SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2001

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

For the transition period from _______ to ___________

Commission File No. 0 - 26173

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

DELAWARE 8699 04-3263743
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL Identification
INCORPORATION OR CLASSIFICATION CODE Number)
ORGANIZATION) NUMBER)

280 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
(Address of Principal Executive Offices) (Zip Code)

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

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 47,314,558 shares of common
stock as of November 7, 2001.

STUDENT ADVANTAGE, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2001

INDEX

PAGE (S)

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at September 30, 2001 (Unaudited)
and December 31, 2000 (Restated)

Consolidated Statement of Operations for the three and nine months ended September
30, 2001 (Unaudited) and 2000 (Unaudited) (Restated)

Consolidated Statement of Cash Flows for the nine months ended September 30, 2001
(Unaudited) and 2000 (Unaudited) (Restated)

Notes to Consolidated Financial Statements (Unaudited)

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

Factors That May Affect Results of Operations and Financial Condition

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORMS 8-K

SIGNATURES

PART 1. FINANCIAL INFORMATION.

Item 1. Financial Statements.

STUDENT ADVANTAGE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

SEPTEMBER 30, DECEMBER 31,
2001 2000
------------- ------------
(unaudited) (Restated)

ASSETS
Current assets
Cash and cash equivalents ................................................. $ 6,317 $ 12,762
Accounts receivable (net of reserves of $1,247 and $815 at
September 30, 2001, and December 31, 2000, respectively).................. 7,791 5,982
Inventory ................................................................. 1,675 --
Prepaid advertising ....................................................... 2 3,350
Prepaid expenses and other current assets ................................. 2,670 1,329
--------- ---------
Total current assets .................................................... 18,455 23,423
Notes receivable .......................................................... 504 --
Property and equipment, net ............................................... 14,201 13,343
Investment ................................................................ -- 1,171
Intangible and other assets, net .......................................... 30,828 13,633
--------- ---------
Total assets ............................................................ $ 63,988 $ 51,570
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable .............................................................. $ 2,343 $ 3,564
Accrued compensation .......................................................... 3,248 2,840
Borrowings under revolving loan ............................................... 4,200 --
Other accrued expenses ........................................................ 12,220 7,541
Deferred revenue .............................................................. 5,115 4,013
Current obligation under capital lease ........................................ 520 1,208
--------- ---------
Total current liabilities ............................................... 27,646 19,166
========= =========

Warrants payable (Note 5) ..................................................... 900 --
Notes Payable ................................................................. 10,000 --
Long-term obligation under capital lease ...................................... 1,894 1,861
--------- ---------
Total long-term obligations ............................................. 12,794 1,861
--------- ---------
Total liabilities ....................................................... 40,440 21,027
--------- ---------

Stockholders' equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized, 0 shares issued
and outstanding .............................................................. -- --
Common stock, $0.01 par value; Authorized: 150,000,000 shares; Issued and
Outstanding: 47,214,558 and 39,621,244 at September 30, 2001
and December 31, 2000, respectively ......................................... 472 396
Additional paid-in capital ................................................. 120,131 104,058
Accumulated deficit ........................................................ (96,816) (73,096)
Notes receivable from stockholders ......................................... (50) (50)
Deferred compensation ...................................................... (189) (765)
--------- ---------
Total stockholders' equity .............................................. 23,548 30,543
--------- ---------
Total liabilities and stockholders' equity .............................. $ 63,988 $ 51,570
========= =========

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

STUDENT ADVANTAGE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2001 2000 2001 2000
-------- -------- -------- --------
(RESTATED) (RESTATED)

Revenue
Student Services ......................................................... $ 20,104 $ 7,070 $ 39,558 $ 21,424
Corporate and University Solutions ....................................... 2,835 5,573 10,150 13,924
-------- -------- -------- --------
Total revenue ...................................................... 22,939 12,643 49,708 35,348

Costs and expenses

Cost of student services revenue (including stock-based compensation
of $7 and $9 for the three months ended September
30, 2001 and 2000, respectively, and $17 and $28 for the nine
months ended September 30, 2001 and 2000, respectively.) ................ 7,185 2,128 11,826 7,733
Cost of corporate and university solutions revenue (including
stock-based compensation of $4 and $6 for the three months
ended September 30, 2001 and 2000, respectively, and $14 and
$20 for the nine months ended September 30, 2001 and 2000, respectively.) 1,330 3,225 5,338 7,632
Product development (including stock-based compensation of $13 and $33
for the three months ended September 30, 2001 and
2000, respectively, and $59 and $140 for the nine months ended
September 30, 2001 and 2000, respectively.) ............................. 3,796 4,625 14,376 12,455
Sales and marketing (including stock-based compensation of $69 and $105
for the three months ended September 30, 2001 and
2000, respectively, and $227 and $322 for the nine months
ended September 30, 2001 and 2000, respectively.) ....................... 9,540 4,324 22,069 13,638
General and administrative (including stock-based compensation
of $24 and $33 for the three months ended September 30, 2001
and 2000, respectively, and $80 and $106 for the nine months ended
September 30, 2001 and 2000, respectively.) ............................. 2,892 2,438 8,628 7,426
Depreciation and amortization ............................................ 3,940 1,504 10,280 3,946
-------- -------- -------- --------
Total costs and expenses .............................................. 28,683 18,244 72,517 52,830
-------- -------- -------- --------
Loss from operations ......................................................... (5,744) (5,601) (22,809) (17,482)

Interest and other income (expense) .......................................... (569) (570) (912) (1,590)
-------- -------- -------- --------

Net loss ..................................................................... $ (6,313) $ (6,171) $(23,721) $(19,072)
======== ======== ======== ========

Basic and diluted net loss per share ......................................... $ (0.13) $ (0.17) $ (0.55) $ (0.53)
======== ======== ======== ========

Shares used in computing basic and diluted net loss per share ................ 47,209 36,170 43,449 35,915
======== ======== ======== ========

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

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

FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
2001 2000
--------------- -------------
(Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................................................. $(23,721) $(19,072)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation ......................................................................... 4,813 1,689
Amortization of intangible assets .................................................... 5,467 2,257
Equity Interest in Edu.com net loss .................................................. 495 2,832
Reserve for allowances and bad debts ................................................. 432 171
Compensation expense relating to issuance of equity .................................. 397 616
Exchange of notes receivable for assets sold ......................................... (504) --
Amortization of marketing expense associated with common stock warrant ............... 888 666
Changes in current assets and liabilities, net of effects of acquisitions:
Accounts and notes receivable ..................................................... (2,997) (1,659)
Prepaid expenses and other current assets ......................................... 2,111 326
Inventory ......................................................................... 3,322 --
Accounts payable .................................................................. (5,254) 1,287
Accrued compensation .............................................................. 408 18
Other accrued expenses ............................................................ 2,393 1,971
Deferred revenue .................................................................. 1,102 (1,906)
--------- ----------
Net cash used in operating activities ............................................. (10,648) (10,804)
========= ==========
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets ................................................................ (3,481) (2,618)
Acquisitions of businesses for cash and common stock ..................................... (9,331) (2,065)
Purchases of marketable securities ....................................................... -- (8,813)
Proceeds from sale of marketable securities .............................................. -- 29,359
Purchase of investment ................................................................... -- (1,365)
--------- ----------
Net cash provided by (used in) investing activities ............................... (12,812) 14,498
========= ==========
LOSS FROM OPERATIONS
Repayment of note from stockholder ....................................................... -- 29
Proceeds from issuance of common stock ................................................... 9,800 --
Proceeds from exercise of common stock options, warrants and employee stock purchase plan 222 325
Repayment of capital lease obligations ................................................... (1,207) --
Proceeds of Revolving line of credit, net ................................................ (789) --
Repayment of note payable ................................................................ (1,011) --
Proceeds of notes payable ............................................................... 10,000 --
--------- ----------
Net cash provided by financing activities ......................................... 17,015 354
========= ==========
Increase (decrease) in cash and cash equivalents .............................................. (6,445) 4,048
Cash and cash equivalents, beginning of period ................................................ 12,762 15,370
--------- ----------
Cash and cash equivalents, end of period ...................................................... $ 6,317 $ 19,418
========= ==========

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

STUDENT ADVANTAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - THE COMPANY

Student Advantage is a media and commerce connection for college students
and the businesses and universities that serve them. We reach students online
through our network of web sites, including Collegeclub.com and
studentadvantage.com, and offline through the Student Advantage Membership
Program, SA Cash Program, and OCM Direct. The Student Advantage Membership
Program is a national fee-based membership program that provides its student
members with exclusive benefits including ongoing discounts on products and
services currently offered by over 15,000 participating locations. Discounts are
made available to students both through our studentadvantage.com web site and at
sponsors' retail locations. OCM Direct is a direct mail marketing business that
provides college and university endorsed products including residence hall
linens and related accessories, care packages, and diploma frames to students.
The SA Cash Program enables students to use their college ID cards as a method
of payment (stored-value card) for off-campus dining, shopping and other
purchasing needs. We also offer business-to-business marketing and events and
promotion services through SA Marketing Group and we offer information services,
internet content and data management services to colleges and universities.
Student Advantage, Inc. was incorporated in the State of Delaware on October 20,
1998. The Company began operations in 1992 as a sole proprietorship, converted
to a general partnership in 1995, converted to a limited liability company in
1996 and became a C Corporation in 1998. From inception through December 1997,
our revenue was derived primarily from annual membership fees. Since that time,
we have expanded our product and service offerings through internal growth as
well as acquisitions.

