THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
                       FORM 10-KSB - DECEMBER 31, 1996

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                   U.S. 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 December 31, 1996.
                                       OR
        [ ]     Transition Report Pursuant to Section 13 or 15(d)
                of the Securities Exchange Act of 1934.


                          Commission File No. 0-27994
                                              -------


                  THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
        (Exact name of small business issuer as specified in its charter)

             FLORIDA                                          59-3203301
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                          Identification Number)

                             186 N. INDUSTRIAL DRIVE
                            LAKE HELEN, FL 32744-0280
                                    904-228-1000
                          (Address and telephone number
                         of principal executive offices)




Securities registered under Section 12(b) of the Exchange Act:  None
Securities registered under Section 12(g) of the Exchange Act:  Common stock,
no par value

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

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

The registrant's revenues for its most recent fiscal year, ended December 31,
1996 were $3,332,612.

The aggregate market value of the registrant's voting stock held by
non-affiliates, computed by reference to the last sale price per share as of
February 28, 1997 was $4,606,636.

There were 4,114,000 shares of the registrant's Common Stock outstanding as of
March 14, 1997.

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                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement of the registrant for the
registrant's Annual Meeting of the Shareholders for the fiscal year ended
December 31, 1996, which definitive proxy statement will be filed with the
Securities and Exchange Commission not later than 120 days after the
registrant's fiscal year end of December 31, 1996 are incorporated by reference
into Part III.

Transitional Small Business Disclosure Format (check one): ___ Yes    _X_  No

                                      INDEX

                                                                           Page
                                     PART I

Item 1.   Business...........................................................3
Item 2.   Properties.........................................................8
Item 3.   Legal Proceedings..................................................8
Item 4.   Submission of Matters to a Vote of Security Holders................9


                                     PART II

Item 5.   Market for Common Equity and Related Stockholder Matters..........9
Item 6.   Management's Discussion and Analysis or Plan of Operations........11
Item 7.   Financial Statements..............................................14
Item 8.   Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosures...................................32


                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
                Compliance with Section 16(a) of the Exchange Act s.........32
Item 10. Executive Compensation.............................................32
Item 11. Security Ownership of Certain Beneficial Owners and Management.....32
Item 12. Certain Relationships and Related Transactions.....................32
Item 13. Exhibits and Reports on Form 8-K, Index............................33

                           2

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                                     PART I

ITEM 1.   BUSINESS

GENERAL

         The Company specializes in publishing free membership directories
for bar associations nationwide. The Company relies upon the sale of
advertising to generate its principal revenues.

         The Company's principal product is the printed publication of city and
county bar association directories throughout the continental United States.
Most bar association directories contain a complete listing of member attorneys
along with their firm names, addresses, telephone numbers and fax numbers. They
often also contain court information and specialized local information which
attorneys may require during their course of business.

         The Company publishes the majority of it's directories "in-house" . In
most cases, the Company assumes all costs of publication, including design,
layout, printing and binding of its directories.

         The Company is a Florida corporation which was organized in September
1993. Since inception, the number of print directories published by the Company
and its predecessor have increased from one directory in 1993, 16 directories
in 1994, 33 directories in 1995 to 46 directories in 1996. The Company's senior
management has approximately 20 years of combined experience in publishing
print specialty directories. This experience, the high quality of the free
print directories published by the Company and the Company's commitment to
client service have contributed to the Company's pattern of growth.

         In December 1995, the Company became the publisher of the directory for
the National Association of Bar Executives ("NABE") which is affiliated with the
American Bar Association. NABE consists of executives from many leading bar
associations at the state, county and local levels. NABE members include bar
executives nationwide including the bar associations for Atlanta, Boston,
Chicago, Dallas, Denver, Detroit, the District of Columbia, Houston, Los
Angeles, New Orleans, New York, Philadelphia, San Francisco and St. Louis. As
the publisher of the NABE directory, the Company believes that it has an
important competitive advantage in the marketing of bar directories to
NABE members.

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PRINT DIRECTORIES

  Industry Overview

         The market for specialty publishing is rapidly growing due in part to
the ever increasing need of businesses for specialized information. According to
an industry source, 221 companies produced 300 databases worldwide in 1979; in
1993, a total of 2,221 companies produced 5,210 databases. As a result of this
need for information, many publishers have oriented their business toward
specialty publishing.

         The specialty publishing market is diverse, consisting of trade
journals, newsletters, directories and magazines aimed at specific target
markets such as computer users, sports fans, women or men, gun collectors, etc.
Print directories, including association directories and yellow page
directories, are just one part of the specialty publishing market. Advertisers
are increasingly seeking ways to channel their advertising dollars toward
specific target markets. Specialty publications, including the Company's bar
association directories, offer advertisers the opportunity to advertise their
products and services to these select markets.

  Legal Specialty Market

         Bar directories have long been an important segment of the legal
publishing industry. Legal directories are often used by attorneys and their
staffs. Nationwide legal directories, such as the Martindale-Hubbell Law
Directory ("Martindale-Hubbell"), can assist in searching for attorneys
nationwide with specific credentials and expertise.

         The majority of attorneys work for smaller law firms or government
agencies which generally lack the substantial support staffs typically found in
large law firms and corporations. These attorneys may rely on the information
contained in their bar association directories. In the course of their
profession, lawyers are required to frequently communicate with other lawyers.
Therefore, bar directories meet a need of attorneys. From a lawyer's
perspective, a bar directory contains a convenient listing of names, addresses
and telephone numbers and often, facsimile numbers of co-counsel, opposing
counsel, local courts and judges. Since a bar association directory is often
used, the advertising contained in those directories is intended to reach its
targeted audience on a regular basis.

THE COMPANY'S BAR DIRECTORIES

         The Company provides directories to individual bar associations
nationwide which distribute the directories to member attorneys. The Company
derives its principal revenues from the sale of yellow page advertising located
after the listing of association members. Advertisers are usually local
merchants marketing their goods and services to lawyers in the communities
served by the bar association. Participating advertisers include title
companies, court reporters, accountants, and office supply companies.
Additionally, the Company markets to many attorneys the option of having their
own specialty listings in their local directory. These listings are contained in
bar directories published by the Company and provide a convenient source of
referrals for attorneys who need assistance in a given area of the law for their
clients.

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         The Company targets bar associations with enough members within a
localized area so that the potential advertising revenue is expected to exceed
direct and indirect publishing costs. In order to do so, the Company researches
the demographics of each bar association and the local community. The Company's
target market consists of all bar associations with approximately 300 or more
members although it has published directories for smaller bar associations. In
targeting bar associations, the Company uses area demographics including the
local yellow pages and other local publications to determine if the number of
potential advertisers which meet its criteria exist in the community.

         The Company is concentrating its efforts on obtaining multiyear
contracts to publish additional bar directories. Once it targets a bar
association for publication of its directory, the Company uses referrals from
other clients to assist in obtaining an agreement to publish that directory. As
the Company has expanded its operations, management has developed business
relationships with bar association executives throughout the country. In
addition, the Company uses its published bar directories and letters from
satisfied bar associations as marketing tools to show prospective new clients.

