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, 1999
                                             -----------------
                                       or
[    ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                        For the transition period from to

                        Commission file Number: 000-21623

                             OBIE MEDIA CORPORATION
                 (Name of small business issuer in its charter)
                                                                93-0966515
                  Oregon                                      (I.R.S. Employer
         (State of incorporation)                            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:  $40,466,000

         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:  $  30,385,519  aggregate  market  value as of
December 31, 1999, 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: 5,884,253 shares of
Common Stock, without par value, on February 8, 2000.

                       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 21, 2000.

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

<PAGE>

                                TABLE OF CONTENTS




Part I

Item 1.    Description of Business.......................................  2
Item 2.    Description of Properties.....................................  10
Item 3.    Legal Proceedings.............................................  10
Item 4.    Submission of Matters to a Vote of Shareholders...............  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 ....................................  12
Item 7.    Financial Statements..........................................  16
Item 8.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosures.....................................  17


Part III

Item 9.    Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act.............  17
Item 10.   Executive Compensation........................................  17
Item 11.   Security Ownership of Certain Beneficial Owners and Management
Item 12.   Certain Relationships and Related Transactions................  17
Item 13.   Exhibits and Reports on Form 8-K..............................  18
Signatures...............................................................  20
Financial Statements..................................................... F-1


                                       ii
<PAGE>

FORM 10-KSB

This Annual Report includes  certain  forward-looking  statements that involve 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: 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  innovative  display  products;  competitive  factors,  including
increased  competition  and price  pressures;  changes  in  regulatory  or other
external  factors;  failure to  successfully  conclude  negotiations  on pending
transactions or to successfully  assimilate  expanded  operations,  inability to
generate advertising revenues to meet contractual  guarantees,  and cancellation
or  interruption  of  contracts  with  governmental  agencies,  as well as those
factors  listed from time to time in the Company's SEC reports,  including,  but
not limited to, the factors  discussed in Exhibit 99.1 Incorporated by reference
in this Annual Report.  Readers are cautioned not to place undue reliance on the
Company's  forward-looking  statements,  which speak only as of the date of this
Annual Report. The Company does not update its forward-looking statements.

Unless otherwise indicated,  the information contained in this Annual Report has
been restated to give  retroactive  effect to 11-for-10 stock splits declared in
October  1997,  November  1998 and October  1999.  Unless the context  otherwise
requires, references in this Annual Report to "Obie Media," the "Company," "we,"
"us" or  "our"  are to Obie  Media  Corporation  and its  subsidiaries.  We have
derived some  information  in this Annual  Report from  government  and industry
sources.  Although  we  believe  this  information  is  reliable,  we  have  not
independently verified it.



                                       1

<PAGE>

PART I
------

ITEM 1.    DESCRIPTION OF BUSINESS

Company Overview

Obie Media  Corporation  is an  out-of-home  advertising  company  which markets
advertising space primarily on transit vehicles and outdoor advertising displays
(billboards  and  wallscapes).  As of  November  30,  1999,  the  Company had 43
exclusive  agreements with transit  districts in the United States and Canada to
operate  transit  advertising  displays.  The  markets  in which  these  transit
districts  are located  include  eight of the 30 largest  U.S.  markets--Dallas;
Portland,  Oregon; Cleveland;  Sacramento;  Hartford; Ft. Lauderdale; St. Louis;
and  Cincinnati--and  the third  largest  Canadian  market,  Vancouver,  British
Columbia. Since our initial public offering ("IPO") in November 1996, the number
of vehicles on which we have the right to operate transit  advertising  displays
has  increased  from  approximately  1,200 to over  8,000.  We also  operate and
generally own over 1,000 advertising  displays on billboards and walls primarily
in Washington,  Oregon, California,  Montana, Wyoming and Idaho. The Company was
formed  in  1987  as  a  subsidiary  of  Obie  Industries   Incorporated  ("Obie
Industries"),  a family-owned  outdoor advertising  business.  To facilitate its
IPO, the Company was separated from Obie Industries in November 1996.

In September  1998, we acquired P & C Media ("P & C"), which has operated in the
out-of-home  advertising industry for over 50 years. At the time of acquisition,
P & C had 19 agreements with transit districts,  including  districts located in
Hartford  and  Stamford,  Connecticut;  Fort  Lauderdale  and West  Palm  Beach,
Florida;  Cincinnati and Cleveland,  Ohio;  Richmond,  Virginia;  and Milwaukee,
Wisconsin.

In August 1999, we completed the offering of an additional  1,100,000  shares of
our common stock to the public. The net proceeds of the offering,  approximately
$9.7  million,  were used to reduce  debt,  including  the debt  incurred in our
acquisition of P & C.


Industry Overview

The out-of-home  advertising industry includes displays on buses, trains, taxis,
subways,  transit  benches  and  shelters,   billboards,   wallscapes  on  urban
buildings,  and displays in shopping centers, malls, airports,  stadiums,  movie
theaters and supermarkets. The industry has grown significantly in recent years.
According to estimates of the Outdoor  Advertising  Association  of America (the
"OAAA"),  between 1993 and 1998,  annual  revenues  generated by the out-of-home
advertising  industry  increased  49.2%  to $4.4  billion  from  $2.95  billion,
representing a compound annual growth rate of 8.4%.


                                       2

<PAGE>

The out-of-home  medium offers several  advantages to  advertisers.  As compared
with television,  newspapers,  magazines and direct mail marketing,  out-of-home
advertising   offers   repetitive   consumer   impacts  at  a   relatively   low
cost-per-thousand-impressions,  a commonly used advertising measurement. Because
of its cost-effective nature, out-of-home advertising is a good vehicle to build
mass-market  support.  Out-of-home  advertising  can  also be used to  target  a
defined  audience  in a specific  location.  This  allows  local  businesses  to
concentrate on a particular geographic area or demographic group.  Additionally,
increases in  automobile  travel times due to highway  congestion  and continued
migration  of  businesses  and  residences  from cities to outlying  suburbs has
increased consumer exposure to out-of-home advertising.

As of 1997,  the OAAA estimated that there were  approximately  396,000  outdoor
advertising displays in the United States, operated by more than 500 companies.

Transit  advertising   represents  a  significant  portion  of  the  out-of-home
advertising   industry.   According  to   estimates   of  the  Federal   Transit
Administration,  in 1997, there were  approximately 331 transit districts in the
United States  operating over 40,000 transit buses.  Transport  Canada estimated
that approximately  13,000 urban transit vehicles were in use in Canada in 1996.
Transit  districts  range in size from very large  districts  with  thousands of
vehicles to small  districts  with 10 or fewer  vehicles.  Advertising  displays
represent a significant source of revenue to transit districts.

Agreements  with transit  districts are awarded  through a competitive  proposal
process.  Each  transit  district  evaluates  proposals  based  on a  number  of
criteria,  but  primarily  on the basis of the  minimum  amount  that the bidder
guarantees to pay to the district.  A transit agreement  typically  requires the
transit  advertising  operator  to  guarantee  to pay the transit  district  the
greater of a minimum  stated  amount or a percentage  (usually  over 50%) of the
advertising revenues generated by the operator's use of the district's vehicles.

The out-of-home  advertising  industry  includes  several large  advertising and
media companies with operations in multiple markets. It also includes many small
and local companies  operating a limited number of displays in a single or a few
local  markets.  There  has been,  and we  expect  there  will  continue  to be,
consolidation in the out-of-home advertising industry.

Obie Media Strategy

Obie Media's overall business  strategy is to expand upon our national  presence
to become a leader in the out-of-home  advertising industry.  Our strategy is to
increase our  revenues and improve our  profitability  by  delivering  to local,
regional and national  advertisers  efficient access to one or multiple markets.
The following are components of our strategy:


o    Develop  Regional  Operating  Centers  ("Hubs").  We seek to  increase  our
     revenues,  profitability and operating efficiencies through our development
     and use of regional operating centers, or hubs. In developing hubs, we seek
     to  establish  an initial  base of  operations  in a  geographic  region by
     obtaining  exclusive  agreements  with  one  or  more  significant  transit
     districts.  We then seek to expand  our  market  presence  by  bidding  for
     contracts  with other transit  districts in the region and by expanding the
     range of non-transit  products and services we offer there.  We believe our
     hub strategy  results in revenue  growth and cost savings by enabling us to
     efficiently   provide   sales  and   administrative   services  to  several
     intra-regional markets from one strategically located operating base.

o    Obtain  Additional  Transit  Advertising  Agreements.  We believe  that, by
     obtaining additional transit advertising  agreements,  we will increase our
     operating efficiencies and geographic diversity and create additional bases
     from which to  achieve  further  market  penetration.  We expect  increased
     revenue and profitability  from the additional  transit agreements to occur
     over time as we implement our direct sales and product strategies.

o    Maintain  a Large,  Proactive  Sales  Force.  We  believe  that our  large,
     proactive  sales force that sells directly to local  advertisers  and, more
     traditionally,  to  advertising  agencies,  enables us to increase  display
     occupancy  levels and maximize our advertising  rates. We believe our ratio
     of sales  personnel  to  display  inventory  is  higher  than the  industry
     average.  We devote significant  resources to recruit and train individuals
     who  will  excel  in our  culture.  The  sales  force  is  motivated  by an
     incentive-based   compensation  program  and  supported  by  a  network  of
     experienced  local  managers  who  operate  under a  centrally  coordinated
     marketing  plan. We believe the size,  quality and  motivation of our sales
     force provide us a competitive advantage.

                                       3
<PAGE>

o    Increase  Revenues From  Existing  Display  Space.  We seek to increase the
     revenue potential of our available transit and outdoor  advertising display
     inventory  by offering  innovative  transit  products  and  increasing  the
     percentage  of time our  display  space  is  occupied.  Innovative  transit
     products we offer include vinyl  displays that are  physically  larger than
     traditional  transit  advertisements.  These vinyl displays offer customers
     greater impact while providing us more revenue from a given transit display
     space. We seek to sell  advertising on our transit and outdoor  displays by
     means of extended  contracts,  which enable us to fill  display  space that
     would normally be vacant between traditional advertising campaigns.

o    Selectively  Pursue  Acquisition  Opportunities.  We continuously  evaluate
     opportunities  to enter new markets and  increase  our presence in existing
     markets  through  the  selective  acquisition  of  out-of-home  advertising
     companies or assets. We intend to continue to focus our acquisition efforts
     on expanding  around our existing hubs and  developing  new hubs in regions
     where attractive growth and consolidation opportunities exist.

o    Increase  Inventory of Outdoor  Displays.  We expect to increase our market
     penetration by acquiring or building additional outdoor displays in new and
     existing markets.  We believe that the resulting increase in inventory will
     provide advertisers a greater variety of display  alternatives and leverage
     our existing sales design and production capabilities.

o    Expand Obie Media's National Sales Effort.  To more effectively  coordinate
     and  expand  our  sales  efforts  to  national   advertisers  and  national
     advertising agencies,  Obie Media has established national sales offices in
     Los Angeles,  Chicago and New York City. We believe that our further growth
     and  expansion  into new markets  will  continue to increase  our  national
     sales.

o    Attract New Advertisers  Through Direct Local Sales. By selling directly to
     local businesses not represented by advertising agencies, we seek to obtain
     a larger share of the overall  advertising  expenditures in our markets and
     broaden  our  customer  base  for  out-of-home  advertising.   We  dedicate
     substantial resources to directly target local businesses whose advertising
     expenditures  may  not  typically  include   out-of-home   advertising  and
     introduce them to the benefits of the medium. We offer comprehensive sales,
     marketing  and creative  services  that make it easier for these  potential
     customers to purchase out-of-home advertising.

Products and Markets

Obie Media offers advertisers a wide range of out-of-home  advertising products,
including transit advertising and outdoor advertising displays.  Our product mix
provides advertisers with significant  flexibility in their advertising programs
and  allows us to  cross-sell  multiple  products  and  leverage  our design and
production capabilities.  We have also benefited from improvements in production
technology, including the use of computerized design, vinyl advertising copy and
improved  lighting  techniques.  These  improvements  have  facilitated  a  more
dynamic, colorful and creative use of the out-of-home medium.

