1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 27, 1997
- --------------------------------------------------------------------------------

Spanish Broadcasting System, Inc.
- --------------------------------------------------------------------------------
(Exact name of the Registrant as specified in charter)

Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)

33-82114 13-3827791
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(Commission File Number) (IRS Employer Identification No.)

26 West 56th Street, New York, New York 10019
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(Address of principal executive offices) (Zip Code)

Company's telephone number, including area code: (212) 541-9200
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Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)

See List of Additional Registrants
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PRIMARY
STANDARD I.R.S.
STATE OR OTHER INDUSTRIAL EMPLOYER
JURISDICTION OF CLASSIFICATION IDENTIFICATION
NAME INCORPORATION NUMBER NUMBER

Spanish Broadcasting System, Inc............................... New Jersey 4832 13-3181941
Spanish Broadcasting System of California, Inc................. California 4832 92-3952357
Spanish Broadcasting System of Florida, Inc.................... Florida 4832 58-1700848
Alarcon Holdings, Inc.......................................... New York 6512 13-3475833
Spanish Broadcasting System Network, Inc....................... New York 4899 13-3511101
SBS Promotions, Inc............................................ New York 7999 13-3456128
SBS of Greater New York, Inc................................... New York 4832 13-3888732

Item 1. Changes in Control of the Company.

Not applicable.

Item 2. Acquisition or Disposition of Assets.

On March 27, 1997, Spanish Broadcasting System, Inc., a
Delaware corporation (the "Company"), acquired (a) from Infinity Holding Corp.
of Orlando ("Infinity") substantially all of the tangible and intangible assets
owned or held by Infinity and used or useful in the business or operations of
radio station WYSY-FM, serving the Chicago metropolitan area, for a purchase
price of $33.0 million, including a $3.0 million seller note (the "Chicago
Acquisition") and (b) from New Age Broadcasting Inc. and The Seventies
Broadcasting Corporation (together, the "Miami Sellers") all of the tangible and
intangible assets owned or held by the Miami Sellers and used or useful in the
business or operations of radio stations WRMA-FM and WXDJ-FM, serving the Miami
metropolitan area, for a cash purchase price of $111.0 million (the "Miami
Acquisitions," and together with the Chicago Acquisition, the "Acquisitions").
The assets acquired in connection with the Acquisitions included, among other
things: (i) personal property, including studio and transmission equipment; (ii)
licenses, permits and other authorizations including those licenses issued by
the Federal Communications Commission (the "FCC") in connection with the
business and operations of such radio stations; (iii) leaseholds, including the
leasehold for the transmitter site for such radio stations; (iv) assumed
contracts; and (v) intangibles. The Company intends to use such assets in the
same manner as the previous owners. The purchase prices for the Acquisitions
were determined by arms-length negotiations between the respective parties,
which, other than the Miami Sellers, are not affiliated with each other. In
connection with the Miami Acquisitions, in September 1996, the Company entered
into an employment agreement with Russell Oasis, one of the owners and operators
of the Miami Sellers. The Acquisitions were financed with the proceeds of
offerings (the "Offerings") made by the Company in reliance upon the exemption
provided in Section 4(2) of the Securities Act of 1933, as amended (the "Act").
See "Item 5 -- Other Events."

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Item 3. Bankruptcy or Receivership.

Not Applicable.

Item 4. Changes in Company's Certifying Accountant.

Not Applicable.

Item 5. Other Events.

On March 27, 1997, the Company completed offerings of (a)
175,000 units (the "Units Offering") comprised of 175,000 shares of the
Company's Series A Senior Exchangeable Preferred Stock, liquidation preference
$1,000 per share, and warrants to purchase 74,900 shares of the Company's Class
A Common Stock, par value $.01 per share ("Common Stock"), and (b) $75.0 million
aggregate principal amount of the Company's 11% Senior Notes due 2004 (the
"Senior Notes") (the "Notes Offering") in transactions not registered under the
Act, in reliance upon the exemption provided in Section 4(2) of the Act.

Concurrently with the consummation of the Offerings, the
Company effected a series of transactions including (i) the Acquisitions, and
(ii) the redemption (the "Redemption") of the Company's Senior Secured Notes due
2001 (the "Senior Secured Notes") and Senior Exchangeable Preferred Stock,
Series A (the "Old Preferred Stock") and the repurchase (the "Repurchase") of
related warrants to purchase an aggregate of 6.0% of the Company's Common Stock,
on a fully-diluted basis (the "Primary Warrants"). In addition, simultaneously
with the consummation of the Offerings, the Company announced its intention to
declare a dividend of up to $4 million in the aggregate (the "Distribution") to
its stockholders and existing warrantholders who elected to receive their pro
rata portion of the Distribution in lieu of the anti-dilution adjustment they
would otherwise have been entitled to as a result of the Distribution.

In connection with the Offerings, the Company obtained the
consents (the "Consent Solicitation") from the holders of the Company's 12.5%
Senior Notes due 2002 to permit (i) the issuance of the Senior Notes, (ii) the
issuance of the $3 million seller note in connection with the Chicago
Acquisition, (iii) the repurchase of the Primary Warrants and (iv) the payment
of the Distribution.

The Offerings, the Redemption, the Repurchase, the
Distribution and the Consent Solicitation, together with the Acquisitions, are
collectively referred to herein as the "Transactions."

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The net proceeds to the Company from the Offerings (together
with cash on hand) were used to finance the Transactions as follows:

Purchase of WRMA-FM and WXDJ-FM $111,000,000
Purchase of WYSY-FM(1) 30,000,000
Redemption/Repurchase of Senior
Secured Notes, Old Preferred Stock
and Primary Warrants 90,595,000

The net proceeds to the Company from the Offerings (together
with cash on hand) were used to finance the Transactions as follows:

Purchase of WRMA-FM and WXDJ-FM $111,000,000
Purchase of WYSY-FM(1) 30,000,000
Redemption/Repurchase of Senior
Secured Notes, Old Preferred Stock
and Primary Warrants 90,595,000

Distribution 4,000,000
Consent Solicitation Fee 2,600,000

----------
(1) Represents the cash portion of the purchase price and
excludes the $3 million seller note.

Item 6. Resignation of Company's Directors.

Not Applicable.

Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.

(a) Financial Statements of Businesses Acquired.
NEW AGE BROADCASTING, INC.:

AUDITED FINANCIAL STATEMENTS

Report of Voynow, Bayard and Company, independent auditors

Balance Sheet at September 30, 1994

Statement of Income and Retained Earnings for the year ended
September 30, 1994

Statement of Cash Flows for the year ended September 30, 1994

Notes to Financial Statements

NEW AGE BROADCASTING, INC. AND THE SEVENTIES
BROADCASTING CORPORATION:

AUDITED FINANCIAL STATEMENTS

Report of Voynow, Bayard and Company, independent auditors

Combined Balance Sheet at September 30, 1995

Combined Statement of Income and Retained Earnings for the
year ended September 30, 1995

Combined Statement of Cash Flows for the year ended September
30, 1995

Notes to Combined Financial Statements

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NEW AGE BROADCASTING, INC. AND THE SEVENTIES BROADCASTING CORPORATION:

AUDITED FINANCIAL STATEMENTS

Report of KPMG Peat Marwick LLP, independent auditors

Combined Balance Sheet at September 30, 1996

Combined Statement of Income for the year ended September 30, 1996

Combined Statement of Cash Flows for the year ended September 30, 1996

Combined Statement of Changes in Stockholders' Equity for the year ended
September 30, 1996

Notes to Combined Financial Statements

UNAUDITED FINANCIAL STATEMENTS

Condensed Combined Balance Sheet at December 31, 1996

Condensed Combined Statements of Operations for the three months ended
December 31, 1995 and 1996

Condensed Combined Statements of Cash Flows for the three months ended
December 31, 1995 and 1996

Notes to Combined Financial Statements

(b) Pro Forma Financial Information PRO FORMA COMBINED FINANCIAL
STATEMENTS

Pro Forma Combined Balance Sheet at December 29, 1996 (Unaudited)

Notes to Pro Forma Combined Balance Sheet (Unaudited)

Pro Forma Combined Statement of Operations for Fiscal Year Ended
September 29, 1996 (Unaudited) and Three Months Ended December 29,
1996 (Unaudited)

Notes to Pro Forma Combined Statement of Operations (Unaudited)

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Sequential
Page No.
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1.1 Financial Advisory Agreement dated March 4, 1997
between the Company and CIBC Wood Gundy Securities
Corp., as financial advisor.

3.1 Certificate of Elimination of Exchangeable Preferred
Stock, Series A, filed March 27, 1997.

3.2 Certificate of Designation of Senior Exchangeable
Preferred Stock, Series A, filed March 27, 1997.

4.1 Second Supplemental Indenture dated as of March 21,

1997 to Indenture dated as of June 29, 1994 among the
Company, the Guarantors named therein and IBJ
Schroder Bank & Trust Company Trustee.

4.2 Indenture dated as of March 15, 1997, among the Company,
the Guarantors named therein, IBJ Schroder Bank & Trust
Company, as Trustee, and CIBC Wood Gundy Securities
Corp., as Initial Purchaser.

4.3 Exchange Debenture Indenture dated as of March 15, 1997,
among the Company, the Guarantors named therein, U.S.
Trust Company of New York, as Trustee, and CIBC Wood Gundy
Securities Corp., as Initial Purchaser.

10.1 Securities Purchase Agreement dated as of March 24,

1997 by and among the Company, the Guarantors named therein
and CIBC Wood Gundy Securities Corp., as Initial Purchaser.

10.2 Unit Agreement dated as of March 15, 1997 among the Company,
the Guarantors and IBJ Schroder Bank & Trust Company,
as Trustee.

10.3 Warrant Agreement dated as of March 15, 1997 by and among the
Company and IBJ Schroder Bank & Trust Company, as Warrant Agent.

10.4 Common Stock Registration Rights and Stockholders Agreement dated
as of March 15, 1997 among the Company, certain Management
Stockholders named therein and CIBC Wood Gundy Securities Corp.

10.5 Notes Registration Rights Agreement dated as of March 15, 1997
among the Company, the Guarantors named therein and CIBC Wood
Gundy Securities Corp.

10.6 Preferred Stock Registration Rights Agreement dated as of

March 15, 1997 among the Company, the Guarantors named therein
and CIBC Wood Gundy Securities Corp.

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Sequential
Page No.
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10.7 National Radio Sales Representation Agreement dated

as of February 3, 1997 between Caballero Spanish Media,
L.L.C. and the Company.

10.8 Employment Agreement dated as of March 4, 1997 between
Raul Alarcon, Jr. and the Company.

10.9 Employment Agreement dated September 27, 1996 between
Russell Oasis and the Company. Incorporated herein by
reference to Exhibit 10.42 of the Company's Annual
Report on Form 10-K for the Year Ended September
29, 1996.

