SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K/A-2
                                   (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, 1997

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 1-13806

                             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:

      TITLE OF EACH CLASS                                NAME OF EACH EXCHANGE
      -------------------                                 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  _


<PAGE>

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.

Aggregate market value of voting stock held by non-affiliates of the Registrant
as of December 16, 1997: $52,048,482.

Number of shares outstanding of Registrant's Common Stock, as of December 16,
1997: 10,359,956.

DOCUMENTS INCORPORATED BY REFERENCE:

           None.

                                       2

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

GENERAL

Transmedia Network Inc., (The "Company") is a marketing company that selectively
issues the TRANSMEDIA/Registered trademark/ Card which is designed to provide
its members with a convenient way to save on the purchase of quality products
and services. Individual and business members accrue savings from a menu of
purchase options, the benefits of which may be utilized in a variety of ways.
Initially created to provide the membership with savings at restaurants, the
program has been expanded to include hotels and resorts, travel and a host of
other leisure time activities. Additionally, the Company offers access to
discount long distance telephone service and discount programs for the purchase
of merchandise from selected retailers.

The Company's operations are transaction driven. Through the advance purchase at
wholesale of "rights-to-receive" from merchants by its sales force, the Company
is able to resell the credits to its cardmembers at savings from retail prices.
The Company earns additional commission income by offering its growing value-and
savings-oriented membership with an array of other goods and services. In
addition, merchants enjoy the ability of analyzing results from the co-marketing
programs.

The Company has recently introduced Transmedia Travel, an exclusive cardmember
booking service, through an affiliation with a major travel agency. Cardmembers
may now book various prepaid packaged vacations such as cruises, tours,
all-inclusive resorts, charter vacations and sports holidays and earn dining
credits (redeemable through use of the Transmedia Card) equal to 10% of the cost
of the vacation.

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 Restaurant Company Inc. which is responsible for obtaining
         and servicing restaurants and obtaining other locations and service
         establishments such as hotels, resort destinations and retailers where
         the Transmedia Card may be used.

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



                                       3
<PAGE>

/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.

/bullet/ TNI Funding I, Inc., which was established as a special purpose
         corporation for purposes of the securitization of cash advances to
         merchants referred to as rights-to-receive.

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-five percent
(95%) 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.

The Transmedia Card is selectively 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, a Turn Meals into Miles/Registered
trademark/ program which offers mileage credits with Continental Airlines, US
Airways and United Airlines of 10 miles for each dollar spent on food and
beverage at participating establishments for an annual 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. The Company recently introduced a "family of savings"
concept through a silver and gold Transmedia Card program designed to replace
the existing 25% savings / $50 fee program. Both the silver and gold programs
are fee based, offer 25% savings at participating establishments and entitle the
cardmember access to additional benefits and savings at either no-cost or a
reduced fee depending upon the cardmembers' election. The silver program retails
for $29.95 and the gold program for $59.95.

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.

                                       4
<PAGE>

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, 1997, the Company had franchises in the following
territories: a large part of New Jersey, the Washington, D.C./Baltimore,
Maryland metropolitan area, Dallas, Ft. Worth, San Antonio and Houston, Texas,
the States of Virginia, North Carolina, South Carolina, and Atlanta, Georgia and
eastern Tennessee. The Company has also granted a certain third party an option
to acquire a franchise for the State of Hawaii. The Company has determined that
it will no longer offer franchises at various locations throughout the United
States. In January 1997, the Company purchased certain of the assets of The
Western Transmedia Company, Inc., the Company's franchisee in the States of
California, Nevada, Oregon and Washington and now conducts the West Coast
operation directly. The Company has entered into an agreement to acquire the
rights-to-receive of East American Trading Company, its franchisee in the
Carolinas, Georgia and eastern Tennessee, and to terminate and cancel the
franchise. After the completion of this transaction in December 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 a minimum number of 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 pays to the Company (i) a one-time franchise fee which varies based
upon the number of full-service restaurants located within the territory granted
to the franchisee, and (ii) 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.

U.S. LICENSING

In November 1995, the Company entered into a license arrangement under which a
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 was ten years, with a potential renewal period of
ten years and under this arrangement, the Company compensated the licensee
through a commission. In December 1996, the Company terminated the license
agreement.

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 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)

                                       5
<PAGE>

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 (i) paid the Company One Million Two
Hundred Fifty Thousand Dollars ($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 discount savings program in Europe and, to a lesser extent, in the
United States. Upon closing of the Countdown acquisition, the Company received
$250,000 in cash and a $500,000 note bearing interest at 10%, which is payable
on April 1, 1998. At the Company's option, the note may be converted into stock
of the licensees.

AREAS OF OPERATION

The Company's areas of operation include Central and South Florida, the New
York, Chicago and Los Angeles metropolitan areas, Boston and surrounding New
England, Philadelphia, San Francisco, Detroit, Indianapolis, Milwaukee, Denver,
Phoenix and effective December 16, 1997, North and South Carolina; Atlanta,
Georgia and parts of Tennessee. Franchised areas include most of New Jersey,
Washington, D.C., Maryland, Virginia and Texas. Licensing arrangements exist for
the United Kingdom, Canada, and Europe, as well as the Asia-Pacific region.

                                       6
<PAGE>

PARTICIPATING RESTAURANTS AND CARDMEMBERS

As of September 30, 1997, directories published by the Company, which are
distributed to cardmembers six times a year, listed 7,087 restaurants available
to cardmembers, and The Transmedia Card was held by an aggregate of 1,298,061
cardmembers, comprised of 904,507 accounts with an average of 1.44 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, 1993 though 1997:

                  1997      1996       1995       1994      1993
------------------------------------------------------------------
Restaurants        7,087     6,974      5,330      3,628     2,328
------------------------------------------------------------------
Cardmembers    1,298,061   924,418    593,161    395,968   197,166

As the table indicates, the number of restaurants listed in directories
published by the Company has risen nearly 4,759 (304%) during the fiscal years
ended September 30, 1993 through September 30, 1997. The number of cardmembers
has increased 1,100,895 for the same period.

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 16, 1997, the Company employed 167 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 merchants, such as restaurants, hotels and other
applicable service establishments. Competitors include discount programs offered
by major credit card companies, 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. The
Company has experienced increased competition in its core dining business in
recent years as variations on the basic discount dining concept have been
introduced. Such variations include restricted usage programs and registered
credit card programs, as well as different levels of discounts and cash advances
to merchants. 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.

                                       7
<PAGE>

ITEM 2.  PROPERTIES

The Company's present executive office consists of 13,096 square feet, located
in Miami, Florida, which the Company occupies pursuant to a lease expiring on
February 28, 2002 and which provides for an annual base rental of $270,825. The
Company's Miami office also houses the Company's cardmember service center. 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 rent 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 increasing by approximately $600 each year
thereafter. In Detroit, the Company leases an executive office for a
fifteen-month period which began on February 1, 1997 at an annual fee of $7,589.
In Tampa, the Company leases an executive office for a twelve-month period which
began on July 1, 1997. The total rental for the thirteen month period is $8,616.
In Phoenix, the Company leases an executive office for a twelve-month period
which began on February 1, 1997 for a total rent of $12,600 for the twelve
months. In San Francisco, the Company assumed a lease for approximately 3,000
square feet, at an annual rent of $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, the Company extended its assumed lease for an
additional year at a monthly base rent of approximately $4,568. The lease will
expire on January 31, 1998.

ITEM 3.  LEGAL PROCEEDINGS

In December 1996, the Company terminated its license agreement (the "Agreement")
with Sports & Leisure Inc. ("S&L"). In February 1997, S&L commenced an action
against the Company in the 11th Judicial Circuit, Dade County, Florida, alleging
that the Company improperly terminated the S&L license agreement and seeking
money damages. The Company has counterclaimed against S&L for breach of the
Agreement and intends to pursue the action vigorously. Management does not
expect the outcome of this case to have a material adverse impact on the
financial position, cash flows or operating results of the Company.

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

During the quarter ended September 30, 1997, 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    69
                       and Chief Executive Officer
James M. Callaghan     Director and Vice President; President of     58
                       Transmedia Restaurant Company Inc.
Barry S. Kaplan        Director and Vice President;                  39
                       President of Transmedia Service Company Inc.

                                        8
<PAGE>

Stephen E. Lerch       Executive Vice President and                  43
                       Chief Financial Officer
Paul A. Ficalora       Executive Vice President                      46
                       of Transmedia Restaurant Company Inc.
Gregory Borges         Treasurer                                     61
Kathryn Ferara         Secretary                                     41

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. He was President of TMNI International Incorporated, a subsidiary,
in 1997.

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. Lerch was elected Executive Vice President and Chief Financial Officer of
the Company, as well as Vice President of TMNI International Incorporated,
Transmedia Restaurant Company Inc. and Transmedia Service Company Inc,
subsidiaries, in 1997. Previously, Mr. Lerch was a Partner at Coopers and
Lybrand LLP, where he worked from 1978 to 1997.

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.

BOARD OF DIRECTORS OF THE REGISTRANT

NAME                 POSITION                                     DIRECTOR SINCE
----                 --------                                     --------------
Melvin Chasen        Chairman of the Board, President and                1983
                     Chief Executive Officer of the Company

Jack Africk          Chairman of the Board                               1992
                     Evolution Consulting Group, Inc.

James J. Callaghan   Vice President of the Company and                   1991
                     President of Transmedia Restaurant Company Inc.

                                       9
<PAGE>

Herbert M. Gardner   Senior Vice President                               1983
                     Janney Montgomery Scott, Inc.

Irwin Hochberg       Senior Partner and President                        1987
                     Bloom Hochberg & Co., P.C.

Barry S. Kaplan      Vice President of the Company and                   1996
                     President of Transmedia Service Company Inc.

Henry Seiden         Chairman and Chief Executive Officer                1988
                     The Seiden Group Inc.

Mr. Africk, who was elected a director of the Company in 1992, is the Chairman
of the Board of Evolution Consulting Group, Inc., Boca Raton, Florida. From 1993
to 1995, he was Vice Chairman of the Board of Duty Free International, Inc., and
is currently a director of that company. Until June 1993, Mr. Africk was Vice
Chairman of UST, Inc. and President and Chief Executive Officer of its
subsidiary, United States Tobacco Company. He is also a director of Crown
Central Petroleum Corporation and of Tanger Factory Outlet Centers, Inc.

Mr. Gardner, a director of the Company since 1983, has been employed as a Senior
Vice President of Janney Montgomery Scott, Inc., an investment banking firm, for
more than five years. He was a director of two predecessors of the Company from
1983 through 1987. Mr. Gardner is a director of Shelter Components Corporation,
a supplier to the manufactured housing industry, and Nu Horizons Electronics
Corp., a company which manufactures specialized truck bodies and shuttle buses.
Mr. Gardner is also a director of American Country Hol.dings, Inc.. (formerly
The Western Systems Corp.), which was the Company's franchisee in California,
Oregon, Washington and parts of Nevada until January 1997, a director of TGC
Industries, Inc., a company in the geophysical services industry, a director of
Hirsch International Corp., an importer of computerized embroidery machines, a
developer of embroidery machine application software and a provider of other
services to the embroidery industry, and a director of Chase Packaging, an
agricultural packaging products company.

Mr. Hochberg, a director of the Company since 1987, served as a director of
Transmedia Network Inc., a Colorado corporation ("Transmedia Colorado"), which
was merged into the Company. He has been Senior Partner and President of Bloom
Hochberg & Co., P.C., a firm of Certified Public Accountants, for more than
seven years. He is also a director of Ampal-America Israel Corporation, a
subsidiary of Bank Hapoalim, which finances industrial, financial, commercial
and agricultural enterprises.

Mr. Seiden, a director of the Company since 1988, is presently the Chairman and
Chief Executive Officer of The Seiden Group Inc., an advertising consultant, and
Vice Chairman of Jordan, McGrath, Case & Taylor Inc., an advertising agency. Mr.
Seiden had been the Chairman of Ketchum Advertising, New York, an advertising
agency which is a division of Ketchum Communications, Inc., from 1987 through
1991.

                                       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, 1995 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, 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            --
         December 31, 1996            7.125         4.750           .02
         March 31, 1997               4.875         5.375            --
         June 30, 1997                3.250         5.375           .02
         September 30, 1997           3.250         4.186            --

         The aggregate number of holders of record of the Company's Common Stock
on December 16, 1997 was approximately 3,300.