Certain historical amounts in these financial statements have been
restated to reflect the acquisition of Edu.com, which has been accounted for
under the purchase method of accounting.

These financial statements should be read in conjunction with the
consolidated financial statements and related footnotes included in our Annual
Report on Form 10-K for the year ended December 31, 2000, and our financial
statements and related footnotes included in our Form 8-K/A, filed on June 28,
2001.

UNAUDITED INTERIM FINANCIAL INFORMATION

The unaudited interim consolidated financial statements of Student
Advantage for the three and nine months ended September 30, 2001 and 2000,
respectively, included herein have been prepared in accordance with generally
accepted accounting principals for interim financial information and with the
instructions for Form 10-Q under the Securities Exchange Act of 1934, as
amended, and Article 10 of Regulation S-X under the Securities Act of 1933, as
amended. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and regulations
relating to interim financial statements.

In the opinion of management, the accompanying unaudited interim
consolidated financial statements reflect all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the financial position
of Student Advantage at September 30, 2001, and the results of its operations
and its cash flows for the three and nine months ended September 30, 2001 and
2000, respectively. The results for the three and nine months ended September
30, 2001 are not necessarily indicative of the expected results for the full
fiscal year or any future period. Certain prior period balances have been
reclassified to conform to the current period presentation.

NOTE 2 - COMPUTATION OF UNAUDITED NET LOSS PER SHARE (1,2)

(in thousands, except per share data)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
----------- ------------ ----------- ------------
(Restated) (Restated)

BASIC AND DILUTED NET LOSS PER SHARE:
Net loss $ (6,313) $ (6,171) $ (23,721) $ (19,072)
=========== =========== =========== ===========

Basic and diluted weighted average
common shares outstanding(3), (4) 47,209 36,170 43,449 35,915
=========== =========== =========== ===========

Basic and diluted net loss per share $ (0.13) $ (0.17) $ (0.55) $ (0.53)
=========== =========== =========== ===========

(1) The financial statements for the three and nine month periods ending
September 30, 2000 have been restated to reflect the acquisition of
Edu.com, which was accounted for using the purchase method of accounting.

(2) Net loss per share is computed under SFAS No. 128, "Earnings Per Share".
Basic net loss per share is computed using the weighted average number of
shares. Diluted loss per share does not differ from basic loss per share
since potential common shares from exercise of stock options and warrants
are anti-dilutive for all periods presented.

(3) All outstanding options and warrants to purchase common stock (totaling
12,397,746 and 5,263,952 at September 30, 2001 and 2000, respectively)
were excluded from the calculation of diluted earnings per share for all
periods presented because their inclusion would have been anti-dilutive.

(4) As of September 30, 2001, Student Advantage had reserved 12,000,000 shares
of its common stock for the exercise of various options with exercise
prices ranging from $0.33 to $10.87.

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

In October 2000, the Emerging Issues Task Force (EITF) issued No. 00-14,
"Accounting for Certain Sales Incentives." This Issue addresses the recognition,
measurement, and income statement classification for sales incentives offered
voluntarily by a vendor without charge to customers that can be used in, or that
are exercisable by a customer as a result of, a single exchange transaction. The
EITF also issued No. 99-19, "Reporting Gross as a Principal versus Net as an
Agent." The issue addresses whether a company should report revenue based on (a)
the gross amount billed to a customer because it has earned revenue from the
sale of the goods or services or (b) the net amount retained (that is, the
amount billed to the customer less the amount paid to a supplier) because it has
earned a commission or fee. Both were effective in connection with the
implementation of Staff Accounting Bulletin 101. The application of this
bulletin has not had a material impact on Student Advantage's financial
position or results of operations.

In October 2000, the EITF issued 00-16, "Recognition and Measurement of
Employer Payroll Taxes on Employee Stock-Based Compensation". The issue
addresses when a liability for employee payroll taxes on employee stock
compensation should be recognized, which is on the date of the event triggering
the measurement and payment of the tax to the taxing authority (for a
nonqualified option in the United States, generally the exercise date). The
application of this issue has not had a material impact on Student Advantage's
financial position or results of operations.

In February 2001, the EITF issued 00-19, "Determination of Whether Share
Settlement is within the Control of the Issuer for Purposes of Applying Issue
No. 96-13". The issue addresses the accounting for contracts that are indexed
to, and potentially settled in, a company's own stock. The issue was effective
for all new contracts and contract modifications entered into after September
20, 2000. For contracts that exist on September 20, 2000, the issue should be
applied on June 30, 2001, to those contracts that remain outstanding at that
date. The application of this issue is being evaluated but is not expected to
have a material impact on Student Advantage's financial position or results of
operations.

In July 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141, which requires
all business combinations to be accounted for using the purchase method, is
effective for all business combinations initiated after June 30, 2001. SFAS 142
applies to goodwill and intangible assets acquired after June 30, 2001, as well
as to goodwill and intangible assets previously acquired. Under this statement,
goodwill and other certain intangible assets deemed to have an infinite life
will no longer be amortized. Instead, these assets will be reviewed for
impairment on a periodic basis, which may result in a non-cash charge to
earnings. This statement is effective for the Company on July 1, 2001 with
respect to any acquisitions completed after June 30, 2001, and on January 1,
2002 for all other goodwill and intangible assets. Management is currently
evaluating the impact that this statement will have on the Company's financial
statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". This statement supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" and APB No. 30, "Reporting the Results of Operations--Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions". This statement provides
guidance on recognizing and measuring impairment for long lived assets excluding
certain long-lived assets, such as goodwill, non-amortized intangible assets and
deferred tax assets. This statement is effective for the Company in the first
quarter of its fiscal year ending December 2002. Management is currently
evaluating the impact that this statement will have on the Company's financial
statements.

NOTE 4 - RELATED PARTY TRANSACTIONS

Effective May 15, 2000, Student Advantage entered into an Affiliate and
E-Commerce Agreement with Princeton Review Publishing, LLC, and The Princeton
Review Management, LLC ("TPR"). Princeton Review Publishing, LLC is a
stockholder of Student Advantage and one of its officers and equity holders is a
member of the Company's Board of Directors. Under the agreement, TPR agreed to
pay the Company a fee to participate in the Student Advantage network by placing
the Student Advantage logo and content

on The Princeton Review's review.com web site. In addition, under the agreement,
TPR agreed to provide discounts as part of the Student Advantage Membership
Program and market the discount to high school, college and university students.
Additionally, under the agreement the Company agreed to pay TPR a fee in
exchange for exclusive advertising sales responsibilities for the review.com web
site. Effective April 1, 2001, Student Advantage amended and restructured its
agreement with TPR. The amendment called for the termination of the original
Affiliate and E-Commerce Agreement effective March 31, 2001. In conjunction with
the amendment, the parties also entered into a Co-Marketing and Membership
agreement expiring on December 31, 2001. Under this agreement TPR agreed to pay
the Company a fee to be the premier test partner on the Company's
collegeclub.com web site. The Company agreed to pay TPR a fee to promote Student
Advantage and the Student Advantage Membership Program on its review.com web
site. In addition, the parties agreed to integrate content onto each other's
respective web sites. The Company recorded revenue of $892,500 and expense of
$1,075,000 related to this agreement during the nine months ended September 30,
2001.

NOTE 5 - OTHER EVENTS

On October 1, 2001, Student Advantage acquired certain assets of
CarePackages.com LLC, a privately held company specializing in sales of gift
packages to students. In connection with the acquisition, we issued shares of
Student Advantage common stock and paid cash to the seller.

On October 2, 2001, Student Advantage announced a restructuring, which included
a reduction in staff of approximately 15% of its total employees. As of
September 30, 2001, we had approximately 480 full time employees. The costs
associated with this restructuring have yet to be fully quantified, and are
currently being evaluated for the appropriate accounting treatment.