Publication of Directories

         The Company publishes bar directories at no cost to most bar
associations. The Company's no-cost approach means that it will publish a
directory, assuming all production costs including design, advertising layout,
printing and binding. In this fashion, the financial risk is transferred from
the association to the Company.

         The publication of bar directories by the Company involves a number of
stages. First the Company must obtain a contract to publish a directory from a
bar association as described above. Once an agreement to publish is reached, the
Company's in-house sales staff solicits advertisements from local businesses
which provide goods and services to attorneys in the bar association's
community. At the same time, the Company markets specialty listings to bar
association members which generates additional revenues. A draft of all
advertisements for the directory is submitted to the bar association which can
reject any advertisements which do not meet its standards. In most directories,
the Company has not experienced a rejection of a proposed advertisement.

         As part of the publication process, the association provides the
Company with a complete database of membership information and other general
information, such as court listings, which the association wants to include in
the directory. Many of the directories published by the Company are pictorial.
In these instances, the Company assists the association in arranging for
photographs of its members using unaffiliated photographers. Most graphics for
the directory are prepared by the Company's staff of graphic artists. Once all
of the graphics are completed including advertising, the Company produces a
draft of the directory, obtains approval from the bar association, and then
arranges for printing and binding of the directory by an independent commercial
printer. After printing and binding, the directories are shipped by the Company
to the bar association which distributes them to its members.

  Clients

         Through December 31, 1996, the Company has published 95 directories,
all but a few of which have been for city, county, or area bar associations.
During 1996 the Company increased its presence in the city and county
bar association markets and entered the state markets with the

                                5
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publication of the New Hampshire Bar Association directory and the
signing of agreements to publish directories for the Tennessee Bar
Association, the North Carolina Bar Association, the Idaho State
Bar, and the West Virginia State Bar. As the Company has grown,
it believes that its emerging national presence has given it
the credibility to permit it to market its products and
services to other state bar associations.

  Alternative Publishing Method

         In addition to turnkey publishing, bar associations can publish
directories themselves. By self-publishing, the bar association staff compiles
the information to be included, negotiates with printers and photographers and
distributes the directories. Under this method, the association pays all costs.
The association can attempt to recoup these costs from either the sale of
advertisements or the sale of directories to its members.

NEWSLETTER PROGRAM

         In December 1995, the Company began publishing the Atlanta Lawyer, the
monthly newsletter for the Atlanta Bar Association. The Company provides this
newsletter to all Atlanta Bar members at no cost. The Company derives its
revenues from the sale of advertising contained in the newsletter. The content
of the newsletter is provided to the Company by the Atlanta Bar Association and
the advertising is solicited by the Company. While the Company still publishes
the Atlanta Bar Association's newsletter on a monthly basis, the Company has
declined other opportunities to publish such newsletters as the Company believes
that its efforts are best focused on directory advertising sales.

  Internet Program

         In 1996, the Company expanded its business to include free electronic
publishing on the Internet for certain bar association clients. The Company
planned to sell advertising on each bar's web site. After pursuing
advertising for these various web sites, the Company decided to cease
this activity after determining that the return on its resources was much
better for print directories advertising. However, the Company plans to
market low cost Internet advertising as an add-on sale to its existing print
directory advertisers in the near future. By doing so, the Company intends to
post all Internet advertising to a single newly created web site, thus
eliminating the need to contract with the bar associations and maintain
an Internet web site for each.

SALES AND ADVERTISING

         Revenues generated from the sale of advertising enable the Company to
provide its publications free of charge to bar associations. The Company
maintains two separate sales offices (Lake Helen, FL and Orlando, FL), each
operated by account executives who specialize in selling advertisements by
telephone to businesses which supply support services and products to the legal
profession as well as to the general public. The Company believes that through
its in-house sales team of approximately 74 full-time account executives, it is
better able to maintain quality control and establish a reputation for
professionalism. The Company's management supervises the sales staff

                            6
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in order to ensure that it is acting in an ethical and professional manner and
clearly communicates that the Company is independent of the bar associations.
All new account executives go through a structured 60-day training program.
The Company's account executives are taught not merely how to sell
advertising but also about the Company and its goals. In accordance with
the Company's structured goal-oriented philosophy, each account executive
works with the sales manager and each month prepares a goal sheet detailing
realistic monthly and daily sales goals.

         All agreements with bar associations provide that each association has
the right to reject any advertising that is not consistent with its guidelines.
Advertising is contained in a section entitled "Attorney Support Services" and
follows a "yellow page" format in print directories and newsletters.

         Advertising sales are assisted by a letter of introduction from the bar
association noting that the Company is publishing the directory and stating how
many attorneys and judges will receive the directory. Like other forms of print
advertising including newspaper and yellow pages, the Company offers a variety
of possible advertisements including inside front cover pages, full and partial
pages, business card listings, and simple classified line listings. The Company
requires a 50% deposit upon approval by the advertiser of a proof and the
balance is payable upon publication. A 10% discount is offered in exchange for
full payment upon approval of a proof.

         The Company markets its sale of specialty listings by direct mail and
advertising in bar newsletters. It does not engage in telephone solicitation of
attorneys.

PRINTING

         The Company is not engaged in the printing of its bar directories and
newsletters but subcontracts this work to independent printing companies. The
Company believes that there is an ample supply of independent printers willing
to perform quality printing services for the Company and that it will not be
materially adversely affected by subcontracting its printing services. In doing
so, the Company believes that it avoids the need to invest substantial sums of
capital in printing and binding equipment and has more flexibility to meet its
clients' specialized needs.

BACKLOG

         The Company's backlog consists of advertising agreements for
directories and newsletters which have not been published. As of March 1, 1997,
the Company's backlog was approximately $2,100,000 as compared to approximately
$1,159,000 a year earlier and $620,000 on March 1, 1995. Since the Company
recognizes revenues when it ships its print bar directories and newsletters, it
anticipates that all of the March 1, 1997 backlog will be recognized as revenues
during the current fiscal year.

SIGNIFICANT CLIENTS

         Although the Company does not derive its revenues directly from bar
associations, advertising sales from the publication of one bar directory
accounted for 19% of the Company's revenues in fiscal 1995, while another
directory accounted for 11%. In 1996, advertising sales from the publication of
one bar directory accounted for 15% of the Company's revenues. The Company will
not receive any revenues during the current fiscal year from the directory
published by one of these bar associations due to that association's policy of
publishing its directory every three years. Because of the Company's increasing
backlog, the Company does not expect to be materially adversely affected by the
absence of revenues from this bar association's directory. See "Business--The
Company's Bar Directories."

                                 7
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COMPETITION

         There are two levels of competition within the Company's business. The
Company competes in obtaining agreements with bar associations to publish its
directory. Once the Company has contracts to publish, it faces substantial
competition in the sale of advertising.

         There are three primary competitive factors which affect the Company's
business--cost, service and product quality. The Company believes its principle
competitive advantage is its ability to offer products and services at no cost
to professional associations.

         As the publisher of the National Association of Bar Executives ("NABE")
directory, the Company perceives that it has an additional competitive advantage
in the marketing of bar directories to NABE members. Individually, NABE's
members generally are in a position to play an important role in the selection
of local directory publishers. Each NABE member receives a NABE directory
published by the Company which gives the Company increased visibility to these
bar association executives.