10.10 Asset Purchase Agreement dated September 16, 1996 among
Raul Alarcon, Jr., New Age Broadcasting, Inc., The
Seventies Broadcasting Corporation and the Company,

and with respect only to Section 9.3 thereof, Alan Potamkin
Russell Oasis and Robert Potamkin. Incorporated herein by
reference to Exhibit 10.43 of the Company's Annual Report
on Form 10-K for the Year Ended September 29, 1996.

10.11 First Amendment to Asset Purchase Agreement dated December 26,
1996 among Raul Alarcon, Jr., New Age Broadcasting, Inc., The
Seventies Broadcasting Corporation and the Company, and with
respect only to Section 9.3 thereof, Alan Potamkin, Russell Oasis
and Robert Potamkin.

10.12 Second Amendment to Asset Purchase Agreement dated
February 28, 1997 among Raul Alarcon, Jr., New Age
Broadcasting, Inc., The Seventies Broadcasting Corporation
and the Company, and with respect only to Section 9.3
thereof, Alan Potamkin, Russell Oasis and Robert Potamkin.

10.13 Asset Purchase Agreement dated August 22, 1996 between
Infinity Holdings Corp. of Orlando and the Company.
Incorporated herein by reference to Exhibit 10.44 of the
Company's Annual Report on Form 10-K for the Year Ended
September 29, 1996.

10.14 Letter Agreement dated January 13, 1997 between the
Company and Caballero Spanish Media, LLC.

Item 8. Change in Fiscal Year.
Not Applicable.

Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not Applicable.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, each of SPANISH BROADCASTING SYSTEM, INC., a Delaware
corporation, SPANISH BROADCASTING SYSTEM, INC., a New Jersey corporation,
SPANISH BROADCASTING SYSTEM OF FLORIDA, INC., SPANISH BROADCASTING SYSTEM
NETWORK, INC., SBS PROMOTIONS, INC., ALARCON HOLDINGS, INC., SBS OF GREATER NEW
YORK, INC. and SPANISH BROADCASTING SYSTEM OF CALIFORNIA, INC., has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, New York as of the 11th day of April, 1997.

SPANISH BROADCASTING SYSTEM, INC., a Delaware corporation,
SPANISH BROADCASTING SYSTEM, INC., a New Jersey corporation
SPANISH BROADCASTING SYSTEM OF FLORIDA, INC.
SPANISH BROADCASTING SYSTEM NETWORK, INC.
SBS PROMOTIONS, INC.
ALARCON HOLDINGS, INC.
SBS OF GREATER NEW YORK, INC.
SPANISH BROADCASTING SYSTEM OF CALIFORNIA, INC.

By: /s/ Joseph A. Garcia
-----------------------------------
Joseph A. Garcia,
Vice President

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INDEX TO FINANCIAL STATEMENTS

Description Seq. Page No.
- ----------- -------------

(a) Financial Statements of Business Acquired

NEW AGE BROADCASTING, INC.:

AUDITED FINANCIAL STATEMENTS

Report of Voynow, Bayard and Company, independent
auditors

Balance Sheet at September 30, 1994

Statement of Income and Retained Earnings for the year
ended September 30, 1994

Statement of Cash Flows for the year ended September 30,
1994

Notes to Financial Statements

NEW AGE BROADCASTING, INC. AND THE SEVENTIES
BROADCASTING CORPORATION:

AUDITED FINANCIAL STATEMENTS

Report of Voynow, Bayard and Company, independent
auditors

Combined Balance Sheet at September 30, 1995

Combined Statement of Income and Retained Earnings for
the year ended September 30, 1995

Combined Statement of Cash Flows for the year ended
September 30, 1995

Notes to Combined Financial Statements

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NEW AGE BROADCASTING, INC. AND THE
SEVENTIES BROADCASTING CORPORATION:

AUDITED FINANCIAL STATEMENTS

Report of KPMG Peat Marwick LLP, independent auditors

Combined Balance Sheet at September 30, 1996

Combined Statement of Income for the year ended
September 30, 1996

Combined Statement of Cash Flows for the year ended
September 30, 1996

Combined Statement of Changes in Stockholders' Equity
for the year ended September 30, 1996

Notes to Combined Financial Statements

UNAUDITED FINANCIAL STATEMENTS

Condensed Combined Balance Sheet at December 31, 1996

Condensed Combined Statements of Operations for the
three months ended December 31, 1995 and 1996

Condensed Combined Statements of Cash Flows for the
three months ended December 31, 1995 and 1996

Notes to Combined Financial Statements

PRO FORMA COMBINED FINANCIAL STATEMENTS

Pro Forma Combined Balance Sheet at December 29, 1996 (Unaudited)

Notes to Pro Forma Combined Balance Sheet (Unaudited)

Pro Forma Combined Statement of Operations for Fiscal Year Ended
September 29, 1996 (Unaudited) and Three Months Ended December 29, 1996
(Unaudited)

Notes to Pro Forma Combined Statement of Operations (Unaudited)

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INDEPENDENT AUDITORS' REPORT

The Shareholders
New Age Broadcasting, Inc.
Miami, Florida 33145

Gentlemen:

We have audited the accompanying balance sheet of New Age Broadcasting,
Inc. (an S corporation) as of September 30, 1994 and the related statements of
income, retained earnings and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion the financial statements referred to above present fairly in
all material respects, the financial position of New Age Broadcasting, Inc. as
of September 30, 1994, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

VOYNOW, BAYARD AND COMPANY
Certified Public Accountants
Ft. Lauderdale, Florida
December 2, 1994

F-1
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NEW AGE BROADCASTING, INC.

BALANCE SHEET
SEPTEMBER 30, 1994

ASSETS
CURRENT ASSETS
Cash (Note 6F)....................................................... $ 209,618
Cash, restricted funds (Note 2)...................................... 100,000
Accounts receivable:
Trade (net of allowance for doubtful accounts of $111,626)........ 1,343,103
Barter (Note 1E).................................................. 86,436 1,429,539
---------
Prepaid expenses..................................................... 58,742
---------
Total Current Assets......................................... 1,797,899
PLANT, PROPERTY AND EQUIPMENT (Note 1C)
Technical equipment, studio and tower................................ 546,091
Office equipment and fixtures, and transportation equipment.......... 275,021
---------
821,112
Accumulated depreciation............................................. 539,886
---------
Net Plant, Property and Equipment................................. 281,226
OTHER ASSETS (Note 1F)
Transmitter site leasehold interest, trademark, FCC license and
goodwill (net of amortization of $1,324,485)...................... 6,464,036
Deferred financing costs (net of amortization of $48,534)............ 78,077
Lease costs (net of amortization of $1,925).......................... 2,713
Deposits............................................................. 265,009
---------
Total Other Assets........................................... 6,809,835
---------
TOTAL ASSETS................................................. $8,888,960
=========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt (Note 3)........................... $ 655,249
Accounts payable:
Trade............................................................. 42,694
Barter (Note 1E).................................................. 15,855
Accrued expenses..................................................... 119,342
---------
Total Current Liabilities.................................... 833,140
LONG-TERM DEBT
Notes payable (Note 3)
AT&T Commercial Finance Company................................... 3,427,000
Transportation equipment financing................................ 28,531
Stockholders (Note 3C)............................................ 217,345
---------
Total........................................................ 3,672,876
Less: Current portion................................................ 655,249
---------
Total Long-Term Debt......................................... 3,017,627
---------
TOTAL LIABILITIES............................................ 3,850,767
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY
Capital stock (par value $10; 1,000 shares authorized, 180 shares
issued and outstanding) (Note 5).................................. 1,800
Additional paid in capital........................................... 998,200
Retained earnings.................................................... 4,038,193
---------
Net Stockholders' Equity.......................................... 5,038,193
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................... $8,888,960
=========

See independent auditors' report.

The accompanying notes are an integral part of the financial statements.

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NEW AGE BROADCASTING, INC.

STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED SEPTEMBER 30, 1994

GROSS BROADCASTING REVENUES......................................... $ 8,339,045
Less agency commissions........................................... (1,029,036)
NET REVENUE......................................................... 7,310,009
OPERATING EXPENSES
Technical......................................................... 765,129
Sales............................................................. 1,475,112
General and administrative........................................ 423,845
---------
Total Operating Expenses.................................. 2,664,086
---------
INCOME FROM OPERATIONS.............................................. 4,645,923
OTHER INCOME, (EXPENSES)
Interest income................................................... 57,771
Officer compensation.............................................. (220,000)
Interest expense, bank............................................ (314,252)
Interest expense, shareholders.................................... (152,599)
Amortization...................................................... (229,305)
Depreciation...................................................... (98,946)
---------
Net Other Expenses........................................ 957,331
---------
NET INCOME................................................ 3,688,592
RETAINED EARNINGS, BEGINNING........................................ 349,601
---------
RETAINED EARNINGS, ENDING........................................... $ 4,038,193
=========

See independent auditors' report.

The accompanying notes are an integral part of the financial statements.

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NEW AGE BROADCASTING, INC.

STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1994

CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME........................................................ $ 3,688,592
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Add (deduct) expenses not using cash
Depreciation and amortization................................ 328,251
Increase in bad debt allowance............................... 90,186
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable........................................ (373,497)
Prepaid expenses........................................... 14,230
(Decrease) in:
Accounts payable and accrued expenses...................... (251,382)
----------
Total Adjustments....................................... (192,212)
----------
Net Cash Provided by Operating Activities............... 3,496,380
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property and equipment......................... (95,703)
Expenditures for trademark acquisition.......................... (35,432)
----------
Net Cash Used in Investing Activities................... (131,135)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of new financing, equipment......................... 17,623
Repayment of bank debt.......................................... (409,334)
Repayment of shareholder debt................................... (3,697,401)
----------
Net Cash Used in Financing Activities................... (4,089,112)
----------
NET DECREASE IN CASH.............................................. (723,867)
CASH, BEGINNING................................................... 1,033,485
----------
CASH, ENDING...................................................... $ 309,618
==========
SUPPLEMENTAL INFORMATION
Interest paid................................................... $ 453,224
==========

See independent auditors' report.

The accompanying notes are an integral part of the financial statements.

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NEW AGE BROADCASTING, INC.

NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization

New Age Broadcasting, Inc. was incorporated on November 19, 1987 under the
laws of the State of Florida. Its principal office and place of business is in
the Miami, Florida area.

B. Operations

The corporation is engaged in the business of operating an FM radio
station, WXDJ-FM. Revenue is gained from the sale of commercial time to third
parties.

C. Plant, Property and Equipment

All plant, property and equipment accounts are stated at cost; additions
and major improvements are capitalized; expenditures for maintenance, repairs
and minor renewals are expensed as incurred. Any gain or loss on disposition of
assets is reflected in the statement of income. Depreciation of assets is
computed by use of the straight-line method over the estimated useful lives of
the respective assets, ranging from 5 to 7 years.

