UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
      ACT OF 1934
                  For the fiscal year ended: November 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: 000-21623

                             OBIE MEDIA CORPORATION
                 (Name of small business issuer in its charter)

                                   
         Oregon                                                  93-0966515
(State of incorporation)                                     (I.R.S. Employer
                                                             Identification No.)

                              4211 West 11th Avenue
                              Eugene, Oregon 97402
                    (Address of principal executive offices)

                    Issuer's telephone number: (541) 686-8400

       Securities registered under Section 12(b) of the Exchange Act: None

                Securities registered under Section 12(g) of the
                                 Exchange Act:

                         Common Stock, without par value
                                (Title of class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.
         Yes  X    No
            -----    -----

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B contained in this Form 10-KSB, and no disclosure will
be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         State issuer's revenues for its most recent fiscal year:  $14,624,955

         State  the  aggregate   market  value  of  the  voting  stock  held  by
nonaffiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within 60
days  prior to the date of  filing:  $12,051,600  aggregate  market  value as of
December 31, 1997 based on the price at which the stock was sold.

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common equity, as of the latest practicable date: 3,855,486 shares of
Common Stock, without par value, on February 12, 1998.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Part III of this Form 10-KSB incorporates information from the issuer's
definitive  proxy statement for the annual meeting of shareholders to be held on
April 3, 1998.

Transitional Small Business Disclosure Format  (Check One):  Yes ; No  X
                                                                     -----

<PAGE>
                                TABLE OF CONTENTS
                                                                          Page
                                                                         ------
Part I

Item 1.  Description of Business.........................................  2
Item 2.  Description of Properties.......................................  9
Item 3   Legal Proceedings...............................................  10
Item 4.  Submission of Matters to a Vote of Security Holders.............  10


Part II

Item 5.  Market for Common Stock and Related
                  Shareholder Matters....................................  11
Item 6.  Management's Discussion and Analysis of Financial Condition 
                  and Results of Operations..............................  11
Item 7.  Financial Statements............................................  16
Item 8.  Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure.................  17


Part III

(Items 9, 10, 11 and 12 are incorporated  herein by reference from the Company's
definitive Proxy Statement for its 1998 annual meeting of shareholders.)

Item 9.  Directors, Executive Offices, Promoters
                  and Control Persons; Compliance with Section 16(a)
                  of the Exchange Act....................................  18
Item 10. Executive Compensation..........................................  18
Item 11. Security Ownership of Certain Beneficial
                  Owners and Management..................................  18
Item 12. Certain Relationships and Related Transactions..................  18


Part IV

Item 13. Exhibits and Reports on Form 8-K................................  19
         Signatures......................................................  22
         Financial Statements............................................  F-1


<PAGE>
                                   FORM 10-KSB


         This Annual Report includes  certain  forward-looking  information that
involves a number of risks and uncertainties. The Company's actual results could
differ materially from the forward-looking statements.  Factors that could cause
or contribute to such differences include the following: a decline in the demand
for  advertising  in the areas  where  the  Company  conducts  its  business;  a
deterioration  of  business  conditions  generally  in such  areas;  slower than
expected  acceptance  of the  Company's  unique  display  products;  competitive
factors,  including  increased  competition  and  price  pressures;  changes  in
regulatory or other external factors; and other factors listed from time to time
in the Company's SEC reports,  including but not limited to, its "Risk  Factors"
discussion in the Registration Statement it filed in connection with its initial
public offering (the "IPO").

Note:  All  share and per  share  information  in this  Annual  Report  has been
restated to give  retroactive  effect to an  11-for-10  stock split  declared in
October 1997 and a 10-for-1 stock split effected prior to the IPO in 1996.

























                                       1
<PAGE>
PART I

ITEM 1.   DESCRIPTION OF BUSINESS


Company Overview

         Obie Media Corporation ("Obie Media" or the "Company")is an out-of-home
media company which markets  advertising space on outdoor  advertising  displays
("billboards")  and transit vehicles  (primarily  passenger buses).  The Company
owns and operates  approximately  660 advertising  faces on outdoor  advertising
structures located in Washington, Oregon, California and Idaho. The Company also
has agreements with 12 local government  transit districts pursuant to which the
Company has the exclusive  right,  for a number of years, to sell advertising on
approximately  2,300  district-owned  transit vehicles.  The Company also leases
building  walls in urban areas for  wallscape  displays,  and the  Company  owns
approximately 700 transit benches on which it sells advertising.

         The  Company,  formed in 1987,  traces its  origins to Obie  Industries
Incorporated ("Obie Industries"),  a family-owned outdoor advertising  business,
founded in 1960. In 1979, all the outdoor advertising assets of Obie Industries,
consisting  of over  1,700  advertising  display  faces,  were  sold to 3M Media
Corporation. Brian B. Obie, the Company's President and Chief Executive Officer,
has worked for Obie Industries since 1962, serving as its President since 1968.

In November 1996, to facilitate  the IPO, the Company  separated from its parent
corporation (Obie Industries), with the Company then being owned directly by the
shareholders of Obie Industries (the "Spin-Off").

Company Growth Strategy

         The Company intends to expand its presence in other geographic areas in
both transit and outdoor advertising.

         The Company  intends to expand by  obtaining  agreements  with  transit
districts  in new  markets  and by  acquiring  or  building  additional  outdoor
displays  in  new  and  existing  markets.  The  Company  intends  to  establish
additional   geographic   "hubs"  in  which  sales,   design,   production   and
administrative  capabilities  are  positioned  to serve both transit and outdoor
advertising displays in a geographic region, in the same manner as the Company's
operations in Eugene, Oregon serve its current markets. Management believes this
strategy will result in increased  operating  efficiencies,  greater  geographic
diversification and increased market penetration.

                                       2
<PAGE>
         Management  believes  the  Company  has  a  competitive   advantage  in
obtaining  agreements  with  transit  districts  due  to  the  Company's  unique
advertising  products  and  sales  strategy,  which  create  a  greater  revenue
potential  per vehicle.  Expansion of  billboards,  urban  wallscapes  and other
out-of-home  media products will be  concentrated in markets being served by the
company at that time, or through acquisitions.

Industry Background

         The out-of-home media industry includes outdoor  advertising  displays,
displays on buses, trains,  taxis,  subways,  transit benches and shelters,  and
wallscapes on urban buildings,  as well as displays in shopping centers,  malls,
airports,  stadiums,  movie theaters and  supermarkets.  The  out-of-home  media
industry  generates  annual  revenues  in excess of $3.0  billion  in the United
States and has experienced  increased  advertiser interest and revenue growth in
recent years.

         Advertisers purchase  out-of-home  advertising for a number of reasons.
Out-of-home   advertising   offers   repetitive   impact  at  a  relatively  low
cost-per-thousand-impressions, a commonly used media measurement, as compared to
television,  radio, newspapers,  magazines and direct mail marketing. Because of
its cost-effective  nature,  out-of-home  advertising is a good vehicle to build
"mass  market"  support.  In addition,  out-of-home  advertising  can be used to
target a defined audience in a specific location and,  therefore,  can be relied
upon by local businesses  concentrating on a particular geographic area or where
customers have specific demographic characteristics.

         The out-of-home media industry has enjoyed increased  consumer exposure
at a time when the  audiences of broadcast  media have been  fragmenting  as the
number of radio and television  networks and other narrowly targeted formats has
increased.  Out-of-home  media has  experienced  significant  changes  in recent
years. First,  out-of-home  advertising has expanded to include many media, such
as those listed above.  Second,  the industry has benefited  significantly  from
improvements in production  technology,  including the use of computer printing,
vinyl advertising copy and improved lighting techniques,  which have facilitated
a more dynamic,  colorful and creative use of the medium.  Lastly, the growth in
automobile  travel  time for  business  and  leisure  due to  increased  highway
congestion and continued  demographic  shifts of residences and businesses  from
the cities to outlying  suburbs  has  increased  the  exposure  for  out-of-home
advertising.



                                       3
<PAGE>
Products and Markets

         Obie  Media  offers  advertisers  a wide  range  of  out-of-home  media
products,  including transit advertising displays, outdoor advertising displays,
building  wallscapes,  and  transit  bench  displays.  This  not  only  provides
advertisers with significant  flexibility in their advertising programs,  but it
also allows the Company to  cross-sell  multiple  products  and to leverage  its
design and production capabilities.

         Transit  Advertising.  The  Company  has  agreements  with  12  transit
districts in Oregon (4),  California (6), Texas (1) and Washington (1). Of these
12  agreements,  five were  entered  into during  fiscal  1997.  Pursuant to its
agreements  with  transit  districts,  the  Company is the  exclusive  seller of
advertising on the transit  vehicles  operated by those transit  districts.  The
Company is in the final stages of completing negotiations to provide advertising
services for the Austin, Texas transit district.

         Agreements  with transit  districts  are awarded  through a competitive
process.  Each  transit  district  evaluates  proposals  based  on a  number  of
criteria, primarily on the basis of minimum revenues which the bidder guarantees
to pay to the district.  The Company's  agreements  typically have terms of from
three to five years,  with renewals or  extensions  either  unilaterally  at the
discretion of the transit  district or upon the mutual agreement of the district
and the Company.