On November 6, 2001, Student Advantage modified certain provisions of its loan
agreement with Reservoir Capital Partners, L.P., Reservoir Capital Associates,
L.P., and Reservoir Capital Master Fund (collectively, the "Lenders") for cash
and additional consideration. This amount will be recorded as a deferred
financing cost included in other assets on its balance sheet for the period
ended December 31, 2001, and will be recognized as interest expense over the
term of the debt. In accordance with EITF 00-19, "Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock", Student Advantage will mark the value of these warrants to market at
each reporting period.

On November 7, 2001, Student Advantage transferred substantially all of the
assets and liabilities relating to its Voice FX business to a newly formed,
wholly owned limited liability company, Voice FX, LLC. The managers and former
owners of the Voice FX business sold the business to Student Advantage in 1999,
and have formed an entity that entered into a call option agreement with Student
Advantage, under which the managers' entity has the right to purchase all of
Student Advantage's membership interests in Voice FX, LLC. As consideration for
the transaction, the managers' entity paid $550,000 in cash, provided promissory
notes totaling $4.15 million, and signed marketing services agreements totaling
$2.65 million.

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

Student Advantage has included in this filing certain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 concerning Student Advantage's business, operations and financial
condition. The words or phrases "can be", "expects", "may affect", "may depend",
"believes", "estimate", "project", and similar words and phrases are intended to
identify such forward-looking statements. Such forward-looking statements are
subject to various known and unknown risks and uncertainties and Student
Advantage cautions you that any forward-looking information provided by or on
behalf of Student Advantage is not a guarantee of future performance. Actual
results could differ materially from those anticipated in such forward-looking
statements due to a number of factors, some of which are beyond Student
Advantage's control, in addition to those discussed in Student Advantage's other
public filings, press releases and statements by Student Advantage's management,
including those set forth below under "Factors That May Affect Future Results".
All such forward-looking statements are current only as of the date on which
such statements were made. Student Advantage does not undertake any obligation
to publicly update any forward-looking statement to reflect events or
circumstances after the date on which any such statement is made or to reflect
the occurrence of unanticipated events.

OVERVIEW

Student Advantage is a media and commerce connection for college students
and the businesses and universities that serve them, primarily through our
leading membership program and network of web sites. We report our revenue in
two categories: Student Services revenue and Corporate and University Solutions
revenue.

Student services revenue is attributable to the parts of our business which
are focused primarily on providing goods and services to students. Student
services revenue includes commerce, subscription and advertising revenue.
Commerce revenue includes primarily transaction-based revenues earned for
selling products and services. To date, commerce revenue has included primarily
revenue that we receive from the sale of residence hall linens and related
accessories, care packages and diploma frames through direct mail marketing ,
fees from SA Cash transactions, and e-commerce revenue from our network of web
sites. Subscription revenue is derived from membership sales. Subscription
revenue is recognized ratably from the date of subscription to the end of the
annual membership period, which ends on August 31 of each year. Memberships are
distributed in several ways, including free distributions, direct sales and
sales to corporate partners. Of the memberships sold, historically almost all
have been sold to AT&T and distributed in conjunction with an AT&T calling card.
In June 2000, we restructured our agreements with AT&T, and as of June 30, 2001,
AT&T had no further obligation to purchase memberships. We also sell memberships
to certain of our corporate partners for resale to students at their retail
locations. In addition, we distribute memberships at no cost to certain
qualified students and sell memberships directly to students for an annual
membership fee per year plus a shipping and handling fee. Advertising revenue
consists primarily of fees for banner advertisements and sponsorships on our
network of web sites.

Corporate and university solutions revenue is attributable to the parts of
our business which are focused primarily on providing goods and services to
corporations and universities. It includes marketing services and commerce
revenue. Marketing services revenue is derived primarily from providing tailored
marketing services to businesses seeking to market their products and services
to college students. These services include organizing and executing marketing
tours that travel to college campuses, staffing tables in college locations on
behalf of businesses and providing media planning and placement. Commerce
revenue includes primarily transaction-based revenues earned in connection with
acquiring customers on behalf of our corporate clients.

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

We recorded deferred compensation of $4.2 million in the year ended
December 31, 1998 and $228,000 in the first quarter of 1999, representing the
difference between the exercise price of stock options granted and the fair
market value of the underlying common stock at the date of grant. The difference
is recorded as a reduction of stockholders' equity and is being amortized over
the vesting period of the applicable stock options, typically four years. Of the
total deferred compensation amount, $771,000 and $398,000 had been amortized
during 2000 and the first nine months of 2001, respectively. During 2000 and the
first nine months of 2001, we reduced the amount of deferred compensation by
approximately $1,165,000 as a result of cancellation of certain stock options
due to the termination of certain employees' employment with Student Advantage.
The amortization of deferred compensation is recorded as an operating expense.
We currently expect to amortize the following remaining amounts of deferred
compensation as of September 30, 2001 in the periods indicated:

October 1, 2001-- December 31, 2001 ................................. $ 84,754

January 1, 2002-- December 31, 2002 ................................. $103,289

January 1, 2003-- December 31, 2003 ................................. $ 1,011

RESULTS OF OPERATIONS

The financial statements for the interim period ended September 30, 2000 reflect
a change in the classification of revenue categories and the associated cost of
sales. The classifications have been changed from "Subscription" and "Other" to
"Student Services" and "Corporate and University Solutions." In addition, the
financial statements for these periods reflect a change in the presentation of
stock based compensation charges. The charges have been included in each of the
operating expense line items rather than as a separate line item. Prior year
amounts have been restated to be consistent with the current year presentation.
Certain historical amounts in these financial statements have been restated to
reflect the acquisition of Edu.com, which has been accounted for under the
purchase method of accounting.

Comparison of Quarter Ended September 30, 2001 with Quarter Ended September
30, 2000

Revenue. Total revenues increased to $22.9 million for the third quarter of
2001 from $12.6 million for the third quarter of 2000, due to an increase in
student services revenues of $13.0 million which was offset in part by a
decrease in corporate and university solutions revenue of $2.7 million.

Student Services Revenue. Student services revenue increased to $20.1
million in the third quarter of 2001 from $7.1 million in the third quarter of
2000. The increase in student services revenue was primarily due to the addition
of the OCM Direct, Inc. direct mail business in the second quarter of 2001. A
significant portion of the direct mail business revenue is recognized during the
third fiscal quarter due to the seasonality of the business, which relates to
the back-to-school retail season. Additionally, online advertising on our
network of web sites increased primarily as a result of increased advertising
from CollegeClub.com, which we acquired in the fourth quarter of 2000, and
online campaigns provided to General Motors Corp. Transaction-based commerce
revenues from our SA Cash program also contributed to the increase. These
increases were offset, in part, by significant decreases in fees from AT&T for
acquisitions of calling card customers and for membership fees as a result of
the restructuring of the AT&T agreements in June 2000.

Corporate and University Solutions Revenue. Corporate and university
solutions revenue decreased to $2.8 million in the third quarter of 2001 from
$5.6 million in the third quarter of 2000. Decreases in marketing services
revenues resulted from decreased marketing spending by several current and
potential customers. This decrease is attributed to overall slow-down in the
economy and more specifically, the advertising and marketing industry and the
events of September 11, 2001. Revenues related to our Voice FX business
decreased as a result of decreased volume in mailings by our customers, which
has a direct effect on the volume of transactions.

General Motors accounted for 12% of total revenue and 14% of student
services revenue in the third quarter of 2001. Capital One accounted for
approximately 7% and 14% of total revenue, 0% and 2% of student services
revenue, and 54% and 30% of corporate and university solutions revenue in the
third quarter of 2001 and the third quarter of 2000, respectively. We do not
expect to earn significant revenues from Capital One after December 31, 2001, as
the services provided to them are provided by our Voice FX business, which we
expect to be sold on or about December 31, 2001. AT&T accounted for
approximately 3% and 45% of total revenue in the third quarter of 2001 and the
third quarter of 2000, respectively. Additionally, AT&T accounted for
approximately 3% and 60% of student services revenue and 0% and 26% of corporate
and university solutions revenue in the third quarter of 2001 and the third
quarter of 2000, respectively.

Cost of Student Services Revenue. Cost of student services revenue consists
of the costs associated with commerce, including the direct mail business,
subscriptions, and advertising revenue. Commerce costs include costs of goods
sold to third parties and personnel-related costs. Cost of subscription revenue
consists of the costs associated with the fulfillment of membership
subscriptions and customer service. Advertising costs consist primarily of
production and mailing costs for the Student Advantage Membership and the SA
Cash programs, royalties paid to colleges and universities for the use of
organizational names and logos and for supplying sports activity content for our
network of web sites and fees paid to partners in exchange for the right to
place media inventory on such partners' web sites. Cost of student services
revenue increased to $7.2 million in the third quarter of 2001 from $2.1 million
in the third quarter of 2000. This increase was primarily due to the increase in
costs as a result of the acquisition of the direct mail business, and cost
related to the restructured AT&T agreement. The increases were partially offset
by the lower costs incurred for the production of SAM, of which no issues were
published in the third quarter of 2001.