D. Station Acquisition

The corporation acquired the operating assets of WXDJ-FM on December 1,
1987 for a purchase price of $8,100,000. The total purchase price was allocated
to the assets in proportion to their relative estimated fair market values based
on independent appraisals obtained by management. The allocation of the purchase
price is summarized, as follows:

Station furniture, fixtures and equipment...................... $ 472,210
Transmitter site leasehold interest, FCC license and
goodwill..................................................... 7,627,790
----------
Total Allocated Purchase Price................................. $8,100,000
=========

E. Barter Transactions

Reciprocal trade agreement transactions for advertising time are recorded
at fair market value of the merchandise or services received and are included in
broadcast revenues and expenses. Any uncompleted transactions are recorded in
accounts receivable and payable as appropriate.

F-5
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NEW AGE BROADCASTING, INC.

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

F. Intangible Assets

Costs of acquiring the leasehold interest and FCC license, as well as
financing and organization costs, are capitalized. These intangible assets are
being amortized over the following estimated lives on a straight-line basis:

AMORTIZATION
EXPENSE FISCAL
YEAR ENDED
SEPTEMBER 30,
ASSET COST LIFE 1994
------------------------------------------------- ---------- -------- --------------

Transmitter site leasehold, FCC license and
goodwill....................................... $7,753,090 40 years $202,835
Trademark........................................ 35,431 14 years 221
Deferred financing costs......................... 126,612 5 years 25,322
Lease costs, new tower........................... 4,638 5 years 927
--------
$229,305
========

2. CASH, RESTRICTED FUNDS

The company has placed $100,000 in a restricted bank account to comply with
State of Florida regulation related to a current promotional contest. The
restriction is expected to be removed from these funds at the contest conclusion
during the next quarter.

3. FINANCING ARRANGEMENTS

A. Notes Payable, AT&T Commercial Finance Corporation

A term note was secured on October 29, 1992 from AT&T Commercial Finance
Corporation in the original amount of $4,150,000. Monthly principal payments are
required under the loan agreements as follows:

03/1/93 through 11/1/93............................................ $40,000
12/1/93 through 11/1/94............................................ 33,000
12/1/94 through 11/1/95............................................ 36,000
12/1/95 through 11/1/96............................................ 40,000
12/1/96 through 10/1/97............................................ 44,000

The remaining balance of the debt is due in full on November 1, 1997.

Interest is due monthly on the debt calculated at a rate based on the prime
rate plus two percent. At September 30, 1994 this rate was 9.75%.

Substantially all corporate assets have been pledged to secure this
obligation. In addition, the stockholders have pledged their stock and have
given their personal guarantees to secure the obligation. The debt agreements
include stipulations limiting capital expenditures, compensation, investments
and dividends and for maintenance of a minimum level of working capital.

B. Notes Payable, Transportation Equipment

The company has secured financing for station vehicles in 1993 and 1994
from a local commercial bank. Forty-eight monthly payments of $742 are due
including interest. The debts are secured by the vehicles financed, as well as
by the personal guarantees of certain stockholders.

F-6
17

NEW AGE BROADCASTING, INC.

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

C. Notes Payable, Stockholders

Financing has been arranged from the stockholders on a demand basis. The
original amount of this financing was $3,510,000 with the related accrued,
unpaid interest amounting to $1,944,746 as of October 1, 1993. Due to
stipulations contained in the AT&T Commercial Finance Corporation loan
agreements described above, this debt and the related accrued, unpaid interest
has previously been classified as long term obligations of the company. By
agreement between the parties in fiscal year 1994, the company was permitted to
use excess cash to repay stockholder debt. As of September 30, 1994, $217,345
remained due to the stockholders and was repaid in October, 1994.

D. The notes mature over the next three years as follows:

YEAR ENDING SEPTEMBER 30
---------------------------------------------------------------

1995........................................................... $ 655,249
1996........................................................... 484,905
1997........................................................... 2,532,722
---------
$3,672,876
=========

4. INCOME TAXES

Effective March 1, 1988, the company elected to be taxed under the
provisions of Subchapter S of the Internal Revenue Code and the State of Florida
Code with a fiscal year ending on September 30. Under these provisions, the
company does not pay federal or state corporate income taxes on its income. The
individual stockholders are liable for federal and state income taxes on their
respective shares of the company's taxable income.

From inception to February 29, 1988, the company was taxed under provisions
Subchapter C of the Internal Revenue Code which taxes the company directly on
its income. The company had incurred net operating losses of $360,260, for tax
purposes, which are available to be carried over to offset taxable income in
future years up to 2002 should "C" status be elected at some future date prior
to 2002.

5. CAPITAL STOCK

The company is authorized to issue 1,000 shares of common stock with a par
value of $10. At the time of issuance, this stock is designated to be either
voting or nonvoting by action of the Board of Directors. On February 29, 1988,
the company issued and has outstanding 180 shares of common stock, which consist
of 49 voting shares and 131 nonvoting shares.

6. COMMITMENTS AND CONTINGENCIES

A. Office Space Lease

The company has secured office space in Miami, Florida under a lease which
commenced May 21, 1991. The company has exercised its second renewal option
under that lease for the period June 1, 1994 through May 31, 1996.

B. Antenna Tower Lease

The company has secured antenna tower space at a facility in Miami and is
currently operating at that site under a temporary FCC operating permit. The
lease covering these facilities is for a five-year period, with six five-year
renewal periods, commencing September 1, 1992 with monthly rents of $3,500 plus
sales tax.

F-7
18

NEW AGE BROADCASTING, INC.

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

The antenna facility lease contains provisions allowing for the subletting
of the facility subject to typical landlord approval policies. The company is in
the process of obtaining a new site for its permanent transmitter facility. In
the event that the company relocates its antenna facility prior to the
expiration of the lease term, a duplicate rental payment would be expected if a
suitable replacement tenant cannot be located for the existing facility.

C. Minimum rents are required under the above leases as follows:

OFFICE ANTENNA
YEAR ENDING SEPTEMBER 30, SPACE TOWER TOTAL
--------------------------------------------------- -------- -------- --------

1995............................................... $ 60,472 $ 44,940 $105,412
1996............................................... 42,190 44,940 87,130
1997............................................... -- 41,195 41,195
------- ------- -------
$102,662 $131,075 $233,737
======= ======= =======

Rent expense for the year ended September 30,1994 amounted to $108,783.

D. The company has obtained office equipment under the terms of a lease which
has been recorded as a capitalized lease transaction. In this transaction, both
the asset and the corresponding liability have been recorded. The terms of the
lease agreement require the payment of 60 monthly installments of $141 including
interest.

E. Temporary Operating Permit

The company is broadcasting from the facility in Miami, Florida under the
authority of a special temporary authorization granted by the FCC. This
authorization was necessary due to the destruction of the permanent tower by
Hurricane Andrew. This special temporary authorization expires on February 14,
1995. The company has filed an application of extension, which is being reviewed
by the FCC. Although an extension has not yet been granted and the company has
not returned to its original facility, management expects no interruption in
operations due to its continuing efforts in obtaining a permanent transmitter
facility.

F. The company had bank deposits of $109,618 at September 30, 1994 in excess
of federally insured limits.

7. RELATED PARTY TRANSACTIONS

Affiliated companies will utilize the station as part of their promotional
programming from time to time. Rates and terms for these spots are similar to
those offered to other customers. During the fiscal year, these cash spots
amounted to $58,775 of gross billings.

8. SUBSEQUENT EVENT

An agreement has been made by the owners of the corporation to acquire the
assets and operations of another radio station in the South Florida area. The
acquisition will actually be undertaken by a new corporation with identical
ownership as the company. It is expected that the acquisition financing
arrangements will involve a refinancing of the debt discussed in note 3A, with
the new loan balance secured by the assets of both companies.

F-8
19

INDEPENDENT AUDITORS' REPORT

The Shareholders
New Age Broadcasting, Inc. and
The Seventies Broadcasting Corporation
Miami, Florida 33145

Gentlemen:

We have audited the accompanying combined balance sheet of New Age
Broadcasting, Inc. and the Seventies Broadcasting Corporation (both S
corporations) as of September 30, 1995 and the related combined statements of
income, retained earnings and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion the financial statements referred to above present fairly in
all material respects, the financial position of New Age Broadcasting, Inc. and
The Seventies Broadcasting Corporation as of September 30, 1995, and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

VOYNOW, BAYARD AND COMPANY
Certified Public Accountants

Ft. Lauderdale, Florida
November 7, 1995

F-9
20

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED BALANCE SHEET
SEPTEMBER 30, 1995

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6F).............................. $ 1,413,127
Accounts receivable:
Trade (net of allowance for doubtful accounts of $64,757)..... 2,326,187
Barter (Note 1D).............................................. 52,484
----------
2,378,671
Prepaid expenses................................................. 117,220
----------
3,909,018
PLANT, PROPERTY AND EQUIPMENT (Note 1E)
Technical equipment, studio and tower............................ 1,757,993
Office equipment and fixtures, and transportation equipment...... 503,188
Capitalized tower lease (Note 3)................................. 643,686
----------
2,904,867
Accumulated depreciation......................................... 913,455
----------
1,991,412
OTHER ASSETS (Note 1F)
Transmitter site leasehold interests, trademark, FCC licenses and
goodwill (net of amortization of $1,848,071).................. 25,739,435
Deferred financing costs (net of amortization of $66,139)........ 429,891
Lease costs (net of amortization of $2,849)...................... 1,789
Deposits......................................................... 273,035
----------
26,444,150
----------
TOTAL ASSETS............................................. $32,344,580
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt (Notes 2 and 3) $ 1,500,713
Accounts payable, Trade.......................................... 210,398
Accrued expenses................................................. 283,401
----------
1,994,512
LONG-TERM DEBT
Notes payable (Note 2):
AT&T Commercial Finance Corporation........................... 23,435,921
Transportation equipment financing............................ 19,628
Stockholders (Note 2C)........................................ 1,450,000
Capital lease obligation (Note 3)............................. 641,523
----------
25,547,072
Less: Current portion............................................ 1,500,713
----------
24,046,359
----------
TOTAL LIABILITIES........................................ 26,040,871
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY
Capital stock (Note 5)........................................... 1,080,000
Retained earnings................................................ 5,223,709
----------
Total Stockholders' Equity............................... 6,303,709
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............... $32,344,580
==========

See independent auditors' report.

The accompanying notes are an integral part of the financial statements.

F-10
21

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED SEPTEMBER 30, 1995

GROSS BROADCASTING REVENUES........................................ $13,414,345
Less: agency commissions......................................... (1,793,697)
NET REVENUE........................................................ 11,620,648
OPERATING EXPENSES
Technical........................................................ 1,591,184
Sales............................................................ 2,203,143
General and administrative....................................... 923,126
----------
4,717,453
----------
INCOME FROM OPERATIONS............................................. 6,903,195
OTHER INCOME (EXPENSES)
Interest income.................................................. 46,667
Officer compensation............................................. (347,500)
Interest expense, bank........................................... (2,000,679)
Amortization..................................................... (669,832)
Depreciation..................................................... (363,590)
Abandonment loss................................................. (110,527)
----------
(3,445,461)
----------
NET INCOME............................................... 3,457,734
RETAINED EARNINGS, BEGINNING....................................... 4,006,630
----------
7,464,364
LESS: DISTRIBUTIONS................................................ 2,240,655
----------
RETAINED EARNINGS, ENDING.......................................... $ 5,223,709
==========

See independent auditors' report.