         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>

<TABLE>
<CAPTION>
ITEM 6.  SELECTED FINANCIAL DATA

                            YEAR ENDED SEPTEMBER 30,
                                   (THOUSANDS)

                                           1997         1996           1995           1994          1993
                                           ----         ----           ----           ----          ----
<S>                                      <C>           <C>            <C>            <C>          <C>
INCOME STATEMENT DATA:

Gross dining sales                       $101,301      $90,076        $78,632        $62,012      $44,820

Net revenues from rights-to-receive        21,232       19,504         15,769         11,899        9,356

Membership and renewal fee income           7,251        6,646          4,081          2,685        1,634
Franchise fee income                        1,438        1,839          1,881          1,061          257
Other income                                1,023          497            423            281           --

Total operating revenues                   30,944       28,486         22,154         15,926       11,247

Total operating expenses                   30,246       23,729         15,809         10,709        7,822

Operating income                              698        4,757          6,345          5,217        3,425

Income (loss) before taxes                   (684)       4,107          6,879          6,974        4,557

Net income (loss)                        $   (424)     $ 2,546        $ 4,196        $ 4,176      $ 2,734
                                         ========      =======        =======        =======      =======
Net income (loss) per share
          Primary                           (0.04)        0.25           0.42           0.42         0.29
          Fully diluted                     (0.04)        0.25           0.42           0.42         0.28

BALANCE SHEET DATA:

Total assets                               72,685       54,514         38,383         28,477       17,903

Long-term debt:
          Recourse                             --       15,000          2,000             --           --
          Non-recourse                     33,000           --             --             --           --

Stockholders' equity                       25,304       25,753         24,191         18,925       12,619

Cash dividends per common share              0.02         0.04           0.04           0.04         0.02
</TABLE>

                                       12
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

 NEW ACCOUNTING PRONOUNCEMENTS

I.       EARNINGS PER SHARE.

In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share" (SFAS No. 128) which establishes standards for
computing and presenting earnings per share (EPS). SFAS No. 128 replaces the
presentation of primary and fully diluted EPS with a presentation of basic and
diluted EPS. Basic EPS is computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that would occur from any
instrument which could result in additional common shares being issued. SFAS No.
128 must be adopted for the Company's fiscal year 1998 and requires restatement
of all prior-period EPS data presented. The adoption will not materially affect
the EPS reported during fiscal year 1997, 1996 or 1995.

II.      REPORTING COMPREHENSIVE INCOME AND DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION

In June 1997, SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131
"Disclosures About Segments of an Enterprise and Related Information" were
issued and are effective for fiscal periods beginning after December 15, 1997
with early adoption permitted. Currently, the Company is evaluating the effects
these statements will have on its financial reporting and disclosures.

RESULTS OF OPERATIONS (1997 VERSUS 1996)

Gross dining sales for the fiscal year ended September 30, 1997 increased 12.5%
to $101,301 as compared to $90,076 for the year ended September 30, 1996. The
sales increase is attributable to an increased base of cardholders and the
acquisition of the Western Transmedia franchise in January 1997. Cardmember
accounts increased 42% to over 900,000 for the year and total cardmembers at
September 30, 1997 were 1,289,061 or 1.4 cardmembers per account. The total
restaurants available to cardmembers remained consistent between years. At
September 30, 1997, the Company had 7,087 restaurants listed in its directories
(6,974 at September 30, 1996), of which 4,922 were in Company-owned sales
territories and 876 were overseas. The increase in Company-owned restaurants
from 4,047 a year ago relates primarily to the acquisition of the California
franchise discussed above. 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 tend to drop sharply because the restaurants, with the
Company's help, have either become successful and no longer require the
Company's financial and marketing resources, the Company chooses not to renew
the restaurant or the restaurant has gone out of business. However, offsetting
this drop are new restaurants that sign on as old ones go out of business,
providing the Company with a continuous flow of new restaurant prospects, and
restaurants that were formerly on the program often sign on again as they
further expand and/or desire the program's benefits again. The Company believes
that in no area where the Company operates is it close to restaurant or
cardmember saturation. Gross dining sales associated with the Western Transmedia
sales territories, principally Los Angeles, Orange County and San Francisco,
amounted to approximately $7,900 since the acquisition in January 1997. Sales
volume in the New York metropolitan area, the Company's largest market, declined
10% compared to the prior year. Offsetting this decrease were increases in other
large markets such as Chicago, Boston and Detroit, as well as in new markets
such as Phoenix and

                                       13
<PAGE>

Denver. Overall, gross dining sales have not grown proportionately with the
increase in the cardmember base. While the introduction of a 20% discount,
no-fee card in 1996 was very effective in building a desired critical mass of
cardmembers, the no fee cardholders, to date, have not been as active as the
traditional fee-paying cardmembers and spending per account has decreased from
prior years. The Company has instituted a number of programs that make the card
easier to both activate and use and to stimulate more frequent usage. The
initial results from the programs implemented in the latter part of fiscal 1997,
as measured in incremental sales, have been positive, particularly the frequent
dining rewards program. The Company intends to continue to focus on activation
and stimulation of its existing cardholder base to better leverage its card
solicitation investment.

At September 30, 1997, the average Rights to Receive balance per participating
Company restaurant was $8,198 versus $9,220 at September 30, 1996.
Rights-to-receive turnover for fiscal 1997 was 1.3, or 9.2 months on hand,
compared to 1.415, or 8.5 months on hand, in the prior year. The lower turnover
relates to an increase in rights-to-receive in the California marketplace as
additional restaurants have been signed on in the reacquired franchise.
Additionally, the continued development of new markets such as Denver and
Phoenix traditionally take longer to achieve expected turnover. As markets
mature, however, additional cardmembers are acquired and dining usage tends to
stabilize at more predictable levels, allowing for more normal carrying amounts
of rights-to-receive.

Cardmember discounts as a percentage of sales declined to 22.7% from 23.8% in
the 1996 comparable period reflecting the continued growth of new memberships in
the 20% discount category. Provision for rights-to-receive losses, which are
included in cost of sales, amounted to $3,209 in 1997, compared to $2,075 in the
prior year period. Processing fees (i.e., the standard fees established by the
major credit card companies for which the Company is responsible for) based on
transactions processed, declined as a percentage of gross dining sales to 3.2%
from 3.8% in the prior year reflecting economies of scale associated with higher
volume and the Company's quality initiatives.

Membership and renewal fee income increased to $7,251, of which $670 was initial
fee income in 1997, compared to $6,646, of which $1,165 was initial fee income
in 1996. The anticipated decline in initial fee income reflects the Company's
continued focus on marketing the 20% savings, no-fee card which was introduced
in 1996. Offsetting this decrease, however, were strong renewals of the 25%
savings, fee-based cardholders. 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 $1,438 from $1,839.
This decrease resulted primarily from the purchase of the California franchisee
in January 1997. On a same territory basis however, exclusive of California,
franchise dining sales increased 17% over the prior year.

Processing income relates to the Company's full service electronic processing
initiative and comprises the sale or lease of point-of-sale terminals to
merchants, principally restaurants, as well as fees received for serving as the
merchants' processor for all of their credit card transactions.

In 1997, selling, general and administrative expenses were significantly
impacted by the 40% net increase in the cardmember base and the related
increases in gross dining volume and other revenue items. The opening of new
territories in the latter part of fiscal 1996 and the acquisition of the
California franchise in January 1997 resulted in additional costs associated
with establishing five new sales territories. The Company also expanded its
support services infrastructure in fiscal 1997 to address gross dining sales
volume that now exceeds $100 million per year and a cardholder base of almost
1.3 million. Increased expenditures, principally personnel related costs, were
made in important functional areas such as cardmember services, merchant support
for credit card processing and marketing. Overall selling, general and
administrative expenses increased $6,323, or 32.8% over the prior year. As a
percentage of gross dining usage, selling

                                       14
<PAGE>

general and administrative expenses were 25.3% in 1997 compared to 21.4% in
1996. The principal components of the increase include salaries and related
expenses ($6,051 in 1997 versus $4,605 in 1996), depreciation and amortization,
principally on the software development costs ($2,232 in 1997 versus $1,163 in
1996), sales commissions ($2,457 in 1997 versus $1,672 in 1996), postage (2,878
in 1997 versus $2,524 in 1996), office related expenses ($2,688 in 1997 versus
$1,810 in 1996) and legal ($983 in 1997 versus $529 in 1996).

In 1997, cardmember acquisition expenses were $4,650 versus $4,456 in 1996.
Included in cardmember acquisition expenses is the amortization of deferred
advertising costs, which amounted to $670 in 1997 and $1,165 in 1996. Costs
capitalized in 1997 and 1996 were $446 and $969, respectively, again reflecting
the acquisition of fewer fee paying cardmembers and correspondingly, lower
initial fee income. The Company uses various techniques at different levels of
cost to solicit new cardmembers. Solicitation is accomplished through direct
mail, telemarketing and the use of affinity and loyalty programs with major
metropolitan newspapers, charitable and other not-for-profit organizations,
alumnae associations and corporations. Third party and strategic marketing
partners are often utilized on either a fee per acquisition or activation basis
or through wholesaling of the fee based savings card. The Company also generates
a significant amount of new cardmembers internally using its in-house business
development group as well as the sales force in the field. The card is marketed
as an enhancement or additional benefit, on a co-branded basis or most
frequently on a stand alone basis. The mix of solicitation programs used has a
direct correlation to the overall acquisition cost per member and the spending
profile of cardmembers acquired. The Company seeks to employ the most cost
effective means of acquiring active and frequent users of the card.

Operating income in 1997 was $698, a 85.0% decrease from $4,757 in 1996.

Other income, net of expense in 1997 was a net expense amounting to $1,382
versus $650 in 1996, an increased expense of $732. The principal reasons for the
change included $1,719 additional interest expense and financing costs in 1997
as a result of a $33 million securitization transaction that closed in December
1996, offset by $750 of license income from the Company's international
licensees and a $401 increase in interest and other income in 1997.

Earnings before taxes amounted to a loss of $684 in 1997 compared with income of
$4,107 in 1996. The effective tax rate in 1997 and 1996 was 38.0%.

Net loss was $424 or $.04 per share in 1997, versus net income of $2,546 or $.25
per share in 1996.

RESULTS OF OPERATIONS (1996 VERSUS 1995)

Gross dining sales for the fiscal year ended September 30, 1996 increased 14.6%
to $90,076, as compared to $78,632 for the year ended September 30, 1995. The
sales increase was primarily due to an increased number of cardmembers and
restaurants available to cardmembers. Cardmember accounts increased 72% to over
634,000 for the year and total cardmembers at September 30, 1996 were 924,418 or
1.46 cardmembers per account. The total restaurants available to cardmembers
increased to 6,974 from 5,330 a year earlier.

At September 30, 1996, the average Rights to Receive balance per Company
restaurant participating was $9,220 versus $8,592 at September 30, 1995.
Rights-to-receive turnover for fiscal 1996 was 1.415, or 8.5 months on hand,
compared to 1.811, or 6.6 months on hand, in the prior year, reflecting the new
market development initiatives in Denver, Phoenix and Detroit.

Cardmember discounts as a percentage of sales declined to 23.8% from 25.2% in
the 1995 comparable period reflecting the introduction of the 20% discount
no-fee card in January 1996. Provision for rights-to-receive losses, which are
included in cost of sales, amounted to $2,075 in 1996, compared to $2,332 in the
prior year period.

                                       15
<PAGE>

Membership and renewal fee income increased to $6,646, of which $1,165 was
initial fee income in 1996, compared to $4,081, of which $835 was initial fee
income in 1995. Fee income is recognized over a twelve-month period beginning in
the month the fee is received. In 1996, 7% of joining cardmembers paid a fee.
The others joined under no-fee programs. The renewal rate in 1996 and 1995
approximated 55% to 60%.

Continuing franchise fee and royalty income decreased to $1,839 from $1,881.
This slight decrease resulted primarily from the purchase of the Chicago
franchisee in July 1995 offset by an increase, on a same territory basis, in
franchise dining sales over the prior year.

In 1996, selling, general and administrative ("SG&A") expenses increased by
$4,907, as compared to 1995, representing a 34.2% increase. As a percentage of
gross dining usage, selling, general and administrative expenses were 21.4% in
1996 compared to 18.3% in 1995. The main components of the increase included
sales salaries and commissions ($2,362 in 1996 versus $1,866 in 1995), and
salaries expense ($4,230 in 1996 versus $3,604 in 1995). The Company also
incurred $801 of expenses in 1996 associated with the start-up of new
territories operated by the Company compared with $268 in 1995.

In 1996, cardmember acquisition expenses were $4,456 versus $1,443 in 1995.
Included in cardmember acquisition expenses was the amortization of deferred
advertising costs amounting to $1,165 in 1996 and $752 in 1995. Costs
capitalized in 1996 and 1995 were $969, and $1,013, respectively.

Operating income in 1996 was $4,757, a 25.0% decrease from $6,345 in 1995.

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

Earnings before taxes amounted to $4,107 in 1996 compared with $6,879, in 1995.
The effective tax rate in 1996 was 38.0% versus 39.0% in 1995.

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

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital increased to $42,062 at September 30, 1997 from
$32,850 at September 30, 1996. This is due primarily to an increase in the
Company's rights-to-receive of $2,829 and an increase in cash and cash
equivalents of $5,786.

On December 24, 1996, the Company made an initial transfer of $33 million of
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 investors.

In exchange for the rights-to-receive, which have a retail value of
approximately $66 million before cardmember discounts, the Company received
approximately $32 million, after transaction 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 remitted to the Company on a monthly basis as a return on
capital from the

                                       16
<PAGE>

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.
Rights-to-receive currently held by the Issuer, as well as cash and certain
deposits restricted under the securitization agreement, have been separately
depicted in the consolidated balance sheet.