Transit  Advertising.  As of November  30,  1999,  the Company had 43  exclusive
agreements  with transit  districts  in the United  States and Canada to operate
transit  advertising  displays on over 8,000  transit  vehicles.  The markets in
which these transit  districts are located  include eight of the 30 largest U.S.
markets--Dallas;  Portland, Oregon; Cleveland; St. Louis; Sacramento;  Hartford;
Ft.  Lauderdale;   and  Cincinnati--and   the  third-largest   Canadian  market,
Vancouver, British Columbia.

Pursuant  to our transit  advertising  agreements,  Obie Media is the  exclusive
seller  of  exterior  advertising  on  the  transit  vehicles  operated  by  the
contracting transit districts.  Typically,  these agreements also provide us the
right to sell advertising on the interior of the vehicles.

Agreements  with transit  districts are awarded  through a competitive  proposal
process.  Each  transit  district  evaluates  proposals  based  on a  number  of
criteria,  but  primarily  on the basis of the  minimum  amount  that the bidder
guarantees to pay to the district.  A transit agreement  typically  requires the
transit  advertising  operator  to  guarantee  to pay the transit  district  the
greater of a minimum  stated  amount or a percentage  (usually  over 50%) of the
advertising revenues generated by the operator's use of the district's vehicles.
Transit  advertising  operators often must post performance  bonds or letters of
credit to secure their guarantees under their transit  agreements.  Obie Media's
transit agreements typically have terms of three to

                                       4
<PAGE>

five years, with renewals or extensions either unilaterally at the discretion of
the  transit  district or upon the mutual  agreement  of the  district  and Obie
Media.

We also sell  advertising  on over 700  transit  benches  in  Portland,  Oregon,
approximately  100  transit  shelters  in  Cincinnati,  over 300 benches in Fort
Worth,  Texas and on  approximately  22 walkway dioramas (a display similar to a
"cut-out"  billboard) in Cleveland.  We believe these  products  complement  our
other product offerings and intend to secure additional  shelters,  dioramas and
transit benches in our markets.

Transit  districts  range in size from very large  districts  with  thousands of
vehicles to small districts with 10 or fewer vehicles.  Through our hub strategy
and proactive  marketing to local  advertisers,  we are able to profitably offer
our services to both large and small transit districts. The following table sets
forth certain  information about Obie Media's transit district  agreements as of
November 30, 1999:

                                         No. of                  Served
Transit District Agreements             Vehicles                  Since

British Columbia
    Vancouver                             1,136                    1998
    Victoria and 27 smaller districts       380                    1998
Ohio
    Cleveland                               833                    1997 (2)
    Cincinnati                              385                    1981 (2)
Texas
    Dallas                                  809                    1997
    Austin                                  303                    1998
Oregon
    Portland                                726                    1994
    Eugene and Springfield                  102                    1980 (1)
    Salem                                    54                    1994
Missouri
    St. Louis                               631                    1999
    Kansas City                             280                    1999
Wisconsin
    Milwaukee                               546                    1992 (2)
    Madison                                 150                    1999
    Racine                                   50                    1997 (2)
    Kenosha                                  42                    1996 (2)
 Connecticut
    Hartford and Stamford                   380                    1996 (2)
    Danbury                                  52                    1999
    Bridgeport                               50                    1981 (2)
    New Britain                              30                    1981 (2)
    Waterbury                                25                    1981 (2)
California
    Sacramento                              246                    1994
    Santa Cruz                              112                    1997
    Stockton                                111                    1989
    Paratransit, Inc. (Sacramento)           86                    1997
    Monterey                                 72                    1995
    Yolo County                              29                    1997
Florida
    Ft. Lauderdale                          202                    1998 (2)
    West Palm Beach                         139                    1998 (2)
    Gainesville                              50                    1981 (2)
    Daytona Beach                            45                    1981 (2)
Ontario, Canada
    London                                  170                    1999
    St. Catharines                           49                    1999
    Burlington                               46                    1999
    Oshawa                                   41                    1999
    Cambridge                                26                    1999


                                       5
<PAGE>

    Niagara Falls                            26                    1999
    Whitby                                   18                    1999
 Virginia
    Richmond                                170                    1984 (2)
    Danville                                 14                    1998 (2)
    Petersburg                               12                    1988 (2)
Washington
    Spokane                                 133                    1999
    Bremerton                               115                    1996
    Yakima                                   22                    1999
                                          -----
Total                                     8,898
                                          =====

(1)      This  agreement  was  serviced by a division of Obie  Industries  (Obie
         Media's parent  corporation  until 1996) prior to 1987, when Obie Media
         was formed.

(2)      These dates  reflect  periods of service under  agreements  with P & C,
         which Obie Media acquired in September 1998.

The above transit district agreements are scheduled to expire as follows:

                                                      Approximate
                                                       Number of
                                                        Vehicles
                                    Number of         Covered Under
                                   Agreements          Agreements
                  Calendar        Scheduled to        Scheduled to
                   Year             Expire(1)         Expire (1)(2)

                2000                     6                1,200
                2001                     4                1,100
                2002                     7                2,100
                2003                     7                  800
                2004                    11                1,900
                2005                     2                1,500
                2006 and after           2                  200

(1)      In addition,  four  agreements  covering a total of  approximately  100
         vehicles are awarded on a  year-to-year  basis.  We have served each of
         these four transit districts since the 1980s.

(2)      Certain of our transit  district  agreements  provide  that they may be
         renewed  for  additional  one-year  to  five-year  periods  beyond  the
         specified  expiration date, either unilaterally by the transit district
         or by mutual  agreement  of Obie Media and the  transit  district.  The
         table  above  represents  the  last  expiration  date in the  contract,
         including  extensions.  Some of our transit district agreements provide
         that the transit district may terminate the agreement before the end of
         the specified term at the  convenience of the transit  district,  or if
         the transit  district  determines that such  termination is in its best
         interest or in the public interest.

Transit Display Products.  We offer  traditional and innovative  non-traditional
transit advertising products.  Traditionally,  transit  advertisements have been
inserted  into  metal  frames  mounted on the  exterior  or  interior  of a bus.
Industry  standard sizes include "Kings,"  "Queens,"  "Tails" and "Heads." While
still offering traditional  advertising  products,  we also offer vinyl displays
that cover  almost the entire side and/or  rear of a bus.  These vinyl  products
create  significant  additional  revenue  potential  per bus  when  compared  to
traditional  products.  We believe  these  products  also give us a  competitive
advantage in bidding for transit advertising agreements in districts that use or
are willing to use them.

Outdoor Advertising Displays. Obie Media owns and operates over 1,000 billboards
primarily  in  Washington,  Oregon,  California,  Montana,  Wyoming  and  Idaho.
Substantially  all of our  billboards  are  bulletins.  We have no  30-sheet  or
8-sheet poster units. Our bulletins are generally located on major thoroughfares
and provide greater impact and higher value than traditional posters.



                                       6
<PAGE>

We lease the property underlying our billboards,  generally under 10-year leases
that give us renewal rights for two  additional  five-year  periods.  The lessor
typically  reserves the right to cancel the lease if  construction  of permanent
improvements on the subject property conflicts with the billboard.

Most of our billboards  were designed and installed  within the last nine years,
and most are built of steel and  engineered to withstand  high winds.  More than
two-thirds of our billboards are  illuminated.  The displays are insured against
damage caused to them by storms, vandalism and other causes.

Obie Media also leases, from others, building walls in urban areas for wallscape
displays.  Wallscapes  are painted on vinyl surfaces or directly on the sides of
buildings. We currently lease 7 building walls for wallscape displays in Seattle
and own a 50% interest in a corporation  that leases,  from others,  19 building
walls for wallscape displays in Portland.

The  following  table gives the number of our outdoor  displays at November  30,
1999:

           Market                                       Displays(1)

         Washington                                       459
         Oregon                                           157
         California                                        87
         Montana                                          212
         Wyoming, Idaho and other                         176
                                                        -----
         Total                                          1,091
                                                        =====

(1) The number of displays listed includes approximately 200 displays, primarily
in Montana and  Wyoming,  purchased  in a  transaction  which closed in January,
2000.  See  "Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations-Recent Developments."

Sales and Service

In each of our principal  markets,  Obie Media maintains a large,  high quality,
proactive  sales  force.  We  believe  our ratio of sales  personnel  to display
inventory is higher than the industry average.  At November 30, 1999, we had 112
sales and marketing employees.  Our superior sales and service efforts are a key
element in maximizing our inventory occupancy levels.

We view our  proactive  sales  efforts as an important  part of our culture.  In
hiring our sales  force,  we carefully  screen  applicants.  We  typically  hire
college graduates who have demonstrated  their suitability and aptitude to excel
in our unique sales environment.  New sales employees undergo extensive training
and are supervised by regional sales managers with substantial advertising sales
experience.  Obie Media and each of our sales representatives  jointly establish
individual  sales  targets.   We  have  monthly  sales  meetings  with  all  our
salespeople to acknowledge  and reward  individuals who are meeting or exceeding
their targets. A sales  representative's  compensation depends  significantly on
meeting or exceeding individual targets.  Sales representatives also participate
in our broad-based stock option plan.

We are  significantly  expanding  our  national  presence  by growing in diverse
geographic  areas. To complement our growth, we have added to our national sales
team working out of certain of our local offices by establishing  national sales
and marketing  offices in Los Angeles,  Chicago and New York City.  Our national
sales team services national advertising  accounts,  calls on customers in major
cities where we do not have sales  offices and supports our sales force in local
markets.

We work directly with companies and  advertising  agencies in  coordinating  the
marketing,  production  and  installation  of  advertising  displays.  Our sales
personnel also serve as customer service  representatives,  maintaining frequent
and regular contact with our advertising  customers to resolve customer concerns
in the field. We believe that our high quality customer  service  contributes to
customer loyalty and improves renewal rates.

Out-of-home advertisements are traditionally sold for a few months at a time. To
increase occupancy, Obie Media employs several techniques to encourage customers
to commit to longer contracts,  including  offering  incentives through our rate
structure and pricing  policies.  We sell certain  innovative  transit


                                       7
<PAGE>

products primarily by means of year-long contracts. We also sell space on almost
all of our outdoor  advertising  displays by means of  extended  contracts,  and
offer  our  outdoor   display   customers  the   opportunity   to  rotate  their
advertisements among several display faces within the same market.

Design and Production

We  maintain  our own design and  production  facilities.  We offer  advertisers
customized design and production services as well as display space.  Charges for
design and production are typically added to the cost of the space and billed to
customers over the life of the advertising  contract. We believe that our design
and  production  capabilities  give us a  significant  competitive  advantage in
direct  sales  to  advertisers  and  brings  new  customers  to the  out-of-home
advertising medium.

Obie Media's design and  production  services are used primarily by direct sales
customers  that  are  not  represented  by  advertising  agencies.   The  design
department works with these advertisers and our sales  representatives to create
advertising copy, design and layout.

We view transit  advertising  design and production as a distinct  activity.  We
attempt to achieve independent  profitability in this operation.  Customers that
are represented by advertising  agencies generally arrange for the production of
their ads, with Obie Media providing  installation services. We increasingly act
as a broker with respect to this production.

Customers

Obie Media  maintains a broad base of local,  regional and national  advertising
customers.  Most of our regional  and  national  customers  are  represented  by
advertising  agencies.  Customers  represented by advertising agencies accounted
for  approximately  66% of our gross revenues for fiscal 1999.  Consistent  with
standard  industry  practice,  advertising  agencies  working  with  Obie  Media
typically  retain 15% of the gross  advertising  revenues  from their  accounts.
Advertising agencies generally create the artistic design and written content of
their customers'  advertising.  They plan and implement their customers' overall
advertising campaign, including the selection of advertising media. Obie Media's
sales personnel,  including our national sales team, are trained to work closely
with advertising agencies to service the needs of these customers.

