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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 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 NUMBER 0-26173

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STUDENT ADVANTAGE, INC.
(Exact name of registrant as specified in its charter)

<Table>

DELAWARE 04-3263743
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
</Table>

280 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
(Address of principal executive offices, including zip code)

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

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

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

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

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

The aggregate market value of the Common Stock held by non-affiliates of
the Registrant on February 28, 2002, was $30,703,517 based upon the closing sale
price of the Common Stock on the Nasdaq National Market on that date as reported
in The Wall Street Journal of $1.05. On that date, the number of shares of
Common Stock outstanding was 47,629,570 and no shares were held as treasury
shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement for its Annual
Meeting of Stockholders for the year ended December 31, 2001, which will be
filed with the Securities and Exchange Commission within 120 days after the end
of the Registrant's fiscal year, are incorporated by reference into Part III
hereof.
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STUDENT ADVANTAGE, INC.
FORM 10-K

TABLE OF CONTENTS

<Table>
<Caption>
PAGE
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PART I.
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 8
Item 3. Legal Proceedings........................................... 9
Item 4. Submission of Matters to a Vote of Securities Holders....... 9

PART II.
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters......................................... 11
Item 6. Selected Consolidated Financial Data........................ 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 13
Item 7A Quantitative and Qualitative Disclosures About Market
Risk........................................................ 36
Item 8. Financial Statements and Supplementary Data................. 37
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 71

PART III.
Item 10. Directors and Executive Officers of the Registrant.......... 71
Item 11. Executive Compensation...................................... 71
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 71
Item 13. Certain Relationships and Related Transactions.............. 71

PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 72
Signatures.................................................. 73
</Table>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

PART I

ITEM 1. BUSINESS

Student Advantage, Inc. is an integrated media and commerce company focused
on the higher education market. We work in partnership with more than 1,000
colleges and universities, student organizations and alumni associations, and
more than 15,000 participating business locations to develop products and
services that enable students to make less expensive and more convenient
purchases on and around campus. Our exclusive university and business
relationships allow us to sell campus-specific products and services and
licensed collegiate sports memorabilia directly to parents, students and alumni.

We reach consumers offline through Student Advantage Campus Services, which
includes the Student Advantage Membership, SA Cash and OCM Direct, and online
through our highly trafficked websites: studentadvantage.com, CollegeClub.com
and our FANSonly Network. On March 25, 2002, the Company re-branded the FANSonly
Network as the Official College Sports Network ("OCSN"). 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 more than 15,000 participating locations.
Discounts are made available to students both through our studentadvantage.com
website and at sponsors' retail locations and are heavily promoted at our
CollegeClub.com website. The SA Cash Programs enable students to use their
college ID cards as a method of payment (stored-value card) for off-campus
dining, shopping and other purchasing needs. 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 and their parents. OCSN is the largest, most
trafficked network on the web devoted exclusively to college sports, providing
online brand management and content delivery to more than 120 top schools and
athletic conferences. We also offer business-to-business marketing and event
management and execution services through SA Marketing Group.

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. The Company's principal executive
offices are located at 280 Summer Street, Boston, Massachusetts 02210, and our
telephone number is (617) 912-2000.

On June 25, 2001, the Company entered into an Agreement and Plan of Merger
(the "Agreement"), by and among the Company, Orion Acquisition Corp., a wholly
owned subsidiary of the Company ("Orion"), OCM Enterprises, Inc. ("OCM") and
Devin A. Schain, Michael S. Schoen, Howard S. Dumhart, Jr., Paul D. Bogart and
Steven L. Matejka (the "OCM Stockholders"). Pursuant to the Agreement, OCM was
merged with and into Orion, which survived the merger and changed its name to
OCM Direct, Inc. ("OCM Direct"). The aggregate consideration paid by the Company
to the OCM Stockholders in connection with the acquisition of OCM was (i) $8.0
million in cash paid at the closing, (ii) 2,433,333 shares of the Company's
common stock, issued at the closing, (iii) shares of common stock to be issued
not later than June 25, 2002 with a value of $1.25 million at the time of
issuance based on the average of the last reported sales prices per share of
common stock over the ten trading days ending on the trading day that is three
days prior to the date of issuance, provided that the number of shares will not
be less than 208,333 or greater than 1,250,000, and (iv) in the event that OCM
Direct attains certain revenue performance goals described in the Agreement
after the closing, up to $1.5 million payable at the Company's option in either
shares of common stock or a combination of shares of common stock and cash, with
the shares of common stock valued at the time of issuance based on the average
of the last reported sales prices per share over the ten trading days ending on
the trading day that is three days prior to the date of issuance or $1.00,
whichever is greater, subject to adjustment under certain circumstances.

On October 1, 2001, the Company, through our wholly-owned subsidiary, OCM
Direct, Inc., acquired substantially all of the assets of CarePackages.com, LLC,
a privately held e-commerce company specializing in the sale of direct mail gift
packages and care packages to college students and their parents. In connection
with the acquisition, OCM Direct created a wholly owned subsidiary,
CarePackages, Inc., and the Company issued 100,000 shares of Student Advantage
common stock and paid $30,000 in cash.

On October 2, 2001, the Company announced a restructuring, which included a
reduction in staff of approximately 15% of its total employees and charges
related to operating leases for office space no longer utilized in the Company's
current operations. As of December 31, 2001 we had approximately 382 full time
employees.

FX to the Buyer for consideration consisting of a Promissory Note for $3.0
million (the "Second Note"), a Promissory Note for $0.9 million (the "Third
Note"), and $1.1 million related to the net working capital of the Voice FX
business, of which $0.2 million was received January 3, 2002 and $0.9 million
was received on March 28, 2002. The Second Note, bearing interest of 14.5%,
requires payments of interest to begin on March 31, 2003, with the principal and
remaining interest coming due on December 31, 2006. The Third Note, which is
non-interest bearing, requires payments of principal beginning June 30, 2003,
with the final payment coming due on December 31, 2007. On December 28, 2001,
the Company and the Buyer entered into two marketing agreements, whereby the
Company will provide marketing and promotional services to the Buyer for a
cumulative fee of $2.7 million. The services will be provided from January 1,
2002 through March 31, 2006.

On November 26, 2001, the Company completed the sale of its eStudentLoan
business to a third-party. As consideration for the transaction the Company
received net proceeds of $2.3 million in cash.

"Student Advantage", "CollegeClub", "U-WIRE", "FANSonly", "Edu.com" and "SA
Cash" are trademarks and service marks of the Company. All other trademarks,
service marks or trade names referred to in this prospectus are the property of
their respective owners.

STRATEGY

Our objective is to set the standard for commerce in higher education by
working in partnership with universities and businesses to make what students
need easily available to them, by making it less expensive and helping them pay
for it more conveniently. We intend to achieve these objectives through the
following:

Enhance Student Commerce Through University-Endorsed Relationships. We
intend to focus on increasing the volume and average value of transactions in
our core Membership Program, SA Cash, OCM Direct and OCSN businesses by
enhancing our value to students, their parents and alumni through new products
and services marketed offline and online in conjunction with our university and
business partners.

Continue to Build the Student Advantage Brand. We believe that in order to
attract and expand our membership base and our service offerings to colleges and
universities, and corporate partners we must continue to build strong brands. By
partnering with leading national and local sponsors and universities we work to
integrate commerce opportunities into the student experience. Our Student
Advantage brand remains our most important consumer brand. We believe that
aggressive brand building will become increasingly important to sustain our
leadership position. We will also continue to enhance our branding both directly
and through co-marketing arrangements with our sponsors.

Aggressively Grow Student Reach. We intend to continue to grow the number
of paid participants in the Student Advantage Membership Program, as well as the
number of registered users on our network of websites, through a variety of
initiatives including:

- continuing the transition from bulk membership sales to individual paid
membership sales,

- increasing the rate of new paid memberships through OCM Direct sales,
online membership sales on studentadvantage.com and CollegeClub.com,
through corporate sponsored distributions and through university and
college sales, and

- increasing our number of corporate sponsors, and therefore, the content
on our network of websites and the benefits of our Membership Program.

Consider a complete or partial divestiture of one or more properties. We
believe that it may be to our interest to consider the continued divestiture of
those pieces of the business that may no longer be central to our mission. In
addition, we believe that we may agree to minority investments in one or more of
our subsidiaries to both attract capital and to avail ourselves of certain other
benefits. These transactions will likely require the approval of one or more of
our lenders.

Continue to Pursue Strategic Acquisitions and Alliances. Since inception,
we have acquired and integrated a number of complementary businesses in order to
expand and strengthen our offerings to students,

their parents, universities and corporate partners. We plan to continue to
acquire companies, make equity investments and enter into alliances that offer
opportunities to increase our product and service offerings and to obtain new
technologies.

PRODUCTS AND SERVICES

We work in partnership with colleges and universities and in cooperation
with businesses to develop products and services that are easily available to
students, their parents and alumni. Our Student Services division offers
students a broad range of products and services, through our Student Advantage
Membership Program, as well as through services and content on our websites
specifically created for their unique needs. Our Corporate and University
Services division offers corporate customers marketing services and offers
universities content, commerce and data management services.

The Student Advantage(R) Membership Program and studentadvantage.com. The
Student Advantage Membership Program is an annual fee-based program, providing
students with exclusive discounts and partner benefits at nearly 15,000
participating retail locations serving college campuses nationwide. Companies
such as Amtrak(R), Greyhound, Tower Records, 1800 Flowers, Dollar Rent-a-Car, US
Airways, Foot Locker and BarnesandNoble.com utilize our membership platform as a
customer relationship management program for acquisition, activation and usage
of their products and services. By aggregating and communicating with students
through the Membership Program, the Company offers our partners a single
point-of-contact to access, influence and reward student-purchasing behaviors.
Memberships are distributed in several ways. We sell memberships directly to
parents and students for an annual membership fee that is currently $20,
distribute memberships at no cost to certain qualified students and sell
memberships to certain of our corporate partners and universities for resale to
students at their retail locations and campuses. Complementing the membership
program is studentadvantage.com, an online resource of commerce relationships,
proprietary information and services developed exclusively for students. In
addition, the Company's online technology store, formerly Edu.com, gives
verified college students, faculty and staff access to academic pricing on
name-brand computer hardware and software.

OCM Direct. The OCM Direct programs supply students and their parents with
a variety of products, including residence hall linens and related accessories,
care packages and diploma frames. OCM Direct has endorsed relationships with
colleges, universities, and on-campus and alumni organizations for its direct
mail marketing circulation of approximately six million. OCM Direct has endorsed
relationships and multi-year agreements with more than 900 colleges and
universities, student organizations and alumni associations. OCM Direct is the
only corporate partner of the National Association of College and University
Residence Halls, and also has relationships with the Association of College and
University Housing Officers -International and the National Orientation
Directors Association.

CollegeClub. CollegeClub.com is an integrated online property that has
attracted over 4.2 million registered users since 1996. The website reaches
college students across the U.S., providing them with services and content
specifically created for their unique needs. The site provides a platform for
corporate clients that want to present their brands and services to college
students. CollegeClub.com has executed promotions for companies that include
General Motors, Warner Bros., Bank of America, Intuit, State Farm Insurance and
The Princeton Review.

Official College Sports Network. On March 25, 2002, we rebranded the
FANSonly Network as the Official College Sports Network (OCSN). Through its
Official Athletic Sites, OCSN provides online brand management, content delivery
and e-commerce services to more than 120 university athletic departments and
conferences throughout the country. FANSonly.com serves as the network hub for
individual Official Athletic Sites.

SA Cash. The SA Cash Programs enable students to use their college ID
cards as a method of payment for off-campus dining, shopping and other
purchasing needs and is currently in use at 16 schools. The stored-value card
program is developed in connection with university and college one-card offices.
The program and the proprietary Student Advantage managed point-of-sale (POS)
system expands the utility of the existing on-campus card programs, providing
students greater purchasing scope with their student ID card. As part of

the SA Cash Programs, the Company creates customized direct marketing and
loyalty programs for students and merchants.

SA Marketing Group. SA Marketing Group is a full-service event marketing
and execution business that develops and executes events for corporate clients.
SA Marketing Group develops and manages marketing programs for all consumer
demographics, specializing in the college and youth markets, and has delivered
programs on behalf of many corporate clients, including General Motors,
Volkswagen, New Balance, Hotjobs.com, MTV, PBS and MBNA.

U-WIRE. U-WIRE is a newswire service, free for college newspaper media,
that distributes student-produced content to more than 500 U-WIRE members,
professional media outlets and syndication partners, such as Yahoo!, NYTimes.com
and Lexis-Nexis. The Company's sponsors and business partners can utilize U-WIRE
to send press releases directly to the student editors at member college
newspapers.

CUSTOMERS

The Company's primary customers are consumers -- college students, their
parents and alumni -- who purchase products and services we make available to
them offline and online. Crucial to our success are the 1,100 colleges and
universities, campus organizations, and alumni associations with which we work
to develop and market valuable and highly-relevant products and services. These
relationships provide the Company with assistance in reaching our primary
customers and often provide certain content and commerce rights that give us a
strong competitive advantage and differentiate us in the marketplace. Our
corporate customers are the third essential element of our customer base. They
are important to the Company for two reasons. Many of them serve as our
marketing partners by adopting the Student Advantage Membership Program as the
platform by which they extend student discounts, thereby increasing the value of
our program to students, while other corporate clients pay us advertising and
related promotional fees to gain access to our customer base. Here are examples
of some of our corporate customers.

GENERAL MOTORS CORPORATION

Through our CollegeClub.com business, the Company has an agreement with
General Motors Corporation that is in effect through 2003. The Strategic
Alliance agreement provides that the Company will develop and conduct a
multi-faceted promotional campaign, and will provide certain advertising,
promotional and e-commerce opportunities for General Motors. The agreement
includes both on-line and off-line productions targeted to the college student
demographic.

VOLKSWAGEN OF AMERICA, INC.

Through our SA Marketing Group, the Company has an agreement with
Volkswagen of America, Inc. (Volkswagen), which is in effect through the end of
2002. The agreement specifies that the Company will provide production and
marketing services to develop, promote and produce the 2002 Volkswagen Major
Motion Picture Show Tour in conjunction with Volkswagen product promotion
partner, Trek Bicycle Corporation, to help increase the awareness of the
Volkswagen Brand and the Volkswagen Certified Pre-Owned Program.

TOWER RECORDS

Student Advantage has an agreement with Tower Records which is in effect
through August, 2003. Tower Records will offer an exclusive discount of 10% off
purchases made in store and online to Student Advantage Members. Students can
also purchase Student Advantage Membership cards online at TowerRecords.com. The
Student Advantage and Tower Records partnership is marketed online at
studentadvantage.com via banner advertisements and a dedicated splash page, as
well as through e-mail communication. Student Advantage communication is
integrated throughout Tower Records stores via banners and posters. Student
Advantage Community Managers will often work together with Tower Records
managers to bring events, contests, and promotions on to the local campus or
into the local store.

SALES AND MARKETING

As of December 31, 2001, the Company had a direct sales organization
consisting of 55 professionals. Fifteen of these professionals are dedicated
primarily to managing our significant sponsor relationships. The remaining
professionals are engaged in a variety of sales functions, including selling
banner advertising and sponsorships, enlisting additional national sponsors for
our Membership Program, seeking opportunities for corporate-sponsored events and
promotions targeted at college students and managing existing sponsor
relationships.

In addition, we maintain a regional sales organization of 12 professionals
in nine regional offices focused primarily on enlisting and managing local
sponsors and providing marketing services. These offices, which are managed from
our headquarters in Boston, provide us with a broad geographical presence and
enable us to implement effective nationwide marketing programs.

The Company uses a variety of online and traditional marketing programs to
increase brand recognition. Our marketing strategy for our brands contains a mix
of online advertising, programs which drive members to our websites, in-store
advertising in local retail locations, on-campus direct solicitation of
students, outbound e-mail, co-marketing with colleges and universities through
on-campus posters and student mailbox drops, print advertising, new media banner
campaigns and direct mail. The Company employed 40 marketing professionals as of
December 31, 2001.

TECHNOLOGY

The Company has implemented a broad array of site management, advertising
management, customer interaction, registration systems, transaction-processing
and fulfillment systems using a combination of its own proprietary technologies
and commercially available, licensed technologies. Our current strategy is to
license commercially available technology whenever possible rather than seek
internally developed solutions. We use internal resources to develop the
specialized software necessary for our business, such as the software required
to register members online.

Consistent with our preference for off-the-shelf software components, the
hardware systems that we utilize also consist of commercially available
components. The Company believes that this architecture provides the ability to
increase scale quickly and reliably, and at a relatively low cost. Our existing
infrastructure currently exceeds present demand, and as such, we have no plans
for additional upgrades.

Our membership database is currently hosted at Hosting.com in Massachusetts
and is in the process of being moved to Navisite, Inc. in Massachusetts and
utilizes Oracle 8i database software. Our production servers utilize Sun
Microsystems, Inc. hardware and use Apache web server software. The Company's
system hardware is currently hosted in Massachusetts and California by Navisite.
A group of systems administrators and network managers at the Company operate
our web site, network operations and transaction-processing systems and monitor
our systems 24 hours a day.

The CollegeClub membership database and web environment is currently hosted
at Navisite in California and is in the process of being moved to Navisite's
Massachusetts facility. The environment utilizes Oracle 8i, running on a Sun
Microsystems and EMC hardware platform. The front-end web environment runs on
Compaq hardware, running the Linux operating system and Apache web server
software. System administrators and network managers at Navisite, in
coordination with Company personnel, operate the web sites, network operations
and transaction-processing systems and monitor our systems 24 hours a day.

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

COMPETITION

We 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; and

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

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.

Competition for online users and advertisers is intense and is expected to
increase over time as 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 websites
dedicated to college students as well as high-traffic websites sponsored by
companies such as AOL Time Warner, CBS, Disney, Terra Lycos, Microsoft, MTV and
Yahoo!

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 websites. As a result, 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.

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.

INTELLECTUAL PROPERTY AND PROPERTY RIGHTS

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

The Company has been subject to claims and expects to be subject to legal
proceedings and claims from time to time in the ordinary course of its business,
including claims of alleged infringement of the trademarks and other
intellectual property rights of third parties. At present, CARE, the
international human rights and relief agency, has requested in writing that the
Company's Care Packages subsidiary phase out the use of the mark "CarePackages."
The Company does not believe that the two marks would raise a risk of confusion
and intends to continue using the mark. Such claims, even if not meritorious,
could result in the expenditure of significant financial and managerial
resources. Further, if such claims are successful, the Company may be required
to change its trademarks, alter its content and pay financial damages. There can
be no assurance that such changes of trademarks, alteration of content or
payment of financial damages will not adversely affect our business.

We may be required to obtain licenses from others to refine, develop,
market and deliver new products and services. A clearinghouse for various
universities' intellectual property rights has requested that the Company's OCM
subsidiary provide an accounting of royalty fees owed for certain products sold.
The Company believes these claims to be without substantive merit, but there can
be no assurances that the Company will not cause it to incur an outlay of
licensing fees and the diversion of management resources in addressing the
claim. There can be no assurance that we will be able to obtain any such license
on commercially reasonable terms or at all or that rights granted pursuant to
any licenses will be valid and enforceable.

GOVERNMENT REGULATION

The Company is subject to various laws and regulations relating to its
business. Although there are currently few laws or regulations directly
governing access to or commerce on the internet, due to the increasing
popularity and use of the internet, a number of laws and regulations may be
adopted regarding user privacy, pricing, acceptable content, taxation and
quality of products and services. In addition, several telecommunications
providers have petitioned the Federal Communications Commission to regulate and
impose fees on internet service providers and online service providers in a
manner similar to long distance telephone carriers. Also, stored-value card
products currently being developed and sold by the Company, although not
currently regulated by the Federal Reserve, may be subject to state banking
regulations and/or future amendments to or interpretations of current Federal
banking regulations. The adoption of any such laws or regulations could
adversely affect our product and service offerings, adversely affect the growth
in use of our products and services, decrease the acceptance of the internet as
a communications and commercial medium or restrict the Company's ability to
introduce new products. Moreover, it may take years to determine the extent to
which existing laws relating to issues such as property ownership, libel and
personal privacy are applicable to the internet. Any new laws or regulations
relating to the internet could decrease demand for our products and services or
otherwise have a material adverse effect on our business.

EMPLOYEES

As of December 31, 2001, the Company had a total of 382 full-time
employees. The Company also hires temporary employees, particularly at the
beginning of each school semester, and contract service providers as necessary.
As we continue to grow and introduce additional products and services, we expect
to hire additional employees, particularly in product development for our
commerce products and sales and marketing. None of our employees is represented
by a labor union or is the subject of a collective bargaining agreement. We
believe that relations with our employees are generally good. Competition for
qualified personnel in our industry is intense, particularly among sales, online
product development and technical staff. We believe that our future success will
depend in part on our continued ability to attract, hire and retain qualified
personnel.

ITEM 2. PROPERTIES

Student Advantage's principal executive offices are located at 280 Summer
Street in Boston, Massachusetts, where we presently lease an aggregate of
approximately 39,000 square feet. Our current leases for this facility expire at
various times through 2008. We also lease additional space in Boston,
Massachusetts; and maintain regional offices in Carlsbad, California; San Diego,
California; Atlanta, Georgia; Chicago, Illinois;

Hanover, New Hampshire; New York, New York; Bethesda, Maryland; Trenton, New
Jersey and Fairfield, Connecticut. In total our leased office and warehouse
space aggregates approximately 283,000 square feet.

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

ITEM 3. LEGAL PROCEEDINGS

We are not presently subject to any material legal proceedings.

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

None.

EXECUTIVE OFFICERS OF THE COMPANY

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

<Table>
<Caption>
NAME AGE OFFICE(S)
- ---- --- ---------

Raymond V. Sozzi, Jr........ 33 Chairman of the Board of Directors, President and Chief
Executive Officer
Kenneth S. Goldman.......... 43 Executive Vice President, Finance, Chief Financial Officer
and Treasurer
Jay P. Summerall............ 43 Executive Vice President, Student Services and Chief
Operating Officer
Craig R. Macfarlane......... 41 Vice President, Technology and Chief Technology Officer
Heather L. Lourie........... 30 Vice President, Corporate Development
Michael J. Phelan........... 40 Vice President, Corporate Marketing and Partnerships
Kevin M. Roche.............. 35 Vice President, Human Resources
</Table>

Raymond V. Sozzi, Jr. founded Student Advantage in 1992 and has served as
Chairman of the Board of Directors, President and Chief Executive Officer of
Student Advantage since its inception.

Kenneth S. Goldman has served as Executive Vice President, Finance, Chief
Financial Officer and Treasurer of Student Advantage since July 2000. From June
1998 to July 2000, Mr. Goldman served as Senior Vice President, Chief Financial
Officer and Treasurer of MediaMap, Inc., a software and media information
company. From April 1996 to June 1998, Mr. Goldman served as Senior Vice
President, Chief Financial Officer and Treasurer for Shoplink.com, an online
provider of groceries, household consumables and services. From February 1993 to
April 1996, Mr. Goldman served as Senior Vice President and Chief Financial
Officer of Liberty International Holdings, Inc., an international financial
services company.

