2

                                                   The following items were the
                                                   subject of a Form 12b-25 and
                                                   are included herein (Item 6,
                                                   Item 7 and Item 8).


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A

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

For the fiscal year ended      SEPTEMBER 30, 1996

                                       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 0-4028


                             TRANSMEDIA NETWORK INC.
                    ---------------------------------------
             (Exact name of Registrant as specified in its charter)

            DELAWARE                                         84-6028875
---------------------------------------------------------------------------
(State or other jurisdiction of                           (I.R.S Employer
incorporation or organization)                            Identification No.)

                 11900 BISCAYNE BOULEVARD, MIAMI, FLORIDA 33181
                 ----------------------------------------------
               (Address of principal executive offices) (zip code)


                                  305-892-3300
                            ------------------------
                         Registrant's telephone number,
                              including area code)

           Securities registered pursuant to Section 12(b) of the Act:

                                                     NAME OF EACH EXCHANGE
      TITLE OF EACH CLASS                            ON WHICH REGISTERED
      -------------------                            ---------------------
            None                                              None

           Securities registered pursuant to Section 12(b) of the Act:

                     COMMON STOCK, PAR VALUE $.02 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 and (2) has been subject to such filing requirements for the
past 90 days.

                                                         Yes  [X]     No [ ]

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.


<PAGE>



Aggregate market value of voting stock held by non-affiliates of the Registrant
as of December 9, 1996: $44,361,461.00.

Number of shares outstanding of Registrant's Common Stock, as of December 30,
1996: 10,126,926.

DOCUMENTS INCORPORATED BY REFERENCE:

                                                LOCATION IN FORM 10-K IN WHICH
         DOCUMENT                                  DOCUMENT IS INCORPORATED
         --------                                  ------------------------
Registrant's Proxy Statement                              Part III
   relating to the 1997
Annual Meeting of Stockholders


                                     - 2 -
<PAGE>



                                     PART I

ITEM 1.  BUSINESS

GENERAL

      Transmedia Network Inc., through its operating subsidiaries (collectively,
      the "Company"), owns and markets a charge card ("The Transmedia Card")
      offering savings to the Company's cardmembers on dining costs for
      restaurants both within and outside the United States from which the
      Company, its franchisees and its licensees have purchased food and
      beverage credits. The Company also offers to holders of The Transmedia
      Card savings on lodging costs at selected hotels, resorts, golf courses
      and ski lifts around the country and on purchases of merchandise from
      selected retailers. The Company's cardholders also have access to discount
      long distance telephone services through a program the Company operates
      jointly with a subsidiary of General Electric Company. The Company derives
      its income principally from retaining the difference between the amounts
      paid in advance by the Company to restaurants and amounts paid by
      cardmembers to the Company (through their credit card companies) for the
      related meals and from cardmember membership fees. The Company also enters
      into contracts with companies which own hotels, golf courses and ski lifts
      as well as merchandise retailers. In exchange for listing in the Company's
      directory, the Company receives commissions when Transmedia cardholders
      frequent these establishments. The Company also receives commissions when
      cardholders use their Transmedia/GE Capital telephone cards. The Company
      derives income from franchising and licensing The Transmedia Card and
      related proprietary rights and know-how, including rights to solicit
      restaurants, hotels, resorts and motels and acquire food, beverage and
      lodging credits, in the United States. The Company also receives revenue
      from licensing The Transmedia Card and related proprietary rights and
      know-how outside the United States.

CORPORATE STRUCTURE

      The Company commenced operations in 1984 and was reincorporated as a
      Delaware corporation in 1987. Currently, it has the following principal
      operating subsidiaries:

              /bullet/   Transmedia Service Company Inc. which is responsible 
              for soliciting and servicing all cardmembers in the United States
              and for all domestic franchising of The Transmedia Card and
              related property rights and know- how.

              /bullet/   Transmedia Restaurant Company Inc. which is responsible
              for obtaining and servicing restaurants and obtaining other
              locations such as hotels, golf courses and ski lifts and retailers
              where the Transmedia Card may be used.

              /bullet/   TMNI International Incorporated which licenses the
              Transmedia Card, service marks, proprietary software and know-how
              outside the United States and has licensed rights to Europe,
              Turkey, the countries comprising the former Union of Soviet
              Socialist Republics, Australia, New Zealand and the Asia-Pacific
              region to date.

                                     - 3 -
<PAGE>



DESCRIPTION OF RIGHTS TO RECEIVE AND THE TRANSMEDIA CARD

      The Company's primary business is the acquisition of Rights to Receive
      from participating establishments which are then sold for cash to holders
      of The Transmedia Card. "Rights to Receive" are rights to receive goods
      and services, principally food and beverages, which are acquired and
      purchased from participating restaurants, for an amount equal to
      approximately fifty percent (50%) of the food and beverage credits or by
      financing the purchase of other goods or services as well as for having
      provided advertising and media placement services to the participating
      establishments. Approximately ninety percent (90%) of Rights to Receive
      are purchased for cash. The Company typically purchases that amount of
      food and beverage credits which will be consumed in a period of no more
      than six months; however, it has not always been possible for the Company
      to predict with accuracy the amount of time in which such credits will be
      consumed, especially when the Company begins operating in new areas, as
      evidenced by the 1996 turn on Rights to Receive of 1.42 times, or 257
      days.

      The Transmedia Card is only issued to applicants who are determined to be
      creditworthy by virtue of their having a current, valid MasterCard, Visa,
      Discover or American Express credit card or who are otherwise deemed
      creditworthy by Company management. The Transmedia Cardmembers have a
      choice of programs, including a "Free for Life" Transmedia Card which
      affords them 20% savings at participating establishments, an account which
      offers mileage credits with Continental Airlines, Delta Airlines and
      United Airlines of 10 miles for each dollar spent on food and beverage at
      participating establishments for a one-time fee of $9.95, and a card which
      offers a 25% savings at participating establishments, for which there is a
      $50 annual fee. Each account may have more than one user and, accordingly,
      more than one cardmember.

      In presenting The Transmedia Card, cardmembers sign for the goods or
      services rendered, as well as for the taxes and tips as they would with
      any other charge card. The Company, upon obtaining the receipt (directly
      or via electronic point of sale transmission) from the appropriate
      establishment, gives the establishment credit against Rights to Receive
      which are owned by the Company. The Company then (i) processes the receipt
      through the cardmember's MasterCard, Visa, Discover or American Express
      card account, which remits to the Company the full amount of the bill, and
      (ii) credits to the cardmember's MasterCard, Visa, Discover or American
      Express account the appropriate discount or credits to the cardmember's
      airline account the appropriate mileage. Taxes and tips are not discounted
      and such sums are remitted to the various establishments.

DOMESTIC FRANCHISING

In 1990, the Company commenced franchising The Transmedia Card (then known as
The Restaurant Card) and related proprietary rights and know-how, including
rights to solicit restaurants and acquire Rights to Receive, in the United
States. At September 30, 1996, the Company had franchises in the following
territories: a large part of New Jersey, California, the Washington,
D.C./Baltimore, Maryland Metropolitan area, Dallas, Ft. Worth and Houston,
Texas, the States of Virginia, North Carolina, South Carolina, Washington and
Oregon and Atlanta, Georgia, eastern Tennessee, Reno, Nevada and the Nevada side
of Lake Tahoe. The Company has also granted a certain third party an option to
acquire a franchise for the State of Hawaii. The 

                                     - 4 -
<PAGE>



Company has determined that it will no longer offer franchises at various
locations throughout the United States. In November 1996, the Company entered
into an agreement to terminate the franchise and to purchase certain of the
assets of The Western Transmedia Company, Inc., the Company's franchisee in the
States of California, Nevada, Oregon and Washington. After the completion of
this transaction (which is expected to occur in January 1997), the Company will
operate in these States directly.

Each franchise sold by the Company is operated under a ten year franchise
agreement that is renewable for one additional ten-year term for all locations.
Each agreement provides that the Company will assist the franchisee with
marketing, advertising, training and other administrative support; relates to a
territory that contains 625 or more full-service restaurants that accept
MasterCard, Visa, Discover or American Express credit cards; and licenses the
franchisee to use the Company's trademarks in connection with the solicitation
of new cardmembers (which is not restricted to the franchisee's territory) and
the purchase of Rights to Receive from restaurants in the territory granted to
the franchisee. The franchisee is responsible for, among other things,
soliciting cardmembers and participating establishments, purchasing Rights to
Receive from participating establishments in its territory, and maintaining
adequate insurance. In consideration for the grant of the franchise, the
franchisee (i) paid to the Company a franchise fee which varies based upon the
number of full-service restaurants located within the territory granted to the
franchisee, and (ii) pays the following continuing fees during the term of the
franchise agreement: (A) 7 1/2% of the total meal credits used within the
franchisee's territory; (B) 2 1/2% of the total meal credits sold within the
franchisee's territory into the Company's advertising and development fund; (C)
a processing fee of $.20 per sales transaction from the franchisee's territory;
and (D) a monthly service charge of $1.00 per participating establishment in the
franchisee's territory. The franchisee receives a commission from the Company
equal to forty percent (40%) of the membership fees paid by all new cardmembers
solicited by the franchisee, with a minimum of $5.00 per account.

U.S. LICENSING

         In November, 1995, the Company entered into a license arrangement under
which the licensee was authorized to solicit Rights to Receive from various
types of resorts, hotels and other entities. The territory covered by the
license agreement is the continental United States, excluding the State of
Minnesota. The term of this arrangement is ten years, with a potential renewal
period of ten years. Under this arrangement, the Company compensates the
licensee through a commission.

NON-U.S. LICENSING

In 1993, the Company commenced licensing The Transmedia Card and related
proprietary rights and know-how outside the United States. The Company's
non-U.S. operations are conducted by its subsidiary, TMNI International
Incorporated. In 1993, the Company granted an exclusive, perpetual license to
Transmedia Europe, Inc. to establish the Company's business in Europe, Turkey
and the countries that formerly comprised the Union of Soviet Socialist
Republics. The 

                                     - 5 -
<PAGE>



license is governed by a Master License Agreement which provides that, among
other things, (i) the licensee has the right to sublicense the rights granted
under the Master License Agreement to others within the territory, provided that
each such sublicense is approved by the Company, (ii) the Company will assist
the licensee with training relating to sales, administration, technical and
operations of the business, and (iii) the licensee is solely responsible for
developing its own market, paying its own expenses for advertising and
soliciting cardmembers and participating establishments in its territory. In
consideration for the license, the licensee (i) paid the Company a
non-refundable purchase price of One Million One Hundred Twenty-Five Thousand
($1,125,000) Dollars, (ii) will pay to the Company two percent (2%) of the gross
volume with respect to the United Kingdom sublicense, (iii) will pay to the
Company twenty-five percent (25%) of initial sublicense fees (with a minimum of
$250,000) paid for each country licensed in the territory, (iv) will pay to the
Company twenty-five percent (25%) of royalties paid by sublicensees to the
licensee, and (v) granted to the Company a five percent (5%) equity interest in
the licenses. Melvin Chasen, the Chairman and Chief Executive Officer of the
Company, served as a director of the licensee until March 1, 1995. In December
1996, Transmedia Europe Inc. amended the sublicense it had granted for France
and expanded the sublicensee's territory to include Belgium and Luxemborg,
Italy, Spain and Switzerland (other than the German speaking area).

In 1994, the Company granted an exclusive perpetual license to Transmedia Asia
Pacific Inc. to establish the Company's business in Australia, New Zealand and
the Asia-Pacific region (such region covering approximately 16 major countries
and areas including, among others, Japan, Hong Kong, Taiwan, Korea, the
Philippines and India). The licensee also took an option to purchase a franchise
for the State of Hawaii. The license granted by the Company is governed by a
Master License Agreement which provides, among other things, that (i) the
Company will assist the licensee with training relating to sales,
administration, technical and operations of the business, and (ii) the licensee
is solely responsible for developing its own market, paying its own expenses for
advertising and soliciting cardmembers and restaurants in its territory. In
consideration for the license, the licensee paid the Company $1,250,000, and
(ii) granted to the Company a five percent (5%) equity interest in the licensee.
The license also provides for the following payments to the Company: (i) With
respect to sublicenses granted in all territories other than Australia and New
Zealand, the licensee will pay to the Company twenty-five percent (25%) of all
initial sublicense fees (in no event less than $500,000 in the People's Republic
of China and Japan, and not less than $250,000 in all other territories), as
well as twenty-five percent (25%) of all royalties, transfer fee payments and
any other monies received; and (ii) with respect to sublicenses granted in
Australia and New Zealand, the licensee will pay to the Company two percent (2%)
of gross sales within such territories. Mr. Chasen served as a director of
Transmedia Asia Pacific Inc. until March 1, 1995.

In December 1996, the Company entered into an agreement with Transmedia Europe,
Inc. and Transmedia Asia Pacific Inc. amending both of the licenses, among other
things, to permit the companies to be reorganized under one entity and to allow
them to acquire and operate worldwide the business of Countdown plc., which
conducts a restaurant discount program in Europe and, to a lesser extent, in the
United States.

