revenues recorded are from external customers.

(15) SUBSEQUENT EVENT

THEFT OF CUSTOMER DATA FROM CD UNIVERSE

The Company was contacted in late December 1999 by a person claiming to
possess CD Universe customer information and demanding compensation in return
for not posting the information on the Internet. The FBI was immediately
contacted and an investigation was initiated. The Company learned on Saturday
January 8, 2000 that customer data was posted on the Internet and immediately
notified the FBI, which caused the site to be shut down the same day. We have
been cooperating with the FBI and other law enforcement officials to discover
the extent to which our data may have been compromised and to identify the
extortionist and limit any damage to the Company's customers.

CD Universe has approximately 300,000 registered customers. Apart from
claims made by the perpetrator and the minimal information on card data
released, we cannot yet determine when or how the data was taken or the extent
of the theft. For the purpose of our response to the theft, we have assumed that
all customers may have been affected and have taken steps to mitigate our
customers' exposure and inconvenience.

Upon learning on January 8, 2000 that customer data had been posted on the
Internet, the Company took several steps to secure its customer data. We
notified the credit card issuers of the theft and provided them with the data
they need to take corrective actions with their card members. We have also sent
e-mail messages to our customers to notify them of the risk that their credit
card data may have been stolen and advise them that they should closely monitor
their accounts. We also suggested that they might wish to have their cards
reissued for additional protection. Similar information and suggestions are
being given to customers who call our support staff.

Information regarding this theft of data has been widely disseminated in the
national press. The publicity generated by the press coverage may cause customer
concerns regarding the security of their credit card data, which could affect
future sales of CD Universe products and consequently its revenues and operating
results. As a result of the theft of data, there may be some adverse impact on
our customer base. There may be a loss of confidence and loyalty in CD Universe
directly and there may be a broader loss of confidence and loyalty in eUniverse,
its e-commerce business and its brand identity. More generally, e-commerce as a
whole could be adversely affected. The Company cannot yet predict the impact, if
any, on its sales and operating results. However, we are developing marketing
and customer relations programs to win back our customers' confidence following
the implementation of our additional security enhancements.

The Company may be required to defend against lawsuits related to the theft
of data. At this time, the Company is unable to determine the extent of any such
effect on sales or exposure to lawsuits or any associated liability. Such
lawsuits could include suits by the Company's shareholders, customers and credit
card processor and by credit card issuers and third-party merchants that accept
the fraudulently obtained credit card information. The Company has maintained
directors and officers' liability insurance and general liability insurance but
is unable to determine whether such insurance would adequately cover any
liability or expenses associated with potential lawsuits.

ACQUISITION OF FALCON VENTURES CORPORATION

In an arms length transaction between unrelated parties, as of February 2, 2000,
the Company acquired all of the outstanding capital stock of Falcon Ventures
Corporation ("Falcon") from Take-Two Interactive Software, Inc. ("T2"), an
unaffiliated third party, in exchange for 310,000 shares of the Company's
common stock. The consideration paid was based upon negotiations between the
parties to determine the value of the Falcon's shares and the shares issued.
Falcon is an online retailer of DVDs through the web site dvdwave.com.

<PAGE>

Falcon is an online retailer of DVD movies, music CDs and VHS movies
through its Web site at DVDwave.com. Falcon was incorporated on November 4, 1998
in California. As of February 25, 1999, T2 acquired all of the issued and
outstanding stock of Falcon in exchange for 50,000 shares of T2 common stock.
The fair market value of the transaction was $506,250, which was determined in
an arms length negotiation between unrelated parties. Falcon has significant
liabilities of $1,100,000 consisting of $500,000 in accounts payable which are
ordinary and consistent with Falcon's line of business and $600,000 in loans due
to T2. The loans from T2 will not be assumed by the Company.

ACQUISITION OF ASSETS OF D. SCOTT SMITH D/B/A POKEMONVILLAGE.COM AND QUAKE CITY
GAMING NETWORK

On February 1, 2000, The Company completed its acquisition of
Pokemonvillage.com, a network of network of Generation Y (ages 10-20) focused
sites. Domain names included in this transaction include Pokemonvillage.com,
Forumnation.com, and Reverseauction.com. Pokemonvillage.com, with over 370,000
unique visitors in December 1999, as reported by Media Matrix, is one of the
largest online communities for enthusiasts of Pokemon, computer/video games, and
other collectables. Forumnation.com is youth focused web site allowing the users
to discuss a variety of subjects such as music, comics, and games that is of
interest to them. ReverseAuction.com site allows the owners of Pokemon cards,
comics, and other collectibles to meet and auction off their items. The purchase
price of this transaction was $250,000 payable in shares of the Company common
stock. Additional payments of $190,000 in cash and $450,000 in stock options may
be payable upon achievement of targeted numbers of banner advertisements
displayed on the web pages of the Pokemonvillage.com and its related web sites
through August 1, 2001. The former owner of Pokemonvillage.com is currently
employed by the company and any additional earnings through the achievement of
targeted goals will be treated as compensation expense in the period earned.

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our
financial statements and the accompanying notes that appear elsewhere in this
report. The results for both the current quarter and nine months reflect the
consolidated operations of eUniverse, including CD Universe, the predecessor
company, Case's Ladder (from June 1), Gamer's Alliance (from July 1) and Big
Network (from September 1) along with results for the corporation established in
connection with the acquisitions of MCA and those identified above. Results for
the comparable periods in 1998 include only those of CD Universe. The following
discussion contains forward-looking statements that reflect our plans, estimates
and beliefs. Our actual results could differ materially from those discussed in
the forward-looking statements.

RESULTS OF OPERATIONS -- QUARTER AND NINE MONTHS ENDED DECEMBER 31, 1999 VS.
1998

NET SALES

Net product sales include the selling price of music, video, games and
other products sold by the Company, net of returns, as well as outbound shipping
and handling charges. Net service sales include membership, sponsorship and
advertising revenues.

QUARTER ENDED NINE-MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- --------------------------
1999 1998 % CHANGE 1999 1998 % CHANGE
---- ---- -------- ---- ---- --------
(IN THOUSANDS) (IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C>
Net sales
Products................... $2,591 $2,572 1% $6,141 $6,871 (11%)
Services................... $ 480 $ -- 100% $ 810 $ -- 100%

</TABLE>

For the quarter ended December 31, 1999, total revenues increased nearly
20% or $0.5 million. Product revenues increased slightly over the prior year but
were 66% over the second quarter. Additionally, advertising revenues grew to
represent 16% of revenues and had a positive effect on gross margins. For the
nine months ended December 31, 1999, total revenues were 1% higher than the
prior year. For the nine month period, product revenues declined by 11% as a
result of the prior quarter's performance that reduced first half sales by 11%.
Revenues include barter advertising where we exchange banner and other ad
impressions on our sites for similar quantities on our barter partner's sites.
Barter revenues represented 3.5% and 1.5% of revenues for the quarter and nine
months, respectively. The company had no barter transactions for the prior year.
Net sales attributable to acquisitions include all sales of services.
Advertising and membership revenues from our acquisitions amounted to $480
thousand during the quarter and $810 thousand for the nine months, compared to
no revenues for the prior year. We expect that advertising revenues will
continue to grow as a result of our emphasis in this area as well as realizing
the full period effect of the acquisitions to date.

GROSS PROFIT

Gross profit is calculated as net sales less the cost of sales, which
consists of the cost of merchandise sold to customers and inbound and outbound
shipping costs.

QUARTER ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------------- ----------------------------
1999 1998 % CHANGE 1999 1998 % CHANGE
---- ---- -------- ---- ---- --------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Gross Profit
Products................. $392 $362 8% $927 $1,073 (14%)
Percentage of sales...... 15.1% 14.1% 15.1% 15.6%

Services................. $487 $-- 100% $795 $-- 100%
Percentage of sales...... 101.4% -- % 98.1% -- %

</TABLE>

<PAGE>

For the quarter ended December 31, 1999, combined gross profit increased as
a percentage of net sales to 29% from 14% and in absolute dollars to $879
thousand from $362 thousand over the same period in 1998, reflecting a change
in the mix of revenues to include advertising and membership revenues as noted
above. Gross margins on product sales increased during the current quarter as a
result of cost reductions in freight and shipping that went into effect in the
quarter. Gross margin percentages on advertising revenues of over 90% are
substantially higher than those of the product revenues of 14-16%. The Company
over time intends to expand its product sales operations by promoting new or
complementary products or sales formats and by expanding the breadth and depth
of its product or service offerings. Gross margins attributable to new business
areas may be lower than those associated with the Company's existing business
activities. However, the Company over time intends to continue to focus on
increasing advertising revenue particularly for Case's Ladder, Gamer's Alliance
and Big Network and thus improving margins.

MARKETING AND SALES

Marketing and sales expenses consist primarily of fulfillment costs,
advertising, public relations and promotional expenditures, and all related
payroll and related expenses for personnel engaged in marketing, selling and
fulfillment activities. Fulfillment costs include the cost of operating and
staffing the distribution and customer service center.

<S> <C> <C> <C> <C> <C> <C>
Marketing and Sales..........$1,101 $373 195% $2,123 $898 136%
Percentage of sales.......... 35.9% 14.5% 30.5% 13.1%
</TABLE>

Marketing and sales expenses increased during the quarter ended December
31, 1999 due to factors principally related to the acquisitions during the
current year. For the three months, costs in the acquired companies accounted
for $476 thousand of the $728 thousand increase. Payroll was $155 thousand,
advertising $60 thousand and consulting and other services were $261 thousand.
Comparatively in the product segment, processing and fulfillment costs increased
$114 thousand, payroll increases were $84 thousand and advertising and promotion
$114 thousand. For the nine months, costs in the acquired units accounted for
$694 thousand of the $1,227 thousand increase. Increases in payroll was $244
thousand, advertising and promotion were $78 thousand and consulting and other
services were $372 thousand. In the product segment there were increases of
$220 thousand for payroll, $217 thousand in processing and fulfillment costs and
advertising increases of $120 thousand. The Company intends to continue its
branding and marketing campaigns, and any increases in sales will increase
fulfillment costs. As a result, the Company expects marketing and sales
expenses to continue to increase significantly in absolute dollars.

PRODUCT DEVELOPMENT

Product development expenses consist of payroll and related expenses for
developing and maintaining the Company's web sites and supporting technology.

