<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION

                            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, 1999 and the one
          month ended December 31, 1999.

                                      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                   (IRS Employer
Incorporation or Organization)                  Identification No.)

        2Park Avenue
     New York, New York                              10016
   ----------------------                           --------
(Address of Principal Executive Offices)           (Zip Code)

      Registrant's telephone number, including area code:  (212) 689-2500

       Securities Registered Pursuant to Section 12(b) of the Act:  None

          Securities Registered Pursuant to Section 12(g) of the Act:


                                                  Name of Each Exchange
     Title of Each Class:                          on which Registered:
     -------------------                           -------------------
Common Stock, $0.01 par value                             None



     Check whether the issuer:  (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
X    No
----    ----

     Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is 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 $18,312,254.

     The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of February 22, 2000, is $7,914,118.

     The number of shares of common stock outstanding as of February 22, 2000
was 8,568,162.
<PAGE>

                                     PART I

     The information set forth in this Report on Form 10-KSB including, without
limitation, that contained in Item 6, Management's Discussion and Analysis and
Plan of Operation, contains "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  Actual results may materially
differ from those projected in the forward-looking statements as a result of
certain risks and uncertainties set forth in this report.  Although management
believes that the assumptions made and expectations reflected in the forward-
looking statements are reasonable, there is no assurance that the underlying
assumptions will, in fact, prove to be correct or that actual future results
will not be different from the expectations expressed in this report.

     Unless otherwise indicated, all information contained in this report and
the consolidated financial statements and the notes to such financial statements
gives effect to a 1-for-3 reverse split of News Communications' common stock
that occurred on January 19, 1999.

Item 1.  Description of Business

Overview

     News Communications, Inc. ("NCI") is a Nevada corporation formed in 1986.
We have 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.  We
currently publish 24 weekly newspapers through eight offices.  The community
newspapers are directed at specific geographic communities and, for the most
part, are distributed free of charge to selected residences and business
establishments in those communities.  Each publication focuses on local news,
entertainment, politics, social issues, lifestyle, culture, and arts of
particular interest to the group of communities at which it is directed.  Some
of the papers publish different editions, with variations in editorial content
and advertising, which are distributed to each community in the targeted group.
The principal source of our revenues is the sale of advertising space in our
publications.

Management Changes

     A significant change for us in 1999 was the introduction of a new senior
management team. In August, Wilbur L. Ross, Jr. stepped down as acting Chief
Executive Officer and we hired Steven Farbman as President and Chief Executive
Officer.  Mr. Farbman had been serving as Vice President and Chief Operating
Officer of American Lawyer Media, Inc. ("ALM"), which publishes 21 national and
regional legal magazines and newspapers, including The American Lawyer and The
National Law Journal. ALM's other businesses include dozens of national and
regional web sites, book and newsletter publishing, production of legal trade
shows and conferences, educational seminars and distribution of branded content
related to the legal industry. Mr. Farbman then recruited Paul Mastronardi, with
whom Mr. Farbman had worked at ALM, to serve as our Vice President and Chief
Financial Officer. Mr. Mastronardi had previously served as Chief Financial
Officer for ALM.

                                       2
<PAGE>

Change in Fiscal Year

     On December 15, 1999, we filed an 8-K with the SEC changing our fiscal year
end to December 31 from November 30.

     As used herein, unless the context requires otherwise, the term "we" refers
to News Communications, Inc. together with its subsidiaries:
<TABLE>
<S>                                        <C>
     Publisher                              Publication
     ---------                              -----------

     Access Network Corp. ("Access")......  Manhattan Spirit, formerly called the West
                                            Side Spirit

     Manhattan Publishing Corp............  Our Town

     West Side Newspapers Corp............  Chelsea-Clinton News and Westsider (together
                                            with Access and Manhattan Publishing Corp. the
                                            "Manhattan Newspapers")

     Tribco Incorporated ("Tribco").......  The Queens Tribune published in nine
                                            editions including The Western Queens Tribune

     Dan's Papers Inc.....................  Dan's Papers and Montauk Pioneer

     Parkchester Publishing Co. Inc.......  Bronx Press Review and Riverdale Review
                                            (the "Bronx Newspapers")

     Nassau Community Newspaper

        Group, Inc. ("NCNG")..............  Lynbrook USA, Malverne Times, Rockville
                                            Centre News & Owl, Valley Stream
                                            MAILeader, Independent Voice of Long
                                            Beach, Oceanside & Island Park,
                                            Rockville Centre-Oceanside Beacon,
                                            Baldwin Citizen, East Rockaway Observer,
                                            Elmont Life, Franklin Square Life, West
                                            Hempstead Life and Long Island
                                            Lifestyles

     South Shore Publishers, Inc..........  South Shore Record (with NCNG, the "Nassau
                                            Newspapers")

     Capitol Hill Publishing, Inc.
        ("Capitol Hill")..................  The Hill

     Brooklyn Newspaper Publishing, Inc...  Brooklyn Skyline
</TABLE>

All of the subsidiaries are wholly-owned except Dan's Papers, Inc., which is 80%
owned by NCI and Capitol Hill, which is 97.5% owned by NCI.

Manhattan Newspapers

     We publish four newspapers through our Manhattan office.

                                       3
<PAGE>

     The Manhattan Spirit is a weekly free circulation newspaper founded in 1985
covering the West Side and lower Manhattan.  Our Town, a 27-year-old weekly
publication which was acquired by NCI in 1991, is distributed in a single
edition, predominantly on the Upper East Side of Manhattan.  Both publications
focus on the lifestyle, culture, arts, entertainment, politics and social issues
of interest to their respective audiences.  Editors and reporters, together with
a variety of contributing free-lance writers and columnists, write and edit all
of the material for each weekly issue of Manhattan Spirit and Our Town.  A
separate production staff performs all composition, layout, and typesetting
work.  Printing is performed by outside contractors.  In addition, the Manhattan
operation offers graphics and printing services to third party publishers and
other local businesses.

     The Manhattan Spirit has won many awards, including, 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.  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, theater and
topics of community interest.

     The Manhattan Spirit and Our Town are published in a four-color tabloid
format.  Both papers are distributed each Thursday and Friday 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.

     The Chelsea-Clinton News and Westsider are the only paid-circulation weekly
newspapers on the West Side of Manhattan.  The Westsider, a 25-year-old
community newspaper, covers the area from 59th to 125th Streets from Riverside
Drive to Central Park West.  The Chelsea-Clinton News, a 56-year-old community
newspaper, covers the area from 14th to 59th Streets from 5th Avenue to 11th
Avenue.  These two publications rely on revenue from display advertising,
classified advertising, subscriptions, newsstand sales and legal advertising.

     All four Manhattan newspapers share display and classified advertising
sales staff.

Dan's Papers

     For the past 40 years Dan's Papers has been a favorite of all people who
visit or live in the Hamptons.  Dan's Papers 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 Hamptons resort area.  Its articles and columns include humor, news,
celebrity profiles, reviews of art gallery shows, restaurants, concerts,
nightclubs and movies, social satire, editorial cartoons and local environmental
and political issues, as well as a special section on real estate.  Dan's Papers
is published in tabloid format, with a 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.

                                       4
<PAGE>

     The staff at Dan's also publishes the Montauk Pioneer, which has been
designated by the Montauk Village Association as the official newspaper of the
community of Montauk, New York.

The Hill

     In September 1994, we began publication of The Hill, a weekly newspaper
devoted to the coverage of the United States Congress.  In just five years the
paper has become required reading for members of Congress and their staff.  The
paper, which offers comprehensive coverage of every aspect of Congress and life
on Capitol Hill, is distributed free of charge to members of Congress and their
staffs, governmental agencies, law firms, lobbying organizations and others.
The Hill derives the largest portion of its revenue from the sale of display
advertising to companies wishing to get their message in front of the decision-
makers in Congress.  Additional revenues come from classified advertising, local
retail advertising, and subscriptions from the sale of the paper outside of the
Capitol area.  The Hill is operated out of 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.

Queens Tribune

     The Queens Tribune, a weekly community newspaper started in 1970, publishes
eight free circulation editions and one paid-circulation edition serving areas
in Queens County in New York City.  Included in such editions are three editions
of the Western Queens Tribune.

     The Queens Tribune is printed in a tabloid format with four-color cover and
some additional color pages inside.  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 the Tribune's
editors and reporters.  The Queens Tribune has won numerous awards for
journalistic excellence, such as, the New York Press Association's coveted first
place award for community leadership.  The paper is delivered through
independent contractors to heavy traffic locations, such as banks, supermarkets,
and sidewalk distribution boxes.  The Queens Tribune generates additional
revenue by offering printing and graphics services to its clients.

The Bronx Newspapers

     Parkchester Publishing Co., Inc. is the publisher of the Bronx Press
Review, a 57-year-old paper which took on a Bronx-wide identity to fill a vacuum
left by the absorption of the daily Bronx Home News by the New York Post in the
late 1940s.  It is a tabloid paper with a four-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, we started the Riverdale Review, which serves
the affluent Riverdale section of the Bronx.  The Riverdale Review is a
community weekly covering the

                                       5
<PAGE>

news, events, people and lifestyles of the Riverdale community. It is
distributed free of charge throughout the affluent northwest Bronx community
which it serves. Approximately 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 section, and through street distribution boxes and other bulk
distribution to high traffic businesses and religious and educational
institutions.

The Nassau Newspapers

     Our Nassau Community Newspaper Group, Inc. publishes 12 weekly newspapers
serving various towns in Nassau County, New York.  Eight of the titles were
purchased in 1993, three others were started by us in 1996 and 1997.  In 1997,
we acquired the South Shore Record, a 33-year-old mailed subscription newspaper
serving the affluent "five-towns" area of Nassau County.  The oldest of the
newspapers, (the Rockville Centre News & Owl) has been in continuous publication
since 1908.  The other titles include the Valley Stream MAILeader, Lynbrook USA,
the East Rockaway Observer, the Independent Voice, which serves Long Beach, The
Oceanside Beacon, The Baldwin Citizen, and the Malverne Community Times.  We
launched Elmont Life and Franklin Square Life in 1996 and West Hempstead Life in
1997.

     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.

     In 1995, we developed a new publication, Long Island Lifestyles, which is
published as a monthly supplement which is inserted into all of the Nassau
publications.  It is also distributed by itself in heavily trafficked areas.

Brooklyn Skyline

     The Brooklyn Skyline is a weekly newspaper published in five editions which
are distributed door-to-door in Brooklyn's southern tier.  Originally a tabloid
shopper-type publication, we converted Brooklyn Skyline into a community
newspaper to complement our other publications.  In addition to an already
established display sales team, in 1999 we developed a classified advertising
sales unit in the Brooklyn office.  Previously, classified sales had been
handled from the Queens operation.  Additional revenue is also generated by the
occasional sale or distribution of circulars to accompany the door-to-door
distribution of Brooklyn Skyline.  It is printed on newsprint with the use of
spot color and is distributed by outside delivery vendors.

The New York Blade News

     In a joint venture that began in the summer of 1997, we joined with the
Washington Blade, a large and respected gay and lesbian weekly newspaper, to
publish The New York Blade News, a weekly, four-color tabloid newspaper that
debuted in 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

                                       6
<PAGE>

operated out of its own offices in New York City but shares production and
distribution staff with the Manhattan newspapers.

Printing and Production

     The printing of each of our publications is presently done by independent
printing shops.  We send 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, such as paper, ink, etc., for printing,
and bills the company for its services and materials used.  We believe that we
obtain our printing services at competitive prices, and if, for any reason, the
arrangements that we have with any of our printers should terminate, management
believes that similarly favorable arrangements could be had with several other
printing shops in or around New York City.  We use several printers and are not
overly reliant on any one vendor.

Advertisers and Readers; Marketing Activities

     Most of our publications are weekly newspapers primarily distributed free
of charge to their readers.  The Bronx Press Review, nine of the Nassau
Newspapers, Westsider and Chelsea-Clinton News and one edition of The Queens
Tribune are paid circulation publications.  The primary source of our revenue is
through the sale of advertising space in the publications, although several
operations also offer graphics and printing services to third parties, including
several school publications.  The advertising revenues of each of our
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 our publications represents multiple insertion advertising.  This is
where an advertising client runs an advertisement in two or more issues of a
publication.  This percentage has remained fairly stable for our publications
over the last five years.  On a year-to-year basis, we estimate that, over the
last four fiscal years, approximately two-thirds of our display advertising
revenues have been from advertisers who were advertisers in the prior year.  No
one advertiser represents more than 5% of our advertising revenues.  Classified
advertising has been a growing area of revenues for the weekly publications.

     We employ sales representatives who are paid through incentive-based
compensation packages.  We have commenced supplementing the sales activities of
the individual publications by enabling sales representatives to sell across the
chain and into our other newspapers.  We are developing a more comprehensive
centralized group sales effort to target regional and national advertisers to
purchase space in all or a combination of our publications.  Management believes
such a program is particularly attractive to advertisers who seek audiences
throughout the greater New York metropolitan area, such as public utilities,
health care providers, and large regional or national retailers.

Competition

     We compete directly for advertising revenues with newspapers and magazines
which are sold to readers or are distributed free, as well as other advertising
media in the geographic and vertical markets that we serve.  We do not
significantly compete, however, with other publishers of newspapers or magazines
for paid circulation revenues, as most of our publications are distributed free
of charge to readers.

                                       7
<PAGE>

     Those newspapers and magazines competing with the Manhattan Spirit and Our
Town for advertising, include, among others, The Resident, New York Press, New
York Observer and The Village Voice.  Although there is no competition for
subscriptions or legal revenue because there are no other paid circulation
weeklies on the West Side, the Chelsea-Clinton News and Westsider do compete for
display and classified advertising with free weeklies on the West Side,
including The Resident.

