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Washington, D.C., November 4, 2003 – Varsity Group Inc. (OTCBB: VSTY.OB) today reported record financial results for the third quarter of 2003 highlighted by a net profit of $3.8 million, a 78% increase from the net profit of $2.1 million recorded for the third quarter of 2002. Revenue increased 49% to $21.5 million from $14.4 million for the three months ended September 30, 2003 and September 30, 2002, respectively.

Basic net profit per share was $0.23 and diluted net profit per share was $0.22 in the third quarter of 2003 (on 16.5 and 17.5 million shares, respectively) compared to a basic and diluted net profit of $0.13 per share (on 16.1 and 17.0 million shares, respectively) in the third quarter of 2002.

“This quarter’s record results demonstrate the strength of the eduPartners business model and our ability to rapidly and profitably expand our business,” said Eric Kuhn, Chairman and Chief Executive Officer of Varsity Group Inc. “Through eduPartners, we successfully served over 200 educational institutions this back-to-school season, providing them with the best service in the textbook industry. Based upon our success expanding our network of schools and the strength of our financial performance this quarter, we will deliver record earnings for our fiscal year ending December 31, 2003.”

“We look toward the future with tremendous optimism about the market opportunity and our ability to continue to scale our business, accelerate the growth of our eduPartners franchise and create shareholder value. We will continue to explore opportunities to leverage the portfolio of assets we have developed including a rapidly growing base of school and individual customers, considerable cash reserves and a strong balance sheet.”

Separately, the Company announced that on November 4, 2003, the Company purchased 175,000 previously issued and outstanding shares of Varsity Group Inc. Common Stock from two officers of the Company.

ABOUT VARSITY GROUP INC.
Varsity Group Inc. is a leading provider of online bookstore solutions for educational institutions. Founded in 1997 as VarsityBooks.com, the company pioneered selling new college textbooks over the Internet. Building on its textbook expertise, Varsity Group offers educational institutions the opportunity to outsource textbook procurement operations by utilizing eduPartners, its e-commerce solution for schools.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Varsity Group’s business that are not historical facts are “Forward-looking statements” that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Contact:
Jack Benson
Chief Financial Officer
jack.benson@varsity-group.com
202-667-3400

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)


			Three Months Ended					Nine Months Ended
			September 30,					September 30,

			2002			2003		2002		2003

Net sales:
	Product		$	13,291		$	19,628	$	14,312	$	21,149
	Shipping			1,091			1,837		1,207		2,055

		Total net sales		14,382			21,465		15,519		23,204

Operating expenses:
	Cost of books			9,037			13,274		9,726		14,337
	Cost of shipping			812			1,147		901		1,279
	Marketing and sales			1,534			2,488		2,113		3,251
	Product development			70			61		148		180
	General and administrative			750			687		1,418		1,397
	Tax related benefit			—			—		—		(515	)
	Non-cash compensation			100			48		313		179

		Total operating expenses		12,303			17,705		14,619		20,108

Profit from operations				2,079			3,760		900		3,096

Other income, net:
	Interest income			71			52		239		184
	Other income			(2	)		1		253		1

	Other income, net			69			53		492		185

Net income			$	2,148		$	3,813	$	1,392	$	3,281

Net income per share:
	Basic		$	0.13		$	0.23	$	0.09	$	0.20

	Diluted		$	0.13		$	0.22	$	0.09	$	0.19

Weighted average shares:
	Basic			16,116,916			16,515,833		16,069,410		16,411,702

	Diluted			16,971,310			17,467,293		16,354,208		17,418,442

VARSITY GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)


						September 30, 2003
			December 31, 2002
						(unaudited)
Current assets:
	Cash and cash equivalents		$	16,950		$	19,064
	Short-term investments			1,500			—
	Accounts receivable, net of allowance of doubtful accounts of $13 at December 31, 2002 and at September 30, 2003			263			3,267
	Other current assets			297			818

		Total current assets		19,010			23,149
	Fixed assets, net			41			126
	Other assets			23			23

		Total assets	$	19,074		$	23,298

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	203		$	576
	Other accrued expenses and other current liabilities			573			1,080
	Taxes payable			1,286			925

		Total current liabilities		2,062			2,581
Long-term liabilities				—			—

		Total liabilities		2,062			2,581

Stockholders’ equity:
	Preferred stock: $.0001 par value, 20,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2002 and September 30, 2003			—			—
	Common stock: $.0001 par value, 60,000,000 shares authorized, 17,098,666 and 17,474,471 shares issued and outstanding at December 31, 2002 and September 30, 2003, respectively			2			2
	Additional paid-in capital			87,638			87,883
	Deferred compensation			(254	)		(75	)
	Accumulated deficit			(69,800	)		(66,519	)
	Treasury Stock, $.0001 par value, 957,063 shares at December 31, 2002 and September 30, 2003			(574	)		(574	)

		Total stockholders’ equity		17,012			20,717

		Total liabilities and stockholders’ equity	$	19,074		$	23,298