FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934

             FOR THE TRANSITION PERIOD FROM __________ TO __________

                         COMMISSION FILE NUMBER 0-24404

                             TRANSMEDIA EUROPE, INC.
             ------------------------------------------------------
             (exact name of registrant as specified in its charter)

            Delaware                                              13-3701141
    -----------------------                                   -----------------
        (State or other                                             (I.R.S.
        jurisdiction of                                          Identification
        incorporation of                                               No.)
         organization)

                 11 ST. JAMES'S SQUARE, LONDON SW1Y 4LB, ENGLAND
                 -----------------------------------------------
                    (Address of principal executive offices)

  Registrant's telephone number, including area code: U.K. 011-44-171-930-0706

           Securities registered pursuant to Section 12(g) of the Act

                    Common Stock, par value $.00001 per share
                                (Title of class)

Indicate by (X) whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days

                                    Yes |_|    No |X|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. |_|

The aggregate market value of voting stock held by non-affiliates of the
Registrant as of May 19, 2000 was $52,055,840.

Number of shares outstanding of the Registrant's Common Stock as of May 19, 2000
was 34,867,431

                    Documents incorporated by reference: None

<PAGE>

                             Transmedia Europe, Inc.

                     Form 10-K for the year ended September 30, 1999

                                      Index

                                                                            Page

PART I

      Item 1.       Business                                                   3
      Item 2.       Properties                                                14
      Item 3.       Legal Proceedings                                         15
      Item 4.       Submission of Matters to a Vote of
                    Security Holders                                          16

PART II

      Item 5.       Market for Registrant's Common Stock and
                    Related Stockholder Matters                               17
      Item 6.       Selected Financial Data                                   19
      Item 7.       Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                       21
      Item 7A.      Quantitative and Qualitative Disclosure
                    About Market Risk                                         26
      Item 8.       Financial Statements and Supplementary Data               26
      Item 9.       Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure                       26

PART III

      Item 10.      Directors and Executive Officers of the Registrant        28
      Item 11.      Executive Compensation                                    30
      Item 12.      Security Ownership of Certain Beneficial
                    Owners and Management                                     34
      Item 13.      Certain Relationships and Related Transactions            35
      Item 14.      Exhibits, Financial Statement Schedules and
                    Reports on Form 8-K                                       36

Signatures                                                                    39


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This Annual Report on Form 10-K and the documents incorporated herein contain
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, those described below and those presented elsewhere by management
from time to time. When used in this Annual Report, statements that are not
statements of current or historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "anticipate", "plan,"
"intend," "believe", "estimate" and similar expressions are intended to identify
such forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. Except as required by law, the Company undertakes no obligation to
update any forward-looking statement, whether as a result of new information,
future events or otherwise.

ITEM 1. BUSINESS.

Transmedia Europe, Inc. ("TME" or "the Company") is a global provider of
membership-based consumer and business services through its subsidiaries and
affiliates. These services are primarily marketed to major corporations
providing specifically designed loyalty programs to aid customer acquisition,
activation and retention. The Company's various member-benefit programs are
currently offered in 28 countries and globally via the internet. The Company
estimates that it currently has over 9 million members participating in its
various loyalty programs.

The business of the Company comprises four segments:

1.    The design and supply of a range of loyalty marketing and member benefit
      programs to corporations and affinity groups. Additionally, the Company
      provides member benefit packages to individuals on an international scale,

2.    E-commerce and internet services,

3.    Direct marketing through DBS Direct, and

4.    Travel services.

History

The Company was incorporated under the laws of the State of Delaware in February
1993. On May 19, 1993 the Company acquired, pursuant to a Master License
Agreement ("License Agreement") dated December 14, 1992, as amended April 12,
and August 11, 1993 an exclusive license (the "License") to use certain
trademarks and service marks, proprietary computer software programs and
know-how of Transmedia Network, Inc. ("Network") to establish and operate a
discount restaurant charge card business in clearly defined geographical areas.
On April 7, 2000 the Company and Network executed a termination agreement
("Termination Agreement") pursuant to which the Company agreed to cancel the
License Agreement in return for forgiveness of indebtedness. See "Recent
Developments" below. The License was limited to the United Kingdom and France
(the "Licensed Territories"). The Company commenced operations as a discount
restaurant charge card business in the United Kingdom in January 1994 and in
France in March 1996. Network was issued 496,284 shares of common stock, par
value $.00001 per share ("Common Stock") of the Company, as part consideration
for the License.

The Company has worked closely with Transmedia Asia Pacific, Inc. ("TMAP") for a
number of years. TMAP acquired a similar license to that of the Company to
operate a discount restaurant charge card business in Asia and other Pacific Rim
countries. TMAP commenced operations in Sydney, Australia in November 1994. TMAP
also executed the Termination Agreement on April 7, 2000.

Through 1996 the Company operated solely as a discount restaurant charge card
business in the United Kingdom through its wholly owned subsidiary Transmedia UK
PLC. In late 1996 management identified the need to expand the Company's
operations to become a broader based "member benefits" provider, believing that
the Company needed a range of benefits to offer its corporate clients and
individual members, in addition to discount dining. Such benefits included
discount shopping, travel, hotel accommodation and telephone helpline services.
TMAP made a similar strategic decision. As a result the


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Company and TMAP jointly acquired in April 1997 Countdown Holdings Limited
("Countdown"), an international provider of membership based discount shopping
and services. See "Countdown". In December 1997 the Company and TMAP acquired
control of NHS Australia Pty Limited ("NHS"), through Transmedia Australia
Holdings Pty Limited ("Transmedia Australia"). NHS owned the business operations
of Nationwide Helpline Services Pty Limited ("Nationwide"). NHS is a provider of
telephone helpline services covering advice on legal, tax, accounting, medical
and home emergency. In addition, NHS offers travel related products such as
airline tickets, vacation packages, insurance and provides international medical
case management and repatriation services to a number of insurance companies.
See "Nationwide Helpline Services".

On May 14, 1998 the Company and TMAP jointly acquired Porkpine Limited
("Porkpine"). Porkpine trades as Logan Leisure, a business which produces and
sells discount shopping and services directories in Ireland. See "Logan
Leisure". On May 22, 1998 the Company and TMAP jointly acquired, through
Transmedia Australia Travel Holdings Pty Limited ("Transmedia Holdings"),
Breakaway Travel Club Pty Limited ("Breakaway"). Breakaway is a licensed travel
agent specializing in discount packaged vacations for individuals employed in
the travel industry in Australia. See "Breakaway". In July 1998 the Company and
TMAP jointly established Countdown America, Inc. ("Countdown USA") to offer
member benefits in the United States and in November 1998 Countdown USA acquired
the membership base and certain assets of National Association of Mature
Americans, Inc. ("NAMA"), a provider primarily of discounted mail order and
retail pharmacy products. On November 17, 1998, Transmedia Australia acquired
the balance of 49% of the shares of common stock of NHS. In November 1998
Countdown launched an internet shopping web-site, Countdown-Arcade. Finally, on
June 15, 1999 the Company and TMAP jointly acquired DSS Direct Connect, L.L.C.
("DBS Direct") a marketer and full-service installer of DirecTV. See "DBS
Direct".

Recent Developments

In light of the close collaboration between the Company and TMAP since
incorporation and, more particularly, in view of their joint ownership of
Countdown, NHS, DBS Direct, Countdown USA, Logan Leisure and Breakaway Travel,
management of the Company and TMAP assessed the rationale for a merger of the
two entities. Management believed that keeping the two companies distinct and
separate is not appropriate or advantageous to shareholders and therefore on
December 28, 1999 they executed a definitive merger agreement ("Merger
Agreement"). Under the terms of the Merger Agreement, TMAP will issue one share
of its common stock for each share of Common Stock of the Company. The merger,
which is expected to be completed in the third quarter of 2000, is subject to a
number of conditions, including shareholder approval. The Company and TMAP each
established independent committees to determine the fairness of the proposed
transaction from a financial point of view.

On April 7, 2000 the Company and Network executed Termination Agreement pursuant
to which the Company agreed to cancel the License Agreement in return for
forgiveness of a promissory note in default in the sum of $250,000 together with
accrued interest of approximately $69,000, forgiveness of a non-interest bearing
promissory note in default in the sum of $750,000 and forgiveness of past due
royalty payments under the License Agreement in the sum of approximately
$170,000. The Termination Agreement provides for a transition period through
June 30, 2000 during which period the Company will transfer its restaurant
cardholder and participating restaurant bases to a new discount-dining product
not bearing the Transmedia brand. The Company believes that termination of the
License Agreement was in the best interests of the Company because the License
Agreement was no longer fundamental to the success of the Company's restaurant
card business. The restaurant card business is now an integral part of the
Company's member benefit/loyalty marketing operations and therefore is expected
to operate more favorably under a brand developed by the Company. Further, the
Company developed its own software and systems and therefore the Company
received no benefit from the systems and software provided under the License
Agreement for the conduct of its day-to-day operations. The Company realized
material financial benefit from the Termination Agreement.


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<PAGE>

Current Business Operations

The business of the Company comprises four segments: (i) member benefits/loyalty
marketing, (ii) e-commerce and internet services, (iii) direct marketing and
(iv) travel services.

Member Benefits/Loyalty Marketing Business

The Company's member benefits business has been developed over a number of years
primarily through the acquisition of independent benefit providers. Today, the
Company's member benefits business comprises Countdown, Logan Leisure, Countdown
USA, Transmedia UK plc, and NHS. The Company is increasingly positioned its
member benefits business as a loyalty and affinity marketing service to its
corporate clients.

Countdown

The Countdown business is primarily a membership-based business which arranges
discounts with major suppliers of goods and services for its members. Countdown
has approximately 7 million members and over 75,000 participating merchants in
28 countries. The Countdown business described below has been dramatically
expanded as an e-commerce and internet based business as separately described
later in this section.

Countdown markets membership on a retail and corporate basis. Retail marketing
involves selling membership to individuals. Memberships sold on this basis
represent a very small portion of total membership. Members pay an annual
membership fee, currently approximately $83, which entitles them to a Countdown
card. Members present their Countdown card at the point of sale when making
purchases from participating merchants. Presentation of the Countdown card
entitles the cardholder to a discount, at the time of purchase, of between 5%
and 50% off the merchant's normal selling price. When members receive their
Countdown card they also receive a directory of participating merchants.
Directories are prepared on both a geographical and product and service basis,
enabling Countdown to supply a directory of participating merchants to
cardholders specific to the geographical area in which the cardholder lives.

Corporate membership marketing involves the sale of membership packages to
corporations, professional organizations, trade unions, etc. In essence
corporate marketing is a loyalty marketing service provided to corporate
clients. In the case of corporate loyalty marketing, the group or organization
purchases a tailored membership for its own customers, members or employees.
Such customers, members or employees receive a Countdown card (typically a
co-branded card) and a directory for use as in the case of individual membership
described above. The annual fee charged on a wholesale basis is typically 10% or
less of the individual annual membership fee.

Countdown has, over a number of years, attracted over 75,000 participating
merchants worldwide from over 45 different retail categories including clothing,
household and leisure goods and services. Countdown does not pay or receive any
fee or royalty to or from participating merchants. Countdown benefits from
merchant participation by being able to offer a wider range of discount
opportunities to its members. Participating merchants are carefully selected and
benefit by attracting incremental business.

Countdown also operates a voucher system with United Kingdom based participating
merchants and others. This segment of the business involves Countdown purchasing
gift vouchers from major retailers which can be used to pay for goods and
services at such major retailer's outlets. Countdown sells such vouchers to its
members who can use the vouchers at face value to make purchases from the
issuing retailer. These vouchers are typically sold by Countdown to its members
at a discount from face value of approximately 5% - 10%.


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Although TMAP has significant influence over the operating and financial
decisions of Countdown, the Company has effective control over the operations of
Countdown. Accordingly, Countdown's operations are consolidated in the financial
statements of the Company.

Logan Leisure

Porkpine operates two businesses trading as Logan Leisure and Logan Leisure &
Entertainment. Both businesses produce and sell books of vouchers ("Voucher
Directories") which entitle the holder to discounts and savings on a range of
products and services including hotel accommodation, restaurants, golf clubs and
general merchandise. Logan Leisure in Northern Ireland and Logan Leisure and
Entertainment in the Republic of Ireland negotiate discounts from a range of
suppliers of goods and services who agree to the inclusion of a voucher
representing such discount in the Voucher Directory. Voucher Directories are
produced annually and are sold to consumers for approximately $160. To take
advantage of a particular discount, the consumer extracts the relevant voucher
from the Voucher Directory and presents it to the merchant at the point of sale
with his or her membership card.

Although TMAP has significant influence over the operating and financial
decisions of Porkpine, the Company has effective control over the operations of
Porkpine. Accordingly, Porkpine's operations are consolidated in the financial
statements of the Company.

Countdown USA

Healthcare products and services are the cornerstone of the Countdown USA
benefits program. Such products and services include mail order and retail
pharmacy, eyewear and hearing products, medical supplies and equipment. In
November 1998 Countdown USA acquired the membership base and certain business
assets NAMA. The acquisition provided Countdown USA with an established
membership base as well as a defined set of benefit packages. Additionally, the
business assets acquired included a series of contracts pursuant to which NAMA
provides customized benefit packages, on a wholesale basis, to other membership
based organizations and corporations throughout the United States.

Although TMAP has significant influence over the operating and financial
decisions of Countdown USA, the Company has effective control over Countdown
USA. Accordingly, the operations of Countdown USA are consolidated in the
financial statements of the Company.

Transmedia UK plc

Transmedia UK plc operates a restaurant card business. The restaurant card is a
charge card used by a cardholder in lieu of a credit card to pay for purchases
at participating restaurants. Using the restaurant card for such purchases
entitles the cardholder to a 25% discount on the food and beverage element of
purchases made at such participating restaurants (i.e. the total purchase price
excluding taxes and service). The restaurant card charges are collected from a
credit card nominated by the cardholder when the restaurant card is first
issued.

Pursuant to the terms of the License and the Termination Agreement the Company
is authorized, through June 30, 2000, to engage in the restaurant charge card
business within the Licensed Territories in the same manner that Network
operates in the United States. The Company was obligated under the License to
pay royalties to Network. Through December 31, 1999 the Company's restaurant
cardholders and cardholders of Network and its franchisees could use the
restaurant card in all territories covered by the Company, Network and its
franchisees. The Company realized all financial benefit from restaurant card
usage within the Licensed Territories but no financial benefit from usage
outside the Licensed Territories. Upon termination of the License Agreement the
Company's business will be independent of Network's and only the Company's
cardholders will be able to use the service.

The restaurant charge card business operates as follows:


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o     The Company identifies restaurants suitable to participate in the program
      and negotiates an agreement pursuant to which they agree to become
      participating restaurants ("Participating Restaurants").

o     The Company advances cash ("Restaurant Credits") to such Participating
      Restaurants.

o     An individual becomes a cardholder ("Cardholder") by completing an
      application at which time they nominate a credit card through which
      charges incurred using the restaurant charge card are recovered.

o     Restaurant Credits entitle the Company to food and beverage at twice the
      value of the Restaurant Credit referred to as "Food and Beverage Credits".
      In effect the Company purchases food and beverage in advance at a 50%
      discount for its cardholders.

o     The Company recovers Food and Beverage Credits when food and beverage is
      purchased at full retail value at Participating Restaurants by Cardholders
      using their restaurant card.

o     As food and beverage is purchased by Cardholders the Food and Beverage
      Credits outstanding are reduced by the retail value of such purchases and
      the Restaurant Credits outstanding are reduced by one-half of such Food
      and Beverage Credits used. The Company recovers the total value of the
      purchase made from the Cardholder's credit card.

o     The Company pays over to the Participating Restaurant the tax and service
      elements of the total purchase.

o     The Cardholder receives a credit equal to 25% of the value of the food and
      beverage purchased.

o     The Company retains the balance.

o     The Company pays a royalty of 2% of Food and Beverage Credits used to
      Network and 1.3875% of Food and Beverage Credits used as sales
      commissions.

o     The total charge is listed on the cardholder's credit card statement along
      with a separate credit equal to 25% of the value of food and beverage
      purchased at the Participating Restaurant.

o     The Company maintains a current record of the amount of Food and Beverage
      Credits outstanding at each Participating Restaurant.

As of September 30, 1999, the Company had approximately 307 (1998: 175)
Participating Restaurants and approximately 51,000 (1998: 29,048) cardholders in
the United Kingdom. In addition to operating in the UK, the Company also
operated a restaurant card business in France through December 31, 1998 when its
operations were terminated. See "Transmedia France".

Nationwide Helpline Services

Although the Company has significant influence over the operating and financial
decisions of NHS, TMAP has effective control over the operations of NHS.
Accordingly, NHS's operations are accounted for under the equity method in the
financial statements of the Company. The NHS member benefit programs consist
primarily of telephone helpline services, credit card registration and
international medical case management and repatriation services. The NHS
telephone helpline services include telephone advice lines covering legal, tax
and accounting issues as well as some medical and home emergency problems. NHS,
through a wholly owned subsidiary IMAN, also provides international medical case
management and repatriation services for travelers on behalf of a number of
major insurance companies.

NHS is a loyalty marketing business which sells its member-benefit programs on a
wholesale basis to a wide range of corporations who typically brand the services
under their own name. The programs offered by NHS enable it's corporate clients
to provide additional benefits to their own customer base. As of September 30,
1999 NHS had approximately 2.3 million members entitled to use the services.

The Telephone Helpline Services business operates through NHS's retention of the
services of outside lawyers, accountants and others ("Service Providers") to
provide a fixed amount of free advice to its members over the telephone. NHS
pays a retainer to such Service Providers in return for their being available to
provide advice to members. In addition to the retainer, Service Providers hope
to benefit by


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<PAGE>

securing new clients when a member requires assistance beyond the initial
telephone advice. Members are recruited through NHS's sale of its Telephone
Helpline Services to corporations such as banks and insurance companies who make
it available as a benefit to their own customers. NHS contracts to provide the
Telephone Helpline Services to its corporate clients for a period of 1 to 3
years. Such corporations benefit by retaining existing customers and/or gaining
new customers through offering a product not offered by their competitors. NHS
charges client corporations an annual fee per customer. In order to provide the
Telephone Helpline Services NHS operates a 24-hour call center. The call center
receives calls from members and then redirects the call to the appropriate
Service Provider. Members are given a unique telephone number for each category
of help/advice offered. Such unique telephone numbers are different for each
corporate client enabling the call center to answer member calls as the
corporate client's helpline service. Members can be connected to the same
advisor each time they call if a matter is on going. The range of help/advice
offered is broad, covering all types of legal, tax and accounting issues that
members may encounter in their daily lives. In addition, NHS offers a stress and
bereavement counseling service and help and advice on a broad range of other
issues from home emergency, home maintenance and security to credit card
registration and social security advice.

IMAN provides international medical case management and repatriation services
for travelers. IMAN has established an international network of doctors, nurses
and medical advisors who are available to assist travelers who require medical
assistance while abroad. The service extends to repatriation in cases where the
traveler must return home to receive treatment. The IMAN product is sold to a
number of major insurance companies who incorporate the IMAN service within
their travel insurance coverage.

The Company intends to focus the marketing of its member benefits business as a
"loyalty marketing" service in the future. Management believes that it can
maximize operating returns from this segment of its business by concentrating
its selling effort to customized benefit programs for its corporate clients.
Such customized benefit programs will be co-branded and targeted to assist
client corporations in building customer loyalty as well as attracting and
retaining new business.

E-Commerce and Internet Services Business

In November 1998 the Company and TMAP launched an internet shopping and services
program, Countdown-Arcade. Management believes that the development of an
e-commerce business is key to the future success and growth of the Company.
Management further believes that the Countdown-Arcade can be developed to become
a full online international shopping web site offering a broad range of
merchandise and services at discounted prices by utilizing the existing
Countdown participating merchant base. The Countdown Arcade, can be found at
http://www.countdownarcade.com. The Countdown-Arcade offers the ability to
purchase over the internet a range of consumer products primarily from UK
suppliers.

New products and services are being added continuously. In addition, members
have the ability to search for merchandise on a country-by-country basis through
a Countdown-Arcade link to the Countdown database of participating merchants
outside the UK. The Countdown-Arcade includes a variety of consumer products at
deeply discounted prices as well as a number of services including discounted
gift vouchers and a full on-line travel service. In February 1999 the Company
launched a Free Internet Access service in the United Kingdom. The service was
initially marketed to the Countdown membership base in the United Kingdom
totaling approximately 3 million. Today Countdown markets the service to a
number of its corporate clients. Countdown receives a percentage of the
telephone connect revenue from all accounts generated and is expected to further
benefit from users of the service being time-linked to the Countdown-Arcade.

The Countdown-Arcade is available to both members and non-members of the
Countdown program. However, while non-members may make purchases, they cannot
take full advantage of the discounts offered unless they become a Countdown
member, which they can do over the internet at any time. The


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Countdown-Arcade is also offered as a co-branded product to add additional
services to third party web sites. The software developed is totally proprietary
to the Company and TMAP and offers the opportunity for licensing to third
parties on a global basis. Management believes that the Company's move into
e-commerce will generate new revenues from transaction commissions on products
and services sold, as well as advertising revenues from corporate sponsors.

