U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB/A
AMENDMENT NO. 1
TO
(Mark One)
------ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
| X | SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
------ For the fiscal year ended November 30, 1994
OR
------
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
------ THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-18299
NEWS COMMUNICATIONS, INC.
(Name of small business issuer in its charter)
Nevada 13-3346991
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
174-15 Horace Harding Expressway, Fresh Meadows, New York 11365
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (718) 357-3380
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
(Title of class)
Redeemable Class C Redeemable Class D Units, each consisting of one
Warrants Warants share of Common Stock, one
(Title of class) (Title of Class) Redeemable Class C Warrant
and one Redeemable Class D
Warrant
(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not 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 reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $13,554,929.
As of February 28 1995, 7,768,076 shares of Common Stock were
outstanding. The aggregate market value of shares of Common Stock (based on the
last sale price as reported by NASDAQ) held by non-affiliates of the issuer was
approximately $13,615,000.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The table on the following page sets forth, for the periods indicated,
certain information relating to each of the Company's publications and to
certain expenses incurred by the parent company, News Communications, Inc. The
numbers set forth below reflect the operations of the following acquired or
start-up publications from the dates indicated: Bronx Review -- December 1993;
Nassau Newspapers -- December 1993; Brooklyn Skyline -- August 1994; Manhattan
File -- August 1994; The Hill -- September 1994; Chelsea-Clinton News and
Westsider -- September 1994. For information with respect to the Company's
financial position and actual results of operations on a consolidated basis,
please refer to Consolidated Financial Statements and Notes thereto.
RESULTS OF OPERATIONS
The following discussion compares results of operations for the fiscal
year ended November 30, 1994 to the fiscal year ended November 30, 1993.
Net Revenues
Existing Publications
The Queens Tribune had an increase in revenues (17%) as a result of an
increased display and classified sales effort. The Manhattan Spirit (10%) and
Our Town (3%) had slight increases in revenues. Display sales staff turnover
prevents greater growth. Classified sales remains strong. Dan's Papers increase
in revenue (29%) was primarily from increased display sales due to greater
recognition in the marketplace and increased efforts, capturing a greater market
share in its North Fork and East-End communities, which continue to prosper
economically. The Bronx Press Review had an increase in revenues (61%) primarily
as a result of its two new publications, Riverdale Review and Westchester
Lifestyles.
Acquisitions and Start-ups
Nassau Newspapers were acquired in December 1993, Brooklyn Skyline was
acquired in August 1994, Westside was acquired in September 1994 and The Hill
and Manhattan File were started during 1994.
Income (Loss)-Publications
Existing Publications
The substantial increases in income for the Queens Tribune (29%), Dan's
Papers (54%), Manhattan Spirit (31%) and Our Town (5%) were a result of
increased sales and/or reductions in operating expenses. In addition, as
newsprint prices have increased greatly, the parent company has engaged in
ongoing negotiations securing new suppliers and contracts mitigating the
negative effect on income. The Bronx Press Review sold its building this year,
with much of the profit being offset by start-up costs associated with the
Riverdale Review and Westchester Lifestyles, resulting in a slight decrease in
income.
Acquisitions and Start-ups
Nassau Newspapers were acquired in December 1993, Brooklyn Skyline was
acquired in August 1994, Westside was acquired in September 1994 and The Hill
and Manhattan File were started during 1994.
Parent Company Expenses
The large increase in parent company expenses are primarily a result of
additional personnel costs and professional fees required for the continuing
corporate growth expansion.
2
<PAGE>
<TABLE>
Year ended November 30,
<S> <C> <C>
1994(1) 1993
NET REVENUES
Existing Publications:
Queens Tribune...................................$3,148,418 $2,682,422
Dan's Papers..................................... 2,921,469 2,270,956
Manhattan Spirit................................. 1,802,405 1,781,839
Our Town......................................... 1,678,349 1,634,792
Bronx Press Review............................... 899,647 557,695
---------- ----------
Total Revenues - Existing Publications 10,450,288 8,927,704
---------- ----------
Acquisitions and Start-ups:
The Hill........................................ 216,962 ___
Manhattan File.................................. 392,070 ___
Nassau Newspapers............................... 2,153,750 ___
Brooklyn Skyline................................ 206,323 ___
Westside Publications........................... 135,536 ---
--------- ----------
Total Revenues - Acquisitions and Start-ups: 3,104,641 ---
--------- ----------
Total Revenues $13,554,929 $8,927,704
=========== ==========
INCOME (LOSS) PUBLICATIONS BEFORE GOODWILL
Existing Publications:
Queens Tribune.................................. $605,903 $468,111
Dan's Papers.................................... 713,290 464,450
Manhattan Spirit................................ 120,878 92,493
Our Town........................................ 239,520 228,197
Bronx Press Review.............................. 1,756 6,203
----------- -----------
Net Income - Existing Publications 1,681,347 1,259,454
----------- -----------
Acquisitions and Start-ups:
The Hill(4)..................................... (387,887) ___
Manhattan File(4)............................... (499,495) ___
Nassau Newspapers............................... (181,459) ___
Brooklyn Skyline................................ (59,825) ___
Westside Publications........................... (16,310) ---
---------- ----------
Net (Loss) - Acquisitions and Start-ups: (1,144,976) ---
----------- ----------
Net Income $536,371 $1,259,454
=========== ==========
INCOME (LOSS) PUBLICATIONS AFTER GOODWILL(2)
Existing Publications:
Queens Tribune.................................. $499,035 $361,243
Dan's Papers.................................... 662,589 413,749
Manhattan Spirit................................ 120,878 92,493
Our Town........................................ 185,675 174,352
Bronx Press Review.............................. (12,492) (3,797)
--------- ----------
Net Income - Existing Publications 1,455,685 1,038,040
--------- ----------
Acquisitions and Start-ups:
The Hill(4)..................................... (387,887) ___
Manhattan File(4)............................... (499,495) ___
Nassau Newspapers............................... (212,436) ___
Brooklyn Skyline................................ (61,865) ___
Westside Publications........................... (20,091) ---
----------- ----------
Net (Loss) - Acquisitions and Start-ups: (1,181,774) ---
----------- ----------
Net Income $ 273,911 $1,038,040
=========== ==========
PARENT COMPANY EXPENSES
Personnel, Rent, General and Administrative $1,288,989 $741,244
Interest (Income) Expense(3) (37,196) 64,167
----------- -----------
Total Parent Company Expenses $1,251,793 $805,411
=========== ===========
NET INCOME (LOSS) $ (977,822) $232,629
=========== ===========
<FN>
- ------------------------------------
(Footnotes to table are on following page)
3
<PAGE>
- --------------------------------
(Footnotes to table on preceding page)
(1) The results of operations for 1994 have been restated to reflect
additional expenses and loss. See Note 18 to the financial
statements.