                                     - 6 -
<PAGE>



AREAS OF OPERATION

The Company's principal areas of operation, through its subsidiaries and its
domestic franchising operations, include the New York Metropolitan area
(consisting of New York City and the counties of Nassau, Suffolk, Westchester,
Rockland, Putnam and Orange in New York State, Northern New Jersey and
Connecticut); Central, Southwest and Southeast Florida; Massachusetts; the
Chicago, Illinois Metropolitan area; Rhode Island; New Hampshire; Maine;
Vermont; Philadelphia, Pennsylvania; Phoenix, Arizona; Denver, Colorado;
Milwaukee, Wisconsin; Indianapolis, Indiana; California; Delaware; Georgia; the
Washington, D.C. Metropolitan area; the Baltimore, Maryland Metropolitan area;
North and South Carolina; the Dallas,/Ft. Worth and Houston, Texas Metropolitan
areas; Atlanta, Georgia, eastern Tennessee; and Virginia.


PARTICIPATING RESTAURANTS AND CARDMEMBERS

As of September 30, 1996, directories published by the Company, which are
distributed to cardmembers six times a year, listed 6,974 restaurants available
to cardmembers, and The Transmedia Card was held by an aggregate of 924,418
cardmembers, comprised of 634,761 accounts with an average of 1.46 cardmembers
per account. The following table sets forth (i) the number of restaurants listed
in directories published by the Company and (ii) the number of cardmembers, as
of the fiscal years ended September 30, 1992 though 1996:


                          1996       1995        1994       1993      1992
                       --------- ---------- ----------- ---------- ---------
RESTAURANTS               6,974      5,330       3,628      2,328     1,449
----------------    ------------ ---------- ----------- ---------- ---------
CARDMEMBERS             924,418    593,161     395,968    197,166   112,029


As the table indicates, the number of restaurants listed in directories
published by the Company has risen nearly three hundred eighty-one percent
(381%) during the fiscal years ended September 30, 1992 through September 30,
1996, and the number of cardmembers has risen nearly seven hundred twenty-five
percent (725%) for the same period. In fiscal 1996, between fifty-five and sixty
percent (55-60%) of all cardmembers renewed their memberships, and approximately
ninety percent (90%) of all restaurants listed in the directories published by
the Company whose initial amount of Rights to Receive were expended in 1996
renewed their contracts with the Company. In addition, eighty percent (80%) of
all restaurants eligible for their second year of renewals in fiscal 1996
renewed their contracts. The Company generally experiences a sharp decline in
renewals among restaurants eligible for a third year of renewals. It has been
the Company's experience, however, that the addition of new restaurants
generally offsets the drop-off in renewing restaurants, and the Company believes
that its service areas are not close to cardmember saturation.


                                     - 7 -
<PAGE>



MARKETING

The Company markets The Transmedia Card through the use of advertising, direct
mail and through promotion with co-marketing partners such as banks and affinity
groups.

EMPLOYEES

As of December 20, 1996, the Company employed 145 persons. The Company believes
that its relationships with its employees are good.

COMPETITION

The charge card business is highly competitive and the Company competes for both
cardmembers and participating restaurants, hotels and other applicable services.
Competitors include discount programs offered by major credit card companies,
such as American Express, Visa, MasterCard and Diners Club and other companies
that offer different kinds of discount marketing programs and numerous small
companies which offer services which may compete with the services offered or to
be offered by the Company. Certain of the Company's competitors may have
substantially greater financial resources and expend considerably larger sums
than does the Company for new product development and marketing. Further, the
Company must compete with many larger and better established companies for the
hiring and retaining of qualified marketing personnel. The Company believes that
the unique features of its program -- that The Transmedia Card can be used by
cardmembers at participating establishments with very few restrictions, that The
Transmedia Card provides substantial savings without the need for a cardmember
to present discount coupons when paying for a meal, and that participating
establishments are provided with cash in advance of customer charges --
contribute to the Company's competitiveness and allow the Company to offer
better value and service to its cardmembers.

ITEM 2.  PROPERTIES

The Company's present executive office consists of 8,303 square feet, located in
Miami, Florida, which the Company occupies pursuant to a lease expiring on
February 28, 1997 and which provides for an annual base rental of $148,860. The
Company's Miami office also houses the Company's cardmember service center. The
Company has entered into a new lease, which commences on March 1, 1997, for
13,096 square feet, thus adding an additional 4,793 square feet of contiguous
space to its current office. The lease will expire on February 28, 2002 and
provides for an annual base rent of $270,825. The Company leases offices in New
York City for 5,710 square feet of office space pursuant to a lease entered into
in May 1996. The lease, which expires on June 30, 2001, provides for minimum
annual rentals of $199,850. In addition, the Company has a four and one-half
year office lease in Philadelphia, Pennsylvania for approximately 1,641 square
feet, which commenced April 1, 1994. The lease provides for a base annual rental
of approximately $24,500 in the first year, which will increase by approximately
$800 each year thereafter. In Boston, Massachusetts, the Company has a
sixty-four month lease for approximately 1,500 square feet, which commenced May
1, 1995. The lease provides for base annual rentals of $29,400. The Company has
an option for one three-year renewal. In Chicago, the Company has a thirty-nine
month lease for approximately 1,183 square feet, which commenced October 1,
1995. The lease provides for an initial annual lease rental of $26,730

                                     - 8 -
<PAGE>



increasing by approximately $600 each year thereafter. In Detroit, the Company
leases an executive office for a twelve-month period which began on May 1, 1995
at an annual fee of $6,840. In Tampa, the Company leases an executive office for
a thirteen-month period which began on June 1, 1995. The total rental for the
thirteen month period is $9,795. In Phoenix, the Company leases an executive
office for a thirteen-month period which began on March 6, 1996 for a total rent
of $9,620 for the thirteen months. In Denver, the Company leases on a
month-to-month basis, an executive office for $450 per month.

In connection with the termination of the franchise granted to The Western
Transmedia Company Inc. and the acquisition of certain of its assets, the
Company will be assuming ongoing leases for two office properties in San
Francisco, California and Los Angeles, California. In San Francisco, California,
the Company would be assuming a lease for approximately 3,000 square feet, at an
annual rent of $54,686.04 from August 1, 1996 to July 31, 1997, $57,642.00 from
August 1, 1997 to July 31, 1998 and $60,597.96 from August 1, 1998 to August 31,
1999. The lease expires on August 31, 1999. In Los Angeles, California, the
Company would be assuming a lease for approximately 2,000 square feet at a
monthly base rent of approximately $4,200. The lease expires on January 31,
1997, however, the Company intends to exercise an option to extend the lease for
two years at a rental equal to market value.

ITEM 3.  LEGAL PROCEEDINGS

As of September 30, 1996, there were no material legal proceedings pending
involving the Company.

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

During the quarter ended September 30, 1996, no matters were submitted to a vote
of the security holders.

EXECUTIVE OFFICERS OF THE REGISTRANT

NAME                      POSITION                                      AGE
----                      --------                                      ---

Melvin Chasen             Director, Chairman of the Board, President     68
                          and Chief Executive Officer
James M. Callaghan        Director and Vice President; President of      57
                          Transmedia Restaurant
                          Company Inc.
Barry S. Kaplan           Director and Vice President;
                          President of Transmedia Service Company Inc.   38


                      - 9 -
<PAGE>



David L. Weinberg         Vice President and Chief                       51
                          Financial Officer;
                          President of TMNI International Inc.
Paul A. Ficalora          Executive Vice President                       45
                          of Transmedia Restaurant
                          Company Inc.
Gregory Borges            Treasurer                                      60
Kathryn Ferara            Secretary                                      40

Mr. Chasen has been a director and the Chairman of the Board, President and
Chief Executive Officer of the Company since 1983. From 1984 through 1987, he
was a director, Chairman of the Board, President and Chief Executive Officer of
Transmedia Network Inc., a Colorado corporation, which was the predecessor of
the Company.

Mr. Callaghan, a director of the Company since 1991, was elected Vice President
of the Company and President of Transmedia Restaurant Company Inc., a
subsidiary, in 1994. He joined the Company in 1989 and served as its Executive
Vice President, Vice President, Sales and Marketing and Treasurer.

Mr. Kaplan was elected a Vice President of the Company and President of
Transmedia Service Company Inc., a subsidiary, in September 1995 and was elected
a Director of the Company in March 1996. From 1986 until joining the Company, he
served in various positions including Executive Vice President, Chief Operating
Officer of Liberty Travel, Inc., a chain of full-service travel agencies.

Mr. Weinberg was elected Vice President and Chief Financial Officer of the
Company in 1992 and in 1994 was also elected President of TMNI International
Incorporated, a subsidiary. He joined the Company as Vice President Finance in
1991. From 1987 to 1991, Mr. Weinberg served as Vice President Finance and
Administration, Chief Financial Officer, Treasurer and Secretary of Columbia
Laboratories, Inc., a health care products company.

Mr. Ficalora was elected Executive Vice President of the Restaurant Company in
1994, having served as Vice President, Operations of the Company from 1992 until
1994, and Director of Franchise Sales from 1991 to 1992.

Mr. Borges was elected Treasurer of the Company in 1992. He joined the Company
in 1985 as Controller.

Mrs. Ferara was elected Secretary of the Company in 1992. She joined the Company
in 1989 as Office Manager and Assistant Secretary.


                                     - 10 -
<PAGE>



PART II

ITEM 5.  MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock is traded on the New York Stock Exchange
under the symbol "TMN". Prior to June 28, 1995, the Company's Common Stock was
included in the Nasdaq National Market . The following table sets forth the high
and low sale prices for the common stock for each fiscal quarter ended from
December 31, 1994 (adjusted for the three-for-two stock split effected on April
22, 1994 and applied retroactively where appropriate) as reported on the New
York Stock Exchange or the Nasdaq National Market, as well as the dividends paid
during each such fiscal quarter.

         The payment of dividends, if any, in the future, will depend upon,
among other things, the Company's earnings and financial requirements, as well
as general business conditions.

      QUARTER ENDED            LOW               HIGH           DIVIDEND PAID
      -------------            ---               ----           -------------

     December 31, 1994        $8.313           $13.750              $.02
     March 31, 1995            8.500            13.250                --
     June 30, 1995             8.000            13.250               .02
     September 30, 1995        8.375            11.375                --
     December 31, 1995         8.750            11.000               .02
     March 31, 1996            7.125             9.750                --
     June 30, 1996             7.125             9.000               .02
     September 30, 1996        5.500             8.625                --

         The aggregate number of holders of record of the Company's Common Stock
on December 20, 1996 was approximately 2,400.

         The payment of dividends, if any, in the future, will depend upon,
among other things, the Company's earnings and financial requirements, as well
as general and business conditions.



                                     - 11 -
<PAGE>



ITEM 6.  SELECTED FINANCIAL DATA

INCOME STATEMENT DATA:
<TABLE>
<CAPTION>

                                                           YEAR ENDED SEPTEMBER 30,
                                                           ------------------------


                                      1996              1995             1994              1993             1992
                                      ----              ----             ----              ----             ----

<S>                            <C>             <C>               <C>              <C>               <C>         
Net sales                      $68,600,122     $  58,792,454     $ 45,605,606     $  33,512,234     $ 23,777,303
Membership and renewal
  fee income                     6,833,013         4,207,368        2,769,618         1,686,423        1,142,345
Continuing franchise and
  royalty fee income             2,469,316         2,633,031        1,503,028           360,076          167,084
Commission income                  682,121           605,441          405,054                --               --

Total revenues                  78,584,572        66,238,294       50,283,356        35,558,733       25,086,732

Operating income                 4,756,552         6,344,850        5,216,578         3,425,433        2,609,244

Net income                       2,546,072         4,196,213        4,176,171         2,734,225        1,744,894

Net income per share
  Primary                             0.25              0.42             0.42              0.29             0.20
  Fully diluted                       0.25              0.42             0.42              0.28             0.20

BALANCE SHEET DATA:

Total assets                   $54,514,255       $38,383,020      $28,477,060     $  17,903,666     $ 13,459,098

Total long-term debt            15,000,000         2,000,000               --                --               --

Stockholders' equity            25,752,898        24,191,249       18,924,979        12,618,829        9,438,386

Cash dividends per
  common share                         .04               .04              .04               .02               --

</TABLE>


   

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

RESTATEMENT

The financial statements for 1994, 1995 and the first three quarters of 1996
have been restated to reflect the writedown of certain costs of acquiring
cardmembers. Previously, to the extent that membership and renewal fees were
expected to be received, the Company had been deferring certain costs of
acquiring cardmembers and amortizing them over the average life of a
cardmembers, 24 months. The restatement reflects the deferral of costs of
acquiring fee paying members only to the extent that initial membership fees are
generated and the amortization of these costs, as required by generally accepted
accounting principles, over twelve months, the period of initial membership.
Accordingly, the restatement resulted in a writedown of previously capitalized
and deferred costs and a corresponding increase in cardmember acquisition
expenses 

                                     - 12 -
<PAGE>



for the respective periods, indicative of the recent trend away from the
Company's utilization of an initial fee requirement and the growing practice of
no fee memberships. The impact of the restatement can be seen in Footnote 17 to
the Consolidated Financial Statements.
    
STATEMENT PRESENTATION

The Company has included all non-capitalizable advertising expenses related to
membership acquisition as a separate line item on its income statement. Also
included on this separate line item is the amortization of capitalizable
advertising costs. Previously, the amortization had been netted against
membership and renewal fee income and all non-capitalizable advertising expenses
had been included in selling, general and administrative expenses. All periods
presented reflect this presentation.