The private placement certificates have a five-year term before amortization of
principal and have an interest rate of 7.4%. 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 historically been available to the Company. The
Company also has the ability to securitize additional tranches or pools of
rights-to-receive in the future at a more economical transaction cost should it
so desire.

Prior to the securitization, the Company maintained a $20 million line of
credit. As a result of the sale of rights-to-receive, described above, the
outstanding obligation under the line of credit was refinanced and the credit
facility was terminated on December 24, 1996. On November 6, 1997, the Company
obtained a new line of credit with a bank for $10 million to be used principally
to finance the purchase of rights-to-receive. This line of credit is unsecured
and may be drawn down based on an advance rate calculated as a percentage of
unrestricted rights-to-receive. The line of credit matures on February 1, 1999
and bears interest at the prime rate with a LIBOR option. There is presently
nothing outstanding under the line.

On November 7, 1997, the Company entered into an agreement to sell 2.5 million
newly-issued common shares and warrants to purchase an additional 1.2 million
common shares for a total of $10.625 million to affiliates of Equity Group
Investments, Inc., a privately held investment company. The warrants will have a
term of five years; one third of the warrants will be exercisable at $6.00 per
share, another third will be exercisable at $7.00 per share and the third and
final will be exercisable at $8.00 per share. As part of this strategic
investment, Equity Group will nominate two candidates for the Board of Directors
who will join three of the Company's existing directors and two new independent
directors.

Capital expenditures by the Company over the past three fiscal years
(approximately $8.8 million) 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 $2.6 million on capital expenditures, consisting primarily
of computer software in fiscal year 1998.

The Company believes that cash on hand at September 30, 1997, together with cash
generated from operations and the existing line of credit, if need be, will
satisfy the Company's total need for cash during the 1998 fiscal year.

The Company's inventory of Rights to Receive increased by $2,829 to a total of
$40,355 at September 30, 1997.

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.

                                       17
<PAGE>

                          Analysis of Rights to Receive

                                          1997         1996          1995
                                          ----         ----          ----
---------------------------------------------------------------------------
Rights to Receive, beginning of year     $37,526      $26,147       $17,473
---------------------------------------------------------------------------
Purchase of Rights to Receive             56,244       59,181        50,294
---------------------------------------------------------------------------
Write-offs of Rights to Receive           (2,764)      (2,655)       (2,132)
                                         --------    ---------     --------
                                          91,006       82,673        65,635
---------------------------------------------------------------------------
Cost of Rights to Receive, included
in cost of sales                          50,651       45,147        39,488
                                         -------     --------      --------
---------------------------------------------------------------------------
Rights to Receive, end of year           $40,355      $37,526       $26,147
                                         =======      =======       =======

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 revenue
growth. Further, management believes that the purchase of Rights to Receive can
be funded generally from cash on hand, operations and the new line of credit, as
well as from funds made available through future securitizations.

Operating activities have resulted in either reduced cash generated from
operations or a net use of cash during the most recent three fiscal years,
principally related to the growth in rights-to-receive. Further expansion into
new markets and planned increases in existing markets could continue this trend
depending on the rate of growth management deems appropriate. As described in
the preceding paragraph, funds generated from operations, supplemented by the
line of credit, if needed, should be sufficient to fund such growth over the
next twelve months.

Cash used in investing activities was $9,450 in the fiscal year ended September
30, 1997, compared with $3,354 used in 1996 and $2,020 used in 1995. 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 and the acquisition of the California
franchise. Management believes that cash to be used in investing activities
associated with capital expenditures in the fiscal year ended September 30, 1998
will approximate $2,600.

Cash flow provided by financing activities was $14,499 for the fiscal year ended
September 30, 1997, compared with cash flows provided by financing activities of
$12,629 in 1996 and $2,655 in 1995. In 1997, the principal source of cash flows
was proceeds from the issuance of secured non-recourse notes relating to the
securitization. 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 was from borrowings under the Company's bank line of credit and from the
exercise of options for common stock.

                                       18
<PAGE>

ITEM 8. FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report                                F - 1

Financial Statements:
    Consolidated Balance Sheets,                            F - 2
      September 30, 1997 and 1996

    Consolidated Statements of Income                       F - 3
      for each of the years in the three-year
      period ended September 30, 1997

    Consolidated Statements of Stockholders'                F - 4
      Equity for each of the years in the three-year
       period ended September 30, 1997

    Consolidated Statements of Cash Flows                   F - 5,6
      for each of the years in the three-year
      period ended September 30, 1997

    Notes to Consolidated Financial Statements              F - 7

    Schedule II - Valuation and Qualifying Accounts         F - 25

                                       19
<PAGE>

KPMG Peat Marwick LLP                                                 1897-1997

450 East Las Olas Boulevard    Telephone 954 524 6000   Telefax 954 462 4836
Fort Lauderdale, FL 33301


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and
  Stockholders
Transmedia Network Inc.:

We have audited the consolidated financial statements of Transmedia Network Inc.
and subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we have also audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and the financial statement
schedule 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 estimated 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, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended September 30, 1997, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

                                        /s/ KPMG Peat Marwick LLP
                                            -----------------------------------
                                            KPMG Peat Marwick LLP

November 13, 1997
Miami, Florida

                                      F-1

<PAGE>

<TABLE>
<CAPTION>
                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           September 30, 1997 and 1996

                                 (in thousands)

                                  ASSETS                                  1997             1996
                                  ------                                  ----             ----
<S>                                                                   <C>                  <C>
Current assets:
     Cash and cash equivalents                                        $     7,223           3,603
     Restricted cash (note 2)                                               2,166               -
     Accounts receivable, net                                               2,260           2,617
     Rights-to-receive, net (note 2)
        Unrestricted                                                        5,110          37,526
        Securitized and owned by Trust                                     35,245               -
     Prepaid expenses and other current assets                              2,279           1,928
                                                                          -------         -------
                   Total current assets                                    54,283          45,674

Securities available for sale, at fair value (note 3)                       1,988           1,868
Equipment held for sale or lease, net (note 4)                                981             712
Property and equipment, net (note 5)                                        7,275           5,664
Other assets                                                                1,375             582
Restricted deposits and investments (note 2)                                1,980               -
Excess of cost over net assets acquired and
      other intangible assets(note 10)                                      4,803              14
                                                                          -------         -------
                   Total assets                                       $    72,685          54,514
                                                                          =======         =======
                   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable - rights-to-receive                             $     4,768           4,784
     Accounts payable - reimbursable tax and tips                             410             485
     Accounts payable - other                                               2,996           2,679
     Accrued expenses                                                         791             773
     Deferred membership fee income                                         3,256           4,103
                                                                          -------         -------
                   Total current liabilities                               12,221          12,824

Secured non-recourse notes payable (note 2)                                33,000               -
Line of credit (note 14)                                                        -          15,000
Other long-term liabilities                                                 2,160             937
                                                                          -------         -------
                   Total liabilities                                       47,381          28,761
                                                                          -------         -------
Commitments (notes 7, 12, 13 and 16)                                            -               -

Stockholders' equity (notes 7 and 8):
     Preferred stock                                                            -               -
     Common stock                                                             204             202
     Additional paid-in capital                                            10,635          10,547
     Unrealized gain on securities available for sale, net (note 5)         1,059             985
     Retained earnings                                                     13,406          14,019
                                                                          -------         -------
                   Total stockholders' equity                              25,304          25,753
                                                                          -------         -------
                   Total liabilities and stockholders' equity         $    72,685          54,514
                                                                          =======         =======
</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, 1997
                     (in thousands, except income per share)

                                                                 1997              1996            1995
                                                                 ----              ----            ----
<S>                                                         <C>                   <C>             <C>
Operating revenue:
     Sales of rights-to-receive:
        Owned by Company                                    $    23,189           90,076          78,632
        Owned by Trust (note 2)                                  78,112                -               -
                                                                -------           ------          ------
             Gross dining sales                                 101,301           90,076          78,632

        Cost of sales                                            57,065           49,096          43,024
        Cardmember discounts                                     23,004           21,476          19,839
                                                                -------           ------          ------
     Net revenue from rights-to-receive                          21,232           19,504          15,769

     Membership and renewal fee income                            7,251            6,646           4,081
     Franchise fee income                                         1,438            1,839           1,881
     Commission income                                              403              497             423
     Processing income                                              620                -               -
                                                                -------           ------          ------
           Total operating revenues                              30,944           28,486          22,154
                                                                -------           ------          ------
Operating expenses:
     Selling, general and administrative expenses                25,596           19,273          14,366
     Cardmember acquisition expenses                              4,650            4,456           1,443
                                                                -------           ------          ------
            Total operating expenses                             30,246           23,729          15,809
                                                                -------           ------          ------
                   Operating income                                 698            4,757           6,345

Other income (expense):
     Initial franchise fee and license fee income, net              740               30             608
     Interest and other income                                      450              172             337
     Interest expense and financing cost                         (2,572)            (852)           (411)
                                                                -------           ------          ------
                   Income (loss) before income taxes               (684)           4,107           6,879

Income tax provision (benefit) (note 9)                            (260)           1,561           2,683
                                                                -------           ------          ------
                   Net income (loss)                        $      (424)           2,546           4,196
                                                                =======           ======          ======
Net income (loss) per common and common equivalent share:
        Primary                                             $      (.04)             .25             .42
                                                                   ====              ===             ===
        Fully diluted                                       $      (.04)             .25             .42
                                                                   ====              ===             ===
Weighted average number of common and common equivalent
   shares outstanding:
        Primary                                                  10,180           10,299          10,112
                                                                 ======           ======          ======
        Fully diluted                                            10,184           10,299          10,112
                                                                 ======           ======          ======
</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, 1997
                                 (in thousands)

                                                          COMMON STOCK           
                                                     ----------------------      ADDITIONAL      UNREALIZED
                                                      NUMBER                      PAID-IN          GAINS        RETAINED
                                                     OF SHARES      AMOUNT        CAPITAL      (LOSSES), NET    EARNINGS     TOTAL
                                                     ---------      ------        -------      -------------    --------     -----
<S>                                                  <C>          <C>             <C>               <C>          <C>         <C>
Balance, September 30, 1994                           9,619       $     192        9,478            1,275         7,980      18,925

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

     Exercise of stock options                          222               4          342                -             -         346

     Income tax benefit related to stock option plan      -               -          689                -             -         689

     Dividend                                             -               -            -                -          (398)       (398)

     Acquisition of franchise                           278               6            4                -           100         110

     Unrealized gains, net                                -               -            -              323             -         323
                                                     ------         -------       ------            -----        ------      ------
Balance, September 30, 1995                          10,119             202       10,513            1,598        11,878      24,191

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

     Exercise of stock options                            8               -           34                -             -          34

     Dividend                                             -               -            -                -          (405)       (405)

     Unrealized loss, net                                 -               -            -             (613)            -        (613)
                                                     ------         -------       ------            -----        ------      ------
Balance, September 30, 1996                          10,127             202       10,547              985        14,019      25,753

     Net loss                                             -               -            -                -          (424)       (424)

     Exercise of stock options                           63               2           64                -             -          66

     Income tax benefit related to stock option plan      -               -           24                -             -          24

     Dividend                                             -               -            -                -          (189)       (189)

     Unrealized gains, net                                -               -            -               74             -          74
                                                     ------         -------       ------            -----        ------      ------
Balance, September 30, 1997                          10,190       $     204       10,635            1,059        13,406      25,304
                                                     ======         =======       ======            =====        ======      ======
</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, 1997
                                 (in thousands)

                                                                  1997         1996        1995
                                                                  ----         ----        ----
<S>                                                             <C>          <C>         <C>
Cash flows from operating activities:
     Net income (loss)                                             (424)       2,546       4,196
     Adjustments to reconcile net income (loss) to net cash
        used in operating activities:
           Depreciation and amortization                          2,232        1,163         694
           Amortization of deferred financing cost                  158            -           -
           Provision for rights-to-receive                        3,209        2,075       2,332
           Deferred income taxes                                   (256)         304        (115)

           Changes in assets and liabilities:
               Accounts receivable                                   90         (845)        527
               Rights-to-receive                                 (3,379)     (13,454)    (11,007)
               Prepaid expenses and other current assets            893         (131)       (398)
               Other assets                                        (363)      (1,175)        181
               Accounts payable - Rights-to-receive                 (17)        (149)      1,291
               Accounts payable - other                             242        1,073         243
               Income taxes receivable (payable)                   (791)        (330)       (319)
               Accrued expenses                                     232         (255)        184
               Deferred membership fee income                      (847)       1,236       1,347
                                                                -------      -------     -------
                     Net cash provided by (used in)
                          operating activities                      979       (7,942)       (844)
                                                                -------      -------     -------
Cash flow from investing activities:
     Additions to property and equipment                         (3,414)      (3,354)     (2,020)
     Acquisition of Western Transmedia                           (7,454)           -           -
     Increase in restricted deposits and investments               (990)           -           -
                                                                -------      -------     -------
                     Net cash used in investing activities      (11,858)      (3,354)     (2,020)
                                                                -------      -------     -------
Cash flows from financing activities:
     Proceeds from issuance of secured
           non-recourse notes                                    31,978            -           -
     Net borrowings (repayments) on revolving line of credit    (15,000)      13,000       2,000
     Increase in restricted cash                                 (2,166)           -           -
     Conversion of warrants and options for common stock, net
        of tax benefits                                              90           34       1,035
     Dividends paid                                                (403)        (405)       (380)
                                                                -------      -------     -------
                     Net cash provided by financing activities   14,499       12,629       2,655
                                                                -------      -------     -------
</TABLE>