QUARTER ENDED NINE-MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------------- ----------------------------
1999 1998 % CHANGE 1999 1998 % CHANGE
---- ---- -------- ---- ---- --------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Product Development........... $726 $ 90 707% $1,221 $247 394%
Percentage of sales........... 22.5% 2.6% 17.6% 3.6%

</TABLE>

<PAGE>

Product development costs increased as a result of increased payroll and
related expense due to inclusion of the results for Case's Ladder, Gamer's
Alliance and Big Network. The $636 thousand increase for the quarter came from
$104 thousand in payroll related costs and $190 thousand in outside services
related to the product segment and the remainder from increases related to the
acquisitions and corporate site development and integration. Additional payroll
in acquisitions added $215 thousand, internet fees $75 thousand and $50 thousand
in outside services. For the nine months, costs in the acquisitions represented
$562 thousand, payroll represented $348 thousand, contractor services
represented $66 thousand and facilities represented $113 thousand. In the
product segment, payroll increases were $220 thousand and contractor services
were $194 thousand. The Company intends to create a tighter structure among
its sites and design new sites, both of which will increase expenses.

GENERAL AND ADMINISTRATIVE

General and administrative ('G&A') expenses consist of payroll and related
expenses for executive, finance and administrative personnel, recruiting,
professional fees and other general corporate expenses.

QUARTER ENDED NINE-MONTHS ENDED
DECEMBER 31, DECEMBER 31,

---------------------------- ----------------------------
1999 1998 % CHANGE 1999 1998 % CHANGE
---- ---- -------- ---- ---- --------
(IN THOUSANDS) (IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C>
General and administrative...$1,318 $ 16 8137% $3,005 $198 1418%
Percentage of sales.......... 42.9% 0.6% 43.2% 2.9%

</TABLE>

Increases in G&A costs are primarily attributable to increased
infrastructure costs associated with the Company's expansion efforts and
increased costs to support its efforts to become registered with the SEC. These
include payroll of $370 thousand, accounting and legal services of $397 thousand
and professional consulting services of $318 thousand and other increases of
$216 thousand consisted of office supplies and support expense categories.
Similarly for the nine months increases included $833 thousand in payroll,
$784 thousand in accounting and legal and $617 thousand in professional
services and other increases of $561 thousand consisted of office supplies and
support expense categories. The company expects G&A costs to continue to
increase commensurate with its expansion plans.

AMORTIZATION OF INTANGIBLES

<TABLE>
<CAPTION>
QUARTER ENDED NINE-MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------- ---------------------
1999 1998 1999 1998
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)

<S> <C> <C> <C> <C>
Amortization of intangibles............ $681 $ -- $1,597 $ -

</TABLE>

The current period charges reflect the acquisitions of CD Universe, Case's
Ladder, Gamer's Alliance and Big Network. The Company expects M&A Costs to
increase in the fourth quarter of 1999 and beyond, because the Company will
record amortization expense relating to the acquisitions of Falcon Ventures and
Pokemon Village. It is likely that the Company will continue to expand its
business through acquisitions and investments, which would cause Amortization
Costs to increase.

STOCK-BASED COMPENSATION

Stock-based compensation is comprised of the portion of acquisition related
consideration conditioned on the continued tenure of key employees, which must
be classified as compensation expense under generally accepted accounting
principles.

QUARTER ENDED NINE-MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------- ---------------------
1999 1998 1999 1998
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Stock-based Compensation............. $ 71 $ -- $162 $ --

</TABLE>

<PAGE>

The expenses for the quarter and nine months are attributable to stock
compensation provided in connection with the acquisitions of MegaDvd.com and
Funone.com and awards under the 1999 Stock Awards Plan where 12,370 shares of
restricted common stock were issued to CD Universe employees that are being
amortized over the vesting period that ends April 14, 2000.

NON-OPERATING INCOME AND (EXPENSE)

<TABLE>
<CAPTION>
QUARTER ENDED NINE-MONTHS ENDED
DECEMBER 31, DECEMBER 31,

---------------------- ---------------------
1999 1998 1999 1998
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)

<S> <C> <C> <C> <C>
Interest income.............................. $19 $ -- $57 $ --
Minority interest............................ $ - $ -- $16 $ --

</TABLE>

Interest income increased due to higher cash balances resulting from the
Company's financing activities, principally the April 1999 issuance of $6.8
million in 6% Convertible Preferred Stock ('Preferred) and $0.9 million in
common stock. Minority interest represents the 20% minority shareholders of Big
Network's share of their losses for the year-to-date period, limited by their
investment.

INCOME TAXES

The Company has not generated any taxable income to date and therefore has
not paid any federal income taxes since inception. Utilization of the Company's
net operating loss carryforwards, which begin to expire in 2011, may be subject
to certain limitations under Section 382 of the Internal Revenue Code of 1986,
as amended. Due to uncertainties regarding realizability of the deferred tax
assets, the Company has provided a valuation allowance on the deferred tax asset
in an amount necessary to reduce the net deferred tax asset to zero.

NET INCOME

QUARTER ENDED NINE-MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------- ---------------------
1999 1998 1999 1998
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)

<S> <C> <C> <C> <C>
Net (Loss).............. $(3,007) $ (118) $(6,312) $ (270)
Percentage of sales..... ( 97.9%) (4.6%) (90.8%) (3.9%)

</TABLE>

Net Income/(Loss) attributable to acquisitions include ($1,125) thousand
for the quarter ended 9/30/99 and nothing for the quarter ended 9/30/98. Net
Income/(Loss) attributable to acquisitions include ($1,813) thousand for the
nine months ended 9/30/99 and nothing for the nine months ended 9/30/98.

LIQUIDITY AND CAPITAL RESOURCES

Since April 14, 1999, the Company has satisfied its cash requirements
primarily through private placements of equity securities (including the $6.3
million raised in April of 1999 in exchange of shares of the Company's Series A
6% Convertible Preferred Stock) and cash flow from sales of music CDs and
videos.

Net cash used in operating activities was $4.1 million and $158 thousand
for the nine-month periods ended December 31, 1999 and 1998, respectively. Net
operating cash flows were primarily attributable to quarterly net losses,
increases in current assets, offset by increases in current liabilities and by
non-cash charges for depreciation and amortization and merger and acquisition
related costs.

Net cash used in investing activities was $1.3 million and $159 thousand
for the nine-month periods ended December 31, 1999 and 1998, respectively. In
the nine-

<PAGE>

months, $0.9 million was used for acquisitions, consisting of $1.9
million in cash paid for the CD Universe acquisition, less $1.0 million received
from acquisitions. The remainder was used for purchases of fixed assets.
Investments for 1998 consisted of fixed asset purchases and loans to a former
officer.

Net cash provided by financing activities of $6.3 million for the
nine-month period ended December 31, 1999 resulted from proceeds relating to the
sale of 1.8 million shares of Preferred for $6.3 million, net of financing costs
and $858,447 from sale of 897,835 shares of common stock.

As of December 31, 1999, the Company's principal commitments include
obligations for leases amounting to about $180 thousand, annually. Continued
acquisitions and investments may also require future capital expenditures.

The Company believes that the cash balance of $0.9 million at December 31,
1999 along with the TakeTwo Interactive investment of $2 million is currently
sufficient to meet the Company's anticipated cash needs. We anticipate that we
will need to raise additional funds to meet our operating needs and the company
is in current discussions with an investment banker, Gerard Klauer Mattison,
in connection with such plans. However, any projections of future cash needs
and cash flows are subject to substantial uncertainty. If current cash that
may be generated from operations are insufficient to satisfy the Company's
liquidity requirements, the Company may seek to sell additional equity or to
obtain a line of credit. The sale of additional equity or convertible debt
securities could result in additional dilution to the Company's stockholders.
In addition, the Company will, from time to time, consider the acquisition of
or investment in complementary businesses, products, services and technologies,
which might impact the Company's liquidity requirements or cause the Company
to issue additional equity. There can be no assurance that financing will be
available in amounts or on terms acceptable to the Company, if at all.

<PAGE>

PART II

OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES

1. As of October 1, 1999, the Company purchased all of the assets of
Funone.com in exchange for 8,733 shares of the Company's common stock,
$.001 par value (the "Common Stock"), valued at $50,000.

2. Effective as of December 10, 1999, as compensation for consulting services
for the following twelve months, the Company issued to Michael Zaroff
warrants to purchase 60,000 shares of Common Stock at an exercise price of
$6.00 per share, which were exercisable immediately and expire on December
31, 2000. These warrants have a value of $118,000 based on the
Black-Scholes valuation model.

3. Effective as of December 10, 1999, as compensation for consulting services
for the following twelve months, the Company issued to Bob Agriogianis
warrants to purchase 60,000 shares of Common Stock at an exercise price of
$6.00 per share, which were exercisable immediately and expire on December
31, 2000. These warrants have a value of $118,000 based on the
Black-Scholes valuation model.

4. Effective as of January 15, 2000, as compensation for consulting services
for 1 month, the Company issued to Mark Bergman warrants to purchase 20,000
shares of Common Stock at an exercise price of $4.75 per share, and
warrants to purchase 20,000 shares of Common Stock at an exercise price of
$5.75 per share, which were exercisable immediately and expire on January
31, 2001. These warrants have a value of $39,000 based on the Black-Scholes
valuation model.

5. As of February 1, 2000, the Company purchased all of the assets of
Pokemonvillage.com and Quake City Gaming Network in exchange for 43,630
shares of Common Stock. See Item 5 below.

6. As of February 2, 2000, the Company purchased all of the outstanding stock
of Falcon Ventures Corporation in exchange for 310,000 shares of Common
Stock. See Item 5 below.

7. As of February 2, 2000, the Company sold 400,000 shares of Common Stock to
Take-Two Interactive Software, Inc. in exchange for $2,000,000 in cash.
Proceeds from this sale are being used for general corporate purposes.

8. The Company amended terms of its Series A 6% Convertible Preferred Stock,
$.10 par value, (the "Preferred Stock") with the consent of the requisite
number of holders of the Preferred Stock and the Company issued warrants as
consideration for such consents. See Item 4 below.

The foregoing sales of Common Stock were made in reliance upon the
exemptions from registration set forth in Section 4(2) of the Securities Act of
1933 and/or Rule 506 of Regulation

<PAGE>

D promulgated thereunder for transactions not involving a public offering. No
underwriters were engaged in connection with the foregoing sales of securities.
These sales were made without general solicitation or advertising. Each
purchaser was an "accredited investor" or a sophisticated investor with access
to all relevant information necessary to evaluate the investment who represented
to the Company that the shares were being acquired for investment.

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

Beginning in December 1999, the Company solicited the consent of the
holders of the Preferred Stock (the "Preferred Stockholders") to modify the
terms of the agreements between the Company and each Preferred Stockholder as
described below. The Company issued warrants to purchase shares of Common Stock
as consideration for the consent of the Preferred Stockholders.