The accompanying notes are an integral part of the financial statements.

F-11
22

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1995

CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME....................................................... $ 3,457,734
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Add (deduct) expenses not using cash
Depreciation and amortization............................... 1,043,401
Loss on abandonment of assets............................... 110,527
Decrease in bad debt allowance.............................. (46,869)
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable....................................... (831,486)
Prepaid expenses.......................................... (1,802)
Deposit................................................... (8,026)
Increase in:
Accounts payable and accrued expenses..................... 219,853
----------
485,598
----------
Net Cash Provided by Operating Activities................... 3,943,332
CASH FLOWS FROM INVESTING ACTIVITIES
Cash purchase of property and equipment........................ (1,541,440)
Expenditures for license acquisition........................... (18,548,970)
Expenditures for trademark..................................... (1,120)
Expenditures for loan costs.................................... (447,210)
----------
Net Cash (Used in) Investing Activities..................... (20,538,740)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of bank loan, net..................................... 22,137,858
Repayment of shareholder debt.................................. (117,345)
Distributions paid............................................. (2,240,655)
Repayment of bank debt......................................... (2,140,000)
----------
Net Cash Provided by Financing Activities................... 17,639,858
----------
NET INCREASE IN CASH AND CASH EQUIVALENTS........................ 1,044,450
CASH AND CASH EQUIVALENTS, BEGINNING............................. 368,677
----------
CASH AND CASH EQUIVALENTS, ENDING................................ $ 1,413,127
==========
SUPPLEMENTAL INFORMATION
Interest paid.................................................. $ 1,908,049
==========

See independent auditors' report.

The accompanying notes are an integral part of the financial statements.

F-12
23

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and Operations

New Age Broadcasting, Inc. and The Seventies Broadcasting Corporation are
incorporated under the laws of the State of Florida with principal offices and
places of business in the Miami, Florida area. The corporations are engaged in
the business of operating FM radio stations, WXDJ-FM and WRMA-FM. Revenue is
earned from the sale of commercial time.

B. Principles of Combination

The financial statements of the two corporations have been presented on a
combined basis, as of September 30, 1995, because of their identical operation,
management and ownership. In addition, a common sales staff offers commercial
advertisements to customers from either one or both stations. All material
intercompany transactions and balances are eliminated in combination.

C. Station Acquisitions

New Age Broadcasting, Inc. acquired the operating assets of WXDJ-FM on
December 1, 1987 for a purchase price of $8,100,000. The Seventies Broadcasting
Corporation acquired the operating assets of WRMA-FM on January 26, 1995 for a
purchase price of $21,250,000. The total purchase price was allocated to the
assets acquired in proportion to their relative estimated fair market values
based on independent appraisals obtained by management. The allocations are
summarized as follows:

WXDJ WRMA
----------- ------------

Station furniture, fixtures and equipment.................. $ 472,210 $ 1,451,030
Transmitter site leasehold interest, FCC license and
goodwill................................................. 7,627,790 19,798,970
---------- -----------
Total Purchase Price....................................... $ 8,100,000 $ 21,250,000
========== ===========

D. Barter Transactions

Reciprocal trade agreement transactions for advertising time are recorded
at the fair market value of the merchandise or services received and are
included in broadcast revenues and expenses. Any incomplete transactions are
recorded in accounts receivable or payable where appropriate.

E. Plant, Property and Equipment

Plant, property and equipment is stated at cost; additions and major
improvements are capitalized; expenditures for maintenance, repairs and minor
renewals are expensed as incurred. Any gain or loss on disposition of assets is
reflected in the statement of income. Depreciation of assets is computed by use
of the straight-line method over the estimated useful lives of the respective
assets, ranging from 5 to 10 years.

F-13
24

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

F. Intangible Assets

Costs of acquiring the leasehold interest and FCC license, as well as
financing costs, are capitalized. These intangible assets are being amortized
over the following estimated lives on a straight-line basis:

AMORTIZATION
EXPENSE YEAR ENDED
ASSET COST LIFE SEPTEMBER 30, 1995
------------------------------------------ ------------ --------- ------------------

Transmitter site leaseholds, FCC licenses
and goodwill............................ $27,552,060 40 years $523,807
Trademark................................. 35,431 14 years 885
Deferred financing costs.................. 496,040 5 years 144,216*
Lease costs, new tower.................... 4,638 5 years 924
-------
$669,832
=======

- ---------------
*Includes $39,755 of unexpired cost on old debt at time of refinancing.

G. Statement of Cash Flows

For purposes of the statement of cash flows, the companies consider all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

2. FINANCING ARRANGEMENTS

A. Note Payable, AT&T Commercial Finance Corporation

A term note was secured on January 26, 1995 from AT&T Commercial Finance
Corporation with the original principal amount of approximately $25,400,000. The
financing was used in the acquisition of the assets of WRMA-FM and the
refinancing of the remaining debt balance of WXDJ-FM, amounting to $3,322,000.
Monthly principal payments are required under the loan agreement as follows:

03/01/95 through 02/01/96......................... $ 80,000
03/01/96 through 02/01/97......................... 150,000
03/01/97 through 02/01/98......................... 165,000
03/01/98 through 02/01/99......................... 180,000
03/01/99 through 01/01/2000....................... 200,000

The remaining balance of the debt is due in full on February 1, 2000.

Interest is due monthly on the debt calculated at a rate based on the
commercial paper rate plus four percent. At September 30, 1995 this rate was
9.86%.

Substantially all corporate assets have been pledged to secure this
obligation. In addition, the stockholders have extended their personal
guarantees in the aggregate amount of $5,000,000. The debt agreements include
stipulations limiting capital expenditures, compensation, investments, dividends
and for the maintenance of minimum levels of working capital.

B. Notes Payable, Transportation Equipment

F-14
25

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

C. Notes Payable, Stockholders

Financing has been arranged from the stockholders on a demand basis in the
amount of $1,450,000. Annual interest has been accrued at the rate of six
percent. This debt has been subordinated to the AT&T Commercial Finance
Corporation obligation.

D. The notes mature over the next five years as follows:

YEAR ENDING SEPTEMBER 30
------------------------------------------------

1996............................................ $ 1,458,903
1997............................................ 1,913,903
1998............................................ 2,086,822
1999............................................ 2,300,000
2000............................................ 17,245,921
----------
$25,005,549
==========

3. CAPITAL LEASE

As part of the acquisition of WRMA-FM, the company assumed the obligation
of a lease for space on the transmission tower. The lease is for a fifty year
term which commenced February 1, 1988. Based on the provisions of Financial
Accounting Standards Board Statement No. 13, the lease meets the criteria of a
capital lease and, accordingly, has been recorded as an asset with a capitalized
cost of $643,686. Depreciation of $9,979 and interest of $25,700, related to
this asset, have been charged to operations and included in technical expenses
on the income statement.

In the initial year of the lease the annual base rent amounted to $36,100
payable monthly. The rent increases annually by the U.S. Department of Labor
Consumer Price Index but never by more than 10%.

Future minimum lease payments inclusive of CPI increases to date, under the
capitalized lease are as follows:

YEAR ENDING SEPTEMBER 30
-----------------------------------------------------------------

1996............................................................. $ 44,576
1997............................................................. 44,576
1998............................................................. 44,576
1999............................................................. 44,576
2000............................................................. 44,576
Thereafter....................................................... 1,663,872
---------
Total.................................................. 1,886,752
Less amount representing interest assuming an implicit effective
rate of 6%..................................................... 1,245,231
---------
Present value of minimum lease payments.......................... $ 641,521
=========

4. INCOME TAXES

Both New Age Broadcasting, Inc., effective March 1, 1988, and The Seventies
Broadcasting Corporation, effective July 8, 1994 have elected to be taxed under
the provisions of Subchapter S of the Internal Revenue Code and the State of
Florida Code with fiscal years ending on September 30 and December 31,
respectively. Under these provisions, the company does not pay federal or state
corporate income taxes on its income. The

F-15
26

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

individual stockholders are liable for federal and state income taxes on their
respective shares of the company's taxable income.

From inception to February 29, 1988, New Age Broadcasting, Inc. was taxed
under provisions of Subchapter C of the Internal Revenue Code in which the
company is taxed directly on its income. The company had incurred net operating
losses of $360,260, for tax purposes, which are available to be carried over to
offset taxable income in future years up to year 2002 should "S" status be
terminated at some future date prior to year 2002.

5. CAPITAL STOCK

New Age Broadcasting, Inc. is authorized to issue 1,000 shares of common
stock with a par value of $10. At the time of issuance, this stock was
designated to be either voting or nonvoting by action of the Board of Directors.
The company issued on February 29, 1988 and has outstanding 180 shares,
consisting of 49 voting shares and 131 nonvoting shares.

Seventies Broadcasting Corporation is authorized to issue 7,500 shares of
common stock with a par value of $.01. The company issued on July 8, 1994 and
has outstanding 1,000 shares.

6. COMMITMENTS AND CONTINGENCIES

A. Office Space Leases

Each company has secured office space in Miami, Florida under a five-year
lease which expires on April 30, 2000 with a five year renewal option
exercisable at that time.

B. Antenna Tower Lease

New Age Broadcasting, Inc. has secured antenna tower space at a facility in
Miami and is currently operating at that site under a temporary FCC operating
permit. The lease covering these facilities is for a five-year period, with six
five-year renewal periods, commencing September 1, 1992 with monthly rents of
$3,500 plus sales tax.

The Seventies Broadcasting Corporation antenna tower facility arrangement
is detailed in Note 3.

C. Minimum rentals required under the above noncancellable operating leases
are as follows:

ANTENNA
OFFICE SPACE TOWER
------------------- -------
YEAR ENDING SEPTEMBER 30, WXDJ WRMA WXDJ TOTAL
--------------------------------- ------- ------- ------- --------

1996............................. $64,332 $70,875 $42,000 $177,207
1997............................. 66,444 70,875 42,000 179,319
1998............................. 66,444 70,875 38,500 175,819
1999............................. 66,444 70,875 137,319
2000............................. 22,150 23,625 45,775

Rent expense for the year ended September 30, 1995 amounted to $239,249.

F-16
27

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- CONTINUED

D. Station Vehicles

The Seventies Broadcasting Corporation has assumed vehicle leases acquired
in the acquisition. Remaining payments on these leases which expire in 1996 are
$5,695.