                                      F-5                            (Continued)

<PAGE>

<TABLE>
<CAPTION>
                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

                                                                               1997           1996          1995
                                                                               ----           ----          ----
<S>                                                                      <C>                  <C>           <C>
                     Net increase (decrease) in cash                     $      3,620           1,333         (209)

Cash and cash equivalents:
     Beginning of year                                                          3,603           2,270        2,479
                                                                               ------         -------       ------
     End of year                                                         $      7,223           3,603        2,270
                                                                               ======         =======       ======
Supplemental disclosures of cash flow information:

     Cash paid during the year for:
        Interest                                                         $      2,219             580           95
                                                                               ======         =======       ======
        Income taxes                                                     $        764           1,382        2,138
                                                                               ======         =======       ======
</TABLE>

Supplemental schedule of noncash investing and financing activities:
     Noncash investing and financing activities:
        During the years ended September 30, 1997, 1996 and 1995, the Company
           adjusted its available for sale investment portfolio to fair value;
           resulting in a net increase (decrease) to stockholders' equity of
           $74, ($613) and $323, net of deferred income taxes.
        At September 30, 1996 and 1995, dividends payable of $214 and $210,
           respectively, are recorded as accrued expenses. There is no dividend
           payable outstanding as of September 30, 1997.
        The acquisition of the West Coast franchisee in fiscal year 1997 (see
           Note 10) was recorded as follows:

                  Fair value of assets acquired:
                           Rights-to-receive          $2,659
                           Other assets                   45
                           Excess of cost over
                              net assets acquired      5,017
                                                     -------
                                                       7,721
                  Less:  Cash paid                     7,454
                                                     -------
                              Liabilities assumed    $   267
                                                     =======

See accompanying notes to consolidated financial statements.

                                      F-6

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

         (A)    DESCRIPTION OF BUSINESS

                Transmedia Network Inc. and subsidiaries' (the "Company") owns
                and markets a charge card ("the Transmedia Card") offering
                savings to the Company's card members on dining costs as well as
                savings on long distance calls, lodging, travel and retail
                catalogues. The Company's primary business activity is to
                acquire rights-to-receive food and beverage credits from
                restaurants ("Rights-to-receive"), which are then sold for cash
                to holders of the Transmedia card. These Rights-to-receive are
                primarily purchased by the Company for cash but may also be
                acquired in exchange for services.

                The Company's areas of operation include Central and South
                Florida, the New York, Chicago and Los Angeles metropolitan
                areas, Boston and surrounding New England, Philadelphia, San
                Francisco, Detroit, Indianapolis, Milwaukee, Denver and Phoenix.
                Franchised areas include most of New Jersey, Washington, D.C.,
                Maryland, Virginia, Texas, North and South Carolina; Atlanta,
                Georgia, and parts of Tennessee. 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.
                functions as the sales organization and is responsible for
                merchant acquisition and relationship management; TMNI
                International Incorporated is responsible for all foreign
                licensing; and Transmedia Service Company Inc. is responsible
                for all card member-related facets of the business, including
                the card member service center, domestic franchising, and
                support services to Transmedia Restaurant Company. In 1997, TNI
                Funding I, Inc. was established as a special purpose corporation
                as part of the securitization discussed in note 2. TNI Funding
                I, Inc. is a wholly owned subsidiary of Transmedia Service
                Company, Inc. 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 acquired 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 and provides for
                anticipated losses on Rights-to-receive from restaurants that
                have ceased operations or whose credits are not utilized by
                cardholders.

                                      F-7

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

                These losses are offset by recoveries from restaurants
                previously written off.

         (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 on
                securities, net of the related tax effects, are recorded as a
                separate component of stockholders' equity until realized.

         (D)    PROPERTY AND EQUIPMENT

                Property and equipment are stated at cost. Depreciation on
                property and equipment used in the business is calculated on the
                straight-line method over an estimated useful life of five
                years. Amortization of leasehold improvements is calculated over
                the shorter of the lease term or estimated useful life of the
                asset.

                Equipment held for sale or lease consists primarily of
                electronic terminals used for credit card processing and is
                stated at cost. Depreciation is calculated on a straight line
                basis over a three year life.

         (E)    EXCESS OF COST OVER NET ASSETS ACQUIRED

                Excess of cost over net assets acquired, which resulted
                primarily from the purchase of The Western Transmedia Company,
                Inc. (see note 10), is amortized on a straight line basis over
                the expected periods to be benefited, generally 20 years. The
                Company assesses the recoverability of this intangible asset by
                determining whether the amortization of the goodwill balance
                over its remaining life can be recovered through undiscounted
                future operating cash flows of the acquired operation. The
                amount of goodwill impairment, if any, is measured based on
                projected discounted future operating cash flows using a
                discount rate reflecting the Company's average cost of funds.
                The assessment of the recoverability of goodwill will be
                impacted if estimated future operating cash flows are not
                achieved.

         (F)    DEFERRED MEMBERSHIP AND RENEWAL FEE INCOME

                Initial membership and renewal fees are billed in advance and
                amortized on a straight-line basis over 12 months, which
                represents the standard cardholder's membership period.

                                      F-8

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

                Certain costs of acquiring cardmembers are deferred and
                amortized, on a straight-line basis over 12 months. The
                advertising costs capitalized as assets by the Company represent
                initial fee-paying member acquisition costs resulting from
                direct-response campaign costs that are recorded as incurred.
                Campaign costs include incremental direct costs of
                direct-response advertising, such as printing of brochures,
                campaign applications and mailing; 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 initial membership fees generated by the
                campaign.

                Card member acquisition expenses represent the cost of acquiring
                cardmembers and consist primarily of direct-response advertising
                costs incurred in excess of fees received and amortization of
                previously deferred costs.

         G)     REVENUE RECOGNITION

                Gross dining sales represent the retail value of the
                rights-to-receive that are recognized when cardmembers use the
                Transmedia Card at a dining establishment.

                Continuing franchise fee revenue represents royalties calculated
                as a percentage of the franchisees' sales and is recognized when
                earned. Initial franchise fees and license fees are recognized
                when material services or conditions relating to the sale of the
                franchise have been substantially performed.

                Commission income represents income earned on discounted
                products and services provided by third parties to the Company's
                cardholders. Such services consist of retail catalogues, phone
                cards and travel services.

         (H)    COST OF SALES AND CARDMEMBER DISCOUNTS

                Cost of sales is composed of the cost of rights-to-receive sold,
                provision for rights-to-receive losses and related processing
                fees.

                Cardmember discount represents the specific discount given to
                cardmembers whenever the Transmedia Card is used.

                                      F-9

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

         (I)    USE OF ESTIMATES

                Management of the Company has made a number of estimates and
                assumptions relating to the reporting of assets and liabilities
                and the disclosure of contingent assets and liabilities to
                prepare these financial statements in conformity with generally
                accepted accounting principles. Actual results could differ from
                those estimates.

         (J)    STOCK BASED COMPENSATION

                In fiscal 1997, the Company adopted the disclosure only
                provision of Statement of Financial Accounting Standards
                ("SFAS") No.123, "Accounting for Stock-Based Compensation." The
                Company continues to account for its stock compensation
                arrangements using the intrinsic value method in accordance with
                Accounting Principles Board ("APB") Opinion No.25, "Accounting
                for Stock Issued to Employees."

         (K)    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.

         (L)    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.

         (M)    CASH AND CASH EQUIVALENTS

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

                                      F-10

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

         (N)    RECLASSIFICATION

                Certain prior year amounts have been reclassified to conform
                with the 1997 presentation. Deferred membership fee revenue is
                classified as a current liability and electronic processing
                expense previously recorded in general and administrative
                expenses, is now allocated to the specific revenue items.

         (O)    NEW ACCOUNTING PRONOUNCEMENTS

                In February 1997, the Financial Accounting Standards Board
                issued Statement No. 128, "Earnings Per Share" (SFAS No. 128)
                which establishes standards for computing and presenting
                earnings per share (EPS). SFAS No. 128 replaces the presentation
                of primary and fully diluted EPS with a presentation of basic
                and diluted EPS. Basic EPS is computed by dividing income
                available to common shareholders by the weighted-average number
                of common shares outstanding for the period. Diluted EPS
                reflects the potential dilution that would occur from any
                instrument which could result in additional common shares being
                issued. SFAS No. 128 must be adopted for the Company's fiscal
                year 1998 and requires restatement of all prior-period EPS data
                presented. The adoption will not materially affect the EPS
                reported during fiscal year 1997, 1996 or 1995.

                In June 1997, SFAS No. 130 "Reporting Comprehensive Income" and
                SFAS No. 131 "Disclosures About Segments of an Enterprise and
                Related Information" were issued and are effective for fiscal
                periods beginning after December 15, 1997 with early adoption
                permitted. Currently, the Company is evaluating the effects
                these statements will have on its financial reporting and
                disclosures.

                                      F-11

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

(2)      SALE OF RIGHTS-TO-RECEIVE

         On December 24, 1996, the Company made an initial transfer of $33
         million of 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 investors.

         In exchange for the rights-to-receive, which have a retail value of
         approximately $66 million before cardmember discounts, the Company
         received approximately $32 million, after transaction 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 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. Rights-to-receive currently held by the Issuer, as well as cash
         and certain deposits restricted under the securitization agreement,
         have been depicted separately in the consolidated balance sheet.

         The private placement certificates have a five-year term before
         amortization of principal and have an interest rate of 7.4%. 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.

                                      F-12

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

(3)      SECURITIES AVAILABLE FOR SALE

         Securities available for sale consist of marketable equity securities
         that are recorded at fair value and have an aggregate basis of $280 as
         of September 30, 1997 and 1996. Gross unrealized gains were $1,774 and
         $1,750 and gross unrealized losses were $66 and $161 as of September
         30, 1997 and 1996, respectively. There were no realized gains or losses
         for the years ended September 30, 1997, 1996 and 1995. Deferred income
         taxes associated with the net unrealized gains were $649 and $604 at
         September 30, 1997 and 1996, respectively.

(4)      EQUIPMENT HELD FOR SALE OR LEASE

         Equipment held for sale and lease consists primarily of electronic
         terminals used for credit card processing. The cost of the terminals on
         hand is determined on a first in, first out basis. The amount presented
         on the balance sheet represents the net book value of terminals after
         reduction for terminals sold and accumulated depreciation of $172 on
         terminals currently under lease at September 30, 1997. There was no
         depreciation in fiscal 1996.

(5)      PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

                                                             SEPTEMBER 30,
                                                   ---------------------------
                                                        1997            1996
                                                        ----            ----
                 Furniture and fixtures            $       644             355
                 Office equipment                       10,463           7,386
                 Leasehold improvements                    131              54
                                                        ------          ------
                                                        11,238           7,795
                 Less accumulated depreciation
                      and amortization                  (3,963)         (2,131)
                                                        -------         ------
                                                   $     7,275           5,664
                                                        =======         ======

         Depreciation and amortization expense for the years ended September 30,
1997, 1996 and 1995 was $1,812, $1,153 and $684, respectively.

                                      F-13

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

(6)      FAIR VALUES OF FINANCIAL INSTRUMENTS

         The fair value of a financial instrument is the amount at which the
         instrument could be exchanged in a current transaction between willing
         parties. The fair value of cash and cash equivalents, restricted cash,
         accounts receivable, rights-to-receive, securities available for sale,
         accounts payable and notes payable approximate the carrying amounts at
         September 30, 1997 and 1996. The fair value of the rights-to-receive is
         based upon the sale described in note 2. The fair value of the
         securities available for sale is based upon quoted market prices for
         these or similar instruments.

(7)      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 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 exercisable not less than one year after the date of grant.

                                      F-14

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

         At September 30, 1997, there were 275,466 shares available for grant
         under the 1996 Stock Option Plan. The per share weighted average fair
         value of stock options granted during 1997 ranged from approximately
         $2.27 to $3.09 on the dates granted using the Black-Scholes
         option-pricing model with the following weighted-average assumption:
         expected dividend yield is 4%, risk-free interest rate of 5.8%, and
         expected lives ranging from five to ten years.

         The Company has continued to comply with APB No.25 to account for stock
         options and accordingly, no compensation expense has been recognized in
         the financial statements. Had the Company determined compensation
         expense based on the fair value at the grant date for its stock options
         under SFAS No. 123, the Company's net income would have been reduced to
         the pro forma amounts indicated below:

                                                    1997              1996
                                                    ----              ----
           Net Income
              As reported                           (424)             2,546
              Pro forma                             (719)             2,365

           Net Income per Common and Common
           Equivalent Share
              As reported                           (.04)               .25
              Pro forma                             (.06)               .24

         The full impact of the calculation of compensation expense for stock
         options under SFAS No. 123 is not reflected in the pro forma net income
         amounts presented above because compensation expense is reflected over
         the option's vesting period which could be up to five years. Also, the
         provision of SFAS 123 apply to grants awarded subsequent to December
         15, 1994.