         Approximately  29% and 37% of the Company's  gross  revenues for fiscal
1997 and 1996,  respectively,  were derived from  customers  purchasing  transit
advertising on vehicles owned by Tri-County Metropolitan Transportation District
of Oregon ("Tri-Met") in Portland,  Oregon. The Company's agreement with Tri-Met
has a scheduled  expiration date in 2001.  Tri-Met has the right to unilaterally
renew the agreement for an additional  three-year  period,  or may terminate the
agreement  earlier if it determines that  termination is in the public interest.
The Company  expects  its  agreement  with  Tri-Met to continue to account for a
substantial portion of the Company's revenues for the foreseeable future.

         On July 1, 1997,  the  Company  began  serving  the  Dallas  Area Rapid
Transit  system (DART) in Dallas,  Texas.  The contract has a term of four years
and nine months, with a scheduled expiration at the end of March 2002. Dallas is
the eighth largest  advertising market in the United States.  Gross revenue from
sales of advertising  in Dallas in fiscal 1997 exceeded $2 million.  The Company
expects its agreement with DART to continue to account for a substantial portion
of the Company's revenues for the foreseeable future.





                                       4
<PAGE>
         Outdoor  Advertising  Structures.  The  Company has  approximately  660
advertising  faces on outdoor  advertising  structures  in  Washington,  Oregon,
California  and Idaho.  The Company  leases the property  underlying its outdoor
advertising  structures,  generally  pursuant  to 10-year  leases  that give the
Company  the  right to renew for two  additional  five-year  periods.  More than
two-thirds of the Company's structures are illuminated.

         Wallscapes and Other Advertising  Displays.  In addition to transit and
outdoor  displays,  the Company  also leases  building  walls in urban areas for
wallscape   displays.   The  Company   currently  leases  8  building  walls  in
Seattle/Tacoma, and owns a 50% interest in a corporation that leases 17 building
walls in Portland.  The Company also owns  approximately  700 transit benches in
the Portland area on which the Company sells advertising.

Sales and Service

         Obie Media maintains an active sales force in each of its markets.  The
Company's  intensive  sales and service efforts are a key component in achieving
occupancy levels that management  believes are higher than industry averages for
both transit and outdoor advertising.

         The  Company  views its  aggressive  sales and  service  efforts  as an
important part of its culture. In hiring its sales force, the Company vigorously
screens  applicants and typically hires college  graduates who have demonstrated
their  suitability and aptitude to excel in the Company's  unique sales culture.
New sales employees  undergo  extensive  training and are supervised by regional
sales  managers  with  substantial  advertising  sales  experience.  Each  sales
representative  and the Company  jointly  establish sales targets for that sales
representative,  and  the  Company  has  monthly  sales  meetings  with  all its
salespeople to acknowledge  and reward  individuals who are meeting or exceeding
their targets.

         The Company works directly with companies and with advertising agencies
in  coordinating  the  marketing,  production  and  installation  of advertising
displays.   The  Company's  sales  personnel  also  serve  as  customer  service
representatives,  maintaining  frequent and regular  contact with the  Company's
advertising customers to resolve customer concerns in the field.





                                       5
<PAGE>
Design, Production and Installation

         The Company  has a fully  staffed and  equipped  design and  production
department  located in Eugene,  Oregon.  These  services  are used  primarily by
direct sales  customers that are not  represented by advertising  agencies.  The
design department works with these advertisers and the sales  representatives to
create  advertising copy, design and layout.  The staff of the design department
uses technologically  advanced computer hardware and software to create original
design copy and, increasingly,  to exchange work product with customers or their
advertising agencies via modem or the Internet. Advertisers that are represented
by  advertising  agencies  generally  arrange for the  production  of their ads,
leaving  the  Company to provide  only  installation  services.  The  Company is
increasingly acting as a broker with respect to this production.

         A local  advertiser  can  purchase  customized  design  and  production
services from the Company,  in addition to display space, and typically pays for
all of the services as part of a single  monthly rate.  For the  convenience  of
customers, the charge to clients for design and production is typically added to
the cost of the space and billed over the life of the advertising contract.  The
Company  believes  that the skills of its design  department,  combined with its
technological  capabilities,  provide a significant competitive advantage in its
direct sales to local advertisers.

         The  Company  views  transit  advertising  design and  production  as a
distinct  activity and  attempts to achieve  independent  profitability  in this
operation. The Company uses computer-aided vinyl lettering or hand paints almost
all of its transit and outdoor advertising displays.  The Company outsources its
high-pictorial, computer-generated production.

         The Company uses self-adhesive  vinyl for its transit displays and soft
roll-up vinyl for substantially all its outdoor advertising displays. Due to its
nearly exclusive use of vinyl, the Company can maintain  centralized  production
facilities,  can easily ship the  displays to its  trained  installers,  and has
greatly simplified the installation process. The Company continues to have a few
outdoor  advertising  structures  that  have  not yet  been  converted  to vinyl
installation.  Displays on these structures  require more expensive shipping and
more labor-intensive installation.

Customers

         The Company maintains a broad base of regional and national advertising
customers,  most of which are  represented  by advertising  agencies.  Customers
represented  by  advertising  agencies  account  for  approximately  60%  of the
Company's  gross  revenues.   Advertising  agencies  working  with  the  Company
typically  retain 15% of 

                                       6
<PAGE>
the gross  advertising  revenues from their  accounts,  consistent with standard
industry  practice.  Advertising  agencies  generally  are  responsible  for the
artistic  design and written  content of their  customers'  advertising and will
plan and  implement  the  overall  advertising  campaign  for  their  customers,
including the selection of advertising  media. The Company's sales personnel are
trained to work closely with the advertising  agencies in the Company's  markets
to service these  customers.  During November 1997 the Company opened a national
sales office in Los Angeles, California, and hired a national sales manager. The
national  sales team is responsible  for calling on customers  located in cities
where the Company does not have sales offices,  such as New York,  Chicago,  St.
Louis and Atlanta.

         Another key component of the Company's sales and marketing  strategy is
to  aggressively  market its  services to local  advertisers.  Accordingly,  the
Company  focuses its direct sales efforts  primarily on local  companies.  Local
advertisers tend to have smaller  advertising  budgets and rely on the Company's
design and production  department for their  advertising copy. Local advertisers
also require the Company to expend more effort on educating  customers regarding
the benefits of transit and outdoor  advertising and helping potential customers
develop their advertising strategy. Although the Company's direct sales are more
labor-intensive  than  its  sales  through  advertising  agencies,  the  Company
believes its direct sales focus is largely  responsible  for its high  occupancy
and renewal rates.

         Historically,  manufacturers  of  cigarettes  have been  major  outdoor
advertisers.   In  the  early  1990s,  due  to  increased  regulation,   tobacco
manufacturers  began  substantially  reducing  their  advertising  expenditures.
However,  the Company's revenues have not been materially  affected,  as tobacco
revenues represent less than 1% of sales.

Competition

         The  Company  competes  in  each  of its  markets  with  other  outdoor
advertising  companies and with other transit advertising  companies that submit
proposals for the exclusive agreements with transit districts.  The Company also
competes for revenues  with other  advertising  media,  including  broadcast and
cable  television,  radio,  print  media,  direct  mail  marketers,  displays in
shopping centers and malls, airports, stadiums, movie theaters and supermarkets,
as well as on taxis, trains and subways.

         Transit.  Transit  advertising  is  fragmented,  consisting  of  a  few
national transit  advertising  companies with operations in multiple markets and
numerous  small  companies  operating  under one or a few  regional  agreements.
Competition  among transit  advertising  companies is primarily in obtaining and
retaining  agreements with 


                                       7
<PAGE>
transit  districts.  Agreements with transit  districts are awarded primarily on
the basis of the minimum revenues the bidder guarantees to the district. Once an
agreement is secured,  the company awarded the agreement  generally  becomes the
exclusive  provider of transit  advertising  within that transit  district.  The
number of  competitors  for each  agreement  depends  primarily on the number of
vehicles  operated by that  transit  district.  In several of its  markets,  the
Company has competed for transit agreements with companies having  substantially
greater total resources than the Company.  The Company  believes that its unique
products  and sales  strategy,  which  create a greater  revenue  potential  per
vehicle,  give the Company a competitive  advantage in obtaining agreements with
transit districts. Thus, the Company is able to successfully compete for transit
agreements against larger companies.

         Outdoor Advertising.  Outdoor advertising also is fragmented. There are
several large outdoor advertising  companies with operations in multiple markets
and many more smaller  companies  operating a limited  number of structures in a
single or a few local markets.  Although some  consolidation has occurred in the
industry over the past few years, the Outdoor Advertising Association of America
recently  estimated  that  there  are  approximately  396,000  outdoor  displays
operated  by more than 600  companies.  In several of its  markets,  the Company
encounters  direct  competition from major outdoor media  companies,  which have
larger  national  networks and greater  total  resources  than the Company.  The
Company  believes  its strong  emphasis  on sales and  customer  service and its
position  as a major  provider  of  advertising  services in each of its primary
markets  enables it to compete  effectively  with the other outdoor  advertising
companies, as well as other media, within those markets.