NEW ACCOUNTING PRONOUNCEMENTS

i.        Accounting for Stock-Based Compensation

          On October 23, 1995, the FASB issued Statement No. 123, "Accounting
for Stock-Based Compensation (FAS "123"). This Statement applies to all
transactions in which an entity acquires goods or services by issuing equity
instruments or by incurring liabilities where the payment amounts are based on
the entity's common stock price. The Statement covers transactions with
employees and nonemployees and is applicable to both public and nonpublic
entities. Entities are allowed (1) to to continue to use the Accounting
Principles Board Opinion No. 25 (APB 25"), or (2) to adopt the FAS 123 fair
value based method. Once the method is adopted, an entity cannot change and the
method selected applies to all of an entity's compensation plans and
transactions. For entities not adopting the FAS 123 fair value based method, the
disclosure requirements of FAS 123, including the pro forma information, are
effective for financial statements for fiscal years beginning after December 15,
1995. The pro forma disclosure are to include all awards granted in fiscal years
that begin after December 15, 1994. However, the disclosures, including the pro
forma net income and earnings per share disclosures, for the fiscal year
beginning after December 15, 1994 will not be included in that year's financial
statements, but will be included in the following year-end financial statements
if the first fiscal year is presented for comparative purposes. Management has
determined that it will follow the accounting method for APB 25 for employees
and that the effect of FAS 123 for non-employees is not significant. FAS 123
will be adopted by the Company as of October 1, 1996.

ii.       Accounting for Transfers of Servicing of Financial Assets and 
          Extinguishments of Liabilities

          In June 1996, the FASB issued Statement of financial Accounting
Standards No. 125 ("FAS 125"), "Accounting for Transfers of Servicing of
Financial Assets and Extinguishments of Liabilities." FAS 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities based on a financial-components
approach that focuses on control. FAS 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
December 31, 1996 and is to be prospectively 

                                     - 13 -
<PAGE>



applied. The Company believes that the adoption of FAS 125 will have no impact
on its financial statements.

RESULTS OF OPERATIONS (1996 VERSUS 1995)

Net sales for the fiscal year ended September 30, 1996 increased 16.7% to
$68,600,122 as compared to $58,792,454 for the year ended September 30, 1995.
The sales increase was due to an increased number of cardmembers and restaurants
available to cardmembers. Approximately ninety percent (90%) of all restaurants
listed in the directories published by the Company renew their contracts with
the Company after the initial amount of rights to receive meal credits purchased
by the Company is expended. In the second year of renewal, the Company renews
approximately 80% of those restaurants continuing in business. After the second
year, renewal rates drop sharply because the restaurants with the Company's help
have become successful and no longer need the Company, the Company chooses not
to renew the restaurant or the restaurant has gone out of business. However,
offsetting this drop is the fact that new restaurants start-up as old ones go
out of business, providing the Company with new restaurant prospects. The
Company believes that in no area where the Company operates is it close to
restaurant or cardmember saturation. At September 30, 1996, the average Rights
to Receive balance per Company restaurant participating was $9,220 versus $8,592
at September 30, 1995. Membership and renewal fee income increased to
$6,833,013, of which $1,164,883 was initial fee income in 1996 from $4,207,368,
of which $835,151 was initial fee income in 1995 as the result of an increased
number of cardmembers, as well as renewals.

In 1996, 7% of joining cardmembers paid a fee. The others joined under no-fee
programs. In 1995, the initial fee was waived 93% of the time. The renewal rates
in both 1996 and 1995 approximated 55% to 60%. Fee income is recognized over a
twelve-month period beginning in the month the fee is received. Continuing
franchise fee and royalty income decreased to $2,469,316 from $2,633,031. This
decrease resulted from the purchase by the Company of its Chicago franchisee on
July 1, 1995. As a result in the growth in the overall elements of revenue,
gross profits increased by $6,688,213 to $33,438,014 in 1996.

In 1996, selling, general and administrative ("SG&A") expenses increased by
$5,262,636, as compared to 1995, representing a 27.8% increase. In 1996, SG&A
expenses of a variable nature amounted to $11,170,000 (46.1% of total SG&A
expenses) versus $9,498,000 (50.1% of total SG&A expenses) in 1995. Main
components of SG&A expenses included sales salaries and commissions ($2,362,000
in 1996 versus $1,866,000 in 1995), bank processing fees ($3,433,000 in 1996
versus $2,834,000 in 1995), Rights to Receive loss expense ($2,075,000 in 1996
versus $2,332,000 in 1995) and salaries expense ($4,230,000 in 1996 versus
$3,604,000 in 1995). The Company also incurred $801,000 of expenses in 1996
associated with the start-up of new territories operated by the Company compared
with $268,000 in 1995.

In 1996, cardmember acquisition expenses were $4,456,435 versus $1,442,560 in
1995. Included in cardmember acquisition expenses was the amortization of
deferred advertising costs amounting to $1,164,865 in 1996 and $751,802 in 1995.
Costs capitalized in 1996 and 1995 were $969,129 and $1,012,740, respectively.
(See Footnote 1(e) to Consolidated Financial Statements.)

                                     - 14 -
<PAGE>



Operating income in 1996 was $4,756,552, a 25.0% decrease from $6,344,850 in
1995.

Other income, net of expense in 1996 was a net expense amounting to $650,000
versus net income of $534,000 in 1995, a difference of $1,184,000. Reasons for
the reduction included $736,000 more interest expense and financing costs in
1996 than 1995, $578,000 less initial franchise fee and license income in 1996
than 1995, $165,000 less in interest and other income in 1996 than 1995, and no
merger and acquisition expenses in 1996 versus $295,000 in 1995, which was
related to the Company's acquisition of its Chicago franchisee.

Earnings before taxes amounted to $4,106,572 in 1996 compared with $6,879,013 in
1995. The effective tax rate in 1996 was 38.0% versus 39.0% in 1995.

Net income was $2,546,072 or $.25 per share, versus $4,196,213 or $.42 per share
in 1995.

RESULTS OF OPERATIONS (1995 VERSUS 1994)

Net sales for the fiscal year ended September 30, 1995 increased 28.9% to
$58,792,454, as compared to $45,605,656 for the year ended September 30, 1994.
The sales increase was primarily due to an increased number of cardmembers and
restaurants available to cardmembers. Approximately ninety percent (90%) of all
restaurants listed in the directories published by the Company renew their
contracts with the Company after the initial amount of Rights to Receive meal
credits purchased by the Company is expended. In the second year of renewal, the
Company renews approximately 80% of those restaurants continuing in business.
After the second year, renewal rates drop sharply because the restaurants with
the Company's help have become successful and no longer need the Company, the
Company chooses not to renew the restaurant or the restaurant has gone out of
business. However, offsetting this drop is the fact that new restaurants
start-up as old ones go out of business, providing the Company with new
restaurant prospects. The Company believes that in no area where the Company
operates is it close to restaurant or cardmember saturation. At September 30,
1995, the average Rights to Receive balance per Company restaurant participating
was $8,592 versus $8,719 at September 30, 1994. Membership and renewal fee
income increased to $4,207,368, of which $835,151 was initial fee income in 1995
from $2,769,618, of which $788,345 was initial fee income in 1994 as the result
of an increased number of cardmembers, as well as renewals. In 1995 and 1994,
the initial fee was waived 93% and 90% of the time, respectively. In April 1994
the Company ceased waiving renewal fees. In 1994 prior to April, the Company
waived renewal fees 35% of the time. The renewal rate in 1995 and 1994
approximated 55% to 60%. Fee income is recognized into income over a
twelve-month period beginning in the month the fee is received. Continuing
franchise fee and royalty income increased to $2,633,031 in 1995 from $1,503,028
in 1994 as a result of the growth in the Company's franchisees and the start-up
of the licensees in the United Kingdom and Australia. Commission income received
by the company increased to $605,441 in 1995 from $405,054 in 1994. As a result
of the growth in the overall elements of revenue, gross profits increased by
$6,938,391 to $26,749,801 in 1995.

                                     - 15 -
<PAGE>



In 1995, selling, general and administrative ("SG&A") expenses increased by
$4,910,504, as compared to 1994, representing a 34.9% increase. In 1995, SG&A
expenses of a variable nature amounted to $9,498,000 (50.1% of total SG&A
expenses) versus $6,540,000 (46.5% of total SG&A expenses) in 1994. Main
components of SG&A expenses included sales salaries and commissions ($1,866,000
in 1995 versus $1,147,000 in 1994), bank processing fees ($2,834,000 in 1995
versus $2,045,000 in 1994), Rights to Receive loss expense ($2,332,000 in 1995
versus $1,743,000 in 1994) and salaries expense ($3,604,000 in 1995 versus
$2,603,000 in 1994). The Company also incurred $268,000 of expenses in 1995
associated with the start-up of new territories operated by the Company.

In 1995 cardmember acquisition expenses were $1,442,560 versus $542,945 in 1994.
Included in cardmember acquisition expenses was the amortization of deferred
advertising costs amounting to $751,802 in 1995 and $303,590 in 1994. Costs
capitalized in 1995 and 1994 were $1,012,740 and $581,770, respectively. (See
Footnote 1(e) to Consolidated Financial Statements.)

Operating income in 1995 was $6,344,850, a 21.6% increase over the $5,216,578 in
1994.

Other income, net of expense in 1995 amounted to $534,163 compared to $1,757,093
in 1994. The reduction of $1,222,930 results from an $863,789 decrease in
initial franchise and license fee income, net of expenses in 1995. The Company
in 1994 had entered into a major license for Australia, New Zealand and the
right to sublicense Asia. In 1995, the Company incurred merger and acquisitions
costs amounting to $294,600 in connection with the acquisition of its Chicago
franchisee.

Earnings before taxes amounted to $6,879,013 in 1995 compared with 6,973,671 in
1994. The effective tax rate in 1995 was 39.0% compared with 40.1% in 1994.

Net income in 1995 was $4,196,213 or $.42 per share, versus $4,176,171 or $.42
per share in 1994.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's working capital decreased to $21,952,478 at September 30,
         1996 from $23,263,096 at September 30, 1995. The Company's
         rights-to-receive increased by $11,378,557; however, this was offset by
         the increase in the use of the Companys line of credit which increased
         by $13,000,000 to $15,000,000 at September 30, 1996, all of which was
         classified as a current liability.

         On June 30, 1995 the Company obtained a loan facility with NationsBank
         of Florida ("NationsBank") under which it could borrow, at the bank's
         prime rate of interest, up to Six Million Dollars ($6,000,000) until
         May 15, 1996, and thereafter, up to Seven Million Five Hundred Thousand
         Dollars ($7,500,000). On January 26, 1996, the loan facility was
         amended and increased to Twenty Million Dollars ($20,000,000) and the
         expiration date was changed to January 26, 1999; however, because of
         the Company's asset securitization described below, the line of credit
         terminated on December 24, 1996.

                                     - 16 -
<PAGE>



   
         In December 1996, the Company entered into a revolving securitization
         transaction to provide for additional liquidity, as well as a platform
         for future growth, at a cost of funds lower than had been historically
         available to it. The transaction structure, among other things,
         isolated the securitized rights-to-receive beyond the reach of the
         Company in the unlikely event of bankruptcy or receivership, thus
         enabling characterization of the transferred assets as a true sale at
         law and an "A" rating on the securities issued. The Company believed
         that the transaction also allowed for derecognition of the transferred
         rights-to-receive and treatment of the securitization as off-balance
         sheet financing under generally accepted accounting principles.

          On December 24, 1995, the Company made an initial transfer of $33
         million of its rights-to-receive to a special purpose corporation
         ("SPC"), an indirect wholly owned subsidiary of the Company, as part of
         the revolving securitization. The rights-to-receive, which were sold to
         the SPC without recourse, were in turn transferred to a limited
         liability corporation (Issuer), which issued $33 million of fixed rate,
         five-year term securities in a private placement to various third party
         investors. In exchange for the rights-to-receive, which have a retail
         value of $66 million before cardmember discounts, the Company will
         receive approximately $32 million, after transactions costs, and a 1%
         equity interest in the Issuer. Future excess cash flows, expected to be
         generated from the securitized assets as the rights-to-receive are
         exchanged for meals by Company cardholders, are to be remitted to the
         Company on a monthly basis as a return on capital from the Issuer.
         Excess cash flows are determined after payments of interest to
         noteholders and investors, as well as trustee and servicing fees.
         During the five-year revolving period, the issuer will be responsible
         for ongoing purchase of rights-to-receive from the Company to ensure
         that the initial pool of $33 million is continually replenished. It is
         anticipated that the net revenue from securitized assets will be
         received in approximately the same amount and within the same time
         frame that such revenue would have been received had the secuitization
         not taken place.

         In March 1997, the Company was advised by the SEC staff that, while
         the transfers of assets may be a true sale under applicable legal
         principles, the second transfer of assets from the SPC to the Issuer
         should not be characterized as a sale under applicable generally
         accepted accounting principles, thus precluding the derecognition of
         the rights-to-receive and resulting in the presentation of the
         transaction as secured non-recourse financing on the consolidated
         balance sheet of the Company.
    