                                      F-15

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

         Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
                                             INCENTIVE STOCK OPTIONS     NONQUALIFIED OPTIONS
                                             -----------------------   ---------------------------
                                                            WEIGHTED                    WEIGHTED
                                                            AVERAGE                     AVERAGE
                                                            EXERCISE                    EXERCISE
                                                 SHARES      PRICE         SHARES        PRICE
                                                 ------      -----         ------        -----
<S>                                              <C>         <C>          <C>            <C>
           Balance at September 30, 1995         509,529      9.85         421,250        5.23
                    Granted(1987 Plan)            35,000      7.91               -           -
                    Granted(1996 Plan)            50,000     10.00               -           -
                    Exercised                     (8,156)     4.13               -           -
                    Cancellations                      -         -               -           -
                                                 -------     -----        --------       -----
           Balance at September 30, 1996         586,373      9.82         421,250        5.23
                    Granted(1996 Plan)           206,800      4.52               -           -
                    Exercised                    (26,156)     3.88        (168,748)       3.88
                    Cancellations                (57,049)      9.3          (5,002)      11.37
                                                 -------     -----        --------       -----
           Balance at September 30, 1997         709,968      8.54         247,500        6.02
                                                 =======     =====        ========       =====
</TABLE>

         At September 30, 1997, the range of weighted average exercise prices
         and remaining contractual life of outstanding options was $4.375 to
         $15.00 and 1 to 10 years, respectively.

         At September 30, 1997 and 1996, the number of options exercisable was
         635,718 and 745,066 and the weighted-average exercise price of those
         options was $8.29 and $6.81, respectively.

(8)      STOCKHOLDERS' EQUITY

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

         The Company has 20 million authorized shares of common stock, $.02 par
         value per share; with 10,189,956 and 10,126,926 issued and outstanding
         at September 30, 1997 and 1996, respectively.

                                      F-16

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

(9)      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, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
                                                                   1997        1996
                                                                   ----        ----
<S>                                                              <C>         <C>
         Deferred tax assets:
              Rights-to-receive                                  $    298    $    132
              Travel programs                                         146          99
              Reserve for frequent flyer miles obligation             106           -
              Charitable contributions                                 72           -
              Other                                                    53          12
                                                                  -------    --------
                    Deferred tax assets                               675         243
                                                                  -------    --------
         Deferred tax liabilities:
              Unrealized gain on securities available for sale        649         604
              Deferred advertising costs                               47         141
              Property and equipment                                  474         191
                                                                  -------    --------
                    Deferred tax liabilities                        1,170         936
                                                                  -------    --------
                             Net deferred tax liability              (495)       (693)
                                                                  =======    ========
</TABLE>

         There was no valuation allowance for deferred tax assets as of
         September 30, 1997 and 1996. The increase/(decrease) in deferred tax
         liability related to securities available for sale was $45 and ($418)
         during 1997 and 1996, respectively.

                                      F-17

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

         Income tax provision (benefit) for the years ended September 30, 1997,
         1996 and 1995 is as follows:

                                          CURRENT      DEFERRED     TOTAL
                                          -------      --------     -----
                1997:
                     U.S. federal         $     (4)      (206)       (210)
                     State and local             -        (50)        (50)
                                          --------       ----       -----
                                          $     (4)      (256)       (260)
                                          ========       ====       =====
                1996:
                     U.S. federal         $    922        336       1,258
                     State and local           335        (32)        303
                                          --------       ----       -----
                                          $  1,257        304       1,561
                                          ========       ====       =====
                1995:
                     U.S. federal         $  2,179        (75)      2,104
                     State and local           619        (40)        579
                                          --------       ----       -----
                                          $  2,798       (115)      2,683
                                          ========       ====       =====

         Reconciliation of the statutory federal income tax rate and the
         Company's effective rate for the years ended September 30, 1997, 1996
         and 1995, is as follows:

<TABLE>
<CAPTION>
                                        1997                    1996                   1995
                                  --------------------   ---------------------   ---------------------
                                           % OF PRETAX             % OF PRETAX             % OF PRETAX
                                   AMOUNT    EARNINGS     AMOUNT     EARNINGS     AMOUNT     EARNINGS
                                   ------    --------     ------     --------     ------     --------
<S>                               <C>          <C>       <C>           <C>       <C>           <C>
        Federal tax rate          $  (232)     34.0      $  1,396      34.0%     $  2,339      34.0%
        State and local taxes,
             net of federal
             income tax benefit       (33)      4.8           200       4.9           382       5.6
        Other                           5      (0.8)          (35)     (0.9)          (38)     (0.6)
                                     ----      ----         -----      ----         -----      ----
                                  $  (260)     38.0%     $  1,561      38.0%     $  2,683      39.0%
                                     ====      ====         =====      ====         =====      ====
</TABLE>

                                      F-18

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

(10)     FRANCHISE AGREEMENTS

         The Company, as franchiser, has entered into various ten-year
         franchising agreements. In accordance with these agreements, the
         Company has granted franchisees a territory with at least 625
         full-service restaurants that accept certain major credit cards. The
         Company will continue to develop trademarks for itself and the system
         of franchisees and in addition provide marketing, advertising, training
         and other administrative support.

         The franchisees are responsible for soliciting restaurants and
         cardholders, advancing consideration to the restaurants to obtain
         Rights-to-receive food and beverage credits, and maintaining adequate
         insurance.

         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 food and beverage credits used
                        within the franchisee's territory.

               /bullet/ 2.5 percent of the total 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.

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

         There were no franchise territories sold during 1996 or 1997.

         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
         for cash the right to operate its business in California, Oregon,
         Washington and a portion of Nevada, Western's rights-to-receive and its
         furniture, fixtures and equipment, as well as the assumption of certain
         obligations. The transaction closed on January 2, 1997. The aggregate
         purchase price was approximately $7,721of which $5,017 has been
         recorded as excess of cost over net assets acquired. The Company had
         previously received 60,000 shares of publicly traded common stock in
         connection with the initial sale of this franchise, representing 2.3
         percent of the franchisee's common stock. The shares are included in
         securities available for sale. In addition, a director of the Company
         owns 6.5 percent of the franchisee's common stock.

                                      F-19

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

         The Company has made an offer to acquire all the rights-to-receive of
         East America Trading Company, its franchisee in the Carolinas and
         Georgia, and to terminate and cancel the franchise agreement. The offer
         consists of 170,000 shares of Transmedia Network stock. The effective
         date of the termination of the franchise is contemplated for December
         4, 1997, at which time the Company intends to assume operational
         control of the sales territories.

(11)     LICENSE AGREEMENTS

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

         In consideration for granting the exclusive licenses, the licensee paid
         the Company license fees aggregating $2,375 for the master license
         agreements and has granted to the Company a five percent equity
         interest in the new entities which will operate in the United Kingdom,
         Australia and New Zealand. The shares comprising the equity interests
         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, New Zealand and 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, unless
                        otherwise agreed to by the Company, and in no event less
                        than $500, 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 the United Kingdom
                        sublicensee,  and 25 percent of any other amounts that
                        the licensee receives from the sublicensee.

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

                                      F-20

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

         In December 1996, the Company amended its agreements with its
         international licensees, Transmedia Europe, Inc. and Transmedia
         Asia-Pacific, Inc. permitting them to acquire, on a worldwide basis,
         the business of Countdown, plc Holding Corp. ("Countdown"). Upon
         closing of the Countdown acquisition, the Company received $250 in cash
         and a $500 note bearing interest at 10%, which is payable on April 1,
         1998. At the Company's option, the note may be converted into stock of
         the licensees.

(12)     LEASES

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

         Future minimum lease payments under noncancelable operating leases as
         of September 30, 1997 are as follows:

                               YEAR ENDING
                              SEPTEMBER 30,                   AMOUNT
                              -------------                   ------
                                   1998                     $      728
                                   1999                            652
                                   2000                            579
                                   2001                            498
                                   2002                            113
                                                                 -----
                       Total minimum lease payments         $    2,570
                                                                 =====

         Rent expense charged to operations was $625, $387, and $293 for the
         years ended September 30, 1997, 1996 and 1995, respectively.

(13)     COMMITMENTS

         The Company has entered into unconditional guaranty agreements with two
         financial institutions, to extend credit in the aggregate amount of
         $1,250 to two franchisees. Franchisee obligations under their
         respective lines of credit were $897 at September 30, 1997. Should the
         Company be required to satisfy any franchisee obligation under the
         guaranty, the franchisee must relinquish its franchise back to the
         Company.

                                      F-21

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

         On November 15, 1996, the Company amended its employment agreement with
         its president and chief executive officer through September 30, 1999.
         The agreement provides for salary at an annual rate of $375 through
         September 30, 1998; and $400 through September 30, 1999, plus 5 percent
         of the Company's pretax income not to exceed $700 for the fiscal years
         ended September 30, 1998 and 1999. 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 15, 1996, the Company's consulting agreement with its
         president and chief executive officer was amended to commence on the
         termination of his employment agreement and to continue for ten years
         thereafter. 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.

         The Company also amended an employment agreement with two vice
         presidents of the Company, one of which is the president of Transmedia
         Restaurant Company and the other is president of Transmedia Service
         Company, through September 30, 1999. The agreement provides for salary
         at an annual rate of $315 through September 30, 1998; and $335 through
         September 30, 1999, plus eligibility for a bonus up to 50% of his
         salary.

         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, either the individual is terminated or certain
         events occur and the individual voluntarily resigns from the Company.

  (14)   LINE OF CREDIT

         Prior to the securitization discussed in note 2, the Company maintained
         a $20 million line of credit. As a result of the sale of
         rights-to-receive described in Note 2, the outstanding obligation under
         the line of credit was refinanced and the credit facility was
         terminated on December 24, 1996.

         On November 6, 1997, the Company obtained a line of credit with a bank
         for $10 million to be used principally to finance the purchase of
         rights-to-receive. This line of credit is unsecured and may be drawn
         down based on an advance rate calculated as a percentage of
         unrestricted rights-to-receive. The line of credit matures on February
         1, 1999 and bears interest at the prime rate with a LIBOR option.

                                      F-22

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

(15)     BUSINESS AND CREDIT CONCENTRATIONS

         Most of the Company's customers are located in the New York City,
         California, Massachusetts and 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, 1997 or
         1996.

 (16)    LITIGATION

         In December 1996, the Company terminated its license agreement (the
         "Agreement") with Sports & Leisure Inc. ("S&L"). In February 1997, S&L
         commenced an action against the Company in the 11th Judicial Circuit,
         Dade County, Florida, alleging that the Company improperly terminated
         the S&L license agreement and seeking money damages. The Company has
         counterclaimed against S&L for breach of the Agreement and intends to
         pursue the action vigorously. Management does not expect the outcome of
         this case to have a material adverse impact on the financial position,
         cash flows or operating results of the Company.

(17)     SUBSEQUENT EVENTS

         On November 7, 1997, the Company entered into an agreement to sell 2.5
         million newly-issued common shares and non-transferable warrants to
         purchase an additional 1.2 million common shares for a total of $10,625
         to affiliates of Equity Group Investments, Inc., a privately held
         investment company. The non-transferable warrants will have a term of
         five years; one third of the warrants will be exercisable at $6.00 per
         share, another third will be exercisable at $7.00 per share and the
         third and final will be exercisable at $8.00 per share. As part of this
         strategic investment, Equity Group will nominate two candidates for the
         Board of Directors who will join three of the Company's existing
         directors and two new independent directors.

                                      F-23

<PAGE>

                             TRANSMEDIA NETWORK INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

(18)     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,
                               1997           1997          1997          1996             1997
                          -------------     --------     ---------    ------------    -------------
<S>                           <C>            <C>           <C>           <C>             <C>
Gross dining sales:           26,507         25,640        26,473        22,681          101,301

Operating revenue:             8,982          7,702         7,283         6,977           30,944

Operating income (loss):         855            118          (271)           (4)             698

Net Income:                      183            184          (587)         (204)            (424)

Earnings per share:              .02            .02          (.06)         (.02)            (.04)
</TABLE>

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED                        YEAR ENDED      YEAR ENDED
                           -------------------------------------------------------    -------------   -------------
                           SEPTEMBER 30,    JUNE 30,      MARCH 31,   DECEMBER 31,    SEPTEMBER 30,   SEPTEMBER 30,
                                1996          1996           1996         1995             1996            1995
                          -------------     --------     ---------    ------------    -------------   -------------
<S>                       <C>                <C>           <C>            <C>             <C>             <C>
Gross dining sales:       $   23,394         23,271        22,743         20,668          90,076          78,632

Operating revenue:             7,975          7,384         7,008          6,119          28,486          22,154

Operating income:              1,109          1,529           829          1,290           4,757           6,345

Net Income:                      464            839           462            781           2,546           4,196

Earnings per share:              .05            .08           .05            .08             .25             .42
</TABLE>

Amendment and Termination of Chief Executive Officer Employment and Consulting
Agreements (Unaudited) Subsequent to the Date of the Independent Auditor's
Report.