Cost of Corporate and University Solutions Revenue. Cost of corporate and
university solutions revenue consists of the costs of marketing services and
commerce. Marketing services costs include the direct and indirect costs
associated with planning and implementing events and promotions, media placement
and other marketing services. Commerce costs include costs incurred primarily in
connection with acquiring customers on behalf of our corporate clients. Cost of
corporate and university solutions revenue decreased to $1.3 million in the
third quarter of 2001 from $3.2 million in the third quarter of 2000, consistent
with the decreases in revenues of both marketing services and the Voice FX
business.

Product Development. Product development expenses consist primarily of
personnel-related and consulting costs associated with the development and
enhancement of our suite of products which includes the Student Advantage
Membership Program, our network of web sites and the SA Cash Program. Product
development expenses decreased to $3.8 million in the third quarter of 2001 from
$4.6 million in the third quarter of 2000. The decrease is primarily due to
costs incurred related to development projects for our web sites and SA Cash
software, which were capitalized in accordance with Generally Accepted
Accounting Principles. Expenses related to the enhancement and maintenance of
our existing web sites and product offerings.

Sales and Marketing. Sales and marketing expenses consist primarily of
personnel and other costs related to our sales and marketing programs. Sales and
marketing expenses increased to $9.5 million in the third quarter of 2001 from
$4.3 million in the third

quarter of 2000. The increase in sales and marketing was due to the acquisitions
of substantially all of the assets of CollegClub.com in the fourth quarter of
2000 and certain assets of Edu.com and OCM Direct. Also contributing to the
increase was a $2.2 million non-cash expense for television advertising relating
to CollegeClub.com. Partially offsetting the increase was the reduction in
amortization expense related to the Lycos warrant to $0 in the third quarter of
2001 compared to $444,000 in the third quarter of 2000.

General and Administrative. General and administrative expenses consist
primarily of costs related to general corporate functions, including executive
management, finance, human resources, facilities, accounting and legal. General
and administrative expenses increased to $2.9 million in the third quarter of
2001 from $2.4 million in the third quarter of 2000. The increase in general and
administrative expenses is primarily due to higher facilities, legal, accounting
and personnel related costs related to the acquisitions of substantially all of
the assets of CollegeClub.com in the fourth quarter of 2000, and certain assets
of Edu.com and OCM Direct in the second quarter of 2001.

Depreciation and Amortization. Depreciation expense increased to $1.9
million in the third quarter of 2001 from $643,000 in the third quarter of 2000
primarily as a result of $8.8 million in fixed assets acquired as a result of
our acquisition of CollegeClub in the fourth quarter of 2000, and, to a lesser
extent, fixed asset purchases during the latter half of 2000 and the first nine
months of 2001. Amortization expense increased to $2.1 million in the third
quarter of 2001 from $861,000 in the third quarter of 2000, primarily as a
result of the acquisitions of ScholarAid, College411, substantially all of the
assets of eStudentLoan.com, and CollegeClub.com in 2000, and certain assets of
Edu.com and OCM Direct in the second quarter of 2001.

Interest and Other Income/(Expense). Interest and other income/(expense)
includes interest income from cash balances, interest expense related to Student
Advantage's debt and financing obligations, and gain on sale of certain assets.
Interest and other income/(expense) aggregated an expense of $569,000 in the
third quarter of 2001 compared to $570,000 in the third quarter of 2000. The
amounts consist of the interest expense on the debt incurred for the purchase of
OCM Direct, as well as interest expense resulting from the assumption of certain
capital leases of ScholarAid and CollegeClub.com in 2000 and the equity loss
recorded on the Edu.com investment. Additionally, interest income earned on
lower average cash and cash equivalents balances during the third quarter of
2001 compared to that of the third quarter of 2000.

Comparison of Nine Months Ended September 30, 2001 with Nine Months Ended
September 30, 2000

Revenue. Total revenues increased to $49.7 million for the first nine
months of 2001 from $35.3 million for the first nine months of 2000 due to an
increase in student services revenue of $18.1 million which was offset in part
by a decrease in corporate and university solutions revenue of $3.8 million. The
increase in student services revenue was primarily due to the addition of the
OCM Direct, direct mail business. The decrease in corporate and university
solutions revenue is primarily due to a decrease in marketing services revenue
resulted from decreased marketing spending by several current and potential
customers.

Student Services Revenue. Student services revenue increased to $39.5
million in the first nine months of 2001 from $21.4 million in the first nine
months of 2000. The increase in student services revenue was primarily due to
the addition of the OCM Direct, direct mail business, which was acquired in the
second quarter of 2001. A significant portion of the direct mail business
revenue is recognized during the third fiscal quarter due to the seasonality of
the business, which relates to the back-to-school retail season. Additionally,
online advertising on our network of web sites increased primarily as a result
of increased advertising from CollegeClub.com, which we acquired in the fourth
quarter of 2000, and online campaigns provided to General Motors Corp.
Transaction-based commerce revenues from our SA Cash program also contributed to
the increase. These increases were offset, in part, by significant decreases in
fees from AT&T for acquisitions of calling card customers and for membership
fees as a result of the restructuring of the AT&T agreements in June 2000.

Corporate and University Solutions Revenue. Corporate and university
solutions revenue decreased to $10.1 million in the first nine months of 2001
from $13.9 million in the first nine months of 2000. Decreases in marketing
services revenues resulted from decreased marketing spending by several current
and potential customers. This decrease is attributed to overall slow-down in the
economy and the events of September 11, 2001 (most notably in the third quarter
of 2001) and more specifically, the declines in spending by the advertising and
marketing industries. Revenues related to our Voice FX business decreased as a
result of decreased volume in mailings by our customers, which has a direct
effect on the volume of transactions.

General Motors Corp. accounted for 18% of total revenue and 44% of student
services revenue for the first nine months of 2001. One other customer, Capital
One, accounted for approximately 13% of total revenue and 63% of corporate and
university solutions revenue for the first nine months of 2001. We do not expect
to earn significant revenues from Capital One after December 31, 2001 as the
services provided to Capital One are provided by our Voice FX business, which we
expect to be sold on or about December 31, 2001. AT&T accounted for
approximately 8% and 39% of total revenue in the first nine months of 2001 and
the first nine months of 2000, respectively. Additionally, AT&T accounted for
approximately 17% and 54% of student services revenue and 6% and 14% of
corporate and university solutions revenue in the third quarter of 2001 and the
third quarter of 2000, respectively.

Cost of Student Services Revenue. Cost of student services revenue
increased to $11.8 million in the first nine months of 2001 from $7.7 million in
the first nine months of 2000. This increase was primarily due to the increase
in costs as a result of the acquisition of the direct mail business, and cost
related to the restructured AT&T agreement. The increases were partially offset
by the lower costs incurred for the production of SAM, of which no issues were
published in the third quarter of 2001.

Cost of Corporate and University Solutions Revenue. Cost of corporate and
university solutions revenue decreased to $5.3 million in the first nine months
of 2001 from $7.6 million in the first nine months of 2000. This decrease is
primarily due to the decrease in costs consistent with the decrease in both
marketing services and revenues from the Voice FX business.

Product Development. Product development expenses increased to $14.4
million in the first nine months of 2001 from $12.5 million in the first nine
months of 2000. The increase is primarily due to costs incurred in connection
with the enhancement of our network of web sites, the development of our
customer database, ongoing development of new product offerings such as SA Cash
and our purchases of substantially all of the assets of eStudentLoan.com and
CollegeClub.com during the second half of 2000 and certain assets of Edu.com in
the second quarter of 2001.

Sales and Marketing. Sales and marketing expenses increased to $22.1
million in the first nine months of 2001 from $13.6 million in the first nine
months of 2000. The increase in sales and marketing expenses was due to
increased expenditures related to the expansion of our sales force, expanding
and servicing our corporate and university base of partners, building brand
awareness, and supporting the marketing services business, as a result of our
acquisitions of eStudentLoan and CollegeClub during 2000 and certain assets of
Edu.com and OCM Direct in the second quarter of 2001.

General and Administrative. General and administrative expenses increased
to $8.6 million in the first nine months of 2001 from $7.4 million in the first
nine months of 2000. Increases in general and administrative expenses are
primarily due to higher facilities, legal, accounting and personnel related
costs, as a result of the purchase of substantially all of the assets of
eStudentLoan and CollegeClub during 2000, certain assets of Edu.com and OCM
Direct in the second quarter of 2001.