Government Regulation

         The outdoor advertising  industry is subject to extensive  governmental
regulation.  These laws and regulations limit the growth of outdoor  advertising
companies and operate as a substantial barrier to entry in the industry.

         Construction  of outdoor  advertising  structures  has  virtually  been
eliminated except in commercial and industrial areas.  Many  jurisdictions  also
have restricted the relocation, location, height and size of outdoor advertising
structures.  Some  jurisdictions also restrict the ability to enlarge or upgrade
existing   structures,   such  as   converting   from  wood  to  steel  or  from
non-illuminated to illuminated structures, and/or restrict the reconstruction of
structures  that are  substantially  destroyed  as a result  of  storms or other
causes.  Most of these laws  require the payment of just  compensation  whenever
legally erected and maintained structures are required to be removed.


                                       8
<PAGE>
         Because most of the Company's outdoor advertising  structures have been
designed  and  installed  within the last nine years,  management  believes  its
structures  conform to current laws and  regulations.  When leasing property for
the installation of new outdoor  advertising  structures,  the Company carefully
reviews applicable laws, including building,  sign and zoning ordinances.  While
these laws and ordinances may restrict the location and size of the  structures,
the Company has been successful in strategically  locating its structures beside
major highways and arterials.

         To date, the Company's  experience is that the  regulatory  environment
can be  effectively  managed and that the  regulations  in its markets  have not
materially  adversely affected its operations.  However, the outdoor advertising
industry is heavily  regulated,  and no assurance  can be given that existing or
future  laws or  regulations  will not have a  material  adverse  effect  on the
Company.

Employees

         At November  30,  1997,  the Company had 96  full-time  and 5 part-time
employees.  None of the Company's employees is covered by collective  bargaining
agreements, except for four installers in Portland, Oregon. The Company believes
it maintains good employee relations.

ITEM 2. DESCRIPTION OF PROPERTIES

         Until April 1997, the Company was located in three separate  facilities
in Eugene,  Oregon,  all of which were rented from affiliated  companies.  After
April 1997, the Company  consolidated its operations in Eugene in a headquarters
building at one of these  locations.  The 20,000 square foot  facility  includes
space for the Company's centralized design and production  departments,  as well
as its accounting,  credit, marketing and management personnel. The headquarters
building is leased from Obie  Industries at market rates.  The Company's rent or
lease payments on these  properties were $123,000 and $79,000 during fiscal 1997
and 1996, respectively.

         The Company  leases  local  operating  offices  for sales,  service and
installation in Spokane, Yakima, and Bremerton,  Washington; Portland and Salem,
Oregon;  Dallas,  Texas; and Sacramento,  Monterey and Lodi,  California,  and a
national  sales  office in Los  Angeles,  California.  The  Company  also leases
approximately  385 parcels of property beneath outdoor  advertising  structures.
Total lease expenses for these leases in fiscal 1997 and 1996 were approximately
$755,000 and $608,000, respectively. The Company's site leases are generally for
a term  of 10  years,  with  two  five-year  renewal  options  at the  Company's
discretion.


                                       9
<PAGE>
ITEM 3. LEGAL PROCEEDINGS

         The Company is not currently subject to any material litigation nor, to
the  Company's  knowledge,  is any material  litigation  threatened  against the
Company.



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

         No  matters  were  submitted  to a vote of the  Company's  shareholders
during the fourth quarter of fiscal 1997.































                                       10
<PAGE>
PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Price Range of Common Stock

         The  Common  Stock  began  trading  on the  Nasdaq  SmallCap  Market on
November 21, 1996 under the symbol  "OBIE." The  following  table sets forth for
the period indicated the high and low bid prices of the Common Stock as reported
by The Nasdaq Stock Market, Inc.

                                            Year ended November 30
                                                High      Low
                                              -------   ------
     Fourth Quarter 1996(from 11/21/96)        7 1/4     6 3/8
     First Quarter 1997                        7 1/2     6
     Second Quarter 1997                       7         5 3/8
     Third Quarter 1997                        7         5 7/8
     Fourth Quarter 1997                       9 1/2     5 7/8

         As of February 12, 1998, there were  approximately 61 holders of record
of the  Company's  Common Stock.  The Company  believes the number of beneficial
owners is  substantially  greater  than the number of record  holders  because a
large  portion of the  Company's  outstanding  Common Stock is held of record in
"street name." The Company has not paid cash dividends on its Common Stock since
the IPO and does not anticipate doing so in the foreseeable  future. The Company
plans to retain any future earnings to finance operations.

In October 1997, the Company  declared an 11-for-10 stock split for shareholders
of record on November 21, 1997. Cash was paid in lieu of fractional shares.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL        
        CONDITION AND RESULTS OF OPERATIONS

Overview

         The  Company  has  grown  significantly   through  the  acquisition  of
additional  agreements with transit  districts,  particularly the agreement with
Tri-Met,  which began on January 1, 1994, and DART, which began on July 1, 1997,
as well as the addition of outdoor  advertising  displays in and around existing
markets and the improvement of occupancy and advertising rates.


                                       11
<PAGE>
         The Company is seeking  agreements with additional transit districts to
expand its operations.  The Company believes it is also important to its overall
sales  effort to build or acquire  additional  displays in existing  markets and
develop or acquire  new  products,  with  respect to both  transit  and  outdoor
advertising, in order to increase revenues.

         Net revenues  represent gross revenues derived from outdoor and transit
advertising  displays less  commissions  retained by  advertising  agencies that
contract for the use of advertising  displays on behalf of  advertisers.  Agency
commissions on revenues that are contracted  through  agencies are typically 15%
of gross revenues.  The Company  considers agency  commissions as a reduction in
gross revenues and measures its operating  performance  based on a percentage of
net revenues  rather than gross  revenues.  Approximately  60% of the  Company's
gross  revenues  are  attributable  to  advertising  sold  through   advertising
agencies.

         Direct advertising expenses consist primarily of occupancy,  production
and installation,  and sales costs.  Occupancy expense is primarily comprised of
payments to transit  districts for the use of space on their  vehicles and lease
payments  to owners  of  property  underlying  outdoor  advertising  structures.
Occupancy  expense also includes the cost of illuminating  outdoor  displays and
property taxes on the outdoor advertising structures.

         Production and installation  expenses consist primarily of the costs of
producing,  shipping and installing  the  advertising  displays.  Sales expenses
consist primarily of the cost of staffing the Company's sales force.

         General  and  administrative  expenses  include  costs  related  to the
individual market territories,  as well as corporate expenses.  Expenses related
to the individual market territories include the personnel and facility required
to  administer  that  market.  Corporate  general  and  administrative  expenses
represent  staff  and  facility  costs  for  the  executive  offices  and  other
centralized functions such as accounting and marketing.










                                       12
<PAGE>
Results of Operations-Comparison of Years Ended November 30, 1997 and 1996

         The  following  table  sets  forth  certain   statement  of  operations
information  for the Company for the periods  indicated as a  percentage  of net
revenues:

                                            Year Ended November 30,
                                               1997       1996
                                             --------   --------

Net revenues................................. 100.0%     100.0%
                                              ------     ------
Operating expenses:
   Direct advertising expenses...............  60.2       58.7
   General and administrative expenses.......  16.9       16.7
   Start up costs............................   1.8        -
   Depreciation and amortization.............   5.0        5.1
                                              ------     ------
     Total operating expenses................  83.8       80.5

   Operating income..........................  16.2       19.5
   Interest expense..........................  (4.4)     (14.7)
   Other income..............................    .3        1.8
                                              ------     ------
   Income before income taxes................  12.1        6.6
   Provision for income taxes................  (4.6)       (.3)
                                              ------     ------
   Income before extra ordinary item.........   7.5        6.3
   Extraordinary item........................   -         (5.4)
                                              ------     ------ 
   Net income                                   7.5%        .9%
                                              ------     ------


         Gross  revenue  increased  34.2% to  $14,624,955  in  fiscal  1997 from
$10,070,258  in  fiscal  1996.  Outdoor  revenues  increased  13.2% in line with
expectations,  from  $4,747,634  in fiscal 1996 to  $5,373,609  in fiscal  1997.
Transit  revenue grew 50.4% from  $6,150,256 in fiscal 1996 to $9,251,346 in the
current  fiscal  year.  The  new  transit   agreements  with   DART(Dallas)  and
RT(Sacramento)  provided  $2,387,662 of that growth.  Agency discounts increased
59.7% from $827,632 to $1,322,129 in fiscal 1997,  primarily due to the addition
of the Dallas market.  Net revenues  



                                       13
<PAGE>
increased 32.1% from $10,070,258 in fiscal 1996 to $13,302,826 in fiscal 1997.

         Direct  advertising  expenses increased 35.5% from $5,907,038 in fiscal
1996 to $8,004,869 in fiscal 1997,  primarily due to increased revenues.  Direct
advertising  expense as a percentage  of net  revenues  rose to 60.2% for fiscal
1997 from 58.7% in fiscal 1996,  primarily  due to the faster  growth of transit
advertising,  which has higher occupancy costs as a percentage of net sales than
outdoor advertising.