(2) Reflects expense for amortization of goodwill by publication as follows:
</FN>
</TABLE>
<TABLE>
Year ended November 30,
1994 1993
---- ----
<S> <C> <C>
Queens Tribune.......... $106,868 $106,868
Dan's Papers............ 50,701 50,701
Our Town................ 53,845 53,845
Bronx Press Review...... 14,248 10,000
Nassau Newspapers....... 30,977 ___
Brooklyn Skyline........ 2,040 ___
Westside Publications... 3,781 ___
-------- ---------
$262,460 $221,414
<FN>
(3) Net of interest income of $61,993 and $12,097 for the years ended
November 30, 1994 and 1993, respectively.
(4) Approximately $400,000 of start-up costs related to Manhattan File and
The Hill which were deferred in the third quarter were expensed in the
fourth quarter upon commencement of regular operations of the
publications.
</FN>
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1994, the Company had an excess of current assets over
current liabilities in the amount of approximately $4,155,000. Through November
1994 Class C and D Warrants were exercised, resulting in net proceeds, after
costs and expenses, of approximately $1,951,000. Until utilized, available cash
is invested in short-term United State Government securities, certificates of
deposit, money market funds, other short-term and long-term interest bearing
investments, and investment grade common equities. Through November 30, 1994
approximately $320,000 was used to acquire the Nassau Newspapers; $190,000 was
used to acquire Westside, and $30,000 to purchase Brooklyn Skyline; $175,000 was
used to pay notes and accrued interest incurred with the reacquisition in 1991
of Common Stock from a former officer; $250,000 was used to pay the remaining
notes due to the former owner of Our Town; and approximately $180,000 was used
to repay notes and accrued interest incurred with the acquisition of the Bronx
Press Review.
For the year ended November 30, 1994, the Company had a cash decrease
of approximately $2,000,000 resulting from (a) operating activities, made up of
operating loss of $563,000, increased by non-cash items such as depreciation and
amortization ($413,000), and changes in balance sheet items such as increases in
accounts receivable ($1,983,000) and increase in accounts payable and accrued
expenses ($584,000); (b) reduced by $1,820,000 for investing activities (see
Consolidated Statements of Cash Flows); (c) increased by financing activities
(including $1,951,347 provided from the exercise of Class C and Class D Warrants
less payments of long-term debt ($470,000)).
For the year ended November 30, 1993, the Company had a cash increase
of approximately $1,200,000 resulting from (a) operating activities, made up of
operating income of $233,000, increased by non-cash items such as depreciation
and amortization ($560,000), and changes in balance sheet items such as
increases in accounts receivable ($779,000); (b) reduced by $345,000 for capital
expenditures; (c) increased by $1,513,000 provided by financing activities
(including $2,080,000 provided from the exercise of Class C and Class D
Warrants).
Although there can be no assurance, management believes that the
Company's operations will generate positive cash flow for the fiscal year ending
November 30, 1995. It is the opinion of management that cash on hand and cash
from operations are expected to be sufficient to meet the Company's cash needs
on an ongoing basis.
The Company's terms of payment for its advertising sales are generally
net 30 days. However, the Company's experience, which management believes is
typical of the weekly newspaper industry, is that payments are received over
much longer periods. As of November 30, 1994, the average age of the Company's
receivables was about 120 days. Management has recognized the continued adverse
4
<PAGE>
economic conditions and has taken that into consideration in identifying those
accounts which require a reserve. As a result, the Company's reserve for bad
debts is believed to be sufficient to avoid the need for further material
write-offs. The Company has sufficient cash on hand to fund the purchase of
stock of DPI if Mr. Rattiner exercises his option requiring the Company to do so
(see Item 12). The Company has no material commitments for capital expenditures
at November 30, 1994.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements listed on page F-1 are included in this Report
beginning on page F-2.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized.
NEWS COMMUNICATIONS, INC.
Date: June 21, 1996 By: /s/ Michael Schenkler
-----------------------------
Michael Schenkler, President
5
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIE
- -------------------------------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Page to Page
Report of Independent Auditors........................... F-2
Consolidated Balance Sheet as of November 30, 1994....... F-3...... F-4
Consolidated Statements of Operations for the years ended
November 30, 1994 and 1993............................... F-5
Consolidated Statements of Stockholders' Equity.......... F-6
Consolidated Statements of Cash Flows for the years ended
November 30, 1994 and 1993............................... F-7...... F-8
Notes to Consolidated Financial Statements............... F-9...... F-17
. . . . . . . . . .
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
News Communications, Inc.
Fresh Meadows, New York
We have audited the accompanying consolidated balance sheet of News
Communications, Inc. and Subsidiaries as of November 30, 1994, and the related
statements of operations, stockholders' equity, and cash flows for each of the
two fiscal years in the period ended November 30, 1994. 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 News Communications, Inc.
and Subsidiaries as of November 30, 1994, and the results of their operations
and their cash flows for each of the two fiscal years in the period ended
November 30, 1994, in conformity with generally accepted accounting principles.