A key component of our sales and marketing  strategy is the proactive  marketing
of our services to local  advertisers.  Local  advertisers  tend to have smaller
advertising  budgets and to require  greater  assistance from our production and
creative personnel to design and produce advertising copy. With respect to local
sales,  we  often  expend  significant  sales  efforts  on  educating  potential
out-of-home  advertising  customers  about the  benefits  of the  medium  and on
developing advertising strategies. While price and availability of display space
are important  factors in local sales,  service and customer  relationships  are
also critical.  We believe that our strength in sales,  design and service gives
us an  advantage  in  local  sales,  and that our  direct  sales  focus on local
companies  significantly  contributes to increased  occupancy and renewal rates.
Further,  we  believe  this focus is an  important  competitive  advantage  that
enables us to profitably serve small transit districts.

Competition

Obie Media's markets are highly competitive.  In the transit advertising market,
we compete with other  out-of-home  advertising  companies that submit proposals
for exclusive  agreements  with transit  districts by means of a formal proposal
process.  In the  outdoor  advertising  display  market,  we compete  with other
out-of-home  advertising companies for customers.  We also compete for customers
with other advertising media,  including broadcast and cable television,  radio,
print media,  direct mail marketing and displays in shopping  centers and malls,
airports,  stadiums,  movie theaters and supermarkets  and on taxis,  trains and
subways.

In recent years, there has been consolidation  among our competitors,  including
consolidation  between out-of-home  advertising companies and broadcast or other
media. For example, in May 1999, Infinity Broadcasting Corporation ("Infinity"),
a subsidiary of CBS Corporation and the sole shareholder of TDI Worldwide,  Inc.
("TDI"),  agreed to acquire  Outdoor  Systems,  Inc.,  a leading  company in the
outdoor  advertising  display  market.  Several  of our  competitors,  including
diversified media companies such as Infinity,  are substantially  larger, better
capitalized,  more  widely  known  and  have  access  to  substantially


                                       8
<PAGE>

greater resources than we do. These traits may provide  competitive  advantages,
particularly in large advertising markets.

Transit.  The  transit  advertising  market has  historically  been  fragmented,
consisting of a few national  transit  advertising  companies with operations in
multiple  markets and  numerous  small  companies  operating  under one or a few
agreements.   In  large  advertising  markets,   Obie  Media  encounters  direct
competition for transit agreements from major transit advertising companies such
as TDI, one of the largest  transit  advertising  companies in the United States
and a dominant competitor in such markets. Competition among transit advertising
companies is primarily based on obtaining and retaining  agreements with transit
districts.  Agreements with transit districts are awarded primarily on the basis
of the minimum amount the bidder guarantees to the district. Other factors which
transit  districts  may  consider  in  awarding  agreements  are  the  financial
resources of the bidder available to support its minimum revenue guarantee,  the
bidder's business  reputation and the soundness of the bidder's  marketing plan.
The  agreements  generally  give the  operator  the  exclusive  right to provide
transit advertising services within the transit district.  The number and nature
of competitors  for each agreement  depend upon the  desirability of the market,
including the number of vehicles operated by the transit district,  and the size
and rank of the market.

Outdoor  Advertising  Displays.  The outdoor  advertising display market is also
fragmented.  Several  large outdoor  advertising  companies  have  operations in
multiple markets. Many more small companies operate a limited number of displays
in a single or a few local markets.  Although some consolidation has occurred in
this  segment of the  out-of-home  industry  over the past few  years,  the OAAA
estimated that, as of 1997, there were approximately 396,000 outdoor displays in
the United States operated by more than 500 companies.  The primary  competitive
factors  in the  outdoor  advertising  display  market  are  the  location  of a
company's displays and the price charged for their use.

Government Regulation

The government  extensively  regulates the outdoor  advertising  industry at the
federal,  state and local levels. These laws and regulations limit the growth of
outdoor  advertising  companies and operate as a substantial barrier to entry in
the industry and, in limited  circumstances,  may restrict  advertising content.
Construction  of new outdoor  structures  has been  substantially  restricted to
commercial and industrial  areas.  Many  jurisdictions  also have restricted the
location,  relocation,  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  displays,  and restrict the  reconstruction  of structures that are
substantially   destroyed  as  a  result  of  storms  or  other   causes.   Some
jurisdictions  have enacted local laws and ordinances  that prohibit  wallscapes
and other outdoor advertising on urban buildings.

We believe our displays  conform to current laws and  regulations.  When leasing
property for the installation of new outdoor advertising  displays, we carefully
review applicable laws, including building, sign and zoning ordinances.  Because
billboards are typically  located adjacent to roads and highways,  they are also
subject  to  removal  through  condemnation  or other  actions  by  governmental
entities  in the  event  of road or  highway  improvement  or  expansion.  While
compensation for such actions is generally  available,  under existing state and
local regulations, we may not be permitted to relocate any condemned displays.

In limited  circumstances,  governmental  laws and regulations may also restrict
the content of outdoor  advertising.  For  example,  some states have banned all
outdoor  advertising of tobacco  products.  In November 1998, 46 states signed a
settlement  agreement with the four largest  American tobacco  companies.  Among
other  things,  the  agreement  bans  transit  and  outdoor  advertising  of the
companies'  tobacco  products  in the 46  states.  The  U.S  Congress  has  also
considered legislation that would severely restrict or ban such advertising.

The outdoor  advertising  industry is heavily  regulated  and existing or future
laws or regulations  could adversely affect us. To date, our operations have not
been materially adversely affected by such laws and regulations.

Employees

At November 30, 1999, we had 205 full-time  and 9 part-time  employees,  of whom
112 were primarily engaged in sales and marketing, 20 were engaged in art design
and production, 53 were engaged in installation,  construction or maintenance of
transit or outdoor  advertising  displays,  and 29 were  employed


                                       9
<PAGE>

in financial,  administrative  or similar  capacities.  None of our employees is
covered  by  collective  bargaining  agreements,  except  for  8  installers  in
Portland, Oregon and 14 installers in British Columbia.


ITEM 2.    DESCRIPTION OF PROPERTIES

Our headquarters are located in a 20,000 square foot facility in Eugene, Oregon.
The  headquarters  includes  space for our  centralized  design  and  production
departments,  as  well  as our  accounting,  credit,  marketing  and  management
personnel.  The headquarters is leased at market rates from Obie Industries,  an
affiliate  of Obie Media,  pursuant to a lease under which Obie Media moved into
the  facility  and  began  paying  rent  in  May  1997.   Lease   payments  were
approximately  $180,000 and $171,000 during fiscal 1999 and 1998,  respectively.
Brian Obie, our Chairman of the Board, President and Chief Executive Officer, is
the President,  a director and the controlling  shareholder of Obie  Industries.
Delores Mord, our Secretary and a director of Obie Media, is Vice  President,  a
director and a shareholder of Obie Industries.

We lease parcels of property beneath outdoor  advertising  structures.  Our site
leases are generally for a term of ten years, with two five-year renewal options
at our discretion.  We also lease local operating offices for sales, service and
installation in Spokane and Yakima, Washington;  Portland and Salem, Oregon; Ft.
Lauderdale and Daytona Beach, Florida; Wallingford,  Connecticut;  Cleveland and
Cincinnati, Ohio; Langhorne, Pennsylvania; Dallas and Austin, Texas; Sacramento,
Monterey, Stockton and Santa Cruz, California; Richmond, Virginia; St. Louis and
Kansas City Missouri; Milwaukee and Madison, Wisconsin;  Vancouver and Victoria,
British Columbia;  and London,  Richmond Hill,  Burlington,  and St. Catharines,
Ontario.  We also lease national  sales offices in Los Angeles,  Chicago and New
York City. Total lease payments for the forgoing leases were  approximately $1.3
million and $1.1 million for fiscal 1999 and 1998, respectively.


ITEM 3.    LEGAL PROCEEDINGS

         Heard   Communications,   Inc.,   doing  business  as  Gateway  Outdoor
Advertising ("Gateway"), the former operator of transit advertising displays for
the Bi-State Development Agency of the  Missouri-Illinois  Metropolitan District
("Bi-State") in metropolitan St. Louis  (including St. Clair County,  Illinois),
has contested  both  judicially  and  administratively  Bi-State's  award of the
transit advertising agreement for St. Louis to us. We began operating under such
agreement in July 1999.

         In the  administrative  action commenced July 2, 1999,  Gateway alleges
that the procurement  process which awarded the contract to us was arbitrary and
capricious in part because Gateway's proposal guaranteed greater minimum revenue
to Bi-State over the term of the contract.  Bi-State denied Gateway's protest by
letter dated July 19, 1999.  Gateway filed a protest with  Bi-State's  Executive
Director requesting our contract with Bi-State be terminated and the bidding for
the contract be reopened.  The  Executive  Director  denied  Gateway's  protest.
Gateway then appealed the Executive  Director's  decision to the Federal Transit
Administration ("FTA"). The appeal to the FTA was denied.

         In the judicial  proceeding before the United States District Court for
the Eastern District of Missouri, Case No. 4:99-CV-1054-CAS,  commenced June 30,
1999,  Gateway  challenges the award of the St. Louis contract to us and seeks a
declaratory  judgment  and an  injunction  prohibiting  Bi-State  and Obie  from
performing  under  the  contract.  We have  intervened  in the  proceeding  as a
party-defendant.  Gateway's  challenge  is based on its claim that its final bid
documents  relating to the contract  were  mishandled  prior to the award of the
contract as well as the grounds  relied upon in the  administrative  proceeding.
The Court  denied a motion by Gateway  for a temporary  restraining  order which
would have  delayed  the award of the  contract to us. The Court has allowed the
judicial  proceeding to enter the "discovery" stage in order to fully develop an
administrative record for trial.

         The judicial proceeding is currently in this "discovery" stage. Several
depositions  of Bi-State  officials  have taken place.  We intend to  vigorously
defend against termination of our St. Louis contract.


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

No matters  were  submitted to a vote of Obie  Media's  shareholders  during the
fourth quarter of fiscal 1999.

                                       10
<PAGE>

PART II
-------

ITEM 5.    MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS

Price Range of Common Stock

Since  November 21, 1996,  our Common Stock has been traded on the Nasdaq Market
under the symbol  "OBIE."  The  following  table  presents  the high and low bid
prices of our Common Stock as reported by The Nasdaq Stock  Market,  as adjusted
to give  retroactive  effect to 11-for-10 stock splits declared by Obie Media in
October 1997, November 1998 and October 1999:

        Fiscal 1999                                       High      Low
         First Quarter ..........................       $17.73    $11.82
         Second Quarter .........................        14.66      9.55
         Third Quarter...........................        11.82      9.38
         Fourth Quarter .........................        10.75      8.58

        Fiscal 1998                                      High       Low
         First Quarter ..........................       $ 9.66     $8.18
         Second Quarter .........................        10.91      9.32
         Third Quarter ..........................        15.00      9.32
         Fourth Quarter .........................        15.00      9.09

As of February  8, 2000,  there were  approximately  64 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."

Dividends

The Company has not paid cash  dividends on its Common Stock during the last two
fiscal years and does not anticipate  doing so in the  foreseeable  future.  The
Company plans to retain any future earnings to finance operations.  In addition,
our  credit  agreements  may limit our  ability to pay  dividends  or make other
distributions on our Common Stock.

Recent Exempt Sales of Securities

Effective  June 1, 1999,  in  connection  with our lease of real  property  from
Robert  Evanson,  we issued to Mr. Evanson  options to purchase 13,310 shares of
our common stock at an exercise price of $5.27 per share.  All such options were
exercisable  upon the effective date of their issuance.  We did not register the
issuance of the options under the  Securities Act in reliance upon the exemption
from  registration  contained  in Section  4(2)  thereof.  The  options  are not
transferable without our consent.




                                       11
<PAGE>

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

Overview

Obie Media is an  out-of-home  advertising  company,  which markets  advertising
space primarily on transit vehicles and outdoor advertising displays (billboards
and  wallscapes).  As of November 30, 1999, we had 43 exclusive  agreements with
transit districts in the United States and Canada to operate transit advertising
displays.  Since our IPO in  November  1996,  the number of vehicles on which we
have the right to  operate  transit  advertising  displays  has  increased  from
approximately  1,200 to over 8,000. We also operate and generally own over 1,000
advertising  displays on billboards and walls  primarily in Washington,  Oregon,
Montana, Wyoming, California and Idaho.