  Print Directories

         The print bar directory market is highly segmented and localized. Other
than Martindale-Hubbell, few competitors focus exclusively on legal directories.
Martindale-Hubbell is a national directory consisting of a set of 25 large
hardcover volumes. The set costs $745 per year and cannot be purchased for a
particular geographic area. However, on a national scale, Martindale-Hubbell is
the pre-eminent name in the print bar directory business.

         For print directories covering a limited geographical area, the
Company's principal competitor is believed to be Legal Directories Publishing
Company ("LDP"), a privately-held company located in Dallas, Texas. LDP
publishes state bar directories which it sells directly to attorneys and others
who have a need for a state bar directory.  LDP is believed to have
significantly larger revenues than the Company.

         Other competitors include  Elson-Alexandre,  an affiliate of Western
Photography Services, Inc. located in Buena Vista, California. Elson-Alexandre
is primarily a portrait  photographer  and publishes the directories as an
adjunct to its core business which is the sale of photographic packages.

  Advertising Competition

         The Company competes with all forms of media which sell
advertising--yellow pages, alternative yellow pages, specialty magazines,
newspapers and television, among others.

         There are no significant barriers to entry by competitors. Since these
potential competitors can enter the Company's business without substantial
capital investment or industry  experience, the Company is seeking to protect
its competitive  position through its co-operative  payment program. See
"Business--Competition",  and "Business--Future Business Strategy."

FUTURE BUSINESS STRATEGY

         The Company's overall marketing strategy is to increase its base of
legal directories published nationwide. The Company also believes that the
fragmented nature of the specialty publishing industry creates favorable
acquisition opportunities.

                                     8
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EMPLOYEES

         At December 31, 1996 the Company had 124 full-time and seven
independent contractors, including its executive officers. The Company's staff
is divided into 24 people in administration, 74 account executives in sales and
marketing, 10 graphic artists, 5 production assistants and 11 customer
service representatives. None of the Company's employees or independent
contractors are covered by a collective bargaining agreement. Management
believes that the Company's relationship with its employees and contractors is
excellent. The Company believes that the future success of the Company is
dependent to a significant degree on its ability to retain existing employees
and to attract and train additional skilled personnel.

ITEM 2.   PROPERTIES

         The Company's corporate headquarters occupy approximately 21,500 square
feet in a seven-year-old two-story concrete building located at 186 North
Industrial Park Drive, Lake Helen, Florida, 32744. The Company purchased the
building and approximately three acres of land for approximately $900,000 in
September of 1996; modifications to enhance the property's usefulness to the
Company increased the investment to approximately $989,000 at December 31, 1996.
In December, 1996 the Company closed on an $800,000 mortgage on the property.
See Note 6 to "Notes to Financial Statements." Prior to its current corporate
headquarter facilities, the Company leased approximately 7,100 square feet in
Deltona, Florida.

         In July, 1996, in addition to its corporate headquarters the Company
opened a sales office location in Orlando, Florida. The Company leased 7,245
square feet under a noncancellable operating lease which expires in 1999 and
which may be renewed by the Company for consecutive one-year increments until
2002. Approximate future minimum lease payments due in 1997 are $99,275. See
Note 5 to "Notes to Financial Statements."

         Management  considers that it may open one or more additional sales
offices during 1997 as the Company's  contract base may mandate.

ITEM 3.   LEGAL PROCEEDINGS

         The Company is not party to any legal proceedings either by or against
it, nor is the Company aware of any pending legal proceedings at the time of
this Report.

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

         No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Report.

                            9
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                                PART II


ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 Market Prices of Securities

         The Company's common stock began trading on the NASDAQ National Market
System on May 17, 1996 under the symbol PCNA. The following table sets forth the
prices as reported to the Company by NASDAQ for the periods indicated. Such
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.

                                    High             Low
                                    ------           ------
1996     Second Quarter             7 1/2            6
         Third Quarter              7 1/8            4 3/4
         Fourth Quarter             5 1/8            2

         As of December 31, 1996, there were approximately 700 beneficial
holders of the Company's common stock.

         The Company did not pay dividends on its common stock in 1996 and it
does not anticipate paying any dividends thereon in the foreseeable future;
rather, it intends to retain any future earnings to finance the development and
expansion of its business.

 Sales of Unregistered Securities within the Last Three years

         During the past three years, the following persons and entities
acquired shares of Common Stock and other securities from the Company as set
forth in the table below:

                                  Class of          Amount of
                       Date       Securities     Securities Sold   Consideration
                       -------    ------------   ---------------   -------------
Peter S. Balise        3/8/96     Bridge Note            $50,000         $50,000
                                  Common Stock             5,000

Matt Butler            3/8/96     Bridge Note            $50,000         $50,000
                                  Common Stock             5,000

Michael D. and
  Beth J. Harris       3/8/96     Bridge Note            $25,000         $25,000
                                  Common Stock             2,500

James M. Koller        3/8/96     Bridge Note            $25,000         $25,000
                                  Common Stock                             2,500

John D. McKey, Jr.     3/8/96     Bridge Note            $50,000         $50,000
                                                           5,000
                                  10
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ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (CONTINUED)


                                  Class of          Amount of
                       Date       Securities     Securities Sold   Consideration
                       -------    ------------   ---------------   -------------
Robert Plakon          3/8/96     Bridge Note            $25,000         $25,000
                                  Common Stock             2,500

Ronald Plakon          3/8/96     Bridge Note            $25,000         $25,000
                                  Common Stock             2,500

Stephen E. Strang      3/8/96     Bridge Note            $25,000         $25,000
                                  Common Stock             2,500

Gerald H. Stein        3/8/96     Bridge Note            $25,000         $25,000
                                  Common Stock             2,500

Matt Butler            5/17/96    Common Stock             3,000    Services as
                                                                    a Director

John D. McKey, Jr.     5/17/96    Common Stock             3,000    Services as
                                                                    a Director

Phillip S. Hofmann     11/25/96   Common Stock             3,000    Services as
                                                                    a Director

James M. Koller        1/29/97    Common Stock             5,000         $11,233
                                                                    Employee
                                                                    Compensation

Christopher J.
  Maikisch             1/29/97    Common Stock             1,900          $4,305
                                                                    Employee
                                                                    Compensation

Yellow Magic, Inc.     1/29/97    Common Stock           $10,400         $33,950
                                                                    Purchase of
                                                                    Software

         The Common Stock and Bridge notes listed above were sold to accredited
investors in reliance upon exemptions from registration pursuant to Section 4
(2) of the Securities Act of 1933 and Rule 506 thereunder.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

         Revenues for the year ended December 31, 1996 increased 71% to
$3,332,612 from $1,949,266 for the year ended December 31, 1995 primarily due
to an increase in the number of directories published. In 1995 the Company
published 33 directories with average net revenues of $59,069 per directory. In
1996 the Company published 46 directories with average net revenues of $68,886
per directory. Additionally during 1996, the

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Company recognized approximately $160,000 in revenues for the Atlanta Lawyer
newsletter and Internet operations; these had no revenues in 1995.

