U.S. SECURITIES AND EXCHANGE COMMISSION    5/19/98
                             Washington, D. C. 20549
                                   FORM 10-KSB


(Mark One)

 |X|  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 
      For the fiscal year ended November 30, 1997

                                       OR
    
 |_|  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
      THE SECURITIES EXCHANGE ACT OF 1934
      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: (718) 357-3380

    Securities registered under Section 12(b) of the   Exchange   Act:   None
    Securities registered  under  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 Exchange  Act 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 ___  No __X_

     Check  if  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. [ X ]

     The issuer's revenues for its most recent fiscal year were $17,538,952. 

     As of May 13, 1998, 8,207,374 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
$6,350,000.

     Transitional Small Business Disclosure Format (check one): Yes ___ No 


                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None



<PAGE>



                                     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) that are distributed to each community in the
targeted  group.  The principal  source of the  Company's  revenues (92% for the
fiscal year ended  November  30, 1997) 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 Life and Long Island
Lifestyles and South Shore Publishers, Inc., publisher of the South Shore Record
(collectively,  with the NCNG publications,  the "Nassau  Newspapers"),  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.

     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 radio broadcasting and
electronic publishing on the Internet.

     The Company  believes that advertisers are receptive to wide circulation at
reduced cost offered by a group of publications  providing a broad  metropolitan
audience.  Furthermore,  because  the  marginal  costs of adding  editorial  and
advertising content are generally significantly lower than the revenues that are
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 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.

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<PAGE>





     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 27-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
2007, subject to earlier termination under certain conditions.

Queens Tribune

     In May 1989, Tribco acquired,  by way of merger,  all the outstanding stock
of two companies that,  together,  published and distributed the Queens Tribune,
which now consists of eight 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,  plus 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.

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<PAGE>



     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 12% of its revenues in the fiscal year ended November 30, 1997.

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  54-year-old
paper that 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  1940's.  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 the 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. 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  that  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, of which
shares 125,571 have been delivered and the remaining 36,572 will be delivered on
December 9, 1998.  The 162,143  shares of Common Stock had an  aggregate  market
value of  $709,375 on  December  9, 1993 but,  because of the  deferral of their
issuance and their nature as restricted  securities,  were valued by the Company
at approximately $355,000 for financial accounting purposes.

     The Company  introduced  Elmont Life and  Franklin  Square Life in 1996 and
West Hempstead Life in 1997. Also in 1997, the Company  acquired the South Shore
Record,  a 33-year  old  mailed  subscription  newspaper  serving  the  affluent
"five-towns" area of Nassau County.

     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 89 years.  The
group averages over 51 years of continuous weekly publication per paper. Each of
the Nassau  Newspapers,  other than Elmont Life,  Franklin  Square Life and West
Hempstead Life, 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.

     In 1995 the Company  introduced Long Island  Lifestyles,  which serves as a
second  section  to each of the Nassau  Newspapers  and is also  distributed  by
itself in  heavily  trafficked  areas.  This  product  offers  moderately-priced
advertising to the central and south Nassau marketplace.


                                     Page 4


<PAGE>



Brooklyn Skyline

     The Brooklyn Skyline,  which was acquired by the Company in August 1994, is
published  weekly  in  five  editions  that  are  distributed   door-to-door  in
Brooklyn's southern tier.  Originally a tabloid  shopper-type  publication,  the
Brooklyn Skyline has been converted by the Company into a community newspaper to
complement its other publications.  "Koch at the Movies," the News Communication
Telephone Poll and the Company's  Citywide  political page "NY Confidential," in
addition to local news coverage by Brooklyn reporters,  distinguish the Brooklyn
Skyline from its major competition,  The Marketeer, an established  door-to-door
shopper.  The Brooklyn  Skyline  generates  revenues from display and classified
advertising. Additional revenue is also generated by the occasional distribution
of circulars with the 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 26-year-old community
newspaper,  covers the area from 59th- 125th  Streets  from  Riverside  Drive to
Central Park West. The Chelsea-Clinton  News, a 57-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 -- WYRE

     In September 1994, the Company  embarked on its most ambitious  undertaking
to date -- the  publication  of The  Hill,  a 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 Capital,  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 Capital  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.

     The  Company has  entered  into an  agreement  to  purchase  radio  station
WYRE-AM,  principally to provide an outlet in the Washington, D.C., area for its
five day a week morning show,  The Hill Reporter.  This show features  Senators,
Congressmen,  other  elected  officials,  lobbyists  and pundits in an interview
format on topics of current interest.  The purchase price is $268,500,  of which
$25,000 has been paid as a deposit and the balance is due on closing. Closing is
pending  resolution of a dispute with the seller as to whether a proposed  tower
will be  adequate.  The Company is  presently  paying WYRE to carry its programs
pursuant to a Programming Services Agreement.

The New York Blade News

     In a joint  venture  that began in the summer of 1997,  the Company  joined
with the Washington Blade, the largest and most respected gay and lesbian weekly
newspaper  in America,  to publish The New York Blade  News,  a weekly,  4-color
tabloid  newspaper  that  debuted  on October  24,  1997.  The  paper,  which is
distributed  by  independent  contractors  to more than 800 locations in the New
York  metropolitan  area  that are  frequented  by New  York's  gay and  lesbian
community,  derives  its  revenue  from the  sales  of  display  and  classified
advertising  and  personal  advertisements.  The New York Blade  News,  which is
distributed each Friday throughout  Manhattan and areas of Brooklyn,  the Bronx,
Queens,  Staten Island as well as Long Island and New Jersey, is operated out of


                                     Page 5


<PAGE>


its own offices in New York City but shares  production and  distribution  staff
with Our Town, Manhattan Spirit, the Westsider and Chelsea-Clinton News.

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,  eight of the  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 six years.
On a year-to-year  basis, the Company  estimates that, over the last five 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.

     The  Company  employs  sales   representatives  who  are  compensated  with
incentive-based  compensation  packages.  The Company generally  supplements the
sales activities of the individual  publications  with  cross-publication  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  that 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.

     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

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<PAGE>


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.

     Although there is no competition for subscriptions or legal notice revenues
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, 1997, the Company had 320 full- and part-time employees,
of whom 55 were editorial; 86 were engaged as display and classified advertising
sales  personnel;  90  were  engaged  in  production;  and 89  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.


                                     Page 7


<PAGE>



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 and  intends to
exercise the option.

     Tribco has a 10 year lease,  which  commenced on November 1, 1990,  with an
unaffiliated  landlord for  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.

     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 five-year lease for 2,110 square
fee of  office  space at 2132  Utica  Avenue,  Brooklyn,  New  York,  commencing
February  1998,  at an annual  rental of  $38,400,  increasing  over the term to
$46,675 in the last year.

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


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 the case was  dormant  for a number  of years.  In May 1998,  the
plaintiff voluntarily discontinued the action with prejudice.

     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
case was tried to a jury and resulted in an adverse  determination  of liability
to the Company and the other defendants in the amount of $100,000. No appeal has
been taken from that  finding.  The plaintiff has requested an award of fees and


                                     Page 8


<PAGE>


costs in the approximate amount of $150,000, which the defendants are vigorously
opposing.


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, 1997.


                                     Page 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  SmallCap  Market under
the symbol NCOM.  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  SmallCap 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.