Jay P. Summerall has served as Chief Operating Officer since July 2001 and
Executive Vice President, Student Services of Student Advantage since May 2000.
From September 1998 to April 2000, Mr. Summerall was General Manager for the
Business unit of AT&T's College and University Solutions (ACUS), a
telecommunications company. Mr. Summerall served in a number of other key
college-focused roles for AT&T from July 1992 to September 1998, including as
the Director of Student Marketing and Sales from 1997 to September 1998.

Craig R. Macfarlane has served as Vice President, Technology and Chief
Technology Officer since August 2000. From February 1999 to August 2000, Mr.
Macfarlane was Chief Technology Officer for iCast, an internet music and radio
company. From May 1996 to January 1999, Mr. Macfarlane was Vice President of
Advanced Media Development at Digitas (formerly SIG), a digital strategy,
technology and infrastructure consulting firm. From January 1995 to May 1996,
Mr. Macfarlane served as Principal Consultant for Websmith Consulting, an
internet consulting firm.

Heather L. Lourie has served as Vice President, Corporate Development of
Student Advantage since January 2000 and as Director, Corporate Development
since May 1999. From 1993 to April 1999, Ms. Lourie was a member and a manager
in the Transaction Services Division of PricewaterhouseCoopers LLP, a public
accounting firm.

Michael J. Phelan has served as Vice President, Corporate Marketing and
Partnerships of Student Advantage since February 2001. Prior to joining Student
Advantage, Mr. Phelan was General Manager and Category Director at Reebok
International, a producer of athletic apparel, responsible for developing
Reebok's youth consumer segment from July 1999 to February 2001. From 1989
through July 1999, he served as the Executive Director of Marketing at Polaroid
Corporation, a company which designs, develops, manufactures and markets digital
and instant imaging and related products.

Kevin M. Roche has served as Vice President, Human Resources since January
2000. From September 1995 to January 2000 Mr. Roche was the Director of
International Human Resources and from July 1998 to January 2000 he was also the
Corporate Director of Human Resources at Reebok International Ltd., a producer
of athletic apparel, where he was responsible for directing and implementing
corporate human resources policies and procedures within Reebok's Global
Operating Regions of Europe, Asia, Latin America, North America and emerging
markets. Before joining Reebok, Mr. Roche held positions at Praxis
International, an enterprise data movement solutions company, and Raytheon
Service Company, a field engineering company.

PART II

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

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

<Table>
<Caption>
HIGH LOW
------- -------

FISCAL YEAR ENDED DECEMBER 31, 2000
First quarter............................................. $22.438 $10.000
Second quarter............................................ $10.500 $ 2.875
Third quarter............................................. $ 9.750 $ 5.500
Fourth quarter............................................ $ 7.813 $ 1.750
FISCAL YEAR ENDED DECEMBER 31, 2001
First quarter............................................. $ 5.875 $ 2.063
Second quarter............................................ $ 2.880 $ 1.750
Third quarter............................................. $ 2.190 $ 0.900
Fourth quarter............................................ $ 1.530 $ 0.960
</Table>

As of February 28, 2002 there were 327 holders of record of the common
stock. Because many of the shares are held by brokers and other institutions on
behalf of stockholders, the Company is unable to estimate the total number of
individual stockholders represented by these holders of record.

The Company has never paid or declared any cash dividends on its Common
Stock. Our loan agreement with Reservoir Capital Partners, Reservoir Capital
Associates and Reservoir Capital Master Fund prohibits the payment of both cash
and stock dividends.

On October 1, 2001, the Company acquired, through our wholly owned
subsidiary, OCM Direct, substantially all of the assets of CarePackages.com,
LLC, a privately held e-commerce company specializing in the sale of direct mail
gift packages and care packages to college students and their parents. A portion
of the consideration paid for the acquisition consisted of 100,000 shares of
Student Advantage common stock. The shares were issued pursuant to an exemption
from registration set forth in Section 4(2) of the Securities Act of 1933, as
amended. No underwriters were involved in the transaction.

On November 6, 2001, the Company modified certain provisions and covenants
of our Loan Agreement with Reservoir Capital Partners, Reservoir Capital
Associates and Reservoir Capital Master Fund and as a partial consideration for
such modifications the Company issued immediately exercisable warrants to
purchase an aggregate of 100,000 shares of common stock with an exercise price
of $.01 per share. The warrants were issued pursuant to an exemption from
registration set forth in Section 4(2) of the Securities Act of 1933, as
amended. No underwriters were involved in the transaction.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

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

Effective June 18, 1999, the date the Company acquired University
Netcasting, Inc., University Netcasting, Inc.'s fiscal year end was changed from
March 31 to December 31 to conform to the Company's fiscal year end. University
Netcasting, Inc.'s results of operations for the years ended March 31, 1997,
1998

and 1999 have been included in the Company's results of operations for the years
ended December 31, 1997 and 1998, respectively. University Netcasting's results
of operations for the twelve months ended December 31, 1999 have been included
in the Company's twelve months ended December 31, 1999. Accordingly, University
Netcasting's results of operations for the three months ended March 31, 1999
have been included in the Company's results for both the years ended December
31, 1998 and 1999. Total revenue and net loss for University Netcasting for the
three months ended March 31, 1999 were $0.7 and $1.6 million, respectively. This
net loss amount has been reported as an adjustment to the consolidated
accumulated deficit.

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-------------------------------- ----------------------
1997 1998 1999 2000 2001
------- -------- ----------- ----------- --------
(RESTATED)* (RESTATED)*
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA
Revenue Student Services............... $ 4,815 $ 15,174 $ 19,722 $ 28,099 $ 51,580
Corporate and University Solutions..... -- 4,186 7,922 19,915 13,783
------- -------- -------- -------- --------
Total revenue....................... 4,815 19,360 27,644 48,014 65,363
------- -------- -------- -------- --------
Costs and expenses
Cost of student services revenue....... 3,330 7,416 11,093 10,263 16,379
Cost of corporate and university
solutions........................... -- 2,963 4,541 9,929 7,051
Product development.................... 3,253 5,169 9,974 18,377 17,117
Sales and marketing.................... 1,905 7,759 12,251 17,880 23,947
General and administrative............. 2,727 5,555 8,876 11,196 11,144
Restructuring and impairment of
long-lived assets................... -- -- -- -- 6,810
Stock-based compensation............... -- -- -- -- 539
Non-cash NBC media expense............. -- -- -- -- 3,348
Depreciation and amortization.......... 351 1,155 1,822 6,382 13,946
------- -------- -------- -------- --------
Total costs and expenses............ 11,566 30,017 48,557 74,027 100,281
------- -------- -------- -------- --------
Loss from operations................... (6,751) (10,657) (20,913) (26,013) (34,918)
Equity interest in Edu.com net loss.... -- -- (316) (3,776) (495)
Realized gain (loss)................... -- -- -- (367) 1,508
Interest income (expense), net......... (77) 121 1,358 1,434 (1,676)
------- -------- -------- -------- --------
Net Loss before Income Taxes........... (6,828) (10,536) (19,871) (28,722) (35,581)
Provision for income taxes.......... -- -- -- -- 207
------- -------- -------- -------- --------
Net loss after Income Taxes.............. $(6,828) $(10,536) $(19,871) $(28,722) $(35,788)
======= ======== ======== ======== ========
Basic and diluted net loss per share..... $ (0.41) $ (0.59) $ (0.72) $ (0.79) $ (0.80)
======= ======== ======== ======== ========
Shares used in computing basic and
diluted net loss per share............. 16,588 17,710 27,410 36,549 44,539
======= ======== ======== ======== ========
</Table>

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

* restatement pertains to Edu.com step acquisition accounting

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
------------------------------- --------------------
1997 1998 1999 2000 2001
------ -------- ----------- ----------- ------
(RESTATED)* (RESTATED)*
(IN THOUSANDS, EXCEPT PER SHARE DATA)

BALANCE SHEET DATA
Cash and cash equivalents................... $5,806 $ 6,140 $15,370 $12,762 $5,093
Restricted cash............................. $ -- $ -- $ -- $ -- $ 667
Marketable securities....................... -- -- 20,546 -- --
Working capital (deficit)................... (1,670) (2,355) 24,139 4,257 (9,263)
Total assets................................ 7,217 11,704 60,480 51,570 58,131
Deferred revenue............................ 5,970 7,064 9,576 4,013 3,521
Long-term obligation under capital leases... -- -- -- 1,861 764
Redeemable convertible preferred stock...... 111 10,196 -- -- --
Stockholders' equity (deficit).............. (1,024) (10,548) 41,378 30,543 11,791
</Table>

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

* restatement pertains to Edu.com step acquisition accounting

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

OVERVIEW

Student Advantage, Inc. is an integrated media and commerce company focused
on the higher education market. We work in partnership with colleges and
universities and in cooperation with businesses to develop products and services
that are easily available to students and alumni. We report our revenue in two
categories: student services revenue and corporate and university solutions
revenue.

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.

On May 1, 2001, the Company issued an aggregate of five million shares of
common stock to five investors, for an aggregate purchase price of $10.0
million. We also issued to these investors warrants to purchase 1.5 million
shares of common stock with an exercise price of $3.00 per share and warrants to
purchase 800,000 shares of common stock with an exercise price of $1.26 per
share. The warrants to purchase 800,000 shares with an exercise price of $1.26
per share are subject to certain exercise price adjustments on certain dates
based upon volume-weighted average sales prices. This exercise price adjustment
will not result in an adjustment to the number of shares of common stock
issuable upon exercise of the warrants.

On May 10, 2001, the Company acquired certain assets of Edu.com, Inc., a
privately held e-commerce company specializing in sales of consumer electronics,
hardware and software to students. Prior to the acquisition, the Company was a
stockholder of Edu.com and a party to a marketing and distribution agreement
with Edu.com. On November 12, 1999, the Company made an equity investment in
Edu.com of approximately $4.3 million in exchange for approximately 922,000
shares of Series B preferred stock and entered into a marketing and distribution
agreement with Edu.com providing for payments of $2.0 million to the Company
over the term of the agreement. In January 2000, we invested an additional $1.0
million in exchange for approximately 217,000 shares of Series B preferred
stock. At December 31, 2000, $1.0 million remained payable under the agreement.
In satisfaction of this obligation, we accepted a secured promissory note, which
was payable on December 31, 2001, from Edu.com. In connection with the Company's
acquisition of certain assets of Edu.com in May 2001, we issued 90,000 shares of
our common stock and a warrant to purchase 225,000 shares of common stock with
an exercise price of $2.28 and a warrant to purchase 225,000 shares of common
stock with an exercise price of $3.42, and assumed certain liabilities of
Edu.com. In addition, we canceled the $1.0 million secured promissory note
previously issued to us by Edu.com in exchange for the transfer of assets
securing the note. This consideration, including the Company's previous

investment in Edu.com was accounted for as a purchase business combination in
accordance with APB Opinion No. 16, "Business Combinations". The accounting
treatment of the additional investment is in accordance with Accounting
Principles Bulletin: The Equity Method for Accounting for Investments in Common
Stock ("APB 18"), which requires the application of step accounting in
accordance with Accounting Research Bulletin 51: Consolidated Financial
Statements Elimination of Intercompany Investment ("ARB 51"). Accordingly, the
Company has retroactively restated our investment in Edu.com on the equity
method of accounting and recorded our ownership percentage of Edu.com's net loss
for the years ended December 31, 1999 and 2000. As a result of applying the
equity method in Edu.com, a portion of the cost of the Company's investment has
been allocated to the equity in the net assets of Edu.com, amounting to
approximately $1.1, $0.2 and $0.5 million for the transactions occurring in
1999, 2000 and 2001 respectively. Goodwill and other intangible assets
aggregated approximately $1.6 million in connection with the acquisition of
Edu.com. During the fourth quarter of 2001, the Company evaluated the value of
the acquisition under SFAS 121, due to the announced restructuring of the
Company. As a result, the Company determined that the remaining balance of
goodwill was permanently impaired and accordingly recorded a loss on investment
of $0.9 million. In addition to the loss, the Company had amortized $0.7 million
of goodwill as of December 31, 2001.

On May 31, 2001, the Company completed the sale of its Rail Connection
business to Wandrian, Inc. (Wandrian), for aggregate consideration of $0.6
million, in the form of a secured promissory note for $0.2 million payable over
three years and a second promissory note for $0.4 million convertible into
shares of Wandrian's Series B Preferred Stock and maturing on May 31, 2006. As a
result of this transaction, the Company recorded a gain of $0.3 million, which
was net of remaining goodwill of approximately $68,000, in its results for the
period ended December 31, 2001.

On June 25, 2001, we entered into a loan agreement (the "Loan Agreement")
with 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 a credit facility in the aggregate principal amount of up
to $15.0 million, consisting of a $10.0 million term loan and a $5.0 million
revolving loan. We borrowed $10.0 million in the form of a term loan (the "Term
Loan") and $5.0 million in the form of a revolving loan (the "Revolving Loan"),
and used substantially all of these proceeds to pay the cash portion of the
purchase

price for the acquisition of OCM Direct and to pay off the existing debt of OCM
Direct. The remainder of the proceeds from the credit facility were used for our
working capital and general corporate purposes.

In connection with the transaction contemplated by the Loan Agreement, the
Company entered into a Warrant Agreement, dated June 25, 2001, by and among the
Company and the Lenders (the "Warrant Agreement"), under which the Company
issued to the Lenders warrants to purchase a number of shares of common stock
based on the outstanding balance of the Term Loan and Revolving Loan. In
accordance with the Warrant Agreement, the Company issued to the Lenders (i)
warrants to purchase an aggregate of 500,000 shares of common stock, which are
exercisable immediately, (ii) warrants to purchase an aggregate of 500,000
shares of common stock, which were amended on March 29, 2002, become exercisable
if any of the Term Loan is outstanding on June 25, 2002, and (iii) warrants to
purchase an aggregate of 500,000 shares of common stock, which become
exercisable if the entire balance of the Term Loan is outstanding on June 25,
2003 (or a pro rata portion of the 500,000 shares if only a portion of the Term
Loan is then outstanding) (collectively, the "Term Warrants"). The number of
shares subject to the Term Warrants is subject to adjustment under certain
circumstances in accordance with the terms of the Term Warrants. The Company
also issued to the Lenders warrants (the "Revolving Warrants") to purchase a
number of shares of common stock based on the outstanding balance of the
Revolving Loan. The number of shares subject to the Revolving Warrants is
initially zero and increases by an aggregate of 20,833 shares for each full
month that the entire Revolving Loan is outstanding (or a pro rata portion of
the 20,833 shares for each shorter time period or lesser outstanding balance).
The Company also agreed to issue one or more default warrants (the "Default
Warrants" and, collectively with the Term Warrants and the Revolving Warrants,
the "Warrants") to purchase shares of common stock in the event that the Company
receives a notice of an event of default under the Loan Agreement. The number of
shares subject to the Default Warrants shall initially equal the outstanding
balance of the Term Loan and Revolving Loan including capitalized interest and
accrued interest at such time divided by $1,000, and shall increase by
one-thirtieth of such amount (or pro rata portion of such amount if the balance
is reduced after the issuance of the Default Warrant) for each day that the
event of default continues. The exercise price applicable to all of the Warrants
is $.01 per share. The number of shares issuable upon exercise of the Warrants
is subject to adjustment in accordance with the terms of the Warrant Agreement
in the event that the Company issues certain additional securities at a price
per share equal to less than ninety percent of the average trading price of the
common stock over the 20 trading days preceding the date of issuance. The
Warrant Agreement required that the Company register with the Securities and
Exchange Commission the shares of common stock issuable upon exercise of the
Warrants or issued in respect of accrued interest for resale by the Lenders
within ninety days after the closing and use commercially reasonable efforts to
cause the registration statement to be declared effective as soon as
practicable. Under the terms of the Warrant Agreement, following payment or
acceleration of the Term Loan, reduction or termination of the revolving loan
commitment or issuance of the Default Warrants, the holders of the Warrants
shall have the right to require the Company to purchase all or a portion of the
Term Warrants, Revolving Warrants and Default Warrants, as the case may be, at a
price per share of $2.50 plus, from and after June 25, 2002, interest at a rate
equal to 27% per annum through the date of payment. The Company valued these
warrants and will continue to mark to market as appropriate under EITF 00-19.

On October 1, 2001, the Company acquired, through our wholly-owned
subsidiary, OCM Direct, substantially all of the assets of CarePackages.com,
LLC, a privately held e-commerce company specializing the sale of direct mail
gift packages and care packages to college students. In connection with the
acquisition, the Company issued 100,000 shares of Student Advantage common
stock, and paid $30,000 in cash. Goodwill and other intangible assets aggregated
$0.1 million in connection with the acquisition.

On October 2, 2001, the Company announced a restructuring, which included a
reduction in staff of approximately 15% of our total employees and charges
related to operating leases for office space no longer utilized in the Company's
current operations. As of December 31, 2001 we had approximately 382 full time
employees. The costs associated with this restructuring charge aggregated
approximately $4.9 million. As a result of the restructuring, the Company
evaluated the remaining book value of several of our intangible assets in
accordance with FASB 121. As a result, the Company wrote down $1.4 million
related to the remaining goodwill of College411, Collegiate Advantage, Campus
Agency and Edu.com.

On November 6, 2001, we modified certain provisions and covenants of our
loan agreement with Reservoir Capital Partners, Reservoir Capital Associates and
Reservoir Capital Master Fund (collectively, the "Lenders") and increased the
aggregate amount of the term loan deemed outstanding under our credit facility
by $0.2 million, paid $0.1 million in cash and issued immediately exercisable
warrants to purchase an aggregate of 100,000 shares of common stock with an
exercise price of $.01 per share. The fair value of the warrants has been
recorded as a deferred financing cost and included in other assets on our
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", we will mark the value of these warrants to
market at the end of each reporting period.

On November 7, 2001, the Company transferred substantially all of the
assets and liabilities relating to our Voice FX business to a newly formed,
wholly owned limited liability company, Voice FX, LLC ("Voice FX"). As of the
same date, two former managers and owners ("the Buyers") of our Voice FX
business, who sold the business to Student Advantage in 1999, entered into a
call option agreement ("the Option") with the Company to purchase all of the
Company's interest in Voice FX. As consideration for the entering into the
Option the Company received $0.9 million, of which $0.6 million was paid in cash
and $0.3 million was in the form of a Promissory Note (the "First Note"),
bearing interest of 12.9%, with a maturity of December 31, 2002. The Option was
exercised on November 7, 2001 and on December 31, 2001 we sold our interest in
Voice FX to the Buyer, for consideration consisting of a Promissory Note for
$3.0 million (the "Second Note"), a Promissory Note for $0.9 million (the "Third
Note"), and $1.1 million related to the net working capital of the Voice FX
business, of which $0.2 million was received January 3, 2002 and $0.9 million
was received on March 28, 2002. The Second Note, bearing interest of 14.5%,
requires payments of interest to begin on March 31, 2003, with the principal and
remaining interest coming due on December 31, 2006. The Third Note, which is
non-interest bearing, requires payments of principal beginning June 30, 2003,
with the final payment coming due on December 31, 2007. The Company recorded the
Second and Third note at the net present value of the payments using a discount
rate of 8%. As a result of the transaction, Student Advantage recorded a total
gain of $1.0 million, which was net of $0.3 million in transaction expenses. Of
the gain, $0.5 million was deferred until such time as the outstanding notes are
collected. On December 28, 2001, the Company and the Buyer entered into two
marketing agreements, whereby the Company will provide marketing and promotional
services to the Buyer for a cumulative fee of $2.7 million. The services will be
provided from January 1, 2002 through March 31, 2006.

On November 26, 2001, the Company completed the sale of its eStudentLoan
business to a third-party. As consideration for the transaction the Company
received net proceeds of $2.3 million in cash. The Company has recognized $0.9
million as a gain in their statement of operations related to this transaction
during the year ended December 31, 2001. In connection with the sale of
eStudentLoan, we entered into an agreement with Reservoir Capital Partners and
the other Lenders which provides that none of the proceeds of such sale would
need to be used to mandatorily prepay our credit facility. We also agreed that
(i) on the 26th day of each month, the amount of the term loans deemed
outstanding under the credit facility shall be increased by $500 for each day
during the preceding month when the amount of the outstanding term loans under
the credit facility exceeded $7.5 million, and (ii) the Lenders would receive
additional warrants to purchase shares of our common stock, at a purchase price
of $.01 per share, which would be exercisable on the 26th day of each month for
an aggregate of 500 shares (subject to adjustment) for each day during the
preceding month when the amount of the outstanding term loans under the credit
facility exceeded $7.5 million. As of December 31, 2001, the shares available
for exercise were 15,000. The fair value of the warrants have been recorded as a
deferred financing cost and included in other assets on our balance sheet and
will be recognized as interest expense over the term of the debt.

We recorded deferred compensation of $4.2 million in 1998 and an additional
$0.2 million in 1999, which were offset by reductions of $0.3, $0.7 and $0.2
million, during 1999, 2000 and 2001, respectively, due to stock option
cancellations as a result of employee terminations. Of the remaining $3.3
million deferred, $3.2 million has been amortized to expense as of December 31,
2001, of which $1.1, $0.8 and $0.5 million was recorded as an expense in 1999,
2000 and 2001, respectively. The remainder is being amortized over the remaining
vesting

period of the individual stock options, typically four years. The stock based
compensation charges have been included in the individual operating expense line
items in the financial statements. We currently expect to amortize the remaining
amount of deferred compensation of $49,000 during 2002.

RECENT DEVELOPMENTS

In February 2002, our subsidiary, OCM Direct and its subsidiaries,
CarePackages, Inc. and Collegiate Carpets, Inc. entered into a revolving loan
agreement with Bank of America providing for a $5.0 million loan facility. The
interest rate under the facility is LIBOR plus 2.5 percent and the facility is
secured by all the assets of OCM Direct and its two subsidiaries. The Company
provided an unsecured guaranty of the obligations of our three subsidiaries to
Bank of America. The maturity date of the loan is January 31, 2003, provided
that OCM Direct is required to repay all amounts outstanding under the loan for
a period of 30 consecutive days between August 1 and October 31, 2002. As of
March 28, 2002, the principal amount of borrowings under the revolving loan
facility is $4.9 million.