         Assuming the December 24, 1996 securitization had been completed on
         September 30, 1996 and that part of the proceeds was used to pay off
         the Company's outstanding line-of-credit balance, the following
         pro-forma condensed balance sheet is presented:

                                     - 17 0
<PAGE>

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30, 1996
                                                               ------------------
                                                       ORIGINAL                  PRO-FORMA
                                                     ------------               ------------

<S>                                                  <C>                        <C>        
          Cash                                       $  3,603,409               $20,603,409
          Rights-to Receive
            UNRESTRICTED                               37,525,957                 4,525,957
            SECURITIZED                                       --                 33,000,000
          Other current assets                          4,545,339                 4,545,339
                                                     ------------               ------------
                   Total current assets                45,674,705                62,674,705
          Non-current assets                            8,839,550                 9,839,550
                                                     ------------               ------------
                   Total assets                       $54,515,255               $72,514,255
                                                     ============               ===========
          Current liabilities                           8,722,226                 8,722,226
          Line of credit                               15,000,000                        --
          SECURED NON-RECOURSE NOTES PAYABLE                   --                33,000,000
          OTHER non-current liabilities                 5,039,131                 5,039,131
                                                     ------------               ------------
                   Total liabilities                   28,761,357                46,761,357
          Stockholders' equity                         25,752,898                25,752,898
                                                     ------------               ------------
                   Total liabilities and
                   stockholders' equity               $54,514,255               $72,514,255
                                                     ============               ===========
</TABLE>

         On November 15, 1996, the Company entered into a purchase agreement
         with The Western Transmedia Company, Inc. ("Western"), a franchisee of
         the Company. Under the terms of the agreement, the Company reacquired
         the right to operate its business in California, Oregon, Washington and
         a portion of Nevada. In addition, the Company acquired Western's Rights
         to Receive, and its furniture, fixtures and equipment. The purchase
         price will approximate $7,750,00, of which $4,750,000, represents the
         cost of the franchise. Closing of the proposed transaction occurred in
         take place in January 1997.

         Capital expenditures by the Company over the past three fiscal years
         (approximately $7,062,105) have been due almost exclusively to the
         Company's development and acquisition of computer hardware and software
         necessary for the operation of the Cardmember Service Center. The
         Company estimates that it will spend approximately $2,600,000 on
         capital expenditures, consisting primarily of computer software in
         fiscal year 1997.

         The Company believes that cash on hand at September 30, 1996, together
         with cash generation by operations plus cash received from the December
         1996 securitization after paying off the Company's line of credit will
         satisfy the Company's total need for cash during the 1997 fiscal year.

         The Company's inventory of Rights to Receive increased by $11,378,557
         to a total of $37,525,957 at September 30, 1996. As noted above, the
         Company sold approximately $33,000,000 of its Rights to Receive in a
         securitization transaction in December 1996.

                                     - 18 -
<PAGE>



         In many instances the Rights to Receive purchased by the Company are
         secured by the furniture, fixtures and kitchen equipment of the related
         restaurants as filed pursuant to the Uniform Commercial Code. The
         Company also attempts to obtain personal guarantees from the restaurant
         owners.
<TABLE>
<CAPTION>

                          Analysis of Rights to Receive

                                              1996            1995           1994
                                              ----            ----           ----
----------------------------------------- --------------- -------------- --------------
<S>                                        <C>             <C>            <C>        
RIGHTS TO RECEIVE, BEGINNING OF YEAR       $26,147,400     $17,472,712    $ 9,968,102
----------------------------------------- --------------- -------------- --------------
PURCHASE OF RIGHTS TO RECEIVE               59,179,978      50,295,531     39,419,189
----------------------------------------- --------------- -------------- --------------
WRITE-OFFS OF RIGHTS TO RECEIVE             (2,654,863)     (2,132,350)    (1,442,633)
                                          -------------   -------------  -------------
                                            82,672,515      65,635,893     47,944,658
----------------------------------------- --------------- -------------- --------------
COST OF SALES                               45,146,558      39,488,493     30,471,946
                                          ------------    ------------   ------------
----------------------------------------- --------------- -------------- --------------
RIGHTS TO RECEIVE, END OF YEAR             $37,525,957     $26,147,400    $17,472,712
                                           ===========     ===========    ===========
</TABLE>

         Management of the Company believes that continued increase in the
         number of restaurants which honor the Transmedia Card (and, therefore,
         increases in the inventory of Rights to Receive purchased) is essential
         to attract additional cardmembers, satisfy existing cardmembers and
         continue the Company's revenues growth. Further, management believes
         that the purchase of Rights to Receive can be funded generally from
         cash on hand, from operations and from funds made available from future
         securitizations.

         Cash flow used in operating activities was $7,941,637 in fiscal year
         ended September 30, 1996, compared with cash used in operating
         activities of $843,422 and $1,526,902 in 1995 and 1994, respectively.
         Cash is primarily used in purchasing Rights to Receive meal credits.
         Management of the Company anticipates that the expenditure for the
         purchases of Rights to Receive will continue to increase as the Company
         expands the number of participating full service restaurants available
         to its cardmembers.

         Cash used in investing activities was $3,354,072 in the fiscal year
         ended September 30, 1996, compared with $2,020,055 used in 1995 and
         $1,860,978 used in 1994. Cash flow deficits from investing activities
         were due primarily to the development and acquisition of computer
         hardware and software necessary for the operation of the Company's
         Cardmember Service Center. Management believes that cash to be used in
         investing activities in the fiscal year ended September 30, 1997 will
         approximate $2,600,000.

         Cash flow provided by financing activities was $12,628,796 for the
         fiscal year ended September 30, 1996, compared with cash flows provided
         by financing activities of $2,654,900 in 1995 and $861,734 in 1994. In
         1996, the principal source of cash flow was from borrowings under the
         Company's bank line of credit. In 1995, the principal source of cash
         flow were from borrowings under the Company's bank line of credit and
         from the exercise of options for common stock. In 1994, the principal
         source of cash flow from financing activities was from the exercise of
         options for common stock and the conversion of warrants.

                                     - 19 -
<PAGE>



ITEM 8. FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report                                        F - 1

Financial Statements:
    Consolidated Balance Sheets,                                    F - 2
      September 30, 1996 and 1995

    Consolidated Statements of Income                               F - 3
      for each of the years in the three-year
      period ended September 30, 1996

    Consolidated Statements of Stockholders'                        F - 4
      Equity for each of the years in the three-year
       period ended September 30, 1996

    Consolidated Statements of Cash Flows                           F - 5,6
      for each of the years in the three-year
      period ended September 30, 1996

    Notes to Consolidated Financial Statements                      F - 7



                                     - 20 -
<PAGE>



                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and
    Stockholders
Transmedia Network Inc.:

We have audited the accompanying consolidated balance sheets of Transmedia
Network Inc. and subsidiaries as of September 30, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the years in the three-year period ended September 30, 1996. These 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
Transmedia Network Inc. and subsidiaries at September 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended September 30, 1996 in conformity with generally accepted
accounting principles.

   
As discussed in Note 16(b) to the consolidated financial statements, the Company
changed its accounting policy for certain costs of acquiring new card members.
    


                                             /s/ KPMG PEAT MARWICK LLP
                                             -------------------------------
                                             KPMG Peat Marwick LLP


   
December 6, 1996, except as to notes 13, 
  16(b) and 16(c), which are dated as of
  December 24, 1996 and note 16(a), which 
  is dated as of March 31, 1997
Miami, Florida
    


                                       F-1
<PAGE>
<TABLE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           September 30, 1996 and 1995


                                  ASSETS                                   1996             1995
                                                                      -------------     -----------
<S>                                                                    <C>                <C>
Current assets:
     Cash and cash equivalents (note 1)                               $   3,603,409       2,270,322
     Accounts receivable, less allowance for doubtful accounts
        of $15,000 in 1996 and 1995 (note 5)                              2,616,586       1,771,821
     Rights to receive (note 5)                                          37,525,957      26,147,400
     Prepaid expenses and other current assets                            1,035,083         708,253
     Unamortized advertising costs (note 16)                                343,385         539,118
     Income taxes receivable                                                307,377              -
     Deferred income taxes (note 8)                                         242,908         441,285
                                                                      -------------     -----------
                   Total current assets                                  45,674,705      31,878,199

Securities available for sale, at fair value (note 3)                     1,868,375       2,899,691
Property and equipment, net (note 2)                                      5,663,693       3,471,700
Other assets                                                              1,307,482         133,430
                                                                      -------------     -----------
                   Total assets                                       $  54,514,255      38,383,020
                                                                      =============     ===========
                   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable - Rights to receive                             $   4,784,352       4,933,070
     Accounts payable - reimbursable tax and tips                           485,245         428,000
     Accounts payable - other                                             2,679,290       1,663,754
     Income taxes payable                                                        -           22,600
     Accrued expenses                                                       773,339       1,028,561
                                                                      -------------     -----------
                   Total current liabilities                              8,722,226       8,075,985

Line of credit (note 13)                                                 15,000,000       2,000,000
Deferred membership and renewal fee income (note 1)                       4,102,786       2,866,916
Deferred income taxes (note 8)                                              936,345       1,248,870
                                                                      -------------     -----------
                   Total liabilities                                     28,761,357      14,191,771
                                                                      -------------     -----------
Stockholders' equity (notes 6 and 7):
     Preferred stock, $.10 par value per share                                   -               - 
     Common stock, $.02 par value per share                                 202,539         202,375
     Additional paid-in capital                                          10,546,612      10,513,055
     Unrealized gain on securities available for sale (net of 
        deferred income taxes of $603,582 in 1996 and 
        $1,021,679 in 1995)                                                 984,792       1,598,011
     Retained earnings                                                   14,018,955      11,877,808
                                                                      -------------     -----------
                   Total stockholders' equity                            25,752,898      24,191,249

Commitments (notes 6, 11 and 12)
                                                                      -------------     -----------
                   Total liabilities and stockholders' equity         $  54,514,255      38,383,020
                                                                      =============     ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

     For each of the years in the three-year period ended September 30, 1996


                                                                         1996              1995             1994
                                                                   --------------      -----------     ----------- 
<S>                                                                  <C>                 <C>             <C>
Revenue:
     Net sales                                                     $   68,600,122       58,792,454      45,605,656
     Membership and renewal fee income                                  6,833,013        4,207,368       2,769,618
     Continuing franchise fee and royalty income                        2,469,316        2,633,031       1,503,028
     Commission income                                                    682,121          605,441         405,054
                                                                   --------------      -----------     ----------- 
                                                                       78,584,572       66,238,294      50,283,356

Cost of sales                                                          45,146,558       39,488,493      30,471,946
                                                                   --------------      -----------     ----------- 
                   Gross profit                                        33,438,014       26,749,801      19,811,410

Selling, general and administrative expenses                           24,225,027       18,962,391      14,051,887
Cardmember acquisition expenses                                         4,456,435        1,442,560         542,945
                                                                   --------------      -----------     ----------- 
                   Operating income                                     4,756,552        6,344,850       5,216,578
                                                                   --------------      -----------     ----------- 
Other income (expense):
     Initial franchise fee and license fee income, net of
        expense                                                            30,100          608,211       1,472,000
     Merger and acquisition expenses                                           -          (294,600)             - 
     Interest and other income                                            171,772          336,742         290,197
     Interest expense and financing costs                                (851,852)        (116,190)         (5,104)
                                                                   --------------      -----------     ----------- 
                                                                         (649,980)         534,163       1,757,093
                                                                   --------------      -----------     ----------- 
Income before income taxes                                              4,106,572        6,879,013       6,973,671
                   Income taxes (note 6)                                1,560,500        2,682,800       2,797,500
                                                                   --------------      -----------     ----------- 

                   Net income                                      $    2,546,072        4,196,213       4,176,171
                                                                   ==============      ===========     =========== 
Net income per common and common equivalent share:
        Primary                                                    $       .25              .42             .42
                                                                   ==============      ===========     =========== 
        Fully diluted                                              $       .25              .42             .42
                                                                   ==============      ===========     =========== 
Weighted average number of common and common equivalent
     shares outstanding:
        Primary                                                        10,299,229       10,112,326       9,980,302
                                                                   ==============      ===========     =========== 
        Fully diluted                                                  10,299,229       10,112,326      10,024,175
                                                                   ==============      ===========     =========== 
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

     For each of the years in the three-year period ended September 30, 1996


                                                                     COMMON STOCK 
                                                             -----------------------------      ADDITIONAL 
                                                                NUMBER                             PAID-IN  
                                                                OF SHARES         AMOUNT           CAPITAL  
                                                             ------------     ------------      -----------

<S>                                                             <C>           <C>                 <C>       
Balance, September 30, 1993                                     6,184,716     $   123,694         8,245,386 

     Net income                                                        -               -                 -  

     Three-for-two stock split                                  3,177,607          63,552                -  

     Exercise of stock options                                    189,758           3,795           181,404 

     Income tax benefit related to stock option plan                   -               -            663,104 

     Conversion of warrants to stock                               66,397           1,329           388,299 

     Dividend                                                          -               -                 -  

     Unrealized gains, net                                             -               -                 -  
                                                             ------------     ------------      -----------
Balance, September 30, 1994                                     9,618,478         192,370         9,478,193 

     Net income                                                        -               -                 -  

     Exercise of stock options                                    221,905           4,438           341,820 

     Income tax benefit related to stock option plan                   -               -            688,610 

     Dividend                                                          -               -                 -  

     Acquisition of franchise                                     278,387           5,567             4,432 