Our gross revenues  increased from $25.2 million in fiscal 1998 to $40.5 million
in fiscal 1999,  representing an increase of 60.5%.  EBITDA  increased from $4.2
million to $5.8 million in the same period,  representing  an increase of 37.3%.
EBITDA  (earnings  before interest,  taxes,  depreciation  and  amortization) is
defined as operating income before depreciation and amortization expense.

Our significant  growth since fiscal 1996 is primarily the result of: (i) growth
in  our  existing  transit  advertising   business,   primarily  resulting  from
agreements with additional transit  districts;  (ii) the acquisition of P & C on
September 1, 1998;  and (iii) the  development  and  acquisition  of new outdoor
displays.  As a result  of  these  factors,  our  operating  performance  is not
necessarily  comparable  on a  period-to-period  basis.  We plan to  continue  a
strategy of expanding through both internal growth and acquisitions.

Our operating  results are affected by general economic  conditions,  as well as
trends in the advertising  industry.  Based on industry sources, in recent years
outdoor  advertising  expenditures  in the United  States  have  increased  more
rapidly than total U.S. advertising  expenditures.  However,  this trend may not
continue and future outdoor  advertising  expenditures may grow more slowly than
expenditures for the advertising industry as a whole.

Our gross  revenues  are derived  from the sale of  advertising  on  out-of-home
advertising  displays,  primarily on transit vehicles under our transit district
agreements and on outdoor advertising displays we own or operate. Gross revenues
are a function of both the  occupancy of these  display  spaces and the rates we
charge.  We  focus  our  sales  effort  on  maximizing  occupancy  levels  while
maintaining  rate  integrity in our markets.  Over the past several  years,  our
transit  advertising  operations  have  expanded  more  rapidly than our outdoor
advertising operations. Revenues from transit advertising sales, as a percentage
of gross revenues,  increased from 77.0% in fiscal 1998 to 85.3% in fiscal 1999.
Increases in our gross revenues over the last two fiscal years are primarily the
result of the increased number of transit vehicles and outdoor displays on which
we market advertising space and, to a lesser extent, rate increases.

Net revenues represent gross revenues less agency  commissions.  Consistent with
standard  industry  practice,  advertising  agencies  working  with  Obie  Media
typically  retain 15% of the gross  advertising  revenues  from their  accounts.
While advertising agencies purchase the majority of the out-of-home  advertising
that we sell,  we believe our focus on direct  sales to  accounts  not served by
advertising  agencies has resulted in Obie Media recognizing  agency commissions
that,  as a  percentage  of our  aggregate  gross  revenues,  are lower than the
industry  average.  Customers  represented  by  advertising  agencies  currently
account for approximately 66% of our gross revenues.  Agency  commissions,  as a
percentage of our gross revenues,  have risen recently, in large part because we
have obtained new transit agreements in a number of districts where the previous
providers made substantially all sales through advertising agencies.

Direct  advertising  expenses  consist  primarily of occupancy,  production  and
installation,  and sales  costs.  Occupancy  expense  primarily  consists of two
elements:  (i) payments to transit  districts for the right to sell  advertising
displayed on their  vehicles;  and (ii) lease  payments to owners of property on
which  our  outdoor  advertising  structures  are  located.  Under  our  transit
agreements,  we typically guarantee to pay the transit district the greater of a
minimum  stated  amount or a percentage  (usually  over 50%) of the  advertising
revenues generated by our use of the district's vehicles. 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 our sales
force.



                                       12
<PAGE>

General and administrative expenses include costs related to individual markets,
as well as corporate  expenses.  Expenses related to individual  markets include
expenses  for the  personnel  and  facilities  required to  administer  that and
neighboring  markets.  Corporate general and  administrative  expenses represent
personnel and facilities costs for our executive  offices and centralized  staff
functions.  We believe that,  although general and administrative  expenses will
increase on an absolute  dollar basis as our revenues  increase,  such  expenses
will decline as a percentage of revenues.

Contract  settlement  represents the financial impact of the settlement  reached
regarding the early  termination of the Tri-Met  contract.  See the Notes to our
Consolidated  Financial  Statements and  "Recent Developments."

Start-up  costs  are the  costs  we  incur  in  pursuing  new  transit  district
agreements  and the costs of  establishing  a sales  force  and  office in a new
market prior to beginning to operate under a new agreement.  These costs consist
primarily of travel expenses,  various personnel costs, legal fees and the costs
of  preparing  our  proposals  in  response  to transit  district  requests  for
proposals.  The amount of start-up  costs we will incur in the future will vary,
both in total  amount and as a percentage  of revenues,  depending on the number
and  complexity  of proposals for new districts and our success in obtaining new
contracts.

Recent Developments

Additional Transit  Advertising  Agreements.  In fiscal 1999, we began operating
displays on  approximately  1,500  additional  vehicles and over 300  additional
benches, including St. Louis (approximately 630 vehicles; the former operator is
disputing  the award of the St. Louis  contract.  See "Legal  Proceedings")  and
Kansas City (approximately 280 vehicles).

Outdoor  Asset  Acquisitions.  In October 1999 and January 2000, we acquired the
outdoor assets of two Montana based companies.  The acquisitions  added over 300
displays to our outdoor display inventory, primarily in Montana and Wyoming. The
total  purchase  price was $4.0 million  cash. We borrowed $4.0 million from our
lender to finance the transactions.

Early Termination of Transit Advertising  Agreement for Portland,  Oregon; Award
of New Contract.  We began serving as the exclusive transit advertising provider
for the Tri-County Metropolitan Transit District, Tri-Met (Portland,  Oregon) in
1994, pursuant to a five-year agreement.  In 1996, Tri-Met extended its contract
with us through June 30, 2001.  The FTA, which  provides  substantial  monies to
transit districts, has taken the position that transit advertising contracts may
not exceed  five years in length.  At the  request of the FTA,  Tri-Met and Obie
Media agreed to terminate our agreement with Tri-Met in 1999.

In December  1998,  Tri-Met and Obie Media  negotiated a settlement  for damages
resulting  from the early  termination  of the contract.  Under the terms of the
settlement,  Obie Media received cash payments and other financial benefits. The
settlement  resulted in a pre-tax gain of $1.1 million  during  fiscal 1999.  In
anticipation  of the  termination of our transit  agreement,  Tri-Met  solicited
proposals  for the  operation  of the  Portland  transit  district by means of a
competitive  proposal process. We were the successful proposer and, in September
of 1999, we began a new contract with Tri-Met.

Acquisition  of P & C. In September  1998, we acquired P & C, which has operated
in the  out-of-home  advertising  industry  for  over 50  years.  At the time of
acquisition  P  &  C  had  19  agreements   with  transit   districts   covering
approximately 3,200 vehicles,  including districts located in Hartford, Stamford
and New  Haven,  Connecticut;  Fort  Lauderdale  and West Palm  Beach,  Florida;
Cincinnati and Cleveland, Ohio; Richmond, Virginia; and Milwaukee, Wisconsin.

Obie Media  acquired P & C for an  aggregate  purchase  price of $7.6 million in
cash,  up to 151,250  shares of our common  stock and  options to purchase up to
163,350  additional shares of our common stock, of which $6.1 million and 60,500
shares  were paid at  closing,  and  options  to  purchase  30,250  shares  were
exercisable  on the closing  date.  Of the  remaining  $1.5  million of the cash
purchase  price,  $500,000 was paid on January 1, 2000 and the remainder will be
paid as  follows;  $500,000  on or before  January 1, 2001,  and  $250,000 on or
before each of January 1, 2002 and 2003.  The  remaining  90,750  shares will be
issued  depending  on P & C's  performance  through  November  30,  2001 and the
unvested  options  will  become  exercisable  over 4 years,  depending  on Wayne
Schur's  continued  employment by us. We financed the  acquisition of P & C from
borrowings  and repaid  those  borrowings  with a portion of the proceeds of our
August 1999 stock offering.  See "Description of Business - Company Overview."



                                       13
<PAGE>

The  acquisition  of P & C has been  accounted for under the purchase  method of
accounting,  with Obie Media  recording  most of the purchase price as goodwill.
The amount of goodwill may increase in the future as  additional  stock  options
vest  and  if  additional  shares  are  issued  as a  result  of P & C's  future
performance. Goodwill is being amortized over 15 years. The acquisition occurred
on  September  1,  1998  and  our  financial  statements  do not  include  P & C
operations prior to that date.

Expansion into Canada.  In August 1998,  our wholly owned  Canadian  subsidiary,
Obie Media Limited,  began operating transit advertising displays for BC Transit
on  approximately  1,500  vehicles  covering  substantially  all of the  transit
districts in British  Columbia,  including  Vancouver  (Canada's  third  largest
market) and Victoria.

Operating Results

Comparison of Years Ended November 30, 1999 and 1998

The following table presents certain items from our  consolidated  statements of
income (and EBITDA) as a percentage of gross revenues.
<TABLE>
<CAPTION>
                                                                     Year Ended
                                                                    November 30,
                                                              -----------------------
                                                                 1999         1998
                                                              ----------   ----------
<S>                                                           <C>          <C>
         Transit advertising revenue..................           85.3 %       77.0 %
         Outdoor advertising revenue..................           14.7         23.0
                                                              --------     --------
         Gross revenue................................          100.0        100.0
         Less agency commissions......................            9.9          9.9
                                                              --------     --------
         Net revenues.................................           90.1         90.1
         Operating expenses:
             Direct advertising expense...............           65.3         58.7
             General and administrative...............           11.6         14.4
             Start-up costs...........................            1.7          0.4
             Contract settlement......................           (2.7)           -
                                                              --------     --------
         EBITDA.......................................           14.2         16.6
         Depreciation and amortization................            3.7          3.7
                                                              --------     --------
         Operating income.............................           10.5         12.9
         Interest expense.............................            2.3          3.1
                                                              --------     --------
         Income before income taxes and extraordinary item        8.2          9.8
         Provision for income taxes...................            3.2          3.8
                                                              --------     --------
         Net income...................................            5.0 %        6.0 %
                                                              ========     ========
</TABLE>

Revenues.  Gross revenues increased $15.2 million,  or 60.5%, from $25.2 million
in fiscal 1998 to $40.5 million in fiscal 1999.  This  increase was  principally
due to transit  advertising  revenues  associated  with the  operations of P & C
(which we acquired September 1, 1998), as well as the addition of new districts,
and transit districts operating less than a full year in 1998, primarily British
Columbia (which we began operating in August 1998).  Transit revenues  increased
$15.1 million,  or 77.8%,  from $19.4 million in fiscal 1998 to $34.5 million in
fiscal 1999,  primarily due to the above factors.  Outdoor advertising  revenues
increased $146,000, or 2.5%, from $5.8 million in fiscal 1998 to $5.9 million in
fiscal 1999.  Agency  commissions  increased $1.5 million,  or 60.2%,  from $2.5
million in fiscal  1998 to $4.0  million in fiscal  1999,  primarily  due to the
large proportion of existing agency business in our new markets.  As a result of
the foregoing  reasons,  net revenues  increased $13.7 million,  or 60.4%,  from
$22.7 million in fiscal 1998 to $36.5 million in fiscal 1999.

Direct  Advertising  Expenses.   Direct  advertising  expenses  increased  $11.6
million,  or 78.7%, from $14.8 million in fiscal 1998 to $26.4 million in fiscal
1999.  This increase was primarily the result of activities  required to support
our increased level of business.  Direct advertising  expenses  increased,  as a
percentage of gross revenues, from 58.7% in fiscal 1998 to 65.3% in fiscal 1999,
primarily due to the growth of the transit  advertising  business,  where costs,
especially  occupancy costs, are higher as a percentage of revenue,  than in the
outdoor advertising business.