Direct Marketing Business

On June 15, 1999 the Company and TMAP purchased DBS Direct. DBS Direct is head
quartered in Seattle, Washington where it commenced operations in July 1998. DBS
Direct has the right, on a preferred basis, to provide localized turn-key sales
and installation services for DirecTV, the leading providers of digital,
"direct-to-the-home" multi-channel video programming services. The DBS Direct
contracts with DirecTV will allow it to become the first nationwide
telemarketing, door-to-door sales, and full-service installer of DirecTV's
Digital Broadcast Satellite in the United States. DBS Direct has three contracts
with DirecTV, one covering Single Family Units ("SFU's"), one covering
Multi-Dwelling Units ("MDU's") and a third covering commercial establishments
such as hotels and restaurants. The "SFU" contract grants DBS Direct the right
to an initial coverage area which includes 12 major metropolitan markets in the
United States, representing approximately 25 million television households, or
25% of the total television households in the United States. DirecTV will add
additional SFU markets to the DBS Direct SFU coverage upon successful launch of
its services in currently contracted markets. The "MDU" contract grants DBS
Direct the entire continental United States as its territory, an addition 25
million television households.

As of the date hereof DBS Direct has three sales offices, two in Seattle,
Washington and one in Chicago. In addition, DBS Direct has appointed two
marketing partners, one in Los Angeles and one operating in Phoenix, Arizona.
DBS Direct pays a commission to its marketing partners for each DirecTV system
sold.

Although TMAP has significant influence over the operating and financial
decisions of DBS Direct, the Company has effective control over the operations
of DBS Direct. Accordingly, the operations of DBS Direct are consolidated in the
financial statements of the Company.

Travel Services Business

The Company's travel services business, which is located only in Australia,
consists of Teletravel and Breakaway. Travel products offered through Teletravel
include the sale of packaged vacations, airline tickets, hotel accommodation and
travel related products such as insurance. Although the Company has significant
influence over the operating and financial decisions of Teletravel and
Breakaway, TMAP has effective control over the operations of these businesses.
Accordingly, the operations of Teletravel and Breakaway are accounted for under
the equity method in the financial statements of the Company.

Teletravel

Teletravel is a telephone based travel agency offering a full range of travel
services such as airline tickets, packaged tours, hotel accommodation, auto
rental and other travel related products such as insurance. The Teletravel
business was originally established to enable NHS to offer travel products to
its corporate clients, in particular those clients who purchase NHS products and
services on a co-branded basis. Teletravel employs its own travel agents who
operate a call center located in Sydney, Australia. Teletravel does not operate
any travel shops for consumers to utilize on a walk-in basis. Instead the
business is entirely telephone based whereby customers call the Teletravel call
center where an experienced travel consultant offers help and advice to the
traveler and then confirms the customers booking. Consumers may pay by check,
credit card or money order. When payment is received tickets and itineraries are
forwarded to the customer. Teletravel generates revenues from commissions
received


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from airlines and travel product providers. Teletravel believes it enjoys an
economic advantage over traditional travel agents who have to bear the costs
associated with their retail outlets.

Breakaway Travel

Breakaway, based in Sydney, Australia, commenced operations in 1995. Breakaway
is a licensed travel agent specializing in discount vacation packages for
individuals employed in the travel industry in Australia. Such individuals are
entitled to become members of Breakaway. Members of Breakaway pay an annual
membership fee of Aus$20 (approximately $12). Breakaway has negotiated
agreements with travel providers pursuant to which it may secure reduced rate
fares from such travel providers. Travel providers include airlines, hotels and
tour operators. These reduced rate fares are marketed to members by Breakaway.

Acquisitions

Countdown

On April 3, 1997, the Company purchased from Mr. C.E.C. Radbone 50% of the
outstanding capital stock of Countdown Holdings Limited, a privately owned
United Kingdom company based in London, England. The consideration paid by the
Company for its 50% interest in Countdown totalled $2,682,487. The purchase
consideration payable to Mr. Radbone was satisfied by the issuance of 1,200,000
shares of Common Stock of the Company and a cash payment of 500,000 UK pounds
sterling (approximately $800,000 as of April 3, 1997). In addition, Mr. Radbone
was granted an option, expiring April 1, 2002, to purchase 250,000 shares of
Common Stock at $1.00 per share. The balance of the outstanding capital stock of
Countdown was simultaneously purchased by TMAP on similar terms.

The cash portion of the purchase price was funded by a $1,000,000 loan, bearing
interest rate of 12% per annum, from Mr. J. Vittoria, a director and shareholder
of the Company. The loan was originally scheduled to mature on September 27,
1997. By agreement between the Company and Mr. Vittoria, the loan, together with
accrued interest, was converted into 1,636,005 shares of Common Stock on
November 1, 1999, a conversion price of $0.80 per share.

In order to obtain the consent of Network to the acquisition the Company and
TMAP each agreed to pay $125,000 in cash to Network. In addition, the Company
and TMAP jointly issued to Network a promissory note in an aggregate principal
amount of $500,000, payable on April 2, 1998 and bearing interest at the rate of
10% per annum. The principal amount of the promissory note, together with
accrued interest, was forgiven pursuant to the terms of the Termination
Agreement.

NHS

On December 2, 1997, Transmedia Australia purchased 51% of the shares of common
stock of NHS. NHS purchased the net assets and business of Nationwide. The total
consideration paid by Transmedia Australia for its 51% interest in the equity
capital of NHS was Aus$6,000,000 (approximately $4,290,000 as of December 2,
1997). Transmedia Australia also agreed to purchase the balance of the equity
capital of NHS for Aus$2,500,000 (approximately $1,787,500) on June 30, 1998
with the right to extend such obligation ("Balance Obligation") until September
30, 1998. Transmedia Australia agreed to pay interest at 5% per annum on the
Balance Obligation for the three months ended September 30, 1998. Transmedia
Australia exercised the extension right. In addition, the Company and TMAP
agreed to pay Aus$4,000,000 in sign-on fees to the two former executive
directors of Nationwide, payable in two equal installments. The first
installment was payable on January 31, 1998 and the second installment was due
for payment on June 30, 1998 but was deferred until September 30, 1998.


                                       10
<PAGE>

Transmedia Australia was unable to make the payments due on September 30, 1998.
However, Transmedia Australia commenced negotiations with Nationwide and on
October 21, 1998 reached an agreement pursuant to which the settlement date for
the Balance Obligation and the final installment of the sign-on fees was
extended to November 16, 1998. In addition, the second installment of the
sign-on fees was reduced from Aus$1 million for each of the Company and TMAP (a
total of Aus$2 million) to Aus$500,000 for each of the Company and TMAP (a total
of Aus$1 million). Finally, it was agreed that the employment contracts of
Messrs. Bostridge and Swinbourn be terminated effective November 16, 1998 upon
payment of three months salary to each. On November 17, 1998 the Balance
Obligation, the reduced final installment of the sign-on fees and the three
months salary to Bostridge and Swinbourn were paid in full. In addition, accrued
interest in the amount of Aus$47,557 (approximately $29,960) was paid.

The final payments to Nationwide and Bostridge and Swinbourn were funded from
the proceeds of a One Year Secured Promissory Note ("Promissory Note") in the
principal sum of $3.4 million executed on November 16, 1998 between TMAP and FAI
General Insurance, a shareholder of the Company. Interest on the Promissory Note
accrued at the rate of 10% per annum and was payable quarterly in arrears. The
Promissory Note was secured by a charge over Transmedia Australia and was
guaranteed by the Company. The Promissory Note holder received a three-year
warrant to purchase 1 million shares of the common stock of TMAP at an exercise
price of $1.00 per share. In addition, the TMAP agreed to exchange warrants to
purchase 633,366 shares of common stock at exercise prices of $1.00 to $1.40,
already held by the Promissory Note holder, for a warrant to purchase 633,366
shares of common stock at an exercise price of $1.00. The warrant is exercisable
at any time from November 16, 1998 through November 15, 2001. The Promissory
Note holder also held warrants on similar terms to purchase 633,366 shares of
the Common Stock of the Company. Such warrants were exchanged by the Company for
a new warrant on the same terms as those of TMAP. The Note was repayable on
November 16, 1999. Interest was paid to November 15, 1999 and $400,000 of
principal was repaid in November 1999. On November 30, 1999 the Note holder and
TMAP executed a new note representing the balance of principal of $3 million.
The new note was payable on February 15, 2000, together with accrued interest at
the rate of 10% per annum. The new note was secured by a charge over Transmedia
Australia and was guaranteed by the Company. The new note has now been repaid in
full by TMAP, together with accrued interest.

NAMA
----

In November 1998 the Company and TMAP purchased from National Association of
Mature Americans, Inc. ("NAMA") through a wholly owned subsidiary of Countdown
USA, Countdown Connect, Inc., the membership base and certain business assets of
NAMA. The consideration paid totaled $400,000 payable in cash. $100,000 was
paid at closing and the balance is payable in three instalments as follows: (i)
$100,000 upon final disposition by NAMA of outstanding litigation against it,
(ii) $100,000 on December 31, 1999 and (iii) $100,000 on December 31, 2000.
Additionally, Mr. Rick Washburne, owner of NAMA, entered into an employment
agreement with Countdown Connect, Inc. The employment agreement was for a period
of five years and provided for an annual salary of $55,000 and other
compensation. The employment agreement between Countdown Connect, Inc. and Mr.
Washburne was terminated for cause in April 1999. On April 21, 1999 the Company,
TMAP, Countdown USA and Countdown Connect, Inc. filed suit against Mr. Washburne
and NAMA seeking to withhold any further payments pursuant to the acquisition
agreement and further to uphold the termination for cause provision of the
employment agreement. As of the date hereof, the legal proceeding is at
deposition stage.

The acquisition provided Countdown USA with an established membership base as
well as a defined set of benefit packages. Additionally, the business assets
acquired included a series of contracts pursuant to which Countdown USA will
provide customized benefit packages, on a wholesale basis, to other memberhip
based organizations and corporations thorughout the United States.

DBS Direct

On June 15, 1999 the Company and TMAP each purchased of DBS Direct.

The transaction (the "Acquisition") was consummated pursuant to an Equity
Purchase Agreement dated May 10, 1999, as amended June 11, 1999 (the
"Acquisition Agreement") among the Company, DBS Direct, the Sellers and TMAP.
The consideration paid by the Company for its 50% interest in DBS Direct
comprised 4,831,057 shares of the Company's common stock. TMAP paid 4,589,732
shares of its common stock for the remaining 50% of DBS Direct. In addition, the
Company and TMAP each contributed $500,000 to the capital of DBS Direct at the
closing of the Acquisition. Such capital contribution was used to repay existing
indebtedness of DBS Direct. Additionally, the Company and TMAP agreed to each
contribute a further $1 million to the capital of DBS Direct to fund the
expansion of its network of sales offices nationally. All Additional capital
contributions have been fully made by the Company and TMAP.

Pursuant to the terms of the Acquisition Agreement, William D. Marks entered
into an employment agreement with DBS Direct and joined the board of directors
of the Company and TMAP. Mr. Marks resigned as a director of the Company on
October 25, 1999. The employment agreement is for a period of three years and
provides for an annual salary of $175,000. Mr. Marks serves as President of DBS
Direct. The employment agreement also provides for participation in any
incentive stock option plans that may be established in the future by the
Company and TMAP.


                                       11
<PAGE>

Transmedia France

In April 1996 the Company commenced a restaurant card business in France through
Transmedia La Carte Restaurant SA ("Transmedia France"). Transmedia France was
organized and capitalized in 1995 by the Company and three other parties.
Transmedia France operated pursuant to the Network License and a banking license
granted by the Bank of France.

In November 1997, when the Company was a 50.1% shareholder in Transmedia France,
Transmedia France was notified by the Bank of France that, under the terms and
provisions of its banking license, it did not meet the prescribed statutory
minimum fully paid capital. Transmedia France notified the Company of its
obligation as the majority shareholder to participate in a capital call to
restore the capital of Transmedia France to the statutory minimum. On February
3, 1998 the Company made representations to the Bank of France that it would
provide additional capital to Transmedia France. On March 31, 1998 the Company
transferred its 100% interest in Transmedia UK plc to Transmedia France at a
valuation of FF5,062,500 (approximately $1,000,000) to meet its additional
capital payment and maintain its 50.1% interest in the share capital of
Transmedia France.

Transmedia France continued to incur operating losses and in July 1998 required
additional capital to maintain the statutory minimum fully paid capital. The
minority shareholders were unwilling to invest further in Transmedia France. To
protect its interest in Transmedia France the Company injected FF1 million
(approximately $167,000) in cash as additional capital in the form of a
subordinated note.

On October 5, 1998 the Company acquired 27,500 shares of common stock of
Transmedia France from a minority shareholder. The consideration paid by the
Company was $200,000 which was satisfied by the issuance of 200,000 shares of
its Common Stock. On December 9, 1998 the Company acquired a further 107,500
shares of common stock of Transmedia France from another minority shareholder.
The consideration paid by the Company was $400,000 which was satisfied by the
issuance of 400,000 shares of its Common Stock. The Company acquired these
minority shareholdings because such minority shareholders had "put options"
pursuant to the terms of a shareholders' agreement entered into by the Company
and others when Transmedia France was originally organized. Under the "put
options" the Company was obligated to purchase such minority shareholdings for a
cash consideration equal to their original investment plus 20% (approximately $3
million). Management believed that the issuance of 600,000 shares of Common
Stock to purchase such minority interests in Transmedia France and be discharged
from the "put options" was in the best interests of the Company. As a result of
the purchase of the minority interests in Transmedia France described above the
Company became beneficial owner of 90% of Transmedia France.

Throughout 1998 Transmedia France continued to fall below the minimum fully paid
capital requirement and was in discussion with the Bank of France through the
summer of 1998 to resolve the situation. Following a disciplinary committee
hearing of the Bank of France in November 1998 Transmedia France was verbally
advised that its banking license would be withdrawn and that as a result
Transmedia France would be required to cease trading. At a subsequent meeting of
the board of directors of Transmedia France it was resolved that the company
would cease trading effective December 31, 1998 and that the company would be
liquidated on a voluntary basis. This decision of the board of directors was
ratified by the shareholders of Transmedia France at an extraordinary general
meeting held in December 1998. Transmedia France subsequently paid all its
liabilities in full and liquidated its assets. The financial statements of
Transmedia France for the year ended September 30, 1998 have been presented on a
liquidated basis and include a charge of $178,603 in respect of the write down
of fixed assets to realizable value and a reserve of $108,225 in respect of
restaurant advances not recoverable on liquidation.

In March 1999 an annual general meeting of shareholders of Transmedia France was
held and the shareholders decided to distribute the shares of Transmedia UK plc
held by Transmedia France to the Company and Societe Generale SA its two
shareholders. Societe Generale SA agreed to sell the 10%


                                       12
<PAGE>

interest in Transmedia UK plc it had acquired as a result of the distribution to
the Company for FF35,000 (approximately $6,000). In addition the Company agreed
to forgive the FF1million (approximately $167,000) subordinated loan, together
with accrued interest, net of FF162,911 (approximately $27,000) due to
Transmedia France from the Company.

Competition

The "membership based" benefits and loyalty marketing business is highly
competitive. The Company competes with a number of other operators, both
internationally and in the individual countries in which it operates. The
Company's competitors range from small private companies to major corporations
who collectively offer a full range of "membership-based" benefit programs. Such
benefit programs include discount shopping, hotel accommodation, travel, dining,
and leisure activities. Additionally, the Company competes with other telephone
helpline service operators and loyalty reward programs such as "air miles".

Countdown, competes directly with a full range of discount shopping programs
offered by a number of other operators. The Company believes that the Countdown
program, with over 75,000 participating merchants in 28 countries, is broader
based than the programs offered by its competitors. Management believes that the
size of its merchant base, as well as the international spread of such merchants
and its varied communication channels covering in-store shopping, special
offers, telephone shopping services and the internet give Countdown an advantage
over its competitors. Such merchant base and program pricing are the principal
methods used by Countdown to retain existing business and secure new business
opportunities over its competitors.

The e-commerce and internet services business is highly competitive. While the
Company's e-commerce business competes with other online discount shopping and
services businesses, management believes that the combination of its own
proprietary software, its international network and range of product and service
providers uniquely position the Company in this sector.

In its restaurant card business the Company competes against other discount
programs. Competitors include programs offered by major credit card companies
such as American Express, Visa, Mastercard and Diners Club. Additionally, other
companies offer different kinds of discount dining programs. For example,
certain hotel groups offer two-for-one dining in their restaurants. The Company
is not aware of any restaurant discount charge card business, similar to that of
the Company, in the Licensed Territories at this time. The unique nature of the
restaurant discount charge card is the principal method used to secure business.
However, there can be no assurance given that new competitors will not enter the
market in the future.

DBS Direct competes with retail distributors of DirecTV in the United States.
However, its position as a full service direct marketer of the DirecTV product
differentiates it significantly from its competitors. The retail sellers of
DirecTV appeal strongly to single family units who tend to install the product
themselves. DBS Direct's position as a provider of a "one-stop-shop" DirecTV
solution covering direct sales to distribution and installation is targeted at
the high value more complex requirement of a multi-TV household.

The Company's affiliate NHS competes with other helpline service providers and
membership based benefit providers. NHS also competes with its product and
service providers who promote their businesses independently of their
arrangements with NHS. The principal methods used by NHS to compete effectively
are beneficial prices, quality of service and the range of products and services
offered. The market sector serviced by NHS is highly attractive to new entrants,
particularly insurance and financial services providers who are seeking to
diversify their product offer.

The Company's travel business interests compete with travel agents and other
operators in the hotel and


                                       13
<PAGE>

travel industries, including retail travel agents, airlines and hotel groups.
The Teletravel business is competitive regarding price and convenience when
compared with retail travel agents where the consumer is usually required to
visit the travel agents premises. Breakaway competes primarily on price as well
as being the only business that provides its services exclusively to employees
of the travel industry.

The Company is not aware of any dominant operators in its business segments and
geographical markets. However, many of the Company's competitors may have
substantially greater financial, personnel, technological, marketing,
administrative and other resources than the Company.

Intellectual Property

The Company operates its restaurant card business pursuant to the rights
acquired through the License Agreement with Network. While the License Agreement
grants the Company the right to use certain proprietary software and systems,
the Company found it necessary to develop its own systems and practices for
sales tax and other considerations. Accordingly, the Company is not reliant on
the License Agreement in order to conduct its day to day operations. However,
TRANSMEDIA is a registered trademark and therefore the Company relies on the
rights it acquired under the License Agreement to use such trademark and such
other trademarks and service marks as Network may apply for in the Licensed
Territories.

Countdown is a registered trademark of the Company's subsidiary, Countdown
Holdings Limited. Countdown has been established for over 29 years and
management believes that the business of Countdown is, to some extent, dependent
on the consumer goodwill and recognition attaching to the Countdown name. The
trademark is registered and protected in all countries of operation. The
Countdown-Arcade operates using proprietary software developed in-house and
wholly owned by the Company and TMAP.

Employees

As of September 30, 1999, the Company employed 103 full-time and 5 part-time
employees. None of the Company's employees are represented by a labor union, and
the Company considers its employee relations to be good.

ITEM 2. PROPERTIES.

The Company leases office accommodation of approximately 4,000 square feet at 11
St James's Square, London, England. The office is shared with TMAP. The lease
expires in February, 2004. The rent payable totals approximately $120,000 per
annum. During the year ended September 30, 1999 the Company charged TMAP
approximately $56,742 for its share of the rental cost.

Countdown leases mixed use office and warehouse accommodation of approximately
10,000 square feet at No.1 Hurlingham Business Park, Sulivan Road, London,
England. The lease is for a period of 20 years expiring in 2015. The rent
payable is currently approximately $165,000 per annum with rent reviews
scheduled at five-year intervals. It is not possible at this time to quantify
the financial impact of such rent reviews.

Logan Leisure leases office accommodation of approximately 280 square feet in
Dublin and approximately 450 square feet in Belfast. The Dublin lease is for a
period of 5 years commencing May 14, 1998 at an annual rent of approximately
$16,000. The Belfast lease commenced June 1, 1996 and expires on May 31, 2000.
The annual rent payable is approximately $11,600.


                                       14
<PAGE>

Through April 1999 Countdown USA operated from office accommodation in Flanders,
New Jersey pursuant to an informal arrangement on a month-to-month basis.
Commencing May 1, 1999 Countdown USA leased office accommodation of
approximately 1,500 square feet at 880 Fairview Road, Simpsonville, South
Carolina. The lease is for a period of 3 years expiring April 30, 2002. The
annual rent payable is $21,750.

DBS Direct leases office accommodation totaling approximately 11,000 square feet
at Suite 100 Eastlake Center, 2815 Eastlake Avenue East, Seattle, Washington.
The lease commenced on May 1, 1999 and expires on April 30, 2004. The annual
rent payable during the first four months of the lease was $189,000 increasing
to $270,000 for months five to ten and to $297,000 per annum for the remainder
of the lease term.

