##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




---

Form 10-K

|  |  |                                                                                                 
|- |  | ------------------------------------------------------------------------------------------------
|þ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
| 
|  |  | For the fiscal year ended December 31,
    2002 or                                              
| 
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|  |  | For the transition period
    from           to                                                 

Commission file number 0-15392



---

REGENT COMMUNICATIONS, INC.

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 31-1492857                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

100 East RiverCenter Boulevard

Suite 900


Covington, Kentucky 41011


(Address of principal executive offices) (Zip
Code)


(859) 292-0030

(Registrants telephone number, including
area code)


Securities registered pursuant to
Section 12(b) of the Act:

None


Securities registered pursuant to
Section 12(g) of the Act:

Common Stock, $.01 par value per
share

(Title of class)


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

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this
Form 10-K. o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Act).     Yes þ          No o

As of June 28, 2002, the last business day
of the registrants most recently completed second fiscal
quarter, the aggregate market value of common stock held by
non-affiliates of the registrant was $261,468,877 based upon the
closing sale price of $7.05 on the Nasdaq Stock Markets
National Market for that date. (For purposes hereof, directors,
executive officers and 10% or greater stockholders have been
deemed affiliates.)

The number of common shares of registrant
outstanding as of March 14, 2003 was 46,496,168.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of registrants definitive Proxy
Statement to be filed during April 2003 in connection with the
2003 Annual Meeting of Stockholders presently scheduled to be
held on May 14, 2003 are incorporated by reference into
Part III of this Form 10-K.



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TABLE OF CONTENTS



|                                                                                                                                      |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                                                                                               
|                                                                                                                                      | Item 1. Business                                                                             
|Acquisitions                                                                                                                         
|Dispositions                                                                                                                         
|                                                                                                                                      | Item 2. Properties.                                                                          
|                                                                                                                                      | Item 3. Legal Proceedings.                                                                   
|                                                                                                                                      | Item 4. Submission of Matters to a Vote of Security Holders.                                 
|PART II                                                                                                                              
|                                                                                                                                      | Item 5. Market for Registrants Common Equity and Related Stockholder Matters.               
|                                                                                                                                      | Item 6. Selected Financial Data.                                                             
|                                                                                                                                      | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                                                                                                      | Item 7A. Quantitative and Qualitative Disclosures about Market Risk.                         
|                                                                                                                                      | Item 8. Financial Statements and Supplementary Data.                                         
|Regent Communications, Inc. Index to Financial Statements                                                                            
|REPORT OF INDEPENDENT ACCOUNTANTS                                                                                                    
|REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS                                                                    
|REGENT COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)                                         
|REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)                                                     
|REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT) (In thousands, except share amounts)
|Condensed Consolidating Statements of Operations (in thousands) for the year ended December 31, 2002                                 
|Condensed Consolidating Statements of Operations (in thousands) for the year ended December 31, 2001                                 
|Condensed Consolidating Statements of Operations (in thousands) for the year ended December 31, 2000                                 
|Condensed Consolidating Balance Sheets (in thousands) December 31, 2002                                                              
|Condensed Consolidating Balance Sheets (in thousands) December 31, 2001                                                              
|Condensed Consolidating Statements of Cash Flows (in thousands) For the year ended December 31, 2002                                 
|Condensed Consolidating Statements of Cash Flows (in thousands) For the year ended December 31, 2001                                 
|Condensed Consolidating Statements of Cash Flows (in thousands) For the year ended December 31, 2000                                 
|SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS                                                                                     
|                                                                                                                                      | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|PART III                                                                                                                             
|                                                                                                                                      | Item 10. Directors and Executive Officers of the Registrant.                                 
|                                                                                                                                      | Item 11. Executive Compensation.                                                             
|                                                                                                                                      | Item 12. Security Ownership of Certain Beneficial Owners and Management.                     
|                                                                                                                                      | Item 13. Certain Relationships and Related Transactions.                                     
|                                                                                                                                      | Item 14. Controls and Procedures.                                                            
|PART IV                                                                                                                              
|                                                                                                                                      | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.                   
|SIGNATURES                                                                                                                           
|EXHIBIT INDEX                                                                                                                        
|Exhibit 4E                                                                                                                           
|Exhibit 10(E)                                                                                                                        
|Exhibit 21                                                                                                                           
|Exhibit 23                                                                                                                           
|Exhibit 99.1                                                                                                                         
|Exhibit 99.2                                                                                                                         



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##### Table of Contents



REGENT COMMUNICATIONS, INC.

INDEX TO ANNUAL REPORT

ON FORM 10-K


|         |  |                                                                                           |  |      |    | 
|-------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                           |  | Page
|         |  |                                                                                           |  |     
|Part I  
|Item 1   |  | Business                                                                                  |  |      | 2  | 
|Item 2   |  | Properties                                                                                |  |      | 19 | 
|Item 3   |  | Legal Proceedings                                                                         |  |      | 19 | 
|Item 4   |  | Submission of Matters to a Vote of Security
    Holders                                   |  |      | 20 | 
|Part II 
|Item 5   |  | Market for Registrants Common Equity and
    Related Stockholder Matters                 |  |      | 20 | 
|Item 6   |  | Selected Financial Data                                                                   |  |      | 21 | 
|Item 7   |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |      | 22 | 
|Item 7A  |  | Quantitative and Qualitative Disclosures about
    Market Risk                            |  |      | 34 | 
|Item 8   |  | Financial Statements and Supplementary Data                                               |  |      | 35 | 
|Item 9   |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure  |  |      | 71 | 
|Part III
|Item 10  |  | Directors and Executive Officers of the Registrant                                        |  |      | 71 | 
|Item 11  |  | Executive Compensation                                                                    |  |      | 71 | 
|Item 12  |  | Security Ownership of Certain Beneficial Owners
    and Management                        |  |      | 71 | 
|Item 13  |  | Certain Relationships and Related Transactions                                            |  |      | 71 | 
|Item 14  |  | Controls and Procedures                                                                   |  |      | 71 | 
|Part IV 
|Item 15  |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |  |      | 72 | 



---

Regent Communications, Inc. is a holding company.
We own and operate our radio stations and hold our radio
broadcast licenses in separate subsidiaries. In this report,
when we use the term Regent and the pronouns
we, our and us, we mean
Regent Communications, Inc. and all its subsidiaries, unless the
context otherwise requires.




1



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##### Table of Contents






PART I






|        |         
|------- | --------
|Item 1. | Business

General Development of Business

We are a radio broadcasting company focused on
acquiring, developing and operating radio stations in mid-sized
and small markets. We currently own 53 FM and 20 AM
radio stations in 17 markets in California, Colorado,
Illinois, Indiana, Kentucky, Louisiana, Michigan, Minnesota,
New York, Pennsylvania and Texas. We have entered into a
written agreement to exchange our four radio stations serving
the Duluth, Minnesota market for five radio stations serving the
Evansville, Indiana market. In conjunction with the above
exchange, we are currently providing programming and certain
other services to the Evansville stations, and the purchaser of
the Duluth stations are providing the same such services to
those stations. We have also entered into written agreements to
acquire two additional stations in an existing market and
currently provide programming and certain other services to one
of the stations pending completion of its purchase. After the
completion of our pending transactions, we will own 56 FM and 20
AM radio stations in 16 markets. Our assembled clusters of radio
stations rank first or second in terms of revenue share in all
of our markets that are ranked by BIA Publications, Inc. in
their Investing in Radio 2002 Market Report, except
Albany, New York, where our cluster ranks third.

Our primary strategy is to secure and maintain a
leadership position in the markets we serve and to expand into
additional mid-sized and small markets where we can achieve a
leadership position. After we enter a market, we seek to acquire
stations that, when integrated with our existing operations,
will allow us to reach a wider range of demographic groups that
appeal to advertisers, increase revenue and achieve substantial
cost savings. Additionally, we believe that our advertising
pricing on the basis of cost per thousand impressions, combined
with the added reach of our radio station clusters, allows us to
compete successfully for advertising revenue against non-radio
competitors such as print media, television and outdoor
advertising.

Relative to the largest radio markets in the
United States, we believe that the mid-sized and small markets
represent attractive operating environments because they are
generally characterized by the following:



| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a greater use of radio advertising compared to
    the national average;                                                                                                                                                                                    
|
| |  | substantial growth in advertising revenues as
    national and regional retailers expand into mid-sized and small
    markets;                                                                                                                              
|
| |  | a weaker competitive environment characterized by
    small independent operators, many of whom lack the capital to
    produce locally-originated programming or to employ more
    sophisticated research, marketing, management and sales
    techniques;
|
| |  | less direct format competition due to a smaller
    number of stations in any given market; and                                                                                                                                                             
|
| |  | lower overall susceptibility to fluctuations in
    general economic conditions due to a lower percentage of
    national versus local advertising revenues.                                                                                                

We believe that these operating characteristics,
coupled with the opportunity to establish or expand radio
station clusters within a specific market, create the potential
for revenue growth and cost efficiencies.

Our portfolio of radio stations is diversified in
terms of geographic location, target demographics and format. We
believe that this diversity helps insulate us from downturns in
specific markets and changes in format preferences.

Completed Acquisitions and
Dispositions

We completed the following acquisitions and
dispositions of radio stations during 2002. The purchase prices
set forth below were paid in cash, except where otherwise
indicated, and include, where applicable, amounts paid under
non-competition agreements, but do not include
transaction-related costs.

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Acquisitions

|                                                                                   |  |        |                  |          |  |              |   |               |  |           |         |     |  |   |     |     |  |  |          | 
|---------------------------------------------------------------------------------- |  | ------ | ---------------- | -------- |  | ------------ | - | ------------- |  | --------- | ------- | --- |  | - | --- | --- |  |  | -------- | 
|                                                                                   |  |        |                  |          |  |              |   | Purchase      |  |          
|                                                                                   |  |        |                  | No. of   |  |              |   | Price         |  | Date     
|Seller                                                                             |  | Market |                  | Stations |  | Call Letters |   | (in millions) |  | Completed
|                                                                                   |  |        |                  |          |  |              |   |               |  |          
|The Frankenmuth Radio Co., Inc. and MTE
    Corporation                            |  |        | Flint, MI        |          |  |              | 1 |               |  |           | WRCL-FM |     |  | $ | 2.0 | (1) |  |  | 6/01/02  | 
|Haith Broadcasting Corporation and Connoisseur
    Communications of Flint, L.L.P. |  |        | Grand Rapids, MI |          |  |              | 1 |               |  |           | WFGR-FM |     |  | $ | 4.9 | (2) |  |  | 6/01/02  | 
|Covenant Communications Corporation                                                |  |        | Flint, MI        |          |  |              | 2 |               |  |           | WQUS-FM | (3) |  | $ | 1.3 |     |  |  | 10/01/02 | 
|                                                                                   |  |        |                  |          |  |              |   |               |  |           | WLSP-AM |     |  |   |     |     |  |  |          | 

We completed the following acquisition in 2003:

|                                             |  |                        |                              |          |   |              |   |               |                |           |                |     |      |  |  |  |         |  |  | 
|-------------------------------------------- |  | ---------------------- | ---------------------------- | -------- | - | ------------ | - | ------------- | -------------- | --------- | -------------- | --- | ---- |  |  |  | ------- |  |  | 
|                                             |  |                        |                              |          |   |              |   | Purchase      |                |          
|                                             |  |                        |                              | No. of   |   |              |   | Price         |                | Date     
|Seller                                       |  | Market                 |                              | Stations |   | Call Letters |   | (in millions) |                | Completed
|                                             |  |                        |                              |          |   |              |   |               |                |          
|Brill Media Company LLC and related entities |  | Lancaster- Reading, PA |                              |          | 2 |              |   |               | WIOV-AMWIOV-FM |           |                | $   | 62.0 |  |  |  | 2/25/03 | 
|                                             |  |                        | Evansville,
IN/Owensboro, KY |          |   |              | 3 |               |                |           | WKDQ-FM        |     |      |  |  |  |         |  |  | 
|                                             |  |                        |                              |          |   |              |   |               |                |           | WBKR-FMWOMI-AM |     |      |  |  |  |         |  |  | 
|                                             |  |                        | Ft
Collins-Greeley, CO       |          |   |              | 3 |               |                |           | KTRR-FM        |     |      |  |  |  |         |  |  | 
|                                             |  |                        | Duluth, MN                   |          |   |              |   |               |                |           | KUAD-FMKKQZ-FM | (4) |      |  |  |  |         |  |  | 
|                                             |  |                        |                              |          |   |              | 4 |               |                |           | KKCB-FM        |     |      |  |  |  |         |  |  | 
|                                             |  |                        |                              |          |   |              |   |               |                |           | KLDJ-FM        |     |      |  |  |  |         |  |  | 
|                                             |  |                        |                              |          |   |              |   |               |                |           | KBMX-FM        |     |      |  |  |  |         |  |  | 
|                                             |  |                        |                              |          |   |              |   |               |                |           | WEBC-AM        |     |      |  |  |  |         |  |  | 



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|    |                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------
|(1) | The purchase price paid consisted of
    approximately $0.6 million in cash and 209,536 shares of
    our common stock.
|   
|(2) | The purchase price paid consisted of
    approximately $3.9 million in cash and 174,917 shares of
    our common stock.
|   
|(3) | WQUS-FM formerly operated under the call letters
    WRXF-FM.                                                          
|   
|(4) | KKQZ-FM, purchased as a construction permit,
    began broadcast operations on November 1, 2002.                       




Dispositions

|          |  |        |            |          |  |              |   |               |  |                |         |  |  |   |     |  |  |  |            | 
|--------- |  | ------ | ---------- | -------- |  | ------------ | - | ------------- |  | -------------- | ------- |  |  | - | --- |  |  |  | ---------- | 
|          |  |        |            | No. of   |  |              |   | Sale Price    |  |               
|Purchaser |  | Market |            | Stations |  | Call Letters |   | (in millions) |  | Date Completed
|          |  |        |            |          |  |              |   |               |  |               
|ABC, Inc. |  |        | Albany, NY |          |  |              | 1 |               |  |                | WGNA-AM |  |  | $ | 2.0 |  |  |  | 03/12/2002 | 

Pending Transactions

We currently have transactions pending which, if
completed, will result in the purchase by us of seven radio
stations and the sale by us of four radio stations. Closing of
these transactions are subject to certain conditions, including
required governmental approvals.

On February 27, 2003, we entered into an
agreement to exchange substantially all of the assets of
KKCB-FM, KLDJ-FM, KBMX-FM and WEBC-AM, serving the Duluth,
Minnesota market, plus $2.7 million in cash, for
substantially all the assets of WYNG-FM, WDKS-FM, WKRI-FM,
WGBF-FM and WGBF-AM, serving the Evansville, Indiana market. On
March 1, 2003, we began providing programming and other

3



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services to the Evansville stations and the
purchaser of the Duluth stations began providing the same such
services to those stations.


On January 10, 2003, we entered into an
agreement to purchase substantially all of the assets of KKPL-FM
and KARS-FM, serving the Fort Collins-Greeley, Colorado market
from AGM-Nevada, L.L.C. for $7.75 million. The purchase
price is payable in a combination of $5.0 million in cash
and $2.75 million in Regent common stock, based on a per
share price equal to the average daily closing price for the ten
consecutive trading days ending on the second trading day
immediately preceding the closing date. In the event the average
share price for that period is less than $7.50 per share we may,
at our sole discretion, reallocate the purchase price to
increase the amount of cash consideration and reduce the portion
paid in Regent common stock. On February 1, 2003, we began
providing programming and other services to KKPL-FM under a time
brokerage agreement. We have placed $387,500 in escrow to secure
our obligations under this agreement.

Acquisition Strategy

Our acquisition strategy is to expand within our
existing markets and into new mid-sized and small markets where
we believe we can effectively use our operating strategies. In
considering new markets, we focus on those markets that have a
minimum of $8.0 million in gross radio advertising revenue
where we believe we can build a station cluster that will
generate at least $1.0 million in annual broadcast cash
flow. The term broadcast cash flow means operating
income (loss) before depreciation and amortization, corporate
general and administrative expenses, gain (loss) on sale of
long-lived assets, and impairment of goodwill and FCC licenses.
Although broadcast cash flow is not a measure of performance
calculated in accordance with generally accepted accounting
principles, we believe that broadcast cash flow is accepted by
the broadcasting industry as a generally recognized measure of
performance and is used by analysts who report publicly on the
performance of broadcasting companies. Nevertheless, this
measure should not be considered in isolation or as a substitute
for operating income (loss), net income (loss), net cash
provided by (used in) operating activities or any other measure
for determining our operating performance or liquidity that is
calculated in accordance with accounting principles generally
accepted in the United States of America. Although significant
competition exists among potential purchasers for suitable radio
station acquisitions throughout the United States, we believe
that there is currently less competition, particularly from the
larger radio operators, in the mid-sized and small markets.
After entering a market, we seek to acquire additional stations
that will allow us to reach a wider range of demographic groups
to appeal to advertisers and increase revenue. We also integrate
these stations into our existing operations in an effort to
achieve substantial cost savings. We have sold or will sell
stations in different markets that did not or do not fit within
our existing acquisition strategy.

We believe that the creation of strong station
clusters in our local markets is essential to our operating
success. In evaluating an acquisition opportunity in a new
market, we assess our potential to build a leading radio station
cluster in that market over time. We will not consider entering
a new market unless we can acquire multiple stations in that
market. We also analyze a number of additional factors we
believe are important to success, including the number and
quality of commercial radio signals broadcasting in the market,
the nature of the competition in the market, our ability to
improve the operating performance of the radio station or
stations under consideration and the general economic conditions
of the market.

We believe that our acquisition strategy,
properly implemented, affords a number of benefits, including:



| |   |                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | greater revenue and broadcast cash flow diversity;                                                                             
|
| |  | improved broadcast cash flow margins through the
    consolidation of facilities and the elimination of redundant
    expenses;
|
| |  | enhanced revenue by offering advertisers a
    broader range of advertising packages;                                          
|
| |  | improved negotiating leverage with various key
    vendors;                                                                    
|
| |  | enhanced appeal to top industry management
    talent; and                                                                     
|
| |  | increased overall scale, which should facilitate
    our capital raising activities.                                           

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##### Table of Contents



We have developed a process for integrating newly
acquired properties into our overall culture and operating
philosophy, which involves the following key elements:



| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | assess format quality and effectiveness so that
    we can refine station formats in order to increase audience and
    revenue share;
|
| |  | upgrade transmission, audio processing and studio
    facilities;                                                                     
|
| |  | expand and strengthen sales staff through active
    recruiting and in-depth training;                                                
|
| |  | convert acquired stations to our communications
    network and centralized networked accounting system; and                          
|
| |  | establish revenue and expense budgets consistent
    with the programming and sales strategy and corresponding cost
    adjustments.  

From time to time, in compliance with applicable
law, we enter into a time brokerage agreement (under which
separately owned and licensed stations agree to function
cooperatively in terms of programming, advertising, sales and
other matters), or a similar arrangement, with a target property
prior to final Federal Communication Commission
(FCC) approval and the consummation of the
acquisition, in order to gain a head start on the integration
process.

