U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                   FORM 10-KSB


         (Mark One)

         ------            ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE 
            X              SECURITIES EXCHANGE  ACT OF 1934 [FEE  REQUIRED] 
         ------            For the fiscal year ended November 30, 1996

                                                     OR
         ------
                           TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
         ------            THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                           For the transition period from          to

                         Commission file number 0-18299

                            NEWS COMMUNICATIONS, INC.
                 (Name of small business issuer in its charter)


            Nevada                                      13-3346991
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)


 174-15 Horace Harding Expressway, Fresh Meadows, New York            11365
  (Address of principal executive offices)                          (Zip Code)

         Issuer's telephone number, including area code: (718) 357-3380

    Securities registered pursuant to Section 12(b) of the Exchange Act: None
      Securities registered pursuant to Section 12(g) of the Exchange Act:

 Common Stock, par value $.01 per share            Redeemable Class D Warrants
           (Title of Class)                              (Title of Class)

                  Check whether the issuer (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

                  Check  if there  is no  disclosure  of  delinquent  filers  in
response to Item 405 of  Regulation  S-B is not  contained in this form,  and no
disclosure  will  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-KSB or any amendment to this Form 10-KSB. [ ]

                  The  issuer's  revenues  for its most recent  fiscal year were
$18,457,963.

                  As of February 28, 1997, 7,910,848 shares of Common Stock were
outstanding.  The aggregate market value of shares of Common Stock (based on the
last sale price as reported by NASDAQ) held by  non-affiliates of the issuer was
approximately $9,535,000.

                  Transitional Small Business Disclosure Format (check one):
                               Yes ____          No   X
                                                     ---                        


                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

                               Page 1 of 66 Pages
                             EXHIBIT INDEX - PAGE 32


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                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS.


                  News Communications, Inc., a Nevada corporation formed in 1986
(the "Company"),  has been primarily  engaged,  through various wholly owned and
partly-owned  subsidiaries,  in the publication  and  distribution of advertiser
supported,   community   oriented   newspapers  and  related  targeted  audience
publications.  The  community  newspapers  are  directed at specific  geographic
communities  and,  for the most  part,  distributed  free of charge to  selected
residences and business  establishments in those  communities.  Each publication
focuses on the  lifestyle,  culture,  arts,  entertainment,  politics and social
issues  of  particular  interest  to the  group  of  communities  at which it is
directed.  Some of the papers publish  different  editions  (with  variations in
editorial  content and  advertising)  which are distributed to each community in
the targeted group. The principal source of the Company's  revenues (89% for the
fiscal year ended  November  30, 1996) is the sale of  advertising  space in its
publications.

                  As used herein,  unless the context  requires  otherwise,  the
term Company refers to News Communications, Inc. together with its subsidiaries,
Access Network Corp.  ("Access"),  publisher of the Manhattan  Spirit  (formerly
called the West Side Spirit), Tribco Incorporated  ("Tribco"),  publisher of the
Queens  Tribune,  the Western  Queens  Tribune and Bayside  Trib at Home,  Dan's
Papers  Inc.  ("DPI"),  publisher  of  Dan's  Papers  and the  Montauk  Pioneer,
Manhattan Publishing Corp.,  publisher of Our Town,  Parkchester  Publishing Co.
Inc.,   publisher   of  the  Bronx  Press  Review  and  the   Riverdale   Review
(collectively,  the "Bronx Newspapers"),  Nassau Community Newspaper Group, Inc.
("NCNG"),  publisher of Lynbrook USA, the Malverne Times,  the Rockville  Center
News & Owl, the Valley Stream  MAILeader,  the Independent  Voice of Long Beach,
Oceanside & Island Park,  the  Rockville  Center-Oceanside  Beacon,  the Baldwin
Citizen,  the East Rockaway  Observer,  Elmont Life,  Franklin Square Life, West
Hempstead  Market  and  Long  Island  Lifestyles   (collectively,   the  "Nassau
Newspapers"),  Manhattan File  Publishing,  Inc.,  publisher of Manhattan  File,
Capitol Hill Publishing,  Inc. ("Capitol Hill"), publisher of The Hill, Brooklyn
Newspaper  Publishing,  Inc.,  publisher  of  Brooklyn  Skyline,  and West  Side
Newspaper Corp., publisher of Chelsea-Clinton News and the Westsider. All of the
subsidiaries are wholly-owned  except DPI, which is 80% owned by the Company and
20% owned by Daniel Rattiner, and Manhattan File Publishing,  Inc., which is 90%
owned by the Company and 10% owned by an employee.

                  The Company plans to develop a regional group of  publications
in the  greater  New  York  Metropolitan  area.  The  Company  intends  to  seek
candidates  through  acquisition,  when possible,  in order to utilize  existing
talent and convert a potential  competitor  into an ally.  However,  the Company
will also consider  start-up  situations where it deems it to be  geographically
and economically in its best interest.

                  In addition  to the New York Metro  area,  the Company is also
exploring  opportunities in resort communities  throughout the United States and
other niche publishing areas, as well as other media ventures such as electronic
publishing on the Internet.

                  The Company  believes that  advertisers  would be receptive to
wide  circulation  at  reduced  cost  that  could  be  offered  by  a  group  of
publications providing a broad metropolitan audience.  Furthermore,  as a result
of the marginal costs of adding editorial and advertising  content are generally
significantly lower than the revenues that would be derived, management believes
the Company can take  advantage of economies of scale,  cross-selling  and other
synergies not available to individual publications.

The Manhattan Spirit

                  The Manhattan  Spirit is a weekly free  circulation  newspaper
founded  in  1985,  which  focuses  on  the  news,  lifestyle,   culture,  arts,
entertainment, politics and social issues of interest to the West Side and lower
Manhattan.  Access  editors  and  support  staff,  together  with a  variety  of
contributing free-lance writers and

                                                                                
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columnists,  write and edit all material for each weekly issue of the  Manhattan
Spirit and perform all composition,  layout,  and typesetting work.  Printing is
performed by outside  contractors.  In addition,  the  Manhattan  Spirit  offers
graphics and printing services to its customers.

                  The Manhattan  Spirit has won many awards,  including,  in the
past four fiscal years, New York State Bar Association  awards for excellence in
journalism. Various national and international magazines have reprinted articles
from  the  Manhattan   Spirit,   including  Glamour  Magazine  and  Cosmopolitan
International,  but  this is not a  significant  source  of  revenue.  Editorial
content  includes  columns by  well-known  columnists  in the fields of food and
wine,  movies and social advice.  Other columnists and writers focus on finance,
theatre and topics of community interest.

                  The Manhattan Spirit is published in a 4-color tabloid format.
It is  distributed  Friday of each week by  independent  contractors  in bulk to
locations throughout Manhattan. The principal places of distribution are lobbies
of luxury  apartment  buildings,  restaurants,  banks,  supermarkets and various
other business establishments as well as in sidewalk distribution boxes.

Our Town

                  Our Town, a 26-year-old  weekly  publication  distributed in a
single edition predominantly on Manhattan's Upper East Side, was acquired by the
Company in May 1991.  The Company  believes it is the East Side's  largest  free
circulation  weekly community  newspaper.  Almost all of its income derives from
display and classified advertising.

                  Our Town is published in a 4-color tabloid format. Delivery is
made by independent contractors to apartment house lobbies, banks,  supermarkets
and sidewalk distribution boxes.

Dan's Papers

                  Dan's  Papers,  published  by DPI,  focuses on the  lifestyle,
culture,  arts,  entertainment,  politics  and social  issues of interest to the
resort  areas of the South and North  Forks of Eastern  Long  Island,  New York,
particularly  the wealthy  resort area known as the  Hamptons.  Its articles and
columns include humor, news,  celebrity profiles,  reviews of art gallery shows,
restaurants, concerts, nightclubs and movies, social satire, editorial cartoons,
local  environmental  and political issues, as well as a special section on real
estate.  Dan's  Papers is  published  in tabloid  format with glossy  cover on a
weekly basis.  It is distributed  each week to locations on Eastern Long Island,
including art  galleries,  gift shops,  supermarkets,  newspaper and card shops,
restaurants  and  boutiques.  There is also weekly  distribution  in  Manhattan.
Management of the Company believes that Dan's Papers has the largest circulation
in Eastern Long Island of any weekly publication.

                  DPI  also  publishes  the  Montauk  Pioneer,  which  has  been
designated by the Montauk Village  Association as the official  newspaper of the
community of Montauk.

                  Dan's  Papers  was  first  published  in  1960  by Mr.  Daniel
Rattiner,  and is believed by the Company to be the first free resort  newspaper
in the United States. The Company acquired its 80% interest in DPI (Mr. Rattiner
is the owner of the other 20%) in October 1988. Mr. Rattiner continues to be the
publisher  and editor of Dan's Papers  under an  employment  agreement  with DPI
expiring in 1998, subject to earlier termination on certain conditions.

Queens Tribune

                  In May  1989,  Tribco  acquired,  by way of  merger,  all  the
outstanding  stock of two companies which,  together,  published and distributed
the Queens Tribune, which now consists of nine free circulation editions and one
paid-circulation  edition weekly  community  newspapers  serving areas in Queens
County in New York City.  Included in such  editions  are three  editions of the
Western Queens Tribune, a five-year old weekly

                                                                                
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publication  distributed in areas in western Queens County not previously served
by the Queens  Tribune,  and the Bayside  Trib at Home,  which  covers the news,
events and lifestyles in the community of Bayside,  Queens. It is distributed by
hand,   door-to-door  in  Bayside,   which  is  one  of  the  most   influential
neighborhoods in Queens County.

                  The Queens  Tribune was started in 1970 and is believed by the
Company to have the largest  circulation  of any weekly  community  newspaper in
Queens  County.  The format is a tabloid with  four-color  front and  additional
pages.  Editorial  content  focuses  on  local,  borough-wide  and  occasionally
city-wide  political and social  issues.  Features  include  community  news and
activities of the week, crime reports, restaurant reviews and similar matters of
interest to the targeted circulation area. Substantially all of the articles and
columns are written by Tribco's  editors and support  staff.  The Queens Tribune
has  won  numerous  awards  for  journalistic  excellence.  Delivery  is made by
independent contractors to heavy traffic locations, such as banks, supermarkets,
and sidewalk distribution boxes. Printing, graphics,  consulting,  distribution,
flyer and insert revenue are significant sources of income to the Queens Tribune
operation,  providing approximately 13% of its revenues in the fiscal year ended
November 30, 1996.

The Bronx Newspapers

                  On  December  18,  1992,  the  Company  acquired   Parkchester
Publishing Co. Inc., publisher of the Bronx Press Review. The Bronx Press Review
is a  fifty-four  year old paper which took on a  Bronx-wide  identity to fill a
vacuum left by the  absorption of the daily Bronx Home News by the New York Post
in the late 1940s. It is a tabloid paper with a 4-color front and back page. The
Bronx  Press  Review  has been  designated  by the New York City  Council as the
official  newspaper  of  Bronx  County  for  the  publication  of he  Concurrent
Resolutions of the Legislature.

                  In the last quarter of 1993, the Company started the Riverdale
Review,  which  serves the  affluent  Riverdale  area of the  Bronx.  It is also
publishing  Westchester  Lifestyles,  a  monthly  supplement  to reach in to the
Westchester advertising market.

                  The Riverdale  Review is a community weekly covering the news,
events, people and lifestyles of the Riverdale community. It is distributed free
of charge  throughout the affluent  northwest  Bronx  community which it serves.
19,000 copies are  distributed  door-to-door  to private  homes,  in bulk to the
lobbies and  mailrooms of the 175 apartment  buildings in the area,  and through
street distribution boxes and other bulk distribution to high traffic businesses
and religious and educational institutions.

The Nassau Newspapers

                  On December 9, 1993, the Company,  through NCNG,  acquired the
assets of the eight Nassau  Newspapers  from a group of sellers for an aggregate
purchase  price of  approximately  $320,000 in cash and 162,143 shares of Common
Stock,  which  will be  issued  on the three  anniversary  dates of the  closing
beginning  on December 9, 1996.  The shares of Common  Stock to be issued had an
aggregate  market  value of  $709,375  but,  because  of the  deferral  of their
issuance  and their  nature as  restricted  securities,  have been valued by the
Company at approximately  $355,000 for financial accounting purposes.  Mr. Barry
Manning  has been  employed  by NCNG to  continue  as  publisher  of the  Nassau
Newspapers.

                  Each of the Nassau  Newspapers  serves a  community  in Nassau
County,  New York, a suburban county adjacent to Queens County in New York City.
The oldest of the Nassau  Newspapers has been in continuous  publication  for 88
years.  The group averages over 50 years of continuous  weekly  publication  per
paper.  Each of the  Nassau  Newspapers  has  been  designated  as the  official
newspaper of its community.  The Company has expanded into six additional Nassau
County  communities  with a  shopper-type  publication  called  the Long  Island
Market.

     Recently  the  Company  has  developed  a  new  publication,   Long  Island
Lifestyles, which serves

                                                                                
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as a second section to its fourteen  existing  Nassau  publications  and is also
distributed  by itself in heavily  trafficked  areas.  This new  product  offers
moderately priced advertising to the central and south Nassau marketplace.

Manhattan File

                  Manhattan   File  is  a  monthly  (plus  five  special  issues
annually),  4-color, perfect bound, glossy magazine that debuted in August 1994.
It targets 20-45 year-old young,  affluent  Manhattan  residents who are fashion
and style conscious. With stories on the latest fashion trends for young men and
women, ideas on interior  decorating,  dining tips, profiles and interviews with
successful thirtysomethings and a comprehensive arts and entertainment guide for
the young and  wealthy,  Manhattan  File fills a local  niche  that the  Company
believes is not served by any other New York publication.

                  Monthly,  Manhattan File distributes  complimentary  copies to
the luxury  buildings on the upper East Side, upper West Side, SoHo and the West
Village  neighborhoods  of  Manhattan,   as  well  as  to  various  restaurants,
boutiques,  salons,  nightclubs,  health clubs and in 75 signature  distribution
boxes throughout  Manhattan.  In all, there are more than 800 distribution sites
where young people live or frequent.

                  National advertisers  targeted are high-end fashion,  jewelry,
liquor, tobacco, and automotive; on the local front, categories targeted include
health clubs,  restaurants,  boutiques,  art auction houses, hotels and cultural
institutions.  Well-known  national  advertisers  have been joined by many local
advertisers including prestigious restaurants, auction houses and hotels.

     The Company owns 90% of the stock of Manhattan  File  Publishing,  Inc. The
remaining 10% is owned by an employee.

Brooklyn Skyline

                  The  Brooklyn  Skyline,  which was  acquired by the Company in
August  1994,  is  published  weekly  in five  editions  which  are  distributed
door-to-door  in Brooklyn's  southern  tier.  Originally a tabloid  shopper-type
publication,  the Company is in the on-going  process of converting the Brooklyn
Skyline to a community  newspaper  to  complement  its other  publications.  The
introduction of "Koch at the Movies," the News Communication  Telephone Poll and
the Company's Citywide political page "NYConfidential" in addition to local news
coverage by newly hired Brooklyn reporters distinguish the Brooklyn Skyline from
its major competition,  The Marketeer,  an established  door-to-door shopper. In
addition to its  established  display  sales  effort,  the Company  introduced a
classified  advertising  section.  Additional  revenue is also  generated by the
occasional  sale of  distribution  of circulars to  accompany  the  door-to-door
distribution of Brooklyn Skyline. The Brooklyn Skyline operates out of an office
in the Mill Basin section of Brooklyn.  It is printed on newsprint  with the use
of spot color and is distributed by crews supervised and trained by the Company.

Chelsea-Clinton News and Westsider

                  The  Chelsea-Clinton  News and  Westsider  are the  only  paid
circulation  weekly newspapers on the West Side of Manhattan.  The Westsider,  a
25-year-old  community newspaper,  covers the area from 59th- 125th Streets from
Riverside  Drive to Central Park West. The  Chelsea-Clinton  News, a 56-year-old
community  newspaper,  covers the area from 14th-59th Streets from 5th Avenue to
11th Avenue.  These two publications  rely on revenue from display  advertising,
classified  advertising,  subscriptions,  newsstand sales, legal advertising and
from an  in-house  typesetting  shop that  brings in more than 20% of the annual
revenue. The Chelsea- Clinton News and Westsider were acquired by the Company in
October 1994.