In connection with the Bank of America borrowing, we also modified the
terms of our credit facility with Reservoir Capital and its affiliates, who we
refer to collectively as Reservoir Capital. Reservoir Capital agreed to consent
to our guaranty of OCM Direct's obligations under the Bank of America credit
facility, to release OCM Direct and its subsidiaries, CarePackages and
Collegiate Carpets, as guarantors under the Reservoir Capital credit facility,
and to release Reservoir Capital's lien on the assets of OCM Direct and its
subsidiaries. Reservoir Capital also agreed to waive compliance with certain
financial covenants set forth in the loan agreement with Reservoir Capital until
March 30, 2002. We also agreed with Reservoir Capital that a default under the
Bank of America loan would also constitute a default under the Reservoir Capital
loan agreement. In addition, we agreed that the amounts available for borrowing
under the revolving loan portion of the credit facility, which was $5.0 million
on March 29, 2002, would be reduced on April 15, 2002 to the actual amount of
borrowings under the revolving loan on such date. In consideration for the
consent, we agreed to pay the Reservoir lenders $0.2 million in cash on April
15, 2002. If by April 15, 2002, Bank of America permits OCM Direct and its
subsidiaries to guarantee our obligations under the Reservoir Capital credit
facility, the fee will be reduced to $0.1 million. We also agreed to pay
additional fees of $0.1 million to Reservoir Capital if the total amount
outstanding under the credit facility exceeds $10.0 million on April 15, 2002
and additional fees ranging from $50,000 to $0.1 million if the amounts of the
revolving borrowings from the Reservoir Lenders exceed $2.5 million on April 15,
2002. Reservoir Capital has the option to require payment in the form of
warrants to purchase our common stock at the rate of one warrant for each dollar
of fees. Each warrant has an exercise price of $.01 per share.

On March 29, 2002, we amended the terms of our credit facility with
Reservoir Capital. We agreed to make a payment to Reservoir Capital of $1.25
million not later than August 1, 2002 and an additional $1.25 million not later
than September 1, 2002, to reduce the Company's outstanding principal to
Reservoir. The amendment to the terms of our credit facility also provides that
in the event Reservoir Capital provides notice to the Company on or before the
June 25, 2002 anniversary date of the loan closing that it is terminating all
commitments under the credit facility in September 2002, the Company will have
until January 1, 2003 to repay the loans before an event of default occurs.
Additionally, the amendment fixed the number of shares subject to the Term
Warrants issued to Reservoir Capital which become exercisable on June 25, 2002,
as specified in the Warrant Agreement, at the full number of shares for, which
the warrants were issued if any amount of the Term Loan is outstanding on that
date, rather than a pro rata portion based on the Term Loan balance. For more
information regarding our credit facility with Reservoir Capital, please read
the section titled "Liquidity and Capital Resources" below. As of March 29,
2002, the principal amount outstanding under the Reservoir Capital credit
facility was $15.2 million.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make

estimates and judgments that affect the reported amount of assets, liabilities,
revenues and expenses. Actual results may differ from these estimates under
different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and potentially result in materially
different results under different assumptions and conditions. We believe that
our critical accounting polices are limited to those described below. For a
detailed discussion on the application of these and other accounting policies,
see Note 1 in the notes to the consolidated financial statements.

REVENUE RECOGNITION

We report revenues 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, their parents and alumni. The Company
derives student services revenue from commerce, subscription and advertising.
Commerce revenue is derived primarily from transaction-based revenue earned for
reselling products and services, processing stored value transactions and
acquiring student customers on behalf of other businesses. To date, commerce
revenue has primarily included 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 websites. Commerce revenue is recognized upon the
completion of the related contractual obligations. Subscription revenue is
derived from membership fees related to enrolling students in the Student
Advantage Membership Program. Memberships are distributed in several ways. We
sell memberships directly to students and parents of students for an annual
membership fee per year, we distribute memberships at no cost to certain
qualified students and we sell memberships to certain of our corporate partners
for resale to students at their retail locations. 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. Advertising revenue
consists primarily of fees for banner advertisements and sponsorships on our
network of websites. In the past, the Company also derived revenue from
advertisements placed in SAM, Student Advantage Magazine. Revenue from fees
related to advertisements placed in SAM is recognized when the magazine is
shipped to members. Website advertising revenue is recognized as the related
impressions are displayed, provided that no significant obligations remain and
collection of the related receivable is assured. Certain advertising
arrangements include guarantees of a minimum number of impressions. For
arrangements with guarantees, revenue is recognized based upon the lesser of:
(1) ratable recognition over the period the advertising is displayed, provided
that no significant Company obligations remain and collection of the receivable
is assured, or (2) a pro-rata portion of contract revenue based upon impressions
delivered relative to minimum guaranteed impressions to be delivered.

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 and is made up of marketing services revenue from
corporate clients and licensing, management and consulting fees from
universities. Marketing services revenue is derived primarily from providing
tailored event management and execution 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. This revenue is recognized upon the completion of the
related contractual obligations. Fees from marketing services are recognized as
the related services are rendered, provided that no significant obligations
remain and collection of the related receivable is assured. Payments received in
advance of revenue being earned are recorded as deferred revenue.

In accordance with the Emerging Issues Task Force ("EITF") Issue No. 99-17
"Accounting for Advertising Barter Transactions," the Company has appropriately
recorded barter revenue and expense based upon the fair value of the advertising
surrendered in the transaction. Fair value is established by reference to
comparable cash transactions during the six-month period preceding the barter
transaction. Generally, barter transactions involve exchanges of banner
advertising. For the years ended December 31, 1999, 2000 and 2001, the Company
recorded $0.6, $1.2 and $4.1 million, respectively, of barter revenue and $0.5,
$1.2 and $4.1 million, respectively, of barter expense recorded as sales and
marketing expense.

In accordance with Staff Accounting Bulletin No. 101 "Revenue Recognition
in Financial Statements" ("SAB 101") and EITF Issue No. 99-19 "Reporting Revenue
Gross as a Principal versus Net," the Company has evaluated our revenue and
determined that it is being appropriately reported in accordance with the
guidance. The Company has recorded certain of its commerce revenue at gross as
the Company is the considered the primary obligor in the transaction.

INTANGIBLE AND OTHER ASSETS

Intangible assets include the excess of the purchase price over
identifiable net assets acquired in acquisitions. Such assets include goodwill,
completed technology, workforce, customer lists, non-compete agreements,
websites and other intangible assets, which are being amortized on a
straight-line basis over their estimated economic lives ranging from two to five
years. Accumulated amortization was $5.3 and $10.0 million at December 31, 2000
and 2001, respectively. The Company periodically evaluates its intangible assets
for potential impairment. As a result of the application of SFAS 142 in 2002,
the remaining goodwill attributable to the acquisition of OCM Direct will not be
amortized, but will be subject to an impairment test.

LONG-LIVED ASSETS

The Company assesses the realizability of long-lived assets in accordance
with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to Be Disposed Of". The Company reviews its long-lived assets
for impairment as events and circumstances indicate the carrying amount of an
asset may not be recoverable. The Company evaluates the realizability of its
long-lived assets based on profitability and cash flow expectations for the
related asset. As a result of its review, the Company recorded asset impairment
charges of $1.9 million for the year ended December 31, 2001.

CONCENTRATIONS OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

SFAS No. 105, "Disclosure of Information About Financial Instruments with
Concentrations of Credit Risk", requires disclosure of any significant
off-balance sheet risk and concentrations of credit risk. The Company does not
have any significant off-balance sheet risk. Financial instruments, which
potentially expose the Company to concentration of credit risk, are comprised
primarily of cash, cash equivalents and trade accounts receivable. The Company
places its cash and cash equivalents with financial institutions that have high
credit ratings. Management believes its credit policies are prudent and reflect
normal industry terms and business risk. The Company does not anticipate
non-performance by the counterparties and, accordingly, does not require
collateral. Concentration of credit risk with respect to accounts receivable is
limited to certain customers to whom the Company makes substantial sales. To
reduce risk, the Company routinely assesses the financial strength of its
customers and, as a consequence, believes that its accounts receivable credit
risk exposure is limited. The Company maintains reserves for potential credit
losses and such losses, in the aggregate, have not exceeded management's
expectations. For the year ended December 31, 1999, one customer accounted for
55% of total revenue. For the year ended December 31, 2000, two customers
accounted for 50% of total revenue. For the year ended December 31, 2001, three
customers accounted for 23% of total revenue. At December 31, 1999 and 2000, two
customers accounted for 56% and 36% of accounts receivable, respectively. At
December 31, 2001, one customer accounted for 33% of accounts receivable.

RESULTS OF OPERATIONS

The financial statements for the years ended December 31, 1999, 2000 and
2001 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."

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2001 WITH THE YEAR ENDED DECEMBER
31, 2000

Revenue. Total revenues increased to $65.4 million for 2001 from $48.0
million for 2000, due to an increase in student services revenue of $23.5
million, which was offset in part by a decrease in corporate and university
solutions revenue of $6.1 million. The increase in student services revenue was
primarily due to the

addition of the direct mail business of OCM Direct and organic growth in our
Official College Sports Network and CollegeClub businesses. The decrease in
corporate and university solutions revenue is primarily due to a decrease in
marketing services revenue resulting from decreased marketing spending by
corporate customers.

Student Services Revenue. Student services revenue increased to $51.6
million in 2001 from $28.1 million in 2000. The increase in student services
revenue was primarily due to the acquisition of OCM Direct, in the second
quarter of 2001, and organic growth in our Official College Sports Network and
CollegeClub businesses. 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 websites 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 programs also contributed
to the increase. These increases were offset, in part, by significant decreases
in fees from AT&T 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 $13.8 million in 2001 from $19.9 million in 2000.
Decreases in marketing services revenues resulted from decreased marketing
spending by several of our corporate customers. This decrease is attributed to
the overall slow-down in the economy and the events of September 11, 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 a
lower volume in mailings by our corporate customers, which has a direct effect
on the volume of transactions.

General Motors Corp. accounted for approximately 11% and 3% of total
revenue in 2001 and 2000, respectively. Additionally, General Motors accounted
for approximately 13% and 5% of student services revenue and 4% and 0% of
corporate and university solutions revenue, in 2001 and 2000, respectively.
Capital One, accounted for approximately 9% and 16% of total revenue and 42% and
36% of corporate and university solutions revenue for 2001 and 2000,
respectively. We do not expect to earn significant revenues from Capital One
after December 31, 2001 as the services provided to Capital One were provided by
our Voice FX business. AT&T accounted for approximately 4% and 34% of total
revenue for 2001 and 2000, respectively. Additionally, AT&T accounted for
approximately 3% and 46% of student services revenue and 5% and 17% of corporate
and university solutions for 2001 and 2000, respectively.

Cost of Student Services Revenue. Cost of student services revenue
consists of the costs associated with subscriptions, commerce and advertising
revenue. Subscription costs consists of the costs associated with the
fulfillment of membership subscriptions and customer service. Commerce costs
include costs of goods sold paid to third parties in connection with selling
products, and personnel-related costs associated with acquiring customers for
the Company and our corporate clients. Advertising costs consist primarily of
production and mailing costs for SAM, Student Advantage Magazine, certain
university commissions paid to colleges for the use of organizational names and
logos and for supplying sports activity content for our network of websites, and
fees paid to partners in exchange for the right to place media inventory on such
partners' websites. The costs related to SAM are only applicable to the year
2000 as no issues were produced during 2001. Cost of student services revenue
increased to $16.4 million in 2001 from $10.3 million in 2000. This increase was
primarily due to the increase in costs as a result of the acquisition of OCM
Direct and costs related to the restructured AT&T agreement. The increases were
partially offset due to no costs being incurred for the production of SAM in
2001.

Cost of Corporate and University Solutions Revenue. Cost of corporate and
university solutions revenue consists primarily of the costs of marketing
services and the costs of acquiring customers on behalf of our corporate
clients. Marketing services costs primarily include the direct and indirect
costs associated with planning and implementing events and promotions. Cost of
corporate and university solutions revenue decreased to $7.1 million in 2001
from $9.9 million in 2000. This decrease is primarily due to the decrease in
costs consistent with the decrease in both marketing services and revenues
provided by the Voice FX business.

Student Advantage Membership Program, the SA Cash Programs and our network of
websites. Product development expenses decreased to $17.2 million in 2001 from
$18.4 million in 2000. The decrease is due in part to the capitalization of
internally developed software costs in 2001 and the impact of the restructuring
charge taken in the fourth quarter of 2001. The decrease was offset in part by
the acquisitions of substantially all the assets of CollegeClub.com in 2000, and
of OCM Direct and certain assets of Edu.com in 2001.

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 $27.6 million in 2001 from $17.9 million in
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, university commissions
paid to colleges for the use of organizational names and logos, building brand
awareness, supporting the marketing services business and as a result of our
acquisitions of certain assets of CollegeClub.com during 2000 and certain of
Edu.com's assets and OCM Direct in 2001. In addition, the increase was due, in
large part, to a non-cash expense of $3.4 million for television advertising
relating to CollegeClub.

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 $11.3 million in 2001 from $11.2
million in 2000. Increases in general and administrative expenses were primarily
due to higher facilities, legal, accounting and personnel related costs
associated with our continued growth, as well as our acquisitions of businesses
over the past year, including certain assets of CollegeClub.com during 2000, and
certain of Edu.com's assets and OCM Direct in 2001. The increase was offset, in
part, by the impact of the restructuring charge taken in 2001.

Depreciation and Amortization. Depreciation expense increased to $6.7
million in 2001 from $2.9 million in 2000 primarily as a result of fixed asset
purchases during the latter part of 2000 and 2001, amortization of capital
leases and as a result of assets acquired through the acquisitions of OCM Direct
during the second quarter of 2001. Amortization expense increased to $7.3
million in 2001 from $3.5 million in 2000, primarily as a result of the
acquisition of OCM Direct in the second quarter of 2001 and the acquisitions of
ScholarAid, College411 and certain assets of eStudentLoan and CollegeClub.com in
2000.

Stock-Based Compensation. We recorded deferred compensation of $4.2
million in 1998 and an additional $0.2 million in 1999, which were offset by
reductions of $0.3, $0.7 and $0.2 million, during 1999, 2000 and 2001,
respectively, due to stock option cancellations as a result of employee
terminations. The remaining $3.2 million was mostly amortized as of December 31,
2001, of which $0.5 million was recorded as an expense in 2001 and $0.8 million
was recorded as an expense in 2000. We currently expect to amortize the
remaining amount of deferred compensation of $49,000 during 2002. The stock
based compensation charges have been included in the individual operating
expense line items in the financial statements.

Impairment of Long-Lived Assets. We recorded a charge of $1.9 million for
the impairment of long-lived assets in the fourth quarter of 2001 relating in
part to a write-down of $1.6 million of goodwill associated to the Company's
acquisitions of or asset purchases from Edu.com, College411, Collegiate
Advantage and Campus Agency. The remaining $0.3 million was a write-down of
certain fixed assets that were acquired from Edu.com. The Company performed an
evaluation of long-lived assets in accordance with FAS 121 as a result of the
restructuring activity in the fourth quarter of 2001.

Restructuring Charges. In the fourth quarter of 2001, the Company
announced a restructuring, which included a reduction in staff of approximately
15% of our total employees and charges related to operating leases for office
space no longer utilized in the Company's current operations. The costs
associated with this restructuring charge aggregated approximately $4.9 million.

Equity Interest in Edu.com. In the second quarter of 2001, the Company
purchased substantially all of the assets of Edu.com, Inc. Prior to the
acquisition the Company held a minority interest in Edu.com, which was accounted
for under the cost method of accounting. The resulting treatment of the
additional investment in the second quarter of 2001, was in accordance with
Accounting Principles Bulletin: The Equity Method for Accounting for Investments
in Common Stock ("APB 18"), which requires the application of step accounting

in accordance with Accounting Research Bulletin 51: Consolidated Financial
Statements Elimination of Intercompany Investment ("ARB 51"). Accordingly, the
Company retroactively restated our investment in Edu.com on the equity method of
accounting and recorded its ownership percentage of Edu.com's net loss. As a
result of applying the equity method to the Edu.com investment, the Company has
recorded an equity interest in Edu.com's net loss of $3.8 and $0.5 million for
the years ended December 31, 2000 and 2001, respectively.

Realized Gain and (Loss). Realized gain and (loss) was $1.5 million in
2001 compared to $(0.4) million in 2000. The gain of $1.5 million in 2001 was a
result of the sales of our Rail Connection, Voice FX and eStudentLoan businesses
during 2001. Realized loss on investment in 2000 represented the write-off of
our investment in alumnipride.com, Inc.

Interest Income (Expense), Net. Interest income (expense), net, includes
interest income from cash balances and interest expense related to the Company's
financing obligations. Interest income (expense), net, was $(1.7) million in
2001 compared to $1.4 million in 2000. The increase in our interest expense
during 2001 was a result of the $10.2 million Term Loan and $5.0 million
Revolving Loan entered into by the Company in June 2001.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2000 WITH THE YEAR ENDED DECEMBER
31, 1999

Revenue. Total revenues increased to $48.0 million for 2000 from $27.6
million for 1999, due both to an increase in student services revenue of $8.4
million, and an increase in corporate and university solutions revenue of $12.0
million.

Student Services Revenue. Student services revenue increased to $28.1
million in 2000 from $19.7 million in 1999. The increase in student services
revenue was due to increases in both online advertising on our network of
websites, transaction-based commerce revenues and subscription revenue. Online
advertising increased primarily as a result of our acquisition of
CollegeClub.com in the fourth quarter of 2000 and online campaigns provided to
AT&T under the restructured agreement. Increases in commerce revenue due to
increases in transaction based revenues and the acquisition of certain assets of
eStudentLoan during 2000, were offset in part by a significant decrease in fees
from AT&T as a result of the restructuring of the AT&T agreement in June 2000.
Subscription revenue increased due to an increase in the number of members in
the Student Advantage Membership Program.

Corporate and University Solutions Revenue. Corporate and university
solutions revenue increased to $19.9 million in 2000 from $7.9 million in 1999.
The increase in corporate and university solutions revenue was primarily due to
increases in revenue related to our acquisition of Voice FX in the fourth
quarter of 1999, marketing services revenues related to several contracts not in
effect in 1999, and, to a lesser extent, event staffing, management and
execution provided under the restructured AT&T agreement.

AT&T accounted for approximately 34% and 55% of total revenue in 2000 and
1999, respectively. Additionally, AT&T accounted for approximately 46% and 67%
of student services revenue and 17% and 25% of corporate and university
solutions revenue in 2000 and 1999, respectively. While revenue from AT&T in
2000 increased on an absolute dollar value basis over revenue in 1999, the
percentage of revenue in those periods derived from AT&T decreased. One other
customer, Capital One, accounted for approximately 16% of total revenue (2% of
student services revenue and 36% of corporate and university solutions revenue)
in 2000.

Cost of Student Services Revenue. Cost of student services revenue
consists of the costs associated with subscriptions, commerce and advertising
revenue. Cost of subscription revenue consists of the costs associated with the
fulfillment of membership subscriptions and customer service. Commerce costs
include costs of goods sold owed to third parties in connection with selling
their products, and personnel-related costs associated with acquiring customers
for AT&T. Advertising costs consist primarily of production and mailing costs
for SAM, Student Advantage Magazine, royalties paid to colleges for the use of
organizational names and logos and for supplying sports activity content for our
network of websites, and fees paid to partners in exchange for the right to
place media inventory on such partners' websites. Cost of student services
revenue decreased to $10.3 million in 2000 from $11.1 million in 1999. This
decrease was primarily due to a significant decrease in

costs consistent with the decrease in commerce revenue related to the
restructuring of the AT&T agreement on June 8, 2000. This decrease was partially
offset by an increase in costs of goods sold owed to third parties in connection
with selling their products. Cost of student services revenue as a percentage of
student services revenue decreased to 37% in 2000 from 56% in 1999 primarily as
a result of both a decrease in low margin activities related to the restructured
AT&T agreement, and the acquisition of higher margin businesses during 2000.

Cost of Corporate and University Solutions Revenue. Cost of corporate and
university solutions revenue consists of the costs of marketing services and
costs of acquiring customers on behalf of our corporate clients. Marketing
services costs include the direct and indirect costs associated with planning
and implementing events and promotions and other marketing services. Cost of
corporate and university solutions revenue increased to $9.9 million in 2000
from $4.5 million in 1999. This increase was due in large part to the
acquisition in the fourth quarter of 1999 of Voice FX, which incurred $3.5
million in cost of corporate and university solutions revenue in 2000. Costs
related to event staffing, management and execution under the restructured AT&T
agreement and marketing services agreements not in effect in 1999 also
contributed to the increase. Cost of corporate and university solutions revenue
as a percentage of corporate and university solutions revenue decreased to 50%
in 2000 from 57% in 1999. This decrease was due primarily to higher margin
revenues from the Voice FX business, which we acquired in the fourth quarter of
1999.

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, SAM, Student Advantage Magazine, the SA cash Programs, and
our network of websites. Product development expenses increased to $18.4 million
in 2000 from $10.0 million in 1999. The increase is primarily due to costs
incurred in connection with the enhancement of our network of websites, the
development of new product offerings such as SA Cash and our Academic Research
Engine, the purchases of ScholarAid, College411 and certain assets of
eStudentLoan and CollegeClub.com during 2000 and the purchase of Voice FX in the
fourth quarter of 1999. These increases were offset in part by non-recurring
charges related to the development of our customer database that were incurred
in 1999.

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 $17.9 million in 2000 from $12.3 million in
1999. The increase in sales and marketing expenses was due, in large part to
increased expenditures related to building brand awareness through the
distribution of our memberships at no cost to certain qualified students,
through self promotion in SAM, Student Advantage Magazine, and through on-
campus promotions, the launching of affiliate programs which contributed
approximately $1.0 million in cost, expanding our sales force, expanding and
servicing our corporate and university base of partners and supporting the
marketing services business. In connection with the Lycos marketing agreement
entered into in the third quarter of 1999, we recorded a warrant valued at $2.2
million. Of this amount, $1.3 million has been amortized to sales and marketing
expense as of December 31, 2000, of which $0.9 million was recorded as an
expense in 2000 and $0.4 million was recorded as an expense in 1999. The
remainder is being amortized on a straight-line basis over the remaining term of
the agreement.

General and Administrative. General and administrative expenses consist
primarily of costs related to general corporate functions, including executive
management, finance, human resources, facilities, accounting and legal. General
and administrative expenses increased to $11.2 million in 2000 from $8.9 million
in 1999. Increases in general and administrative expenses were primarily due to
higher facilities, legal, accounting and personnel related costs associated with
our continued growth, as well as our acquisitions of businesses over the past
year, including approximately $1.0 million in non-recurring charges related to
the acquisition of substantially all of the assets of CollegeClub.com. These
increases were offset, in part, by non-recurring charges of $1.3 million related
to the acquisitions of University Netcasting, Inc. and Transaction Service
Providers, Inc., which were incurred in 1999.

Depreciation and Amortization. Depreciation expense increased to $2.9
million in 2000 from $0.9 million in 1999 primarily as a result of fixed asset
purchases during the latter part of 1999 and 2000, amortization of capital
leases and as result of assets acquired through the acquisitions of ScholarAid,
College411 and

certain assets of eStudentLoan and CollegeClub.com during 2000. Amortization
expense increased to $3.5 million in 2000 from $1.0 million in 1999, primarily
as a result of the acquisition of Voice FX in the fourth quarter of 1999 and the
acquisitions of ScholarAid, College411 and certain assets of eStudentLoan and
CollegeClub.com during 2000.