Operating Strategy

Our operating strategy focuses on maximizing our
radio stations appeal to listeners and advertisers and,
consequently, increasing our revenue and broadcast cash flow. To
achieve these goals, we have implemented the following
strategies:

Ownership of Strong Radio Station
Clusters.We seek to secure and
maintain a leadership position in the markets we serve by owning
multiple stations in those markets. By coordinating programming,
promotional and sales strategies within each local station
cluster, we attempt to capture a wider range of demographic
listeners to appeal to advertisers. We believe that the
diversification of our programming formats and inventory of
available advertising time strengthens relationships with
advertisers, increasing our ability to maximize the value of our
inventory. We believe that operating multiple stations in a
market enhances our ability to market the advantages of
advertising on radio versus other media, such as newspapers and
television.

We believe that our ability to utilize the
existing programming and sales resources of our radio station
clusters enhances the growth potential of both new and
underperforming stations while reducing the risks associated
with the implementation of station performance improvements,
such as new format launches. We believe that operating leading
station clusters allows us to attract and retain talented local
personnel, who are essential to our operating success.
Furthermore, we seek to achieve cost savings within a market
through the consolidation of facilities, sales and
administrative personnel, management and operating resources,
such as on-air talent, programming and music research, and the
reduction of other redundant expenses.

Aggressive Sales and
Marketing.We seek to maximize our
share of local advertising revenue in each of our markets
through aggressive sales and marketing initiatives. We provide
extensive training through in-house sales and time management
programs and independent consultants who hold frequent seminars
and are available for consultation with our sales personnel. We
emphasize regular, informal exchanges of ideas among our
management and sales personnel across our various markets. We
seek to maximize our revenue by utilizing sophisticated
inventory management techniques to provide our sales personnel
with frequent price adjustments based on regional and local
market conditions. We further strengthen our relationship with
some advertisers by offering the ability to create customer
traffic through an on-site event staged at, and broadcast from,
the advertisers business location. We believe that, prior
to their acquisition, many of our newly acquired stations had
underperformed in sales, due primarily to undersized sales
staffs. Accordingly, we have significantly expanded the sales
forces of many of our acquired stations.

Targeted Programming and
Promotion.To maintain or improve our
position in each market, we combine extensive market research
with an assessment of our competitors vulnerabilities in
order to identify

5



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##### Table of Contents



significant and sustainable target audiences. We
then tailor the programming, marketing and promotion of each
radio station to maximize its appeal to the targeted audience.
We attempt to build strong markets by:




| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | creating distinct, highly visible profiles for
    our on-air personalities, particularly those broadcasting during
    morning drive time, which traditionally airs between
    6:00 a.m. and 10:00 a.m.;
|
| |  | formulating recognizable brand names for select
    stations; and                                                                                                                                         
|
| |  | actively participating in community events and
    charities.                                                                                                                                             

Decentralized
Operations.We believe that radio is
primarily a local business and that much of our success will be
the result of the efforts of regional and local management and
staff. Accordingly, we decentralize much of our operations at
these levels. Each of our station clusters is managed by a team
of experienced broadcasters who understand the musical tastes,
demographics and competitive opportunities of their particular
market. Local managers are responsible for preparing annual
operating budgets and a portion of their compensation is linked
to meeting or surpassing their operating targets. Corporate
management approves each station clusters annual operating
budget and imposes strict financial reporting requirements to
track station performance. Corporate management is responsible
for long range planning, establishing corporate policies and
serving as a resource to local management.

Station Portfolio

When our pending acquisition transactions are
completed, we will own 56 FM and 20 AM radio stations
in 16 mid-sized and small markets. The following table sets
forth information about the stations that we own and expect to
own after giving effect to our pending transactions.

As you review the information in the table below,
you should note the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The abbreviation MSA in the table
    means the markets rank among the largest metropolitan
    statistical areas in the United States.                                                                                                                                                                                                                                                                                           
|
| |  | The symbol * indicates a station
    that is the subject of one of our pending acquisitions, and the
    symbol # indicates a station that we have
    entered into an agreement to sell. The completion of each
    pending acquisition or disposition is subject to certain
    conditions, including governmental approvals. There can be no
    assurance that these conditions will be satisfied in any
    particular case.
|
| |  | In the Primary Demographic Target column, the
    letter A designates adults, the
    letter W designates women and the
    letter M designates men. The numbers following
    each letter designate the range of ages included within the
    demographic group.                                                                                                                                                              
|
| |  | Station Cluster Rank by Market Revenue Share in
    the table is the ranking, by radio cluster market revenue, of
    each of our radio clusters in its market among all other radio
    clusters in that market.                                                                                                                                                                                                                    
|
| |  | We obtained all metropolitan statistical area
    rank information, market revenue information and station cluster
    market rank information for all of our markets from Investing
    in Radio 2002 Market Report, published by
    BIA Publications, Inc.                                                                                                                                                                        
|
| |  | We obtained all audience share information from
    the Fall 2002 Radio Market Report published by The
    Arbitron Company. We derived station cluster audience share
    based on persons ages 12 and over, listening Monday through
    Sunday, 6:00 a.m. to 12:00 midnight.                                                                                                                                                      
|
| |  | N/A indicates the market has no MSA rank and is
    not rated by Arbitron.                                                                                                                                                                                                                                                                                                                                                           

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|                     |           |      |     |             |  |             |  |                        |  |          |  |         |  |  |   |  |  |  |      |  | 
|-------------------- | --------- | ---- | --- | ----------- |  | ----------- |  | ---------------------- |  | -------- |  | ------- |  |  | - |  |  |  | ---- |  | 
|                     |           |      |     |             |  |             |  | Station                |  |         
|                     |           |      |     |             |  |             |  | Cluster                |  | Station 
|                     |           |      |     |             |  |             |  | Rank by                |  | Cluster 
|                     |           |      |     | Station     |  | Primary     |  | Market                 |  | 12+     
|Radio Market/        |           | MSA  |     | Programming |  | Demographic |  | Revenue                |  | Audience
|Station Call Letters |           | Rank |     | Format      |  | Target      |  | Share                  |  | Share   
|                     |           |      |     |             |  |             |  |                        |  |         
|Albany, NY           |           |      | 59  |             |  |             |  |                        |  |          |  |         |  |  | 3 |  |  |  | 19.7 | 
|                     | WQBJ(FM)  |      |     |             |  |             |  | Rock                   |  |          |  | M 18-49 |  |  |   |  |  |  |      |  | 
|                     | WQBK(FM)  |      |     |             |  |             |  | Rock                   |  |          |  | M 18-49 |  |  |   |  |  |  |      |  | 
|                     | WABT(FM)  |      |     |             |  |             |  | 80s                   |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WGNA(FM)  |      |     |             |  |             |  | Country                |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WTMM(AM)  |      |     |             |  |             |  | Sports                 |  |          |  | M 35+   |  |  |   |  |  |  |      |  | 
|Chico, CA            |           |      | 190 |             |  |             |  |                        |  |          |  |         |  |  | 1 |  |  |  | 17.1 | 
|                     | KFMF(FM)  |      |     |             |  |             |  | Rock                   |  |          |  | M 18-49 |  |  |   |  |  |  |      |  | 
|                     | KALF(FM)  |      |     |             |  |             |  | Country                |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | KQPT(FM)  |      |     |             |  |             |  | Alternative            |  |          |  | A 18-34 |  |  |   |  |  |  |      |  | 
|                     | KZAP(FM)  |      |     |             |  |             |  | Rhythmic CHR           |  |          |  | A 18-34 |  |  |   |  |  |  |      |  | 
|Duluth, MN           |           |      | 221 |             |  |             |  |                        |  |          |  |         |  |  | 2 |  |  |  | 24.8 | 
|                     | WEBC(AM)# |      |     |             |  |             |  | News/Talk              |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|                     | KLDJ(FM)# |      |     |             |  |             |  | Oldies                 |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|                     | KKCB(FM)# |      |     |             |  |             |  | Country                |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | KBMX(FM)# |      |     |             |  |             |  | Adult Contemporary     |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|El Paso, TX          |           |      | 70  |             |  |             |  |                        |  |          |  |         |  |  | 2 |  |  |  | 12.0 | 
|                     | KSII(FM)  |      |     |             |  |             |  | Hot Adult Contemporary |  |          |  | W 25-54 |  |  |   |  |  |  |      |  | 
|                     | KLAQ(FM)  |      |     |             |  |             |  | Rock                   |  |          |  | M 18-49 |  |  |   |  |  |  |      |  | 
|                     | KROD(AM)  |      |     |             |  |             |  | News/Talk              |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|Erie, PA             |           |      | 156 |             |  |             |  |                        |  |          |  |         |  |  | 2 |  |  |  | 35.8 | 
|                     | WXKC(FM)  |      |     |             |  |             |  | Adult Contemporary     |  |          |  | W 25-54 |  |  |   |  |  |  |      |  | 
|                     | WXTA(FM)  |      |     |             |  |             |  | Country                |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WRIE(AM)  |      |     |             |  |             |  | Nostalgia              |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|                     | WQHZ(FM)  |      |     |             |  |             |  | Classic Hits           |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|Evansville, IN       |           |      | 155 |             |  |             |  |                        |  |          |  |         |  |  | 2 |  |  |  | 39.0 | 
|                     | WKDQ(FM)  |      |     |             |  |             |  | Country                |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WYNG(FM)* |      |     |             |  |             |  | Country                |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WDKS(FM)* |      |     |             |  |             |  | CHR                    |  |          |  | A 18-34 |  |  |   |  |  |  |      |  | 
|                     | WKRI(FM)* |      |     |             |  |             |  | Rock                   |  |          |  | A 18-34 |  |  |   |  |  |  |      |  | 
|                     | WGBF(FM)* |      |     |             |  |             |  | Rock                   |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WGBF(AM)* |      |     |             |  |             |  | Talk                   |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|Flint, MI            |           |      | 119 |             |  |             |  |                        |  |          |  |         |  |  | 2 |  |  |  | 22.7 | 
|                     | WCRZ(FM)  |      |     |             |  |             |  | Adult Contemporary     |  |          |  | W 25-54 |  |  |   |  |  |  |      |  | 
|                     | WWBN(FM)  |      |     |             |  |             |  | Rock                   |  |          |  | M 18-49 |  |  |   |  |  |  |      |  | 
|                     | WFNT(AM)  |      |     |             |  |             |  | Nostalgia              |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|                     | WRCL(FM)  |      |     |             |  |             |  | Rhythmic CHR           |  |          |  | A 18-34 |  |  |   |  |  |  |      |  | 
|                     | WQUS(FM)  |      |     |             |  |             |  | Classic Hits           |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WLSP(AM)  |      |     |             |  |             |  | Variety                |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 

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|                         |           |      |     |             |  |             |  |                         |  |          |  |         |  |  |     |  |  |  |      |  | 
|------------------------ | --------- | ---- | --- | ----------- |  | ----------- |  | ----------------------- |  | -------- |  | ------- |  |  | --- |  |  |  | ---- |  | 
|                         |           |      |     |             |  |             |  | Station                 |  |         
|                         |           |      |     |             |  |             |  | Cluster                 |  | Station 
|                         |           |      |     |             |  |             |  | Rank by                 |  | Cluster 
|                         |           |      |     | Station     |  | Primary     |  | Market                  |  | 12+     
|Radio Market/            |           | MSA  |     | Programming |  | Demographic |  | Revenue                 |  | Audience
|Station Call Letters     |           | Rank |     | Format      |  | Target      |  | Share                   |  | Share   
|                         |           |      |     |             |  |             |  |                         |  |         
|Ft. Collins-Greeley, CO. |           |      | 130 |             |  |             |  |                         |  |          |  |         |  |  | 1   |  |  |  | 15.4 | 
|                         | KUAD(FM)  |      |     |             |  |             |  | Country                 |  |          |  | A 25-54 |  |  |     |  |  |  |      |  | 
|                         | KTRR(FM)  |      |     |             |  |             |  | Adult Contemporary      |  |          |  | A 25-54 |  |  |     |  |  |  |      |  | 
|                         | KKQZ(FM)  |      |     |             |  |             |  | Classic Rock            |  |          |  | A 25-54 |  |  |     |  |  |  |      |  | 
|                         | KKPL(FM)* |      |     |             |  |             |  | Alternative             |  |          |  | A 18-34 |  |  |     |  |  |  |      |  | 
|                         | KARS(FM)* |      |     |             |  |             |  | Rock                    |  |          |  | A 18-34 |  |  |     |  |  |  |      |  | 
|Grand Rapids, MI         |           |      | 66  |             |  |             |  |                         |  |          |  |         |  |  | 2   |  |  |  | 16.6 | 
|                         | WLHT(FM)  |      |     |             |  |             |  | Adult Contemporary      |  |          |  | W 25-54 |  |  |     |  |  |  |      |  | 
|                         | WGRD(FM)  |      |     |             |  |             |  | New Rock                |  |          |  | M 18-49 |  |  |     |  |  |  |      |  | 
|                         | WTRV(FM)  |      |     |             |  |             |  | Soft Adult Contemporary |  |          |  | W 35+   |  |  |     |  |  |  |      |  | 
|                         | WNWZ(AM)  |      |     |             |  |             |  | Talk                    |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 
|                         | WFGR(FM)  |      |     |             |  |             |  | Classical               |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 
|Lafayette, LA            |           |      | 98  |             |  |             |  |                         |  |          |  |         |  |  | 1   |  |  |  | 25.3 | 
|                         | KPEL(FM)  |      |     |             |  |             |  | Talk                    |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 
|                         | KTDY(FM)  |      |     |             |  |             |  | Adult Contemporary      |  |          |  | A 25-54 |  |  |     |  |  |  |      |  | 
|                         | KRKA(FM)  |      |     |             |  |             |  | Classic Rock            |  |          |  | M 25-54 |  |  |     |  |  |  |      |  | 
|                         | KFTE(FM)  |      |     |             |  |             |  | Alternative             |  |          |  | A 18-34 |  |  |     |  |  |  |      |  | 
|                         | KMDL(FM)  |      |     |             |  |             |  | Country                 |  |          |  | A 25-54 |  |  |     |  |  |  |      |  | 
|                         | KPEL(AM)  |      |     |             |  |             |  | Talk                    |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 
|                         | KROF(AM)  |      |     |             |  |             |  | Sports                  |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 
|Lancaster-Reading, PA    |           |      | 115 |             |  |             |  |                         |  |          |  |         |  |  | 2   |  |  |  | 8.2  | 
|                         | WIOV(AM)  |      |     |             |  |             |  | Talk                    |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 
|                         | WIOV(FM)  |      |     |             |  |             |  | Country                 |  |          |  | A 25-54 |  |  |     |  |  |  |      |  | 
|Owensboro, KY            |           |      | N/A |             |  |             |  |                         |  |          |  |         |  |  | N/A |  |  |  | N/A  | 
|                         | WOMI(AM)  |      |     |             |  |             |  | News/Talk               |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 
|                         | WBKR(FM)  |      |     |             |  |             |  | Country                 |  |          |  | A 25-54 |  |  |     |  |  |  |      |  | 
|Peoria, IL               |           |      | 135 |             |  |             |  |                         |  |          |  |         |  |  | 2   |  |  |  | 17.9 | 
|                         | WVEL(AM)  |      |     |             |  |             |  | Gospel                  |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 
|                         | WGLO(FM)  |      |     |             |  |             |  | Classic Rock            |  |          |  | M 25-54 |  |  |     |  |  |  |      |  | 
|                         | WIXO(FM)  |      |     |             |  |             |  | Alternative             |  |          |  | A 18-34 |  |  |     |  |  |  |      |  | 
|                         | WRVP(FM)  |      |     |             |  |             |  | CHR                     |  |          |  | A 18-34 |  |  |     |  |  |  |      |  | 
|                         | WPPY(FM)  |      |     |             |  |             |  | CHR                     |  |          |  | A 18-34 |  |  |     |  |  |  |      |  | 
|                         | WFYR(FM)  |      |     |             |  |             |  | Country                 |  |          |  | A 25-54 |  |  |     |  |  |  |      |  | 
|Redding, CA              |           |      | 215 |             |  |             |  |                         |  |          |  |         |  |  | 1   |  |  |  | 43.2 | 
|                         | KSHA(FM)  |      |     |             |  |             |  | Soft Adult Contemporary |  |          |  | W 25-54 |  |  |     |  |  |  |      |  | 
|                         | KNNN(FM)  |      |     |             |  |             |  | CHR                     |  |          |  | A 18-34 |  |  |     |  |  |  |      |  | 
|                         | KRDG(FM)  |      |     |             |  |             |  | Oldies                  |  |          |  | A 35-54 |  |  |     |  |  |  |      |  | 
|                         | KRRX(FM)  |      |     |             |  |             |  | Rock                    |  |          |  | M 18-49 |  |  |     |  |  |  |      |  | 
|                         | KNRO(AM)  |      |     |             |  |             |  | ESPN                    |  |          |  | M 35+   |  |  |     |  |  |  |      |  | 
|                         | KQMS(AM)  |      |     |             |  |             |  | News/Talk/Sports        |  |          |  | A 35+   |  |  |     |  |  |  |      |  | 

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|                     |          |      |     |             |  |             |  |                    |  |          |  |         |  |  |   |  |  |  |      |  | 
|-------------------- | -------- | ---- | --- | ----------- |  | ----------- |  | ------------------ |  | -------- |  | ------- |  |  | - |  |  |  | ---- |  | 
|                     |          |      |     |             |  |             |  | Station            |  |         
|                     |          |      |     |             |  |             |  | Cluster            |  | Station 
|                     |          |      |     |             |  |             |  | Rank by            |  | Cluster 
|                     |          |      |     | Station     |  | Primary     |  | Market             |  | 12+     
|Radio Market/        |          | MSA  |     | Programming |  | Demographic |  | Revenue            |  | Audience
|Station Call Letters |          | Rank |     | Format      |  | Target      |  | Share              |  | Share   
|                     |          |      |     |             |  |             |  |                    |  |         
|St. Cloud, MN        |          |      | 212 |             |  |             |  |                    |  |          |  |         |  |  | 1 |  |  |  | 28.3 | 
|                     | KMXK(FM) |      |     |             |  |             |  | Adult Contemporary |  |          |  | W 25-54 |  |  |   |  |  |  |      |  | 
|                     | WWJO(FM) |      |     |             |  |             |  | Country            |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WJON(AM) |      |     |             |  |             |  | News/Talk          |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|                     | KLZZ(FM) |      |     |             |  |             |  | Classic Rock       |  |          |  | M 25-54 |  |  |   |  |  |  |      |  | 
|                     | KKSR(FM) |      |     |             |  |             |  | Dance CHR          |  |          |  | A 18-34 |  |  |   |  |  |  |      |  | 
|                     | KXSS(AM) |      |     |             |  |             |  | Adult Standards    |  |          |  | A 35-64 |  |  |   |  |  |  |      |  | 
|Utica-Rome, NY       |          |      | 151 |             |  |             |  |                    |  |          |  |         |  |  | 1 |  |  |  | 34.6 | 
|                     | WODZ(FM) |      |     |             |  |             |  | Oldies             |  |          |  | A 35-54 |  |  |   |  |  |  |      |  | 
|                     | WLZW(FM) |      |     |             |  |             |  | Adult Contemporary |  |          |  | W 25-54 |  |  |   |  |  |  |      |  | 
|                     | WFRG(FM) |      |     |             |  |             |  | Country            |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WRUN(AM) |      |     |             |  |             |  | Sports             |  |          |  | M 35+   |  |  |   |  |  |  |      |  | 
|                     | WIBX(AM) |      |     |             |  |             |  | News/Talk          |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|Watertown, NY        |          |      | 257 |             |  |             |  |                    |  |          |  |         |  |  | 1 |  |  |  | 39.5 | 
|                     | WCIZ(FM) |      |     |             |  |             |  | Classic Hits       |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WFRY(FM) |      |     |             |  |             |  | Country            |  |          |  | A 25-54 |  |  |   |  |  |  |      |  | 
|                     | WTNY(AM) |      |     |             |  |             |  | Talk               |  |          |  | A 35+   |  |  |   |  |  |  |      |  | 
|                     | WNER(AM) |      |     |             |  |             |  | ESPN               |  |          |  | M 35+   |  |  |   |  |  |  |      |  | 

Advertising Sales

Virtually all of our revenue is generated from
the sale of local, regional and national advertising for
broadcast on our radio stations. In 2002, approximately 84%
of our net broadcast revenue was generated from the sale of
local and regional advertising. Additional broadcast revenue is
generated from the sale of national advertising, network
compensation payments and other miscellaneous transactions. The
major categories of our advertisers include telephone companies,
retail merchants, restaurants, fast food chains, automotive
companies and grocery stores.