Incident to the Agreement of November 7, 1997 regarding the investment by Equity
Group Investments, Inc. (See Note 17), the Company and Melvin Chasen, Chairman
of the Board, Chief Executive Officer and President, agreed to amend his
Employment Agreement and to terminate his Consulting Agreement on December 29,
1997. Pursuant to this Agreement, the Company made a cash payment of $2.75
million to Mr. Chasen and recognized a one-time pre-tax charge of $3.1 million
in the quarter ended December 31, 1997.


                                      F-24

<PAGE>

<TABLE>
<CAPTION>
                            TRANSMEDIA NETWORK, INC.

                  SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

        For each of the years in the three-years ended September 30, 1997
                                 (in thousands)

                                                        BALANCE,        CHARGED                      BALANCE,
                                                       BEGINNING           TO                         END OF
                                                        OF YEAR         EXPENSES       WRITE-OFFS      YEAR
                                                      ----------        --------       ----------    --------
<S>                                                       <C>             <C>            <C>            <C>
Accounts receivable:
     Year ended September 30, 1997:
        Allowance for doubtful accounts                   $   15            501            (501)         15
                                                             ===          =====          ======         ===
     Year ended September 30, 1996:
        Allowance for doubtful accounts                   $   15            425            (425)         15
                                                             ===          =====          ======         ===
     Year ended September 30, 1995:
        Allowance for doubtful accounts                   $   25            333            (343)         15
                                                             ===          =====          ======         ===
Rights to receive:
     Year ended September 30, 1997:
        Allowance for doubtful accounts                   $  320          3,209          (2,764)        765
                                                             ===          =====          ======         ===
     Year ended September 30, 1996:
        Allowance for doubtful accounts                   $  900          2,075          (2,655)        320
                                                             ===          =====          ======         ===
     Year ended September 30, 1995:
        Allowance for doubtful accounts                   $  700          2,332          (2,132)        900
                                                             ===          =====          ======         ===
</TABLE>

                                      F-25

<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

         The members of the Company's Board of Directors and nominees to the
Company's Board of Directors are as follows (Note, Messrs. Chasen, Africk and
Gardner are also nominees for election to the Company's Board of Directors at
the 1998 Annual Meeting of Stockholders):

                   CURRENT DIRECTORS AND NOMINEES FOR ELECTION

                                    POSITION AND/OR                      DIR
NOMINEE                    AGE      PRINCIPAL OCCUPATION                 SINCE
----------------------     ---      ---------------------------------    -----
Melvin Chasen              69       Chairman of the Board,               1984
                                    President and Chief Executive
                                    Officer of the Company

Jack Africk                69       Chairman of the Board,               1992
                                    Evolution Consulting Group, Inc.

James J. Callaghan         57       Vice President of the Company        1991
                                    and President, Transmedia
                                    Restaurant Company Inc.

Irwin Hochberg             69       Senior Partner and President,        1987
                                    Bloom Hochberg & Co., P.C.

Barry S. Kaplan            39       Vice President of the Company        1996
                                    and President, Transmedia
                                    Service Company Inc.

Henry Seiden               69       Chairman and Chief Executive         1988
                                    Officer, The Seiden Group Inc.

                                       20
<PAGE>

Herbert M. Gardner         58       Senior Vice President, Janney        1983
                                    Montgomery Scott, Inc.

Rod F. Dammeyer            57       Managing Director,
                                    Equity Group Investments, Inc.       *

F. Philip Handy            53       Managing Director, Equity Group      *
                                    Investments, Inc.

George S. Wiedemann        53       Chairman of the Board and Chief      *
                                    Executive Officer, Grey Marketing

Lester Wunderman           77       Chairman of the Board,               *
                                    Wunderman Cato Johnson

*Not previously a director of the Company

BUSINESS EXPERIENCE

         MR. CHASEN has been a director and the Chairman of the Board, President
and Chief Executive Officer of the Company since 1984. From 1984 through 1987,
he was a director, Chairman of the Board, President and Chief Executive Officer
of Transmedia Colorado. From its inception in 1983 until 1984, he was President
and a director of Transmedia Network Inc., a private Delaware corporation
engaged in the media barter business, which merged with Transmedia Colorado in
1984. Until March 1995, Mr. Chasen served as a director of The Western
Transmedia Company, Inc., as a director of Transmedia Europe, Inc., the
Company's European licensee, and as a director of Transmedia Asia Pacific, Inc.,
the Company's licensee for the Asia-Pacific rim region.

         MR. AFRICK, who became a director of the Company in 1992, is the
Chairman of the Board of Evolution Consulting Group, Inc., Boca Raton, Florida.
From 1993 to 1995, he was Vice Chairman of the Board of Duty Free International,
Inc., and was a director of that company until August 1997. Until June 1993, Mr.
Africk was Vice Chairman of UST, Inc. and the President and Chief Executive
Officer of its subsidiary, United States Tobacco Company. He is also a director
of Crown Central Petroleum Corporation and of Tanger Factory Outlet Centers,
Inc.

                                       21
<PAGE>

         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. HOCHBERG, a director of the Company since 1987, served as director
of Transmedia Network Inc., a Colorado corporation ("Transmedia Colorado"),
which was merged into the Company. He has been Senior Partner and President of
Bloom Hochberg & Co., P.C., a firm of certified public accountants, for more
than seven years. He is also a director of Ampal-America Israel Corporation, a
subsidiary of Bank Hapoalim, which finances industrial, financial, commercial
and agricultural enterprises.

         MR. SEIDEN, a director of the Company since 1988, is presently the
Chairman and Chief Executive Officer of The Seiden Group, Inc., an advertising
consultant, and Vice Chairman of Jordan, McGrath, Case & Taylor Inc., an
advertising agency. Mr. Seiden had been the Chairman of Ketchum Advertising, New
York, an advertising agency which is a division of Ketchum Communications, Inc.,
from 1987 through 1991.

         MR. GARDNER, a director of the Company since 1983, has been employed as
a Senior Vice President of Janney Montgomery Scott Inc., an investment banking
firm, for more than five years. He was a director of two predecessors of the
Company from 1983 through 1987. Mr. Gardner is a director of Nu Horizons
Electronics Corp., an electronics components distributor. He is Chairman of the
Board of Supreme Industries, Inc., a company which manufactures specialized
truck bodies and shuttle buses. Mr. Gardner is also a director of American
Country Holdings Inc., a property and casualty insurance holding company. This
company (formerly, the Western Transmedia Company Inc.) was the Company's
franchisee in California, Oregon, Washington and parts of Nevada until January
1997. He is also a director of TGC Industries, Inc., a company in the
geophysical services industry, a director of Hirsch International Corp., an
importer of computerized embroidery machines, a developer of embroidery machine
application software and a provider of other services to the embroidery
industry.

         MR. DAMMEYER is a Managing Director of Equity Group Investments, Inc.
He also serves as President, Chief Executive Officer and a director of Anixter
International, Inc., where he has been employed since 1985. Currently, Mr.
Dammeyer also serves as a director of each of Antec Corporation, CNA Surety
Corp., Inc., Grupo Azucarero Mexico (GAM), IMC Global, Inc., Jacor
Communications, Inc., Lukens Inc. and TeleTech Holdings, Inc. He is also a
trustee of Van Kampen American Capital, Inc, a closed-end fund, and a member of
the Chase Manhattan Corporation Advisory Board.

                                       22
<PAGE>

         MR. HANDY is a Managing Director of Equity Group Investments, Inc.
Prior to joining Equity Group, Mr. Handy was Chairman and President of Winter
Park Capital Company, a private investment firm he founded in 1980. From 1976 to
1980, he was President of ComBanks Corporation, a bank holding company in
Central Florida. Mr. Handy formerly owned and was Chairman and Chief Executive
Officer of Maryland Club Foods, Inc., a coffee roasting and marketing company
which was purchased from the Coca-Cola Company and subsequently sold in October
1989 to Procter & Gamble Company. He also served as Chairman and Chief Executive
Officer and was a majority owner of TOC Retail Inc., a 350-store gas
marketing/convenience store chain. He was majority owner and Chairman of the
Board of Bordo Citrus Products, Inc. and Lakeland Packing Company, citrus-based
food service companies. Mr. Handy currently serves as a director of each of
Anixter International, Inc., Banca Quandium S.A., Q-Tel, S.A. de C., and Jacor
Communications, Inc.

         MR. WIEDEMANN is the Chairman of the Board and Chief Executive Officer
of Grey Direct, a direct marketing agency that specializes in multimedia direct
response advertising, which he founded in 1979. He also founded Grey Interactive
in 1993 and Grey Direct e.marketing in 1995. Mr. Wiedemann was elected to the
Direct Marketing Association Board of Directors in October 1990, and presently
serves as Chairman Elect of that Board.

         MR. WUNDERMAN is founder and Chairman of the Board of Wunderman Cato
Johnson, a direct marketing advertising agency, and a director of Dentsu
Wunderman Direct, an affiliated company, in Japan. He also currently serves as a
Visiting professor of Direct Marketing at the School for Continuing Education at
New York University and as a director of InfoNautics Inc. Mr. Wunderman was
formerly a director of The Advertising Council and of Direct Marketing
Association and served for two years as Secretary/Treasurer and as a member of
the Operations Committee and Board of Directors of the American Association of
Advertising Agencies. Mr. Wunderman coined the term "direct marketing" and is
the author of two books: FRONTIERS OF DIRECT MARKETING, published in 1981, and
BEING DIRECT, published in 1997.

EXECUTIVE OFFICERS

         Information concerning the executive officers of the Company is set
forth following Item 4 in Part I of the Original Report under the caption
"Executive Officers of the Registrant".

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons holding more than 10 percent
of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission reports of changes in ownership and annual
reports of ownership of Common Stock and other equity securities of the Company.
Such directors, executive officers and ten-percent stockholders are also
required to furnish the Company with copies of all such filed reports.

                                       23
<PAGE>

              The Company believes that, during the fiscal year ended September
30, 1997, all filing requirements under Section 16(a) of the Securities Exchange
Act of 1934, as amended, applicable to its officers, directors and greater than
ten percent stockholders were complied with on a timely basis.

ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table provides, for the periods indicated, certain summary
information concerning the cash and non-cash compensation earned by or awarded
to the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers who were serving as executive officers as of
September 30, 1997 (collectively, the "named executive officers"):

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                                                                  LONG-TERM
                                                                             COMPENSATION AWARDS

                                                                            SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION              YEAR        SALARY       BONUS          OPTIONS (#)
-------------------------------------------------------------------------------------------------
<S>                                      <C>        <C>         <C>                 <C>   
Melvin Chasen                            1997       $350,000    $     --            20,000
   Chairman of the Board, President      1996        300,000     216,100                --
   and Chief Executive Officer           1995        275,000     362,900            30,000

James M. Callaghan                       1997        300,000      30,000            15,000
   Vice President                        1996        250,000      10,000                --
                                         1995        180,000      16,400            15,000

Barry S. Kaplan                          1997        280,000          --            15,000
   Vice President                        1996        225,000          --            50,000
                                         1995         27,692          --            20,000

Stephen E. Lerch                         1997        193,000      15,000            30,000
   Executive Vice President and          1996             --          --                --
   Chief Financial Officer               1995             --          --                --

Paul A. Ficalora                         1997        155,500          --             6,000
   Executive Vice President of           1996        146,250      10,000                --
   Transmedia Restaurant Company Inc.    1995        130,673      30,000            10,000
</TABLE>

                                       24
<PAGE>

EMPLOYMENT AGREEMENTS

         In December of 1997, the Company and Mr. Chasen entered into an
agreement (i) pursuant to which Mr. Chasen's employment with the Company will
terminate on September 15, 1998; (ii) his Amended and Restated Consulting
Agreement was terminated; (iii) his right to receive $1,000,000 in the event of
the sale of a control block of stock of the Company was extinguished; and (iv)
he agreed to a five-year non-competition covenant and a confidentiality
agreement with the Company. In return, (i) Mr. Chasen received a payment of
$2,750,000 on December 30, 1997; (ii) the Company agreed that any of his stock
options which are unvested as of the termination of his employment will vest and
that all his stock options will be exercisable through December 31, 1998; (iii)
his indebtedness to the Company in the amount of $134,900 was canceled; (iv) the
Company agreed to purchase a new car for him of similar style and quality to the
leased automobile which the Company currently provides him (estimated to cost
approximately $60,000); (v) Mr. Chasen and his wife will receive health
insurance coverage for the remainder of their respective lives (currently
costing approximately $6,700 per year); and (vi) he will be reimbursed for his
reasonable accounting and legal expenses (approximately $22,000) incurred in
connection with such negotiations. For the fiscal year ended September 30, 1997,
Mr. Chasen received a base salary of $350,000 and did not receive a bonus.
During 1998, Mr. Chasen's base salary will be $375,000 and he will be eligible
for a bonus, not to exceed $700,000.