     Unrealized gains, net                                             -               -                 -
                                                             ------------     ------------      -----------
Balance, September 30, 1995                                    10,118,770         202,375        10,513,055 

     Net income                                                        -               -                 -  

     Exercise of stock options                                      8,156             164            33,557 

     Dividend                                                          -               -                 -  

     Unrealized loss, net                                              -               -                 -  
                                                             ------------     ------------      -----------
Balance, September 30, 1996                                    10,126,926     $   202,539        10,546,612 
                                                             ============     ============      ===========


See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                         [CONTINUED FROM PREVIOUS PAGE]

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY, CONTINUED

     For each of the years in the three-year period ended September 30, 1996



                                                              UNREALIZED
                                                                GAINS            RETAINED
                                                            (LOSSES), NET        EARNINGS          TOTAL
                                                            -------------      ------------     -----------

Balance, September 30, 1993                                            -          4,249,749       12,618,829

     Net income                                                        -          4,176,171        4,176,171

     Three-for-two stock split                                         -            (63,552)              - 

     Exercise of stock options                                         -                 -           185,199

     Income tax benefit related to stock option plan                   -                 -           663,104

     Conversion of warrants to stock                                   -                 -           389,628

     Dividend                                                          -           (383,025)        (383,025)

     Unrealized gains, net                                      1,275,073                -         1,275,073
                                                             ------------      ------------     -----------
Balance, September 30, 1994                                     1,275,073         7,979,343      18,924,979

     Net income                                                        -          4,196,213       4,196,213

     Exercise of stock options                                         -                 -          346,258

     Income tax benefit related to stock option plan                   -                 -          688,610

     Dividend                                                          -           (397,861)       (397,861)

     Acquisition of franchise                                          -            100,113         110,112

     Unrealized gains, net                                        322,938                -          322,938
                                                             ------------      ------------     -----------
Balance, September 30, 1995                                     1,598,011        11,877,808      24,191,249

     Net income                                                        -          2,546,072       2,546,072

     Exercise of stock options                                         -                 -           33,721

     Dividend                                                          -           (404,925)       (404,925)

     Unrealized loss, net                                        (613,219)               -         (613,219)
                                                             ------------      ------------     -----------
Balance, September 30, 1996                                       984,792        14,018,955      25,752,898
                                                             ============      ============     ===========
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

     For each of the years in the three-year period ended September 30, 1996


                                                                              1996            1995            1994
                                                                        -------------     -----------      ----------
<S>                                                                        <C>                <C>             <C> 
Cash flows from operating activities:
     Net income                                                         $   2,546,072       4,196,213       4,176,171
     Adjustments to reconcile net income to net cash 
        used in operating activities:
           Depreciation and amortization                                    1,163,367         693,960         360,621
           Deferred income taxes                                              303,948        (115,054)         45,826
           Loss on disposal of property and equipment                           8,712           4,090          71,717
           Changes in assets and liabilities:
               Accounts receivable                                           (844,765)        526,684        (732,418)
               Rights to receive                                          (11,378,557)     (8,674,688)     (7,504,610)
               Income taxes receivable                                       (307,377)             -               - 
               Prepaid expenses and other current assets                     (326,830)       (137,289)       (408,475)
               Unamortized advertising costs                                  195,733        (260,938)       (278,180)
               Other assets                                                (1,184,052)        177,553        (203,876)
               Accounts payable - Rights to receive                          (148,718)      1,290,739       1,907,463
               Accounts payable - other                                     1,072,781         242,812         592,414
               Income taxes payable                                           (22,600)       (318,739)       (202,293)
               Accrued expenses                                              (255,221)        184,082          43,583
               Deferred membership and renewal fee
                 income                                                     1,235,870       1,347,153         605,155
                                                                        -------------     -----------      ----------
                     Net cash used in operating activities                 (7,941,637)       (843,422)     (1,526,902)
                                                                        -------------     -----------      ----------
Cash flow from investing activities:
     Additions to property and equipment                                   (3,354,572)     (2,020,055)     (1,687,478)
     Purchase of securities available for sale                                     -               -         (180,000)
     Proceeds from sale of property and equipment                                 500              -            6,500
                                                                        -------------     -----------      ----------
                     Net cash used in investing activities                 (3,354,072)     (2,020,055)     (1,860,978)
                                                                        -------------     -----------      ----------
Cash flows from financing activities:
     Net borrowings on note payable to bank under revolving
        line of credit                                                     13,000,000       2,000,000              - 
     Conversion of warrants and options for common stock, net
        of tax benefits                                                        33,721       1,034,868       1,237,931
     Dividends paid                                                          (404,925)       (379,968)       (376,197)
                                                                        -------------     -----------      ----------
                     Net cash provided by financing activities
                                                                           12,628,796       2,654,900         861,734
                                                                        -------------     -----------      ----------

                                      F-5
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

                                                                            1996           1995            1994

                     Net (decrease) increase in cash                    $   1,333,087        (208,577)     (2,526,146)

Cash and cash equivalents, beginning of year                                2,270,322       2,478,899       5,005,045
                                                                        -------------     -----------      ----------
Cash and cash equivalents, end of year                                  $   3,603,409       2,270,322       2,478,899
                                                                        =============     ===========      ==========
Supplemental disclosures of cash flow information:
     Cash paid during the year for:
        Interest                                                        $     580,379          95,135              - 
                                                                        =============     ===========      ==========
        Income taxes                                                    $   1,382,330       2,138,000       2,293,855
                                                                        =============     ===========      ==========
</TABLE>

Supplemental schedule of noncash investing and financing activities:
     Noncash investing and financing activities:
        During the years ended September 30, 1996 and 1995, the Company 
           adjusted its available for sale investment portfolio to fair value;
           resulting in a net (decrease) increase to stockholders' equity of
           ($613,219) and $322,938, net of deferred income taxes.
        On March 20, 1996 and  September 16, 1996,  the Company  declared a 
           cash dividend of $.02 per share of common stock outstanding, payable
           on April 19, 1996 and October 24, 1996, respectively, to
           stockholders' of record at close of business on April 5, 1996 and
           October 10, 1996, respectively. At September 30, 1996, the dividend
           payable of $213,801 is recorded as accrued expenses.
        On March 23, 1995 and  September 18, 1995,  the Company  declared a 
           cash dividend of $.02 per share of common stock outstanding, payable
           on April 21, 1995 and October 19, 1995, respectively, to
           stockholders' of record at close of business on April 7, 1995 and
           October 5, 1995, respectively. At September 30, 1995, the dividend
           payable of $210,263 is recorded in accrued expenses.


See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        September 30, 1996, 1995 and 1994


(1)      DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (A)    DESCRIPTION OF BUSINESS

                Transmedia Network Inc. and subsidiaries' (the "Company") main
                business activity is to acquire rights to receive goods and
                services from restaurants and other establishments ("Rights to
                receive"), which are then sold to the Company's cardholders for
                cash. These Rights to receive are primarily purchased by the
                Company for cash.

                The Company's primary area of operations includes the Central
                and Southeast Florida area, the New York and Chicago
                metropolitan areas, Boston and Philadelphia, as well as its
                surrounding areas, including Delaware, also Detroit,
                Indianapolis, Milwaukee, Denver and Phoenix. Franchised areas
                include most of New Jersey, Washington, D.C., Maryland,
                Virginia, Texas, Oregon, North and South Carolina; Atlanta,
                Georgia, and parts of Tennessee, and California, including parts
                of Nevada and the state of Washington. Licensing arrangements
                exist for the United Kingdom, Canada, and Europe, as well as the
                Asia-Pacific region.

                Transmedia Network Inc.'s corporate structure consists of three
                wholly owned subsidiaries: Transmedia Restaurant Company Inc.,
                is in charge of all restaurant-oriented functions of the
                Company; TMNI International Incorporated is responsible for all
                foreign licensing; and Transmedia Service Company Inc. which is
                responsible for all card member-related facets of the business,
                including the card member service center and domestic
                franchising. All intercompany accounts and transactions have
                been eliminated in consolidation.

         (B)    RIGHTS TO RECEIVE

                Rights to receive ("Rights") are composed primarily of food and
                beverage credits from restaurants. Rights are stated at the
                gross amount of the commitment to the establishment
                (approximately 50 percent of the retail value of Rights
                obtained). Accounts payable-Rights represent the unfunded
                portion of the total commitments. Cost is determined by the
                first-in, first-out method. The Company reviews the
                realizability of the Rights on a periodic basis, provides for
                write-offs of rights to receive and write-off of Rights from
                restaurants that have ceased operations or whose credits are not
                utilized by cardholders. These write-offs are offset by
                recoveries from restaurants.

         (C)    SECURITIES AVAILABLE FOR SALE

   
                The company classifies any debt and marketable equity securities
                in one of three categories: trading, available for sale, or held
                to maturity. Securities available for sale are recorded at fair
                value. Realized gains and losses from the sale of securities
                available for sale are computed using the specific
                identification method. Unrealized gains and losses, net of the
                related tax effects, on securities are recorded as a separate
                component of stockholders' equity until realized.
    

                                      F-7
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         (D)    PROPERTY AND EQUIPMENT

                Property and equipment are stated at cost. Depreciation on
                property and equipment is calculated using the straight-line
                method over the estimated useful lives of the assets.
                Amortization of leasehold improvements is calculated over the
                shorter of the lease term or estimated useful life of the asset.

         (E)    DEFERRED MEMBERSHIP AND RENEWAL FEE INCOME AND UNAMORTIZED 
                ADVERTISING COSTS

                Deferred membership and renewal fee income is billed in advance
                and amortized, straight-line, over the period of membership.
                Deferred membership and renewal fee income, is classified as a
                noncurrent liability since working capital will not be required
                as the deferred income is recognized over future periods.

   
                Certain costs of acquiring cardmembers are deferred and
                amortized, on a straight-line basis, over 12 months, which is
                the initial cardholder membership period. The advertising costs
                capitalized as assets by the Company represent initial
                fee-paying member acquisition costs resulting from
                direct-response campaign costs which are recorded as incurred.
                Campaign costs include incremental direct costs of
                direct-response advertising, such as printing of brochures,
                campaign applications and mailings; as well as, payroll and
                payroll-related costs paid to employees directly related to the
                campaigns and to outside sources. Such costs are deferred only
                to the extent of membership fees generated by the campaign.
    

                Card member acquisition expenses represent the cost of acquiring
                cardmembers and consist primarily of direct-response advertising
                costs.

         (F)    FRANCHISE AND LICENSE FEE INCOME

                Continuing franchise fee revenue is based on the franchisees'
                sales and are recognized when earned.

                Initial franchise fees and license fees are recognized when
                material services or conditions relating to the sale have been
                substantially performed. Initial franchise fees and license fees
                consist of the following:
<TABLE>
<CAPTION>

                                                                         September 30,
                                                          ------------------------------------------
                                                               1996            1995       1994
                                                               ----            ----       ----

<S>                                                        <C>              <C>          <C>      
               Initial franchise and license fees          $  75,000        725,000      1,680,000
               Initial franchise and license expenses         44,900       (116,789)      (208,000)
                                                              ------       --------     ----------

                                                           $  30,100        608,211      1,472,000
                                                              ======        =======      =========
</TABLE>


                                      F-8
<PAGE>


                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         (G)    NET SALES

                Net sales represent the retail value usage of the rights to
                receive sold, less the 20-30 percent discount offered to the
                Company's cardholders.

   
         (H)    COMMISSION INCOME
    

                Commission income represents income for advertising services
                provided by the Company to restaurants or other establishments,
                other than services derived from the purchase of rights to
                receive in advance.

         (I)    INCOME PER COMMON AND COMMON EQUIVALENT SHARE

                Primary income per common and common equivalent share is
                computed by dividing net income by the weighted average number
                of common stock outstanding and common stock equivalents. Fully
                diluted income per share computation reflects the effect of
                common shares contingently issuable upon the exercise warrants
                in periods in which such exercise would cause dilution. Fully
                diluted income per share also reflects additional dilution
                related to stock options due to the use of the market price at
                the end of the period, when higher than the average price for
                the period.

   
         (J)    INCOME TAXES
    

                The Company recognizes deferred tax liabilities and assets for
                the expected future tax consequences of events that have been
                included in the financial statements or tax returns. Under this
                method, deferred tax liabilities and assets are determined based
                on the difference between the financial statement and tax basis
                of assets and liabilities using enacted tax 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 recognized in income in the period that includes the
                enactment date.

   
         (K)    CASH AND CASH EQUIVALENTS

                Cash and cash equivalents are instruments with original
                maturities at the date of purchase of three months or less.
    

         (L)    RECLASSIFICATION

                Certain prior year amounts have been reclassified to conform
                with the 1996 presentation.