Each stations local sales staff solicits
advertising either directly from the local advertiser or
indirectly through an advertising agency. We pay a higher
commission rate to our sales staff for direct advertising sales.
Through direct advertiser relationships, we can better
understand the advertisers business needs and more
effectively design advertising campaigns to sell the
advertisers products. We employ personnel in each of our
markets to produce commercials for the advertiser. In-house
production combined with effectively designed advertising
establishes a stronger relationship between the advertiser and
the station cluster. National sales are made by a firm
specializing in radio advertising sales on the national level in
exchange for a commission based on net revenue. Regional sales,
which we define as sales in regions surrounding our markets to
companies that advertise in our markets, are generally made by
our local sales staff.

Depending on the programming format of a
particular station, we estimate the optimum number of
advertising spots available. The number of advertisements that
can be broadcast without jeopardizing listening levels is
limited in part by the format of a particular station and by the
volume of advertisements being run on competing stations in the
local market. Our stations strive to maximize revenue by
managing advertising inventory. Our stations adjust pricing
based on local market conditions and the ability to provide
advertisers with an effective means of reaching a targeted
demographic group. Each of our stations has a general target
level of on-air inventory. This target level of inventory may be
different at different times of the day but tends to remain
stable over time. Much of our selling activity is based on
demand for our radio stations on-air inventory and, in
general, we respond to this demand by varying prices rather than
our target inventory level

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for a particular station. Therefore, most changes
in revenue can be explained by demand-driven pricing changes.


A stations listenership is reflected in
ratings surveys that estimate the number of listeners tuned to
the station and the time they spend listening. Each
stations ratings are used by its advertisers and
advertising representatives to consider advertising with the
station and are used by us to chart audience levels, set
advertising rates and adjust programming. The radio broadcast
industrys principal ratings service is The Arbitron
Company, which publishes periodic ratings surveys for
significant domestic radio markets. These surveys are our
primary source of audience ratings data.

We believe that radio is one of the most
efficient and cost-effective means for advertisers to reach
specific demographic groups. Advertising rates charged by radio
stations are based primarily on the following:



| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the supply of, and demand for, radio advertising
    time;                                                                                                                                                
|
| |  | a stations share of audiences in the
    demographic groups targeted by advertisers, as measured by
    ratings surveys estimating the number of listeners tuned to the
    station at various times; and
|
| |  | the number of stations in the market competing
    for the same demographic groups.                                                                                                                       

Rates are generally highest during morning and
afternoon commuting hours.

Competition

The radio broadcasting industry is highly
competitive. The success of each station depends largely upon
audience ratings and its share of the overall advertising
revenue within its market. Stations compete for listeners and
advertising revenue directly with other radio stations within
their respective markets. Radio stations compete for listeners
primarily on the basis of program content that appeals to a
particular demographic group. Building a strong listener base
consisting of a specific demographic group in a market enables
an operator to attract advertisers seeking to reach those
listeners. Companies that operate radio stations must be alert
to the possibility of another station changing format to compete
directly for listeners and advertisers. A stations
decision to convert to a format similar to that of another radio
station in the same geographic area may result in lower ratings
and advertising revenue, increased promotion and other expenses
and, consequently, lower broadcast cash flow.

Factors that are material to a radio
stations competitive position include management
experience, the stations local audience rank in its
market, transmitter power, assigned frequency, audience
characteristics, local program acceptance and the number and
characteristics of other radio stations in the market area.
Management believes that radio stations that elect to take
advantage of joint arrangements such as local marketing
agreements or joint sales agreements may in certain
circumstances have lower operating costs and may be able to
offer advertisers more attractive rates and services.

Although the radio broadcasting industry is
highly competitive, some barriers to entry exist. The operation
of a radio broadcast station requires a license from the FCC,
and the number of radio stations that can operate in a given
market is limited by the availability of FM and AM radio
frequencies allotted by the FCC to communities in that market,
as well as by the FCCs rules and policies regulating the
number of stations that may be owned or controlled by a single
entity. A summary of certain of those rules and policies can be
found under the heading Federal Regulation of Radio
Broadcasting below.

Our stations compete for advertising revenue with
other stations and with other media, including newspapers,
broadcast television, cable television, magazines, direct mail,
coupons and outdoor advertising. In addition, the radio
broadcasting industry is subject to competition from new media
technologies that are being developed or introduced, such as the
delivery of audio programming by cable or direct broadcast
satellite television systems, by satellite-delivered digital
audio radio service and by in-band digital audio broadcasting.
Two providers of satellite-delivered digital audio broadcasting
have commenced service and state that they intend to deliver by
satellite to nationwide and regional audiences, multi-channel,
multi-format, digital radio services with sound quality
equivalent to compact discs. Furthermore, terrestrial in-band
digital audio broadcasting may deliver multi-channel,
multi-format programming in the same bands now used by AM and

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FM broadcasters. The delivery of information
through the Internet also could create a new form of
competition, as could the development of non-commercial
low-power FM radio stations that serve small, localized areas.


We cannot predict what additional new services or
other regulatory matters might be considered in the future by
the FCC, nor assess in advance what impact those proposals or
changes might have on our business. The radio broadcasting
industry historically has grown despite the introduction of new
technologies for the delivery of entertainment and information.
A growing population and greater availability of radios,
particularly car and portable radios, have contributed to this
growth. There can be no assurances, however, that this
historical growth will continue.

Employees

At March 14, 2003, we employed approximately
890 persons. Ten of our employees in Watertown, New York are
covered by a collective bargaining agreement. None of our other
employees are covered by collective bargaining agreements. We
consider our relations with our employees generally to be good.

Federal Regulation of Radio
Broadcasting

Introduction.Our
ownership, operation, purchase and sale of radio stations is
regulated by the FCC, which acts under authority derived from
the Communications Act of 1934, as amended. Among other things,
the FCC:



| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | assigns frequency bands for broadcasting;                                                                                                               
|
| |  | issues, renews, revokes and modifies station
    licenses, and determines the location, power and other technical
    parameters of those licenses;     
|
| |  | determines whether to approve changes in
    ownership or control of station licenses;                                                                  
|
| |  | regulates equipment used by stations; and                                                                                                               
|
| |  | adopts and implements regulations and policies
    that directly or indirectly affect the ownership, operation and
    employment practices of stations.

The following is a brief summary of certain
provisions of the Communications Act and of specific FCC
regulations and policies. Failure to observe these or other
rules and policies can result in the imposition of various
sanctions, including fines, the grant of abbreviated license
renewal terms or, for particularly egregious violations, the
denial of a license renewal application, the revocation of a
license or the denial of FCC consent to acquire additional radio
stations.

License Grant and
Renewal.Radio stations operate under
renewable broadcasting licenses that are ordinarily granted by
the FCC for maximum terms of eight years. Licenses are renewed
through an application to the FCC. Petitions to deny license
renewals can be filed by interested parties, including members
of the public. These petitions may raise various issues before
the FCC. The FCC is required to hold hearings on renewal
applications if the FCC is unable to determine that renewal of a
license would serve the public interest, convenience and
necessity, or if a petition to deny raises a substantial and
material question of fact as to whether the grant of the renewal
application would be inconsistent with the public interest,
convenience and necessity. If, as a result of an evidentiary
hearing, the FCC determines that the licensee has failed to meet
certain requirements and that no mitigating factors justify the
imposition of a lesser sanction, then the FCC may deny a license
renewal application. Historically, FCC licenses have generally
been renewed. We are not currently aware of any facts that would
prevent the timely renewal of our licenses to operate our radio
stations, although we cannot assure you that all of our licenses
will be renewed.

The FCC classifies each AM and FM station. An AM
station operates on either a clear channel, regional channel or
local channel. A clear channel is one on which AM stations are
assigned to serve wide areas. Clear channel AM stations are
classified as either: Class A stations, which operate on an
unlimited time basis and are designed to render primary and
secondary service over an extended area; Class B stations,
which operate

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on an unlimited time basis and are designed to
render service only over a primary service area; or Class D
stations, which operate either during daytime hours only, during
limited times only or on an unlimited time basis with low
nighttime power. A regional channel is one on which Class B
and Class D AM stations may operate and serve primarily a
principal center of population and the rural areas contiguous to
it. A local channel is one on which AM stations operate on an
unlimited time basis and serve primarily a community and the
suburban and rural areas immediately contiguous thereto.
Class C AM stations operate on a local channel and are
designed to render service only over a primary service area that
may be reduced as a consequence of interference.


The minimum and maximum facilities requirements
for an FM station are determined by its class. FM class
designations depend upon the geographic zone in which the
transmitter of the FM station is located. In general, commercial
FM stations are classified as follows, in order of increasing
power and antenna height: Class A, B1, C3, B, C2, C1, C0
and C. The FCC recently adopted a rule that subjects
Class C FM stations to involuntary downgrades to
Class C0 if they do not meet certain antenna height
specifications.

The following table sets forth the market, call
letters, FCC license classification, antenna height above
average terrain (HAAT), power and frequency of each of the
stations that are owned and operated by us or that are the
subject of a pending acquisition or subsequent sale, and the
date on which each stations FCC license expires.

|            |  |              |           |       |  |         |    |           |  |           |     |            |  |  |       |  |  |  |           |  |  |  |          | 
|----------- |  | ------------ | --------- | ----- |  | ------- | -- | --------- |  | --------- | --- | ---------- |  |  | ----- |  |  |  | --------- |  |  |  | -------- | 
|            |  |              |           |       |  |         |    |           |  |           |     | Expiration
|            |  |              |           |       |  |         |    |           |  |           |     | Date of   
|            |  | Station Call |           | FCC   |  | HAAT in |    | Power in  |  |           |     | FCC       
|Market      |  | Letters      |           | Class |  | Meters  |    | Kilowatts |  | Frequency |     | License   
|            |  |              |           |       |  |         |    |           |  |           |     |           
|Albany, NY  |  |              | WQBJ(FM)  |       |  |         | B  |           |  |           | 150 |            |  |  | 50.0  |  |  |  | 103.5 MHz |  |  |  | 06/01/06 | 
|            |  |              | WQBK(FM)  |       |  |         | A  |           |  |           | 92  |            |  |  | 6.0   |  |  |  | 103.9 MHz |  |  |  | 06/01/06 | 
|            |  |              | WABT(FM)  |       |  |         | A  |           |  |           | 107 |            |  |  | 5.0   |  |  |  | 104.5 MHz |  |  |  | 06/01/06 | 
|            |  |              | WGNA(FM)  |       |  |         | B  |           |  |           | 300 |            |  |  | 12.5  |  |  |  | 107.7 MHz |  |  |  | 06/01/06 | 
|            |  |              | WTMM(AM)  |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0   |  |  |  | 1300 kHz  |  |  |  | 06/01/06 | 
|           
|Chico, CA   |  |              | KFMF(FM)  |       |  |         | B1 |           |  |           | 344 |            |  |  | 2.0   |  |  |  | 93.9 MHz  |  |  |  | 12/01/05 | 
|            |  |              | KQPT(FM)  |       |  |         | B  |           |  |           | 193 |            |  |  | 28.0  |  |  |  | 107.5 MHz |  |  |  | 12/01/05 | 
|            |  |              | KALF(FM)  |       |  |         | B  |           |  |           | 386 |            |  |  | 7.0   |  |  |  | 95.7 MHz  |  |  |  | 12/01/05 | 
|            |  |              | KZAP(FM)  |       |  |         | B1 |           |  |           | 393 |            |  |  | 1.5   |  |  |  | 96.7 MHz  |  |  |  | 12/01/05 | 
|           
|Duluth, MN  |  |              | WEBC(AM)# |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0   |  |  |  | 560 kHz   |  |  |  | 04/01/05 | 
|            |  |              | KLDJ(FM)# |       |  |         | C2 |           |  |           | 251 |            |  |  | 18.5  |  |  |  | 101.7 MHz |  |  |  | 04/01/05 | 
|            |  |              | KKCB(FM)# |       |  |         | C1 |           |  |           | 241 |            |  |  | 100.0 |  |  |  | 105.1 MHz |  |  |  | 04/01/05 | 
|            |  |              | KBMX(FM)# |       |  |         | C2 |           |  |           | 278 |            |  |  | 7.7   |  |  |  | 107.7 MHz |  |  |  | 04/01/05 | 
|           
|El Paso, TX |  |              | KSII(FM)  |       |  |         | C  |           |  |           | 433 |            |  |  | 98.0  |  |  |  | 93.1 MHz  |  |  |  | 08/01/05 | 
|            |  |              | KLAQ(FM)  |       |  |         | C  |           |  |           | 424 |            |  |  | 88.0  |  |  |  | 95.5 MHz  |  |  |  | 08/01/05 | 
|            |  |              | KROD(AM)  |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0   |  |  |  | 600 kHz   |  |  |  | 08/01/05 | 
|           
|Erie, PA    |  |              | WXKC(FM)  |       |  |         | B  |           |  |           | 150 |            |  |  | 50.0  |  |  |  | 99.9 MHz  |  |  |  | 08/01/06 | 
|            |  |              | WRIE(AM)  |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0   |  |  |  | 1260 kHz  |  |  |  | 08/01/06 | 
|            |  |              | WXTA(FM)  |       |  |         | B1 |           |  |           | 154 |            |  |  | 10.0  |  |  |  | 97.9 MHz  |  |  |  | 08/01/06 | 
|            |  |              | WQHZ(FM)  |       |  |         | A  |           |  |           | 187 |            |  |  | 1.7   |  |  |  | 102.3 MHz |  |  |  | 08/01/06 | 

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|                         |  |              |           |       |  |         |    |           |  |           |     |            |  |  |              |  |  |  |           |  |  |  |          | 
|------------------------ |  | ------------ | --------- | ----- |  | ------- | -- | --------- |  | --------- | --- | ---------- |  |  | ------------ |  |  |  | --------- |  |  |  | -------- | 
|                         |  |              |           |       |  |         |    |           |  |           |     | Expiration
|                         |  |              |           |       |  |         |    |           |  |           |     | Date of   
|                         |  | Station Call |           | FCC   |  | HAAT in |    | Power in  |  |           |     | FCC       
|Market                   |  | Letters      |           | Class |  | Meters  |    | Kilowatts |  | Frequency |     | License   
|                         |  |              |           |       |  |         |    |           |  |           |     |           
|Evansville, IN           |  |              | WKDQ(FM)  |       |  |         | C  |           |  |           | 300 |            |  |  | 100.0        |  |  |  | 99.5 MHz  |  |  |  | 08/01/04 | 
|                         |  |              | WYNG(FM)* |       |  |         | B  |           |  |           | 150 |            |  |  | 50.0         |  |  |  | 105.3 MHz |  |  |  | 08/01/04 | 
|                         |  |              | WDKS(FM)* |       |  |         | A  |           |  |           | 100 |            |  |  | 6.0          |  |  |  | 106.1 MHz |  |  |  | 08/01/04 | 
|                         |  |              | WKRI(FM)* |       |  |         | B  |           |  |           | 128 |            |  |  | 50.0         |  |  |  | 94.9 MHz  |  |  |  | 08/01/04 | 
|                         |  |              | WGBF(FM)* |       |  |         | A  |           |  |           | 138 |            |  |  | 3.2          |  |  |  | 103.1 MHz |  |  |  | 08/01/04 | 
|                         |  |              | WGBF(AM)* |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0  daytime |  |  |  | 1280 kHz  |  |  |  | 08/01/04 | 
|                         |  |              |           |       |  |         |    |           |  |           |     |            |  |  | 1.0 night    |  |  |  |           |  |  |  |          | 
|Flint, MI                |  |              | WCRZ(FM)  |       |  |         | B  |           |  |           | 101 |            |  |  | 50.0         |  |  |  | 107.9 MHz |  |  |  | 10/01/04 | 
|                         |  |              | WWBN(FM)  |       |  |         | A  |           |  |           | 149 |            |  |  | 1.8          |  |  |  | 101.7 MHz |  |  |  | 10/01/04 | 
|                         |  |              | WFNT(AM)  |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0  daytime |  |  |  | 1470 kHz  |  |  |  | 10/01/04 | 
|                         |  |              |           |       |  |         |    |           |  |           |     |            |  |  | 1.0 night    |  |  |  |           |  |  |  |          | 
|                         |  |              | WZRZ(FM)  |       |  |         | A  |           |  |           | 133 |            |  |  | 3.5          |  |  |  | 93.7 MHz  |  |  |  | 10/01/04 | 
|                         |  |              | WQUS(FM)  |       |  |         | A  |           |  |           | 91  |            |  |  | 3.0          |  |  |  | 103.1 MHz |  |  |  | 10/01/04 | 
|                         |  |              | WLSP(AM)  |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0          |  |  |  | 1530 kHz  |  |  |  | 10/01/04 | 
|                        
|Ft. Collins-Greeley, CO. |  |              | KUAD(FM)  |       |  |         | C1 |           |  |           | 212 |            |  |  | 100.0        |  |  |  | 99.1 MHz  |  |  |  | 04/01/05 | 
|                         |  |              | KTRR(FM)  |       |  |         | C2 |           |  |           | 125 |            |  |  | 50.0         |  |  |  | 102.5 MHz |  |  |  | 04/01/05 | 
|                         |  |              | KKQZ(FM)  |       |  |         | C3 |           |  |           | 168 |            |  |  | 8.7          |  |  |  | 94.3 MHz  |  |  |  | 04/01/05 | 
|                         |  |              | KKPL(FM)* |       |  |         | C2 |           |  |           | 150 |            |  |  | 50.0         |  |  |  | 99.9 MHz  |  |  |  | 04/01/05 | 
|                         |  |              | KARS(FM)* |       |  |         | C  |           |  |           | 372 |            |  |  | 100.0        |  |  |  | 102.9 MHz |  |  |  | 04/01/05 | 
|                        
|Grand Rapids, MI         |  |              | WLHT(FM)  |       |  |         | B  |           |  |           | 168 |            |  |  | 40.0         |  |  |  | 95.7 MHz  |  |  |  | 10/01/04 | 
|                         |  |              | WGRD(FM)  |       |  |         | B  |           |  |           | 180 |            |  |  | 13.0         |  |  |  | 97.9 MHz  |  |  |  | 10/01/04 | 
|                         |  |              | WTRV(FM)  |       |  |         | A  |           |  |           | 92  |            |  |  | 3.50         |  |  |  | 100.5 MHz |  |  |  | 10/01/04 | 
|                         |  |              | WNWZ(AM)  |       |  |         | B  |           |  |           | N/A |            |  |  | 1.0  daytime |  |  |  | 1410 kHz  |  |  |  | 10/01/04 | 
|                         |  |              |           |       |  |         |    |           |  |           |     |            |  |  | .05 night    |  |  |  |           |  |  |  |          | 
|                         |  |              | WFGR(FM)  |       |  |         | A  |           |  |           | 150 |            |  |  | 2.75         |  |  |  | 98.7 MHz  |  |  |  | 10/01/04 | 
|                        
|Lafayette, LA            |  |              | KMDL(FM)  |       |  |         | C2 |           |  |           | 171 |            |  |  | 38.0         |  |  |  | 97.3 MHz  |  |  |  | 06/01/04 | 
|                         |  |              | KRKA(FM)  |       |  |         | C1 |           |  |           | 263 |            |  |  | 97.0         |  |  |  | 107.9 MHz |  |  |  | 06/01/04 | 
|                         |  |              | KFTE(FM)  |       |  |         | C2 |           |  |           | 163 |            |  |  | 42.0         |  |  |  | 96.5 MHz  |  |  |  | 06/01/04 | 
|                         |  |              | KTDY(FM)  |       |  |         | C  |           |  |           | 300 |            |  |  | 100.0        |  |  |  | 99.9 MHz  |  |  |  | 06/01/04 | 
|                         |  |              | KPEL(FM)  |       |  |         | C3 |           |  |           | 89  |            |  |  | 25.0         |  |  |  | 105.1 MHz |  |  |  | 06/01/04 | 
|                         |  |              | KPEL(AM)  |       |  |         | B  |           |  |           | N/A |            |  |  | 1.0  daytime |  |  |  | 1420 kHz  |  |  |  | 06/01/04 | 
|                         |  |              |           |       |  |         |    |           |  |           |     |            |  |  | 0.75 night   |  |  |  |           |  |  |  |          | 
|                         |  |              | KROF(AM)  |       |  |         | D  |           |  |           | N/A |            |  |  | 1.0  daytime |  |  |  | 960 kHz   |  |  |  | 06/01/04 | 
|                         |  |              |           |       |  |         |    |           |  |           |     |            |  |  | .095 night   |  |  |  |           |  |  |  |          | 
|                        
|Lancaster-Reading, PA    |  |              | WIOV(AM)  |       |  |         | C  |           |  |           | N/A |            |  |  | 1.0          |  |  |  | 1240 kHz  |  |  |  | 08/01/06 | 
|                         |  |              | WIOV(FM)  |       |  |         | B  |           |  |           | 214 |            |  |  | 25.0         |  |  |  | 105.1 MHz |  |  |  | 08/01/06 | 
|                        
|Owensboro, KY            |  |              | WOMI(AM)  |       |  |         | C  |           |  |           | N/A |            |  |  | 0.83         |  |  |  | 1490 kHz  |  |  |  | 08/01/04 | 
|                         |  |              | WBKR(FM)  |       |  |         | C  |           |  |           | 320 |            |  |  | 100.0        |  |  |  | 92.5 MHz  |  |  |  | 08/01/04 | 