Stock-Based Compensation. We recorded deferred compensation of $4.2
million in 1998 and an additional $0.2 million in 1999, which were offset by
reductions of $0.3 and $0.7 million due to stock option cancellations as a
result of employee terminations during 1999 and 2000, respectively. Of this
amount, $2.7 million has been amortized to expense as of December 31, 2000, of
which $0.8 million was recorded as an expense in 2000 and $1.1 million was
recorded as an expense in 1999. The remainder is being amortized over the
remaining vesting period of the individual stock options, typically four years.
The stock based compensation charges have been included in the individual
operating expense line items in the financial statements.

Realized Loss on Investment. Realized loss on investment represents the
write-off of our investment in alumnipride.com, Inc. As of December 31, 2000, we
evaluated the investment and determined that the value had been permanently
impaired and accordingly, recorded a loss in the amount of $0.4 million.

Equity Interest in Edu.com. In the second quarter of 2001, the Company
purchased substantially all of the assets of Edu.com, Inc. Prior to the
acquisition, the Company had held a minority interest in Edu.com, which was
accounted for under the cost method of accounting. The resulting treatment of
the additional investment through the acquisition in the second quarter of 2001,
was in accordance with Accounting Principles Bulletin: The Equity Method for
Accounting for Investments in Common Stock ("APB 18"), which requires the
application of step accounting in accordance with Accounting Research Bulletin
51: Consolidated Financial Statements Elimination of Intercompany Investment
("ARB 51"). Accordingly, the Company retroactively restated our investment in
Edu.com on the equity method of accounting and recorded its ownership percentage
of Edu.com's net loss. As a result of applying the equity method to the Edu.com
investment, the Company recorded equity interest in Edu.com's net loss of $0.3
million and $3.8 million for the years ended December 31, 1999 and 2000,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations primarily through the
private placement and public offering of securities, cash from operations,
borrowings under our term loan, credit facilities and loans from equity holders.
In May 2001, we completed a private placement of equity securities to new and
existing investors and received $9.8 million in net proceeds. In June 2001, we
received $14.5 million in net proceeds from a $10 million term loan and a $5
million revolving credit facility provided by entities affiliated with Reservoir
Capital Partners, who we refer to collectively as Reservoir Capital.

As of December 31, 2001, we had $5.8 million in cash, cash equivalents and
restricted cash as compared to cash, cash equivalents and marketable securities
of $12.7 million at December 31, 2000.

Net cash used for operating activities was $14.2 million in 2001, a
decrease of $3.9 million compared to net cash used for operating activities of
$18.1 million in 2000. Net cash used in 2001 was primarily a result of a net
loss of $35.8 million, an increase in accounts receivable of $2.4 million and a
decrease in accounts payable and accrued expenses of $1.6 million. The net loss
in 2001 was partially offset by depreciation and amortization of $13.9 million,
decreases in inventory and prepaid expenses of $4.5 million.

Net cash used for investing activities was $10.6 million in 2001, an
increase of $15.7 million compared to net cash provided by investing activities
of $5.1 million in 2000. Net cash used in 2001 was primarily due to $14.2
million used in the acquisition of OCM Direct and purchases of fixed assets,
partially offset by $2.4 million from proceeds related to the sales of our
eStudentLoan and Voice FX subsidiaries. Net cash provided by financing
activities was $27.8, an increase of $17.4 million compared to net cash provided
by financing activities of $10.4 million in 2000. The proceeds provided by
financing activities in 2001 were

primarily the result of the net proceeds of $20.0 million from the credit
facility with Reservoir Capital and the private placement of equity securities
to investors.

As of March 28, 2002, the outstanding principal balance under our credit
facility with Reservoir Capital was $15.2 million. The terms of our credit
facility with Reservoir Capital requires that we make a payment of $1.25 million
not later than August 1, 2002 and make an additional payment of $1.25 million
not later than September 1, 2002. The credit facility matures in June 2004,
provided that Reservoir Capital may terminate all commitments under the credit
facility as early as September 2002 and require payment of all amounts
outstanding under the credit facility by January 1, 2003. If prior to June 25,
2002, Reservoir Capital does not furnish to us notice that it is terminating the
credit facility, Reservoir Capital has the right to terminate the credit
facility in September 2003 and require full payment in October 2003.

The credit facility with Reservoir Capital is secured by substantially all
of our assets and all of the assets of our subsidiaries other than OCM Direct
and its subsidiaries. Interest accrues under the credit facility at 12% per
annum, and interest on the term loan portion is not currently payable in cash
unless, under certain circumstances, the lenders elect to have us pay such
interest, in which case, we may choose to pay the accrued interest in cash or in
shares of our common stock (provided that the option to pay in common stock will
only be available if, after issuance of such shares of common stock, the shares
would be the subject of an effective registration statement or could be
immediately resold by the Lenders). If we elect to pay interest in common stock,
the number of shares of common stock deliverable will be determined by dividing
the amount of interest being paid by 80% of the volume weighted average price as
of the applicable term loan interest payment date. We also pay annual facility
and commitment fees equal to 2.5% of the amounts borrowed. The credit facility
requires that we and our subsidiaries comply with certain affirmative, negative
and financial covenants, including limitations on the incurrence of additional
indebtedness, mandatory prepayments in the event that we complete equity
financings or asset dispositions and cash flow and cash balance minimums.

In February 2002, our subsidiary, OCM Direct and its subsidiaries,
CarePackages and Collegiate Carpets, entered into a revolving loan agreement
with Bank of America providing for a $5.0 million loan facility. The interest
rate under the facility is LIBOR plus 2.5 percent, and the facility is secured
by all the assets of OCM Direct and its two subsidiaries. Student Advantage
provided an unsecured guaranty of the obligations of OCM Direct and its
subsidiaries to Bank of America. The maturity date of the loan is January 31,
2003, provided that OCM Direct is required to repay all amounts outstanding
under the loan for a period of 30 consecutive days between August 1 and October
31, 2002. As of March 28, 2002, the principal amount outstanding under the
revolving loan facility was $4.9 million.

We have taken significant steps through the restructuring that we announced
in October 2001 to reduce operating costs for 2002. We currently anticipate that
our available cash resources, together with cash expected to be provided from
operations based upon an anticipated increase in revenue for 2002, will be
sufficient to meet our anticipated needs for working capital and capital
expenditures for at least the next 12 months. For purposes of evaluating our
cash resources over the next 12 months, we have assumed that we will not be
required to repay any amounts under our credit facility with Reservoir Capital
other than the two required payments of $1.25 million each in August 2002 and
September 2002. Our expectations regarding available cash resources during the
next 12 months are also based on significant reductions in the net loss that we
expect to incur in 2002. If our revenue and expense projections do not
materialize as anticipated, if Reservoir Capital exercises its right to require
us to repay all amounts outstanding under our credit facility, or if we are
otherwise required to repay the amount outstanding under our credit facility
with Reservoir Capital, we will be required to obtain additional funds. We may
seek to obtain additional funds through debt or equity financing.

To the extent that we finance our requirements through the issuance of
additional equity securities, any such issuance would result in dilution to the
interests of our stockholders. Furthermore, to the extent that we incur
indebtedness in connection with financing activities, we will be subject to all
of the risks associated with incurring substantial indebtedness, including the
risk that interest rates may fluctuate and cash flow may be insufficient to pay
principal and interest on any such indebtedness. We have no current arrangements
with

respect to, or sources of, additional financing. There can be no assurance that
any additional financing will be available to us on acceptable terms, if at all.

RECENT ACCOUNTING PRONOUNCEMENTS

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 Company has adopted EITF 00-19 and has applied it to warrants as
appropriate.

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 No. 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. As a result of the
application of SFAS 142, the goodwill attributable to the acquisition of OCM
Direct will not be amortized.

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.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

WE HAVE EXPERIENCED LOSSES IN THE PAST AND EXPECT FUTURE LOSSES

We have not achieved profitability and have incurred significant operating
losses to date. We incurred net losses of $35.8 million and $28.7 million in
2001 and 2000, respectively. As of December 31, 2001, our accumulated deficit
was $108.9 million. We expect to continue to incur significant operating and
capital expenditures and, as a result, we will need to generate significant
revenue and reduce expenses to achieve and maintain profitability. There are no
assurances that we will be able to reduce our expenses 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.

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 need 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 and may require
additional external financing through credit facilities, sale of debt or equity
securities in Student Advantage or by obtaining other financing facilities to
support our operations. In addition, we will require additional equity or debt
financing to fund the purchase price, to the extent payable in cash, for any
future significant acquisitions. Our loan agreement with Reservoir Capital
Partners, Reservoir Capital Associates and Reservoir Capital Master Fund 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.

In addition, additional funds raised through the issuance of equity
securities or securities convertible into stock may have negative effects our
stockholders, such as a:

- dilution in percentage of ownership in the Company, and

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

Also, additional financing may not be available when needed or available on
terms favorable to us. 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 or presence in existing
markets,

- penetrate new markets or take advantage of future opportunities, or

- respond to competitive pressures.

WE HAVE TAKEN ON A MATERIAL AMOUNT OF INDEBTEDNESS

We incurred material indebtedness in connection with the acquisition of OCM
Direct in June 2001 under the terms of the loan agreement we entered into with
Reservoir Capital Partners, Reservoir Capital Associates, and Reservoir Capital
Master Fund. As of March 28, 2002, 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, we are required to meet certain
financial and non-financial covenants. The credit facility matures in June 2004,
provided that the Lenders may terminate all commitments under the credit
facility as early as September 2002 and require payment of all amounts
outstanding under the credit facility by January 1, 2003. If the lenders do not
give us notice of termination of the credit facility by June 25, 2002, the
lenders have the right to terminate the facility in September 2003 and require
full payment by October 2003.

In February 2002, OCM Direct and its two subsidiaries entered into a loan
and security agreement with Bank of America providing for a secured revolving
loan of up to $5.0 million, which is guaranteed on an unsecured basis by Student
Advantage, Inc. The maturity date of the loan is January 31, 2003, provided that
OCM Direct is required to repay all amounts outstanding under the loan for a
period of 30 days between August 1 and October 31, 2002. As of March 28, 2002,
the principal indebtedness due under this facility was $4.9 million.

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

- our ability to obtain additional financing for any future acquisitions,
working capital, capital expenditures or other purposes maybe 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 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 implement 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.

GENERAL MARKET CONDITIONS COULD ADVERSELY AFFECT OUR BUSINESS

We believe that general economic conditions and financial difficulties that
many companies have experienced have caused a slowdown in consumer and business
spending and in companies' budgets for marketing services and have reduced the
perceived urgency by companies to begin or to continue marketing initiatives. As
a result, our current customers may cancel or delay spending on marketing and
other initiatives and there may be a decrease in demand for our services from
potential customers. If companies continue to delay or reduce 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. Moreover, the current market conditions have decreased the
demand for online advertising, and have put downward pressure on the cost per
thousand impressions 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 such advertising
service we have provided to them. In addition, recent acts of terrorism have
reduced consumer spending on transportation and travel services and have
exacerbated political, financial, and economic uncertainties, which may cause
our revenues related to these businesses to suffer.

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 current opportunities, 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.

WE MAY NOT SUCCESSFULLY IMPLEMENT OUR BUSINESS STRATEGY

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

- maintain our network of university-endorsed relationships as our primary
access point to students, their parents and alumni for delivery of our
Membership, SA Cash and OCM Direct products and services, and our online
Official College Sports Network website,

- maintain our network of corporate sponsors,

- continue to aggressively build the Student Advantage brand,

- continue to increase our student reach and grow the number of paid
participants in our Membership Program through OCM Direct sales, online
membership sales, corporate sponsored distributions, and university and
college sales, and

- continue to establish our network of websites as part of our integrated
approach for delivering our products and services, including licensed
college sports products, member registration and renewal, information
regarding national and local sponsors, and customer service.

We are 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, our SA
Cash university partners and our Official College Sports Network university
partners. A failure to acquire or maintain alliances and relationships with
colleges and universities could have a material adverse effect on our business.

We are also dependent upon our sponsors, both national and local, to
provide our members and SA Cash participants with discounts on their products
and services. However, 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.

We may encounter difficulties in establishing or maintaining our network of
web sties. Several companies that provide content to our web sites have
discontinued operations or filed for bankruptcy protection. We may be forced to
procure 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.

Finally, we cannot guarantee that Internet users will maintain interest in
our network of websites. A decline in membership or usage of our network of
websites would decrease revenue.

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 websites 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 websites, 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 at a higher per unit price

point. 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.

A LIMITED NUMBER OF CUSTOMERS CURRENTLY ACCOUNT FOR A SIGNIFICANT PERCENTAGE OF
OUR TOTAL REVENUES

A limited number of customers currently account for a significant
percentage of our total revenues. In 2001, three customers, in the aggregate,
accounted for approximately 23% of our total revenue. In 2000, two customers, in
the aggregate, accounted for approximately 50% of total revenues. While we
anticipate that revenue 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. In addition, 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.

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. 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.

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 renew the
membership subscription. Our revenue growth is highly dependent upon our ability
to market the value of our Membership Program 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 FACE SIGNIFICANT COMPETITION, WHICH COULD ADVERSELY AFFECT OUR BUSINESS

We 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; and

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

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
three others. In the future, the Company may undertake additional acquisitions
and 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 transaction;

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

- under-perfomance of an acquired business relative to our expectations;

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

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

- inability to fully utilize all intellectual property of the acquired
company;

- exposure to legal claims for activities and obligations of the acquired
business arising from events occurring prior to the acquisition; and

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

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. If we are unable to
effectively fully manage these risks in connection with our acquisitions or
dispositions, our business, operating results and financial condition could be
adversely affected.

WE MUST MANAGE OUR GROWTH AND CONSOLIDATION SUCCESSFULLY, INCLUDING THE
INTEGRATION OF ACQUIRED COMPANIES, IN ORDER TO ACHIEVE OUR DESIRED RESULTS

We have experienced dramatic growth in personnel in recent years and expect
to continue to hire additional personnel in selected areas. We also reduced our
workforce in 2001 to decrease our costs and create greater operational
efficiency. This growth and consolidation requires significant time and resource
commitments from us and our management. Further, as a result of our
acquisitions, approximately 65% of our employees are based outside of our
Boston, Massachusetts, headquarters. If we are unable to effectively manage a
large and geographically dispersed group of employees, anticipate our future
growth or manage our consolidations effectively, our business will be adversely
affected.

OUR MANAGEMENT TEAM HAS LIMITED EXPERIENCE IN RUNNING A PUBLIC COMPANY

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

WE MUST ATTRACT AND RETAIN 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 high. 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 SYSTEM 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
Hosting.com in Boston, Massachusetts and Navisite in Andover, Massachusetts and
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 website. 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 websites must accommodate a high volume of traffic and deliver
frequently updated information. Our websites 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 websites
as not functioning properly and therefore cause them to use another website or
other methods to obtain information.

In addition, our users depend on Internet service providers, online service
providers and other website operators for access to our network of websites.
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 UP ON 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 adequate 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 websites or in
our publications or 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 websites through links to
other websites or through content and materials that may be posted by members in
chat rooms or bulletin boards including those located on the CollegeClub.com
website. 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 efforts to block Spam 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
websites, including CollegeClub.com.

OUR STATUS UNDER STATE AND FEDERAL FINANCIAL SERVICES REGULATION 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 as 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 MEMBERS AND USERS AND MAY SUBJECT US TO
LITIGATION

We collect and our network of websites captures information regarding our
members and users in order to provide information to them, enable them to access
the services offered on our websites, 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 websites.

Our network of websites 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. 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 website will decline, which would reduce our
ability to generate revenue through the affected website.

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 INDUSTRIES

Rapidly changing technologies, frequent new product and service
introductions and evolving industry standards characterize our market. 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 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 on 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.

CERTAIN CURRENT STOCKHOLDERS OWN A LARGE PERCENTAGE OF OUR VOTING STOCK

As of January 31, 2002, our executive officers, directors and affiliated
entities, together own approximately 39% 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
PAGE
----

Reports of Independent Public Accountants................... 38
Consolidated Balance Sheets as of December 31, 2000 and
2001...................................................... 40
Consolidated Statement of Operations for the years ended
December 31, 1999, 2000 and 2001.......................... 41
Consolidated Statement of Changes in Redeemable Convertible
Preferred Stock and Stockholders' Equity for the years
ended December 31, 1999, 2000 and 2001.................... 42
Consolidated Statement of Cash Flows for the years ended
December 31, 1999, 2000 and 2001.......................... 44
Notes to Consolidated Financial Statements.................. 46
</Table>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Student Advantage, Inc.

We have audited the accompanying consolidated balance sheets of Student
Advantage, Inc. and subsidiaries (a Delaware Corporation) ("the Company") as of
December 31, 2001, and the related consolidated statements of operations,
changes in redeemable convertible preferred stock and stockholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express the
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Student Advantage, Inc. and
subsidiaries as of December 31, 2001, and the results of their operations and
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States.

/s/ Arthur Andersen LLP

Boston, Massachusetts
March 29, 2002

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

In our opinion, the consolidated balance sheets and the related
consolidated statements of operations, of changes in redeemable convertible
preferred stock and stockholders equity and of cash flows present fairly, in all
material respects, the financial position of Student Advantage, Inc. and its
subsidiaries at December 31, 2000, and the results of their operations and their
cash flows for each of the two years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 1, the accompanying consolidated financial statements
for the years ended December 31, 1999 and 2000 have been restated to reflect the
application of the equity method of accounting for the Company's investment in
Edu.com, Inc.

/s/ PricewaterhouseCoopers, LLP

Portland, Maine
February 7, 2001
Except as to the restatement described in Note 1,
as to which the date is May 10, 2001

STUDENT ADVANTAGE, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
DECEMBER 31,
----------------------
2000 2001
---------- ---------
(RESTATED)

ASSETS
Current assets
Cash and cash equivalents................................. $ 12,762 $ 5,093
Restricted cash........................................... -- 667
Accounts receivable (net of reserves of $815 and $737 at
December 31, 2000 and 2001, respectively................ 5,982 6,163
Inventory................................................. -- 1,863
Prepaid advertising....................................... 3,350 1
Prepaid expenses and other current assets................. 1,329 3,108
-------- ---------
Total current assets.................................... 23,423 16,895
Notes receivable.......................................... -- 4,378
Property and equipment, net............................... 13,343 12,033
Investment................................................ 1,171 --
Intangible and other assets, net.......................... 13,633 24,825
-------- ---------
Total assets............................................ $ 51,570 $ 58,131
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable............................................ $ 3,564 $ 5,196
Accrued compensation........................................ 2,840 2,517
Other accrued expenses...................................... 7,541 11,056
Current borrowings under revolving line of credit........... -- 2,500
Deferred revenue............................................ 4,013 3,521
Current obligation under capital lease...................... 1,208 1,368
-------- ---------
Total current liabilities............................... 19,166 26,158
-------- ---------
Deferred gain............................................... -- 534
Other accrued expenses...................................... -- 4,188
Warrants payable............................................ -- 1,996
Long-term borrowings under revolving line of credit......... -- 2,500
Notes payable............................................... -- 10,200
Long-term obligation under capital lease.................... 1,861 764
-------- ---------
Total long-term obligations............................. 1,861 20,182
-------- ---------
Total liabilities....................................... 21,027 46,340
-------- ---------
Commitments and Contingencies (Note 13)
Stockholders' equity
Preferred stock, $0.01 par value, 5,000,000 shares
authorized, no shares issued and outstanding.............. -- --
Common stock, $0.01 par value; 150,000,000 shares
authorized; issued and outstanding:
39,621,244 and 47,531,254 at December 31, 2000 and 2001,
respectively............................................ 396 476
Additional paid-in capital................................ 104,058 120,298
Accumulated deficit....................................... (73,096) (108,884)
Notes receivable from stockholders........................ (50) (50)
Deferred compensation..................................... (765) (49)
-------- ---------
Total stockholders' equity.............................. 30,543 11,791
-------- ---------
Total liabilities and stockholders' equity.............. $ 51,570 $ 58,131
======== =========
</Table>

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

STUDENT ADVANTAGE, INC.

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

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
----------------------------------
1999 2000 2001
---------- ---------- --------
(RESTATED) (RESTATED)

Revenue
Student Services.......................................... $ 19,722 $ 28,099 $ 51,580
Corporate and University Solutions........................ 7,922 19,915 13,783
-------- -------- --------
Total revenue.......................................... 27,644 48,014 65,363
-------- -------- --------
Costs and expenses
Cost of student services revenue (including stock-based
compensation of $58, $33 and $24 for years ended 1999,
2000 and 2001, respectively)........................... 11,093 10,263 16,403
Cost of corporate and university solutions revenue
(including stock-based compensation of $33, $25 and $19
for the years ended 1999, 2000 and 2001,
respectively).......................................... 4,541 9,929 7,070
Product development (including stock-based compensation of
$320, $163 and $82 for the years ended 1999, 2000 and
2001, respectively).................................... 9,974 18,377 17,199
Sales and marketing (including stock-based compensation of
$547, $413 and $306 for the years ended 1999, 2000 and
2001 respectively)..................................... 12,251 17,880 27,601
General and administrative (including stock-based
compensation of $161, $137 and $108 for the years ended
1999, 2000 and 2001, respectively)..................... 8,876 11,196 11,252
Depreciation and amortization............................. 1,822 6,382 13,946
Impairment of long-lived assets........................... -- -- 1,916
Restructuring charges..................................... -- -- 4,894
-------- -------- --------
Total costs and expenses............................... 48,557 74,027 100,281
-------- -------- --------
Loss from operations........................................ (20,913) (26,013) (34,918)
Equity interest in Edu.com net loss......................... (316) (3,776) (495)
Realized gain/(loss)........................................ -- (367) 1,508
Interest and other income/(loss)............................ 1,358 1,434 (1,676)
-------- -------- --------
Net loss before Income Taxes................................ (19,871) (28,722) (35,581)
Provision for income tax.................................... -- -- 207
-------- -------- --------
Net loss after Income Taxes................................. $(19,871) $(28,722) $(35,788)
======== ======== ========
Basic and diluted net loss per share........................ $ (0.72) $ (0.79) $ (0.80)
======== ======== ========
Shares used in computing basic and diluted net loss per
share..................................................... 27,410 36,549 44,539
======== ======== ========
</Table>

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

STUDENT ADVANTAGE, INC.

CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
REDEEMABLE CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------------- ------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
----------- --------- ---------- ------ ---------- -----------

Balance, December 31, 1998................. 2,952,568 $ 10,196 20,746,255 $207 $ 18,944 $ (25,706)
---------- -------- ---------- ---- -------- ---------
Exercise of common stock options and
warrants.................................. -- -- 1,075,046 11 665 --
Sale of common stock under employee stock
purchase plan............................. -- -- 36,258 -- 246 --
Issuance of common stock and common stock
warrants in connection with the
acquisition of Mentor Interactive......... -- -- 18,056 -- 299 --
Issuance of common stock in connection with
the acquisition of Transaction Service
Providers................................. -- -- 195,000 2 268 (444)
Issuance of common stock in initial public
offering, net of issuance costs........... -- -- 6,900,000 69 49,823 --
Conversion of preferred stock to common
stock in connection with the initial
public offering........................... (2,952,568) (10,196) 6,026,043 61 9,505 --
Issuance of common stock for services...... -- -- 8,658 -- 108 --
Issuance of common stock warrant........... -- -- -- -- 2,221 --
Deferred compensation relating to grants of
stock options............................. -- -- -- -- 228 --
Deferred compensation related to
cancellation of stock options for
terminated employees...................... -- -- -- -- (259) --
Compensation relating to grants of stock
options................................... -- -- -- -- -- --
Issuance of common stock in connection with
the acquisition of Voice FX............... -- -- 430,082 4 5,642 --
Adjustment to conform fiscal periods for
University Netcasting..................... -- -- -- -- -- 1,647
Net loss................................... -- -- -- -- -- (19,871)
---------- -------- ---------- ---- -------- ---------
Balance December 31, 1999.................. -- $ -- 35,435,398 $354 $ 87,690 $ (44,374)
---------- -------- ---------- ---- -------- ---------
Exercise of common stock options........... -- -- 389,968 4 168 --
Sale of common stock under employee stock
purchase plan............................. -- -- 145,638 2 412 --
Issuance of common stock in connection with
the acquisitions of ScholarAid and
College411................................ -- -- 325,479 3 1,712 --
Issuance of common stock and warrants to At
Home Corporation and John Hancock Small
Cap Value Fund............................ -- -- 2,000,000 20 9,945 --
Issuance of common stock in connection with
the acquisition of College Club........... -- -- 1,324,761 13 4,808 --
Deferred compensation related to
cancellation of stock options for
terminated employees...................... -- -- -- -- (677) --
Compensation relating to grants of stock
options................................... -- -- -- -- -- --
Repayment of stock subscription............ -- -- -- -- -- --
Net loss................................... -- -- -- -- -- (28,722)
---------- -------- ---------- ---- -------- ---------
Balance December 31, 2000.................. -- $ -- 39,621,244 $396 $104,058 $ (73,096)
---------- -------- ---------- ---- -------- ---------

NOTES TOTAL
RECEIVABLE FROM TREASURY DEFERRED STOCKHOLDERS'
STOCKHOLDERS STOCK COMPENSATION EQUITY
--------------- -------- ------------ -------------

Balance, December 31, 1998................. $ -- $(630) $(3,363) $(10,548)
---- ----- ------- --------
Exercise of common stock options and
warrants.................................. (79) -- -- 597
Sale of common stock under employee stock
purchase plan............................. -- -- -- 246
Issuance of common stock and common stock
warrants in connection with the
acquisition of Mentor Interactive......... -- -- -- 299
Issuance of common stock in connection with
the acquisition of Transaction Service
Providers................................. -- -- -- (174)
Issuance of common stock in initial public
offering, net of issuance costs........... -- -- -- 49,892
Conversion of preferred stock to common
stock in connection with the initial
public offering........................... -- 630 -- 10,196
Issuance of common stock for services...... -- -- -- 108
Issuance of common stock warrant........... -- -- -- 2,221
Deferred compensation relating to grants of
stock options............................. -- -- (228) --
Deferred compensation related to
cancellation of stock options for
terminated employees...................... -- -- 259 --
Compensation relating to grants of stock
options................................... -- -- 1,119 1,119
Issuance of common stock in connection with
the acquisition of Voice FX............... -- -- -- 5,646
Adjustment to conform fiscal periods for
University Netcasting..................... -- -- -- 1,647
Net loss................................... -- -- -- (19,871)
---- ----- ------- --------
Balance December 31, 1999.................. $(79) $ -- $(2,213) $ 41,378
---- ----- ------- --------
Exercise of common stock options........... -- -- -- 172
Sale of common stock under employee stock
purchase plan............................. -- -- -- 414
Issuance of common stock in connection with
the acquisitions of ScholarAid and
College411................................ -- -- -- 1,715
Issuance of common stock and warrants to At
Home Corporation and John Hancock Small
Cap Value Fund............................ -- -- -- 9,965
Issuance of common stock in connection with
the acquisition of College Club........... -- -- -- 4,821
Deferred compensation related to
cancellation of stock options for
terminated employees...................... -- -- 677 --
Compensation relating to grants of stock
options................................... -- -- 771 771
Repayment of stock subscription............ 29 -- -- 29
Net loss................................... -- -- -- (28,722)
---- ----- ------- --------
Balance December 31, 2000.................. $(50) $ -- $ (765) $ 30,543
---- ----- ------- --------
</Table>

STUDENT ADVANTAGE, INC.

CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
REDEEMABLE CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------------- ------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
----------- --------- ---------- ------ ---------- -----------

Exercise of common stock options........... -- -- 118,234 1 71 --
Sale of common stock under employee stock
purchase plan............................. -- -- 168,446 3 266 --
Issuance of common stock and warrants in
connection with the acquisition of
Edu.com................................... -- -- 90,000 1 1,163 --
Issuance of common stock in connection with
the Greylock, Jennison & Stark PIPES
financing, net of financing fees.......... -- -- 5,000,000 50 9,750 --
Issuance of common stock in connection with
the acquisition of OCM Direct............. -- -- 2,433,330 24 5,086 --
Issuance of common stock in connection with
the acquisition of CarePackages........... -- -- 100,000 1 81 --
Deferred compensation related to
cancellation of stock options for
terminated employees...................... -- -- -- (177) --
Compensation relating to grants of stock
options................................... -- -- -- -- -- --
Net loss................................... -- -- -- -- -- (35,788)
---------- -------- ---------- ---- -------- ---------
Balance December 31, 2001.................. -- $ -- 47,531,254 $476 $120,298 $(108,884)
========== ======== ========== ==== ======== =========

NOTES TOTAL
RECEIVABLE FROM TREASURY DEFERRED STOCKHOLDERS'
STOCKHOLDERS STOCK COMPENSATION EQUITY
--------------- -------- ------------ -------------

Exercise of common stock options........... -- -- -- 72
Sale of common stock under employee stock
purchase plan............................. -- -- -- 269
Issuance of common stock and warrants in
connection with the acquisition of
Edu.com................................... -- -- -- 1,164
Issuance of common stock in connection with
the Greylock, Jennison & Stark PIPES
financing, net of financing fees.......... -- -- -- 9,800
Issuance of common stock in connection with
the acquisition of OCM Direct............. -- -- -- 5,110
Issuance of common stock in connection with
the acquisition of CarePackages........... -- -- -- 82
Deferred compensation related to
cancellation of stock options for
terminated employees...................... -- -- 177 --
Compensation relating to grants of stock
options................................... -- -- 539 539
Net loss................................... -- -- -- (35,788)
---- ----- ------- --------
Balance December 31, 2001.................. $(50) $ -- $ (49) $ 11,791
==== ===== ======= ========
</Table>

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

STUDENT ADVANTAGE, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
----------------------------------
1999 2000 2001
---------- ---------- --------
(RESTATED) (RESTATED)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(19,871) $(28,722) $(35,788)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation............................................ 829 2,925 6,666
Amortization of intangible assets....................... 956 3,457 7,280
Impairment of long term assets.......................... -- -- 1,916
Restructuring charge, net............................... -- -- 3,272
Equity interest in Edu.com net loss..................... 316 3,776 495
Provision for bad debt.................................. 180 487 655
Stock based compensation................................ 1,119 771 539
Issuance of stock in exchange for services.............. 151 -- --
Issuance of warrants in exchange for services........... -- -- 15
Exchange of notes receivable for assets sold, net....... -- -- (480)
Amortization of marketing expense associated with common
stock................................................. 444 888 888
Gain on disposal of assets.............................. (16) -- --
Realized loss on write-off of investment................ -- 367 --
Changes in current assets and liabilities, net of
effects of acquisitions:
Accounts and notes receivable......................... (776) (1,904) (2,372)
Prepaid expenses, other current assets................ (2,375) 1,512 1,339
Inventory............................................. -- -- 3,134
Accounts payable...................................... 1,003 128 (2,874)
Accrued compensation.................................. 386 1,299 (247)
Other accrued expenses................................ 2,472 2,768 (153)
Long-term accrued expenses............................ -- -- 2,335
Deferred gain on sale of Voice FX..................... -- -- (534)
Deferred revenue...................................... 2,095 (5,811) (239)
-------- -------- --------
Net cash used in operating activities................. (13,087) (18,059) (14,153)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets................................. (2,971) (3,098) (3,666)
Acquisitions of businesses, net of cash acquired.......... (2,485) (10,992) (9,361)
Purchases of marketable securities........................ (47,223) (8,813) --
Proceeds from sale of marketable securities............... 26,677 29,359 --
Purchase of investment.................................... (4,262) (1,368) --
Proceeds from sale of Voice FX............................ -- -- 338
Proceeds from sale of eStudentLoan........................ -- -- 2,077
Proceeds from sales of fixed assets....................... 20 -- --
-------- -------- --------
Net cash provided by (used in) investing activities... (30,244) 5,088 (10,612)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash............................... -- -- (667)
Proceeds from sale of preferred and common stock, net of
issuance................................................ 49,892 9,965 9,800
Repayment of note from stockholder........................ -- 29 --
Proceeds from exercise of common stock options, warrants
and employee stock purchase............................. 922 586 341
Repayment of capital lease obligations.................... -- (217) (1,489)
Proceeds of revolving line of credit, net................. -- -- 11
Repayment of note payable................................. -- -- (1,100)
Proceeds of notes payable................................. 100 -- 10,200
-------- -------- --------
Net cash provided by financing activities............. 50,914 10,363 17,096
-------- -------- --------
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
44

STUDENT ADVANTAGE, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(IN THOUSANDS)

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
----------------------------------
1999 2000 2001
---------- ---------- --------
(RESTATED) (RESTATED)

Adjustment to conform fiscal period of University
Netcasting................................................ $ 1,647 -- --
Net increase (decrease) in cash and cash equivalents........ 9,230 $ (2,608) $ (7,669)
Cash and cash equivalents, beginning of period.............. 6,140 15,370 12,762
-------- -------- --------
Cash and cash equivalents, end of period.................... $ 15,370 $ 12,762 $ 5,093
======== ======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest.................... $ -- $ 5 $ --
======== ======== ========
Cash paid during the year for taxes....................... $ -- $ -- $ --
======== ======== ========
Supplemental Disclosure of Noncash Activities:
Issuance of warrants to purchase common stock............. 2,200 2,100 6,000
======== ======== ========
During 1999, the Company acquired businesses as follows:
Fair value of intangible and tangible assets and goodwill
acquired................................................ $ 8,626 $ -- $ --
Common stock, common stock options and warrants issued.... (6,189) -- --
Cash paid................................................. (1,462) -- --
-------- -------- --------
Liabilities assumed....................................... $ 975 $ -- $ --
======== ======== ========
During 2000, the Company acquired businesses as follows:
Fair value of intangible and tangible assets and goodwill
acquired................................................ $ -- $ 21,292 $ --
Common stock, common stock options and warrants issued.... -- (6,536) --
Cash paid................................................. -- (11,004) --
-------- -------- --------
Liabilities assumed....................................... $ -- $ 3,752 $ --
======== ======== ========
During 2001, the Company acquired businesses as follows:
Fair value of intangible and tangible assets and goodwill
acquired................................................ $ -- $ -- $ 30,744
Common stock, common stock options and warrants issued.... -- -- (6,331)
Cancellation of debt...................................... -- -- (1,000)
Decrease in prior investment.............................. -- -- (3,200)
Cash paid................................................. -- -- (9,198)
-------- -------- --------
Liabilities assumed....................................... $ -- $ -- $ 11,015
======== ======== ========
During 2001, the Company disposed of business lines as
follows:
Cash received............................................. $ -- $ -- $ 2,966
Notes received............................................ -- -- 5,140
Net assets given up....................................... -- -- (6,270)
Deferred gain............................................. (534)
Other gain................................................ 206
-------- -------- --------
Gain on sale.............................................. $ -- $ -- $ 1,508
======== ======== ========
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
45

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION, NATURE OF BUSINESS AND BASIS OF PRESENTATION

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

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

The Company has also experienced substantial net losses since its inception
and, as of December 31, 2001, had an accumulated deficit of $108.9 million. Such
losses and accumulated deficit resulted primarily from significant costs
incurred in the development of the Company's products and services and the
preliminary establishment of the Company's infrastructure. The Company has taken
significant steps through the restructuring that it announced in October 2001 to
reduce operating costs for 2002. The Company currently anticipates that its
available cash resources, together with cash expected to be provided from
operations based upon an anticipated increase in revenue for 2002, will be
sufficient to meet its anticipated needs for working capital and capital
expenditures for at least the next 12 months. For purposes of evaluating cash
resources through January 1, 2003, the Company has assumed that it will not be
required to repay any amounts under our credit facility with Reservoir Capital
other than the two required payments of $1.25 million each in August 2002 and
September 2002. As disclosed in Note 6, the Company amended its agreement with
Reservoir Capital to extend the earliest payment date of the debt to January 1,
2003. The Company's expectations regarding available cash resources during the
next 12 months are also based on significant reductions in the net loss that the
Company expects to incur in 2002. If the Company's revenue and expense
projections do not materialize as anticipated, if Reservoir capital exercises
its right to require the Company to pay all amounts outstanding under the credit
facility, or if it is otherwise required to repay the amounts outstanding under
the Company's credit facility with Reservoir Capital, the Company will be
required to obtain additional financing. Failure to generate sufficient
revenues, obtain additional capital or financing if needed, or reduce certain
discretionary spending if necessary, could have a material adverse effect on the
Company's ability to achieve its intended business objectives.

In June 1999, the Company acquired University Netcasting, Inc. ("UNI").
This acquisition was accounted for using the pooling of interests method;
accordingly, the historic consolidated financial statements

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of the Company prior to the acquisition have been restated to reflect the
financial position, results of operations and cash flows of UNI.

The 1999 and 2000 financial statements have been retroactively restated to
reflect the investment in Edu.com on the equity method of accounting due to step
acquisition accounting. See Note 2 for further discussion.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

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

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash and cash equivalents. The
Company invests its excess cash in money markets and certificates of deposit,
which are subject to minimal credit and market risk. The Company's cash
equivalents are classified as "available for sale" and are recorded at cost
which approximates fair value. As of December 31, 2000 and 2001, the Company had
cash and cash equivalents of $12.8 and $5.1 million, respectively. In addition
to the the Company's cash and cash equivalents at December 31, 2001, $0.7
million of restricted cash is held in part by our third party credit card
processor and the remaining balance is being held in escrow as agreed in certain
acquisitions

INVESTMENTS

The Company's existing investments do not have readily determinable fair
values and are, therefore, accounted for using the cost method. The Company
periodically reviews the value of its investments to consider whether an "other
than temporary" decline in market value, below the related carrying amount, has
occurred. Factors considered include the current estimated fair value of the
investment, the length of time and extent to which market value has been less
than cost and the financial condition and near-term prospects of the issuer.
When appropriate an impairment loss is recognized related to a decline in
investment value.

On November 12, 1999, the Company made an equity investment in Edu.com,
Inc. ("Edu.com"), a privately held e-commerce company. The Company paid
approximately $4.3 million in exchange for approximately 922,000 shares of
Series B preferred stock of Edu.com. In January 2000, the Company invested an
additional $1.0 million in exchange for approximately 217,000 shares of Series B
preferred stock. On May 10, 2001, the Company acquired certain assets of Edu.com
in exchange for 90,000 shares of Student Advantage common stock and a warrant to
purchase 225,000 shares of common stock, with an exercise price of $2.28 and a
warrant to purchase 225,000 shares of common stock with an exercise price of
$3.42, and assumed certain liabilities of Edu.com. In addition, the Company
canceled the $1.0 million secured promissory note previously issued to the
Company by Edu.com in exchange for the assets securing the note. This
consideration and the Company's previous investment in preferred stock of
Edu.com has been accounted for under the purchase method of accounting. The
accounting treatment of the additional investment is to be in accordance with
Accounting Principles Bulletin: The Equity Method for Accounting for Investments
in

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Common Stock ("APB 18"), which requires the application of step accounting in
accordance with Accounting Research Bulletin 51: Consolidated Financial
Statements Elimination of Intercompany Investment ("ARB 51"). Accordingly, the
Company has retroactively restated our investment in Edu.com on the equity
method of accounting and recorded our ownership percentage of Edu.com's net loss
for the years ended December 31, 1999 and 2000. As a result of applying the
equity method in Edu.com, a portion of the cost of the Company's investment has
been allocated to the equity in the net assets of Edu.com, amounting to
approximately $1.1, $0.2 and $0.5 million for the transactions occurring in
1999, 2000 and 2001 respectively. During the fourth quarter of 2001, the Company
evaluated the value of the acquisition under FAS 121, due to the announced
restructuring of the Company. As a result, the Company determined that the
remaining balance of goodwill was permanently impaired and accordingly recorded
a loss on investment of $0.9 million. In addition to the loss, the Company had
amortized $0.7 million of goodwill as of December 31, 2001.

On July 12, 2000, the Company made an investment in alumnipride.com, Inc.,
("alumnipride.com"), a privately held company providing customized websites to
national alumni associations. The Company paid approximately $0.4 million in
exchange for approximately 97,000 shares of Series B preferred stock of
alumnipride.com. In October 2000, alumnipride.com was acquired by
UConnections.com, Inc. ("Uconnections.com"), and the shares of preferred stock
of alumnipride.com were exchanged for 270,569 shares of common stock of
UConnections.com. At December 31, 2000 the Company evaluated the investment and
determined that the fair value had been permanently impaired and accordingly
recorded an unrealized loss in the amount of $0.4 million.

REVENUE RECOGNITION

The Company derives student services revenue from subscription, commerce
and advertising. Subscription revenue is derived from membership fees related to
enrolling students in the Student Advantage Membership Program. 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. Commerce revenue
is derived primarily from transaction-based revenue earned for reselling
products and services, processing stored value transactions and acquiring
student customers on behalf of other businesses. This revenue is recognized upon
the completion of the related contractual obligations. The Company derives
revenue from advertisements placed in SAM, Student Advantage Magazine and on its
network of websites. Revenue from fees related to advertisements placed in SAM
is recognized when the magazine is shipped to members. Website advertising
revenue is recognized as the related impressions are displayed, provided that no
significant obligations remain and collection of the related receivable is
assured. Certain advertising arrangements include guarantees of a minimum number
of impressions. For arrangements with guarantees, revenue is recognized based
upon the lesser of: (1) ratable recognition over the period the advertising is
displayed, provided that no significant Company obligations remain and
collection of the receivable is assured, or (2) a pro-rata portion of contract
revenue based upon impressions delivered relative to minimum guaranteed
impressions to be delivered.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In accordance with Staff Accounting Bulletin No. 101 "Revenue Recognition
in Financial Statements" ("SAB 101") and EITF Issue No. 99-19 "Reporting Revenue
Gross as a Principal versus Net," the Company has evaluated its revenue and
determined that it is being appropriately reported in accordance with the
guidance. The Company has recorded certain of its commerce revenue at gross as
the Company is the considered the primary obligor in the transaction.

USE OF ESTIMATES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company financial instruments, which include
cash equivalents, investments, accounts payable, accrued expenses and notes
payable, approximate their fair values at December 31, 2000 and 2001. The
Company's notes receivable issued in connection with the VoiceFX transaction
(Note 4) have been recorded at the net present value of the payments using a
discount rate of 8%.

CONCENTRATIONS OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

SFAS No. 105, "Disclosure of Information About Financial Instruments with
Concentrations of Credit Risk", requires disclosure of any significant
off-balance sheet risk and concentrations of credit risk. The Company does not
have any significant off-balance sheet risk. Financial instruments, which
potentially expose the Company to concentration of credit risk, are comprised
primarily of cash, cash equivalents and trade accounts receivable. The Company
places its cash and cash equivalents with financial institutions that have high
credit ratings. Management believes its credit policies are prudent and reflect
normal industry terms and business risk. The Company does not anticipate
non-performance by the counter parties and, accordingly, does not require
collateral. Concentration of credit risk with respect to accounts receivable is
limited to certain customers to whom the Company makes substantial sales. To
reduce risk, the Company routinely assesses the financial strength of its
customers and, as a consequence, believes that its accounts receivable credit
risk exposure is limited. The Company maintains reserves for potential credit
losses and such losses, in the aggregate, have not exceeded management's
expectations. For the year ended December 31, 1999, one customer accounted for
55% of total revenue. For the year ended December 31, 2000, two customers
accounted for 50% of total revenue. For the year ended December 31, 2001, three
customers accounted for 23% of total revenue. At December 31, 1999 and 2000, two
customers accounted for 56% and 36% of accounts receivable, respectively. At
December 31, 2001, one customer accounted for 33% of accounts receivable.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRODUCT DEVELOPMENT

Costs incurred in product development by the Company are expensed as
incurred.

PROPERTY AND EQUIPMENT

Fixed assets are recorded at cost. Depreciation is recorded using the
straight-line method over estimated useful lives as follows:

<Table>
<Caption>
YEARS
-----

Furniture and fixtures...................................... 3
Computer equipment and software............................. 2-3
Equipment................................................... 3
</Table>

Amortization of capitalized leased assets and leasehold improvements is
recorded using the straight-line method over the shorter of the lease term or
the useful life. Repair and maintenance costs are expensed as incurred. When
fixed assets are retired or otherwise disposed of, the asset cost and
accumulated depreciation and amortization are removed from the accounts and any
resulting gain or loss is reflected in income.

CAPITALIZED COMPUTER SOFTWARE COSTS

The Company records expenditures for computer software in accordance with
the provision of Statement of Position 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use". In accordance with
this statement, costs incurred for data conversion, training and maintenance are
expensed as incurred. Once the preliminary project stage is completed, direct
costs incurred during the application development stage are capitalized and
amortized over the estimated useful life of the asset. The Company capitalized
$0.5 and $1.6 million in 2000 and 2001, respectively. Amortization of software
cost is provided on a straight-line basis over the estimated useful life, which
is approximately two or three years.

WEB SITE DEVELOPMENT COSTS

The Company records expenditures for website development in accordance with
the provision of the Emerging Issues Task Force Issue No. 00-2, "Accounting for
Web Site Development Costs." In accordance with this statement, costs incurred
for data conversion, training and maintenance are expensed as incurred. Once the
preliminary project stage is completed, direct costs incurred during the
application development stage are capitalized and amortized over the estimated
useful life of the asset. The Company capitalized $0.8 and $0.6 million in 2000
and 2001, respectively. Amortization of website development cost is provided on
a straight-line basis over the estimated useful life, which is approximately two
or three years.