The Hill

     In September 1994, the Company  embarked on its most ambitious  undertaking
to date -- the
                                                                                
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publication of The Hill, a new weekly  newspaper  devoted to the coverage of the
United States Congress. Martin Tolchin, an award-winning,  forty year veteran of
the New York Times signed a five year  contract to serve as publisher and editor
and chief of The Hill. The paper, which offers  comprehensive  coverage of every
aspect of Congress and life in the  Capitol,  is  distributed  free of charge to
members of Congress and their  staffs.  The Hill derives the largest  portion of
its  revenue  from the sale of  display  advertising  to  companies  wishing  to
influence the decisions of Congress.  Additional  revenues come from  classified
advertising,  local retail advertising,  subscriptions and the sale of the paper
outside of the  Capitol  area.  The Hill is  operated  out of its own offices in
Washington, D.C. It is printed on newsprint in black ink and process four color.
It is primarily  distributed to  congressional  office  buildings and government
agencies as well as to select retail locations, hotels and street boxes.

Printing and Production

                  The  printing  of  each  of  the  Company's   publications  is
presently done by independent  printing shops.  The Company sends to the printer
completely composed,  laid-out, typeset pages for photo-offset reproduction.  In
each case, the printer is able to provide all of the necessary  materials (i.e.,
paper,  ink,  etc.) for  printing,  and bills the Company for its  services  and
materials  used. In some instances,  the Company  purchases its own paper rather
than that  supplied by the  printer.  The Company  believes  that it obtains its
printing  services  at  competitive   prices,   and  if,  for  any  reason,  the
arrangements that it has with its printers should terminate, management believes
that similarly  favorable  arrangements could be had with several other printing
shops in or around New York City.

Advertisers and Readers; Marketing Activities

                  Most of the  Company's  publications  are  weeklies  primarily
distributed free of charge to their readers.  The Bronx Press Review,  the eight
Nassau Newspapers, the Westsider and Chelsea-Clinton News and one edition of the
Queens  Tribune are paid  circulation  publications.  The primary  source of the
Company's  revenue is through the sale of advertising space in the publications,
although  several of the weekly  publications  also offer  graphics and printing
services to outside service purchasers,  including several school  publications.
The advertising revenues of each of the Company's  publications are derived from
a  wide  variety  of   businesses   and   individuals   reflecting   the  varied
opportunities,  tastes and  demands  of the  residents  of each of the  targeted
distribution  areas.  Currently,  at least 85% of the  advertising  space in the
Company's  publications  represents  multiple  insertion  advertising  (where an
advertising   client  runs  an   advertisement  in  two  or  more  issues  of  a
publication).  This  percentage  has remained  fairly  stable for the  Company's
publications  over the last five years.  On a  year-to-year  basis,  the Company
estimates that, over the last four fiscal years, approximately two-thirds of its
display advertising  revenues have been from advertisers who were advertisers in
the  prior  year.  No one  advertising  client  represents  more  than 5% of the
Company's advertising revenues.  Classified  advertising has been a growing area
of revenues for the weekly  publications,  as has been  advertising  directed to
telephonic response.

                  The Company employs sales  representatives who are compensated
with   incentive-based   compensation   packages.   The  Company  has  commenced
supplementing   the  sales  activities  of  the  individual   publications  with
centralized group sales activities seeking  advertisers for all or a combination
of  the  Company's   publications.   Management   believes  such  a  program  is
particularly attractive to advertisers who seek audiences throughout the greater
New York metropolitan area, such as chain store and franchise operations.

Competition

                  The Company  competes  directly for advertising  revenues with
newspapers and magazines which are sold to readers or are  distributed  free, as
well as other  advertising  media. The Company does not  significantly  compete,
however,  with other  publishers of newspapers or magazines for paid circulation
revenues  as most of its  publications  are  distributed  free of  charge to its
readers.


                                                                                
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                  Those  newspapers  and magazines  competing with the Manhattan
Spirit and Our Town for  advertising  and targeted at Manhattan or parts thereof
include,  among others, the Resident,  New York Press, New York Observer and The
Village Voice. In order to compete with the lower  advertising  rates of smaller
publications in the Manhattan Spirit's market area, the Company utilizes a split
zone  program  whereby  advertisers  may  purchase  space  in  only  half of the
Manhattan  Spirit's copies at an appropriately  reduced rate.  During the months
from May  through  September,  Dan's  Papers  serves the same  market as Hampton
Magazine,  a free  circulation  publication.  Dan's  Papers is aimed at the same
market as the East Hampton  Star and the  Southampton  Press,  which are sold to
readers and the free  weekly The  Independent.  The Montauk  Pioneer is the only
paper that serves Montauk.  The Queens Tribune competes with many  publications,
including  Newsday and the free  circulation  publications  Queens Chronicle and
Queens  Courier,   both  of  which  are  somewhat  smaller  in  circulation  and
advertising  revenue than the Queens  Tribune.  The Bronx Press Review  competes
against  community  newspapers  such as the Bronx Times  Reporter  and the Bronx
News.

                  The Riverdale Review is the only saturation circulation,  free
distribution  newspaper serving that affluent community.  The Riverdale Press, a
paid circulation weekly, has a smaller circulation.

                  In  addition  to  Newsday,  a  daily  newspaper,   the  Nassau
Newspapers  have several other weekly  competitors in the south-west  section of
the county. These include the South Shore Tribune, a free circulation newspaper,
a group of paid circulation  newspapers published by Richner  Publications,  and
Pennysaver/This   Week  and  Shoppers  Guide,  two  free   circulation   shopper
publications.

                  Manhattan File is the only free  distributed  glossy magazines
targeting young adults in Manhattan. Competitors include national magazines like
Vanity Fair, Details,  Rolling Stone and New York Magazine.  Also, locally there
is a small  competitive  overlap for advertising with the free  newspapers,  The
Village Voice and The New York Press.

                  Although there is no competition  for  subscriptions  or legal
revenue because there are no other paid  circulation  weeklies on the West Side,
the  Chelsea-Clinton  News and  Westsider do compete for display and  classified
advertising  with other free weeklies on the West Side,  including the Manhattan
Spirit and The Resident.

                  The Brooklyn  Skyline is one of a number of free  distribution
papers in Brooklyn. The Marketeer,  an established  door-to-door shopper, is its
primary competitor.

     The Hill, which is the largest  circulation paper on Capitol Hill, services
the same market as Roll Call.


                  There  are  numerous  other  publications  distributed  in the
Company's circulation areas, some of which have resources  substantially greater
than those of the Company,  which compete for advertising  against the Company's
publications.  Management of the Company  expects to be competitive  because the
Company  can  offer  customers  the  ability  to focus its  advertisements  on a
specific  market,  thereby  giving the  customer  a chance to  control  costs by
narrowing its advertising scope and eliminating waste. Management believes that,
over the  years of  publication,  the  Company's  newspapers  have  developed  a
favorable  reputation  and  following.  The Company also believes it can compete
favorably by offering  advertisers  the opportunity to choose from a menu of the
Company's  publications,  by offering  advertisers  more favorable  rates as the
number of  publications  increases and by affording  advertisers  the ability to
pinpoint a specific group or geographic area or combination  thereof.  The major
barrier to the entry of new competitive  publications is the need for sufficient
capital to start up and continue operations until a sufficient  advertising base
is created.

Employees

                  As of  November  30,  1996,  the  Company  had 274  full-  and
part-time employees,  of whom 47 were editorial;  95 were engaged as display and
classified advertising sales personnel; 59 were engaged in production;

                                                                                
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<PAGE>



and 73 were engaged in administrative and clerical activities.  The Company also
maintains a roster of free-lance contractors. Management considers its relations
with the Company's employees to be satisfactory.

Seasonality

                  Dan's  Papers and the Montauk  Pioneer,  which are resort area
newspapers,  have significant seasonal variations in revenues.  This seasonality
may cause operating results to vary significantly from quarter to quarter,  with
the third fiscal  quarter  being the most  significant  in terms of revenues and
income.



ITEM 2.           DESCRIPTION OF PROPERTY.

     The Company and its subsidiaries  operate out of eight separate  locations.
The Manhattan  Spirit,  Our Town,  Chelsea-Clinton  News and the Westsider share
7,000  square foot  premises at both 242 West 30th Street,  New York,  New York,
under  a  lease  with an  unaffiliated  landlord  which  commenced  in 1995  and
terminates  in January  2001, at an annual rental of $52,000 for the first year,
increasing over the term to $75,380 in the last year.

     DPI leases from Mr.  Daniel  Rattiner,  current 20% owner and  President of
DPI,  1,910  square  feet of office  space in a  building  on  Montauk  Highway,
Bridgehampton,  New York,  at an annual  rate of  $38,200  (plus  cost-of-living
increases) for a term of ten years  terminating in October 1998. The Company has
an option to renew its lease for an additional five-year term.

     Tribco has a ten year lease,  which  commenced on November 1, 1990, with an
unaffiliated  landlord to rent  approximately  8,000 square feet of office space
and space for publication of the Queens Tribune in Fresh Meadows,  New York, for
annual base rents  ranging from $88,000 to $128,000.  The lease is renewable for
five years at a $152,000  base annual  rent.  These  premises  also serve as the
Company's executive and financial offices.

     Parkchester Publishing Co. Inc. has a five year lease for 2,500 square feet
of office space at 170 West 233rd Street, Bronx, New York, commencing June 1994,
at an annual rental of $34,200,  increasing over the term to $38,500 in the last
year.

                  NCNG has a five year  lease for  7,600  square  feet of office
space at 216 East 2nd Street, Mineola, New York, commencing November 1994, at an
annual rental of $53,400,  increasing over the term to $62,350 in the last year.
The Company has an option to renew its lease for an additional five years.

                  Manhattan File  Publishing,  Inc. has a five and one-half year
lease for 3,500 square feet of office space at 594 Broadway, New York, New York,
commencing March 1994, at an annual rental of $56,000.

                  Capitol Hill Publishing,  Inc. has a five year lease for 3,735
square  feet of  office  space  at 733  15th  Street,  N.W.,  Washington,  D.C.,
commencing August 1994, at an annual rental of $68,880.

                  Brooklyn Newspaper Publishing, Inc. has a three year lease for
2,500  square fee of office  space at 2123  Utica  Avenue,  Brooklyn,  New York,
commencing  November 1994, at an annual rental of $18,000,  increasing  over the
term to $19,800 in the last year.

                  The Company  believes  that its present  space is adequate for
current purposes and offers moderate expansion possibilities.

                                       8

<PAGE>

ITEM 3.           LEGAL PROCEEDINGS.

     An action entitled Jean Jee v. News Communications,  Inc. was instituted in
Supreme Court,  New York County in January 1991. The  complainant  alleged libel
against  the  Company in  connection  with an article  printed in the  Manhattan
Spirit and claimed $2,000,000 in compensatory  damages and unspecified  punitive
damages.  The Company filed an answer  denying the material  allegations  of the
complaint  and this case has been  dormant  for a number of years.  The  Company
believes that this case is without merit and shall remain dormant.

     An action entitled Tracey Robinson v. The Hill, News  Communications,  Inc.
and Media Venture  Group,  Inc. was  instituted in September  1996 in the United
States  District  Court for the District of Columbia in which the  plaintiff,  a
former  sales  person for Capitol  Hill,  has alleged  race  discrimination  and
retaliation  in  connection  with her  discharge  and  claims  compensatory  and
punitive damages of $5.2 million plus back pay, front pay and other relief.  The
Company and its  subsidiaries  believe that the claim is without  merit and have
filed an answer denying the material  allegations of the complaint and asserting
affirmative  defenses.  The  Company and the  subsidiaries  intend to defend the
action vigorously.  The action is presently in the early stages of the discovery
process.


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

                  The   Company  did  not  submit  any  matters  to  a  vote  of
stockholders during the last quarter of the fiscal year ended November 30, 1996.

                                                                                
                                       9

<PAGE>



                                     PART II

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

                  The  Company's  Common Stock is quoted on the Nasdaq Small Cap
Market under the symbol NCOM. The Units (symbol  NCOMU),  each consisting of one
share of Common Stock,  one  Redeemable  Class C Warrant  (symbol NCOMM) and one
Redeemable Class D Warrant (symbol NCOML),  were also quoted on the Nasdaq Small
Cap Market until October 9, 1996,  when they ceased to be quoted upon expiration
of the exercise period of the Class C Warrants.  The Class D Warrants,  although
eligible, have not been quoted separately.  The prices listed below are the high
sales and low sale prices for the periods reported.

                  The Company's  Redeemable Class A Warrants,  which were quoted
on Nasdaq  under the  symbol  NCOMW,  expired  on March  29,  1996.  None of the
Company's  Redeemable  Class B Warrants,  which also  expired on March 29, 1996,
were ever issued.

<TABLE>
<CAPTION>



                                                         Common Stock                                Units
Quarter Ended                                       High                   Low                High               Low
-------------                                       ----                   ---                ----               ---
<S>                                                 <C>                    <C>                 <C>               <C>   
February 28, 1995                                   3.06                   1.94               4.00              2.00
May 31, 1995                                        2.75                   1.88               2.75              2.25
August 31, 1995                                     2.94                   2.00               4.25              4.25
November 30, 1995                                   3.00                   2.37               3.25              2.50
February 28, 1996                                   3.25                   2.38                N/A               N/A
May 31, 1996                                        2.81                   2.13               3.00              2.75
August 31, 1996                                     2.50                   1.63                N/A               N/A
November 30, 1996                                   2.56                   1.00               2.00              2.00
=================================================================== ======================================================
</TABLE>


                  The Company  estimates  that at  November  30, 1996 there were
approximately  1,900 beneficial owners of its Common Stock and approximately 650
beneficial owners of the Class D Warrants. There were approximately 1,000 record
owners of the Company's Common Stock and  approximately 80 record holders of the
Class D Warrants.

Dividend Policy

                  The Company has never  declared or paid any cash  dividends on
its Common  Stock and does not intend to pay cash  dividends on its Common Stock
in the foreseeable  future. The Company intends to retain any future earnings to
finance the growth of the Company. Applicable provisions of Nevada corporate law
may affect the  ability of the  Company to declare  and pay cash  dividends  and
common stock  dividends on the Common  Stock as well as Preferred  Stock.  Under
Nevada law, dividends may be paid from a corporation's excess of assets over its
liabilities including capital (based upon certain computations) or in case there
shall be no such excess,  out of its net profits for the current fiscal year and
the  preceding  fiscal year or out of its net profits for the  preceding  fiscal
year.  Dividends on the 10% Preferred Stock are payable annually in an amount of
$500 per share of 10%  Preferred  Stock,  in cash or in  shares of Common  Stock
having a fair  market  value of $500,  payable on  September  19th of each year.
Dividends  on the 10%  Preferred  Stock may be paid in shares of Common Stock to
the extent the Company has sufficient  authorized but unissued Common Stock even
if the Company has  sufficient  assets or net profits to pay such  dividends  in
cash. It is anticipated that any permitted

                                                                                
                                       10

<PAGE>



dividends  will,  at least in the  foreseeable  future,  continue  to be paid in
shares of Common  Stock.  There can be no  assurance  that,  in the future,  the
Company will have  sufficient  surplus  available  for payment of cash or Common
Stock  dividends.  See  "Description of Securities" and  Consolidated  Financial
Statements and Notes thereto.

Recent Sales of Unregistered Securities

                  The following securities were issued by the Company during the
fiscal  year  ended  November  30,  1996,  and were  not  registered  under  the
Securities  Act of 1933,  as amended (the "Act").  Each of the  transactions  is
claimed to be exempt from registration with the Securities  Exchange  Commission
pursuant to Section 4(2) of the Act and/or  Regulation D promulgated  thereunder
as  transactions  by an issuer  not  involving  a public  offering.  All of such
securities  are deemed to be restricted  securities for the purposes of the Act.
All certificates  representing such issued and outstanding restricted securities
of the Company  have been  properly  legended  and the Company has issued  "stop
transfer" instructions to its transfer agent with respect to such securities.