         General  and  administrative  costs as a  percentage  of net sales rose
slightly  from  16.7% in  fiscal  1996 to  16.9% in  fiscal  1997.  General  and
administrative   costs  increased  33.0%  to  $2,241,849  in  fiscal  1997  from
$1,685,135  in  fiscal  1996.  Fiscal  1997 was the  first  full  year  with the
additional   expense  of  being  a  public  company.   This  increase  was  also
attributable to the expenses  incurred in  consolidating  its Eugene  operations
from three locations to one in fiscal 1997. General and administrative costs are
expected to decrease as a percentage of sales as the Company grows.

         During fiscal 1997, the Company  incurred costs of $236,743  associated
with  attempting  to obtain new  transit  agreements  and  pre-opening  costs in
locations where the Company has established transit district agreements. Most of
the fiscal 1997 costs resulted from  participating in the appeal process related
to the DART proposal.  The Company will incur start-up costs in the future.  The
amount will vary, both in total cost and as a percentage of sales,  depending on
the  complexity and number of proposals for new districts and the success of the
Company in obtaining contracts for new districts.

         Depreciation and amortization  expense  increased 29.3%,  from $513,775
for fiscal 1996 to $664,207 in fiscal 1997, primarily due to capital spending on
outdoor  advertising  structures  and  increased  capital  spending  for  office
furniture, fixtures and computer equipment associated with new offices in Dallas
and Sacramento and the  consolidation of the three Eugene locations into the new
headquarters building.

         Interest  expense  decreased  60.5%,  to $584,258  for fiscal 1997 from
$1,480,237  in fiscal 1996,  primarily due to the  refinancing  of the Company's
term debt in October 1996 which reduced the interest rate on the term debt,  and
the reduction of debt pursuant to the Company's IPO in November 1996.

         Income  before  income taxes  increased  140.8% to $1,614,375 in fiscal
1997 from $670,300 in fiscal 1996, primarily for the reasons outlined above.

         Income tax expense  increased  to $614,311 for fiscal 1997 from $31,000
in fiscal  1996.  The income tax  expense  for  fiscal  1996 was  reduced by the
benefit from net operating loss carryforwards from prior years.



                                       14
<PAGE>
         During 1996, the Company incurred an extraordinary  expense as a result
of prepayment  penalties related to the early payment of debt and for previously
capitalized loan costs that were written off. The extraordinary  expense totaled
$543,355, net of the related income tax benefit of $342,000.

         Net income for fiscal 1997 rose to  $1,000,064  from  $95,945 in fiscal
1996 primarily due to the reasons explained above.

Liquidity and Capital Resources

         The Company's working capital was $646,500 and $379,848 at November 30,
1997 and 1996, respectively.  The increase in working capital resulted primarily
from an increase in accounts  receivable  partially  offset by borrowings on the
line of  credit.  Traditionally,  the  Company  satisfies  its  working  capital
requirements with cash from operations and revolving credit borrowings.

         Net cash  provided by  operating  activities  decreased  to $817,120 in
fiscal 1997 from  $1,295,896 in fiscal 1996.  This decrease was primarily due to
the  increase  in accounts  receivable.  The  increase  in  accounts  receivable
resulted  primarily  from  increased  business,  particularly  with  advertising
agencies.

         The net cash used in investing  activities increased from $1,127,431 in
fiscal 1996, to $1,439,617  in fiscal 1997,  primarily due to increased  capital
expenditures  relating to the new Eugene  headquarters  facility and opening new
offices  in  Dallas  and  Sacramento.  Fiscal  1996  capital  expenditures  were
partially offset by proceeds from the disposition of a billboard under threat of
condemnation. The Company intends to continue to develop new outdoor advertising
structures.  The Company intends to finance future capital  expenditures  with a
combination of earnings and borrowed funds.

         The Company's net cash provided by financing activities was $147,557 in
fiscal  1997 and  $251,907  in  fiscal  1996.  The cash  provided  by  financing
activities in fiscal 1996 was primarily  from the IPO (net of debt  repayments).
The net cash provided by financing  activities in fiscal 1997 resulted primarily
from increased float on the Company's payments.

         At November 30, 1997,  the Company had an operating line of credit with
a commercial  bank,  which bears  interest at the bank's prime rate. The line is
secured by qualified accounts receivable and limited to a maximum of $2,000,000.
Of that  amount,$742,864  had been  borrowed at November 30, 1997.  This line of
credit is to be reviewed on April 30, 1998.



                                       15
<PAGE>
         At November 30,  1997,  the Company  also had  long-term  debt of $6.34
million with its commercial  bank,  with interest based  partially on the bank's
prime rate plus .5% (9.0%) and partially on IBOR plus 2% (7.9375%).  (See Note 6
to the consolidated financial statements.)

         The  company   anticipates   capital   expenditures  of   approximately
$2,200,000 of which  approximately  $1,050,000  will be used to develop  outdoor
advertising  structures  and  $698,000  will be  used  to pay  for  the  outdoor
advertising  structures of a related  partnership(MO  Partners) that the Company
acquired in December 1997, pursuant to an option granted to the Company in 1996.
The Company intends to finance these expenditures with earnings and the proceeds
of borrowings  under a billboard  construction  line currently being  negotiated
with the bank.

         The Company  believes  that cash  generated  from  operations  and bank
borrowings  under its  credit  agreements  will be  sufficient  to  finance  the
Company's operations, including anticipated capital expenditures, through fiscal
1998.

         The  Company is in the  process of  assessing  the subject of year 2000
related issues on its business.  The Company  believes that costs to upgrade its
information and operating systems will not be material.

Seasonality

         The Company's transit  advertising  revenues have exhibited some degree
of seasonality.  Typically,  the Company experiences its highest revenues in the
fourth fiscal quarter and its lowest revenues in the first fiscal  quarter.  The
Company  expects this trend to continue.  A reduction in revenues in any quarter
is likely to result in a period-to-period  decline in operating  performance and
net income.

New Accounting Pronouncements

         New  accounting  pronouncements  are  discussed  in Note 1 of  Notes to
Consolidated Financial Statements.


ITEM 7. FINANCIAL STATEMENTS

         The financial  statements and supplementary  data required by this Item
are included on pages F-1 to F-15 of this Annual Report.



                                       16
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE


         In September  1997,  the Company filed Form 8-K  announcing a change in
auditors from Coopers & Lybrand LLP to Arthur Andersen LLP.





































                                       17
<PAGE>
PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; 
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Information  with  respect  to  directors  and  executive  officers  is
included under "Election of Directors" and "Executive Officers" in the Company's
definitive  proxy  statement for its 1998 Annual Meeting of  Shareholders  to be
filed not later than 120 days after the end of the fiscal  year  covered by this
Annual Report, and such information is incorporated herein by reference.

         Information  with respect to Section 16(a) of the  Securities  Exchange
Act is included under  "Compliance with Section 16(a)of the Securities  Exchange
Act" in the Company's  definitive proxy statement for its 1998 Annual Meeting of
Shareholders  to be filed not later  than 120 days  after the end of the  fiscal
year covered by this Annual Report, and such information is incorporated  herein
by reference.

ITEM 10. EXECUTIVE COMPENSATION

         Information  with respect to executive  compensation  is included under
"Executive  Compensation"  in the Company's  definitive  proxy statement for its
1998 Annual  Meeting of  Shareholders  to be filed not later than 120 days after
the end of the fiscal year covered by this Annual Report,  and such  information
is incorporated herein by reference.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information  with respect to security  ownership of certain  beneficial
owners and management is included under  "Principal  Shareholders and Management
Ownership"  in the  Company's  definitive  proxy  statement  for its 1998 Annual
Meeting of Shareholders to be filed not later than 120 days after the end of the
fiscal year covered by this Annual Report,  and such information is incorporated
herein by reference.


                                       18
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information   with  respect  to  certain   relationships   and  related
transactions  with  management is included under "Certain  Transactions"  in the
Company's definitive proxy statement for its 1998 Annual Meeting of Shareholders
to be filed not later than 120 days after the end of the fiscal year  covered by
this Annual Report, and such information is incorporated herein by reference.


PART IV


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)  Financial Statements.   The Financial Statements are listed in the Index
        to Consolidated Financial Statements on page F-1 of this Annual Report.

