United States
                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549

                                    Form 10-KSB


(Mark One)

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

      For the fiscal year ended:  December 31, 1996

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

      For the transition period from ___________ to ___________

                    Commission file number:  0-26624
                     Alternate Postal Delivery, Inc.
______________________________________________________________________________
               (Name of small business issuer in its charter)

           Michigan                             38-2841197
______________________________________________________________________________
(State or other jurisdiction of           (I.R.S. Employer incorporation or
     organization)                             Identification No.)

     One Ionia S.W., Suite 300, Grand Rapids, Michigan           49503
______________________________________________________________________________
    (Address of principal executive offices)                   (Zip Code)

    Issuer's telephone number  (616) 235-0698

Securities registered under Section 12(g) of the Exchange Act:  Common Stock,
no par value.

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X]  No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year:  $19,937,151

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days:  $4,996,674, based on 1,480,496 shares held by nonaffiliates as of March
10, 1997, and the average of the closing bid and asked prices for said shares
in the Nasdaq Small-Cap Market as of such date.

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 4,022,894 shares of Common
Stock, as of March 15, 1997.


                     DOCUMENTS INCORPORATED BY REFERENCE

The Company's definitive proxy materials to be filed on or about April 21,
1997 are incorporated by reference in Part III of this Form 10-KSB.  In
addition certain exhibits identified in Part III, Item 12 are incorporated by
reference to said exhibits as filed with (i) Form SB-2 Registration Statement
(Commission File No. 33-95332C), (ii) Report on Form 10-KSB for the fiscal
year ended December 31, 1995, and (iii) Reports on Form 8-K (dated April 11,
1996) and Form 8-K/A (dated April 4, 1996).

                              TABLE OF CONTENTS

                                                                          Page

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4

Item 1.  Description of Business . . . . . . . . . . . . . . . . . . . . .  4

Item 2.  Description of Property . . . . . . . . . . . . . . . . . . . . .  8

Item 3.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . .  8

Item 4.  Submission of Matters to a Vote of Security Holders . . . . . . .  9

PART II  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

Item 5.  Market for the Common Equity and Related Stockholder Matters
         Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . .  9

Item 6.  Management's Discussion and Analysis  . . . . . . . . . . . . . .  9

Item 7.  Financial Statements  . . . . . . . . . . . . . . . . . . . . . . 14

Item 8.  Changes in and Disagreement with Accountants on Accounting and
         Financial Disclosure  . . . . . . . . . . . . . . . . . . . . . . 33

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act . . . . . . . . 33

Item 10. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . 33

Item 11. Security Ownership of Certain Beneficial Owners and Management. . 33

Item 12. Certain Relationships and Related Transactions  . . . . . . . . . 33

Item 13. Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . . . 33
         Reports on Form 8-K   . . . . . . . . . . . . . . . . . . . . . . 33

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

                                   PART I

Item 1.  DESCRIPTION OF BUSINESS

OVERVIEW

     Alternate Postal Delivery, Inc.(the "Company") is a consolidator in the
print segment of the Direct Marketing Services industry.  The Alternate Postal
network provides an alternate means of delivering targeted sales and marketing
materials to the home that can be more flexible and less expensive than
delivery by the United States Postal Service (USPS).  During 1996, management
took several steps to strategically reposition the Company, aiming to reduce
its vulnerability to private delivery industry changes, principally changes
related to USPS mail classification and rate making, and to position the
Company as a participant in the much larger direct marketing services
industry.  Acquisitions have provided critical mass, expanding the Company's
reach to 50 million households.  Through alliances, the Company has
significantly enhanced its product sample business revenue capability and has
leveraged its database software.  The Company's shift in focus has been driven
by a number of external factors, including postal reclassification, which
negatively affected the magazine delivery business by providing postal
discounts to large circulation magazines; the impact of electronic media on
placing national newspaper advertising; and increased competition in the
newspaper sampling business.  Management expects that alliances will continue
to enhance the Company's reputation in the marketplace and will create growing
visibility for the Company as a viable provider for targeted delivery of
direct marketing materials.

     The Company began in 1989 as the nation's first private delivery network
for material classified as second, third and special fourth class mail by the
USPS.  From 1990 through 1993, the Company focused on building a network of
private delivery affiliates ( the "Affiliates") to deliver products, primarily
magazines and catalogs.  In 1994, the Company focused on increasing its
delivery of advertising and promotional materials, including product samples.
In 1995, the Company completed its initial registered public offering of
securities and expanded its operations, including implementation of its
Company-owned delivery service in the St. Petersburg, Florida market.  During
1996, the Company added to its Affiliate network by signing agreements with 12
daily newspapers who were formerly licensees of Publishers Express, a
competitor of the Company who left the industry.  In January 1996, the Company
acquired the assets of a private delivery company in Northern California,
adding more depth to its Company-owned delivery services.  In March 1996, the
company acquired the business of National Home Delivery, Inc. through a
pooling of interests transaction.  This acquisition gave the Company a greater
territory coverage for delivery services, as well as another area of business,
run of press (ROP) advertising in suburban newspapers.

Developing the Distribution Network

     Alternate Postal Delivery has built a unique national private
distribution system for delivery of address-specific advertising materials,
catalogs, magazines, telephone directories and promotional samples that
reaches 50 million households in the U.S.  The Company is the largest
competitor to the USPS delivering addressed advertising mail, and the only
nationally-based private delivery alternative for second, third and special
fourth class mail.

     The Company built its national distribution system through a network of
Affiliates, mainly subsidiaries or divisions of newspaper companies with
existing local distribution capability.  In addition to print ads published in
the paper (ROP ads), newspapers sometimes include advertising in the form of
free standing inserts (coupons and other marketing materials) delivered inside
the paper.  Although these ads compete with direct mail advertising, their
reach is limited to newspaper subscribers or those people who purchase
newspapers from retail outlets.  To gain broader distribution, newspapers may
set up a separate (often weekly) newspaper to be delivered to non-subscribers
as a vehicle for expanding delivery of saturation materials (free-standing
inserts, coupons and marketing flyers) to a much broader audience.  The
Company built its affiliate network with the support of three major newspaper
groups (initial bondholders of the Company and now shareholders): E.W.
Scripps, Capital Cities/ABC and the Tribune Publishing Co., each of which has
subsidiaries that are part of the Company's affiliate network.

     This private delivery distribution network offers delivery flexibility --
without USPS restrictions regarding size and packaging, and with the advantage
of timing deliveries for maximum impact -- enabling retailers, manufacturers,
publishers and other advertisers to distribute targeted messages in creative
ways, at a lower cost than using the USPS.

Targeting the Consumer Message/Database Marketing

     The Company has developed its own proprietary database marketing software
-- Pro*Filer -- that can target, profile and analyze geo-demographic and
psychographic data.  Utilizing data from R.L. Polk or Metromail -- considered
to contain the most accurate and robust consumer information available in the
U.S. -- Pro*Filer software performs fast segmentation analysis, identifies the
appropriate recipients for specific products; generates "look-alikes" from a
customer list; and targets individuals, households, block groups, carrier
routes and zip codes by using multiple data formats.  This enables advertisers
to increase the efficiency of their sales and marketing dollars by identifying
the most likely prospects for their products.

     The Company has a licensing agreement with Claritas, Inc. for its PRIZM
information system.  This provides geo-demographic consumer profiles which
identify zip codes containing households with a propensity to buy a particular
product or service.  Using a custom-built software program, the Company is
able to match these PRIZM-generated targeted consumers to the newspaper
delivery database covering the same targeted zip codes.  Mapping capabilities
are also an important feature of the PRIZM software.

INDUSTRY OVERVIEW AND REGULATORY ENVIRONMENT

     The direct marketing services industry is extremely fragmented and
encompasses an estimated 11,000 U.S. companies.  Consolidation is beginning to
occur as providers attempt to leverage their business by cross-selling
services, and by coordinating different elements of marketing and media
programs to offer a turnkey solution.  Direct marketing requires a variety of
functions and steps as described below.