                                       14
<PAGE>

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased  $1.0  million,  or 28.9%,  from $3.6  million in fiscal  1998 to $4.7
million in fiscal 1999. The increase resulted  primarily from increased costs of
administering  new transit  districts and districts which operated for less than
all of fiscal 1998.  General and  administrative  expenses,  as a percentage  of
gross revenues, decreased from 14.4% in fiscal 1998 to 11.6% in fiscal 1999.

Contract Settlement.  During 1999, we recognized a non-recurring pre-tax gain of
$1.1 million  associated with our contract  settlement with Tri-Met (See Note 11
to our Consolidated Financial Statements).

Start-Up Costs. Start-up costs increased $562,000,  from $106,000 in fiscal 1998
to $668,000 in fiscal 1999,  primarily due to our increased response to requests
for proposal for transit district contracts,  our bidding on a greater number of
large  district  contracts,  and the costs  incurred in  retaining  the Portland
contract.

Depreciation and Amortization  Expenses.  Depreciation and amortization expenses
increased  $577,000,  or 61.7%,  from $936,000 in fiscal 1998 to $1.5 million in
fiscal 1999,  primarily due to our  investment in equipment in new markets,  our
upgrading of computer  capabilities  and adding outdoor displays in our existing
operations  and  the  amortization  of  goodwill  associated  with  the  P  &  C
acquisition.  Depreciation and amortization expenses are expected to increase in
fiscal 2000 primarily due to  depreciation  from our Montana  acquisitions.  See
"Recent Developments."

Operating  Income.  Due to the above factors,  operating  income  increased $1.0
million,  or 30.3%,  from $3.3  million in fiscal 1998 to $4.2 million in fiscal
1999.

Interest Expense.  Interest expense increased $166,000,  or 21.4%, from $776,000
in fiscal 1998 to $942,000 in fiscal  1999,  primarily  due to the  indebtedness
incurred in connection with the acquisition of P & C, offset by the reduction in
debt from the net  proceeds  of our August  1999  stock  offering.  See  "Recent
Developments."

Provision for Income Taxes.  Provision for income taxes increased  $309,000,  or
31.6%,  from $978,000 for fiscal 1998 to $1.3 million in fiscal 1999,  primarily
due to the increase in income before income taxes.

Net Income. As a result of the foregoing factors, net income increased $511,000,
or 34.1%, from $1.5 million for fiscal 1998 to $2.0 million for 1999.

Seasonality

Obie Media's  revenues and operating  results  historically  have  fluctuated by
season. Typically, our results of operations are strongest in the fourth quarter
and  weakest in the first  quarter of our fiscal year  ending  November  30. Our
transit  advertising  operations are more seasonal than our outdoor  advertising
operations  as  our  outdoor  advertising  display  space,  unlike  our  transit
advertising  display space, is and has been sold nearly  exclusively by means of
12-month  contracts.  We  believe  that  the  seasonality  of our  revenues  and
operating results will increase as our transit  advertising  operations continue
to  expand  more  rapidly  than  our  outdoor   advertising   operations.   This
seasonality,  together  with  fluctuations  in  general  and  regional  economic
conditions and the timing and expenses related to acquisitions, the obtaining of
new transit  agreements  and other actions we have taken to implement our growth
strategy,  have contributed to fluctuations in our periodic  operating  results.
These fluctuations likely will continue.  Accordingly, our results of operations
in any period may not be indicative of the results to be expected for any future
period.

Liquidity and Capital Resources

We have historically  satisfied our working capital  requirements with cash from
operations and revolving credit borrowings.  Our working capital at November 30,
1998 and 1999 was $1.0 million and $3.0 million, respectively.  Acquisitions and
capital expenditures,  primarily for the construction of new outdoor advertising
displays,  have been financed  primarily  with borrowed  funds.  At November 30,
1999,  Obie Media had  outstanding  borrowings of $ 9.2 million,  of which $ 5.2
million was pursuant to long-term credit  agreements,  $1.5 million was pursuant
to the  agreement  to  acquire  P & C, and $ 2.5  million  was  pursuant  to our
operating line of credit.  Our indebtedness is  collateralized  by substantially
all of our assets  (See Note 5 to our  Consolidated  Financial  Statements).  At
November 30, 1999,  available borrowing capacity under the line of credit, based
on collateralized accounts, was $1.5 million.



                                       15
<PAGE>

Obie Media's net cash provided by operations  was $ 1.8 million and $ 251,000 in
fiscal 1998 and 1999, respectively.  The decrease was primarily due to decreases
in accrued  expenses and increased  accounts  receivable and prepaid  production
expenses,  offset in part by an  increase  in net  income and  depreciation  and
amortization.

Net cash used in  investing  activities  was $ 8.0  million and $ 3.3 million in
fiscal 1998 and 1999, respectively. The decrease from fiscal 1998 to fiscal 1999
was  primarily  due to the $6.3 million used in our 1998  acquisition  of P & C.
Capital  expenditures totaled $ 1.7 million and $ 3.2 million in fiscal 1998 and
1999,  respectively.  Capital  expenditures  consist  primarily  of the  cost of
building and acquiring  outdoor  advertising  displays.  We anticipate  that our
capital  expenditures,  exclusive of those related to an  acquisition  closed in
January  2000 (see  "Recent  Developments"),  will  approximate  $2.5 million in
fiscal 2000.

Net cash provided by financing activities was $ 6.6 million and $ 2.7 million in
fiscal 1998 and 1999,  respectively.  Cash provided in fiscal 1999 was primarily
from the proceeds of our public stock offering  completed in August 1999, net of
payments on long-term debt.

We expect to pursue a policy of continued  growth through  obtaining new transit
district agreements,  acquiring out-of-home  advertising companies or assets and
constructing new outdoor advertising  displays.  We intend to finance our future
expansion  activities using a combination of internal and external  sources.  We
believe that internally  generated funds and funds available for borrowing under
our bank  credit  facilities  will be  sufficient  to satisfy  all debt  service
obligations  and  finance  our   operations,   including   anticipated   capital
expenditures,  but excluding possible acquisitions,  through fiscal 2000. Future
acquisitions  by Obie  Media,  if any,  may  require  additional  debt or equity
financing.

Year 2000 Compliance

The Year 2000  problem  is the result of the  inability  of some  computers  and
computer software programs to accurately recognize,  for dates after 1999, dates
which are often  expressed as a two-digit  number.  The  inability to accurately
recognize  date  information  could  adversely  affect  computer  operations and
calculations or cause computer systems and computer-dependent mechanical systems
not to operate at all.

Prior to December 31, 1999, we completed an assessment of our internal technical
and non-technical systems to ascertain whether they were Year 2000 compliant. We
identified and replaced one information processing system that was not Year 2000
compliant. Following such assessment and system replacement, we believe that all
of our internal technical and non-technical systems are Year 2000 compliant.

To  date,  we have  not,  nor to our  knowledge,  has any  third  party  transit
district, vendor or service provider significant to our operations,  experienced
any material Year 2000 related problems. However, we cannot determine if we will
be subject to Year 2000  compliance  problems in the future,  particularly  with
respect to February 29, 2000,  or if Year 2000 problems have arisen that we have
failed to detect.

We will continuously  monitor our systems to resolve any Year 2000 problems that
may arise in the  future.  We believe  that our  efforts  to  achieve  Year 2000
compliance  and the  impact of the Year 2000  problem  will not have a  material
effect on our operations.

Market Risk

We have not entered into derivative financial instruments.  We may be exposed to
future  interest rate changes on our debt. We do not believe that a hypothetical
10% change in interest rates would have a material effect on our cash flows.

New Accounting Pronouncements

New  accounting  pronouncements  are  discussed  in  Note 1 to our  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-21 of this Annual Report.

                                       16
<PAGE>

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable


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 2000 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  2000  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 2000 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 2000 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 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to certain relationships and related party transactions
is included  under  "Certain  Transactions"  in the Company's  definitive  proxy
statement for its 2000 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.






                                       17
<PAGE>

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, as amended (1)

3.2      Restated Bylaws, as amended (1)

4.1      See Articles 3, 4 and 8 of Exhibit 3.1 and Articles 1, 2, 5, 6 and 7 of
         Exhibit 3.2

10.1*    Restated 1996 Stock Incentive Plan (4)

10.2     Form of Indemnification Agreement between the Company and its directors
         (4)

10.3     Form of Indemnification  Agreement between the Company and its officers
         (4)

10.4     Lease  between Obie  Industries  Incorporated  and the  Company,  dated
         November 12, 1996 (1)

10.5     Amendment,  dated  July 15,  1997,  to  lease  agreement  between  Obie
         Industries Incorporated and the Company (2)

10.6     Restated  and Amended  Loan  Agreement,  dated as of September 1, 1998,
         among the Company, Obie Media Limited,  Philbin & Coine, Inc., and U.S.
         Bank National Association, and related documents (4)

10.7     First  Amendment,  dated as of January 3, 2000, of Restated and Amended
         Loan Agreement among the Company, Obie Media Limited,  Philbin & Coine,
         Inc., and U.S. Bank National Association.

10.8     Stock Purchase Agreement among Registrant and Philbin & Coine, Inc. and
         Wayne P. Schur dated August 25, 1998 (3)

10.9*    Employment Agreement,  dated September 1, 1998, between the Company and
         Wayne P. Schur (4)

10.10*   Addendum, entered into September 1, 1999, to Employee Agreement between
         the Company and Wayne P. Schur.

10.11*   Non-Qualified Stock Option Agreement,  dated September 1, 1998, between
         the Company and Wayne P. Schur(4)

10.12    Settlement  Offer  Letter  dated  September  25,  1998 from  Tri-County
         Metropolitan Transportation District of Oregon to Registrant, signed by
         the Registrant indicating acceptance (5)

20.1     Portions of the Definitive  Proxy Statement for the 2000 Annual Meeting
         of Shareholders to be held on April 21, 2000 (6)

21.1     List of Subsidiaries (4)

23.1     Consent of Arthur Andersen LLP, Independent Public Accountants

27.1     Financial Data Schedule

99.1     Safe Harbor for  Forward-Looking  Statements  under Private  Securities
         Litigation Reform Act of 1995: Certain Cautionary Statements (4)

----------
*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),   declared
         effective on November 21, 1996.

(2)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the year ended November 30, 1997 filed February 27, 1998.

(3)      Incorporated by reference to the Company's Form 8-K filed September 14,
         1998.

                                       18
<PAGE>

(4)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the year ended November 30, 1998 filed March 1, 1999.

(5)      Incorporated  by reference to the Company's  Registration  Statement on
         Form S-1 (Registration No. 333-79367), declared effective on August 10,
         1999.

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

Upon  written  request  to  Brian  B.  Obie,  CEO and  President  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. Obie Media filed no reports on Form 8-K during the
         fourth quarter of fiscal 1999.














                                       19
<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 28, 2000          By/s/Brian B. Obie
                                       ----------------------------------
                                       Brian B. Obie, Chairman, President
                                       and Chief Executive Officer

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 28, 2000          By/s/Brian B. Obie
                                       ----------------------------------
                                      Brian B. Obie, Chairman, President
                                      and Chief Executive Officer

                                    PRINCIPAL FINANCIAL AND ACCOUNTING
                                    OFFICER:

Dated:   February 28, 2000          By/s/Michael E. Hubbard
                                       ----------------------------------
                                      Michael E. Hubbard,
                                      Corporate Controller

                                    DIRECTORS:

Dated:   February 28, 2000          By/s/Delores M. Mord
                                       ----------------------------------
                                     Delores M. Mord, Director

Dated:   February 28, 2000          By/s/Randall C. Pape'
                                       ----------------------------------
                                     Randall C. Pape', Director

Dated:   February 28, 2000          By/s/Stephen A. Wendell
                                       ----------------------------------
                                     Stephen A. Wendell, Director

Dated:   February 28, 2000          By/s/Richard C. Williams
                                       ----------------------------------
                                     Richard C. Williams, Director

Dated:   February 28, 2000          By/s/Wayne P. Schur
                                       ----------------------------------
                                     Wayne P. Schur, Director



                                       20
<PAGE>

EXHIBIT INDEX

Exhibit*
-------

10.7     First  Amendment,  dated as of January 3, 2000, of Restated and Amended
         Loan Agreement among the Company, Obie Media Limited,  Philbin & Coine,
         Inc., and U.S. Bank National Association.