         The Company's Amended and Restated Employment Agreement with Mr.
Callaghan provides that he will serve the Company as vice president for a term
expiring on September 30, 1999 and will receive a base salary of $300,000,
$315,000, $335,000 during fiscal 1997, 1998 and 1999, respectively, as well as
be eligible to receive a bonus not to exceed one-half of his salary in each year
of the term of the Employment Agreement. The Amended and Restated Employment
Agreement terminates September 30, 1999. The Company has agreed to maintain in
force a $500,000 life insurance policy on Mr. Callaghan, with his estate listed
as beneficiary during the term of the Employment Agreement, which will be
transferred to Mr. Callaghan, without cost, at the end of the employment term
(whether or not he becomes disabled during the term). If Mr. Callaghan becomes
disabled during the employment term, he will receive his full compensation
during the first six months of disability, and thereafter will be paid 75% of
his salary (without bonus) for the remaining term of the Agreement. The Company
may terminate the Employment Agreement for certain enumerated causes. The
Employment Agreement restricts Mr. Callaghan from competing against the Company
for a two-year period following termination.

         The Company's Amended and Restated Employment Agreement with Mr. Kaplan
provides for a base salary of $280,000 in fiscal year 1997, $315,000 in fiscal
year 1998, $335,000 for fiscal year 1999 and a bonus not to exceed one-half of
his base salary for each year of the term of the Employment Agreement. The
Amended and Restated Employment Agreement terminates on September 30, 1999. The
Company has agreed to maintain in force a $500,000 life insurance policy on Mr.
Kaplan, with his estate listed as beneficiary during the term of the Employment
Agreement, which will be transferred to Mr. Kaplan, without cost, at the end of
the employment term (whether or not he becomes disabled during the term). If Mr.
Kaplan becomes disabled during the employment term, he will receive his full
compensation during the first six months of disability, and thereafter will be
paid 75% of his salary (without bonus) for the remaining term of the Agreement.
The Company may terminate the Employment Agreement for certain enumerated
causes. The Employment Agreement restricts Mr. Kaplan from competing against the
Company for a two-year period following the termination of his employment.

Effective February 1, 1997, the Company entered into a letter agreement with Mr.
Stephen E. Lerch, pursuant to which Mr. Lerch was elected Executive Vice
President of the Company. Pursuant to this letter agreement, Mr. Lerch received
a base salary of $200,000, plus a minimum bonus of $15,000 during fiscal 1997,
and a signing incentive of $60,000 that has already been paid. As compensation
for services rendered to the Company, Mr. Lerch also received ten year options
to purchase 10,000 shares of Common Stock at an exercise price of $5.25 per
share,

                                       25
<PAGE>

which was the fair market value at the time of the grant. The letter agreement
also provides that Mr. Lerch will be entitled to receive a lump sum payment of
$500,000 in the event of a change of control of the Company in which he was not
offered a comparable position of comparable salary. The letter agreement has no
term and does not define a "change of control." Cosequently, whether the
Investment would constitute a "change of control" within the meaning of the
letter is subject to interpretation. The Purchasers and Mr. Lerch have not
discussed the terms of his future employment with the Company. In the event Mr.
Lerch ceases to be an employee of the Company and unless the Compensation
Committee decides otherwise, his options will generally remain exercisable for a
period of 90 days (one year in the case of his death or disability) following
the termination of his employment pursuant to the terms of the 1996 Plan.

OPTIONS GRANTED

         The following table sets forth, as to the executive officers named in
the Summary Compensation Table, with respect to the fiscal year ended September
30, 1997, information relating to the grants of stock options pursuant to the
1996 Plan and otherwise:

<TABLE>
<CAPTION>
                                         OPTION GRANTS IN LAST FISCAL YEAR

                                               INDIVIDUAL GRANTS
------------------------------------------------------------------------------------------
                                                PERCENT OF                                     POTENTIAL REALIZABLE
                                    NUMBER OF   TOTAL OPTIONS                                  VALUE AT ASSUMED
                                    SECURITIES  GRANTED TO                                     ANNUAL RATES OF
                                    UNDERLYING  EMPLOYEES      EXERCISE OF                     STOCK PRICE
                   DATE OF          OPTIONS     IN FISCAL      BASE PRICE   EXPIRATION         APPRECIATION
NAME                GRANT           GRANTED     YEAR           ($/SH)(1)       DATE            FOR OPTION TERM
----               --------         ----------  -------------  -----------  --------------     ------------------------
                                                                                                   5%           10%
                                                                                               -----------  -----------
<S>                <C>                <C>          <C>           <C>        <C>                <C>          <C>
Barry S. Kaplan    April 14, 1997     15,000       7.25%         $4.3750    April 14, 2007     $106,896.15  $170,214.30

Stephen E. Lerch   February 10, 1997  10,000       4.84%         $5.2500    February 10, 2007  $ 71,264.10  $113,476.20

Stephen E. Lerch   April 14, 1997     20,000       9.67%         $4,3750    April 14, 2007     $171,034.00  $272,343.00

Melvin Chasen      April 14, 1997     20,000       9.67%         $4.3750    April 14, 2007     $171,034.00  $272,343.00

James E. Callaghan April 14, 1997     15,000       7.25%         $4.3750    April 14, 2007     $106,896.15  $170,214.30

Paul A. Ficalora   April 14, 1997      6,000       2.90%         $4.3750    April 14, 2007     $ 42,758.46  $ 68,085.72

<FN>
--------------
(1)  All options were granted at 100% of the underlying Common Stock price on the date of grant.
</FN>
</TABLE>

                                       26
<PAGE>

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           The following table sets forth certain information as of December 24,
1997 regarding ownership of the Company's Common Stock by each person who is
known by the Company to own beneficially more than 5% of its Common Stock.
Except as otherwise specified, the named beneficial owner has sole voting and
investment power with respect to the shares beneficially owned by him.

<TABLE>
<CAPTION>
                                            PRIOR TO GIVING EFFECT               AFTER GIVING EFFECT
                                               TO THE INVESTMENT                  TO THE INVESTMENT
                                          ---------------------------       ----------------------------
                                           AMOUNT OF                         AMOUNT OF
                                          COMMON STOCK                      COMMON STOCK
                                          BENEFICIALLY     PERCENT OF       BENEFICIALLY      PERCENT OF
NAME AND ADDRESS                             OWNED            CLASS            OWNED             CLASS
----------------                          ------------     ----------       ------------      ----------
<S>                                       <C>                 <C>             <C>                <C>  
Melvin Chasen..........................   1,147,231(1)        10.76%          1,147,231           7.99%
     c/o Transmedia Network Inc.
     11900 Biscayne Boulevard
     Miami, Florida  33181

Transmedia Investors, L.L.C.;             1,348,009(2)        13.01%          5,048,009(3)       35.90%
Samstock, L.L.C........................
     c/o Samstock, L.L.C.
     Two North Riverside Plaza
     Chicago, Illinois  60606
</TABLE>

         The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of December 24, 1997, by each
director and nominee for director of the Company, the executive officers named
in the Summary Compensation Table and the executive officers and directors as a
group and includes options and warrants to purchase shares of Common Stock which
will become exercisable by February 24, 1998. Except as otherwise indicated,
each such stockholder has sole voting and investment power with respect to the
shares beneficially owned by such stockholder.

<TABLE>
<CAPTION>
                                              AMOUNT OF        OPTIONS AND
                                            COMMON STOCK        WARRANTS
                                            BENEFICIALLY       EXERCISABLE                        PERCENT OF
NAME AND ADDRESS                               OWNED          WITHIN 60 DAYS            TOTAL        CLASS
----------------                            ------------      --------------         -----------  ----------
<S>                                          <C>                  <C>                <C>             <C>
Melvin Chasen..........................        849,731            297,500            1,147,231(1)    10.76%
     c/o Transmedia Network Inc.
     11900 Biscayne Boulevard
     Miami, Florida  33181

James M. Callaghan.....................         85,662            142,500              228,162(4)     2.17%
     c/o Transmedia Network Inc.
     750 Lexington Avenue
     New York, New York  10022
</TABLE>

                                       27
<PAGE>

<TABLE>
<CAPTION>
                                              AMOUNT OF        OPTIONS AND
                                            COMMON STOCK        WARRANTS
                                            BENEFICIALLY       EXERCISABLE                        PERCENT OF
NAME AND ADDRESS                               OWNED          WITHIN 60 DAYS            TOTAL        CLASS
----------------                            ------------      --------------         -----------  ----------
<S>                                          <C>                  <C>                <C>             <C>
Herbert M. Gardner.....................        297,661             28,750              326,411(5)     3.14%
     c/o Transmedia Network Inc.
     750 Lexington Avenue
     New York, New York  10022

Irwin Hochberg.........................         10,937             28,750               39,687(6)     0.38%
     c/o Transmedia Network Inc.
     750 Lexington Avenue
     New York, New York  10022

Henry Seiden...........................        139,280             28,750              168,030(7)     1.62%
     c/o Transmedia Network Inc.
     750 Lexington Avenue
     New York, New York  10022

Jack Africk............................         63,830             28,750               92,580(8)     0.89%
     c/o Transmedia Network Inc.
     750 Lexington Avenue
     New York, New York  10022

Paul A. Ficalora.......................        186,035             20,750              206,785(9)     1.99%
     c/o Transmedia Network Inc.
     750 Lexington Avenue
     New York, New York  10022

Barry S. Kaplan........................         32,800             35,000               67,800(10)    0.65%
     c/o Transmedia Network Inc.
     11900 Biscayne Boulevard
     Miami, Florida  33181

Gregory R. Borges......................         18,625              9,250               27,875(11)    0.27%
     c/o Transmedia Network Inc.
     11900 Biscayne Boulevard
     Miami, Florida  33181

Kathryn M. Ferara......................            657              5,125                5,782(12)    0.06%
     c/o Transmedia Network Inc.
     11900 Biscayne Boulevard
     Miami, Florida  33181

Stephen E. Lerch.......................             --                 --                   --          --
     c/o Transmedia Network Inc.
     11900 Biscayne Boulevard
     Miami, Florida  33181

All directors and executive officers as      1,685,218            625,125            2,310,343       20.82%
     a group (11 persons)..............

                                       28
<PAGE>

<FN>
-------------------
 (1) Includes for Mr. Chasen (i) 139,600 shares owned by a family partnership
         for which Mr. Chasen exercises voting and investment authority, (ii)
         options to purchase 135,000 shares at a price of $4.8333 per share,
         which options were granted outside the 1987 Stock Option and Rights
         Plan (the "1987 Plan") and expire in May 2002, (iii) options to
         purchase 67,500 shares of Common Stock of the Company at an exercise
         price of $7.4445 per share, which options were granted outside the 1987
         Plan and expire in September 1998, (iv) options to purchase 33,750
         shares at a price of $15.00 per share, which options were granted under
         the 1987 Plan and expire in March 2004, (v) options to purchase 15,000
         shares at a price of $12.25 per share, which options were granted under
         the 1987 Plan and expire in March 2005 and (vi) options to purchase
         46,250 shares, which were granted under the 1987 and 1996 Plans and are
         now exercisable subsequent to the agreement Mr. Chasen executed with
         the Company on December 29, 1997. All of such options are presently
         exercisable. Does not include (i) 200,778 shares held by Iris Chasen,
         the wife of Mr. Chasen, or (ii) 55,000 shares held by Mr. Chasen's
         three adult children, as of clauses (i) and (ii) of which Mr. Chasen
         disclaims beneficial ownership. Subject to the terms of the Transaction
         Documents, Mr. Chasen's beneficially owned shares are subject to shared
         voting power with the Purchasers.

 (2) Includes 1,348,009 shares which are owned by Melvin Chasen and Iris Chasen,
         but which are subject to the proxy in favor of the Purchasers contained
         in the Agreement Among Stockholders.

 (3) Includes (i) 2,500,000 shares pursuant to the Purchase Agreement, (ii)
         warrants to purchase 1,200,000 shares at exercise prices in equal parts
         at $6.00 per share, $7.00 per share, and $8.00 per share, which
         warrants expire on the fifth anniversary of the closing of the
         Investment, and (iii) 1,348,009 shares which are owned by Melvin Chasen
         and Iris Chasen, but which are subject to the voting and disposition
         restrictions in favor of Purchasers contained in the Agreement Among
         Stockholders.

 (4) Includes for Mr. Callaghan (i) 5,038 shares held in Mr. Callaghan's
         Individual Retirement Account, (ii) options to purchase 84,375 shares
         of Common Stock at an exercise price of $4.8333 per share, which
         options were granted under the 1987 Plan and expire in May 2002, (iii)
         options to purchase 33,751 shares at an exercise price of $7.4445 per
         share, which were granted under the 1987 Plan and expire in September
         2003, (iv) options to purchase 16,875 shares at an exercise price of
         $15.00 per share, which options were granted under the 1987 Plan and
         expire in March 2004, and (v) options to purchase 7,500 shares at a
         price of $12.25 per share, which options were granted under the 1987
         Plan, and expire in March 2005. All of such options are presently
         exercisable. Does not include (i) options issued under the 1987 and
         1996 Plans to purchase 28,125 shares, which are not exercisable within
         60 days of December 24, 1997, or (ii) 5,724 shares held in the
         Individual Retirement Account of Mr. Callaghan's wife, as to all of
         which shares Mr. Callaghan disclaims beneficial ownership.