Depreciation and Amortization. Depreciation expense increased to $4.8
million in the first nine months of 2001 from $1.7 million in the first nine
months of 2000 primarily as a result of fixed asset purchases during the latter
part of 2000 and the first nine months of 2001. Amortization expense increased
to $5.5 million in the first nine months of 2001 from $2.3 million in the first
nine months of 2000, primarily as a result of the acquisitions of ScholarAid,
College411, substantially all of the assets of eStudentLoan, and CollegeClub in
2000, and certain assets of Edu.com and OCM Direct in the second quarter of
2001.

Interest and Other Income/(Expense). Interest and other income/(expense)
aggregated an expense of $912,000 first nine months of 2001 compared to $1.6
million for the first nine months of 2000. The decrease of $678,000 is a result
of the reduction in the loss from the equity interest in Edu.com offset by an
increase in the interest expense on the debt incurred for the purchase of OCM
Direct, as well as interest expense resulting from the assumption of certain
capital leases of ScholarAid and CollegeClub.com in 2000. Additionally, interest
income earned on lower average cash and cash equivalents balances during the
third quarter of 2001 compared to that of the third quarter of 2000. Borrowings
under a revolving loan were $4.2 million at September 30, 2001 and $0 under a
line of credit at September 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

Student Advantage has financed its operations primarily through the private
and public placement of securities, cash from operations, borrowings under its
credit facilities and loans from equity and debt holders. In October 1998,
Student Advantage completed a private placement of equity securities to new
investors and received $9.9 million in net proceeds. In June 1999, Student
Advantage completed its initial public offering selling 6.0 million shares and
raising $44.6 million, net of offering costs. On July 21, 1999, an additional
900,000 shares were issued by Student Advantage as a result of the full exercise
of the underwriters' over-allotment option, resulting in additional net proceeds
of $6.7 million. In October 2000, Student Advantage completed a private
placement of equity securities to investors and received $10.0 million in gross
proceeds. Also in October 2000, we completed our acquisition of substantially
all of the assets of CollegeClub and certain of its subsidiaries and paid $8.3
million in cash, assumed certain liabilities and issued approximately 1.3
million shares of our common stock in connection with the acquisition.

On May 1, 2001 Student Advantage completed a private placement of equity
securities to new and existing investors and received $10 million in gross
proceeds.

On June 25, 2001, Student Advantage entered into a Loan Agreement by and
among Student Advantage, the subsidiaries of Student Advantage, and Reservoir
Capital Partners, L.P., Reservoir Capital Associates, L.P. and Reservoir Capital
Master Fund, L.P. (collectively the, "Lenders") providing for the establishment
of credit facility in the aggregate principal amount of up to $15 million,

consisting of a $10 million term loan and a $5 million revolving loan. On June
25, 2001, Student Advantage borrowed $10 million in the form of a term loan and
$5 million in the form of a revolving loan, and used a portion of these proceeds
to pay the cash portion of the purchase price for the acquisition of OCM Direct.
The remainder of the proceeds from the credit facility, which aggregated
approximately $549,000 were used for working capital and general corporate
purposes of the Company. The credit facility matures in June 2004, provided that
the Lenders may call the credit facility by giving notice to Student Advantage
prior to an anniversary date of the closing date, in which case the obligations
there under must be paid by the 120th day after such anniversary date (provided
that if the amounts are paid after the 90th day, additional fees are chargeable
by the Lenders). In addition, the credit facility requires mandatory prepayments
in connection with certain asset sales and equity issuances by Student Advantage
or its subsidiaries. The credit facility is secured by a lien against
substantially all of the assets of Student Advantage, and is guaranteed by all
Student Advantage subsidiaries (including OCM Direct), which guarantees are also
secured.

As of September 30, 2001, Student Advantage had $6.3 million in cash and
cash equivalents. During the month of September 2001, management changed the
company payroll cycle to semi-monthly from a bi-weekly cycle. The cash and cash
equivalents balance at September 30, 2001 includes cash for the semi-monthly
cycle ended October 2, 2001. Management believes that this change does not
effect the overall cash position at September 30, 2001 due to the timing of the
six payroll cycles in the third quarter of 2001, including three payroll periods
during the month of August 2001.

Net cash used in operating activities was $10.6 million for the first nine
months of 2001 and $10.8 million for the first nine months of 2000. The net cash
used in the first nine months of 2001 was primarily a result of a net loss of
$23.7 million, offset by depreciation and amortization of $10.3 million.

Net cash used in investing activities was $12.8 million for the first nine
months of 2001 resulted from the acquisition of OCM Direct and certain assets of
Edu.com and the purchase of fixed assets. Net cash provided by investing
activities in the first nine months of 2000 was $14.5 million.

Net cash provided by financing activities in the first nine months of 2001
of $17 million was primarily related to the sale of 5 million shares of common
stock in a private placement, and the net proceeds from the debt financing
consisting of two loans from the Lenders (a term loan of $10 million and a
revolving loan of $5 million), which were used to replace an existing line of
credit used by OCM Direct prior to its acquisition. Approximately $800,000 has
been paid down on the revolving line of credit as of September 30, 2001. On
October 29, 2001, we borrowed the $800,000 then available on the revolving loan.

Student Advantage has experienced substantial increases in its expenditures
consistent with growth in operations and staffing, and anticipates that this
will continue for the foreseeable future. Additionally, Student Advantage will
continue to evaluate possible investments in businesses, products and
technologies, direct mail business, sales and marketing programs and
aggressively promote its brands. While Student Advantage expects to continue to
incur negative cash flows after the third quarter of fiscal 2001, the Company
currently anticipates that its available cash resources, together with cash
expected to be provided from operations, will be sufficient to meet its
anticipated needs for working capital and capital expenditures for at least the
next 12 months, provided assuming that the Lenders of the term loan and
revolving loan do not demand repayment of a material portion of the borrowed
credit facility, or we otherwise default. If our revenue and expense projections
do not prove accurate, the Company may be required to obtain additional
financing to and reduce its costs further. If additional financing is not
obtained then management will take appropriate action to manage cash resources
that would include the implementation of further cost reductions. Management
estimates that these cost reductions would provide the necessary funds for
operations at such reduced levels. In addition, any significant acquisitions by
us may require additional equity or debt financing to fund the purchase price,
if paid in cash, as well as approval by certain debt and equity holders. There
can be no assurance that additional funding will be available when required or
that it will be available on terms acceptable to us.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued SFAS No. 141, "Business Combinations", and
SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141, which
requires all business combinations to be accounted for using the purchase
method, is effective for all business combinations initiated after June 30,
2001. SFAS 142 applies to goodwill and intangible assets acquired after June 30,
2001, as well as to goodwill and intangible assets previously acquired. Under
this statement, goodwill and other certain intangible assets deemed to have an
infinite life will no longer be amortized. Instead, these assets will be
reviewed for impairment on a periodic basis, which may result in a non-cash
charge to earnings. This statement is effective for the Company on July 1, 2001
with respect to any acquisitions completed after June 30, 2001, and on January
1, 2002 for all other goodwill and intangible assets. Management is currently
evaluating the impact that this statement will have on the Company's financial
statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This statement supersedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" and APB No. 30, "Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions". This
statement provides guidance on recognizing and measuring impairment for long
lived assets excluding certain long-lived assets, such as goodwill,
non-amortized intangible assets and deferred tax assets. This statement is
effective for the Company in the first quarter of its fiscal year ending
December 2002. Management is currently evaluating the impact that this statement
will have on the Company's financial statements.

FACTORS THAT MAY AFFECT FUTURE RESULTS

WE HAVE EXPERIENCED LOSSES IN THE PAST AND EXPECT FUTURE LOSSES

We have not achieved sustained profitability and have incurred significant
operating losses. We incurred net losses of $24.9 million in 2000 and $23.7
million in the first three fiscal quarters of 2001. As of September 30, 2001,
our accumulated deficit was $96.8 million. We expect to continue to incur
significant operating and capital expenditures and, as a result, we will need to
generate significant revenue and positive cash-flow to achieve and maintain
profitability. We have recently cut our operating expenses to reduce our
negative cash flow and enhance our ability to attain and sustain profitability.
There are no assurances that we will be able to cut expenses further without
affecting our ability to generate revenues, consummate transactions or achieve
and sustain profitability.

We cannot assure you that we will achieve sufficient revenue for profitability.
Even if we do achieve profitability, we cannot assure you that we can sustain or
increase profitability on a quarterly or annual basis in the future. If revenue
grows more slowly than we

anticipate, or if operating expenses exceed our expectations or cannot be
adjusted accordingly, our business, results of operations and financial
condition will be materially and adversely affected.