         While revenues rose $1,383,346 from 1995 to 1996, costs rose $2,667,806
and the Company incurred a loss of $691,495 for the year ended December 31, 1996
compared to net income of $580,246 for the year ended December 31, 1995.

         An increase of $1,139,554 in salaries and commissions accounted for the
single largest factor in the increase in costs. During 1995, the Company's
employment ranged from approximately 18 at the beginning of the year to
approximately 43 full-time at year-end; by the end of 1996, the Company was
at 124 full-time employees. The Company's increase in staff was primarily in
the area of sales for the Orlando sales office in the latter part of the
year; approximately 74 of the 124 employees at the end of 1996 were
salespeople; an additional 11 were in sales administration and support. The
Company added this staff in order to be able to sell advertising
for the increased number of directories scheduled for shipment
during 1996 and beyond. Advertising contracts booked for print
directories totaled approximately $4,100,000 for 1996, compared
to approximately $1,900,000 for 1995.

         General and administrative expenses increased $847,783 in 1996
from 1995. The largest single component of these costs was bad debt
expense, which increased from $37,730 in 1995 to $422,460 in 1996.
As the Company continues to grow, it has found that the level of
uncollectible receivables has also increased. Therefore, the Company
revised its allowance for doubtful accounts at December 31, 1996
to 9 1/2% of net sales for amounts owed six months or less relating
to directory publications and 20% for amounts owed six months or
less relating to newsletter and Internet revenues; in addition,
the Company provided a full reserve for amounts owed more than six
months, based upon an expectation that a small percentage of these
monies will be collected. All amounts owed more than one year are
written off. The Company's bad debt expense for 1996 was 12.7% of
net revenues, which gives effect to the varying allowances
described above. The Company also noted significant increases in
legal, outside accounting, and other professional services
which primarily are a direct result of the Company's transition
from private to public ownership. Those three areas rose from
$6,787 in 1995 to $177,674 in 1996; the Company considers that
at least $100,000 of the expense in 1996 was attributable to
services the Company contracted as a result of being publicly
owned.

         Marketing and selling expense increased $299,480 from
1995 to 1996. More than half of this increase was telephone
expense which rose 166% to $245,371 in 1996 from $92,095 in
1995. This is directly attributable to the increase in staff
noted above, particularly the sales staff, who conduct most
of their business over the telephone. Contracted labor
relating to selling and marketing activities rose more
than $50,000 from 1995 to 1996.

                           12
<PAGE>

         Materials and printing costs increased to 17% of net sales in 1996 from
13% of sales in 1995. The Company believes that this increase in the ratio of
costs to revenues was due to both increases in the costs and decreases in the
amount of advertising revenues relative to the costs, which vary little in
relationship to the amount of advertising contained. There were a number of
advertising sales campaigns for directories shipped in 1996 that were
curtailed in order to meet a scheduled ship date. The Company estimates
that the materials and printing costs for 1997 will be closer to those
for 1996 than for 1995.

         Other income of $27,416 for the year ended December 31, 1996 was
comprised of $109,588 of interest and investment income, $89, 654 of interest
expense, and $7,482 of other non-operating income.

LIQUIDITY AND CAPITAL RESOURCES

     Pursuant to a registration statement on Form SB-2 with the Securities and
Exchange Commission dated May 17, 1996 the Company's common stock commenced
trading on the NASDAQ National Market System under the symbol PCNA. Gross
proceeds of $6,325,000 were raised from the sale of 1,150,000 shares at $5.50
per share. Net proceeds to the Company after paying all related costs of the
offering were approximately $4,900,000.

     The Company used $300,000 of the proceeds from its initial public offering
to repay bridge notes which had been issued earlier in the year in order to
provide funds during the pre-offering period. During the year ended December 31,
1996 the Company distributed the 1995 S Corporation earnings of $447,178 to
shareholders as of December 31, 1995.

     At December 31, 1996, the Company had $1,760,831 in cash and equivalents
and $2,477,500 in U.S. Treasury securities.

         The Company's only debt is an $800,000 mortgage on which it closed
December 30, 1996. This mortgage relates to the Company's land and building
purchased in September, 1996 for use as its corporate headquarters. At December
31, 1996 the Company's investment in the land and building was approximately
$989,000. Additional information concerning the mortgage is included in Note 6
of the Notes to Financial Statements.

         Net cash used in operations was $73,994 for the year ended December 31,
1996 compared to $487,182 provided by operations for the same period a year
earlier. The most significant reason for the decrease in cash provided from
operations in 1996 from 1995 was the operating loss for reasons described above
under Results of Operations. Accounts receivable before the allowance for
doubtful accounts increased by $142,017 during the one-year period; however, an
increase of $230,032 in the allowance caused net receivables to decrease by
$88,015. Directories in progress, which represents estimated costs accumulated
for directories unpublished at the end of the period, increased $57,205 during
the year ended December 31, 1996, reflecting the increase in the amount of
directories in progress at the end of 1996 from that a year earlier. Deferred
revenue, which represents amounts received from advertisers prior to shipment of
the related directories, increased $190,177 primarily for

                                  13
<PAGE>

the same reason. Accrued expenses at December 31, 1996 consist primarily of
approximately $94,000 in accrued wages and deferred compensation and $111,000
in various accrued expenses and property and sales taxes.

     In early 1997, the Company purchased a software system designed
specifically for its industry for $83,950. Later in 1997 the Company may invest
an estimated $175,000 in software and computer hardware for automation of its
sales functions. The Company has no commitments at this time to acquire a
material amount of capital assets.

     As described in the Company's registration statement on Form SB-2, the
Company intends to seek to increase market share through the acquisition of
print directory competitors or the rights to certain publishing contracts held
by such competitors. As of the date of this filing, the Company has not entered
into any agreements, understandings, or commitments relating to any potential
acquisition, although discussions with respect to such transactions are being
conducted. Such transactions are expected to involve a combination of cash,
Company stock, and payments from the future earnings of the acquired operations;
the cash requirements for these transactions is not expected to exceed the
$1,000,000 identified in the registration statement.

     Based on current cash and investment balances and the Company's anticipated
results of future operations, the Company believes that it has sufficient cash
resources to fund its operations for the next twelve months or more.

FORWARD-LOOKING STATEMENTS

         The statements made above relating to the Company's anticipation that
all of the March 1, 1997 backlog will be recognized as revenue during the
current fiscal year, to the anticipated material and printing costs in 1997
and to the Company's intentions or expectations regarding an increase in market
share through the acquisition of print directory competitors or the right to
certain publishing contracts held by such competitors are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The results
anticipated by any or all of these forward-looking statements may not occur.
Important factors that may cause actual results to differ materially from the
forward-looking statements include the following: (1) unanticipated
cancellation by bar associations of existing contracts to publish directories;
(2) unplanned postponement of the shipment of directories due to factors over
which the Company has no control; (3) unanticipated changes in third-party
printing costs as a result of changes in labor or paper costs; (4) the
Company's ability to continue to sell sufficient advertising per directory
published in order to maintain the same percentages of materials and printing
costs to directory revenues; and (5) the Company's ability to identify, or
consummate the acquisition of, or successfully operate, suitable print
directory competitors or rights to suitable publishing contracts held by such
competitors.

                              14
<PAGE>

ITEM 7.   FINANCIAL STATEMENTS

                  The Publishing Company of North America, Inc.