DBS Direct also leases three sales offices one in Seattle, one in Wenatchee,
Washington and one in Chicago. The Seattle sales office, located at 4200 Aurora
Avenue N, totals approximately 4,400 square feet. The lease commenced on April
1, 1998 and expires on March 31, 2001. The initial annual rent payable was
$38,400, increasing at the rate of 5% per annum during the term of the lease.
The Wenatchee sales office is located at 511 Valley Mall Parkway, East
Wenatchee, Washington totals approximately 525 square feet. The lease is a
month-to-month lease and commenced on November 23, 1998. The rent payable is
$400 per month. The Chicago sales office is located at Unit B, Clybourn Commons,
2000 North Clybourn, Chicago and totals approximately 2,137 square feet. The
lease commenced on August 8, 1999 and is for an initial term of five years with
an option to extend the term for a further five years. The initial rent payable
is approximately $68,400 per annum, increasing by 3% each year during the term
of the lease.

Through August 31, 1998 the Company's subsidiary Transmedia France leased office
accommodation totaling approximately 2,500 square feet at 9, Rue de la Paix,
Paris 75002, France at an annual rental of approximately $110,000. The lease was
extended on a month-to-month basis through January 31, 1999 when the property
was vacated.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company and its subsidiaries are subject to legal
proceedings and claims in the ordinary course of business.

On January 12, 1998 the Company entered into a settlement agreement
("Settlement") with J.L. Ernst, N.H. Ernst and Ernst Enterprises, Inc.
(collectively "Ernst") for the purpose of settling all claims alleged by Ernst
in a suit filed in Texas in 1996. The suit related to a transaction pursuant to
which the Company would have granted Ernst a license to operate a restaurant
card business similar to the Company's in Belgium/Luxemburg. The Settlement
called for the issuance by the Company to Ernst shares of the Company's common
stock with a market value of $75,000. The Agreement further provided that such
shares be registered and freely tradable on or before June 30, 1998. The
Agreement further provided that in the event that the shares were not registered
and freely tradable by that time the Agreement called for the Company to buy
back the shares for $100,000. At June 30, 1998 the shares were not registered
and freely tradable and on December 8, 1998 Ernst filed a motion to enforce the
Settlement. As a result Ernst held a judgment against the Company in the amount
of $105,000. The Company made such payment on April 16, 1999 together with
$1,450 interest, a total of $106,450.

On September 29, 1999 NAMA of Texas filed a civil action against the Company,
TMAP and Countdown USA in Harris County, Texas. NAMA of Texas is a licensee of
NAMA, a business acquired by the Company and TMAP through Countdown USA in
November 1998. NAMA of Texas is claiming breach of contract pursuant to a
License and Consulting Agreement for the provision, by NAMA, of medical and
other benefit programs to NAMA of Texas. NAMA of Texas is claiming damages for
loss of


                                       15
<PAGE>

business and income in the sum of $5 million, punitive damages in the sum of $3
million, interest, attorney fees and all costs including court costs. Management
of the Company, TMAP and Countdown USA believe that the claims of NAMA of Texas
are unfounded and that they have meritorious defenses against such claims. The
Company, TMAP and Countdown USA filed their original answer on November 5, 1999
and on November 12, 1999 filed a Notice of Removal to Federal Court. The Federal
Court ordered an initial pre-trial conference for May 18, 2000. At the pre-trial
conference the Judge dismissed the case against the Company and TME with the
condition that should Countdown USA ultimately lose the case and is not capable
of paying any judgment against it, then the Company and TME could be enjoined
again.

The Company is engaged in a dispute with Edward J. Guinan, III, its former Chief
Executive Officer, with respect to amounts which the Company claims Mr. Guinan
owes to the Company. Mr. Guinan's employment agreement was terminated for cause
on September 30, 1999 and the Company considers the employment agreement to no
longer be effective. Mr. Guinan's attorneys recently have challenged this
position and have also asserted claims for various advances which Mr. Guinan
asserts were made on behalf of the Company and for which he claims to be
entitled to reimbursement. No legal action has been commenced by the Company or
Mr. Guinan. At this time it cannot be determined when and if this dispute can be
resolved or what the net amount, if any, which Mr. Guinan owes to the Company or
the Company owes to Mr. Guinan.

The Company is engaged in a dispute with Carl Freyer, a former director and
consultant to the Company. Mr. Freyer claims that an agreement was reached in
December 1999 pursuant to which he, or his affiliate, was granted warrants plus
cash payments in lieu of prior compensation arrangements. The Company asserts
that there is no such valid agreement and that the only rights of Mr. Freyer, or
his affiliate, relate to the Company's obligation to submit for shareholder
approval, warrants previously granted covering 300,000 shares exercisable at
$1.00 per share. At this time no litigation has been commenced.

Except as disclosed above, the Company is not aware of any material pending
legal proceedings or claims against the Company or any of its subsidiaries.

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

No matters were submitted to a vote of stockholders of the Company during the
fourth quarter of the year ended September 30, 1999.


                                       16
<PAGE>

                                     PART II

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

(a)   Market Information. The Company's Common Stock was traded on the Nasdaq
      SmallCap Market under the symbol "MBTE" through March 10, 1998 and on the
      OTC Electronic Bulletin Board under the symbol "MBTE" thereafter until
      January 20, 2000. On January 20, 2000 the Company's Common Stock was
      de-listed from the OTC Electronic Bulletin Board for failure to file its
      Quarterly and Annual Reports in a timely manner. The Company's Common
      Stock is now reported on the "Pink Sheets". The following table sets forth
      the high and low bid prices as reported for the periods indicated below.

      Quarter ended               High                 Low

      December 31, 1997           1.375               0.875
      March 31, 1998              1.750               0.750
      June 30, 1998               1.875               1.250
      September 30, 1998          1.500               0.750

      December 31, 1998           2.133               0.750
      March 31, 1999              1.383               0.750
      June 30, 1999               1.750               0.250
      September 30, 1999          1.625               0.812

      December 31, 1999           4.531               0.562
      March 31, 2000              6.000               2.625

(b)   Holders. As of May 19, 2000 there were approximately 227 holders of record
      of shares of Common Stock. The Company is aware that a significant number
      of beneficial owners of Common Stock hold their shares in "street name".

(c)   Dividends. Holders of Common Stock are entitled to dividends when, as, and
      if declared by the Board of Directors out of funds legally available
      therefor. The Company has not paid any cash dividends on its Common Stock
      and, for the foreseeable future, intends to retain future earnings, if
      any, to finance the operations, development and expansion of its business.
      Future dividend policy is subject to the discretion of the Board of
      Directors. Holders of preferred stock are entitled to dividends when and
      if funds are legally available therefor. The Company has not paid any
      dividends on its preferred stock but continues to accrue such dividends.

Recent Sales of Unregistered Securities

On February 1, 1998 the Company commenced a private placement of shares of its
Common Stock pursuant to the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. The placement closed on April 30, 1998 upon the sale of 1,950,000
shares of Common Stock at $1.25 per share resulting in net proceeds to the
Company of $2,437,500. For every three shares purchased each subscriber received
a warrant to purchase one share of Common Stock at an exercise price of $1.25
per share for no additional consideration. The warrants are exercisable at any
time after issuance for a period of three years.

On April 29, 1998 the Company engaged in a private placement of debt securities.
The placement was made pursuant to the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder. The placement consisted of three 250,000 pounds sterling
(approximately $425,000) face amount 8% promissory notes payable on November 1,
1998 and


                                       17
<PAGE>

one 200,000 pounds sterling (approximately $340,000) face amount 8% promissory
note payable on the same date. The holders of the 250,000 pounds sterling
promissory notes each received a three and a half year warrant to purchase
41,660 shares of Common Stock at an exercise price of $2.00 per share (the
market price of the Company's Common Stock on the date of grant) and the holder
of the 200,000 pounds sterling promissory note received a warrant to purchase
33,328 shares on the same terms. The Company failed to pay the promissory notes
on the due date and accordingly, pursuant to the terms of the promissory notes,
the holders each received additional warrants for the same number of shares and
exercisable on the same terms as the original warrants. The warrants are
exercisable at any time after issuance through November 1, 2001. The Company has
now repaid all the promissory notes in full, together with accrued interest.

In consideration for extending the time available to the Company to repay the
balance of the promissory notes, two of the note holders received additional
warrants to purchase in aggregate 74,988 shares of Common Stock at an exercise
price of $1.00 per share. Such warrants are exercisable at anytime through
November 1, 2001. In addition, the Company agreed to adjust the exercise price
of all warrants issued to the four promissory note holders to $1.00 per share.

On July 2, 1998 the Company engaged in a private placement of debt securities.
The placement was made pursuant to the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder. The placement consisted of a $3,125,000 face amount, 8%
promissory note ("Note") payable on January 5, 1999 and resulted in net proceeds
to the Company of $2,926,588 after deduction of arrangement fees. The Note was
secured by a pledge of 2 million shares of the common stock of TMAP ("Security
Shares") held by Edward J. Guinan III, then Chairman of the Board and Chief
Executive Officer of the Company. Additionally, the note holder received a
warrant to purchase 600,000 shares of Common Stock at an exercise price of $2.00
per share. The warrant was exercisable at anytime from July 6, 1998 through July
6, 2001. The Company failed to pay the Note on the due date. The Company was in
discussions with the note holder through September 1999 to agree extensions of
time to repay the Note. In consideration for extending the time available to the
Company to repay the Note, on September 15, 1999 the Company agreed to replace
the warrant issued to the note holder with a new warrant to purchase 700,000
shares of Common Stock at an exercise price of $1.00 per share. The warrant was
exercisable at anytime from September 15, 1999 through September 30, 2002.
Through September 1999 the Company made repayments totaling $1,050,000. In
November 1999 the note holder commenced sales of the Security Shares realizing
net proceeds of $2,100,230. As of the date hereof the Company has repaid the
balance of the Note in full together with accrued interest.

On October 16, 1998 the Company commenced a private placement of shares of its
Common Stock pursuant to the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. The placement closed on November 30, 1998 upon the sale of 842,666
shares of Common Stock at $0.75 per share resulting in net proceeds to the
Company of $632,000.

On January 25, 1999 the Company commenced a private placement of shares of its
Common Stock pursuant to the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. The placement closed on February 24, 1999 upon the sale of 700,000
shares of Common Stock at $1.25 per share resulting in net proceeds to the
Company of $875,000.

On May 11, 1999 the Company commenced a private placement of shares of its
Common Stock pursuant to the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. The placement closed on June 25, 1999 upon the sale of 3 million
shares of common stock at $.75 per share resulting in net proceeds to the
Company of $2,250,000


                                       18
<PAGE>

On August 11, 1999 the Company commenced a private placement of shares of its
Common Stock pursuant to the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. The placement closed on September 10, 1999 upon the sale of 166,666
shares of common stock at $.75 per share resulting in net proceeds to the
Company of $125,000.

On September 30, 1999 the Company commenced a private placement of shares of its
Common Stock pursuant to the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. The placement closed on October 5, 1999 upon the sale of 625,000
shares of common stock at $.65 per share resulting in net proceeds to the
Company of $406,250.

On October 21, 1999 the Company commenced a private placement of shares of its
Common Stock pursuant to the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. The placement closed on November 20, 1999 upon the sale of 3,906,250
shares of common stock at $.80 per share resulting in net proceeds to the
Company of $3,125,000. In connection with the placement, the Company granted a
warrant to purchase 300,000 shares of Common Stock at an exercise price of $1.00
per share to an unaffiliated third party. The warrant is exercisable at anytime
from November 1, 1999 through October 31, 2002.

ITEM 6. SELECTED FINANCIAL DATA

The selected statements of operations and balance sheet data set forth below are
derived from the audited financial statements of the Company. The information
set forth below should be read in conjunction with the audited consolidated
financial statements of the Company and notes thereto. See Item 8 "Financial
Statements and Supplemental Data" and Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations". On May 14, 1998 the
Company and TMAP each acquired a 50% interest in Logan Leisure. The results of
Logan Leisure have been consolidated with those of the Company from the date of
acquisition using the purchase method of accounting. In July 1998 the Company
and TMAP jointly incorporated Countdown USA and on June 15, 1999 the Company and
TMAP jointly acquired DBS Direct. The results of Countdown USA have been
consolidated with those of the Company from the date of incorporation and the
results of DBS Direct have been consolidated with those of the Company from the
date of acquisition using the purchase method of accounting.


                                       19
<PAGE>

Income Statement Data

<TABLE>
<CAPTION>
                               Year Ended      Year Ended      Year Ended      Year Ended      Year Ended
                              September 30,   September 30,   September 30,   September 30,   September 30,
                                  1999            1998            1997            1996            1995
<S>                           <C>             <C>             <C>             <C>             <C>
Revenues                      $  9,815,718    $ 10,568,531    $  7,870,256    $  3,696,400    $  3,967,997

Gross profit                     3,986,591       4,888,215       3,160,345       1,610,495       1,701,411

Selling,General &
Administrative                  (8,283,101)    (12,660,826)     (7,399,595)     (3,670,307)     (3,816,386)

Loss from operations            (4,296,510)     (7,772,611)     (4,239,250)     (2,059,812)     (2,114,975)

Share of losses and
amortization of goodwill of
affiliated companies              (290,487)        (59,170)       (116,899)       (509,404)        (92,455)

Interest, net                   (1,010,652)       (261,923)         11,287           8,112          28,978

Income (tax) benefit                (3,628)         35,802          13,621               0               0

Minority interest                  425,258         362,580         805,859               0               0

Preferred stock dividend          (134,420)       (134,420)       (220,865)       (134,420)        (37,000)

Net loss                      $ (5,310,439)   $ (7,829,742)   $ (3,746,247)   $ (2,695,524)   $ (2,215,452)

Net loss per share, basic
and diluted                   $      (0.24)   $      (0.47)   $      (0.27)   $      (0.24)   $      (0.19)

<CAPTION>

Balance Sheet Data
                              -------------------------------As of Sept. 30-------------------------------

                                  1999            1998            1997            1996            1995
                                  ----            ----            ----            ----            ----
<S>                           <C>             <C>             <C>             <C>             <C>
Current Assets                $  3,409,267    $  5,640,852    $  2,991,538    $  1,854,831     $ 3,144,262

Total Assets                    15,879,572      11,068,965       9,073,025       3,926,355       5,821,680

Working Capital
  (Deficiency)                  (5,940,315)     (7,158,979)     (4,687,385)        580,665       1,635,642

Stockholders Equity              4,796,475      (2,343,963)        559,149       2,152,189       3,813,060
</TABLE>


                                       20
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following discussion should be read in conjunction with the audited
consolidated financial statements and notes thereto, included in Item 8 of this
report, and is qualified in its entirety by reference thereto.

General

Historically, the business of the Company was the design and supply of a range
of member-benefit programs to corporations, affinity groups and individuals. In
1996 the Company and TMAP decided to work closely to implement a strategy to
create a broader based international member benefits/loyalty marketing business.
As a result the Company currently has established business operations in
operations in Europe, the United States and elsewhere through Countdown,
Countdown USA, DBS Direct and Logan Leisure. Additionally, through its
affiliates Transmedia Australia and Transmedia Holdings, it has an interest in
businesses in Australia.

The business of the Company comprises four segments:

1.    The design and supply of a range of loyalty marketing and member benefit
      programs to corporations and affinity groups. Additionally, the Company
      provides member benefit packages to individuals on an international scale,

2.    E-commerce and internet services,

3.    Direct marketing through DBS Direct, and

4.    Travel services.

The future success of the Company is primarily dependent upon its ability to
implement its strategy to leverage its existing assets to develop and expand its
Internet activities and generate additional revenues from its member and
merchant bases. In its member benefits/loyalty marketing, the Company has
recently focused its sales effort as a loyalty and affinity marketing service to
corporate clients. Management will continue to build the Company's membership
base and broaden the range of member-benefit programs offered. As of the date
hereof, management is actively recruiting senior sales, marketing and other
executives to strengthen the management team to facilitate such development and
expansion. The Company will continue to look for new opportunities within the
member benefits/loyalty marketing industry and may expand its operations through
further acquisitions.

Management believes there is significant opportunity for the Company in its
e-commerce and internet services business. Such opportunity includes revenue
generation, not only through the Countdown-Arcade shopping web site, but also by
providing Internet services to its merchant base, corporate clients and
Countdown licensees. The Company will continue to develop and expand its
e-commerce and internet services activities primarily through strategic
alliances.

In the United States the Company intends to aggressively develop its Countdown
USA and DBS Direct businesses through cross marketing and strategic
partnerships. The Company is actively recruiting senior sales, marketing and
program executives to be based in the United States to support the development
and expansion of Countdown USA and DBS Direct. This strengthening of the
Company's United States based management team will also help to facilitate the
expansion of its e-commerce and other internet services in the United States
marketplace.

In light of the close collaboration between the Company and TMAP in recent years
and, more particularly, in view of the joint ownership of Countdown, Countdown
USA, DBS Direct, NHS, Logan Leisure and Breakaway Travel, management of the
Company and TMAP have executed a Merger Agreement, subject to shareholder
approval. The proposed merger is also subject to fairness opinions by
independent investment advisers.


                                       21
<PAGE>

The Company aims to become a leading global provider of customized loyalty
programs and services to corporations worldwide, providing superior business to
consumer solutions for businesses. The Company's objective is to package online
commerce and Internet content with traditional offline commerce into a web-based
and real world affinity solution for corporations and associations. For members,
online offerings will include Internet access (free in some jurisdictions), a
customized multi-media portal, targeted e-commerce and global directory
services. The Company's (including its affiliates) offline content is currently
available in 28 countries and includes a wide range of products and services
such as discount shopping, discount dining, travel and telephone helpline
services.

Results of Operations

Fiscal 1999 compared to Fiscal 1998

The Company generated revenues of $9,815,718 (1998: $10,568,531) in the year
ended September 30, 1999, a decrease of $752,813 or 7.1% over the corresponding
period in 1998. Countdown and the restaurant card business recorded decreases of
20.3% and 13.8% respectively which were offset by Logan Leisure being
consolidated for a full year (4.5 months in fiscal 1998), DBS Direct which
generated revenues of $702,751 in the three and a half months post acquisition
and Countdown USA which generated revenues of $115,589 (1998: nil).

Cost of sales totaled $5,829,127 (1998: $5,680,316) for the year ended September
30, 1999, generating a gross profit percentage of 40.6% (1998: 46.3%). The
decrease in gross profit percentage reflected a lower margin achieved by
Countdown 36.9% (1998: 46.5%) and the lower margin DBS Direct business 27,7%.
Logan Leisure improved gross margin from 64.3% to 73.4% in fiscal 1999. The
restaurant card business achieved a gross profit percentage of 44.5% as compared
to 46.2% in fiscal 1998.

Selling, general and administrative expenses totaled $8,283,101 (1998:
$12,660,826) for the year ended September 30, 1999, a decrease of $4,377,725 or
34.6% over fiscal 1998. Countdown and the restaurant card business in the UK
accounted for $2,630,074 and $739,633 of such decrease respectively. Countdown
achieved reductions in a number of cost categories in fiscal 1999 including
payroll ($679,000), professional fees ($353,000), communication costs
($120,000), travel ($63,000), selling expenses ($66,000) and doubtful debt
provision ($457,000). Selling, general and administrative expenses in the UK
restaurant card business recorded similar cost decreases, primarily payroll
($413,000), professional fees ($109,000) and doubtful debt provision ($134,000).
Transmedia France, which ceased operations in December 1998, accounted for a
further $700,583 of the year on year decrease in selling, general and
administrative expenses. Logan Leisure, which was acquired in May 1998, recorded
an increase in selling general and administrative expenses of $234,888 as a
result of being consolidated for a full year in fiscal 1999. Likewise, Countdown
USA, which commenced operations in fiscal 1999, recorded an increase in selling,
general and administrative expenses of $401,470. Selling, general and
administrative expenses of DBS Direct, which was acquired on June 11, 1999,
totaled $970,087 (1998: nil). Head office selling general and administrative
totaled $3,316,497 in fiscal 1999, a decrease of $1,913,880 or 39.4% as compared
to fiscal 1998. Head office Selling, general and administrative expenses in
fiscal 1998 included a number of non-recurring expenses including sign-on fees
in relation to the NHS acquisition ($925,000 approximately), $1,036,828 to write
down the carrying value of the Transmedia France license and other assets to
fair value, a write-down of approximately $462,000 in the carrying value of the
TMNI License, a write-off of approximately $264,000 relating to an aborted
acquisition and $100,000 to settle the Ernst lawsuit (see Item 3 Legal
Proceedings). Excluding the impact of such items, head office expenses increased
by $873,948 in fiscal 1999 as compared to 1998. The year on year increases in
head office expenses principally comprised the costs of establishing the
Countdown Internet Services division ($204,000), closure of Transmedia France
($140,000), increased payroll costs ($284,000), travel expenses ($161,000),
amortization of investment banker fees settled by the issuance of a warrant
$(168,000) and communication costs ($21,000).