As discussed in Note 18 to the consolidated financial statements, the
Company restated its consolidated financial statements as of and for the year
ended November 30, 1994, to record printing and other expenses, and to eliminate
intercompany revenue and accounts receivable.
MORTENSON AND ASSOCIATES, P. C.
Certified Public Accountants.
Cranford, New Jersey
March 8, 1995
[Except for Note 18 as to
which the date is March 27, 1996]
F-2
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET AS OF NOVEMBER 30, 1994.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
[Restated]
Assets:
Current Assets:
Cash and Cash Equivalents $ 842,857
Marketable Securities 924,633
Accounts Receivable [Less: Allowance for Doubtful
Accounts of $979,962] 3,599,890
Other Current Assets 162,204
Due from Related Parties 80,121
---------
Total Current Assets 5,609,705
---------
Property and Equipment At Cost - Net of Accumulated
Depreciation and Amortization of $500,156 688,505
---------
Other Assets:
Goodwill - Net 3,903,111
Other Assets 193,037
---------
Total Other Assets 4,096,148
----------
Total Assets $10,394,358
==========
See Notes to Consolidated Financial Statements.
</TABLE>
F-3
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET AS OF NOVEMBER 30, 1994.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
[Restated]
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable $ 767,574
Accrued Expenses 893,795
Accrued Payroll Taxes 130,867
Notes Payable 75,747
Other Current Liabilities 6,440
---------
Total Current Liabilities 1,874,423
---------
Stockholders' Equity:
Preferred Stock, $1.00 Par Value; 500,000 Shares Authorized:
10% Convertible Preferred Stock, 1,250 Shares Authorized;
32 Issued and Outstanding, $500 Per Share Per Annum
Cumulative Dividends, $160,000 Liquidation Value 32
8% Convertible Preferred Stock, 500 Shares Authorized,
217 Issued and Outstanding, $80 Per Share Per Annum
Cumulative Dividends, $217,000 Liquidation Value 217
12% Convertible Preferred Stock, 200 Shares Authorized,
200 Shares Issued and Outstanding, $120 Per Share Per
Annum Cumulative Dividends, $200,000 Liquidation Value 200
Common Stock, $.01 Par Value; Authorized 100,000,000
Shares; 7,915,776 Shares Issued 79,157
Paid-in Capital - Preferred Stock 519,873
Paid-in-Capital - Common Stock 13,648,238
[Deficit] (5,319,053)
----------
Totals 8,928,664
Less: Treasury Stock [151,000 Common Shares] - At Cost (408,729)
----------
Total Stockholders' Equity 8,519,935
----------
Total Liabilities and Stockholders' Equity $10,394,358
==========
See Notes to Consolidated Financial Statements.
</TABLE>
F-4
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years ended
November 30,
1 9 9 4 1 9 9 3
------- -------
[Restated]
<S> <C> <C>
Net Revenues $ 13,554,929 $ 8,927,704
---------- ----------
Operating Expenses:
Direct Mechanical Costs 4,841,549 2,718,946
Salaries, Benefits and Outside Labor Costs 7,011,739 4,067,880
Rent, Occupancy and Utilities 587,871 337,864
Provision for Doubtful Accounts 376,000 219,000
General and Administrative 1,847,492 1,301,021
---------- - ---------
Total Operating Expenses 14,664,651 8,644,711
---------- ----------
Operating [Loss] Income Before Interest
Expense, Interest Income, and Other Income (1,109,722) 282,993
Interest [Expense] (24,797) (62,461)
Interest Income 61,993 12,097
Other Income 94,642 --
--------- ---------
[Loss] Income Before Federal and State Income
Taxes and Extraordinary Item (977,884) 232,629
Less: Federal and State Income Taxes -- 192,533
--------- ---------
[Loss] Income Before Extraordinary Item (977,884) 40,096
Extraordinary Item: Reduction of Income Taxes Resulting
from Utilization Of Operating Loss Carryforwards -- 192,533
--------- --------
Net [Loss] Income (977,884) 232,629
Less: Preferred Stock Dividends 41,360 41,360
--------- ---------
Net [Loss] Income Available to Common
Stockholders $ (1,019,244) $ 191,269
=========== ==========
Per Common Share:
[Loss] Income Before Extraordinary Item $ (.13) $ .01
====== ====
[Loss] Income Per Common Share $ (.13) $ .03
====== ====
Average Number of Common Shares Outstanding 7,580,203 6,232,630
========= =========
See Notes to Consolidated Financial Statements.
