BigStar Reports 2000 Third Quarter Financial Results; Gross Profit Increases From Prior Quarter and Year Earlier Results.

Business/Entertainment Editors

NEW YORK--(BUSINESS WIRE)--Nov. 10, 2000

BigStar Entertainment Inc. (Nasdaq:BGST) today announced its financial results for the third quarter and nine months ended September 30, 2000.

As in the second quarter, the results reflect the adoption of a new pronouncement regarding accounting for sales incentives, which has no effect on the company's net loss and loss per share. All amounts reported for previous periods have been restated to reflect the current classification. Net revenues reported are net of coupons redeemed by customers, and cost of sales includes the cost of promotional items, both of which were originally recorded as sales and marketing expenses.

For the current third quarter, the company reported a gross profit of $473,000 on net revenues of $1,364,000, resulting in a gross margin of 34.6%. The gross profit increased $510,000 from last year's third quarter, during which the company had a loss on sales of $37,000 on net revenues of $2,865,000. The improved gross profit is a result of significantly lower coupon and promotional costs and sales prices that reflected lower discounts to the products' suggested retail price.

Net revenues for the current quarter included $87,000 in revenues generated by Advaya, the company's online direct marketing division, as well as $219,000 in advertising and promotional revenues. In the 1999 third quarter, the company reported $730,000 in advertising revenues, of which $344,000 were barter transactions.

The company reduced its operating cash loss for the 2000 third quarter to $2,340,000, from $5,326,000 for the 1999 third quarter. Sequentially, the operating cash loss this quarter decreased 51.9% from the $4,865,000 reported for the immediately prior quarter. Operating cash loss excludes depreciation and amortization expenses from the reported loss from operations.

The company's net loss for the 2000 third quarter declined to $2,907,000, or $0.29 per share, from $5,337,000, or $0.70 per share, in the third quarter last year, due primarily to improved gross margins and significantly reduced sales and marketing expenses, and offset in part by higher operating and development expenses associated with its Web site. The lower loss per share also reflects the additional shares outstanding as a result of the company's initial public offering in the third quarter of 1999 and a private placement in the fourth quarter of 1999.

"While we continue to operate in a challenging industry and market, we remain optimistic about the company's ability to leverage its proprietary technology, both in terms of its online retail business, as well as Advaya, our emerging direct-marketing division," said David Friedensohn, chairman and chief executive officer. "We believe we have ample capital to continue to develop shareholder value at BigStar and Advaya over the next year and we will continue to deploy that capital in a disciplined manner."

For the nine months ended September 30, 2000, net revenues increased 24.5% to $8,161,000 from $6,557,000 reported for the corresponding period last year. The resulting gross profit also increased to $1,136,000 from a loss on sales of $1,162,000 for the 1999 nine-month period.

Net revenues for the nine months ended September 30, 2000 included revenues of $153,000 generated by Advaya and $1,536,000 in advertising and promotional revenues, of which $235,000 was from barter transactions. The company had $1,014,000 in advertising and promotional revenues during the corresponding period last year including $627,000 in barter revenues.

The net loss for the nine-month period ended September 30, 2000 amounted to $15,096,000, or $1.49 per share, compared with a net loss of $13,124,000, or $2.26 per share, for the prior year nine-month period. The higher net loss is primarily attributable to increased marketing and personnel expenses during the first quarter of 2000. The lower loss per share reflects the additional shares outstanding as a result of the company's initial public offering in the third quarter of 1999 and the private placement in the fourth quarter of 1999.

About BigStar Entertainment

BigStar Entertainment Inc. (Nasdaq:BGST) operates bigstar.com (AOL keyword: BigStar), a leading Shop-A-Tainment(TM) destination site, based on internal analysis of traffic, sales and other metrics. bigstar.com is exclusively dedicated to filmed entertainment products, and sells more than 70,000 titles of videos and digital video discs (DVDs). BigStar's offering of more than 8,000 movie trailers is among the largest on the Internet.