(a)(2)  Exhibits:

Exhibit           Description

  3.1    Restated Articles of Incorporation(1)

  3.2    Amendment to Restated Articles of Incorporation(2)

  3.3    Restated Bylaws(1)

  3.4    Amendment to Restated Bylaws(2)

  4.1    See Articles 3, 4 and 8 of Exhibit 3.1 and Articles 1, 2, 5, 6 and 7 of
         Exhibit 3.3(1)

  10.1*  Restated 1996 Stock Incentive Plan(2)

  10.2*  Form of Nonqualified  Stock Option Agreement for use with Restated 1996
         Stock Incentive Plan(2)

  10.3*  Form of Incentive  Stock Option  Agreement  for use with  Restated 1996
         Stock Incentive Plan(2)

  10.4   Form  of   Indemnification   Agreement  between  the  Company  and  its
         directors(1)

  10.5   Form  of   Indemnification   Agreement  between  the  Company  and  its
         officers(1)

  10.6   Tri-County Metropolitan  Transportation District of Oregon Professional
         Services Contract for Transit Advertising  Services between Tri-Met and
         the Company, dated July 1, 1996, and related documents(1)



                                       19
<PAGE>
  10.7   Lease  between Obie  Industries  Incorporated  and the  Company,  dated
         November 12, 1996(2)

  10.8   Loan  Agreement,  dated  October 31, 1996,  among the  Company,  United
         States National Bank of Oregon, Obie Industries  Incorporated and Brian
         Obie, and related documents(2)

  10.9   Amendments,  dated  December 31, 1996 and  February  12, 1997,  to Loan
         Agreement  dated  October 31, 1996,  among the Company,  United  States
         National Bank of Oregon,  Obie Industries  Incorporated and Brian Obie,
         and related documents(2)

  10.10  Option Agreement  between MO Partners and the Company,  dated effective
         October 1, 1996(2)

  10.11  Dallas Area Rapid  Transit  contract  C-97000039  between  DART and the
         Company, dated July 1, 1997, and related documents

  10.12  Amendment,  dated June 20, 1997,  to Loan  Agreement  dated October 31,
         1996,  among the Company,  United States National Bank of Oregon,  Obie
         Industries Incorporated and Brian Obie.

  10.13  Agreement between MO Partners and the Company, dated effective December
         31, 1997

  10.14  Amendment  dated July 15, 1997 to lease  agreement  between  Obie Media
         Corporation and Obie Industries dated November 12, 1996.

  20.1   Portions of  Definitive  Proxy  Statement  for 1998 Annual  Shareholder
         Meeting(3)

  21.1   List of Subsidiaries(1)

  27.1   Financial Data Schedule
--------------------

*   Management Contract or Compensatory Plan or Arrangement.

(1) Incorporated herein by reference from the Company's  Registration  Statement
on Form SB-2  (Registration  No.  333-5728-LA)  filed  with the  Securities  and
Exchange Commission on October 3, 



                                       20
<PAGE>
1996.

(2) Incorporated  herein by reference from the Company's  Amendment No. 1 to the
Registration  Statement on Form SB-2  (Registration No.  333-5728-LA) filed with
the Securities and Exchange Commission on November 15, 1996.

(3) To be filed with the  Securities  and  Exchange  Commission  within 120 days
after the end of the fiscal year covered by this Annual Report.


         Upon written request to James W. Callahan,  Chief Financial  Officer of
Obie Media Corporation,  4211 West 11th Avenue,  Eugene, OR 97402,  shareholders
will be furnished a copy of any exhibit,  upon payment of $ .25 per page,  which
represents the Company's reasonable expense in furnishing the exhibit requested.

(b) Reports on Form 8-K. 
    -------------------- 
In September  1997,  the Company filed Form 8-K  announcing a change in auditors
from Coopers & Lybrand LLP to Arthur Andersen LLP.














                                       21
<PAGE>
                                   SIGNATURES

                  In  accordance  with  Section  13 or 15(d)  of the  Securities
Exchange  Act of 1934,  the  Registrant  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


OBIE MEDIA CORPORATION



Dated:  February 27, 1998                           By/s/ Brian B. Obie
                                                       -----------------
                                                       Brian B. Obie
                                                       President

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following  persons on behalf of the  Registrant  and in
the capacities and on the dates indicated.

                                     PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR:



Dated:  February 27, 1998                 By/s/ Brian B. Obie
                                             -----------------
                                           Brian B. Obie, President,
                                           Chief Executive Officer and Director

                                     PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:



Dated:  February 27, 1998                 By/s/ James W. Callahan
                                             ---------------------
                                           James W. Callahan, 
                                           Chief Financial Officer and Treasurer








                                       22
<PAGE>
         DIRECTORS:



Dated:  February 24, 1998                          By/s/ Delores M. Mord
                                                    -------------------
                                                    Delores M. Mord, Director



Dated:                                             By
                                                    -------------------
                                                    Randall C. Pape, Director



Dated:  February 27, 1998                          By/s/ Stephen A. Wendell
                                                    ----------------------
                                                    Stephen A. Wendell, Director



Dated:  February 24, 1998                          By/s/ Richard C. Williams
                                                    -----------------------
                                                    Richard C. Williams,Director
















                                       23
<PAGE>
                                  EXHIBIT INDEX

Exhibit*

  10.11  Dallas  Area Rapid  Transit  contract  C-7000039  between  DART and the
         Company, dated July 1, 1997, and related documents

  10.12  Amendment,  dated June 20, 1997,  to Loan  Agreement  dated October 31,
         1996,  among the Company,  United States National Bank of Oregon,  Obie
         Industries Incorporated and Brian Obie.

  10.13  Agreement between MO Partners and the Company, dated effective December
         31, 1997

  10.14  Amendment  dated July 15, 1997 to lease  agreement  between  Obie Media
         Corporation and Obie Industries dated November 12, 1996.

  27.1   Financial Data Schedule

-----------

* See Item 13(a)(2) of this Annual Report for a list of all exhibits,  including
those incorporated by reference.
















                                       24
<PAGE>

                             OBIE MEDIA CORPORATION

                              FINANCIAL STATEMENTS
                        AS OF NOVEMBER 30, 1997 AND 1996
                         TOGETHER WITH AUDITORS' REPORT




















                                      F-1

<PAGE>

                     [Coopers & Lybrand L.L.P. Letterhead]





Report of Independent Accountants




Board of Directors
Obie Media Corporation:


We have  audited  the  accompanying  consolidated  balance  sheet of Obie  Media
Corporation as of November 30, 1996, and the related consolidated  statements of
income,  changes in  shareholders'  equity (deficit) and cash flows for the year
then ended.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We  conducted  our  audit  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  Obie  Media
Corporation  as of November 30, 1996,  and the results of their  operations  and
their cash flows for the year then ended in conformity  with generally  accepted
accounting principles.




COOPERS & LYBRAND L.L.P.
/S/Coopers & Lybrand L.L.P.



Eugene, Oregon
January 22, 1997, except for Note 6, as
   to which the date is February 12, 1997





                                      F-2

<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholders
of Obie Media Corporation:

We have  audited  the  accompanying  consolidated  balance  sheet of Obie  Media
Corporation (an Oregon  corporation) and subsidiary as of November 30, 1997, and
the related consolidated  statements of income,  changes in shareholders' equity
(deficit) and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Obie Media  Corporation  and
subsidiary  as of November 30,  1997,  and the results of their  operations  and
their cash flows for the year then ended in conformity  with generally  accepted
accounting principles.


ARTHUR ANDERSEN LLP
/s/Arthur Andersen LLP



Portland, Oregon,
  January 30, 1998


                                      F-2a

<PAGE>
                             OBIE MEDIA CORPORATION

<TABLE>
<CAPTION>
                           CONSOLIDATED BALANCE SHEETS

                        AS OF NOVEMBER 30, 1997 AND 1996


                                     ASSETS

                                                                 1997                1996
                                                             -----------         -----------
CURRENT ASSETS:
<S>                                                          <C>                 <C>        
  Cash                                                       $         -         $   474,940
  Accounts receivable, net of allowance for doubtful
    accounts of $146,692 and $90,000, respectively             2,878,360           1,550,193
  Prepaid expenses and other current assets                      790,234             812,450
  Deferred tax assets                                          1,105,240             709,000
                                                             -----------         -----------
          Total current assets                                 4,773,834           3,546,583

PROPERTY AND EQUIPMENT, net                                    9,264,855           8,458,014

OTHER ASSETS                                                     245,733             147,987

DEFERRED TAX ASSETS                                                    -             380,000
                                                             -----------         -----------
                                                             $14,284,422         $12,532,584
                                                             ===========         ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Checks outstanding in excess of cash deposits              $   173,611         $         -
  Current portion of long-term debt                              859,323             743,973
  Line of credit                                                 742,864                   -
  Accounts payable                                               403,449             757,020
  Accrued expenses                                             1,166,883           1,070,440
  Deferred revenue                                               781,204             595,302
                                                             -----------         -----------
          Total current liabilities                            4,127,334           3,166,735
                                                             -----------         -----------

DEFERRED TAX LIABILITIES                                         630,551                   -

LONG-TERM DEBT, less current portion                           5,695,219           6,554,587
                                                             -----------         -----------
          Total liabilities                                   10,453,104           9,721,322

MINORITY INTEREST IN SUBSIDIARY                                   35,424              27,407

COMMITMENTS (Note 9)

SHAREHOLDERS' EQUITY:
  Preferred stock, without par value, 10,000,000 shares
    authorized, no shares issues and outstanding                       -                   -
  Common stock, without par value; 20,000,000 shares
    authorized, 3,855,486 and 3,850,000 shares issued and
    outstanding, respectively                                  6,173,967           6,161,992
  Accumulated deficit                                         (2,378,073)         (3,378,137)
                                                             -----------         -----------
          Total shareholders' equity                           3,795,894           2,783,855
                                                             -----------         -----------
          Total liabilities and shareholders' equity         $14,284,422         $12,532,584
                                                             ===========         ===========