     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 Independent, a free weekly newspaper.  The
Montauk Pioneer is the only paper that serves Montauk.

     The Queens Tribune competes with many publications, including Newsday and
the free circulation publications Queens Chronicle and Queens Courier.

     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.

     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, a twice weekly newspaper that has been in
publication nearly 50 years.  The Hill also competes for advertising with two
magazines, The National Journal and Congressional Quarterly.

     There are numerous other publications distributed in our circulation areas,
which compete for advertising against our publications.  Management believes our
publications are competitive because we can offer customers the ability to focus
their advertisements on a specific market, thereby giving the customers a chance
to control costs by narrowing their advertising scope.  Management believes
that, over the years of publication, our newspapers have developed a favorable
reputation and following.  We also believe that we can compete favorably by
offering advertisers the opportunity to choose from a menu of 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.

                                       8
<PAGE>

Employees

     As of November 30, 1999, we had 250 full-time and 44 part-time employees,
of whom 64 were editorial; 89 were engaged as display and classified advertising
sales personnel; 75 were engaged in production; and 66 were engaged in
administrative and clerical activities.  As of December 31, 1999, we had 245
full-time and 46 part-time employees, of whom 65 were editorial; 87 were engaged
as display and classified advertising sales personnel; 76 were engaged in
production; and 63 were engaged in administrative and clerical activities.  We
also maintain a roster of free-lance contractors.  Management considers its
relations with its employees to be satisfactory.  None of our employees are
represented by a union.

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.  The
Hill's revenues also vary throughout the year depending on whether or not
Congress is in session.

Where You Can Find More Information

     We file annual, quarterly and special reports, proxy statements and other
information with the SEC.  Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov.  You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois.  Please call the SEC at 1-800-
SEC-0330 for further information on the public reference rooms.

Item 2.  Description of Properties

     We operate out of eight separate locations.

     On November 3, 1999, we entered into a five-year lease at 2 Park Avenue in
New York City.  The 2,900 square feet of office space will serve as our
executive offices including the centralization of our finance and administrative
staff.  The annual base rental is approximately $93,000 per year.

     The Manhattan Spirit, Our Town, Chelsea-Clinton News and the Westsider
share 7,000 square foot premises at 242 West 30th Street in New York City, under
a lease which commenced in 1995 and terminates in January 2001, at an annual
rental of approximately $75,000 per year.

     Dan's Papers leases 2,810 square feet of office space in a building on
Montauk Highway, Bridgehampton, New York, at an annual rate of approximately
$74,000, plus cost-of-living increases, for a term of ten years terminating in
October 2008.  We have an option to renew this lease for an additional five-year
term.  See "Certain Transactions" for information regarding our lease of this
space from Mr. Daniel Rattiner, President of Dan's Papers.

     Tribco has a ten-year lease, which commenced on November 1, 1990, to rent
approximately 8,000 square feet of office space in Fresh Meadows, New York, for
annual base

                                       9
<PAGE>

rents ranging from $88,000 to $128,000.  The lease is renewable for
five years at a $152,000 base annual rent.

     Parkchester Publishing Co. operates out of 2,500 square feet of office
space at 170 West 233rd Street, Bronx, New York.  We are currently leasing the
space on a month-to-month basis.

     The Nassau Newspapers has recently signed a lease for approximately 5,000
square feet of office space at 33 Atlantic Avenue in Lynbrook, New York for a
seven-year term.  The base rent in the first year is $69,600 increasing to
$76,500 in the final year.

     In 1999, Capitol Hill Publishing, Inc. renewed its lease for approximately
4,000 square feet of office space at 733 15th Street, N.W., Washington, D.C. for
five years terminating July 21, 2004.  The annual rent is approximately $82,000.

     Brooklyn Newspaper Publishing, Inc. has a five-year lease for 2,110 square
feet of office space at 2102 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.

     We believe that our present space is adequate for current purposes and
offers moderate expansion possibilities.

Item 3.  Legal Proceedings

     We are not a party to any material legal proceedings.


Item 4.  Submission of Matters to a Vote of Security Holders.

     None.

                                       10
<PAGE>

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

     Our shares trade on The Nasdaq SmallCap Stock Market under the trading
symbol "NCOM".  The following table sets forth, for the periods indicated, the
range of high and low closing bid quotations as reported by Nasdaq for each
quarter during the last two fiscal years.  The bid quotations set forth below
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions.


                                               High         Low
                                               -----       -----

   Fiscal Year Ended November 30, 1998
      First Quarter.....................       $5.85       $3.42
      Second Quarter....................        4.68        3.60
      Third Quarter.....................        3.96        2.52
      Fourth Quarter....................        3.28        1.22

   Fiscal Year Ended November 30, 1999
      First Quarter.....................       $2.00       $1.00
      Second Quarter....................        2.13        1.13
      Third Quarter.....................        1.88        1.00
      Fourth Quarter....................        1.97        1.03

   Fiscal Month Ended December 31, 1999        $1.16       $ .94

     On February 22, 2000, the last reported sales price for our shares on The
Nasdaq SmallCap Stock Market was $1.94 per share.  At February 18, 2000, we had
1,153 stockholders of record.  We estimate that there are approximately 2,600
beneficial owners of our common stock.

     We have never paid cash dividends on our common stock and do not expect to
pay such dividends in the foreseeable future.  We currently intend to retain any
future earnings for use in our business.  The payment of any future dividends on
our common stock will be determined by our Board in light of the conditions then
existing, including our financial condition and requirements, future prospects,
restrictions in future financing agreements, business conditions and other
factors deemed relevant by the Board.

     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 News Communications has sufficient authorized but unissued common
stock even if we have sufficient assets or net profits to pay such dividends in
cash.  These dividends have been and, in the future, it is anticipated that any
permitted dividends will, at least in the foreseeable future, continue to be
paid in shares of common stock.  See "Consolidated Financial Statements" for
more information regarding our securities and any dividends we have paid.

                                       11
<PAGE>

Recent Sale of Unregistered Securities

     The securities described below were issued by us within the past three
years and were not registered under the Securities Act of 1933.  Each of the
transactions is claimed to be exempt from registration with the SEC pursuant to
Section 4(2) of the Securities Act as transactions not involving a public
offering.  All of such securities, other than the dividends paid on shares of
preferred stock in shares of common stock, are deemed to be restricted
securities for the purposes of the Securities Act.  All certificates
representing such issued and outstanding restricted securities have been
properly legended and we have issued "stop transfer" instructions to its
transfer agent with respect to such securities. No commissions were paid in
connection with any of these issuances.

1.   On September 30, 1997, we issued an aggregate of 7,800 shares of our common
     stock, in payment of our dividend obligations, to holders of our 10%
     convertible preferred stock.

2.   On November 5, 1997, Dan's Papers and News Communications entered into a
     Loan Agreement with Rothschild Recovery Fund L.P. pursuant to which Dan's
     Papers borrowed $1,500,000 from Rothschild Recovery Fund.  In connection
     with the execution of the Loan Agreement, we issued to Rothschild a five-
     year warrant to purchase, on or after February 28, 1998, 100,000 shares of
     common stock at an initial exercise price of $6.75 per share (subject to
     adjustment in certain circumstances).

3.   In April 1998, we issued 20,000 shares of newly authorized $10 convertible
     preferred stock, series 2, to Bershad Investment Group, L.P., for $200,000.
     In December 1999, the $10 convertible preferred stock, series 2, was
     converted into 133,333 shares of common stock.

4.   On September 30, 1998, we issued an aggregate of 5,876 shares of our common
     stock, in payment of our dividend obligations, to holders of our 10%
     convertible preferred stock.

5.   On July 28, 1999, we issued 250,000 shares of our common stock to Steven
     Farbman in connection with his employment with us without consideration.
     For a description of this transaction, see Item 10, Executive Compensation,
     page 22.

6.   On September 30, 1999, we issued an aggregate of 6,174 shares of our common
     stock, in payment of our dividend obligations, to holders of our 10%
     convertible preferred stock.

7.   On January 31, 2000, we issued 483,200, 140,297 and 925,372 shares of our
     common stock to Melvyn I. Weiss, Wilbur L. Ross, Jr. and J. Morton Davis,
     respectively, at a purchase price of $1.75 per share, or $2,710,520 in the
     aggregate.

Item 6.  Management's Discussion and Analysis or Plan of Operation

     The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of our results of
operations and financial

                                       12
<PAGE>

condition. The discussion should be read in conjunction with our audited
consolidated financial statements and notes thereto.

Overview

     Revenues in fiscal 1999 were $18.3 million, an increase of 2.7% over the
$17.8 million in fiscal 1998, with display advertising accounting for 75% of
total sales and classified advertising generating 14% of the total. Other
revenue categories include: legal notice advertising (4.5%), commercial printing
(3.7%), and subscription and other (2.8%). A weak first quarter was offset by
strong third and fourth quarter revenue performances. The net loss in fiscal
1999 increased by $1.12 million to $3.83 million from a net loss of $2.71
million. Since the number of shares outstanding increased in fiscal 1999, the
loss per share decreased to $0.66 in fiscal 1999 from $1.01 in fiscal 1998.
Operating losses before interest, taxes, depreciation and amortization (EBITDA)
were reduced by 26% in fiscal 1999 to a loss of $1.29 million from a loss of
$1.74 million in fiscal 1998, excluding certain special items discussed below.
EBITDA is used in this report because management believes that EBITDA is an
effective way of monitoring our operating performance and is widely used among
media related businesses. EBITDA should be considered in addition to, not
instead of, operating profit, net income, cash flows and other measures of
financial performance reported in accordance with generally accepted accounting
principles.

Results of Operations

Revenue

     The following chart shows a comparison of revenue, in thousands of dollars,
by category:

----------------------------------------------------------------------------
Category                 Fiscal    Fiscal     Change      Percent change
                          1999      1998
----------------------------------------------------------------------------
Display Advertising       13,717    13,199        518                3.9%
----------------------------------------------------------------------------
Classified Advertising     2,557     2,290        267               11.7%
----------------------------------------------------------------------------
All Other                  2,038     2,333       (295)             (12.6%)
----------------------------------------------------------------------------
Total Revenue             18,312    17,822        490                2.7%
----------------------------------------------------------------------------

     In fiscal 1999, display (75%) and classified (14%) advertising, which
comprised 89% of our revenue, increased 5.1% compared to fiscal 1998. Other
revenue declined by 12.6% as certain unprofitable commercial printing ventures
were discontinued in fiscal 1999. Revenue performance was stronger in the second
half of the year with a particularly strong fourth quarter, which grew by 18.6%
over the same period in fiscal 1998. Among our individual

                                       13
<PAGE>

operating units Manhattan, Dan's Papers, The Hill and Brooklyn all had positive
contributions to revenue growth in fiscal 1999.

     In Manhattan, new sales managers in the display and classified departments
were recruited to reverse a declining trend that emerged in the early part of
the year. As a result, revenues at the Manhattan newspapers in the last six
months of fiscal 1999 were 14% higher than revenues during the same period in
fiscal 1998. Dan's Papers had the traditional strong summer months, and was also
able to maintain momentum into the fall, helping the paper achieve strong (20%
growth) fourth quarter results. The Hill was hurt in the first part of the year
by the impeachment hearings and the resulting slowdown in Congressional
activity. The early shortfall was more than made up during a very strong (86%
growth) fourth quarter. Brooklyn Skyline installed a new classified sales
department in the first quarter and showed steady growth (22% for the year)
throughout the year. In November, the Brooklyn Skyline introduced the Health
Expo, which proved to be so successful that it has inspired some of our other
publishers to plan their own shows for fiscal 2000. Queens and Nassau had strong
classified advertising gains for both the fourth quarter and the full year.

Operating Performance

     EBITDA, excluding three one-time expenses, improved by $442,000 from a loss
of $1.74 million in fiscal 1998 to a loss of $1.29 million in fiscal 1999.
Favorable paper prices, fewer glossy covers in the Manhattan newspapers and the
elimination of certain unprofitable commercial printing activities helped reduce
overall cost of sales by 2.4%, from $8.6 million in fiscal 1998 to $8.4 million
in fiscal 1999. We made a decision to invest in stronger editorial and sales
departments, which resulted in higher personnel expenses. A more efficient use
of our production personnel (primarily hourly employees) helped offset some of
that increase.

     The three one-time expenses which were incurred in fiscal 1999 related to
the hiring of a new president and chief executive officer, an increase in the
reserve for uncollected receivables and an adjustment to the accrual for unpaid
commissions.

     On July 28, 1999, Steven Farbman entered into an Employment Agreement with
NCI. As part of that Employment Agreement, Mr. Farbman was awarded a stock grant
of 250,000 shares of common stock. In addition, we also agreed to pay Mr.
Farbman cash compensation equal to 45% of the value of the stock grant. The
resulting net expense to the company in fiscal 1999 was $657,031.

     The senior management team has reevaluated the reserve for uncollected
receivables.  During the fourth quarter, management has recorded a $1.014
million charge against earnings for uncollectible receivables that relate to
periods prior to 1999.  Management believes it has reserved properly for fiscal
1999 and has begun to institute more rigorous collection policies.

     Historically, sales commission expense has been recorded at the time the
commission was paid to the employee which did not vary significantly from the
accrual basis.  Management believes the commission expense should be accrued at
the same time that the corresponding

                                       14
<PAGE>

revenue is recorded, similar to the way it records expenses for printing and
other direct expenses. Management believes that this method will more accurately
reflect the operating performance of the company and its subsidiaries. The net
effect of this change is a one-time commission expense of $173,611.