                                       22
<PAGE>

The Company's share of losses of its affiliates Transmedia Australia and
Transmedia Holdings, including amortization of underlying goodwill, was $290,487
for the year ended September 30, 1999 (1998: $59,170).

The minority interest in the Company comprises TMAP's interests in Countdown,
DBS Direct, Logan Leisure and Countdown USA.

The Company has net operating losses carried forward for income tax purposes. No
deferred tax benefit has been recognized for the year ended September 30, 1999
due to the 100% valuation allowance against deferred tax assets.

Fiscal 1998 compared to Fiscal 1997

The Company generated revenues of $10,568,531 (1997: $7,870,256) in the year
ended September 30, 1998, an increase of $2,698,275 or 34.3% over the
corresponding period in 1997, reflecting the impact of the Countdown acquisition
in April 1997 and the acquisition of Logan Leisure in May 1998. Countdown and
Logan Leisure generated revenues of $7,142,705 and $108,694 respectively. The
fiscal 1998 revenues generated by Countdown compare to revenues of $3,239,052
generated in the six months from the date of acquisition to September 30, 1997.
Pre-existing business recorded a decline in revenues of $372,752 to $3,317,132
due to lower card usage by cardholders as a result of rationalization of the
participating restaurant base in the UK.

Cost of sales totaled $5,680,316 (1997: $4,709,911) for the year ended September
30, 1998, generating a gross profit percentage of 46.3% (1997: 40.2%). The
increase in gross profit percentage reflected the impact of the higher margin
Countdown and Logan Leisure businesses and improved gross profit achievement in
pre-existing operations. The gross profit percentages achieved by Countdown and
Logan Leisure respectively were 46.5% and 64.3% in fiscal 1998. Pre-existing
operations achieved a gross profit percentage of 46.42% in fiscal 1998.

Selling, general and administrative expenses totaled $12,660,826 (1997:
$7,399,595) for the year ended September 30, 1998, an increase of $5,261,231 or
71.1% over fiscal 1997. Countdown, Logan Leisure and Countdown USA accounted for
$2,817,263, $209,777 and $43,691 of such increase respectively. Selling, general
and administrative expenses of pre-existing operations and head office were
$7,795,248 in fiscal 1998, an increase of $2,204,120 or 39.4% as compared to
fiscal 1997. Selling, general and administrative expenses in fiscal 1998
included a number of non-recurring expenses including sign-on fees in relation
to the NHS acquisition ($925,000 approximately), $1,036,828 to write down the
carrying value of the Transmedia France license and other assets to fair value,
a writedown of approximately $462,000 in the carrying value of the TMNI License,
a write-off of approximately $264,000 relating to an aborted acquisition and
$100,000 to settle the Ernst lawsuit (see Item 3 Legal Proceedings). These
expenses were partially offset by cost reductions realized in pre-existing
operations of approximately $962,000. Such cost reductions were primarily in
selling expenses ($291,663), accounting and other professional fees ($115,229),
bad debt expense ($273,681), royalties ($70,390) and interest expense ($93,669).

The Company's share of losses of its affiliates Transmedia Australia and
Transmedia Holdings were $59,170 for the year ended September 30, 1998 (1997:
$116,899). The minority interests in the Company in fiscal 1998 comprised third
party shareholdings in Transmedia France and TMAP's interests in Countdown,
Logan Leisure and Countdown USA.


                                       23
<PAGE>

Liquidity and Capital Resources

The following table represents the net cash provided by or used in operating,
financing and investment activities for each period as indicated:

                                                        Year Ended
                                                        ----------

                                         September 30, 1999   September 30, 1998

Cash used in
Operating Activities                        $(4,930,250)         $(4,934,752)

Cash used in
Investing Activities                           (242,407)         $(2,191,561)

Cash provided by financing
Activities                                    4,199,265          $ 7,192,227

The Company incurred a net loss of $5,310,439 for the year ended September 30,
1999. Such loss, adjusted for non-cash items, resulted in funds used in
operating activities totaling $4,930,250, net of working capital movements.
Non-cash items included depreciation and amortization charges totaling $718,942,
accrued sign-on fees of $(296,500), a provision for irrecoverable restaurant
credits of $(304,355), the Company's share of losses incurred by its affiliates
of $277,186, minority interest $(425,258), accrued interest expense $510,335,
non-cash consultancy fees $168,000 and loss on sale of fixed assets $33,390.

The fiscal 1999 net cash used in investing activities of $242,407 comprised the
cash element of the Company's investment in Logan Leisure $25,575, the
acquisition of NAMA by Countdown USA $100,000 and investment in fixed assets
$116,832. In fiscal 1998 cash used in investing activities, net of the proceeds
of sale of fixed assets of $167,833, comprised the cash elements of the
Company's investment in Logan Leisure $570,623 and the Company's investment of
$1,788,771 in its affiliates Transmedia Australia and Transmedia Holdings.

To meet its cash requirements during fiscal 1999, the Company sold in aggregate
4,709,332 shares of Common Stock in equity private placements, resulting in net
proceeds to the Company of $3,882,000. In addition, the Company raised
approximately $498,800 through the issuance of short-term promissory notes. As
of the date hereof all of the short-term promissory notes have been repaid in
full. In fiscal 1999 cash generated by financing activities was partially
off-set by repayment of loans totaling approximately $2,771,375. From October 1,
1999 through the date hereof the Company has raised an additional $3,125,000
through the sale of 3,906,250 shares of Common Stock and loans totaling
$1,433,804, including accrued interest, were converted into 1,761,005 shares of
Common Stock.

Historically, the Company's ability to grow and generate cash from operations
has been restricted by the implementation of its strategy to create a broader
based international member benefit/loyalty marketing business primarily through
the joint acquisition of synergistic businesses with TMAP. The Company currently
has established business operations in Europe and the United States and through
its affiliates, Transmedia Australia and Transmedia Holdings, has an interest in
business operations in Australia. While the Company will continue to operate
cash negative in the short-term, management believes that after completion of
the proposed merger with TMAP, the Company and TMAP will be well positioned to
achieve profitability in the medium term. However, there can be no assurance
given that the proposed merger will be completed or when, if at all,
profitability will be achieved.


                                       24
<PAGE>

Inflation and Seasonality

The Company does not believe that its operations have been materially influenced
by inflation in the fiscal year ended September 30, 1999, a situation which is
expected to continue for foreseeable future. Some of the Company's affiliated
businesses such as Teletravel and Breakaway are seasonal, as is the Company's
restaurant card business albeit to a lesser extent. However, the Company has no
basis at this time on which to project seasonal effects, if any, on its business
as a whole.

Effect of Year 2000

In fiscal 1998 the Company established a Year 2000 group to evaluate the
potential exposure of the Company's computer systems and computer reliant
systems to Year 2000 issues. The working group completed its evaluation and
developed a plan to address its possible exposure related to the impact of the
Year 2000 on its computer systems. Key operating, financial and management
information systems were assessed and plans developed to address any systems
modifications required by December 31, 1999. The financial impact of making the
required system changes was not material to the Company's consolidated financial
position, results of operations or cash flow. The cost of system modifications
was approximately $50,000.

The core business system used in the Company's restaurant card business was not
Year 2000 compliant and could have failed to operate beyond December 31, 1999
without corrective action. Interim systems, Year 2000 compliant, were developed
and implemented. The system is scheduled to be replaced in its entirety in
fiscal 2000. Countdown's systems were also evaluated and as a result some
modification and upgrading was completed in the first quarter of 1999. Non-core
business applications such as word processing and management information
reporting systems required only minor modification. Computer hardware has been
substantially upgraded to appropriate processors. The systems of the Company's
affiliates Transmedia Australia and Transmedia Holdings are fully compliant.

The Company communicated with others with whom it does business, including but
not limited to, financial institutions and key customers, to determine their
Year 2000 compliance readiness and the extent to which the Company is vulnerable
to any third party Year 2000 issues. There can be no assurance that the systems
of third parties, on which the Company's systems rely, have been converted (if
required) on a timely basis, or that a failure to convert or a conversion that
is incompatible with the Company's systems would not have a material adverse
effect on the Company.

New U.S. Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
on Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," effective for fiscal years beginning after December 15, 1997. This
statement established standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
as including all changes in equity except those resulting from investments by
owners and distributions to owners. The Company adopted SFAS No. 130 in the
first quarter of fiscal 1999.

In June 1997, FASB issued SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information," effective for fiscal years beginning after
December 15, 1997. This statement established standards for the way that public
companies report information about operating segments in financial statements
issued to the public. It also established standards for disclosures regarding
products and services, geographic areas and major customers. The Company adopted
SFAS No. 131 in fiscal 1999.

Both of the above standards require comparative information to be restated.
Results of operations and financial position were unaffected by implementation
of these new standards.


                                       25
<PAGE>

In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Post-retirement Benefits" (SFAS No. 132), which revises
employers' disclosures about pension and other post-retirement benefit plans.
SFAS 132 is effective for financial statements for periods beginning after
December 15, 1997 and requires comparative information for earlier years to be
restated. This standard does not currently apply to the Company.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes standards for accounting
for various derivative instruments commonly used in hedging activities. The
Company will be required to adopt SFAS No. 133 in fiscal 2000.

ITEM 7 A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company's primary market risk is foreign exchange rate variability. The
Company's reporting currency is the United States dollar. However, the
functional currencies of the Company's operating subsidiaries and affiliates
additionally include sterling, the Irish punt and the Australian dollar.
Management believes that fluctuations in currency exchange rates in the near
term will not materially affect the Company's consolidated operating results,
financial position or cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

This information is submitted in a separate section of this report. See pages
F-1, et. seq.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

Effective September 26, 1997 KPMG resigned as the Company's independent
auditors. On the same date the Company appointed BDO Stoy Hayward as the
Company's independent auditors. This action was recommended by the Audit
Committee and approved by the Board of Directors.

In connection with their audit of the Company's consolidated financial
statements for the fiscal year ended September 30, 1996, and in the subsequent
interim period, there were no disagreements between KPMG and the Company on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope and procedures which, if not resolved to the satisfaction of
KPMG, would have caused KPMG to make reference to such matters in their report.


                                       26
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Name                    Age         Position
----                    ---         --------

Grant White (1)(2)      29          Chief Executive Officer and Director

Paul L. Harrison        38          President, Secretary and Principal Financial
                                    Officer and Director

----------
(1)   Appointed a director and Chairman on February 25, 2000.
(2)   Appointed Chief Executive Officer on March 1, 2000.

Directors hold office until the next annual meeting of stockholders and until
their successors are duly elected and qualified. All officers hold office until
the meeting of the board of directors following the next annual meeting of
stockholders or until their earlier resignation or removal. There are no family
relationships between any of the directors or executive officers of the Company.

Grant White
Chairman and Chief Executive Officer

Grant White joined the board of directors of the Company on February 25, 2000
when he was also appointed Chairman. Effective March 1, 2000 he was appointed
Chief Executive Officer of the Company and TMAP. Prior to March 2000 he was a
director of Gleacher & Co., a New York based merger and acquisition investment
bank. He joined Gleacher & Co. in 1995 and moved to San Francisco in 1999 to
establish Gleacher & Co.'s west coast operations focusing on technology
investment banking and venture capital investing. Mr. White has a bachelor of
commerce degree from Queen's University at Kingston (Canada).

Paul L. Harrison
President, Secretary and
Principal Financial and Accounting Officer

Paul Harrison has been a director of the Company since June 1996. He was a
director and President of Transmedia Australia from May 1994 until June 1997.
Mr. Harrison was also President, Principal Financial and Accounting Officer and
Secretary of TMAP until October 1999. In 1993, Mr. Harrison acted as a
consultant to the Company in connection with the initial funding of the Company
and commencement of its business operations. Prior to 1993, Mr. Harrison was
Vice-President responsible for European Equities at Salomon Brothers, London,
where his responsibilities included coordinating and marketing the sale of
various derivatives and other equity securities to European based institutional
clients.


                                       27
<PAGE>

Reports under Section 16 (a) of the Securities Exchange Act of 1934.

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and 10% shareholders to file with the Securities
and Exchange Commission ("SEC") certain reports regarding such persons'
ownership of the Company's securities. The Company is aware that Edward J.
Guinan III, a former director and officer of the Company, is delinquent in his
filings with to respect transactions in Common Stock owned by him and Common
Stock pledged by him. The Company has requested that Mr. Guinan bring his
filings current on a number of occasions and has offered to assist him in doing
so. As far as the Company is aware, Mr. Guinan is currently working to complete
such filings.

Mr. Michael R. Chambrello, Chief Executive Officer of the Company from October
1, 1999 to February 29, 2000, was late in filing a Form 4 with respect to the
conversion of a short-term loan to shares of Common Stock in December 1999. Mr.
Chambrello has now filed such Form 4 with the SEC.

The Company is not aware of any other late filings of reports under Section 16.


                                       28
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the aggregate compensation paid during the three
years ended September 30, 1999 to the Company's Chief Executive Officer. No
other executive officer of the Company earned in excess of $100,000 for services
rendered during fiscal 1999.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                    Annual         Long-Term          Other
                                                 Compensation     Compensation     Compensation

Name and Principal                                                                  All Other
Position                    Year         Notes      Salary        Options/SAR's    Compensation
<S>                         <C>          <C>       <C>                 <C>           <C>
Edward J. Guinan III
Chief Executive Officer     1999         (1)(2)    $156,887            0             $408,090

(resigned  as  of August
16, 1999)                   1998         (3)(2)     165,330            0               80,359

                            1997         (4)(2)     162,100            0               38,472

Paul L. Harrison
President                   1999         (1)(2)      78,444            0               19,090

(acting Chief Executive
Officer from August 16
to September 30, 1999)      1998         (3)(2)      82,665            0                8,668

                            1997         (4)(2)      77,000            0                    0
</TABLE>

(1)   Based upon an exchange rare of 1 pound sterling = $1.5689
(2)   Other compensation represents reimbursement of travel and entertainment
      expenses
(3)   Based upon an exchange rate of 1 pound sterling = $1.6533
(4)   Based upon an exchange rate of 1 pound sterling = $1.6210

Board Of Directors Report On Executive Compensation

The Board of Directors acts as the compensation committee, except that all
matters relating to the Outside Directors Plan are determined by the Company's
employee directors. The Board of Directors formulates and decides all matters
related to the salaries, bonuses, fringe benefits or other compensation of the
executive officers of the Company. The Board of Directors also decides upon
matters related to the granting of stock options under the 1994 Option Plan.

Pursuant to rules adopted by the Securities and Exchange Commission ("SEC"), set
forth below is a report submitted by the members of the Board of Directors
addressing the Company's compensation policies for fiscal 1999 as they affected
the Company's executive officers generally and, in particular, as they affected
Edward J. Guinan, III who served as Chief Executive Officer.

Board Policies Regarding Executive Officers

The Board's executive compensation policies are intended to provide competitive
levels of compensation adequate to retain qualified executives, to recognize
individual contributions to the business of the Company, and to align
management's and shareholders' interests.

The Board believes that the Company competes with other organizations for
qualified executives and is therefore required to adopt competitive compensation
structures. Hence, in determining the compensation payable to the Company's
executive officers, the Board considers on an informal basis the prevailing
levels of compensation paid by such organizations, as well as the individual
contributions to the Company which each of the executives has made and would be
expected to make in the business of the Company, and such other factors as the
Committee may deem relevant at the time of making such determination.

Compensation paid to the Company's executive officers for fiscal year ended
September 30, 1999 consisted primarily of base annual salary. Base salaries for
the Company's executive officers for the fiscal year ended September 30, 1999
were determined by the Board. In setting such base salaries, the Board
considered the factors set forth in the immediately preceding paragraph.

Compensation Of Chief Executive Officer

SEC regulations require that the Board disclose the bases for compensation
reported to Mr. Guinan in fiscal 1999 and to discuss the relationship between
such compensation and the Company's performance during the last fiscal year.

The Company's employment arrangement with Mr. Guinan provided for a fixed salary
based upon an existing employment agreement. No bonus was paid during the fiscal
year ended September 30, 1999. The Board determined that in order to reduce
employment expenses and to reward Mr. Guinan for his financing and transaction
achievements and to further incentivize his continuing involvement that it would
enter into a new employment contract reducing his salary by 50% and providing
2,500,000 options. Based on other employment of Mr. Guinan, the Company
considers Mr. Guinan's employment contract to have ended on September 30, 1999
and does not intend to grant any options to Mr. Guinan thereunder. There is no
direct relationship between the amount of compensation and measurable objective
criteria of the Company's performance in fiscal 1999.

Stock Performance Chart

The line graph set forth below compares the cumulative total shareholder return
(change in stock price plus reinvested dividends) on the Common Stock for the
period beginning August 4,1995 and ending on September 30, 1999 with the
cumulative total return on the NASDAQ Index and a Peer Group consisting of
Cendant Corporation and Memberworks over the same period. The comparison assumes
$100 was invested on August 4, 1995 in the Common Stock and in each of the
foregoing indices and that all dividends paid by companies included in each
index were reinvested.

Option/SAR Grants in Last Fiscal Year

The Company did not grant any stock options to the named executive officers
during the fiscal year ended September 30, 1999.

Aggregate Options/SAR Exercises in Last Fiscal Year and FY-End Options/Values

As of September 30, 1999, no executive officer of the Company held exercisable
or non-exercisable options to purchase shares of Common Stock of the Company.

Employment Agreements

(1) On October 1, 1999 the Company and Michael R. Chambrello entered into an
Employment Agreement for a term ending on September 30, 2002. The Employment
Agreement provided for an annual salary of $150,000 and participation in
executive benefit programs if and when put into effect by the Company. In
addition, the Employment Agreement provided that Mr. Chambrello be entitled to
receive stock options pursuant to the Company's 1993 Stock Option Plan, to be
amended subject to shareholder approval, having a term of 5 years and covering
1,250,000 shares of the Company's Common Stock. The stock options had exercise
prices and vested as follows:


                                       29
<PAGE>

# of Shares       Vesting Date            Exercise Price

250,000           October 1, 1999         $0.875
250,000           October 1, 2000         $0.875
187,500           February 1, 2001        Note (i)
375,000           February 1, 2002        Note (ii)
187,500           February 1, 2003        Note (iii)
--------------------------------------------------------------------------------

(i)   110% of market price on February 1, 2000
(ii)  187,500 shares at 110% of market price on February 1, 2000 and 187,500
      shares at 110% of market price on February 1, 2001
(iii) 110% of market price on February 1, 2001

The Employment Agreement was terminated effective February 29, 2000 by mutual
consent. The Company and TMAP each made a cash payment of $62,500 and issued
50,000 fully paid non-assessable shares of Common Stock to Mr. Chambrello and
Mr. Chambrello's entitlement to stock options pursuant to the terms of the
Employment Agreement were cancelled. The Employment Agreement included
confidentiality and non-compete restrictions during the term of the Employment
Agreement and for a period of 18 months thereafter. Additionally, the Employment
Agreement included the Company's right to discharge Mr. Chambrello for cause
including failure or refusal to perform his duties, dishonesty, conviction of a
felony or fraud, engagement in acts detrimental to the Company, material breach
of any provision of the Employment Agreement, disability or death. Mr.
Chambrello was required to devote substantial business efforts to the Company.
Mr. Chambrello was also employed by TMAP through February 29, 2000. The
Employment Agreement also provided that Mr. Chambrello's other business
activities not conflict with the terms of the Employment Agreement.

(2) Effective October 1, 1999 the Company and Paul L. Harrison entered into an
Employment Agreement for a term ending on September 30, 2001. The Employment
Agreement provides for an annual salary of $250,000 and participation in
executive benefit programs if and when put into effect by the Company. In
addition, the Employment Agreement provides that Mr. Harrison be entitled to
receive stock options pursuant to the Company's 1993 Stock Option Plan, to be
amended subject to shareholder approval, having a term of 5 years and covering
2,250,000 shares of the Company's Common Stock. The stock options have exercise
prices and vest as follows:

# of Shares      Vesting Date           Exercise Price

1,000,000        October 1, 1999        $0.875
  500,000        October 1, 2000        $0.875
  375,000        February 1, 2001       110% of market price on February 1, 2000
  375,000        February 1, 2002       110% of market price on February 1, 2000

The Employment Agreement includes confidentiality and non-compete restrictions
during the term of the Employment Agreement and for a period of 18 months
thereafter. Mr. Harrison may be discharged for cause including failure or
refusal to perform his duties, dishonesty, conviction of a felony or fraud,
engagement in acts detrimental to the Company, material breach of any provision
of the Employment Agreement, disability or death. Mr. Harrison is required to
devote substantial business efforts to the Company.