<TABLE>
<CAPTION>

                                                         Common Stock                                Units
                                                     --------------------------              -----------------------  
Quarter Ended                                       High                   Low                High               Low
-------------                                       ----                   ---                ----               ---
<S>                                                <C>                     <C>               <C>                <C>         
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
February 28, 1997                                   2.88                   1.97                N/A               N/A
May 31, 1997                                        2.50                   1.75                N/A               N/A
August 31, 1997                                     2.25                   1.63                N/A               N/A
November 30, 1997                                   2.44                   1.50                N/A               N/A
                                                   =====                   ====              ======             =====
</TABLE>


     The Company has been advised by The Nasdaq Stock  Market,  Inc.  ("Nasdaq")
that  the  Company  is  not  in  compliance   with  Nasdaq's  new  net  tangible
assets/market capitalization/net income requirements for companies listed on the
Nasdaq  SmallCap  Market which became  effective on February 23, 1998,  and that
Nasdaq  intended to delist the  Company's  securities  from the Nasdaq  SmallCap
market at the close of business on March 16,  1998.  The Company has  received a
temporary  exception to the new  requirements  and a temporary stay of delisting
pending a hearing. The Company has submitted a written plan to Nasdaq describing
how the Company will achieve and maintain  compliance with the new requirements.
As of the date of this report the Nasdaq  hearing  panel has not yet  rendered a
decision regarding the Company's plan of compliance. If the Nasdaq hearing panel
rejects the Company's plan of  compliance,  the Company may seek an oral hearing
of  Nasdaq's  decision  to  delist  the  Company's  securities.  There can be no
assurance that the plan of compliance will be accepted by Nasdaq. If the plan of
compliance is rejected and the Company's  securities are  subsequently  delisted
from the Nasdaq SmallCap Market,  trading,  if any, in the Company's  securities
would  thereafter  be  conducted on the OTC  Bulletin  Board,  in which event an
investor  may find it more  difficult  to  dispose  of,  or to  obtain  accurate
quotations as to the market value of, the Company's securities.  In addition, if
the Common Stock were to become  delisted from trading on Nasdaq and the trading
price of the Common  Stock were to fall  below  $5.00 per share,  trading in the
Common  Stock  also  would be  subject  to the  requirements  of  certain  rules
promulgated under the Securities Exchange Act of 1934, as amended,  that require
additional  disclosure by broker-dealers in connection with any trades involving
a stock defined as a penny stock (generally, any non-Nasdaq equity security that
has a market price of less than $5.00 per share, subject to certain exceptions).
Such rules  require the  delivery,  prior to any penny stock  transaction,  of a
disclosure  schedule  explaining the penny stock market and the risks associated
therewith,  and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than  established  customers  and  accredited
investors  (generally  institutions).  For  these  types  of  transactions,  the
broker-dealer  must make a special  suitability  determination for the purchaser


                                     Page 10


<PAGE>


and have received the purchaser's  written  consent to the transaction  prior to
sale. The additional  burdens imposed upon  broker-dealers  by such requirements
may discourage  them from effecting  transactions  in the Company's  securities,
which could  severely  limit the liquidity of the Company's  securities  and the
ability of  investors  to sell such  securities  in the  secondary  market.  The
foregoing  factors would adversely  impact the Company's  ability to raise funds
publicly.

     The Company  estimates  that at November 30, 1997 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 holders 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  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, 1997,  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 November 5, 1997, DPI and the Company  entered into a Loan Agreement
("RRF Loan  Agreement")  with Rothschild  Recovery Fund L.P. ("RRF") pursuant to
which DPI borrowed  $1,500,000 from RRF. In connection with the execution of the
RRF Loan Agreement,  the Company issued to RRF a five-year  warrant to purchase,
on or after February 28, 1998,  300,000 shares of Common Stock of the Company at
an initial exercise price of $2.25 per share (subject to adjustment).


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

Results of Operations

     1997 was a transitional year for the Company. New management, which came to
the Company  during the last quarter of 1996,  completed  its first full year of
operations.  Its objectives  included  increasing  revenues,  implementing  cost
cutting measures and focusing on the publications which have impacted the bottom
line most negatively. New sales management and a new sales team have resulted in
a turnaround to  profitability  at The Hill. The Company  decided to discontinue
the  money  losing  operations  at  Manhattan  File  and has  sold all but a 10%
interest in that subsidiary.  Completing the transition of Brooklyn Skyline to a


                                     Page 11


<PAGE>


newspaper from a shopper, the introduction of four-color printing and bolstering
the sales  force has  resulted  in  increasing  revenues.  A new  publisher  was
installed  at the Nassau  Newspapers  and the South Shore Record was acquired to
provide Nassau with access to the high demographic market of the "Five Towns."

     The Company  increased its revenues 5% ($909,000) from  $16,615,000 in 1996
to  $17,524,000 in 1997, and loss from  continuing  operations  decreased by 43%
($1,494,000) from a loss of $3,462,000 in 1996 to $1,968,000 in 1997.

     The increase in revenues was attributable  primarily to The Hill, where the
effect of its high quality  editorial  content combined with a circulation audit
and a change in sales  management  and staff resulted in an increase of revenues
of  $936,000  (71%);  Brooklyn  Skyline,  where its  increased  acceptance  as a
newspaper  and as an  advertising  force in the  community  along  with its 1996
expansion into a fifth zone helped increase  revenues  $221,000 (18%); and Dan's
Papers where its continuing  capitalization  on an ever increasing market in the
Long Island posh resort  area,  the  Hamptons,  and an  increased  sales  effort
combined to increase revenues $374,000 (10%). These revenue gains were offset in
part by Queens  Tribune's  decrease of $531,000 (16%), of which $200,000 related
to a softening of the advertising  market in Queens and $331,000  related to the
discontinuance  of various low profit margin print and  distribution  jobs;  and
Bronx  Newspapers  decrease of $124,000 (14%),  which was a result of changes in
sales management.

     Salaries and outside labor costs  increased  $79,000 (1%), even as revenues
increased  by 5%, as budget  cuts  phased in  beginning  in 1996 took their full
effect.

     Direct  mechanical  costs decreased  $492,000 (8%) primarily as a result of
the  decrease  and   stabilization  of  newsprint   prices,   coupled  with  the
renegotiation of printing  contracts and the reduction in outside printing.  The
Company  believes  that the  changes  made  during  1996-97  will be more  fully
reflected in improved operating results during fiscal 1997-98.

     At  November  30,1997,  the  Company  had an excess of current  assets over
current  liabilities  of  approximately  $49,000.  Net cash  used by  continuing
operations was $1,318,000.  During the year ended November 30, 1997, the Company
repaid $275,000 of the bank loans (an additional $100,000 was repaid in December
1997);  $421,000 was used to purchase South Shore;  $29,000 was used towards the
purchase of WYRE;  and $101,000  was  invested in or advanced to the Blade.  The
funds were  provided  from cash on hand at the  beginning of the year and from a
$1,500,000  one-year  loan in November  1997 from an affiliate of an officer and
shareholder.

     For the year ended  November  30,  1996,  net cash used by  operations  was
$1,627,000. These funds were provided from a two-year loan from a shareholder in
May 1996, a $675,000  increase in bank loans 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  order  to  comply  with  the  requirements  of  NASD  Marketplace  Rule
4310(c)(2),  the Company intends to offer its existing shareholders the right to
purchase  additional  shares of its  Common  Stock.  The gross  proceeds  of the
offering  would be  approximately  $3,500,000.  To assure the  Company  that the
offering will raise the required  funds, an officer and shareholder and a holder
of  preferred  stock of the Company  have  committed  to purchase  all shares of
Common Stock not purchased by other shareholders.  The Company is in the process
of negotiating an extension of the May 1996 loan (discussed  above) which is due
May 21, 1998 in order that it be repaid from the capital raised.


                                     Page 12


<PAGE>



     Management  believes that the stock  offering and operations of the Company
will generate  positive cash flow for the fiscal year ending  November 30, 1998.
Although there can be no assurance 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.

Discontinued Operations

     The  Company  owned  90%  of  Manhattan  File  Publishing,  Inc.  ("MFPI"),
publisher of  Manhattan  File, a monthly  (plus five special  issues  annually),
4-color,  perfect bound, glossy magazine,  until February 1998, when the Company
sold  80% of MFPI to an  employee.  The  Company  now  owns  10% of MFPI and the
employee  owns 90% of MFPI.  All  financial  results  for 1996  attributable  to
Manhattan File have been reclassified as discontinued operations.