     * Identification of the Audience
     * Design and Packaging the Product
     * Delivery of the Product
     * Evaluation of Effectiveness

     Identification of the Audience.  Database services are integral to a
successful direct marketing campaign.  Comprehensive consumer databases (which
store and analyze information on more than 90% of U.S. households) are used to
increase the effectiveness of direct marketing campaigns by generating and
enhancing prospect lists, thereby identifying the most appropriate audience
for a product.  Sophisticated data warehousing and decision support software
facilitate the development of new services and niche-based expertise.

     Design and Packaging the Product.  Direct mail (the most traditional
media) is the second largest category of direct marketing expenditures (after
telemarketing), and includes promotional brochures, catalogs, coupons, shared
mail and product samples.

     Delivery of the Product.  Significant participants in direct marketing
such as ADVO and Cox Direct, use the USPS exclusively to deliver shared mail
and other advertising materials.  Alternate delivery methods, including the
Company's national distribution network of newspaper affiliates may offer
delivery of address-specific mail which can be more flexible and less
expensive than USPS delivery, particularly for heavier packages and samples.

     Evaluation of Effectiveness.  As direct marketing programs become more
targeted, verifying their effectiveness and defining their impact on consumer
purchasing is an important part of the campaign.

     In building its business, the Company has become involved in several
phases of the direct marketing pathway: identifying the audience (using
database software), packaging the message (samples delivered in pouched
polybags, advertising fliers and other advertising and marketing materials),
and delivering the message (arranging for and executing the delivery through
its national distribution network).

DESCRIPTION OF OPERATIONS

     During the year, management structured the business into four operating
areas:

Associate Network (Network for distribution of samples and marketing
materials).  This area of business, headquartered in New York, represented
approximately 15% of the Company's total revenues in 1996.  On October 1,
1996, the Company formed a strategic alliance with News America FSI to
cost-effectively distribute product samples nationwide.  News America FSI is
the largest publisher of free-standing inserts in the United States and Canada.
With this alliance, management sees this area of business as its fastest-
growing sector over the next two years.

Suburban Network (Network for ROP display ads and inserts in newspapers).
This business, headquartered in Schaumburg, Illinois, has been brokering ads
since 1972 for more than 1,000 suburban newspapers across the country, with a
reach of approximately 15 million households.  The Company acquired this
business in a pooling of interests transaction in 1996.  For 1996, this area
of business represented approximately 45% of the total revenues.  Management
expects this area of business to benefit from electronic ad delivery for added
ease of use and potential growth.

Direct Network (Network of Company-owned private delivery operations in
California and Florida.)  This area of business serves the same function as
the Affiliates. In addition to monthly deliveries of specific address
materials and other products in Florida and California, this Company-owned
delivery network contracts for special projects or one-time annual deliveries
such as phone books in various locations in the United States.  This area of
business was responsible for approximately 15% of the total revenues for 1996.

Address-Specific Network (Network for delivery of magazines and catalogs; and
sales of targeting software).  Magazine deliveries have provided the Company
with revenues on a regular basis due to the recurring nature of the
deliveries.  Following the 1996 postal reclassification case, which offered
USPS discounts to certain large circulation publishers, management reduced its
reliance on magazine sales.  This area of business also includes sales of the
Company's targeting software, "Pro*filer", to newspapers and others seeking
marketing solutions.  As part of the Pro*filer sales, the Company also sells
data to purchasers of the software.  During 1996, this area of business
contributed approximately 25% of the total revenues.

PRINCIPAL CUSTOMERS

     During the year ended December 31, 1996, the Company had no single
customer which accounted for 10% or more of the Company's revenues for that
period.  During the year ended December 31, 1995, the Company had business
with one advertising agency which accounted for 10.6% of the Company's
revenues for that period.

     As a result of the acquisitions completed in 1996 and the Company's
change in focus to marketing capabilities, magazine publishers are no longer
the Company's primary customers.  The expansion of the Company's associate
network and the increase in generation of revenue through advertising agency
contacts have also served to decrease the Company's reliance on any particular
customer as a single source of revenue.

STRATEGIC ALLIANCES AND ACQUISITIONS

     On January 29, 1996, the Company acquired substantially all of the
assets, including customer contracts, of Preferred Customer Delivery, Inc., a
privately-held alternate delivery company based in San Francisco, California.
The Company believes that this acquisition represents a significant expansion
of its business in the Direct Network area.

     On March 29, 1996, the Company acquired National Home Delivery, Inc.
(USSPI) through a pooling of interests transaction.  Management feels that
this acquisition has helped to expand the Company's ability to grow in the
area of product sampling by expanding the infrastructure necessary to deliver
the products.

     On October 1, 1996, the Company formed a strategic alliance with News
America FSI, the largest publisher of free-standing inserts in the United
States and Canada.  The alliance was established to create a method to cost-
effectively distribute product samples nationwide.  Nearly 75% of
manufacturers use sampling, and there has been a 19% increase in the sampling
of both new and established products during the past year, according to the
18th Annual Survey of Promotional Practices.  Management expects that this
alliance will help it capture a larger share of this industry.

     In December 1996, the Company entered into an agreement with American
Newspaper Network ("ANN"), based in Seattle, Washington, which will enable
advertising agencies to purchase display space with the Company's Suburban
Network newspaper clientele on-line and to electronically transmit copy and
graphics for these advertisements to newspapers.  Implementation of the
capabilities should go into effect in the second quarter of 1997.

COMPETITION

     The Company's primary competitor for delivery of address specific
materials is the USPS, which competition could increase if the USPS makes
further changes in mail classification and rates, or makes other operational
changes which decrease or stabilize the cost of USPS delivery, or which
improve USPS service as perceived by consumers and commercial mailers. The
Company's primary competitors for non-address specific advertising material,
primarily samples, include Valassis, Sunflower Sampling, and a number of
owner-operated businesses.  The Company's primary competitor in the area of
ROP advertising is Landon & Associates, Inc.  Barriers to entry in the local
private delivery market are not significant.  Accordingly, if the private
express statutes are amended to permit the private delivery of additional
classes of mail, additional competitors may be attracted to the industry, some
of which may have greater resources than the Company.

EMPLOYEES

     As of December 31,1996, the Company had 55 full-time employees, of whom
13 were in sales and sales support, 28 were in operations, 6 were in computer
systems, and 8 were in general and administrative positions.  In addition, as
of December 31, 1996, the Company had approximately 60 part-time employees in
operations, which number varies from month to month.  As discussed above, the
Company anticipates reducing the number of operational and administrative
employees in 1997 due to the implementation of the ANN agreement. (See
"STRATEGIC ALLIANCES AND ACQUISITIONS")

SERVICE MARKS, TRADEMARKS, AND PATENTS

     The Company currently has one service mark registered with the United
States Patent and Trademark Office, its name "Alternate Postal Delivery, Inc."
as it appears within the Company's logo.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company currently leases its principal executive offices in Grand
Rapids, Michigan at a monthly base rent of approximately $2,440 and sales
office space in New York City, New York at a monthly base rent of $2,810.  In
addition, one of the Company's wholly-owned subsidiaries Alternate Postal
Direct, Inc., rents warehouse space in Grand Rapids, Michigan at a monthly
rent of $560; warehouse and office space in St.Petersburg, Florida pursuant to
two leases at an aggregate monthly rent of $3,810; and office and warehouse
space in San Francisco, California pursuant to two leases  at an aggregate
monthly rent of $4,420.  Another wholly-owned subsidiary, National Home
Delivery, Inc. (d/b/a USSPI) rents sales office space in Schaumburg, Illinois,
and Detroit, Michigan at an aggregate monthly rent of $4,647.  The Company
does not deem any of these leases to be material, since all of these
facilities could be replaced with substantially equivalent facilities at
similar cost without great difficulty.

     The Company has no lease or reimbursement obligations with respect to the
at-home offices utilized by some of its off-site employees.

ITEM 3.  LEGAL PROCEEDINGS

     None.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

     None.