(3) Effective October 1, 1999 the Company and Charles M. Taylor entered into an
Employment Agreement for a term ending on September 30, 2001. The Employment
Agreement provides for an annual salary of $150,000 and participation in
executive benefit programs if and when put into effect by the


                                       30
<PAGE>

Company. In addition, the Employment Agreement provides that Mr. Taylor be
entitled to receive stock options pursuant to the Company's 1993 Stock Option
Plan, to be amended subject to shareholder approval, having a term of 5 years
and covering 1,500,000 shares of the Company's Common Stock. The stock options
have exercise prices and vest as follows:

# of Shares      Vesting Date           Exercise Price

375,000          October 1, 1999        $0.875
375,000          October 1, 2000        $0.875
375,000          February 1, 2001       110% of market price on February 1, 2000
375,000          February 1, 2002       110% of market price on February 1, 2000

The Employment Agreement was terminated effective May 10, 2000. In connection
with the termination, the Company agreed to make cash payments totaling $250,000
and to issue 412,500 fully paid non-assessable shares of Common Stock to Mr.
Taylor. Mr. Taylor's entitlement to stock options pursuant to the terms of the
Employment Agreement were cancelled. The Employment Agreement included
confidentiality and non-compete restrictions during the term of the Employment
Agreement and for a period of 18 months thereafter. Additionally, the Employment
Agreement included the Company's right to discharge Mr. Taylor for cause
including failure or refusal to perform his duties, dishonesty, conviction of a
felony or fraud, engagement in acts detrimental to the Company, material breach
of any provision of the Employment Agreement, disability or death. Mr. Taylor
was required to devote substantial business efforts to the Company.

(4) Mr. Edward J. Guinan III was Chief Executive Officer of the Company until
August 16, 1999 when he tendered his resignation. Mr. Guinan was employed by the
Company pursuant to the terms of an employment agreement dated March 2, 1998.
The employment agreement was for a term ending on March 1, 2001. Based on other
employment of Mr. Guinan, the Company considers Mr. Guinan's employment contract
to have ended. The Company and Mr. Guinan have yet to finalize amounts which the
Company believes are owed by Mr. Guinan to the Company and/or shares of Common
Stock which Mr. Guinan asserts should be issued to him.

Stock Option Plans

In April, 1993, the Company adopted the 1993 Stock Option Plan ("the 1993
Plan"). The 1993 Plan was established to attract and retain personnel of the
highest calibre and to offer an incentive for officers and employees to promote
the business of the Company. The 1993 Plan authorizes the granting of incentive
stock options or non-qualified stock options to purchase the shares of common
stock of the Company, subject to adjustment in the event of stock splits, stock
dividends, recapitalizations, mergers, reorganizations, exchanges of shares and
other similar changes affecting the Company's common stock. Unless terminated
earlier, the 1993 Plan expires on December 31, 2003. Officers, employees and
other independent contractors who perform services for the Company or any of its
subsidiaries are eligible to receive incentive stock options. The 1993 Plan is
administered by the Board of Directors or a committee appointed by the board,
which determines the persons to whom awards will be granted, number of share
options to be granted and the specific terms of each grant. Under the 1993 Plan,
no stock option may be granted having an exercise price less than the fair
market value of the Company's common stock on the date of grant.

In August 1993 options to acquire 206,000 shares of Common Stock were granted
under the 1993 Plan at an exercise price of $1.00 per share, 6,000 of which were
exercised in fiscal 1995 and the balance of 200,000 expired in fiscal 1999.

In January 1996, the Company's Board of Directors approved, and on April 25,
1996 the Company's stockholders approved, the 1996 Outside Directors Stock
Option Plan (the "Outside Directors Plan"). The


                                       31
<PAGE>

purpose of the Outside Directors Plan is to attract and retain the services of
experienced and knowledgeable independent directors. The Outside Directors Plan
provides, commencing January 1, 1996, for the automatic granting to each
non-employee director of the Company a stock option to purchase 10,000 shares of
Common Stock of the Company on January 1 each year. In addition, the Outside
Directors Plan provided that Mr. Vittoria and another non-employee director (who
has since resigned) each received an option to purchase an additional 20,000
shares in recognition of their services as directors prior to adoption of the
Outside Directors Plan. The maximum number of shares of Common Stock which may
be issued under the Outside Directors Plan is 300,000 subject to adjustment in
the event of stock splits, stock dividends, recapitalizations, mergers,
reorganizations, exchanges of shares and other similar changes affecting the
Company's issued Common Stock. Each option issued under the Outside Directors
Plan is exercisable by the optionee for a period of five years from the date of
the grant. Unless terminated sooner, the Outside Directors Plan expires on
January 11, 2006. The Outside Directors Plan is administered by the Company's
employee directors. Options granted under the Outside Directors Plan have an
exercise price equal to the fair market value of the Common Stock on the last
date preceding the date of grant.

As of December 31, 1999, 60,000 options have been granted under the Outside
Directors Plan.


                                       32
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as to the number of shares of Common
Stock beneficially owned, as of May 19, 2000, by (i) each beneficial owner of
more than five percent of the outstanding Common Stock, (ii) each current named
executive officer and director and (iii) all current executive officers and
directors of the Company as a group. All shares are owned both beneficially and
of record unless otherwise indicated. Additionally, unless otherwise indicated,
the address of each beneficial owner is c/o Transmedia Europe, Inc. 11 St.
James's Square, London SW1Y 4LB, England.

              Number and Percentage of Shares of Common Stock Owned

<TABLE>
<CAPTION>

                                                                            Percentage
Name and Address                           Notes         # of Shares Owned       Owned
<S>                                      <C>                  <C>               <C>
Edward J. Guinan III
12 St. James's Square
London                                   (2) to (6) and (14)  4,799,441         13.48%

Joseph V. Vittoria                       (7) to (9)           3,056,005          8.53%

William D. Marks                               (10)           2,343,063          6.61%

Gleacher & Co. LLC
660 Madison Avenue
New York, NY 10021                             (11)           3,000,000          7.80%

Grant White                                                           0          0.00%

Pictet & Cie Nominees
29 Blvd
Georges Favon 1204
Geneva, Switzerland                                           2,458,334          6.93%

Paul L. Harrison                        (12) & (13)           2,288,000          6.07%

All directors and officers
as a group (one person)                (12) to (13)           2,288,000          6.07%
</TABLE>

(1)   Based on 34,867,431 shares of Common Stock outstanding on May 19, 2000.
(2)   Includes 226,858 shares of Common Stock owned by Conestoga Partners II,
      Inc. ("Conestoga") which Mr Guinan may be deemed to beneficially own. Mr
      Guinan is Chief Executive Officer, President and a director of Conestoga
      and is beneficial owner of 75% of the outstanding capital stock of
      Conestoga.
(3)   Includes 800,000 shares of Common Stock and 133,332 shares of Common Stock
      issuable upon exercise of warrants owned by trusts set up for Mr Guinan's
      children and certain other shares which Mr Guinan disclaims beneficial
      ownership of.
(4)   Includes 225,000 shares of Common Stock issuable on conversion of shares
      of the Company's 6.5% non-voting Convertible Preferred Stock.
(5)   Includes 581 shares of Common Stock owned by International Advance, Inc.
      which Mr Guinan may be deemed to beneficially own. Mr Guinan is Chief
      Executive Officer, President, a director and the controlling stockholder
      of IA.
(6)   Does not include 93,750 shares of Common Stock owned by Edward J Guinan
      Jr., Mr Guinan's father, which Mr Guinan disclaims beneficial ownership
      of.
(7)   Includes 125,000 shares of Common Stock issuable upon exercise of warrants
      granted in April 1997 in relation to the acquisition of Countdown and
      167,873 shares of Common Stock issuable upon exercise of warrants granted
      as part of the August 1997 Private Placement.
(8)   Includes 19,125 shares of Common Stock issuable upon conversion of shares
      of the Company's 6.5% non-voting Convertible Preferred Stock.
(9)   Includes 60,000 shares of Common Stock issuable upon exercise of warrants
      granted as part of the 1996 Directors Stock Option Plan.
(10)  Does not Include 1,956,578 shares of Common Stock owned by Mrs Donna
      Marks, Mr Marks's stepmother which Mr Marks disclaims beneficial ownership
      of.
(11)  Includes 3,000,000 shares of Common Stock issuable upon exercise of a
      warrant granted for services.
(12)  Includes 2,250,000 shares of Common Stock issuable upon exercise of
      options granted in October 1999, subject to shareholder approval.
(13)  Does not include 226,858 shares of Common Stock owned by Conestoga. Mr
      Harrison is a director and minority shareholder of Conestoga, but Mr.
      Harrison disclaims beneficial ownership of the shares of Common Stock
      owned by Connestoga.
(14)  Because Mr. Guinan has not filed current information, the information set
      forth is based upon the most recent information available to the Company.

                                       33
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In fiscal 1999 the Company charged a management fee of $1,210,939 (1998:
$1,060,526) to TMAP in respect of TMAP's share of corporate office expenses
comprising salaries, professional fees, rent, travel and other corporate costs.

As of September 30, 1999 TMAP owed the Company $276,972. Such receivable is
non-interest bearing and is repayable on demand.

Mr. Vittoria is a director of TMAP. Messrs. Harrison and Freyer were also
directors of TMAP through October 25, 1999. See "Directors and Executive
Officers of Registrant".

During fiscal 1997, the Company entered into an agreement with Mr. Joseph
Vittoria, then a director and shareholder of the Company, whereby Mr. Vittoria
advanced a loan of $1,000,000 to the Company. The purpose of the loan was to
enable the Company to pay the cash element of the Countdown acquisition purchase
consideration. The loan, which was bearing interest at 12% per annum and was
collateralized by a pledge of all the shares of Countdown purchased by the
Company, was originally scheduled to mature on September 27, 1997. On November
1, 1999, Mr. Vittoria agreed to convert the principal of the loan, together with
accrued interest in the sum of $308,804, to shares of common stock at a price of
$0.80 per share. Accordingly Mr. Vittoria received 1,636,005 shares of common
stock in full satisfaction of the principal of the loan and accrued interest.

On October 25, 1999, Mr. M. Chambrello, then Chief Executive Officer of the
Company, advanced a short-term loan to the Company in the sum of $100,000. The
loan was used to meet the short term cash needs of the Company. On November 1,
1999 Mr. Chambrello agreed to convert the loan into shares of common stock at
$0.80 per share. Accordingly, 125,000 shares of common stock were issued to Mr.
Chambrello.


                                       34
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

The following documents are being filed as part of this Report.

(a)(1)   Financial Statements:

         Transmedia Europe, Inc.
         See "Index to Financial Statements" contained in Part II, Item 8

(a)(2)   Financial Statement Schedules:

         II     Schedule of Valuation and Qualifying Accounts

(a)(3)   Exhibits:

3.1      Restated Certificate of Incorporation of the Company.
3.2      By-laws of the Company.

4.1      Specimen Certificate of the Company's Common Stock.

10.1(a)  Master License Agreement, dated December 14, 1992, by and between
         Network and Conestoga.
10.1(b)  First Amendment to Master License Agreement.
10.1(c)  Agreement dated May 5, 1993, between Conestoga and the Company
         transferring Conestoga's rights under the Master License Agreement to
         the Company.
10.1(d)  Amendment No. 1, dated July 21, 1993, between Conestoga and the Company
         to the May 5, 1993 Agreement.
10.1(e)  Assignment and Assumption Agreement and Second Amendment to Master
         License Agreement, dated August 11, 1993, by and among Network, TMNI
         International Incorporated and the Company.
10.1(f)  Bill of Sale and Assignment and Assumption Agreement, dated May 5,
         1993, by and among Conestoga, the Company and Network.
10.1(g)  Indemnity Agreement, dated May 5, 1993, between the Company and Melvin
         Chasen indemnifying Melvin Chasen as a director.
10.1(h)  Employment Agreement, dated as of July 21, 1993, between the Company
         and Edward J. Guinan III.
10.1(i)  Employment Agreement, dated as of July 21, 1993, between the Company
         and David John Banford.
10.1(j)  Consulting Agreement, dated May 15, 1994, between the Company and David
         John Banford.
10.1(k)  1993 Stock Option Plan of the Company.
10.1(l)  Consulting Agreement, dated October 15, 1993, between the Company and
         Bostoner International.
10.1(m)  Termination Agreement dated June 30, 1994 between the Company and Peter
         Weinberg.
10.1(n)  Leases for Company offices.
10.1(o)  Form of Contract with Company Participating Restaurant.
10.1(p)  Settlement Agreement, dated July 19, 1994, between the Company and
         David John Banford.
10.1(q)  First Amendment to Sublicense Agreement by and between Network, the
         Company, International Advance, Inc. and Transmedia France.


                                       35
<PAGE>

10.1(r)  Agreement and plan of reorganization dated February 10, 1997 (Exhibit
         to December 31, 1996 Form 10-Q filed February 14, 1997).
10.1(s)  Service Agreement dated April 3, 1997 between Countdown plc and C.E.C.
         Radbone.
10.1(t)  Common Stock Purchase Warrant dated April 3, 1997 between the Company
         and J. Vittoria.
10.1(u)  Loan Facility Agreement dated March 27, 1997 between the Company and J.
         Vittoria.
10.1(v)  Share Pledge Agreement dated April 3, 1997 between the Company and J.
         Vittoria.
10.1(w)  Master License Amendment dated December 20, 1996 between the Company,
         Network and TMNI.
10.1(x)  Registration Rights Agreement dated April 3, 1997 between the Company
         and C.E.C. Radbone.
10.1(y)  Agreement dated December 6, 1996 between Transmedia Network, TM Int.
         and the Company.
10.1(z)  Sublicense Agreement dated June 30, 1995 between International Advance
         and Network (Exhibit to 1996 form 10-K filed December 30, 1996).

10.1(aa) Master License Agreement amendment, dated December 6, 1996, by and
         between Network, the Company and Transmedia Asia Pacific, Inc. (Exhibit
         to 1996 form 10-K filed December 30, 1996).
10.1(bb) Agreement dated April 3, 1997 between the Company, Transmedia Asia
         Pacific, Inc. and C. E. C. Radbone as to the acquisition of Countdown
         Holdings Limited. (Exhibit to Form 8K filed April 18, 1997).
10.1(cc) Amendment to loan agreement by a director of the Company in connection
         with a loan of $1,000,000 to facilitate the acquisition of Countdown
         Holdings Limited. (Exhibit to 1997 Form 10-K filed March 31, 1998).
10.1(dd) Lease on 1 Hurlingham Business Park, Sulivan Road, London SW6 3DU,
         United Kingdom. (Exhibit to 1997 Form 10-K filed March 31, 1998).
10.1(ee) Call Option to purchase the balance of 49% of NHS (Exhibit to 1997 Form
         10-K filed March 31, 1998).
10.1(ff) $500,000 Promissory Note in favor of TMNI (Exhibit to 1997 Form 10-K
         filed March 31, 1998).
10.1(gg) Agreement dated November 6, 1997 for the purchase of the business and
         assets of NHS. (Exhibit to Form 8K filed December 17, 1997).
10.1(hh) Agreements for the acquisition of 100% of the issued share capital of
         Porkpine Limited among Compass Trustees Limited, Transmedia Europe,
         Inc. and Transmedia Asia Pacific, Inc. and Gavin Logan and Joanne
         Logan, dated May 14, 1998. (Exhibit to Form 8K filed June 1, 1998).
10.1(ii) Share sale agreement dated March 26, 1998 re acquisition of Breakaway
         Travel Pty Limited. (Exhibit to Form 8K filed June 8, 1998).
10.1(jj) Equity Purchase Agreement dated May 10, 1999 by and among DSS Direct
         Connect L.L.C., William D. Marks, Donna M. Marks, Kevin R. Drewyer,
         Direct Investors, Inc. , Transmedia Europe, Inc. and Transmedia Asia
         Pacific, Inc., as amended June 11, 1999. (Exhibit to Form 8K filed July
         1, 1999).
10.1(kk) *Termination Agreement dated as of April 7, 2000 by and among
         Transmedia Network, Inc., TMNI International Incorporated, Transmedia
         Asia Pacific, Inc. and Transmedia Europe, Inc.

10.1(ll) Employment Agreement, dated as of March 2, 1998, between the Company
         and Edward J. Guinan, III. (Exhibit to 1998 Form 10-K filed August 9,
         1999).
10.1(mm) *Employment Agreement, dated as of October 1, 1999, between the Company
         and Michael R. Chambrello.
10.1(nn) *Employment Agreement, dated as of October 1, 1999, between the Company
         and Paul L. Harrison.
10.1(oo) *Employment Agreement, dated as of October 1, 1999, between the Company
         and Charles M. Taylor.

16.1(a)  Letter from the Company's former independent accountant, KPMG. (Exhibit
         to Form 8K/A#1 filed October 16, 1997)


                                       36
<PAGE>

21.1     List of subsidiaries

99.1(a)  Audited Consolidated Financial Statements for the years ended August
         31, 1995 and 1996 for Countdown Holdings Limited and Pro-forma
         financial information re Countdown Holdings Limited investment.
         (Exhibit to Form 8K/A#1 filed June 17, 1997).

99.2(a)  Unaudited Financial Statements for the years ended June 30, 1995, 1996
         and 1997 for Nationwide Helpline Services Pty Limited, former owner of
         NHS and Pro-forma financial information re acquisition of NHS. (Exhibit
         to Form 8K/A#1 filed December 14, 1998)

99.3(a)  Audited Financial Statements for Letville Holdings Limited for the year
         ended March 31, 1998, Floracourt Limited for the 25 months ended March
         31, 1998 and G. & J. Logan trading as Logan Leisure for the year ended
         March 31, 1998 and Pro-forma financial information re Logan Leisure
         investment. (Exhibit to Form 8K/A#1 filed July 31, 1998)

99.4(a)  Audited Financial Statements for Breakaway Travel Club Pty Limited for
         the years ended June 30, 1995, 1996 and 1997 and Pro-forma financial
         information re acquisition of Breakaway Travel Club Pty Limited.
         (Exhibit to Form 8K/A#1 filed July 31, 1998)

99.5(a)  Audited financial statements of DSS Direct Connect LLC. Covering the
         period from inception on March 3, 1998 to September 30, 1998 and the
         period October 1, 1998 to June 14, 1999 together with unaudited
         pro-forma financial information.

*     Filed herewith

(b)   Reports on Form 8-K

      None.


                                       37
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized

                                        TRANSMEDIA EUROPE, INC.
                                        (Registrant)

Date: May 23, 2000                      /s/ Grant White
                                        ---------------------------------------
                                        Grant White
                                        Chief Executive Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the date indicated.

Date: May 23, 2000                      /s/ Paul L. Harrison
                                        ---------------------------------------
                                        Paul L. Harrison
                                        Director, Secretary and
                                        Principal Accounting Officer


                                       38
<PAGE>

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------------------------------

                                                                           Page:

Report of BDO Stoy Hayward, Independent Auditors                            F-1

Consolidated balance sheets
as of September 30, 1999 and 1998                                           F-2

Consolidated statements of operations
for the years ended September 30, 1999, 1998 and 1997                       F-4

Consolidated statements of stockholders equity (deficit)
for the years ended September 30, 1999, 1998 and 1997                       F-5

Consolidated statements of comprehensive income (loss)
for the years ended September 30, 1999, 1998 and 1997                       F-8

Consolidated statements of cash flows
for the years ended September 30, 1999, 1998 and 1997                       F-9

Notes to the consolidated financial statements                              F-12

Schedule II - Valuation and qualifying accounts and reserves                F-33

<PAGE>

Independent Auditors' Report
--------------------------------------------------------------------------------

Board of Directors and Stockholders
Transmedia Europe, Inc.

         We have audited the accompanying consolidated balance sheets of
         Transmedia Europe, Inc. and subsidiaries as of September 30, 1999 and
         1998 and the related consolidated statements of operations,
         stockholders' equity (deficit), comprehensive income (loss) and cash
         flows for each of the three years in the period ended September 30,
         1999. We have also audited the financial statement schedule listed in
         the accompanying index. These consolidated financial statements and
         schedule are the responsibility of the management of Transmedia Europe,
         Inc.. Our responsibility is to express an opinion on these consolidated
         financial statements and schedule based on our audits.

         We conducted our audits in accordance with generally accepted auditing
         standards in the United States. These standards require that we plan
         and perform the audit to obtain reasonable assurance about whether the
         consolidated financial statements and schedule are free from 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 Transmedia Europe, Inc. and subsidiaries as of September
         30, 1999 and 1998, and the results of their operations and their cash
         flows for each of the three years ended September 30, 1999 in
         conformity with generally accepted accounting principles in the United
         States. Also, in our opinion, the schedule presents fairly, in all
         material respects, the information set forth therein.