Forward-looking Statements

     When used in this and in future  filings by the Company with the Securities
and Exchange Commission,  in the Company's press releases and in oral statements
made with the approval of an authorized  executive  officer of the Company,  the
words  or  phrases  "will  likely   result,"   "plans,"  "will   continue,"  "is
anticipated,"   "estimated,"  "project"  or  "outlook"  or  similar  expressions
(including  confirmations by an authorized  executive  officer of the Company of
any such  expressions  made by a third party with  respect to the  Company)  are
intended  to  identify  "forward-looking  statements"  within the meaning of the
Private Securities  Litigation Reform Act of 1995. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speaks only as of the date made. Such statements are subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from historical earnings and those presently  anticipated or projected.  Factors
that may cause actual results to differ  materially  from those  contemplated by
such forward- looking statements include, among others, competitive pressures in
the  industry  in which the Company is engaged,  unanticipated  fluctuations  in
paper prices and general economic  conditions.  The Company has no obligation to
release  publicly  the  result  of  any  revisions  that  may  be  made  to  any
forward-looking  statements to reflect  anticipated or  unanticipated  events or
circumstances occurring after the date of such statements.


ITEM 7. FINANCIAL STATEMENTS.

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

                                       13
<PAGE>

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

     Moore Stephens,  P.C. (formerly named Mortensen & 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,  L.L.P.  The
decision to change auditors was approved by the Audit Committee of the Company's
Board of Directors.  The report of Mortensen & 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.

     Coopers & Lybrand L.L.P. has been engaged by the Company as its independent
auditors.

                                     Page 14


<PAGE>



                                    PART III

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

     As of May 8, 1998, 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                             55       Director of the Company
           Thomas Allon                              34       Executive Vice President of the Company
           Robert Berkowitz                          49       Controller of the Company
           Carl Bernstein                            53       Director of the Company
           John Catsimatidis                         49       Director of the Company
           Mark Dickstein                            39       Director of the Company
           Jerry Finkelstein                         82       Chairman of the Board and Director of the Company
           Andrew J. Maloney                         66       Director of the Company
           John E. McConnaughy, Jr.                  68       Director of the Company
           Robert E. Nederlander                     64       Director of the Company
           Daniel Rattiner                           58       President, Publisher, Editor and Director of DPI
           Wilbur L. Ross, Jr.                       60       Director and Chief Executive Officer of the Company
           Michael Schenkler                         52       Director and President of the Company and director
                                                              and officer of subsidiaries
           Andrew J. Stein                           52       Director of the Company
           Sy Syms                                   71       Director of the Company
           Arthur Tarlow                             68       Director of the Company
           Hillel Weinberger                         44       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 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

                                     Page 15


<PAGE>


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.

     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.

     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,  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.


                                     Page 16


<PAGE>



     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.,
Chairman of  Rothschild  Recovery  Fund LLP and a director of  Rothschild  North
America 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.

     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,  McConnaughy,
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. Sydney Gruson, a deceased former director, was also
a designee of the holders of the $10 Convertible Preferred Stock.

     There are  presently  two  vacancies on the board of  directors  due to the
death of Mr. Gruson on March 1, 1998 and the death of another  former  director,
Eric Breindel, on February 28, 1998.

                                     Page 17


<PAGE>




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, 1997, all Section 16(a) filing
requirements applicable to its officers,  directors and greater than ten percent
beneficial  owners  were  complied  with,  except  that John E.  McConnaughy,  a
director of the Company,  failed to report the  ownership of 5,900 shares of $10
Convertible  Preferred  Stock of the Company and 23,600  Common  Stock  Purchase
Warrants of the Company on his report on Form 3 as filed on November  11,  1996.
Mr. McConnaughy filed an amended Form 3 in May 1998 to include such securities.


                                     Page 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, 1997, 1996 and 1995.

                           SUMMARY COMPENSATION TABLE


                                             
                                                                              
<TABLE>
<CAPTION>


                                                                                                               Compensation
                                                                                                                 Long-Term 
                                                                         Annual Compensation                      Awards
                                                                                                Other
                                                                                               Annual           Securities
                                                                                              Compensa-         Underlying
                                                               Salary          Bonus            tion             Options
Name and Principal Position                       Year           ($)            ($)              ($)               (#)
--------------------------------------------      -----       -------          ------         ---------         ----------
<S>                                               <C>              <C>                                                 
Wilbur L. Ross, Jr., Chief Executive Officer      1997             1             ---             ---                ---
                                                  1996             1             ---             ---              200,000
Michael Schenkler, President and Chief Exec       1997       158,197             ---             ---                ---
utive Officer (1995-1996) of the Company and      1996       154,621             30,000          ---               10,000
officer of subsidiaries                           1995       150,000             ---             ---               10,000
Daniel Rattiner, Officer of Dan's Papers, Inc.    1997       133,770             81,000          ---                ---
                                                  1996       130,869            110,235        15,000(1)            ---
                                                  1995       127,813             61,169        15,000(1)            ---
Jerry Finkelstein, Chairman of the Board of the   1997       195,000             ---             ---                ---
Company                                           1996       195,000             ---             ---               10,000
                                                  1995       195,000             ---             ---              360,000
Thomas Allon, Executive Vice President of the     1997         84,141            45,000          ---                ---
Company and officer of subsidiaries               1996         82,341            45,000          ---                ---
                                                  1995         80,885            45,000          ---                ---
</TABLE>

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

(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). Beginning in November 1997, Mr. Rattiner is also entitled
         to a new leased or purchased automobile every two years, having a value
         not in excess of $40,000,  and a new leased portable computer every two
         years, having a value not in excess of $4,000.


                        AGGREGATE YEAR-END OPTION VALUES
                               (November 30, 1997)

<TABLE>
<CAPTION>

                                      Number of securities underlying
                                    unexercised options at fiscal year-           Value of unexercised in-the-money
                                                  end (#)                          options at fiscal year-end ($)
Name                                 Exercisable          Unexercisable         Exercisable            Unexercisable
<S>                                    <C>            <C>                             <C>                       
Wilbur L. Ross, Jr.                    200,000                 ---                    0                      ---
Michael Schenkler                      142,500                 ---                1,250                      ---
Jerry Finkelstein                      697,500                 ---                1,250                      ---
Daniel Rattiner                         35,000                 ---                    0                      ---
</TABLE>



                                     Page 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 2007, as amended,  as
compensation  for his services to DPI,  Daniel Rattiner earns a base salary from
DPI of $110,000 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.  Mr.
Rattiner may terminate his  employment at any time after  November 25, 2000. 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 the  agreement  regarding  the  sale  of the  $10  Convertible
Preferred  Stock,  Wilbur L. Ross, Jr. serves 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 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.

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. No grants were made under the
Discretionary Option Plan during the fiscal year ended November 30, 1997.

     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

                                     Page 20


<PAGE>


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. Grants under the Non-Discretionary
Option Plan were completed during the fiscal year ended November 30, 1996.


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 May 13, 1998, 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)                             4.7%
         218-14 Northern Boulevard
         Bayside, NY 11432
Thomas Allon                                                  61,666 (3)                                *
        174-15 Horace Harding
            Expressway
        Fresh Meadows, NY  11365
Carl Bernstein                                                 5,000 (3)                                *
         35 East 84th Street
         New York, NY 10028
John Catsimatidis                                             55,000 (3)                                *
         832 11th Avenue
         New York, NY 10019
Mark Dickstein                                               185,000 (3)(4)                          2.2%
         120 East End Avenue
          New York, NY 10028
Jerry Finkelstein                                          1,489,503 (3)(5)                         16.7%
         150 East 58th Street
         33rd Floor
         New York, NY 10158
Andrew J. Maloney                                             53,000 (3)                                *
         1 World Trade Center
         New York, NY 10001
John E. McConnaughy, Jr.                                       5,000 (3)                                *
         637 Valley Road
         New Canaan, CT 06840
</TABLE>

-----------------------------
Continued on next page.