GENERAL MARKET CONDITIONS COULD ADVERSELY AFFECT OUR BUSINESS

Our customers may cancel or delay spending on marketing and other initiatives
because of the current economic climate. Recently, many companies have
experienced financial difficulties or uncertainty, and have begun to delay
spending on marketing as a result. We believe that general economic conditions
have caused a slowdown in consumer and business spending and in companies'
budgets for marketing services. In addition, recent acts of terrorism have
reduced consumer spending on transportation and travel services and have
exacerbated political, financial, and economic uncertainties, with the result
that our revenues related to these businesses may suffer.

Furthermore, financial difficulties that many companies have experienced have
further reduced the perceived urgency by companies to begin or to continue
marketing initiatives. Decreases in marketing initiatives have resulted and may
continue to result in decreased demand for our services. If companies continue
to delay their marketing initiatives because of the current economic climate, or
for other reasons, our business, financial condition and results of operations
could be materially adversely affected.

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

We have a limited operating history on which an investor can evaluate our
business. Our operations began in 1992. An investor in our common stock must
consider the risks and difficulties frequently encountered by early stage
companies implementing an online and offline strategy. These risks include,
without limitation, our possible inability to:

- - sustain historical revenue growth rates,

- - generate sufficient revenue to achieve and maintain profitability,

- - generate or raise sufficient capital to operate and expand our business,

- - implement our business model,

- - maintain the satisfaction of our members and users, and our university and
corporate partners,

- - introduce new and enhanced web and offline products, content, and services
and avail ourself of current opportunities , and

- - respond to competitive developments and market conditions.

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

OUR ABILITY TO GENERATE SIGNIFICANT REVENUES AND PROFITS FROM CERTAIN
ESTABLISHED AND NEW PRODUCTS AND SERVICES IS UNCERTAIN

Our business model depends, in part, on increasing the amount of revenues and
profits derived from certain established and new products and services. Our
ability to generate significant revenues and profits from these products and
services will depend, in part, on the implementation of our strategy to generate
significant transaction commerce and user traffic through the use of our
membership card programs, to achieve a significant presence in university and
college communities, and to develop and expand on sponsor relationships to
include revenue sharing agreements based on transaction volume. There is intense
competition among offerors of alternative payment methods, including
stored-value cards, debit card and credit cards, and among web sites that sell
online advertising.

During the second quarter of 2001, AT&T completed its obligation to purchase
Student Advantage memberships in bulk. In prior periods, the majority of student
memberships have been obtained through AT&T or other corporate partners'
promotional offers of Student Advantage memberships. These promotional offers
have typically included a free one-year membership in the Student Advantage
Membership Program. Our corporate partners have purchased Student Advantage
memberships in bulk to fulfill these promotional offers. We have focused our
efforts to change the marketing model for the sale of memberships from a
primarily bulk sale model to a more balanced model which includes the sale of
memberships to both corporate partners in bulk and direct sales to individuals.
We expect to sell memberships under this

new model through our corporate partners, the Student Advantage network of web
sites, our direct mail marketing business and other related marketing channels.
We have experienced and anticipate continuing to experience a decline in the
overall number of memberships sold through bulk sale arrangements, although we
expect that this decline will be partially offset by an increase in the number
of individual memberships sold. The inability to successfully develop this
marketing model or the related sales channels could have a materially adverse
effect on the business and our ability to attract and retain corporate
partners. It is difficult for us to project future levels of subscription,
transaction-related, and advertising revenues and profits.

OUR PERFORMANCE COULD BE EFFECTED BY THE FINANCIAL CONDITION OF SUPPLIERS AND
CLIENTS IN THE INTERNET AND E-COMMERCE INDUSTRIES

Several companies that provide content to our web sites have discontinued
operations or filed for bankruptcy protection. We may be forced to procure
alternate services from other suppliers, and cannot assure you that we will be
able to do so in a timely and cost-effective manner, and may be required to
alter certain of our offerings to reflect such events. In addition, our members
and customers may perceive our web sites to be missing certain content or
attributes due to the failure of certain business partners. Additionally, many
of our revenue sources have slowed their payment cycles, and because a
substantial portion of our revenue is generated from a limited number of
customers, the non-payment or late payment of amounts due from customers could
have a material adverse effect on our business, financial condition and results
of operations.

WE MAY NEED ADDITIONAL CAPITAL, AND THE FUTURE FUNDING OF THESE CAPITAL NEEDS IS
UNCERTAIN

We require substantial working capital to fund our business. Due in part to the
spending patterns of students and universities and our needs to acquire
inventory for our OCM Direct products, we experience seasonal variations in our
receipts and expenditures of cash. We have experienced and expect to continue to
experience periodic cash demands that exceed our cash flow.

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

- - dilution in percentage of ownership in Student Advantage, and

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

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

- - maintain, develop or enhance our offerings,

- - take advantage of future opportunities, or

- - respond to competitive pressures.

If we are unable to raise additional funds on favorable terms, we may be
required to cut our expenditures further, which may affect our ability to
penetrate new markets, enhance our presence in existing markets, and generate
sustained revenues. In addition, significant acquisitions by us will require
additional equity or debt financing to fund the purchase price, to the extent
payable in cash. There can be no assurance that additional funding will be
available when required or that it will be available on terms acceptable to us.

WE HAVE TAKEN ON A MATERIAL AMOUNT OF INDEBTEDNESS

We incurred material indebtedness in connection with the acquisition of OCM
Direct under the terms of the loan agreement we entered into with Reservoir
Capital Partners, Reservoir Capital Associates, and Reservoir Capital Master
Fund. As of November 7, 2001, we had $15.2 million of outstanding principal
indebtedness under the loan agreement. The loan agreement imposes significant
restrictions on our ability to raise additional equity, make investments and
acquisitions, obtain other financing, and realize proceeds from sales of
business units. We are required to make periodic interest payments over the
borrowing period, at the end of which, the total outstanding principal
balance will become due and payable. In addition to the repayment terms, we are
required to meet certain financial and non-financial covenants. In addition, the
Lenders have the right to require early repayment of all or a portion of the
credit facility on each anniversary date.

Our debt may have important consequences to us, including but not limited to the
following:

- - our ability to obtain additional financing for future acquisitions (if
any), working capital, capital expenditures or other purposes may be
impaired or any such financing may not be on terms favorable to us;

- - a substantial decrease in net operating cash flows or increase in expenses
could make it difficult for us to meet our debt service requirements or
force us to modify our operations or sell assets; and

- - our debt structure may place us at a competitive disadvantage and affect
our ability to adjust rapidly to market conditions or may make us
vulnerable to a downturn in our business or the economy generally or
changing market conditions and regulations.

Our ability to repay or to refinance our obligations with respect to our
indebtedness will depend on our future financial and operating performance,
which, in turn, may be subject to prevailing economic and competitive conditions
and to certain financial, economic, and other factors, many of which are beyond
our control. Our ability to meet our debt service and other obligations may
depend in significant part on the extent to which we can implement successfully
our business and growth strategy. There can be no assurance that we will be able
to successfully implement our strategy or that the anticipated results of our
strategy will be realized.

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

A limited number of customers currently account for a significant percentage of
our total revenues. In the first nine months of 2001, three customers, in the
aggregate, accounted for approximately 39% of our total revenue. In 2000, two
customers, in the aggregate, accounted for approximately 50% of total revenues.
While we anticipate that revenues from this limited number of customers will
decline as a percentage of total revenues, we expect a limited number of
customers to continue to account for a significant percentage of total revenues
in the future, and we believe that we must continue to acquire additional
customers to be successful. The loss of any one of these customers, or a
material decrease in the services provided to these customers, could have a
materially adverse effect on our business.

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

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

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

Colleges and universities are becoming increasingly wary of businesses that
market products and services to their students. Recent proposed and enacted laws
(including recent California legislation) may restrict how companies can market
products and services to students. Many colleges and universities are seeking to
decrease or eliminate such marketing. In particular, colleges and universities
are concerned that many students have incurred substantial levels of credit card
debt. As a result, colleges and universities often attempt to prevent credit
card companies and other companies that offer credit from marketing to their
students. In the past, we have been mistaken for a credit card company because
we give students a plastic card and a unique identification number to represent
their membership, and because we participate in the issuance by universities of
a stored-value card used in conjunction with student ID cards (SA Cash). This
sometimes makes it difficult for us to gain access to college and university
students, and we have been denied access to certain college and university
campuses. To date, we have not maintained sufficient data to determine the
specific number of colleges and universities that have denied us access to their
campuses. Any inability to directly contact students on campus or through direct
mail could have a material adverse effect on our business.