1. Clarification of Certificate of Designation.

As a result of an ambiguity caused by the wording of the Certificate of
Designation of Preferred Stock setting forth the terms of the Preferred Stock
(the "Certificate of Designation"), the Company desired to clarify that the
Company is not required to notify the Preferred Stockholders at least thirty
(30) days prior to acquiring the stock or assets of another company and that
such a transaction does not constitute a Liquidation Event so long as the
Company is the surviving entity in such a transaction. The Company solicited the
consent of the Preferred Stockholders to the following amendment to clarify the
wording in the Certificate of Designation by deleting Section 4(c)(ii) and
inserting in lieu thereof:

"(ii) a consolidation, merger, acquisition, reorganization or other
business combination of the Company with or into any other non-publicly
traded company or companies where the Company is not the surviving company,
shall be treated as a Liquidation Event as defined in Section 4(a)."

2. Amendment to Registration Rights.

Pursuant to Section 2 of the Registration Rights Agreement (the
"Registration Rights Agreement"), by and among each of the Preferred
Stockholders (collectively, the "Subscribers") and the Company dated as of April
1999 and Section 5.5 of the Regulation D Subscription Agreement between the
Company and each of the Subscribers (the "Subscription Agreement"), the Company
is required to file a Registration Statement to register the shares of its
Common Stock issuable upon conversion of the Preferred Stock. In order to assist
the Company in its financing activities, the Company sought to delete Section 2
of the Registration Rights Agreement and Section 5.5 of the Subscription
Agreement. The Company solicited each Preferred Stockholder's consent pursuant
to Section 11 of the Registration Rights Agreement to amend that Agreement to
delete Section 2 thereof; provided that Section 2 shall be reinstated in the
event that the Company has not raised additional capital contributions or
proceeds from debt issuances of at least $5 million within 6 months of the date
of the letter soliciting the Preferred Stockholder's consent (the "Letter Date")
of which at least $3 million shall have been raised

<PAGE>

within 4 months of the Letter Date (referred to as "Minimum Proceeds"). The
Company also requested each Preferred Stockholder's consent to amend the
Subscription Agreement to delete Section 5.5 thereof. Each Subscriber was also
requested to agree to waive its piggyback registration rights as provided in
Section 3 of the Registration Rights Agreement with respect to any registration
statement that the Company is required to file for other holders of Series A
Preferred Stock in the event that such a registration statement is required to
be filed in the next 12 months following the Letter Date.

3. Consent to Delay Conversion of Preferred Stock.

Notwithstanding the provisions of the Certificate of Designation, the
Company sought each Preferred Stockholder's agreement not to convert its shares
of Preferred Stock to shares of Common Stock until August 15, 2000; provided
that the Company raises the Minimum Proceeds. However, each Preferred
Stockholder may convert and sell up to twenty percent (20%) of its shares of
Preferred Stock during any 30 day period beginning April 15, 2000 in the event
that the Company's Common Stock average weekly Closing Bid Price is greater than
$12.00 per share during such period.

The requests to consent described in paragraphs 1, 2 and 3 above were
approved as of February 2, 2000 by the requisite consents from the Preferred
Stockholders. In consideration for the Preferred Stockholders' consent to items
1 through 3 above, the Company issued to each of the Preferred Stockholders
(a) a warrant to purchase a number of shares of Common Stock equal to ten
percent (10%) of the number of shares of Preferred Stock beneficially owned by
the Preferred Stockholder at an exercise price of $6.00 per share; and (b) a
warrant to purchase a number of shares of Common Stock equal to ten percent
(10%) of the number of shares of Preferred Stock beneficially owned by the
Preferred Stockholder at an exercise price of $8.00 per share.

ITEM 5. OTHER INFORMATION

Acquisition of Assets of D. Scott Smith d/b/a Pokemonvillage.com and Quake City
Gaming Network

As of February 1, 2000, the Company acquired substantially all of the assets
from D. Scott Smith, an unaffiliated third party, used in the operation of the
Pokemonvillage.com and Quake City Gaming Network web sites, in exchange for
43,630 shares of Common Stock valued at $250,000. The consideration paid was
based upon negotiations between the parties to determine value of the assets
acquired and the shares issued. After the closing, Mr. Smith became and is
currently employed by the Company. The Pokemonvillage.com and Quake City Gaming
Network web sites provide online communities for enthusiasts of computer/video
games, and other collectibles; forums for youth focused discussions on a variety
of subjects that includes games, music, comics, and other collectibles; and
forums for owners of collectible cards, comics, and other collectibles to meet
and auction off their items.

Acquisition of Falcon Ventures Corporation

<PAGE>

As of February 2, 2000, the Company acquired all of the outstanding capital
stock of Falcon Ventures Corporation ("Falcon") from Take-Two Interactive
Software, Inc. ("T2"), an unaffiliated third party, in exchange for 310,000
shares of the Company's common stock. The consideration paid was based upon
negotiations between the parties to determine the value of the Falcon's shares
and the shares issued. Falcon is an online retailer of DVDs through the web
site dvdwave.com.

Financial statements required under Item 7 of Form 8-K with respect to the two
transactions described above are not being filed with this report on Form 10-Q
and will be filed as an amendment hereto within 60 days of the date of this
report.

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The following exhibits are filed as part of this report:

<TABLE>
<CAPTION>
Exhibit
- -------
Number Exhibit Title/Description
- ------ -------------------------
<S> <C>
3.01 -- Articles of Incorporation of the Company.(1)
3.02 -- Amended Articles of Incorporation of the Company
regarding change of name.(1)
3.03 -- Certificate of Amendment of Articles of Incorporation
regarding issuance of Preferred Stock.(1)
3.04 -- Bylaws of the Company.(1)
3.05 -- Amendment to Bylaws.(1)
3.06 -- Designation of Preferred Stock of Motorcycle Centers of
America, Inc. dated April 7, 1999, as filed with the
Secretary of the State of Nevada, which defines the rights
and preferences of the Preferred Stock of the Company.(1)
10.01 -- Stock Purchase Agreement by and between Palisades
Capital, Inc. and Charles Beilman, dated as of October 1,
1998 (the 'Stock Purchase Agreement').(1)
10.02 -- Amendment to Stock Purchase Agreement, dated December 29,
1998.(1)
10.03 -- Amendment No. 2 to Stock Purchase Agreement, dated
February 11, 1999.(1)
10.04 -- Amendment No. 3 to Stock Purchase Agreement, dated as of
March , 1999.(1)
10.05 -- Amendment Number 4 to Stock Purchase Agreement, dated as
of June 9, 1999.(1)
10.06 -- Agreement and Plan of Reorganization by and among
Motorcycle Centers of America, Inc., Entertainment
Universe, Inc. and the principal officers of Entertainment
Universe, Inc., dated April 9, 1999.(1)
10.07 -- Entertainment Universe, Inc. Regulation D Subscription
Agreement, dated as of April , 1999.(1)
10.08 -- Entertainment Universe, Inc. Registration Rights
Agreement, dated as of April 1999.(1)
10.09 -- Assignment and Assumption Agreement by and between
Entertainment Universe, Inc. and Motorcycle Centers of
America, Inc., dated as of April 14, 1999.(1)
10.10 -- Stock Purchase Agreement by and among Motorcycle Centers
of America, Inc. and the shareholders of Case's Ladder,
Inc., dated as of April 21, 1999.(1)
10.11 -- Contract of Employment by and between Entertainment
Universe, Inc. and William R. Wagner, dated March 25,
1999.(1)
10.12 -- Employment Agreement by and between eUniverse, Inc. and
Leland N. Silvas, dated as of April 14, 1999.(1)
10.13 -- Letter agreement between Entertainment Universe, Inc. and
E.P. Opportunity Fund, L.L.C. regarding appointment of a
director of Entertainment Universe, Inc., dated April 6,
1999.(1)
10.14 -- Modification and Restatement of Lease by and between
Vincenzo Verna Trustee d/b/a Harvest Associates and CD
Universe, Inc. for the Company's office space in
Wallingford, Connecticut, dated as of February 1, 1999.(1)
10.15 -- Agreement and Plan of Reorganization by and among
eUniverse, Inc., Gamer's Alliance, Inc., and Larry N.
Pevnick and Robin T. Pevnick, Ten Ent., residents of St.
Louis County, Missouri, and Stan Goldenberg and Andrea R.
Goldenberg, Ten Ent., residents of St. Louis County,
Missouri, dated as of the 1st day of July, 1999.(2)
10.15.1 -- Second Amendment to Agreement and Plan of Reorganization
by and among eUniverse, Inc., Gamer's Alliance, Inc., and
Larry N. Pevnick and Robin T. Pevnick, Ten Ent., residents
of St. Louis County, Missouri, and Stan Goldenberg and
Andrea R. Goldenberg, Ten Ent., residents of St. Louis
County, Missouri, dated as of the 12th day of November,
1999.(1)
10.16 -- Agreement and Plan of Reorganization by and among
eUniverse, Inc., The Big Network, Inc., Stephen D.
Sellers, John V. Hanke and Michael Sellers, dated July 30,
1999 (effective as of August 31, 1999).(2)
10.17 -- Letter Agreement by and among Brad D. Greenspan, Charles
Beilman, Stephen D. Sellers and John V. Hanke regarding
appointment of a director of eUniverse, Inc., dated as of
August 31, 1999.(2)
10.18 -- Employment Agreement by and between eUniverse, Inc. and
John Haiduck, dated as of June 17, 1999.(2)
10.19 -- Employment Agreement by and between eUniverse, Inc. and
Stephen D. Sellers, dated as of August 31, 1999.(2)
10.21 -- eUniverse, Inc. Registration Rights Agreement dated July
30, 1999.(2)
10.22 -- Office Sublease by and between Golden Gate University and
The Big Network, Inc., dated July 9, 1999.(2)
10.23 -- Engagement Letter by and among Gerard Klauer Mattison &
Co., Inc. by Entertainment Universe, Inc. and Brad
Greenspan, dated February 24, 1999.(2)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit
- -------
Number Exhibit Title/Description
- ------ -------------------------
<S> <C>

10.24 -- Indemnification Agreement by Entertainment Universe, Inc.
and Brad Greenspan in favor of Gerard Klauer Mattison &
Co., Inc., dated February 24, 1999.(2)
10.25 -- eUniverse, Inc. 1999 Stock Awards Plan.(2)
10.26 -- Online Partner Agreement between CD Universe, Inc. and
Accessio.com Inc., regarding US-Style, dated November 5,
1998.(1)
10.27 -- Employment Agreement by and between eUniverse, Inc. and
Martin Hamilton, dated as of October 25, 1999.(1)
10.28 -- Web Advertising Agreement by and between eUniverse, Inc.
and Mpath Interactive, Inc., dated as of August 13, 1999.
Portions of Exhibit 10.28 have been omitted pursuant to a
request for confidential treatment.(3)
10.29 -- eUniverse, Inc. Common Stock Purchase Warrant to Gerard
Klauer Mattison & Co., Inc., dated April 14, 1999.(1)
10.30 -- Asset Purchase Agreement by and between eUniverse, Inc. and Scott
Smith d/b/a POKEMONVILLAGE.COM AND QUAKECITY GAMING
NETWORK, dated as of February 1, 2000.*
10.31 -- Letter agreement by and among eUniverse, Inc. Take-Two
Interactive Software, Inc. and Falcon Ventures
Corporation, dated as of February 2, 2000.*
10.32 -- Employment Agreement by and between eUniverse, Inc. and
William R. Wagner dated as of April 5, 1999.*
21.01 -- Subsidiaries of eUniverse, Inc.(1)
27.01 -- Financial Data Schedule*
</TABLE>

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

(1) Incorporated by reference to the Company's Form 10 filed on June 15, 1999
(Registration File No. 0-26355).