Income Taxes

     We currently have a net operating loss (NOL) carryforward for federal
income tax purposes of approximately $13,700,000, which is available to offset
federal taxable income through the fiscal year 2018.  We have provided a 100%
valuation allowance on deferred tax assets substantially resulting from the NOL
carryforwards discussed above.

Effects of Inflation

     We do not believe that inflation has had a significant impact on our
financial position or the results of operations in the past three years.

Liquidity and Capital Resources

     In order to comply with the requirements of NASD Marketplace Rule
4310(c)(2), from January 19, 1999 through February 16, 1999, we offered our
existing stockholders the right to purchase additional shares of its common
stock. On February 22, 1999 the Company successfully completed this offering
which resulted in gross proceeds of $5,750,000. In January 1999, we repaid the
$750,000 balance of bank loans from a $1,200,000 loan received from Messrs.
Ross, Weiss and Davis on December 31, 1998.  This $1,200,000 loan was repaid on
February 28, 1999 with proceeds from the rights offering.

     During fiscal year ended November 30, 1999, the total net cash used by
operations was $2,825,000 which included a reduction of our accounts payable of
$1,070,000.  Cash used for investing activities totaled $433,000 including
$206,000 used to fund the operations of our unconsolidated subsidiary.  We
expect this contribution to be reduced dramatically in fiscal 2000.

     As of December 31, 1999, we had a shortage of current assets over current
liabilities in the amount of approximately $1,893,000.  On January 31, 2000 we
sold an aggregate of 1,548,889 shares of common stock at a price of $1.75 per
share.  The proceeds of the sale of shares was used to pay $2,710,521
representing the unpaid principal balance and accrued interest on our
indebtedness to D.H. Blair Investment Banking Corp. and Wilbur L. Ross.

     While we cannot be sure we will generate positive cash flow for the fiscal
year ending December 31, 2000, management is confident that along with the
starting cash balance as of January 1, 2000 it has the resources available to it
to fund NCI's future cash needs.

Item 7.  Financial Statements

     The consolidated financial statements of News Communications, Inc. and its
subsidiaries including the notes thereto, together with the report thereon of
BDO Seidman LLP is presented beginning at page F-1.

                                       15
<PAGE>

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

     None.

                                       16
<PAGE>

                                   PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

     Our executive officers, directors and other significant employees and their
ages and positions are as follows:
<TABLE>
<CAPTION>
Name of Individual           Age  Position with News Communications and Subsidiaries
---------------------------  ---  ------------------------------------------------------------
<S>                          <C>  <C>
Jerry Finkelstein (1)(2)      84  Chairman of the Board and Director of News Communications
Wilbur L. Ross, Jr. (1)       62  Director and Publisher of News Communications
Michael Schenkler             54  Director of News Communications and Officer of Subsidiary
Steven Farbman (1)            39  President, Chief Executive Officer and Director of News Communications
Paul Mastronardi              40  Vice President and Chief Financial Officer of News Communications
Steven Price (3)              38  Director of News Communications
Martin A. Bell (2)            49  Director of News Communications
Gary Weiss (1)(2)             37  Director of News Communications
Robert E. Nederlander (3)     65  Director of News Communications
Martin Mendelsohn (3)         57  Director of News Communications

</TABLE>
-------------------------------
(1) Member of Executive Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee

     Jerry Finkelstein has been a director of News Communications 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 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.

     Wilbur L. Ross, Jr. has been a director of News Communications since
October 1996. Mr. Ross served as Chief Executive Officer of News Communications
from October 1996 to August 1999. Since 1988, Mr. Ross has been Executive
Managing Director of Rothschild Inc. and Chairman of Rothschild Recovery Fund
and Asia Recovery Fund. Mr. Ross is also a director of World Airways, Inc., Mego
Financial Corp., a developer of timeshare properties, and Syms Corp., a clothing
retailer.

                                       17
<PAGE>

     Michael Schenkler has been a director of News Communications since March
1990, and served as president from December 1991 to July 1999.  He has been
publisher of The Queens Tribune since 1979.  Prior to taking over the Queens
Tribune 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.

     Steven Farbman has been President and Chief Executive Officer and a
director of News Communications since July 29, 1999.  From 1992 to 1999, he
served as Vice President and Chief Operating Officer of American Lawyer Media,
Inc. and its predecessor National Law Publishing Company, a publisher of legal
periodicals.

     Paul Mastronardi has been Vice President and Chief Financial Officer of
News Communications since August 16, 1999.  Prior to such date, from December
1997 to June 1999, Mr. Mastronardi served as Vice President, Finance of American
Lawyer Media.  From March 1996 to December 1997, he was Vice President and Chief
Financial Officer of the National Law Publishing Company (subsequently purchased
by American Lawyer Media).  He served as Director of Financial Planning for
Bantam Doubleday Dell, a division of Bertelsmann Inc., from April 1995 to March
1996.  Prior to that time, Mr. Mastronardi spent fourteen years at Gruner & Jahr
USA Publishing, where he served in a variety of capacities, including Staff
Accountant, Manager of Information Systems, Senior Financial Manager and
Director of Financial Planning.

     Steven Price has been a director of News Communications since July 29,
1999.  Since June 1998, he has been President and Chief Executive Officer of
LiveWire Corporation, a telecommunications investment and management company.
From 1996 to 1998, Mr. Price was President and Chief Executive Officer of
PriCellular Corporation, a publicly traded cellular telephone operator which was
sold in June 1998.  Mr. Price served as senior vice president, corporate
development of PriCellular from 1994 to 1996.

     Martin A. Bell has been a director of News Communications since July 29,
1999.  He has been Vice Chairman of D.H. Blair Investment Banking Corporation
since December 1995, prior to which time he served as Senior Vice President and
General Counsel to the firm.  He is also a director of Venus Exploration, Inc.

     Gary Weiss has been a director of News Communications since July 29, 1999.
He has been President of Weiss Capital Group LLC, an investment and consulting
firm since 1997.  From 1992 to 1997, Mr. Weiss was a managing director of Bennis
& Reissman Inc.

     Robert E. Nederlander has been a director of News Communications since
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 theaters.  Mr. Nederlander is also a director of Riddell Sports,
Inc., a sporting goods manufacturer, Mego Financial Corp., Allis Chalmers Corp.,
and Cendant Corp.

     Martin Mendelsohn has been a director of News Communications since July 29,
1999.  Since 1992, he has been a partner at Verner, Liipfert, Bernhard,
McPherson and Hand.

                                       18
<PAGE>

     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.

     We and Mr. Finkelstein, The Jerry Finkelstein Foundation, Inc. and Shirley
Finkelstein, Mr. Finkelstein's wife (collectively, the "Finkelstein Group");
Wilbur L. Ross, Jr.; J. Morton Davis, D.H. Blair Investment Banking Corp.,
Rivkalex Corporation and Rosalind Davidowitz, Mr. Davis' wife (collectively, the
"Davis Group"); Melvyn I. Weiss ("Weiss") and the M&B Weiss Family Partnership
(collectively, the "Weiss Group"); and Mr. Farbman (each member of the
Finkelstein Group, Mr. Ross, the Davis Group, the Weiss Group and Mr. Farbman,
individually, a "Stockholder" and collectively the "Stockholders") entered into
a Stockholders' Agreement. Under the terms of the Stockholders' Agreement, while
Mr. Farbman is President and Chief Executive Officer of the Company, the
Stockholders have agreed to act to maintain the size of the Board at 9 members.
The Stockholders have also agreed to vote their shares so as to elect as
directors of the Company (i) Mr. Finkelstein; (ii) two persons designated by Mr.
Ross, one of whom is Mr. Ross and the other of whom initially is Mr.
Nederlander; (iii) three persons designated by Mr. Farbman, one of whom is Mr.
Farbman, one of whom is Mr. Price and one of whom is Mr. Schenkler; (iv) one
person to be designated by the Weiss Group who initially is Mr. Weiss; (v) one
person to be designated by the Davis Group who initially is Mr. Bell; and (vi)
one person to be designated by the Davis Group, the Weiss Group and the
Finkelstein Group acting jointly who currently is Mr. Mendelsohn. As a result of
the Stockholders' Agreement and the collective ownership by the Stockholders of
more than 66% of the Company's Common Stock, the Stockholders will control the
election of the members of the entire Board of Directors. Mr. Farbman and Mr.
Price are brothers-in-law.

Committees of the Board of Directors

     The Board currently has three committees:  the Executive Committee, the
Audit Committee and the Compensation Committee.

     The Executive Committee is comprised of Messrs. Farbman, Ross, Finkelstein
and Weiss.  Mr. Ross serves as Chairman of the Executive Committee.

     The Audit Committee is comprised of Messrs. Nederlander, Price and
Mendelsohn.  The Audit Committee recommends the independent accountants
appointed by the Board to audit our the financial statements, which includes an
inspection of our books and accounts, and reviews with such accountants the
scope of their audit and their report thereon, including any questions and
recommendations that may arise relating to such audit and report or our internal
accounting and auditing system procedures.  The composition of the Audit
Committee complies with the independent director requirements of Nasdaq.

     The Compensation Committee is comprised of Messrs. Finkelstein, Bell and
Weiss.  The function of the Compensation Committee is to review and approve the
compensation of executive officers and establish targets and incentive awards
under our incentive compensation plans.  The Compensation Committee reports to
the Board.

Compliance with Section 16(a) of the Exchange Act

                                       19
<PAGE>

     Section 16(a) of the Securities Exchange Act of 1934 requires a company's
officers, directors and persons who own more than ten percent of a registered
class of such company's equity securities to file reports of ownership and
changes in ownership with the SEC.  Officers, directors and ten percent
stockholders are required by regulation to furnish us with copies of all Section
16(a) forms they file.  Based on our records, we believe that during fiscal
1999, our officers, directors and ten percent beneficial owners complied with
all applicable filing requirements.

Item 10.  Executive Compensation.

Summary Compensation Table

     The following table sets forth information for each of the fiscal years
ended November 30, 1999, 1998 and 1997 concerning the compensation paid and
awarded to all individuals serving as our executive officers or key employees
whose total annual salary and bonus exceeded $100,000 for these periods:

                          SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                                                                        Long-Term
                                                                                   Other Annual        Compensation    Restricted
                                              Annual Compensation                  Compensation           Awards      Stock Awards
                                   -----------------------------------------------------------------------------------------------
                                                     Salary          Bonus                                 Options
Name and Principal Position             Year          ($)             ($)                ($)                 (#)
                                   -----------------------------------------------------------------------------------------------
<S>                                  <C>          <C>           <C>          <C>                  <C>
Steven Farbman, President and            1999(3)     $ 46,250          ---               ---              830,000       $453,125
 Chief Executive Officer

Jerry Finkelstein, Chairman of the       1999         168,083          ---           $150,000(1)             ---
 Board                                   1998         195,000          ---               ---                 ---
                                         1997         195,000          ---               ---                 ---

Wilbur L. Ross, Jr., Chief               1999(2)     $      1          ---               ---                 ---
 Executive Officer                       1998        $      1          ---               ---                 ---
                                         1997        $      1          ---               ---                 ---

Michael Schenkler, President and         1999(4)      164,528          ---               ---                 ---
 Publisher of The Queens Tribune         1998         167,223          ---               ---                 ---
                                         1997         158,197          ---               ---                 ---
</TABLE>
_____________________________
(1)  During July 1999, Mr. Finkelstein's Employment Agreement was amended to
     reduce his annual salary to $95,000 from $195,000.  In connection with the
     amendment of Mr. Finkelstein's employment agreement, Mr. Finkelstein also
     received a one-time cash payment of $150,000.


(2)  Mr. Ross resigned as Chief Executive Officer of News Communications in July
     1999.

                                       20
<PAGE>

(3)  Mr. Farbman was hired as President and Chief Executive Officer in July
     1999.  At that time, he received 250,000 shares of our common stock having
     a fair market value of $453,125.  Mr. Farbman's compensation does not
     include an additional $203,906 paid in December 1999 under the terms of his
     Employment Agreement, which is more fully described at Employment
     Agreements, page 22.

(4)  Mr. Schenkler served as President of News Communications from December 1991
     until his resignation in July 1999.

                                OPTION GRANTS IN LAST FISCAL YEAR
                                        (Individual Grants)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
                                                     Percent Of
                                                    Total Options
                                     Number of         Granted
                                     Securities      To Employees   Exercise or
                                     Underlying       In Fiscal      Base Price
               Name                   Options           Year          ($/Sh)      Expiration Date
                (a)                     (b)             (c)             (d)             (e)
-------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>             <C>           <C>
Steven Farbman....................     830,000                      $1.8125         07-28-2004
                                  ---------------------------------------------------------------
Paul Mastronardi..................     100,000                      $1.625          08-16-2004
                                  ---------------------------------------------------------------
Jerry Finkelstein.................     200,000                      $2.25           07-28-2004
                                  ---------------------------------------------------------------
 ..................................
                                  ---------------------------------------------------------------
-------------------------------------------------------------------------------------------------
</TABLE>
                       AGGREGATE YEAR-END OPTION VALUES
                              (November 30, 1999)
<TABLE>
<CAPTION>
                          Number of unexercised options at     Value of unexercised in-the-money
                                fiscal year-end (#)             options at fiscal year-end ($)
Name                       Exercisable     Unexercisable         Exercisable     Unexercisable
----                      --------------  ----------------     ---------------  ----------------
<S>                       <C>             <C>                  <C>              <C>
Steven Farbman                 3,333         830,000                 ---               ---
Wilbur L. Ross                71,666             ---                 ---               ---
Michael Schenkler             10,000             ---                 ---               ---
Jerry Finkelstein            396,666             ---                 ---               ---
Paul Mastronardi                 ---         100,000                 ---               ---
Gary Weiss                   153,333             ---                 ---               ---
Employment Agreements
</TABLE>

     On July 28, 1999, Steven Farbman, our President and Chief Executive
Officer, entered into an Employment Agreement with us (the "Employment
Agreement").  The Employment Agreement expires on November 30, 2004 unless it is
terminated earlier by Mr. Farbman or by us.