                              Financial Statements

                     Years ended December 31, 1996 and 1995




                                    CONTENTS

Report of Independent Certified Public Accountants...........................16

Audited Financial Statements

Balance Sheets...............................................................17
Statements of Operations.....................................................18
Statements of Shareholders' Equity...........................................19
Statements of Cash Flows.....................................................20
Notes to Financial Statements................................................22

                             15
<PAGE>

               Report of Independent Certified Public Accountants

The Board of Directors
The Publishing Company of North America, Inc.

We have audited the accompanying balance sheets of The Publishing Company of
North America, Inc. as of December 31, 1996 and 1995, and the related statements
of operations, shareholders' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our 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 The Publishing Company of North
America, Inc. at December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

ERNST & YOUNG LLP

Orlando, Florida
February 21, 1997

                                16
<PAGE>

<TABLE>
<CAPTION>
                                    The Publishing Company of North America, Inc.

                                                     Balance Sheets

                                                                                             DECEMBER 31
                                                                                        1996            1995
                                                                                -----------------------------------
<S>                                                                             <C>               <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                         $1,760,831        $286,023
   Available-for-sale securities                                                      2,477,500          16,500
   Accounts receivable, less allowance for doubtful accounts of $267,787 and
     $37,755 in 1996 and 1995, respectively                                             228,997         317,012
   Directories in progress                                                              144,823          87,618
   Refundable income taxes                                                               72,068               -
   Other current assets                                                                  17,544          16,747
                                                                                -----------------------------------
Total current assets                                                                  4,701,763         723,900

Property and equipment, net                                                           1,329,783         169,200
Other assets                                                                             66,417               -
                                                                                -----------------------------------
Total assets                                                                         $6,097,963        $893,100
                                                                                ===================================

LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
   Accounts payable                                                               $     234,334    $     33,318
   Accrued expenses                                                                     205,670          39,767
   Deferred revenue                                                                     460,434         270,257
   Mortgage payable                                                                      48,889               -
                                                                                -----------------------------------
Total current liabilities                                                               949,327         343,342

Mortgage payable after one year                                                         751,111               -
                                                                                -----------------------------------
Total liabilities                                                                     1,700,438         343,342

Commitments and contingencies                                                                -                -

Shareholders' equity:
   Common shares, no par value:
     15,000,000 shares authorized, 4,114,000 and 2,925,000 shares issued and
     outstanding in 1996 and 1995, respectively                                       5,137,565             100
   Unrealized loss on available-for-sale securities                                     (13,024)        (17,520)
   Retained earnings (accumulated deficit)                                             (691,495)        567,178
   Unearned compensation, net                                                           (35,521)              -
                                                                                -----------------------------------
Total shareholders' equity                                                            4,397,525         549,758
                                                                                -----------------------------------
Total liabilities and shareholders' equity                                           $6,097,963        $893,100
                                                                                ===================================

See accompanying notes.

</TABLE>

                              17
<PAGE>

<TABLE>
<CAPTION>
                                      The Publishing Company of North America, Inc.

                                               Statements of Operations

                                                                                     YEAR ENDED DECEMBER 31
                                                                                     1996               1995
                                                                             ------------------ ------------------
<S>                                                                          <C>                <C>
Net sales                                                                         $3,332,612         $1,949,266

Cost and expenses:
   Salaries and commissions                                                        1,957,318            817,764
   Materials and printing                                                            573,635            247,978
   Depreciation                                                                       93,055             37,723
   Marketing and selling                                                             406,647            107,167
   General and administrative                                                      1,020,868            173,085
                                                                             ------------------ ------------------
                                                                                   4,051,523          1,383,717
                                                                             ------------------ ------------------
Income (loss) from operations                                                       (718,911)           565,549

Other income                                                                          27,416             14,697
                                                                             ------------------ ------------------
Net income (loss)                                                             $     (691,495)    $      580,246
                                                                             ================== ==================

Net (loss) per share                                                          $         (.19)
                                                                             ==================

Shares used in computation of net (loss) per share                                 3,681,233
                                                                             ==================

Pro forma data (unaudited):
   Income as reported before pro forma provision for income taxes
                                                                                                  $     580,246
   Pro forma provision for income taxes                                                                (218,700)
                                                                                                ------------------
   Pro forma net income                                                                           $     361,546
                                                                                                ==================

Pro forma net income per share                                                                    $         .12
                                                                                                ==================

Shares used in computation of pro forma net income per share                                          2,955,000
                                                                                                ==================



See accompanying notes.

</TABLE>

                               18
<PAGE>

<TABLE>
<CAPTION>
                                     The Publishing Company of North America, Inc.

                                          Statement of Shareholders' Equity

                                                                       RETAINED
                                                                       EARNINGS
                                         COMMON       UNREALIZED     (ACCUMULATED        UNEARNED
                                         STOCK           LOSS          DEFICIT)         COMPENSATION         TOTAL
                                    --------------- --------------- ---------------- ------------------- ---------------
<S>                                   <C>              <C>            <C>                <C>              <C>
Balance at January 1, 1995            $       100      $       -      $    34,936        $       -        $     35,036
   Unrealized holding loss on
     available-for-sale security                -        (17,520)               -                -             (17,520)
   Shareholder distributions                    -              -          (48,004)               -             (48,004)
   Net income                                   -              -          580,246                -             580,246
                                    --------------- --------------- ---------------- ------------------- ---------------
Balance at December 31, 1995                  100        (17,520)         567,178                -             549,758
   Issuance of common stock             4,976,215              -                -                -           4,976,215
   Shareholder distributions                    -              -         (447,178)               -            (447,178)
   Transfer of undistributed
     earnings                             120,000              -         (120,000)               -                   -
   Unrealized holding gain on
     available-for-sale security                -          4,496                -                -               4,496
   Restricted stock granted                41,250              -                -          (41,250)                  -
   Amortization of unearned
     compensation                               -              -                -            5,729               5,729
   Net loss                                     -              -         (691,495)               -            (691,495)
                                    --------------- --------------- ---------------- ------------------- ---------------
Balance at December 31, 1996           $5,137,565       $(13,024)       $(691,495)        $(35,521)         $4,397,525
                                    =============== =============== ================ =================== ===============



See accompanying notes.

</TABLE>

                                       19
<PAGE>

<TABLE>
<CAPTION>
                                      The Publishing Company of North America, Inc.