</TABLE>
F-5
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Paid-in Paid-in
Preferred Capital Common Capital
Stock Preferred Preferred Stock Common Common Treasury
[Shares] Stock Stock [Shares] Stock Stock [Deficit] Stock Total
--------- --------- -------- ------ ------ ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance - November 30, 1992 453 $453 $534,385 6,088,719 $60,888 $9,082,407 $(4,457,578) $(408,729) $4,811,826
Conversion from Preferred
Stock to Common (3) (3) (10,884) 5,400 54 10,833 -- -- --
Stock Issued in Connection
with Exercise of C and
D Warrants -- -- -- 872,760 8,726 2,071,768 -- -- 2,080,494
Additional Cost of Public
Offering -- -- -- -- -- (5,000) -- -- (5,000)
Dividend on Preferred Stock -- -- -- -- -- -- (41,360) -- (41,360)
Shares Issued as Preferred
Dividend -- -- -- 5,463 55 17,445 (17,500) -- --
Stock Issued in Connection
with Exercise of Stock
Options -- -- -- 1,667 17 3,533 -- -- 3,550
Net Income -- -- -- -- -- -- 232,629 -- 232,629
------- ------- ------- --------- ------ ---------- ----------- --------- ---------
Balance - November 30, 1993 450 450 523,501 6,974,009 69,740 11,180,986 (4,283,809) (408,729) 7,082,139
Conversion from Preferred
Stock to Common (1) (1) (3,628) 1,800 18 3,611 -- -- --
Stock Issued in Connection
With Exercise of C and
D Warrants -- -- -- 807,887 8,079 1,943,268 -- -- 1,951,347
Shares Issued for Acquisitions -- -- -- 122,123 1,221 143,535 -- -- 144,756
Shares Issuable for
Acquisitions -- -- -- -- -- 354,687 -- -- 354,687
Shares Issued in Connection
with Exercise of Options -- -- -- 3,333 33 6,217 -- -- 6,250
Shares Issued as Preferred
Dividend -- -- -- 6,624 66 15,934 (16,000) -- --
Dividend on Preferred Stock -- -- -- -- -- -- (41,360) -- (41,360)
Net [Loss], As Restated -- -- -- -- -- -- (977,884) -- (977,884)
Balance - November 30, 1994 449 $449 $519,873 7,915,776 $79,157 $13,648,238 $(5,319,053) $(408,729) $8,519,935
=== === ======= ========= ====== =========== ========== ======== =========
See Notes to Consolidated Financial Statements.
</TABLE>
F-6
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years ended
November 30,
1 9 9 4 1 9 9 3
------- -------
[Restated]
<S> <C> <C>
Operating Activities:
Net [Loss] Income $(977,884) $232,629
-------- -------
Adjustments to Reconcile Net [Loss] Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 413,062 340,287
Provision for Losses on Accounts Receivable 376,000 219,000
Expense Related to Exercise of Options 5,250 --
Gain on Sale of Building (94,642) --
Changes in Assets and Liabilities:
[Increase] in Accounts Receivable (1,982,551) (779,022)
[Increase] in Other Current Assets (87,113) (54,477)
[Increase] Decrease in Other Assets (106,344) 20,031
Increase in Accounts Payable and Accrued Expenses 998,312 75,349
[Decrease] in Payroll Taxes Payable (7,494) (84,684)
Decrease] Increase in Other Current Liabilities (66,024) 64,862
[Decrease] in Other Payables -- (6,265)
-------- --------
Total Adjustments (551,544) (204,919)
-------- --------
Net Cash Provided [Used] by - Operating Activities - Forward (1,529,428) 27,710
---------- --------
Investing Activities:
Capital Expenditures (422,193) (255,548)
Proceeds from Sale of Building 100,000 --
Investment in Marketable Securities (924,633) --
Purchase of Nassau Newspapers (319,906) --
Purchase of Westside (194,898) --
Purchase of Brooklyn (32,750) --
Purchase of Bronx Press Review (25,676) (90,000)
------- -------
Net Cash [Used] by - Investing Activities - Forward (1,820,056) (345,548)
---------- --------
Financing Activities:
Principal Payments Long-Term Debt (470,250) (521,250)
Proceeds from Exercise of Stock Options 1,000 500
Proceeds from Exercise of Warrants and Underwriter Option 1,951,347 2,080,494
Principal Payments on Notes Payable (81,254) --
Costs of Public Offering -- (5,000)
Dividend on Preferred Stock (41,360) (41,360)
------- -------
Net Cash Provided by - Financing Activities - Forward $ 1,359,483 $ 1,513,384
See Notes to Consolidated Financial Statements.
</TABLE>
F-7
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years ended
November 30,
1 9 9 4 1 9 9 3
------- -------
[Restated]
<S> <C> <C>
Net Cash Provided [Used] by - Operating Activities -
Forwarded $(1,529,428) $ 27,710
---------- --------
Net Cash [Used] by - Investing Activities - Forwarded (1,820,056) (345,548)
---------- --------
Net Cash Provided by - Financing Activities - Forwarded 1,359,483 1,513,384
---------- ---------
Net [Decrease] Increase in Cash and Cash Equivalents (1,990,001) 1,195,546
Cash and Cash Equivalents - Beginning of Years 2,832,858 1,637,312
--------- ---------
Cash and Cash Equivalents - End of Years $ 842,857 $ 2,832,858
========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the years for:
Interest $ 8,240 $ --
Income Taxes $ -- $ --
Supplemental Schedule of Non-Cash Investing and Financing Activities:
See Note 3 to financial statements relating to acquisitions consummated in December 1993, August
1994 and September 1994 and Note 9 relating to capital transactions.
See Notes to Consolidated Financial Statements.
</TABLE>
F-8
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
[1] Organization and Industry Segment
News Communications, Inc. ["the Company"] was incorporated in the State of
Nevada and is primarily engaged, through various wholly-owned and two eighty
percent owned subsidiaries in the publication and distribution of advertiser
supported, community oriented newspapers and a magazine. The Company's
subsidiaries are Access Network Corp. ["Access"], Manhattan Publishing Corp.
["MPC"], Tribco Incorporated ["Tribco"], Dan's Papers Inc. ["DPI"], Parkchester
Publishing Co., Inc. ["Bronx Press Review"], Long Island Community Newspaper
Group, Inc. ["Nassau Newspapers"], Manhattan File Publishing, Inc, ["Manhattan
File"], Capitol Hill Publishing, Inc ["Capitol Hill"], Brooklyn Newspaper
Publishing, Inc. ["Brooklyn"] and West Side Newspaper Corp. ["West Side"]. The
Company functions primarily in one industry segment, that is the news
publication business.
[2] Summary of Significant Accounting Policies
Consolidation - The consolidated financial statements of the Company include the
accounts of the parent company and its wholly-owned and majority owned
subsidiaries. All material intercompany transactions have been eliminated.