         (M)    NEW ACCOUNTING PRONOUNCEMENTS

                (I)    ACCOUNTING FOR STOCK-BASED COMPENSATION

                       On October 23, 1995, the FASB issued Statement No. 123,
                       "ACCOUNTING FOR STOCK-BASED COMPENSATION" ("FAS 123").
                       This Statement applies to all transactions in which an
                       entity acquires goods or services by issuing equity
                       instruments or by

                                      F-9
<PAGE>


                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                       incurring liabilities where the payment amounts are based
                       on the entity's common stock price. The Statement covers
                       transactions with employees and nonemployees and is
                       applicable to both public and nonpublic entities.
                       Entities are allowed (1) to continue to use the
                       Accounting Principles Board Opinion No. 25 method ("APB
                       25"), or (2) to adopt the FAS 123 fair value based
                       method. Once the method is adopted, an entity cannot
                       change and the method selected applies to all of an
                       entity's compensation plans and transactions. For
                       entities not adopting the FAS 123 fair value based
                       method, FAS 123 requires pro forma net income and
                       earnings per share information as if the fair value based
                       method has been adopted. For entities not adopting the
                       fair value based method, the disclosure requirements of
                       FAS 123, including the pro forma information, are
                       effective for financial statements for fiscal years
                       beginning after December 15, 1995. The pro forma
                       disclosure are to include all awards granted in fiscal
                       years that begin after December 15, 1994. However, the
                       disclosures, including the pro forma net income and
                       earnings per share disclosures, for the fiscal year
                       beginning after December 15, 1994 will not be included in
                       that year's financial statements but will be included in
                       the following year-end financial statements if the first
                       fiscal year is presented for comparative purposes.
                       Management has determined that it will follow the
                       accounting method for APB 25 for employees and that the
                       effect of FAS 123 for nonemployees is not significant.
                       FAS 123 will be adopted by the Company as of October 1,
                       1996.

               (II)    ACCOUNTING FOR TRANSFERS OF SERVICING OF FINANCIAL 
                       ASSETS AND EXTINGUISHMENTS OF LIABILITIES

                       In June 1996, the FASB issued Statement of Financial
                       Accounting Standards No. 125 ("FAS 125"), "ACCOUNTING FOR
                       TRANSFERS OF SERVICING OF FINANCIAL ASSETS AND
                       EXTINGUISHMENTS OF LIABILITIES." FAS 125 provides
                       accounting and reporting standards for transfers and
                       servicing of financial assets and extinguishments of
                       liabilities based on a financial-components approach that
                       focuses on control. FAS 125 is effective for transfers
                       and servicing of financial assets and extinguishments of
                       liabilities occurring after December 31, 1996 and is to
                       be prospectively applied. The Company believes that the
                       adoption of FAS 125 will have no impact on its financial
                       statements.


                                      F-10
<PAGE>
<TABLE>
<CAPTION>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(2)      PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

                                                                                           ESTIMATED
                                                                 SEPTEMBER 30,            USEFUL LIVES
                                                          -----------------------------   -------------
                                                               1996            1995
                                                               ----            ----

<S>                                                   <C>                   <C>           <C>    
                 Furniture and fixtures               $      354,502        169,875       5 years
                 Office equipment                          7,386,056      4,334,136       5 years
                 Leasehold improvements                       53,791         61,272    Life of lease
                                                         -----------    -----------
                                                           7,794,349      4,565,283
                 Less accumulated depreciation            (2,130,656)    (1,093,583)
                                                           ---------      ---------

                                                      $    5,663,693      3,471,700
                                                           =========      =========
</TABLE>

         Depreciation and amortization expense for the years ended September 30,
         1996 and 1995 was $1,153,367 and $683,960, respectively.

(3)      SECURITIES AVAILABLE FOR SALE

         Securities available for sale are recorded at fair value and consist of
         shares of common stock of various companies with an aggregate cost of
         $280,000 and $280,000 as of September 30, 1996 and 1995. Gross
         unrealized gains were $1,749,625 and $2,685,941 as of September 30,
         1996 and 1995, respectively. Gross unrealized losses were $161,250 and
         $66,250 as of September 30, 1996 and 1995, respectively. There were no
         realized gains or losses for the years ended September 30, 1996 and
         1995.

(4)      FAIR VALUES OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107, "DISCLOSURES ABOUT
         FAIR VALUE OF FINANCIAL INSTRUMENTS," defines the fair value of a
         financial instrument as the amount at which the instrument could be
         exchanged in a current transaction between willing parties, other than
         in a forced or liquidation sale. For the financial instruments shown
         below. The following presents the carrying amount and fair value of the
         Company's financial instruments at September 30, 1996:

                                                   CARRYING            FAIR
                                                    AMOUNT             VALUE
                                                  ----------        ----------

            Rights to receive                 $   37,525,957        37,525,957
                                                  ==========        ==========

            Securities available for sale     $    1,868,375         1,868,375
                                                 ===========       ===========

            Line of credit                    $   15,000,000        15,000,000
                                                  ==========        ==========


                                      F-11
<PAGE>


                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The fair value of the rights to receive is based upon the sale
         described in note 16(a). The fair value of the securities available for
         sale is based upon quoted market prices for these or similar
         instruments. Amounts outstanding under the line of credit are
         considered to be at fair value because the rate of increase fluctuates
         as market conditions charge.

(5)      ALLOWANCE ACCOUNTS

         The following tables describe the activity in the allowance accounts
         for accounts receivable and rights to receive:
<TABLE>
<CAPTION>

                                                                BALANCE,       CHARGED                       BALANCE,
                                                                BEGINNING        TO                           END OF
                                                                 OF YEAR       EXPENSES        WRITE-OFFS      YEAR
                                                              ------------    ---------        ----------    ---------

<S>                                                              <C>           <C>              <C>            <C>
       Accounts receivable:
            Year ended September 30, 1966:
               Allowance for doubtful accounts                 $    15,000       424,807         (424,807)     15,000
                                                                  ========    ==========       ==========    ========

            Year ended September 30, 1995:
               Allowance for doubtful accounts                 $    25,000       332,528         (342,528)     15,000
                                                                  ========    ==========       ==========    ========

            Year ended September 30, 1994:
               Allowance for doubtful accounts                 $    20,000       111,527         (106,527)     25,000
                                                                  ========    ==========       ==========    ========

       Rights to receive:
            Year ended September 30, 1996:
               Allowance for doubtful accounts                  $  900,000     2,074,863       (2,654,863)    320,000
                                                                   =======     =========       ==========     =======

            Year ended September 30, 1995:
               Allowance for doubtful accounts                  $  700,000     2,332,350       (2,132,350)    900,000
                                                                   =======     =========       ==========     =======

            Year ended September 30, 1994:
               Allowance for doubtful accounts                  $  400,000     1,742,633       (1,442,633)    700,000
                                                                   =======     =========        =========     =======

         Write-offs for rights to receive are offset by recoveries from restaurants.
</TABLE>

(6)      STOCK OPTION PLANS

         Under the Company's 1987 Stock Option and Rights Plan (the "1987
         Plan"), the Company may grant stock options and related stock
         appreciation rights to persons who are now or who during the term of
         the 1987 Plan become key employees (including those who are also
         directors) and independent sales agents. Stock options granted under
         the 1987 Plan may either be incentive stock options or nonqualified
         stock options for federal income tax purposes. The 1987 Plan, as
         amended in 1992, provides that the stock option committee of the board
         of directors may grant stock options or stock appreciation rights with
         respect to a maximum of 1,012,500 shares of common stock at a price not
         less than the fair market value at the date of grant for qualified and
         nonqualified stock options. The exercise price under an incentive stock
         option granted to a person owning stock representing more than 10
         percent of the common stock must equal at least 110 percent of the fair
         market value at the date of grant. Options are exercisable beginning
         not less than one year after date of grant. All options expire either
         five or ten years from the date of grant

                                      F-12
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         and each becomes exercisable in installments of 25 percent of the
         underlying shares for each year the option is outstanding, commencing
         on the first anniversary of the date of grant.

         In March 1996, the 1996 Long-Term Incentive Plan (the "1996 Plan") was
         approved for adoption by the Company's stockholders. Under the 1996
         Plan, the Company may grant awards, which may include stock options,
         stock appreciation rights, restricted stock, deferred stock, stock
         granted as a bonus or in lieu of other awards, dividend equivalents and
         other stock based awards to directors, officers and other key employees
         and consultants of the Company. A maximum of 505,966 shares of the
         Company's common stock is included in the 1996 Plan. Stock options
         granted under the 1996 Plan may be either incentive stock options or
         nonqualified stock options for federal income tax purposes. The
         exercise price under an incentive stock option to a person owning stock
         representing more than 10 percent of the common stock must equal at
         least 110 percent of the fair market value at the date of grant.
         Options are excercisable not less than one year after the date of
         grant.

         The following table summarizes the stock options granted and exercised
         during 1996 and 1995:
<TABLE>
<CAPTION>

                                                                             1996           1995
                                                                             ----           ----

<S>                                                                           <C>          <C>    
           Total stock options granted - common stock                         85,000       165,500
                                                                           =========       =======

           Total stock options exercised - common stock                        8,156       221,905
                                                                           =========       =======

           Average exercise price                                          $   4.13       $  1.56
                                                                           ========       =======

           Nonqualified stock options exercised - common stock                   -         208,686
                                                                           =========      ========

              Current windfall tax benefit                                 $     -         688,610
                                                                           =========      ========

           Total warrants converted to common stock                              -            -

              Average exercise price                                       $     -        $  4.56
                                                                           =========      =======
</TABLE>


                                      F-13
<PAGE>
<TABLE>
<CAPTION>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         At September 30, 1996 and 1995, options under the Plans to purchase
         586,373 and 509,529 shares of common stock are outstanding as follows:

                                                       SEPTEMBER 30, 1996
                                               --------------------------------  
                      ISSUANCE                    NUMBER OF            EXERCISE       EXPIRATION
                        DATE                        SHARES               PRICE           DATE
                     ---------                 ------------        ------------       -----------

<S>                                                  <C>           <C>                      <C> 
                March 1992                           26,157        $     3.8889       March 1997
                May 1992                            102,093              4.8333       May 1997
                September 1993                       77,623              7.4445       September 2003
                February 1994                        37,500             12.2500       February 2004
                March 1994                           97,500             15.0000       March 2004
                March 1995                          135,500             12.2500       March 2005
                August 1995                          25,000              9.2500       August 2005
                December 1995                        50,000             10.0000       December 2000
                March 1996                           25,000              7.8750       March 2001
                June 1996                            10,000              8.0000       June 2001
                                                   --------
                                                    586,373
                                                   ========

                                                       SEPTEMBER 30, 1995
                                               --------------------------------  
                      ISSUANCE                    NUMBER OF            EXERCISE       EXPIRATION
                        DATE                        SHARES               PRICE           DATE
                     ---------                 ------------        ------------       -----------

                March 1992                           33,750        $     3.8889       March 1997
                May 1992                            102,093              4.8333       May 1997
                September 1993                       78,186              7.4445       September 2003
                February 1994                        37,500             12.2500       February 2004
                March 1994                           97,500             15.0000       March 2004
                March 1995                          135,500             12.2500       March 2005
                August 1995                          25,000              9.2500       August 2005
                                                   --------
                                                    509,529
                                                   ========

         In addition to the options under the Plan, at September 30, 1996 and
         1995, the Company has issued the following nonqualified options to
         purchase an additional 421,250 and 421,250 shares of common stock
         outstanding as follows:

                                                       SEPTEMBER 30, 1996
                                               --------------------------------  
                      ISSUANCE                    NUMBER OF            EXERCISE       EXPIRATION
                        DATE                        SHARES               PRICE           DATE
                     ---------                 ------------        ------------       -----------

                March 1992                          168,750             3.8889        March 1997
                May 1992                            135,000             4.8333        May 1997
                September 1993                      112,500             7.4445        September 1998
                May 1995                              5,000             11.375        May 2000
                                                  ---------
                                                    421,250
                                                  =========


                                      F-14
<PAGE>


                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                       SEPTEMBER 30, 1996
                                               --------------------------------  
                      ISSUANCE                    NUMBER OF            EXERCISE       EXPIRATION
                        DATE                        SHARES               PRICE           DATE
                     ---------                 ------------        ------------       -----------

                March 1992                          168,750        $    3.8889        March 1997
                May 1992                            135,000             4.8333        May 1997
                September 1993                      112,500             7.4445        September 1998
                May 1995                              5,000             11.375        May 2000
                                                  ---------
                                                    421,250
                                                  =========
</TABLE>

         During 1996 and 1995, expired or canceled stock options totaled -0- and
         17,500, respectively.

(7)      STOCKHOLDERS' EQUITY

         The Company has 1 million authorized shares of preferred stock, $.10
         par value per share; none of which has been issued.

         Effective March 22, 1994, the Company effected a three-for-two stock
         split recorded in the form of a 50 percent stock dividend on its common
         stock. All references to the number of common shares and per common
         share amounts have been restated to reflect the split.

         During March 1994, the Company amended its certificate of incorporation
         to increase the number of shares of authorized common stock from 10
         million to 20 million.

(8)      INCOME TAXES

         The tax effects of the temporary differences that give rise to
         significant portions of the deferred tax assets and liabilities at
         September 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>

                                                                      1996             1995
                                                                   -----------       ---------

<S>                                                                 <C>               <C>
         Deferred tax assets:
              Travel programs                                      $    98,730            -
              Amortization of leasehold improvements                     5,956            -
              Rights to receive                                        132,032         351,000
              Accrued expenses                                            -             84,435
              Accounts receivable                                        6,190           5,850
                                                                     ---------       ---------
                    Total gross deferred tax assets                    242,908         441,285
              Less valuation allowance                                    -               -
                                                                     ---------       ---------
                    Net deferred tax assets                            242,908         441,285
                                                                     ---------       ---------

         Deferred tax liabilities:
              Unrealized gain on securities available for sale         603,582       1,021,679
              Deferred advertising costs                               141,681         210,786
              Property and equipment                                   191,082          21,405
                                                                     ---------       ---------
                    Total gross deferred tax liabilities               936,345       1,248,870
                                                                     ---------       ---------
         Net deferred tax liability                                   (693,437)       (807,585)
                                                                     =========       =========
</TABLE>


                                      F-15
<PAGE>


                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         There was no valuation allowance for deferred tax assets as of
         September 30, 1996 and 1995. The increase/(decrease) in deferred taxes
         related to securities available for sale was (418,097) and $135,611
         during 1996 and 1995, respectively.