                                                Statements of Cash Flows

                                                                                      YEAR ENDED DECEMBER 31
                                                                                      1996              1995
                                                                              ------------------------------------
<S>                                                                             <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                               $    (691,495)        $580,246
Adjustments to reconcile net income (loss) to net cash provided by (used in)
   operating activities:
     Depreciation                                                                      93,055           37,723
     Amortization of unearned compensation                                              5,729                -
     Bad debt expense                                                                 422,460           48,987
     Exchange of advertising for machinery and equipment                              (12,639)         (11,778)
     Accretion of bridge notes                                                         77,778                -
     (Gain) loss on sale of securities                                                  4,953           (7,713)
     Increase in accounts receivable                                                 (334,444)        (284,604)
     Increase in directories in progress                                              (57,205)         (32,487)
     Increase in refundable income taxes                                              (72,068)               -
     Increase in other assets                                                         (67,214)            (964)
     Increase in accounts payable                                                     201,016           52,085
     Increase in deferred revenue                                                     190,177          105,687
     Increase in accrued expenses                                                     165,903                -
                                                                              ------------------------------------
Net cash provided by (used in) operating activities                                   (73,994)         487,182

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities                                         (4,441,315)         (67,860)
Sales of available-for-sale securities                                              1,979,858           41,553
Purchases of property and equipment                                                (1,241,000)        (128,762)
                                                                              ------------------------------------
Net cash used in investing activities                                              (3,702,457)        (155,069)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgage payable                                                        800,000                -
Proceeds from bridge notes                                                            300,000                -
Repayment of bridge notes                                                            (300,000)               -
Repayment of shareholder advances                                                           -          (13,610)
Shareholder distributions                                                            (178,871)         (48,004)
Repayment of promissory notes to shareholders                                        (268,307)               -
Net proceeds from initial public offering of common shares                          4,898,437                -
                                                                              ------------------------------------
Net cash provided by (used in) financing activities                                 5,251,259          (61,614)
                                                                              ------------------------------------

Net increase in cash and cash equivalents                                           1,474,808          270,499
Cash and cash equivalents at beginning of year                                        286,023           15,524
                                                                              ------------------------------------
Cash and cash equivalents at end of year                                           $1,760,831         $286,023
                                                                              ====================================

</TABLE>

                              20
<PAGE>

<TABLE>
<CAPTION>
                                      The Publishing Company of North America, Inc.

                                          Statements of Cash Flows (continued)


                                                                                    YEAR ENDED DECEMBER 31

SUPPLEMENTAL CASH FLOW INFORMATION                                                   1996              1995
                                                                              ------------------------------------
<S>                                                                            <C>                <C>
Income taxes paid                                                              $       72,068     $           -
                                                                              ====================================

Interest paid                                                                  $       89,472     $           -
                                                                              ====================================

Exchange of advertising for supplies                                           $       33,487     $      26,649
                                                                              ====================================
                                                                              ====================================

Distribution to shareholders in exchange for promissory notes                  $      268,307     $           -
                                                                              ====================================



See accompanying notes.

</TABLE>

                                     21
<PAGE>

                  The Publishing Company of North America, Inc.

                          Notes to Financial Statements

                                December 31, 1996


1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

The Publishing Company of North America, Inc. (the Company) began operations on
September 30, 1993. The primary business activity of the Company is publishing
membership directories for bar associations and selling advertising in those
directories. The Company markets its directories to associations throughout the
continental United States. During 1996, advertising sales from the publication
of one bar directory accounted for approximately 15% of the Company's revenues.
During 1995, advertising sales from the publication of two directories accounted
for approximately 19% and 11% of the Company's revenues, respectively.

CASH AND CASH EQUIVALENTS

The Company considers all highly-liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

ACCOUNTS RECEIVABLE

Accounts receivable are comprised primarily of amounts due from advertisers in
the bar association directories. The Company's allowance for doubtful accounts
is estimated by management as a percentage of sales. All amounts outstanding in
excess of one year are written off.

AVAILABLE-FOR-SALE SECURITIES

Available-for-sale securities are carried at fair value, with the unrealized
gains and losses reported in a separate component of shareholders' equity.
Realized gains and losses and declines in value judged to be
other-than-temporary are included in investment income. The cost of securities
sold is based on the specific identification method. Interest and dividends are
included in investment income.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation for machinery and
equipment and office furniture and fixtures is computed using a 150% accelerated
depreciation method over five years. Real property is depreciated using the
straight line method over 30 years. Leasehold improvements are depreciated using
the straight-line method over the remaining lease term.

                             22
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Expenditures for maintenance and repairs are charged to expense as incurred.
Major improvements are capitalized.

REVENUE RECOGNITION

Revenues and related costs are recorded by the Company upon shipment of
directories. Costs accumulated under directories in progress are stated at
estimated costs, not in excess of estimated realizable value. Deferred revenue
represents amounts received from advertisers prior to shipment of the related
directories.

INCOME TAXES

Until January 1, 1996, the Company elected by consent of its shareholders to be
taxed under the provisions of Subchapter S of the Internal Revenue Code. Under
those provisions, the Company did not pay federal corporate income taxes on its
taxable income; instead, the shareholders were liable for individual federal
income taxes on the Company's taxable income. In March 1996, the Company
terminated its S Corporation status effective January 1, 1996 and thereafter it
became taxed as a C Corporation. As a direct result of the conversion, a
deferred tax liability of $48,110 was recognized and charged to income as of
January 1, 1996. In March 1996, the Company made a distribution of $178,871 to
existing shareholders for estimated federal income taxes due on 1995 S
Corporation income and the Company issued $268,307 of notes payable to existing
shareholders for S Corporation earnings not previously declared as dividends
during 1995. These notes were paid in July 1996. Proforma income tax adjustments
had the Company been a C Corporation during 1995 are provided in the
accompanying financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

ADVERTISING COSTS

The costs of advertising are expensed as incurred. For the years ended December
31, 1996 and 1995, advertising costs included in other operating costs were
$38,261 and $13,762, respectively.

                                 23
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION

In October 1995, the FASB issued Statement of Financial Accounting Standards No.
123, Accounting and Disclosure of Stock-Based Compensation, which encourages but
does not require companies to recognize stock awards based on their fair value
at the date of grant. The Company currently follows, and expects to continue to
follow, the provision of Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees (APB 25), and related interpretations in
accounting for its employee stock options. Under APB 25, no compensation expense
is recognized when the exercise price of the Company's employee stock options
equals or exceeds the market price of the underlying stock on the date of grant.

EARNINGS PER SHARE

Income (loss) per share is based upon the weighted average number of common
shares outstanding during each year.

Pro forma net income per share is computed based on the weighted average number
of common shares outstanding. In accordance with the Securities and Exchange
Commission requirements, common and common equivalent shares issued during the
12-month period prior to the filing of an initial public offering have been
included in the calculation as if they were outstanding for all periods
presented using the treasury stock method and the initial public offering price.

Historical net income per share is not considered meaningful for the year ended
December 31, 1995; accordingly, such per share information is not presented.

RECLASSIFICATIONS

Certain amounts in the 1995 financial statements have been reclassified to
conform to the presentation adopted in 1996.