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|               |  |              |          |       |  |         |    |           |  |           |     |            |  |  |               |  |  |  |           |  |  |  |          | 
|-------------- |  | ------------ | -------- | ----- |  | ------- | -- | --------- |  | --------- | --- | ---------- |  |  | ------------- |  |  |  | --------- |  |  |  | -------- | 
|               |  |              |          |       |  |         |    |           |  |           |     | Expiration
|               |  |              |          |       |  |         |    |           |  |           |     | Date of   
|               |  | Station Call |          | FCC   |  | HAAT in |    | Power in  |  |           |     | FCC       
|Market         |  | Letters      |          | Class |  | Meters  |    | Kilowatts |  | Frequency |     | License   
|               |  |              |          |       |  |         |    |           |  |           |     |           
|Peoria, IL     |  |              | WGLO(FM) |       |  |         | B1 |           |  |           | 189 |            |  |  | 7.0           |  |  |  | 95.5 MHz  |  |  |  | 12/01/04 | 
|               |  |              | WPPY(FM) |       |  |         | A  |           |  |           | 137 |            |  |  | 3.3           |  |  |  | 101.1 MHz |  |  |  | 12/01/04 | 
|               |  |              | WRVP(FM) |       |  |         | A  |           |  |           | 100 |            |  |  | 6.0           |  |  |  | 98.5 MHz  |  |  |  | 12/01/04 | 
|               |  |              | WVEL(AM) |       |  |         | D  |           |  |           | N/A |            |  |  | 5.0  daytime  |  |  |  | 1140 kHz  |  |  |  | 12/01/04 | 
|               |  |              | WFYR(FM) |       |  |         | B1 |           |  |           | 103 |            |  |  | 23.5          |  |  |  | 97.3 MHz  |  |  |  | 12/01/04 | 
|               |  |              | WIXO(FM) |       |  |         | A  |           |  |           | 178 |            |  |  | 1.5           |  |  |  | 99.9 MHz  |  |  |  | 12/01/04 | 
|              
|Redding, CA    |  |              | KRRX(FM) |       |  |         | C  |           |  |           | 600 |            |  |  | 100.0         |  |  |  | 106.1 MHz |  |  |  | 12/01/05 | 
|               |  |              | KNNN(FM) |       |  |         | C2 |           |  |           | 465 |            |  |  | 1.6           |  |  |  | 99.3 MHz  |  |  |  | 12/01/05 | 
|               |  |              | KQMS(AM) |       |  |         | C  |           |  |           | N/A |            |  |  | 1.0           |  |  |  | 1400 kHz  |  |  |  | 12/01/05 | 
|               |  |              | KSHA(FM) |       |  |         | C  |           |  |           | 475 |            |  |  | 100.0         |  |  |  | 104.3 MHz |  |  |  | 12/01/05 | 
|               |  |              | KRDG(FM) |       |  |         | C1 |           |  |           | 379 |            |  |  | 28.0          |  |  |  | 105.3 MHz |  |  |  | 12/01/05 | 
|               |  |              | KNRO(AM) |       |  |         | B  |           |  |           | N/A |            |  |  | 10.0  daytime |  |  |  | 1670 kHz  |  |  |  | 12/01/05 | 
|               |  |              |          |       |  |         |    |           |  |           |     |            |  |  | 1.0 night     |  |  |  |           |  |  |  |          | 
|              
|St. Cloud, MN  |  |              | KMXK(FM) |       |  |         | C2 |           |  |           | 150 |            |  |  | 50.0          |  |  |  | 94.9 MHz  |  |  |  | 04/01/05 | 
|               |  |              | WJON(AM) |       |  |         | C  |           |  |           | N/A |            |  |  | 1.0           |  |  |  | 1240 kHz  |  |  |  | 04/01/05 | 
|               |  |              | WWJO(FM) |       |  |         | C  |           |  |           | 305 |            |  |  | 97.0          |  |  |  | 98.1 MHz  |  |  |  | 04/01/05 | 
|               |  |              | KKSR(FM) |       |  |         | C2 |           |  |           | 138 |            |  |  | 50.0          |  |  |  | 96.7 MHz  |  |  |  | 04/01/05 | 
|               |  |              | KLZZ(FM) |       |  |         | C3 |           |  |           | 126 |            |  |  | 9.0           |  |  |  | 103.7 MHz |  |  |  | 04/01/05 | 
|               |  |              | KXSS(AM) |       |  |         | B  |           |  |           | N/A |            |  |  | 2.5  daytime  |  |  |  | 1390 kHz  |  |  |  | 04/01/05 | 
|               |  |              |          |       |  |         |    |           |  |           |     |            |  |  | 1.0 night     |  |  |  |           |  |  |  |          | 
|              
|Utica-Rome, NY |  |              | WODZ(FM) |       |  |         | B1 |           |  |           | 184 |            |  |  | 7.4           |  |  |  | 96.1 MHz  |  |  |  | 06/01/06 | 
|               |  |              | WLZW(FM) |       |  |         | B  |           |  |           | 201 |            |  |  | 25.0          |  |  |  | 98.7 MHz  |  |  |  | 06/01/06 | 
|               |  |              | WFRG(FM) |       |  |         | B  |           |  |           | 151 |            |  |  | 100.0         |  |  |  | 104.3 MHz |  |  |  | 06/01/06 | 
|               |  |              | WIBX(AM) |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0           |  |  |  | 950 kHz   |  |  |  | 06/01/06 | 
|               |  |              | WRUN(AM) |       |  |         | B  |           |  |           | N/A |            |  |  | 5.0  daytime  |  |  |  | 1150 kHz  |  |  |  | 06/01/06 | 
|               |  |              |          |       |  |         |    |           |  |           |     |            |  |  | 1.0 night     |  |  |  |           |  |  |  |          | 
|              
|Watertown, NY  |  |              | WCIZ(FM) |       |  |         | A  |           |  |           | 100 |            |  |  | 6.0           |  |  |  | 93.3 MHz  |  |  |  | 06/01/06 | 
|               |  |              | WFRY(FM) |       |  |         | C1 |           |  |           | 145 |            |  |  | 97.0          |  |  |  | 97.5 MHz  |  |  |  | 06/01/06 | 
|               |  |              | WTNY(AM) |       |  |         | B  |           |  |           | N/A |            |  |  | 1.0           |  |  |  | 790 kHz   |  |  |  | 06/01/06 | 
|               |  |              | WNER(AM) |       |  |         | D  |           |  |           | N/A |            |  |  | 3.5  daytime  |  |  |  | 1410 kHz  |  |  |  | 06/01/06 | 
|               |  |              |          |       |  |         |    |           |  |           |     |            |  |  | 0.04 night    |  |  |  |           |  |  |  |          | 



---



|  |                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------
|* | Stations indicated with an asterisk (*) are
    subject to acquisition by us under an existing agreement.
| 
|# | Stations indicated with a pound sign (#) are
    subject to disposal by us under an existing agreement.  

Transfers or Assignment of
Licenses.The Communications Act
prohibits the assignment or transfer of a broadcast license
without the prior approval of the FCC. In determining whether to
grant approval, the FCC considers a number of factors pertaining
to the licensee (and proposed licensee), including:



| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | compliance with the various rules limiting common
    ownership of media properties in a given market, as well as
    level of market concentration that would result from the
    proposed transaction;
|
| |  | the character of the licensee and
    those persons holding attributable interests in the
    licensee; and                                                                                         

14



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##### Table of Contents





| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | compliance with the Communications Acts
    limitations on alien ownership as well as compliance with other
    FCC regulations and policies.

To obtain FCC consent to assign or transfer
control of a broadcast license, appropriate applications must be
filed with the FCC. If the application involves a
substantial change in ownership or control, the
application must be placed on public notice for not less than
30 days during which time petitions to deny or other
objections against the application may be filed by interested
parties, including members of the public. Once the FCC grants an
application, interested parties may seek reconsideration of that
grant for 30 days, after which time the FCC may for another
ten days reconsider the grant on its own motion. If the
application does not involve a substantial change in
ownership or control, it is a pro forma application.
The pro forma application is nevertheless subject to
having informal objections filed against it. When passing on an
assignment or transfer application, the FCC is prohibited from
considering whether the public interest might be served by an
assignment or transfer of the broadcast license to any party
other than the assignee or transferee specified in the
application.

Multiple Ownership
Rules.The Communications Act, the
Telecommunications Act of 1996 and FCC rules impose specific
limits on the number of commercial radio stations an entity can
own in a single market. These rules preclude us from acquiring
certain stations we might otherwise seek to acquire. The rules
also effectively prevent us from selling stations in a market to
a buyer that has reached its ownership limit in the market. The
local radio ownership rules are as follows:



| |   |                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | in markets with 45 or more commercial radio
    stations, ownership is limited to eight commercial stations, no
    more than five of which can be either AM or FM;                                                                         
|
| |  | in markets with 30 to 44 commercial radio
    stations, ownership is limited to seven commercial stations, no
    more than four of which can be either AM or FM;                                                                           
|
| |  | in markets with 15 to 29 commercial radio
    stations, ownership is limited to six commercial stations, no
    more than four of which can be either AM or FM; and                                                                         
|
| |  | in markets with 14 or fewer commercial radio
    stations, ownership is limited to five commercial stations or no
    more than 50.0% of the markets total, whichever is lower,
    and no more than three of which can be either AM or FM.

The FCC generally applies its ownership limits to
attributable interests held by an individual,
corporation, partnership or other association. In the case of
corporations directly or indirectly controlling broadcast
licenses, the interests of officers, directors, and those who,
directly or indirectly, have the right to vote 5.0% or more of
the corporations voting stock are generally attributable.
In addition, certain passive investors are attributable if they
hold 20.0% or more of the corporations voting stock.

The FCC has, for several years, followed a
practice of reviewing proposed transactions based on the degree
of concentration that would result from such transactions in the
market for radio advertising revenue. This practice was made an
official interim policy in November 2001. Under that interim
policy, the FCC subjects to heightened scrutiny those
applications that would result in a single entity controlling
stations that generate 50 percent of the radio advertising
in a given market, or in two entities controlling stations that
together generate 70 percent of the radio advertising
revenue in a given market. The FCC has stated that it will
subject to such heightened scrutiny our proposed acquisitions of
KKPL-FM (serving the Ft. Collins-Greeley, Colorado market), as
well as WYNG-FM, WDKS-FM, WKRI-FM, WGBF-FM, and WGBF-AM (serving
the Evansville, Indiana market). The FCC continues to follow
that interim policy, but has undertaken a comprehensive review
of what, if any, consideration should be given in its review of
license transfer applications to issues of market concentration.
The outcome of this review and its impact on our business
remains uncertain.

In addition to the limits on the number of radio
stations that a single owner may own in a particular geographic
market, the FCC also has cross-ownership rules that limit or
prohibit radio station ownership by the owner of television
stations or a newspaper in the same market. The FCC has revised
its radio/ television cross-ownership rule to allow for greater
common ownership of radio and television stations. The revised

15



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##### Table of Contents



radio/ television cross-ownership rule permits a
single owner to own up to two television stations, consistent
with the FCCs rules on common ownership of television
stations, and one radio station in all markets. In addition, an
owner can own additional radio stations, subject to local
ownership limits for the market, as follows:




| |   |                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | in markets where 20 media voices will remain, an
    owner may own an additional five radio stations, or, if the
    owner only has one television station, an additional six radio
    stations; and
|
| |  | in markets where ten media voices will remain, an
    owner may own an additional three radio stations.                                                                                              

A media voice includes each
independently owned, full power television and radio station and
each newspaper, plus one voice for all cable television systems
operating in the market. The FCCs broadcast/ newspaper
cross-ownership rule prohibits the same owner from owning a
broadcast station and a daily newspaper in the same geographic
market.

The FCC also has a rule, known as the
equity-debt-plus rule, which causes certain creditors or
investors to be attributable owners of a station, regardless of
whether there is a single majority shareholder. Under this rule,
a major programming supplier or a same-market owner will be an
attributable owner of a station if the supplier or owner holds
debt or equity, or both, in the station that is greater than
33.0% of the value of the stations total debt plus equity.
A major programming supplier includes any programming supplier
that provides more than 15.0% of the stations weekly
programming hours. A same-market owner includes any attributable
owner of a media company, including broadcast stations, cable
television, and newspapers, located in the same market as the
station, but only if the owner is attributable under an FCC
attribution rule other than the equity-debt-plus rule. The
attribution rules limit the number of radio stations we may
acquire or own in any market and may also limit the ability of
certain potential buyers of stations owned by us from being able
to purchase some or all of the stations which they might
otherwise wish to purchase from us.

The FCC is currently reviewing its broadcast
ownership rules and policies, including those that affect the
ownership of radio and television stations nationwide and in
individual markets, as well as the broadcast/ newspaper cross
ownership rule. The FCC may relax its existing standards, or it
may impose more strict ownership limits. We are unable to
predict the outcome of this proceeding, or its impact on our
business.

Alien Ownership
Rules.The Communications Act
prohibits the issuance or holding of broadcast licenses by
aliens, including any corporation if more than 20.0% of its
capital stock is owned or voted by aliens. In addition, the FCC
may prohibit any corporation from holding a broadcast license if
the corporation is directly or indirectly controlled by any
other corporation of which more than 25.0% of the capital stock
is owned of record or voted by aliens, if the FCC finds that the
prohibition is in the public interest. These restrictions apply
in similar fashion to other forms of businesses and
organizations, including partnerships and limited liability
companies. Our charter provides that our capital stock is
subject to redemption by us by action of the Board of Directors
to the extent necessary to prevent the loss of any license held
by us, including any FCC license.

Time Brokerage.Over
the past few years, a number of radio stations have entered into
what have commonly been referred to as time brokerage agreements
or local marketing agreements. While these agreements may take
varying forms, under a typical time brokerage agreement,
separately owned and licensed radio stations agree to enter into
cooperative arrangements of varying sorts, subject to compliance
with the requirements of antitrust laws and with the FCCs
rules and policies. Under these arrangements, separately-owned
stations could agree to function cooperatively in programming,
advertising sales and similar matters, subject to the
requirement that the licensee of each station maintain
independent control over the programming and operations of its
own station. One typical type of time brokerage agreement is a
programming agreement between two separately-owned radio
stations serving a common service area, whereby the licensee of
one station provides substantial portions of the broadcast
programming for airing on the other licensees station,
subject to ultimate editorial and other controls being exercised
by the latter licensee, and sells advertising time during those
program segments.

The FCCs rules provide that a radio station
that brokers more than 15.0% of its weekly broadcast time on
another station serving the same market will be considered to
have an attributable ownership interest in the

16



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##### Table of Contents



brokered station for purposes of the FCCs
multiple ownership rules. As a result, in a market where we own
a radio station, we would not be permitted to enter into a time
brokerage agreement with another local radio station in the same
market that we could not own under the local ownership rules,
unless our programming on the brokered station constituted 15.0%
or less of the other local stations programming time on a
weekly basis. FCC rules also prohibit a radio station from
duplicating more than 25.0% of its programming on another
station in the same broadcast service (i.e., AM-AM or FM-FM)
through a time brokerage agreement where the brokered and
brokering stations which it owns or programs serve substantially
the same area.


Programming and
Operation.The Communications Act
requires broadcasters to serve the public interest. Since 1981,
the FCC gradually has relaxed or eliminated many of the more
formalized procedures it developed to promote the broadcast of
types of programming responsive to the needs of a stations
community of license. However, licensees continue to be required
to present programming that is responsive to community problems,
needs and interests and to maintain records demonstrating such
responsiveness. Complaints from listeners concerning a
stations programming will be considered by the FCC when it
evaluates the licensees renewal application, although
listener complaints may be filed and considered at any time and
must be maintained in the stations public file.

Stations also must pay regulatory and application
fees and follow various FCC rules that regulate, among other
things, political advertising, the broadcast of obscene or
indecent programming, the advertisement of casinos and
lotteries, sponsorship identification and technical operations,
including limits on radio frequency radiation.