INTANGIBLE AND OTHER ASSETS

Intangible assets include the excess of the purchase price over
identifiable net assets acquired in acquisitions. Such assets include goodwill,
completed technology, workforce, customer lists, non-compete agreements,
websites and other intangible assets, which are being amortized on a
straight-line basis over their estimated economic lives ranging from two to five
years. Accumulated amortization was $5.3 and $10.0 million at December 31, 2000
and 2001, respectively. The Company periodically evaluates its intangible assets
for potential impairment. As a result of the application of SFAS 142 in 2002,
the goodwill attributable to the acquisition of OCM Direct will not be amortized
in 2002, but will be subject to an impairment test.

LONG-LIVED ASSETS

The Company assesses the realizability of long-lived assets in accordance
with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to Be Disposed Of". The

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company reviews its long-lived assets for impairment as events and circumstances
indicate the carrying amount of an asset may not be recoverable. The Company
evaluates the realizability of its long-lived assets based on profitability and
cash flow expectations for the related asset. As a result of its review, the
Company recorded asset impairment charges of $1.9 million for the year ended
December 31, 2001.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for stock-based awards to employees using the
intrinsic value method as prescribed by Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Accordingly, no compensation expense is recorded for options
issued to employees in fixed amounts and with fixed exercise prices at least
equal to the fair market value of the Company's common stock at the date of
grant. The Company has adopted the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," through disclosure only (Note 9). All stock-based
awards to non-employees are accounted for at their fair value in accordance with
SFAS No. 123.

In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation -- an Interpretation of APB No. 25" ("FIN 44"). FIN 44 clarifies
the application of APB 25 and, among other issues clarifies the following: the
definition of an employee for purposes of applying APB 25; the criteria for
determining whether a plan qualifies as a non-compensatory plan; the accounting
consequence of various modifications to the terms of the previously fixed stock
options or awards; and the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 was effective July 1, 2000, but certain
conclusions in FIN 44 cover specific events that occurred at earlier dates. The
application of FIN 44 has not had a material impact on the Company's financial
position or results of operations.

INCOME TAXES

Prior to its reorganization as a C Corporation in 1998 (Note 1), the
Company was treated as a limited liability company for federal and state income
tax purposes. Accordingly, no provision for corporate income taxes was recorded
during this period and all losses were passed through to Student Advantage LLC's
members. At the time of its reorganization, the Company adopted the liability
method of accounting for income taxes as set forth in SFAS No. 109, "Accounting
for Income Taxes" (Note 10).

ADVERTISING EXPENSE

The Company recognizes advertising expense as incurred. Advertising expense
was approximately $1.2, $1.0 million and $4.7 million for the years ended
December 31, 1999, 2000 and 2001, respectively.

NET LOSS PER SHARE

In accordance with SFAS No. 128, "Earnings per Share", basic and diluted
net loss per share is computed by dividing the net loss available to common
stockholders for the period by the weighted average basic and diluted number of
shares of common stock outstanding during the period. The calculation of diluted
net loss per share excludes potential common stock, as their effect is
anti-dilutive.

All outstanding options and warrants to purchase common stock (in 2001
totaling 11,538,814) were excluded from the calculation of diluted earnings per
share for all periods presented because their inclusion would have been
anti-dilutive.

RECLASSIFICATION

The financial statements for the years ended December 31, 1999 and 2000
reflect a change in the classification of revenue categories and the associated
cost of sales. The classifications have been changed

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

from "Subscription" and "Other" to "Student Services" and "Corporate and
University Solutions." In addition, the financial statements for the years ended
December 31, 1999 and 2000 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. Certain prior year
amounts have been reclassified to conform to current year presentation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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 Company has adopted EITF 00-19 and has applied it to warrants as
appropriate.

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 No. 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 was 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.

3. ACQUISITIONS

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

On April 1, 1999, Student Advantage completed its acquisitions of The
Travel Holding Group, LLC ("The Travel Holding Group"), and The Campus Agency,
LLC ("The Campus Agency), in exchange for a promissory note in the amount of
$330,000 that has been paid in full. The Campus Agency provides media planning
and strategy consulting services to the U.S. student travel market. The Travel
Holding Group is a reseller of Eurail passes. The acquisition was accounted for
as a purchase business combination in accordance with APB Opinion No. 16,
"Business Combinations", and the Company has consolidated the operations of The
Travel Holding Group and The Campus Agency beginning on the date of acquisition.
Goodwill and other intangible assets in the aggregate amount of $307,000 were
recorded in connection with these acquisitions and are being amortized over
three years. At December 31, 2001, due to the Company's restructuring in the
fourth quarter, the Company evaluated the value of its intangible assets in
accordance with FAS 121. As a result, the

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company wrote down $5,500 related to the remaining goodwill of The Campus Agency
and The Travel Holding Group.

On May 27, 1999, the Company acquired substantially all of the assets of
Mentor Interactive Corp., a provider of internet-based research tools and
related materials, in exchange for 18,056 shares of common stock and a warrant
to purchase 24,000 shares of common stock at a purchase price of $11.08 per
share with an aggregate estimated fair value of approximately $0.3 million. The
acquisition was accounted for as a purchase business combination in accordance
with APB Opinion No. 16, "Business Combinations", and the Company has
consolidated the operations of Mentor Interactive Corp. beginning on the date of
acquisition. Goodwill and other intangible assets in the aggregate of $0.3
million were recorded with the acquisition. Due to a change in estimated
economic life, the remaining balance of approximately $0.2 million was fully
amortized in 2000.

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

On June 18, 1999, the Company acquired all of the outstanding stock of
University Netcasting, Inc. ("UNI") in exchange for 2,425,610 shares of Student
Advantage common stock and the conversion of all UNI outstanding common stock
options for options to purchase 66,634 shares of Student Advantage common stock.
UNI is a leading operator of official athletic websites for colleges,
universities and college sports associations. Through its FANSonly Network, UNI
provides sports fans with comprehensive online information and analysis on
college sports. This acquisition was accounted for using the pooling of
interests method; accordingly, the historic consolidated financial statements of
the Company prior to the acquisition have been restated to reflect the financial
position, results of operations and cash flows of UNI. Effective June 18, 1999,
UNI's fiscal year end changed from March 31 to December 31 to conform to the
Company's year end. UNI's results of operations for the years ended March 31,
1997, 1998 and 1999 have been included in the Company's December 31, 1996, 1997
and 1998 results, respectively. UNI's results for year ended December 31, 1999
have been included in the Company's year ended December 31, 1999 results.
Accordingly, UNI's operations for the three months ended March 31, 1999 have
been included in the Company's results for both the years ended December 31,
1998 and 1999. Revenue and net loss for UNI for the three months ended March 31,
1999 were $0.7 and $1.6 million, respectively. This net loss has been reported
as an adjustment to the consolidated accumulated deficit.

On October 7, 1999, the Company acquired Voice FX Corporation ("Voice FX"),
a leading provider of internet and interactive voice response services to
college and university registrars. In connection with the acquisition, the
Company paid approximately $1.1 million in cash, issued 430,082 shares of
Student Advantage common stock, valued at approximately $5.0 million, and agreed
to assume all outstanding options to purchase Voice FX common stock through
issuing 59,687 options to purchase common stock valued at approximately $0.7
million. The Company also incurred approximately $0.2 million in professional
and other fees associated with this acquisition. The acquisition was accounted
for as a purchase business combination in accordance with APB Opinion No. 16,
"Business Combinations", and the Company has consolidated the operations of
Voice FX beginning on the date of acquisition. Goodwill and other intangible
assets in the aggregate amount of $6.4 million have been recorded in connection
with the acquisition and are being amortized on a straight-line basis over
expected useful lives of between three and five years.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

<Table>

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

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

<Table>
<Caption>
YEAR ENDED
DECEMBER 31, 1999
-----------------
(UNAUDITED, IN
THOUSANDS, EXCEPT
PER SHARE)

Net revenue................................................. $ 31,571
Net loss.................................................... $(22,097)
Net loss per common share:
Basic and diluted......................................... $ (0.81)
</Table>

On May 17, 2000, the Company acquired College411.com, Inc. ("College411"),
a provider of web-based college and university student-focused content. In
connection with the acquisition, the Company issued 193,837 shares of common
stock, assumed all of College411's outstanding common stock options, which were
converted into options to purchase a total of 36,162 shares of the Company's
common stock, and forgave a loan of approximately $0.3 million. The acquisition
was accounted for as a purchase business combination in accordance with APB
Opinion No. 16, "Business Combinations", and the Company has consolidated the
operations of College411 beginning on the date of acquisition. Goodwill and
other intangible assets in the aggregate amount of $1.5 million have been
recorded in connection with the acquisition and are being amortized on a
straight-line basis over two years. At December 31, 2001, due to the company
restructuring in the fourth quarter, the company evaluated the value of its
intangible assets in accordance with FAS 121. As a result, the Company wrote
down $0.3 million related to the remaining goodwill of College411.

On May 18, 2000, the Company acquired ScholarAid.com, Inc. ("ScholarAid"),
a provider of web-based scholarship and educational research tools. In
connection with the acquisition, the Company issued 131,638 shares of common
stock, assumed all of ScholarAid's outstanding common stock options, which were
converted into options to purchase a total of 21,302 shares of the Company's
common stock, and forgave a loan of approximately $0.5 million. The acquisition
was accounted for as a purchase business combination in accordance with APB
Opinion No. 16, "Business Combinations", and the Company has consolidated the
operations of ScholarAid beginning on the date of acquisition. Goodwill and
other intangible assets in the aggregate amount of $1.4 million have been
recorded in connection with the acquisition and are being amortized on a
straight-line basis over three years. On November 26, 2001 in relation to the
sale of eStudentLoan, the remaining $0.7 million of goodwill was written off
again the gain on the eStudentLoan transaction.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On July 28, 2000, the Company acquired from CollegeClub.com, Inc.
("CollegeClub"), certain assets of its eStudentLoan, LLC ("eStudentLoan")
subsidiary relating to its student loan search engine business, in exchange for
approximately $0.9 million in cash. The acquisition was accounted for as a
purchase business combination in accordance with APB Opinion No. 16, "Business
Combinations", and the Company has consolidated the operations of eStudentLoan
beginning on the date of acquisition. An intangible asset in the approximate
amount of $1.1 million was recorded in connection with the acquisition and is
being amortized on a straight-line basis over three years. On November 26, 2001,
the Company completed the sale of its eStudentLoan business to a third-party. As
consideration for the transaction the Company received net proceeds of $2.3
million in cash. The Company has recognized $0.9 million as a gain in their
statement of operations related to this transaction during the year ended
December 31, 2001. The recorded gain was net of $1.2 million of remaining
goodwill related to the acquisitions of eStudentLoan and Scholaraid.

On October 31, 2000, the Company acquired substantially all of the assets
of CollegeClub, an integrated communications and media internet company for
college students, and certain of its subsidiaries that had filed for protection
under Chapter 11 of the federal Bankruptcy Code, in exchange for approximately
$8.3 million in cash, 1,324,761 shares of common stock and the assumption of
certain liabilities. The sale was approved by the federal Bankruptcy Court in
Southern California. The acquisition was accounted for as a purchase business
combination in accordance with APB Opinion No. 16, "Business Combinations", and
the Company has consolidated the operations of College Club beginning on the
date of acquisition. An intangible asset, related to a contract with a customer
that was acquired through the acquisition, in the approximate amount of $4.6
million has been recorded in connection with this acquisition and is being
amortized on a straight-line basis over thirty months.

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

<Table>

Working capital, net........................................ $ 2,359
Long-term obligation under capital leases................... (2,045)
Fixed assets................................................ 8,769
Contracts................................................... 4,649
-------
Total purchase price...................................... $13,732
=======
</Table>

The following unaudited pro forma data summarizes the results of operations
for the years ended December 31, 1999 and 2000 as if the acquisition of
CollegeClub had been completed on the first day of each respective period. The
pro forma data gives effect to actual operating results prior to the acquisition
and adjustments to reflect amortization of goodwill and other intangible assets.
These pro forma amounts do not purport to be indicative of the results that
would have actually been obtained if the acquisition had occurred on January 1,
1999 and 2000, respectively, or that may be obtained in the future. The pro
forma amounts below do not include amounts related to insignificant acquisitions
that occurred during 1999 and 2000.

<Table>
<Caption>
1999 2000
----------- -----------
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE DATA)

Net revenue................................................. $ 30,557 $ 54,239
Net loss.................................................... $(46,378) $(73,074)
Net loss per common share:
Basic and diluted......................................... $ (1.69) $ (2.00)
</Table>

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

agreement with Edu.com. On November 12, 1999, the Company made an equity
investment in Edu.com of approximately $4.3 million in exchange for
approximately 922,000 shares of Series B preferred stock and entered into a
marketing and distribution agreement with Edu.com providing for payments of $2.0
million to the Company over the term of the agreement. In January 2000, we
invested an additional $1.0 million in exchange for approximately 217,000 shares
of Series B preferred stock. At December 31, 2000, $1.0 million remained payable
under the agreement. In satisfaction of this obligation, we accepted a secured
promissory note, which was payable on December 31, 2001, from Edu.com. In
connection with the Company's acquisition of certain assets of Edu.com in May
2001, we issued 90,000 shares of our common stock and a warrant to purchase
225,000 shares of common stock with an exercise price of $2.28 and a warrant to
purchase 225,000 shares of common stock with an exercise price of $3.42, and
assumed certain liabilities of Edu.com. In addition, we canceled the $1.0
million secured promissory note previously issued to us by Edu.com in exchange
for the transfer of assets securing the note. This consideration, including the
Company's previous investment in Edu.com was accounted for as a purchase
business combination in accordance with APB Opinion No. 16, "Business
Combinations". The resulting treatment of the additional investment is in
accordance with Accounting Principles Bulletin: The Equity Method for Accounting
for Investments in Common Stock ("APB 18"), which requires the application of
step accounting in accordance with Accounting Research Bulletin 51: Consolidated
Financial Statements Elimination of Intercompany Investment ("ARB 51").
Accordingly, the Company has retroactively restated our investment in Edu.com on
the equity method of accounting and recorded our ownership percentage of
Edu.com's net loss for the years ended December 31, 1999 and 2000. As a result
of applying the equity method in Edu.com, a portion of the cost of the Company's
investment has been allocated to the equity in the net assets of Edu.com,
amounting to approximately $1.1, $0.2, and $0.5 million for the transactions
occurring in 1999, 2000 and 2001 respectively. Goodwill and other intangible
assets aggregated approx. $1.6 million in connection with the acquisition of
Edu.com. During the fourth quarter of 2001, the Company evaluated the value of
the acquisition under FAS 121, due to the announced restructuring of the
Company. As a result, the Company determined that the remaining balance of
goodwill was permanently impaired and accordingly recorded a loss on investment
of $0.9 million. In addition to the loss, the Company had amortized $0.7 million
of goodwill as of December 31, 2001.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the Company has consolidated the operations of OCM Direct beginning on the date
of acquisition. Goodwill and other intangible assets aggregated $18.5 million in
connection with the acquisition of OCM Direct.

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

<Table>

Working capital, net........................................ $ 4,921
Long-term obligation under capital leases................... (552)
Fixed assets................................................ 1,633
Contracts................................................... 1,400
Technology.................................................. 300
Goodwill.................................................... 16,818
-------
Total purchase price...................................... $24,520
=======
</Table>

The following unaudited pro forma data summarizes the results of operations
for the years ended December 31, 2001 as if the acquisition of OCM Direct had
been completed on the first day of the period. The pro forma data gives effect
to actual operating results prior to the acquisition and adjustments to reflect
amortization of goodwill and other intangible assets. These pro forma amounts do
not purport to be indicative of the results that would have actually been
obtained if the acquisition had occurred on January 1, 2001, or that may be
obtained in the future. The pro forma amounts below do not include amounts
related to insignificant acquisitions that occurred during 2001.

<Table>
<Caption>
2001
-----------------
(UNAUDITED, IN
THOUSANDS, EXCEPT
PER SHARE DATA)

Net revenue................................................. $ 71,387
Net loss.................................................... $(40,164)
Net loss per common share:
Basic and diluted......................................... $ (0.88)
</Table>

On October 1, 2001, the Company and our wholly-owned subsidiary, OCM
Direct, Inc., acquired substantially all of the assets of CarePackages.com, LLC,
a privately held e-commerce company specializing the sale of direct mail gift
packages or care packages to college students. The acquisition was accounted for
as a purchase business combination in accordance with APB Opinion No. 16,
"Business Combinations", and the Company has consolidated the operations of OCM
Direct beginning on the date of acquisition. In connection with the acquisition,
the Company issued 100,000 shares of the Company's common stock, and paid
$30,000 in cash to creditors of CarePackages.com, LLC. Goodwill and other
intangible assets aggregated $0.1 million in connection with the acquisition.

4. DISPOSITIONS

On May 31, 2001, the Company completed the sale of its Rail Connection
business to Wandrian, Inc. ("Wandrian"), for aggregate consideration of $0.6
million, in the form of a secured promissory note for $0.2 million payable over
the next three years and a second promissory note for $0.4 million convertible
into Wandrian's Series B Preferred Stock and maturing on May 31, 2006. As a
result of this transaction, the Company recorded a gain of $0.3 million, which
was net of remaining goodwill of approximately $68,000, in its results for the
period ended December 31, 2001.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FX"). As of the same date, two former managers and owners ("the Buyers") of our
Voice FX business, who sold the business to Student Advantage in 1999, entered
into a call option agreement ("the Option") with the Company to purchase all of
the Company's interest in Voice FX. As consideration for the entering into the
Option the Company received $0.9 million, of which $0.6 million was paid in cash
and $0.3 million was in the form of a Promissory Note (the "First Note"),
bearing interest of 12.9%, with a maturity of December 31, 2002. The Option was
exercised on November 7, 2001 and on December 31, 2001, we sold our interest in
Voice FX to the Buyer, for consideration consisting of a Promissory Note for
$3.0 million (the "Second Note"), a Promissory Note for $0.9 million (the "Third
Note"), and $1.1 million related to the net working capital of the Voice FX
business, of which $0.2 million was received January 3, 2002 and $0.9 million
was received on March 28, 2002. The Second Note, bearing interest of 14.5%,
requires payments of interest to begin on March 31, 2003, with the principal and
remaining interest coming due on December 31, 2006. The Third Note, which is
non-interest bearing, requires payments of principal beginning June 30, 2003,
with the final payment coming due on December 31, 2007. The Company recorded the
Second and Third note at their net present value of the payments using a
discount rate of 8%. As a result of the transaction, Student Advantage recorded
a total gain of $1.0 million, which was net of $0.3 million in transaction
expenses. Of the gain, $0.5 million was deferred until such time as the
outstanding notes are collected. On December 28, 2001, the Company and the Buyer
entered into two marketing agreements, whereby the Company will provide
marketing and promotional services to the Buyer for a cumulative fee of $2.7
million. The services will be provided from January 1, 2002 through March 31,
2006.

On November 26, 2001, the Company completed the sale of its eStudentLoan
business to a third-party. As consideration for the transaction the Company
received net proceeds of $2,300,000 in cash. The Company has recognized $0.9
million as a gain in their statement of operations related to this transaction
during the year ended December 31, 2001. The recorded gain was net of $1.2
million of remaining goodwill related to the acquisitions of eStudentLoan and
Scholaraid.

5. PROPERTY AND EQUIPMENT

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

<Table>
<Caption>
DECEMBER 31
-----------------
2000 2001
------- -------

Furniture and fixtures...................................... $ 396 $ 859
Computer equipment and software............................. 17,366 10,787
Equipment................................................... 465 10,941
Leasehold improvements...................................... 853 1,101
------- -------
19,080 23,688
Less: Accumulated depreciation and amortization............. 5,737 11,655
------- -------
$13,343 $12,033
======= =======
</Table>

Depreciation and amortization expense with respect to property and equipment and
capital leases for the years ended December 31, 1999, 2000 and 2001 was $0.9,
$2.9 and $6.7 million, respectively.

6. BORROWINGS

On June 25, 2001, the Company entered into a loan agreement (the "Loan
Agreement") by and among the Company, the subsidiaries of the Company 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 a credit facility in the aggregate principal amount of up
to $15.0 million, consisting of a $10.0 million term loan and a $5.0 million
revolving loan. The Company borrowed $10.0 million in the form of

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

a term loan (the "Term Loan") and $5.0 million in the form of a revolving loan
(the "Revolving Loan"), and used substantially all of these proceeds to pay the
cash portion of the purchase price for the acquisition and existing debt of OCM
Direct, Inc. The remainder of the proceeds from the credit facility were used
for working capital and general corporate purposes of the Company. The credit
facility matures in June 2004 provided the Lenders may terminate all commitments
under the credit facility as early as September 2002 and require payment of all
outstanding amounts under the credit facility by January 1, 2003. If the Lenders
do not give us notice of termination of the credit facility by June 25, 2002,
the Lenders have the right to terminate the facility in September 2003 and
require payment by October 2003. In addition, the credit facility requires
mandatory prepayments of $1.25 million before August 1, 2002 and again on
September 1, 2002 to paydown the principal due under the credit facility, and in
connection with certain asset sales and equity issuances by the Company or its
subsidiaries. The credit facility is secured by a lien against substantially all
of the assets of the Company, and is guaranteed by all of the Company's
subsidiaries (excluding OCM Direct and its subsidiaries), which guarantees are
also secured, excluding OCM Direct and its subsidiaries. Interest accrues under
the credit facility at 12% per annum, and interest on the term loan portion is
not currently payable in cash unless, under certain circumstances, the Lenders
elect to have the Company pay such interest, in which case, the Company may
choose to pay the accrued interest in cash or in common stock (provided that the
option to pay such amount in common stock will only be available if, after
issuance of such shares of common stock, the shares would be the subject of an
effective registration statement or could be immediately resold by the Lenders).
If the common stock option is selected, the number of shares of common stock
deliverable will be determined by dividing the amount of interest being paid by
80% of the volume weighted average price as of the applicable term loan interest
payment date. The Company will assess the impact of beneficial conversion
features if the common stock option is selected. The Company is also required to
pay annual facility and commitment fees equal to 2.5% of the amounts borrowed.
The credit facility also requires that the Company and its subsidiaries comply
with certain affirmative, negative and financial covenants, which are more
specifically described in the Loan Agreement.

On November 6, 2001, we modified certain provisions and covenants of our
Loan Agreement with the Lenders and increased the aggregate amount of the term
loan deemed outstanding under our credit facility by $0.2 million, paid $0.1
million in cash and issued immediately exercisable warrants to purchase an
aggregate of 100,000 shares of common stock with an exercise price of $.01 per
share. The fair value of the warrants has been 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", we will mark the
value of these warrants to market at each reporting period.

On March 29, 2002, the Company amended its Loan Agreement with the Lenders
to provide that in the event the Lenders provide notice to the Company on or
before the June 25, 2002 anniversary date of the loan closing that it is
terminating all commitments under the credit facility in September 2002, the
Company will have until January 1, 2003 to repay the loans before an event of
default occurs. This amendment does not serve to eliminate or modify any other
default provisions. The Company also agreed to pay the Lenders $1.25 million
before August 1, 2002 and $1.25 million before September 1, 2002, to reduce the
Company's principal due under the credit facility. Additionally, the amendment
fixed the number of shares subject to the Term Warrants issued to the Lenders
which become exercisable on June 25, 2002, as specified in the Warrant
Agreement, at the full number of shares for which the Term Warrants were issued
if any amount of the Term Loan is outstanding on that date, rather than a pro
rata portion based on the Term Loan balance.