The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>

                                      F-3

<PAGE>
                             OBIE MEDIA CORPORATION
<TABLE>
<CAPTION>
                        CONSOLIDATED STATEMENTS OF INCOME

                 FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996



                                                              1997               1996
                                                             -----------         -----------

REVENUES:
<S>                                                          <C>                 <C>        
  Outdoor advertising                                        $ 5,373,609         $ 4,747,634
  Transit advertising                                          9,251,346           6,150,256
  Less- Agency commissions                                    (1,322,129)           (827,632)
                                                             -----------         -----------
          Net revenues                                        13,302,826          10,070,258

OPERATING EXPENSES:
  Direct advertising expenses                                  8,004,869           5,907,038
  General and administrative                                   2,241,849           1,685,135
  Start up costs                                                 236,743                   -
  Depreciation and amortization                                  664,207             513,775
                                                             -----------         -----------
          Operating income                                     2,155,158           1,964,310

OTHER (INCOME) EXPENSE:
  Interest expense                                               584,258           1,480,237
  Minority interest in subsidiary                                  8,017               2,138
  Other                                                          (51,492)           (188,365)
                                                             -----------         -----------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM              1,614,375             670,300

PROVISION FOR INCOME TAXES                                       614,311              31,000
                                                             -----------         -----------
INCOME BEFORE EXTRAORDINARY ITEM                               1,000,064             639,300

EXTRAORDINARY ITEM, early debt payoff penalty and write-
  off of loan fees, net of income tax benefit                          -            (543,355)
                                                             -----------         -----------
NET INCOME                                                   $ 1,000,064         $    95,945
                                                             ===========         ===========

NET INCOME PER SHARE BEFORE EXTRAORDINARY ITEM               $       .26         $       .23

EXTRAORDINARY ITEM, net of tax                                      -                  (.20)
                                                             -----------         -----------
NET INCOME PER SHARE                                         $       .26         $       .03
                                                             ===========         ===========

SHARES USED IN PER SHARE CALCULATIONS                          3,900,230           2,778,946
                                                             ===========         ===========
</TABLE>

The  accompanying  notes are an integral  part of these consolidated statements.


                                      F-4

<PAGE>
                             OBIE MEDIA CORPORATION
<TABLE>
<CAPTION>
      CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

                 FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996



                                                      Receivable
                                                         From
                                                      Affiliates,       Accumulated
                          Shares          Amount          Net             Deficit            Total
                         ---------     ----------     -----------       -----------       -----------
BALANCE,
<S>                      <C>           <C>            <C>               <C>               <C>
  November 30, 1995      2,750,000     $  250,000     $(1,179,922)      $(1,721,602)      $(2,651,524)

  Issuance of
    common stock         1,100,000      5,911,992               -                 -         5,911,992

  Net income                     -              -               -            95,945            95,945

  Net withdrawals                -              -        (572,558)                -          (572,558)

  Distributions                  -              -       1,752,480        (1,752,480)                -
                         ---------     ----------     -----------       -----------       -----------
BALANCE,
  November 30, 1996      3,850,000      6,161,992               -        (3,378,137)        2,783,855

  Additional
    initial public
    offering
    expenses                     -        (24,788)              -                 -           (24,788)

  Issuance of
    common stock             5,500         36,875               -                 -            36,875

  Purchase of
    Fractional
    shares of
    common stock               (14)          (112)              -                 -              (112)
  
  Net income                     -              -               -         1,000,064         1,000,064
                         ---------     ----------     -----------       -----------       -----------
BALANCE,
  November 30, 1997      3,855,486     $6,173,967     $         -       $(2,378,073)      $ 3,795,894
                         =========     ==========     ===========       ===========       ===========
</TABLE>

The  accompanying notes are an  integral  part of these consolidated statements.


                                      F-5

<PAGE>
                             OBIE MEDIA CORPORATION
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996


                                                               1997                1996
                                                           -----------         ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                        <C>                 <C>         
  Net income                                               $ 1,000,064         $     95,945
  Adjustments to reconcile net income to net cash
    provided by operating activities-
      Depreciation and amortization                            664,207              513,775
      Extraordinary item                                             -              885,355
      Gain on disposition of property and equipment                  -             (183,175)
      Deferred income taxes                                    614,311             (311,000)
      Minority interest in subsidiary                            8,017                2,138
      Change in assets and liabilities:
        (Increase) decrease in-
          Accounts receivable                               (1,328,167)            (208,940)
          Prepaid expenses and other assets                   (106,961)            (321,451)
        Increase (decrease) in-
          Accounts payable                                    (316,696)             262,529
          Accrued expenses                                      96,443              524,416
          Deferred revenue                                     185,902               36,304
                                                           -----------         ------------
          Net cash provided by operating activities            817,120            1,295,896

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                      (1,439,617)          (1,363,131)
  Proceeds from disposition of property and equipment                -              235,700
                                                           -----------         ------------
          Net cash used in investing activities             (1,439,617)          (1,127,431)
                                                           -----------         ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                             -            7,000,000
  Cost to issue common stock                                   (24,788)          (1,088,008)
  Purchase of fractional shares of common stock                   (112)                   -
  Net borrowings (payments) on lines of credit                 742,864              (88,429)
  Checks outstanding in excess of cash deposits                173,611             (378,043)
  Proceeds from long-term debt                                       -           12,000,000
  Payments on long-term debt                                  (744,018)         (15,917,001)
  Net advances to affiliates                                         -             (572,558)
  Early debt payoff penalty                                          -             (704,054)
                                                           -----------         ------------
          Net cash provided by financing activities            147,557              251,907
                                                           -----------         ------------
NET INCREASE (DECREASE) IN CASH                               (474,940)             420,372

CASH, beginning of year                                        474,940               54,568
                                                           -----------         ------------
CASH, end of year                                          $         -         $    474,940
                                                           ===========         ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Interest capitalized                                     $    10,637         $     45,439
  Accrued loan fees capitalized                                      -               90,938
  Acquisition of vehicle with capital lease obligation               -               28,901
  Distribution of receivable to affiliates                           -            1,752,480
  Issuance of stock to employee benefit plan                    36,875                   -

CASH PAID FOR INTEREST                                     $   571,445         $  1,470,967

The  accompanying notes are an  integral  part of these consolidated statements.
</TABLE>


                                      F-7

<PAGE>
                             OBIE MEDIA CORPORATION


                          NOTES TO FINANCIAL STATEMENTS

                           NOVEMBER 30, 1997 AND 1996



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Company

Obie Media Corporation (the Company), formerly Obie Outdoor Advertising, Inc. is
a full service  out-of-home  advertising  company with  agreements  with transit
districts in Oregon,  Washington,  California and Texas, and outdoor advertising
structures in Washington, Oregon, California and Idaho.

On November 21, 1996,  the company  completed an initial  public  offering  (the
Offering) of 1,100,000 shares of its common stock,  raising  $5,887,204,  net of
expenses  of  $1,112,796.  The  net  proceeds  were  used to  reduce  previously
outstanding debt (see Note 6).

Spin-Off

Prior to November 20,  1996,  the Company was a  subsidiary  of Obie  Industries
Incorporated. To facilitate the Offering, the Company was spun-off as a separate
entity.

Prior  to the  spin-off,  the  Company  engaged  in  various  transactions  with
affiliates under common control.  These transactions primarily included advances
of working capital needs for a discontinued  business and capital  expenditures.
Such transactions  resulted in a net receivable consisting of amounts receivable
from and  payable to  affiliated  companies.  As part of the  spin-off,  the net
receivable   from  affiliates   totaling   $1,752,480  was  distributed  by  the
declaration of a dividend and, accordingly,  increased the Company's accumulated
deficit.

Basis of Presentation

The  consolidated  financial  statements  include  the Company and its 50% owned
subsidiary.  All significant  intercompany accounts and transactions between the
Company and its subsidiary have been eliminated in consolidation.

Use of Estimates

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

Revenue Recognition

The  Company has  contracts  to provide  future  advertising  to its  customers.
Advertising  revenue is recognized  ratably over the period the  advertising  is
displayed.  Payments received for advertising  revenue in advance of display are
deferred.  Costs  incurred  for  the  production  and  installation  of  outdoor
advertising  displays,  which are not specifically  recoverable in the event the
related contract is canceled,  are expensed as incurred.  Costs incurred for the
production and installation of displays for transit advertising,  which are paid
for by the customer  ratably over the term of the  advertising  contract and are
specifically  recoverable  in the event the related  contract is  canceled,  are
deferred and recognized as expense as the related revenue is recognized over the
life of respective contracts.


<PAGE>



Concentration of Credit Risk

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist  principally  of cash and accounts  receivable.  The Company
places its cash with high credit quality financial institutions.  Concentrations
of credit risk with respect to accounts  receivable are not  significant  due to
the large number of customers,  and their dispersion across different industries
and geographic areas.