The FCC has adopted rules prohibiting employment
discrimination by broadcast stations on the basis of race,
religion, color, national origin, and gender; and requiring
broadcasters to implement programs to promote equal employment
opportunities (EEO) at their stations. The rules
generally require broadcast stations to disseminate information
about job openings widely so that all qualified applicants,
including minorities and women, have an adequate opportunity to
compete for the job. The rules require broadcasters to widely
disseminate information about job openings to all segments of
the community to ensure that all qualified applicants have
sufficient opportunity to apply for the job, to send job vacancy
announcements to recruitment organizations, and to undertake
various outreach efforts such as job fairs,
internship programs, and interaction with educational and
community groups. Broadcasters must also: file reports with the
FCC detailing outreach efforts; those with ten or more full-time
employees must periodically certify their compliance with the
EEO rules; and must file employment information with the FCC for
statistical purposes.

The FCC recently issued a decision holding that a
broadcast station may not deny a candidate for federal political
office a request for broadcast advertising time solely on the
grounds that the amount of time requested is not the standard
length of time which the station offers to its commercial
advertisers. This decision is currently being reconsidered by
the FCC. The effect that this FCC decision will have on our
programming and commercial advertising is uncertain.

Proposed and Recent
Changes.In addition to those
discussed elsewhere in this document, Congress and the FCC may
in the future consider and adopt new laws, regulations and
policies regarding a wide variety of matters that could,
directly or indirectly, affect the operation, ownership and
profitability of our radio stations, result in the loss of
audience share and advertising revenue for our radio stations,
and affect our ability to acquire additional radio stations or
finance such acquisitions. Such matters could include:



| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | proposals to impose spectrum use or other fees on
    FCC licensees;                                                                                             
|
| |  | revisions to political broadcasting rules,
    including requirements that broadcasters provide free air time
    to candidates;                                 
|
| |  | technical and frequency allocation matters;                                                                                                                      
|
| |  | proposals to restrict or prohibit the advertising
    of beer, wine and other alcoholic beverages;                                                               
|
| |  | changes in the FCCs attribution and
    multiple ownership policies, including narrowing the definition
    of the local market for multiple ownership purposes;

17



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| |   |                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes to broadcast technical requirements;                                                                                                                                                        
|
| |  | proposals to allow telephone or cable television
    companies to deliver audio and video programming to the home
    through existing phone, cable television or other communication
    lines; and
|
| |  | proposals to limit the tax deductibility of
    advertising expenses by advertisers.                                                                                                                

The FCC has selected In-Band On-Channel as
the exclusive technology for terrestrial digital operations by
AM and FM radio stations. The FCC has authorized limited
commencement of hybrid In-Band On-Channel
transmissions, that is, simultaneous broadcast in both digital
and analog format pending the adoption of formal licensing and
service rules. The advantages of digital audio broadcasting over
traditional analog broadcasting technology include improved
sound quality and the ability to offer a greater variety of
auxiliary services. In-Band On-Channel technology would
permit an FM station to transmit radio programming in both
analog and digital formats, and eventually in digital only
formats, using the bandwidth that the radio station is currently
licensed to use. It is unclear what formal licensing and service
rules the FCC will adopt regarding In-Band On-Channel
technology and what effect such regulations would have on our
business or the operations of our radio stations. It is also
unclear what impact the introduction of digital broadcasting
will have on the markets in which we compete.

Finally, the FCC has adopted procedures for the
auction of broadcast spectrum in circumstances where two or more
parties have filed for new or major change applications, which
are mutually exclusive. Such procedures may limit our efforts to
modify or expand the broadcast signals of our stations.

We cannot predict what other matters might be
considered in the future by the FCC or Congress, nor can we
judge in advance what impact, if any, the implementation of any
of these proposals or changes might have on our business.

Federal Antitrust Considerations.The Federal Trade Commission and the
United States Department of Justice, which evaluate transactions
to determine whether those transactions should be challenged
under the federal antitrust laws, have been increasingly active
recently in their review of radio station acquisitions,
particularly where an operator proposes to acquire additional
stations in its existing markets.

For an acquisition meeting certain size
thresholds, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules promulgated thereunder, require
the parties to file Notification and Report Forms with the
Federal Trade Commission and the Department of Justice and to
observe specified waiting period requirements before
consummating the acquisition. During the initial 30-day period
after the filing, the agencies decide which of them will
investigate the transaction. If the investigating agency
determines that the transaction does not raise significant
antitrust issues, then it will either terminate the waiting
period or allow it to expire after the initial 30 days. On
the other hand, if the agency determines that the transaction
requires a more detailed investigation, then, at the conclusion
of the initial 30-day period, it will issue a formal request for
additional information. The issuance of a formal request extends
the waiting period until the 20th calendar day after the
date of substantial compliance by all parties to the
acquisition. Thereafter, the waiting period may only be extended
by court order or with the consent of the parties. In practice,
complying with a formal request can take a significant amount of
time. In addition, if the investigating agency raises
substantive issues in connection with a proposed transaction,
then the parties frequently engage in lengthy discussions or
negotiations with the investigating agency concerning possible
means of addressing those issues, including persuading the
agency that the proposed acquisition would not violate the
antitrust laws, restructuring the proposed acquisition,
divestiture of other assets of one or more parties, or
abandonment of the transaction. These discussions and
negotiations can be time consuming, and the parties may agree to
delay completion of the acquisition during their pendency.

At any time before or after the completion of a
proposed acquisition, the Federal Trade Commission or the
Department of Justice could take such action under the antitrust
laws as it considers necessary or desirable in the public
interest, including seeking to enjoin the acquisition or seeking
divestiture of the business or other assets acquired.
Acquisitions that are not required to be reported under the
Hart-Scott-Rodino Act may be investigated by the Federal Trade
Commission or the Department of Justice under the antitrust laws
before or

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after completion. In addition, private parties
may under certain circumstances bring legal action to challenge
an acquisition under the antitrust laws.


As part of its increased scrutiny of radio
station acquisitions, the Department of Justice has stated
publicly that it believes that commencement of operations under
time brokerage agreements, local marketing agreements, joint
sales agreements and other similar agreements customarily
entered into in connection with radio station transfers prior to
the expiration of the waiting period under the Hart-Scott-Rodino
Act could violate the Hart-Scott-Rodino Act. In connection with
acquisitions subject to the waiting period under the
Hart-Scott-Rodino Act, so long as the Department of Justice
policy on the issue remains unchanged, we would not expect to
commence operation of any affected station to be acquired under
time brokerage agreement, local marketing agreement or similar
agreement until the waiting period has expired or been
terminated.

Our Internet site (www.regentcomm.com)
makes available to interested parties our annual report on
Form 10-K, quarterly reports on Form 10-Q, and current
reports on Form 8-K, and all amendments to those reports,
as well as all other reports and schedules we file
electronically with the Securities and Exchange Commission (the
Commission), as soon as reasonably practicable after
such material is electronically filed with or furnished to the
Commission. Interested parties may also find reports, proxy and
information statements and other information on issuers that
file electronically with the Commission at the Commissions
Internet site (http://www.sec.gov).






|        |            
|------- | -----------
|Item 2. | Properties.

The types of properties required to support each
of our radio stations include offices, studios, transmitter
sites and antenna sites. A stations studios are generally
housed with its offices in business districts. The transmitter
sites and antenna sites are generally located so as to provide
maximum market coverage.

We currently own studio facilities in Redding,
California; Burton (Flint), Michigan; Lafayette, Louisiana;
Pekin (Peoria), Illinois; St. Cloud, Minnesota; Whitesboro
(Utica-Rome), New York; Watertown, New York;
Owensboro, Kentucky; Windsor (Ft. Collins), Colorado; and
Ephrata (Lancaster), Pennsylvania. We own transmitter and
antenna sites in Redding, California; Burton, Otisville,
Millington and Lapeer (Flint), Michigan; St. Cloud, Rice,
Stearns County and Graham Township (St. Cloud), Minnesota;
Whitestown, Deerfield and Kirkland (Utica-Rome), New York;
Watertown and Rutland (Watertown), New York; Peoria County
and Woodford County (Peoria), Illinois; Lafayette and Abbeville
(Lafayette), Louisiana; Albany, New York; Grand Rapids,
Michigan; Owensboro, Utica and Henderson (Owensboro), Kentucky;
Pierce, Windsor and Wellington (Ft. Collins), Colorado;
Douglas County (Duluth), Minnesota; and Lancaster and Wyomissing
(Lancaster), Pennsylvania. We expect to acquire additional and
dispose of certain real estate in connection with our pending
transactions. We lease our remaining studio and office
facilities, including corporate office space in Covington,
Kentucky, and our remaining transmitter and antenna sites. We do
not anticipate any difficulties in renewing any facility leases
or in leasing alternative or additional space, if required. We
own substantially all of our other equipment, consisting
principally of transmitting antennae, towers, transmitters,
studio equipment and general office equipment.

Substantially all of our personal property and
equipment serve as collateral for our obligations under our
existing credit facility.






|        |                   
|------- | ------------------
|Item 3. | Legal Proceedings.

As previously reported, Regent Communications,
Inc. and certain of its officers were named as defendants in a
class action lawsuit relating to our initial public offering,
which proceeding remains pending in the United States district
court for the Southern District of New York. The suit against
Regent is a related proceeding to the In re Initial Public
Offering Securities Litigation brought by various plaintiffs in
connection with various initial public offerings conducted
during the applicable statute of limitations time periods.
Although the suit remains in its preliminary stages, the Regent
officers who were initially named as defendants have
subsequently been dismissed from the proceeding. In addition,
settlement discussions are ongoing with respect to the In re
Initial Public Offering Securities Litigation, in which Regent
expects that it could elect to

19



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##### Table of Contents



participate if a settlement is reached on a
global basis. Notwithstanding the foregoing, the outcome of this
litigation remains uncertain and we have not reserved for it.


We currently and from time to time are involved
in litigation incidental to the conduct of our business, but we
are not a party to any lawsuit or proceeding that, in our
opinion, is likely to have a material adverse effect on us.






|        |                                                         
|------- | --------------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security
    Holders.

There were no matters submitted to our security
holders during the fourth quarter of the fiscal year ended
December 31, 2002.




PART II






|        |                                                                           
|------- | --------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity
    and Related Stockholder Matters.

Shares of our common stock have been quoted on
The Nasdaq Stock Market under the symbol RGCI since
January 25, 2000, following effectiveness of the
registration statement for the initial public offering of our
common stock. The following table sets forth, for each of the
calendar quarters indicated, the reported high and low sales
prices of our common stock as reported in the Nasdaq National
Market.

|               |  |      |        |     |  |   |        | 
|-------------- |  | ---- | ------ | --- |  | - | ------ | 
|2002           |  | High |        | Low
|               |  |      |        |    
|First quarter  |  | $    | 8.8800 |     |  | $ | 4.9000 | 
|Second quarter |  | $    | 8.8999 |     |  | $ | 6.0100 | 
|Third quarter  |  | $    | 7.0000 |     |  | $ | 4.2600 | 
|Fourth quarter |  | $    | 6.9000 |     |  | $ | 4.8100 | 

|               |  |   |         |  |  |   |        | 
|-------------- |  | - | ------- |  |  | - | ------ | 
|2001           |  |   |         | 
|               |  |   |         | 
|First quarter  |  | $ | 9.7812  |  |  | $ | 5.6250 | 
|Second quarter |  | $ | 11.9900 |  |  | $ | 6.0500 | 
|Third quarter  |  | $ | 8.7100  |  |  | $ | 5.7500 | 
|Fourth quarter |  | $ | 7.3500  |  |  | $ | 4.8800 | 

As of March 14, 2003, there were
approximately 368 holders of record of our common stock. The
number of record holders was determined from the records of our
transfer agent and does not include beneficial owners of common
stock whose shares are held in the names of securities brokers,
dealers and registered clearing agencies.

We have never declared or paid cash dividends on
our common stock and do not intend to do so in the foreseeable
future. In addition, our credit agreement with our lenders
prohibits the payment of cash dividends on our common stock.

In December 2002, 5,358 shares of our common
stock were issued to a former director of Faircom Inc. at prices
ranging from $0.89 to $3.73 per share upon the exercise of
options that were outstanding under the Regent Communications,
Inc. Faircom Conversion Stock Option Plan, which provided
substitute options for those granted under the Faircom Inc.
Stock Option Plan prior to our merger with Faircom Inc. These
shares issued on exercise of options were issued pursuant to the
exemptions contained in section 4(2) of the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder.

20



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##### Table of Contents








|        |                         
|------- | ------------------------
|Item 6. | Selected Financial Data.

The selected financial data below should be read
in conjunction with our consolidated financial statements and
related notes and Managements Discussion and
Analysis of Financial Condition and Results of Operations
included elsewhere in this report.

SELECTED CONSOLIDATED FINANCIAL DATA

(In thousands, except per share
data)


|                                                                                                      |                   |                         |        |      |  |      |        |      |  |      |         |   |  |   |         |   |  |   |         |   | 
|----------------------------------------------------------------------------------------------------- | ----------------- | ----------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | - | 
|                                                                                                      |                   |                        
|                                                                                                      |                   | Year Ended December 31,
|                                                                                                      |                   |                        
|                                                                                                      |                   | 2002                    |        | 2001 |  | 2000 |        | 1999 |  | 1998
|                                                                                                      |                   |                         |        |      |  |      |        |      |  |     
|OPERATING RESULTS(1)(2):                                                                              |                   |                         |        |      |  |      |        |      |  |      |         |   |  |   |         |   |  |   |         |  
|Net broadcast revenues                                                                                |                   | $                       | 70,390 |      |  | $    | 53,745 |      |  | $    | 44,107  |   |  | $ | 23,854  |   |  | $ | 14,772  |  
|Operating income (loss)                                                                               |                   |                         | 9,460  |      |  |      | (3,078 | )    |  |      | 831     |   |  |   | (612    | ) |  |   | (433    | )
|Income (loss) before income taxes, extraordinary
    items and cumulative effect of accounting change |                   |                         | 6,819  |      |  |      | (2,378 | )    |  |      | 14,966  |   |  |   | (6,300  | ) |  |   | (3,290  | )
|Extraordinary items, net of taxes (3)                                                                 |                   |                         |       |      |  |      |       |      |  |      | (1,114  | ) |  |   | (471    | ) |  |   | (1,170  | )
|Cumulative effect of accounting change, net of
    income taxes(4)                                    |                   |                         | (6,138 | )    |  |      |       |      |  |      |        |   |  |   |        |   |  |   |        |  
|Net (loss) income                                                                                     |                   |                         | (6,480 | )    |  |      | (1,713 | )    |  |      | 13,852  |   |  |   | (6,771  | ) |  |   | (4,460  | )
|Preferred stock dividend requirements                                                                 |                   |                         |       |      |  |      |       |      |  |      | (629    | ) |  |   | (5,205  | ) |  |   | (2,166  | )
|Preferred stock accretion(5)                                                                          |                   |                         |       |      |  |      |       |      |  |      | (26,611 | ) |  |   | (17,221 | ) |  |   | (4,787  | )
|Loss applicable to common shares                                                                      |                   |                         | (6,480 | )    |  |      | (1,713 | )    |  |      | (13,388 | ) |  |   | (29,197 | ) |  |   | (11,413 | )
|BASIC AND DILUTED NET LOSS                                                                            |                   |                         |        |      |  |      |        |      |  |      |         |   |  |   |         |   |  |   |         |  
|                                                                                                      | PER COMMON SHARE: |                         |        |      |  |      |        |      |  |      |         |   |  |   |         |   |  |   |         |   | 
|Loss before extraordinary items and cumulative
    effect of accounting change                        |                   | $                       | (0.01  | )    |  | $    | (0.05  | )    |  | $    | (0.39   | ) |  | $ | (119.69 | ) |  | $ | (42.67  | )
|Extraordinary items                                                                                   |                   |                         |       |      |  |      |       |      |  |      | (0.03   | ) |  |   | (1.96   | ) |  |   | (4.88   | )
|Cumulative effect of accounting change                                                                |                   |                         | (0.14  | )    |  |      |       |      |  |      |        |   |  |   |        |   |  |   |        |  
|                                                                                                      |                   |                         |        |      |  |      |        |      |  |      |         |   |  |   |         |   |  |   |         |  
|Basic and diluted net loss per common share                                                           |                   | $                       | (0.15  | )    |  | $    | (0.05  | )    |  | $    | (0.42   | ) |  | $ | (121.65 | ) |  | $ | (47.55  | )
|                                                                                                      |                   |                         |        |      |  |      |        |      |  |      |         |   |  |   |         |   |  |   |         |  
|Weighted average number of common shares used in
    basic and diluted calculation                    |                   |                         | 43,177 |      |  |      | 34,218 |      |  |      | 31,715  |   |  |   | 240     |   |  |   | 240     |  

|                                                            |  |              |         |      |  |      |         |      |  |      |         |  |  |   |         |   |  |   |         |  
|----------------------------------------------------------- |  | ------------ | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | - |  | - | ------- | -
|                                                            |  |             
|                                                            |  | December 31,
|                                                            |  |             
|                                                            |  | 2002         |         | 2001 |  | 2000 |         | 1999 |  | 1998
|                                                            |  |              |         |      |  |      |         |      |  |     
|BALANCE SHEET DATA(1)(2):                                   |  |              |         |      |  |      |         |      |  |      |         |  |  |   |         |   |  |   |         |  
|Current assets                                              |  | $            | 16,984  |      |  | $    | 12,179  |      |  | $    | 12,012  |  |  | $ | 10,329  |   |  | $ | 11,619  |  
|Total assets                                                |  |              | 308,030 |      |  |      | 306,356 |      |  |      | 252,733 |  |  |   | 83,727  |   |  |   | 67,618  |  
|Current liabilities                                         |  |              | 7,948   |      |  |      | 6,054   |      |  |      | 4,902   |  |  |   | 3,115   |   |  |   | 13,027  |  
|Long-term debt and capital leases, less current
    portion |  |              | 11,449  |      |  |      | 87,094  |      |  |      | 45,094  |  |  |   | 25,331  |   |  |   | 34,618  |  
|Redeemable preferred stock                                  |  |              |        |      |  |      |        |      |  |      |        |  |  |   | 89,265  |   |  |   | 27,406  |  
|Total stockholders equity (deficit)                        |  | $            | 278,490 |      |  | $    | 208,338 |      |  | $    | 198,420 |  |  | $ | (37,810 | ) |  | $ | (10,077 | )



---



|    |                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Acquisitions in 2002, 2001, 2000, 1999 and 1998,
    affect comparability among years (see Note 2 in Notes to
    Consolidated Financial Statements).                                                                                                                                                                                
|   
|(2) | On June 15, 1998, we acquired, pursuant to
    an agreement of merger, all of the outstanding common stock of
    Faircom Inc. for 3,700,000 shares of our Series C
    convertible preferred stock. The acquisition was treated for
    accounting purposes as the acquisition of Regent by Faircom
    under the purchase method of

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|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | accounting, with Faircom as the accounting
    acquirer. Consequently, the historical financial statements
    prior to June 15, 1998, the date of merger, are those of
    Faircom.
|   
|(3) | Refer to Managements Discussion and
    Analysis of Financial Condition and Results of Operations for
    discussion of year 2000 extraordinary item.                              
|   
|(4) | Refer to Note 8 of the Notes to Consolidated
    Financial Statements.                                                                                                              
|   
|(5) | Refer to Note 5 of the Notes to Consolidated
    Financial Statements.                                                                                                              






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

Introduction



| |        
| | -------
| | General

Our company was formed in November 1996 to
acquire, own and operate clusters of radio stations in mid-sized
and small markets. The proceeds from our January 2000 Initial
Public Offering (IPO), proceeds from our April 2002
offering of common stock, and borrowings under our credit
facility have given us the ability to increase our size
significantly over the past three years. We currently own 73
radio stations in 17 markets. During 2002, we acquired three
radio stations in our Flint, Michigan market, one radio station
in our Grand Rapids, Michigan market, and disposed of one radio
station in Albany, New York. In February 2003, we completed the
purchase of 12 radio stations in five new markets. In
conjunction with the pending acquisition of these stations, we
provided the stations with programming and other services
beginning in September 2002. We have the following pending
transactions.



| |   |                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The exchange of four radio stations we currently
    own in one market for five radio stations in a market we have a
    presence in. In March 2003, we began providing programming and
    other services to the stations we intend to acquire, and the
    purchaser of the stations we intend to sell began providing the
    same such services to those stations.
|
| |  | The purchase of two radio stations in an existing
    market, one of which we began providing programming and other
    services to in February 2003.                                                                                                                                                                                                                 

The principal source of our revenue is the sale
of broadcasting time on our radio stations for advertising. As a
result, our revenue is affected primarily by the advertising
rates our radio stations charge. Correspondingly, the rates are
based upon a stations ability to attract audiences in the
demographic groups targeted by its advertisers, as measured
principally by periodic Arbitron Radio Market Reports. In 2002,
our radio stations derived approximately 84% of their net
broadcast revenues from local and regional advertising in the
markets in which they operated, and the remainder resulted
principally from the sale of national advertising, network
compensation payments and other miscellaneous transactions.