     Under the Employment Agreement, Mr. Farbman will be paid an initial base
salary of $185,000.  The base salary will increase annually by an amount equal
to the percentage increase in the cost of living for the New York metropolitan
area, and the Board of Directors will annually review Mr. Farbman's compensation
to determine whether a further increase is warranted.  In addition to his base
salary, Mr. Farbman will receive an annual bonus based upon increases in
earnings before interest, taxes, depreciation and amortization for such period
("EBITDA").  For the fiscal year ending November 30, 1999, the bonus will be 15%
of the amount by which EBITDA for the six months ending November 30, 1999
exceeds the EBITDA for the six months ending November 30, 1998.  Thereafter, the
amount of Mr. Farbman's bonus will be 15% of the amount by which EBITDA for the
fiscal year ending November 30, 1999 exceeds the EBITDA for the immediately
preceding fiscal year.  Mr. Farbman will also be eligible to receive other cash
or stock bonuses as the Board may determine from time to time in its sole
discretion.

                                       21
<PAGE>

     Mr. Farbman's designated beneficiary will also have the right to receive
$1,000,000 of a $3,000,000 key man insurance policy that we have agreed to
maintain on the life of Mr. Farbman.  We have also agreed to provide Mr. Farbman
with an automobile allowance of $20,000 per year.

     The Employment Agreement may be terminated by us at any time for Cause (as
defined in the Employment Agreement).  If Mr. Farbman's employment is terminated
for Cause, we will have no further obligations under the Employment Agreement
other than base salary and expenses accrued through the date of termination.
The Employment Agreement may also be terminated by us upon Mr. Farbman's death
or disability.  In such event, we will pay to Mr. Farbman or his estate an
amount equal to his annual  base salary at the time of his death unless, in the
case of his death, Mr. Farbman's estate receives the insurance proceeds
described above.

     The Employment Agreement may also be terminated by Mr. Farbman for "Good
Reason," which includes, among other things, Mr. Farbman's removal as President
and Chief Executive Officer and as one of our directors, a material change in
Mr. Farbman's duties or responsibilities, a reduction in Mr. Farbman's
compensation, the breach of the Stockholders' Agreement or a change in control.
If Mr. Farbman terminates his employment for Good Reason, he will be entitled to
receive an amount equal to (A) the sum of (x) Mr. Farbman's Base Salary then in
effect and (y) the greater of the Bonus for the year preceding his termination
or the Bonus that he would have received had he completed the year in which his
termination occurred multiplied by (B) the lesser of (x) two (2) or (y) the
number of years remaining in the Term (including fractional portions of a year),
but in no event shall the multiplier be less than one (1).

     The Employment Agreement contains a restrictive covenant that restricts Mr.
Farbman from engaging in (i) publication of community oriented newspapers in the
communities served by us, (ii) publication of newspapers, magazines or
periodicals the content of which is similar to or competitive with any of our
publications of having a circulation that is directed to a specific demographic
group to whom any of our publications are directed or (iii) a business that
directly competes within the same geographic market in which our business
accounts for, or is projected to account for, more than 5% of our gross
revenues.  The Employment Agreement also prohibits Mr. Farbman from soliciting
our customers and employees.  These restrictions apply both during the term and
for (x) two (2) years after the termination of Mr. Farbman's employment by us
for Cause or by Mr. Farbman without Good Reason or (y) one (1) year after the
termination of Mr. Farbman's employment by us without Cause, by Mr. Farbman for
Good Reason or as a result of Mr. Farbman's disability.

     In connection with our employment of Mr. Farbman, on July 28, 1999, we have
also entered into a Restricted Stock Agreement and a Stock Option Agreement with
Mr. Farbman.  Under the terms of the Restricted Stock Agreement, we issued to
Mr. Farbman 250,000 shares of common stock.

     The terms of Mr. Farbman's Stock Option Agreement are set forth in
Directors' and Officers' Options at page 23.

                                       22
<PAGE>

     Pursuant to an amended and restated employment agreement entered into by
News Communications and Jerry Finkelstein as of August 20, 1993, and terminating
on August 19, 2003, Mr. Finkelstein is employed as Chairman of the Board of
Directors of News Communications at an annual salary of $195,000.  On July 29,
1999, the Board of Directors and Mr. Finkelstein agreed to amend Mr.
Finkelstein's employment agreement to reduce his annual salary to $95,000 from
$195,000.  Mr. Finkelstein may also be paid annual bonuses at the discretion of
the Board, based upon such factors as our results of operations and transactions
involving News Communications which are introduced to us by Mr. Finkelstein or
in which he is otherwise involved on our behalf.  We also provide Mr.
Finkelstein with medical and other benefits and perquisites.  Mr. Finkelstein
may terminate the agreement at any time by giving us at least 10 days' notice.
In the event of his permanent disability or death, 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.

Director Compensation

     We have no established compensation arrangements with our directors.  See
"Directors' and Officers' Options" for a discussion of our Directors and
Officers Stock Option Plan and options granted to certain directors and
officers.

     However, on July 28, 1999 we granted to Gary Weiss, one of our directors
five (5) year options to purchase 100,000 shares of our common stock at a price
of $2.25 per share in consideration for services rendered to us during our
search for a permanent Chief Executive Officer.

Directors' and Officers' Options

     On August 16, 1999, pursuant to a Stock Option Agreement, we granted Paul
Mastronardi options to purchase 100,000 shares of our common stock at an
exercise price of $1.625 per share.  The options shall vest in four equal
installments of 25,000 shares beginning on the first anniversary of the
agreement through the fourth anniversary subject to accelerated vesting
provisions set forth in the Stock Option Agreement.

     On July 28, 1999, we entered into a Stock Option Agreement with Steven
Farbman.  Under the terms of the Stock Option Agreement, we granted Mr. Farbman
options to purchase 830,000 shares of our common stock at an exercise price of
$1.8125 per share.  The options vest in four equal installments of 207,500
shares commencing on July 28, 2000 and on each July 28 thereafter.  The vesting
may be such that 10% of the shares shall vest for each cumulative $.05
improvement in per share earnings before interest, taxes, depreciation and
amortization over that for the fiscal year ended November 30, 1998.

     On July 28, 1999, we entered into a Stock Option Agreement with Jerry
Finkelstein.  Under the terms of the Stock Option Agreement, we granted
Finkelstein immediately exercisable five year options to purchase 200,000 shares
of our common stock at an exercise price of $2.25 per share. In addition, all of
Finkelstein's unexpired options were extended to July 2004.

     On July 28, 1999, pursuant to a Stock Option Agreement, we granted Gary
Weiss, one of our directors, immediately exercisable five year options to
purchase 150,000 shares of our common stock at an exercise price of $2.25 per
share.

     On December 21, 1999, the Board adopted subject to stockholder approval,
a Stock Incentive Plan pursuant to which the Board may award options to purchase
an aggregate of 200,000 shares of our common stock to directors, officers,
employees and consultants. Options under the Stock Incentive Plan may be non-
qualified or incentive stock options for purposes of income taxation under
Section 422 of the Internal Revenue Code of 1986. All qualified incentive stock
options granted under the plan must have an exercise price at least equal to
Fair Market Value (as defined in the plan) as

                                       23
<PAGE>

of the grant date while non-qualified stock options may be granted at an
exercise price less than Fair Market Value.  No grants were made under the Stock
Incentive Plan during the fiscal year ended November 30, 1999.

     On August 17, 1993, the Board adopted a Discretionary Directors and
Officers Stock Option Plan pursuant to which, as amended, the Board may award
options to purchase an aggregate of 500,000 shares of common stock to directors
and officers of News Communications 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 422 of
the Internal Revenue Code of 1986.  No grants were made under the Discretionary
Option Plan during the fiscal years ended November 30, 1998 and 1999.

     On August 17, 1993, the Board also adopted a Non-Discretionary Directors
Stock Option Plan pursuant to which each director was granted on August 17, 1993
and is granted each anniversary thereof on which he or she continues to be a
director, a five-year option to purchase 3,333 shares of common stock at the
market price on the date of grant.  The Non-Discretionary Option Plan also
provides that any person becoming a director within the six months after any
August 17 will be granted an option for 3,333 shares on the date he or she
becomes a director.  Pursuant to the Non-Discretionary Option Plan, each person
who was a director of News Communications, on August 17, 1999 received a grant
of an option to purchase 3,333 shares of common stock exercisable at $1.625 per
share.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain information regarding ownership of
our common stock, as of February 18, 2000 by each person known to us to own
beneficially more than 5% of our outstanding common stock, by each person who is
a director of News Communications, by each person listed in the Summary
Compensation Table and by all directors and officers of News Communications as a
group.

     The information contained in the table was furnished by the persons listed
therein.  The calculations of the percent of shares beneficially owned are based
on 8,568,162 shares of common stock outstanding on February 18, 2000 plus with
respect to each such person the number of additional shares that will be
outstanding upon exercise of the warrants and options exercisable within sixty
(60) days set forth herein.

<TABLE>
<CAPTION>
                                                        Beneficial Ownership                  Current
Name and Address                                           of Common Stock               Percent of Class
----------------                                           ---------------               ----------------
<S>                                             <C>                                    <C>
Martin A. Bell                                              3,333 (1) (8)                       *
D.H. Blair Investment Banking Corp.
44 Wall Street
New York, NY  10005
</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>
                                                        Beneficial Ownership                  Current
Name and Address                                           of Common Stock               Percent of Class
----------------                                           ---------------               ----------------
<S>                                             <C>                                    <C>
Steven Farbman                                                 253,333 (1)                      2.59%
2 Park Avenue
New York, New York  10016
Jerry Finkelstein                                           660,667 (1)(2)                      6.76%
150 East 58th Street
33rd Floor
New York, NY  10158
Martin Mendelsohn                                              3,333 (1)                           *
Verner, Liipfert, Bernhard,
 McPherson and Hand
901 15th Street, N.W.
Suite 700
Washington, D.C. 20005
Robert E. Nederlander                                        50,801 (1)(3)                         *
810 7th Avenue, 21st Floor
New York, NY  10019
Steven Price                                                   3,333 (1)                           *
c/o LiveWire Corporation
711 Westchester Avenue
White Plains, NY  10604
Wilbur L. Ross, Jr.                                      683,269 (1)(3)(4)                      6.99%
1251 Avenue of the Americas
New York, NY  10020
Michael Schenkler                                           210,144 (1)(5)                      2.15%
174-15 Horace Harding Expressway
Fresh Meadows, NY  11365
Gary Weiss                                                     153,333                          1.57%
Weiss Capital Group LLC
99 Seaview Blvd.
Port Washington, NY  11050
Melvyn I. Weiss                                        1,296,430 (1)(3)(6)                     13.27%
One Pennsylvania Plaza
New York, NY  10119
J. Morton Davis                                           2,524,428 (1)(7)                     25.84%
D.H. Blair Investment Banking Corp.
44 Wall Street
New York, NY  10005
All Directors and Executive Officers as a                 5,842,404 (9)                        59.81%
Group (11 persons)
</TABLE>
-------------------------------
*    Less than one percent.

                                       25
<PAGE>

(1)  Includes the following numbers of shares purchasable upon the exercise of
     presently exercisable options and warrants: Mr. Bell--3,333; Mr. Davis--
     7,867; Mr. Farbman--3,333; Mr. Finkelstein--396,666; Mr. Mendelsohn--3,333;
     Mr. Nederlander--18,333; Mr. Price--3,333; Mr. Ross--125,000; Mr.
     Schenkler--10,000; Mr. M. Weiss--26,667; Mr. G. Weiss--153,333.

(2)  Includes
     (a) 9,945 shares owned by The Jerry Finkelstein Foundation, Inc., of which
         Mr. Finkelstein is President, and
     (b) 66,667 shares owned by Mr. Finkelstein's wife.

(3)  Includes the following numbers of shares issuable upon conversion of shares
     of $10 convertible preferred stock:  Mr. Nederlander--32,468; Mr. Weiss--
     64,935; Mr. Ross--129,870.

(4)  Does not include
     (a) 16,667 shares owned by Rothschild Inc.
     (b) 32,468 shares issuable upon conversion of shares of $10 convertible
         preferred stock owned by Arrow Investment Limited Partnership.
     (c) 25,974 shares issuable upon exercise of warrants owned by Arrow
         Investment Limited Partnership.
     (d) 100,000 shares issuable upon exercise of warrants owned by the
         Rothschild Recovery Fund L.P.
     (e) 16,670 shares of common stock owned by Arrow Investment Limited
         Partnership.
          Mr. Ross disclaims beneficial ownership of all of such shares.

(5)         Includes
     (a) 3,000 shares that are issuable upon conversion of our 10% preferred
         stock.
     Does not include
     (b) 13,678 shares owned by Mr. Schenkler's wife as custodian for two minor
         children of which Mr. Schenkler disclaims beneficial ownership.

(6)  Includes 160,071 shares owned by the M&B Weiss Family Partnership.