                                       24
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



2. AVAILABLE-FOR-SALE SECURITIES

Available-for-sale securities and the related gross unrealized gains and losses
were as follows:

<TABLE>
<CAPTION>
                                                                         DECEMBER 31, 1996
                                            ------------------------------------------------------------------------
                                                               GROSS UNREALIZED GROSS UNREALIZED   ESTIMATED FAIR
                                                     COST           GAINS            LOSSES            VALUE
                                            ------------------------------------------------------------------------
<S>                                               <C>                <C>            <C>                <C>
U.S. Treasury Securities                          $2,456,504         $15,404        $    (3,908)       $2,468,000
Equity Securities                                     34,020               -            (24,520)            9,500
                                            ------------------------------------------------------------------------
                                                  $2,490,524         $15,404           $(28,428)       $2,477,500
                                            ========================================================================


                                                                         DECEMBER 31, 1995
                                            ------------------------------------------------------------------------
                                                               GROSS UNREALIZED GROSS UNREALIZED   ESTIMATED FAIR
                                                   COST             GAINS            LOSSES            VALUE
                                            ------------------------------------------------------------------------
Equity Securities                                $    34,020         $     -        $   (17,520)       $   16,500
                                            ========================================================================

</TABLE>

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                                    DECEMBER 31
                                                                              1996               1995
                                                                       ---------------------------------------
<S>                                                                           <C>                <C>
         Land                                                                 $ 255,000          $      -
         Building                                                               733,884                 -
         Machinery and equipment                                                414,068           183,386
         Office furniture and equipment                                          50,205            17,594
         Leasehold improvements                                                       -            11,973
                                                                       ---------------------------------------
                                                                              1,453,157           212,953
         Less accumulated depreciation                                         (123,374)          (43,753)
                                                                       ---------------------------------------
                                                                             $1,329,783          $169,200
                                                                       =======================================
</TABLE>
                              25

<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)

4. INCOME TAXES

In March 1996, the Company terminated its S Corporation status effective January
1, 1996, at which time the Company became subject to corporate federal and state
income taxes. At December 31, 1996, the Company has a net operating loss
carryforward of approximately $128,000 for income tax purposes that expires in
the year 2011.

The reconciliation of income tax computed at the U.S. federal statutory tax
rates to income tax expense for 1996 is:

         Income taxes computed at the federal statutory rate
            of 34%                                                   $ (235,109)
         State income taxes, net of federal benefit                     (24,617)
         Cumulative effect of converting from S Corporation to
            C Corporation                                               26,405
         Other                                                           4,533
         Valuation allowance                                           228,788
                                                                     -----------
         Total income tax provision                                  $    -
                                                                     ===========

The components of the deferred income tax asset and liability at December 31 are
as follows:

                                                                         1996
                                                                     -----------
         Deferred tax assets:
            Accrual to cash                                            $192,939
            Net operating loss carryforward                              48,171
            Unrealized loss on securities                                 4,901
         Deferred tax liabilities:
            Depreciation                                                (17,223)
            Accrual to cash                                                   -
         Valuation allowance                                           (228,788)
                                                                     -----------
         Net deferred tax asset (liability)                          $        -
                                                                     ===========

The net change in the valuation allowance for 1996 was a charge to expense of
$228,788.

The unaudited pro forma tax provision, presented as if the Company were a
taxable entity during 1995 and calculated in accordance with SFAS No. 109, is
as follows:

         Current income tax provision                                  $166,000
         Deferred income tax provision (benefit)                         52,700
                                                                     -----------
                                                                       $218,700
                                                                     ===========

                                26
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



4. INCOME TAXES (CONTINUED)

A reconciliation of statutory federal income taxes to the proforma tax provision
is as follows:

         Income taxes computed at the federal statutory rate of 34%    $197,100
         State income taxes, net of federal benefit                      21,060
         Other                                                              540
                                                                     -----------
                                                                       $218,700
                                                                     ===========

5. LEASE OBLIGATIONS

The Company is obligated for the rental of its sales office in Orlando, Florida,
under a noncancellable operating lease. The lease expires in 1999 and may be
renewed by the Company for consecutive one-year increments until 2002.
Approximate future minimum lease payments are as follows:

          1997                                                      $    99,000
          1998                                                          102,000
          1999                                                           52,000
                                                                     -----------
                                                                       $253,000
                                                                     ===========

For the years ended December 31, 1996 and 1995, total rental expenses included
in other operating costs were $89,720 and $66,700, respectively.

6. MORTGAGE PAYABLE

In September 1996, the Company purchased land and a building in Lake Helen,
Florida, for use as its corporate headquarters for approximately $900,000.
Modifications to improve the property's usefulness increased the investment to
approximately $989,000 at December 31, 1996. In December 1996, the Company
closed on an $800,000 mortgage on this property. Monthly principal payments are
due along with accrued interest on the outstanding principal based upon the
LIBOR (London InterBank Offering Rate) plus 250 basis points. In December 2011,
a final balloon payment is due of the remaining principal balance and any unpaid
interest accrued.

The mortgage is secured by assets with a carrying value of $1,307,000 at
December 31, 1996.

                          27
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



6. MORTGAGE PAYABLE (CONTINUED)

The mortgage becomes due for the years ended December 31 as follows:

          1997                                                       $   48,889
          1998                                                           53,333
          1999                                                           53,333
          2000                                                           53,333
          2001                                                           53,333
          Thereafter                                                    537,779
                                                                     -----------
                                                                       $800,000
                                                                     ===========

The mortgage agreement requires the Company, among other provisions, to maintain
minimum levels of funds flow (as defined in the agreement). The covenant was not
met as of and for the year ended December 31, 1996. The Company has obtained a
waiver of the required minimum level of funds flow through January 31, 1998.
Accordingly, amounts payable under the mortgage agreement are classified as
long-term in the accompanying balance sheet.

7. INITIAL PUBLIC OFFERING OF THE COMPANY'S COMMON STOCK

Pursuant to a registration statement on Form SB-2 with the Securities and
Exchange Commission, on May 17, 1996 the Company's common stock commenced
trading on the NASDAQ National Market System under the symbol PCNA. Gross
proceeds of $6,325,000 were raised from the sale of 1,150,000 shares at $5.50
per share. Net proceeds to the Company after paying all related costs of the
offering were approximately $4,900,000.

8. RELATED PARTY TRANSACTIONS

In March 1996, the Company borrowed $300,000 through the private placement of
units consisting of an aggregate $300,000 principal amount of Bridge Notes and
an aggregate of 30,000 shares of common stock. The Bridge Notes bore interest at
a rate of 8% per annum and were repaid upon the closing of the Company's initial
public offering. The Company's President loaned $50,000 and its Chief Financial
Officer loaned $25,000 to the Company pursuant to this transaction. Interest
expense for 1996 was $89,472 on these debt instruments.

                           28
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



8. RELATED PARTY TRANSACTIONS (CONTINUED)

In July 1996, the Company elected to retire $268,307 of notes payable plus
accrued interest to existing shareholders representing 1995 S Corporation
earnings not previously paid as dividends. This amount included payments which
aggregated to $178,795 to the President and Executive Vice President of the
Company.

During 1996, the Company entered into a consulting agreement with two of its
shareholders, one of whom later became a Director of the Company. The agreement
provides for the payment of $25,000 per annum to each shareholder for a period
of three years in exchange for certain agreed-upon consulting services.

9. SHAREHOLDERS' EQUITY

In March 1996, the Company amended and restated its Articles of Incorporation
affecting shareholders' equity, including (i) increasing the number of
authorized shares of common stock to 15,000,000; (ii) changing the par value
from $1 per share to no par value; and (iii) effecting a 29,250-to-1 stock split
on outstanding shares. All share and per share information in the accompanying
financial statements has been restated to reflect the effect of the change in
authorized shares and split.

INCENTIVE STOCK PLAN

The Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25) and related interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FASB Statement No. 123,
Accounting for Stock-Based Compensation, requires use of option valuation models
that were not developed for use in valuing employee stock options. Under APB 25,
because the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.