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

We tend to sell most of our memberships in the beginning of each academic term.
All of these memberships expire on August 31 of each year. Because the aggregate
number of memberships within a school year increases as new members are added,
we

recognize revenue from memberships ratably over the period from the time of
subscription until the end of our membership year and, therefore, our
subscription revenue will typically be higher in the first and second quarters
than in the fourth quarter of each fiscal year. It is difficult to determine how
the third quarter will typically compare, since it includes two calendar months
from the end of a membership year and the first month of the subsequent
membership year. In addition, a significant portion of the direct mail business
revenues occurs during the third quarter. The revenue on these sales is
generally recognized when the products are shipped to our customers. Our limited
operating history and rapid growth make it difficult for us to more fully assess
the impact of seasonal factors on our business.

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

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

You should not rely on quarter-to-quarter comparisons of our operating results
or our operating results for any particular quarter as indicative of our future
performance. It is possible that in some future periods our operating results
may be below the expectations of public market analysts and investors. In this
event, the price of our common stock might fall. A significant portion of our
revenue is derived from our membership and direct mail business. A significant
percentage of our members graduate each year and, therefore, do not renew their
memberships. Furthermore, substantially all of our memberships expire annually
and require our members to re-new the membership subscription. Our revenue
growth is highly dependent upon our ability to market the value of our
membership to college students and to retain members on a yearly basis. To date,
we have not maintained sufficient data to determine the specific number of
members who renew on a yearly basis. A failure to acquire new members or renew
current members could have a material adverse effect on our business. Through
our direct mail business, a disproportionate share of our revenue is recorded in
the second and third quarter of each calendar year as a result of the timing of
our mailings and customer demand.

WE MAY NOT SUCCESSFULLY IMPLEMENT OUR INTERNET STRATEGY

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

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

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

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

In addition, with respect to CollegeClub.com, we rely mostly on our users to
generate content that is attractive and pertinent to develop and maintain the
web site. A decline in engaging member-generated content could make
collegeclub.com and our other web sites less attractive.

Moreover, the current market conditions have decreased the demand for online
advertising, have put downward pressure on the cost per thousand impressions
("CPM") which we can charge for such advertising and have increased the
likelihood that, despite our best efforts and written agreements supporting such
efforts, certain of our customers may be unable to pay for the advertising
services we have provided to them. Finally, we cannot guarantee that Internet
users will maintain interest in our network of web sites. A decline in
membership or usage of our network of web sites would decrease revenue. Our
failure to successfully implement our Internet strategy could have a material
adverse effect on our business.

WE FACE SIGNIFICANT COMPETITION, WHICH COULD ADVERSELY AFFECT OUR BUSINESS

The market for online users and advertisers on the Internet is rapidly evolving.
Competition for members, visitors, sponsors and merchants is intense and is
expected to increase over time. Barriers to entry are relatively low. We compete
for visitors, traffic, sponsors and online merchants with web directories,
search engines, content sites, online service providers and traditional media
companies. We also face competition from other companies maintaining web sites
dedicated to college students as well as high-traffic web sites sponsored by
companies such as Alloy, AOL Time Warner, CBS, Disney, Terra Lycos,
Microsoft, MTV and Yahoo!

We also compete with other companies targeting the student population, such as:

- - publishers and distributors of traditional offline media, particularly those
targeting college students, such as campus newspapers, other print media,
television and radio;

- - providers of payment platforms such as stored-value cards and credit cards,
including Visa and MasterCard; and

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

Increased competition from these and other sources could require us to respond
to competitive pressures by establishing pricing, marketing and other programs
or seeking out additional strategic alliances or acquisitions that may be less
favorable to us than we could otherwise establish or obtain.

Many of our competitors have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than we do. In addition, substantially all of
our current advertising customers have established collaborative relationships
with other high-traffic web sites. Our advertising customers might conclude that
other Internet businesses, such as search engines, commercial online services
and sites that offer professional editorial content are more effective sites for
advertising than we are. Moreover, we may be unable to maintain either the level
of traffic on our web sites or a stable membership base, which would make our
sites less attractive than those of our competitors.

We believe that our ability to compete depends upon many factors, including the
following:

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

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

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

- - the effectiveness of our customer service efforts,

- - user affinity and loyalty,

- - demographic focus,

- - critical mass of users,

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

- - the emergence of new competitors.

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

- - the amount of traffic on a web site,

- - brand recognition,

- - the demographics of a site's users,

- - the ability to offer targeted audiences,

- - the average duration of user visits, and

- - cost-effectiveness.

OUR MEMBERSHIP PROGRAM EXPERIENCES SIGNIFICANT COMPETITION FROM OTHER MARKETING
ACTIVITIES

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

WE MAY UNDERTAKE ADDITIONAL ACQUISITIONS OR DIVESTITURES THAT MAY LIMIT OUR
ABILITY TO MANAGE AND MAINTAIN OUR BUSINESS, MAY RESULT IN ADVERSE ACCOUNTING
TREATMENT AND MAY BE DIFFICULT TO INTEGRATE INTO OUR BUSINESS.

From January 1, 1999 to date, we acquired fifteen businesses and have sold, or
agreed to sell two others. We may undertake additional acquisitions in the
future, and may consummate sales of certain businesses or operations. These
transactions involve a number of risks, including:

- - diversion of management attention and transaction costs associated in
negotiating and closing the transactions;

- - challenges in determining the fair value of goodwill which could adversely
affect our results from operations;

- - inability to retain the management, key personnel and other employees of
the acquired business;

- - inability to establish uniform standards, controls, procedures and
policies;

- - inability to realize the benefits of divestitures and collect monies
owed us;

- - inability to retain the acquired company's customers; and

- - exposure to legal claims for activities and obligations of the acquired
business prior to acquisition, of the transferred business or risks that we
cannot fully utilize all intellectual property.

Integrating the operations of an acquired business can be a complex process that
requires integration of service personnel, sales and marketing groups,
technological infrastructure and service offerings, and coordination of our
development efforts. Customer satisfaction or performance problems with an
acquired business could affect our reputation as a whole. In addition, any
acquired business could significantly under-perform relative to our
expectations.

WE MAY BE UNABLE TO SUCCESSFULLY MANAGE CHANGES IN OUR BUSINESS

We have experienced a period of significant growth. This growth has placed
significant demands on our management and strains on our resources. Revenue has
increased from approximately $1.8 million in 1996 to $48.0 million in 2000 and
to $49.7 million in the first nine months of 2001, as compared to $35.3 million
in the first nine months of 2000. Since 1996, we increased from fewer than 50 to
approximately 480 employees.

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

OUR MANAGEMENT TEAM HAS LIMITED EXPERIENCE IN RUNNING A PUBLIC COMPANY

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

WE MUST ATTRACT AND RETAIN KEY MANAGEMENT AND OTHER HIGHLY QUALIFIED PERSONNEL
IN A COMPETITIVE LABOR MARKET

Our success depends largely upon the continued service of our executive
officers, including Raymond V. Sozzi, Jr., our president and chief executive
officer, and other key management and technical personnel, and our ability to
continue to attract, retain and motivate other qualified personnel. Competition
for such personnel is intense. We have experienced, and we expect to continue to
experience in the future, difficulty in hiring highly skilled employees with the
appropriate qualifications. Furthermore our business is labor intensive. If our
ability to assemble a qualified work force were impaired, or if we do not
succeed in attracting new personnel and retaining and motivating our current
personnel, our business could be adversely affected.

OUR SYSTEMS MAY FAIL OR EXPERIENCE A SLOWDOWN

Substantially all of our communications hardware and certain of our other
computer hardware operations are located at third-party locations such as Exodus
Communications, Inc. in Waltham, Massachusetts and Navisite in San Jose,
California. Fire, floods, earthquakes, power loss (whether through brown-outs or
the like) or distribution issues, telecommunications failures, break-ins, acts
of terrorism, and similar events could damage these systems. Computer viruses,
electronic break-ins or other similar disruptive problems could also adversely
affect our Web site. Our business could be adversely affected if our systems
were affected by any of these occurrences. At least one of our system providers
has filed for bankruptcy protection which could limit our ability to exercise
certain rights under our agreement with that party, and has caused us to divert
internal resources to address contingency plans. Our insurance policies may not
adequately compensate us for any losses that may occur due to any failures or
interruptions in our systems. We do not presently have any secondary "off-site"
systems or a formal disaster recovery plan. Our network of web sites must
accommodate a high volume of traffic and deliver frequently updated information.
Our web sites have in the past and may in the future experience slower response
times or decreased traffic for a variety of reasons. These types of occurrences
could cause users to perceive our web sites as not functioning properly and
therefore cause them to use another web site or other methods to obtain
information.