Advaya Inc., a division of BigStar, is a digital direct marketing service that serves businesses and companies that want to communicate directly with their customers online. The company provides a variety of e-marketing services and products to its customers including Advaya Direct 3.0 SM., a personalized, targeted e-messaging and e-mail service. Through its proprietary Web-based software tool, Advaya enables clients to manage subscriber databases and build, schedule, test, send and analyze targeted messages to their users.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: BigStar Entertainment has included in this press release certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning potential future events and developments affecting BigStar's business, operations and financial condition. Examples of forward-looking statements include, but are not limited to, "can be," "expects," "may affect," "may depend," "believes," "estimates," "anticipates," "projects" and similar words and phrases. Such forward-looking statements are subject to various known and unknown risks and uncertainties and BigStar cautions you 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 press releases, public filings and statements by BigStar's management, including (i) the highly 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, (iv) issues related to BigStar's entry into new markets, and (v) 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. For a description of additional risks and uncertainties, please refer to BigStar's filings made from time to time with the Securities and Exchange Commission.

                      BIGSTAR ENTERTAINMENT, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                    Three Months Ended          Nine Months Ended
                       September 30,              September 30,
                     2000         1999          2000          1999

Net sales        $ 1,364,320  $ 2,865,361  $  8,161,475  $  6,557,122
Cost of sales        891,692    2,902,738     7,024,976     7,718,879
  Gross profit       472,628      (37,377)    1,136,499    (1,161,757)
Operating
 expenses
  Sales and
   marketing         571,515    3,220,788     6,468,839     6,543,418
  Web site and
   software
   development     2,003,700      889,175     6,682,321     3,239,581
  General and
   administrative    973,999    1,371,261     3,800,911     2,431,932
    Total
     operating
     expenses      3,549,214    5,481,224    16,952,071    12,214,931
    Loss from
     operations   (3,076,586)  (5,518,601)  (15,815,572)  (13,376,688)
Interest income,
 net                 112,196      181,816       662,804       252,294
Loss before
 Minority interest
 in Advaya Loss   (2,964,390)  (5,336,785)  (15,152,768)  (13,124,394)
Minority interest
 in Advaya Loss      (57,220)        --         (57,220)         --
  Net Loss       $(2,907,170) $(5,336,785) $(15,095,548) $(13,124,394)

Per share
 information:
  Net loss per
   share - basic
   and diluted   $     (0.29) $     (0.70) $      (1.49) $      (2.26)

   Weighted
    average
    common shares
    outstanding -
    basic and
    diluted       10,185,641    7,645,572    10,155,333     5,805,801



                      BIGSTAR ENTERTAINMENT, INC.
                      CONSOLIDATED BALANCE SHEETS

                                   September 30,     December 31,
                                        2000            1999
                                     (unaudited)
Assets:

Cash and cash equivalents           $  7,731,431    $ 24,325,051
Accounts receivable,
 net of allowance                        593,415       1,129,454
Prepaids and other current assets        676,799       1,387,903
  Total current assets                 9,001,645      26,842,408
Property and equipment, net            3,013,344       2,253,109
Other assets                             602,207         756,546
  Total assets                      $ 12,617,196    $ 29,852,063

Liabilities:

Accounts payable                    $  2,766,332    $  3,729,806
Accrued expenses                         708,006       2,146,552
Accrued payroll costs                       --           695,000
  Total current liabilities            3,474,338       6,571,358

Minority interest                        192,780            --
Stockholders' Equity:
Common stock                              10,186          10,032
Additional paid-in capital            48,151,461      47,885,409
Deferred compensation                    (10,570)       (509,059)
Accumulated deficit                  (39,200,999)    (24,105,677)
  Total stockholders' equity           8,950,078      23,280,705
  Total liabilities and
   stockholders' equity             $ 12,617,196    $ 29,852,063