(7)         Includes
     (a) 1,372,303 shares of common stock and warrants to purchase 207,867
         shares owned by D.H. Blair Investment Banking Corp., of which J. Morton
         Davis is a director and the sole stockholder, and
     (b) 19,156 shares of common stock issuable upon exercise of 5,900 shares of
         $10 convertible preferred stock.

     Does not include
     (c) 41,276 shares owned by Rivkalex Corporation ("Rivkalex"), a private
         corporation owned by Rosalind Davidowitz, Mr. Davis's wife, and
     (d) 749,166 shares of common stock owned by Rosalind Davidowitz.
         Mr. Davis and D.H. Blair Investment Banking Corp. expressly disclaim
         beneficial ownership of all securities held by Rivkalex and Rosalind
         Davidowitz.

(8)  Does not include 1,372,303 shares of common stock and warrants to purchase
     207,867 shares owned by D.H. Blair Investment Banking Corp., of which
     Martin A. Bell is Vice Chairman.  Mr. Bell expressly disclaims beneficial
     ownership of all securities held by D.H. Blair Investment Banking Corp.

(9)  Includes shares issuable upon exercise of the options referenced in (1)
     above, conversion of the $10 convertible preferred stock referenced in (3)
     above, conversion of the 10% preferred stock referenced in (5) above.

Item 12.  Certain Relationships and Related Transactions.

     July 28, 1999 Stockholder's Agreement.  Please see Item 9, Directors,
Executive Officers, Promoters and Control Persons, page 19.

     July 28, 1999 Restricted Stock Agreement with Steven Farbman. Please see
Item 10, Employment Agreements, page 22.

                                       26
<PAGE>

     July 28, 1999 Stock Option Agreement with Steven Farbman.  Please see
Item 10, Employment Agreements, page 22.

     August 16, 1999 Stock Option Agreement with Paul Mastronardi.  Please see
Director and Officer Options, page 23.

     On July 28, 1999, the maturity of the $1,000,000 aggregate principal amount
of indebtedness of our subsidiaries, Tribco Incorporated and Access Network
Corp., to D.H. Blair Investment Banking Corp. was extended to January 31, 2000.
With respect to the repayment of the such indebtedness, on July 28, 1999, we
entered into a Subscription Agreement with Messrs. Weiss, Ross and Davis to
which Messrs. Weiss, Ross and Davis agreed to purchase 483,200, 140,297 and
925,372 shares of the our common stock, respectively, at a purchase price of
$1.75 per share, on January 31, 2000. On January 31, 2000 we sold an aggregate
of 1,548,869 shares at a price of $1.75 per share. The proceeds of the sale of
shares was used to pay $2,710,520.83 representing the unpaid principal balance
and accrued interest on our indebtedness to DH Blair Investment Banking Corp.
and Wilbur L. Ross, Jr.

     On January 12, 1999, Messrs. Ross, Weiss and Davis entered into a Standby
Agreement with News Communications in which they agreed to purchase any shares
remaining unsold in the rights offering.  The Standby Agreement granted each
such person certain registration rights that will allow them to register for
sale the unsold shares that they purchase during the three-year period following
the closing of the rights offering.  Pursuant to the Standby Agreement, Messrs.
Ross, Weiss and Davis purchased, 224,722, 524,399 and 749,149 shares,
respectively.

     On December 31, 1998, Messrs. Ross, Weiss and Davis each loaned News
Communications $400,000, for a total of $1,200,000.  In consideration for the
loans, each such person received a promissory note from News Communications in
the principal amount of $400,000, payable on February 28, 1999, at an interest
rate equal to the prime lending rate then in effect, plus 1%.  We used $750,000
of the loans to repay the line of credit from Chase Manhattan Bank, N.A.  This
indebtedness was satisfied from proceeds on a rights offering on February 28,
1999.

     Dan's Papers leases from Mr. Rattiner 2,810 square feet of office space at
an annual rate of approximately $74,000, plus cost-of-living adjustments, in a
building on Montauk Highway, Bridgehampton, New York, for a term of ten years
terminating in October 2008.

     Rothschild Inc., of which Wilbur L. Ross, Jr. is Executive Managing
Director, furnished investment banking services to News Communications in
connection with the issuance and sale of our $10 convertible preferred stock and
associated warrants. In
                                       27
<PAGE>

consideration for such services, we issued Rothschild Inc. 16,668 shares of
common stock, valued at $6.00 per share.

     On November 5, 1997, Dan's Papers and News Communications entered into the
Rothschild Recovery Fund Loan Agreement with Rothschild Recovery Fund L.P.
pursuant to which Dan's Papers borrowed $1,500,000 from Rothschild Recovery
Fund.  In addition, in connection with the execution of the Rothschild Recovery
Fund Loan Agreement, we issued to Rothschild Recovery Fund a five-year warrant
to purchase 100,000 shares of our common stock at an initial exercise price of
$6.75 per share, subject to adjustment.  Wilbur L. Ross, Jr. purchased the loan
from Rothschilds Recovery Fund in July 1999.  Wilbur L. Ross, Jr. is Chairman of
Rothschild Recovery Fund.  This loan has been satisfied from the proceeds of the
sale of our common stock on January 31, 2000 to Messrs. Weiss, Ross and Davis as
set forth above.

     In May 1996, News Communications, Tribco and Access obtained a $1,000,000
loan from D. H. Blair Investment Banking Corp., one of our principal
stockholders.  This loan has been satisfied from the proceeds of the sale of our
common stock on January 31, 2000 to Messrs. Weiss, Ross and Davis as set forth
above.  As additional consideration for the loan, we issued D.H. Blair
Investment Banking Corp. a five-year warrant to purchase 66,667 shares of our
common stock at an initial exercise price of $7.50 per share, subject to
adjustment.

     The transactions described above are on terms as favorable to News
Communications as those that could have been obtained from independent third
parties and arms-length negotiations.

Item 13.  Exhibits, List and Reports on Form 10-KSB.

      (a)    Exhibits
             --------

<TABLE>
<CAPTION>
                                                                   Incorporated by    Exhibit No. in
 Exhibit                                                           Reference from       Referenced
 Number                         Description                         Document (1)         Document
<S>                                                                 <C>                  <C>
    3.1    Articles of Incorporation of the company (formerly             A                 3.1
           known as Applied Resources, Inc.), filed with the
           Secretary of State of the State of Nevada on May 20,
           1986.
</TABLE>

                                       28
<PAGE>

<TABLE>
<S>                                                                 <C>                  <C>
    3.1.1  Certificate of Amendment of the Articles of                    A                      3.1.1
           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                    C                      3.1.3
           Incorporation of the company, filed with the
           Secretary of the State of Nevada on July 26, 1994.
      3.2  By-Laws of the company (as amended and restated).              C                      3.2.1
      4.1  Form of Common Stock Certificate.                              B                        4.1
      4.2  Form of 10% Convertible Preferred Stock Certificate.           B                        4.2
    4.2.1  Resolution of Board of Directors fixing the terms of           B                      4.2.1
           the 10% Convertible Preferred Stock.
    4.2.2  Resolution of Board of Directors fixing the terms of           C                      4.2.2
           the 8% Convertible Preferred Stock.
    4.2.3  Certificate of Amendment of Certificate of                     C                      4.2.4
           Designation of 8% Convertible Preferred Stock.
    4.2.4  Resolution of Board of Directors fixing the terms of           C                      4.2.3
           the 12% Convertible Preferred Stock.
    4.2.5  Certificate of Designation of 12% Convertible                  L                      4.2.5
           Preferred Stock
    4.2.6  Certificate of Designation of $10 Convertible                  H                      10.33
           Preferred Stock (included as part of Exhibit 10.21).
      4.3  Form of Rights Certificate                                     L                        4.3
     10.1  1987 Stock Option Plan of the company, as amended.             G                     10.1.1
     10.2  Discretionary Directors and Officers Stock Option              C                     10.2.1
           Plan.
     10.3  Non-discretionary Directors Stock Option Plan.                 C                     10.2.2
     10.4  Stockholders' Agreement, dated as of October 13,               D                        2.1
           1988, between Daniel Rattiner and the company.
     10.5  Agreement of Lease, dated October 31, 1988, between            D                        2.4
           Daniel Rattiner and DP Acquisition Corp., as to
           building known as Dan's Papers, Ltd. Located on
           Montauk Highway, Bridgehampton, New York.
</TABLE>

                                       29
<PAGE>

<TABLE>
<S>                                                                 <C>                  <C>
     10.6  Amendment of Lease, dated October 31, 1998, between            L                       10.6
           Dan's Paper's Inc. (f/k/a D.P. Acquisition, Inc.)
           and Daniel Rattiner.
     10.7  Letter dated November 22, 1996 from the company to             J                     10.4.4
           Daniel Rattiner regarding exercise of option to
           purchase stock of Dan's Papers, Ltd.
     10.8  Employment and Stockholders' Agreement dated as of             K                     10.4.5
           November 25, 1997 by and between the company and
           Daniel Rattiner
     10.9  Amended and Restated Employment Agreement, dated               J                   10.7.4.1
           October 28, 1996, between Jerry Finkelstein and the
           company.
    10.10  Stock Option Agreement dated September 1, 1993,                C                      10.11
           between Jerry Finkelstein and the company.
    10.11  Letter Agreement, dated June 15, 1990, between Dan's           B                      10.21
           Papers, Inc. and Dan's Papers, Ltd.
    10.12  Lease for space at 174-15 Horace Harding Expressway,           B                      10.25
           Fresh Meadows, New York.
    10.13  Agreement of Lease dated January 28, 1995, between             E                      10.24
           Furcraft Associates, Inc. and the company.
    10.14  Warrant dated May 17, 1996, to purchase 400,000                H                      10.31
           shares of the company's common stock issued by the
           company to D.H. Blair Investment Banking Corp.
    10.15  Warrant dated May 21, 1996, to purchase 200,000                H                      10.32
           shares of the company's common stock issued by the
           company to D.H. Blair Investment Banking Corp.
</TABLE>

                                       30
<PAGE>

<TABLE>
<S>                                                                 <C>                  <C>
    10.16  Form of Subscription Agreement made as of October 4,           H                      10.33
           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.
    10.17  Form of Standby Agreement dated January 12, 1998               L                      10.25
           among the company, Wilbur L. Ross, Jr., Melvyn I.
           Weiss and J. Morton Davis, as amended.
    10.18  Employment Agreement dated as of July 28, 1999 by              N                       10.1
           and between News Communications, Inc. and Steven
           Farbman.
    10.19  Restricted Stock Agreement dated as of July 28, 1999           N                       10.2
           by and between News Communications, Inc. and Steven
           Farbman.
    10.20  Stock Option Agreement dated as of July 28, 1999 by            N                       10.3
           and between News Communications, Inc. and Steven
           Farbman.
    10.21  Stockholders Agreement dated July 28, 1999 by and              N                       10.4
           among the News Communications, Inc., Wilbur L. Ross,
           Jr., Melvyn I. Weiss, The M&B Weiss Family
           Partnership, Jerry Finkelstein, Shirley Finkelstein,
           The Jerry Finkelstein Foundation, Inc., J. Morton
           Davis, D.H. Blair Investment Banking Corp., Rivkalex
           Corporation, Rosalind Davidowitz and Steven Farbman.
    10.22  Subscription Agreement dated July 28, 1999 by and              N                       10.5
           between News Communications, Inc., Wilbur L. Ross,
           Jr., Melvyn I. Weiss and J. Morton Davis.
    10.23  Stock Option Agreement dated July 28, 1999 by and              *                         *
           between News Communications, Inc. and Jerry
           Finkelstein.
</TABLE>

                                       31
<PAGE>

<TABLE>
<S>                                                                 <C>                  <C>
    10.24  Letter Agreement dated July 29, 1999 by and  between           *                         *
           Jerry Finkelstein and News Communcations, Inc.
    10.25  Stock Option Agreement dated July 28, 1999 by and              *                         *
           between News Communications, Inc. and Gary Weiss.
    10.26  Stock Option Agreement dated August 16, 1999 by and            *                         *
           between News Communications, Inc. and Paul
           Mastronardi.
    10.27  1999 Stock Option Plan of News Communications, Inc.            *                         *
       21  Subsidiaries of the company.                                   K                         22
       24  Power of Attorney (included on signature page)                 *                         *
       27  Financial Data Schedule                                        *                         *
</TABLE>

Notes:

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.
C     Registration Statement of the company on Form S-1, No. 33-46467.
D     Current Report of the company on Form 8-K relating to events occurring on
      October 31, 1988.
E     Annual Report of the company on Form 10-KSB for the year ended November
      30, 1992.
F     Annual Report of the company on Form 10-KSB for the year ended November
      30, 1994.
G     Annual Report of the company on Form 10-KSB for the year ended November
      30, 1995.
H     Quarterly Report of the company on Form 10-QSB for the quarter ended
      August 31, 1996.
I     Current Report of the company on Form 8-K/A relating to events occurring
      on February 3, 1997.
J     Annual Report of the company on Form 10-KSB/A for the year ended November
      30, 1996.
K     Annual Report of the company on Form 10-KSB for the year ended November
      30, 1997.
L     Registration Statement on Form SB-2 (Registration No. 333-67407), declared
      effective by the SEC on January 14, 1999.
M     Annual Report of the company on Form 10-KSB40 for the year ended November
      30, 1998.
N     Current Report of the company on Form 8-K relating to events occurring on
      July 28, 1999.
O     Current Report of the company on Form 8-K relating to events occurring on
      December 15, 1999.


*     Filed herewith.

(b)   No reports were filed on Form 8-K during the last quarter of fiscal
      year 1999.