         BDO STOY HAYWARD
         London
         England

         April 11, 2000


                                      F-1
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated balance sheets

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

<TABLE>
<CAPTION>

                                                  September 30,     September 30,
                                         Note          1999             1998

<S>                                      <C>       <C>               <C>
ASSETS

Current assets
  Cash and cash equivalents                        $   340,511       $   747,913
  Trade accounts receivable                            441,869           656,859
  Restaurant credits (net of
   allowance for irrecoverable
   credits of $36,449 as of
   September 30, 1999 and of
   $340,804 as of September
   30, 1998)                                           705,996         1,075,406
  Amounts due from related parties       3(a)        1,095,783         2,780,234
  Other current assets                                 419,108           380,440
  Prepaid fees                            12           406,000                --
                                                   -----------       -----------

Total current assets                                 3,409,267         5,640,852
                                                   -----------       -----------

Non current assets
  Investments in affiliated
   companies                               4            21,269           311,756
  Office furniture and equipment
   (net of accumulated depreciation
   of $988,807 as of September 30,
   1999 and $1,037,004
   as of September 30, 1998)                           430,792           284,602
  Goodwill (net of accumulated
   amortization of $1,170,311 as of
   September 30, 1999 and $678,166
   as of September 30,1998)                5        10,033,569         3,686,832
  Other intangible assets (net of
   accumulated amortization of
   $763,362 as of September 30,
   1999 and $631,944 as of
   September 30, 1998)                     5         1,257,922           989,340
  Other assets                                         320,753           155,583
  Prepaid fees                            12           406,000                --
                                                   -----------       -----------

Total non current assets                            12,470,305         5,428,113
                                                   -----------       -----------

TOTAL ASSETS                                       $15,879,572       $11,068,965
                                                   ===========       ===========
</TABLE>

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.


                                      F-2
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated balance sheets (Continued)

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

<TABLE>
<CAPTION>

                                                  September 30,     September 30,
                                         Note         1999              1998

<S>                                      <C>       <C>               <C>
LIABILITIES AND STOCKHOLDERS'
 EQUITY (DEFICIT)

Current liabilities
  Bank lines of credit                             $   449,142       $   516,471
  Trade accounts payable                             1,511,409         2,146,034
  Deferred income                                    1,029,550           721,542
  Accrued liabilities                                2,088,184         2,062,879
  Amount due to related parties          3(b)        1,138,872         2,316,405
  Sign-on fees payable                                       -           296,500
  Notes payable                            7         3,132,425         4,740,000
                                                   -----------       -----------

Total current liabilities                            9,349,582        12,799,831
Non current liabilities
  Amounts due to related parties         3(c)        1,302,137                 -
  Other                                                 41,514            27,676
                                                   -----------       -----------

Total liabilities                                   10,693,233        12,827,507
                                                   -----------       -----------

Minority interest                                      389,864           585,421
                                                   -----------       -----------

Stockholders' equity (deficit)
 6 1/2% Convertible preferred
  stock $0.01 par value per share,
  5,000,000 shares authorized
  (590,857 issued and outstanding
  shares as of September 30, 1999
  and 1998)                                              5,909             5,909
 Common stock $0.00001 par value,
  95,000,000 shares authorized
  (28,516,843 issued and
  outstanding as of September 30,
  1999 and 18,376,454 as of
  September 30, 1998)                                      285               184
 Additional paid in capital                         28,947,501        17,018,781
 Treasury stock (at cost,
   196,995 shares)                                    (517,112)         (517,112)
  Accumulated other comprehensive
   income (loss) -
  Cumulative foreign currency
   translation adjustment                              155,248          (366,808)
  Accumulated deficit                              (23,795,356)      (18,484,917)
                                                   -----------       -----------

Total stockholders' equity (deficit)                 4,796,475        (2,343,963)
                                                   -----------       -----------
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY (DEFICIT)                    $15,879,572       $11,068,965
                                                   ===========       ===========
</TABLE>

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.


                                      F-3
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated statements of operations

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

<TABLE>
<CAPTION>

                                             Year ended     Year ended     Year ended
                                            September 30,  September 30,  September 30,
                                  Note          1999            1998           1997

<S>                             <C>          <C>            <C>            <C>
Revenues                                     $ 9,815,718    $ 10,568,531   $ 7,870,256

Cost of revenues                              (5,829,127)     (5,680,316)   (4,709,911)
                                             -----------    ------------   -----------

Gross profit                                   3,986,591       4,888,215     3,160,345

Selling, general and
 administrative expenses        3,4&6(b)      (8,283,101)    (12,660,826)   (7,399,595)
                                             -----------    ------------   -----------

Loss from operations                          (4,296,510)     (7,772,611)   (4,239,250)

Share of losses and
 amortization of
 goodwill of affiliated
 companies                          4           (290,487)        (59,170)     (116,899)
Interest expense (including
 additional interest expense
 of $428,000 in fiscal 1999)    7(a)&(b)      (1,028,038)       (295,257)           --
Interest income                                   17,386          33,334        11,287
                                             -----------    ------------   -----------

Loss before income tax,
 minority interest,
 preferred share dividends                    (5,597,649)     (8,093,704)   (4,344,862)

Income taxes                        9             (3,628)         35,802        13,621
Minority interest                                425,258         362,580       805,859
                                             -----------    ------------   -----------

                                              (5,176,019)     (7,695,322)   (3,525,382)

Preferred share dividends                       (134,420)       (134,420)     (220,865)
                                             -----------    ------------   -----------

Net loss                                     $(5,310,439)   $ (7,829,742)  $(3,746,247)
                                             ===========    ============   ===========

Net loss per common share:
  Basic and diluted                10        $     (0.24)   $      (0.47)  $     (0.27)

Weighted average number of
 common shares outstanding,
 basic and diluted                 10         22,565,627      16,548,416    13,736,502
</TABLE>

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.


                                       F-4
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated statements of changes in stockholders' equity (deficit)

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

<TABLE>
<CAPTION>

                                Number of                       Number of                      Additional
                                 common          Common         preferred      Preferred         paid-in        Treasury
                                 shares           stock          shares          stock           capital          stock
<S>                             <C>           <C>                  <C>        <C>             <C>             <C>
Balance, September 30,
 1996                           12,319,537    $        123         590,857    $      5,909    $  9,647,072    $   (517,112)

Issuance of common
 stock for cash                    556,250               5              --              --       1,095,995              --
Issuance of common
 stock relating to
 acquisition                     1,200,000              12              --              --       1,199,988              --
Net loss                                --              --              --              --              --              --
Effect of foreign currency
 translation                            --              --              --              --              --              --
Compensation expense
 - restricted stock                     --              --              --              --              --              --
Option re Countdown                     --              --              --              --         165,000              --
                              ------------    ------------    ------------    ------------    ------------    ------------

Balance, September 30,
 1997                           14,075,787    $        140         590,857    $      5,909    $ 12,108,055    $   (517,112)
                              ------------    ------------    ------------    ------------    ------------    ------------

<CAPTION>

                               Cumulative
                                foreign          Unearned
                                currency       compensation
                               translation      restricted       Accumulated
                               adjustment         stock            deficit           Total
<S>                           <C>              <C>              <C>              <C>
Balance, September 30,
 1996                         $      3,125     $    (78,000)    $ (6,908,928)    $  2,152,189

Issuance of common
 stock for cash                         --               --               --        1,096,000
Issuance of common
 stock relating to
 acquisition                            --               --               --        1,200,000
Net loss                                --               --       (3,746,247)      (3,746,247)
Effect of foreign currency
 translation                      (385,793)              --               --         (385,793)
Compensation expense
 - restricted stock                     --           78,000               --           78,000
Option re Countdown                     --               --               --          165,000
                              ------------     ------------     ------------     ------------

Balance, September 30,
 1997                         $   (382,668)    $         --     $(10,655,175)    $    559,149
                              ------------     ------------     ------------     ------------
</TABLE>

<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated statements of changes in stockholders' equity (deficit) (Continued)

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

<TABLE>
<CAPTION>

                                     Number of                       Number of                      Additional
                                      common         Common          preferred      Preferred        paid-in        Treasury
                                      shares          stock            shares         stock          capital          stock
<S>                                  <C>           <C>             <C>             <C>             <C>             <C>
Balance, September 30,
 1997                                14,075,787    $        140         590,857    $      5,909    $ 12,108,055    $   (517,112)

Issuance of common
 stock for cash                       3,422,095              35              --              --       3,909,560              --
Issuance of common
 stock relating to
 acquisition of NHS                     500,000               5              --              --         499,995              --
Issuance of common
 stock relating to
 acquisition of Porkpine                225,000               2              --              --         326,172              --
Issuance of common stock
 to settle an outstanding
 liability                               53,572               1              --              --          75,000              --
Issuance of common stock
 relating to failed
 acquisition                            100,000               1              --              --          99,999              --
Net loss                                     --              --              --              --              --              --
Effect of foreign currency
 translation                                 --              --              --              --              --              --
                                   ------------    ------------    ------------    ------------    ------------    ------------

Balance, September 30,
 1998                                18,376,454    $        184         590,857    $      5,909    $ 17,018,781    $   (517,112)
                                   ------------    ------------    ------------    ------------    ------------    ------------

<CAPTION>

                                Cumulative
                                 foreign          Unearned
                                 currency       compensation
                               translation       restricted       Accumulated
                                adjustment         stock            deficit           Total
<S>                           <C>               <C>              <C>              <C>
Balance, September 30,
 1997                         $    (382,668)    $        --      $(10,655,175)    $    559,149

Issuance of common
 stock for cash                          --              --                --        3,909,595
Issuance of common
 stock relating to
 acquisition of NHS                      --              --                --          500,000
Issuance of common
 stock relating to
 acquisition of Porkpine                 --              --                --          326,174
Issuance of common stock
 to settle an outstanding
 liability                               --              --                --           75,001
Issuance of common stock
 relating to failed
 acquisition                             --              --                --          100,000
Net loss                                 --              --        (7,829,742)      (7,829,742)
Effect of foreign currency
 translation                         15,860              --                --           15,860
                              -------------     -----------      ------------     ------------

Balance, September 30,
 1998                          $   (366,808)    $        --      $(18,484,917)    $ (2,343,963)
                              -------------     -----------      ------------     ------------
</TABLE>

<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated statements of changes in stockholders' equity (deficit) (Continued)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                 Number of                       Number of                      Additional
                                  common         Common          preferred      Preferred        paid-in         Treasury
                                  shares         stock            shares          stock          capital          stock
<S>                             <C>           <C>                   <C>        <C>             <C>             <C>
Balance, September 30,
 1998                            18,376,454   $         184         590,857    $      5,909    $ 17,018,781    $   (517,112)

Issuance of common stock
 for cash                         4,709,332              47              --              --       3,881,953              --
Issuance of common stock
 to acquire minority
 interest in Transmedia
 France (Note 3)                    600,000               6              --              --         599,994              --
Issuance of common stock
 relating to acquisition of
 DBS Direct                       4,831,057              48              --              --       6,038,773              --
Net loss                                 --              --              --              --              --              --
Effect of foreign currency
 translation                             --              --              --              --              --              --
Additional interest
 (Note 7(a)&(b))                         --              --              --              --         428,000              --
Prepaid fees (Note 12)                   --              --              --              --         980,000              --
                               ------------    ------------    ------------    ------------    ------------    ------------

Balance, September 30,
 1999                            28,516,843    $        285         590,857    $      5,909    $ 28,947,501    $   (517,112)
                               ------------    ------------    ------------    ------------    ------------    ------------

<CAPTION>

                               Cumulative
                                foreign          Unearned
                                currency       compensation
                               translation      restricted       Accumulated
                               adjustment         stock            deficit            Total
<S>                           <C>               <C>              <C>              <C>
Balance, September 30,
 1998                         $   (366,808)     $        --      $(18,484,917)    $ (2,343,963)

Issuance of common stock
 for cash                               --               --                --        3,882,000
Issuance of common stock
 to acquire minority
 interest in Transmedia
 France (Note 3)                        --               --                --          600,000
Issuance of common stock
 relating to acquisition of
 DBS Direct                             --               --                --        6,038,821
Net loss                                --               --        (5,310,439)      (5,310,439)
Effect of foreign currency
 translation                       522,056               --                --          522,056
Additional interest
 (Note 7(a)&(b))                        --               --                --          428,000
Prepaid fees (Note 12)                  --               --                --          980,000
                              ------------      -----------      ------------     ------------

Balance, September 30,
 1999                         $    155,248      $        --      $(23,795,356)    $  4,796,475
                              ------------      -----------      ------------     ------------
</TABLE>

<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated statements of comprehensive income (loss)

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

<TABLE>
<CAPTION>

                                             Year ended      Year ended       Year ended
                                            September 30,   September 30,    September 30,
                                                1999            1998             1997
<S>                                          <C>             <C>             <C>
Net loss                                     $(5,310,439)    $(7,829,742)    $(3,746,247)

Other comprehensive income (loss)

  Foreign currency translation adjustment        522,056          15,860        (385,793)
                                             -----------     -----------     -----------

Comprehensive loss                           $(4,788,383)    $(7,813,882)    $(4,132,040)
                                             ===========     ===========     ===========
</TABLE>

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.


                                      F-8
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated statements of cash flows

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

<TABLE>
<CAPTION>

                                                  Year ended     Year ended      Year ended
                                                 September 30,  September 30,   September 30,
                                                     1999           1998            1997
<S>                                              <C>             <C>             <C>
Cash flows from operating activities
  Net loss                                       $(5,310,439)    $(7,829,742)    $(3,746,247)

Adjustments to reconcile net loss to net cash
 used in operating activities
  Depreciation                                        82,078         344,851         302,902
  Loss/(profit) from the sale of fixed assets         33,390              --              --
  Amortization of other intangible assets            131,418         108,086         199,600
  Write-off license to fair value                         --         750,000              --
  Amortization of goodwill -  subsidiaries           492,145         532,196          52,715
                           - affiliates               13,301           9,171              --
  Provision/(recovery) for irrecoverable
    restaurant credits                              (304,355)        291,423         266,806
  Provision for bad debts                                 --         245,286              --
  Share of losses of affiliates                      277,186          59,170         116,899
  Accrued interest expense                           510,335         259,902              --
  Accrued sign-on fees                              (296,500)        296,500              --
  Reserve against non-trade receivable                    --          86,938              --
  Minority interest                                 (425,258)       (362,580)       (805,859)
  Amortization of unearned compensation                   --              --          78,000
  Other                                                   --          75,001              --
  Amortization of prepaid fees                       168,000              --              --

Changes in assets and liabilities
  Trade accounts payable                            (692,108)       (413,707)      1,237,587
  Accrued liabilities                               (709,786)        574,663         527,346
  Accounts receivable                                247,535        (100,910)        321,438
  Restaurant credits                                 673,765        (302,811)         22,538
  Prepaid expenses and other current assets           22,367         367,932          78,301
  Deferred income                                    308,008         185,033         293,506
  Other assets                                      (165,170)       (138,830)             --
  Other non-current liabilities                       13,838          27,676              --
                                                 -----------     -----------     -----------

Net cash used in operating activities             (4,930,250)     (4,934,752)     (1,054,468)
                                                 -----------     -----------     -----------

Cash flows from investing activities
  Cash paid for interest in affiliates                    --      (1,788,771)             --
  Cash paid to acquire NAMA                         (100,000)             --              --
  Cash paid to acquire Porkpine                      (25,575)       (570,623)             --
  Cash paid to acquire Countdown                          --              --      (1,209,655)
  Purchase of NHS option                                  --              --        (142,946)
  (Cash paid)/net proceeds on fixed assets          (116,832)        167,833        (156,794)
                                                 -----------     -----------     -----------

Net cash used in investing activities               (242,407)     (2,191,561)     (1,509,395)
                                                 -----------     -----------     -----------
</TABLE>


                                      F-9
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated statements of cash flows (Continued)

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

<TABLE>
<CAPTION>

                                                 Year ended     Year ended      Year ended
                                                September 30,  September 30,   September 30,
                                                    1999           1998            1997
<S>                                             <C>             <C>             <C>
Cash flows from financing activities
  Net proceeds received from issuance
   of common stock                                3,882,000       3,909,595       1,096,000
  Due from/(to) related parties                   1,719,670        (960,389)      1,538,686
  Proceeds from Notes payable                       498,800       4,740,000              --
  Repayment of Notes payable                     (2,771,375)             --              --
  DBS Direct - Capital contributions by TMAP        937,500              --              --
  Bank lines of credit                              (67,330)       (496,979)          7,071
                                                -----------     -----------     -----------

Net cash provided by financing activities         4,199,265       7,192,227       2,641,757
                                                -----------     -----------     -----------

Effect of foreign currency exchange
 rate changes on cash                               563,262          15,860        (385,793)
                                                -----------     -----------     -----------

Net (decrease)/increase in cash and
 cash equivalents                                  (410,130)         81,774        (307,899)
Cash and cash equivalents at
 beginning of period                                747,913         554,624          61,661
Cash acquired as part of acquisitions                 2,728         111,515         800,862
                                                -----------     -----------     -----------

Cash and cash equivalents at end of period      $   340,511     $   747,913     $   554,624
                                                ===========     ===========     ===========

Supplemental disclosures of cash flow
 information

  Cash paid during the year for:
    Interest                                    $   517,703     $    69,875     $    74,173
</TABLE>

No amounts of cash were paid for income taxes in fiscal 1999, 1998 or 1997.

Supplemental disclosures of non-cash investing and financing activities

(1)   In April, 1997, the Company issued 1,200,000 shares of its common stock as
      part payment for its investment in Countdown Holdings Limited
      ("Countdown"). The consideration totalled $2,659,655 made up as follows:

        Cash payment                                      $1,209,655
        Issuance of 1,200,000 shares of Common Stock       1,200,000
        Loan note in favour of TMNI International, Inc.      250,000
                                                          ----------
                                                          $2,659,655
                                                          ==========


                                      F-10
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Consolidated statements of cash flows (Continued)

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

(2)   In December, 1997, the Company issued 500,000 shares of its common stock
      as part payment for its acquisition by NHS Australia Pty Limited of the
      business of Nationwide Helpline Service Pty Limited.

        Cash payment                                      $1,662,023
        Issuance of 500,000 shares of Common Stock           500,000
                                                          ----------

                                                           2,162,023
                                                          ==========

(3)   In May, 1998, the Company issued 225,000 shares of its common stock as
      part payment for its investment in Porkpine Limited ("Porkpine"). The
      consideration totalled $922,372 made up as follows:

        Cash payment                                      $  570,623
        Issuance of 225,000 shares of common stock           326,174
                                                          ----------

        As of September 30, 1998                             896,797
        Additional consideration                              25,575
                                                          ----------

                                                          $  922,372
                                                          ==========

(4)   In June, 1999, the Company issued 4,831,057 shares of its common stock as
      part payment for its 50% investment in DSS Direct Connect, LLC ("DBS
      Direct"). The remaining interest of 50% was acquired by TMAP. The
      consideration totalled $7,538,821 made up as follows:

        Issuance of 4,831,057 shares of common stock      $6,038,821
        Capital contribution
          Paid                                               937,500
          Deferred                                           562,500
                                                          ----------

                                                          $7,538,821
                                                          ==========

      The deferred capital contribution was paid in November and December 1999.

(5)   In December 1998, the Company issued 600,000 shares of its common stock to
      both of the minority shareholders in Transmedia France.


                                      F-11
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements

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

1     The Company

      Transmedia Europe, Inc. ("TME" or "the Company") is a Delaware corporation
      which was organised in February 1993 and commenced operations in the UK in
      December 1993.

      On December 2, 1997, Transmedia Australia Holdings Pty Limited
      ("Transmedia Australia"), a company owned equally by the Company and
      Transmedia Asia Pacific, Inc. ("TMAP"), purchased 51% of the Common Stock
      of NHS Australia Pty Limited ("NHS"). On November 17, 1998 Transmedia
      Australia acquired the remaining 49% of NHS. Transmedia Australia is
      accounted for as an affiliate.

      On May 14, 1998 the Company and TMAP purchased jointly 100% of the
      outstanding Common Stock of Porkpine Limited ("Porkpine").

      On May 22, 1998 Transmedia Australia Travel Holdings Pty Limited
      ("Transmedia Holdings"), a company owned equally by the Company and TMAP
      acquired 100% of the issued share capital of Breakaway Travel Club Pty
      Limited ("Breakaway").

      In July 1998, the company and TMAP jointly incorporated Countdown America,
      Inc. which changed its name to Countdown USA, Inc. on March 23, 1999.
      ("Countdown USA").

      On June 15, 1999 the Company and TMAP purchased jointly 100% of the
      outstanding common stock of DSS Direct Connect, LLC ("DBS Direct").

      As of September 30, 1999, the Company had the following equity interests
      in its direct subsidiaries and affiliates:

<TABLE>
<CAPTION>

                Name                                Country of incorporation      % owned
<S>                                                 <C>                             <C>
      Subsidiaries
        Transmedia UK plc                               United Kingdom              100
        Countdown Holdings Limited                      United Kingdom               50
        Porkpine Limited                                Channel Islands              50
        DSS Direct Connect, LLC                     United States of America         50
        Countdown USA, Inc.                         United States of America         50

      Affiliates
        Transmedia Australia Travel Holdings
        Pty Limited                                        Australia                 50
        Transmedia Australia Holdings Pty Limited          Australia                 50
</TABLE>

      All references herein to "Company" and "TME" include Transmedia Europe,
      Inc. and its subsidiaries unless otherwise indicated.

      Although the Company has significant influence over the operating and
      financial decisions of the affiliates the Company does not have effective
      control over their operations and therefore they are accounted for under
      the equity method.


                                      F-12
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

2     Significant accounting policies

      (a) Principles of consolidation

      The consolidated financial statements include the financial statements of
      the Company and its subsidiaries and affiliates, including 50% held
      subsidiaries where effective control is exercised by the Company over the
      financial and operational decisions of the subsidiary. All significant
      intercompany transactions have been eliminated on consolidation.