     (i) On May 17, 1996, the Company issued to D.H.  Blair  Investment  Banking
Corp. ("DHBIB") an immediately exercisable warrant to purchase 400,000 shares of
Common Stock exercisable at $2.50 per share. On May 21, 1996, the Company issued
to DHBIB an immediately exercisable warrant to purchase 200,000 shares of Common
Stock exercisable at $2.50 per share.

     (ii) On August  17,  1996,  the  Company  granted  immediately  exercisable
options to purchase  10,000 shares of Common Stock to each of its then directors
other than Mr.  Ackerman  (12  persons)  under the  Company's  Non-Discretionary
Directors Stock Option Plan, exercisable at $1.625 per share.

     (iii) On  October  28,  1996,  the  Company  sold to a group of 15  private
investors an aggregate of 200,000 shares of its $10 Convertible Preferred Stock,
each of which is  convertible  into 5 shares of Common Stock at $2.00 per share,
and immediately  exercisable warrants to purchase an aggregate of 800,000 shares
of Common Stock  exercisable  at $2.00 per share.  On that date the Company also
granted  Wilbur L.  Ross,  Jr. an  immediately  exercisable  option to  purchase
200,000 shares of Common Stock under the Company's  Discretionary  Directors and
Officers Stock Option Plan, exercisable at $2.00 per share and granted 8 persons
who became directors options to each purchase 5,000 shares of Common Stock under
the Company's  Non-Discretionary  Directors  Stock Option Plan,  exercisable  at
$2.00 per share. In connection with such transactions, the Company issued 50,000
shares  of  its  Common  Stock,  valued  at  $100,000,  to  Rothschild  Inc.  as
consideration for investment banking services rendered by that firm.


                                                                                
                                       11

<PAGE>



ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

RESULTS OF OPERATIONS

                  New management has reviewed the Company's  financial condition
in depth and as a result has significantly  increased the provision for doubtful
accounts by $1,086,000 for the fiscal year ended November 30, 1996.  There is no
cash effect or additional operational cash cost of this adjustment.

                  In addition the 1996 financial  statements contain adjustments
related to the following items:  $154,000 accrual of prior year franchise taxes;
$145,000 charge for warrants issued in connection with consulting services and a
loan;  $79,000 liability related to accrued vacation time;  $123,000 deferral of
prepaid  classified  revenue;  $68,000  accrual  of  an  adjustment  to  workers
compensation insurance premiums; $82,000 charge for a publisher's bonus in order
to reflect charges on a current basis;  $43,000 accrual of sales  commissions in
order to reflect charges on a current basis.

                  The effect of the above  financial  adjustments  is a reported
increase  in loss as compared to  previous  years of  approximately  $1,780,000,
resulting in a net loss for 1996 of  $3,815,000  an increase of 120% from 1995's
loss of $1,732,000. 

                  Total revenues in 1996 were  approximately  $220,000 (1%) over
1995,  even  though  1995  had the  benefit  of an  additional  issue  for  most
publications.  The increase in revenues was primarily attributable to the Queens
Tribune's  expansion  with the "Bayside Trib at Home  ($243,000,  8%);" Brooklyn
Skyline's  expansion  into  a  fifth  zone  ($194,000,   8%);  Manhattan  File's
additional special supplements ($230,000, 15%), and Dan's Papers' capitalization
on an ever growing market in the Long Island post resort area, the Hamptons, and
positioning  itself  as the  advertising  standard  on Long  Island's  east  end
($222,000, 7%).

                  These revenue  gains were offset by decreased  revenues at The
Hill  (where  advertising  is  directed  at  Congress)  due  to  a  decrease  in
Congressional  activity as a result of a presidential and congressional election
($332,000, 20%); a decrease at Nassau Newspapers, primarily from the sale of two
shoppers ($124,000, 5%); while a turnover in sales management adversely affected
the sales  staff,  causing a decrease in revenues at the  Manhattan  papers (Our
Town, Manhattan Spirit and Westsider) ($200,000, 5%).

               Salaries and outside labor costs increased approximately 
$306,000 (3%) in 1996. Savings


<PAGE>



from budget cuts phased in beginning  the second  quarter of 1996 which  reduced
staff 12% to 274 at November 30, 1996 from 307 employees at the end of 1995 were
offset by additional  labor costs  relating to the  expansions  in  publications
noted above and  increased  sales  commissions  and bonuses.  The  provision for
doubtful  accounts  increased  $1,085,589  as a result of the Company using more
detailed  receivable aging schedules and modifying its assumptions in estimating
its allowance for bad debt as of November 30, 1996. This additional  analysis of
agings  resulting  in a  write-off  of  $2,044,000  of  receivables  against the
increased  allowance  for bad debt. A charge for warrants  issued in  connection
with a consulting  agreement  ($128,000),  recording of a liability  for accrued
vacation time ($79,000) and franchise  taxes  ($154,000) were the primary causes
for the increase in General and Administrative costs.  Additional bank loans and
the  loan  from   shareholder   caused  the  increase  in  interest  expense  of
approximately $177,000.

                  Direct mechanical costs increased  approximately $360,000 (5%)
in 1996 mostly as a result of  printing  costs  which  increased  as a result of
expansions  noted above and newsprint prices which were at a historic high until
May 1996.  Although prices have been decreased,  they are still generally higher
than prices at the beginning of 1995.

LIQUIDITY AND CAPITAL RESOURCES

                  For the  year  ended  November  30,  1995,  net  cash  used by
operations was  $1,983,000.  These funds were provided by $925,000 from the sale
of marketable  securities,  $500,000 from bank loans,  and $558,000 from cash on
hand at the beginning of the year.

                  At  November  30,  1996,  the Company had an excess of current
assets over current liabilities in the amount of approximately  $2,146,000.  Net
cash  used  by  operations  was  $2,133,000.  The  funds  were  provided  from a
$1,000,000  two-year loan from its largest  shareholder  in May 1996, a $675,000
increase in a bank loan and from the issuance of $2,000,000  in $10  Convertible
Preferred Stock in October 1996. Approximately $500,000 of the proceeds was used
to reduce the Company's  accounts payable through November 30, 1996. In February
1997 the Company repaid $275,000 of the bank loans. The Company presently has no
material commitment for capital expenditures.

                  Management  believes that the Company will  generate  positive
cash flow for the fiscal year ending November 30, 1997. Although there can be no
assurances  to this  effect,  management  is confident  that it has  available a
variety of funding and revenue sources to meet the Company's future cash needs.

OUTLOOK

                  In the last quarter of the 1996 fiscal year, the Company 
underwent a change in


<PAGE>


management which was accompanied by the election of eight new of Directors (half
of the Board), a new CEO, and an infusion of additional capital.  Although,  the
effect of this change in management could not be felt  operationally in the 1996
fiscal year, new management's  diligence in assessing the financial condition of
the Company and its  decision to record  adjustments  will enable the Company to
move forward and  institute  additional  cost  savings,  revenue  producing  and
collection policies that will in the long term,  management believes,  accrue to
the Company's benefit.

                  Specifically,  the Company  expects to:  increase  its revenue
growth in 1997  through  an  increased  sales  effort,  and  improvement  in its
recruitment and training of sales staff; continue implementation of cost cutting
measures begun in 1996 which is anticipated to have more of an impact during the
upcoming year;  review and improve its policies and procedures as they relate to
credit and collection of receivables;  and to focus on the recent start-ups (The
Hill and  Manhattan  File) and  acquisitions  (Westside  and Nassau) in order to
speed up their turnaround into income producing publications.

                  The Company  expects to improve  results from  operations as a
result  of a series  of  budget  cuts  instituted  during  fiscal  year 1996 and
modified in the current  year.  In addition to the  cutbacks in staff  described
above, the Company  anticipates  estimated  annualized  savings of approximately
$50,000 by a change in health insurance carriers, and $650,000 through a variety
of production and distribution  cutbacks and repositionings  such as elimination
of door-to-door  distribution in some areas, reduced page counts and a reduction
in certain page sizes.

                  While there can be no assurances, new management believes that
the steps it is undertaking to improve operations,  if effective, will result in
a significant improvement in the profitability of the Company.




<PAGE>


     
ITEM 7.           FINANCIAL STATEMENTS.

                  The  financial  statements  listed on page F-1 are included in
this Report beginning on page F-2.

ITEM 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE.

                  Moore Stephens,  P.C.  (formerly named Mortenson & Associates,
P.C.) served as  independent  auditors of the Company for the fiscal years ended
November  30,  1994 and 1995 and until  February  3, 1997.  On February 3, 1997,
Moore  Stephens,  P.C. was dismissed by the Company because it was determined by
the  Company  that its best  interest  would be  served by  retaining  Coopers &
Lybrand,  LLP.  The  decision  to  change  auditors  was  approved  by the Audit
Committee  of the  Company's  Board of  Directors.  The  report of  Mortenson  &
Associates,  P.C. dated March 27, 1996, relating to the financial  statements of
the Company as of November 30, 1995 and for the two years then ended contained a
statement  regarding  uncertainty  about the Company's  ability to continue as a
going  concern.  During  the  Company's  two most  recent  fiscal  years and the
subsequent interim period preceding such dismissal,  there were no disagreements
between  the  Company and Moore  Stephens,  P.C.  on any  matters of  accounting
principles or practices,  financial  statement  disclosure or auditing  scope or
procedures.

                  Cooper's & Lybrand  LLP has been  engaged by the Company as of
February 3, 1997 as its independent auditors.

                                                                                
                                       14

<PAGE>



                                    PART III

ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

                  As of February 28, 1997,  the Company's  directors,  executive
officers and other  significant  employees  and their ages and  positions are as
follows:

<TABLE>
<CAPTION>


          Name of Individual                         Age      Position with Company and Subsidiaries
          ------------------                         ---      --------------------------------------
               <S>                                   <C>                   <C>   
           Gary Ackerman                             54       Director of the Company
           Thomas Allon                              33       Executive Vice President of the Company
           Robert Berkowitz                          47       Controller of the Company
           Carl Bernstein                            52       Director of the Company
           Eric Breindel                             40       Director of the Company
           John Catsimatidis                         47       Director of the Company
           Mark Dickstein                            38       Director of the Company
           Jerry Finkelstein                         80       Chairman of the Board and Director of the Company
           Sydney Gruson                             69       Director of the Company
           Andrew J. Maloney                         64       Director of the Company
           John E. McConnaughy, Jr.                  67       Director of the Company
           Robert E. Nederlander                     63       Director of the Company
           Daniel Rattiner                           57       President, Publisher, Editor and Director of DPI
           Wilbur L. Ross, Jr.                       59       Director and Chief Executive Officer of the Company
           Michael Schenkler                         51       Director and President of the Company and director
                                                                 and officer of subsidiaries
           Andrew J. Stein                           51       Director of the Company
           Sy Syms                                   70       Director of the Company
           Arthur Tarlow                             67       Director of the Company
           Hillel Weinberger                         43       Director of the Company

</TABLE>

     Gary  Ackerman has been a director of the Company  since March 1990. He has
served in the United States House of  Representatives  as a Representative  from
New York since March 1983.  From 1979 until 1983,  Mr.  Ackerman was a member of
the New York State  Senate.  From 1970 to 1979,  Mr.  Ackerman  was the founder,
editor and publisher of the Queens Tribune.

     Thomas  Allon was  elected  Executive  Vice  President  of the  Company  in
November 1994. He has been Publisher of the Manhattan  Spirit and Our Town since
1992.  From 1990 to 1991 he was Managing/Associate  Publisher of the Manhattan
Spirit.

     Robert  Berkowitz has served as  Controller  of the Company since  December
1992. From
                                                                                
                                       15

<PAGE>
    


November 1991 to November  1992,  Mr.  Berkowitz was a financial and  management
consultant with Gobstein,  Weingarten & Goldfarb,  a certified public accounting
firm. From August 1989 to November 1991 he was the Chief Accounting  Officer for
Meringoff Equities,  an owner and manager of commercial real estate. From August
1980 to August 1989 he was  Vice-President  and Controller of the Trump Group, a
private investment company specializing in the acquisition and operation of both
public  and  private  companies.  From  1977  to  1980 he was  with  the  public
accounting firm of Price Waterhouse.

     Carl  Bernstein was elected a director of the Company in October 1996.  For
more than five years,  Mr.  Bernstein has been a writer and  journalist.  During
this period he has been a Contributing  Editor to Time Magazine and is presently
a  Contributing  Editor to Vanity Fair. Mr.  Bernstein was the  co-author,  with
Robert  Woodward,  of "All the  President's  Men" and "The Final Days." His most
recent  publications  are  "Loyalties:  A Son's  Memoir,"  published  by Simon &
Schuster,  and, as co-author,  "His  Holiness:  Pope John Paul II and The Hidden
History of Our Times," published by Doubleday.

     Eric Breindel has been a director of the Company  since  October 1993.  Mr.
Breindel is Senior Vice  President of News  Corporation,  a holding  company for
publishing television and other media enterprises.  From 1986 until earlier this
year,  Mr.  Breindel  was  Editorial  Page Editor of the New York Post.  He also
writes for  Commentary,  The New  Republic,  The Wall  Street  Journal and other
periodicals.  He is the recipient of numerous professional awards and honors and
appears  regularly as a commentator on both  television and radio news programs.
Mr. Breindel is a graduate of Harvard College and Harvard Law School.

     John  Catsimatidis  has been a director  of the Company  since  December 3,
1991. Mr.  Catsimatidis is also the Chairman of Red Apple Group, Inc., a holding
company for supermarket  chains in New York.  Since July 1988, Mr.  Catsimatidis
has served as Chairman of the Board and director of Sloan Supermarkets, Inc., an
American Stock Exchange listed company which owns and operates supermarkets. Mr.
Catsimatidis  is also  currently  the  Chairman  of the Board,  Chief  Executive
Officer  and  director of United  Refining  Company,  a refiner and  retailer of
petroleum products.

     Mark Dickstein was elected a director of the Company in October 1996. Since
1986,  Mr.  Dickstein has been  President of Dickstein  Partners Inc., a private
investment  firm.  He is also a director  of Carson  Pirie  Scott & Co. and Hill
Stores Company, leading retailing organizations.

     Jerry  Finkelstein  has been a director of the Company since  December 1987
and became  Chairman of the Board in August 1993.  He served as publisher of The
New York Law Journal  from 1960 to 1984.  Mr.  Finkelstein  was  Chairman of the
Board of Struthers Wells  corporation for more than five years prior to November
1993, when he resigned.  Struthers Wells  Corporation filed for protection under
Chapter  XI  of  the  United  States  Bankruptcy  Code  in  February  1994.  Mr.
Finkelstein is a former member of the Board of Directors of Rockefeller  Center,
Inc., Chicago Milwaukee Corporation,  Chicago Milwaukee Railroad Corporation and
TPI   Enterprise,   Inc.   (formerly   Telecom  Plus   International   Inc.),  a
communications  company.  He is also a former Commissioner of the Port Authority
of New York and New Jersey.

     Sydney Gruson was elected a director of the Company in October 1996.  Since
1987, Mr. Gruson has been a Senior Advisor of Rothschild Inc. From 1944 to 1987,
he was with The New York Times,  first as a  correspondent  and then as a senior
executive.  As the time of his retirement in 1987, he was  Vice-Chairman  of The
New York  Times  Company  and  deputy  to the  paper's  publisher.  He is also a
director of The International Herald Tribune.

     Andrew J. Maloney has been a director of the Company since  September 1993.
He is a  partner  at the New  York law firm of  Brown & Wood.  From  1986  until
December 1992, Mr. Maloney was United States  Attorney for the Eastern  District
of New York. Mr. Maloney is a graduate of the United States Military  Academy at
West Point and Fordham Law School.