Property and Equipment - All expenditures for betterments and additions are
capitalized. Expenditures for normal repairs and maintenance are charged against
income as incurred. Depreciation and amortization are provided for financial
reporting purposes on the basis of the various estimated useful lives of the
assets, using the straight-line method as follows:
Years
Transportation Equipment 5
Furniture, Fixtures and Office Equipment 5 - 10
Leasehold Improvements Shorter of Useful
Life of Asset or
Length of Lease
Depreciation and amortization expense for the years ended November 30, 1994 and
1993 amounted to $123,503 and $118,873, respectively.
Accounts Receivable - The Company uses the allowance method based on a
percentage of accounts receivable to provide for uncollectible trade
receivables.
Goodwill - Goodwill represents the excess of the cost of acquired assets over
their fair values at dates of acquisition and is being amortized over ten to
twenty years on a straight-line basis. Amortization expense and accumulated
amortization amounted to $264,079 and $1,151,730, respectively, for the year
ended November 30, 1994. Amortization expense for the year ended November 30,
1993 amounted to $221,414. The Company's policy is to record an impairment loss
against he net unamortized cost of goodwill in the period when it is determined
that the carrying amount of the asset may not be recoverable. At each balance
sheet date, the Company evaluates the realizability of goodwill for each
subsidiary having a material goodwill balance. This determination is based on an
evaluation of such factors as the occurrence of a significant event, a
significant change in the environment in which the business operates or if the
expected future non-discounted net income of the subsidiary would become less
than the carrying amount of the goodwill asset. Based upon its most recent
analysis, the Company believes that no material impairment of goodwill exists at
November 30, 1994.
Cash and Cash Equivalents - For purposes of the statement of cash flows the
Company considers all highly liquid instruments purchased with original
maturities of three months or less to be cash equivalents.
Revenue Recognition - Revenues are earned as the advertisements are run, in
accordance with customer agreements. Unearned revenues of $14,225 at November
30, 1994 are included in accrued expenses and represent future advertisements
that have been paid for by customers in advance.
F-9
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2
- -------------------------------------------------------------------------------
[2] Summary of Significant Accounting Policies [Continued]
Covenant not to Compete - Included in other assets is a covenant not to compete
with an initial cost of $127,400, which is being amortized over five years on a
straight-line basis. At November 30, 1994, accumulated amortization amounted to
$76,990. Amortization expense amounted to $25,480 for each of the years ended
November 30, 1994 and 1993.
Seasonality - One of the Company's publications [which generated approximately
21% of revenues in fiscal 1994 and 25% of revenues in fiscal 1993] is a resort
area newspaper, which has most of its revenue generated during the summer.
Concentration of Customers - The majority of the Company's customers are located
in four of the boroughs of New York City, in Nassau County and on Eastern Long
Island.
Concentration of Credit Risk - Financial instruments that potentially subject
the Company to concentration of credit risk consist primarily of temporary cash
investments and trade receivables. The Company restricts investments of
temporary cash investments to financial institutions with high credit standing.
At November 30, 1994, the Company had cash and invested assets of approximately
$1,425,358 which were subject to credit risk in excess of insured amounts.
Credit risk on trade receivables is minimized as a result of the large number of
customers comprising the Company's customer base and their dispersion across
different businesses.
[3] Acquisitions
On December 9, 1993, the Company, through its wholly-owned subsidiary, Nassau
Newspapers, acquired certain assets of Long Island News Group ["LING"] and MB
Publishing Co. ["MB"] publishers of eight paid weekly newspapers in Nassau
County, New York for $300,000 in cash and stock valued at approximately
$355,000. The stock was valued by the Company at approximately $2.20 per share.
This valuation represents a discount from the December 9, 1993, quoted market
price of the stock. Such discount was reflected due to the restricted nature of
the securities and the deferral of their issuance. The stock is scheduled to be
issued to the seller as follows:
<TABLE>
<S> <C>
Date Shares
December 9, 1996 103,857
December 9, 1997 21,714
December 9, 1998 36,572
------
Total 162,143
</TABLE>
On August 18, 1994, the Company acquired through its wholly-owned subsidiary,
Brooklyn, certain assets of Brooklyn Skyline Publications, Inc. ["Brooklyn
Skyline"] for cash and stock valued at approximately $104,000.
On September 27, 1994, the Company acquired through its wholly-owned subsidiary,
West Side, certain assets of Enlightenment Press, Inc. ["Enlightenment"], the
publisher of the Chelsea Clinton News and the West Side, for cash and stock
valued at approximately $246,000.
A summary of the purchase price details is as follows:
<TABLE>
<CAPTION>
Nassau
Newspapers Brooklyn West Side Total
<S> <C> <C> <C> <C>
Cash $300,000 $ 25,000 $180,000 $505,000
Common Stock at Par [284,266 shares] -- 600 621 1,221
Additional Paid-in Capital 354,687 78,150 65,385 498,222
------- ------ ------ -------
Totals $654,687 $103,750 $246,006 $1,004,443
======= ======= ======= =========
</TABLE>
F-10
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3
- -------------------------------------------------------------------------------
[3] Acquisitions [Continued]
The transactions above were accounted for by the purchase method of accounting
under which purchase prices were allocated to the acquired assets based on
estimated fair values at the date of acquisition. The assets purchased consisted
primarily of the common law rights in the trade marks, trade names and
publication names of the newspapers published by the previous owners. The value
of the assets purchased amounted to $1,036,997 of which $32,554 was for legal
and other costs directly related to the acquisitions. The cost, which has been
allocated to goodwill, will be amortized on a straight-line basis over twenty
years.
The results of operations of the above publications are included in the
consolidated statement of operations for the year ended November 30, 1994 only
for the periods from the dates of purchase to such year end.