      The accompanying financial statements have been prepared assuming that the
      Company will continue as a going concern.

      (b) Restaurant credits

      Restaurant credits represent the total advances made to participating
      restaurants in exchange for food and beverage credits, less the amount by
      which these food and beverage credits are recouped by the Company as a
      result of cardholders utilising their cards at participating restaurants.
      The amount by which such food and beverage credits are recouped amounts to
      approximately 50% of the retail value of food and beverages consumed by
      cardholders. The Company reviews recoverability of restaurant credits and
      establishes an allowance for restaurant credits to restaurants that have
      ceased operations or whose credits may not be utilised by cardholders.

      The amount of funds advanced to participating restaurants are generally
      unsecured and are recoverable as cardholders utilise their restaurant
      charge card at the respective restaurant. In certain cases the Company may
      request a personal guarantee from the owner of a restaurant with respect
      to the recoverability of the advance if the restaurant ceases operations
      or ceases to be a participating restaurant. Generally no other forms of
      collateral or security are obtained from the restaurant owners.

      (c) Long-lived assets

      Long-lived assets, such as office furniture and equipment, goodwill and
      other intangibles, 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. In fiscal 1999 the Company provided
      $Nil as a write-down against assets in Transmedia France (fiscal 1998 -
      $178,603; fiscal 1997 - $91,514) and a write-down of $Nil (fiscal 1998 -
      $750,000; fiscal 1997 - $Nil) against intangibles.

      (d) Intangible assets excluding goodwill

      Other intangible assets consist primarily of the cost of the Transmedia
      License paid to TMNI International, Inc. ("TMNI") in cash plus the fair
      value of Company shares granted in exchange for the Transmedia License to
      operate in the licensed territories using the systems, procedures and
      'know how' of the Transmedia business.

      The license cost is being amortized on a straight-line basis over its
      estimated useful life of 15 years from the commencement of operations.


                                      F-13
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

2     Significant accounting policies (Continued)

      (e) Office furniture and equipment

      Office furniture and equipment are stated at cost less accumulated
      depreciation. Depreciation is calculated using the straight-line method
      over the estimated lives which are between 3-5 years.

      (f) Goodwill

      The excess of cost of investments over the fair value of net assets
      acquired which is not otherwise allocated is determined to be goodwill and
      is amortized on a straight-line basis over a period of ten or fifteen
      years.

      (g) Income taxes

      The Company recognises deferred tax liabilities and assets for the
      expected future tax consequences of events that have been included in the
      financial statements or tax returns. Accordingly, deferred tax liabilities
      and assets are determined based on the difference between the financial
      statement and tax basis of assets and liabilities using enacted rates in
      effect for the year in which the differences are expected to reverse. The
      effect on deferred tax assets and liabilities of a change in tax rates is
      recognised in income in the period that includes the enactment date.

      A valuation allowance is established to reduce the deferred tax assets
      when management determines it is more likely than not that the related tax
      benefits will not be realised.

      (h) Revenue recognition

      Revenues comprise:

        i)   the retail value of food and beverage purchased from participating
             restaurants by the Company's Transmedia cardholders (less the
             cardholders' 20% or 25% discount) and cardholders' membership fees.

        ii)  Countdown cardholders' membership fees and Countdown voucher sales.

        iii) Countdown license fees from licenses.

        iv)  Porkpine cardholders' membership fees and voucher sales.

        v)   DBS Direct revenue from the sale of DirecTV equipment and
             installation charges, and subscriber activation commissions.

      Transmedia card membership fees are recognised as revenue in equal monthly
      instalments over the membership period. All other components of revenue,
      including other membership fees and Countdown license fees are
      non-refundable and recognised as revenue when the related services have
      been performed.


                                      F-14
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

2 Significant accounting policies (Continued)

  (i) Foreign currency translation

      The reporting currency of the Company is the United States dollar. The
      functional currencies of the Company's operating subsidiaries and
      affiliates are UK pound sterling, United States dollar, Irish punt and the
      Australian dollar. The UK pound sterling is the functional currency of the
      Company's member benefits business because it is the primary currency of
      the environment in which the businesses operate as autonomous units. A
      significant proportion of the cash generated and expended by these
      businesses is in UK pounds sterling. The US dollar is the functional
      currency of the Company's direct marketing business because it is the
      primary currency of the environment in which the business operates as an
      antonomous unit. Similarly the functional currency of the Company's
      interest in Porkpine and NHS are the Irish punt and Australian dollar
      respectively, because the businesses are located and operate in the
      Republic of Ireland and Australia.

      For consolidation purposes, the assets and liabilities of overseas
      subsidiary undertakings are translated at the closing exchange rates.
      Consolidated statements of operations of such undertakings are
      consolidated at the average rates of exchange during the period. Exchange
      differences arising on the translation of subsidiaries' financial
      statements are recorded in the cumulative foreign currency translation
      adjustment account as a component of stockholders' equity (deficit).

      Transactions in foreign currencies are recorded using the rate of exchange
      ruling at the date of the transaction. Monetary assets and liabilities
      denominated in foreign currencies are translated using the rate of
      exchange ruling at the balance sheet date and the gains or losses on
      translation are included in the consolidated statement of operations. In
      the year ended September 30, 1999 the Company recorded an exchange loss of
      $196,761 (fiscal 1998 - loss of $58,339; fiscal 1997 - loss of $16,218).

      The average exchange rates during the years ended September 30, 1999, 1998
      and 1997 and the exchange rates in effect as of September 30, 1999 and
      1998 were as follows:

                                                UK pound    Australian   Ireland
                                                sterling     dollar       punt
        Average exchange rates

          Year ended September 30, 1999          1.6244       0.6649     1.3773
          Year ended September 30, 1998          1.6533       0.6470     1.4215
          Year ended September 30, 1997          1.6200       0.7302        N/A

        Closing exchange rate

          September 30, 1999                     1.6463       0.6528     1.3513
          September 30, 1998                     1.7000       0.5930     1.4995
          September 30, 1997                      1.612       0.7251     1.4545

  (j) Cash equivalents

      For purposes of the statements of cash flows, the Company considers all
      investments with an original maturity of three months or less to be a cash
      equivalent.


                                      F-15
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

2 Significant accounting policies (Continued)

  (k) Advertising costs

      The Company expenses advertising costs as incurred. Advertising costs for
      the years ended September 30, 1999, 1998 and 1997 were $Nil, $Nil and
      $26,311 respectively. The Company has used direct response advertising in
      the past and may use such advertising in the future. However, the Company
      did not have costs related to direct response advertising campaigns during
      the years ended September 30, 1999, 1998 and 1997.

  (l) Use of Estimates

      In preparing the consolidated financial statements in conformity with
      generally accepted accounting principles, management is required to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of contingent liabilities at the date of
      the consolidated financial statements and revenues and expenses during the
      reported period. Actual results could differ from these estimates.

  (m) Financial instruments

      Financial instruments held by the Company include cash and cash
      equivalents, restricted cash, notes payable, restaurant credits and
      amounts due from/to related parties and approximated fair value as of
      September 30, 1999 and 1998 due to either short maturity or terms similar
      to those available to similar companies in the open market.

  (n) Comprehensive income

      The Company adopted Statement of Financial Accounting Standard ("SFAS")
      No.130, "Reporting Comprehensive Income", which establishes standards for
      reporting and display of comprehensive income, its components and
      accumulated balances. Comprehensive income is defined to include all
      changes in equity except those resulting from investments by owners and
      distributions to owners. Among other disclosures, SFAS No.130 requires
      that all items that are required to be recognized under current accounting
      standards as components of comprehensive income be reported in a financial
      statement that is displayed with the same prominence as other financial
      statements. The only item of comprehensive income (loss) is foreign
      currency translation adjustments.

  (o) Recent US accounting pronouncements not yet implemented

      In June 1998, the Financial Accounting Standards Board ("FASB") issued
      SFAS No.133, "Accounting for Derivative Instruments and Hedging
      Activities", which establishes standards for accounting for the various
      derivative instruments commonly used in hedging activities. This standard
      has been amended by SFAS No.137 and is now effective for fiscal years
      beginning after June 15, 2000. While management is still reviewing the
      statement, the adoption of this statement will not have a material effect
      on the company's consolidated financial position, results of operations or
      cash flows, and any effect will generally be limited to the form and
      content of its disclosures.


                                      F-16
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

3 Related party transactions

<TABLE>
<CAPTION>
                                                         September 30,  September 30,
                                                             1999           1998
<S>                                                      <C>            <C>
      (a) Amounts due from related parties:

        International Advance, Inc.                      $        --    $   779,986
        Conestoga Partners, Inc.                                  --        208,035
        TMAP                                                 794,496      1,567,312
        Transmedia Australia Pty Limited                          --        224,901
        E Guinan III                                         301,287             --
                                                         -----------    -----------
                                                         $ 1,095,783    $ 2,780,234
                                                         ===========    ===========

      (b) Amounts due to related parties - current:

        E Guinan III                                     $        --    $    96,735
        J V Vittoria                                              --      1,182,137
        TMNI International, Inc.                           1,116,207      1,037,533
        NHS                                                   22,665             --
                                                         -----------    -----------

                                                         $ 1,138,872    $ 2,316,405
                                                         ===========    ===========

      (c) Amounts due to related parties - non current:

        J V Vittoria (Refer Note 15)                     $ 1,302,137    $       --
                                                         ===========    ===========
</TABLE>

      Loans to related parties are unsecured, non-interest bearing and repayable
      upon demand except as noted below.

      During fiscal 1997 the Company entered into an agreement with Mr J
      Vittoria, a director and shareholder of the Company, whereby Mr Vittoria
      advanced a loan of $1,000,000 to the Company. The purpose of the loan was
      to enable the Company to pay the cash element of the purchase of the
      Company's interest in Countdown. The loan, which bears interest at 12% per
      annum and is collateralized by a pledge of all the shares of Countdown
      purchased by the Company, was originally scheduled to mature on September
      27, 1997. The loan was renewed upon maturity for an indefinite period by
      agreement between the Company and Mr Vittoria. The loan is repayable on 60
      days notice from Mr Vittoria. Refer also Note 15 - "Subsequent Events".

      During fiscal 1997 the Company executed a promissory note in the sum of
      $750,000 in favour of TMNI as consideration for the rights to acquire
      sub-licenses in certain European countries.


                                      F-17
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

3     Related party transactions (Continued)

      The Company and TMAP issued a joint promissory note together in the total
      principal amount of $500,000 to TMNI for which the liability has been
      split between the two companies equally. The promissory note was payable
      in April 2, 1998, bears interest at the rate of 10% per annum, and is
      convertible at the holder's option into common stock at the rate of $1.20
      per share. To date this promissory note has not been repaid or converted.

      During the year ended September 30, 1999, the Company charged a corporate
      management fee of $1,210,939 (fiscal 1998 - $1,060,526; fiscal 1997 -
      $679,787) to TMAP in respect of TMAP's share of head office expenses,
      comprising salaries, rent, travel and other associated office and
      professional costs.

4     Investments in affiliated companies

      Investments in affiliated companies are made up as follows:

                                                    September 30,  September 30,
                                                         1999           1998

Transmedia Australia
  Cost of investment                                   $ 253,349     $ 253,349
  Shares of losses
   - from date of acquisition to September 30, 1998      (68,666)      (68,666)
   - year ended September 30, 1999                      (181,134)           --
  Amortization of goodwill on investment                 (17,145)       (7,763)
                                                       ---------     ---------

                                                         (13,596)      176,920
                                                       ---------     ---------

Transmedia Holdings
  Cost of investment                                   $ 126,748     $ 126,748
  Shares of profits/(losses)
   - from date of acquisition to September 30, 1998        9,496         9,496
   - year ended September 30, 1999                       (96,052)           --
  Amortization of goodwill on investment                  (5,327)       (1,408)
                                                       ---------     ---------

                                                          34,865       134,836
                                                       ---------     ---------

Total investment in affiliates                         $  21,269     $ 311,756
                                                       ---------     ---------


                                      F-18
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

4     Investment in affiliated company (Continued)

      On December 2, 1997, Transmedia Australia, a company owned equally by the
      Company and TMAP but controlled and consolidated by TMAP, purchased 51% of
      the common stock of NHS a newly incorporated company. NHS purchased the
      net assets and business of Nationwide Helpline Services Pty Limited
      ("Nationwide"). Nationwide was an Australian provider of telephone
      helpline services and other member benefit programs. The total
      consideration paid by Transmedia Australia for its 51% interest in the
      equity of NHS was Aus$6,000,000 (approximately $4,290,000 as of December
      2, 1997). Transmedia Australia also exercised their right to purchase the
      balance of the equity of NHS for Aus$2,500,000 payable on June 30, 1998
      with the right to extend such obligation ("Balance Obligation") until
      September 30, 1998 by paying interest at 5% per annum. Transmedia
      Australia exercised the extension right. In addition the Company and TMAP
      agreed to pay Aus$4,000,000 in sign-on fees to the two former executive
      directors of Nationwide. On October 21, 1998 the Company and TMAP reached
      agreement to reduce these sign-on fees by Aus$1,000,000.

      On November 17, 1998 the Company and TMAP acquired the remaining 49% and
      settled the Balance Obligation. The Company and TMAP also paid the reduced
      sign-on fees on that date.

      The total revised sign-on fees of Aus$3,000,000 (approximately $1,940,000)
      have been charged as compensation expense equally in the statement of
      operations of the Company and TMAP for the year ended September 30, 1998
      within selling, general and administrative expenses.

      On May 22, 1998, Transmedia Holdings, a company owned equally by the
      company and TMAP but controlled and consolidated by TMAP, acquired 100% of
      the issued share capital of Breakaway Travel Club Pty Limited
      ("Breakaway"). The total consideration paid was Aus$375,000 (approximately
      $230,000) plus acquisition costs of $16,000. Such consideration was paid
      equally by the Company and TMAP in cash.


                                      F-19
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

5     Goodwill and other intangible assets

      Goodwill is made up as follows:

<TABLE>
<CAPTION>
                                                     September 30,    September 30,
                                                         1999              1998
<S>                                                  <C>              <C>
      Acquisition of Countdown                       $  3,560,591     $  3,560,591
      Acquisition of Transmedia France                         --          (64,621)
      Acquisition of Porkpine                             894,603          869,028
      Acquisition of DBS Direct (Refer Note 6(c))       6,748,686               --
                                                     ------------     ------------

                                                       11,203,880        4,364,998
      Less: accumulated amortization                   (1,170,311)        (678,166)
                                                     ------------     ------------

                                                     $ 10,033,569     $  3,686,832
                                                     ============     ============

<CAPTION>

      Intangible assets are made up as follows:

                                                     September 30,    September 30,
                                                         1999              1998
<S>                                                  <C>              <C>
      Cost of Transmedia license                     $  1,621,284     $  2,371,284
      Impairment of Transmedia license                         --         (750,000)
      Acquisition of NAMA (Refer Note 6(d))               400,000               --
                                                     ------------     ------------

                                                        2,021,284        1,621,284
      Less: accumulated amortization                     (763,362)        (631,944)
                                                     ------------     ------------

                                                     $  1,257,922     $    989,340
                                                     ============     ============
</TABLE>


                                      F-20
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

6     Acquisitions

  (a) Porkpine

      On May 14, 1998 the Company and TMAP purchased 100% of the outstanding
      common stock of Porkpine Limited ("Porkpine"). The consideration paid
      totalled 1,060,000 pounds sterling ($1,749,000 approximately) and was
      subject to increase or decrease by an amount equal to the net current
      assets of Porkpine and its subsidiaries as at the date of completion. The
      net current assets of Porkpine and its subsidiaries as of May 14, 1998
      totalled $33,627.

  (b) Other

      The Company incurred costs of $362,000 in July 1998 and issued 100,000
      shares of common stock with a market price of $1.00 at the date of issue
      in connection with a failed acquisition. These costs have been included in
      selling, general and administrative expenses in the statement of
      operations.

  (c) DBS Direct

      On June 15, 1999 the Company and TMAP jointly purchased 100% of the
      outstanding common stock of DBS Direct. The consideration totalled
      $15,077,642 of which $12,077,642 was satisfied by issuing 4,831,057 shares
      of common stock in the Company and 4,589,732 shares of common stock in
      TMAP, and $3,000,000 payable in cash as a capital contribution. As of
      September 30, 1999 $1,875,000 of the cash element has been paid. The
      balance of the capital contribution was paid in November and December
      1999.

      The operating results of DBS Direct have been included in the consolidated
      financial statements from June 15, 1999. The pro-forma income statement
      for the Company as if the acquisition of DBS Direct had occurred as of
      October 1, 1997 is set out below.

<TABLE>
<CAPTION>
                                                     Year ended          Year ended
                                                    September 30,       September 30,
                                                        1999               1998
<S>                                                 <C>                 <C>
        Revenues                                    $10,644,760         $10,341,740
                                                    ===========         ===========

        Operating loss                              $(5,288,942)        $(8,074,198)
                                                    ===========         ===========

        Net loss                                    $(6,077,394)        $(8,874,990)
                                                    ===========         ===========

        Loss per share                              $     (0.27)        $     (0.54)
                                                    ===========         ===========
</TABLE>

  (d) Countdown USA

      In June 1998, the Company and TMAP jointly incorporated Countdown USA. In
      November, 1998 Countdown USA acquired the membership base and certain
      assets of the National Association of Mature Americans, Inc. ("NAMA"). The
      consideration payable totalled $400,000. No value was attributed to the
      assets acquired.


                                      F-21
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

7     Notes payable

      (a)   On April 29, 1998 the Company engaged in a private placement of debt
            securities. The Placement was made pursuant to the exemption from
            registration afforded by Section 4(2) of the Securities Act of 1933,
            as amended, and Regulation D promulgated thereunder. The placement
            consisted of three 8% promissory notes each in the amount of 250,000
            pounds sterling (approximately $425,000) face amount, payable on
            November 1, 1998 and one 8% promissory note in the amount of 200,000
            pounds sterling (approximately $340,000) face amount, payable on the
            same date. The holders of the 250,000 pounds sterling promissory
            notes each received a three and a half year warrant to purchase
            41,660 shares of the common stock of the Company at an exercise
            price of $2.00 per share and the holder of the 200,000 pounds
            sterling promissory note received a warrant to purchase 33,328
            shares on the same terms. The warrants are exercisable at any time
            after issuance through November 1, 2001.

            The Company failed to pay the promissory notes on the due date and
            pursuant to the terms of the promissory notes, the holders each
            received additional warrants for the same number of shares and
            exercisable on the same terms as the original warrants. As of
            September 30, 1999 the Company had repaid the three 250,000 pounds
            sterling promissory notes, together with interest.

            In addition, the holder of the 200,000 pounds sterling promissory
            note had been paid approximately $61,373 in part repayment. As of
            the date hereof, the balance of the note has been repaid.

            During the course of negotiations with the note holders, the Company
            granted two of the 250,000 pound promissory note holders an
            additional warrant each to purchase 41,660 shares of common stock
            and agreed to adjust the exercise price of all warrants issued to
            all note holders from $2.00 to $1.00.

            The fair value of the warrants using the Black Scholes model is
            $211,000 which has been charged as additional interest expense over
            the life of the note.


                                      F-22
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

7     Notes payable (Continued)

      (b)   On July 2, 1998 the Company engaged in a private placement of debt
            securities. The placement was made pursuant to the exemption from
            registration afforded by Section 4(2) of the Securities Act of 1933,
            as amended, and Regulation D promulgated thereunder. The placement
            consisted of a $3,125,000 face amount, 8% promissory note payable on
            January 5, 1999 and resulted in net proceeds of $2,926,588 to the
            Company after deduction of arrangement fees. These funds were raised
            to meet the working capital requirements of the Company. As of
            September 30, 1999 the amount outstanding was $2,345,440.

            The Note was secured by a pledge of 2 million shares of the common
            stock of TMAP ("Security Shares") held by Edward J. Guinan III, then
            Chairman of the Board and Chief Executive Officer of the Company.
            Additionally, the note holder received a warrant to purchase 600,000
            shares of common stock at an exercise price of $2.00 per share. The
            warrant was exercisable at anytime from July 6, 1998 through July 6,
            2001. The Company failed to pay the Note on the due date. The
            Company was in discussions with the note holder through September
            1999 to agree extensions of time to repay the Note. In consideration
            for extending the time available to the Company to repay the Note,
            on September 15, 1999 the Company agreed to replace the warrant
            issued to the note holder with a new warrant to purchase 700,000
            shares of Common Stock at an exercise price of $1.00 per share. The
            warrant was exercisable at anytime from September 15, 1999 through
            September 30, 2002. Through September 1999 the Company has made
            repayments totalling $1,050,000. In November 1999 the note holder
            commenced sales of the Security Shares realizing net proceeds of
            $2,100,230. As of the date hereof the Company has repaid the balance
            of the Note in full together with accrued interest.