         Income tax expense (benefit) for the years ended September 30, 1996 and
         1995 is as follows:
<TABLE>
<CAPTION>

                                                    CURRENT          DEFERRED           TOTAL
                                                  ----------        --------         ----------

<S>             <C>                              <C>               <C>              <C>
                1996:
                     U.S. federal              $     921,553         336,313          1,257,866
                     State and local                 334,999         (32,365)           302,634
                                                  ----------        --------         ----------
                                               $   1,256,552         303,948          1,560,500
                                                   =========         =======          =========

                1995:
                     U.S. federal              $   2,179,357         (75,488)         2,103,869
                     State and local                 618,497         (39,566)           578,931
                                                 -----------        --------        -----------
                                               $   2,797,854        (115,054)         2,682,800
                                                   =========         =======          =========

                1994:
                     U.S. federal              $   2,018,072         195,618          2,213,690
                     State and local                 733,602        (149,792)           583,810
                                                  ----------         -------         ----------
                                               $   2,751,674          45,826          2,797,500
                                                   =========        ========          =========
</TABLE>

         Reconciliation of the statutory federal income tax rate and the
         Company's effective rate for the years ended September 30, 1996, 1995
         and 1994, is as follows:
<TABLE>
<CAPTION>

                                               1996                         1995                        1994
                                     ---------------------------  --------------------------  -------------------------
                                                  % OF PRETAX                  % OF PRETAX                  % OF PRETAX
                                        AMOUNT      EARNINGS         AMOUNT      EARNINGS         AMOUNT      EARNINGS
                                     -----------  -----------    ------------  -----------    ------------  -----------

<S>                               <C>                 <C>        <C>               <C>        <C>               <C>  
        Federal tax rate          $    1,396,276      34.0%      $  2,338,864      34.0%      $  2,371,048      34.0%
        State and local taxes,
             net of federal
             income tax benefit          302,634       7.4            578,931       8.4            583,810       8.4
        Other                           (138,410)     (3.4)          (234,995)     (3.4)          (157,358)     (2.3)
                                      ----------      ----         ----------     -----          ---------     -----

                                  $    1,560,500      38.0%      $  2,682,800      39.0%      $  2,797,500      40.1%
                                       =========      ====          =========      ====          =========      ====
</TABLE>

(9)      FRANCHISE AGREEMENTS

         The Company, as franchiser, has entered into various ten-year
         franchising agreements with franchisees. In accordance with these
         agreements, the Company has agreed to provide marketing, advertising,
         training and other administrative support. All material services or
         conditions relating to the franchise sales have been substantially
         performed or satisfied by the Company as of September 30, 1996. In
         addition, the Company has agreed to grant a territory with at least 625
         full-service restaurants that accept certain major credit cards; and
         will continue to develop trademarks for itself and the system of
         franchisees. The Company also has agreed to pay a commission to the
         franchisees in an amount equal to 40 percent of the initial membership
         cardholders' fees for all new cardholders solicited by the franchisees.


                                      F-16
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The franchisees are responsible for soliciting restaurants and
         cardholders, paying consideration to the restaurants to obtain Rights
         to receive meal and beverage credits, and maintaining adequate
         insurance. During 1994, the Company funded two of its franchisees
         through the issuance of notes receivable totaling $220,000 (included in
         other assets). Such notes are secured by Rights to receive purchased by
         such franchisees in their respective geographic territories. As of
         September 1996, no amounts were outstanding for these notes.

         In consideration for granting the franchises, the franchisees paid the
         Company initial franchise fees and an initial fee to the Company's
         advertising and development fund. Continuing fees to be paid by the
         franchisees are as follows:

               /bullet/   7.5 percent of the total meal credits used within the
                          franchisee's territory.

               /bullet/   2.5 percent of the total meal credits used within the
                          franchisee's territory to be deposited into the
                          advertising and development fund.

               /bullet/   A processing fee of $0.20 per sale transaction slip
                          forwarded to the Company from the franchisee's
                          territory.

               /bullet/   A weekly service charge of $0.23 per participating
                          restaurant in the franchisee's territory.

         As of September 30, 1996 and 1995, the Company maintained $1,897 and
         $1,068, respectively, in its advertising and development fund, which is
         included as cash in the accompanying consolidated financial statements.
         These funds may be used in the Company's sole discretion to meet any
         and all costs of maintaining, administering, directing and preparing
         advertising for purposes of enhancing the franchise system, the
         restaurant card and for soliciting and marketing to restaurants and
         restaurant card holders.

         The Company received 60,000 shares of publicly traded common stock in
         connection with the sale of its fourth and fifth franchise territories
         during 1995, which represented 2.3 percent of the franchisee's 1995
         common stock. There were no franchise territories sold during 1996. The
         shares are included in securities available for sale. In addition, the
         chairman and a director of the Company own 0.3 percent and 6.5 percent
         of the franchisee's common stock, respectively.

(10)     LICENSE AGREEMENTS

         In March 1994, the Company entered into an agreement for an exclusive
         perpetual license of its software and trademark in the Asia-Pacific
         region. In accordance with the agreement, the Company agreed to assist
         the licensee with training relating to sales, administration,
         technology and operations of the business. All material services or
         conditions relating to the license sale had been substantially
         performed or satisfied by the Company as of September 30, 1994. The
         licensee may grant sublicenses in the territory and is responsible for
         the operations of the business in the Asia-Pacific region, including
         procuring member restaurants and providing related services and
         activities throughout the territory.

                                      F-17
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         In consideration for granting the exclusive license, the licensee paid
         the Company in fiscal 1994 a license fee totaling $1,250,000 for the
         master license agreement and has granted to the Company a 5 percent
         equity interest in the new entity which will operate in Australia and
         New Zealand. The shares comprising the equity interest are included in
         securities available for sale. Continuing fees to be paid by the
         licensee are as follows:

               /bullet/   25 percent of any amounts that the licensee receives
                          from any sublicensee within the territory, other than
                          Australia and New Zealand. Such amounts shall include,
                          but not be limited to, royalty payments, transfer fee
                          payments and up-front sublicense fee payments. The
                          portion of the up-front sublicense fee paid to the
                          Company shall not be less than $250,000, unless
                          otherwise agreed to by the Company, and in no event
                          less than $500,000, for each of the People's Republic
                          of China and Japan.

               /bullet/   Royalty of two percent of gross sales of the Australia
                          and New Zealand sublicensee, and 25 percent of any
                          other amounts that the licensee receives from the
                          sublicensee.

         The Company has an agreement for an exclusive perpetual license of its
         software and trademarks in the continent of Europe. In accordance with
         this agreement, the Company agreed to assist the licensee with training
         relating to sales, administration, technology, and operations of the
         business. All material services or conditions relating to the license
         sale have been substantially performed or satisfied by the Company. The
         licensee may grant sublicenses in the territory and is responsible for
         the operations of the business in Europe, including procuring member
         restaurants and providing related services and activities throughout
         the territory.

         In consideration for granting the exclusive license, the licensee paid
         the Company in August 1993 a license fee of $1,125,000 for the master
         license agreement and has granted to the Company a five percent equity
         interest in the new entity which will operate in the United Kingdom.
         Continuing fees to be paid by the licensee are as follows:

               /bullet/   25 percent of any amounts that licensee receives from
                          any sublicensee within the territory, other than the
                          United Kingdom. Such amounts shall include, but not be
                          limited to, royalty payments, transfer fee payments
                          and up-front sublicense fee payments. The portion of
                          the up-front sublicense fee paid to the Company shall
                          not be less than $250,000, unless otherwise agreed to
                          by the Company.

               /bullet/   Royalty of two percent of gross sales of the United
                          Kingdom sublicensee, and 25 percent of any other
                          amounts that the licensee receives from the
                          sublicensee.

         During 1995, the Company received $250,000 from the European licensee
         when it exercised its right to sublicense within the territory.

(11)     LEASES

         The Company leases certain equipment and office space under long-term
         lease agreements.

                                      F-18
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Future minimum lease payments under noncancelable operating leases as
of September 30, 1996 are as follows:

                           YEAR ENDING
                          SEPTEMBER 30,
                          -------------

                               1997                      $       341,872
                               1998                              269,783
                               1999                              230,585
                               2000                              210,707
                               2001                              137,800
                                                              ----------

                   Total minimum lease payments          $     1,190,747
                                                               =========

         Rent expense charged to operations was $386,915, $292,907, and $263,821
         for the years ended September 30, 1996, 1995 and 1994, respectively.

(12)     COMMITMENTS

         On July 14, 1995, the Company entered into an unconditional guaranty
         agreement with a financial institution, to extend credit in the amount
         of $450,000 to a franchisee, which agreement is still outstanding at
         September 30, 1996.

         On October 1, 1994, the Company amended its employment agreement with
         its president through September 30, 1997. The agreement provides for
         salary at an annual rate of $275,000 through September 30, 1995;
         $300,000 through September 30, 1996; and $350,000 through September 30,
         1997, plus 5 percent of the Company's pretax income not to exceed
         $600,000 for the fiscal years ended September 30, 1995 and 1996 and
         $700,000 for the fiscal year ended September 30, 1997. In addition, in
         the event of a sale of the Company, the president has the right to
         resign from his positions with Transmedia within one year and receive
         $1 million upon such resignation.

         On November 24, 1993, the Company also entered into a consulting
         agreement with its president to commence on September 30, 1997 through
         January 1, 2005. The agreement provides compensation at an annual
         amount equal to 50 percent of the sum of the highest base salary and
         bonus received by the president in any year under the employment
         agreement, discussed above, not to exceed in any one year during the
         term of the consulting agreement, 10 percent of the Company's prior
         year's pretax income, but in any event not less than $100,000.

         On October 1, 1994, the Company also amended an employment agreement
         with an executive vice president through September 30, 1997. The
         agreement provides for salary at an annual rate of $180,000 through
         September 30, 1995; $250,000 through September 30, 1996; and $300,000
         through September 30, 1997, plus 3 percent of the increase in the
         Company's pretax income over the prior fiscal year for fiscal years
         1995, 1996 and 1997. In addition, this executive received a $150,000
         signing bonus, forfeitable pro rata over the term of the agreement. In
         the event of a sale of the Company, this executive has the right to
         resign from his positions with Transmedia within one year and receive
         $750,000 upon such resignation.

                                      F-19
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         On October 31, 1994, the Company approved a severance plan for selected
         officers and key employees of the Company. This plan offers one year of
         salary for each year of service with the Company, up to a maximum of
         three years, if, within the two-year period following a change in
         control of the Company, the individual is terminated or voluntarily
         resigns from the Company.

         On December 5, 1995, the Company entered into an employment agreement
         with a vice president through September 30, 1997. This agreement
         provides for salary at an annual rate of $225,000 through September 30,
         1996 and $250,000 through September 30, 1997, and is eligible for a
         performance bonus in each year up to one-third of the annual salary. In
         addition, a $500,000 split dollar life insurance policy, options to
         purchase 50,000 shares of the Company's common stock, and a $500,000
         severance payment in the event of termination following a change in
         control.

(13)     LINE OF CREDIT

   
         The Company maintains a line of credit with a bank to finance the
         purchase of Rights to receive. On January 26, 1996 the Company
         increased the line of credit to $20 million. The facility matures on
         January 26, 1999. As of September 30, 1996 and 1995, $15 million and $2
         million were outstanding under this credit facility, respectively. The
         credit facility has an interest rate of prime and is unsecured. There
         were no conditions under which the line of credit may be withdrawn. As
         a result of the sale of the rights to receive described in note 16(a),
         the outstanding obligation under the line of credit was refinanced and
         the credit facility was terminated on December 24, 1996.
    

(14)     BUSINESS AND CREDIT CONCENTRATIONS

         Most of the Company's customers are located in the New York City and
         Southeast Florida areas. No single customer accounted for more than 5
         percent of the Company's sales in any fiscal year presented.

         No single restaurant's Rights to receive balance was greater than 5
         percent of the total Rights to receive balance at September 30, 1996 or
         1995.

(15)     BUSINESS COMBINATIONS

         On July 1, 1995, the Chicago franchisee (the "franchisee"), was merged
         into the Company, and 278,387 shares of the Company's common stock were
         issued in exchange for all the outstanding common stock of the
         franchisee. The merger was accounted for as a pooling of interests and
         the accompanying financial statements reflect this transaction.