                                    PART II

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

     The following table sets forth the quarterly high and low bid prices in
the market for the Company's Common Stock (which is its only class of security
outstanding), as reported in the Nasdaq Small-Cap Market, since beginning of
trading on September 21, 1995.  The Company's Common Stock is traded under the
symbol "ALTD."  Such quotations represent interdealer prices, without retail
markup, markdown or commission, and do not necessarily represent actual
transactions.

<TABLE>
<CAPTION>
                                                           Closing Bid Price
                                                             Low        High
               Year ended December 31, 1996:
               <S>                                         <C>         <C>
               First quarter . . . . . . . . . . . . . . .  5 1/4       6
               Second quarter  . . . . . . . . . . . . . .  4           5 1/8
               Third quarter   . . . . . . . . . . . . . .  3 1/4       4
               Fourth quarter  . . . . . . . . . . . . . .  2 3/4       3 1/2

               Year ended December 31, 1995
               Third quarter (Sept. 21 - Sept. 30) . . . .  5 1/2       6
               Fourth quarter  . . . . . . . . . . . . . .  5 1/4       6
</TABLE>

     As of March 10, 1997, the Company's Common Stock was held of record by 31
holders.  Registered ownership includes nominees who may hold securities on
behalf of multiple beneficial owners.  The Company estimates that the number
of beneficial owners as of March 10, 1997 is approximately 300.

DIVIDEND POLICY

     The Company has never paid cash dividends on its Common Stock.  The
Company currently intends to retain any earnings for use in its operations and
does not anticipate paying cash dividends in the foreseeable future.  Future
dividend policy will be determined by the Company's Board of Directors based
upon the Company's earnings, if any, its capital needs and other relevant
factors.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

FORWARD-LOOKING STATEMENT

     Except for historical information contained herein, the matters set forth
in this management discussion are forward-looking comments based on current
expectations.  These forward-looking comments involve a number of risks and
uncertainties including, but not limited to competition; timing of receipt and
fulfillment of customer orders; the results of marketing efforts; the expense
and time required to complete research, and marketing efforts; and the
integration of acquired businesses.

THE YEAR IN REVIEW

     During the first half of 1996, the Company focused on integration of the
sales and operations of the two businesses acquired in the first quarter. In
connection with this integration, the Company analyzed selling, general and
administrative expenses of the combined entities and made appropriate cutbacks
where duplications or unnecessary expenses existed, resulting in improvement
in operating efficiencies.  In addition, in April 1996 twelve new Affiliates
started their address specific deliveries following the discontinuation of
Publishers Express.  The addition of these Affiliates generated an increase in
the address specific area of the Company's business; however, reductions in
revenue occurred in the third quarter due to cutbacks in territory by some of
the Affiliates and reductions in delivery orders from magazine publishers as a
result of the USPS rate reductions.

     In the second half of 1996, the Company entered into its strategic
alliance with News America FSI for product sampling.  The Company anticipates
growth in revenues as a result of the alliance.

     With 1996 revenues of approximately $20 million, the Company believes
that it has achieved the critical mass necessary to be viewed as a credible
participant in the marketing services industry, and that it is positioned to
attract the attention of larger marketing companies looking for partnership
opportunities.

RESULTS OF OPERATIONS

     The annual results of operations for the years ended December 31, 1996
and 1995 are as follows:

<TABLE>
<CAPTION>
                                               1996          1995
                                              ------        ------
     <S>                                   <C>           <C>
     Net sales . . . . . . . . . . . . . . $19,937,151   $18,149,028
     Cost of sales . . . . . . . . . . . .  14,972,771    14,007,660
                                           -----------   -----------
     Gross profit. . . . . . . . . . . . .   4,964,380     4,141,368
                                           -----------   -----------
     Selling, general and
      administrative expenses. . . . . . .   5,578,338     4,282,865
     Other operating expenses. . . . . . .     252,773       145,424
                                           -----------   -----------
     Operating loss. . . . . . . . . . . .(    866,731) (    286,921)
                                           -----------   -----------
     Extraordinary gain from early
      extinguishment of debt . . . . . . .     232,909
                                           -----------   -----------
     Net loss. . . . . . . . . . . . . . .($   603,543) ($   879,983)
                                           ===========   ===========
     Loss per share:
        Primary . .. . . . . . . . . . . .(      $0.16) (      $0.31)
                                           ===========   ===========
        Fully diluted. . . . . . . . . . .(      $0.18)        *
                                           ===========   ===========

        *Per share amount is anti-dilutive and therefore not presented.

     Weighted average number of shares
      outstanding:
        Primary  . . . . . . . . . . . . .   3,850,890     2,830,854
        Fully diluted  . . . . . . . . . .   3,343,825     3,157,824
</TABLE>

     The annual results for 1995 have been restated as a result of a pooling-
of-interest transaction consummated on March 29, 1996.  The results for 1996
reflect the combined entities.

     The amount and percentage of sales generated during the years ended
December 31, 1996 and 1995 in each of the four areas of business identified by
the Company are as follows:

<TABLE>
<CAPTION>
                                               1996             1995
                                             --------         ---------
     <S>                                  <C>              <C>
     Associate Network . . . . . . . . . .$2,629,708-13%   $2,769,819-15%
     Suburban Network. . . . . . . . . . .$9,074,940-46%   $8,993,949-50%
     Direct Network. . . . . . . . . . . .$2,960,088-15%   $  460,958- 2%
     Address-Specific Network. . . . . . .$5,272,415-26%   $5,924,302-33%
</TABLE>

     Associate Sales.  Associate Network sales remained relatively unchanged
from 1995 to 1996; however, fluctuations occurred, and will continue to occur
from quarter to quarter since the timing of deliveries affects the timing of
revenue recognition.  The News America FSI alliance is not expected to affect
revenues until the middle of 1997 due to the lead time involved in product
sampling deliveries, and the time involved in promotional event development
for product samples.

     Suburban Sales.  Suburban Network sales also remained relatively constant
when compared to the previous year.

     Direct Sales.  Direct Network sales showed a substantial increase over
the previous year due to the acquisition in California in January 1996 and a
full year of revenue from the Florida operation.

     Address-Specific Sales.  Address-specific Network sales decreased during
1996 due to the cutbacks made in address specific deliveries as a result of
the USPS reclassification case which affected the results of the third quarter
of 1996.

     The following table sets forth selected consolidated earnings data of the
Company expressed as a percentage of sales for the years ended December 31,
1996 and 1995:

<TABLE>
<CAPTION>
                                               1996          1995
                                             --------      --------
     <S>                                     <C>           <C>
     Net sales . . . . . . . . . . . . . .    100.0%        100.0%
     Gross profit. . . . . . . . . . . . .     24.9          22.8
     Selling, general and
      Administrative expenses. . . . . . .     28.0          23.6
     Operating loss. . . . . . . . . . . .   (  4.3)       (  1.6)
     Net loss. . . . . . . . . . . . . . .   (  3.0)       (  4.8)
                                             ========      ========
</TABLE>

     The annual results for 1995 have been restated as a result of a pooling-
of-interest transaction consummated on March 29, 1996.  The results for 1996
reflect the combined entities.

     Net Sales.  The Company's 1996 acquisitions resulted in a change in the
mix of revenues from 1995 to 1996.  While the address specific delivery of
magazines was a constant recurring form of revenue, the gross profit earned
was relatively low compared to other forms of revenue.  The Company
anticipates that the change in mix of revenues may result in greater quarterly
fluctuations in revenues.

     Gross Profit.  The gross profit percentage increased during the year
ended December 31, 1996 as compared to 1995 as a result of the change in the
revenue mix.  The Direct Network achieves a higher gross profit margin than
the other sources of revenue.  With this area of business making up a larger
percentage of the total revenue, the Company attained a higher gross profit
margin.

     Selling, general and administrative expenses.  The increase in revenues
in the Direct Network also resulted in an increase in selling, general and
administrative expenses due to the acquisition of Preferred Customer Delivery,
Inc. on January 29, 1996.  However, the Company implemented operating
efficiencies during the second half of 1996 which decreased these expenses
from what they were in the second quarter of 1996.