                                       32
<PAGE>

                           News Communications, Inc.
                                  and Subsidiaries






                                      Consolidated Financial Statements
                                      Years Ended November 30, 1998 and 1999 and
                                               One Month Ended December 31, 1999
<PAGE>

                                             News Communications, Inc.
                                                       and Subsidiaries

                                                                        Contents

Independent auditors' report...............................................  F-2

Consolidated financial statements:
Balance sheets.............................................................  F-3
Statements of operations...................................................  F-4
Statements of stockholders' equity (deficit)...............................  F-5
Statements of cash flows...................................................  F-6
Notes to consolidated financial statements...........................  F-7- F-28

                                      F-1
<PAGE>

Independent Auditors' Report

Board of Directors and Stockholders of
 News Communications, Inc.

We have audited the accompanying consolidated balance sheets of News
Communications, Inc. and Subsidiaries as of November 30, 1999 and December 31,
1999, and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the years ended November 30, 1998 and 1999
and the one month ended December 31, 1999. 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 audits.

We conducted our audits 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 audits
provide 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, 1999 and December 31,
1999, and the consolidated results of their operations and their cash flows for
the years ended November 30, 1998 and 1999 and the one month ended December 31,
1999, in conformity with generally accepted accounting principles.



February 17, 2000

                                      F-2
<PAGE>

                                             News Communications, Inc.
                                                       and Subsidiaries


                                                     Consolidated Balance Sheet

<TABLE>
<CAPTION>
                                                                                            November 30,          December 31,
                                                                                                1999                 1999
-----------------------------------------------------------------------------------------------------------------------------
Assets
Current:
<S>                                                                                     <C>                 <C>
 Cash                                                                                        $  1,365,286        $  1,250,288
 Accounts receivable, net of allowance for doubtful accounts of $2,097,366 and                  2,533,288           2,208,904
  $2,031,763
 Due from related parties                                                                          18,200              17,566
 Other                                                                                            226,720             254,838
-----------------------------------------------------------------------------------------------------------------------------
      Total current assets                                                                      4,143,494           3,731,596
Investment in unconsolidated entities                                                             173,802             171,119
Property and equipment, net                                                                       418,310             405,509
Intangible assets, net                                                                          2,922,561           2,901,533
Other, net                                                                                        153,574             150,449
-----------------------------------------------------------------------------------------------------------------------------
                                                                                             $  7,811,741        $  7,360,206
=============================================================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable                                                                            $    589,663        $    694,937
 Accrued expenses                                                                               2,077,114           1,962,572
 Due to related parties                                                                         2,835,260           2,823,696
 Unearned revenue                                                                                 150,542             143,015
-----------------------------------------------------------------------------------------------------------------------------
      Total current liabilities                                                                 5,652,579           5,624,220
-----------------------------------------------------------------------------------------------------------------------------
Minority interest                                                                                 502,473             492,358
-----------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
 Preferred stock, $1.00 par value; 500,000 shares authorized; 217,835 and 197,835                 217,835             197,835
  shares issued and outstanding, respectively; $2,594,000 and $2,394,000 aggregated
  liquidation value, respectively
 Common stock, $.01 par value; authorized 100,000,000 shares; 6,888,674 and 7,022,007              68,886              70,219
  shares issued and outstanding, respectively
 Paid-in capital - preferred stock                                                              2,216,540           2,036,540
 Paid-in capital - common stock                                                                20,247,047          20,445,714
 Deficit                                                                                      (20,684,890)        (21,097,951)
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                2,065,418           1,652,357
 Less:  Treasury stock (50,333 common shares) - at cost                                           408,729             408,729
-----------------------------------------------------------------------------------------------------------------------------
      Total stockholders' equity                                                                1,656,689           1,243,628
-----------------------------------------------------------------------------------------------------------------------------
                                                                                             $  7,811,741        $  7,360,206
=============================================================================================================================
</TABLE>
         See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

<TABLE>
<CAPTION>
                                                                             News Communications, Inc.
                                                                                      and Subsidiaries


                                                                  Consolidated Statement of Operations

                                                                        Year ended November 30,              One month
                                                                      --------------------------               ended
                                                                                                            December 31,
                                                                       1998                1999                 1999
<S>                                                             <C>                 <C>                 <C>
-------------------------------------------------------------------------------------------------------------------------
Net revenues                                                          $17,822,070         $18,312,254          $1,184,829
-------------------------------------------------------------------------------------------------------------------------
Operating expenses:
 Salaries, benefits and outside labor costs                             9,787,867          11,033,731             802,710
 Direct mechanical costs                                                5,658,234           5,664,282             414,466
 General and administrative                                             2,788,938           2,050,731             217,195
 Provision for doubtful accounts                                          699,269           1,967,126              60,500
 Rent, occupancy and utilities                                            881,291             949,158              78,343
-------------------------------------------------------------------------------------------------------------------------
   Total operating expenses                                            19,815,599          21,665,028           1,573,214
-------------------------------------------------------------------------------------------------------------------------
   Loss from operations                                                (1,993,529)         (3,352,774)           (388,385)
Interest expense                                                         (322,970)           (238,341)            (15,360)
-------------------------------------------------------------------------------------------------------------------------
       Loss before minority interest and equity in loss of
        unconsolidated entities                                        (2,316,499)         (3,591,115)           (403,745)
Less:
 Minority interest in income of subsidiary                                178,600              42,399             (10,115)
 Equity in loss of unconsolidated entities                                216,636             200,000              16,667
-------------------------------------------------------------------------------------------------------------------------
Net loss                                                              $(2,711,735)        $(3,833,514)         $ (410,297)
=========================================================================================================================
Loss per common share -
 Basic and diluted                                                         $(1.01)              $(.66)              $(.06)
=========================================================================================================================
Weighted average number of common shares outstanding                    2,721,670           5,767,606           6,904,513
=========================================================================================================================
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

<TABLE>
<CAPTION>
                                                                             News Communications, Inc.
                                                                                      and Subsidiaries


                                               Consolidated Statement of Stockholders' Equity (Deficit)


Years ended November 30, 1998 and 1999 and one month ended December 31, 1999
-----------------------------------------------------------------------------------------------------------------
                                                                       Paid-in
                                               Preferred stock         capital-               Common stock
                                        ---------------------------    preferred       -------------------------
                                           Shares        Amount          stock            Shares       Amount
-----------------------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>                  <C>            <C>              <C>

Balance, November 30, 1997                200,340          $200,340      $2,077,025           2,737,410  $27,373
Stock issued in connection with
 purchase of Nassau Newspapers                  -                 -               -              48,714      487
Issuance of $10 convertible preferred
 stock                                     20,000            20,000         180,000                   -        -
Stock issued as preferred dividends             -                 -               -               5,876       59
Dividends on preferred stock                    -                 -               -                   -        -
Net loss                                        -                 -               -                   -        -

Balance, November 30, 1998                220,340           220,340       2,257,025           2,792,000   27,919
Rights offering                                 -                 -               -           3,833,333   38,333
Costs associated with offering                  -                 -               -                   -        -
Conversion of 5 shares 10% preferred
 into 3,000 shares of common stock             (5)               (5)        (17,985)              3,000       30
Conversion of 2,500 shares $10
 preferred to 4,167 common stock           (2,500)           (2,500)        (22,500)              4,167       42
Stock issued as preferred dividends             -                 -               -               6,174       62
Issuance of 250,000 shares common stock
 par $.01 at $1.8125                            -                 -               -             250,000    2,500
Dividends on preferred stock                    -                 -               -                   -        -
Net loss                                        -                 -               -                   -        -

Balance, November 30, 1999                217,835           217,835       2,216,540           6,888,674   68,886
Conversion of 20,000 shares $10
 preferred to 133,333 shares of common
 stock                                    (20,000)          (20,000)       (180,000)            133,333    1,333
Dividends on preferred stock                    -                 -               -                   -        -
Net loss                                        -                 -               -                   -        -
-----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                197,835          $197,835      $2,036,540           7,022,007  $70,219
-----------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Years ended November 30, 1998 and 1999 and one month ended December 31, 1999
---------------------------------------------------------------------------------------------------------
                                         Paid-in                                                Total
                                        capital -                                           stockholders'
                                         common                             Treasury           equity
                                          stock            Deficit           stock            (deficit)
<S>                                     <C>           <C>                    <C>             <C>
---------------------------------------------------------------------------------------------------------
Balance, November 30, 1997              $14,486,654        $(14,049,876)     $(408,729)       $ 2,332,787
Stock issued in connection with
 purchase of Nassau Newspapers                 (487)                  -              -                  -
Issuance of $10 convertible preferred
 stock                                            -                   -              -            200,000
Stock issued as preferred dividends          12,941             (13,000)             -                  -
Dividends on preferred stock                      -             (33,121)             -            (33,121)
Net loss                                          -          (2,711,735)             -         (2,711,735)
---------------------------------------------------------------------------------------------------------
Balance, November 30, 1998               14,499,108         (16,807,732)      (408,729)          (212,069)
Rights offering                           5,711,667                   -              -          5,750,000
Costs associated with offering             (467,709)                  -              -           (467,709)
Conversion of 5 shares 10% preferred
 into 3,000 shares of common stock           17,960                   -              -                  -
Conversion of 2,500 shares $10
 preferred to 4,167 common stock             24,958                   -              -                  -
Stock issued as preferred dividends          10,438             (10,500)             -                  -
Issuance of 250,000 shares common stock
 par $.01 at 1.8125                         450,625                   -              -            453,125
Dividends on preferred stock                      -             (33,144)             -            (33,144)
Net loss                                          -          (3,833,514)             -         (3,833,514)
---------------------------------------------------------------------------------------------------------
Balance, November 30, 1999               20,247,047         (20,684,890)      (408,729)         1,656,689
Conversion of 20,000 shares $10
 preferred to 133,333 shares of common
 stock                                      198,667                   -              -                  -
Dividends on preferred stock                      -              (2,764)             -             (2,764)
Net loss                                          -            (410,297)             -           (410,297)
---------------------------------------------------------------------------------------------------------
Balance, December 31, 1999              $20,445,714        $(21,097,951)     $(408,729)       $ 1,243,628
=========================================================================================================
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>

<TABLE>
<CAPTION>
                                                                             News Communications, Inc.
                                                                                      and Subsidiaries


                                                                  Consolidated Statement of Cash Flows


                                                                                                           One month
                                                                         Year ended November 30,             ended
                                                                       ---------------------------        December 31,
                                                                            1998          1999                1999
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>           <C>           <C>
Cash flows from operating activities of continuing operations:
 Net loss                                                               $(2,711,735)  $(3,833,514)           $ (410,297)
 Adjustments to reconcile net loss to net cash provided by (used in)
  operating activities:
    Depreciation and amortization                                           485,978       426,891                41,652
    Provision for doubtful accounts                                         699,269     1,967,126                60,500
    Amortization of debt discount                                            99,329             -                     -
    Noncash compensation to officer                                               -       453,125                     -
    Minority interest                                                       178,600        42,399               (10,115)
    Loss from unconsolidated entities                                       216,636       200,000                16,667
    Changes in assets and liabilities:
      (Increase) decrease in:
       Accounts receivable                                                 (475,936)   (1,219,763)              263,884
       Other current assets                                                (100,194)       25,496               (28,119)
       Other assets                                                          30,656      (109,096)                3,125
       Related party receivable                                               1,196         8,217                   635
      Increase (decrease) in:
       Accounts payable                                                   1,033,350    (1,070,296)              105,274
       Accrued expenses                                                     421,945       396,079              (114,542)
       Other current liabilities                                             57,135       (44,245)               (7,527)
       Related party payable                                                251,750       (67,178)              (11,564)
-----------------------------------------------------------------------------------------------------------------------
         Net cash provided by (used in) operating activities of
          continuing operations                                             187,979    (2,824,759)              (90,427)
-----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities of continuing operations:
 Capital expenditures                                                      (139,949)     (226,527)               (7,823)
 Investment in unconsolidated entities                                     (312,000)     (206,196)              (13,984)
-----------------------------------------------------------------------------------------------------------------------
         Net cash used in investing activities of continuing
          operations                                                       (451,949)     (432,723)              (21,807)
-----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities of continuing operations:
 Proceeds from common stock                                                 200,000             -                     -
 Proceeds from rights offering                                                    -     5,750,000                     -
 Costs associated with rights offering                                            -      (467,709)                    -
 Principal payments on notes payable                                       (150,000)     (750,000)                    -
 Dividend on preferred stock                                                (33,121)      (33,144)               (2,764)
-----------------------------------------------------------------------------------------------------------------------
         Net cash provided by (used in) financing activities of
          continuing operations                                              16,879     4,499,147                (2,764)
-----------------------------------------------------------------------------------------------------------------------
Net cash used in discontinued operations                                    (53,908)            -                     -
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                            (300,999)    1,241,665              (114,998)
Cash, beginning of period                                                   424,620       123,621             1,365,286
-----------------------------------------------------------------------------------------------------------------------
Cash, end of period                                                     $   123,621   $ 1,365,286            $1,250,288
=======================================================================================================================
Supplemental disclosures of cash flow information:
 Cash paid during the period for interest                               $   171,249   $   175,654            $   12,188
 Stock issued as preferred dividend                                          13,000        10,500                     -
=======================================================================================================================
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements



<TABLE>
<S>      <C>                    <C>
1.       Organization and       Description of Business -  News Communications, Inc., a Nevada
         Industry Segment       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, which is the news publication business.

                                Change in Year-End - In December 1999, the Company elected to
                                change its year-end to December 31 from November 30. This change
                                was made effective December 31, 1999.