     John E.  McConnaughy , Jr. was elected a director of the Company in October
1996.  Mr.  McConnaughy  is  Chairman  and CEO of JEMC  Corporation,  a  company
involved in investing. From 1969 to 1986,
                                                                                
                                       16

<PAGE>



he served as Chairman and CEO of Peabody International Corp.  ("Peabody").  From
1981, when it was spun off from Peabody, until his retirement in 1992, he served
as Chairman and CEO of GEO International  Corporation  ("GEO"). In October 1993,
GEO filed a petition for  reorganization  under  Chapter 11 of the United States
Bankruptcy Code. Mr.  McConnaughy is also a director of DeVlieg  Bullard,  Inc.,
Mego Financial Corp.,  Transact  International,  Inc.,  Pantapec  International,
Inc., Riddell Sports, Inc., Enviropur Waste Refining and Technologies,  Inc. and
Wave Systems, Inc.

     Robert E.  Nederlander  was  elected a director  of the  Company in October
1996. Since 1981, he has been President of Nederlander  Organization,  Inc., the
owner  and/or  operator  of one of the  world's  largest  chains  of  legitimate
theatres.  Mr.  Nederlander  is also a director of Riddell  Sports,  Inc.,  Mego
Financial Corp., Mego Mortgage Corp., Allis Chalmers Corp. and HFS Inc.

     Daniel Rattiner is Publisher and Editor of Dan's Papers,  having held these
positions since he began the publication in 1960. He has also been President and
a director of DPI since its organization in October 1988.

     Wilbur L. Ross,  Jr. was elected a director of the Company in October 1996.
Since 1988, Mr. Ross has been Senior  Managing  Director of Rothschild  Inc. Mr.
Ross is also a director of Mego Financial Corp. and Syms Corp.

     Michael  Schenkler  has been a director  of the  Company  since March 1990,
became a Vice  President  in August 1990 and was elected  President  in December
1991.  He has  been  President  of the  Queens  Tribune  since  1979  and is its
publisher.  Prior to taking  over the  Queens  Tribune  full  time in 1982,  Mr.
Schenkler  spent 15 years as an educator  employed by the Board of  Education of
New York City, where he served as a teacher,  assistant principal and principal.
Mr. Schenkler is President of all of the Company's  subsidiaries  other than DPI
and NCNG, of which he is Vice President.

     Andrew J. Stein has been a director of the Company  since July 1994.  He is
President of Benake Corporation, a management consulting firm. Prior to assuming
such position in 1993, Mr. Stein was actively  involved in public affairs.  From
1986 to 1993, he was President of the Council, New York City. From 1978 to 1985,
he was  President  of the Borough of Manhattan  and from 1969 to 1977,  he was a
member of the New York State Assembly. He was also Chairman of the New York City
Commission on Public  Information and  Communication,  and has been a Trustee of
the New York City  Employees  Retirement  System and an ex officio member of The
Museum of The City of New York, The New York Public  Library,  The  Metropolitan
Museum of Art and The Queens Borough Public  Library.  Mr. Stein is a son of Mr.
Finkelstein.

     Sy Syms was  elected a  director  of the  Company in  October  1996.  He is
Chairman  and Chief  Executive  Officer of Syms  Corp.,  clothing  retailers,  a
position he has held since 1983. Mr. Syms is also a director of Israel  Discount
Bank of New York.

     Arthur  Tarlow has been a director of the Company  since August 1993. He is
an attorney  currently  of counsel to Meyer,  Suozzi,  English & Klein,  P.C. of
Mineola,  New  York,  where he has been  practicing  for more than 10 years as a
specialist  in  taxation,  estates  and trusts.  He is also a  Certified  Public
Accountant  and was a partner in the  accounting  firm of David Tarlow & Company
for more than 25 years  until  August  1995.  He is  currently  a partner in the
accounting  firm of  Tarlow & Tarlow.  He is a member of the New York  State Bar
Association, admitted to practice before the U.S. Tax Court, and a member of the
New York State  Society of CPAs and the American  Institute of Certified  Public
Accountants.

     Hillel  Weinberger  was elected a director of the Company in October  1996.
Since 1988, he has been Senior Vice  President and Senior  Portfolio  Manager of
Loews/CNA Holdings. He is also a director of Applause,  Inc., a leading producer
of licensed gift items.

     The directors serve until the next annual meeting of stockholders and until
their  respective  successors are elected and  qualified.  Officers serve at the
discretion of the Board of Directors.

                                                                                
                                       17

<PAGE>



                  Pursuant  to the  agreement  regarding  the  sale  of the  $10
Convertible  Preferred  Stock, the Company's Board of Directors was increased to
16  members,  of whom the  holders of the $10  Convertible  Preferred  Stock are
entitled to nominate and elect 8 members. Messrs. Bernstein,  Dickstein, Gruson,
McConnauaghy,  Nederlander,  Ross,  Syms and Weinberger are the designees of the
holders of the $10  Convertible  Preferred  Stock to serve as  directors  of the
Company and became directors on October 28, 1996, the date of the closing of the
sale of the $10  Convertible  Preferred  Stock.  At that time,  five of the then
serving  directors,  Messrs.  Joseph K. Fisher,  David  Jaroslawicz,  William J.
Kelleher,  Jr.,  Christopher  McGrath and Martin J.  McLaughlin,  resigned.  See
"Description of Securities - Preferred Stock - $10 Convertible Preferred Stock."

Section 16(a) Beneficial Ownership Reporting Compliance

                  To the  Company's  knowledge,  based  solely  on review of the
copies of such reports furnished to the Company and information furnished by the
reporting  person,  during the fiscal year ended  November 30, 1996, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with, except that Gary Ackerman made
a filing on Form 5 with  respect  to one  transaction  required  to be  reported
earlier on Form 4 and the Report on Form 3 of Carl Bernstein was filed late.


                                                                                
                                       18

<PAGE>



ITEM 10.          EXECUTIVE COMPENSATION.

Summary of Cash and Certain Other Compensation

                  The following table shows compensation paid by the Company and
its  subsidiaries  to certain of its  executive  officers  (including  the chief
executive officer) for the fiscal years ended November 30, 1996, 1995 and 1994.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>


                                                                         Annual Compensation                    Long-Term
                                                                                                              Compensation
                                                                                                                  Awards
                                                                                                Other
                                                                                                Annual
                                                                                              Compensa-
                                                               Salary           Bonus           tion             Options
Name and Principal Position                        Year         ($)              ($)             ($)               (#)
---------------------------                        ----        -----            -----           -----             ----
<S>                                                <C>        <C>                <C>             <C>                <C>   
Michael Schenkler, President and Chief Exec        1996       154,621             ---            ---             10,000
utive Officer of the Company and officer of        1995       150,000             ---            ---             10,000
subsidiaries                                       1994       142,553             ---            ---             67,500
Daniel Rattiner, Officer of Dan's Papers, Inc.     1996       130,869           60,235        15,000(1)            ---
                                                   1995       127,813           61,169        15,000(1)            ---
                                                   1994       124,016           39,367        15,000(1)            ---
Jerry Finkelstein, Chairman of the Board of the    1996       195,000             ---            ---             10,000
Company                                            1995       195,000             ---            ---            360,000
                                                   1994       175,392             ---            ---            217,500
Thomas Allon, Executive Vice President of the      1996        82,341           45,000           ---               ---
Company and officer of subsidiaries                1995        80,885           45,000           ---               ---
                                                   1994        80,673           12,035           ---             40,000

--------------------------------------
<FN>

(1)      Mr.  Rattiner is entitled to receive an  aggregate  of $15,000 per year
         for discounted  trade-sale  merchandise  from  advertisers (who provide
         such  merchandise  to Mr.  Rattiner  in lieu of paying the  Company for
         advertising).

</FN>
</TABLE>


                     OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)
<TABLE>
<CAPTION>

                                  Number of                Percent of
                                 Securities              Total Options/
                                 Underlying               SARs Granted              Exercise or
                                Options/SARs              to Employees               Base Price
                                 Granted (#)             in Fiscal Year                ($/Sh)               Expiration Date
                                -------------            ---------------            ------------            ---------------
<S>                                 <C>                        <C>                       <C>                      <C>   
Michael Schenkler                  10,000                      5.9                      1.625                    8/17/01
Jerry Finkelstein                  10,000                      5.9                      1.625                    8/17/01

</TABLE>

                        AGGREGATE YEAR-END OPTION VALUES
                               (November 30, 1996)
<TABLE>
<CAPTION>


                                      Number of unexercised options at            Value of unexercised in-the-money
                                             fiscal year-end(#)                     options at fiscal year-end($)
Name                                 Exercisable          Unexercisable         Exercisable            Unexercisable
----                                 -----------          -------------         -----------            -------------
<S>                                     <C>                   <C>                   <C>                     <C>  
Michael Schenkler                      142,500                ---                 19,375                    ---
Jerry Finkelstein                      697,500                ---                226,250                    ---
Daniel Rattiner                         35,000                ---                  4,375                    ---
</TABLE>

                                       19

<PAGE>

Employment Contracts and Other Employment Agreements

                  Pursuant  to an  employment  agreement  entered  into  by  the
Company and Michael  Schenkler as of October 15, 1994, and  terminating  October
14, 1999, Mr. Schenkler is employed as President of the Company and President of
Tribco.  Mr.  Schenkler  earns a base  salary of $150,000  per year  (subject to
cost-of-living  increases)  and such annual bonuses as the Board of Directors of
the Company may determine in its sole  discretion.  The  agreement  requires Mr.
Schenkler to protect  confidential  information of the Company and restricts him
from  engaging  in  certain  competitive  activities  during  the  term  of  his
employment and for one year thereafter.

                  Pursuant to an employment  agreement  terminating  in 1998, as
amended,  as compensation  for his services to DPI, Daniel Rattiner earns a base
salary from DPI of $100,000  per year,  adjusted  for  increases in the consumer
price index  after  1988,  plus a bonus in each fiscal year based on net profits
(as defined) of DPI. Mr.  Rattiner may terminate his employment at any time. Mr.
Rattiner has pledged to keep secret DPI's confidential matters and, in the event
he leaves the employ of DPI,  not to compete  with DPI for  specific  periods of
time, depending on the reasons for his separation.

                  Pursuant  to an  employment  agreement  entered  into  by  the
Company and Jerry  Finkelstein as of August 20, 1993, and  terminating on August
19, 2003, as amended and restated,  Mr.  Finkelstein  is employed as Chairman of
the Board of Directors of the Company ("Board") at an annual salary of $195,000.
Mr.  Finkelstein may also be paid annual bonuses at the discretion of the Board,
based upon such factors as the Company's  results of operations and transactions
involving the Company which are introduced to the Company by Mr.  Finkelstein or
in which he is  otherwise  involved on behalf of the  Company.  The Company also
provides Mr.  Finkelstein with medical and other benefits and  perquisites.  Mr.
Finkelstein  may terminate the agreement at any time on at least 10 days' notice
to the Company.  In the event of his permanent  disability or death,  salary and
bonuses shall continue to paid to him or the legal  representative of his estate
until the end of the term of the agreement.

                  Pursuant  to an  employment  agreement  entered  into  by  the
Company and Thomas Allon as of November 1, 1994,  and  terminating  November 30,
1997,  Mr. Allon is employed as  Executive  Vice  President of the Company.  Mr.
Allon  earns a base  salary  of  $80,000  per year  (subject  to  cost-of-living
increases)  and, for fiscal years  beginning  December 1, 1994, is entitled to a
bonus  of 5% of the net  profits  of the  Company  derived  from  the  Company's
publications  Manhattan Spirit, Our Town,  Manhattan File,  Chelsea-Clinton News
and  Westsider,  but in no event shall such bonus be less than  $45,000 nor more
than $70,000 for any fiscal year.  The  agreement  requires Mr. Allon to protect
confidential  information  of the Company  and  restricts  him from  engaging in
certain  competitive  activities  during the term of his  employment and for one
year thereafter.

                  Pursuant  to the  agreement  regarding  the  sale  of the  $10
Convertible  Preferred Stock,  Wilbur L. Ross, Jr. will serve as Chief Executive
Officer of the Company and Chairman of the Executive  Committee of the Board. In
consideration for the services  rendered by him in such capacities,  Mr. Ross is
to be paid $1 per year and was granted  five-year  options to  purchase  200,000
shares of Common  Stock at $2.00 per  share  under the  Company's  Discretionary
Option Plan.

                  The Company has no established compensation arrangements with
its directors.  See "Directors' and Officers' Options," below.

                                       20
<PAGE>

Directors' and Officers' Options

     On August  17,  1993,  the Board  adopted a  "Discretionary  Directors  and
Officers Stock Option Plan" (the "Discretionary Option Plan") pursuant to which,
as amended,  the Board may award  options to purchase an  aggregate of 1,500,000
shares  of  Common  Stock to  directors  and  officers  of the  Company  and its
subsidiaries which shall be exercisable at the market price on the date of grant
for  periods,  and under  conditions,  specified  by the  Board in such  grants.
Options under the Discretionary  Option Plan are non-qualified and non-incentive
options for purposes of income  taxation  and are not intended to qualify  under
Section 422A of the Internal Revenue Code of 1986. The only grant made under the
Discretionary  Option Plan during the fiscal year ended  November 30, 1996,  was
the grant to Mr. Ross described above.

     On August 17, 1993, the Board also adopted a  "Non-Discretionary  Directors
Stock Option Plan" (the "Non-Discretionary  Option Plan") pursuant to which each
director is granted on August 17, 1993 and each anniversary  thereof on which he
or she continues to be a director,  a five-year option to purchase 10,000 shares
of Common Stock at the market price on the date of grant. The  Non-Discretionary
Plan also  provides  that any person  becoming  a director  within the six month
after any August 17 will be  granted an option for 10,000  shares on the date he
or she becomes a director. The Non-Discretionary Option Plan was approved by the
shareholders of the Company on July 15, 1994. Pursuant to the  Non-Discretionary
Option  Plan,  each  person who was a director  of the  Company  (other than Mr.
Ackerman)  on August 17, 1996  received a grant of an option to purchase  10,000
shares of Common  Stock  exercisable  at $1.625  per share and each  person  who
became a director on October 28, 1996  received a grant of an option to purchase
5,000 shares of Common Stock  exercisable at $2.25 per share.  The latter grants
completed the grants that may be made under the Non-Discretionary Option Plan.




                                                                                
                                       21

<PAGE>



ITEM 11.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


                  The following table sets forth certain  information  regarding
ownership of the Company's Common Stock, as of February 28, 1997, by each person
known to the Company to own beneficially more than 5% of the outstanding  Common
Stock,  by each  person  who is a director  of the  Company,  by each  executive
officer of the Company listed in the tables in Item 10, and by all directors and
officers of the Company as a group.

<TABLE>
<CAPTION>


                                                Amount and Nature
                                                  of Beneficial                                Percent of
Beneficial Owner                                  Ownership (1)                                   Class
----------------                                 ---------------                               --------
<S>                                                    <C>                                        <C>   
Gary Ackerman                                        386,644 (2)                                  4.9%
         218-14 Northern Boulevard
         Bayside, N.Y. 11432
Carl Bernstein                                         5,000 (3)                                    *
         35 East 84th Street
         New York, New York 10028
Eric Breindel                                         62,500 (3)                                    *
         1211 Avenue of the Americas
         New York, N.Y. 10036
John Catsimatidis                                     55,000 (3)                                    *
         832 11th Avenue
         New York, N.Y.  10019
Mark Dickstein                                       185,000 (3)(4)                               2.3%
         120 East End Avenue
          New York, NY 10028
Jerry Finkelstein                                  1,489,503 (3)(5)                              17.4%
         150 East 58th Street
         33rd Floor
         New York, N.Y. 10158
Sydney Gruson                                          5,900 (3)(4)                                 *
        1251 Avenue of the Americas
        New York, N.Y. 10020
Andrew J. Maloney                                     53,000 (3)                                    *
         1 World Trade Center
         New York, N.Y. 10001
John E. McConnaughy, Jr.                               5,000 (3)                                    *
         637 Valley Road
         New Canaan, CT 06840
Robert E. Nederlander                                118,000 (3)(4)                               1.5%
         570 Park Avenue
         New York, N.Y. 10022
-----------------------------
Continued on next page.

