BigStar Reports 2000 First-Quarter Financial Results; Revenues Increase 260 Percent.

Business & Entertainment Editors

NEW YORK--(BUSINESS WIRE)--May 9, 2000

BigStar Entertainment Inc. (Nasdaq:BGST) today announced record revenues for its first quarter ended March 31, 2000.

For the first quarter, revenues increased 260 percent to $5,230,591, from the $1,453,780 reported in the prior-year first quarter. Net revenues for the 2000 first quarter included $757,226 in advertising and promotional revenues, of which $235,000 was from barter advertising. The company had no advertising and promotional revenues in the 1999 first quarter.

The gross profit for the first quarter of 2000 was $1,374,802, compared with a $199,941 gross profit for the same period a year ago. The resulting gross margin was 26.3 percent for the 2000 first quarter, vs. 13.8 percent for the corresponding 1999 quarter.

For the 2000 first quarter, the company reported a net loss of $7,031,958, or $0.70 per share, compared with a net loss of $2,965,767, or $0.77 per share, for the 1999 first quarter. Sequentially, the company reduced its net loss by $701,504, or $0.18 per share, from the fourth-quarter 1999 net loss of $7,733,462, or $0.88 per share.

"Our sales performance for the quarter highlights the continued success of BigStar's Shop-A-Tainment business model and the benefits of direct marketing and software development to target and reach an ever-increasing customer base," said David Friedensohn, chairman and chief executive officer.

Friedensohn noted that, during the first quarter, the company reduced its sales and marketing expenses to $4.8 million, from $6.1 million in the preceding fourth quarter, and increased sales, reflecting the successful establishment of the BigStar name and a strategic decision to focus resources on targeted sales and marketing campaigns that offer more direct financial benefits.

"BigStar's growing subscriber base, currently at 1.7 million, and our 24,000 affiliated Web sites, offer exciting and low-cost direct marketing opportunities. With the launch of `The BigStar Show' on ValueVision's SnapTV Network later this month, the company is now positioned as the first true direct marketing convergence entity linking the Internet, filmed entertainment and television," Friedensohn added.

Subsequent to the first quarter, the company announced the launch of Advaya Inc., a new subsidiary formed to license the company's direct marketing software services, the Advaya Direct Marketing System(TM), and associated services, targeting the $160 billion online direct marketing industry.

BigStar also announced Advaya's first five clients, in addition to bigstar.com: MediaBay Inc. (Nasdaq:MBAY), fashionmall.com Inc. (Nasdaq:FASH), Flirt Inc., iGain and The Wall Street Transcript.

"With proprietary capabilities that segment, target and track individual subscribers, as well as provide real-time reporting, the Advaya software enables marketers to send personalized messages to customers and track results at multiple levels. The direct marketing service is scalable and has benefited BigStar with sales conversion results that are significantly better than those of traditional direct marketing methods," Friedensohn said.

BigStar Entertainment Inc. (http://www.bigstar.com) is a leading online Shop-A-Tainment destination that is exclusively dedicated to filmed entertainment products. BigStar sells videos and digital video discs (DVDs).

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: BigStar Entertainment Inc. has included in this news release certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning BigStar's business, operations and financial condition. The words or phrases "can be," "expects," "may affect," "may depend," "believes," "estimate," "project" and similar words and phrases are intended to identify such forward-looking statements. Such forward-looking statements are subject to various known and unknown risks and uncertainties and BigStar cautions that any forward-looking information provided by or on behalf of BigStar is not a guarantee of future performance. Actual results could differ materially from those anticipated in such forward-looking statements due to a number of factors, some of which are beyond BigStar's control, in addition to those discussed in BigStar's other news releases, public filings and statements by BigStar's management, including (i) the volatile and competitive nature of the Internet industry, (ii) changes in domestic and foreign economic and market conditions, (iii) the effect of federal, state and foreign regulation on BigStar's business, and (iv) the effect of any future acquisitions. All such forward-looking statements are current only as of the date on which such statements were made. BigStar does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

                      BigStar Entertainment Inc.
                 Consolidated Statements of Operations
                              (Unaudited)

                                  Three months          Three months
                                     ended                 ended
                                 March 31, 2000        March 31, 1999


Net sales                          $  5,230,591          $  1,453,780
Cost of sales                         3,855,789             1,253,839
  Gross profit                        1,374,802               199,941
Operating expenses
  Sales and marketing                 4,765,588             1,725,632
  General and administrative          1,568,435               675,202
  Web site and software development   2,354,568               782,398
    Total operating expenses          8,688,591             3,183,232
    Loss from operations             (7,313,789)           (2,983,291)
Interest income, net                    281,831                17,524
Net Loss                           $ (7,031,958)         $ (2,965,767)

Per share information:
Net loss per share -
 basic and diluted                 $      (0.70)         $      (0.77)

Weighted average common shares
 outstanding - basic and diluted     10,107,597             3,863,606


                      BigStar Entertainment Inc.
                      Consolidated Balance Sheets

                                  March 31, 2000         Dec. 31, 1999
                                    (unaudited)

Assets:
Cash and cash equivalents          $ 13,986,186          $ 17,422,817
Accounts receivable,
 net of allowance                     1,249,787             1,129,454
Short-term investments                3,943,554             6,902,234
Prepaids and other current assets     1,463,362             1,387,903
  Total current assets               20,642,889            26,842,408
Property and equipment, net           2,433,840             2,253,109
Other assets                            752,146               756,546
  Total assets                     $ 23,828,875          $ 29,852,063

Liabilities:
Accounts payable                   $  4,184,507          $  3,729,806
Accrued expenses                      2,484,041             2,146,552
Accrued payroll costs                   262,532               695,000
  Total current liabilities           6,931,080             6,571,358
Minority interest                       250,000                    --

Stockholders' Equity:
Common stock                             10,152                10,032
Additional paid-in capital           48,171,119            47,885,409
Deferred compensation                  (395,841)             (509,059)
Accumulated deficit                 (31,137,635)          (24,105,677)
  Total stockholders' equity         16,647,795            23,280,705
  Total liabilities and
   stockholders' equity            $ 23,828,875          $ 29,852,063