2.       Summary of             Principles of Consolidation - The consolidated financial
         Significant            statements of the Company include the accounts of the parent
         Accounting Policies    company and its wholly-owned and majority-owned subsidiaries.
                                Investments in unconsolidated affiliates which are 50% or less
                                owned are accounted for under the equity method. All intercompany
                                accounts and 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. Estimates have been made by
                                management with respect to the Company's allowance for doubtful
                                accounts, amortization relating to goodwill and tradenames, among
                                other items. Actual results could differ from those estimates.
</TABLE>

                                      F-7
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements



<TABLE>
<S>                          <C>
                                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:
</TABLE>


<TABLE>
<CAPTION>
                                                                                   Years
-----------------------------------------------------------------------------------------------
<S>                                                                          <C>
Furniture, fixtures and office equipment                                            5-10
Leasehold improvements                                                       Shorter of useful
                                                                             life of asset or
                                                                             length of lease
Computer equipment                                                                    5
Distribution boxes                                                                    5
-----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>                             <C>

                                Tradenames - Tradenames are amortized over ten to twenty years on
                                a straight-line basis.

                                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.

                                Revenue Recognition - Advertising revenues are earned when
                                advertisements appear in the various publications. Unearned
                                revenues of $150,542 and $143,015 at November 30, 1999 and
                                December 31, 1999, respectively, represent future advertisements
                                that have been paid for by customers in advance.

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

                                Seasonality - One of the Company's publications (which generated
                                approximately 24% of revenues in fiscal 1998 and 1999 and
                                approximately 14% for the one month ended December 31, 1999) 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.
</TABLE>

                                      F-8
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements
<TABLE>
<S>                             <C>
                                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, 1999 and December 31, 1999, the
                                Company had no funds with financial institutions subject to a
                                credit risk beyond the insured amount.

                                Loss Per Common Share - Basic loss per share includes no dilution
                                and is computed by dividing loss available to common shareholders
                                by the weighted average number of common shares outstanding for the
                                period. Diluted loss per share reflects the potential dilution
                                from the assumed exercise of stock options, warrants and conversion
                                of Preferred stock. Diluted loss per share has not been
                                presented for the years ended November 30, 1998 and 1999 and the
                                one month ended December 31, 1999, as the effects of stock options
                                would be anti-dilutive. Accordingly, basic and dilutive earnings per
                                share did not differ for the years ending November 30, 1998 and 1999
                                and the one month ended December 31, 1999.

                                For the years ended November 30, 1998 and 1999 and the one month ended
                                December 31, 1999, options to purchase 627,713, 867,183 and 1,618,332
                                shares of common stock, warrants to purchase 600,000, 566,667 and 566,667
                                shares of common stock and convertible preferred shares of 409,885,
                                402,971 and 371,658, respectively, were not included in the computation of
                                diluted loss per share because the effect would be antidilutive.

                                Income Taxes - Income taxes are calculated using the liability
                                method specified by SFAS No. 109 "Accounting for Income Taxes."
                                SFAS 109 requires a company to recognize deferred tax liabilities
                                and assets for the expected future tax consequences of events
                                that have been recognized in a company's financial statements or
                                tax returns. Under this method, deferred tax liabilities and
                                assets are determined based on the difference between the
                                financial statement carrying amounts and tax basis of assets and
                                liabilities using enacted tax rates in effect in the years in
                                which the differences are expected to reverse. Deferred tax
                                assets are reduced by a valuation allowance to the extent
                                realization is uncertain.

</TABLE>

                                      F-9
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>                             <C>
                                Stock Options - The Company accounts for stock options in
                                accordance with SFAS No. 123 "Accounting for Stock Based
                                Compensation," which allows a choice of either the intrinsic
                                value method or the fair value method of accounting for employee
                                stock options.  The Company has elected to use the current
                                intrinsic value method.

                                Long-Lived Assets - Long-lived assets, such as intangibles and
                                property and equipment, are evaluated for impairment when events
                                or changes in circumstances indicate that the carrying amount of
                                the assets may not be recoverable through the estimated
                                undiscounted future cash flows from the use of these assets. When
                                any such impairment exists, the related assets will be written
                                down to fair value. No impairment losses have been necessary
                                through December 31, 1999.

                                Restatement - The financial statements and related notes have
                                been restated to give retroactive effect to a one-for-three
                                reverse stock split on January 19, 1999.

                                Segment Information - The Company adopted SFAS No. 131,
                                "Disclosures about Segments of an Enterprise and Related
                                Information" for fiscal 1999.  The statement requires disclosure
                                of certain financial information related to operating segments.
                                The Company has determined that it operates in one reportable
                                segment.
</TABLE>

                                      F-10
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
3.       Property and Equipment            Major classes of property and equipment are as
                                           follows:
                                                     November 30,           December 31,
                                                         1999                  1999
-----------------------------------------------------------------------------------------
<S>                                                 <C>                     <C>
Leasehold improvements                                  $269,703               $225,180
Computer equipment and software                          421,725                424,448
Machinery and equipment                                   20,235                  8,139
Furniture, fixtures and office
  equipment                                              103,358                103,357
Distribution boxes                                        73,763                 73,763
-----------------------------------------------------------------------------------------
                                                         888,784                834,887
Less:  Accumulated depreciation and
 amortization                                            470,474                429,378
-----------------------------------------------------------------------------------------
Property and equipment, net                             $418,310               $405,509
=========================================================================================
</TABLE>

<TABLE>
<S>      <C>                    <C>
                                Depreciation expense for the years ended November 30, 1998 and
                                1999 amounted to $166,337 and $168,411, respectively.
                                Depreciation expense for the one month ended December 31, 1999
                                amounted to $20,624.

4.       Intangible Assets      Intangible assets consist of goodwill and tradenames. Intangibles
                                are amortized on a straight-line basis over their estimated
                                lives, which vary from 10 to 20 years. Tradenames and goodwill as
                                of November 30, 1999 and December 31, 1999 consisted of:
</TABLE>


<TABLE>
<CAPTION>
                                               November 30,       December 31,
                                                                                  Useful lives
----------------------------------------------------------------------------------------------
<S>                                      <C>                <C>                   <C>
Goodwill                                        $2,117,708         $2,117,708     10-20 years
Tradenames                                       2,850,000          2,850,000     10-20 years
----------------------------------------------------------------------------------------------
                                                 4,967,708          4,967,708
Less:  Accumulated amortization:
      Goodwill                                     883,496            893,649
    Tradenames                                   1,161,651          1,172,526
----------------------------------------------------------------------------------------------
                                                $2,922,561         $2,901,533
==============================================================================================
</TABLE>

<TABLE>
<S>      <C>                    <C>
                                Amortization expense of $297,483 and $258,480 was recognized for
                                the years ended November 30, 1998 and 1999, respectively.
                                Amortization expense for the one month ended December 31, 1999
                                amounted to $21,028.
</TABLE>

                                      F-11
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements
<TABLE>
<S>                                                                      <C>
5.       Related Parties        Short-term note payable in the amount of $1,000,000 at November
                                30, 1999 and December 31, 1999 consisted of a promissory note due
                                to a principal shareholder of the Company, which is included in
                                due to related party. The note was originally due on June 21,
                                1999, but was extended until January 31, 2000. The note has a
                                stated interest rate of 8.5 percent per annum. Interest is
                                payable quarterly commencing July 1, 1996. As of November 30,
                                1999, accrued interest was approximately $184,000. As of December
                                31, 1999, accrued interest was approximately $191,000. As
                                additional consideration for the promissory note, in 1996
                                detachable warrants to purchase 66,667 shares of the Company's
                                common stock at $7.50 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.

                                Short-term note payable in the amount of $1,500,000 at November
                                30, 1999 and December 31, 1999 consisted of a promissory note due
                                to an affiliate of a principal shareholder and officer of the
                                Company. The note was originally due on December 31, 1998, but
                                was extended until January 31, 2000. The note 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 100,000 shares of the
                                Company's common stock at $6.75 per share were issued to the
                                lender and, accordingly, $91,800 of the proceeds of the note were
                                allocated to the warrants in 1997 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.

                                Interest expense for the years ended November 30, 1998 and 1999,
                                relating to the above notes was approximately $231,000. Interest
                                expense for the one month ended December 31, 1999 amounted to
                                approximately $19,000.
</TABLE>

                                      F-12
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>                             <C>
                                On January 31, 2000 the Company sold an aggregate of 1,548,869
                                shares of common stock at a price of $1.75. The proceeds of the
                                sale were used to pay the $1,000,000 and $1,500,000 short-term
                                notes payable referred to above, along with the accrued interest
                                in the amount of $210,520.

                                Certain Company office facilities are leased from an officer of a
                                subsidiary of the Company. Rental expense amounted to
                                approximately $52,000 and $66,000 for the years ended November
                                30, 1998 and 1999, respectively. Rent expense for the one month
                                ended December  31, 1999 amounted to approximately $6,300.  The
                                lease payment 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 expired on
                                October 31, 1998. A new lease was entered into on October 31,
                                1998 with the same terms as the original lease.

                                Amounts owed to an officer of a subsidiary of the Company for a
                                bonus and expenses amounted to approximately $43,000 at November
                                30, 1999 and December 31, 1999. Amounts due to another officer of
                                a subsidiary of the Company for a bonus and expenses amounted to
                                approximately $73,000 and $60,000 at November 30, 1999 and
                                December 31, 1999, respectively.  Amounts due to other employees
                                for bonuses amounted to $35,000 and $25,000 at November 30, 1999
                                and December 31, 1999, respectively.

                                Revenues from related parties amounted to $44,750 and $24,350
                                during the years ended November 30, 1998 and 1999, respectively.
                                Revenues from related parties for the one month ended December
                                31, 1999 amounted to $-0-.
</TABLE>

                                      F-13
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>      <C>                    <C>
6.       Fair Value of          SFAS No. 107, "Disclosures about Fair Value of Financial
         Financial              Instruments," and SFAS No. 119, "Disclosure about Derivative
         Instruments            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, 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, 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.       Leases                 The Company leases all operating facilities under operating
                                leases expiring through October 2008. Rent expense under
                                operating leases was approximately $513,000 and $560,000 for the
                                years ended November 30, 1998 and 1999, respectively. Rent
                                expense for the one month ended December 31, 1999 was
                                approximately $46,000.

                                The future minimum payments under noncancelable operating leases
                                consisted of the following at December 31, 1999:
</TABLE>


<TABLE>
<CAPTION>
Fiscal year ending December 31,                                               Operating leases
-----------------------------------------------------------------------------------------------
<S>                                                                          <C>
2000                                                                                 $  565,677
2001                                                                                    395,567
2002                                                                                    392,122
2003                                                                                    360,743
2004                                                                                    269,183
Thereafter                                                                              182,179
-----------------------------------------------------------------------------------------------
                                                                                     $2,165,471
===============================================================================================
</TABLE>
<TABLE>
<S>      <C>                    <C>
                                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.

</TABLE>

                                      F-14
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>      <C>                    <C>
8.       Commitments and        The Company has an employment agreement expiring in 2007 with the
         Contingencies          President of DPI. The agreement stipulates an annual salary of
                                $144,000, 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 of approximately $50,000
                                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, 1999 and December 31, 1999, the value
                                of the put option based on the aforementioned formula was
                                approximately $1.4 million. The option is related to the 1988
                                acquisition of DPI by the Company.

                                In July 1999, NCI entered into a five-year employment agreement
                                with the CEO and president of the Company. The agreement
                                stipulates a base salary of $185,000 (adjusted for increases in
                                the consumer price index), bonuses and other benefits. In
                                addition, the agreement also calls for the awarding of 250,000
                                shares of the Company's common stock and options for 830,000
                                shares of the Company's common stock (see Note 9). Compensation
                                expense associated with the above transaction amounted to
                                approximately $657,000 and is included in the year ended November
                                30, 1999 salaries benefits and outside labor costs expense.

</TABLE>

                                      F-15
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>                             <C>
                                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 called for an annual salary of
                                $195,000 and certain other benefits. Stock options for 100,000
                                shares of the Company's common stock at an exercise price of
                                approximately $7.14 per share, which were awarded to the Chairman
                                in connection with the agreement, expired on August 31, 1998. 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. In July
                                1999, the agreement was modified reducing the annual salary to
                                $95,000 and the chairman of the board received a one-time payment
                                of $150,000. The $150,000 is being amortized over the remaining
                                four years of the agreement. In addition, all of the Chairmans'
                                unexpired options were extended to July 2004.
</TABLE>

                                      F-16
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>      <C>                    <C>
9.       Common Stock           At November 30, 1999 and December 31, 1999, the Company has
                                approximately 3,152,506 and 3,019,173 shares of common stock,
                                respectively, reserved for issuance upon conversion of
                                outstanding preferred stock and exercise of options and warrants.

                                In January 1999, there was a one-for-three reverse stock split
                                for the Company's common stock.

                                In January 1999, the Company distributed 6,174 shares of its
                                common stock in payment of $500 dividend per share due holders
                                as of September 19, 1999 on each of the 21 shares of 10%
                                nonvoting convertible preferred stock.

                                In February 1999, the Company completed a stock rights offering
                                of 3,833,333 shares of its common stock at $1.50 per share for
                                gross proceeds of $5,750,000.

                                In July 1999, the Company issued 250,000 shares of its common
                                stock to an officer of the Company in accordance with the terms
                                of his agreement (see Note 8).

                                In May 1999, the Company converted 2,500 shares of $10 preferred
                                stock to 4,167 shares of common stock.

                                During the year ended November 30, 1999, the Company converted
                                five shares of its 10% preferred stock to 3,000 shares of common
                                stock.