     Other operating expenses.  The Company incurred certain expenses during
1996 and 1995 in the Suburban Network of $193,525 and $95,424, respectively,
for start-up costs of a project called "Home Mall".  Subsequent to the
pooling-of-interest transaction, the Company chose not to pursue this line of
business.  In 1996, the Company also incurred acquisition expenses of $59,248
in connection with the pooling-of-interest transaction.  In 1995, the Company
incurred an expense of $50,000 for write-off of an escrow deposit for a
purchase transaction which was not consummated.

     Operating loss.  Integration of the businesses acquired in 1996 and
establishment of the infrastructure for future revenue growth, resulted in an
operating loss in 1996 which was greater than the loss incurred in 1995.

     Extraordinary gain.  The Company recorded an extraordinary gain on the
early retirement of debt in the amount of $232,909 in 1996.

     Net loss.  The net loss for 1996 was positively affected by the decrease
in interest expense and the increase in interest income which resulted from
the application and investment of proceeds of the Company's initial public
offering completed on September 21, 1995, as well as the elimination of
interest expense on the convertible notes which were converted to Common Stock
concurrently with the offering.  Interest income and interest expense for the
year ended December 31, 1996 was $153,397 and $103,336 respectively.  Interest
income and interest expense in 1995 was $95,678 and $266,192, respectively.
In addition, 1995 included a one-time charge to earnings of $375,000 as a
result of the conversion of certain convertible notes to common stock.

     The results of the fourth quarter of 1996 as compared to the same period
in 1995 is summarized as follows:

<TABLE>
<CAPTION>
                                           Quarter ending December 31,
                                               1996          1995
                                              ------        ------
     <S>                                    <C>           <C>
     Net sales . . . . . . . . . . . . . . $ 5,007,403   $ 5,039,147
     Cost of sales . . . . . . . . . . . .   3,756,804     3,920,912
                                           -----------   -----------
     Gross profit. . . . . . . . . . . . .   1,250,599     1,118,235
     Selling, general and
      Administrative expenses. . . . . . .   1,262,511     1,167,604
     Other expenses. . . . . . . . . . . .(      1,449)      145,424
                                           -----------   -----------
     Operating loss. . . . . . . . . . . .(     10,463) (    194,793)
                                           -----------   -----------
     Net profit (loss) . . . . . . . . . . $    22,238  ($   195,362)
                                           ===========   ===========
</TABLE>

     The decrease in revenue for the fourth quarter of 1996 as compared to the
fourth quarter of 1995 is principally attributable to the decrease in revenues
from the delivery of magazines in the affiliate network area of the business.
This area of business is down $336,038 or 27% in the fourth quarter of 1996 as
compared to the same quarter in 1995.  The associate network recognized an
increase in revenue of $226,429 or 70%; however, this area of business is
particularly susceptible to quarterly fluctuations based on the timing of
revenues.  The suburban network had a decrease in revenues of $493,782 or 16%
over the previous year.  The direct network had an increase in revenues of
$571,647 or 184% over the previous year due to the acquisition of the San
Francisco, CA delivery operation which the Company made in January 1996.

     Operating results were positively affected during the fourth quarter of
1996 as compared to the fourth quarter of 1995 due to the achievement of
higher gross profit percentage on revenues.

     Net profit (loss) for the fourth quarter of 1996 as compared to the
fourth quarter of 1995 was positively affected by the change in other income
and expenses items.  During the fourth quarter of 1995 the Company incurred a
nonrecurring expense of $95,424.  In addition, the fourth quarter of 1995
incurred a one-time charge for a forfeited escrow deposit.  Interest income
and interest expense for the fourth quarter of 1996 was $27,308 and $11,140
respectively.  Interest income and interest expense for the fourth quarter of
1995 was $57,660 and $41,044, respectively.

INFLATION

     The Company believes that inflation has not had a material impact on its
operations or liquidity to date.

SEASONALITY AND OTHER BUSINESS FLUCTUATIONS

     Although the Company experiences some seasonality in operations
corresponding with holiday advertising, such variations are not material to
overall results of operations.

     The events from the national economy that impact the Company include
employment levels, postal regulations, and newsprint and coated paper price
increases.

     An increase in employment levels affect, to some degree, the available
pool of contract carriers that make the deliveries for the Company's network
of Affiliates.  This usually increases an Affiliate's cost of recruitment,
including the Company-owned Affiliates in the Alternate Postal Direct, Inc.
subsidiary, and may contribute subtle pressure on negotiated delivery costs.

RISKS AND UNCERTAINTIES

     The Company believes that the impact of the Year 2000, will not have a
major impact on any future results.  The Company is currently looking at
purchasing new systems in some areas and is building a new database system of
its own which will be prepared to handle the Year 2000.

LIQUIDITY AND CAPITAL RESOURCES

     During 1996, the Company was able to fund its operations with available
funds from the Company's initial public offering completed in September 1995.
In December 1996, the Company established a bank line of credit for $500,000
to assist in future cash flow needs.  The Company plans to spend $150,000 to
$250,000 to upgrade and combine the existing databases.  Cash and equivalents
decreased by $1,533,110 to $1,857,955 at December 31, 1996.

SUMMARY OF CASH FLOWS

     Cash flows from operating activities.  Cash used in operating activities
was $771,074 in 1996 compared to $958,864 in 1995.

     Cash flows from investing activities.  During 1996 the Company made
expenditures for property and equipment of $32,085 as compared to $86,972 in
1995.  Most of the purchases in 1996 were for computer equipment and upgrades.
In addition, in 1996 the Company made cash payments of $197,621 for costs of
the acquisition of Preferred Customer Delivery, Inc.

     Cash flows from financing activities.  During 1996, the Company began a
debt reduction strategy whereby it offered to pay long-term noteholders of
National Home Delivery, Inc. 60% of the principal balance due upon an early
retirement of the debt.  The Company paid down this debt by $488,257 and
recognized a gain on early retirement of debt of $232,909.

     The Company believes that cash flows from operations, along with the
balance of the proceeds of the public offering will be adequate to fund its
current growth plans and meet its presently anticipated capital expenditure
requirements for the next twelve months.

OUTLOOK FOR THE FUTURE

     In 1997 the Company intends to focus on the following:

     * Continuing to control selling, general & administrative expenses,
     * Building the "best of the breed" one-order, one-bill database,
       for all product deliveries, by combining the Company's current
       databases into one,
     * Seeking and evaluating alliances and acquisitions that leverage
       the Company's current infrastructure,
     * Maximization of the alliance with News America FSI, and
     * Implementation of the Agreement with American Newspaper Network(ANN)

     The Company believes that the above focused objectives will enhance
shareholder, employee, and client values for 1997 and beyond.

ITEM 7.  CONSOLIDATED FINANCIAL STATEMENTS

                                                            Page
      Report of Independent Accountants                     15
      Consolidated Balance Sheets                           16-17
      Consolidated Statements of Operations                 18
      Consolidated Statements of Changes in
          Shareholder's Equity (Deficit)                    19
      Consolidated Statements of Cash Flows                 20-21
      Notes to Consolidated Financial Statements            22-32


                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Shareholders of
Alternate Postal Delivery, Inc.
and Subsidiaries

We have audited the accompanying consolidated balance sheets of Alternate
Postal Delivery, Inc. and Subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of operations, shareholders' equity
(deficit) and cash flows for the years then ended.  These consolidated
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall 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 Alternate Postal Delivery, Inc. and Subsidiaries as of December 31, 1996
and 1995, and the consolidated results of their operations and their cash
flows for the years then ended, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

Grand Rapids, Michigan
March 21, 1997


                 ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                           December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                   ASSETS

                                                   1996            1995
                                                                (Restated)
                                               ------------    ------------
Current assets:
  <S>                                          <C>             <C>
  Cash and cash equivalents                    $ 1,857,955     $ 3,391,065
  Accounts receivable, trade, less
   allowance of $100,000 and $47,000 in
   1996 and 1995 respectively                    2,511,361       2,446,225
  Notes receivable, current portion                 37,375          21,315
  Prepaid expenses and other assets                255,863         456,263
                                               ------------    ------------
          Total current assets                   4,662,554       6,314,868