(2) Incorporated by reference to the Company's Form SB-2 filed on September 13,
1999 (Registration File No. 333-86959).

(3) Incorporated by reference to the Company's Form 10-Q filed on November 15,
1999.

(b) Reports on Form 8-K

The Company did not file any reports on Form 8-K during the quarterly
period ended December 31, 1999.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.

eUNIVERSE, INC.
Registrant

Dated: February 14, 2000 /s/ WILLIAM R. WAGNER
--------------------------------------
William R. Wagner
Chief Financial Officer
(Principal Financial Officer)
and Registrant's Authorized Officer

<PAGE>

Exhibit 10.30

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT, dated as of February 1, 2000, by and
between eUNIVERSE, INC., a Nevada corporation having its principal business
office at 101 North Plains Industrial Road, Wallingford, Connecticut 06492 (the
"EUI"), SCOTT SMITH (d/b/a POKEMONVILLAGE.COM AND QUAKECITY GAMING NETWORK), an
individual having an address at 17316 Woolworth Avenue, Omaha, Nebraska 68130
(the "Seller").

WITNESSETH:

WHEREAS, EUI desires to purchase and Seller desires to sell all of the
assets of the on-line interactive entertainment business known as
PokemonVillage.com, that is presently operated through the URL:
http://www.pokemonvillage.com and QuakeCity Gaming Network, that is presently
operated through the URL: http://www.quakecity.net at the (collectively, the
"Business").

NOW, THEREFORE, for and in consideration of the premises and of the
agreements and covenants herein contained, the parties hereby agree as follows:

1. DEFINITIONS

As used herein, the following terms shall have the following meanings
unless the context otherwise requires:

1.1 "ASSETS" shall mean all of the assets listed at Schedule 1.1.

1.2 "ASSUMED LIABILITIES" shall mean those certain contractual
obligations of the Seller and assumed by EUI, as set forth at Schedule 1.2.

1.3 "CLOSING" shall mean the consummation of the transactions
contemplated herein, as described in Section 9 hereof.

1.4 "CLOSING DATE" shall mean the actual date that all of the Closing
conditions are satisfied or waived, unless otherwise agreed between the parties.

1.5 "CONSENT(S) TO ASSIGNMENT" shall mean (each of) the written
consent(s) and estoppel certificate(s) of the lessor(s) or obligee(s) with
respect to Seller's assignment to EUI of the Assumed Liabilities, in form and
substance satisfactory to EUI and its counsel.

1.6 "FINANCIAL INFORMATION" shall mean the financial information of
Seller attached at Schedule 1.6.

1.7 "PREMISES" shall mean, collectively, the premises at which the
Business is located.

1.6 "PURCHASE PRICE" shall mean the purchase price payable by EUI
pursuant to Section 2.2 hereof.

<PAGE>

1.7 "REAL PROPERTY" means all leasehold interest in real estate,
easements, rights to access, rights-of-way and other real property interests
which are owned, or are leased, used or held for use by the Seller in connection
with the Business.

2. PURCHASE AND SALE OF ASSETS

2.1 PURCHASE AND SALE. Except as otherwise expressly set forth in this
Agreement, on the Closing Date, Seller shall sell, assign, transfer, convey and
deliver to EUI and EUI agrees to purchase and accept from the Seller, all right,
title and interest in and to all of the Assets of the Business.

2.2 PURCHASE PRICE.

(a) AMOUNT. Purchase Price. The purchase price for the
Purchased Assets shall be Two Hundred Fifty Thousand Dollars
($250,000.00) (the "Purchase Price") payable in shares of common stock
of EUI (the "EUI Shares"), as determined in Section 2.2(b) below.

(b) CALCULATION AND PAYMENT OF THE PURCHASE PRICE. The
Purchase Price shall be calculated and payable as follows:

(i) On the Closing Date, EUI shall pay to Seller the amount
of Two Hundred Fifty Thousand Dollars ($250,000.00) in
EUI Shares at a share price equal to $5.73 per share
(the "Payment").

No fractional shares of EUI Shares will be issued, no cash will be paid
in lieu of fractional shares, and the total number of EUI Shares issued to
Seller shall be rounded to the nearest whole number.

2.3 WEB SITE AND DOMAIN NAMES. Upon execution of this Agreement, EUI
shall deliver to Seller a computer server. Within seven (7) days of receipt of
the computer server, Seller shall transfer all contents in electronic format
used to operate the Business onto such server and return the such server to EUI
at the address set forth above. Seller and EUI shall take all action needful or
necessary to transfer all domain names for the Business to EUI with full title,
free and clear of any encumbrances on or before 30 days following the Closing.

3. ASSUMPTION OF LIABILITIES

3.1 ASSUMPTION OF LIABILITIES. Seller hereby assigns, conveys, sets
over and transfers to EUI all of Seller's interest in the Assumed Liabilities,
together with all of Seller's right, title and interest therein, and Seller
represents and warrants that it has the authority to do so. EUI hereby accepts
from Seller such transfer and assignment of the Assumed Liabilities, for the
duration of their respective terms. EUI agrees to be bound by the terms of the
Assumed Liabilities and to keep, perform and fulfill all of Seller's obligations
thereunder arising after the Closing, subject to the following conditions at
Closing:

<PAGE>

(a) no event of default by Seller has occurred and is
continuing with respect to any of the Assumed Liabilities; and

(b) Seller shall have fully and timely performed all of its
obligations under this Agreement.

3.2 NO FURTHER ASSUMPTION. The parties acknowledge and agree that this
is a sale of all assets and that, except as otherwise specifically set forth in
this Section 3, EUI shall neither assume nor be liable for any contracts, debts,
warranties, obligations, undertakings or liabilities whatsoever of the Seller,
and Seller shall remain solely liable for any and all claims against the
Business or its assets and all liabilities and accounts payable arising out of
Seller's operation of the Business, acts or omissions prior to the Closing. EUI
shall be responsible for claims, liabilities and accounts payable arising out of
EUI's operation of the Business, acts or omissions after the Closing.

3.3 OTHER INSTRUMENTS. Each party agrees from time to time to execute
and deliver to the other party (or its designee) such other documents,
instruments and writings as may be reasonably requested by either party or its
counsel to give full effect to the transaction described in this Agreement.

4. SELLER'S REPRESENTATIONS AND WARRANTIES

Seller hereby represents and warrants to EUI, as of the date hereof, as
follows:

4.1 DUE AUTHORIZATION. This Agreement has been duly executed and
delivered by the Seller and is a valid and binding obligation of the Seller,
fully enforceable in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any law, ordinance or regulation or
any decree or order of any court or administrative or other governmental body
which is either applicable to, binding upon or enforceable against the Seller;
or (ii) except where consent is required and obtained, result in any breach of
or default under any mortgage, lease, promissory note, contract, purchase order,
indenture, trust or other instrument or written agreement which is either
binding upon or enforceable against the Seller.

4.2 NO DEFAULT. Seller is not in default with respect to any material
liabilities or material obligations, including without limitation the Assumed
Liabilities, which are related to the Assets or the Business, and all such
liabilities or obligations incurred or accrued have been paid and discharged as
they become due and all such liabilities and obligations have been, as of and
through the Closing Date, incurred in the ordinary course of business. All
taxes, wages, utilities, rent on the Premises and other accounts payable in
connection with the Seller's operation of the Business through the Closing are
current and not past due.

4.3 LICENSES AND REGULATIONS. Seller is in compliance with all federal,
state and local laws and regulations respecting employment and employment
practices, the Premises and the operation of the Business, to its knowledge.
Seller has not received any notice of violation of any applicable zoning
regulation, ordinance, regulation or requirement relating to its operations or

<PAGE>

properties, whether owned or leased, and to the best of Seller's knowledge,
there is no such violation or grounds therefor which could adversely affect the
operation of the Business.

4.4 TITLE TO ASSETS. Seller is the sole and exclusive owner of and has
good and marketable title to all of the Assets, free and clear of all liens,
mortgages, pledges, encumbrances or charges of every kind, nature, and
description whatsoever, except for the Assumed Liabilities, if any.

4.5 FINANCIAL INFORMATION CORRECT. As of the dates and for the periods
indicated thereon, the Financial Information (i) is correct and complete in all
material respects; (ii) is in accordance with the books and records of the
Seller; and (iii) present fairly the financial condition and results of
operations of the Business. Since the date on the Financial Information, and as
of the date hereof, there has not been any material change in the financial
condition, results of operations, Assets, liabilities (including without
limitation the Assumed Liabilities) or business condition of the Seller or the
Business which could have a material, adverse effect on the Assets, the Assumed
Liabilities, the Business or financial condition of the Seller.

4.6 NO LITIGATION. There are no existing suits, governmental
proceedings, or litigation pending or threatened against the Seller or its
properties which could materially affect the Assets, the Business, the Premises,
or the financial condition of Seller. Seller has not filed any voluntary
petition in bankruptcy, nor been served with or otherwise received notice of any
involuntary petition in bankruptcy having been filed against Seller.

4.7 TAXES AND FEES. The Seller has paid or adequately provided for any
and all taxes, license fees, or other charges levied, assessed, or imposed upon
any of the Assets, the Premises, or other Business property of the Seller; and
Seller has filed all tax returns and reports required by federal, state and
local tax authorities; the returns so filed are correct, true and complete; and
the Seller is not involved in any dispute with any tax authority nor has it
received any notice of any deficiency, audit or other indication of deficiency
from any tax authority, not otherwise disclosed to EUI in writing.

4.8 BOOKS AND RECORDS. All books and records of Seller which have been
provided to EUI for inspection are true, correct and complete, and contain no
material omission with respect to the Business or operations or status of the
Seller or the Assets.

4.9 POWERS OF ATTORNEY. The Seller states that there are no persons
holding a power of attorney on behalf of the Seller that would enable such
persons to sell any of the Business.