In March 1996, the Board of Directors approved the Company's 1996 Stock Plan
(the Plan) covering 500,000 shares of the Company's common stock. The Plan
provides for incentive stock options, non-qualified stock options,
non-discretionary stock options, and awards of stock to employees, officers,
directors, and certain other parties related to the Company. Generally, grants
of options vest each December 31 in equal installments over three or five
years and they expire ten years from the date of grant.

                          29
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



9. SHAREHOLDERS' EQUITY (CONTINUED)

At December 31, 1996 options for 121,500 shares were outstanding, of which
24,300 were exercisable.

The following table summarizes option activity from the Plan's inception through
December 31, 1996:

                                                              WEIGHTED AVERAGE
                                                                  EXERCISE
                                                      SHARES        PRICE
                                                ------------------------------

Outstanding at January 1, 1996                             -          -
   Granted                                           123,500        $5.17
   Forfeited                                          (2,000)       $5.50
                                                ------------------------------
Outstanding at December 31, 1996                     121,500        $5.16
                                                ==============================

The weighted average fair value of options granted during the year ended
December 31, 1996 was $3.18.  The weighted average remaining contractual
life of these options is 9.43 years.

PROFORMA DISCLOSURES

Proforma information regarding net income is required by FASB Statement 123
Accounting for Stock-Based Compensation, and has been determined as if the
Company had accounted for its employee stock options under the fair value method
of that Statement. The fair value for these options was estimated at the date
of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 1996: risk-free interest rate of 5.82%;
dividend yield of 0%; volatility factor of .682; and a weighted-average expected
life of the options of five years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because change in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

                             30
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



9. SHAREHOLDERS' EQUITY (CONTINUED)

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma net loss and net loss per share for the year ended December 31, 1996 is
$768,772 and $.21, respectively.

RESTRICTED STOCK

The Company issued 9,000 restricted shares of its common stock in 1996 to
certain of its directors. The number of shares and related value used in
computing unearned compensation, which is shown as a separate component of
shareholders' equity in the balance sheet, is as follows:

<TABLE>
<CAPTION>
                                                                            MARKET            TOTAL
                                                           NUMBER       VALUE PER SHARE       MARKET
                                                             OF           AT ISSUANCE   VALUE AT ISSUANCE
                                                           SHARES
                                                     ------------------------------------------------------
<S>                                                          <C>              <C>              <C>
         Issued May 17, 1996                                 6,000            $5.50            $33,000
         Issued November 25, 1996                            3,000             2.75              8,250
                                                     ------------------------------------------------------
                                                             9,000             -               $41,250
                                                     ======================================================
</TABLE>

The unearned compensation is being amortized over the respective vesting period
of the shares. Expense charged against operations during 1996 was $5,729.

STOCK WARRANTS

The underwriter of the Company's initial public offering purchased warrants for
$95 to purchase up to 95,000 shares of the Company's common stock at $6.60 per
share (120% of the initial public offering price). The warrants are exercisable
for a period of four years commencing May 17, 1997, at which time holders of
these warrants obtain certain registration rights.

10. EMPLOYEE BENEFIT PLAN

In April of 1996 the Company established a 401(k) Salary Reduction Plan covering
substantially all employees with six months of service or more. Participants may
contribute up to 15% of his or her annual compensation. The Company's matching
contribution is determined annually by the Board of Directors. The Company's
contribution for 1996 was approximately $6,000.

                             31
<PAGE>

                  The Publishing Company of North America, Inc.

                    Notes to Financial Statements (continued)



11. SUBSEQUENT EVENTS

In December, 1996 the Company contracted to purchase a software system designed
specifically for the yellow-page publishing industry; delivery of the software
was taken in January, 1997. The software provides for customer and order
management, workflow control, typesetting and pagination, and certain accounting
functions. The price of the system was $83,950, of which $50,000 was paid in
cash and the balance through the issuance of 10,400 shares of the Company's
restricted (unregistered) common stock.

In January 1997, the Board of Directors granted options for 75,100 shares of its
common stock to certain of its employees and nonemployee consultants. At the
same time, 6,900 shares of common stock were issued to two employees of the
Company in lieu of cash compensation for 1996 services.

                              32
<PAGE>

                                    PART III

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

         Not applicable.

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

         Information concerning Directors, Executive Officers, Promoters and
Control Persons is incorporated herein by reference to the definitive proxy
statement of the Company for the Company's Annual Meeting of the Shareholders
for the fiscal year ended December 31, 1996, which definitive proxy statement
will be filed with the Securities and Exchange Commission not later than 120
days after the Company's fiscal year end of December 31, 1996.

ITEM 10. EXECUTIVE COMPENSATION

         Information concerning Executive Compensation is incorporated herein by
reference to the definitive proxy statement of the Company for the Company's
Annual Meeting of the Shareholders for the fiscal year ended December 31, 1996,
which definitive proxy statement will be filed with the Securities and Exchange
Commission not later than 120 days after the Company's fiscal year end of
December 31, 1996.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information concerning Security Ownership of Certain Beneficial Owners
and Management is incorporated herein by reference to the definitive proxy
statement of the Company for the Company's Annual Meeting of the Shareholders
for the fiscal year ended December 31, 1996, which definitive proxy statement
will be filed with the Securities and Exchange Commission not later than 120
days after the Company's fiscal year end of December 31, 1996.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information concerning Certain Relationships and Related Transactions
is incorporated herein by reference to the definitive proxy statement of the
Company for the Company's Annual Meeting of the Shareholders for the fiscal year
ended December 31, 1996, which definitive proxy statement will be filed with the
Securities and Exchange Commission not later than 120 days after the Company's
fiscal year end of December 31, 1996.

                                  33

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

   Index to Exhibits
      1.   Exhibit 3.0    Articles of Incorporation and By-Laws..............36
      2.   Exhibit 10.0   Mortgage and Security Agreement to
                             First Union National Bank.......................36
      3.   Exhibit 10.1   First Union Real Estate Balloon Promissory Note....60
      4.   Exhibit 10.3   Assignment of Leases, Rents, and
                          Profits to First Union National Bank...............72
      5.   Exhibit 11.0   Statement Re: computation of per share
                             earnings (Loss).................................78
      6.   Exhibit 27.0   Financial Data Schedule............................79

b.  No reports on Form 8-K were filed during the quarter ended
December 31, 1996.

                                 34
<PAGE>

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf on March 31, 1997 by the
undersigned, thereunto duly authorized.

THE PUBLISHING COMPANY OF NORTH AMERICA, INC.

                                          /s/ Peter S. Balise
                                          ---------------------------------
                                                     President

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


Signatures                    Title                                Date
-----------------------    --------------------------------     --------------



/s/ Peter S. Balise         Chairman of the Board of Directors   March 31, 1997
-----------------------


/s/ D. Scott Plakon         Director                             March 31, 1997
-----------------------


/s/ Phillip S. Hofmann      Director                             March 31, 1997
-----------------------


/s/ James M. Koller         Chief Financial Officer              March 31, 1997
-----------------------    (Principal Financial Officer
                            and Chief Accounting Officer)

                                         35