Notes receivable, less current portion              34,595          75,834

Property and equipment:
  Computer equipment                               508,813         457,737
  Furniture and fixtures                           383,020         364,021
                                               ------------    ------------
                                                   891,833         821,758
  Accumulated depreciation and
   amortization                                   (658,877)       (537,255)
                                               ------------    ------------
                                                   232,956         284,503

Computer software, net                              43,151          62,458

Intangible assets, net                           1,220,490         814,078

Other assets                                        32,241           5,158
                                               ------------    ------------
                                               $ 6,225,987     $ 7,556,899
                                               ============    ============

</TABLE>

                                   Continued


                 ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS, CONTINUED

                           December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                   LIABILITIES

                                                   1996            1995
                                                                 (Restated)
                                               ------------    ------------
Current liabilities:
     <S>                                          <C>             <C>
     Notes payable, bank                       $   300,000     $   294,239
     Accounts payable                              760,389         915,024
     Accounts payable, related parties             100,321         157,848
     Accrued liabilities                           416,947         372,608
     Deferred revenue                              302,096         483,449
     Current portion of capitalized lease
      obligations                                   27,802          29,736
     Current portion of long-term debt             153,348          44,596
                                               ------------    ------------
          Total current liabilities              2,060,903       2,297,500

Long-term debt, less current portion               324,933       1,051,101
Capitalized lease obligations, less current
 portion                                            10,008          33,362

Commitments and contingencies (Note B)

                              SHAREHOLDERS' EQUITY

Preferred stock-no par value, 2,000,000
 authorized, no shares issued and outstanding
Common stock-no par value, voting, 8,000,000
 authorized shares; 4,022,894 and 3,972,894
 shares issued and outstanding in 1996 and 1995,
 respectively                                    9,677,530       9,418,780
Accumulated losses, through
 September 30, 1993 (Note A)                    (1,291,039)     (1,291,039)
                                               ------------    ------------
          Total common stock                     8,386,491       8,127,741

Accumulated losses, since
 October 1, 1993 (Note A)                       (4,556,348)     (3,952,805)
                                               ------------    ------------
          Total shareholders' equity             3,830,143       4,174,936
                                               ------------    ------------
                                               $ 6,225,987     $ 7,556,899
                                               ============    ============
</TABLE>

  The accompanying notes are an integral part of the consolidated financial
statements.

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 for the years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                                 1996             1995
                                                              (Restated)
                                             -----------      -----------
<S>                                          <C>              <C>
Net sales                                    $19,937,151      $18,149,028
Cost of sales                                 14,972,771       14,007,660
                                             -----------      -----------
     Gross profit                              4,964,380        4,141,368

Selling, general and
 administrative expenses                       5,578,338        4,282,865
Other operating expenses (Note G)                252,773          145,424
                                             -----------      -----------
                                               5,831,111        4,428,289
                                             -----------      -----------
     Loss from operations                    (   866,731)     (   286,921)

Other income (expense) (Note J)                   36,709      (   575,877)
                                             -----------      -----------
Loss before income taxes
 and extraordinary gain                      (   830,022)     (   862,798)

Income tax expense                                 6,430           17,185
                                             -----------      -----------
Loss before extraordinary gain               (   836,452)     (   879,983)

Extraordinary gain from early
 retirement of debt                              232,909
                                             -----------      -----------
Net loss                                     ($  603,543)     ($  879,983)
                                             ===========      ===========
Net loss per share: (Exhibit 11.1)
  Primary:
   Loss before extraordinary gain            ($      .22)     ($      .31)
   Extraordinary gain                                .06
                                             -----------      -----------
   Net loss                                  ($      .16)     ($      .31)
                                             ===========      ===========
  Fully diluted: (Note A)
   Loss before extraordinary gain            ($      .25)
   Extraordinary gain                                .07
                                             -----------      -----------
   Net loss                                  ($      .18)          *
                                             ===========      ===========
Weighted average number of shares
  outstanding: (Exhibit 11.1)
  Primary                                      3,850,890        2,830,854
                                             ===========      ===========
  Fully diluted                                3,343,825        3,157,824
                                             ===========      ===========
     *Per share amount is anti-dilutive and therefore not presented.

</TABLE>

  The accompanying notes are an integral part of the consolidated financial
statements.

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

                 for the years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                                                   Total
                               Accumulated        Accumulated   Shareholders'
                    Common   Losses, through     Losses, since     Equity
                    Stock   September 30, 1993  October 1, 1993   (Deficit)
                    ------  ------------------  --------------- -------------
Balances,
<S>                <C>           <C>               <C>            <C>
December 31, 1994  $    5,000   ($1,291,039)      ($  890,513)   ($2,176,552)
 as previously
 reported

Pooling of Interests
 with National Home
 Delivery, Inc.
 (Note B)           3,015,000        --           ( 2,182,309)       832,691
                   ----------   ------------      ------------   ------------
Balances,
 December 31, 1994
 as restated        3,020,000   ($1,291,039)      ($3,072,822)   ($1,343,861)

Issuance of
 Common stock       6,398,780                                      6,398,780

Net loss                                          (   879,983)   (   879,983)
                   ----------   ------------      ------------   ------------
Balances,
 December 31, 1995  9,418,780   ( 1,291,039)      ( 3,952,805)     4,174,936

Issuance of
 Common Stock         258,750                                        258,750

Net loss                                          (   603,543)   (   603,543)
                   ----------   ------------      ------------   ------------
Balances,
 December 31, 1996 $9,677,530   ($1,291,039)      ($4,556,348)    $3,830,143
                   ==========   ============      ============   ============

     The accomanying notes are an integral part of the consolidated financial
statements.

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                 for the years ended December 31, 1996 and 1995


</TABLE>
<TABLE>
<CAPTION>
                                                   1996            1995
                                                                 (Restated)
                                               ------------    ------------
Cash flows from operating activities:
  <S>                                          <C>             <C>
  Net loss                                     ($   603,543)   ($   879,983)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
  Depreciation                                      137,837         131,157
  Amortization                                      115,333          81,498
  Conversion charge on convertible notes payable                    375,000
  Deferred financing fees on convertible notes
   payable                                                           30,363
  Extraordinary gain on settlement of debt      (   232,909)
  Loss on sale of assets                              7,140
  Changes in assets and liabilities:
    (Increase) decrease in:
     Accounts receivable                        (    66,786)         80,834
     Prepaid and other assets                       221,030    (    228,340)
    (Decrease) increase in:
     Accounts payable                           (   212,162)   (    270,801)
     Accrued liabilities                             44,339    (     66,358)
     Deferred revenue                           (   181,353)   (    212,234)
                                                ------------    ------------
     Net cash used in operating activities     (    771,074)   (    958,864)
                                                ------------    ------------
Cash flows from investing activities:
   Purchases of property and equipment         (     32,085)   (     86,972)
   Proceeds from sale of equipment                    1,500
   Purchases of software                       (      2,985)
   Payment for business acquisition            (    197,621)
   Payments received for notes receivable             3,864
   Issuance of notes receivable                                (     71,568)
                                               ------------    ------------
     Net cash used in investing activities     (    227,327)   (    158,540)
                                               ------------    ------------
Cash flows from financing activities:
   Proceeds from issuance of common stock                         6,324,990
   Payment of expenses in connection with
     issuance of common stock                                  (  1,051,220)
   Payments on notes payable,bank              (  7,169,239)   (  6,698,761)
   Proceeds from issuance on notes
     payable, bank                                7,175,000       6,393,000
   Principal payments on long-term debt
     and lease obligations                     (    540,470)   (    878,586)
                                               ------------    ------------
     Net cash (used in) provided by
       financing activities                     (   534,709)      4,089,423
                                               ------------    ------------
</TABLE>
                                    Continued


                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

                 for the years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                                   1996            1995
                                                                 (Restated)
                                               ------------    ------------
Net (decrease) increase in cash and cash
 <S>                                            <C>               <C>
 equivalents                                    ( 1,533,110)      2,972,019

Cash and cash equivalents, beginning of year      3,391,065         419,046
                                               ------------    ------------
Cash and cash equivalents, end of year         $  1,857,955    $  3,391,065
                                               ============    ============


Supplemental Disclosure of Cash Flow
 Information:
  Income taxes paid                            $      6,430    $     17,185
                                               ============    ============
  Interest paid                                $    103,325    $    266,192
                                               ============    ============
</TABLE>

Supplemental Schedule of Noncash Investing and Financing Activities:

     During the year ended December 31, 1996, capital lease obligations of
$8,454 were incurred when the Company entered into leases for new equipment.
In addition, in connection with the acquisition of certain assets of Preferred
Customer Delivery, Inc.(Note B), the Company assumed a note payable in the
amount of $110,000 and issued 50,000 shares of its common stock valued at
$258,750.