4.10 NO REGISTRATION UNDER THE SECURITIES ACT. The Seller understands
that EUI Shares to be issued to the Seller under this Agreement have not been
and will not be registered under the Securities Act of 1933 (the "Securities
Act") in reliance upon exemptions contained in the Securities Act or
interpretations thereof, and cannot be offered for sale, sold or otherwise
transferred unless such shares of EUI stock are registered or qualify for
exemption from registration under the Securities Act.

4.12 INVESTMENT. The Seller has such knowledge and experience in
financial and business matters that the Seller is capable of evaluating the
merits and risks of the Seller's investment in EUI

<PAGE>

Shares being acquired hereunder. The Seller understands and is able to bear any
economic risks associated with such investment. The Seller acknowledges that the
Seller has had the opportunity ask questions to the officers and management of
EUI about the business and financial condition of EUI. EUI Shares being issued
to the Seller hereunder are being acquired by the Seller in good faith solely
for his own accounts, for investment and not with a view toward resale or other
distribution within the meaning of the Securities Act. Such EUI Shares shall not
be offered for sale, sold or otherwise transferred by the Seller without either
registration or exemption from registration under the Securities Act or
applicable state securities laws. No EUI Shares were offered to the Seller by
means of publicly disseminated advertisements or sales literature.

5. EUI'S REPRESENTATIONS AND WARRANTIES

EUI represents and warrants to Seller as follows:

5.1 ORGANIZATION. EUI is a corporation duly organized, legally existing
and in good standing under the laws of its state of incorporation and has full
corporate power, ability and authority (i) to enter into this Agreement and (ii)
to carry out the other transactions and agreements contemplated hereby.

5.2 DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement and each of the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action of EUI. This Agreement has been
duly executed and delivered by EUI and is a valid and binding obligation of EUI,
fully enforceable in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any provision of EUI's charter or
bylaws, or any law, ordinance or regulation or any decree or order of any court
or administrative or other governmental body which is either applicable to,
binding upon or enforceable against EUI; or (ii) result in any breach of or
default under any material mortgage, contract, agreement, indenture, trust,
written agreement or other instrument which is either binding upon or
enforceable against EUI.

5.3 NO LITIGATION. There are no existing suits, governmental
proceedings, or litigation pending or threatened against EUI or its properties
which could materially affect the financial condition of EUI. EUI has not filed
any voluntary petition in bankruptcy, nor been served with or otherwise received
notice of any involuntary petition in bankruptcy having been filed against EUI.

6. SURVIVAL AND INDEMNIFICATION

6.1 SURVIVAL. All representations, warranties, agreements and covenants
made and given herein shall survive the execution and delivery of this Agreement
and the Closing.

6.2 INDEMNIFICATION. Seller shall indemnify, defend and save EUI
harmless from any actions, claims, losses, damages, demands or expense
(including without limitation all court costs and reasonable attorney's fees on
account thereof) suffered or incurred by EUI, its successors or assigns, arising
from (i) any untruthfulness of any representation made by the Seller in this
Agreement or in any document delivered to EUI by or on behalf of Seller pursuant
to this

<PAGE>

Agreement, or (ii) breach of any covenant or warranty of the Seller contained in
this Agreement or in any document delivered to EUI by or on behalf of Seller
pursuant to this Agreement. EUI shall notify the Seller promptly of any written
actions, claims or demands against EUI of which the Seller is responsible
hereunder. Each party shall cooperate fully with the other, and the Seller shall
control such defense and the right to litigate, settle, appeal (provided it pays
the cost of any required appeal bond), compromise or otherwise deal with any
such claim or resulting judgment; provided that such settlement, compromise or
other resolution of such claim does not result in any liability to EUI.

6.3 BROKERS. No finder, broker, agent or other intermediary has acted
for or on behalf of the Seller or EUI in connection with the negotiation or
consummation of this Agreement or the transactions contemplated hereby.

6.4 BULK TRANSFER ACT. While not acknowledging the applicability of the
Bulk Transfers provision of the Connecticut Uniform Commercial Code ("Bulk Sales
Act"), the parties do nevertheless agree as follows:

6.4.1 EUI does hereby waive the provisions of the Bulk Sales
Act regarding Seller's duties as same may apply to this transaction.

6.4.2 The Seller does hereby agree to indemnify and hold EUI
harmless on account of any loss or damage which EUI may incur or sustain on
account of the above waiver, including reimbursement of EUI's reasonable
attorney's fees.

7. CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES.

All representations and warranties of the parties contained herein
shall be true in all material respects at and as of the Closing Date with the
same effect as though such representations and warranties were made at and as of
such time; and each party shall have performed and complied with all
obligations, covenants, and conditions required by this Agreement to have been
performed or complied with by it prior to or on the Closing Date.

8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES.

8.1 Conditions Precedent to the Obligations of EUI. The obligations of
EUI to effect the transactions contemplated herein are further subject to the
satisfaction at or prior to the Closing Date of the following conditions, unless
waived by EUI in writing:

(a) The representations and warranties of Seller set forth in
this Agreement shall be true and correct as of the date of this Agreement, and
shall also be true and correct (except for such changes as are contemplated by
the terms of this Agreement) on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date, except if and to the
extent any failures to be true and correct would not have a material adverse
effect on the Business.

(b) From the date of this Agreement through the Closing Date,
Seller shall not

<PAGE>

have suffered any change that has had a net effect greater than Two Thousand
Dollars ($2,000.00) on the Business, or the financial condition, assets,
liabilities or earnings of Seller (a "Material Adverse Change") in the Business
or the assets, operations or financial condition of Seller (other than changes
relating to the transactions contemplated by this Agreement).

(c) Seller shall have performed all obligations and covenants
and conditions required to be performed by it under this Agreement at or prior
to the Closing Date.

(d) Seller shall have no outstanding debt other than
reasonable and customary accounts payable incurred in the ordinary course of
business and what is incurred as a result of the consummation of the
transactions contemplated by this Agreement.

(e) Seller shall have Two Thousand Dollars ($2,000.00) excess
of current assets over current liabilities as shown on Seller's Financial
Information as of the Closing Date prepared in accordance with GAAP.

(f) All actions, proceedings, instruments and documents
required to carry out this Agreement, or incidental hereto, and all other legal
matters shall have been approved by counsel to EUI, and such counsel shall have
received all documents, certificates and other papers reasonably requested by it
in connection therewith.

(g) Seller shall state, and reaffirm as of the Closing Date,
that the materials, including current financial statements, prepared and
delivered by EUI to Seller, have been read and understood by Seller, that it is
familiar with the business of EUI, that it is acquiring the EUI Shares under
Section 4(2) of the Securities Act, commonly known as the private offering
exemption of the Securities Act, with the intent of holding such EUI shares for
investment, and not with a view to, or for resale in connection with, any
transfer or distribution of such EUI shares or any portion thereof, and that the
EUI Shares are restricted and may not be resold, except in reliance on an
exemption under the Securities Act.

8.2 Conditions Precedent to Obligations of Seller. The obligations of
Seller to effect the transactions contempleted herein are subject to the
satisfaction at or prior to the Closing Date of the following conditions, unless
waived by Seller in writing:

(a) The representations and warranties of EUI set forth in
this Agreement shall be true and correct as of the date of this Agreement, and
shall also be true in all material respects (except for such changes as are
contemplated by the terms of this Agreement) on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date, except
if and to the extent any failures to be true and correct would not have a
material adverse effect on EUI.

(b) From the date of this Agreement through the Closing Date,
EUI shall not have suffered any adverse changes in its business, operations or
financial condition which are material to EUI (other than changes generally
affecting the industries in which EUI operates, including changes due to actual
or proposed changes in law or regulation).

<PAGE>

(c) EUI shall have materially performed all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date.

(d) EUI shall have furnished Seller with copies of (i)
resolutions duly adopted by its Boards of Directors approving the execution and
delivery of this Agreement and all other necessary or proper corporate action to
enable them to comply with the terms of this Agreement, and (ii) to the extent
required pursuant to EUI's charter or bylaws, resolutions duly adopted by the
holders of the EUI Shares approving the issuance of the EUI Shares, such
resolutions to be certified by the Secretary or Assistant Secretary of EUI.

(e) All actions, proceedings, instruments and documents
required to carry out this Agreement, or incidental hereto, and all other legal
matters shall have been approved by Seller or counsel to Seller, and Seller or
such counsel shall have received all documents, certificates and other papers
reasonably requested by it in connection therewith.

9. CLOSING

9.1 DATE AND PLACE OF CLOSING. The Closing shall take place at the
offices of Martin, Lois & Gasparrini, LLC, 1177 Summer Street, Stamford,
Connecticut 06905. The Closing shall be effective as of 12:01 a.m. Stamford,
Connecticut on February 1, 2000.

9.2 SELLER'S OBLIGATIONS AT CLOSING. Seller shall deliver to EUI:

(a) at the time of Closing, executed bills of sale and
other instruments in a form satisfactory to EUI and
its counsel as may be necessary to transfer all of
the Assets to EUI and to consummate the transactions
called for by this Agreement;

(b) at the time of Closing, Consent(s) to Assignment of
the Assumed Liabilities;

(d) at the time of Closing, an executed domain name
transfer agreement substantially in the form attached
hereto as Exhibit "B".

(e) at the Closing, Seller shall deliver to EUI, a
certificate signed by Seller certifying that the
representations and warranties of Seller set forth in
this Agreement are true and correct as of the date of
this Agreement.

(f) at the Closing, Seller shall deliver to EUI, a
certificate signed by Seller supporting the private
offering exemption under Section 4(2) of the
Securities Act.

9.3 EUI'S OBLIGATIONS AT CLOSING. At the time of Closing, EUI shall
deliver to Seller:

<PAGE>

(a) the Payment;

(b) copies of resolutions adopted by the board of
directors and the compensation committee of EUI
authorizing the transactions contemplated by this
Agreement, certified in each case as of the Closing
Date by a secretary or assistant secretary of EUI.

(c) at the Closing, EUI shall deliver to Seller, a
certificate signed by a duly authorized officer of
EUI certifying that the representations and
warranties of EUI set forth in this Agreement are
true and correct as of the date of this Agreement.

10. GENERAL PROVISIONS

10.1 NO WAIVERS. Neither party shall be deemed to waive any of its
rights, powers or remedies hereunder unless such waiver is in writing and signed
by said party. No delay or omission by either party in exercising any of said
rights, powers or remedies shall operate as a waiver thereof. Nor shall a waiver
signed by either party of any breach of the covenants, conditions or agreements
binding on the other party on one occasion be construed as a waiver or consent
to such breach on any future occasion or a waiver of any other covenant,
condition, or agreement herein contained.