E. Temporary Operating Permit

New Age Broadcasting, Inc. is broadcasting from the facility in Miami,
Florida under the authority of a special temporary authorization granted by the
FCC. This authorization was necessary due to the destruction of the permanent
tower by Hurricane Andrew. This special temporary authorization expires on
February 14, 1996. Although an extension has not yet been granted and the
company has not returned to its original facility, management expects no
interruption in operations due to a construction permit granted by the FCC for a
new antenna and tower location and a pending application for a city of license
change which would allow WXDJ to remain at the existing temporary tower location
on a permanent basis.

F. The companies have bank deposits of $74,537 at September 30, 1995 in
excess of federally insured limits. The companies at September 30, 1995 have
$1,178,295 on deposit with the Merrill Lynch Institutional Fund (an uninsured
fund).

G. Litigation

The Seventies Broadcasting Corporation is involved in a lawsuit over a
lease for office space occupied by the company when it acquired WRMA. Management
believes that the lease is unenforceable and the company has since relocated
from these premises. Management believes that it will prevail in this legal
action and has, accordingly, made no provision in the financial statements for
any amounts under the lease obligation.

7. RELATED PARTY TRANSACTIONS

Affiliated companies will occasionally utilize the stations as part of
their promotional programming. Rates and terms for these spots are similar to
those offered to other customers. During the fiscal year, revenue from these
cash spots amounted to $273,680.

F-17
28

INDEPENDENT AUDITORS' REPORT

The Stockholders
New Age Broadcasting Inc.
and The Seventies Broadcasting Corporation:

We have audited the accompanying combined balance sheet of New Age
Broadcasting Inc. and The Seventies Broadcasting Corporation as of September 30,
1996 and the related combined statements of income, changes in stockholders'
equity and cash flows for the year then ended. These combined financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audit.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of New Age Broadcasting
Inc. and The Seventies Broadcasting Corporation as of September 30, 1996, and
the results of their operations and their cash flows for the year ended
September 30, 1996, in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

New York, New York
November 15, 1996

F-18
29

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED BALANCE SHEET
SEPTEMBER 30, 1996

ASSETS (NOTES 2 AND 6)
Current assets:
Cash and cash equivalents..................................................... $ 535,243
Receivables, net of allowance for doubtful accounts of $47,669................ 2,468,932
Prepaid expenses and other current assets..................................... 113,360
-----------
Total current assets.................................................. 3,117,535
Property and equipment, net of accumulated depreciation of $1,299,069 (note
4)............................................................................ 1,751,679
Intangible assets, net of accumulated amortization of $2,705,959 (note 5)....... 25,382,210
Other assets.................................................................... 306,722
-----------
$30,558,146
===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (note 6).................................... 1,912,594
Current portion of capital lease obligation (note 8).......................... 3,621
Accounts payable.............................................................. 56,122
Accrued expenses (note 9)..................................................... 550,948
Unearned revenue.............................................................. 62,878
-----------
Total current liabilities............................................. 2,586,163
Long-term debt, less current portion (note 6)................................... 20,462,743
Capital lease obligation, less current portion (note 8)......................... 635,336
Commitments and contingencies (notes 2, 8 and 9)
Stockholders' equity:
New Age Broadcasting common stock, $10 par value. Authorized 1,000 shares; 180
shares issued and outstanding.............................................. 1,800
The Seventies Broadcasting Corporation common stock, $.01 par value.
Authorized 7,500 shares; 1,000 shares issued and outstanding............... 10
Additional paid-in-capital.................................................... 1,078,190
Retained earnings............................................................. 5,793,904
-----------
Total stockholders' equity............................................ 6,873,904
-----------
$30,558,146
===========

See accompanying notes to combined financial statements.

F-19
30

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED STATEMENT OF INCOME
YEAR ENDED SEPTEMBER 30, 1996

Gross revenues (note 7)......................................................... $16,070,961
Less agency commissions......................................................... (2,110,537)
-----------
Net revenues.......................................................... 13,960,424
-----------
Operating expenses (notes 8 and 9):
Selling....................................................................... 1,524,965
General and administrative.................................................... 1,521,784
Programming................................................................... 1,360,601
Advertising and promotion..................................................... 581,510
Engineering................................................................... 245,943
Officers' salaries............................................................ 275,000
Depreciation and amortization................................................. 1,076,224
-----------
6,586,027
-----------
Operating income...................................................... 7,374,397
Interest expense, net of interest income of $43,864 (note 7).................... (2,261,202)
-----------
Net income............................................................ $ 5,113,195
===========

See accompanying notes to combined financial statements.

F-20
31

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1996

Cash flows from operating activities:
Net income.................................................................... $ 5,113,195
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.............................................. 1,076,224
Change in allowance for doubtful accounts.................................. (17,088)
Amortization of deferred financing costs................................... 99,205
Changes in operating assets and liabilities:
Increase in receivables.................................................. (73,173)
Increase in prepaid expenses and other current assets.................... (33,687)
Decrease in other assets................................................. (3,860)
Decrease in accounts payable............................................. (154,276)
Increase in accrued expenses............................................. 337,172
Decrease in unearned revenue............................................. (6,747)
-----------
Total adjustments..................................................... 1,231,490
-----------
Net cash provided by operating activities............................. 6,344,685
-----------
Cash flows from investing activities:
Additions to property and equipment........................................... (145,881)
Additions to intangible assets................................................ (910)
-----------
Net cash used in investing activities................................. (146,791)
-----------
Cash flows from financing activities:
Repayments of long-term debt.................................................. (1,080,212)
Repayment of stockholders' loans.............................................. (1,450,000)
Payments of capital lease obligation.......................................... (2,566)
Distributions to stockholders................................................. (4,543,000)
-----------
Net cash used in financing activities................................. (7,075,778)
-----------
Net decrease in cash and cash equivalents............................. (877,884)
Cash and cash equivalents at beginning of year.................................. 1,413,127
-----------
Cash and cash equivalents at end of year........................................ $ 535,243
===========
Supplemental cash flow information:
Cash paid for interest........................................................ $ 2,298,491
===========

See accompanying notes to combined financial statements.

F-21
32

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED SEPTEMBER 30, 1996

NEW AGE BROADCASTING INC. THE SEVENTIES BROADCASTING CORP.
----------------------------------------- --------------------------------------
COMBINED
COMMON STOCK COMMON STOCK ---------------------------------------
---------------- ADDITIONAL --------------- ADDITIONAL ADDITIONAL
NO. OF PAR PAID-IN RETAINED NO. OF PAR PAID-IN RETAINED PAID-IN RETAINED STOCKHOLDERS'
SHARES VALUE CAPITAL EARNINGS SHARES VALUE CAPITAL EARNINGS CAPITAL EARNINGS EQUITY
------ ------ ---------- ----------- ------ ----- ---------- --------- ----------- ----------- -------------

Balance
at
September
30,
1995... 180 $1,800 $ 998,200 $ 4,991,242 1,000 $10 $ 79,990 $ 232,467 $ 1,078,190 $ 5,223,709 $ 6,303,709
Distributions
to
stockholders... -- -- -- (3,683,000) -- -- -- (860,000) -- (4,543,000) (4,543,000)
Net
income... -- -- -- 4,260,991 -- -- -- 852,204 -- 5,113,195 5,113,195
--- ------ ------- ---------- ----- --- ------- ------- --------- ---------- ----------
Balance
at
September
30,
1996... 180 $1,800 $ 998,200 $ 5,569,233 1,000 $10 $ 79,990 $ 224,671 $ 1,078,190 $ 5,793,904 $ 6,873,904
=== ====== ======= ========== ===== === ======= ======= ========= ========== ==========

See accompanying notes to combined financial statements.

F-22
33

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996

(1) ORGANIZATION AND NATURE OF BUSINESS

New Age Broadcasting Inc. ("New Age") and The Seventies Broadcasting
Corporation ("SBC") (collectively, the "Companies") are each incorporated under
the laws of the State of Florida and have their principal places of business in
the Miami, Florida area. The Companies are owned by the same principal
stockholders and are engaged in the business of operating radio stations. New
Age owns and operates radio station WXDJ-FM and SBC owns and operates radio
station WRMA-FM, both serving the greater Miami area.

(2) DISPOSITION OF ASSETS

In September 1996, the Companies entered into an agreement to sell
substantially all of the Companies' collective assets used or useful in the
operation of its radio stations for approximately $111 million, subject to
adjustments based on broadcast cash flow, as defined in the agreement.
Completion of the transaction is pending FCC approval, among other things. Under
the terms of the agreement, the buyer has delivered a $10 million letter of
credit to the Companies. The Companies may draw upon the letter of credit if an
event of default occurs, as defined in the agreement. If an event of default
occurs, liquidated damages are limited to $30 million, as defined in the
agreement.

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PRESENTATION

The combined financial statements include the accounts of both New Age and
SBC. All significant intercompany balances and transactions have been eliminated
in combination.

(B) REVENUE RECOGNITION

Revenues are recognized when advertisements are aired.

Property and equipment are stated at cost. The Company depreciates the cost
of its office and radio station equipment and furniture and fixtures using the
straight-line method over estimated useful lives, which range from five to ten
years. Leasehold improvements are amortized on a straight-line basis over the
shorter of the remaining life of the lease or the useful life of the
improvements.

(D) INTANGIBLE ASSETS

Intangible assets consist of the excess of cost over the aggregate fair
value of the net assets acquired, as well as the values attributed to
identifiable intangibles. Such costs are being amortized on a straight-line
basis over the respective estimated useful lives, which range from five to 40
years. In evaluating the recoverability of intangible assets, management gives
consideration to a number of factors, including the operating performance of its
stations and dispositions of other radio properties in specific markets, among
other things.

(E) 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

F-23
34

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(F) BARTER TRANSACTIONS

The Company records barter transactions at the fair value of goods or
services received.

(G) INCOME TAXES

New Age and SBC have elected to be taxed as S corporations, with fiscal
years ending on September 30 and December 31, respectively, under the Internal
Revenue Code and the State of Florida Code. Accordingly, the Companies do not
pay Federal or state income taxes, as their stockholders will include their
pro-rata share of taxable income or loss in their individual income tax returns.
New Age has $278,885 on deposit with the Internal Revenue Service relating to
the difference in taxes that would be payable for its stockholders on a calendar
year basis versus a fiscal year basis. This amount is classified as other assets
in the accompanying combined balance sheet.

From inception to February 29, 1988, New Age was taxed under the provisions
of subchapter C of the Internal Revenue Code. During that period, the Company
incurred net operating losses of $360,260 for tax purposes, which are available
to be carried forward to offset taxable income in future years up to 2002,
should S corporation status be terminated before then.

(H) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the accompanying combined balance sheet
for cash and cash equivalents, receivables, accounts payable and accrued
expenses approximate fair values.

(I) CASH EQUIVALENTS

The Companies consider all highly liquid instruments purchased with a
maturity of three months or less to be cash equivalents.