10.10    Addendum, entered into September 1, 1999, to Employee Agreement between
         the Company and Wayne P. Schur.

23.1     Consent of Arthur Andersen LLP, Independent Public Accountants

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.
















                                       21

<PAGE>

                             OBIE MEDIA CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




Report of Independent Public Accountants                                 F-2

Consolidated Balance Sheet as of November 30, 1999 and 1998              F-3

Consolidated Statements of Income for the years ended
         November 30, 1999 and 1998                                      F-4

Consolidated Statements of Changes in Shareholders'Equity
         (Deficit) for the years ended November 30, 1999 and 1998        F-5

Consolidated Statements of Cash Flows for the years ended
         November 30, 1999 and 1998                                      F-6

Notes to Consolidated Financial Statements                               F-8



















<PAGE>

Report of Independent Public Accountants


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

We have  audited  the  accompanying  consolidated  balance  sheets of Obie Media
Corporation (an Oregon corporation) and subsidiaries as of November 30, 1999 and
1998,   and  the  related   consolidated   statements  of  income,   changes  in
shareholders'  equity  and cash  flows for each of the two  years in the  period
ended November 30, 1999. 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 audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Obie Media  Corporation  and
subsidiaries  as of  November  30,  1999  and  1998,  and the  results  of their
operations  and their cash  flows for each of the two years in the period  ended
November 30, 1999 in conformity with generally accepted accounting principles.


                                                             ARTHUR ANDERSEN LLP
                                                          /s/Arthur Andersen LLP



Portland, Oregon
February 16, 2000


                                      F-2
<PAGE>

                             OBIE MEDIA CORPORATION

                           CONSOLIDATED BALANCE SHEETS

                        AS OF NOVEMBER 30, 1999 AND 1998

<TABLE>
<CAPTION>

                                     ASSETS
                                     ------                    1999               1998
                                                           -----------        -------
<S>                                                        <C>                <C>
CURRENT ASSETS:
  Cash                                                     $    34,224        $   326,140
  Accounts receivable, net of allowance for doubtful
    accounts of $359,850 and $291,938, respectively          8,715,044          6,719,218
  Prepaid expenses and other current assets                  2,134,137          1,156,061
  Deferred income taxes                                        959,427            758,832
                                                           -----------        -----------
          Total current assets                              11,842,832          8,960,251

PROPERTY AND EQUIPMENT, net                                 12,837,224         10,493,174

OTHER ASSETS:
  Goodwill, net                                              7,183,581          7,696,394
  Other assets, net                                            336,464            497,512
                                                           -----------        -----------
                                                           $32,200,101        $27,647,331
                                                           ===========        ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
CURRENT LIABILITIES:
  Current portion of long-term debt                        $ 1,743,718        $ 1,511,276
  Line of credit                                             2,505,534          1,414,877
  Accounts payable                                             999,894            780,268
  Accrued expenses                                           1,581,257          2,674,287
  Income taxes payable                                         443,916            299,090
  Deferred revenue                                           1,610,855          1,247,470
                                                           -----------        -----------
          Total current liabilities                          8,885,174          7,927,268

DEFERRED INCOME TAXES                                          995,407            783,502

LONG-TERM DEBT, less current portion                         4,919,353         13,354,395
                                                           -----------        -----------
          Total liabilities                                 14,799,934         22,065,165

MINORITY INTEREST IN SUBSIDIARY                                 35,424             35,424

COMMITMENTS (Note 8)

SHAREHOLDERS' EQUITY:
  Preferred stock, without par value, 10,000,000 shares
    authorized, no shares issued and outstanding                     -                  -
  Common stock, without par value; 20,000,000 shares
    authorized, 5,855,244 and 4,747,833 shares
    issued and outstanding, respectively                    16,657,650          6,851,053
  Options issued for common stock                              211,763            211,763
  Foreign currency translation                                    (993)                 -
  Retained earnings (accumulated deficit)                      496,323         (1,516,074)
                                                           -----------        -----------
          Total shareholders' equity                        17,364,743          5,546,742
                                                           -----------        -----------
                                                           $32,200,101        $27,647,331
                                                           ===========        ===========

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

                                      F-3
<PAGE>

                             OBIE MEDIA CORPORATION

                        CONSOLIDATED STATEMENTS OF INCOME

                 FOR THE YEARS ENDED NOVEMBER 30, 1999 AND 1998



                                                     1999               1998
                                                 -----------        -----------

REVENUES:
  Outdoor advertising                            $ 5,942,294        $ 5,796,230
  Transit advertising                             34,523,332         19,421,970
                                                 -----------        -----------
  Gross revenues                                  40,465,626         25,218,200
  Less- Agency commissions                        (4,005,600)        (2,500,455)
                                                 -----------        -----------
          Net revenues                            36,460,026         22,717,745

OPERATING EXPENSES:
  Direct advertising expenses                     26,438,100         14,792,952
  General and administrative                       4,676,977          3,628,028
  Depreciation and amortization                    1,512,890            935,545
  Start-up costs                                     668,200            106,375
  Contract settlement                             (1,077,469)                 -
                                                 -----------        -----------
          Operating income                         4,241,328          3,254,845

INTEREST EXPENSE                                     942,316            776,001
                                                 -----------        -----------
INCOME BEFORE INCOME TAXES                         3,299,012          2,478,844

PROVISION FOR INCOME TAXES                         1,286,615            977,665
                                                 -----------        -----------
NET INCOME                                       $ 2,012,397        $ 1,501,179
                                                 ===========        ===========

BASIC NET INCOME PER SHARE                       $       .40        $       .32
                                                  ===========        ===========

DILUTED NET INCOME PER SHARE                     $       .39        $       .32
                                                  ===========        ===========


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

                                      F-4
<PAGE>

                             OBIE MEDIA CORPORATION

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                 FOR THE YEARS ENDED NOVEMBER 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                      Options    Cumulative      Retained
                                                                     Issued for     Other         Earnings
                                                                       Common   Comprehensive   (Accumulated
                                            Shares       Amount        Stock        Loss          Deficit)        Total
                                           ---------   -----------   --------   -------------   ------------   -----------
<S>                                        <C>         <C>           <C>           <C>          <C>            <C>
BALANCE, November 30, 1997                 4,665,137   $ 6,173,967   $      -      $ -          $(2,378,073)   $ 3,795,894
  Issuance of common stock for benefit
    plan and stock option exercises           22,196       127,788          -        -                    -        127,788
  Issuance of common stock for the
    acquisition of business                   60,500       512,500          -        -                    -        512,500
  Purchase of property from related party
    in excess of net book value                    -             -          -        -             (639,180)      (639,180)
  Options issued for common stock for the
    acquisition of business                        -             -    211,763        -                    -        211,763
  Income tax benefit of nonqualified
    stock option exercises                         -        36,798          -        -                    -         36,798
  Net income                                       -             -          -        -            1,501,179      1,501,179
                                           ---------   -----------   --------    -----          -----------    -----------
BALANCE, November 30, 1998                 4,747,833     6,851,053    211,763        -           (1,516,074)     5,546,742
  Issuance of common stock for benefit
    plan and stock option exercises            7,433       102,149          -        -                    -        102,149
  Issuance of common stock for public
    offering, net of expenses              1,100,000     9,704,745          -        -                    -      9,704,745
  Purchase of fractional shares                  (22)         (297)         -        -                    -           (297)
  Foreign currency translation                     -             -          -     (993)                   -           (993)
  Net income                                       -             -          -        -            2,012,397      2,012,397
                                           ---------   -----------   --------    -----          -----------    -----------
BALANCE, November 30, 1999                 5,855,244   $16,657,650   $211,763    $(993)         $   496,323    $17,364,743
                                           =========   ===========   ========    =====          ===========    ===========
</TABLE>

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

                                      F-5
<PAGE>

                             OBIE MEDIA CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED NOVEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
                                                              1999                1998
                                                          -----------         -----------

<S>                                                      <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                             $ 2,012,397          $ 1,501,179
  Adjustments to reconcile net income to net cash
    provided by operating activities-
      Depreciation and amortization                        1,512,890              935,545
      Contract settlement                                   (527,469)                   -
      Deferred income taxes                                   11,310              499,359
      Change in assets and liabilities net of effect
        of acquisition:
          (Increase) decrease in-
            Accounts receivable                           (1,995,826)          (2,759,773)
            Prepaid expenses and other assets               (967,558)            (231,977)
          Increase (decrease) in-
            Accounts payable                                 219,626              337,735
            Accrued expenses                                (522,778)             927,378
            Income taxes payable                             144,826              335,888
            Deferred revenue                                 363,385              230,859
                                                         -----------          -----------
          Net cash provided by operating activities          250,803            1,776,193
                                                         -----------          -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                    (3,196,166)          (1,679,981)
  Acquisition of business, net of cash required                    -           (6,288,846)
  Other investing activities                                 (69,219)             (36,259)
                                                         -----------          -----------
          Net cash used in investing activities           (3,265,385)          (8,005,086)
                                                         -----------          -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock for offering     11,000,000                    -
  Costs to issue common stock                             (1,077,243)             (43,012)
  Proceeds from issuance of common stock for options          16,221               55,885
  Net borrowings (payments) on lines of credit             1,090,657              672,013
  Checks outstanding in excess of cash deposits                    -             (173,611)
  Proceeds from long-term debt                                     -            7,000,000
  Net payments on long-term debt                          (8,298,600)            (886,871)
  Payments of debt issuance costs                             (7,079)             (69,371)
  Other financing activities                                    (297)                   -
                                                         -----------          -----------
          Net cash provided by financing activities        2,723,659            6,555,033
                                                         -----------          -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                         (993)                   -
                                                         -----------          -----------
NET INCREASE (DECREASE) IN CASH                             (291,916)             326,140

CASH, beginning of period                                    326,140                    -
                                                         -----------          -----------
CASH, end of period                                      $    34,224          $   326,140
                                                         ===========          ===========
                                                                               (Continued)

                                      F-6
<PAGE>

                             OBIE MEDIA CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED NOVEMBER 30, 1999 AND 1998

                                   (Continued)


                                                             1999                1998
                                                         -----------          -----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Issuance of stock to employee benefit plan                  85,928          $    71,903
  Note payable issued to acquire outdoor advertising
    structures                                                96,000              698,000
  Issuance of common stock and stock options for the
    acquisition of business                                        -              724,263
  Issuance of note payable for the acquisition of
    business                                                       -            1,500,000
  Costs associated with financing activities                 175,000              131,855
  Income tax benefit of nonqualified stock option
    exercises                                                      -               36,798
  Interest capitalized                                        14,886               14,104

CASH PAID FOR INTEREST                                       921,998              850,626

CASH PAID FOR TAXES                                        1,130,479              138,216

</TABLE>

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




                                      F-7
<PAGE>

                             OBIE MEDIA CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           NOVEMBER 30, 1999 AND 1998



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
    -------------------------------------------

Company
-------

Obie Media Corporation (the Company) is a full service  out-of-home  advertising
company  which  markets  advertising  space  primarily  on transit  vehicles and
outdoor advertising displays (billboards and wallscapes).  At November 30, 1999,
the Company had 43 exclusive  agreements  with  transit  districts in the United
States  and  Canada to  operate  transit  advertising  displays.  These  transit
districts are located in, among other  advertising  markets:  Dallas;  Portland,
Oregon; Cleveland; Sacramento;  Hartford; Ft. Lauderdale;  Cincinnati, St. Louis
and Vancouver,  British  Columbia.  The Company also operates and generally owns
advertising  displays on billboards and walls  primarily  located in Washington,
Oregon, California, Montana and Idaho.

On August 16,  1999,  the Company  completed a secondary  offering of  1,100,000
shares of its common stock,  raising $9,704,745,  net of expenses of $1,295,255.
The net proceeds were used to reduce previously outstanding debt.