10.2 ARBITRATION. Any controversy or claim arising out of or related to
this Agreement or the breach thereof shall be settled by binding arbitration in
Fairfield County, Connecticut, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment on the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.

10.3 ASSIGNMENT. Neither party may assign any portion of this
Agreement, voluntarily or involuntarily, including without limitation by
operation of law or by merger in which such party does not survive. Any attempt
to do so shall be null and void. No person or entity not a party hereto shall
have any interest herein or be deemed a third party beneficiary hereof, and
nothing contained herein shall be construed to create any rights enforceable by
any other person or third party.

10.4 PARTNERSHIP. Nothing herein contained shall be construed as
creating a partnership or joint venture by or between the parties.

10.5 BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.

10.6 SEVERABILITY. Any provision of this Agreement held or determined
by a court (or other legal authority) of competent jurisdiction to be illegal,
invalid, or unenforceable in any jurisdiction shall be deemed separate, distinct
and independent, and shall be ineffective to the extent of such holding or
determination without (i) invalidating the remaining provisions of this
Agreement in that jurisdiction or (ii) affecting the legality, validity or
enforceability of such provision in any other jurisdiction.

<PAGE>

10.7 TIME OF ESSENCE. Time is of the essence of this Agreement.

10.8 CAPTIONS HEADINGS. Captions and paragraph headings used in this
Agreement are for convenience only and shall not be used to interpret any
provision hereof.

10.9 ENTIRE AGREEMENT. This Agreement, together with Schedules and
Exhibits identified herein, constitutes the entire agreement and understanding
of the parties with respect to the subject matter hereof, and is intended as the
parties' final expression and complete and exclusive statement of the terms
thereof, superseding all prior or contemporaneous agreements, representations,
promises and understandings, whether written or oral, and may be amended or
modified only by an instrument in writing signed by both parties.

10.10 NOTICES. Any notice required or permitted to be given hereunder
shall be (a) in writing, (b) effective on the first business day following the
date of receipt, and (c) delivered by one of the following means: (i) by
personal delivery; (ii) by prepaid, overnight package delivery or courier
service; or (iii) by the United States Postal Service, first class, certified
mail, return receipt requested, postage prepaid. All notices given under this
Agreement shall be addressed, in the case of Seller, as follows:

Scott Smith
17316 Woolworth Avenue
Omaha, Nebraska 68130

and, in the case of EUI, as follows:

eUniverse, Inc.
101 North Plains Industrial Road
Wallingford, CT 06492
Attn: President

or to such other addresses of which the parties have been advised in writing by
any of the above-described means. Personal delivery to Seller or to EUI or to
any officer, partner, agent, or employee of such party at its address herein
shall constitute receipt. The following shall also constitute receipt: (i) a
party's rejection or other refusal to accept notice, and (ii) the inability to
deliver to a party because of a changed address of which no notice has been
received by the other party. Notwithstanding the foregoing, no notice of change
of address shall be effective until ten (10) days after the date of receipt
thereof. This Section shall not be construed in any way to affect or impair any
waiver of notice or demand herein provided.

10.11 REMEDIES CUMULATIVE AND NONEXCLUSIVE. Unless stated otherwise,
all remedies provided for in this Agreement shall be cumulative, nonexclusive
and in addition to, but not in lieu of, any other remedies available to either
party at law, in equity, or otherwise.

10.12 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of Connecticut, without giving effect
to any principles of conflicts of law.

<PAGE>

10.13 PRONOUNS. Pronouns used herein shall be construed as masculine,
feminine, or neuter, and both singular and plural, as the context may require,
and the term "person" shall include an individual, corporation, association,
partnership, trust, and other organization.

10.14 REFERENCES TO OTHER DOCUMENTS. All references herein to any
document, instrument, or agreement shall be deemed to refer to such document,
instrument, or agreement as the same may be amended, modified, restated,
supplemented, or replaced from time to time.

10.15 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same Agreement.

IN WITNESS WHEREOF, each party has executed or caused its duly
authorized officer to execute this Agreement the day and year first above
written.

EUNIVERSE, INC.

By /s/ Brad D. Greenspan
-----------------------------
Name: Brad D. Greenspan
Its: Chairman of the Board

/s/ D. SCOTT SMITH
-----------------------------
D. SCOTT SMITH

<PAGE>

EXHIBIT 10.31

December 16, 1999

eUniverse, Inc.
101 North Plains Industrial Road
Wallingford, Connecticut 06492
Attention: Brad Greenspan, Chief Executive Officer

Dear Mr. Greenspan:

This letter confirms the agreement of the parties hereto with respect
to (i) the acquisition by eUniverse, Inc. ("eUniverse") of all of the issued and
outstanding capital stock (the "Falcon Shares") of Falcon Ventures, Inc. d/b/a
DVDWave.com ("Falcon") from Take-Two Interactive Software, Inc. ("T2") and (ii)
the purchase by T2 of 400,000 shares of Common Stock ("eUniverse Common Stock")
from eUniverse. The principal terms of the acquisition of the Falcon Shares by
eUniverse and the purchase of eUniverse Common Stock by T2 (collectively, the
"Transactions") would be as follows:

I. The closing of the purchase by eUniverse of the Falcon Shares (the
"Closing") shall occur within five (5) business days from SEC Effectiveness (as
defined below). At the Closing, eUniverse shall purchase all of the Falcon
Shares free and clear of all liens, claims and encumbrances. The purchase price
to be paid by eUniverse for the Falcon Shares shall be 310,000 shares of validly
issued, fully paid and non-assessable eUniverse Common Stock.

II. At the Closing, T2 shall purchase 400,000 shares of validly issued,
fully paid and non-assessable eUniverse Common Stock for $2,000,000 in cash (or
$5.00 per share). Subject to the execution of a mutually agreeable cooperative
advertising plan agreement (the "Advertising Plan"), T2 shall have an option,
exercisable in whole or in part, during the period commencing on the date hereof
until June 1, 2000, to purchase up to an additional 200,000 validly issued,
fully paid and non-assessable shares of eUniverse Common Stock (the "Option
Shares") for an aggregate purchase price of $1,000,000 (or $5.00 per share). All
eUniverse Common Stock to be purchased or issued hereunder shall be free and
clear of all liens, claims and encumbrances.

III. The parties hereto intend to enter into definitive Stock Purchase
Agreements within thirty (30) days following the date hereof containing
reasonable representations and warranties (which would survive the Closing),
covenants mutually agreed to by the parties, reciprocal indemnification
provisions by eUniverse (on one hand) and T2 (on the other hand),
non-competition provisions, closing conditions and mutually agreed upon
limitations on certain business conduct by Falcon, including, but not limited
to, the following:

T2 hereby represents and warrants to eUniverse that (i) Falcon is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is duly qualified to transact business in the State
of California; (ii) the authorized capital stock of Falcon consists of 1,000,000
shares of Common Stock, all of which shares are issued and outstanding and are
held by T2; (iii) Falcon has no other securities outstanding or options or
rights to purchase any of its securities; (iv) the execution and delivery of
this agreement by Falcon and T2 has been duly authorized and this agreement is a
valid and binding obligation of Falcon and T2 enforceable in accordance with its
terms; (v) this agreement does not violate or conflict with any other agreement
to which Falcon or T2 is a party or require the consent of any third-party
(except for the consent of T2's lender, which T2 agrees to use its best efforts
to obtain); (vi) attached hereto are Falcon's financial statements at October
31, 1999 (the "Financial Statement Date") which are true and accurate in all
material respects and present fairly the financial position and the results of
operation of Falcon (after eliminating intercompany payables); (vii) Falcon has
no material liabilities of any nature whatsoever which are not disclosed in such
financial statements other than liabilities incurred in the ordinary course of
business following the Financial Statement Date; (viii) Falcon is not a party to
any pending litigation and neither T2 nor Falcon is aware of any threatened
litigation with respect to Falcon; (ix) the Falcon Shares when paid for as
contemplated hereby will be validly issued, fully paid and non-assessable and
free and clear of any liens, claims or encumbrances, and eUniverse will

<PAGE>

acquire good title to the Falcon Shares; (x) Falcon owns or has rights to all
properties and assets necessary to conduct its business; and (xi) T2 represents
that it is taking the eUniverse Common Stock for investment purposes only and
not with a view toward the distribution thereof.

eUniverse hereby represents and warrants to T2 that (i) the information
(including the financial statements and notes thereto) contained in its
Registration Statement on Form 10 (No. 0-26355), (the "Form 10 Registration
Statement") is true, accurate and complete in all material respects and does not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading; (ii)
the shares of eUniverse Common Stock to be purchased by T2 when issued and paid
for as contemplated hereby will be duly and validly authorized, fully-paid and
non-assessable, and T2 will acquire good title to the shares; (iii) except with
respect to a potential claim by Isoscelese Fund, there is no litigation pending
or threatened against eUniverse or any of its subsidiaries (other than as
disclosed in the Form 10 Registration Statement); (iv) the execution and
delivery of this agreement by eUniverse has been duly authorized and this
agreement constitutes the valid and binding obligation of eUniverse enforceable
in accordance with its terms; (v) eUniverse has no material liabilities of any
nature whatsoever which are not disclosed in the Form 10 Registration Statement,
including any material contingent liability resulting from the issuance of its
securities; (vi) eUniverse is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada and is qualified in each
jurisdiction necessary for the conduct of its business; (vii) eUniverse's
fully-diluted capital stock and capitalization is as set forth in the Form 10
Registration Statement; (viii) eUniverse satisfies the stock and quantitative
requirements for listing on the Nasdaq Small Cap Market; and (ix) this agreement
does not violate or conflict with any agreement to which eUniverse is a party or
require the consent of any third party.

Each of the parties hereto hereby indemnifies and agrees to hold
harmless the other party hereto and its respective affiliates from and against
any and all losses, obligations, liabilities, claims, damages, costs and
expenses (including reasonable attorneys' fees) which any of them may sustain,
suffer and incur and which arise or out of, are caused by, relate to, or result
or occur from or in connection with any breach of any of the representations,
warranties or covenants made by such party. The foregoing indemnity shall apply
to claims by third parties and direct claims by T2 or eUniverse. Notwithstanding
the foregoing, the indemnification obligations shall not be applicable except to
the extent that the aggregate of all indemnificable amounts sought against the
indemnifying party exceeds $100,000 and the maximum liability of each
indemnifying party shall not exceed the amount of consideration received
pursuant to this agreement. The representations, warranties and covenants set
forth above shall survive the Closing.

From the execution hereof until the Closing, Falcon shall conduct its
business operations in the ordinary course and in a manner consistent with past
practice. For a period of one (1) year following the Closing, neither T2 nor any
of its affiliates shall engage in any activities competitive with the business
conducted by Falcon on the date of Closing.