(4) PROPERTY AND EQUIPMENT

Property and equipment consist of the following at September 30, 1996:

Transmitter equipment........................................... $ 1,059,548
Studio and technical equipment.................................. 792,826
Capitalized tower lease......................................... 643,686
Furniture and fixtures.......................................... 378,515
Leasehold improvements.......................................... 61,894
Vehicles........................................................ 46,346
Computer equipment.............................................. 28,448
Construction in progress........................................ 39,485
-----------
3,050,748
Less accumulated depreciation................................... (1,299,069)
-----------
$ 1,751,679
===========

F-24
35

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(5) INTANGIBLE ASSETS

Intangible assets consist of the following at September 30, 1996:

FCC licenses.................................................... $27,552,060
Loan acquisition costs.......................................... 496,040
Trademarks...................................................... 35,431
Tower lease costs............................................... 4,638
-----------
28,088,169
Less accumulated amortization................................... (2,705,959)
-----------
$25,382,210
==========

(6) LONG-TERM DEBT

Long-term debt consists of the following at September 30, 1996:

AT&T Commercial Finance Corporation note, payable in monthly
installments plus interest at the 30-day commercial paper rate
plus 3.75%(a)................................................. $22,365,921
Barnett Bank note, payable in monthly installments of
$375, including interest at 7.75%(b).......................... 3,284
Barnett Bank note, payable in monthly installments of
$367, including interest at 6.25%(b).......................... 6,132
-----------
22,375,337
Less current portion............................................ (1,912,594)
-----------
$20,462,743
==========

(a) A term note was secured on January 26, 1995 from AT&T Commercial
Finance Corporation. The original principal amount of approximately
$25,400,000 was used to finance the purchase of the operating assets of
WRMA-FM by SBC in January 1995 and to refinance existing debt of New
Age in the amount of $3,322,000.

The term note was amended on February 16, 1995 and August 1, 1996 to
remove or replace certain provisions of the original loan agreement.

The Companies may elect to defer principal payments in the event that
certain criteria are met, including adherence to certain financial
ratio covenants and the existence of no events of default. In July
1996, the Company elected to defer principal payments under this
provision, totalling $450,000.

Interest is due monthly in arrears on the balance of principal
outstanding at the beginning of each month, at a rate based on the
30-day commercial paper rate plus 3.75%. At September 30, 1996, this
rate was 9.15%.

Substantially all of the Companies' assets have been pledged as
security under this agreement. In addition, the stockholders of the
companies have personally guaranteed the obligation in an aggregate
amount of $3,000,000. The agreement contains covenants and
stipulations, including limits on capital expenditures, directors'
compensation, investment and distributions, and the maintenance of
various financial ratios, among other things.

F-25
36

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The loan agreement requires monthly principal payments according to the
following schedule:

March 1, 1995 through February 1, 1996................................ $ 80,000
March 1, 1996 through February 1, 1997................................ 150,000
March 1, 1997 through February 1, 1998................................ 165,000
March 1, 1998 through February 1, 1999................................ 180,000
March 1, 1999 through February 1, 2000................................ 200,000

The remaining principal balance is due on February 1, 2000. At
September 30, 1996, the carrying value of this indebtedness
approximates market value.

(b) The Companies also secured financing from Barnett Bank of South Florida
for station vehicles purchased in 1993 and 1994. These obligations are
secured by the vehicles that were financed and by the personal
guarantees of certain stockholders.

The scheduled maturities of long-term debt are as follows at September 30, 1996:

FISCAL YEAR
ENDING
SEPTEMBER 30,
--------------------------------------------------------------------

1997............................................................. $ 1,912,594
1998............................................................. 2,086,822
1999............................................................. 2,300,000
2000............................................................. 16,075,921
-----------
$ 22,375,337
===========

(7) RELATED PARTY TRANSACTIONS

The Companies have had transactions in the normal course of business with
entities whose owners are also stockholders of the Companies. The Companies have
sold commercial air time to entities owned by the Companies' stockholders at
varying rates, which were consistent with market rates. Revenue from the sale of
air time to entities owned by stockholders of the Companies during 1996 amounted
to $71,430. At September 30, 1996, receivables included $19,975 due from such
related parties.

The Companies had subordinated loans payable to stockholders in the
aggregate amount of $1,450,000 at September 30, 1995, which bore interest at 6%
per annum. The AT&T loan agreement was amended during 1996 to allow these loans
to be repaid in full during 1996. Interest expense related to these loans
payable included in the accompanying combined statement of income totalled
$30,750 for fiscal 1996.

(8) COMMITMENTS

(A) LEASES

The Company leases office space and facilities, and certain equipment under
operating leases that expire at various dates through 2000. Certain leases
provide for base rental payments plus escalation charges for real estate taxes
and operating expenses.

New Age is broadcasting from its antenna tower facility in Miami, Florida
under the authority of a special temporary authorization granted by the FCC and
has been granted a construction permit by the FCC to construct a new antenna by
January 3, 1997 related to its pending city of license change. This matter is a
direct result of the destruction of New Age's permanent tower in Homestead,
Florida by Hurricane Andrew in

F-26
37

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

1992. Management has requested an extension of this deadline, and believes that
its request will be granted by the FCC with no interuption of operations.

The Company leases transmission tower space under a capital lease agreement
that expires in February 2038. The amount capitalized under this lease agreement
and included in property and equipment at September 30, 1996 is $643,686, net of
accumulated depreciation of $24,949.

At September 30, 1996, future minimum lease payments under such leases are
as follows:

CAPITAL OPERATING
FISCAL YEAR LEASE LEASES
---------------------------------------------------------- ----------- ---------

1997...................................................... $ 44,576 $ 229,968
1998...................................................... 44,576 224,004
1999...................................................... 44,576 185,504
2000...................................................... 44,576 92,685
2001...................................................... 44,576 19,992
Thereafter................................................ 1,619,296 --
----------- -------
Total minimum lease payments......................... 1,842,176 $ 752,153
=======
Less interest at 6%.................................. (1,203,219)
-----------
Present value of minimum lease payments.............. 638,957
Less current portion................................. 3,621
-----------
$ 635,336
===========

Total rent expense for the fiscal year ended September 30, 1996 amounted to
$578,683, which includes a contingent liability arising from litigation (see
note 9).

(B) EMPLOYMENT CONTRACTS

At September 30, 1996, the Company had employment contracts for certain
on-air talent, general managers and other employees expiring through February
1999. Future payments under such contracts are as follows at September 30, 1996:

FISCAL YEAR
--------------------------------------------------------------------------

1997...................................................................... $810,534
1998...................................................................... 169,058
1999...................................................................... 5,000
--------
$984,592
========

Certain contracts contain provisions for severance and provisions whereby
employees terminated without cause are entitled to the remaining payments due
under the contract. The Companies' minimum liability under such contracts was
$462,273 at September 30, 1996.

In connection with the litigation discussed in note 9, the Companies have
been required to maintain a standby letter of credit in the amount of $325,000.
It is anticipated that this amount will approximate the monetary value of the
final settlement of the litigation.

F-27
38

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(9) LITIGATION

SBC is involved in litigation relating to an alleged breach of a studio
lease plus interest and attorneys' fees and costs. An adverse judgment delivered
by the Bankruptcy Court is currently in appeal. While management is vigorously
contesting the findings of the Bankruptcy Court, the likelihood of success of
the pending appeal is considered uncertain, and therefore SBC has accrued
$350,000, which is included in accrued expenses in the accompanying combined
balance sheet, in connection with this matter.

F-28
39

NEW AGE BROADCASTING INC. AND THE SEVENTIES BROADCASTING CORPORATION

CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)

DECEMBER
31,
1996
-----------

ASSETS
Current assets:
Cash and cash equivalents..................................................... $ 416,111
Receivables................................................................... 3,147,708
Less allowance for doubtful accounts........................................ (47,669)
-----------
Net receivables.......................................................... 3,100,039
Other current assets.......................................................... 68,326
-----------
Total current assets................................................ 3,584,476
-----------
Property and equipment, net................................................... 1,679,188
Franchise costs, net.......................................................... 25,181,010
Other assets.................................................................. 306,722
-----------
$30,751,396
==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt............................................. $ 1,961,355
Accounts payable and accrued expenses......................................... 504,092
Unearned revenue.............................................................. 64,045
-----------
Total current liabilities................................................ 2,529,492
Long-term debt, less current portion.......................................... 21,050,128

Stockholders' equity:
New Age Broadcasting common stock,
$10 par value. Authorized 1,000 shares;
issued and outstanding 180 shares........................................ 1,800
The Seventies Broadcasting Corporation
common stock, $.01 par value. Authorized
7,500 shares; issued and outstanding 1,000 shares........................ 10
Additional paid in capital.................................................. 1,078,190
Retained earnings........................................................... 6,091,776
-----------
Total stockholders' equity............................................... 7,171,776
-----------
$30,751,396
==========

See accompanying notes to unaudited condensed combined financial statements.

F-29
40

NEW AGE BROADCASTING INC. AND THE SEVENTIES BROADCASTING CORPORATION

CONDENSED COMBINED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1996
(UNAUDITED)

1995 1996
--------- ---------

Gross broadcasting revenues............................................. 4,350,351 4,375,411
Less: agency commissions.............................................. 552,212 585,844
--------- ---------
Net broadcasting revenues.......................................... 3,798,139 3,789,567
--------- ---------
Operating expenses
Engineering........................................................... 50,975 59,403
Program............................................................... 309,873 361,115
Selling............................................................... 560,002 417,082
General and Administrative............................................ 248,639 231,656
Corporate expenses.................................................... 62,500 68,750
Depreciation & Amortization........................................... 246,063 246,063
--------- ---------
1,478,052 1,384,069
--------- ---------
Operating income................................................... 2,320,087 2,405,498
--------- ---------
Other expense:
Interest expense, net................................................. 615,456 557,626
--------- ---------
Net income.............................................................. 1,704,631 1,847,872
========= =========

See accompanying notes to unaudited condensed combined financial statement

F-30
41

NEW AGE BROADCASTING INC. AND THE SEVENTIES BROADCASTING CORPORATION

CONDENSED COMBINED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1996
(UNAUDITED)

1995 1996
---------- -----------

Cash flows from operating activities:
Net income......................................................... $1,704,631 $ 1,847,872
---------- -----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................... 246,063 246,063
Amortization of deferred financing costs......................... 33,283 33,283
Changes in operating assets and liabilities:
Increase in receivables....................................... (410,526) (631,107)
Decrease in prepaid expenses and other current assets......... 24,196 45,034
Decrease in accounts payable and accrued expenses............. (98,713) (102,978)
(Decrease) increase in unearned revenue....................... (9,737) 1,167
---------- -----------
Total adjustments........................................ (215,434) (408,538)
---------- -----------
Net cash provided by operating activities..................... 1,489,197 1,439,334
---------- -----------
Cash flows from investing activities:
Additions to property and equipment................................ (37,840) (5,655)
---------- -----------
Net cash used in investing activities......................... (37,840) (5,655)
---------- -----------
Cash flows from financing activities:
Distributions to stockholders...................................... 0 (1,550,000)
Repayments of long-term debt....................................... (245,918) (2,811)
---------- -----------
Net cash used in financing activities......................... (245,918) (1,552,811)
---------- -----------
Net increase (decrease) in cash and cash equivalents............... 1,205,439 (119,132)
Cash and cash equivalents at beginning of period................... 1,413,127 535,243
---------- -----------
Cash and cash equivalents at end of period......................... $2,618,566 $ 416,111
========== ===========
Cash paid for:
Interest......................................................... $ 598,949 $ 476,093
========== ===========

See accompanying notes to unaudited condensed combined financial statements.