                                In December 1999, the Company converted 20,000 shares of $10
                                preferred stock to 133,333 shares of common stock.

</TABLE>

                                      F-17
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

10.      Preferred Stock        Preferred stock consisted of the following:

<TABLE>
<CAPTION>
                                                   November 30, 1999      December 31, 1999
---------------------------------------------------------------------------------------------
<S>                                                     <C>                   <C>
10% nonvoting convertible preferred stock,
   1,250 shares authorized; 21 shares issued
   and outstanding, $500 per share per annum
   cumulative dividends, $105,000 liquidation
   value.                                                $       21            $       21
8% convertible preferred stock, 500 shares
   authorized, 114 shares issued and
   outstanding, $80 per share per annum
   cumulative dividends, $114,000 liquidation
   value.                                                       114                   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                   200
$10 convertible preferred stock, 220,000
   shares authorized, 217,500 and 197,500
   issued and outstanding, $2,175,000 and
   $1,975,000 liquidation value, respectively.              217,500               197,500
==============================================================================================
 (a)      The 10% nonvoting  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 600  shares of common
          stock  for  each  share  of  preferred  stock,  subject  to  standard  anti-dilution
          provisions.
</TABLE>

                                      F-18
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>                     <C>

                                During 1999, holders of the Company's 10% convertible preferred
                                stock converted 5 shares into 3,000 shares of common stock. As a
                                result, common stock at par increased by $30, additional paid-in
                                capital - common stock increased by $17,960, preferred stock at
                                par decreased by $5 and additional paid-in capital - preferred
                                stock decreased by $17,985.

                           (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 $6.30, 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.

                                During the years ended November 30, 1998 and 1999, cash dividends
                                totaling $33,121 and $33,144, 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 266,667 shares of common stock at $6.00 per share
                                (see Note 14) for an aggregate consideration of $2,000,000. 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 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. In July 1999, the $10 convertible preferred stockholders waived
                                this right through July 2004.
</TABLE>

                                      F-19
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>                         <C>

                                During 1999, holders of the Company's $10 convertible preferred
                                stock converted 2,500 shares into 4,167 shares of common stock.
                                As a result, common stock at par increased by $42, additional
                                paid-in-capital common stock increased by $24,958, preferred
                                stock at par decreased by $2,500 and additional paid-in-capital
                                preferred stock decreased by $22,500.

                                During December 1999, holders of the Company's $10 preferred
                                stock converted 20,000 shares into 133,333 shares of common
                                stock. As a result, common stock at par increased by $1,333,
                                additional paid-in-capital common stock increased by $198,667,
                                preferred stock at par decreased by $20,000 and additional
                                paid-in-capital preferred stock decreased by $180,000.

                                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.

                                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 $6.00, and is subject to adjustments generally
                                for dilution or decline in the market price below $6.00.

                                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.
</TABLE>

                                      F-20
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>      <C>                    <C>
11.      Stock-Based            SFAS No. 123, "Accounting for Stock-Based Compensation,"
         Compensation           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. The fair value of options for purposes
                                of the SFAS No. 123 pro forma disclosures has been estimated
                                using a Black-Scholes option pricing model. No options were
                                granted by the Company during 1998.

                                In July 1999, the Company entered into a stock option agreement
                                with an officer of the company.  The Company granted options to
                                purchase 830,000 shares of common stock at an exercise price of
                                $1.8125 per share.  The options vest in four equal installments
                                of 207,500 shares commencing in July 2000.

                                In July 1999, the Company entered into a stock option agreement with
                                two directors for five year options to purchase an aggregate of
                                350,000 shares of common stock at an exercise price of $2.25 per share.
                                The options are immediately exercisable.

                                In August 1999, the Company entered into a stock option agreement with
                                an officer for options to purchase 100,000 shares of common stock at
                                an exercise price of $1.625 per share.  The options vest in four equal
                                installments of 25,000 shares, commencing in August 2000.

                                Information regarding the Company's stock option plans is as
                                follows:
</TABLE>

                                      F-21
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>                     <C>

                            (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 122,222 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, 1998 and 1999 and
                                December 31, 1999, 45,000, 39,999 and 39,999 options were
                                exercisable, respectively. The following is a summary of
                                transactions:
</TABLE>

<TABLE>
<CAPTION>
                                              November 30,        December 31,
                                           1998         1999           1999
-----------------------------------------------------------------------------------
<S>                                     <C>          <C>          <C>
Outstanding, beginning of period            45,555       45,000        39,999
Granted during the period                        -            -             -
Terminated during the period                  (555)      (5,001)            -
-----------------------------------------------------------------------------------
Outstanding, end of period(1)               45,000       39,999        39,999
===================================================================================

(1)  With an exercise price per share ranging from $6.00 to $9.38, giving effect
     to the one-for-ten reverse stock split, which occurred on May 12, 1992, and
     the one-for-three reverse stock split which occurred on January 19, 1999.
     The weighted average exercise price per share at November 30, 1998 and 1999
     and December 31, 1999 was $7.20, $7.22 and $7.22, respectively.
</TABLE>

                                      F-22
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements


     At November 30, 1998 and 1999 and December 31, 1999, there were 77,222,
     82,223 and 82,223 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, respectively.

(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 666,667 shares of common
     stock to directors and officers of the Company and its subsidiaries which
     shall be exercisable at the market price on the date of grant for periods
     (generally five years) and, under certain conditions, specified by the
     Board in such grants. Options under the Discretionary Option Plan are
     nonqualified and nonincentive 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 years ended November 30, 1999 and 1998.

     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 3,333 shares of common stock at the market price on the date of
     the grant. The Non-Discretionary Option Plan also provides that any person
     becoming a director within the six months after any August 17 will be
     granted options. On August 17, 1999, options to purchase 30,000 shares of
     common stock were granted at an exercise price of $1.625 per share.

                                      F-23
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

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

<TABLE>
<CAPTION>

                                                                  November 30,
                                                         ----------------------------     December 31,
                                                               1998          1999             1999
------------------------------------------------------------------------------------------------------
<S>                                                        <C>           <C>           <C>
Outstanding, beginning of year                                  666,833       498,500          368,333
Expired during the year                                        (168,333)     (160,167)              --
Granted during the year                                              --        30,000               --
------------------------------------------------------------------------------------------------------
Outstanding, end of year (1)                                    498,500       368,333          368,333
======================================================================================================

     (1)  With an exercise price per share ranging from $1.63 to $8.07. The
          weighted average exercise price at November 30, 1999 and December 31,
          1999 was $6.05 per share.

For purposes of pro forma disclosure, the estimated fair value of the options is
amortized to expense over the options' vesting period. The fair value of these
options was estimated at the date of grant using a Black-Scholes options pricing
model with the following weighted-average assumptions for 1999, risk-free
interest rates from 5.75% to 5.82%; volatility factor of the expected market
price of the Company's Common Stock of 45.8%; and a weighed-average expected
life of the options of 4.97 years. The Company's pro forma information relative
to the Company's option plan is as follows:

                                                               One month
                                         Year ended              ended
                                          November              December
                                          30, 1999              31, 1999
------------------------------------------------------------------------------
Pro Forma Net Loss:

Net loss as reported                    $  (3,833,514)       $  (410,297)

Additional compensation
expense under SFAS #123                      (426,184)           (55,674)

------------------------------------------------------------------------------
                                          $(4,259,703)       $  (465,971)
==============================================================================
</TABLE>

                                      F-24
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements


                      During the year ended November 30, 1998, no options were
                      granted and therefore pro forma information has only been
                      presented for the year ended November 30, 1999 and the one
                      month ended December 31, 1999.

12.     Stock         At December 31, 1999, the Company has 566,667 shares of
        Warrants      stock reserved for issuance upon exercise of warrants.
                      Information regarding the Company's warrants outstanding
                      is as follows:

                      Non-Redeemable Warrants - At November 30, 1998 and 1999
                      and December 31, 1999, the Company had outstanding
                      600,000, 566,667 and 566,667 nonredeemable warrants,
                      respectively. Each warrant entitles the holder to purchase
                      one share of the Company's common stock at an exercise
                      price ranging from $6.00 to $7.50 per share. The warrants
                      are all currently exercisable and expire on the following
                      dates:

                        Number of warrants                  Expiration date
                      -------------------------------------------------------
                             200,000                       May 2001
                             266,667                       October 2001
                             100,000                       November 2002
                      -------------------------------------------------------

                      There were no exercises of non-redeemable warrants during
                      the years ended November 30, 1999 and 1998. All of the
                      warrants that expire May 2001 were issued to a principal
                      shareholder of the Company, of which 66,667 were issued in
                      connection with a promissory note (see Note 5) and 133,333
                      were issued as consideration for consulting services. The
                      266,667 warrants expiring in October 2001 were issued with
                      the $10 convertible preferred stock (see Note 11) All of
                      the warrants that expire November 2002 were issued to an
                      affiliate of the principal shareholder of the Company in
                      connection with a promissory note (see Note 5).


                                      F-25
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>      <C>                    <C>

13.      Income Taxes           The Company has a deferred tax asset amounting to approximately
                                $7,300,000 at November 30, 1999 and $7,500,000 at December 31,
                                1999, principally relating to net operating loss carryforwards
                                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 due
                                to the Company's financial condition, its lack of a history of
                                consistent earnings, and possible limitations on the use of
                                carryforwards giving 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, 1999 and December 31, 1999, the Company had
                                net operating loss income tax carryforwards of approximately
                                $13.3 million and $13.7 million, respectively, which expire in
                                the years 2004 through 2018.
</TABLE>

                                      F-26
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements

<TABLE>
<S>      <C>                    <C>                                             <C>
14.      Summary Results of     One month ended December 31, 1998               Unaudited
         Operations
                              ---------------------------------------------------------------------
                                Revenue                                                  $1,263,740
                                Total operating expenses                                  1,503,932
                                Loss from operations                                       (240,192)
                                Taxes                                                             -
                                EPS                                                            (.10)
                              ---------------------------------------------------------------------
</TABLE>

                                      F-27
<PAGE>

                                              News Communications, Inc.
                                                       and Subsidiaries

                             Notes to Consolidated Financial Statements


15.   Recent            In June 1998, the FASB issued SFAS No. 133, "Accounting
      Accounting        for Derivative Instruments and Hedging Activities". SFAS
      Standards         No. 133 requires companies to recognize all derivative
                        contracts at their fair values, as either assets or
                        liabilities on the balance sheet. If certain conditions
                        are met, a derivative may be specifically designated as
                        a hedge, the objective of which is to match the timing
                        of gain or loss recognition on the hedging derivative
                        with the recognition of (1) the changes in the fair
                        value of the hedged asset or liability that are
                        attributable to the hedged risk, or (2) the earnings
                        effect of the hedged forecasted transaction. For a
                        derivative not designated as a hedging instrument, the
                        gain or loss is recognized in income in the period of
                        change. SFAS No. 133 is effective for all fiscal
                        quarters of fiscal years beginning after June 15, 2000.

                        Historically, the Company has not entered into
                        derivative contracts either to hedge existing risks or
                        for speculative purposes. Accordingly, the Company does
                        not expect adoption of the new standard to affect its
                        financial statements.

                        In March 1998, the Accounting Standards Executive
                        Committee issued SOP 98-1, "Accounting for the Costs of
                        Computer Software Developed or Obtained for Internal
                        Use," which is effective for fiscal years beginning
                        after December 15, 1998. SOP 98-1 provides guidance on
                        accounting for costs of computer software developed or
                        obtained for internal use. The pronouncement will not
                        have a material impact on the Company.

16.   Significant       During the fourth quarter of the year ended November 30,
      Fourth            1999, the Company recorded a significant adjustment,
      Quarter           which increased the net loss by approximately
      Adjustments       $1,442,000. The adjustment was to record an additional
                        reserve for uncollectable receivables for approximately
                        $1,442,000.

                                      F-28
<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.


                                 By  /s/ Steven Farbman
                                    ----------------------------------
                                                  Steven Farbman,
                                 President and Chief Executive Officer

     Each person whose signature appears below hereby constitutes and appoints
either Wilbur L. Ross, Jr. or Michael Schenkler his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments to this report, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying all that said attorney-in-fact and agent or his substitute or
substitutes, or any of them, may lawfully do or cause to be done by virtue
hereof.

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

<TABLE>
<CAPTION>
            Signature                               Title                           Date
<S>                                <C>                                      <C>
/s/ Steven Farbman                 President and Chief Executive Officer    February ___, 2000
-------------------------------    (Principal Executive Officer)
Steven Farbman

/s/  Wilbur L. Ross, Jr.           Director                                 February ___, 2000
-----------------------------
Wilbur L. Ross, Jr.

                                   Director                                 February ___, 2000
-----------------------------
Jerry Finkelstein

/s/  Michael Schenkler             Director                                 February ___, 2000
-----------------------------
Michael Schenkler

/s/ Paul Mastronardi               Chief Financial Officer                  February ___, 2000
-----------------------------
Paul Mastronardi

/s/ Robert Berkowitz               Controller                               February ___, 2000
-----------------------------
Robert Berkowitz
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
<S>                                <C>                                      <C>
                                   Director                                 February ___, 2000
-----------------------------
Steven Price

                                   Director                                 February ___, 2000
-----------------------------
Martin A. Bell

                                   Director                                 February ___, 2000
-----------------------------
Robert E. Nederlander

/s/  Gary Weiss                    Director                                 February ___, 2000
-----------------------------
Gary Weiss

/s/ Martin Mendelsohn              Director                                 February ___, 2000
-----------------------------
Martin Mendelsohn
</TABLE>