     During the year ended December 31, 1995, the Company recorded a charge of
$375,000 as a result of an inducement to the bondholders to convert $750,000
of convertible notes payable to $1,125,000 of common stock.  In addition,
capital lease obligations of $9,558 were incurred when the Company entered
into leases for new equipment.

  The accompanying notes are an integral part of the consolidated financial
statements.

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.   Summary of Significant Accounting Policies:

     The following is a summary of significant accounting policies followed in
the preparation of the financial statements.

Principles of Consolidation

     The consolidated financial statements include the accounts of Alternate
Postal Delivery, Inc. (APD) and its wholly-owned subsidiaries Alternate Postal
Direct, Inc. (formerly APD Implementation Company), Newspaper Marketing
Solutions, Inc., and National Home Delivery, Inc.(NHD)(collectively referred
to as the Company).  All significant intercompany transactions have been
eliminated.

Business

     The Company is a consolidator in the print segment of the direct
marketing services industry and provides delivery of targeted sales and
marketing materials to the home by means that can be more flexible and less
expensive than delivery by the United States Postal Service (USPS).  The
Company provides its services throughout the United States.  The Company's
customers are comprised of advertising agencies, magazine publishers,
cataloguers, newspaper publishers, and the packaged goods industry.  Decreases
in USPS rates could negatively impact the Direct Marketing Services industry
and, because barriers to enter local markets are not significant, positive
changes may attract additional competitors to the industry.

Revenue Recognition

     Revenues for delivery services are recognized at the time of delivery.
Revenues for advertising in newspapers are recognized when the ads run in the
newspapers.  Revenues for software sales are recognized at the time of
implementing a contract.  Revenues for affiliate activation fees are deferred
until such time as the affiliates are no longer eligible for a refund.

     During the year ended December 31, 1996, the Company had no customers
which accounted for 10 percent or more of the Company's revenues.  During the
year ended December 31, 1995, the Company had business with one advertising
agency which accounted for 10.6 percent of the Company's revenue.

Cash Equivalents

     The Company considers all highly liquid instruments to be cash
equivalents, which includes U.S. treasury bills.

Property and Equipment

     Property and equipment are recorded at cost.  Upon sale or retirement,
the cost and related accumulated depreciation are eliminated from the
respective accounts and the resulting gain or loss is included in operations.
Maintenance and repairs which do not improve or extend the lives of the
respective assets are charged to expense as incurred.


                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

A.   Summary of Significant Accounting Policies, continued:

     Depreciation and amortization are computed over the estimated useful
lives of the assets using the straight-line and accelerated methods:

                  Computer equipment          5 years
                  Furniture and fixtures      5 to 7 years

     Property and equipment includes computer equipment and furniture and
fixtures under capital leases of $119,159 and $110,705 at December 31, 1996
and 1995 and accumulated amortization of $68,529 and $43,938 respectively.

Computer Software

     Purchased computer software is recorded at cost and is amortized over the
estimated useful lives of the assets.  At December 31, 1996 and 1995,
accumulated amortization was $101,593 and $79,301, respectively.

Intangible Assets

     Intangible assets consist of the excess cost over fair market value of
net assets of acquired businesses and are being amortized ratably over 20
years.  The carrying value of goodwill is periodically reviewed to determine
if an impairment has occurred.

     At December 31, 1996 and 1995, accumulated amortization was $440,160 and
$370,039, respectively.

Income taxes

     Since inception the Company had been an S Corporation, whereby income or
loss was included in the federal income tax returns of the shareholders.  On
October 1, 1993 the Company formed a wholly-owned subsidiary, which caused a
change in the Company's tax status from an S Corporation to a C Corporation
(see Income Taxes Note).  As a result of this change, accumulated losses at
September 30, 1993 were reclassified to reduce common stock to zero with the
remaining balance presented as a separate component of shareholders' equity
(deficit).

Advertising

     The cost of advertising and marketing programs are charged to operations
in the year incurred.  Advertising expense was $208,749 and $152,986 for the
years ended December 31, 1996 and 1995, respectively.

Financial Instruments

     At December 31, 1996 and 1995, the Company has cash and cash equivalents,
notes receivable, and debt which are considered financial instruments.  The
market value of these financial instruments, as determined through information
obtained from banking sources and management estimates, approximate the
carrying value reported in the balance sheet.


                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

A.   Summary of Significant Accounting Policies, continued:

Loss Per Share

     Loss per share is determined by dividing the net loss by the weighted
average number of shares of common stock outstanding.  The computation of
fully diluted net loss per share further assumes conversion of convertible
notes payable and elimination of the related interest requirements (see Note
E).  The fully diluted computation was anti-dilutive for the year ended
December 31, 1995; therefore, the 1995 net loss per share as presented on the
accompanying statements of operations represents both the primary and fully
diluted amount.

Recent Accounting Pronouncement

     In February of 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share".
This Statement simplifies the standards for computing earnings per share,
replacing the presentation of primary earnings per share with a presentation
of basic earnings per share.  SFAS No. 128 also requires dual presentation of
basic and diluted earnings per share on the face of the income statement for
all entities with complex capital structures.  Basic earnings per share is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period.  Diluted earnings
per share is computed similarly to fully diluted earnings per share pursuant
to APB Opinion No.15, "Earnings per Share", which is superseded by this
Statement.  This Statement is effective for financial statements issued for
periods ending after December 15, 1997, with early application being
prohibited.  The Company has not yet determined the impact of this Statement
on the consolidated financial statements.

Estimates

     The preparation of these financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods.  Actual results could differ from those estimates.

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

B.   Acquisitions:

     On January 29, 1996, the Company acquired certain assets of Preferred
Customer Delivery, Inc.(PCD) in a transaction accounted for by the purchase
method. The purchase price included a cash payment of $165,000, $110,000
assumption of debt and the issuance of 50,000 shares of the Company's common
stock valued at $258,750. In addition, there is a provision for contingent
consideration of an 8%, $100,000 promissory note payable two years from the
closing date if certain revenue levels are achieved.  Any amounts paid on this
promissory note will be accounted for as additional goodwill and will be
amortized over the remaining life.  The Company recorded goodwill of
approximately $477,000 as a result of this acquisition.  The results of
operations of PCD are included in the consolidated financial statements from
the date of acquisition.  PCD's results of operations were not significant to
the consolidated financial statements for the period in 1996 prior to the
acquisition.

     On March 29, 1996, the Company acquired National Home Delivery, Inc. in a
transaction accounted for by the pooling-of-interests method.  The Company
issued 700,000 shares of its common stock for all of the outstanding shares of
NHD.  Additionally, stock options outstanding under NHD's plan were exchanged
for 129,069 stock options of the Company.  The options were issued at an
exercise price of $5.02.  In June 1994, the U.S. Bankruptcy Court approved a
reorganization plan for NHD.  At the date of the pooling, certain notes
payable were still outstanding and subject to the provisions of the
reorganization plan.  (Note D)

     The following table sets forth the unaudited pro forma results of
operations for the period immediately preceding the acquisition date as if the
acquisition were consummated at the beginning of the immediately preceding
period.  This pro forma information does not purport to be indicative of what
would have occurred had the acquisition been made as of that date or of
results which may occur in the future.