At November 30, 1997, the Company had agreements with twelve transit  districts.
Customers  advertising  on  transit  vehicles  owned  by two  and  one of  these
districts  represented 42% and 37% of the Company's total revenues for the years
ended November 30, 1997 and 1996,  respectively.  Transit  agreements range from
one to five years and are  subject to renewal  either at the  discretion  of the
transit  district  or upon the mutual  agreement  of the Company and the transit
district.  Generally,  these  agreements  require the Company to pay the transit
district the greater of a percentage of the related advertising revenues, net of
the advertising production charges, or a guaranteed minimum amount.

Fair Value of Financial Instruments

The  Company's  financial  instruments  consist  of cash,  accounts  receivable,
accounts payable,  accrued expenses and debt  instruments.  At November 30, 1997
and 1996, the fair value of the Company's financial instruments are estimated to
be equal to their reported  carrying value. The carrying value of long-term debt
approximates  fair  value.  The  resulting   estimates  of  fair  value  require
subjective  judgments and are  approximates.  Changes in the  methodologies  and
assumptions could significantly affect the estimates.

Cash

Cash consists of demand  deposits with two federally  insured  banks.  At times,
balances may exceed amounts insured.

Property and Equipment

Property  and  equipment  are stated at cost.  Depreciation  is  provided on the
straight-line  method  over the  estimated  useful  lives.  Normal  repairs  and
maintenance are expensed as incurred.  The cost and accumulated  depreciation of
assets sold or otherwise retired are removed from the accounts and the resulting
gain or loss is  recognized.  Interest is  capitalized  in  connection  with the
construction of properties and equipment.

Other Assets

Other assets include loan costs, which are stated at cost and amortized over the
life of the loan.

Income Taxes

The  Company  uses the  liability  method  to record  deferred  tax  assets  and
liabilities that are based on the difference between the tax bases of assets and
liabilities and their carrying amounts for financial reporting  purposes.  These
temporary  differences  result from the use of different  accounting methods for
financial statement and tax reporting purposes.

Earnings Per Share

Earnings per common share is computed on the weighted  average  number of common
shares outstanding during the period after  consideration of the dilutive effect
of stock options.  Such amounts have been retroactively  adjusted to reflect the
10-for-1 stock split which occurred in 1996 and the 11-for-10  stock split which
occurred  in 1997  (see  Note  8).  Fully  diluted  earnings  per  share  is not
significantly  different  from  primary  earnings  per  share  for  the  periods
presented.



<PAGE>



New Accounting Pronouncements

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  (SFAS) No. 128,  "Earnings  Per  Share."  This
standard revises the disclosure  requirements of earnings per share,  simplifies
the  computation  of  earnings  per share and  increases  the  comparability  of
earnings per share on an international basis. SFAS No. 128 will be effective for
the Company for the year ending  November 30, 1998. The earnings per share under
the new  standard  do not  differ  from  those  calculated  under  the  existing
standard.

2.  PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of the following:

                                                November 30,
                                          -----------------------
                                            1997           1996
                                          --------       --------

Prepaid leases                            $322,811       $291,149
Transit advertising production costs       294,991        394,290
Other                                      172,432        127,011
                                          --------       --------
                                          $790,234       $812,450
                                          ========       ========

3.  PROPERTY AND EQUIPMENT:

Property and equipment consist of the following:

                                               November 30,
                                     ------------------------------
                                         1997               1996    Asset Lives
                                     -----------        ----------- -----------

Outdoor advertising structures       $10,577,588        $ 9,860,227    20 years
Other equipment and leaseholds         2,139,119          1,431,589  5-20 years
                                     -----------        -----------
                                      12,716,707         11,291,816
Less- Accumulated depreciation         3,451,852          2,833,802
                                     -----------        -----------
                                     $ 9,264,855        $ 8,458,014
                                     ===========        ===========

4.  OTHER ASSETS:

Other assets consist of the following:

                                               November 30,
                                          -----------------------
                                            1997           1996
                                          --------       --------

Loan costs                                $133,220       $ 90,938
Other                                      112,513         57,049
                                          --------       --------
                                          $245,733       $147,987
                                          ========       ========



<PAGE>



5.  ACCRUED EXPENSES:

Accrued expenses consist of the following:

                                                   November 30,
                                           ----------------------------
                                              1997              1996
                                           ----------        ----------

Transit district fees                      $  753,571        $  552,538
Payroll and related items                     307,365           425,044
Other                                         105,947            92,858
                                           ----------        ----------
                                           $1,166,883        $1,070,440
                                           ==========        ==========

6.  FINANCING ARRANGEMENTS:
<TABLE>
<CAPTION>
Long-term debt consists of the following:

                                                                         November 30,
                                                                 ----------------------------
                                                                    1997              1996
                                                                 ----------        ----------
<S>                                                              <C>               <C>
Term loan with United States National Bank (USNB), as
  described below                                                $6,340,000        $7,000,000
Note payable in annual payments of $12,000 plus interest at
  10%, with collateral of outdoor advertising structures,
  due October 1999                                                   24,000            36,000
Note payable in monthly payments of $5,900 including
  interest at 10%, guaranteed by Brian B. Obie, due April
  2000                                                              149,786           202,698
Notes payable in monthly payments of $2,219 including
  interest ranging from 9% to 9.98%, with collateral of
  several vehicles, maturing through November 2002                   40,756            59,862
                                                                 ----------        ----------
                                                                  6,554,542         7,298,560
Less- Current portion                                               859,323           743,973
                                                                 ----------        ----------
                                                                 $5,695,219        $6,554,587
                                                                 ==========        ==========
</TABLE>

The aggregate  principal  payments due on the above debt  subsequent to November
30, 1997 are:

1998                                 $  859,323
1999                                  1,161,199
2000                                  1,131,732
2001                                  1,105,464
2002                                  1,105,173
Thereafter                            1,191,651
                                     ----------
                                     $6,554,542
                                     ==========

In October 1996, the Company received a $12,000,000 bridge loan from USNB, which
was used to refinance  substantially all of the Company's then existing debt. In
connection with the  refinancing of the long-term debt, the Company  incurred an
extraordinary  expense of $885,355 for prepayment penalties related to the early
extinguishment  of debt and for  previously  capitalized  loan  costs  that were
written off.



<PAGE>



Upon the completion of the Offering,  the  outstanding  balance on this loan was
reduced to $7,000,000. Effective February 12, 1997, the outstanding loan balance
was converted to a seven-year term loan,  payable in monthly  installments,  due
April 30, 2004, with interest to be based, at the Company's option, partially at
the  Inter-Bank  Offering Rate (IBOR) plus 2% (7.9375% at November 30, 1997) and
the  remainder at USNB's prime rate plus .5% (9.0% at November  30,  1997).  The
loan  is  collateralized  by  substantially  all of the  Company's  assets.  The
weighted average interest rate on this loan was approximately 8% at November 30,
1997.

The  Company  also has a  $2,000,000  operating  line of credit  with USNB.  The
interest  rate is at USNB's  prime rate (8.5% at  November  30,  1997) and it is
collateralized by receivables.  The operating line will be reviewed on April 30,
1998.  The  outstanding  balance on this line of credit at November 30, 1997 and
1996 was $742,864 and $0, respectively.

The Company was in compliance with all loan covenants at November 30, 1997.

7.  INCOME TAXES:

The provision for income taxes was a deferred  provision of $614,311 and $31,000
for the years ended November 30, 1997 and 1996, respectively.  A deferred income
tax benefit of $342,000 was recorded related to the  extraordinary  item for the
year ended November 30, 1996.

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

                                                       Years Ended
                                                       November 30,
                                               ---------------------------
                                                  1997              1996
                                               ----------        ---------

Current deferred tax assets:
  Deferred revenue                             $  457,595        $ 417,000
  Prepaid commissions                             291,029          225,000
  Allowance for doubtful accounts                  56,652           35,000
  Net operating loss carryforwards                442,565          176,000
  Accrued expenses and other                        6,001           37,000
                                               ----------         --------
          Total current deferred tax assets     1,253,842          890,000

Current deferred tax liabilities:
  Prepaid fees                                   (148,602)        (181,000)
                                               ----------        ---------
          Net current deferred tax assets      $1,105,240        $ 709,000
                                               ==========        =========

Noncurrent deferred tax assets:
  Property and equipment                          $     -        $ 145,000
  Net operating loss carryforwards                      -          235,000
                                               ----------        ---------
                                                  $     -        $ 380,000
                                               ==========        =========
Noncurrent deferred tax liabilities:
  Property and equipment                       $  630,551          $     -
                                               ==========        =========

Based  on  management's  assessment,  it is more  likely  than  not that the net
deferred tax assets will be realized through future taxable income.  The company
has net operating loss carryforwards  totaling approximately  $1,146,000.  These
carryforwards  expire  as  follows:  2003 -  $25,000;  2004 -  $421,000;  2005 -
$130,000; 2006 - $6,000; 2007 - $27,000; 2008 - $15,000; and 2011 - $522,000.