 (5) Includes for Mr. Gardner (i) 137,439 shares held by Herbert M. Gardner
         (Keogh), (ii) 4,260 shares held by The Gardner Family Foundation, Inc.
         of which Mr. Gardner is President, (iii) options to purchase 11,250
         shares of Common Stock of the Company at an exercise price of $7.4445
         per share, which options were granted outside the 1987 Plan and expire
         in September 1998, (iv) options to purchase 7,500 shares of Common
         Stock at an exercise price of $15.00 per share, which options were
         granted under the 1987 Plan and expire in March 2004, and (v) options
         to purchase 5,000 shares of Common Stock at an exercise price of $12.25
         per share, which options were granted under the 1987 Plan and expire in
         March 2005 and (vi) options to purchase 5,000 shares of Common Stock at
         an exercise price of $7.875, which options were granted under the 1996
         Plan and expire in March 2006. All of such options are presently
         exercisable. Does not include (i) 3,834 shares

                                       29
<PAGE>

         held by Mr. Gardner's wife individually or as custodian for their
         children and (ii) options to purchase 5,500 shares at an exercise price
         of $4.375, which are not exercisable within 60 days of December 24,
         1997, as to all of which shares Mr. Gardner disclaims beneficial
         ownership.

 (6) Includes for Mr. Hochberg (i) options to purchase 11,250 shares of Common
         Stock of the Company at an exercise price of $7.4445 per share, which
         options were granted outside the 1987 Plan and expire in September
         1998, and (ii) options to purchase 7,500 shares of Common Stock at an
         exercise price of $15.00 per share which options were granted under the
         1987 Plan and expire in March 2004, and (iii) options to purchase 5,000
         shares of Common Stock at an exercise price of $12.25 per share, which
         options were granted under the 1987 Plan and expire in March 2005, and
         (iv) options to purchase 5,000 shares of Common Stock at an exercise
         price of $7.875, which options were granted under the 1996 Plan and
         expire in March 2006. All of such options are presently exercisable.
         Does not include (i) options to purchase 5,500 shares, which were
         granted under the 1996 Plan and are not exercisable within 60 days of
         December 24, 1997; (ii) 4,362 shares owned by Mrs. Hochberg and (iii)
         10,500 shares owned by Mr. Hochberg's children and grandchildren, as to
         all of which Mr. Hochberg disclaims beneficial ownership.

 (7) Includes for Mr. Seiden (i) options to purchase 11,250 shares of Common
         Stock of the Company at an exercise price of $7.4445 per share, which
         options were granted outside the 1987 Plan and expire in September
         1998, (ii) options to purchase 7,500 shares of Common Stock at an
         exercise price of $15.00 per share, which options were granted under
         the 1987 Plan and expire in March 2004, and (iii) options to purchase
         5,000 shares of Common Stock at an exercise price of $12.25 per share,
         which options were granted under the 1987 Plan and expire in March 2005
         and (iv) options to purchase 5,000 shares of Common Stock at an
         exercise price of $7.875, which options were granted under the 1996
         Plan and expire in March 2006. All of such options are presently
         exercisable. Does not include options to purchase 5,500 shares, which
         were granted under the 1996 Plan and are not exercisable within 60 days
         of December 24, 1997.

 (8) Includes for Mr. Africk (i) 63,830 shares owned by a family corporation for
         which Mr. Africk exercises voting and investment authority, (ii)
         options to purchase 11,250 shares of Common Stock of the Company at an
         exercise price of $7.4445 per share, which options were granted outside
         the 1987 Plan and expire in September 1998, and (iii) options to
         purchase 7,500 shares of Common Stock at an exercise price of $15.00
         per share, which options were granted under the 1987 Plan and expire in
         March 2004 and (iv) options to purchase 5,000 shares of Common Stock at
         an exercise price of $12.25 per share, which options were granted under
         the 1987 Plan and expire in March 2005 and (v) options to purchase
         5,000 shares of Common Stock at an exercise price of $7.875, which
         options were granted under the 1996 Plan and expire in March 2006. All
         of such options are presently exercisable. Does not include options to
         purchase 5,500 shares, which were granted under the 1996 Plan and are
         not exercisable within 60 days of December 24, 1997.

 (9) Includes for Mr. Ficalora (i) options to purchase 15,750 shares at an
         exercise price of $7.4445 per share, which options were granted under
         the 1987 Plan and expire in September 2003, and (ii) options to
         purchase 5,000 shares at an exercise price of $12.25, which options
         were granted under the 1987 Plan and expire in March 2005. All of such
         options are presently exercisable. Does not include (i) options to
         purchase 10,000 shares, which were granted under the 1987 and 1996
         Plans and are not exercisable within 60 days of November 20, 1997, (ii)
         6,075 shares held by Mrs. Ficalora, and (iii) 1,350 shares held by Mr.
         Ficalora's child, as to all of which shares Mr. Ficalora disclaims
         beneficial ownership.

                                       30
<PAGE>

(10) Includes for Mr. Kaplan, (i) options to purchase 10,000 shares at an
         exercise price of $9.25 per share, which options were granted under the
         1987 Plan and expire in August 2005, and (ii) options to purchase
         12,500 shares at an exercise price of $10.00 per share, which options
         were granted under the 1987 Plan and expire in December 2005. All of
         such options are presently exercisable. Does not include options issued
         under the 1987 and 1996 Plans to purchase 62,500 shares, which are not
         exercisable within 60 days of December 24, 1997.

(11) Includes for Mr. Borges (i) options to purchase 6,750 shares at an exercise
         price of $7.4445 per share, which options were granted under the 1987
         Plan and expire in September 2003, and (ii) options to purchase 2,500
         shares at an exercise price of $12.25 per share, which options were
         granted under the 1987 Plan and expire in March 2005. All of such
         options are presently exercisable. Does not include options to purchase
         7,500 shares, which were granted under the 1987 and 1996 Plans and are
         not exercisable within 60 days of December 24, 1997.

(12) Includes for Ms. Ferara (i) options to purchase 3,375 shares at an exercise
         price of $7.4445 per share, which options were granted under the 1987
         Plan and expire in September 2003 and (ii) options to purchase 1,750
         shares at an exercise price of $12.25 per share, which options were
         granted under the 1987 Plan and expire in March 2005. All of such
         options are presently exercisable. Does not include options to purchase
         6,750 shares, which were granted under the 1987 and 1996 Plans and are
         not exercisable within 60 days of December 24, 1997.
</FN>
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In December 1997, the Company and Mr. Chasen entered into an agreement (i)
pursuant to which Mr. Chasen's employment with the Company will terminate on
September 15, 1998; (ii) his Amended and Restated Consulting Agreement was
terminated; (iii) his right to receive $1,000,000 in the event of the sale of a
control block of stock of the Company was extinguished; and (iv) he agreed to a
five-year non-competition covenant and a confidentiality agreement with the
Company. In return, (i) Mr. Chasen received a payment of $2,750,000 on December
30, 1997; (ii) the Company agreed that any of his stock options which are
unvested as of the termination of his employment will vest and that all his
stock options will be exercisable through December 31, 1998; (iii) his
indebtedness to the Company in the amount of $134,900 was canceled; (iv) the
Company agreed to purchase a new car for him of similar style and quality to the
leased automobile which the Company currently provides him (estimated to cost
approximately $60,000); (v) Mr. Chasen and his wife will receive health
insurance coverage for the remainder of their respective lives (currently
costing approximately $6,700 per year); and (vi) he will be reimbursed for his
reasonable accounting and legal expenses (approximately $22,000) incurred in
connection with such negotiations.

Although the final terms of the of the Company's agreement with Mr. Chasen
described above were not presented to the Board of Directors, the agreement as
originally negotiated was approved by the board by a vote of five to one, with
Mr. Chasen abstaining. The originally negotiated agreement contained terms
identical to those contained in the final agreement described above except that
in lieu of a purchased automobile and the forgiveness of indebtedness to the
Company in the amount of $134,900, the Company was to have provided Mr. Chasen
during a five year period following the term of his employment with a leased
automobile, secretarial services and an office, at Mr. Chasen's option, on the
Company's premises or at an off-site location. These changes to Mr. Chasen's
agreement were raised and insisted upon by the Purchasers only after the Board
approval had already been obtained, and at a time (during the year-end holiday
season) when the agreement with Mr. Chasen had to be signed and carried into
effect (including the making of the payments required thereunder) prior to
December 31, 1997 or incur possible adverse tax consequences. The changes
required by the Purchasers in the final

                                       31
<PAGE>

agreement reduced the costs to the Company of the transaction from that which
was previously approved by the Board.

Mr. Gardner, a director of the Company, voted against approval of the agreement
as originally negotiated. His stated objections were that (i) the cash payment
to Mr. Chasen, in his judgment, was too high; (ii) that, based on the Company's
cash resources at the time (approximately $4.5 million) and cash requirements,
the Company was not in a position to make the payment and, if it did, it would
have to borrow under its revolving credit facility to fund its cash needs; and
(iii) that the cash payment would generate a significant operating loss during
the first fiscal quarter of 1998. The Company has not had to borrow funds to
meet its cash needs (its current average cash reserves are approximately $1.6
million). In addition, the payment to Mr. Chasen was less than the present value
of the maximum payments the Company might otherwise have been obligated to make
under the Employment Agreement and the Consulting Agreement, as unmodified.
Further, the Board noted that the payments under the non-modified terms of the
Employment and Consulting Agreements might have been non-deductible to the
Company for U.S. federal income tax purposes under Section 280G (the golden
parachute rules) and under Section 162(m) of the Internal Revenue Code of 1986
(which risk was substantially by the terms of the modified agreement). The
Company has treated the termination of Mr. Chasen's Amended and Restated
Employment Agreement and his Amended and Restated Consulting Agreement as a
one-time pretax charge of approximately $3.1 million in the first quarter ended
December 31, 1997.

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.

         (a)(2)   Financial Statement Schedules

         Schedule II - Valuation and Qualifying Accounts

         (a)(3)   Exhibits

                                       32
<PAGE>

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.

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

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            Amendment dated January 20, 1997 to Employment Agreement between
                Company and James Callaghan (10)

10.10           Amendment dated January 20, 1997 to Employment Agreement between
                Company and Barry Kaplan (10)

                                       33
<PAGE>

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

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

10.13           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)

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

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

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

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

10.18           Stock Purchase and Sale Agreement, dated as of November 6, 1997,
                among Transmedia Network Inc., Samstock, L.L.C., and Transmedia
                Investors, L.L.C. (14)

10.19           Form of Warrant to purchase Common Stock (14)

10.20           Investment Agreement, dated as of November 6, 1997, among
                Transmedia Network Inc., Samstock, L.L.C., and Transmedia
                Investors, L.L.C. (14)

10.21           Agreement Among Stockholders Agreement, dated as of November 6,
                1997, among Transmedia Network Inc., Samstock, L.L.C.,
                Transmedia Investors, L.L.C., Melvin Chasen and Iris Chasen (14)

10.22           Stockholder Cooperation Agreement, dated as of November 6, 1997,
                among Transmedia Investors, L.L.C., Samstock, L.L.C. and Melvin
                Chasen and Iris Chasen. (14)

10.23           Security Agreement dated as of December 1, 1996 among TNI
                Funding Company I, L.L.C. as Issuer, The Chase Manhattan Bank as
                Trustee and as Collateral Agent, TNI Funding I, Inc., as Seller
                and Transmedia Network Inc., as Servicer. (13)

10.24           Purchase Agreement dated as of December 1, 1996 among Transmedia
                Network Inc., Transmedia Restaurant Company Inc., Transmedia
                Service Company Inc. and TNI Funding I, Inc., as Purchaser. (13)

10.25           Purchase and Servicing Agreement dated as of December 1, 1996
                among TNI Funding Company I, L.L.C., as Issuer, TNI Funding I,
                Inc. as Seller, Transmedia Network Inc., as Servicer, Frank
                Felix Associates, Ltd., as Back-up Servicer and The Chase
                Manhattan Bank, as Trustee. (13)

10.26           Indenture dated as of December 1, 1996 between TNI Funding
                Company I, L.L.C., as Issuer and The Chase Manhattan Bank, as
                Trustee. (13)

                                       34
<PAGE>

10.27           Comerica Bank and Transmedia Network Inc., Transmedia Restaurant
                Company Inc., TMNI International Incorporated, Transmedia
                Service Company Inc., - $10,000,000.00 Line of Credit. (13)

10.28           Letter of Agreement dated January 29, 1997 between Company and
                Stephen E. Lerch.

21.1            Subsidiaries of Transmedia Network Inc.(1)

23.1            Consent of Independent Auditors.(13)

27.1            Financial Data Schedule

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)

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.

                                       35
<PAGE>

         (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.

         (14)     Filed as an exhibit to the Company's Current Report on Form
                  8-K as of November 6, 1997

         (b)      The Company did not file any Form 8-K Current Reports during
                  the fourth quarter of the fiscal year ended September 30,
                  1997.

         (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:  February 10, 1998

                                       36