The financial results of our business are
seasonal. As is typical in the radio broadcasting industry, our
first calendar quarter will be expected to produce the lowest
revenues for the year, and the fourth calendar quarter will be
expected to produce the highest revenues for the year. Our
operating results in any period may be affected by the
incurrence of advertising and promotion expenses that do not
necessarily produce commensurate revenues until the impact of
the advertising and promotion is realized in future periods.

Prior to 2002, and excluding gains on the sale or
exchange of radio stations, we had historically generated net
losses, primarily as a result of significant non-cash charges
for depreciation and amortization relating to the acquisitions
of radio stations and interest charges on outstanding debt.
Prior to new guidance that was issued by the Financial
Accounting Standards Board in 2001 relating to purchase
accounting and the amortization of intangible assets, we
historically amortized on a straight-line method over a 15- to
40-year period, the FCC licenses and goodwill attributable to
substantially all of our radio stations. During 2001, the
Financial Accounting Standards Board issued new guidance on
purchase accounting and the amortization of intangible assets,
which significantly reduced the amount of non-cash amortization
charges we recognized in our financial statements in 2002.
Goodwill and FCC licenses we recorded for acquisitions that we
completed subsequent to July 1, 2001, were not amortized
due to this new guidance, and beginning January 1, 2002, we
ceased amortizing all goodwill and FCC licenses. Based upon the
large number of acquisitions we

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consummated within the last three years, we
anticipate that depreciation charges will continue to be
significant for several years. To the extent that we complete
additional acquisitions, our interest expense and depreciation
charges related to property and equipment and other intangible
assets are likely to increase.


Our financial results are dependent on a number
of factors, including the general strength of the local and
national economies, population growth, the ability to provide
popular programming, local market and regional competition,
relative efficiency of radio broadcasting compared to other
advertising media, signal strength and government regulation and
policies. From time to time, the markets in which we operate
experience weak economic conditions that may negatively affect
our revenue. We believe, however, that this impact is somewhat
mitigated by our diverse geographical presence.



| |                                                        
| | -------------------------------------------------------
| | Effect of Recently Issued Accounting
    Pronouncements

In December 2002, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 148, Accounting for
Stock-Based Compensation  Transition and
Disclosure  an amendment of FASB Statement
No. 123 (SFAS 148). SFAS 148 amends FASB
Statement No. 123, Accounting for Stock-Based
Compensation to provide alternative methods of transition
for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition,
SFAS 148 amends the disclosure requirements of Statement
No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method
used on reported results. The transition guidance and annual
disclosure provisions of SFAS 148 are effective for fiscal years
ending after December 15, 2002, with earlier application
permitted in certain circumstances. The interim disclosure
provisions are effective for financial reports containing
financial statements for interim periods beginning after
December 15, 2002. We have adopted the annual financial
statement disclosure provisions of SFAS 148 and have reflected
such disclosures in Note 1 of the Notes to Consolidated
Financial Statements. We have not yet determined the impact, if
any, of the transition and interim financial statement
disclosure provisions of SFAS 148.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (FIN 45). FIN 45
provides for an interpretation of Statements of Financial
Accounting Standards Nos. 5, 57, and 107, and rescission of
Financial Accounting Standards Board Interpretation No. 34.
This interpretation elaborates on the disclosures to be made by
a guarantor in its financial statements about its obligations
under certain guarantees that it has issued. FIN 45 also
clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. We will adopt
FIN 45 effective January 1, 2003 and will apply its
provisions prospectively to all guarantees issued or modified
after December 31, 2002. We do not believe the impact of
adoption, if any, will materially impact our financial position,
cash flows or result of operations.

In June 2002, the FASB issued Statement of
Financial Accounting Standards No. 146, Accounting
for Exit or Disposal Activities (SFAS 146).
SFAS 146 addresses the recognition, measurement, and reporting
of costs that are associated with exit and disposal activities,
including costs related to terminating contracts that are not
capital leases and termination benefits that employees who are
involuntarily terminated receive in certain instances. SFAS 146
supersedes Emerging Issues Task Force Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (Including Certain
Costs Incurred in a Restructuring) (EITF 94-3)
and requires liabilities associated with exit and disposal
activities to be expensed as incurred. We will adopt SFAS 146
effective January 1, 2003, and apply its provisions
accordingly.

In April 2002, the FASB issued Statement of
Financial Accounting Standards No. 145, Rescission of
SFAS Nos. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections
(SFAS 145). SFAS 145 rescinds FASB Statement
No. 4, Reporting Gains and Losses from Extinguishment
of Debt, and an amendment of that Statement, FASB
Statement No. 64, Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements. As a result, gains and
losses from extinguishments of debt should be classified as
extraordinary items only if they meet the criteria in APB
Opinion No. 30, Reporting

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##### Table of Contents



the Results of Operations, Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions
(APB 30). Applying the provisions of
APB 30 will distinguish transactions that are part of an
entitys recurring operations from those that are unusual
or infrequent or that meet the criteria for classification as an
extraordinary item. SFAS 145 also amends FASB Statement
No. 13, Accounting for Leases, to eliminate
inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease
modifications that have economic effects that are similar to
sale-leaseback transactions. This statement also rescinds FASB
Statement No. 44, Accounting for Intangible Assets of
Motor Carriers and amends other existing authoritative
pronouncements to make various technical corrections, clarify
meanings or describe their applicability under changed
conditions. We adopted this standard for lease transactions
entered into after May 15, 2002 and have determined the
impact of adoption to be immaterial. The provisions of SFAS 145
related to debt extinguishments will be adopted on
January 1, 2003, and could have an impact on us, to the
extent that we would make any changes to our credit facility. We
had no debt extinguishments during the year ended
December 31, 2002.


In June 2001, the FASB issued Statement of
Financial Accounting Standards No. 143, Accounting
for Asset Retirement Obligations (SFAS 143)
that addresses the recognition of asset retirement obligations.
The objective of SFAS 143 is to provide guidance for legal
obligations associated with the retirement of tangible
long-lived assets. The statement is effective for fiscal years
beginning after June 15, 2002. We will adopt SFAS 143 as
required in the year 2003, and have determined the impact of
adoption to be immaterial.



| |                             
| | ----------------------------
| | Critical Accounting Policies

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make judgements
and estimates that affect the reported amounts of assets,
liabilities, revenues, and expenses, and related disclosures of
contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, the most significant of which include
establishing allowances for doubtful accounts, evaluating the
realizability of our deferred tax assets, allocating the
purchase price of acquisitions, and determining the
recoverability of our long-lived assets. The basis for our
estimates are historical experience and various assumptions that
are believed to be reasonable under the circumstances, given the
available information at the time of the estimate, the results
of which form the basis for making judgements about the carrying
values of assets and liabilities that are not readily available
from other sources. Actual results may differ from these
estimates under different assumptions and conditions.

We believe the following critical accounting
policies affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Allowance for Doubtful
    Accounts We maintain an
    allowance for doubtful accounts for estimated losses resulting
    from the inability of our customers to make required payments.
    We routinely review customer account activity in order to assess
    the adequacy of the allowances provided for potential losses.
    Our allowance is calculated based upon a percentage of cash
    revenues, and includes a provision for known issues. Based on
    historical information, we believe that our allowance is
    adequate. However, changes in general economic, business and
    market conditions could affect the ability of our customers to
    make their required payments; therefore, the allowance for
    doubtful accounts is reviewed monthly and changes to the
    allowance are updated as new information is received. Although
    no near-term changes are expected, unforeseen changes to future
    allowance percentages could materially impact overall financial
    results.
|
| | Deferred Tax
    Assets At
    December 31, 2002, we had a deferred tax asset of
    approximately $13.4 million, the primary component of which
    is our net operating loss carryforwards. During the third and
    fourth quarters of 2002, we recorded $4.4 million of income
    tax expense to establish valuation allowances on net operating
    loss carryforwards scheduled to expire in the years 2002 through
    2016. The recording of the $4.4 million valuation allowance
    resulted in a net deferred tax asset of $9.0 million. We
    have determined that it is not necessary to record a valuation
    allowance against our net operating loss carryforwards for years
    2017 through 2022, based on estimated future taxable income
    during those years. Our estimated future taxable income in those
    periods takes into consideration the run-off of significant tax
    amortization related to existing FCC licenses and deductible
    goodwill by 2016. The decision to record

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the valuation allowance was based on the downturn
    in economic conditions that have reduced private market values
    of radio station assets and limited our ability to implement our
    tax-planning strategy to utilize the net operating loss
    carryforwards. The need to record an additional valuation
    allowance against our deferred tax assets is reviewed quarterly,
    and if we were to determine that we would be unable to realize a
    portion, or the remainder of the deferred tax assets in the
    future, an adjustment to the deferred tax assets would be
    recorded as expense in the period such determination was made.
    Additionally, if it were determined that we would be able to
    utilize a portion of the net operating loss carryforwards that
    are reserved for in the valuation allowance, an adjustment to
    the valuation allowance would be recorded as a reduction of
    expense. If our provisions for current or deferred taxes are not
    adequate due to unfavorable law changes or unforeseen economic
    conditions, we could experience losses in excess of the current
    or deferred income tax provisions we have established.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | Acquisition of Radio
    Stations The total cost of
    acquired stations is allocated to the underlying net assets of
    such stations, based on their respective estimated fair values.
    The excess of the purchase price over the estimated fair values
    of the net assets acquired is recorded as goodwill. Determining
    the fair value of assets acquired and liabilities assumed
    requires managements judgment and often involves the use
    of significant estimates and assumptions, including assumptions
    with respect to asset lives and market multiples, among other
    items.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Impairment of Long-Lived
    Assets In accordance with
    Statement of Financial Accounting Standards No. 144,
    Accounting for the Impairment or Disposal of Long-Lived
    Assets (SFAS 144), long-lived assets to be
    held and used (fixed assets and definite-lived intangible
    assets) are reviewed for impairment whenever events or
    circumstances indicate that the carrying amount may not be
    recoverable. The carrying amount of a long-lived asset is not
    recoverable if it exceeds the sum of the undiscounted cash flows
    expected to result from the use and eventual disposal of the
    asset. If we were to determine that the carrying amount of an
    asset was not recoverable, we would record an impairment loss
    for the difference between the carrying amount and the fair
    value of the asset. We determine the fair value of our
    long-lived assets based upon the market value of similar assets,
    if available, or independent appraisals, if necessary.
    Long-lived assets to be disposed of and/or held for sale are
    reported at the lower of carrying amount or fair value, less
    cost to sell. We determine the fair value of these assets in the
    same manner as described for assets held and used.                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Goodwill and Indefinite-Lived Intangible
    Assets The FASB issued
    Statement of Financial Accounting Standards No. 141,
    Business Combinations (SFAS 141) and
    Statement of Financial Accounting Standards No. 142,
    Goodwill and Other Intangible Assets (SFAS
    142) in June 2001. SFAS 141 specifies criteria that
    intangible assets acquired in a purchase method business
    combination must be recognized and reported apart from goodwill.
    SFAS 142 requires that a company no longer amortize goodwill and
    intangible assets determined to have an indefinite life and also
    requires an annual impairment testing of those assets. Our FCC
    licenses qualify as indefinite-lived intangible assets, and
    represent a significant portion of the assets on our balance
    sheet. Consistent with the application provisions of SFAS 142,
    we apply a fair value approach employing a discounted cash flow
    methodology to test impairment of both indefinite-lived
    intangible assets and goodwill on a market by market basis. To
    arrive at a value for discounted cash flow of a market,
    management relies upon estimates of future cash flows and the
    effects of changes in business conditions. To the extent that
    the carrying value exceeds the fair value of the assets, an
    impairment loss will be recorded. SFAS 142 also requires
    intangible assets with definite useful lives to continue to be
    amortized over their respective useful lives and be tested for
    impairment whenever events and circumstances indicate that the
    carrying amount may not be recoverable.



| |                                                               
| | --------------------------------------------------------------
| | Cautionary Statement Concerning
    Forward-Looking Statements

This Form 10-K includes certain
forward-looking statements with respect to our company and its
business that involve risks and uncertainties. These statements
are influenced by our financial position, business strategy,
budgets, projected costs and the plans and objectives of
management for future operations. They use words such as
anticipate, believe, plan,
estimate, expect, intend,
project and other

25



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similar expressions. Although we believe our
expectations reflected in these forward-looking statements are
based on reasonable assumptions, we cannot assure you that our
expectations will prove correct. Actual results and developments
may differ materially from those conveyed in the forward-looking
statements. For these statements, we claim the protections for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.


Important factors that could cause actual results
to differ materially from the expectations reflected in the
forward-looking statements made in this Form 10-K include
changes in general economic, business and market conditions, as
well as changes in such conditions that may affect the radio
broadcast industry or the markets in which we operate,
including, in particular, the current political unrest and
ongoing war on terrorism and in the Middle East, increased
competition for attractive radio properties and advertising
dollars, fluctuations in the cost of operating radio properties,
our ability to manage our growth, our ability to integrate our
acquisitions, and changes in the regulatory climate affecting
radio broadcast companies. Further information on other factors
that could affect the financial results of Regent
Communications, Inc. is included in Regents other filings
with the Securities and Exchange Commission. These documents are
available free of charge at the Commissions website at
http://www.sec.gov and/or from Regent Communications,
Inc. The forward-looking statements speak only as of the date on
which they are made, and we undertake no obligation to update
any forward-looking statement to reflect events or circumstances
after the date of this Form 10-K. If we do update one or
more forward-looking statements, you should not conclude that we
will make additional updates with respect to those or any other
forward-looking statements.

Results of Operations

Following is a discussion of the key factors that
have affected our business over the last three years. This
commentary should be read in conjunction with our consolidated
financial statements and the related footnotes included herein.



| |                      
| | ---------------------
| | 2002 Compared to 2001

Results from operations in 2002, as compared to
2001, were affected considerably by full year results for our
2001 acquisitions in Peoria, Illinois, Lafayette, Louisiana, and
to a lesser extent, Erie, Pennsylvania, and our 2002
acquisitions of radio stations in Flint and Grand Rapids,
Michigan, as well as the 2001 disposition of our stations in
Palmdale, California. Additionally, in September 2002, we began
operating the Brill Media stations under time brokerage
agreements. Accordingly, the results of our operations in 2002
are not comparable to those of the prior period, nor are they
necessarily indicative of future results. Additionally, our
results for the third and fourth quarters of 2001 were
negatively impacted by the September 11, 2001 terrorist
attacks, and we cannot predict the effect on our operations, if
any, of any future terrorist attacks or the impact of the war in
the Middle East.



| |                       
| | ----------------------
| | Net Broadcast Revenues

Net broadcast revenues were approximately
$70.4 million in 2002, a 31.0% increase over 2001 net
revenues of approximately $53.7 million. Approximately
$9.3 million of the increase was attributable to full year
results for stations we acquired in 2001. Results for the
stations we acquired or began operations under time brokerage
agreements in 2002 contributed approximately $6.6 million
of the net revenue increase, and the remainder was due to
revenue increases at stations we owned for both years, offset
partially by the sale of our Palmdale, California stations
during 2001.



| |                           
| | --------------------------
| | Station Operating Expenses

Operating expenses were approximately
$49.0 million in 2002, compared to approximately
$38.5 million in 2001. The increase is primarily a result
of full year results for the stations we acquired in 2001, which
represented approximately $5.8 million of the increase, as
well as expenses for the stations we purchased or operated under
time brokerage agreements in 2002, which added approximately
$5.6 million of additional operating expense. A significant
portion of the increase in our operating expense was due to
research and

26



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##### Table of Contents



promotional expenses we incurred to properly
target our intended demographic audiences within our markets, as
well as to promote our radio stations through various
advertising campaigns and contest prize give-aways, which we
believe will promote long-term growth at our radio stations.




| |                              
| | -----------------------------
| | Depreciation and Amortization

Depreciation and amortization expense decreased
by 75.0%, from approximately $13.4 million in 2001, to
approximately $3.4 million in 2002. Effective
January 1, 2002, we adopted the provisions of SFAS 142,
which eliminated the amortization of goodwill and other
intangible assets determined to have an indefinite life, and
also requires an annual impairment testing of those assets.
Amortization expense related to goodwill and indefinite-lived
intangible assets was approximately $6.3 million, net of
income taxes, for the year ended December 31, 2001.



| |                  
| | -----------------
| | Corporate Expense

Corporate general and administrative expenses
increased from approximately $4.9 million in 2001 to
approximately $6.1 million in 2002. This increase was due
to a combination of the following: salary components of two
employees who were charged at the market level in 2001 and were
charged to corporate expense in 2002, due to our ability to
leverage those resources at the corporate level; increased legal
expenses; implementation of and compliance with various
provisions of the Sarbanes-Oxley Act of 2002; an increase in
Directors and Officers insurance premiums; and
compensation paid to outside Directors for their service on the
Companys Board of Directors, a policy which began in 2002.



| |                       
| | ----------------------
| | Impairment of Goodwill

In conjunction with our annual impairment testing
of goodwill and indefinite-lived intangible assets, it was
determined that the fair value of goodwill for our Peoria,
Illinois market was less than the carrying value of the goodwill
recorded in our financial statements. As a result, during the
fourth quarter of 2002, we recorded an impairment charge of
$1.8 million, net of income taxes, against operating income.



| |                                  
| | ---------------------------------
| | Gain on Sale of Long-lived Assets

On March 12, 2002, we completed the sale of
WGNA-AM in Albany, New York for $2.0 million in cash. We
recorded a pre-tax gain of approximately $442,000 on the sale.
We treated the disposal of WGNA-AM as the disposal of long-lived
assets, rather than a business or a component of a business, due
to the fact that the station had no independent revenue stream
from its operations.