<PAGE>



Income tax  expense  (benefit)  for the years ended  November  30, 1997 and 1996
differs from the amounts  computed by applying the U.S.  federal income tax rate
of 34% to pretax income,  considering  the effect of the  extraordinary  item as
follows:
<TABLE>
<CAPTION>
                                                                        Years Ended
                                                                        November 30,
                                                                  -------------------------
                                                                    1997            1996
                                                                  --------        ---------
<S>                                                               <C>             <C>
Computed "expected" tax expense (benefit)                         $548,888        $ (73,119)
Increase (reduction) in income taxes resulting from:
  Increase in net operating losses available to the Company              -         (220,986)
  State and local taxes, net of federal income tax benefit          65,423          (13,638)
  Other differences, net                                                 -           (3,257)
                                                                  --------        ---------
          Actual income tax expense (benefit)                     $614,311        $(311,000)
                                                                  ========        =========
</TABLE>

8. SHAREHOLDERS' EQUITY:

The Company's  Restated Articles of Incorporation  (the Articles)  authorize the
issuance of up to  20,000,000  shares of Common Stock and  10,000,000  shares of
preferred stock issuable in series (Preferred Stock).

In  connection  with  the  Company's   Offering,   the  Company's   Articles  of
Incorporation  were  amended  and  restated  on October 1, 1996 to  authorize  a
10-for-1  stock  split.  In October of 1997,  the Company  declared an 11-for-10
stock split for shareholders of record on November 21, 1997.

Preferred Stock

The Board of Directors is authorized, without further shareholder authorization,
to  issue  Preferred  Stock  in one or  more  series  and to fix the  terms  and
provisions of each series, including dividend rights and preferences, conversion
rights,  voting rights,  redemption rights and rights on liquidation,  including
preferences over Common Stock.

Common Stock

Holders of Common  Stock are  entitled  to one vote per share on all  matters on
which holders of Common Stock are entitled to vote.  Holders of Common Stock are
entitled to receive dividends when and as declared by the Board of Directors out
of any funds lawfully  available  therefor, and,  in the event of liquidation or
distribution of assets, are entitled to participate  ratably in the distribution
of such assets  remaining after payment of liabilities,  in each case subject to
any  preferential  rights granted to any series of Preferred Stock that may then
be outstanding.



<PAGE>



1996 Stock Incentive Plan

On October 2, 1996, the Company's Board of Directors and shareholder adopted the
1996 Stock Incentive Plan,  which provides for the issuance of 330,000 shares of
Common Stock  pursuant to Incentive  Stock Options  (ISOs),  Nonqualified  Stock
Options  (NSOs),  stock  bonuses  and stock  sales to key  managers,  employees,
directors and  consultants of the Company.  ISOs may be issued only to employees
of the Company and will have a maximum term of ten years from the date of grant.
The  exercise  price for ISOs may not be less than 100% of the fair market value
of the Common  Stock at the time of the grant,  and the  aggregate  fair  market
value (as  determined  at the time of the  grant) of  shares  issuable  upon the
exercise  of ISOs for the first  time in any one  calendar  year may not  exceed
$100,000.  In the case of ISOs granted to holders of more than 10% of the voting
power of the Company,  the exercise  price may not be less than 110% of the fair
market value of the Common  Stock at the time of the grant,  and the term of the
option may not exceed  five  years.  NQOs may be granted at not less than 85% of
the fair market value of the Common Stock at the date of grant.  Options  become
exercisable  in  whole  or in  part  from  time to  time  as  determined  by the
Compensation  Committee,  which will  administer the 1996 Stock  Incentive Plan.
Stock options  totaling  18,700 were granted  during the year ended November 30,
1997. In  connection  with the Offering,  stock  options  totaling  128,150 were
granted  at  an  exercise price of $6.05 per share.   During 1997, 2,200 options
issued in Novembr 1996 were canceled.

The following table summarizes  information  about stock options  outstanding at
November 30, 1997:
<TABLE>
<CAPTION>

                                   Options Outstanding                          Options Exercisable
                  --------------------------------------------------      -------------------------------
                                          Weighted                           Number of
                      Number               Average          Weighted           Shares            Weighted
    Range of      Outstanding at          Remaining         Average        Exercisable at         Average
    Exercise       November 30,          Contractual        Exercise        November 30,         Exercise
     Prices            1997              Life - Years        Price              1997               Price
   ----------     --------------         ------------       --------       --------------        -------
<S><C>                <C>                     <C>           <C>              <C>                  <C>

   $     6.05         125,950                 14.0            $6.05          25,190               $6.05
         6.88          14,300                 14.2             6.88               -                -
         6.70           4,400                 14.6             6.70               -                -
   ----------         -------                 ----            -----          ------               -----
   $6.05-6.88         144,650                 14.0            $6.15          25,190               $6.05
   ==========         =======                 ====            =====          ======               =====
</TABLE>

As of November 30, 1996, no options were exercisable.

Statement of Financial Accounting Standards No. 123

During 1995,  the  Financial  Accounting  Standards  Board issued SFAS 123 which
defines a fair value based method of accounting  for employee  stock options and
similar equity  instruments  and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans.  However, it also
allows an entity to continue to measure  compensation cost for those plans using
the method of accounting  prescribed by APB 25. Entities electing to continue to
use the  accounting  treatment in APB 25 must make pro forma  disclosures of net
income and, if presented,  earnings per share, as if the fair value based method
of accounting defined in SFAS 123 had been adopted.



<PAGE>



The Company has elected to account for its stock-based  compensation plans under
APB 25; however,  the Company has computed,  for pro forma disclosure  purposes,
the value of all options  granted  during 1997 and 1996 using the  Black-Scholes
option  pricing model as  prescribed  by SFAS 123 using the  following  weighted
average assumptions for grants:

                                                           Years Ended
                                                           November 30,
                                                      --------------------
                                                        1997         1996
                                                      -------      -------
Risk-free interest rate                                 6.25%         6.0%
Expected dividend yield                                    0%           0%
Expected lives                                        8 years      8 years
Expected volatility                                    55.84%       55.84%

Using the Black-Scholes  methodology,  the total value of options granted during
1997 and 1996 was $78,161 and $466,049,  respectively,  which would be amortized
on a pro forma basis over the  vesting  period of the  options  (typically  five
years). The weighted average per share fair value of options granted during 1997
and 1996 was $4.60 and $4.07, respectively. If the Company had accounted for its
stock-based  compensation  plans in accordance  with SFAS 123, the Company's net
income and net  income per share  would  approximate  the pro forma  disclosures
below:

                                         Years Ended November 30,
                            -------------------------------------------------
                                     1997                       1996
                            ----------------------      ---------------------
                                As                         As
                             Reported    Pro Forma      Reported    Pro Forma

Net income                  $1,000,064    $896,022       $95,945    $94,428
Net income per share             $0.26       $0.23         $0.03      $0.03

The effects of applying SFAS 123 in this pro forma disclosure are not indicative
of future  amounts.  SFAS 123 does not apply to awards prior to January 1, 1995,
and additional awards are anticipated in future years.

9.  COMMITMENTS:

Operating Leases

The  Company  leases   outdoor   advertising   structures   from  an  affiliated
partnership.  The lease agreement  requires  monthly  payments of a minimum base
rent  plus  additional  rent  equal to 5% of the  gross  revenues  derived  from
advertising  displayed on the structures.  Future minimum base rent payments are
$8,500 per month through December 1996, and increase to $9,000 per month for the
following  calendar year. The lease expires December 31, 1997. In December 1997,
the Company exercised its option to purchase the property at a purchase price of
$698,000.  Total lease expense  pursuant to this lease was $108,397 and $107,945
for the years ended November 30, 1997 and 1996, respectively.

The Company also rents office and production space from  affiliates.  Such rents
totaled  $123,180  and $78,897 for the years ended  November  30, 1997 and 1996,
respectively.

The Company leases parcels of property beneath outdoor  advertising  structures.
These leases are  generally  for a term of up to ten years,  with two  five-year
renewal options at the Company's discretion.  The Company also leases facilities
for sales,  service  and  installation  for its  operating  offices.  Total rent
expense  pursuant to these  leases was $755,486 and $607,566 for the years ended
November 30, 1997 and 1996, respectively.



<PAGE>



Future minimum lease payments for all operating  leases above are as follows for
the years ending November 30:

          1998                 $1,054,556
          1999                    966,394
          2000                    888,449
          2001                    802,170
          2002                    669,043
       Thereafter               1,757,133

Debt Guarantees

The  Company  has  guaranteed  the debt of an  affiliated  partnership  totaling
$414,729 at November 30, 1997.

10.  EMPLOYEE BENEFIT PLAN:

Substantially all of the Company's  employees who have met vesting  requirements
participate   in  a  defined   contribution   benefit  plan  that  provides  for
discretionary  annual  contributions  by the Company.  During 1997 and 1996, the
Company  accrued  $32,154 and $51,020,  respectively,  as a contribution  to the
plan.  In 1997,  the  Company  paid  the 1996  accrued  contribution  through  a
contribution  of 5,500 shares of its common stock to the plan and the balance in
cash.