</TABLE>


                                                                                
                                       22

<PAGE>

<TABLE>
<CAPTION>


                                                Amount and Nature
                                                  of Beneficial                                Percent of
Beneficial Owner                                  Ownership (1)                                   Class
----------------                               ------------------                              -----------
<S>                                                    <C>                                         <C>  
Daniel Rattiner                                     168,308 (3)(6)                                 2.1%
      26 Three Mile Harbor
      Hog Creek Road
      East Hampton, N.Y. 11932
Wilbur L. Ross, Jr.                                 570,000 (3)(4)(7)                              6.7%
      1251 Avenue of the Americas
      New York, NY 10020
Michael Schenkler                                   455,267 (3)(8)                                 5.7%
      174-15 Horace Harding Expressway
      Fresh Meadows, N.Y. 11365
Andrew J. Stein                                     180,000 (3)                                    2.3%
      625 Madison Avenue
      New York, N.Y. 10022
Sy Syms                                             185,000 (3)(4)                                 2.3%
      Syms Way
      Secaucus, NJ 07094
Arthur Tarlow                                        79,716 (3)                                    1.0%
      1505 Kellum Place
      Mineola, N.Y. 11501
Hillel Weinberger                                   221,000 (3)(4)                                 2.7%
      667 Madison Avenue
      New York, NY 10021
All Directors and                                 4,309,005 (3)(9)                                40.9%
      Executive Officers as
      a Group
      (19 persons)
J. Morton Davis                                   2,577,430 (10)                                  30.4%
D.H. Blair Holdings, Inc.
D.H. Blair Investment
  Banking Corp.
      44 Wall Street
      New York, N.Y. 10005

-------------------------------------------
*        Less than one percent.
<FN>

(1)      Based upon  information  furnished  by the  persons  listed.  Except as
         otherwise  indicated,  the stockholders  listed possess sole voting and
         investment power with respect to the shares listed.

(2)      Includes 5,334 shares owned by Mr. Ackerman's children for whom Mr. Ackerman is custodian.

(3)      Includes the following numbers of shares purchasable upon the exercise of presently exercisable options
         and warrants: Mr. Bernstein--5,000; Mr. Breindel--46,500; Mr. Catsimatidis--55,000; Mr.
         Dickstein--85,000; Mr. Finkelstein--697,500; Mr. Gruson--5,400; Mr. Maloney--53,000; Mr.
         McConnaughy--5,000; Mr. Nederlander--45,000; Mr. Rattiner--35,000; Mr. Ross--365,000; Mr.
         Schenkler--142,500; Mr. Stein--130,000; Mr. Syms--85,000; Mr. Tarlow--67,500; Mr.

                                                                                                                 
                                       23

<PAGE>



         Weinberger--101,000.

--------------------------------------------------
(Footnotes continued from prior page)

(4)      Includes the following numbers of shares issuable upon conversion of shares of $10 Convertible
         Preferred Stock: Mr. Dickstein--100,000; Mr. Gruson--500; Mr. Nederlander--50,000; Mr.
         Ross--200,000; Mr. Syms--100,000; Mr. Weinberger--120,000.

(5)      Includes (i) 29,834 shares owned by The Jerry  Finkelstein  Foundation,
         Inc., of which Mr.  Finkelstein  is President,  and (ii) 200,000 shares
         owned by Mr. Finkelstein's wife.

(6)      Includes (i) 500 shares owned by Mr. Rattiner's wife and (ii) 1,800 shares issuable upon conversion of
         the Company's 10% Preferred Stock.

(7)      Does not include (a) 50,000 shares owned by Rothschild Inc. and (b) 50,000 shares issuable upon
         conversion of shares of $10 Convertible Preferred Stock owned by Rothschild North America Inc. ("RNA")
         and 40,000 shares issuable upon exercise of warrants owned by RNA. Mr. Ross disclaims beneficial
         ownership of all of such shares.

(8)      Includes  9,000  shares  that  are  issuable  upon  conversion  of  the
         Company's  10%  Preferred  Stock  owned  by  Mr.  Schenkler's  wife  as
         custodian  for two  minor  children  of which Mr.  Schenkler  disclaims
         beneficial ownership.

(9)      Includes shares  issuable upon the exercise of the options  referred to
         in (3) above, and 61,666 shares issuable to Mr. Thomas Allen, Executive
         Vice President of the Company,  upon exercises of presently exercisable
         stock  options  and 22,501  shares  issuable to Mr.  Robert  Berkowitz,
         Controller of the Company, upon exercise of presently exercisable stock
         options.

(10)     Includes (i) 1,843,915 shares of Common Stock and Warrants to purchase 600,000 shares owned by
         D.H. Blair Investment Banking Corp. ("Blair Investment"), a wholly-owned subsidiary of D.H. Blair
         Holdings, Inc. ("Blair Holdings"), of which J. Morton Davis is a shareholder and director, (ii) 61,915
         shares owned by Rivkalex Corporation ("Rivkalex"), a private corporation owned by Rosalind Davidowitz,
         Mr. Davis's wife, (iii) 71,600 shares owned by Rosalind Davidowitz.  Mr. Davis, Blair Holdings and Blair
         Investment expressly disclaim beneficial ownership of all securities held by Rivkalex and Rosalind
         Davidowitz.
</FN>
</TABLE>


ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The  Company  has the  option,  in certain  circumstances,  to acquire  Mr.
Rattiner's  shares in DPI. Mr.  Rattiner can require the Company to purchase his
20%  interest in DPI at any time on or after  October 13, 1993 for a price equal
to 20% of DPI's  retained  earnings (if any) plus the greater of $200,000 or 20%
of DPI's  gross  collected  revenues  (after  deduction  of  advertising  agency
commissions)  for the full  fiscal  year  prior to the year in which  notice  is
given.  After November 26, 1997, it shall be a condition to Mr. Rattiner's right
to exercise this option that DPI's after-tax profits are at least equal to 7% of
the  gross   collected   revenues   (after   deduction  of  advertising   agency
commissions).

     DPI leases from Mr. Rattiner 1,910 square feet of office space at an annual
rate of $38,200  (plus  cost-of-living  adjustments)  in a  building  on Montauk
Highway, Bridgehampton, New York, for a term of ten years terminating in October
1998 (plus a five-year option).

     Rothschild Inc., of which Wilbur L. Ross, Jr. is Senior Managing Director
                                                                                
                                       24

<PAGE>



and Sydney Gruson is Senior Advisor,  furnished  investment  banking services to
the  Company in  connection  with the  issuance  and sale of the  Company's  $10
Convertible  Preferred Stock and associated warrants.  In consideration for such
services,  the Company issued Rothschild Inc. 50,000 shares of its Common Stock,
valued at $2.00 per share.

     In May 1996, the Company, Tribco and Access obtained a $1,000,000 loan from
DHBIB, a principal  stockholder of the Company. The loan is repayable on May 21,
1998 and bears interest at the rate of 8 1/2% per annum payable  quarterly.  The
loan is secured by a security  interest granted by the borrowers to DHBIB on all
of their  personal  property and fixtures and by a pledge made by the Company to
DHBIB of all of the outstanding common stock of Tribco and Access. As additional
consideration  for the loan,  the Company  issued  DHBIB a five-year  warrant to
purchase  200,000  shares of Common Stock at an initial  exercise price of $2.50
per share,  subject to adjustment.  Effective May 17, 1996, the Company  entered
into  an  agreement  with  DHBIB  pursuant  to  which  DHBIB  is  to  act  as  a
non-exclusive  financial  advisor and  investment  banker to the Company.  As an
inducement  to DHBIB's  providing  such  services,  the Company  issued  DHBIB a
five-year  warrant  to  purchase  400,000  shares of Common  Stock at an initial
exercise price of $2.50 per share, subject to adjustment.

     Gristede's and Red Apple Markets,  supermarket chains that are owned by Red
Apple  Group,  Inc.,  of  which  Mr.  Catsimatidis  is  Chairman,   and  Sloan's
Supermarkets,  Inc., of which Mr. Catsimatidis is Chairman, advertise in various
of the Company's publications and also utilize various of the Company's printing
services.  Such  advertising and printing  services are charged at the Company's
standard rates and totaled  approximately  $267,000 during the fiscal year ended
November 30, 1996.



                                                                                
                                       25

<PAGE>

                                     PART IV

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K.


         (a)      Exhibits.
<TABLE>
<CAPTION>

                                                                       Incorporated              Exhibit
Exhibit                                                                by Reference              No. in
Number            Description                                          from Document (1)         Document
-------           -----------                                          --------------            --------
<S>                   <C>                                                    <C>                    <C>   

3.1               Articles of Incorporation of the                            A                     3.1
                  Company  (formerly known as Applied 
                  Resources,  Inc.),  filed
                  with the  Secretary of State of the State of Nevada
                  on May 20, 1986.

3.1.1             Certificate of Amendment of the                             A                   3.1.1
                  Articles of Incorporation of the Company,
                  filed with the Secretary of State of the
                  State of Nevada on December 8, 1987.

3.1.2             Certificate of Amendment of the Articles of                 B                   3.1.2
                  Incorporation of the Company, filed with the
                  Secretary of State of Nevada on August 16, 1990.

3.1.3             Certificate of Amendment of the Articles of                 J                   3.1.3
                  Incorporation of the Company, filed with the
                  Secretary of State of Nevada on July 26, 1994.                                

3.2.1             By-Laws of the Company (as amended and                      J                   3.2.1
                  restated).                                                                      

4.1               Form of Common Stock Certificate.                           B                     4.1

4.2               Form of 10% Preferred Stock                                 B                     4.2
                  Certificate.

4.2.1             Resolution of Board of Directors fixing                     B                   4.2.1
                  the terms of the 10% Convertible Preferred Stock.

4.2.2             Resolution of Board of Directors fixing the                 J                   4.2.2
                  terms of the 8% Convertible Preferred Stock.

4.2.3             Resolution of the Board of Directors fixing the             J                   4.2.3
                  terms of the 12% Convertible Preferred Stock.

4.2.4             Certificate of Amendment of Certificate                     J                   4.2.4
                  of Designation of 8% Convertible Preferred
                  Stock.

-------------------------------
See Notes at end of Item 13.
</TABLE>

                                                                                
                                       26

<PAGE>
<TABLE>
<CAPTION>


                                                                       Incorporated              Exhibit
Exhibit                                                                by Reference              No. in
Number            Description                                          from Document             Document
--------          -------------                                       ---------------           ---------
<S>                   <C>                                                  <C>                     <C>  
4.2.5             Resolution of Board of Directors fixing the                 M
                  terms of the $10 Convertible Preferred Stock
                  (included as part of Exhibit 10.33).                                            10.33

4.7.1             Revised form of Warrant Agreement related                   J                   4.7.1
                  to Class C Warrants and Class D Warrants.

4.8               Form of Class C Warrant.                                    J                     4.8

4.9               Form of Class D Warrant.                                    J                     4.9

10.1.1            1987 Stock Option Plan, as amended.                         L                  10.1.1

10.2.1            Discretionary Directors and Officers                        J                  10.2.1
                  Stock Option Plan.

10.2.2            Non-Discretionary Directors Stock                           J                  10.2.2
                  Option Plan.

10.4              Shareholders' Agreement, dated as of                        D                     2.1
                  October 13, 1988, between Daniel Rattiner and the Company.

10.4.1            Asset Purchase Agreement, dated as                          D                     2.2
                  of October 13, 1988, between Dan's Papers,
                  Ltd. and DP Acquisition Corp.

10.4.3            Agreement of Lease, dated October                           D                     2.4
                  31, 1988, between Daniel Rattiner and 
                  DP Acquisition Corp., as to building  known 
                  as Dan's Papers,  Ltd.,  located on Montauk
                  Highway, Bridgehampton, New York.

10.7.3.1          Employment Agreement, dated as of                           K                10.7.3.1
                  October 14, 1994, between Michael Schenkler
                  and the Company.

10.7.3.2          Employment Agreement dated as of                            K                10.7.3.2
                  November 1, 1994, between Thomas Allon and the Company.

10.7.4.1          Amended and Restated Employment                             *                10.7.4.1
                  Agreement, dated October 28, 1996,
                  between Jerry Finkelstein and the Company.

10.11             Stock Option Agreement dated September                      J                    10.11
                  1, 1993, between Jerry Finkelstein and
                  the Company.

</TABLE>

                                                                                
                                       27

<PAGE>
<TABLE>
<CAPTION>


                                                                       Incorporated              Exhibit
Exhibit                                                                by Reference              No. in
Number            Description                                          from Document             Document
-------          --------------                                       ---------------            ---------
<S>                    <C>                                                   <C>                    <C> 
10.13             Letter Agreement, dated June 15, 1990, between              B                    10.21
                  Dan's Papers Inc. and Dan's Papers, Ltd.

10.17             Lease for space at 174-15 Horace Harding                    B                    10.25
                  Expressway, Fresh Meadows, New York.

10.25.1           Form of Agreement dated December 18,                        J                  10.25.1
                  1992, between the Company and Myron
                  Garfinkle.

10.25.2           Form of Promissory Note dated December                      J                  10.25.2
                  18, 1992, in principal amount of
                  $79,000 issued by Company to Myron
                  Garfinkle.

10.25.3           Stock Pledge Agreement dated December                       J                  10.25.3
                  18, 1992, between Myron Garfinkle and
                  the Company.

10.26             Acquisition Agreement and Employment                        J                    10.26
                  Agreement between Long Island News Group,
                  Inc. and Barry Manning and MB Publishing,
                  Inc. and Barry Manning and David Manning
                  and Long Island Community Newspaper Group,
                  Inc. and the Company.

10.27             Acquisition Agreement and Employment                        J                    10.27
                  Agreement between Long Island News Group,
                  Inc. and Barry Manning and MB Publishing,
                  Inc. and Barry Manning and David Manning
                  and Long Island Community Newspaper Group,
                  Inc. and the Company.

10.28             Agreement dated May 17, 1996 between D.H.                   M                    10.28
                  Blair Investment Banking Corp. ("Blair") and
                  the Company.

10.29             Loan Agreement dated May 21, 1995 among                     M                    10.29
                  Blair, the Company, Tribco Incorporated
                  ("Tribco") and Access Network Corp.
                  ("Access").

10.30             $1,000,000 Promissory Note dated May 21,                    M                    10.30
                  1996 issued by the Company, Tribco and
                  Access to the order of Blair.

10.31             Warrant dated May 17, 1996, to purchase                     M                    10.31
                  400,000 shares of the Company's Common
                  Stock issued by the Company to Blair.

                                                                                                                 
</TABLE>
                                       28

<PAGE>
<TABLE>
<CAPTION>


                                                                       Incorporated              Exhibit
Exhibit                                                                by Reference              No. in
Number            Description                                          from Document             Document
-------           ------------                                        ---------------           -----------
<S>                   <C>                                                  <C>                       <C>  
10.32             Warrant, dated May 21, 1996, to purchase                    M                    10.32
                  200,000 shares of the Company's Common
                  Stock issued by the Company to Blair.

10.33             Form of Subscription Agreement made as of                   M                    10.33
                  October  4, 1996  among the  Company  and
                  persons  designated therein as "Purchasers," 
                  including Exhibit 1 thereto, form of Certificate 
                  of Designation  of $10.00  Convertible  Preferred
                  Stock, and Exhibit 2 thereto, form of Warrant.

11                Statement re computation of per share                       *
                  earnings.

16.2              Letter from Moore Stephens, P.C. dated                      N                     16.2
                  March 4, 1997.

22                Subsidiaries of the Company.                                *

27                Financial Data Schedule (filed electronically only)


         (b)               Reports on Form 8-K.

                           None

<FN>


Notes:
(1)      The  Commission  file  number  assigned to the  Company's  Registration
         Statement on Form S-18,  filed with the Commission on May 29, 1986, was
         33-6126.  The  Company's  first  registration  of  a  class  of  equity
         securities  under the Securities  Exchange Act of 1934 became effective
         on February  21,  1990.  The  Commission  file  number  assigned to the
         Company at that time was 0-18299.  The Commission  file number assigned
         to the  Company's  Registration  Statement  on Form  S-1,  as  declared
         effective by the  Commission on September 19, 1990,  was 33-35484.  The
         Commission file number assigned to the Company's Registration Statement
         on Form S-1,  as declared  effective  by the  Commission  on October 9,
         1992, was 33-46467.
A        Annual Report of the Company on Form 10-K for the year ended November 30, 1987.
B        Registration Statement of the Company on Form S-1, No. 33-35484.
D        Current Report of the Company on Form 8-K relating to events occurring on October 31, 1988.
H        Current Report of the Company on Form 8-K relating to events occurring on May 22, 1991.
J        Registration Statement of the Company on Form S-1, No. 33-46467.
K        Annual Report of the Company on Form 10-KSB for the year ended November 30, 1994.
L        Annual Report of the Company on Form 10-KSB for the year ended November 30, 1995.
M        Quarterly Report of the Company on Form 10-QSB for the quarter ended August 31, 1996.
N        Current Report of the Company on Form 8-K/A relating to event occurring on February 3, 1997.