<TABLE>
<CAPTION>
                                               Year ended
                                               December 31,
                                             1996       1995
                                            ------     ------
              Revenue:
               Pre-merger:
                 <S>                     <C>           <C>
                 APD                     $ 2,249,577   $ 7,583,904
                 NHD                       3,613,911    10,565,124
                 PCD                          --         2,912,528
               Post-merger                14,073,663        --
                                         -----------   -----------
                                         $19,937,151   $21,061,556
                                         ===========   ===========
              Net income (loss):
               Pre-merger:
                 APD                    ($   276,223) ($   713,523)
                 NHD                          22,165  (    166,460)
                 PCD                          --             9,661
               Post-merger              (    349,485)       --
                                         -----------   -----------
                                        ($   603,543) ($   870,322)
                                         ===========   ===========
</TABLE>

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

B.   Acquisitions, continued:

     Subsequent to the pooling in 1996, the Company recognized an
extraordinary gain of $232,909 on the settlement of debt.

C.   Retirement Plan:

     On September 1, 1996, the Company established a qualified 401(k)
retirement plan covering all employees who have met certain requirements as to
age and date of service.  The plan allows for employees to make contributions
by salary reductions.  Company contributions are determined annually at the
discretion of the Board of Directors.  Company contributions for the year
ended December 31, 1996 were $4,331.

D.   Long-Term Debt:

     Long-term debt consisted of the following at December 31, 1996 and 1995:

<TABLE>
<CAPTION>
                                                    1996          1995
                                                 ----------    ----------
Note payable to shareholder, interest
 at 7.5 percent, due June 1997, collateralized
 <S>                                              <C>           <C>
 by accounts receivable                           $140,000      $200,000

Notes payable, unsecured, in settlement of trade
 and other claims, interest at 8 percent,
 principal and interest payable June 1999,
 contingent payments of principal and
 interest may be required at December, 1997;
 and December, 1998, based on adjusted
 operating results, as defined in the
 agreement                                         227,433       882,027

Note payable, non interest bearing,
 payable in monthly installments of $521,
 with the remaining balance due August 1, 1998.    103,750         --

Other                                                7,098        13,670
                                                  ---------    ---------
                                                   478,281     1,095,697
Less current maturities                            153,348        44,596
                                                  ---------    ---------
                                                  $324,933    $1,051,101
                                                  =========   ==========
</TABLE>

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

D.   Long-Term Debt, continued:

     The following is a schedule of principal amounts of long-term debt
payable in future years:

                                    Year

                                    1997     $153,348
                                    1998       97,500
                                    1999      227,433
                                             --------
                                             $478,281
                                             ========

     During 1996, the Company retired approximately $488,000 of unsecured
notes payable at a discount.  The Company paid 60 cents on the dollar and
accordingly recognized an extraordinary gain on early retirement of the debt
of $232,909.

     The Company has a line of credit agreement with a bank, providing for
borrowings not to exceed $500,000, based upon a percentage of eligible
accounts receivable.  The agreement, which expires November 30, 1997, bears
interest at 1/2 percent over the bank's prime rate (prime rate was 8.25
percent at December 31, 1996).  At December 31, 1996 the Company had an
outstanding balance on the line of credit of $300,000.

E.   Common Stock:

     In July 1995, the Company amended its articles of incorporation to
increase authorized voting common stock to 8,000,000 shares and to authorize
2,000,000 shares of preferred stock.  The Company exchanged the outstanding
non-voting shares for an equal number of voting shares and eliminated the non-
voting class of common stock.  In addition, the Company declared a 33.90688 to
one stock split.  The accompanying consolidated financial statements have been
adjusted retroactively to give effect to the stock split for all periods
presented.  All reference in the financial statements to the number of common
shares and price per share amounts have been retroactively adjusted to reflect
this split.  The stock split did not change total shareholder's equity and had
no effect on the carrying value of assets or liabilities of the Company.

     In July 1995, the Company established the Outside Directors Deferred
Compensation Plan (the "Deferred Compensation Plan").  The Deferred
Compensation Plan provides for the deferral of directors fees and, ultimately
the issuance of common stock in lieu of the deferred cash fee.  In connection
with this plan, the Company has reserved 50,000 shares of common stock.

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

E.   Common Stock, continued:

     In September 1995, the Company filed with the Securities and Exchange
Commission a Form SB-2 Registration Statement and sold 1,265,000 shares of
common stock, at $5 per share.  Effective with the offering, 50 percent of
outstanding notes payable were converted to 232,500 shares of common stock and
244,875 warrants at $6 per share.  Pursuant to the original terms of the
convertible notes, 150,000 shares would have been issued upon the conversion.
As a result of the inducement to convert, the Company recorded a charge of
$375,000 in 1995 to reflect the excess in fair value over original conversion
terms.  Also effective with the offering, the underwriters obtained a warrant
for 110,000 shares of common stock exercisable at $6 per share.  The warrant
is exercisable commencing one year from the offering until four years after
such date.

F.   Leases:

     The Company leases certain office facilities, warehouse facilities, and
equipment used in its operations.  Future minimum rental payments required
under leases that have initial or remaining terms in excess of one year at
December 31, 1996 are as follows:

<TABLE>
<CAPTION>
             Year                         Capital      Operating
             <C>                          <C>          <C>
             1997                         $32,946      $179,539
             1998                           9,019        19,670
             1999                           4,534
                                         ---------    ----------
                                           46,499       199,209
                                                      ==========
             Less amount representing
                  imputed interest          8,689
                                         ---------
                                           37,810
             Less current portion          27,802
                                         ---------
                                          $10,008
                                         =========
</TABLE>

     Rental expense for facilities, transportation vehicles and equipment for
the years ended December 31, 1996 and 1995 was approximately $300,900 and
$164,200, respectively.

G.   Other Operating Expenses:

     The Company incurred start-up expenses for a project which the Company
chose not to pursue in the amount of $193,525 and 95,424 for 1996 and 1995,
respectively.  In 1996, the company also incurred acquisition expenses of
$59,248 in connection with the pooling-of-interest transaction completed on
March 29, 1996.  In addition, the Company incurred an expense of $50,000 in
1995 for write-off of an escrow deposit for a purchase transaction which was
not consummated.

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

H.   Income Taxes:

     Deferred income taxes are recognized for the temporary differences
between the tax bases of assets and liabilities and their financial reporting
amounts.  The income tax provision is the tax payable/recoverable for the
period and the change during the period in deferred tax assets and
liabilities.

     Income tax expense for the years ended December 31, 1996 and 1995
consists of the following:

<TABLE>
<CAPTION>
                                               Year Ended
                                               December 31,
                                             1996       1995
                                           ---------  ---------
       Federal:
            <S>                           <C>         <C>
            Deferred benefit              ($183,000)  ($114,000)
            Change in valuation allowance   183,000     114,000
       State:                                 6,430      17,185
                                           --------    --------
                                           $  6,430    $ 17,185
                                           ========    ========

     Major components of the Company's deferred taxes are as follows:

                                               December 31,
                                             1996        1995
                                           --------   ---------
       Receivable allowance              $   34,000  $   22,000
       Vacation accrual                      50,000      45,000
       Net operating loss carryforward    1,726,000   1,560,000
       Valuation allowance               (1,810,000) (1,627,000)
                                         ----------   ---------
                                         $     -     $     -
                                         ==========   =========
</TABLE>

     At December 31, 1996, the Company has net operating loss carryforwards of
approximately $5,100,000, which are available to reduce future taxable income.
These carryforwards expire in 2005 to 2010.  The net operating loss
carryforwards include approximately $3,296,000 which relate to the operations
of NHD prior to the pooling of interest and are subject to certain
limitations.

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

I.   Stock Options:

     In July 1995, the Company established the Long-Term Incentive Stock
Option Plan (the "Incentive Plan") and the Outside Directors and Advisors
Stock Option Plan (the "Directors & Advisors Plan"), to encourage stock
ownership by employees, officers, directors and other individuals as
determined by the Board of Directors or a committee appointed by the Board of
Directors.  Options granted under the Incentive Plan may be either incentive
stock options as defined by the Internal Revenue Code, or nonqualified stock
options.  All options under the Directors & Advisors Plan are nonqualified
options.  Options granted under the Directors and Advisors Plan are vested
when granted and have a term of 10 years.  Options granted under the Incentive
Plan have a vesting period of 6 months to 5 years with terms ranging from 5 to
10 years. In connection with these plans, the Company has reserved a total of
450,000 shares of common stock.  Options were not granted at less than the
fair market value of the Company's common stock on the date of grant,
therefore, no compensation expense has been recognized in 1996.