The following proforma combined results of operations are adjusted for the
amortization of goodwill purchased in connection with the acquisitions as though
they had occurred on December 1, 1992:
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1994 1993
------------- -----------
<S> <C> <C>
Net Revenues $15,999,000 $12,866,000
Net [Loss] Income $ (364,000) $ 127,000
Net [Loss] Income Per Share $ (.05) $ .02
</TABLE>
The proforma financial information is not necessarily indicative either of the
results of operations that would have occurred had the mergers been effected
December 1, 1992, or of the future results of operations.
Certain former owners of the publications purchased have entered into employment
contracts with the Company [See Note 10].
[4] Accrued Payroll Taxes
Accrued payroll taxes represent past-due amounts owed, plus interest and
penalties.
[5] Notes Payable
Inconnection with the purchase of the Parkchester Publishing Co., Inc.
[Publisher of the "Bronx Press Review"], the Company incurred indebtedness of
$235,000, of which $75,747 was remaining at November 30, 1994. Interest accrues
on the unpaid balance at the rate of prime plus one [approximately 7% at
November 30, 1994].
Following are the maturities of notes payable:
November 30,1995 $75,747
======
Interest expense related to the above indebtedness for the years ended November
30, 1994 and 1993 amounted to approximately $24,800 and $63,200, respectively.
F-11
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4
- -------------------------------------------------------------------------------
[6] Related Parties
Certain Company office facilities are leased from an officer of a subsidiary of
the Company. Rental expense amounted to approximately $46,000 and $45,300 for
the years ended November 30, 1994 and 1993, respectively. The lease commitment
is adjusted annually based on the consumer price index as of November of each
year with an option for five additional years. At November 30, 1994, interest
bearing advances and loans due from related parties amounted to $80,121.
Interest income earned on such amounts as reflected in the statement of
operations for the year ended November 30, 1994, amounted to approximately
$3,500.
[7] Leases
TheCompany leases all operating facilities under operating leases expiring
through October, 2000. Rent expense under operating leases was approximately
$280,000 and $163,000 for years ending November 30, 1994 and 1993, respectively.
The future minimum payments under non-cancelable operating leases consisted of
the following at November 30, 1994 [including amounts in Note 6]:
Operating Leases
1995 $ 402,100
1996 440,400
1997 446,200
1998 451,900
1999 335,800
Thereafter 214,300
---------
Total Minimum Lease Payments $2,290,700
=========
The operating leases also provide for cost escalation payments and payments for
maintenance and real estate taxes.
[8] Treasury Stock
Treasury stock is shown at cost and consists of 151,000 shares of Common Stock.
[9] Preferred Stock
[A] The 10% Convertible Preferred Stock is redeemable at the option of the
Company, under certain circumstances.
In September 1994, the Company distributed 6,624 shares of its Common Stock in
payment of a $500 dividend per share due holders as of September 19, 1994 on
each of 32 shares of 10% Convertible Preferred Stock. As a result, Common Stock
at par was increased by $66, additional paid-in capital - Common Stock was
increased by $15,934 and retained earnings was decreased by $16,000.
[B] Issuance of Preferred Shares - On May 20, 1992, the Company issued 100
shares of its 8% Convertible Preferred Stock and 200 shares of its 12%
Convertible Preferred Stock, in exchange for an aggregate of $300,000. On July
15, 1992, an additional 117 shares of 8% Convertible Preferred Stock were issued
for $117,000. During the year ended November 30, 1994 and 1993, cash dividends
totaling $41,360 each year were paid on the 8% Convertible Preferred Stock and
the 12% Convertible Preferred Stock.
F-12
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5
- -------------------------------------------------------------------------------
[9] Preferred Stock [Continued]
[C] Conversion of Preferred Stock - During 1993, 3 shares of 10% Convertible
Preferred Stock were converted to 5,400 shares of Common Stock. During 1994, one
share of 10% Convertible Preferred Stock was converted to 1,800 shares of Common
Stock.
[10] Commitments and Contingencies
In connection with the acquisition of "Our Town," the newspaper published by
MPC, the Company granted the Seller a five year option to purchase up to 100,000
shares of its common stock at an exercise price of $2.81 per share [the average
of the closing bid and asked prices on May 21, 1991].
Asubsidiary of the Company has indemnified two former employees and a director
from and against legal fees and adverse judgments arising in connection with
certain legal actions, except such adverse judgments as may be based on claims
that allege or involve wrongful conduct by said former employee.
The Company has an employment agreement expiring in 1998 with the President of
DPI. The agreement stipulates an annual salary of $100,000 per year, adjusted
for increases in the consumer price index, plus a bonus in each fiscal year
based on net profits [as defined] of DPI, and fringe benefits totaling
approximately $25,000 annually.
The President of DPI has the option ["put"] to require the Company to buy his
shares of DPI on or after October 13, 1993 for a price equal to 20% of the
retained earnings [if any] of DPI plus the greater of $200,000 or 20% of gross
collected revenues [net of agency commissions] for the full fiscal year prior to
exercise of the option. The option may be exercised only if the after tax profit
[for the fiscal year preceding exercise] is at least equal to seven percent of
gross revenues [net of agency commissions] for such fiscal year. The put option,
by its terms, is exercisable at November 30, 1994. Should the option be
exercised, the Company would be required to pay approximately $660,000 for the
shares. The option is related to the 1988 acquisition of DPI by the Company. As
such, if the option is exercised the Company will record the cost as additional
goodwill to be amortized over the remaining useful life of that asset [November
1999].
The Company has an employment contract, through October 14, 1995, with its
President. The contract stipulates annual base salary of $150,000 plus bonuses
as determined by the Board of Directors.
In August 1993, the Chairman of the Board entered into an employment agreement
with the Company. The agreement calls for an annual salary of $145,000 and
certain other benefits. Stock options for 300,000 shares of the Company's Common
Stock at an exercise price of approximately $2.38 per share expiring on August
31, 1998 were awarded to the chairman in connection with the agreement [See Note
12B].