*        Filed herewith.
</FN>
</TABLE>

                                                                                
                                       29


<PAGE>



NEWS COMMUNICATIONS, INC. and SUBSIDIARIES
Index to Consolidated Financial Statements




                                                                       Page


Report of Independent Accountants                                       2-3

Consolidated Balance Sheet as of November 30, 1996                      4-5
 
Consolidated Statements of Operations for the years ended
    November 30, 1996 and 1995                                          6
  
Consolidated Statements of Stockholders' Equity for the years ended
     November 30, 1996 and 1995                                         7

Consolidated Statements of Cash Flows for the years ended
    November 30, 1996 and 1995                                          8-9

Notes to Consolidated Financial Statements                             10-26









                                       F-1
 
<PAGE>









Report of Independent Accountants


To the Board of Directors and Stockholders of
News Communications, Inc.
Fresh Meadows, New York

We  have  audited  the   accompanying   consolidated   balance   sheet  of  News
Communications,  Inc. and  Subsidiaries as of November 30, 1996, and the related
consolidated  statement of operations,  stockholders' equity, and cash flows for
the year ended November 30, 1996. These  consolidated  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial position of News
Communications,  Inc.  and  Subsidiaries  as  of  November  30,  1996,  and  the
consolidated results of their operations and their cash flows for the year ended
November 30, 1996, in conformity with generally accepted accounting principles.





Coopers & Lybrand L.L.P.




New York, New York
March 12, 1997




                                       F-2

<PAGE>
                         REPORT OF INDEPENDENT AUDITORS


To the Board of Directors and Stockholders of
   News Communications, Inc.
   Fresh Meadows, New York


                  We have audited the  accompanying  consolidated  statements of
operations,  stockholders'  equity, and cash flows of News Communications,  Inc.
and its subsidiaries  for the year ended November 30, 1995.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

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

                  In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects,  the consolidated  results of
operations and cash flows of News Communications,  Inc. and its subsidiaries for
the year  ended  November  30,  1995,  in  conformity  with  generally  accepted
accounting principles.








                                                       MOORE STEPHENS, P.C.
                                                  Certified Public Accountants.



Cranford, New Jersey
March 27, 1996

                                       F-3

<PAGE>




NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Balance Sheet
As of November 30, 1996


<TABLE>
<CAPTION>


                                          Assets:
<S>                                                                                                             <C>   
Current assets:
    Cash                                                                                             $       1,494,887
    Restricted cash                                                                                            198,390
    Accounts receivable - [less: allowance for doubtful accounts of $862,615]                                3,862,405
    Due from related parties                                                                                    14,000
    Other                                                                                                      130,445
                                                                                                    ------------------
            Total current assets                                                                             5,700,127

Property and equipment - at cost - net                                                                         520,791

Other assets:
    Goodwill - net                                                                                           3,373,535
    Other - net                                                                                                116,671
                                                                                                    ------------------
            Total other assets                                                                               3,490,206
                                                                                                    ------------------
            Total assets                                                                          $          9,711,124
                                                                                                    ==================
</TABLE>





See Notes to the Consolidated Financial Statements.




                                       F-4

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES


Consolidated Balance Sheet

As of November 30, 1996

<TABLE>
<CAPTION>


                           Liabilities and Stockholders' Equity:
<S>                                                                                                              <C> 
Current liabilities:
    Accounts payable                                                                              $          1,100,720
    Accrued expenses                                                                                           642,656
    Accrued payroll and payroll taxes                                                                          453,639
    Note payable                                                                                             1,175,000
    Due to related party                                                                                        59,688

    Unearned revenue                                                                                           122,653

                                                                                                    ------------------
               Total current liabilities                                                                     3,554,356


Related party - long term debt                                                                                 953,333

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

Total Liabilities                                                                                            4,507,689

                                                                                                    ------------------
Commitments and contingencies
Minority interest                                                                                              114,228
                                                                                                    ------------------
Stockholders' equity:
     Preferred stock, $1.00 par value; 500,000 shares authorized; $2,577,000                                   200,449
     aggregate liquidation value
       Common stock, $.01 par value; authorized 100,000,000 shares;
         8,038,039 shares issued                                                                                80,380
Paid-in capital - preferred stock                                                                            2,201,690
Paid-in-capital - common stock                                                                              14,062,652
Retained deficit                                                                                           (11,047,235)
                                                                                                    ------------------
                                                                                                             5,497,936
Less:  Treasury stock [151,000 common shares] - at cost                                                        408,729

              Total stockholders' equity                                                                     5,089,207
                                                                                                    ------------------
              Total liabilities and stockholders' equity                                          $          9,711,124
                                                                                                    ==================
</TABLE>


See Notes to the Consolidated Financial Statements.




                                       F-5

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Statements of Operations

For the years ended November 30, 1996 and 1995

<TABLE>
<CAPTION>


                                                                                  1996                  1995
<S>                                                                               <C>                    <C>    
                                                                            -----------------     ------------------
Net revenues                                                                 $     18,334,866      $      18,113,462
                                                                            -----------------     ------------------

Operating expenses:
     Salaries, benefits and outside labor costs                                     9,818,203              9,511,879
     Direct mechanical costs                                                        6,968,414              6,606,636
     General and administrative                                                     2,762,303              2,408,344
     Provision for doubtful accounts                                                1,481,589                396,000
     Rent, occupancy and utilities                                                    941,874                870,949
                                                                            -----------------     ------------------

              Total operating expenses                                          219,723,38383             19,793,808
              Loss from operations                                                 (3,637,517)            (1,680,346)


Other income (expense):
     Interest expense                                                                (177,471)               (32,608)
     Interest income                                                                   ---                    28,708

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

              Total other income (expense)                                          (177,471)                (3,900)

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

Loss before income taxes and minority interest                                    (3,814,988)            (1,684,246)
Provision for income taxes                                                             ---                    ---
                                                                            -----------------     ------------------

              Net loss before minority interest                                   (3,814,988)            (1,684,246)

Less: Minority interest in income of subsidiary                                        66,440                 47,788

                                                                            -----------------    -------------------
                  Net loss                                                   $    (3,881,428)        $   (1,732,034)
                                                                            =================       ================
Loss per common share                                                        $          (.49)        $         (.22)
                                                                            =================       ================
Weighted average number of common shares outstanding                         $      7,991,997        $     7,966,186
                                                                            =================       ================

</TABLE>



See Notes to the Consolidated Financial Statements.




                                       F-6

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>

                                                       Paid-in                        Paid-in

                                Preferred              Capital    Commom              Capital                             Total

                                  Stock    Preferred  Preferred   Stock    Common     Common    Retained     Treasury  Stockholders'

                                 (Shares)     Stock     Stock    (Shares)   Stock      Stock     Deficit      Stock       Equity
                                 --------    -------   -------   --------  -------    --------  ---------    --------    -----------
<S>                                <C>        <C>       <C>        <C>      <C>         <C>        <C>         <C>         <C>


  Balance, November 30, 1994       449   $    449    $ 519,873  7,915,776  $79,157  $13,648,238 $(5,319,053)  $408,729   $8,519,935

Stock issued in connection               
 with exercise of C warrants        -          -          -        24,561      246       46,891       -           -          47,137
  
Stock issued in connection with
 exercise of options                -          -          -        10,000      100       12,400       -           -          12,500

Stock issued as preferred
 dividends                          -          -          -         7,238       73       15,927     (16,000)      -             -

Dividend on preferred stock         -          -          -           -         -           -       (41,360)      -         (41,360)

Net loss                            -          -          -           -         -           -    (1,732,034)      -      (1,732,034)
                                ----------------------------------------------------------------------------------------------------
  Balance, November 30, 1995       449        449      519,873  7,957,665   79,576   13,723,456  (7,108,447)   408,729    6,806,178

Stock issued in connection with
 exercise of C warrants             -          -          -         9,750       98       19,402       -           -          19,500

Stock issued in connection with
 exercise of options                -          -          -        10,000      100       12,400       -           -          12,500

Issuance of $10 Convertible
 Preferred Stock                20,000    200,000    1,800,000        -         -           -         -           -       2,000,000

Costs of raising capital            -          -      (118,183)    50,000      500       99,500       -           -         (18,183)

Warrants issued in connection
 with long term debt                -          -          -           -         -        64,000       -           -          64,000

Warrants issued in connection
 with consulting services           -          -          -           -         -       128,000       -           -         128,000

Stock issued as preferred
 dividends                          -          -          -        10,624      106       15,894     (16,000)      -             -

Dividend on preferred stock         -          -          -           -         -           -       (41,360)      -         (41,360)

Net loss                            -          -          -           -         -           -    (3,881,428)      -      (3,881,428)
                              ------------------------------------------------------------------------------------------------------

  Balance, November 30, 1996    20,449   $200,449   $2,201,690  8,038,039  $80,380  $14,062,652 $(11,047,235) $408,729   $5,089,207
                              ========= =========   =========== =========  =======  =========== ============= ========   ===========

</TABLE>


See Notes to the Consolidated Financial Statements.




                                       F-7

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Statement of Cash Flows

For the years ended November 30, 1996 and 1995
<TABLE>
<CAPTION>
                                                                       1996                           1995
                                                                ---------------------------------------------------------
<S>                                                                    <C>                             <C>  
Operating activities:
    Net loss                                                     $  (3,881,428)                $   (1,732,034)
                                                                ---------------------------------------------------------


Adjustments to reconcile net loss to net cash (used for)
  operating activities:
        Depreciation and amortization                                  514,110                        494,606
        Provision for doubtful accounts                              1,481,589                        396,000
        Compensation recognized related to warrants issued             128,000                              -
        Amortization of debt discount                                   17,333                              -
        Minority interest                                               66,440                         47,788

    Changes in assets and liabilities:
        (Increase) decrease in:
            Account receivable                                        (613,313)                    (1,526,791)
            Other current assets                                       (52,375)                        84,138
            Other assets                                                 2,929                          8,850
            Related party receivable                                   105,233                        (39,112)

       Increase (decrease) in:
            Accounts payable and accrued expenses                     (185,777)                        69,395
            Accrued payroll and payroll taxes                          131,487                        191,284
            Other current liabilities                                  122,653                         (6,440)
            Related party payable                                       30,506                         29,182
                                                                  ---------------------------------------------------
                   Total adjustments                                 1,748,815                       (251,100)
                                                                  ---------------------------------------------------
                   Net cash - operating activities - forward        (2,132,613)                    (1,983,134)
                                                                  ---------------------------------------------------

Investing activities:
    Capital expenditures                                               (50,431)                      (148,409)
    Sale of marketable securities                                            -                        924,633
                                                                  ---------------------------------------------------
                   Net cash - investing activities - forward           (50,431)                       776,224
                                                                  ---------------------------------------------------
Financing activities:
    Proceeds from preferred stock                                    2,000,000                              -
    Proceeds from exercise of stock options                             12,500                         12,500
    Costs of raising capital                                           (18,183)                             -
    Proceeds from exercise of warrants and underwriter option           19,500                         47,137
    Principal payments on notes payable                                (24,000)                       (99,750)
    Dividend on preferred  stock                                       (41,360)                       (41,360)
    Proceeds from notes payable                                      1,675,000                        500,000
                                                                  ---------------------------------------------------
                       Net cash - financing activities - forward     3,623,457                        418,527
                                                                  ---------------------------------------------------
</TABLE>


See Notes to the Consolidated Financial Statements.




                                       F-8

<PAGE>
<TABLE>
<CAPTION>


                                                                        1996                            1995
                                                                  ---------------------------------------------------------
<S>                                                                     <C>                             <C>  
Net cash - operating activities - forwarded                     $   (2,132,613)                 $   (1,983,134)

Net cash - investing activities - forwarded                            (50,431)                        776,224

Net cash - financing activities - forwarded                          3,623,457                         418,527
                                                                  ---------------------------------------------------------

              Net increase (decrease) in cash                        1,440,413                        (788,383)

Cash - beginning of year                                                54,474                         842,857
                                                                  ---------------------------------------------------------

Cash - end of year                                              $    1,494,887                  $       54,474
                                                                  =========================================================

Supplemental disclosure of cash flow information:

               Cash paid during the year for interest           $      130,969                  $       19,704






</TABLE>





See Notes to the Consolidated Financial Statements.




                                       F-9

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



1.       Organization and Industry Segment:

News Communications,  Inc., a Nevada corporation,  is primarily engaged, through
various  wholly-owned  and  majority-owned  subsidiaries  in the publication and
distribution  of  advertiser  supported,  community  oriented  newspapers  and a
magazine.  The  Company's  publishing  subsidiaries  are  Access  Network  Corp.
["Access"],  Manhattan Publishing Corp. ["MPC"], Tribco Incorporated ["Tribco"],
Dan's Papers,  Inc.  ["DPI"],  Parkchester  Publishing  Co., Inc.  ["Bronx Press
Review"],   Nassau  Community  Newspaper  Group,  Inc.  ["Nassau   Newspapers"],
Manhattan File Publishing,  Inc,  ["Manhattan  File"],  Capitol Hill Publishing,
Inc. ["Capitol Hill"], Brooklyn Newspaper Publishing, Inc. ["Brooklyn"] and West
Side Newspaper Corp. ["West Side"]. News  Communications,  Inc. and Subsidiaries
[the "Company"]  function in one industry segment,  that is the news publication
business.



2.       Summary of Significant Accounting Policies:

Consolidation - The consolidated financial statements of the Company include the
accounts  of  the  parent  company  and  its  wholly-owned  and   majority-owned
subsidiaries. All material intercompany transactions have been eliminated.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that effect the reported  amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting  period.  Significant  estimates  have  been made by  management  with
respect to the Company's allowance for doubtful accounts,  amortization relating
to goodwill,  depreciation  and  amortization  in  connection  with property and
equipment, and the possible outcome of outstanding litigation among other items.
Actual results could differ from those estimates.

Property and  Equipment - All  expenditures  for  betterments  and additions are
capitalized. Expenditures for normal repairs and maintenance are charged against
income as incurred.  Depreciation  and  amortization  are provided for financial
reporting  purposes on the basis of the various  estimated  useful  lives of the
assets, using the straight-line method as follows:


                                                Years



      Transportation equipment                  5

      Furniture, fixtures and office
      equipment                                 5-10

      Leasehold improvements                    Shorter of useful life of asset
                                                or length of lease



                                      F-10
                                                                                

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued





Goodwill - Goodwill  represents  the excess of the cost of acquired  assets over
their fair values at dates of  acquisition  and is being  amortized  over ten to
twenty years on a  straight-line  basis.  The  Company's  policy is to record an
impairment loss against the net unamortized  cost of goodwill in the period when
it is determined  that the carrying  amount of the asset may not be recoverable.
At each balance sheet date, the Company  evaluates the realizability of goodwill
for each subsidiary having a material goodwill  balance.  This  determination is
based on an evaluation of such factors as the occurrence of a significant event,
a significant change in the environment in which the business operates or if the
expected future  non-discounted  net income of the subsidiary  would become less
than the carrying  amount of the goodwill  asset.  An  impairment  loss would be
recognized if the unamortized  goodwill balance exceeds the non-discounted  cash
flows of the  subsidiaries.  Based upon its most  recent  analysis,  the Company
believes that no impairment of goodwill exists at November 30, 1996.

Revenue Recognition - Advertising revenues are earned when advertisements appear
in the various publications.

Direct  Mechanical  Costs - Production  and  distribution  related  expenses are
classified as direct mechanical costs.