| |                 
| | ----------------
| | Interest Expense

Interest expense decreased by 32.7% in 2002
compared to 2001. The decrease was primarily the result of the
paydown of outstanding debt under our credit facility with
proceeds from our April 2002 stock offering. Also contributing
to the decrease was lower interest rates throughout 2002, as
compared to 2001. The weighted average interest rate for the
year 2002 was 3.59%, compared to 5.32% for the 2001 year.
The weighted average interest rate at December 31, 2002 was
2.67%, as compared to an average interest rate of 3.37% at
December 31, 2001.



| |                                   
| | ----------------------------------
| | Gain on the Sale of Radio Stations

On June 1, 2001, we completed the sale of
our three stations in Palmdale, California to Concord Media
Group, Inc. We recognized a pre-tax gain of approximately
$4.4 million on this transaction, which is reflected in the
Consolidated Statements of Operations for the year ended
December 31, 2001.



| |             
| | ------------
| | Income Taxes

We recorded income tax expense of approximately
$7.2 million in 2002, prior to the income tax benefit from
cumulative effect of accounting change. This represents a 34%
federal rate and a 4.8% state rate, and

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includes $4.4 million of income tax expense
related to the establishment of valuation allowances on our
federal and state net operating loss carryforwards scheduled to
expire in the years 2002 through 2016. We have cumulative
federal and state tax loss carryforwards of approximately
$49.8 million at December 31, 2002 which expire in the
years 2003 through 2022. The utilization of a portion of these
net operating loss carryforwards for federal income tax purposes
is limited, pursuant to the annual utilization limitations
provided under the provisions of Internal Revenue Code
Section 382. In arriving at the determination as to the
amount of the valuation allowance required for the years ended
December 31, 2002 and 2001, we considered the impact of
deferred tax liabilities resulting from purchase transactions,
statutory restrictions on the use of operating losses, and a tax
planning strategy available to us. Consequently, during the
second half of 2002, we determined that when considering the
current state of private market values for radio station assets,
it would be more likely than not that we would not be able to
implement our tax planning strategy within the foreseeable
future.




| |                                           
| | ------------------------------------------
| | Cumulative Effect of Accounting
    Change

Upon the adoption of SFAS 142, we completed a
transitional impairment analysis of our indefinite-lived FCC
licenses and recorded an impairment loss of approximately
$3.9 million, net of income tax benefit of approximately
$2.4 million. Additionally, we completed the two-step
transitional impairment analysis of goodwill and recorded an
impairment loss of approximately $2.2 million, net of
income tax benefit of approximately $1.4 million. To
estimate fair value, we used a discounted cash flow methodology.
These losses are reflected as a cumulative effect of accounting
change in the Consolidated Statements of Operations for the year
ended December 31, 2002.



| |                     
| | --------------------
| | Same Station Results

The performance of a radio station group, such as
ours, is customarily measured by its ability to generate
broadcast cash flow. The term broadcast cash flow
means operating income (loss) before depreciation and
amortization, corporate general and administrative expenses,
gain (loss) on sale of long-lived assets and impairment of
goodwill and FCC licenses. Although broadcast cash flow is not a
measure of performance calculated in accordance with accounting
principles generally accepted in the United States, we believe
that broadcast cash flow is accepted by the broadcasting
industry as a generally recognized measure of performance and is
used by analysts who report publicly on the performance of
broadcasting companies. Nevertheless, this measure should not be
considered in isolation or as a substitute for operating income
(loss), net income (loss), net cash provided by (used in)
operating activities or any other measure for determining our
operating performance or liquidity that is calculated in
accordance with generally accepted accounting principles.

While acquisitions have affected the
comparability of our 2002 operating results to those of 2001, we
believe meaningful quarter-to-quarter comparisons can be made
for results of operations for those markets in which we have
been operating for five full quarters, exclusive of markets
disposed of during those years. These comparable results between
2002 and 2001 are listed in the table below by quarter,
excluding the effect of barter transactions (dollars in
thousands).

|                                              |  |         |        |         |  |        |        |           |  |           |       |        |  |   |       |  |  |   |       |  |  |  |       |  
|--------------------------------------------- |  | ------- | ------ | ------- |  | ------ | ------ | --------- |  | --------- | ----- | ------ |  | - | ----- |  |  | - | ----- |  |  |  | ----- | -
|                                              |  | 2002    |        | 2001    |  |        |        | 2002      |  | 2001      |       |       
|                                              |  | Net     |        | Net     |  | %      |        | Broadcast |  | Broadcast |       | %     
|                                              |  | Revenue |        | Revenue |  | Change |        | Cash Flow |  | Cash Flow |       | Change
|                                              |  |         |        |         |  |        |        |           |  |           |       |       
|Quarter 1                                     |  |         |        |         |  |        |        |           |  |           |       |        |  |   |       |  |  |   |       |  |  |  |       |  
|Same stations (43 stations in
    10 markets) |  | $       | 9,732  |         |  | $      | 9,969  |           |  |           | (2.4) | %      |  | $ | 2,323 |  |  | $ | 2,572 |  |  |  | (9.7) | %
|Remaining stations and barter effect          |  |         | 3,254  |         |  |        | 1,365  |           |  |           |       |        |  |   | 717   |  |  |   | 321   |  |  |  |       |  
|                                              |  |         |        |         |  |        |        |           |  |           |       |        |  |   |       |  |  |   |       |  |  |  |       |  
|Total                                         |  | $       | 12,986 |         |  | $      | 11,334 |           |  |           |       |        |  | $ | 3,040 |  |  | $ | 2,893 |  |  |  |       |  
|                                              |  |         |        |         |  |        |        |           |  |           |       |        |  |   |       |  |  |   |       |  |  |  |       |  

Revenue for the first quarter of 2002 was
negatively impacted by the weak economy. In addition, we had a
very successful first quarter of 2001, making comparable revenue
growth in 2002 difficult, given the

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economic climate. These two factors resulted in a
corresponding decrease in broadcast cash flow compared to the
prior year quarter.


|                                              |  |         |        |         |  |        |        |           |  |           |       |        |  |   |       |  |  |   |       |  |  |  |     |  
|--------------------------------------------- |  | ------- | ------ | ------- |  | ------ | ------ | --------- |  | --------- | ----- | ------ |  | - | ----- |  |  | - | ----- |  |  |  | --- | -
|                                              |  | 2002    |        | 2001    |  |        |        | 2002      |  | 2001      |       |       
|                                              |  | Net     |        | Net     |  | %      |        | Broadcast |  | Broadcast |       | %     
|                                              |  | Revenue |        | Revenue |  | Change |        | Cash Flow |  | Cash Flow |       | Change
|                                              |  |         |        |         |  |        |        |           |  |           |       |       
|Quarter 2                                     |  |         |        |         |  |        |        |           |  |           |       |        |  |   |       |  |  |   |       |  |  |  |     |  
|Same stations (43 stations in
    10 markets) |  | $       | 12,904 |         |  | $      | 12,941 |           |  |           | (0.3) | %      |  | $ | 4,765 |  |  | $ | 4,544 |  |  |  | 4.9 | %
|Remaining stations and barter effect          |  |         | 4,358  |         |  |        | 1,717  |           |  |           |       |        |  |   | 1,027 |  |  |   | 241   |  |  |  |     |  
|                                              |  |         |        |         |  |        |        |           |  |           |       |        |  |   |       |  |  |   |       |  |  |  |     |  
|Total                                         |  | $       | 17,262 |         |  | $      | 14,658 |           |  |           |       |        |  | $ | 5,792 |  |  | $ | 4,785 |  |  |  |     |  
|                                              |  |         |        |         |  |        |        |           |  |           |       |        |  |   |       |  |  |   |       |  |  |  |     |  

Revenue for the second quarter was flat compared
to the prior year quarter results, as economic conditions showed
little improvement. Broadcast cash flow increased over the prior
year quarter due to cost savings in administrative and
promotional expenses.

|                                              |  |         |        |         |  |        |        |           |  |           |     |        |  |   |       |  |  |   |       |  |  |  |      |  
|--------------------------------------------- |  | ------- | ------ | ------- |  | ------ | ------ | --------- |  | --------- | --- | ------ |  | - | ----- |  |  | - | ----- |  |  |  | ---- | -
|                                              |  | 2002    |        | 2001    |  |        |        | 2002      |  | 2001      |     |       
|                                              |  | Net     |        | Net     |  | %      |        | Broadcast |  | Broadcast |     | %     
|                                              |  | Revenue |        | Revenue |  | Change |        | Cash Flow |  | Cash Flow |     | Change
|                                              |  |         |        |         |  |        |        |           |  |           |     |       
|Quarter 3                                     |  |         |        |         |  |        |        |           |  |           |     |        |  |   |       |  |  |   |       |  |  |  |      |  
|Same stations (43 stations in
    10 markets) |  | $       | 13,601 |         |  | $      | 12,548 |           |  |           | 8.4 | %      |  | $ | 4,712 |  |  | $ | 3,932 |  |  |  | 19.8 | %
|Remaining stations and barter effect          |  |         | 5,109  |         |  |        | 1,481  |           |  |           |     |        |  |   | 1,254 |  |  |   | 246   |  |  |  |      |  
|                                              |  |         |        |         |  |        |        |           |  |           |     |        |  |   |       |  |  |   |       |  |  |  |      |  
|Total                                         |  | $       | 18,710 |         |  | $      | 14,029 |           |  |           |     |        |  | $ | 5,966 |  |  | $ | 4,178 |  |  |  |      |  
|                                              |  |         |        |         |  |        |        |           |  |           |     |        |  |   |       |  |  |   |       |  |  |  |      |  

The events of September 11, 2001 had a
significant impact on the Companys net revenue and
broadcast cash flow for the third quarter of 2001. The third
quarter of 2002 reflects improved results, as well as increases
in political revenue due to cyclical elections.

|                                              |  |         |        |         |  |        |        |           |  |           |     |        |  |   |       |  |  |   |       |   |  |  |      |  
|--------------------------------------------- |  | ------- | ------ | ------- |  | ------ | ------ | --------- |  | --------- | --- | ------ |  | - | ----- |  |  | - | ----- | - |  |  | ---- | -
|                                              |  | 2002    |        | 2001    |  |        |        | 2002      |  | 2001      |     |       
|                                              |  | Net     |        | Net     |  | %      |        | Broadcast |  | Broadcast |     | %     
|                                              |  | Revenue |        | Revenue |  | Change |        | Cash Flow |  | Cash Flow |     | Change
|                                              |  |         |        |         |  |        |        |           |  |           |     |       
|Quarter 4                                     |  |         |        |         |  |        |        |           |  |           |     |        |  |   |       |  |  |   |       |   |  |  |      |  
|Same stations (49 stations in
    11 markets) |  | $       | 13,368 |         |  | $      | 12,160 |           |  |           | 9.9 | %      |  | $ | 4,811 |  |  | $ | 3,652 |   |  |  | 31.7 | %
|Remaining stations and barter effect          |  |         | 8,064  |         |  |        | 1,564  |           |  |           |     |        |  |   | 1,818 |  |  |   | (293  | ) |  |  |      |  
|                                              |  |         |        |         |  |        |        |           |  |           |     |        |  |   |       |  |  |   |       |   |  |  |      |  
|Total                                         |  | $       | 21,432 |         |  | $      | 13,724 |           |  |           |     |        |  | $ | 6,629 |  |  | $ | 3,359 |   |  |  |      |  
|                                              |  |         |        |         |  |        |        |           |  |           |     |        |  |   |       |  |  |   |       |   |  |  |      |  

Net revenue for the fourth quarter of 2002 showed
improvements in the advertising environment, along with the
relative maturity of our portfolio over the same period of the
prior year.

2001 Compared to 2000



| |                                                         
| | --------------------------------------------------------
| | Net Broadcast Revenue and Station Operating
    Expenses

In 2001 compared to 2000, we experienced
increases in net broadcast revenues and station operating
expenses, due primarily to our year 2001 acquisition of radio
stations in Peoria, Illinois and full year results for our year
2000 acquisitions in Albany, New York and Grand Rapids,
Michigan. These acquisitions contributed approximately
$12.9 million of the 21.9% increase in net revenue in 2001
over 2000, and approximately $9.3 million of the 27.7%
increase in operating expense for the same periods. Offsetting
these increases were decreases in the same categories due to the
disposition in 2001 of our Palmdale, California radio stations
and our year 2000 dispositions of our Flagstaff, Arizona,
Mansfield, Ohio, and Victorville, California markets, which
accounted for approximately $5.9 million and
$4.2 million of the variances in net revenue and operating
expense, respectively. Additionally, our 2001 results were
impacted by the events of September 11, 2001.

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| |                              
| | -----------------------------
| | Depreciation and Amortization

Depreciation and amortization expense increased
by 56.2% from 2000. This is due to a combination of a full year
of depreciation and amortization expense for acquisitions that
occurred at various times throughout the 2000 year, plus
depreciation expense on approximately $5.3 million of
depreciable property and equipment additions attributable to
station acquisitions in 2001, and to a lesser extent,
depreciation on approximately $3.2 million of capital
expenditures during 2001.



| |                   
| | ------------------
| | Corporate Expenses

Corporate general and administrative expenses
increased from approximately $4.5 million in 2000 to
approximately $4.9 million in 2001. Beginning in the second
quarter of 2000, we began increasing the size of our
infrastructure to meet the demands of supporting a public
company whose stock is listed on a national stock market.



| |                 
| | ----------------
| | Interest Expense

Interest expense decreased by 22.5% in 2001
compared to 2000. After removing the effect of approximately
$1.5 million of the 2000 interest expense, which was the
result of the mark to fair market value of our warrant
liability, interest expense increased approximately 20.3%. The
increase is due to an average debt level of approximately
$47.5 million during 2001 compared to approximately
$16.5 million in 2000. Average debt levels were lower in
2000 as we had paid down all our debt with proceeds from the IPO
in January 2000 and subsequently did not incur any borrowings
under our new credit facility until August 2000. The increase in
interest expense was mitigated somewhat by significant decreases
in interest rates during 2001. The weighted average interest
rate was 5.32% for the 2002 year, compared to 7.90% for the
2000 year. The weighted average interest rates were
approximately 3.37% and 8.05% at December 31, 2001 and
2000, respectively.



| |                                       
| | --------------------------------------
| | Gain on the Sale of Radio
    Stations

On June 1, 2001, we completed the sale of
our three stations in Palmdale, California to Concord Media
Group, Inc. We recognized a pre-tax gain of approximately
$4.4 million on this transaction, which is reflected in the
Consolidated Statements of Operations for the year ended
December 31, 2001. On August 24, 2000, we completed an
exchange agreement entered into with Clear Channel Broadcasting,
Inc., Capstar Radio Operating Company and their affiliates, in
which we exchanged our eight stations serving the Mansfield,
Ohio (2 FM/1 AM) and Victorville, California
(3 FM/2 AM) markets plus approximately
$80.5 million in cash for ten stations serving the Grand
Rapids, Michigan (3 FM/1 AM) and Albany, New York
(4 FM/2 AM) markets. As a result of this transaction,
we recognized a pre-tax gain on the exchange of approximately
$17.8 million, which is reflected in the Consolidated
Statements of Operations for the year ended December 31,
2000.



| |                   
| | ------------------
| | Income Tax Benefit

We recorded an income tax benefit of $665,000 in
2001. This tax benefit represents a 34% federal rate offset by
state income taxes and the amortization of intangibles in excess
of the amounts that are deductible for tax purposes. At
December 31, 2001, we had cumulative federal and state tax
loss carryforwards of approximately $40.0 million. These
loss carryforwards had expiration dates in years 2002 through
2021. The utilization of a portion of these net operating loss
carryforwards for federal income tax purposes is limited
pursuant to the annual utilization limitations provided under
the provisions of Internal Revenue Code Section 382. In
arriving at the determination as to the amount of the valuation
allowance required for the years ended December 31, 2001
and 2000, we considered the impact of deferred tax liabilities
resulting from purchase transactions, statutory restrictions on
the use of operating losses, and a tax planning strategy
available to us. Consequently, we determined that no valuation
allowance was required at December 31, 2001 and 2000.
During 2000, we released the entire valuation allowance. As a
result of these events, no income tax expense was recorded in
2000.

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| |                   
| | ------------------
| | Extraordinary Loss

On January 28, 2000, we paid off the
outstanding debt, accrued interest and related fees from our old
credit facility, totaling approximately $25.1 million,
using proceeds from our IPO. This final paydown resulted in an
extraordinary loss of approximately $1.1 million, net of
income tax, from the write-off of deferred financing costs.

Liquidity and Capital Resources

Our cash and cash equivalents balance at
December 31, 2002 was approximately $2.7 million
compared to approximately $1.8 million at December 31,
2001. Net cash provided by operating activities was
approximately $11.0 million in 2002, compared to
approximately $8.4 million in 2001. The increase was due
primarily to the operating activities of radio stations acquired
or operated under time brokerage agreements in 2002 and in the
latter part of 2001. Cash flow used in investing activities was
approximately $8.3 million in 2002 compared to
approximately $53.2 million in 2001. The decrease is due
primarily to fewer acquisitions of radio stations in 2002
compared to 2001, offset by proceeds from the disposition of
radio stations in 2001. Cash flows used in financing activities
were approximately $1.8 million, compared to cash flows
provided by financing activities of approximately
$45.8 million in 2001. During 2002, proceeds received from
our April 2002 stock offering and the final proceeds received
from our November 2001 private placement of equity were used to
repay borrowings under our credit facility. Additionally,
approximately $1.1 million was used to purchase treasury
stock during the last half of 2002. During 2001, cash provided
by financing activities was primarily the result of debt issued
in connection with our 2001 acquisitions and a private placement
of equity securities during the fourth quarter.



| |                 
| | ----------------
| | Sources of Funds

In 2002, our sources of cash totaled
approximately $92.8 million and were derived from a
combination of: net proceeds from our April 2002 common stock
offering; cash provided by operating activities; borrowings
under our credit facility; net proceeds from the sale of
long-lived assets; and final payment for shares issued during
our November 2001 private placement of equity.

On April 29, 2002, we completed the sale of
10.5 million shares of common stock at a price of $7.50 per
share. Net cash proceeds after underwriting discounts and
commissions were approximately $74.6 million. Approximately
$70.6 million of the proceeds were used to pay down
outstanding borrowings under our credit facility. The remaining
$4.0 million of proceeds were used to fund a portion of the
purchase price of two radio stations purchased during 2002.