                                     Page 21


<PAGE>

<TABLE>
<CAPTION>


                                                       Amount and Nature
                                                         of Beneficial                           Percent of
Beneficial Owner                                         Ownership (1)                              Class
                                                        

<S>                                                       <C>                                        <C> 
Robert E. Nederlander                                     118,000 (3)(4)                             1.4%
         570 Park Avenue
         New York, NY 10022
Daniel Rattiner                                           168,308 (3)(6)                             2.0%
        26 Three Mile Harbor
        Hog Creek Road
        East Hampton, NY 11932
Wilbur L. Ross, Jr.                                       570,000 (3)(4)(7)                          6.5%
        1251 Avenue of the Americas
        New York, NY 10020
Michael Schenkler                                         455,267 (3)(8)                             5.4%
      174-15 Horace Harding
           Expressway
      Fresh Meadows, NY 11365
Andrew J. Stein                                           180,000 (3)                                2.2%
      625 Madison Avenue
      New York, NY 10022
Sy Syms                                                   185,000 (3)(4)                             2.2%
      Syms Way
      Secaucus, NJ 07094
Arthur Tarlow                                              79,716 (3)                                  *
      1505 Kellum Place
      Mineola, NY 11501
Hillel Weinberger                                         221,000 (3)(4)                             2.6%
       667 Madison Avenue
       New York, NY 10021
All Directors and                                       4,240,605 (3)(9)                            39.5%
      Executive Officers as
      a Group
      (17 persons)
                                                        2,672,230 (10)                              30.2%
J. Morton Davis         
D.H. Blair Holdings, Inc.
D.H. Blair Investment
  Banking Corp.
     44 Wall Street
     New York, NY 10005
</TABLE>

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

*       Less than one percent.

(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.
--------------------------------------------------
(Footnotes continued on next page)

                                     Page 22


<PAGE>





(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.  Allon--61,666;  Mr.
        Bernstein--5,000; Mr. Catsimatidis--55,000;  Mr. Dickstein--85,000;  Mr.
        Finkelstein--697,500;  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. Weinberger--101,000.

(4)     Includes the following numbers of shares issuable upon conversion of $10
        Convertible    Preferred    Stock:    Mr.    Dickstein--100,000;     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., (b) 50,000
        shares issuable upon conversion of $10 Convertible Preferred Stock owned
        by Rothschild North America Inc. ("RNA") and 40,000 shares issuable upon
        exercise of warrants owned by RNA, and (c) 300,000 shares  issuable upon
        exercise of warrants owned by the Rothschild Recovery Fund L.P. 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  exercise of  the options  referenced in
        (3) above, conversion of the $10 Convertible Preferred  Stock referenced
        in (4) above and the 10% Preferred  Stock  referenced  in (6) above,  as
        well as 22,501  shares  issuable to Mr. Robert Berkowitz,  Controller of
        the Company, upon exercise of presently exercisable stock options.

(10)    Includes (i)  1,867,615  shares of Common Stock and warrants to purchase
        623,600  shares of Common Stock 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 of Common Stock owned by
        Rivkalex  Corporation  ("Rivkalex"),  a  private  corporation  owned  by
        Rosalind  Davidowitz,  Mr.  Davis's wife,  (iii) 89,600 shares of Common
        Stock owned by  Rosalind  Davidowitz  and (iv)  29,500  shares of Common
        Stock  issuable  upon  exercise  of  5,900  shares  of  $10  Convertible
        Preferred  Stock.  Mr.  Davis,   Blair  Holdings  and  Blair  Investment
        expressly  disclaim  beneficial  ownership  of all  securities  held  by
        Rivkalex and Rosalind Davidowitz.


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 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.

     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).
 
                                    Page 23


<PAGE>





     Rothschild  Inc., of which Wilbur L. Ross, Jr. is Senior Managing  Director
and Sydney  Gruson,  a  deceased  former  director  of the  Company,  was 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.

     On  November  5,  1997,  DPI and the  Company  entered  into  the RRF  Loan
Agreement with RRF pursuant to which DPI borrowed  $1,500,000  from RRF pursuant
to a promissory note bearing  interest  payable monthly at the rate of 9.75% and
with a maturity date of December 31, 1998.  The note is secured by a lien on all
of DPI's assets and is  guaranteed  by the Company.  In addition,  in connection
with the  execution  of the RRF Loan  Agreement,  the  Company  issued  to RRF a
five-year warrant to purchase,  on or after February 28, 1998, 300,000 shares of
Common  Stock of the  Company at an initial  exercise  price of $2.25 per share.
Wilbur L. Ross, Jr. is Chairman of RRF.

     In May 1996, the Company, Tribco and Access obtained a $1,000,000 loan from
D.  H.  Blair  Investment  Banking  Corp.  ("Blair  Investment"),   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 Blair  Investment on all of
their  personal  property  and  fixtures  and by a pledge made by the Company to
Blair Investment of all of the outstanding common stock of Tribco and Access. As
additional  consideration  for the loan, the Company  issued Blair  Investment 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 Blair  Investment  pursuant to
which  Blair  Investment  is to act as a  non-exclusive  financial  advisor  and
investment  banker  to the  Company.  As an  inducement  to  Blair  Investment's
providing such services, the Company issued Blair Investment 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  $25,300 during the fiscal year ended
November 30, 1997.


                                     Page 24


<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>
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.

</TABLE>

-------------------------------
(1)      See Notes at end of Item 13.

                                     Page 25


<PAGE>

<TABLE>
<CAPTION>

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

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

10.4.4            Letter dated November 22, 1996 from the                       N                    10.4.4
                  Company to Daniel Rattiner regarding
                  exercise of option to purchase stock
                  of Dan's Papers, Inc.

10.4.5            Employment and Shareholders'  Agreement                       * 
                  dated as of November 25, 1997 between and among 
                  Daniel Rattiner and the Company.

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

</TABLE>

                                     Page 26


<PAGE>

<TABLE>
<CAPTION>

                                                                          Incorporated               Exhibit
Exhibit                                                                   by Reference               No. in
Number             Description                                            from Document              Document
-----------       --------------------------------------------------      ---------------           ----------
<S>                                                                          <C>                     <C>       
10.7.4.1          Amended and Restated  Employment                              N                    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.

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.

10.26             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.

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

10.29             Loan Agreement dated May 21, 1995 among                       M                    10.29
                  Blair Investment, 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 Investment.

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 Investment.

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 Investment.

</TABLE>

                                     Page 27


<PAGE>
<TABLE>
<CAPTION>
                                                                          Incorporated               Exhibit
Exhibit                                                                   by Reference               No. in
Number                Description               0                          from Document              Document
-----------       --------------------------------------------------      ---------------           ----------
<S>               <C>                                                       <C>                      <C>
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.

10.34             Loan Agreement dated as of November 5,                        *
                  1997 by and between Rothschild Recovery
                  Fund L.P. and Dan's Papers, Inc. and
                  the Company.

10.35             Asset Purchase Agreement dated as of                          *
                  April 11, 1997 by and between M.B.C.
                  Incorporated and the Company.

10.36             Program Services Agreement dated as                           *
                  of April 11, 1997 by and between M.B.C.
                  Incorporated and the Company.

10.37             Stock Purchase Agreement dated as of                          *
                  November 25, 1997, by and between
                  Florence B. Schwartzberg and the
                  Company.

10.38             Employment Agreement dated as of                              *
                  November 25, 1997, by and between
                  Florence B. Schwartzberg and the
                  Company.

10.39             Agreement dated as of February 26,                            *
                  1998 by and between the Company
                  and Magazine Holding, Inc.

10.40             Shareholders Agreement dated as of                            *
                  December 22, 1997 by and between
                  the Company, The Washington Blade,
                  Inc. and New York Blade News, Inc.

11.1              Statement re computation of per share                         *
                  earnings.

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

22                Subsidiaries of the Company.                                  *

</TABLE>

                                     Page 28


<PAGE>
<TABLE>
<CAPTION>


                                                                          Incorporated               Exhibit
Exhibit                                                                   by Reference               No. in
Number                Description                                         from Document              Document
-----------       --------------------------------------------------      ---------------           ----------
<S>               <C>                                                         <C>
27                 Financial Data Schedule (filed electronically only)          *

</TABLE>
---------------------------------------
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.

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    Annual Report of the Company on Form 10-KSB for the year ended November 30,
     1996.