In November 1994, the Executive Vice-President of the Company entered into a
three year employment agreement with the Company at an annual salary of $80,000
[subject to cost-of-living increases] plus a bonus based on 5% of the net profit
[for fiscal years beginning December 1, 1994] of Access, MPC, Manhattan File and
West Side. Such bonus is to be no less than $45,000, nor more than $70,000.
The President of Nassau Newspapers has an employment agreement expiring in
December 1996. The agreement stipulates an annual salary of $99,000 plus a bonus
based upon the net profits [as defined] of Nassau Newspapers.
The Publisher of Brooklyn has an employment agreement expiring in August 1999.
The agreement stipulates an annual salary of $60,000, plus increases and bonuses
based upon the net profits [as defined] of Brooklyn.
F-13
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6
- -------------------------------------------------------------------------------
[10] Commitments and Contingencies [Continued]
Certain holders of options, warrants and stock of the Company have received
registration rights with respect to the securities held by or issuable to them.
These registration rights could results in substantial future expense to the
Company and could adversely affect any future equity or debt financing.
[11] Litigation
The Company is subject to lawsuits arising out of its business. Management,
after review and consultation with counsel, believes it has meritorious defenses
and does not believe that it is reasonably possible that there is any liability
from these matters would not materially affect the consolidated financial
position of the Company or the consolidated results of its operations.
[12] Stock Options and Warrants
[A] Stock Option Plan - The Company has a Stock Option Plan pursuant to which it
has reserved authorized, but unissued, shares of Common Stock for issuance of
both Qualified Incentive Stock Options and Non-qualified Stock Options to
employees, officers and directors of the Company. The option price will be the
fair market value [110% of the fair market value for Qualified Incentive Stock
Options granted to a holder of 10% or more of the Company's Common Stock] as
defined by the plan. Generally, options may be exercised commencing two years
from the date of grant and terminating ten years from the date of grant.
Following is a summary of transactions:
<TABLE>
<CAPTION>
Shares under Option
November 30,
1 9 9 4 1 9 9 3
------- -------
<S> <C> <C>
Outstanding - Beginning of Periods 106,666 44,166
Granted during period 62,000 85,000
Terminated during period 32,500 22,500
------ ------
Outstanding - End of Periods [1] 136,166 106,666
======= =======
</TABLE>
[1] With an exercise price per share ranging from $2.00 to $9.00, giving effect
to the one-for-ten reverse stock split, which occurred on May 12, 1992.
At November 30, 1994 and 1993, there were 30,501 and 60,001 shares,
respectively, reserved for future grants.
[B] Directors and Officers Stock Option Plan - On August 17, 1993, the Board of
Directors ["the Board"] adopted a "Discretionary Directors and Officers Stock
Option Plan" [the "Discretionary Option Plan"] pursuant to which the Board may
award options to purchase an aggregate of 1,000,000 shares of Common Stock to
directors and officers of the Company and its subsidiaries which shall be
exercisable at the market price on the date of grant for periods, and under
conditions, specified by the Board in such grants. Options under the
Discretionary Option Plan are non-qualified and non-incentive options for
purposes of income taxation and are not intended to qualify under Section 422A
of the Internal Revenue Code of 1986. On August 12, 1994, the Board granted nine
Company officers and directors options to purchase up to 170,500 shares of
Common Stock under the Discretionary Option Plan, which are exercisable until
August 31, 1999, at prices ranging from $2.00 to $2.63 per share [the last sale
price on the date of the grant].
F-14
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7
- -------------------------------------------------------------------------------
[12] Stock Options and Warrants [Continued]
[B] Directors and Officers Stock Option Plan [Continued] - On August 17, 1993,
the Board also adopted a "Non-discretionary Directors Stock Option Plan" [the
"Non-discretionary Option Plan"] pursuant to which each director will be
granted, on August 17, 1993 and each anniversary thereof on which he or she
continues to be a director, a five-year option to purchase 10,000 shares of
Common Stock at the market price on the date of the grant. The Non-
discretionary Plan also provides that any person becoming a director within the
six months after any August 17 will be granted an option for 10,000 shares on
the date he or she becomes a director. The Non-discretionary Option Plan will be
subject to the approval of the shareholders of the Company. Pursuant to the
Non-discretionary Option Plan, Company directors each received options to
purchase 10,000 shares of Common Stock at $2.63 per share on August 17, 1994.
[C] Warrants - At November 30, 1994, the Company had outstanding Redeemable
Class A Warrants to purchase 2,305,980 shares of the Company's Common Stock at
approximately $4.49 per share. The Warrants became exercisable September 19,
1990 and expire September 19, 1995. The Warrants are redeemable by the Company,
under certain conditions, until September 19, 1995. During the year ended
November 30, 1994, 368,295 redeemable Class C Warrants and 289,560 redeemable
Class D Warrants were exercised resulting in gross proceeds to the Company of
approximately $1,600,000. In January 1994 the underwriter of the Company's
October 1992 public offering exercised its unit option resulting in gross
proceed to the Company of approximately $495,000. At November 30, 1994 there
remained outstanding 830,450 redeemable Class C Warrants and 938,935 redeemable
Class D Warrants. Each Class C Warrant which entitles the holder to purchase one
share of the Company's Common Stock at $2.00 per share, became exercisable
October 9, 1993 and expire October 9, 1996. Each Class D Warrant which entitles
the holder to purchase one share of the Company's Common Stock at $3.00 per
share, became exercisable October 9, 1993 and expire October 9, 1998. The
warrants are redeemable by the Company under certain conditions, after October
9, 1993.