Seasonality - One of the Company's  publications (which generated  approximately
18% of revenues in fiscal 1996 and 1995) is a resort area newspaper, which earns
a significant portion of its revenue during the summer months.

Concentration of Customers - The majority of the Company's customers are located
in four of the  boroughs of New York City,  in Nassau  County and  Eastern  Long
Island.

Concentrations of Credit Risk - Financial  instruments that potentially  subject
the Company to  concentrations  of credit risk are cash and accounts  receivable
arising from its normal business activities.  The Company routinely assesses the
financial  strength of its customers  and,  based upon factors  surrounding  the
credit  risk  of its  customers,  establishes  an  allowance  for  uncollectible
accounts and, as a  consequence,  believes that its accounts  receivable  credit
risk exposure beyond such allowance is limited. The Company places its cash with
high credit quality financial institutions.  The Company has not experienced any
losses with financial institutions. The amount on deposit in any one institution
that exceeds  federally insured limits is subject to credit risk. As of November
30, 1996, the Company had approximately  $1,600,000 with financial  institutions
subject to a credit risk beyond the insured amount.




                                      F-11

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

Restricted  Cash - Cash received in connection with the October 1996 exercise of
Redeemable  Class C warrants,  for which common  stock has yet to be issued,  is
reflected as restricted cash [See Note 15].

Stock-Based   Compensation   -  Stock-based   employee,   officer  and  director
compensation  is accounted for in accordance with  Accounting  Principles  Board
(APB) Opinion No. 25,  "Accounting for Stock Issued to Employees."  Accordingly,
compensation cost for stock options issued to employees,  officers and directors
is measured as the excess,  if any, of the quoted  market price of the Company's
stock at the date of grant over the amount a receipient  must pay to acquire the
stock.  For the years ended  November  30, 1996 and 1995,  the Company  only has
granted  options  at  market  value  on  the  date  of  grant.  Accordingly,  no
compensation cost has been recognized for stock option plans [See Note 14].



   3.    Property and Equipment and Depreciation and Amortization:

Major classes of property and equipment as of November 30, 1996 are as follows:


   Leasehold improvements                              $  326,300
   Computer equipment                                     445,549
   Machinery and equipment                                227,261
   Furniture and fixtures and office equipment            236,911
   Distribution boxes                                     119,492
   Automobiles                                             31,987
                                                       --------------
       Total - at cost                                  1,387,500
   Less:  Accumulated depreciation and amortization       866,709
                                                       --------------
       Property and equipment - net                    $  520,791
                                                       --------------


Depreciation and amortization  expense for the years ended November 30, 1996 and
1995 amounted to $187,076 and $179,477, respectively.






                                      F-12

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

    4.   Intangible Assets:

A breakdown of intangible assets at November 30, 1996 is as follows:

                         Amortization
                            Period
                             Years        Cost        Amortization        Net



  Goodwill                   10-20    $ 5,101,219     $ 1,727,684   $ 3,373,535
                                      ============    =============   ==========

  Covenant not-to-compete      5      $   127,400     $   127,400   $         0
                                      ============    =============   ==========

  Organization costs           5      $    67,933     $      23,131 $    44,802
                                      ============    =============   ==========



Covenant  not-to-compete  and  organization  costs are  included  in the caption
"Other Assets" on the balance sheet.

Amortization expense of $327,034 and $315,129 was recognized for the years ended
November 30, 1996 and 1995, respectively.



     5.  Notes Payable

Short-term note payable at November 30, 1996 consisted of a $1,175,000  offering
basis loan due on January 6, 1997 at the Bank's  prime rate plus 2 percent.  The
prime rate at November 30, 1996 was 8.25  percent.  While under no obligation to
do so, the Bank, at its sole option,  can continue to extend the due date of the
loan in intervals of two months.

On  January  6, 1997,  the due date of the loan was  extended  to March 6, 1997.
However, $275,000 of the note was paid prior to that date. On March 6, 1997, the
due date of the remaining loan balance was extended to May 6, 1997.

All of the Company's accounts receivable are pledged as collateral for the loan.

Long-term note payable in the amount of $ 953,333 (net of  unamortized  discount
of  $46,667)  at  November  30, 1996  consisted  of a  promissory  note due to a
principal shareholder of the Company. The note is due on May 21, 1998, and has a
stated  interest  rate of 8.5 percent per annum.  Interest is payable  quarterly
commencing July 1, 1996. As additional  consideration  for the promissory  note,
detachable  warrants to purchase 200,000 shares of the Company's common stock at
$2.50 per share  were  issued to the  lender  and,  accordingly,  $64,000 of the
proceeds of the  promissory  note was allocated to the  detachable  warrants and
included in additional paid-in-capital - common stock. All




                                      F-13

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

of the assets of the Company,  as well as all of the outstanding common stock of
Tribco and Access, are pledged as collateral for the note.

Interest  expense for the years  ended  November  30, 1996 and 1995  amounted to
approximately $177,000 and $32,600, respectively.



     6.  Fair Value of Financial Instruments

Statement of Financial Accounting Standards ["SFAS"] No. 107, "Disclosures about
Fair  Value of  Financial  Instruments,"  and SFAS No.  119,  "Disclosure  about
Derivative  Financial  Instruments  and Fair  Value of  Financial  Instruments,"
require the disclosure of the fair value of financial  instruments,  both assets
and liabilities recognized and not recognized in the consolidated balance sheet,
for which it is  practicable  to estimate fair value.  The  Company's  financial
instruments  include  cash  and  cash  equivalents,   trade  receivables,  trade
payables,  and current and long-term  debt.  The carrying value of the Company's
financial instruments  approximates fair value. The fair values of cash and cash
equivalents,  net  accounts  receivable,  trade  payables  and  short-term  debt
approximate  cost  because of the  immediate  or  short-term  maturity  of these
financial  instruments.  The fair value of long-term debt is estimated  based on
discounting  expected cash flows at rates currently available to the Company for
instruments with similar risks and maturities.



     7.  Related Parties:

Certain Company office  facilities are leased from an officer of a subsidiary of
the Company.  Rental expense amounted to  approximately  $49,000 and $48,000 for
the years ended November 30, 1996 and 1995,  respectively.  The lease commitment
is adjusted annually based on the consumer price index as of November. The lease
term is for ten years with a renewal  option of five years.  The original  lease
term expires on October 31, 1998.

At November 30, 1996,  amounts owed to an officer of a subsidiary of the Company
for a bonus and expenses amounted to approximately $60,000.

As discussed  in Note 5, at November 30, 1996,  the Company has a long term note
payable due to a principal  shareholder.  The  Company  also has issued  600,000
warrants to a  principal  shareholder,  for which a total value of $192,000  has
been assigned [See Note 15].




                                      F-14

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

Revenues from related parties  amounted to $354,125 and $28,135 during the years
ended November 30, 1996 and 1995, respectively.


     8.  Leases:

The Company leases all operating  facilities  under  operating  leases  expiring
through  January 2001.  Rent expense under  operating  leases was  approximately
$512,000 and $464,000 for years ending November 30, 1996 and 1995, respectively.

The future minimum payments under  non-cancelable  operating leases consisted of
the following at November 30, 1996:

                Fiscal Year Ending             Operating
                    November 30,                 Leases

                      1997                    $  446,236

                      1998                       451,929

                      1999                       335,763

                      2000                       201,742

                      2001                        12,564
                                               -------------

                                              $1,448,234

The operating leases also provide for cost escalation  payments and payments for
maintenance  and real estate  taxes.  The  Company has options to renew  certain
leases for additional five-year terms.








                                      F-15

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

     9.  Commitments and Contingencies:

              A subsidiary of the Company has indemnified  two former  employees
              and a director  from adverse  judgments  and legal fees arising in
              connection  with  certain  legal  actions,   except  such  adverse
              judgments  as may be  based  on  claims  that  allege  or  involve
              wrongful conduct by said former employees and director.

              The Company has an employment  agreement expiring in 1998 with the
              President of DPI. The  agreement  stipulates  an annual  salary of
              $100,000 per year,  adjusted for  increases in the consumer  price
              index,  plus a bonus in each  fiscal year based on net profits [as
              defined]  of  DPI,  and  fringe  benefits  totaling  approximately
              $25,000 annually.

              The President of DPI has a put option that requires the Company to
              buy his 20% interest of DPI for a price equal to 20 percent of the
              retained earnings,  if any, of DPI plus the greater of $200,000 or
              20 percent of gross collected revenues [net of agency commissions]
              for the full fiscal  year prior to  exercise  of the  option.  The
              option  may be  exercised  only if the after tax  profit  [for the
              fiscal year preceding exercise] is at least equal to seven percent
              of gross  revenues  [net of agency  commissions]  for such  fiscal
              year. The put option, by its terms, is not exercisable at November
              30, 1996. The option is related to the 1988  acquisition of DPI by
              the Company.

              The Company has an employment contract,  through October 14, 1999,
              with its President.  The contract stipulates an annual base salary
              of $150,000 plus bonuses as determined by the board of directors.

              In August 1993, the Chairman of the Board entered into a five year
              employment  agreement  with the  Company.  In  October  1996,  the
              agreement  was  amended to extend the  employment  period  through
              August 2003. The agreement  calls for an annual salary of $195,000
              and certain other  benefits.  Stock options for 300,000  shares of
              the Company's  Common Stock at an exercise price of  approximately
              $2.38 per share  expiring on August 31,  1998 were  awarded to the
              Chairman in connection  with the  agreement.  At his request,  the
              Company  will also  provide the Chairman of the Board with medical
              and other benefits and perquisites,  including  reimbursement  for
              expenses  relating to maintenance of appropriate  office space for
              him,  including rent and  secretarial  costs.  The Chairman of the
              Board may terminate the agreement at any time on at least 10 days'
              notice to the Company.






                                      F-16

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

              In the event of his  permanent  disability  or death,  amounts  of
              salary and bonuses  shall  continue to be paid to him or the legal
              representative  of his  estate  until  the end of the  term of the
              agreement.

              In November  1994,  the  Executive  Vice-President  of the Company
              entered into a three year employment agreement with the Company at
              an annual salary of $80,000 [subject to cost-of-living  increases]
              plus a bonus  based on 5 percent of the net profits of the Company
              derived from [for fiscal years beginning December 1, 1994] Access,
              MPC,  Manhattan  File and West  Side.  Such bonus is to be no less
              than $45,000, nor more than $70,000.

              The President of Nassau  Newspapers  has an  employment  agreement
              expiring in December  1996.  The  agreement  stipulates  an annual
              salary of  $99,000,  plus a bonus  based upon the net  profits [as
              defined] of Nassau Newspapers.

              The Publisher of Brooklyn has an employment  agreement expiring in
              August 1999. The agreement stipulates an annual salary of $60,000,
              plus increases and bonuses based upon the net profits [as defined]
              of Brooklyn.

              Certain holders of options, warrants and stock of the Company have
              received  registration  rights with respect to the securities held
              by or issuable to them. These registration  rights could result in
              substantial  future  expense to the  Company  and could  adversely
              affect any future equity or debt financing.



     10.          Legal Proceedings:

              An action  entitled  Jean Jee v. News  Communications,  Inc.,  was
              instituted in the Supreme Court, New York County, in January 1991.
              The  complaint   alleges  libel  claims  against  the  Company  in
              connection  with an article  printed in the  Manhattan  Spirit and
              claims $2,000,000 in compensatory damages and unspecified punitive
              damages.  The  Company has filed an answer  denying  the  material
              allegations of the complaint.  Discovery has not yet commenced and
              there  has been no  activity  in the case for a number  of  years.
              Management  believes,  although  there can be no assurance,  that,
              based upon the  application  of the relevant law [as  explained to
              management by counsel representing the Company] to the facts known
              to it, the claims asserted in this action are without merit.

              An action entitled Tracey Robinson v. The Hill, News Communica-
              tions, Inc., and Media Venture Group, Inc., was initiated in
              September 1996 in the United States District Court




                                      F-17

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

              for the  District  of Columbia  in which the  Plaintiff,  a former
              national advertising  executive for Capitol Hill, has alleged race
              discrimination  and  retaliation in connection  with her discharge
              and claims compensatory and punitive damages of $5.2 million.  The
              Company  believes that the claim is without merit and has filed an
              answer  denying the  material  allegations  of the  complaint  and
              asserting affirmative defenses.  The Company intends to defend the
              action vigorously.  The action is presently in the early stages of
              the discovery process.

              Management  of the Company is unable to predict or  determine  the
              final  outcome of the  aforementioned  proceedings  or whether the
              resolution  of the matters could  materially  affect the Company's
              financial position, results of operations, or liquidity.


     11.          Common Stock:

              At November  30,  1996,  the Company has  approximately  8,443,000
              shares of common stock  reserved for issuance  upon  conversion of
              outstanding  preferred stock and exercise of options and warrants.
              In addition,  the Company has reserved for issuance 162,143 shares
              of common stock (valued by the Company at approximately  $355,000)
              in connection  with the Company's  1993  acquisition of the Nassau
              Newspapers,  which  is to be  issued  by the  Company  at  various
              installment dates ending December 9, 1998.


     12.          Preferred Stock:

              Preferred Stock at November 30, 1996 consisted of the following:


10% non-voting  convertible preferred stock, 1,250 shares authorized;  32 issued
and  outstanding,  $500 per  share  per  annum  cumulative  dividends,  $160,000
liquidation value
                                                                       $ 32


8%  convertible   preferred  stock,  500  shares  authorized,   217  issued  and
outstanding, $80 per share per annum cumulative dividends,  $217,000 liquidation
value

                                                                        217




                                      F-18

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued



12% convertible  preferred stock, 200 shares  authorized,  200 shares issued and
outstanding, $120 per share per annum cumulative dividends, $200,000 liquidation
value
                                                                    200

$10  convertible   preferred  stock,  200,000  shares  authorized,   issued  and
outstanding, $2,000,000 liquidation value

                                                                200,000

     (a) The 10%  Non-voting  Convertible  Preferred  Stock is redeemable at the
         option of the Company,  under  certain  circumstances.  The holders can
         convert their shares of preferred  stock into shares of common stock at
         the rate of 1,800  shares of common  stock for each share of  preferred
         stock, subject to standard anti-dilution provisions.

         In October 1996,  the Company  distributed  10,624 shares of its common
         stock in  payment  of a $500  dividend  per  share  due  holders  as of
         September  19,  1996  on  each  of the  32  shares  of  10%  Non-voting
         Convertible  Preferred  Stock.  As a  result,  common  stock at par was
         increased  by  $106,  additional  paid-in-capital  - common  stock  was
         increased by $15,894 and retained earnings was decreased by $16,000.

         In September 1995, the Company  distributed  7,300 shares of its common
         stock in  payment  of a $500  dividend  per  share  due  holders  as of
         September  19, 1995 on each of 32 shares of 10%  Convertible  Preferred
         Stock.  As a  result,  common  stock  at  par  was  increased  by  $73,
         additional  paid-in-capital - common stock was increased by $15,927 and
         retained earnings was decreased by $16,000.

     (b) The 8% Convertible  Preferred Stock and the 12%  Convertible  Preferred
         Stock  may be  redeemed,  in  whole or in part,  at the  option  of the
         Company for a redemption  price equal to the liquidation  preference of
         $1,000 per share plus accrued and unpaid dividends.  The holders of the
         8% and 12%  Convertible  Preferred Stock may convert each share, at any
         time, into shares of common stock. The number of shares of common stock
         into which  each share of  preferred  stock may be  converted  shall be
         obtained by dividing  $1,000 by a conversion  price of $2.10,  which is
         subject  to  standard   anti-dilution   provisions.   The  8%  and  12%
         Convertible Preferred Stock have no voting rights except if the Company
         is in default of four consecutive  dividend payments,  then holders are
         entitled to vote.






                                      F-19

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

         During the years  ended  November  30,  1996 and 1995,  cash  dividends
         totaling  $41,360  each  year  were  paid  to  the  holders  of  the 8%
         Convertible Preferred Stock and the 12% Convertible Preferred Stock. At
         November 30, 1996, the 8% Cumulative  Preferred Stock dividend amounted
         to  $4,328  or $20 per share  and the 12%  Cumulative  Preferred  Stock
         dividend amounted to
         $5,984 or $30 per share.