As of December 31, 2000 and 2001 the Company had total borrowings
outstanding of $0 and $15.2 million, respectively.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. PREFERRED STOCK

UNDESIGNATED PREFERRED STOCK

On April 5, 1999, the Company's Board of Directors approved, which the
stockholders approved in May 1999, 5,000,000 shares of undesignated preferred
stock. Issuances of the undesignated preferred stock may be made at the
discretion of the Board of Directors (without stockholder approval), in one or
more series and with such designations, rights and preferences as determined by
the Board. As a result, the undesignated preferred stock may have dividend,
liquidation, conversion, redemption, voting or other rights, which may be more
expansive than the rights of holders of common stock. At December 31, 2000 and
2001 there were no shares of undesignated preferred stock issued or outstanding.

8. STOCKHOLDERS' EQUITY

INITIAL PUBLIC OFFERING ("IPO")

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

PRIVATE PLACEMENT

On October 27, 2000, the Company issued 800,000 shares of common stock to
At Home Corporation ("Excite@Home"), a provider of broadband services, and
1,200,000 shares of common stock to John Hancock Small Cap Value Fund, for an
aggregate purchase price of $10.0 million. The Company also issued to these
investors warrants to purchase a total of 1,000,000 shares of common stock, half
of which were issued with an exercise price of $5 per share and half of which
were issued with an exercise price of $6 per share. In connection with the
transaction, the Company entered into an alliance agreement with Excite@Home to
jointly market Excite@Home's broadband service and Student Advantage Network
content to student and university customers.

On May 1, 2001, the Company issued five million shares of common stock to
five investors, for an aggregate purchase price of $10.0 million. We also issued
to these investors warrants to purchase an additional 2.3 million shares of
common stock, including warrants to purchase 1.5 million shares of common stock
with an exercise price of $3.00 per share and warrants to purchase 800,000
shares of common stock with an exercise price of $1.26 per share. The warrants
to purchase 800,000 shares with an exercise price of $1.26 per share are subject
to certain exercise price adjustments on certain dates based upon
volume-weighted average sales prices. An adjustment described in the preceding
sentence to the exercise price of the warrants shall not result in an adjustment
to the number of shares of common stock issuable upon exercise of the warrants.

See warrant footnote below for discussion of how warrants were valued and
recorded.

WARRANTS

In July 1999, the Company entered into a marketing agreement with Lycos,
Inc. In connection with the transaction, Lycos was granted a warrant (the "Lycos
warrant") to purchase 550,000 shares of common stock at a purchase price of
$10.88 per share. The Lycos warrant terminates on July 21, 2002 and was
exercisable on or after July 21, 2000. The Company valued the Lycos warrant,
using the Black-Scholes method, at $2.2 million, which is included in other
assets and is being recognized as a sales and marketing expense. During 2000 and
2001, $0.9 and $0.9 million of the warrants value was recognized as sales and
marketing expense, respectively. As of December 31, 2001 the company had
completely amortized the asset.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In May 1999, the Company issued a warrant for the purchase of 24,000 shares
of common stock at a purchase price of $11.08 per share in connection with its
acquisition of Mentor Interactive Corp. This warrant was exercisable upon issue
and expired unexercised on May 27, 2000.

In October 2000, the Company issued a warrant for the purchase of 200,000
shares of common stock with an exercise price of $5.00 and an additional warrant
for the purchase of 200,000 shares of common stock with an exercise price of
$6.00 in connection with the private placement. These warrants were exercisable
upon issuance and expire on October 26, 2002 and October 26, 2003, respectively.
The Company valued the warrants, using the Black-Scholes method, at $0.8
million.

In October 2000, the Company issued a warrant for the purchase of 300,000
shares of common stock with an exercise price of $5.00 and an additional warrant
for the purchase of 300,000 shares of common stock with an exercise price of
$6.00 in connection with the private placement. These warrants were exercisable
upon issuance and expire on October 26, 2002 and October 26, 2003, respectively.
The Company valued the warrants, using the Black-Scholes method, at $1.3
million.

In May 2001, in connection with the Company's private placement, the
Company issued warrants to purchase 1,925,000 shares of common stock. Of the
warrants issued, 800,000 and 1,125,000 have exercise prices of $1.26 and $3.00,
respectively. These warrants were exercisable upon issuance and expire on May 1,
2005. The warrants priced at $1.26 have an adjustment feature for changes in the
market price of the underlying stock semi-annually through May 1, 2003. The
Company valued the warrants, using the Black-Scholes method, at $3.8 million,
and recorded the amount as a cost of the private placement.

In May 2001, the Company issued a warrant for the purchase of 225,000
shares of common stock with an exercise price of $2.28 and an additional 225,000
warrants with an exercise price of $3.42 in connection with the purchase of
certain Edu.com assets. These warrants were exercisable upon issuance and expire
May 9, 2006. The Company valued the warrants, using the Black-Scholes method, at
$0.9 million.

In June 2001, in connection with the transaction contemplated by the Loan
Agreement with Reservoir Capital Partners, L.P., Reservoir Capital Associates,
L.P. and Reservoir Capital Master Fund, L.P. (collectively the "lenders") the
Company entered into a Warrant Agreement (the "Warrant Agreement"), dated June
25, 2001, by and among the Company and the Lenders, under which the Company
issued to the Lenders warrants to purchase a number of shares of common stock
based on the outstanding balance of the Term Loan and Revolving Loan. In
accordance with the Warrant Agreement, the Company issued to the Lenders (i)
warrants to purchase an aggregate of 500,000 shares of common stock, which are
exercisable immediately, (ii) warrants to purchase an aggregate of 500,000
shares of common stock, which were amended in March 2002 to become exercisable
if any of the Term Loan is outstanding on June 25, 2002, and (iii) warrants to
purchase an aggregate of 500,000 shares of common stock, which become
exercisable if the entire balance of the Term Loan is outstanding on June 25,
2003 (or a pro rata portion of the 500,000 shares if only a portion of the Term
Loan is then outstanding) (collectively, the "Term Warrants"). The number of
shares subject to the Term Warrants is subject to adjustment under certain
circumstances in accordance with the terms of the Term Warrants. The Company
also issued to the Lenders warrants (the "Revolving Warrants") to purchase a
number of shares of common stock based on the outstanding balance of the
Revolving Loan. The number of shares subject to the Revolving Warrants is
initially zero and increases by an aggregate of 20,833 shares for each full
month that the entire Revolving Loan is outstanding (or a pro rata portion of
the 20,833 shares for each shorter time period or lesser outstanding balance).
The Company also agreed to issue one or more default warrants (the "Default
Warrants" and, collectively with the Term Warrants and the Revolving Warrants,
the "Warrants") to purchase shares of common stock in the event that the Company
receives a notice of an event of default under the Loan Agreement. The number of
shares subject to the Default Warrants shall initially equal the outstanding
balance of the Term Loan and Revolving Loan including capitalized interest and
accrued interest at such time divided by $1,000, and shall increase by
one-thirtieth of such amount (or pro rata portion of such amount if the balance
is reduced after the issuance of

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the Default Warrant) for each day that the event of default continues. The
exercise price applicable to all of the Warrants is $.01 per share. The number
of shares issuable upon exercise of the Warrants is subject to adjustment in
accordance with the terms of the Warrant Agreement in the event that the Company
issues certain additional securities at a price per share equal to less than
ninety percent of the average trading price of the common stock over the 20
trading days preceding the date of issuance. The Warrant Agreement also requires
that the Company register with the Securities and Exchange Commission the shares
of common stock issuable upon exercise of the Warrants or issued in respect of
accrued interest for resale by the Lenders within ninety days after the closing
and use commercially reasonable efforts to cause the registration statement to
be declared effective as soon as practicable. Under the terms of the Warrant
Agreement, following payment or acceleration of the Term Loan, reduction or
termination of the revolving loan commitment or issuance of the Default
Warrants, the holders of the Warrants shall have the right to require the
Company to purchase all or a portion of the Term Warrants, Revolving Warrants
and Default Warrants, as the case may be, at a price per share of $2.50 plus,
from and after June 25, 2002, interest at a rate equal to 27% per annum through
the date of payment. As of December 31, 2001, the Company valued the warrants
issued under the Warrant Agreement at the full put-right value of $1.3 million
which is higher than the fair value of the warrants. This amount has been
recorded as a deferred financing cost included in other assets in the
accompanying balance sheet and is being 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", the Company will continue to mark the value of these warrants to market
at each reporting period and record the warrants at the higher of the put right
value or the fair value.

In September 2001, the Company issued a warrant for the purchase of 17,500
shares of common stock with an exercise price of $1.50 in connection with
certain services provided. The Company valued the warrant, using the
Black-Scholes method, at $15,000, which was recorded as a sales and marketing
expense.

On November 6, 2001, we modified certain provisions and covenants of our
loan agreement with Reservoir Capital Partners, Reservoir Capital Associates and
Reservoir Capital Master Fund (collectively, the "Lenders") and increased the
aggregate amount of the term loan deemed outstanding under our credit facility
by $0.2 million, paid $0.1 million in cash and issued immediately exercisable
warrants to purchase an aggregate of 100,000 shares of common stock with an
exercise price of $.01 per share. The amount was 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", we will mark the value of these warrants to market at the end of each
reporting period.

On November 26, 2001, we sold all of the outstanding shares of stock of our
subsidiary eStudentLoan, Inc. In connection with the sale of eStudentLoan, we
entered into an agreement with Reservoir Capital Partners, L.P. which provides
that none of the proceeds of such sale would need to be used to mandatorily
prepay our credit facility. We also agreed that (i) on the 26th day of each
month, the amount of the term loans deemed outstanding under the credit facility
shall be increased by $500 for each day during the preceding month when the
amount of the outstanding term loans under the credit facility exceeded $7.5
million, and (ii) the lenders would receive additional warrants to purchase
shares of our common stock, at a purchase price of $0.01 per share, which would
be exercisable on the 26th day of each month for an aggregate of 500 shares
(subject to adjustment) for each day during the preceding month when the amount
of the outstanding term loans under the credit facility exceeded $7.5 million.
As of December 31, 2001, the shares available for exercise were 15,000. The fair
value of the warrants has been recorded as a deferred financing cost and
included in other assets on our balance sheet and will be recognized as interest
expense over the term of the debt.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, 2001, the Company has reserved 5,129,667 shares of its
common stock for the exercise of these warrants.

9. STOCK AWARD PLANS

1995 STOCK OPTION PLAN

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

1996 STOCK OPTION PLAN

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

1998 STOCK INCENTIVE PLAN

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

On April 5, 1999, the Board approved an amendment to the 1998 Stock Plan,
which the stockholders approved in May 1999, providing for the issuance of up to
an aggregate 7,500,000 shares of the Company's common stock to eligible
employees, officers, the Board of Directors with terms to be defined therein.

On May 19, 2000, the Board approved an amendment to the 1998 Stock Plan,
which the stockholders approved in May 2000, providing for an increase in the
number of shares of common stock issuable under the plan from 7,500,000 to
9,500,000 shares.

On March 5, 2001, the Board approved an amendment to the 1998 Stock Plan,
which the stockholders approved in May 2001, providing for an increase in the
number of shares of common stock issuable under the plan from 9,500,000 shares
to 12,000,000 shares.

During 1998, the Company granted stock options to purchase 2,313,000 shares
of its common stock with an exercise price of $0.33 per share. During 1999, the
Company granted stock options to purchase 47,550 shares of its common stock with
an exercise price of $1.87 per share. During 1998 and 1999, the Company recorded
deferred compensation of $4.2 and $0.2 million, respectively, representing the
differences between the estimated fair market value of the common stock on the
date of grant and the exercise price. During 1999, 2000 and 2001 the Company
recorded compensation expense relating to these options totaling $1.1, $0.8 and
$0.5 million, respectively. Compensation relating to options which vested
immediately upon grant was expensed in full at the date of grant, while
compensation related to options which vest over time was recorded as a component
of stockholders' equity (deficit) and is being amortized over the vesting
periods of the related options. In 1999, 2000 and 2001, as a result of employee
terminations, deferred compensation related to

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

certain of these options was reduced by approximately $0.3, $0.7 and $0.2
million, respectively. Had compensation cost for the Company's option grants
been determined based on the fair value at the date of grant consistent with the
method prescribed by SFAS No. 123, the Company's net loss and net loss per share
would have increased to the pro forma amounts indicated below:

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
---------------------------------------
1999 2000 2001
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net loss:
As reported........................................ $(19,871) $(28,722) $(35,788)
Pro forma.......................................... (22,082) (33,739) (42,004)
Basic and diluted net loss per share:
As reported........................................ (0.72) (0.79) (0.80)
Pro forma.......................................... (0.81) (0.92) (0.92)
</Table>

Because additional option grants are expected to be made subsequent to
December 31, 2001 and because most options vest over several years, the pro
forma effects of applying the fair value method may be material to the results
of operations in future years. The weighted average grant date fair values of
options granted during 1999, 2000 and 2001 were $6.43, $1.96 and $2.08,
respectively.

Under SFAS No. 123, the fair value of each employee option grant is
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted-average assumptions used for grants made during the years
ended December 31, 1999, 2000 and 2001: no dividend yield; risk free interest
rates of 5.25%, 5.35% and 5.10%, respectively; 97%, 100% and 88% volatility in
1999, 2000 and 2001, respectively, and an expected option term of 6 years for
each of the three years.

Stock option activity under the Company's option plans since January 1,
1998 is as follows:

<Table>
<Caption>
OUTSTANDING OPTIONS
---------------------------------------------------------------------
1999 2000 2001
--------------------- --------------------- ---------------------
WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- -------- ---------- -------- ---------- --------

Outstanding -- beginning of year........... 2,375,073 $ 0.41 3,883,445 $7.07 6,490,830 $5.75
Granted, at fair value................... 2,842,299 10.05 4,974,703 4.75 1,440,160 2.14
Granted, at below fair value............. 47,550 1.87 -- -- 294,350 1.88
Granted, at above fair value............. -- -- -- -- 636,193 2.06
Exercised................................ (1,053,005) 0.44 (457,281) 0.44 (118,606) 0.33
Canceled................................. (328,472) 4.99 (1,910,037) 7.27 (2,333,780) 5.51
---------- ------ ---------- ----- ---------- -----
Outstanding at December 31,................ 3,883,445 $ 7.09 6,490,830 $5.75 6,409,147 $4.58
========== ====== ========== ===== ========== =====
Exercisable at December 31,................ 495,443 $ 4.11 678,294 $7.48 2,562,486 $5.18
========== ====== ========== ===== ========== =====
</Table>

As of December 31, 2001, 4,144,244 shares were available for grant under
the 1998 Stock Plan.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes information about stock options outstanding
at December 31, 2001:

<Table>
<Caption>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- -------------------------------------
WEIGHTED WEIGHTED NUMBER OF
NUMBER AVERAGE AVERAGE SHARES EXERCISABLE
OUTSTANDING AS OF REMAINING LIFE EXERCISE AS OF WEIGHTED AVERAGE
DECEMBER 31, 2001 (YEARS) PRICE DECEMBER 31, 2001 EXERCISE PRICE
----------------- -------------- ---------------- ------------------ ----------------

$0.33 - $ 1.61....... 360,913 7.72 $ 0.67 131,980 $ 0.42
$1.70 - $ 1.73....... 754,150 9.61 $ 1.73 -- $ --
$1.75 - $ 2.10....... 690,214 9.48 $ 2.03 179,997 $ 2.01
$2.13 - $ 3.06....... 944,827 8.76 $ 2.85 638,227 $ 2.93
$3.12 - $ 3.56....... 207,679 8.72 $ 3.49 47,805 $ 3.51
$3.75 - $ 3.75....... 888,544 2.50 $ 3.75 427,222 $ 3.75
$3.81 - $ 5.00....... 336,251 8.48 $ 4.61 133,504 $ 4.69
$5.25 - $ 5.63....... 716,085 2.67 $ 5.62 308,867 $ 5.61
$5.70 - $ 8.01....... 789,456 8.11 $ 7.50 305,256 $ 7.56
$8.25 - $22.25....... 721,028 7.37 $11.35 389,628 $11.43
--------- ---------
6,409,147 2,562,486
========= =========
</Table>

1999 EMPLOYEE STOCK PURCHASE PLAN

On April 5, 1999, the Board of Directors authorized, which the stockholders
approved in May 1999, the 1999 Employee Stock Purchase Plan (the "Purchase
Plan"). The Purchase Plan provides for the issuance of up to 450,000 shares of
the Company's common stock to eligible employees. Under the Purchase Plan, the
Company is authorized to make one or more offerings during which employees may
purchase shares of common stock through payroll deductions made over the term of
the offering. The per-share purchase price at the end of each offering is equal
to 85% of the closing price of the common stock at the beginning or end of the
offering period (as defined by the Purchase Plan), whichever is lower. During
2000, 63,964 shares of the Company's common stock were purchased under the
Purchase Plan at $2.60 per share and 81,674 shares of the Company's common stock
were purchased under the Purchase Plan at $3.03 per share. During 2001, 87,919
shares of the Company's common stock were purchased under the Purchase Plan at
$2.13 per share and 80,527 shares of the Company's common stock were purchased
under the Purchase Plan at $1.02 per share.

10. INCOME TAXES

The Company accounts for income taxes in accordance with the provisions of
SFAS 109, "Accounting for Income Taxes". Under SFAS 109, a deferred tax asset or
liability is recorded for all temporary differences between book and tax
reporting of assets and liabilities. A deferred tax valuation allowance is
required if it is more likely than not that all or a portion of any deferred tax
assets will not be realized. At December 31, 2001, the Company has available net
operating losses (NOL's) of approximately $93.6 million that are available to
offset future taxable income through 2020. If substantial changes in the
Company's ownership should occur, as defined by Section 382 of the Internal
Revenue Code, there could be annual limitations on the amount of carryforwards,
which can be realized in future periods. Due to the uncertainty surrounding the
Company's ability to realize these NOL's and the Company's other deferred tax
assets, a full valuation allowance has been placed against the otherwise
recognizable tax asset.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The approximate income tax effect of each type of temporary difference and
carryforwards is as follows:

<Table>
<Caption>
DECEMBER 31,
--------------------
2000 2001
-------- ---------

Deferred tax assets:
Deferred revenue.......................................... $ 1,060 $ 3,211
Net operating loss carryforwards.......................... 20,936 93,567
Non current assets........................................ 497 5,521
Accruals.................................................. 2,666 3,703
Other..................................................... 148 24
-------- ---------
Total deferred tax assets......................... 25,307 106,026
Deferred tax asset valuation allowance...................... (25,307) $(106,026)
-------- ---------
$ -- $ --
======== =========
</Table>

The Company's net operating loss carryforwards increased from 2000 to 2001
due to the Company's net loss for 2001 and accrual to tax return adjustments.

A reconciliation of the federal statutory rate to the effective rate as of
December 31, 2001 is as follows:

<Table>
<Caption>
YEAR ENDED
DECEMBER 31,
2001
------------

Federal statutory rate...................................... (34.0)%
State taxes, net of federal benefit......................... (4.7)%
Nondeductible amortization.................................. 3.3%
Dispositions................................................ (3.9)%
Increase in valuation allowance............................. 40.1%
Other....................................................... (0.2)%
-----
Effective rate.................................... 0.6%
=====
</Table>

11. EMPLOYEE SAVINGS PLAN

During 1998, the Company adopted an employee retirement savings plan under
Section 401(k) of the Internal Revenue Code, which covers substantially all
employees. Under the terms of the 401(k) Plan, employees may contribute a
percentage of their salary, up to a maximum of 20%. The Company contributed
$0.1, $0.2 and $0.2 million to the 401(k) Plan on behalf of its employees during
1999, 2000 and 2001, respectively.

12. RELATED PARTY TRANSACTION

Effective May 15, 2000, the Company 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 the Company and one of its officers and equity holders is a
member of the Company's Board of Directors. Under the agreement, TPR pays 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 website.
In addition, TPR will 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 pays TPR a
fee in exchange for exclusive advertising sales responsibilities for the
review.com website. The agreement expires on June 15, 2002. The Company recorded

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

revenue of $0.8 million and expense of $0.7 million related to this agreement
during the year ended December 31, 2001.

In 2001, Raymond V. Sozzi, Jr., our Chairman and CEO, advanced on aggregate
of $277,000 to the Company, all of which was repaid in 2001 without interest.

13. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company leases its operating facility and certain office equipment
under noncancelable operating lease agreements. Rent expense under these leases
for the years ended December 31, 1999, 2000 and 2001 totaled approximately $1.5,
$1.9 and $2.1 million, respectively.

As a result of the Company's acquisitions of or purchases of certain assets
from ScholarAid and CollegeClub during 2000 and OCM Direct, CarePackages.com and
Edu.com in 2001, the Company assumed certain capital leases of computer
equipment. Initial lease terms range from 3 to 5 years.

Future minimum lease payments under noncancelable operating and capital
leases at December 31, 2001 are as follows (in thousands):

<Table>
<Caption>
YEAR ENDING DECEMBER 31, CAPITAL LEASES OPERATING LEASES
- ------------------------ -------------- ----------------

2001..................................................... $1,488 $ 3,580
2002..................................................... 739 2,711
2003..................................................... 32 2,341
2004..................................................... 21 1,979
2005..................................................... 8 960
Thereafter............................................... 1 190
------ -------
Total minimum lease payments............................. $2,289 $11,761
====== =======
Less: Imputed interest (at rates from 2.03% to 42.83%)... (157)
======
Present value of net minimum lease payments.............. 2,132
======
Less: Current portion.................................... (1,368)
======
Long-term portion of obligations......................... $ 764
======
</Table>

LEGAL PROCEEDINGS

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

14. RESTRUCTURING CHARGE

In the quarter ended December 31, 2001, the Company recorded a $4.9 million
charge in connection with a restructuring of the Company's operations. Included
in the $4.9 million charge is $1.3 million related to a reduction in staff of
approximately 15% of the Company's total employees and $3.6 million in charges
related to operating leases for office space no longer utilized in our current
operations.

As of December 31, 2001, $3.3 million in restructuring charges related to
the facility lease costs are accrued and unpaid.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A rollforward of the restructuring accrual is as follows:

<Table>
<Caption>
DEDUCTIONS FOR CASH
BALANCE AT CHARGED TO COSTS PAYMENTS AND NON- BALANCE AT
BEGINNING OF PERIOD AND EXPENSES CASH ITEMS END OF PERIOD
------------------- ---------------- ------------------- -------------

Accrual for
Restructuring
Charge............... $-- $4,894 $(1,622) $3,272
</Table>

15. QUARTERLY FINANCIAL DATA

The following table sets forth unaudited quarterly statement of operations
data for each of the four quarters in the years ended December 31, 2000 and
2001. In the opinion of management, the unaudited financial statements have been
prepared on a basis consistent with the audited financial statements and include
all adjustments, which are only normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations for the
unaudited periods. The results of operations for any quarter are not necessarily
indicative of the results of operations for any future period.