IV. The Closing is subject to (i) the Form 10 Registration Statement
being declared effective by the Securities and Exchange Commission ("SEC
Effectiveness") no later than January 30, 2000 (provided that T2's obligation to
purchase the eUniverse Common Stock is subject to the continued listing of the
eUniverse securities on the Nasdaq OTC Bulletin Board); (ii) the representations
and warranties of the parties shall be true in all material respects on the
Closing Date; (iii) Falcon shall have working capital of at least $75,000
(Falcon shall eliminate intercompany payables by restructuring or otherwise and
not allocate overhead for Jack of All Games employees); (iv) all consents of
third parties necessary in the reasonable judgment of the parties (including the
required consent of the holders of Series A Preferred Stock to amend eUniverse's
Designation of Series A Preferred Stock) shall be obtained; and (v) there shall
not have occurred after the date hereof, in the reasonable judgment of the
parties, a material adverse change in the financial or business condition of
either eUniverse or Falcon. In addition, the obligation of T2 to purchase the
eUniverse Common Stock shall be subject to consummation of the acquisition of
the Falcon Shares by eUniverse.

V. Each of the parties hereto hereby represents and warrants to the
other parties hereto that it has done nothing to incur any obligation or
liability for a finder's fee, commission, brokerage fee or like payment in
connection with the transactions contemplated hereby, except for eUniverse's
obligation to Gerard, Klauer & Mattison & Co, Inc. Each of eUniverse and T2
shall bear its own expenses in connection with the Transactions.

<PAGE>

VI. As soon as reasonably practicable following the Closing, but in no
event later than five (5) business days following the Closing, eUniverse shall
include all of the shares of eUniverse Common Stock purchased by T2 (including
any Option Shares), in its currently pending Registration Statement on Form S-1
(No. 333-86959) filed under the Securities Act of 1933 (the "Act") and cause
such Registration Statement to be declared effective by the Securities and
Exchange Commission as soon as practicable under the Act but in no event later
than thirty (30) days following the Closing. T2 shall have the same rights with
respect to the registration and sale of its shares of eUniverse Common Stock as
the holders of the Series A Preferred Stock included in such Registration
Statement; provided, however, that T2 shall have the ability to sell up to
100,000 shares of eUniverse Common Stock without any restriction following the
effectiveness of such Registration Statement; provided, further, that eUniverse
shall have a five (5) day option to repurchase such shares at a price equal to
the greater of market or a bona fide offer. Subject to entering into the
Advertising Plan, T2 shall be granted a right for a period of three years from
the Closing to designate a member to eUniverse's Board of Directors. eUniverse
will nominate and cause T2's designee to become elected.

VII. Each party and its representatives shall be given reasonable
access, during normal business hours to facilities, employees, books and records
of the other party for the purpose of conducting a "due diligence"
investigation. Each party agrees that all confidential information which is
obtained by it in connection with the foregoing shall be maintained by it on a
confidential basis. Each party shall cooperate fully in connection with any
investigation hereunder.

VIII. Prior to the Closing, the parties shall cooperate with each other
in connection with the issuance of any press release or otherwise making any
public statement with respect to the contents of this document or the
transactions contemplated hereby, and none of the parties hereto shall issue any
such press release or make any such public statement prior to such consultation,
except as my be required by law or applicable stock exchange or NASDAQ
regulations.

IX. The parties agree to negotiate in good faith definitive Stock
Purchase Agreements and other agreements in connection with the transactions
contemplated hereby. Unless and until the parties are able to negotiate
definitive Stock Purchase Agreements, this Agreement will constitute (i) a
binding agreement between the parties, and (ii) the entire agreement between the
parties regarding the subject matter thereof, and will be governed by the
internal laws of the State of New York.

Please acknowledge your agreement by signing the enclosed copy of this
letter and returning it to the undersigned.

Very truly yours,

AGREED AND ACCEPTED:

eUNIVERSE, INC. TAKE-TWO INTERACTIVE SOFTWARE, INC.

By: /s/ Brad Greenspan By: /s/ Ryan A. Brant
------------------------------ ------------------------
Brad Greenspan Ryan A. Brant
Chief Executive Officer Chief Executive Officer

FALCON VENTURES, INC.

By: /s/ Larry Muller
--------------------------
Larry Muller
Chief Financial Officer

<PAGE>

EXHIBIT 10.32

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
April 5, 1999, by and between eUniverse, Inc., a corporation organized under the
laws of the State of Nevada (the "Company"), and William R. Wagner, an
individual residing in Westport, Connecticut (the "Executive").

WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and subject to the conditions
hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:

1. TERM OF EMPLOYMENT.

Subject to the terms and conditions of this Agreement, the Company
hereby employs the Executive and the Executive hereby accepts employment with
the Company pursuant to this Agreement for the period commencing on April 5,
1999 (the "Commencement Date"), and ending one (1) year after the Commencement
Date (the "Initial Term"), subject to the termination provisions contained in
Section 11. After the Initial Term, the Executive's employment under this
Agreement shall continue on the same terms and conditions, except that the
Executive shall be an employee-at-will, without a specified term of employment
subject to the notice provisions contained in Section 11(d).

As used herein, the term "Employment Period" shall mean the entire
period of time that the Executive is employed by the Company, inclusive of the
Initial Term, any extensions hereof for a specified period of time, and any
period during which the Executive is an employee-at-will without a specified
term of employment.

2. POSITION; DUTIES AND PLACE OF EMPLOYMENT.

(a) The Company hereby employs the Executive as the Chief Financial
Officer and Secretary. The Executive shall report to the Chief Executive
Officer, Chairman and Board of Directors of the Company; provided, however, that
the Company, in its sole discretion, shall have the right to make changes in the
Executive's reporting assignment. The Executive shall render to the Company such
services as are typically associated with the position in which he is employed,
and any other services that the Company may reasonably require of him.

(b) The Executive shall perform his duties faithfully, diligently and
to the best of his ability in accordance with the reasonable directions and
orders of the person to whom he reports, and the Company's Board of Directors,
or their designees, and shall devote such time, efforts and attention to the
business and affairs of the Company as may reasonably be required to achieve its
objectives and to perform the duties required hereunder. The Executive shall
devote all of his working time, efforts and attention for the benefit of the
Company and to the performance of his duties and responsibilities under this
Agreement.

(c) The Executive shall not render to others any service of any kind
for compensation without the prior approval of the Board of Directors of the
Company, which approval shall be at his sole discretion to grant or deny. The
Executive will not engage in any activity, including any ownership

<PAGE>

interest, which conflicts or interferes with the performance of duties hereunder
or usurps the business interests, existing or potential, of the Company.

(d) The place of employment of the Executive shall be at Wallingford,
Connecticut provided, however, that the Company, in its discretion, shall have
the right to assign the Executive to another location. At any time that the
Company deems it to be appropriate, the Executive shall temporarily work at such
other place or places as may be determined by the Company.

3. COMPENSATION.

During the Initial Term, the Company shall to pay to the Executive, as
compensation for Executive's services and his compliance with this Agreement,
(i) a salary of $125,000 per annum, payable in periodic installments in
accordance with the Company's regular payroll practices; and (ii) those certain
stock options set forth in the stock option letter dated June 15, 1999 and
pursuant to the Company's 1999 Stock Awards Plan. On an annual basis, the
Company shall review the Executive's performance and other relevant factors
relating to salary, and at the time of such review, the salary may be increased
as determined in the sole discretion of the Compensation Committee of the Board
of Directors of the Company. Executive shall be entitled to take a maximum of
four (4) weeks of vacation days during each calendar year.

4. ACCELERATED VESTING OF STOCK OPTIONS UPON A CHANGE OF CONTROL.

In the event of a "Change of Control" of the Company during the
Employment Period, all of the remaining Stock Options granted in Section 3
above, shall immediately Vest as of the date of the Change of Control. "Change
of Control" shall occur:

(a) upon the acquisition by any person, including a group (as defined
in Section 13(d) of the Securities Exchange Act of 1934, as amended), other than
the Company or any of its Subsidiaries or any employee benefit plan maintained
by the Company or any of its Subsidiaries, of beneficial ownership of 50% or
more of the outstanding stock of the Company entitled to vote;

(b) upon the approval by the shareholders of the Company of a
definitive agreement for the merger, consolidation, liquidation,
recapitalization or sale of substantially all of the assets of the Company; or

(c) Upon a sale or other transfer of all or substantially all of the
assets of the Company in one or a series of transactions.

5. BENEFITS.

The Company shall provide the Executive with coverage pursuant to a
medical plan that shall be selected by the Company in its sole discretion. The
Executive shall also be entitled to participate in all other benefit plans
provided by the Company to which Executive is eligible.

6. REIMBURSEMENT OF EXPENSES.

The Company shall reimburse the Executive for normal and reasonable
business expenses incurred by him in the course of his employment, including the
reasonable costs for transportation and accommodations when the Executive is
required to travel away from the location at which he is employed. Such
reimbursement shall be subject to the Company's standard procedures with respect
to
2

<PAGE>

reimbursement, including such matters as pre-approval requirements, lodging
and meal allowances, and reimbursement rates for automobile travel.

7. CONFIDENTIALITY.

The Executive acknowledges that in connection with his employment by
the Company, he will have access to trade secrets of the Company and other
information and materials which the Company desires to keep confidential,
including customer lists, supplier lists, financial statements, business records
and data, marketing and business plans, and information and materials relating
to the Company's services, products, methods of operation, key personnel,
proprietary software and other proprietary intellectual property and information
disclosed to the Company of third parties to which the Company owes a duty of
nondisclosure (collectively, the "Confidential Information"); provided, however,
that Confidential Information does not include information which (i) is or
becomes publicly known through the lawful action of any party other than the
Executive; (ii) has been made available by the Company, directly or indirectly,
to a non-affiliated third party without obligation of confidentiality; or (iii)
the Executive is obligated to produce as a result of a court order or pursuant
to governmental action or proceeding, provided that the Executive gives the
Company prompt written notice of such requirement prior to such disclosure and
assistance in obtaining an order protecting the information from public
disclosure. The Executive covenants and agrees that, both during and after the
Employment Period, he will keep secret all Confidential Information and will not
disclose, reveal, divulge or otherwise make known any Confidential Information
to any person (other than the Company or its employees or agents in the course
of performing his duties hereunder) or use any Confidential Information for his
own account or for the benefit of any other individual or entity, except with
the prior written consent of the Company.