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

OUR ABILITY TO EXECUTE ON OUR SUPPLY CHAIN MANAGEMENT PLAN IN OUR DIRECT
MARKETING BUSINESS IS DEPENDENT UPON A LIMITED NUMBER OF SUPPLIERS THAT MAY BE
SUBJECT TO INTERNATIONAL SHIPPING OR TRADE LIMITATIONS

Our direct marketing business requires reasonably accurate execution of our
supply chain management plan. We are dependent on third parties to supply us
with products for resale to our customers. These third party suppliers may be
subject to international shipping or trade limitations, which may impact the
timing of the delivery and/or cost of these products. If we are unable to
successfully procure accurate quantities of goods from our suppliers on a timely
basis, we may not be able to fulfill the orders of our customers. Furthermore,
if customer demand does not materialize based on our projections, it may result
in excess inventory of certain products. Either of these circumstances may have
a materially adverse effect on our business.

OUR NETWORKS MAY BE VULNERABLE TO UNAUTHORIZED ACCESS, COMPUTER VIRUSES AND
OTHER DISRUPTIVE PROBLEMS

A party who is able to circumvent our security measures could misappropriate
proprietary information or cause interruptions in our operations. Internet and
online service providers have in the past experienced, and may in the future
experience, interruptions in service as a result of the accidental or
intentional actions of Internet users, current and former employees or others.
Moreover, any well-publicized compromise of security could deter people from
using the Internet or from using it to conduct transactions that involve
transmitting confidential information. We may be required to expend significant
capital or other resources to protect against the threat of security breaches or
to alleviate problems caused by such breaches. Although we intend to continue to
implement industry-standard security measures, there can be no assurance that
the measures we implement will not be circumvented in the future. Eliminating
computer viruses and alleviating other security problems may require
interruptions, delays or cessation of service to users accessing web pages that
deliver our content and services, any of which could harm our business, our
financial condition and the results of our operations.

WE MAY BE SUED FOR INFORMATION RETRIEVED FROM THE INTERNET

We may be subjected to claims for defamation, invasion of privacy, negligence,
copyright or trademark infringement, personal injury or other legal theories
relating to the information we publish on our network of web sites or in our
publications or the use of our academic search engine in the form of web
crawling or framing. These types of claims have been brought, sometimes
successfully, against online services as well as other print publications in the
past, particularly in connection with archive services. Our syndication of
content, including U-Wire content, to such archive services could expose us to
indemnification claims in the event copyright holders assert their rights, and a
request for indemnification for legal fees incurred is pending. We could also be
subjected to claims based upon the content that is accessible from our network
of web sites through links to other web sites or through content and materials
that may be posted by members in chat rooms or bulletin boards including those
located on the collegeclub.com web site. Our insurance may not adequately
protect us against these types of claims.

WE MAY LOSE MEMBERS AND OUR REPUTATION MAY SUFFER BECAUSE OF UNSOLICITED
BULK-MAIL OR SPAM

Unsolicited bulk e-mail, or spam (including the dissemination of pornographic
links), and our attempts and others' attempts to control such spam could harm
our business and our reputation, particularly with respect to CollegeClub.com.
To the extent our spam-blocking efforts are not effective, our systems may
become unavailable or may suffer from reduced performance. Spam-blocking efforts
by others may also result in others blocking our members' legitimate messages.
Additionally, our reputation may be harmed if e-mail addresses with our domain
names are used in this manner. Any of these events may cause members to become
dissatisfied and discontinue their use of our network of web sites, including
CollegeClub.com.

OUR STATUS UNDER STATE AND FEDERAL FINANCIAL SERVICES REGULATIONS IS UNCLEAR.
VIOLATION OF ANY PRESENT OR FUTURE REGULATION COULD EXPOSE US TO LIABILITY,
FORCE US TO CHANGE OUR BUSINESS PRACTICE OR FORCE US TO CEASE OR ALTER OUR
OFFERINGS.

Our SA Cash offerings involve an industry potentially subject to government
regulation. In the future, we might be subjected to federal or state banking
laws or regulations. If we are deemed to be in violation of any current or
future regulations, we could be exposed to financial liability or forced to
change our business practices or offerings. As a result, we could face
significant legal fees, delays in extending our product offerings, a curtailing
of current or contemplated offerings, and damage to our reputation that could
adversely affect our financial results.

We believe the licensing requirements of the Office of the Comptroller of the
Currency, the Federal Reserve Board or other federal or state agencies that
regulate or monitor banks or other types of providers of electronic commerce
services do not apply to our activities. One or more states may conclude that,
under its statutes, we are engaged in an unauthorized banking business. In that
event, we might be subject to monetary penalties and adverse publicity and might
be required to cease doing business with residents of those states. A number of
states have enacted legislation regulating check sellers, money transmitters or
service providers to banks. This uncertainty regarding the scope and
application of these regulations has slowed our ability to market our offerings.
Such liability or changes could have a material adverse effect on our business,
results of operations and financial condition. Even if we are not forced to
change our business practices, we could be required to obtain licenses or
regulatory approvals that could cause us to incur substantial costs.

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

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

Our network of web sites currently uses "cookies" to track demographic
information and user preferences. A cookie is information keyed to a specific
server, file pathway or directory location that is stored on a user's hard
drive, possibly without the user's knowledge,

but is generally removable by the user. Germany has imposed laws limiting the
use of cookies, and a number of internet commentators, advocates and
governmental bodies in the United States and other countries have urged the
passage of laws limiting or abolishing the use of cookies. If these laws are
passed, our business, financial condition and results of operations could be
materially harmed.

Legislative or regulatory requirements may heighten privacy concerns if
businesses must notify Internet users that the data may be used by marketing
entities to direct product promotion and advertising to the user. The Federal
Trade Commission and state agencies have been investigating various Internet
companies regarding their use of personal information. In 1998, the United
States Congress enacted the Children's On-line Privacy Protection Act of 1998.
In addition, the Gramm-Leach-Bliley Act ("GLB"), which governs privacy issues
related to financial institutions, went into effect on July 1, 2001. If our
programs are determined to be of a nature covered by the GLB, we may be required
to undertake certain notices to our members and users and/or modify the
membership program and other services. We depend upon collecting personal
information from our customers, and the regulations promulgated under this act
have made it more difficult for us to collect personal information from some of
our customers. If third parties are able to penetrate our network security or
otherwise misappropriate our users' personal information, we could be subject to
liability. We could also be liable for claims based on unauthorized purchases
with credit card information, impersonation or other similar fraud claims. We
could also be held responsible for disclosing personal information or images,
such as our disclosing such information for unauthorized marketing purposes or
for including it in our photo gallery and web cam section on collegeclub.com.
These claims could result in litigation. In addition, we could incur additional
expenses if new regulations regarding the use of personal information are
introduced or if our privacy practices are investigated. Other countries and
political entities, such as the European Economic Community, have adopted such
legislation or regulatory requirements. If consumer privacy concerns are not
adequately addressed, our business, financial condition and results of
operations could be materially harmed. We may also be subject to additional
state and Federal banking regulations (Federal Reserve) in connection with the
introduction of some of our eStudentLoan offerings. Although we carry general
liability insurance, this insurance may not be available to cover a particular
claim or may be insufficient. Additionally, our user community on
CollegeClub.com exists in part because of our members' willingness to provide
information about themselves. If claims, litigation, regulation or the acts of
third parties reduce our members' willingness to share this information or our
ability to use it, the attractiveness of the web site will decline, which would
reduce our ability to generate revenue through the affected web site.

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

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

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

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

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

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

- - patent, trademark and copyright law,

- - trade secret protection, and

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

Despite our best efforts, we cannot assure you that our intellectual property
rights will not be infringed, violated or legally imitated. Failure to protect
our intellectual property could have a material adverse effect on our business.
We have been, and may be, sued or named as a defendant in the future for
infringement of the trademark and other intellectual property rights of third
parties. Any such proceedings or claims could have a material adverse effect on
our business, financial condition and results of operations.

CERTAIN CURRENT STOCKHOLDERS OWN A LARGE PERCENTAGE OF OUR VOTING STOCK

As of November 7, 2001, our executive officers, directors and affiliated
entities, together own approximately 48% of our outstanding common stock.
Therefore, these stockholders are able to significantly influence all matters
requiring stockholder approval and, thereby, our management and affairs. Matters
that typically require stockholder approval include:

- - election of directors,

- - merger or consolidation, and

- - sale of substantially all of our assets.

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

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

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

OUR CHARTER DOCUMENTS MAY INHIBIT A TAKEOVER

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

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

PART II. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits
None.

(b) Reports on Form 8-K

The Company filed a Current Report on Form 8-K dated June 25, 2001 with the
Securities and Exchange Commission on July 10, 2001 reporting the acquisition of
OCM Enterprises, Inc. and the establishment of a credit facility with Reservoir
Capital Partners, L.P., Reservoir Capital Associates, L.P. and Reservoir Capital
Master Fund, L.P.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

Student Advantage, Inc.

(Registrant)

Dated: November 14, 2001 By: /s/ Kenneth S. Goldman
------------------------
Kenneth S. Goldman,
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)