F-31
42

NEW AGE BROADCASTING INC. AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
(UNAUDITED)

1) BASIS OF PRESENTATION

The condensed combined financial statements include the accounts of New Age
Broadcasting Inc. and the Seventies Broadcasting Corporation (the "Companies").
All significant intercompany balances and transactions have been eliminated in
combination. The accompanying unaudited condensed combined financial statements
for the three month periods ended December 31, 1995 and 1996 do not contain all
disclosures required by generally accepted accounting principles. These
condensed combined financial statements should be read in conjunction with the
combined financial statements of the Companies as of and for the fiscal year
ended September 30, 1996.

In the opinion of management of the Companies, the accompanying unaudited
condensed combined financial statements contain all adjustments, which are all
of a normal, recurring nature, necessary for a fair presentation of the results
of the interim periods. The results of operations for the three month period
ended December 31, 1996 are not necessarily indicative of the results for a full
year.

2) DISPOSITION OF ASSETS

In September 1996, the Companies entered into an agreement to sell
substantially all of the Companies' collective assets used or useful in the
operation of its radio stations for approximately $111 million, subject to
adjustments based on broadcast cash flow, as defined in the agreement. Under the
terms of the agreement, the buyer has delivered a $10 million letter of credit
to the Companies. The Companies may draw upon the letter of credit if an event
of default occurs, as defined in the agreement. If an event of default occurs,
liquidated damages are limited to $30 million, as defined in the agreement.

F-32
43
PRO FORMA COMBINED FINANCIAL STATEMENTS

The unaudited pro forma combined statement of operations data for the
fiscal year ended September 29, 1996 and the three months ended December 29,
1996 are presented to give effect to the Transactions and the acquisition by the
Company of the assets of radio station WPAT-FM New York, which was consummated
in March 1996, as if such events had occurred at the beginning of each period.
The results of WYSY-FM have not been included in the pro forma statement of
operations because the Company believes that such acquisition does not meet the
significance test set forth in Section 3-05 of Regulation S-X for presentation
of pro forma information and would not be meaningful to an understanding of the
Company's pro forma results of operations because WYSY-FM is being reformatted
from an English-language to a Spanish-language station. The pro forma balance
sheet data at December 29, 1996 is presented as if, at such date, the
Transactions, including the acquisition of WYSY-FM, had occurred. As a result,
the pro forma statement of operations data excludes the actual and expected
operating results of WYSY-FM, however, the pro forma balance sheet data, and pro
forma interest expense, reflects the funding of the purchase of WYSY-FM.

The purchase prices of WYSY-FM, WXDJ-FM and WRMA-FM were determined
based upon arms-length negotiations between the Company and the sellers. The
purchase price for the Acquisitions have been allocated primarily to a franchise
costs and other intangibles. This preliminary allocation of purchase price may
change upon final appraisal of the fair market value of the net assets acquired.

In the opinion of management, all adjustments necessary to present
fairly this pro forma information have been made.

These pro forma combined financial statements should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto as of and for the fiscal year ended September 29, 1996, included in the
Company's Annual Report on Form 10-K for the fiscal year ended September 29,
1996, and the three months ended December 29, 1996, included in the Company's
Quarterly Report on Form 10-Q for the quarter ended December 29, 1996, and with
the combined financial statements and the notes thereto of New Age Broadcasting,
Inc. and The Seventies Broadcasting Corporation for the year ended September 30,
1996 and the three months ended December 31, 1996 included elsewhere in this
Current Report on Form 8-K. THE PRO FORMA INFORMATION IS NOT NECESSARILY
INDICATIVE OF THE RESULTS THAT WOULD HAVE BEEN REPORTED HAD SUCH EVENTS ACTUALLY
OCCURRED ON THE DATES SPECIFIED, NOR IS IT INDICATIVE OF THE COMPANY'S FUTURE
RESULTS.

F-33
44

PRO FORMA COMBINED BALANCE SHEET
AT DECEMBER 29, 1996
(IN THOUSANDS)
(UNAUDITED)

HISTORICAL
---------------------
THE WXDJ/WRMA
COMPANY (A) ADJUSTMENTS PRO FORMA
-------- --------- ----------- ---------

ASSETS
Current assets.................................... $ 16,564 $ 3,584 $ (3,584)(b) $ 17,582
1,018(c)
Property and equipment, net....................... 19,319 1,679 (1,679)(b) 19,319
Franchise costs and other intangible assets,
net............................................. 133,033 25,181 33,500(d) 279,033
(25,181)(b)
112,500(e)
Other assets...................................... 6,636 307 3,675(f) 8,937
(307)(b)
(1,374)(g)
-------- ------- -------- --------
Total assets.................................. $175,552 $30,751 $ 118,568 $324,871
======== ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities............................... $ 5,906 $ 2,529 $ (2,529)(b) $ 5,906
Long-term debt:
Senior Secured Notes, net of unamortized
discount...................................... 36,773 (36,773)(c) --
Old Notes, net of unamortized discount.......... 100,799 100,799
Notes offered hereby............................ 75,000(f) 75,000
Other long-term debt............................ 1,031 21,050 (21,050)(b) 4,031
3,000(d)

Series A Preferred Stock.......................... 37,509 (37,509)(c) --
Senior Preferred Stock offered hereby............. 158,375(f) 148,050
(10,325)(f)
Stockholders' equity (deficiency)................. (6,466) 7,172 (7,172)(b) (8,915)
(4,000)(c)
(13,700)(c)
(1,374)(g)
16,625(f)
-------- ------- -------- --------
Total liabilities and stockholders'
deficiency.................................. $175,552 $30,751 $ 118,568 $324,871
======== ======= ======== ========
(see notes on following pages)

F-34
45

NOTES TO PRO FORMA COMBINED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)

(a) To reflect historical balance sheet data for WXDJ-FM/WRMA-FM as of December
31, 1996 as reflected in the unaudited financial statements of New Age
Broadcasting Inc. and The Seventies Broadcasting Corporation which were
acquired as part of the Transactions.

(b) To eliminate assets and liabilities and stockholders' equity of
WXDJ-FM/WRMA-FM not purchased or assumed in the WXDJ-FM/WRMA-FM
acquisitions.

Redemption of Senior Secured Notes at par:
Carrying value at December 29, 1996...................................... $36,773
Redemption price over carrying value which would be charged to earnings
as
an extraordinary item................................................. 1,612
-------
$38,385
=======

Redemption of Series A Preferred Stock at par:
Carrying value at December 29, 1996...................................... $37,509
Redemption price over carrying value charged to stockholders' equity
(deficiency).......................................................... 3,765
-------
$41,274
=======

Redemption of Primary Warrants, charged to stockholders' equity
(deficiency)............................................................. $ 8,323
=======
Distribution to common shareholders and holders of Old Warrants............ $ 4,000
=======

Excess proceeds as of December 29, 1996. The amounts required to redeem the
Senior Secured Notes and the Series A Preferred Stock will increase after
December 29, 1996 as a result of additional interest and dividends
accruing which would be payable in additional Senior Secured Notes and
Series A Preferred Stock, respectively. Consequently a significant
portion of these excess proceeds will be needed to redeem the Senior
Secured Notes and Series A Preferred Stock............................... $ 3,018
=======

(d) To reflect the acquisition of the assets of WYSY-FM, consisting primarily of
franchise costs and other intangibles. The preliminary allocation of the
purchase price may change upon final appraisal of the fair market value of
the net assets acquired.

Cash consideration to the seller of WYSY-FM................................ $30,000
Note payable to seller of WYSY-FM.......................................... 3,000
Estimated fees and expenses attributable to the acquisition of WYSY-FM..... 500
-------
Purchase price........................................................ $33,500
=======

(e) To reflect the allocation of purchase price of WXDJ-FM/WRMA-FM to the assets
acquired, primarily franchise costs and other intangibles. The preliminary
allocation of the purchase price may change upon final appraisal of the fair
market value of the net assets acquired.

Cash consideration to the Miami Sellers................................... $111,000
Estimated fees and expenses attributable to the acquisition of
WXDJ-FM/WRMA-FM......................................................... 1,500
--------
Purchase price....................................................... $112,500
========

F-35
46

(f) To reflect the Offerings and related estimated transaction fees as set forth
below:

Notes..................................................................... $ 75,000
Units consisting of
Series A Preferred Stock, at initial estimated value................. 158,375
Warrants, at initial estimated value................................. 16,625
--------
Fees associated with the Notes Offering................................... (3,675)
Fees associated with the Units Offering................................... (10,325)
--------
$236,000
========

(g) To reflect the write-off of deferred financing costs relating to the Senior
Secured Notes.

F-36
47

PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)

FISCAL YEAR ENDED SEPTEMBER 29, 1996
--------------------------------------------------------------
HISTORICAL
----------------------------------
THE WPAT WXDJ/WRMA PRO FORMA
COMPANY (A) (B) ADJUSTMENTS (N)
----------- -------- --------- ----------- ---------

Gross broadcasting revenues....................................... $55,338 $ 4,315 $16,071 $ (1,421)(c) $ 74,303
Less: agency commissions.......................................... (6,703) (316) (2,111) (9,130)
------- ------- ------- -------
Net revenues.................................................... 48,635 3,999 13,960 65,173
Station operating expenses........................................ 27,876 2,635 5,235 (579)(d) 35,167
Corporate expenses................................................ 3,748 114 275 61(e) 4,198
Depreciation and amortization..................................... 4,556 530 1,076 2,286(f) 8,448
------- ------- ------- -------
Operating income (loss)......................................... 12,455 720 7,374 17,360
Interest expense, net............................................. 16,533 5,311 2,261 (1,358)(g) 23,082
335(h)
Other expense (income) net........................................ 1,574 (43,641) -- 43,641(i) 1,574
------- ------- ------- -------
Income (loss) before income taxes............................... (5,652) 39,050 5,113 (7,296)
Income tax expense (benefit)...................................... (1,166) 12,704 -- (12,704)(j) (1,166)
------- ------- ------- -------
Income (loss) before extraordinary items........................ (4,486) $ 26,346 $ 5,113 (6,130)
======= =======
Dividends on preferred stock.................................... (2,452) (23,374)(k) (25,826)
------- -------
Income (loss) applicable to common stock before extraordinary
items........................................................... $(6,938) $(31,956)
======= =======
Ratio of earnings to fixed charges(m)............................. -- --
EBITDA reconciliation:
Operating income (loss)......................................... $12,455 $ 17,360
Depreciation and amortization................................... 4,556 8,448
------- -------
EBITDA.......................................................... $17,011 $ 25,808
======= =======