[13] Income Taxes
The provision for federal and state income taxes consists of the following:
<TABLE>
<CAPTION>
November 30,
1 9 9 4 1 9 9 3
------- -------
<S> <C> <C>
Federal Currently Payable $ -- $146,129
State Currently Payable -- 46,404
---- ------
Totals -- 192,533
Less: Extraordinary Item:
Reduction of Income
Taxes resulting from
Utilization of Operating
Loss Carryforwards -- (192,533)
---- ---------
$ -- $ --
</TABLE>
The Company has net operating loss carryforwards for tax purposes which expire
as follows:
Year Amount
- ---- ---------
2001 $ 25,000
2002 145,000
2003 585,000
2004 950,000
2005 370,000
2006 365,000
2007 340,000
-------
Total $2,780,000
=========
F-15
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8
- -------------------------------------------------------------------------------
[13] Income Taxes [Continued]
As a result of the change in ownership in October 1987, the use of approximately
$460,000 of the net operating loss carryforwards to offset taxable income in any
year ending after October 1, 1987 will be limited.
The Company adopted Statement of Financial Accounting Standards ["SFAS"] No.
109, "Accounting for Income Taxes," effective December 1, 1993. SFAS No. 109
requires the establishment of a deferred tax asset for all deductible temporary
differences and operating loss carryforwards. The deferred tax asset
attributable to operating loss carryforwards amounted to approximately
$1,200,000 at November 30, 1994. Because of the Company's cumulative losses in
recent years, however, any deferred tax asset established for utilization of the
Company's tax loss carryforwards would correspondingly require a valuation
allowance of the same amount pursuant to SFAS No. 109. Accordingly, no deferred
tax asset is reflected in these consolidated financial statements.
[14] Earnings [Loss] Per Share
Earnings [Loss] per share amounts are computed based on the weighted average
number of shares outstanding. Options, warrants and Convertible Preferred Stock
are assumed converted if dilutive.
[15] New Authoritative Pronouncements
As described in Note 13, the Company adopted Statement of Financial Accounting
Standards ["SFAS"] No. 109, "Accounting for Income Taxes," on December 1, 1993.
Since that implementation, the Financial Accounting Standards Board has issued
eleven new authoritative accounting pronouncements ["SFAS's"]. With the
exception of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," these new pronouncements either do not apply to the Company,
or will be implemented when the Company engages in applicable transactions. SFAS
No. 115 requires management to classify its investments in debt and equity
securities as trading, held-to-maturity, and/or available-for-sale at the time
of purchase and to reevaluate such determination at each balance sheet date. The
Company does not anticipate that it will have many investments that will qualify
as trading or held-to-maturity investments. Debt securities for which the
Company does not have the intent or ability to hold to maturity will be
classified as available- for-sale, along with most investments in equity
securities. Securities available-for-sale are to be carried at fair value, with
any unrealized holding gains and losses, net of tax, reported in a separate
component of shareholders' equity until realized. The Company will implement
SFAS No. 115 on December 1, 1994. None of these potentially applicable
accounting pronouncements is anticipated to have a material impact on the
Company's consolidated financial statements.
[16] Subsequent Events
[A] Exercise of Warrants - Subsequent to November 30, 1994, 4,800 redeemable
Class C Warrants were exercised resulting in gross proceeds to the Company of
approximately $9,600.
[B] Payment of Debt - In January 1995, the Company made the scheduled payment,
including interest, described in Note 5.
F-16
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9
- -------------------------------------------------------------------------------
[17] Fourth Quarter Adjustments [Unaudited]
There were certain adjustments recorded in the fourth quarter of fiscal year
ended November 30, 1994, and the aggregate effect of such adjustments was
material to the results of that quarter. Approximately $400,000 of start-up
costs relating to Manhattan File and Capitol Hill which were deferred in the
third quarter were expensed in the fourth quarter upon commencement of regular
operations of those publications.
[18] Restatement of Consolidated Financial Statements
The accompanying consolidated financial statements have been restated to record
printing and other expenses, and to eliminate intercompany revenue and accounts
receivable. The effect of the restatement was to increase the net loss for
November 30, 1994 by $414,533 [$.05 per share].
. . . . . . . . . .
F-17
<PAGE>
NEWS COMMUNICATIONS, INC.
- -------------------------------------------------------------------------------
EXHIBIT 11
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
November 30,
------------
1 9 9 4 1 9 9 3
------- -------
[Restated]
<S> <C> <C>
Fully Diluted:
Average Shares Outstanding Disregarding
Dilutive Convertible Preferred Stock 7,580,203 6,232,630
Assuming Conversion at beginning of
Year of:
10% Convertible Preferred Stock 57,600 59,400
8% Convertible Preferred Stock 103,333 103,333
12% Convertible Preferred Stock 95,238 95,238
------ ------
Shares Outstanding 7,836,374 6,490,601
========= =========
Income [Loss] Available to Common
Stockholders for Fully Diluted
Calculations $ (1,019,244) $ 191,269
========== =======
Per Share Amount:
Net Income [Loss] $ (.13) $ .03
==== ===
</TABLE>
This calculation is submitted in accordance with Securities Exchange Act of 1934
Release No. 9083 although it is contrary to para 48 of APB No. 15 because it
produces an antidilutive result.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-01-1993
<PERIOD-END> NOV-30-1994
<CASH> 842,857
<SECURITIES> 924,633
<RECEIVABLES> 4,579,852
<ALLOWANCES> 979,962
<INVENTORY> 0
<CURRENT-ASSETS> 5,609,705
<PP&E> 1,188,661
<DEPRECIATION> 500,156
<TOTAL-ASSETS> 10,394,358
<CURRENT-LIABILITIES> 1,874,423
<BONDS> 0
<COMMON> 0
449
79,157
<OTHER-SE> 14,168,111
<TOTAL-LIABILITY-AND-EQUITY> 10,394,358
<SALES> 13,554,929
<TOTAL-REVENUES> 13,554,929
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,797
<INCOME-PRETAX> (977,884)
<INCOME-TAX> 0
<INCOME-CONTINUING> (977,884)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 41,360
<NET-INCOME> (1,019,244)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