The increase in revenue in the third quarter of 2001 is due to the
seasonality of the OCM Direct business which was acquired during 2001.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

All revenue for the Company has been generated in the United States,
therefore no geographic disclosure is required.

<Table>
<Caption>
QUARTER ENDED
-----------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
2000 2000 2000 2000 2001 2001 2001 2001
---------- ---------- ---------- ---------- --------- -------- --------- --------
(RESTATED) (RESTATED) (RESTATED) (RESTATED)
(UNAUDITED, IN THOUSANDS)

Revenue
Student services.............. $ 6,963 $ 7,391 $ 7,070 $ 6,675 $ 9,038 $10,416 $20,104 $ 12,023
Corporate and university
solutions................... 4,179 4,172 5,573 5,991 4,170 3,145 2,835 3,633
------- ------- ------- ------- ------- ------- ------- --------
Total revenue............... 11,142 11,563 12,643 12,666 13,208 13,561 22,939 15,656
------- ------- ------- ------- ------- ------- ------- --------
Costs and expenses
Cost of student services
revenue..................... 2,883 2,724 2,128 2,528 1,810 2,831 7,185 4,576
Cost of corporate and
university solutions
revenue..................... 2,229 2,177 3,225 2,298 2,437 1,571 1,330 1,732
Product development........... 3,823 4,011 4,625 5,918 5,821 4,757 3,796 2,825
Sales and marketing........... 4,786 4,524 4,324 4,246 6,049 6,480 9,540 5,532
General and administrative.... 2,341 2,646 2,438 3,771 2,830 2,908 2,892 2,622
Depreciation and
amortization................ 1,007 1,436 1,504 2,435 2,711 3,628 3,940 3,666
Impairment of long-lived
assets...................... -- -- -- -- -- -- -- 1,916
Restructuring charges......... -- -- -- -- -- -- -- 4,894
------- ------- ------- ------- ------- ------- ------- --------
Total costs and expenses.... 17,069 17,518 18,244 21,196 21,658 22,175 28,683 27,763
------- ------- ------- ------- ------- ------- ------- --------
Loss from operations............ (5,927) (5,955) (5,601) (8,530) (8,450) (8,614) (5,744) (12,107)
------- ------- ------- ------- ------- ------- ------- --------
Equity interest in edu.com net
loss.......................... (944) (944) (944) (944) (495)
Realized gain (loss) on
write-off of investment....... -- -- -- (367) -- -- -- 1,220
Interest income (expense),
net........................... 473 396 374 191 (70) 222 (569) (974)
------- ------- ------- ------- ------- ------- ------- --------
Net Loss before Income Taxes.... -- -- -- -- -- -- -- (11,861)
Provision for Income Taxes.... -- -- -- -- -- -- -- 207
------- ------- ------- ------- ------- ------- ------- --------
Net loss........................ $(6,398) $(6,503) $(6,171) $(9,650) $(9,015) $(8,392) $(6,313) $(12,068)
======= ======= ======= ======= ======= ======= ======= ========
Basic and diluted net loss per
share......................... $ (0.18) $ (0.18) $ (0.17) $ (0.25) $ (0.23) $ (0.18) $ (0.13) $ (0.25)
======= ======= ======= ======= ======= ======= ======= ========
Shares used in computing basic
and diluted net loss per
share......................... 35,590 35,980 36,170 38,446 39,663 45,508 47,209 47,368
</Table>

16. SEGMENT DISCLOSURE

In accordance with SFAS 131, the Company views its operations and manages
its business as one segment.

17. OTHER FINANCING

In February 2002, our subsidiary, OCM Direct and its two subsidiaries,
CarePackages, Inc. and Collegiate Carpets, Inc. entered into a revolving loan
agreement with Bank of America providing for a $5.0 million loan facility. The
interest rate under the facility is LIBOR plus 2.5 percent and the facility is
secured by all of the assets of OCM Direct and its two subsidiaries. The Company
provided an unsecured guaranty of the obligations of its three subsidiaries to
Bank of America. The maturity date of the loan is January 31, 2003, provided
that OCM Direct is required to repay all amounts outstanding under the loan for
a period of 30 consecutive days between August 1 and October 1, 2002. As of
March 28, 2002, the principal amount of borrowings under the Bank of America
revolving loan facility is $4.9 million.

STUDENT ADVANTAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the Bank of America borrowing, the Company agreed with
Reservoir Capital Partners and its two affiliate senior lenders (the "Reservoir
Lenders") that the Reservoir Lenders would consent to the Company's guaranty of
the obligations to Bank of America, release OCM Direct, CarePackages and
Collegiate Carpets (the "Subsidiaries") from their guaranty obligations of the
Company's obligations to the Reservoir Lenders and also release the Reservoir
Lenders' lien on the Subsidiaries' assets, and waive certain financial covenants
in the underlying loan agreements with the Company until March 30, 2002. The
parties also agreed that in the event that the Bank of America loan went into
default, that default would also constitute an event of default under the
agreements with the Reservoir Lenders and that, under such circumstances, the
Reservoir Lenders could purchase that loan from Bank of America and the
borrowings would be deemed as borrowings under the Reservoir Lenders'
agreements. In addition, the consent from the Reservoir Lenders provided that
the amount of available revolving loan borrowings, currently $5.0 million, would
be reduced, on April 15, 2002, to the actual amount of revolving loan borrowings
on such date. In consideration for the consent, the Company agreed to pay the
Reservoir Lenders $0.2 million on April 15, 2002. If by April 15, 2002, Bank of
America agrees to allow the borrowing Subsidiaries to guarantee the obligations
of the Company to the Reservoir Lenders, the fee will be reduced to $0.1
million. In addition, the Company has agreed with the Reservoir Lenders to pay
additional fees of $0.1 million if the total amounts of all loans extended by
the Reservoir Lenders exceeds $10.0 million on April 15, 2002 and additional
fees of from $50,000 to $0.1 million if the amounts of the revolving borrowings
from the Reservoir Lenders exceed $2.5 million April 15, 2002. The Reservoir
Lenders have the right to elect to take such payments in the form of warrants to
purchase common stock, with an exercise price of $.01 per share, at the rate of
one warrant for each dollar of fees. As of March 28, 2002, the principal amount
of borrowings under the Reservoir revolving loan facility is $15.2 million

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

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information regarding directors and compliance with Section 16(a) of
the Securities and Exchange Act of 1934, as amended, required by Item 10 is
incorporated by reference from the Company's definitive proxy statement for its
Annual Meeting of Stockholders for the year ended December 31, 2001 (the "2001
Proxy Statement"). The information regarding executive officers of the Company
is included in Part I of this Annual Report on Form 10-K under the section
captioned "Executive Officers of the Registrant".

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference from the
2001 Proxy Statement. The information specified in Item 402(k) and (1) of
Regulation S-K and set forth in the 2001 Proxy Statement is not incorporated by
reference.

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

The information required by Item 12 is incorporated by reference from the
2001 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by Item 13 is incorporated herein by reference
from the 2001 Proxy Statement.

PART IV

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

(A)(1) LIST OF FINANCIAL STATEMENTS

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

Reports of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 2000 and 2001
Consolidated Statements of Operations for the years ended December 31,
1999, 2000 and 2001
Consolidated Statements of Changes in Redeemable Convertible Preferred
Stock and Stockholders' Equity for the years ended December 31, 1999, 2000
and 2001
Consolidated Statements of Cash Flows for the years ended December 31,
1999, 2000 and 2001

(A)(2) LIST OF SCHEDULES

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

(A)(3) EXHIBITS

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

(B) REPORTS ON FORM 8-K

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on April 1, 2002.

STUDENT ADVANTAGE, INC.

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

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

<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----

/s/ RAYMOND V. SOZZI, JR. Chairman of the Board of Directors, April 1, 2002
------------------------------------------------ President and Chief Executive
Raymond V. Sozzi, Jr. Officer (Principal Executive
Officer)

/s/ KENNETH S. GOLDMAN Executive Vice President, Chief April 1, 2002
------------------------------------------------ Financial Officer and Treasurer
Kenneth S. Goldman (Principal Financial and Accounting
Officer)

/s/ JOHN M. CONNOLLY Director April 1, 2002
------------------------------------------------
John M. Connolly

/s/ WILLIAM S. KAISER Director April 1, 2002
------------------------------------------------
William S. Kaiser

/s/ JOHN S. KATZMAN Director April 1, 2002
------------------------------------------------
John S. Katzman

/s/ MARC J. TURTLETAUB Director April 1, 2002
------------------------------------------------
Marc J. Turtletaub

/s/ CHARLES E. YOUNG Director April 1, 2002
------------------------------------------------
Charles E. Young
</Table>

EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
- ------- -----------

3.1 Amended and Restated Certificate of Incorporation of the
Registrant. (incorporated herein by reference from the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1999).
3.2 Amended and Restated By-Laws of the Registrant, as amended.
(incorporated herein by reference from the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1999).
10.1 1998 Stock Incentive Plan, as amended (incorporated herein
by reference from the Registrant's Definitive Proxy
Statement on Schedule 14A filed on April 4, 2001).*
10.2 1999 Employee Stock Purchase Plan (incorporated herein by
reference from the Registrant's Registration Statement on
Form S-1 (File No. 333-75807)).*
10.3 Form of Indemnification Agreement between the Registrant and
each of its directors and officers (incorporated herein by
reference from the Registrant's Registration Statement on
Form S-1 (File No. 333-75807)).*
10.4 Investor Rights Agreement, dated as of October 20, 1998,
among the Registrant and certain stockholders (incorporated
herein by reference from the Registrant's Registration
Statement on Form S-1 (File No. 333-75807)).*
10.5 Employment Agreement, dated March 25, 1996, between the
Registrant and Raymond V. Sozzi, Jr., as amended by First
Amendment to Employment Agreement, dated as of October 20,
1998 (incorporated herein by reference from the Registrant's
Registration Statement on Form S-1 (File No. 333-75807)).*
10.6+ Agreement, effective as of February 1, 1997, between AT&T
Communications, Inc. and the Registrant (incorporated herein
by reference from the Registrant's Registration Statement on
Form S-1 (File No. 333-75807)).
10.7+ Marketing Agreement, effective February 1, 1998, between
AT&T Corp. and the Registrant (incorporated herein by
reference from the Registrant's Registration Statement on
Form S-1 (File No. 333-75807)).
10.8 Notice of AT&T's Election to Extend Agreements, dated July
14, 1998 (incorporated herein by reference from the
Registrant's Registration Statement on Form S-1 (File No.
333-75807)).
10.9+ Letter Agreement, dated May 20, 1999, between AT&T
Communications, Inc. and the Registrant (incorporated herein
by reference from the Registrant's Registration Statement on
Form S-1 (File No. 333-75807)).
10.10 Leases for premises at 280 Summer Street, Boston,
Massachusetts (incorporated herein by reference from the
Registrant's Registration Statement on Form S-1 (File No.
333-75807)).
10.11 Sublease, dated as of May 20, 1999, between the Registrant
and Morrison, Mahoney & Miller, LLP (incorporated herein by
reference from the Registrant's Registration Statement on
Form S-1 (File No. 333-92367)).
10.12 Investment Agreement, dated March 25, 1996, between the
Registrant and Princeton Review Publishing, L.L.C.
(incorporated herein by reference from the Registrant's
Registration Statement on Form S-1 (File No. 333-75807)).
10.13 Letter Agreement, dated September 8, 1997, between the
Registrant and Princeton Review Publishing. (incorporated
herein by reference from the Registrant's Registration
Statement on Form S-1 (File No. 333-75807)).
10.14 Letter Agreement, dated October 20, 1998, between the
Registrant and Princeton Review Publishing, L.L.C.
(incorporated herein by reference from the Registrant's
Registration Statement on Form S-1 (File No. 333-75807)).
</Table>

<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
- ------- -----------

10.15 Mailing and Fulfillment Services Agreement, dated August 8,
1996, between the Registrant and Aero Fulfillment Services
(incorporated herein by reference from the Registrant's
Registration Statement on Form S-1 (File No. 333-75807)).
10.16 Common Stock Purchase Warrant, dated July 21, 1999 issued to
Lycos, Inc. (incorporated herein by reference from the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000).
10.17+ First Amendment to Marketing Agreement between AT&T Corp and
the Registrant, effective as of April 21, 2000 (incorporated
herein by reference from the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2000).
10.18+ Marketing and Membership Agreement between AT&T Corp. and
the Registrant, effective June 8, 2000 (incorporated herein
by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 2000).
10.19 Common Stock Purchase Warrant, Number 6, dated October 27,
2000, issued to At Home Corporation (incorporated herein by
reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 2000).
10.20 Common Stock Purchase Warrant, Number 7, dated October 27,
2000, issued to At Home Corporation (incorporated herein by
reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 2000).
10.21 Common Stock Purchase Warrant, Number 8, dated October 27,
2000, issued to Hare & Co. f/b/o John Hancock Small Cap
Value Fund (incorporated herein by reference from the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000).
10.22 Common Stock Purchase Warrant, Number 9, dated October 27,
2000, issued to Hare & Co. f/b/o John Hancock Small Cap
Value Fund (incorporated herein by reference from the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000).
10.23 Registration Rights Agreement, dated as of May 1, 2001, by
and between Student Advantage, Inc. and Jennison Associates
LLC as subadviser for the Prudential Small Company Fund,
Inc. (incorporated herein by reference from the Registrant's
Current Report on Form 8-K dated May 1, 2001 filed on May 4,
2001).
10.24 Common Stock Purchase Warrant, dated May 1, 2001, issued to
Jennison Associates LLC as subadviser for the Prudential
Small Company Fund, Inc. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated May
1, 2001 filed on May 4, 2001).
10.25 Registration Rights Agreement, dated as of May 1, 2001, by
and between Student Advantage, Inc. and Jennison Associates
LLC as subadviser for The Prudential Insurance Company of
America Variable Contract Account -- 6 (incorporated herein
by reference from the Registrant's Current Report on Form
8-K dated May 1, 2001 filed on May 4, 2001).
10.26 Common Stock Purchase Warrant, dated May 1, 2001, issued to
Jennison Associates LLC as subadviser for The Prudential
Insurance Company of America Variable Contract Account - 6
(incorporated herein by reference from the Registrant's
Current Report on Form 8-K dated May 1, 2001 filed on May 4,
2001).
10.27 Registration Rights Agreement, dated as of May 1, 2001, by
and between Student Advantage, Inc. and Greylock IX Limited
Partnership (incorporated herein by reference from the
Registrant's Current Report on Form 8-K dated May 1, 2001
filed on May 4, 2001).
10.28 Common Stock Purchase Warrant, dated May 1, 2001, issued to
Greylock IX Limited Partnership (incorporated herein by
reference from the Registrant's Current Report on Form 8-K
dated May 1, 2001 filed on May 4, 2001).
</Table>

<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
- ------- -----------

10.29 Registration Rights Agreement, dated as of May 1, 2001, by
and between Student Advantage, Inc. and Baystar Capital,
L.P. (incorporated herein by reference from the Registrant's
Current Report on Form 8-K dated May 1, 2001 filed on May 4,
2001).
10.30 Common Stock Purchase Warrant, dated May 1, 2001, issued to
Baystar Capital, L.P. (incorporated herein by reference from
the Registrant's Current Report on Form 8-K dated May 1,
2001 filed on May 4, 2001).
10.31 Registration Rights Agreement, dated as of May 1, 2001, by
and between Student Advantage, Inc. and Baystar
International, Ltd. (incorporated herein by reference from
the Registrant's Current Report on Form 8-K dated May 1,
2001 filed on May 4, 2001).
10.32 Common Stock Purchase Warrant, dated May 1, 2001, issued to
Baystar International, Ltd. (incorporated herein by
reference from the Registrant's Current Report on Form 8-K
dated May 1, 2001 filed on May 4, 2001).
10.33 Common Stock Purchase Warrant, dated May 10, 2001, issued to
Edu.com, Inc. (incorporated herein by reference from the
Registrant's Current Report on Form 8-K dated May 10, 2001
filed on May 16, 2001).
10.34 Common Stock Purchase Warrant, dated May 10, 2001, issued to
Edu.com, Inc. (incorporated herein by reference from the
Registrant's Current Report on Form 8-K dated May 10, 2001
filed on May 16, 2001).
10.35 Registration Rights Agreement, dated as of June 25, 2001, by
and among Student Advantage, Inc. and Devin A. Schain,
Michael S. Schoen, Paul D. Bogart, Howard S. Dumhart, Jr.
and Steven L. Matejka (incorporated herein by reference from
the Registrant's Current Report on Form 8-K dated June 25,
2001 filed on July 10, 2001).
10.36 Loan Agreement, dated as of June 25, 2001, by and among
Student Advantage, Inc., the subsidiaries of Student
Advantage, Inc., and Reservoir Capital Partners, L.P.,
Reservoir Capital Associates, L.P., Reservoir Capital Master
Fund, L.P. (incorporated herein by reference from the
Registrant's Current Report on Form 8-K dated June 25, 2001
filed on July 10, 2001).
10.37 Security Agreement, dated as of June 25, 2001, by and among
Student Advantage, Inc., the subsidiaries of Student
Advantage, Inc., and Reservoir Capital Partners, L.P., as
administrative agent (incorporated herein by reference from
the Registrant's Current Report on Form 8-K dated June 25,
2001 filed on July 10, 2001).
10.38 Warrant Agreement, dated as of June 25, 2001, by and among
Student Advantage, Inc., Reservoir Capital Partners, L.P.,
Reservoir Capital Associates, L.P., Reservoir Capital Master
Fund, L.P. (incorporated herein by reference from the
Registrant's Current Report on Form 8-K dated June 25, 2001
filed on July 10, 2001).
10.39 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Partners, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.40 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Master Fund, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.41 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Associates, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.42 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Partners, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
</Table>

<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
- ------- -----------

10.43 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Master Fund, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.44 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Associates, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.45 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Partners, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.46 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Master Fund, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.47 Term Warrant, dated June 25, 2001, issued to Reservoir
Capital Associates, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.48 Revolving Warrant, dated June 25, 2001, issued to Reservoir
Capital Partners, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.49 Revolving Warrant, dated June 25, 2001, issued to Reservoir
Capital Master Fund, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.50 Revolving Warrant, dated June 25, 2001, issued to Reservoir
Capital Associates, L.P. (incorporated herein by reference
from the Registrant's Current Report on Form 8-K dated June
25, 2001 filed on July 10, 2001).
10.51 Amendment to Loan Agreement, dated as of September 28, 2001,
between the Registrant and Reservoir Capital Partners,
L.P.(amending the Loan Agreement by and among Student
Advantage, Inc., the subsidiaries of Student Advantage,
Inc., and Reservoir Capital Partners, L.P., Reservoir
Capital Associates, L.P. and Reservoir Capital Master Fund,
L.P.) (incorporated herein by reference from the
Registrant's Registration Statement on Form S-3 (File No.
333-75488).
10.52 Amendment No. 2, dated as of November 6, 2001, among the
Registrant, the subsidiaries of Student Advantage, Inc., and
Reservoir Capital Partners, L.P., Reservoir Capital
Associates, L.P. and Reservoir Capital Master Fund, L.P.
(amending the Loan Agreement by and among Student Advantage,
Inc., the subsidiaries of Student Advantage, Inc., and
Reservoir Capital Partners, L.P., Reservoir Capital
Associates, L.P. and Reservoir Capital Master Fund, L.P.)
(incorporated herein by reference from the Registrant's
Registration Statement on Form S-3 (File No. 333-75488)).
10.53 First Amendment to Warrant Agreement, dated as of November
6, 2001, among the Registrant and Reservoir Capital
Partners, L.P., Reservoir Capital Associates, L.P. and
Reservoir Capital Master Fund, L.P. (amending the Warrant
Agreement by and among Student Advantage, Inc. and Reservoir
Capital Partners, L.P., Reservoir Capital Associates, L.P.
and Reservoir Capital Master Fund, L.P.) (incorporated
herein by reference from the Registrant's Registration
Statement on Form S-3 (File No. 333-75488)).
10.54 Term Warrant, dated November 6, 2001, issued to Reservoir
Capital Partners, L.P. (incorporated herein by reference
from the Registrant's Registration Statement on Form S-3
(File No. 333-75488).
10.55 Term Warrant, dated November 6, 2001, issued to Reservoir
Capital Master Fund, L.P. (incorporated herein by reference
from the Registrant's Registration Statement on Form S-3
(File No. 333-75488)).
</Table>

<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
- ------- -----------

10.56 Term Warrant, dated November 6, 2001, issued to Reservoir
Capital Associates, L.P. (incorporated herein by reference
from the Registrant's Registration Statement on Form S-3
(File No. 333-75488)).
10.57 Letter Agreement, dated November 26, 2001, among the
Registrant and Reservoir Capital Partners, L.P.
(incorporated herein by reference from the Registrant's
Registration Statement on Form S-3 (File No. 333-75488)).
10.58 Warrant, dated November 26, 2001, issued to Reservoir
Capital Partners, L.P. (incorporated herein by reference
from the Registrant's Registration Statement on Form S-3
(File No. 333-75488)).
10.59 Warrant, dated November 26, 2001, issued to Reservoir
Capital Master Fund, L.P. (incorporated herein by reference
from the Registrant's Registration Statement on Form S-3
(File No. 333-75488)).
10.60 Warrant, dated November 26, 2001, issued to Reservoir
Capital Associates, L.P. (incorporated herein by reference
from the Registrant's Registration Statement on Form S-3
(File No. 333-75488)).
10.61 Amendment No. 3, dated as of February 14, 2002, among the
Registrant, the subsidiaries of Student Advantage, Inc., and
Reservoir Capital Partners, L.P., Reservoir Capital
Associates, L.P. and Reservoir Capital Master Fund, L.P.
(amending the Loan Agreement by and among Student Advantage,
Inc., the subsidiaries of Student Advantage, Inc., and
Reservoir Capital Partners, L.P., Reservoir Capital
Associates, L.P. and Reservoir Capital Master Fund, L.P.).
10.62 Revolving Line of Credit Loan Agreement and Security
Agreement, dated February 13, 2002 by and among OCM Direct,,
Inc., CarePackages, Inc., Collegiate Carpets, Inc. and Bank
of America, N.A.
10.63 Letter Agreement, dated February 13, 2002, by and among OCM
Direct, Inc., CarePackages, Inc. and Collegiate Carpets,
Inc.
10.64 Guaranty by the Registrant, dated February 13, 2002, in
favor of Bank of America, N.A.
21 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of PricewaterhouseCoopers LLP
99.1 Letter to Commission Pursuant to Temporary Note 3T
</Table>

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

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

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