            The fair value of the warrants using the Black Scholes model is
            $217,000 which has been charged as additional interest expense over
            the life of the note.

      (c)   On July 16, 1999 the Company engaged in a private placement of debt
            securities. The Placement was made pursuant to the exemption from
            registration afforded by Section 4(2) of the Securities Act of 1933,
            as amended, and Regulation D promulgated thereunder. The Placement
            was a promissory note of $150,000 face amount with no fixed
            repayment date and carried no interest. The holder received a 3 year
            warrant to purchase 50,000 shares of the common stock of the Company
            at an exercise price of $1.00 per share. The warrants are
            exercisable at any time after issuance through August 29, 2002.

            As of September 30, 1999 the full amount was due. As of the date
            hereof the Company has repaid the promissory note.

      (d)   On August 27, 1999 the Company engaged in a private placement of
            debt securities. The Placement was made pursuant to the exemption
            from registration afforded by Section 4(2) of the Securities Act of
            1933, as amended, and Regulation D promulgated thereunder. The
            Placement was a promissory note of (pound)100,000 (approximately
            $158,800) face amount, with no fixed repayment date and carried no
            interest. The holder received a 3 year warrant to purchase 37,500
            shares of the common stock of the Company at an exercise price of
            $1.00 per share. The warrants are exercisable at any time after
            issuance through August 25, 2002.

            As of September 30, 1999 the full amount was due. As of the date
            hereof the Company has repaid the promissory note.


                                      F-23
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

7     Notes payable (Continued)

      (e)   On June 2, 1999 the Company engaged in a private placement of debt
            securities. The Placement was made pursuant to the exemption from
            registration afforded by Section 4(2) of the Securiteis Act of 1933,
            as amended, and Regulation D promulgated thereunder. The Placement
            was a promissory note of $250,000 face amount, with no fixed
            repayment date and carried no interest.

            As of September 30, 1999 $190,000 was due. As of the date hereof the
            Company has repaid the promissory note.

8     Stockholders equity

      On February 1, 1998 the Company commenced a private placement of common
      shares pursuant to the exemption from registration afforded by Section
      4(2) of the Securities Act of 1993, as amended, and Regulation D
      promulgated thereunder. The Placement closed on April 30, 1998 upon the
      sale of 1,950,000 shares of common stock of the Company resulting in net
      proceeds to the company of $2,437,500. For every three shares sold each
      subscriber received a three year warrant to purchase one share of the
      common stock of the Company at an exercise price of $1.25 per share for no
      additional consideration. The warrants are exercisable at any time after
      the date of grant for a period of three years.

      On October 16, 1998 the Company commenced a private placement pursuant to
      the exemption from registration afforded by Section 4(2) of the Securities
      Act of 1933, as amended, and Regulation D promulgated thereunder. The
      placement closed on November 30, 1998 upon the sale of 842,666 shares of
      common stock at $0.75 per share resulting in net proceeds to the Company
      of $632,000.

      On January 25, 1999 the Company commenced a private placement pursuant to
      the exemption from registration afforded by Section 4(2) of the Securities
      Act of 1933, as amended, and Regulation D promulgated thereunder. The
      placement closed on February 24, 1999 upon the sale of 700,000 shares of
      common stock at $1.25 per share resulting in net proceeds to the Company
      of $875,000.

      On May 11, 1999 the Company commenced a private placement pursuant to the
      exemption from registration afforded by Section 4(2) of the Securities Act
      of 1933, as amended, and Regulation D promulgated thereunder. The
      placement closed on June 25, 1999 upon the sale of 3 million shares of
      common stock at $0.75 per share resulting in net proceeds to the Company
      of $2,250,000.

      On August 11, 1999 the Company commenced a private placement pursuant to
      the exemption from registration afforded by Section 4(2) of the Securities
      Act of 1933, as amended, and Regulation D promulgated thereunder. The
      placement closed on September 10, 1999 upon the sale of 166,666 shares of
      common stock at $0.75 per share resulting in net proceeds to the Company
      of $125,000.

      Refer also Note 15 - "Subsequent Events"


                                      F-24
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

9     Income taxes

      Income taxes reflected in the accompanying consolidated statements of
      operations differ from the amounts computed by applying the US federal tax
      rate of 35% to loss before taxes as a result of the following:

<TABLE>
<CAPTION>

                                           Year ended      Year ended      Year ended
                                          September 30,   September 30,   September 30,
                                               1999           1998            1997
<S>                                        <C>             <C>             <C>
      Computed 'expected' tax benefit      $ 1,959,177     $ 2,914,000     $ 1,477,000
      Non deductible expenses                 (201,500)       (208,000)        (85,000)
      Change in valuation allowance for
       deferred tax assets                  (1,747,049)     (2,734,802)     (1,398,621)
      Other (net)                               (7,000)         (7,000)         (7,000)
                                           -----------     -----------     -----------

                                           $     3,628     $   (35,802)    $   (13,621)
                                           ===========     ===========     ===========

<CAPTION>

      The tax effects of temporary differences that give rise to deferred tax
      assets are as follows:

                                           Year ended      Year ended      Year ended
                                          September 30,   September 30,   September 30,
                                               1999           1998            1997
<S>                                        <C>             <C>             <C>
      Deferred tax assets:

        Net operating loss carry forwards  $ 7,786,049     $ 5,871,000     $ 2,957,000
        Deferred license fee                        --              --         170,000
        Royalties                                   --          92,000         254,000
        Pre-operating costs capitalised
         for tax purposes                        7,000           7,000           7,000
        Other                                   98,000         174,000          22,000
                                           -----------     -----------     -----------

        Total                                7,891,049       6,144,000       3,410,000
        Less valuation allowance            (7,891,049)     (6,144,000)     (3,410,000)
                                           -----------     -----------     -----------

                                           $        --     $        --     $        --
                                           ===========     ===========     ===========
</TABLE>


                                      F-25

<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

10 Loss per common share

      The following table summarises securities that were outstanding as of
      September 30, 1999, 1998 and 1997, but not included in the calculation of
      diluted loss per share because the exercise of such options and warrants
      would be anti-dilutive.

                                   September 30,   September 30,  September 30,
                                       1999            1998            1997

Stock options and warrants           7,223,843       9,183,023       1,198,036

      Refer also Note 15 - "Subsequent Events" - to the issuance of common stock
      which if issued prior to September 30, 1999 would have materially altered
      the loss per common share.

11 Leases

      The Company leases certain office space under lease agreements.

      Future minimum lease payments under non-cancellable operating leases as of
      September 30, 1999, are as follows:

Year ending September 30, 2000                                        $  270,000
Year ending September 30, 2001                                           270,000
Year ending September 30, 2002                                           270,000
Year ending September 30, 2003                                           270,000
Year ending September 30, 2004                                           264,000
Thereafter                                                             2,462,000
                                                                      ----------

                                                                      $3,806,000
                                                                      ==========

      The amount charged to the consolidated statement of operations for rent
      expense for the year ended September 30, 1999 was $236,590 (fiscal 1998 -
      $286,043; fiscal 1997 - $150,137).


                                      F-26
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

12 Stock options and warrants

      Under the Company's 1993 Stock Option and Rights Plan (the 'Plan'), the
      Company may grant stock options and stock appreciation rights to persons
      who are now or who during the term of the Plan become key employees
      (including those who are also directors) and to independent sales agents.
      Stock options granted under the Plan may either be incentive Stock Options
      or non-qualified stock options for US federal income tax purposes. The
      Plan provides that the Stock Option Committee of the Board of Directors
      may grant stock options or stock appreciation rights with respect of a
      maximum of 250,000 shares of common stock at an exercise price not less
      than the fair market value at the date of grant for qualified and
      non-qualified stock options.

      In addition, the Company issued options for 40,000 shares of Common Stock
      in 1996 (of which 10,000 were cancelled in 1997), and 10,000 in 1997,
      under the Company's 1996 Stock Option Plan for Outside Directors ("the
      1996 Plan"). The 1996 Plan provides that the Stock Option Committee of the
      Board of Directors may grant stock options with respect to a maximum of
      300,000 shares of Common Stock. These options have a five year term.

      In April 1997, the Company granted an option to purchase up to 250,000
      shares of Common Stock at a purchase price of $1 per share to the owner of
      Countdown as part of the consideration given for the 50% purchase of
      Countdown. In addition, the Company issued warrants to purchase 125,000
      shares of common stock at an exercise price of $1.25 per share with an
      expiration date of April 2002.

      In April and July 1999 the Company issued 3,000,000 warrants in lieu of
      payment to external advisors. The warrants were valued at approximately
      $980,000 using the Black-Scholes model and the Company has recorded the
      amount as prepaid fees with a related credit to additional paid-in
      capital. The prepaid fees are being charged to the statement of operations
      over the minimum period of the services to be provided.


                                      F-27
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

12 Stock options and warrants (Continued)

      Stock option and warrant activity during the periods indicated is as
follows:

<TABLE>
<CAPTION>
                                                     Weighted                   Weighted
                                         Options     average      Warrants       average
                                        number of    exercise     number of     exercise
                                         shares       price        shares         price
<S>                                    <C>             <C>        <C>             <C>
  Balance as of September 30, 1996         40,000      $2.08         597,619      $1.62

  Granted                                      --         --         185,417       2.00
  Granted                                  10,000       1.25              --         --
  Granted                                 250,000       1.00         125,000       1.13
  Cancelled                               (10,000)     (2.08)             --         --
                                       ----------      -----      ----------      -----

  Balance as of September 30, 1997        290,000      $1.12         908,036      $1.63

  Granted                                 200,000       1.00       1,268,351       1.00
  Granted                                      --         --         799,996       1.25
  Granted                               4,750,000       1.00              --         --
  Granted                                 120,000       1.50         846,640       2.00
                                       ----------      -----      ----------      -----

  Balance as of September 30, 1998      5,360,000      $0.98       3,823,023      $1.42

  Granted                                  20,000       1.38       5,020,802       0.86
  Cancelled                            (4,850,000)     (1.00)     (1,649,982)     (1.06)
  Expired                                (200,000)     (1.00)       (300,000)     (1.83)
                                       ----------      -----      ----------      -----

  Balance as of September 30, 1999        330,000      $0.76       6,893,843      $1.08
                                       ==========      =====      ==========      =====
</TABLE>

      The range of exercise prices for the options are $1.00 to $2.08. The range
      of exercise prices for the warrants are $0.86 to $2.50. All the options
      and warrants shown as of September 30, 1999 and 1998 were exercisable at
      that date.


                                      F-28
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

12 Stock options and warrants (Continued)

      The Company applies APB Opinion No. 25 in accounting for its stock options
      issued to employees and, accordingly, other than in respect of that stated
      above no compensation cost has been recognized for its stock options and
      warrants in the financial statements since options were granted at the
      market price on the date of grant. Had the Company determined compensation
      cost based upon the fair value at the grant date for its stock options and
      warrants under SFAS No. 123, the Company's net losses would have been
      increased to the proforma amounts indicated below:

<TABLE>
<CAPTION>
                                               September 30,    September 30,    September 30,
                                                   1999             1998             1997

<S>                                            <C>             <C>              <C>
       Net loss       - As reported            $(5,310,439)    $(7,829,742)     $(3,746,247)
                      - Proforma               $(5,350,884)    $(7,982,663)     $(3,770,548)

       Loss per share - As reported
                      - Basic                  $     (0.24)    $     (0.47)     $     (0.27)
                      - Diluted                $     (0.24)    $     (0.47)     $     (0.27)

       Loss per share - Proforma
                      - Basic                  $     (0.24)    $     (0.48)     $     (0.27)
                      - Diluted                $     (0.24)    $     (0.48)     $     (0.27)
</TABLE>

      In arriving at such proforma amounts, the Company estimates the fair value
      of each stock option on the grant date by using the Black Scholes
      Valuation Method with the following weighted average assumptions used for
      grants in fiscal 1999, 1998 and 1997 respectively: no dividends paid for
      all years; expected volatility of 40%; a risk free interest rate of 6.7%
      and an expected life being the remaining term of the option. The per share
      weighted fair value of the stock options granted in 1999, 1998 and 1997
      were $0.21, $0.48 and $0.68 respectively.

13 Business and credit concentrations

      The Company's customers are primarily located in the United Kingdom and
      United States. No corporate customer accounted for more than 10% of
      consolidated revenues for the year ended September 30, 1999.

      No single restaurant credit receivable was greater than 10% of the
      Company's total restaurant credit receivable balance at September 30,
      1999.


                                      F-29
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

14 Commitments and contingencies

      Legal proceedings

            From time to time the Company is subject to legal proceedings and
            claims in the ordinary course of business.

            On September 29, 1999 the National Association of Mature Americans
            ("NAMA") of Texas filed a civil action against the Company, TMAP and
            Countdown USA in Harris County, Texas. NAMA of Texas is a licensee
            of NAMA, a business acquired by the Company and TMAP through
            Countdown USA in November 1998. NAMA of Texas is claiming breach of
            contract pursuant to a License and Consulting Agreement for the
            provision, by NAMA, of medical and other benefit programs to NAMA of
            Texas. NAMA of Texas is claiming damages for loss of business and
            income in the sum of $5 million, punitive damages in the sum of $3
            million, interest, attorney fees and all costs including court
            costs. Management of the Company, TMAP and Countdown USA believe
            that the claims of NAMA of Texas are unfounded and that they have
            meritorious defences against such claims. The Company, TMAP and
            Countdown USA filed their original answer on November 5, 1999 and on
            November 12, 1999 filed a Notice of Removal to Federal Court. The
            court has ordered an initial pre-trial conference on April 10, 2000.

            The Company is engaged in a dispute with Edward J. Guinan,
            III, its former Chief Executive Officer, with respect to amounts
            which the Company claims Mr. Guinan owes to the Company. Mr.
            Guinan's employment agreement was terminated for cause on September
            30, 1999 and the Company considers the employment agreement to no
            longer be effective. Mr. Guinan's attorneys recently have challenged
            this position and have also asserted claims for various advances
            which Mr. Guinan asserts were made on behalf of the Company and for
            which he claims to be entitled to reimbursement. No legal action has
            been commenced by the Company or Mr. Guinan. At this time it cannot
            be determined when and if this dispute can be resolved or what the
            net amount, if any, which Mr. Guinan owes to the Company or the
            Company owes to Mr. Guinan.

            The Company is engaged in a dispute with Carl Freyer, a former
            director and consultant to the Company. Mr. Freyer claims that an
            agreement was reached in December 1999 pursuant to which he, or his
            affiliate, was granted warrants plus cash payments in lieu of prior
            compensation arrangements. The Company asserts that there is no such
            valid agreement and that the only rights of Mr. Freyer, or his
            affiliate, relate to the Company's obligation to submit for
            shareholder approval, warrants previously granted covering 300,000
            shares exercisable at $1.00 per share. At this time no litigation
            has been commenced.

            The Company is not aware of any legal proceedings or claims against
            the Company that will have, individually or in aggregate a material
            adverse affect on the Company's business, prospects, financial
            condition and results of operation.

15 Subsequent Events

      (a) Equity placements

            On September 30, 1999 the Company commenced a private placement
            pursuant to the exemption from registration by Section 4(2) of the
            Securities Act of 1933, as amended, and Regulation D promulgated
            thereunder. The placement closed on October 5, 1999 upon the sale of
            625,000 shares of common stock at $0.65 per share resulting in net
            proceeds to the Company of $406,250.

            On October 21, 1999 the Company commenced a private placement
            pursuant to the exemption from registration afforded by Section 4(2)
            of the Securities Act of 1933, as amended, and Regulation D
            promulgated thereunder. The placement closed on November 20, 1999
            upon the sale of 3,906,250 shares of common stock at $0.80 per share
            result in net proceeds to the Company of $3,125,000.

      (b) Related parties

            On November 1, 1999 Mr J Vittoria agreed to convert the loan in the
            principal sum of $1,000,000, together with accrued interest at that
            date of $308,804 to shares of common stock at a price of $0.80 per
            share.

      (c) Transmedia license

            On April 7, 2000 the Company and TMNI executed a termination
            agreement pursuant to which the Company gave up its rights under the
            License Agreement in return for forgiveness of amounts owing by the
            Company. Refer Note 3 - "Related party transactions".


                                      F-30
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

16 Industry and geographic area segments

      The Company is engaged in four lines of business: member benefit/loyalty
      programs, direct marketing, travel services and e-commerce, with the
      latter being insignificant in fiscal 1999. The Company was not engaged in
      e-commerce in fiscal 1998 or 1997. Operations of the subsidiary companies
      are conducted in Europe and the United States. The following is a summary
      of the Company's operations by business segment and by geographical
      segment.

      The accounting policies of the segments are the same as those described in
      Note 2 - "Significant accounting policies".

<TABLE>
<CAPTION>
                                                            Year ended       Year ended        Year ended
                                                           September 30,    September 30,     September 30,
                                                               1999              1998              1997
<S>                                                        <C>               <C>               <C>
     (a)  Statement of operations

       Revenues
          Member benefit/loyalty programs                  $  9,112,967      $ 10,568,531      $  7,870,256
          Direct marketing                                      702,751                --                --
                                                           ------------      ------------      ------------

          Revenues for reportable segments
           and consolidated revenues                          9,815,718        10,568,531         7,870,256
                                                           ------------      ------------      ------------

       Operating loss
          Member benefit/loyalty programs                      (668,571)       (4,119,455)       (2,364,255)
          Direct marketing                                     (972,202)               --                --
                                                           ------------      ------------      ------------

                                                             (1,640,773)       (4,119,455)       (2,364,255)
          Less: Corporate overhead                           (2,655,737)       (3,653,156)       (1,874,995)
                                                           ------------      ------------      ------------

          Total operating loss for reportable segments       (4,296,510)       (7,772,611)       (4,239,250)
                                                           ------------      ------------      ------------

       Share of profit/(losses) of affiliates
          Member benefit/loyalty programs                       (81,202)          (48,860)         (116,899)
          Travel services                                      (209,285)          (10,310)               --
                                                           ------------      ------------      ------------

                                                               (290,487)          (59,170)         (116,899)
                                                           ------------      ------------      ------------

       Net interest income/(expense)                         (1,010,652)         (261,923)           11,287
                                                           ------------      ------------      ------------

       Net loss before taxation, minority
        interests and dividends                            $ (5,597,649)     $ (8,093,704)     $ (4,344,862)
                                                           ============      ============      ============
</TABLE>


                                      F-31
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Continued)

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

16 Industry and geographic area segments (Continued)

<TABLE>
<CAPTION>
                                                  Year ended        Year ended        Year ended
                                                 September 30,     September 30,     September 30,
                                                     1999              1998              1997
<S>                                              <C>               <C>               <C>
       Geographic region

          Revenues
            Europe                               $  8,899,738      $ 10,568,531      $  7,870,256
            United States of America                  915,980                --                --
                                                 ------------      ------------      ------------

                                                 $  9,815,718      $ 10,568,531      $  7,870,256
                                                 ============      ============      ============

          Net loss before taxation, minority
           interests and dividends

            Europe                                 (3,528,963)       (6,013,394)       (4,344,862)
            United States of America               (1,778,279)       (1,161,969)               --
            Australia                                (290,407)         (918,341)               --
                                                 ------------      ------------      ------------

                                                 $ (5,597,649)     $ (8,093,704)     $ (4,344,862)
                                                 ============      ============      ============
</TABLE>

<TABLE>
<CAPTION>
                                                    September 30,    September 30,
                                                        1999             1998
<S>                                                 <C>              <C>
          Long-lived assets

            Europe                                    3,940,570        4,127,017
            United States of America                  8,508,466          989,340
            Australia                                    21,269          311,756
                                                    -----------      -----------

                                                    $12,470,305      $ 5,428,113
                                                    ===========      ===========

     (b)  Total assets

          Member benefit/loyalty programs           $ 7,682,655      $10,757,209
          Direct marketing                            8,175,648               --
          Investment in affiliates                       21,269          311,756
                                                    -----------      -----------

                                                    $15,879,572      $11,068,965
                                                    ===========      ===========
</TABLE>


                                      F-32
<PAGE>

TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES

Valuation and qualifying accounts and reserves                       Schedule II
for the years ended September 30, 1999, 1998 and 1997

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

<TABLE>
<CAPTION>
                                           Column A                  Column B             Column C      Column D    Column E

                                                                    Additions
Description                                                   Charged to  Acquisition                    Balance
                                          Balance at          costs and        of         Deductions     at end
                                      beginning of period      expenses   subsidiaries    (describe)    of period     Notes
<S>                                    <C>       <C>           <C>            <C>                        <C>             <C>
Allowances for irrecoverable
restaurant credits                     1997      399,328       245,955        20,851            --       666,134
                                       1998      666,134       391,546                     (716,876)     340,804         1
                                       1999      340,804           --            --        (304,355)      36,449         2
</TABLE>

Note 1

      The deduction of $716,876 relates to the write-off of certain
      irrecoverable restaurant credits in Transmedia UK plc.

Note 2

      The reduction includes $54,626 relating to the provision in Transmedia
      France (liquidated) and $249,729 relating to a write-off of certain
      irrecoverable restaurant credits in Transmedia UK plc.