THREE MONTHS ENDED DECEMBER 29, 1996
--------------------------------------------------
HISTORICAL
-----------------------
THE WXDJ/WRMA
COMPANY (B) ADJUSTMENTS PRO FORMA
----------- --------- ----------- ----------

Gross broadcasting revenues.................................................. $13,995 $ 4,375 $ 18,370
Less: agency commissions..................................................... (1,629) (586) (2,215)
------- ------- -------
Net revenues............................................................... 12,366 3,789 16,155
Station operating expenses................................................... 7,083 1,070 8,153
Corporate expenses........................................................... 994 68 $ (68)(e) 994
Depreciation and amortization................................................ 1,395 246 457(f) 2,098
------- ------- -------
Operating income (loss).................................................... 2,894 2,405 4,910
Interest expense, net........................................................ 5,007 557 179(g) 5,743
Other expense (income), net.................................................. 27 -- 27
------- ------- -------
Income (loss) before income taxes.......................................... (2,140) 1,848 -- (860)
Income tax expense (benefit)................................................. (814) -- 487(l) (327)
------- ------- -------
Income (loss) before extraordinary items................................... (1,326) $ 1,848 (533)
=======
Dividends on preferred stock................................................. (1,325) (4,910)(k) (6,235)
------- -------
Income (loss) applicable to common stock before extraordinary items.......... $(2,651) $ (6,768)
======= =======
Ratio of earnings to fixed charges(m)........................................ -- --
EBITDA reconciliation:
Operating income (loss).................................................... $ 2,894 $ 4,910
Depreciation and amortization.............................................. 1,395 2,098
------- -------
EBITDA..................................................................... $ 4,289 $ 7,008
======= =======

(see notes on following pages)

F-37
48

NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)

(a) To reflect the historical operating results for WPAT-FM and WPAT-AM from
October 1, 1995 through March 31, 1996 based upon unaudited financial
statements. The Company began operating WPAT-FM under a local marketing
agreement on January 20, 1996. The fiscal year end for WPAT-FM and WPAT-AM
was December 31 under the ownership of Park Radio of Greater New York, Inc.

(b) To reflect the historical operating results for WXDJ-FM and WRMA-FM for the
period indicated based upon unaudited financial statements. The fiscal year
end for WXDJ-FM and WRMA-FM was September 30, and throughout the periods
presented, WXDJ-FM and WRMA-FM were under the ownership of the sellers, New
Age Broadcasting, Inc. and The Seventies Broadcasting Corporation,
respectively.

(c) To adjust gross broadcasting revenues for the elimination of the revenue
derived from WPAT-AM programming which was not acquired by the Company.

(d) To eliminate expenses of WXDJ-FM and WRMA-FM relating to an unsuccessful
prior sale.

(e) To reflect adjustment to corporate expense for the elimination of corporate
expenses which would not be incurred following the WPAT-FM and
WXDJ-FM/WRMA-FM acquisitions and for additional salaries to be paid to Mr.
Russell Oasis, a WXDJ-FM/WRMA-FM officer, based on his employment agreement
with the Company.

YEAR ENDED THREE MONTHS
SEPTEMBER 29, ENDED
1996 DECEMBER 29, 1996
----------------- -----------------

Elimination of corporate expenses of WPAT-FM prior to
acquisition........................................ $(114) $ --
Elimination of corporate expenses of WXDJ-FM/WRMA-FM
prior to acquisition............................... (275) (68)
Additional salary to Mr. Russell Oasis............... 450 --
------- -------
Pro forma adjustment............................... $ 61 $ (68)
============= =============

(f) To reflect additional pro forma depreciation and amortization related to the
acquisitions of WPAT-FM based upon the final purchase price and to the
acquisitions of WXDJ-FM, WRMA-FM and WYSY-FM based upon a preliminary
allocation of the total consideration and related amortization reflected as
follows:

WPAT WXDJ/WRMA TOTAL
------- --------- --------

Franchise costs and other intangible assets, net..... $86,359 $112,500 $198,859
Year ended September 29, 1996
Pro forma amortization............................... $ 1,079 $ 2,813 $ 3,892
Less: depreciation and amortization - historical..... (530) (1,076) (1,606)
------- -------- --------
Pro forma adjustment............................... $ 549 $ 1,737 $ 2,286
======= ======== ========
Three months ended December 29, 1996
Pro forma amortization............................... $ 703 $ 703
Less: depreciation and amortization - historical..... (246) (246)
-------- --------
Pro forma adjustment............................... $ 457 $ 457
======== ========

F-38
49

(g) To reflect adjustments to interest expense as a result of the Transactions:

THREE MONTHS
YEAR ENDED ENDED
SEPTEMBER 29, 1996 DECEMBER 29, 1996
------------------ -----------------

Pro forma interest on the Notes at 11% per annum..... $ 8,250 $ 2,063
Pro forma interest on the seller note to Infinity
(assumed interest rate of 10% per annum)........... 300 75
Pro forma amortization of debt issuance costs of the
Notes.............................................. 525 131
Interest expense, including amortization of debt
issuance costs, on the Senior Secured Notes being
retired in the Transactions........................ (2,861) (1,533)
Interest expense -- WPAT-FM-historical............... (5,311) --
Interest expense -- WXDJ-FM/WRMA-FM-historical....... (2,261) (557)
------- -------
Pro forma adjustment................................. $ (1,358) $ 179
======= =======

(h) To eliminate interest income on the approximately $17.2 million down payment
of cash used to finance the acquisition of WPAT-FM based upon the average
interest rate of 3.9% earned by the Company during the six months ended
March 31, 1996.

(i) To adjust for other income of WPAT-FM resulting from the sale of its assets
prior to its acquisition by the Company which would not have been realized
by the Company.

(j) To eliminate income tax expense of Park Radio of Greater New York, Inc.
prior to the acquisition of radio station WPAT-FM by the Company which would
not have been incurred by the Company.

(k) To reflect adjustments to preferred stock dividends as a result of the
Transactions:

THREE MONTHS
YEAR ENDED ENDED
SEPTEMBER 29, 1996 DECEMBER 29, 1996
------------------ -----------------

Elimination of dividends on Series A Preferred
Stock.............................................. $ 2,452 $ 1,325
Assumed dividends on Senior Preferred Stock at
14 1/4% per annum.................................. (25,826) (6,235)
------- -------
Pro forma adjustment................................. $(23,374) $ (4,910)
======= =======

(l) To reflect income tax effect of the above items.

(m) For purposes of this computation, earnings are defined as earnings or loss
before extraordinary items and fixed charges. Fixed charges are the sum of
(i) interest costs, (ii) amortization of deferred financing costs, (iii) the
portion of operating lease rental expense that is representative of the
interest factor (deemed to be one third) and (iv) dividends on preferred
stock. Historical and pro forma earnings were inadequate to cover fixed
charges by $6,938 and $31,956, respectively, for the fiscal year ended
September 29, 1996 and $2,651 and $6,768 for the three months ended December
29, 1996.

F-39
50

INDEX TO EXHIBITS Sequential
Page No.
----------
1.1 Financial Advisory Agreement dated March 4, 1997
between the Company and CIBC Wood Gundy Securities
Corp., as financial advisor.

3.1 Certificate of Elimination of Exchangeable Preferred
Stock, Series A, filed March 27, 1997.

3.2 Certificate of Designation of Senior Exchangeable
Preferred Stock, Series A, filed March 27, 1997.

4.1 Second Supplemental Indenture dated as of March 21,
1997 to Indenture dated as of June 29, 1994 among the
Company, the Guarantors named therein and IBJ
Schroder Bank & Trust Company, as Trustee.

4.2 Indenture dated as of March 15, 1997, among the
Company, the Guarantors named therein, IBJ Schroder
Bank & Trust Company, as Trustee, and CIBC Wood Gundy
Securities Corp., as Initial Purchaser.

4.3 Exchange Debenture Indenture dated as of March 15,
1997, among the Company, the Guarantors named
therein, U.S. Trust Company of New York, as Trustee,
and CIBC Wood Gundy Securities Corp., as Initial
Purchaser.

10.1 Securities Purchase Agreement dated as of March 24,
1997 by and among the Company, the Guarantors named
therein and CIBC Wood Gundy Securities Corp., as
Initial Purchaser.

10.2 Unit Agreement dated as of March 15, 1997 among the
Company, the Guarantors and IBJ Schroder Bank & Trust
Company, as Trustee.

10.3 Warrant Agreement dated as of March 15, 1997 by and
among the Company and IBJ Schroder Bank & Trust
Company, as Warrant Agent.

10.4 Common Stock Registration Rights and Stockholders
Agreement dated as of March 15, 1997 among the
Company, certain Management Stockholders named therein
and CIBC Wood Gundy Securities Corp.

10.5 Notes Registration Rights Agreement dated as of March
15, 1997 among the Company, the Guarantors named
therein and CIBC Wood Gundy Securities Corp.

51
Sequential
Page No.
----------
10.6 Preferred Stock Registration Rights Agreement dated
as of March 15, 1997 among the Company, the
Guarantors named therein and CIBC Wood Gundy
Securities Corp.

10.7 National Radio Sales Representation Agreement dated
as of February 3, 1997 between Caballero Spanish
Media, L.L.C. and the Company.

10.8 Employment Agreement dated as of March 4, 1997
between Raul Alarcon, Jr. and the Company.

10.10 Asset Purchase Agreement dated September 16, 1996
among Raul Alarcon, Jr., New Age Broadcasting, Inc.,
The Seventies Broadcasting Corporation and the
Company, and with respect only to Section 9.3
thereof, Alan Potamkin, Russell Oasis and Robert
Potamkin. Incorporated herein by reference to Exhibit
10.43 of the Company's Annual Report on Form 10-K for
the Fiscal Year Ended September 29, 1996.

10.11 First Amendment to Asset Purchase Agreement
dated December 26, 1996 among Raul Alarcon, Jr., New
Age Broadcasting, Inc., The Seventies Broadcasting
Corporation and the Company, and with respect only to
Section 9.3 thereof, Alan Potamkin, Russell Oasis and
Robert Potamkin.

10.12 Second Amendment to Asset Purchase Agreement
dated February 28, 1997 among Raul Alarcon, Jr., New
Age Broadcasting, Inc., The Seventies Broadcasting
Corporation and the Company, and with respect only to
Section 9.3 thereof, Alan Potamkin, Russell Oasis and
Robert Potamkin.

10.13 Asset Purchase Agreement dated August 22, 1996
between Infinity Holdings Corp. of Orlando and the
Company. Incorporated herein by reference to Exhibit
10.44 of the Company's Annual Report on Form 10-K
for the Year Ended September 29, 1996.

10.14 Letter Agreement dated January 13, 1997 between the
Company and Caballero Spanish Media, LLC.