8. OWNERSHIP OF INTELLECTUAL PROPERTY.

The Executive agrees that all inventions, copyrightable material,
software, formulas, trademarks, trade secrets and the like which are developed
or conceived by the Executive in the course of his employment by the Company or
on the Company's time or property (collectively, the "Intellectual Property"),
shall be disclosed promptly to the Company and the Company shall own all right,
title and interest in and to the Intellectual Property. The parties expressly
agree that any and all of the Intellectual Property developed by the Executive
shall be considered works made-for-hire for the Company pursuant to the United
States Copyright Act of 1976, as amended from time to time. In order to ensure
that the Company shall own all right, title and interest in and to the
Intellectual Property in the event that any of the Intellectual Property is not
deemed a work made-for-hire (as defined in Section 101 of the Copyright Act of
1976) and in any other event, the Executive hereby assigns all such Intellectual
Property to the Company, and the Executive covenants and agrees to affix to the
Intellectual Property appropriate legends and copyright notices indicating the
Company's ownership of all Intellectual Property and all underlying
documentation to the extent reasonably appropriate, and will execute such
instruments of transfer, assignment, conveyance or confirmation as the Company
considers necessary to transfer, confirm, vest, perfect, maintain or defend the
Company's right, title and interest in and to the Intellectual Property
throughout the world.

9. COVENANT TO DELIVER BUSINESS MATERIALS AND TO REPORT.

The Executive acknowledges and agrees that all written materials
including, without limitation, all memoranda, notes, records, reports, programs,
algorithms and other documents or codes (and all copies thereof) concerning the
business or affairs of the Company including, without limitation, the
Intellectual Property, which he created or obtained or which otherwise came into
his possession or control while employed with the Company, are property of the
Company, and the Executive shall promptly return all copies thereof to the
Company after the termination of his employment by the Company. In addition,

<PAGE>

the Executive agrees to render to the Company such reports as it may request
with respect to the activities undertaken by him or conducted under his
direction in connection with his employment by the Company.

10. NON-COMPETITION AGREEMENT.

The Executive hereby acknowledges and recognizes that prior to the date
hereof and during the Employment Period he has been and will be privy to trade
secrets and other Confidential Information which is critical to the business of
the Company; that his services to the Company will be of special, unique and
intellectual character; and that the Company would find it extremely difficult
to replace the Executive. Accordingly, in the event the employment of the
Executive is terminated for any reason, the Executive agrees that, in
consideration of the covenants and agreements of the Company contained in this
Agreement, the sufficiency of which are hereby acknowledged by the Executive, he
will not, directly or indirectly through another person or entity, on his own
behalf or in the service of or on behalf of others, from the date hereof through
the date which is one year after the last day of the Executive's employment by
the Company, (i) engage or participate in, offer, perform or provide any
services, business or products which are competitive with those provided by the
Company or its subsidiaries within the two year period immediately preceding the
date of termination of the Executive's employment by the Company, or (ii)
solicit, or attempt to solicit, persuade or induce any employee, client or
customer of the Company or any of its subsidiaries to terminate or reduce its
business relationship with the Company or any of its subsidiaries.

The Executive understands that the foregoing restrictions may limit his
ability to earn a livelihood in a business similar to the business of the
Company and its subsidiaries, but he nevertheless believes that he has received
and will receive sufficient consideration and other benefits pursuant to this
Agreement to clearly justify such restrictions. In light of his education,
skills and ability, the Executive believes that the foregoing restrictions will
not prevent him from earning a living.

11. RIGHT OF INJUNCTION.

The Executive acknowledges that the harm and injury to the Company
which would result from the breach or threatened breach of any of the provisions
of Sections 6, 7, 8 or 9 of this Agreement (the "Injunctive Sections") by the
Executive cannot be adequately compensated for in money damages. The Executive
further acknowledges that any breach of any of the provisions of the Injunctive
Sections by him would cause the Company irreparable harm. Therefore, the
Executive agrees that in the event of a breach or threatened breach of any of
the provisions of the Injunctive Sections by him, the Company in a lawsuit
seeking an injunction restraining the Executive from such actual or threatened
breach, shall not be required to prove (i) that irreparable harm or injury would
result from the breach of said Sections, or (ii) that the Company has no
adequate remedy at law.

The Executive shall reimburse the Company for all reasonable costs and
expenses (including, without limitation, reasonable attorney's fees and
expenses) incurred in connection with the enforcement of any of the provisions
of the Injunctive Sections if it is determined that the Company was entitled to
such relief.

Nothing contained herein shall be construed as prohibiting the Company
or the Executive from pursuing any other remedies (including, without
limitation, an action for damages) which may be available for any actual or
threatened breach of any provision this Agreement, and the pursuit of an
injunction or any other particular remedy shall not be deemed to be an election
of such remedy to the exclusion of any other remedy.

12. TERMINATION OF EMPLOYMENT.

<PAGE>

(a) Termination by Company for Cause. Notwithstanding anything to the
contrary contained herein, the Company may terminate the employment of the
Executive at any time for Cause (as defined below) upon written notice to the
Executive. As used herein, the term for "Cause" shall be defined as (i) the
Executive shall have committed any material breach of any of the provisions set
forth herein; provided that the Executive shall have been provided written
notice of such breach and shall not have cured or taken steps to cure such
breach within one week after receiving such notice; or (ii) the Executive shall
have committed any act of fraud or willful misconduct in connection with the
performance of his duties or obligations hereunder, or shall have been convicted
of any felony under the laws of the United States or any of its subdivisions (or
pleaded guilty or nolo contendre to any such crime) or any other crime that
relates to the Executive's services to, or employment by, the Company; or (iii)
the Executive shall have committed any material act of misfeasance, malfeasance,
nonfeasance, disloyalty, dishonesty or breach of trust to the detriment of the
Company; or (iv) the Executive shall have willfully failed to follow the
direction of his superiors or the Board of Directors of the Company to the
detriment of the Company; provided that such direction did not require that the
Executive violate any statute, rule or regulation applicable to the Executive;
provided further that the Executive shall have been provided with written notice
of such failure and shall not have cured or taken steps to cure such failure
within such one week after receiving such notice.

(b) Termination Due to Disability. Notwithstanding anything to the
contrary contained herein, but subject to the provisions of applicable law, the
Company shall have the right to terminate the Executive's employment by the
Company upon three (3) months prior written notice if he becomes Disabled (as
hereinafter defined) during the Employment Period. As used herein, "Disabled"
shall mean that the Executive has a physical or mental condition which prevents
him from performing the essential functions required of him pursuant to this
Agreement, with or without accommodation, which condition has continued for a
period of 60 consecutive business days or existed for a total of at least 90
business days in any twelve month period as determined in good faith by the
Board of Directors of the Company.

(c) Termination Due to Death. Notwithstanding anything to the contrary
contained herein, the Executive's employment by the Company shall terminate if
he dies during the Employment Period.

(d) Termination by Either Party. Either party may terminate this
Agreement upon three (3) months prior written notice given to the other party
with termination effective on the last day of such notice period.

13. MISCELLANEOUS PROVISIONS.

(a) Survival of Certain Obligations. The Executive's duties and
obligations under Sections 6, 7, 8 and 9 and the Company's rights under Section
10 of this Agreement and any other provision hereof specifying an obligation or
a right of a party after the termination of Executive's employment or this
Agreement, for any reason whatsoever, shall survive such termination and shall
remain in full force and effect.

(b) Successors and Assigns; Prohibition on Assignment. This Agreement
is binding upon, and shall inure to the benefit of, the Company and its
successors and assigns. With respect to the Executive, this is an agreement for
the performance of personal services. Absent the prior written consent of the
Company, and subject to the terms of the Executive's Will and the laws of
descent and distribution, the Executive shall not assign, transfer, convey,
encumber or otherwise dispose of any of his rights under this Agreement, and
likewise, he shall not assign any of his duties or obligations under this
Agreement.

<PAGE>

(c) No Conflicts. The Executive represents and warrants to, and
covenants with, the Company that the execution and delivery by him of this
Agreement do not, and his performance of his obligations hereunder will not,
constitute a breach of any agreement, written or oral, to which he is a party or
by which he is bound.

(d) Entire Agreement. This Agreement contains all of the
representations, covenants and agreements between the parties hereto with
respect to the subject matter hereof, and constitutes the entire agreement of
the parties with respect to said subject matter. This Agreement supersedes any
and all other prior or contemporaneous agreements, whether oral or in writing,
between the parties with respect to the subject matter thereof, including but
not limited to the Contract of Employment and several addenda thereto, dated
March 25 and 31, 1999.

(e) Construction in Favor of Validity. It is the desire and intent of
the parties hereto that the provisions of this Agreement be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated by a court of competent
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or enforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

(f) Amendment and Waiver. This Agreement may not be amended or modified
except by an instrument in writing signed by the party to be bound thereby.

No delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder. Any failure by either party hereto
to require strict performance by the other party or any waiver by any party
hereto of any term, covenant or agreement herein shall not be construed as a
waiver of any other breach of the same or any other term, covenant or agreement
herein.

(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut without giving effect to
any principles of conflicts of law.

(h) Notices. Any notice required or permitted to be given hereunder
shall be (a) in writing, (b) effective on the first business day following the
date of receipt, and (c) delivered by one of the following means: (i) by
personal delivery; (ii) by prepaid, overnight package delivery or courier
service; (iii) by the United States Postal Service, first class, certified mail,
return receipt requested, postage prepaid; or (iv) by prepaid telecopier, telex,
or other similar means of electronic communication (followed by confirmation on
the same or following day by overnight delivery or by mail as aforesaid). All
notices given under this Agreement shall be addressed as follows:

in the case of the Company:

eUniverse, Inc.
101 North Plains Industrial Road
Wallingford, CT 06492

Attention: President

<PAGE>

and, in the case of the Executive:

William R. Wagner

or to such other addresses or telecopier numbers of which the parties have been
advised in writing by any of the above-described means. Personal delivery to a
party or to any officer, partner, agent, or employee of such party at its
address herein shall constitute receipt. The following shall also constitute
receipt: (i) a party's rejection or other refusal to accept notice, and (ii) the
inability to deliver to a party because of a changed address or telecopier
number of which no notice has been received by the other party. Notwithstanding
the foregoing, no notice of change of address or telecopier number shall be
effective until ten (10) days after the date of receipt thereof. This Section
shall not be construed in any way to affect or impair any waiver of notice or
demand herein provided.

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

IN WITNESS WHEREOF, this Agreement was executed by the undersigned as
of the date first above written.

EUNIVERSE, INC.
("Company")

By: /s/ Leland N. Silvas
-------------------------------
Its: President and CEO

/s/ William R. Wagner
-------------------------------
WILLIAM R. WAGNER
("Executive")

<ARTICLE> 5

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<PERIOD-START> APR-01-1999 APR-01-1998
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