Philbin & Coine, Inc. Acquisition
---------------------------------

On  September 1, 1998,  the Company  acquired  all of the  outstanding  stock of
Philbin & Coine,  Inc., a New York corporation doing business as P&C Media (P&C)
in exchange for 60,500 newly issued shares of the Company's  common stock valued
at  $512,500,  stock  options for 30,250  shares of the  Company's  common stock
valued at $211,763  (Note 7), cash of  approximately  $6.1  million,  a note for
$1,500,000  (Note 5) and incurred  fees and expenses of $191,497.  Additionally,
subject to certain  performance  contingencies  in the purchase  agreement,  the
Company  will be  required  to issue up to an  additional  90,750  shares of the
Company's  common stock to the former P&C shareholder in future years. The value
of any  subsequently  issued  shares will be allocated to costs in excess of the
fair value of net assets acquired.

Included in accounts  receivable in the accompanying  balance sheets at November
30,  1999  and  1998 is a  receivable  from the  former  shareholder  of P&C for
approximately $76,000, which relates to the acquisition of P&C.

The  transaction  has been  accounted  for as a purchase  with the excess of the
purchase  price  over the fair value  (which  approximated  historical  carrying
value) of the net assets acquired  allocated to goodwill.  The operations of P&C
have been included in the  accompanying  financial  statements since the date of
acquisition.

A summary of the net assets acquired follows:

Working capital                                                       $  408,123
Property and equipment                                                   273,564
Other assets                                                              11,680
Intangibles                                                            7,822,393
                                                                      ----------
                                                                      $8,515,760
                                                                      ==========


                                      F-8
<PAGE>

The following  unaudited pro forma  consolidated  results of operations  for the
year ended  November 30, 1998,  have been prepared as if the  acquisition of P&C
had occurred as of the beginning of fiscal year 1998:

Net revenue                                        $28,197,250
Operating income                                     2,847,366
Net income                                           1,054,648
Net income per share-
  Basic                                                 $.22
  Diluted                                               $.22

These pro forma results are not  necessarily  indicative of what actually  would
have  occurred had the  acquisition  been  completed as of the  beginning of the
period presented,  nor are they necessarily  indicative of the results that will
be obtained in the future.

Basis of Presentation
---------------------

The  consolidated  financial  statements  include the Company,  its wholly owned
subsidiary, Obie Media Limited, and its 50% owned subsidiary, OB Walls, Inc. All
significant  intercompany  accounts and transactions between the Company and its
subsidiaries have been eliminated in consolidation.

Foreign Currency Translation
----------------------------

The  financial  statements  of the  Company's  foreign  subsidiary,  Obie  Media
Limited,  are translated  into United States dollars using exchange rates at the
balance sheet date for assets and  liabilities,  and average  exchange rates for
the  period for  revenues  and  expenses.  The  effect of the  foreign  currency
translation was insignificant for the years ended November 30, 1999 and 1998.

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  and amounts  billed 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.

                                      F-9
<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, 1999,  the Company had 43  agreements  with transit  districts.
Customers  advertising  on  transit  vehicles  owned  by  seven  of the  transit
districts served by the Company:  Dallas;  Portland,  Oregon;  British Columbia;
Cleveland; Sacramento;  Cincinnati and Milwaukee represented approximately 55.4%
of the  Company's  total net revenues for the year ended  November 30, 1999.  No
single  advertising  customer  represented 10% or more of the Company's revenues
for any of the periods presented in the accompanying financial statements.

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 (Notes 8 and 11).

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, 1999
and 1998, 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.

Property and Equipment
----------------------

Property  and  equipment  are stated at cost.  Depreciation  is  provided on the
straight-line   method  over  the   estimated   useful   lives.   Additions  and
improvements,  including interest incurred during construction, are capitalized.
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  expense
incurred is capitalized in connection  with the  construction  of properties and
equipment.

Goodwill and Other Long-Lived Assets
------------------------------------

Goodwill  resulting from the P&C  acquisition  is being  amortized over 15 years
using  the  straight-line  method  and  is net of  accumulated  amortization  of
$651,416 and $126,000 at November 30, 1999 and 1998, respectively.  Goodwill and
other long-lived assets are periodically  evaluated when facts and circumstances
indicate that the value of such assets may be impaired. Evaluations are based on
undiscounted  projected  earnings.  If the valuation indicates that undiscounted
earnings are  insufficient  to recover the recorded  assets,  then the projected
earnings are discounted to determine the revised carrying value and a write-down
for the difference is recorded.

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

                                      F-10
<PAGE>

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

Basic  earnings per share (EPS) and diluted EPS are  computed  using the methods
prescribed  by  Statement  of  Financial  Accounting  Standards  (SFAS) No. 128,
"Earnings per Share." Basic EPS is calculated  using the weighted average number
of common shares  outstanding for the period and diluted EPS is calculated using
the weighted  average  number of common  shares and dilutive  common  equivalent
shares outstanding. Such amounts have been retroactively adjusted to reflect the
11-for-10  stock split which  occurred in November 1998 and the 11-for-10  stock
split which occurred in November 1999 (Note 7).

Following is a reconciliation of basic EPS and diluted EPS:

                                                 Year Ended November 30, 1999
                                             -----------------------------------
                                                                       Per Share
                                               Income        Shares     Amount
                                             ----------     ---------  ---------
Basic EPS-
  Income available to common shareholders    $2,012,397     5,089,486    $0.40
Effect of Dilutive Securities-
  Stock options                                       -        91,504
                                             ----------     ---------
Diluted EPS-
  Income available to common shareholders    $2,012,397     5,180,990    $0.39
                                             ==========     =========

                                                 Year Ended November 30, 1998
                                             -----------------------------------
                                                                       Per Share
                                               Income        Shares     Amount
                                             ----------     ---------  ---------
Basic EPS-
  Income available to common shareholders    $1,501,179     4,689,659     $0.32
Effect of dilutive securities-
  Stock options                                       -        65,166
                                             ----------     ---------
Diluted EPS-
  Income available to common shareholders    $1,501,179     4,754,825     $0.32
                                             ==========     =========


                                      F-11
<PAGE>

Recent Accounting Pronouncements
--------------------------------

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting Standards No. 130 "Reporting  Comprehensive  Income" (SFAS
130).  This  statement  establishes  standards for  reporting and  displaying of
comprehensive  income  and  its  components  in a full  set  of  general-purpose
financial  statements.  The  objective of SFAS 130 is to report a measure of all
changes in equity of an  enterprise  that  result  from  transactions  and other
economic events of the period other than transactions  with owners.  The Company
adopted SFAS 130 during the first quarter of fiscal 1999.  Comprehensive  income
does not  materially  differ from  currently  reported net income in the periods
presented.

Effective  in its fiscal year ending  November  30,  1999,  the Company  adopted
Statement of Financial  Accounting Standards No. 131 "Disclosures about Segments
of an Enterprise and Related  Information"  (SFAS 131). SFAS 131 changes current
practice under SFAS 14 by  establishing a new framework on which to base segment
reporting  (referred to as the "management"  approach) and also requires interim
reporting of segment information.  Based upon definitions  contained within SFAS
131, the Company has determined that it operates in one segment.

In  June  1998,  the  Financial  Accounting  Standards  Board  issued  Financial
Accounting Standards No. 133 "Accounting for Derivative  Instruments and Hedging
Activities" (SFAS 133), which establishes accounting and reporting standards for
all  derivative  instruments.  SFAS 133 was to be  effective  for  fiscal  years
beginning after June 15, 1999. In June 1999, the Financial  Accounting Standards
Board issued Statement of Financial Accounting Standards No. 137 as an amendment
to SFAS  133 and  deferred  the  effective  date of  SFAS  133 to  fiscal  years
beginning  after  June  15,  2000.  The  Company  currently  has  no  derivative
instruments and, therefore,  the adoption of SFAS 133 is not expected to have an
impact on the Company's financial position or results of operations.

2.  PREPAID EXPENSES AND OTHER CURRENT ASSETS:
    ------------------------------------------

Prepaid expenses and other current assets consist of the following:

                                                             November 30,
                                                       ----------------------
                                                          1999         1998
                                                       ----------   ----------

            Prepaid leases                             $  384,893   $  379,435
            Transit advertising production costs        1,041,430      500,297
            Other                                         707,814      276,329
                                                       ----------   ----------
                                                       $2,134,137   $1,156,061
                                                       ==========   ==========


                                      F-12
<PAGE>

3.  PROPERTY AND EQUIPMENT:
    -----------------------

Property and equipment consist of the following:

                                              November 30,
                                        ------------------------
                                           1999          1998      Asset Lives
                                        -----------   -----------  -----------

     Outdoor advertising structures     $13,835,142   $11,281,887     20 years
     Other equipment and leaseholds       4,173,827     3,434,153   5-20 years
                                        -----------   -----------
                                         18,008,969    14,716,040
     Less- Accumulated depreciation       5,171,745     4,222,866
                                        -----------   -----------
                                        $12,837,224   $10,493,174
                                        ===========   ===========

4.  ACCRUED EXPENSES:
    -----------------

Accrued expenses consist of the following:

                                              November 30,
                                        ----------------------
                                           1999             1998
                                        ----------       ----------

      Transit district fees             $  314,183       $1,890,581
      Payroll and related items            592,788          403,073
      Other                                674,286          380,633
                                        ----------       ----------
                                        $1,581,257       $2,674,287
                                        ==========       ==========


                                      F-13
<PAGE>

5.  FINANCING ARRANGEMENTS:
    -----------------------

Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                                          November 30,
                                                                 -----------------------------
                                                                    1999               1998
                                                                 ----------         ----------
<S>                                                              <C>                <C>
Term loan with U.S. Bank National Association (U.S. Bank),
  payable in monthly installments, with interest to be
  based, at the Company's option, partially at the London
  Inter-Bank Offering rate (LIBOR) plus 2% (7.44375% at
  November 30, 1999) and the remainder at U.S. Bank's
  prime rate plus .5% (9.00% at November 30, 1999) the
  loan is collateralized by substantially all of the
  Company's assets.                                              $4,500,000         $5,565,000
Note payable in annual payments of $12,000 plus interest
  at 10%, repaid in October 1999                                          -             12,000
Note payable in monthly payments of $5,900 including
  interest at 10%, repaid in April  1999                                  -             96,025
Note payable to U.S. Bank, as described below                       575,071            664,762
Notes payable in monthly payments of $2,219 including
  interest ranging from 9% to 9.98%, repaid in September
  1999                                                                    -             27,884
Bridge loan with U.S. Bank, as described below                            -          7,000,000
Note payable to former shareholder of P&C in certain
  installment payments plus interest at 6%, due January 1,
  2003 (Note 1)                                                   1,500,000          1,500,000
Note payable in monthly payments of $4,000 plus interest
  at 8%, due September 2001                                          88,000                  -
                                                                 ----------        -----------
                                                                  6,663,071         14,865,671
Less- Current portion                                             1,743,718          1,511,276
                                                                 ----------        -----------
                                                                 $4,919,353        $13,354,395
                                                                 ==========        ===========
</TABLE>

The aggregate  principal  payments due on the above debt  subsequent to November
30, 1999 are:

      Fiscal Year Ending
         November 30,

             2000                      $1,743,718
             2001                       1,743,718
             2002                       1,449,718
             2003                       1,449,708
             2004                         199,708
          Thereafter                       76,501
                                       ----------
                                       $6,663,071
                                       ==========


                                      F-14
<PAGE>

On August 1, 1998, the Company  received a $698,000 loan from U.S.  Bank,  which
was used to pay a note due to an  affiliated  partnership  (Note 8). The loan is
payable in monthly  installments  of $8,310 through July 15, 2005, with interest
to be based,  at the Company's  option,  partially at LIBOR plus 2% (7.44375% at
November 30, 1999) and the remainder at U.S. Bank's prime rate plus .5% (9.0% at
November 30,  1999).  The loan is  collateralized  by  substantially  all of the
Company's assets.