(16)     SUBSEQUENT EVENTS

         (A)    SALE OF RIGHTS TO RECEIVE

   
                On December 24, 1996, the Company made an initial transfer of
                $33 million of its rights-to-receive to a special purpose
                corporation ("SPC"), an indirect wholly owned subsidiary, as
                part of a revolving securitization. The rights-to-receive, which
                were sold to the SPC without recourse, were in turn transferred
                to a limited liability corporation ("Issuer"), which issued $33
                million of fixed rate securities in a private placement to
                various third party 
    

                                      F-20
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


   
                investors. In exchange for the rights-to-receive, which have a
                retail value of approximately $66 million before cardmember
                discounts, the Company will receive approximately $32 million,
                after transaction costs, and a one percent equity interest in
                the Issuer. Future excess cash flows, expected to be generated
                from the securitized assets as the rights-to-receive are
                exchanged for meals by Company cardholders, are to be remitted
                to the Company on a monthly basis as a return on capital from
                the Issuer. Excess cash flows are determined after payments of
                interest to noteholders and investors, as well as trustee and
                servicing fees. It is anticipated that the net revenue from
                securitized assets will be received in approximately the same
                amount and within the same time frame that such revenue would
                have been received had the securitization not taken place.

                The private placement certificates have a five-year term before
                amortization of principal. During this revolving period, the
                Issuer is responsible for the ongoing purchase of
                rights-to-receive from the Company to ensure that the initial
                pool of $33 million is continually replenished as the
                rights-to-receive are utilized by cardholders. It is anticipated
                that replenishment of rights-to-receive will provide for a
                continuous stream of additional net revenue throughout the
                period.

                The Company's intention in executing the revolving
                securitization transaction was to provide current liquidity, as
                well as a platform for future growth, at a cost of funds lower
                than has been historically available to the Company. This was
                accomplished by, among other things, isolating the
                rights-to-receive beyond the reach of the Company or its
                creditors in the event of bankruptcy or other receivership
                through a transfer of assets that constitutes a true sale at
                law. It was also the Company's belief that the structure of the
                transaction provided for derecognition of the rights-to-receive
                and treatment of the securitization as off-balance sheet
                financing under generally accepted accounting principles.

                In March 1997, the Company was advised by the SEC staff that
                while the transfers of assets may be a true sale under
                applicable legal principles, the second transfer of assets from
                the SPC to the Issuer should not be characterized as a sale
                under applicable generally accepted accounting principles, thus
                precluding the derecognition of the rights-to-receive and
                resulting in the presentation of the transaction as secured
                nonrecourse financing on the consolidated balance sheet of the
                Company.
    

         (B)    RESTATEMENT OF PRIOR FINANCIAL STATEMENTS

   
                The financial statements for 1994, 1995 and the first three
                quarters of 1996 have been restated to reflect the writedown of
                certain costs of acquiring card members. Previously, to the
                extent that membership and renewal fees were expected to be
                received, the Company had been deferring certain costs of
                acquiring card members and amortizing them over the average life
                of a card member, 24 months. The restatement reflects the
                deferral of costs of acquiring fee paying card members only to
                the extent that initial membership fees are generated and the
                amortization of these costs, as required by generally accepted
                accounting principles, over twelve months, the period of initial
                membership. The impact of the restatement can be seen in
                Footnote 17 to the Consolidated Financial Statements.
    

                                      F-21
<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         (C)    PURCHASE OF FRANCHISE

                On November 15, 1996, The Company entered into a purchase
                agreement with The Western Transmedia Company, Inc. ("Western"),
                a franchisee of the Company. Under the terms of the agreement,
                the Company will reacquire the right to operate its business in
                California, Oregon, Washington and a portion of Nevada. In
                addition, the Company will acquire Western's rights to receive,
                its furniture, fixtures and equipment. The purchase price will
                approximate $7,750,000, of which $4,750,000 represents the cost
                of the franchise. Closing of the proposed transaction is
                expected to take place in January 1997.

(17)     SELECTED QUARTERLY FINANCIAL DATA

         Selected quarterly financial data is as follows:

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED                        YEAR ENDED
                                ---------------------------------------------------------  ---------------
                                SEPTEMBER 30,      JUNE 30,     MARCH 31,    DECEMBER 31,    SEPTEMBER 30,
                                    1996             1996          1996          1995             1996
                                -------------    -----------   ----------    ------------  ---------------

<S>                                <C>              <C>           <C>           <C>             <C>
    Revenue:
         Previously reported  $      N/A          19,746,529    19,304,706    17,338,991        N/A
         As restated               20,830,262     20,343,320    19,740,219    17,670,771       78,584,572

    Gross Profit:
         Previously reported         N/A           7,991,865     7,841,164     6,985,808        N/A
         As restated                8,255,093      8,588,656     8,276,677     7,317,588       33,438,014

    Net Income:
         Previously reported         N/A           1,112,005     1,106,157       906,933        N/A
         As restated                  464,312        839,878       461,295       780,587        2,546,072

    Earnings per share:
         Previously reported         N/A           .11           .11            .09             N/A
         As restated                 .05           .08           .05            .08             .25
</TABLE>

<TABLE>
<CAPTION>

                                                   THREE MONTHS ENDED                        YEAR ENDED       YEAR ENDED
                               -----------------------------------------------------------  -------------  ---------------
                                  SEPTEMBER 30,    JUNE 30,      MARCH 31,    DECEMBER 31,   SEPTEMBER 30,   SEPTEMBER 30,
                                      1995           1995          1995           1994            1995            1994
                               ----------------   ----------    ----------    ------------  -------------  ---------------

<S>                               <C>               <C>           <C>           <C>              <C>            <C>
    Revenue:
         Previously reported  $    17,725,220     16,376,824    16,517,893     14,920,410      65,540,347      50,145,362
         As restated               17,964,875     16,565,425    16,671,376     15,036,618      66,238,294      50,283,356

    Gross Profit:
         Previously reported        7,039,702      6,478,398     6,544,404      5,989,350      26,051,854      19,673,416
         As restated                7,279,357      6,666,999     6,697,887      6,105,558      26,749,801      19,811,410

    Net Income:
         Previously reported        1,090,026      1,173,582     1,196,567      1,167,551       4,627,726       4,406,622
         As restated                  736,295      1,221,446     1,115,971      1,122,501       4,196,213       4,176,171

    Earnings per share:
         Previously reported         .11           .12            .12           .12             .46             .44
         As restated                 .07           .12            .11           .11             .42             .42
</TABLE>


                                      F-22
<PAGE>


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

         None.



PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information called for by Item 10 is set forth under the heading
         "Executive Officers of the Registrant" in Part I hereof and in
         "Election of Directors" in the Company's 1997 Proxy Statement, which is
         incorporated herein by this reference.

ITEM 11.  EXECUTIVE COMPENSATION

         Information called for by Item 11 is set forth under the heading
         "Executive Compensation" in the Company's 1997 Proxy Statement, which
         is incorporated herein by this reference.



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information called for in Item 12 is set forth under the heading
         "Security Ownership of Certain Beneficial Owners and Management" in the
         Company's 1997 Proxy Statement, which is incorporated herein by this
         reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information called for in Item 13 is set forth under the heading
         "Certain Relationships and Related Transactions" in the Company's 1997
         Proxy Statement, which is incorporated herein by this reference.



PART IV

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

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

         (a)(1)   Financial Statements:
                    Transmedia Network Inc.
                    See "Index to Financial Statements" contained in Part II, 
                       Item 8.


                                     - 21 -
<PAGE>



         (a)(2)   Financial Statement Schedules

         No schedules have been included because they are not applicable or the
         required information is shown in the Financial Statements or the Notes
         thereto.

         (a)(3)   Exhibits

DESIGNATION                         DESCRIPTION

2.1      Assignment and Assumption of Franchise Agreements dated September 30,
         1994 between Transmedia Network Inc. and the Service Company.(1)

2.2      Capital Contribution dated September 30, 1994 by Transmedia Network
         Inc. to the Service Company.(1)

2.3      Trademark Contribution dated September 30, 1994 from Transmedia Network
         to the Service Company.(1)

2.4      Capital Contribution dated September 30, 1994 from Transmedia Network
         Inc. to the Restaurant Company.(1)

2.5      Administrative Services Agreement dated as of September 30, 1994
         between Transmedia Service Company Inc. and Transmedia Restaurant
         Company Inc.(1)

2.6      Franchise Agreement dated September 30, 1994 between Transmedia Service
         Company Inc. and Transmedia Restaurant Company Inc.(1)

3.1      Certificate of Incorporation of the Company, as amended.(2)

3.2      Certificate of Amendment to the Certificate of Incorporation of the
         Company.(9)

3.3      Certificate of Amendment to the Certificate of Incorporation of the
         Company, as filed with the Delaware Secretary of State on March 22,
         1994.(1)

3.4      By-Laws of the Company.(3)

10.2     1987 Stock Option and Rights Plan, as amended.(1)(10)

10.3     Form of Stock Option Agreement (as modified) between the Company and
         certain Directors and Schedule of Options granted and outstanding (as
         of September 30, 1995) to such Directors pursuant to the respective
         Stock Option Agreements with such Directors.(10) (11)

10.4     Amended and Restated Employment Agreement dated as of November 15, 1996
         between the Company and Melvin Chasen.(12)


                                     - 22 -
<PAGE>



10.5     Amended and Restated Consulting Agreement dated as of November 15, 1996
         between the Company and Melvin Chasen.(12)

10.6     Employment Agreement effective April 1, 1992 between the Company and
         James Callaghan.(9) (10)

10.7     Amendment dated October 1, 1994, to Employment Agreement between the
         Company and James Callaghan.(1)(10)

10.8     Employment Agreement dated as of October 1, 1995 between the Company
         and Barry Kaplan. (10)(12)

10.9     Master License Agreement dated December 14, 1992 between the Company
         and Conestoga Partners, Inc.(8)

10.10    First Amendment to Master License Agreement dated April 12, 1993,
         between the Company and Conestoga Partners, Inc.(9)

10.11    Second Amendment to Master License Agreement -- Assignment and
         Assumption Agreement dated August 11, 1993 among the Company, TMNI
         International Incorporated and Transmedia Europe, Inc.(9)

10.12    Master License Agreement Amendment No. 3 dated November 22, 1993
         between TMNI International Incorporated and Transmedia Europe, Inc.(9)

10.13    Master License Agreement dated March 21, 1994 between TMNI
         International Incorporated and Conestoga Partners II, Inc. licensing
         rights in the Asia Pacific region.(1)

10.14    Agreement, dated as of December 6, 1996, among the Company, TMNI
         International Incorporated, Transmedia Europe Inc. and Transmedia Asia
         Pacific Inc.(12)

10.15    Agreement, dated as of November 15, 1996 between the Company and The
         Western Transmedia Company Inc.(12)

21.1     Subsidiaries of Transmedia Network Inc.(1)

23.1     Consent of Independent Auditors.(13)

99.1     Prospectus of the Company dated July 10, 1992 filed pursuant to the
         Securities Act of 1933.(5)

99.2     Prospectus of the Company dated August 12, 1992 filed pursuant to the
         Securities Act of 1933.(6)


                                     - 23 -
<PAGE>



99.3     Form of Subscription Agreement.(7)

99.4     Agency Agreement dated April 9, 1992 between the Company and Janney
         Montgomery Scott Inc.(8)

99.5     Warrant Purchase Agreement dated June 15, 1992 between the Company and
         Janney Montgomery Scott.(8)

_________________

         (1)      Filed as an exhibit to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994 and
                  incorporated by reference.

         (2)      Filed as an exhibit to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1988, and
                  incorporated by reference thereto.

         (3)      Filed as an exhibit to the Post Effective Amendment to the
                  Registration Statement on Form S-1 (Registration No. 33-5036),
                  and incorporated by reference thereto.

         (4)      Filed as an exhibit to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1990, and
                  incorporated by reference thereto.

         (5)      Filed as an exhibit to the Company's Registration Statement on
                  Form S-8 (Registration No. 33-494460), and incorporated by
                  reference thereto.

         (6)      Filed as an exhibit to the Company's Registration Statement on
                  Form S-3 (Registration No. 33-49374), and incorporated by
                  reference thereto.

         (7)      Filed as an exhibit to the Company's Form 8-K Current Report
                  dated June 15, 1992, and incorporated by reference thereto.

         (8)      Filed as an exhibit to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1992, and
                  incorporated by reference thereto.

         (9)      Filed as an exhibit to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1993, and
                  incorporated by reference thereto.

         (10)     Management contract or compensatory plan or arrangement
                  required to be filed as an exhibit to this Annual Report on
                  Form 10-K pursuant to Item 14(c) hereof.

         (11)     Filed as an exhibit to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1995 and
                  incorporated by reference.

         (12)     Filed as an exhibit to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1996, and
                  incorporated by reference.

         (13)     Filed as an exhibit hereto.


                                     - 24 -
<PAGE>



         (b)      The Company did not file any Form 8-K Current Reports during
                  the fiscal year ended September 30, 1995.

         (c)      Exhibits:

                  See paragraph (a) (3) above for items filed as exhibits to
                  this Annual Report on Form 10-K as required by Item 601 of
                  Regulation S-K.

         (d)      Financial Statement Schedules:

                  See paragraphs (a)(1) and (a)(2) above for financial statement
                  schedules and supplemental financial statements filed as part
                  of this Annual Report on Form 10-K.

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 NETWORK INC.



                                               By: /S/MELVIN CHASEN
                                               ------------------------------
                                               Melvin Chasen, President
                                               and Chief Executive Officer

Dated:  April 24, 1997


                                     - 25 -
<PAGE>

                               INDEX TO EXHIBITS


EXHIBIT
NUMBER                   DESCRIPTION
-------                  -----------

23.1           Consent of Independent Auditor

27             Financial Data Schedule