     In conjunction with the acquisition in 1996 of National Home Delivery,
Inc., stock options of National Home Delivery, Inc. were exchanged for 129,069
incentive options of the Company.  As of December 31, 1996, these options are
outstanding and exercisable.

     The Company applies APB Opinion 25 and related interpretations in
accounting for its stock option plans.  Had compensation cost for the
Company's stock based plans been determined based on the fair value at the
1996 and 1995 grant dates, consistent with the method prescribed by the
Statement of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation", the Company's net loss and loss per share would have been
adjusted to the proforma amounts indicated in the following table:

<TABLE>
<CAPTION>
                                         Year Ended
                                        December 31,
                                      1996        1995
                                   -----------  -----------
          Net Loss
            <S>                     <C>          <C>
            As Reported             ($603,543)   ($879,983)
            Pro Forma               ($856,163)   ($953,088)

          Loss Per Share
            As Reported
              Primary                  ($0.16)      ($0.31)
              Fully diluted            ($0.18)         *
            Pro Forma
              Primary                  ($0.22)      ($0.34)
              Fully diluted            ($0.26)         *

          *Per share amount is anti-dilutive and therefore not presented.
</TABLE>

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

I.   Stock Options, continued:

     The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions
for December 31, 1996 and 1995 respectively; risk free rates ranging from 5.46
percent to 6.6 percent; no dividend yield for all years; expected life 5
years; and volatility of 41 percent.  Option valuation models, like the stock
price Black-Scholes model, require the input of highly subjective assumptions
including the expected stock price volatility.  Because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its stock options.

<TABLE>
<CAPTION>
                          December 31, 1996      December 31, 1995
                         --------------------   ---------------------
                         Options    Weighted-    Options    Weighted-
                                       Avg.                    Avg.
                                    Exercise                Exercise
                                      Price                   Price
                        ---------   ---------   ---------   ---------
Outstanding-beginning
<S>                      <C>         <C>         <C>         <C>
of year                  235,569     $5.00       129,069     $5.02

Granted                   84,927     $5.24       116,600     $4.98

Exercised

Forfeited                 21,950     $5.04        10,100     $5.00

Outstanding-end of year  298,546     $5.07       235,569     $5.00

Exercisable at end of
year ($4.25 to $5.75)    227,019                 139,069

Weighted-average fair
value of options granted
during the year            $2.35                   $2.27

     The weighted average remaining contractual life of options outstanding at
December 31, 1996 is 8.1 years.
</TABLE>

                ALTERNATE POSTAL DELIVERY, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

J.   Other Income (Expense):

<TABLE>
<CAPTION>

     Other income and expense consists of the following:

                                                 1996             1995
                                                              (Restated)
                                             -----------      -----------
         <S>                                 <C>              <C>
         Interest income                     $  153,397       $   95,678
         Interest expense                   (   103,336)     (   266,192)
         Conversion charge on convertible
          notes payable                                      (   375,000)
         Deferred financing fees on
          convertible notes payable                          (    30,363)
         Loss on sale of assets             (    13,352)
                                             -----------      -----------
                                             $   36,709      ($  575,877)
                                             ===========      ===========
</TABLE>

K.   Related Party Transactions:

     Amounts due for the delivery of materials by private delivery affiliates
that are affiliated through common shareholders are presented in accounts
payable, related parties on the accompanying consolidated balance sheet.

L.   Subsequent Events:

     In February 1997, the Company offered to pay 75 cents for each
outstanding dollar for the early retirement of certain long-term notes
payable.  As a result, the company paid $114,436, recorded a gain on early
retirement of debt of $38,145, and accordingly reduced long-term debt by
$152,581.

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

     None.

                             PART III

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

     Incorporated by reference to the Company's definitive proxy materials to
be filed with the Commission on or about April 21, 1997.

Item 10.  Executive Compensation

     Incorporated by reference to the Company's definitive proxy materials to
be filed with the Commission on or about April 21, 1997.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     Incorporated by reference to the Company's definitive proxy materials to
be filed with the Commission on or about April 21, 1997.

Item 12.  Certain Relationships and Related Transactions

     Incorporated by reference to the Company's definitive proxy materials to
be filed with the Commission on or about April 21, 1997.

Item 13.  Exhibits and Reports on Form 8-K

Reports on Form 8-K

     The following reports on Form 8-K were filed by the Company during the
last quarter of the fiscal year ended December 31, 1996.

     None.                            SIGNATURES


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


                              ALTERNATE POSTAL DELIVERY, INC.



Dated: March 28, 1997            By:/s/ Phillip D. Miller


     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.

                                                              Dated

/s/Phillip D. Miller                                     March 28, 1997
Phillip D. Miller, Chief Executive Officer and
President (Principal executive officer) and Chairman of the
Board of Directors



/s/Sandra J. Smith                                       March 28, 1997
Sandra J. Smith, Chief Financial Officer and
Treasurer (Principal accounting and financial officer)



/s/Stan Henry                                            March 28, 1997
Stan Henry, Director



/s/Charles Rees                                          March 28, 1997
Charles Rees, Director



/s/Harry Edelson                                         March 28, 1997
Harry Edelson, Director

                              INDEX TO EXHIBITS
Index
Number     Description                                                  Page#

2.1        Asset Purchase Agreement with Preferred Customer Delivery, Inc.
           dated January 24, 1996 (3)
2.2        Acquisition Agreement with National Home Delivery, Inc.
           dated March 29, 1996 (4)
3.1        Amended and Restated Articles of Incorporation of
           the Company (1)
3.2        Bylaws of the Company, as amended (1)
4.1        Form of Stock Certificate evidencing Common Stock,
           no par value (1)
4.2        Form of Lock-Up Agreement executed by certain
           shareholders (1)
4.3        1995 Long-Term Incentive and Stock Option Plan (1)
4.4        1995 Outside Directors and Advisors Stock Option Plan (1)
4.5        Outside Directors Deferred Compensation Plan (1)
4.6        Form of Noteholder Warrant (1)
4.7        Form of Registration Rights Agreement with Noteholders(1)
10.1       Forms of Agreement with Newspaper Affiliates (1)
10.2       Form of Agreement with Magazine Publishers (1)
10.3       Employment Agreement dated July 21, 1995 between the
           Company and Phillip D. Miller (1)
10.4       Agreement dated July 21, 1995 between the Company and
           D.B. Krieger regarding his role as Chairman (1)
10.5       Form of Software License Agreement (1)
10.7       Financial Services Agreement dated October 21, 1994
           between the Company and Carnegie Hill Company, and
           amendment dated January 3, 1995 (1)
10.8       Lease Renewal dated August 8, 1995 for Grand Rapids,
           MI Executive Offices (2)
10.9       Lease for Santa Rosa, CA warehouse and office space (2)
10.10      Lease for Concord, CA warehouse and office space (2)
10.11      Lease for San Leandro, CA warehouse and office space (2)
10.12      Sublease for San Leandro, CA warehouse and office space (2)
10.13      Lease for St. Petersburg, FL warehouse sites (2)
10.14      Lease for St. Petersburg, FL warehouse and office space (2)
11.1       Statement regarding computation of per share earnings (5)     36
21.1       List of Subsidiaries of the Company (5)                       37
________________________

(1)   Incorporated by reference to said exhibit included in Registration
      Statement on form SB-2, Commission File No. 33-95332C.

(2)   Incorporated by reference to said exhibit filed with the Registrant's
      Annual Report on Form 10-KSB for the year ended December 31, 1995.

(3)   Incorporated by reference to Form 8-K/A (dated April 4, 1996)

(4)   Incorporated by reference to Form 8-K (dated April 11, 1996)

(5)   Filed herewith.