On September 1, 1998,  the Company  received a $7,000,000  bridge loan from U.S.
Bank,  which was used to finance the  Company's  acquisition  of P&C (Note 1) as
well as pay down certain indebtedness of P&C in connection with the acquisition.
The principal  balance was repaid with the proceeds of the  Company's  secondary
offering, completed in August 1999.

The Company also has a $4,000,000  operating  line of credit with U.S. Bank. The
interest  rate is at U.S.  Bank's prime rate (8.5% at November 30, 1999) and the
line is collateralized by receivables, equipment, inventory and contract rights.
The  outstanding  balance on this line of credit at November  30, 1999 and 1998,
was $2,505,534 and $1,414,877, respectively.

The Company was in compliance with all loan covenants at November 30, 1999.

6.  INCOME TAXES:
    -------------

For the year ended  November 30, 1999, the provision for income taxes included a
current  provision of $1,275,305  and a deferred  provision of $11,310.  For the
year ended  November 30, 1998 the provision for income taxes  included a current
provision of $478,306 and a deferred provision of $499,359.

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

                                                         November 30,
                                                 ----------------------------
                                                    1999              1998
                                                 ----------         ---------

Current deferred tax assets:
  Deferred revenue                               $  851,800         $ 621,895
  Prepaid commissions                               234,215           224,560
  Allowance for doubtful accounts                   115,142           112,746
  Accrued expenses and other                         59,244            25,468
                                                 ----------         ---------
          Total current deferred tax assets       1,260,401           984,669

Current deferred tax liabilities:
  Prepaid fees and other                           (300,974)         (225,837)
                                                 ----------         ---------
          Net current deferred tax assets        $  959,427         $ 758,832
                                                 ==========         =========

Noncurrent deferred tax liabilities:
  Property and equipment                         $  995,407         $ 783,502
                                                 ==========         =========


                                      F-15
<PAGE>

Income tax expense for the years ended  November  30, 1999 and 1998 differs from
the  amounts  computed by applying  the U.S.  federal  income tax rate of 34% to
pretax income, as follows:

                                                       Year Ended
                                                      November 30,
                                                   -------------------
                                                   1999           1998
                                                   -----          ----

Statutory federal income tax rate                   34.0%         34.0%
Increase in income taxes resulting from-
  Foreign, State and local taxes, net of
    federal income tax benefit                       4.0           4.6
  Other differences, net                             1.0           0.8
                                                    ----          -----
          Actual income tax expense                 39.0%         39.4%
                                                    ====          =====

7.  SHAREHOLDERS' EQUITY:
    ---------------------

The Company's Restated Articles of Incorporation 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 November 1998, the Company declared an 11-for-10 stock split for shareholders
of record on  November  21,  1998.  In October  1999,  the  Company  declared an
11-for-10 stock split for shareholders of record on November 22, 1999.

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
requiring  shareholder  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.











                                      F-16
<PAGE>

Stock Options
-------------

On September 1, 1998,  the Company  granted  nonstatutory  stock  options to the
former  shareholder  of  P&C,  as  part  of the  acquisition  of P&C  (Note  1),
exercisable for 151,250 shares of the Company's common stock.  Additionally,  as
part of the acquisition,  the Company granted  nonstatutory stock options to the
legal  counsel  of the P&C  shareholder  exercisable  for  12,100  shares of the
Company's  common  stock.  Of the 163,350  stock  options  granted,  30,250 were
exercisable  on the date of grant at an exercise  price of $7.20 per share,  and
included  in the  purchase  price  for the  acquisition  of P&C  (Note  1).  The
remaining  121,000  options  granted  to  the  former  shareholder  of  P&C  are
exercisable  in  30,250  increments  on  the  annual  anniversary  dates  of the
Company's employment  agreement signed with the former P&C shareholder,  subject
to certain provisions regarding the former P&C shareholder's employment with the
Company.  These  options  will be  recorded  as  additional  goodwill  once  the
contingent provisions are met.

In  addition,  on  October  2,  1996,  the  Company's  Board  of  Directors  and
shareholders  adopted the 1996 Stock  Incentive Plan (the Plan),  which provides
for the issuance of up to 399,300  shares of common stock  pursuant to Incentive
Stock Options (ISOs), Nonqualified Stock Options (NSOs), stock bonuses and stock
sales to 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
by any one  person  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.  NSOs
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 Board of Directors' Compensation  Committee,  which
administers the Plan. Activity under the Plan is summarized as follows:

                                                                 Weighted
                                       Shares        Shares       Average
                                      Available     Subject to   Exercise
                                      for Grant     Options        Price
                                      --------      --------     --------
BALANCES, November 30, 1997            224,274       175,027       $ 5.08
  Options granted                      (79,365)       79,365        10.22
  Options canceled                      30,608       (30,608)        6.83
  Options exercised                          -       (13,709)        5.02
                                      --------      --------
BALANCES, November 30, 1998            175,517       210,075         6.77
  Options granted                     (106,281)      106,281        12.27
  Options canceled                      38,358       (38,358)       11.45
  Options exercised                          -        (1,629)        6.01
                                      --------      --------
BALANCES, November 30, 1999            107,594       276,369         8.24
                                      ========      ========


                                      F-17
<PAGE>

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.

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 the years ended  November 30, 1999 and
1998,  using the  Black-Scholes  option  pricing model as prescribed by SFAS 123
using the following weighted average assumptions for grants:

                                                     Year Ended
                                                    November 30,
                                                --------------------
                                                  1999          1998
                                                -------       -------
     Risk-free interest rate                      5.50%         6.00%
     Expected dividend yield                         0%            0%
     Expected lives                             6 years       6 years
     Expected volatility                         72.00%        53.11%

Using the Black-Scholes  methodology,  the total value of options granted during
the years  ended  November  30,  1999 and 1998,  was  $895,367  and  $1,535,903,
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 the years ended November 30, 1999 and 1998,
was  $8.42  and  $7.66,  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:
<TABLE>
<CAPTION>
                                                        Year Ended November 30,
                                    --------------------------------------------------------------
                                                1999                               1998
                                    ---------------------------        ---------------------------
                                        As                                 As
                                     Reported         Pro Forma         Reported         Pro Forma
                                    ----------       ----------        ----------       ----------
<S>                                 <C>              <C>               <C>              <C>
    Net income                      $2,012,397       $1,626,324        $1,501,179       $1,355,304
    Basic net income per share         $0.40            $0.32             $0.32            $0.30
    Diluted net income per share       $0.39            $0.32             $0.32            $0.30
</TABLE>

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.

                                      F-18
<PAGE>

The following table summarizes  information  about stock options  outstanding at
November 30, 1999:
<TABLE>
<CAPTION>
                          Options Outstanding                      Options Exercisable
-----------------------------------------------------------    --------------------------
                     Weighted
                      Number          Average      Weighted       Number        Weighted
  Range of         Outstanding at     Remaining     Average    Exercisable at     Average
    Exercise        November 30,     Contractual   Exercise    November 30,     Exercise
     Prices            1999         Life - Years    Price          1999           Price
---------------    --------------   ------------   --------    --------------   ---------
<S>        <C>         <C>              <C>         <C>             <C>           <C>
 $ 5.00 -  5.68        139,753          12.0        $ 5.08          80,391        $ 5.06
           7.20        139,150          13.8          7.20          60,500          7.20
   8.47 -  9.30         54,407          13.5          8.62           9,341          8.64
  10.44 - 10.63         23,804          14.6         10.56               -          -
  11.57 - 12.60         29,173          13.6         11.66           5,615         11.63
          13.53         53,432          14.1         13.63               -          -
 --------------        -------          ----        ------         -------       -------
 $ 5.00 - 13.53        439,719          13.2        $ 7.95         155,847        $ 6.34
 ==============        =======          ====        ======         =======       =======
</TABLE>

At November 30, 1998,  84,288  options were  exercisable  at a weighted  average
exercise price of $5.82 per share.

8.  COMMITMENTS AND CERTAIN RELATED PARTY TRANSACTIONS:
    ---------------------------------------------------

Transit Agreements
------------------

Certain transit  agreements require the Company to remit to the transit district
the greater of a percentage of the related advertising  revenues or a guaranteed
minimum amount.  At November 30, 1999 future  guaranteed  minimum payments under
the transit agreements are as follows:

      Fiscal Year Ending
         November 30,
      ------------------
             2000                     $17,409,718
             2001                      17,169,432
             2002                      14,090,414
             2003                       8,926,526
             2004                       6,122,053
          Thereafter                    2,965,184

Operating Leases
----------------

The  Company  leased   outdoor   advertising   structures   from  an  affiliated
partnership.  The lease agreement  required  monthly  payments of a minimum base
rent  plus  additional  rent  equal to 5% of the  gross  revenues  derived  from
advertising displayed on the structures.  Minimum base rent payments were $8,500
per month  through  December  1996,  and  increased  to $9,000 per month for the
following  calendar  year.  The lease  expired  December 31,  1997.  Total lease
expense pursuant to this lease was $17,981 for the year ended November 30, 1998.

In December  1997,  the Company  exercised  its option to purchase  the property
discussed  above at a purchase price of $698,000.  In accordance  with generally
accepted accounting principles, the Company recorded only the book value carried
on the  books  of the  affiliated  partnership  at the  date  of  purchase.  The
difference between the net book value of these assets and the purchase price has
been recorded as a charge to the Company's accumulated deficit.

                                      F-19
<PAGE>

The Company also rents office and production space from  affiliates.  Such rents
totaled  $180,311 and  $171,096 for the years ended  November 30, 1999 and 1998,
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  $1,338,141  and  $1,073,074 for the years
ended November 30, 1999 and 1998, respectively.

At November 30, 1999,  future  minimum lease  payments for all operating  leases
described above are as follows:

      Fiscal Year Ending
         November 30,
      ------------------
             2000                    $1,493,986
             2001                     1,338,225
             2002                     1,129,168
             2003                       903,209
             2004                       790,392
          Thereafter                    878,492

9.  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  the years  ended
November  30,  1999  and  1998,  the  Company  accrued   $100,000  and  $86,304,
respectively,  as  contributions to the plan. In 1999, the Company paid the 1998
accrued  contribution through a contribution of 5,643 shares of its common stock
to the Plan and the balance in cash. In 1998,  the Company paid the 1997 accrued
contribution  through a contribution  of 8,486 shares of its common stock to the
Plan and the balance in cash.

10.  GEOGRAPHIC INFORMATION:
     -----------------------

For geographic information, revenues are allocated between the United States and
Canada,  depending on whether the advertising  contracts are to customers within
the  United  States or located  outside  the United  States.  Long-lived  assets
outside the United States were immaterial for all periods presented.

                                                 Years Ended November 30,
                                             ------------------------------
                                                 1999               1998
                                             -----------        -----------

     Canada                                  $ 5,275,211        $ 1,518,643
     United states                            31,184,815         21,199,102
                                             -----------        -----------
                                             $36,460,026        $22,717,745
                                             ===========        ===========


                                      F-20
<PAGE>

11.  CONTRACT SETTLEMENT:
     --------------------

The  Company  had a  contract  to  provide  advertising  sales  services  to the
Tri-County  Metropolitan Transit District (Tri-Met) in Portland,  Oregon, which,
by its terms, was scheduled to expire in June 2001. The Company originally began
serving Tri-Met in January 1994,  pursuant to a five-year  agreement,  which was
later extended for an additional two years.  The Federal Transit  Administration
(FTA), which provides  substantial  monies to transit  districts,  has taken the
position that transit advertising contracts may not exceed five years in length.
At the request of the FTA,  Tri-Met and the  Company  agreed that the  Company's
agreement  with Tri-Met was to  terminate on June 30, 1999 and in December  1998
entered into an agreement to compensate the Company for early termination of the
existing  contract.  The total amount of the contract  settlement was $1,077,469
and  is  included  as an  offset  in  operating  expenses  in  the  accompanying
consolidated statements of income for the year ended November 30, 1999.

In anticipation of the termination of the Company's transit district  agreement,
Tri-Met solicited  proposals for the operation of the Portland transit district.
On August 2, 1999,  Tri-Met  announced  its  intention to award the new Portland
contract to the Company.




















                                      F-21