O    Current Report of the Company on Form 8-K/A relating to event  occurring on
     February 3, 1997.

*        Filed herewith.

         (b)     Reports on Form 8-K.

                 None

                                     Page 29

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Index to Consolidated Financial Statements

                                                                          Page


Report of Independent Accountants                                  F-2

Consolidated Balance Sheet as of November 30, 1997                 F-3 to F-4

Consolidated Statements of Operations for the years ended
    November 30, 1997 and 1996                                     F-5

Consolidated Statements of Stockholders' Equity for the 
   years ended November 30, 1997 and 1996                          F-6 to F-7

Consolidated Statements of Cash Flows for the years ended
    November 30, 1997 and 1996                                     F-8 to F-9

Notes to Consolidated Financial Statements                         F-10 to F-23


                                      F-1






             

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Report of Independent Accountants



To the Board of Directors and Stockholders of
News Communications, Inc.


     We  have  audited  the  accompanying  consolidated  balance  sheet  of News
Communications,  Inc. and  Subsidiaries as of November 30, 1997, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
the years  ended  November  30,  1997 and  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, 1997,  and the
consolidated  results  of their  operations  and their  cash flows for the years
ended  November  30,  1997 and  1996,  in  conformity  with  generally  accepted
accounting principles.



Coopers & Lybrand L.L.P.




New York, New York
May 15, 1998






                                        F-2

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES



Consolidated Balance Sheet

As of November 30, 1997

                                        Assets:

Current assets:
    Cash                                                           $    424,620
    Accounts receivable - [less: allowance 
     for doubtful accounts of $849,530]                               3,479,269
    Due from related parties                                             27,613
     Other                                                              176,738
                                                                    -----------
      Total current assets                                            4,108,240

Investment in unconsolidated entities                                    72,242


Property and equipment - at cost - net                                  399,364

Other assets:
    Goodwill - net                                                    3,481,766
    Other - net                                                          81,267
                                                                  -------------
               Total other assets                                     3,563,033
                                                                  -------------
                                                                  $   8,142,879
                                                                  =============

See Notes to Consolidated Financial Statements


                                       F-3

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES


                                  
Consolidated Balance Sheet

As of November 30, 1997

                         Liabilities and Stockholders' Equity:
Current liabilities:
    Accounts payable                                              $     626,610
    Accrued expenses                                                  1,166,573
    Accrued payroll and payroll taxes                                    92,516
    Note payable                                                        900,000
    Due to related party                                              1,136,021
    Unearned revenue                                                    137,652
                                                                  -------------
               Total current liabilities                              4,059,372

Net liabilities of discontinued operations                               53,908

Related party - long term debt                                        1,415,338
                                                                  -------------
Total Liabilities                                                     5,528,618
                                                                  -------------
Commitments and contingencies

Minority interest                                                       281,474
                                                                  -------------
Stockholders' equity:

     Preferred stock, $1.00 par value; 500,000 shares                   200,340
      authorized; $2,444,000 aggregate liquidation value

     Common stock, $.01 par value; authorized 100,000,000 
      shares; 8,212,231 shares issued and outstanding                    82,122

Paid-in capital - preferred stock                                     2,077,025
Paid-in-capital - common stock                                       14,431,905
Retained deficit                                                    (14,049,876)
                                                                 --------------
                                                                      2,741,516

Less:  Treasury stock [151,000 common shares] - at cost                 408,729
                                                                 --------------
              Total stockholders' equity                              2,332,787
                                                                 --------------
              Total liabilities and stockholders' equity         $    8,142,879
                                                                 ==============

See Notes to Consolidated Financial Statements





                                        F-4

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Statements of Operations

For the years ended November 30, 1997 and 1996
<TABLE>
<CAPTION>

                                                                                               1997                    1996
                                                                                   ----------------------------------------------
<S>                                                                                <C>                     <C>             
Net revenues                                                                       $           17,523,952  $           16,614,501
                                                                                   ----------------------------------------------
Operating expenses:
    Salaries, benefits and outside labor costs                                                 8,880,694               8,801,931
    Direct mechanical costs                                                                    5,683,638               6,175,727
    General and administrative                                                                 2,702,444               2,674,163
    Provision for doubtful accounts                                                            1,013,904               1,360,057
    Rent, occupancy and utilities                                                                842,735                 820,299
                                                                                   ----------------------------------------------
              Total operating expenses                                                        19,123,415              19,832,177
              Loss from operations                                                            (1,599,463)             (3,217,676)

Other income (expense):
     Interest expense                                                                           (200,948)               (177,471)
                                                                                   ----------------------------------------------
              Total other income (expense)                                                      (200,948)               (177,471)
                                                                                   ----------------------------------------------
Loss before income taxes and minority interest                                                (1,800,411)             (3,395,147)
Provision for income taxes                                                                       -                      -
                                                                                   ----------------------------------------------
              Net loss before minority interest                                               (1,800,411)             (3,395,147)

Less: Minority interest in income of subsidiary                                                  167,246                  66,440
                                                                                   ----------------------------------------------

Loss from continuing operations                                                               (1,967,657)             (3,461,587)

Loss from discontinued operations                                                               (730,585)               (419,841)
Gain (Loss) on disposal                                                                         (255,973)
                                                                                   ----------------------------------------------
                  Net loss                                                         $          (2,954,215)  $          (3,881,428)
                                                                                   ==============================================
Loss per common share:

Continuing Operations                                                              $                (.24)  $                (.44)
                                           
Discontinued Operations                                                            $                (.12)  $                (.05)
                                                                                   ----------------------------------------------
Total                                                                              $                (.36)  $                (.49)
                                                                                   ----------------------------------------------
Weighted average number of common shares outstanding                               $            8,132,754  $            7,991,997
                                                                                   ==============================================
</TABLE>

See Notes to Consolidated Financial Statements



                                       F-5

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

For the years ended November 30, 1997 and 1996

<TABLE>
<CAPTION>
                                        
                                                                                                                          Total
                               Preferred            Paid-in      Common                Paid-in                            Stock-  
                                Stock     Pre-      Capital      Stock                 Capital    Retained    Treasury    holders'
                               (Shares)   ferred    Preferred   (Shares)   Common      Common     Deficit     Stock       Equity
                                          Stock     Stock                  Stock       Stock
                               --------   -------   ----------  --------   --------  ----------- -----------  --------  -----------
<S>                            <C>        <C>       <C>        <C>        <C>        <C>         <C>         <C>        <C>  
 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           -          -            -      9,750        98       19,402           -         -       19,500
with exercise of C warrants

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

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

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

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

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

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

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 Consolidated Financial Statements

                                       F-6

<PAGE>

NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

For the years ended November 30, 1997 and 1996

<TABLE>
<CAPTION>

                                                                                                                          Total
                               Preferred            Paid-in      Common                Paid-in                            Stock-  
                                Stock     Pre-      Capital      Stock                 Capital    Retained    Treasury    holders'
                               (Shares)   ferred    Preferred   (Shares)   Common      Common     Deficit     Stock       Equity
                                          Stock     Stock                  Stock       Stock
                               --------   -------   ----------  --------   --------  ----------- -----------  --------  -----------
<S>                            <C>        <C>       <C>        <C>        <C>        <C>         <C>         <C>        <C>        
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

Stock issued in connection           -          -            -     90,545      906      140,515            -         -      141,421
with exercise of C warrants

Stock issued in connection           -          -            -     16,000      160         (160)           -         -            -
with purchase of Nassau 
Newspapers

Conversion of 8% Convertible       (103)     (103)    (102,897)    49,047      490      102,510            -         -            -
Preferred Stock

Warrants issued in connection         -         -            -          -        -       91,800            -         -       91,800
with long term debt

Conversion of 10% Convertible        (6)       (6)     (21,768)    10,800      108       21,666            -         -            -
Preferred Stock

Stock issued as preferred             -         -            -      7,800       78       12,922      (13,000)        -            -
dividends

Dividend on preferred stock           -         -            -          -        -            -      (35,426)        -      (35,426)