         In December  1996, a holder of the Company's 8%  Convertible  Preferred
         Stock  converted 50 shares to 23,809  shares of common stock and 23,809
         warrants to purchase common stock exercisable at $2.10 per share.

     (c) In October 1996, the Company  entered into an agreement with a group of
         investors  to  which  the  company  issued  200,000  shares  of a newly
         designated $10.00 Convertible  Preferred Stock and warrants to purchase
         800,000  shares  of common  stock at $2.00  per share for an  aggregate
         consideration of $2,000,000.  The holders of $10 Convertible  Preferred
         Stock, acting as a single class, are entitled to nominate and elect, at
         all times, one-half of the total number of Directors of the Company.

         Dividends on the $10 Convertible  Preferred Stock are noncumulative and
         are  payable at a rate of five times the amount of  dividends,  if any,
         per share declared and paid by the Company on its common stock.  During
         1996,  no  dividends  were  declared  and  paid on the $10  Convertible
         Preferred Stock.

         The holders of the $10  Convertible  Preferred  Stock may convert  each
         share, at any time,  into shares of common stock.  The number of shares
         of common stock into which each share of the $10 Convertible  Preferred
         Stock  may  be  converted  shall  be  obtained  by  dividing  $10  by a
         conversion  price.  The conversion price is initially set at $2.00, and
         is subject to  adjustments  generally  for  dilution  or decline in the
         market price below $2.00.

         The holders of the $10 Convertible  Preferred Stock have  substantially
         the same voting  rights as the holders of the  Company's  common stock;
         however,  the  vote of the  holders  of the $10  Convertible  Preferred
         Stock,  acting as a single class, is required for shareholder  approval
         of certain corporate matters to be considered obtained.  Each holder of
         the $10 Convertible  Preferred Stock is entitled to the number of votes
         that  he or  she  would  have  had if  each  share  of $10  Convertible
         Preferred Stock had been converted into shares of common stock

              .





                                      F-20

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

   13.    Treasury Stock:

           Treasury  stock is shown at cost and  consists  of 151,000  shares of
Common Stock.



   14.   Stock-Based Compensation

         In October 1995,  the Financial  Accounting  Standards  Board  ["FASB"]
         issued SFAS No. 123,  "Accounting for Stock-Based  Compensation."  SFAS
         No. 123 establishes  financial  accounting and reporting  standards for
         employee stock-based compensation plans and to transactions in which an
         entity issues its equity  instruments to acquire goods or services from
         non-employees. SFAS No. 123 encourages, but does not require, companies
         to record compensation cost for employee stock-based compensation plans
         at fair value, and the Company may continue to account for its employee
         plans using the intrinsic  value based method of accounting  prescribed
         by APB  Opinion  No. 25. The  Company  does not expect to adopt the new
         accounting  standard for its employee  stock-based  compensation plans.
         However,  pro forma  disclosures  of net income and  earnings per share
         must be made as if the  SFAS  No.  123  accounting  standard  had  been
         adopted.  If the Company chooses to continue to apply the provisions of
         APB  Opinion  No.  25,   adoption  of  the  SFAS  No.  123   disclosure
         requirements  is not required by the Company  until 1997, at which time
         comparative  pro forma  disclosures  will be  presented  for  grants of
         employee stock-based compensation made in 1996 and 1997.

         The accounting requirements of SFAS No. 123 for transactions with other
         than employees are mandatory and are effective for transactions entered
         into after December 15, 1995.  The Company has applied the  recognition
         provisions of SFAS No. 123 for those non-employee  transactions entered
         into subsequent to December 15, 1995.

         Information regarding the Company's stock option plans is as follows:

     (a)  Stock  Option Plan - The  Company  has a Stock  Option Plan [the Plan]
          pursuant to which it has reserved authorized,  but unissued, shares of
          common stock for issuance of both  Qualified  Incentive  Stock Options
          and Non-Qualified  Stock Options to employees,  officers and directors
          of the Company.  Under the Plan, a maximum of 366,666 shares of common
          stock is  available  for  issuance.  The option price will be the fair
          market  value [110% of the fair market value for  Qualified  Incentive
          Stock  Options  granted  to a holder  of 10% or more of the  Company's
          Common  Stock] as  defined  by the  Plan.  Generally,  options  may be
          exercised  commencing two years from the date of grant and terminating
          ten  years  from the date of grant.  At  November  30,  1996 and 1995,
          approximately   121,200   and   64,200   options   were   exercisable,
          respectively. The following is a summary of transactions:



                                      F-21

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

<TABLE>
<CAPTION>



                                                                             1996                      1995
                                                                       ----------------- ---------------------- 
<S>                                                                           <C>                      <C>   

                 Outstanding - Beginning of year                          179,167                       136,166
                  Granted during the year                                              -                 58,001

                  Terminated during the year                                           -                 15,000

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

                  Outstanding - End of year (1)                          179,167                        179,167

                                                                       ================= ====================== 
<FN>


                (1) With an  exercise  price per  share  ranging  from  $2.00 to
                $9.00,  giving  effect to the  one-for-ten  reverse stock split,
                which  occurred  on May 12,  1992.  The options  outstanding  at
                November 30, 1995 include  options  granted on July 5, 1995 that
                were  approved by the  Company's  stockholders  on December  15,
                1995. The weighted  average  exercise price at November 30, 1996
                was $2.24 per share.

</FN>
</TABLE>

        At November 30, 1996 and 1995,  there were 187,500  shares (after giving
        effect to the  December  15, 1995  amendment to the Stock Option Plan to
        increase  the number of shares of common  stock  available  for issuance
        pursuant to the Plan) available for future grants.

     (b)  Directors  and Officers  Stock  Option Plan - On August 17, 1993,  the
          Board of  Directors  adopted a  Discretionary  Directors  and Officers
          Stock  Option  Plan  as  amended  [the  "Discretionary  Option  Plan"]
          pursuant to which the Board may award options to purchase an aggregate
          of 1,500,000  shares of Common Stock to directors  and officers of the
          Company and its subsidiaries  which shall be exercisable at the market
          price on the date of grant for periods  (generally  five  years),  and
          under conditions, specified by the Board in such grants. Options under
          the  Discretionary  Option Plan are  non-qualified  and  non-incentive
          options  for  purposes  of income  taxation  and are not  intended  to
          qualify under Section 422A of the Internal Revenue Code of 1986.

     On August 17, 1993,  the Board also adopted a  Non-Discretionary  Directors
     Stock Option Plan [the  "Non-Discretionary  Option Plan"] pursuant to which
     each  director  will be granted,  on August 17,  1993 and each  anniversary
     thereof on which he or she continues to be a director,  a five-year  option
     to purchase  10,000  shares of Common Stock at the market price on the date
     of the grant.  The  Non-Discretionary  Plan also  provides  that any person
     becoming  a  director  within  the six  months  after any August 17 will be
     granted  an  option  for  10,000  shares  on the date he or she  becomes  a
     director.




                                      F-22

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

        The  following is a summary of  transactions  relating the Directors and
Officers Stock Option Plans:
<TABLE>
<CAPTION>



                                                                                    1996                    1995
                                                                    -----------------------------  ------------------------
<S>                                                                                  <C>                      <C>   

                  Outstanding - Beginning of year                                       1,760,500                 1,290,500
                 Granted during the year                                                  360,000                   470,000
                                                                    -----------------------------  ------------------------

                        Outstanding - End of the year (1)                               2,120,500                 1,760,500

                                                                    =============================  ========================
<FN>

                 (1) With an exercise price per share ranging from $1.25 to $2.69.  The weighted average exercise
                 price at November 30, 1996 was $2.23 per share.
</FN>
</TABLE>

                                                                    
   15.   Stock Warrants

   At November 30, 1996,  the Company has 2,437,130 of common stock reserved for
   issuance  upon  exercise of warrants.  Information  regarding  the  Company's
   warrants outstanding is as follows:

   Redeemable Class C Warrants - Each Class C Warrant, which entitles the holder
   to  purchase  one share of the  Company's  Common  Stock at $2.00 per  share,
   became  exercisable  October 9, 1993 and expired October 9, 1996.  During the
   year ended  November  30,  1995,  24,561  Redeemable  Class C  Warrants  were
   exercised.  The net proceeds of these  transactions  was $47,137.  During the
   year ended  November  30,  1996,  107,945  Redeemable  Class C Warrants  were
   exercised  for  proceeds of  $215,890.  Common  stock has yet to be issued in
   connection with the October 1996 exercise of 99,195 of the Redeemable Class C
   warrants. The proceeds received from the exercise ($198,390) are reflected as
   "Restricted Cash" with a corresponding  liability reflected in "Other Current
   Liabilities" in the consolidated financial statements.

   Redeemable Class D Warrants - Each Class D Warrant, which entitles the holder
   to  purchase  one share of the  Company's  Common  Stock at $3.00 per  share,
   became  exercisable  October 9, 1993 and expire  October 9, 1998. The Class D
   Warrants are redeemable by the Company under certain conditions.  At November
   30, 1996 and 1995, the Company had  outstanding  853,935  Redeemable  Class D
   Warrants.

   Non-Redeemable  Warrants - At  November  30,  1996 and 1995,  the Company had
   outstanding 1,485,000 and 85,000 non-redeemable warrants,  respectively. Each
   warrant entitles the holder




                                      F-23

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

   to purchase  one share of the  Company's  common  stock at an exercise  price
   ranging  from  $1.38 to $3.00  per  share.  The  warrants  are all  currently
   exercisable and expire on the following dates:


                        Number of Warrants              Expiration Date
                             85,000                       October 1998
                            100,000                           May 1999
                            600,000                           May 2001
                            800,000                       October 2001


   There were no exercises  of  non-redeemable  warrants  during the years ended
   November 30, 1996 and 1995.

   All of  the  warrants  that  expire  May  2001  were  issued  to a  principal
   shareholder of the Company, of which 200,000 were issued in connection with a
   promissory  note [See Note 5] and 400,000  were issued as  consideration  for
   consulting services.



   16.   Income Taxes

   The Company has a deferred tax asset  amounting to $3,342,329 at November 30,
   1996,  principally relating to net operating loss carryforwards of $7,493,210
   and a basis  difference in the carrying  amount of trade accounts  receivable
   for financial reporting purposes and the amount used for income tax purposes.
   The Company recorded a valuation  allowance  amounting to the entire deferred
   tax asset balance because the Company's  financial  condition,  its lack of a
   history  of  consistent  earnings,  and  possible  limitations  on the use of
   carryforwards  give rise to  uncertainty as to whether the deferred tax asset
   is realizable.  No amount of current or deferred  federal or state income tax
   is presented.






                                      F-24

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

   As of November 30, 1996,  the  approximate  amount of the net operating  loss
   income tax carryforwards and their expiration dates are as follows:
<TABLE>
<CAPTION>


                          Expiring in Years Ending
                                November 30,                                      Carryforwards
                       --------------------------------------        -----------------------------------
<S>                                <C>                                                  <C>  

                              2004                                           $           202,301

                              2005                                                       937,798

                              2006                                                       369,706

                              2007                                                       701,056

                              2008                                                             0

                              2009                                                       263,267

                              2010                                                       911,832

                              2011                                                     4,107,250

                                                                             -------------------
                                         Total                               $         7,493,210

                                                                             ===================
</TABLE>


   17.   Loss Per Share

         Loss per share  amounts are  computed  by  dividing  the net loss after
         deduction of preferred stock  dividends by the weighted  average number
         of shares  outstanding.  Options,  warrants and  convertible  preferred
         stock are assumed converted if dilutive.


   18.    New Authoritative Accounting Pronouncements

         The FASB  issued  SFAS  No.  121,  "Accounting  for the  Impairment  of
         Long-Lived  Assets and for Long- Lived  Assets to Be  Disposed  of," in
         March of 1995.  SFAS No. 121 established  accounting  standards for the
         impairment of long-lived assets, certain identifiable intangibles,  and
         goodwill  related  to  those  assets  to be  held  and  used,  and  for
         long-lived assets and certain  identifiable  intangibles to be disposed
         of.  SFAS No. 121 is  effective  for  financial  statements  issued for
         fiscal years  beginning  after  December 15, 1995. The Company does not
         expect  that  SFAS  No.  121  will  have  a  material   impact  on  its
         consolidated financial statements.






                                      F-25

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued
   19.   Significant Fourth Quarter Adjustments

         During the fourth  quarter of 1996,  the  Company  recorded a charge of
         $1,300,000 to increase the  allowance  for doubtful  accounts and write
         off certain  accounts  receivable  balances.  In addition,  a charge of
         approximately $150,000 was recorded relating to overdue state and local
         franchise

















                                      F-26

<PAGE>




                                   SIGNATURES

                  In  accordance  with Section 13 or 15(d) of the Exchange  Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                                  NEWS COMMUNICATIONS, INC.

Date:    March 14, 1997                        BY: /s/ Wilbur L. Ross, Jr.
                                                  ------------------------
                                                      Wilbur L. Ross, Jr.
                                                    Chief Executive Officer


                  In  accordance  with the  Exchange  Act,  this report has been
signed  by  the  following  persons  on  behalf  of  the  registrant  and in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>

              Signature                                          Title                                                  Date
<S>                                                                <C>                                                  <C>   

/s/   Wilbur L. Ross, Jr.                              Director and Chief Executive Officer                        March 14, 1997
--------------------------------------                 (Principal Executive Officer)
        (Wilbur L. Ross, Jr.)                         

/s/   Jerry Finkelstein                                Director                                                    March 14, 1997
--------------------------------------
         (Jerry Finkelstein)

/s/   Michael Schenkler                                Director                                                    March 14, 1997
--------------------------------------
         (Michael Schenkler)

/s/   Robert Berkowitz                                 Controller (Principal Financial and                         March 14, 1997
--------------------------------------                  Accounting Officer)
        (Robert Berkowitz)                 

/s/   Gary Ackerman                                    Director                                                    March 14, 1997
--------------------------------------
          (Gary Ackerman)

/s/   Carl Bernstein                                   Director                                                    March 14, 1997
--------------------------------------
         (Carl Bernstein)

/s/   Eric Briendel                                    Director                                                    March 14, 1997
--------------------------------------
          (Eric Briendel)

/s/   John Catsimatidis                                Director                                                    March 14, 1997
--------------------------------------
         (John Catsimatidis)

/s/   Mark Dickstein                                   Director                                                    March 14, 1997
--------------------------------------
          (Mark Dickstein)

/s/   Sydney Gruson                                    Director                                                    March 14, 1997
--------------------------------------
         (Sydney Gruson)

</TABLE>

                                                                                
                                       30

<PAGE>
<TABLE>
<CAPTION>



           Signature                                        Title                                                     Date
<S>                                                          <C>                                                       <C>   

/s/   Andrew J. Maloney                                Director                                                    March 14, 1997
--------------------------------------
        (Andrew J. Maloney)                                                                                        

/s/   John E. McConnaughy, Jr.                                                    Director
--------------------------------------
      (John E. McConnaughy, Jr.)

/s/   Robert E. Nederlander                            Director                                                    March 14, 1997
--------------------------------------
        (Robert E. Nederlander)

/s/   Andrew J. Stein                                  Director                                                    March 14, 1997
--------------------------------------
         (Andrew J. Stein)

/s/   Sy Syms                                          Director                                                    March 14, 1997
--------------------------------------
            (Sy Syms)

/s/   Arthur Tarlow                                    Director                                                    March 14, 1997
--------------------------------------
          (Arthur Tarlow)

/s/   Hillel Weinberger                                Director                                                    March 14, 1997
--------------------------------------
         (Hillel Weinberger)


</TABLE>

                                                                                
                                       31

<PAGE>



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>




Exhibit No.                  Description                                                               Page No.
<S>                               <C>                                                             <C>   

10.7.4.1                     Amended and Restated Employment Agreement, dated                       33
                             October 28, 1996, between Jerry Finkelstein and the
                             Company

11                           Statement re computation of per share earnings                         38

22                           Subsidiaries of the Company                                            39

27                           Financial Data Schedule (filed electronically only)                    40


</TABLE>
                                                                                
                                       32

<PAGE>