Net loss                              -         -            -          -        -            -   (2,954,215)        -   (2,954,215)
                               --------   -------   ----------  ---------  -------  ----------- ------------- --------   ---------- 
 Balance, November 30, 1997      20,340  $200,340   $2,077,025  8,212,231  $82,122  $14,431,905 $(14,049,876) $408,729   $2,332,787
                              =========  ========   ==========  =========  =======  =========== ============= ========   ==========
</TABLE>

See Notes to Consolidated Financial Statements

                                      F-7

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended November 30, 1997 and 1996

<TABLE>
<CAPTION>
                                                                                                 1997                    1996     
                                                                                        -------------------------------------------
<S>                                                                                     <C>                    <C>                
Operating activities of continuing operations
    Net loss                                                                            $      (2,954,215)     $       (3,881,428)
                                                                                        ------------------------------------------- 
Adjustments to reconcile net loss to net cash (used for)
  Loss from discontinued operations                                                               986,558                   419,841

        Depreciation and amortization                                                             447,462                   497,774
        Provision for doubtful accounts                                                         1,013,904                 1,370,224
        Compensation recognized related to warrants issued                                              -                   128,000
        Amortization of debt discount                                                              39,138                    17,333
        Minority interest                                                                         167,246                    66,440

    Changes in assets and liabilities:
      (Increase) decrease in:
         Account receivable                                                                   (1,227,954)                 (345,658)
         Other current assets                                                                    (26,614)                  (63,424)
         Other assets                                                                             64,471                     2,929
         Related party receivable                                                                (13,613)                  105,233
                                                                                                                      
      Increase (decrease) in:
         Accounts payable and accrued expenses                                                   395,509                  (181,351)
         Accrued payroll and payroll taxes                                                      (316,076)                   83,591
         Other current liabilities                                                                15,000                   122,653
         Related party payable                                                                    91,000                    30,506
                                                                                        -------------------------------------------
                Total adjustments                                                              1,636,031                 2,254,091
                                                                                        -------------------------------------------
                   Net cash - operating activities of continuing operations                   (1,318,184)               (1,627,337)
                                                                                        -------------------------------------------
  Investing activities of continuing operations:
    Purchase of South Shore Publishers, Inc.                                                    (421,500)                       -
    Capital expenditures                                                                        (102,658)                  (47,626)
    Investment in unconsolidated entities                                                       ( 72,242)                       -
                                                                                        -------------------------------------------
                  Net cash - investing activities of continuing operations                      (596,400)                  (47,626)
                                                                                        -------------------------------------------
Financing activities of continuing operations:
    Proceeds from preferred stock                                                                      -                 2,000,000
    Proceeds from exercise of stock options                                                      181,090                    12,500
    Costs of raising capital                                                                     (39,670)                  (18,183)
    Proceeds from exercise of warrants and underwriter option                                          -                    19,500
    Principal payments on notes payable                                                         (275,000)                  (24,000)
    Dividend on preferred  stock                                                                 (35,426)                  (41,360)
    Proceeds from notes payable                                                                 1,500,000                1,675,000
                                                                                        -------------------------------------------
                  Net cash - financing activities of continuing operations                     1,330,994                 3,623,457
                                                                                         ------------------------------------------
                                 
</TABLE>

See Notes to Consolidated Financial Statements




                                     F-8

<PAGE>


NEWS COMMUNICATIONS, INC. and SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued


<TABLE>
<CAPTION>


                                                                                                1997                   1996
                                                                                         ------------------------------------------
<S>                                                                                      <C>                   <C>             
Net cash - operating activities of continuing operations forwarded:                      $    (1,318,184)      $    (1,627,337)

Net cash - investing activities of continuing operations forwarded:                             (596,400)              (47,626)

Net cash - financing activities of continuing operations forwarded:                            1,330,994             3,623,457

Net cash used in discontinued operations                                                        (486,677)             (508,081)
                                                                                        -----------------------------------------
              Net increase (decrease) in cash                                                 (1,070,267)            1,440,413

Cash - beginning of year                                                                       1,494,887                54,474
                                                                                        ----------------------------------------
Cash - end of year                                                                      $        424,620        $    1,494,887
                                                                                        ========================================
Supplemental disclosure of cash flow information:

               Cash paid during the year for interest                                   $        189,572        $      130,969

</TABLE>



See Notes to 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.  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"],  Capitol Hill Publishing,  Inc.  ["Capitol  Hill"],  Brooklyn
     Newspaper Publishing,  Inc. ["Brooklyn"],  West Side Newspaper Corp. ["West
     Side"]  and  South   Shore   Publishers,   Inc.   ["South   Shore"],   News
     Communications,  Inc.  and  Subsidiaries  [the  "Company"]  function in one
     industry segment, that is the news publication business.

     As  discussed  in Note 20,  Manhattan  File  Publishing,  Inc,  ["Manhattan
     File"], the Company's only magazine publishing subsidiary,  is presented as
     a discontinued operation.


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 affect 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
                                               -----------
       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,
     1997.

     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 22% and 21% of revenues in fiscal 1997 and 1996 respectively)
     is a resort-area newspaper, that 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,
     1997, the Company had  approximately  $425,000 with financial  institutions
     subject to a credit risk beyond the insured amount.

     Reclassifications  - Certain prior year amounts have been  reclassified  to
     conform to the current year's presentation.





                                    F-11

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

3.   Property and Equipment and Depreciation and Amortization:

     Major  classes of property  and  equipment  as of November  30, 1997 are as
     follows:

        Leasehold improvements                                  $    281,112
        Computer equipment and software                              390,327
        Machinery and equipment                                      114,637
        Furniture and fixtures and office equipment                  125,135
        Distribution boxes                                            42,634
                                                                -------------
            Total - at cost                                          953,845
        Less:  Accumulated depreciation 
           and amortization                                          554,481
                                                                -------------
            Property and equipment - net                         $   399,364
                                                                -------------

     Depreciation and amortization expense for the years ended November 30, 1997
     and 1996 amounted to $172,593 and $170,740, respectively.

4.  Intangible Assets:

     A breakdown of intangible assets at November 30, 1997 is as follows:

                      Amortization
                         Period
                         Years         Cost         Amortization        Net
                      ------------   ----------     ------------     ----------
    Goodwill             10-20       $5,474,720      $1,992,954      $3,481,766
                                     ==========      ==========      ==========
    Organization costs   5           $   30,184      $   17,860      $   12,324
                                     ==========      ==========      ==========

     Organization  costs are  included  in the  caption  "Other  Assets"  on the
     balance sheet.

     Amortization  expense of $289,467 and $314,397 was recognized for the years
     ended November 30, 1997 and 1996, respectively.

5.   Notes Payable

     Short-term  note payable at November 30, 1997  consisted of a $900,000 loan
     due on January 5, 1998 at the Bank's  prime rate plus 2 percent.  The prime
     rate at November 30, 1997 was 8.5 percent. The Bank has not called the loan
     subsequent to its due date, and, at its sole option, can continue to extend
     the due date of the loan.  $100,000  of the note was paid in January  1998.
     All of the Company's accounts  receivable are pledged as collateral for the
     loan.

     Short-term  note  payable in the  amount of  $985,333  (net of  unamortized
     discount of $14,667) at November 30, 1997  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 were allocated
     to the  detachable  warrants and included in additional  paid-in-capital  -
     common  stock.  All 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.

     Long term note  payable in the  amount of  $1,415,338  (net of  unamortized
     discount of $84,662) at November 30, 1997  consisted  of a promissory  note
     due to an affiliate of a principal  shareholder and officer of the Company.
     The note is due on December 31,  1998,  and has a stated  interest  rate of
     9.75 percent per annum.  Interest is payable monthly commencing December 1,
     1997.  As  additional  consideration  for the  note  payable,  warrants  to
     purchase  300,000  shares of the Company's  common stock at $2.25 per share
     were issued to the lender, and,  accordingly $91,800 of the proceeds of the
     note were  allocated to the warrants and included in  additional  paid-in -
     capital - common stock.  The loan was made to DPI, and all of the assets of
     DPI are pledged as collateral for the note.


                                       F-12

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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 $58,000
     and $49,000 for the years ended  November 30, 1997 and 1996,  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, 1997,  amounts  owed to an officer of a subsidiary  of the
     Company for a bonus and expenses amounted to approximately $150,000.

     As discussed in Note 5, at November 30, 1997, the Company has a short - and
     long - term note payable due to affiliates of principal shareholders of the
     Company.

     Revenues from related  parties  amounted to $25,300 and $354,125 during the
     years ended November 30, 1997 and 1996, respectively.


8.  Leases:

     The Company leases all operating facilities under operating leases expiring
     through January 2003. Rent expense under operating leases was approximately
     $541,000  and  $512,000  for  years  ended  November  30,  1997  and  1996,
     respectively.

     The future minimum payments under non-cancelable operating leases consisted
     of the following at November 30, 1997:

            Fiscal Year Ending             Operating
              November 30,                   Leases
            -------------------           -----------
                 1998                      $ 487,229

                 1999                        375,923

                 2000                        243,911

                 2001                         58,842

                 2002                         46,675
                                          -----------
                                          $1,212,580
                                          ===========

                                       F-13

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



     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.

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 2007 with the President
     of DPI. The agreement  stipulates an annual salary of $10,000  greater than
     his base salary for the fiscal year beginning December 1, 1997 (base salary
     at December 1, 1997 was  $134,000),  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  $37,000
     annually.

     The  President of DPI has a put option that requires the Company to buy his
     20 percent  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.  At November 30,  1997,  the value of
     the put option based on the  aforementioned  formula was  approximately  $1
     million.  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.  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.



                                      F-14

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

     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 alleged
     libel claims 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.  In May  1998,  the  plaintiff  voluntarily
     discontinued the action with prejudice.

     An action entitled Tracey Robinson v. The Hill, News Communications,  Inc.,
     and Media  Venture  Group,  Inc.,  was  initiated in September  1996 in the
     United  States  District  Court 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
     case was  tried to a jury  and  resulted  in an  adverse  determination  of
     liability to the Company in the amount of $100,000, which has been recorded
     in the period ended  November 30, 1997.  No appeal has been taken from that
     finding.  The  plaintiff  has  requested  an award of fees and costs in the
     approximate amount of $150,000, which the Company is vigorously opposing.

     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, 1997,  the Company had  approximately  8,293,000  shares of
     common stock reserved for issuance upon conversion of outstanding preferred
     stock and exercise of options and  warrants.  In addition,  the Company had
     reserved for issuance 146,143 shares of common stock (valued by the Company
     at   approximately   $320,000)  in  connection   with  the  Company's  1993
     acquisition of the Nassau Newspapers. In March 1998 the shares were issued;
     however, 36,572 have been placed in escrow for delivery in December 1998.


12.  Preferred Stock:

     Preferred Stock at November 30, 1997 consisted of the following:



                                       F-15

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES


Notes to Consolidated Financial Statements, Continued




    10%  non-voting   convertible  preferred  stock,  1,250
    shares authorized; 26 issued and outstanding,  $500 per
    share per annum cumulative dividends, $130,000 liquidation 
    value                                                              $   26


    8% convertible  preferred stock, 500 shares authorized,
    114 issued and outstanding, $80 per share per annum 
    cumulative dividends, $114,000 liquidation value                      114


    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                   200,000
    authorized, issued and outstanding, $2,000,000
    liquidation value


(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  increased  by $106,  additional
     paid-in-capital  - common  stock was  increased  by  $15,894  and  retained
     earnings 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-16

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

     During  1997,  holders of the  Company's  8%  Convertible  Preferred  Stock
     converted  103  shares  into  49,047  shares  of common  stock  and  49,047
     five-year warrants to purchase common stock exercisable at $2.10 per share.
     As  a  result,   common  stock  at  par   increased  by  $490,   additional
     paid-in-capital  - common stock  increased by $102,510,  preferred stock at
     par  decreased by $103 and  additional  paid-in-capital  - preferred  stock
     decreased by $102,897.

     During the years ended November 30, 1997 and 1996, cash dividends  totaling
     $35,426  and  $41,360,  respectively  were  paid to the  holders  of the 8%
     Convertible Preferred Stock and the 12% Convertible Preferred Stock.


(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  [See  Note  15] 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 is 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.  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.

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.  The  Company has  elected,  as  permitted  by SFAS No. 123, to
     account for its employee  plans using the  intrinsic  value based method of
     accounting  prescribed by  Accounting  Principles  Board ( APB) Opinion No.
     25.  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.
    

                                       F-17

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

     The fair  value of  options  for  purposes  of the  SFAS No.  123  proforma
     disclosures has been estimated using a Black-Scholes  option pricing model.
     No options were granted by the Company during 1997.  Based on Black-Scholes
     values,  the weighted average fair value of options granted during 1996 was
     $0.75.  The fair value is estimated on the date of grant with the following
     weighted  average  assumptions  used for options granted in 1996;  expected
     volatility of 72 percent;  risk free  interest  rate of 6.27  percent;  and
     expected  lives of  approximately  one year.  As of November 30, 1997,  the
     weighted average  remaining  contractual life was  approximately two years.
     Pro forma net loss from  continuing  operations  and pro forma net loss for
     1996 would be approximately $3,733,000 and $4,153,000,  respectively.  Pro-
     forma loss per share from continuing operations and proforma loss per share
     for 1996 would be approximately $.47 and $.52, respectively.

     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,
     1997 and 1996,  approximately 136,667 and 121,200 options were exercisable,
     respectively. The following is a summary of transactions:

 
                                              1997               1996
                                             -------           --------
                          
    Outstanding - Beginning of year          179,167            179,167

    Granted during the year                        -                  -

    Terminated during the year               (42,500)                 -
                                             -------           --------

    Outstanding - End of year (1)            136,667            179,167
                                             =======           ========

     (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 weighted  average  exercise price at November 30, 1997 was $2.24
     per share.


     At November 30, 1997 and 1996, there were 230,000 and 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 2,000,000  shares of Common
     Stock to directors and officers of the Company and its  subsidiaries  which



                                      F-18
<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

     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.  No grants were made under the  Discretionary  Option Plan during the
     fiscal year ended November 30, 1997.

     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 options.  The maximum number of options authorized  pursuant to the
     plan amounts to 500,000 which were granted as of November 30, 1996.

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



                                                 1997              1996
                                             -----------       ----------
     Outstanding - Beginning of year           2,120,500        1,760,500

     Granted during the year                           -          360,000
                                             -----------       ----------

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

     (1) With an  exercise  price per share  ranging  from  $1.25 to $2.69.  The
     weighted average exercise price at November 30, 1997 was $2.21 per share.

 
 15. Stock Warrants

     At November  30,  1997,  the Company had  2,437,130  shares 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,  1996,  107,945  Redeemable  Class C
     Warrants  were  exercised  for  proceeds of  $215,890.  The common stock in
     connection with the October 1996 exercise of 90,545 of the Redeemable Class
     C warrants was issued in March and May 1997.

     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, 1997 and 1996, the Company had outstanding  853,935 Redeemable
     Class D Warrants.



                                       F-19

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

     Non-Redeemable  Warrants - At November  30, 1997 and 1996,  the Company had
     outstanding 1,885,000 and 1,585,000 non-redeemable warrants,  respectively.
     Each warrant  entitles  the holder 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
                       300,000                        November 2002

     There were no exercises of  non-redeemable  warrants during the years ended
     November 30, 1997 and 1996.  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.  The 800,000  warrants
     expiring in October  2001 were issued  with the $10  convertible  preferred
     stock [See Note 12]. All of the  warrants  that expire  November  2002 were
     issued  to  an  affiliate  of  principal  shareholder  of  the  Company  in
     connection with a promissory note [See Note 5].


16. Income Taxes

     The Company has a deferred tax asset  amounting to  $3,854,612  at November
     30, 1997,  principally  relating to net  operating  loss  carryforwards  of
     $9,560,829 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.

     As of November 30, 1997, the  approximate  amount of the net operating loss
     income tax carryforwards and their expiration dates are as follows:

          Expiring in Years Ending
               November 30,                        Carryforwards
          --------------------------             --------------------

                2004                              $     202,301
                2005                                    937,798
                2006                                    144,487
                2007                                    701,056
                2008                                          0
                2009                                          0
                2010                                    538,204
                2011                                  3,687,409
                2012                                  3,349,574
                                                   --------------   
                        Total                     $   9,560,829
                                                  ================

                                       F-20



<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


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

     In February 1997, the FASB issued SFAS No. 128 "Earnings Per Share",  which
     will require  companies  to present  basic  earnings per share  ["EPS"] and
     diluted  earnings per share,  instead of the primary and fully  diluted EPS
     that  is  currently   required.   The  new  standard  requires   additional
     informational  disclosures,  and also makes  certain  modifications  to the
     currently  applicable EPS  calculations  defined in APB Opinion No. 15. The
     new  standard  is  required  to be  adopted  by all  public  companies  for
     reporting  periods  ending  after  December  31,  1997,  and  will  require
     restatement  of EPS for all prior periods  reported.  Early adoption of the
     standard is prohibited. However, the Company's loss per share for the years
     ended November 30, 1997 and 1996 would not have been  materially  different
     had the Company applied the provisions of SFAS No. 128.

     The FASB also issued the following  additional  standards.  These standards
     principally relate to presentation and disclosure items. While not required
     to be adopted by the Company  until 1999,  the Company does not  anticipate
     that the standards will have a material  impact on the Company's  financial
     statement presentation or footnote disclosures:  

          - SFAS No. 130, "Reporting Comprehensive Income"
          - SFAS No.  131,  "Disclosures  about  Segments of an  Enterprise  and
            Related Information"
          - SFAS No.  132,  "Employers'  Disclosure  about  Pensions  and  other
            Postretirement Benefits"

19.  Acquisitions

     On November 26, 1997 the Company  acquired all of the outstanding  stock of
     South Shore for approximately $421,500. In accordance with the terms of the
     agreement,  the Company is entitled to an adjustment  of purchase  price if
     certain net working capital  requirements are not met as of the acquisition
     date. The entire  purchase price was allocated to intangible  assets and is
     being amortized over an average period of 15 years.



                                       F-21

<PAGE>


NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


     In 1997 the  Company  acquired 50 percent of the  outstanding  stock of New
     York Blade News, Inc. (NYBN) for approximately $100,000. The New York Blade
     began  publishing  in October  1997  under the terms of a letter  agreement
     between the Company and the owner of the  remaining 50 percent  interest in
     NYBN.

     In April 1997,  the Company  entered into an agreement,  subject to certain
     conditions,  to acquire  the  business  of a radio  station  in  Annapolis,
     Maryland  for a purchase  price of $268,000.  As of November 30, 1997,  the
     purchase had not yet been  consummated;  however,  a deposit of $25,000 was
     made during 1997.

20.  Discontinued Operations

     In August 1997,  the Company  adopted a plan to  discontinue  the Manhattan
     File glossy magazine  business.  Accordingly,  operating  results have been
     reclassified  and reported in discontinued  operations.  Net liabilities of
     Manhattan File consist mainly of accounts  receivable and accounts payable.
     On February 26, 1998, the Company entered into an agreement whereby it sold
     80  percent of the  outstanding  shares of  Manhattan  File  (retaining  10
     percent)  to the  holder of the  remaining  10 percent  of the  shares.  In
     accordance with the terms of the agreement,  the only  consideration  to be
     received  by the  Company  is any  excess of  accounts  receivable,  at the
     closing  date,  collected  in excess of payments of accounts  payable  that
     existed at the closing date.  The  estimated  loss on the sale of Manhattan
     File,  which includes  operating  losses until disposal,  is  approximately
     $256,000. Revenues from Manhattan File amounted to approximately $1,582,000
     and   $1,720,000   for  the  years  ended   November  30,  1997  and  1996,
     respectively.


21. Subsequent Events

     In February 1998, the Company  distributed 7,800 shares of its common stock
     in payment of a $500  dividend  per share due holders as of  September  19,
     1997 on each  of the 26  shares  of 10%  Non-voting  Convertible  Preferred
     Stock.  As a  result,  common  stock at par  increased  by $78,  additional
     paid-in-capital  - common stock increased by $12,922 and retained  earnings
     decreased by $13,000.

     In April 1998, the Company entered into an agreement  pursuant to which the
     Company issued 20,000 shares of $10.00  Convertible  Preferred Stock for an
     aggregate consideration of $200,000.

     The  Company's  common  stock is listed on the Nasdaq  Stock  Market,  Inc.
     ["Nasdaq"].  The Company has been advised by Nasdaq that the Company is not
     in   compliance    with    Nasdaq's   new   net   tangible    assets/market
     capitalization/net  income  requirements for companies listed on the Nasdaq
     SmallCap  Market  which became  effective  on February  23, 1998,  and that
     Nasdaq intended to delist the Company's securities from the Nasdaq SmallCap
     market as of the close of  business  on March 16,  1998.  The  Company  has
     received a temporary exception to the new requirements and a temporary stay
     
     

     



                                       F-22
<PAGE>

     of delisting pending a hearing. The Company has submitted a written plan to
     Nasdaq  describing how the Company aims to achieve and maintain  compliance
     with the new  requirements.  Such plan  contemplates  a rights  offering of
     approximately  2,550,000  shares  at $1.375  per  share for total  offering
     proceeds of approximately $3,500,000. To the extent all or a portion of the
     shares are not subscribed to, certain principal shareholders of the Company
     have agreed to purchase  any unsold  shares.  As of the date of this report
     the Nasdaq  hearing  panel has not yet  rendered a decision  regarding  the
     Company's  plan of  compliance.  If the Nasdaq  hearing  panel  rejects the
     Company's  plan of  compliance,  the  Company  may seek an oral  hearing of
     Nasdaq's  decision  to delist  the  Company's  securities.  There can be no
     assurance  that the plan of compliance  will be accepted by Nasdaq.  If the
     plan  of  compliance  is  rejected  and  the   Company's   securities   are
     subsequently delisted from the Nasdaq SmallCap Market,  trading, if any, in
     the Company's  securities would thereafter be conducted on the OTC Bulletin
     Board.


                                      F-23
<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:    May 19, 1998              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                     May 19, 1998
-----------------------------           (Principal Executive Officer)
     (Wilbur L. Ross, Jr.)   

-----------------------------
     (Jerry Finkelstein)                Director

-----------------------------
     (Michael Schenkler)                Director


/s/ Robert Berkowitz                    Controller (Principal Financial and                      May 19, 1998
------------------------------------    Accounting Officer)
     (Robert Berkowitz)                 

/s/ Gary Ackerman                       Director                                                 May 19, 1998
-----------------------------
     (Gary Ackerman)
                                        
-----------------------------
     (Carl Bernstein)                   Director


/s/ John Catsimatidis                   Director                                                 May 19, 1998
-----------------------------
     (John Catsimatidis)

/s/ Mark Dickstein                      Director                                                 May 19, 1998
-----------------------------
     (Mark Dickstein)

/s/ Andrew J. Maloney                   Director                                                 May 19, 1998
---------------------------
     (Andrew J. Maloney)

/s/ John E. McConnaughy, Jr.            Director                                                 May 19, 1998
-----------------------------
    (John E. McConnaughy, Jr.)

/s/ Robert E. Nederlander               Director                                                 May 19, 1998
------------------------------
     (Robert E. Nederlander)

/s/ Andrew J. Stein                     Director                                                 May 19, 1998
------------------------------
     (Andrew J. Stein)

/s/ Sys Syms                            Director                                                 May 19, 1998
-----------------------------
     (Sy Syms)

/s/ Arthur Tarlow                       Director                                                 May 19, 1998
-----------------------------
     (Arthur Tarlow)

/s/ Hillel Weinberger                   Director                                                 May 19, 1998
-----------------------------
     (Hillel Weinberger)

</TABLE>

         


<PAGE>