We have a credit agreement with a group of
lenders that provides for a senior reducing revolving credit
facility in the initial amount of $125.0 million, maturing
December 31, 2006. The credit facility permits the
borrowing of available credit for working capital requirements
and general corporate purposes, including transaction fees and
expense, and to fund permitted acquisitions. The facility also
permits us to request from time to time that the lenders issue
letters of credit in an aggregate amount up to
$25.0 million in accordance with the same lending
provisions. Mandatory prepayments and commitment reductions are
required upon certain asset sales, subordinated debt proceeds,
excess cash flow amounts and sales of equity securities. On
April 30, 2002, the provisions of the excess cash flow
calculation reduced our available commitment by approximately
$3.9 million, and in April 2003, the provisions under that
calculation will further reduce our available commitment by
approximately $3.6 million. The commitment and our maximum
borrowings,

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including the permanent reduction due to excess
cash flow and the scheduled quarterly reductions, reduce over
five years, beginning in 2002, as follows (in thousands):


|             |  |                   |         | 
|------------ |  | ----------------- | ------- | 
|December 31, |  | Commitment Amount
|             |  |                  
|2001         |  | $                 | 125,000 | 
|2002         |  |                   | 102,793 | 
|2003         |  |                   | 77,919  | 
|2004         |  |                   | 55,657  | 
|2005         |  |                   | 33,394  | 
|2006         |  |                   | -0-     | 

The scheduled reduction in available commitment
amounts each year occurs ratably over each quarter. For 2002,
the quarterly reduction amount for the first quarter was
$4,687,500. The remaining 2002 quarterly reductions were reduced
to approximately $4.5 million per quarter, due to the
permanent reduction in the facility from the April 2002 excess
cash flow reduction. The $25.0 million letter of credit
sub-limit also reduces proportionately but not below
$15.0 million. We received net proceeds of approximately
$74.6 million from the April 29, 2002 public sale of
our common stock, which we used to pay down approximately
$70.6 million of outstanding indebtedness under the
facility. Under the terms and conditions of the credit facility,
the borrowings available to us would have been permanently
reduced by the net proceeds we received from the stock offering.
However, we exercised our option to provide a reinvestment
notice to the lender, which allowed us to re-borrow
substantially all of such proceeds for acquisitions and other
permitted investments which were complete and/or for which
binding agreements were obtained within 270 days of such
election. Our Brill Media and AGM-Nevada purchases qualify under
such election, and in February 2003, we re-borrowed
$62.0 million of the amounts covered by the reinvestment
notice to fund the Brill Media purchase. We intend to re-borrow
at least $5.0 million of the purchase price of the
AGM-Nevada acquisition, the minimum portion which must be paid
in cash, and may, at our option, fund the entire
$7.75 million purchase price through borrowings under the
credit facility. Consequently, borrowings under the facility
were permanently reduced in January 2003, by approximately
$4.4 million.

Under the credit facility, we are required to
maintain a minimum interest rate coverage ratio, minimum fixed
charge coverage ratio, maximum corporate overhead, and maximum
financial leverage ratio and to observe negative covenants
customary for facilities of this type. Borrowings under our
credit facility bear interest at a rate equal to, at our option,
either (a) the higher of the rate announced or published
publicly from time to time by the agent as its corporate base of
interest or the Overnight Federal Funds Rate plus 0.5%, in
either case plus the applicable margin determined under the
credit facility, or (b) the reserve-adjusted Eurodollar
Rate plus the applicable margin which varies between 1.25% and
2.75% depending upon our financial leverage. Borrowings under
the credit facility bore interest at an average rate of 2.67% as
of December 31, 2002. We are required to pay certain fees
to the agent and the lenders for the underwriting commitment,
which varies between 0.375% and 0.75% depending upon the amount
of the facility utilized and our leverage ratio, and for the
administration and use of the credit facility. Our indebtedness
under the credit facility is collateralized by liens on
substantially all of our assets and by a pledge of our operating
and license subsidiaries stock and is guaranteed by these
subsidiaries. As of March 1, 2003 we had borrowings under
this facility of approximately $71.5 million.

On March 12, 2002, we completed the
disposition of substantially all the operating assets of
WGNA-AM, serving the Albany, New York market, for
$2.0 million in cash to ABC, Inc. On February 15,
2002, ABC, Inc. began providing programming and other services
to the station under a time brokerage agreement. We recognized a
pre-tax gain on the sale of approximately $442,000. The proceeds
from the sale of the station were used to pay down borrowings
under our credit facility.

On February 5, 2002, we received
approximately $1.2 million from the release of an escrow
account holding 200,000 shares of our common stock. The shares,
sold to a venture capital fund related to one of our independent
directors, were part of our November 2001 private placement
offering of 900,000 shares issued at $5.75 per share, and were
held in escrow pending confirmation from Nasdaq that stockholder
approval would

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not be required for such sale. The proceeds from
the private placement were used to pay down borrowings under our
credit facility.




| |              
| | -------------
| | Uses of Funds

In 2002, we utilized our sources of cash
primarily to: repay borrowings of approximately
$80.7 million under our credit facility; acquire radio
stations and pay related acquisition costs totaling
approximately $6.2 million; and repurchase shares of our
common stock for approximately $1.1 million. Additionally
in 2002, we funded capital expenditures of approximately
$3.9 million to upgrade our equipment and consolidate
duplicate facilities in order to remain competitive and to
create cost savings over the long term. We expect capital
expenditures to be approximately $5.1 million in 2003. The
increase is due primarily to; planned expansions to accommodate
recent station acquisitions; consolidations to eliminate
duplicate facilities; and general increases in expenditures due
to significantly more owned and operated stations in 2003.

On February 25, 2003, we completed the
acquisition of 12 radio stations from Brill Media Company LLC
and its related entities. We began providing programming and
other services to the stations under a time brokerage agreement
on September 11, 2002. The stations we acquired and the
markets they serve are as follows:



| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | WIOV-FM and WIOV-AM, serving the
    Lancaster-Reading, Pennsylvania market                                                                                                                 
|
| |  | WKDQ-FM, WBKR-FM and WOMI-AM, serving the
    Evansville, Indiana and Owensboro, Kentucky markets                                                                                           
|
| |  | KTRR-FM, KUAD-FM and KKQZ-FM (formerly a
    construction permit prior to commencing broadcast operations on
    November 1, 2002) serving the Ft. Collins-Greeley,
    Colorado market, and
|
| |  | KKCB-FM, KLDJ-FM, KBMX-FM and WEBC-AM, serving
    the Duluth, Minnesota market                                                                                                             

The purchase price of these assets was
approximately $62.0 million, which we paid in cash through
borrowings under our credit facility.



| |                                      
| | -------------------------------------
| | Pending Sources and Uses of
    Funds

On January 10, 2003, we entered into an
agreement to purchase substantially all of the assets of KKPL-FM
and KARS-FM, serving the Fort Collins-Greeley, Colorado
market from AGM-Nevada, L.L.C. for $7.75 million. The
purchase price is payable in a combination of $5.0 million
in cash and $2.75 million in Regent common stock, based on
a per share price equal to the average daily closing price for
the ten consecutive trading days ending on the second trading
day immediately preceding the closing date. In the event the
average share price for that period is less than $7.50 per share
we may, at our sole discretion, reallocate the purchase price to
increase the amount of cash consideration and reduce the portion
paid in Regent common stock. On February 1, 2003, we began
providing programming and other services to KKPL-FM under a time
brokerage agreement. We have placed $387,500 in escrow to secure
our obligations under this agreement. The FCC has indicated that
it will subject this acquisition to heightened scrutiny based on
the competitive conditions in this market. Based on this review,
we cannot predict when, or if, we will be allowed to complete
this transaction.

On February 27, 2003, we entered into an
agreement with Clear Channel Broadcasting, Inc. and its
affiliates (Clear Channel) to exchange our four
stations (KKCB-FM, KLDJ-FM, KBMX-FM and WEBC-AM) serving the
Duluth, Minnesota market and $2.7 million in cash for Clear
Channels five stations (WYNG-FM, WDKS-FM, WKRI-FM, WGBF-FM
and WGBF-AM) serving the Evansville, Indiana market. On
March 1, 2003, we began providing programming and other
services to the Evansville stations, and Clear Channel began
providing the same such services to the Duluth stations. The FCC
has indicated that it will subject this acquisition to
heightened scrutiny based on the competitive conditions in this
market. Based on this review, we cannot predict when, or if, we
will be allowed to complete this transaction.

On March 19, 2002 we filed a Registration
Statement on Form S-3 covering a combined
$250.0 million of common stock, convertible preferred
stock, depository shares, debt securities, warrants, stock
purchase

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contracts and stock purchase units (the
Shelf Registration Statement). The Shelf
Registration Statement also covers debt securities issued by one
of our subsidiaries, and guarantees of such debt securities by
us. We used approximately $78.8 million of the amounts
available under the Shelf Registration Statement for our April
2002 offering of common stock.


Our Board of Directors has authorized us to
repurchase shares of our common stock on the open market when
the share price reaches predetermined levels set by the Board.
During the third quarter of 2002, the amount of our common stock
we were authorized to repurchase was increased to bring the
level to $10.0 million. During the first quarter of 2003 we
made purchases of our common stock totaling approximately
$1.0 million under this program.

We believe the cash generated from operations and
available borrowings under our credit facility will be
sufficient to complete our pending acquisitions and to meet our
requirements for corporate expenses and capital expenditures for
the remainder of the 2003 year, based on our projected
operations and indebtedness and giving effect to scheduled
quarterly credit facility commitment reductions. We are
currently in discussions with a number of potential lenders for
new financing alternatives, and expect to enter into a new
financing agreement during the second quarter of 2003 that will
increase our borrowing capacity. After giving effect to all
completed and pending asset transactions, at December 31,
2003, outstanding borrowings under our existing credit facility
would be approximately $74.0 million, with available
borrowings of approximately $3.9 million, subject to the
terms and conditions of the credit facility.

We have no off-balance sheet financing
arrangements with related or unrelated parties and no
unconsolidated subsidiaries. Contractual obligations related to
our credit facility and other long-term debt, capital leases and
operating leases are summarized below (in thousands). Under the
terms of our credit facility, our maximum borrowings will reduce
over five years, beginning in 2002. Based upon our outstanding
borrowings at December 31, 2002, the payments detailed
below under Long-term Debt would be required to maintain
compliance with our credit facility.

|                                   |  |                        |        |          |  |             |       |            |  |            |       |  |  |   |        |  |  |   |       | 
|---------------------------------- |  | ---------------------- | ------ | -------- |  | ----------- | ----- | ---------- |  | ---------- | ----- |  |  | - | ------ |  |  | - | ----- | 
|                                   |  |                       
|                                   |  | Payments Due by Period
|                                   |  |                       
|                                   |  |                        |        | One year |  | Two to      |       | Four to    |  |           
|Contractual Obligation             |  | Total                  |        | or less  |  | three years |       | five years |  | Thereafter
|                                   |  |                        |        |          |  |             |       |            |  |           
|Long-term Debt                     |  | $                      | 11,419 |          |  | $           | 60    |            |  | $          | 120   |  |  | $ | 11,239 |  |  | $ | -0-   | 
|Capital Leases                     |  |                        | 144    |          |  |             | 63    |            |  |            | 74    |  |  |   | 7      |  |  |   | -0-   | 
|Operating Leases                   |  |                        | 9,847  |          |  |             | 1,271 |            |  |            | 1,951 |  |  |   | 1,781  |  |  |   | 4,844 | 
|                                   |  |                        |        |          |  |             |       |            |  |            |       |  |  |   |        |  |  |   |       | 
|Total Contractual Cash Obligations |  | $                      | 21,410 |          |  | $           | 1,394 |            |  | $          | 2,145 |  |  | $ | 13,027 |  |  | $ | 4,844 | 
|                                   |  |                        |        |          |  |             |       |            |  |            |       |  |  |   |        |  |  |   |       | 






|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures
    about Market Risk.

We are exposed to the impact of interest rate
changes as borrowings under our credit facility bear interest at
variable interest rates. It is our policy to enter into interest
rate transactions only to the extent considered necessary to
meet our objectives. As of December 31, 2002, we have not
employed any financial instruments to manage our interest rate
exposure. Based on our exposure to variable rate borrowings at
December 31, 2002, a one percent change in the weighted
average interest rate would change the Companys annual
interest expense by approximately $110,000.

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|        |                                                 
|------- | ------------------------------------------------
|Item 8. | Financial Statements and Supplementary
    Data.




Regent Communications, Inc.

Index to Financial Statements


|                               |                                                                                                                                   |      |  |    | 
|------------------------------ | --------------------------------------------------------------------------------------------------------------------------------- | ---- |  | -- | 
|                               |                                                                                                                                   | Page
|                               |                                                                                                                                   |     
|Financial Statements:          |                                                                                                                                   |      |  |   
|                               | Report of Independent Accountants                                                                                                 |      |  | 36 | 
|                               | Consolidated Statements of Operations for the
    years ended December 31, 2002, 2001 and 2000                                    |      |  | 37 | 
|                               | Consolidated Balance Sheets at December 31,
    2002 and 2001                                                                     |      |  | 38 | 
|                               | Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, 2001 and 2000                                    |      |  | 39 | 
|                               | Consolidated Statements of Changes in
    Stockholders Equity (Deficit) for the years ended
    December 31, 2002, 2001 and 2000 |      |  | 40 | 
|                               | Notes to Consolidated Financial Statements                                                                                        |      |  | 41 | 
|Financial Statement Schedules: |                                                                                                                                   |      |  |   
|                               | For each of the three years in the period ended
    December 31, 2002:                                                            |      |  |    | 
|                               | II  Valuation and Qualifying Accounts                                                                                            |      |  | 70 | 

All other schedules are omitted because they are
not applicable or the required information is shown in the
consolidated financial statements and notes thereto.

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of
Regent Communications, Inc.:

In our opinion, the consolidated financial
statements listed in the accompanying index present fairly, in
all material respects, the financial position of Regent
Communications, Inc. and its subsidiaries at December 31,
2002 and December 31, 2001, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in
all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements. These financial statements and financial statement
schedule are the responsibility of the Companys
management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on
our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the
United States of America, which 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, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.

As discussed in Note 8, effective
January 1, 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets.

/s/ PRICEWATERHOUSECOOPERS LLP

Cincinnati, Ohio

March 5, 2003


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REGENT COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |         |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ------ | ------ | ----- | ---- | ------ | ------ | ------ | - | ------- | ------- | ------ | -
|                                                                                                                                                      |                                                                               |                                                                                                      
|                                                                                                                                                      |                                                                               | Year Ended December 31,                                                                              
|                                                                                                                                                      |                                                                               |                                                                                                      
|                                                                                                                                                      |                                                                               | 2002                                                                                                  |        | 2001   |       | 2000
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |     
|                                                                                                                                                      |                                                                               |                                                                                                      
|                                                                                                                                                      |                                                                               | (In thousands, except                                                                                
|                                                                                                                                                      |                                                                               | per share amounts)                                                                                   
|Broadcast revenues, net of agency commissions of
    $7,296, $5,594 and $4,217 for the years ended December 31,
    2002, 2001 and 2000, respectively |                                                                               | $                                                                                                     | 70,390 |        |       | $    | 53,745 |        |        | $ | 44,107  |        
|Station operating expenses                                                                                                                            |                                                                               |                                                                                                       | 48,963 |        |       |      | 38,530 |        |        |   | 30,173  |        
|Depreciation and amortization                                                                                                                         |                                                                               |                                                                                                       | 3,360  |        |       |      | 13,436 |        |        |   | 8,602   |        
|Corporate general and administrative expenses                                                                                                         |                                                                               |                                                                                                       | 6,149  |        |       |      | 4,857  |        |        |   | 4,501   |        
|Impairment of goodwill                                                                                                                                |                                                                               |                                                                                                       | 2,900  |        |       |      |       |        |        |   |        |        
|Gain on sale of long-lived assets                                                                                                                     |                                                                               |                                                                                                       | 442    |        |       |      |       |        |        |   |        |        
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|                                                                                                                                                      |                                                                               | Operating income (loss)                                                                               |        |        | 9,460 |      |        |        | (3,078 | ) |         |         | 831    |  
|Interest expense                                                                                                                                      |                                                                               |                                                                                                       | (2,208 | )      |       |      | (3,279 | )      |        |   | (4,229  | )      
|Gain on exchange/sale of radio stations, net                                                                                                          |                                                                               |                                                                                                       |       |        |       |      | 4,444  |        |        |   | 17,504  |        
|Other (expense) income, net                                                                                                                           |                                                                               |                                                                                                       | (433   | )      |       |      | (465   | )      |        |   | 860     |        
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|                                                                                                                                                      |                                                                               | Income (loss) before income taxes, extraordinary
    item, and cumulative effect of accounting change |        |        | 6,819 |      |        |        | (2,378 | ) |         |         | 14,966 |  
|Income tax (expense) benefit                                                                                                                          |                                                                               |                                                                                                       | (7,161 | )      |       |      | 665    |        |        |   |        |        
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|(Loss) income before extraordinary item and
    cumulative effect of accounting change                                                                |                                                                               |                                                                                                       | (342   | )      |       |      | (1,713 | )      |        |   | 14,966  |        
|Extraordinary loss from debt extinguishment, net
    of taxes                                                                                         |                                                                               |                                                                                                       |       |        |       |      |       |        |        |   | (1,114  | )      
|Cumulative effect of accounting change, net of
    applicable income taxes of $3,762                                                                  |                                                                               |                                                                                                       | (6,138 | )      |       |      |       |        |        |   |        |        
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|NET (LOSS) INCOME                                                                                                                                     |                                                                               | $                                                                                                     | (6,480 | )      |       | $    | (1,713 | )      |        | $ | 13,852  |        
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|LOSS APPLICABLE TO COMMON SHARES:                                                                                                                     |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|                                                                                                                                                      | Net (loss) income                                                             |                                                                                                       | $      | (6,480 | )     |      | $      | (1,713 | )      |   | $       | 13,852  |       
|                                                                                                                                                      | Preferred stock dividend requirements                                         |                                                                                                       |        |       |       |      |        |       |        |   |         | (629    | )     
|                                                                                                                                                      | Preferred stock accretion                                                     |                                                                                                       |        |       |       |      |        |       |        |   |         | (26,611 | )     
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|Loss applicable to common shares                                                                                                                      |                                                                               | $                                                                                                     | (6,480 | )      |       | $    | (1,713 | )      |        | $ | (13,388 | )      
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|BASIC AND DILUTED LOSS PER COMMON SHARE:                                                                                                              |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|                                                                                                                                                      | Loss before extraordinary item and cumulative
    effect of accounting change |                                                                                                       | $      | (0.01  | )     |      | $      | (0.05  | )      |   | $       | (0.39   | )     
|                                                                                                                                                      | Extraordinary item                                                            |                                                                                                       |        |       |       |      |        |       |        |   |         | (0.03   | )     
|                                                                                                                                                      | Cumulative effect of accounting change                                        |                                                                                                       |        | (0.14  | )     |      |        |       |        |   |         |        |       
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|                                                                                                                                                      |                                                                               | Net loss per common share                                                                             |        | $      | (0.15 | )    |        | $      | (0.05  | ) |         | $       | (0.42  | )
|                                                                                                                                                      |                                                                               |                                                                                                       |        |        |       |      |        |        |        |   |         |        
|Weighted average number of common shares used in
    basic and diluted calculation                                                                    |                                                                               |                                                                                                       | 43,177 |        |       |      | 34,218 |        |        |   | 31,715  |        

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

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REGENT COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)


|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |         |         | 
|---------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                                         |                                                                                                                                                          |                                           
|                                         |                                                                                                                                                          | December 31,                              
|                                         |                                                                                                                                                          |                                           
|                                         |                                                                                                                                                          | 2002                                       |         | 2001   
|                                         |                                                                                                                                                          |                                            |         |        
|ASSETS                                  
|Current assets:                          |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         | Cash and cash equivalents                                                                                                                                |                                            | $       | 2,656   |         |  | $       | 1,765   |        
|                                         | Accounts receivable, net of allowance of $854 and
    $719 at December 31, 2002 and 2001, respectively                                                   |                                            |         | 13,517  |         |  |         | 9,772   |        
|                                         | Other current assets                                                                                                                                     |                                            |         | 811     |         |  |         | 642     |        
|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         |                                                                                                                                                          | Total current assets                       |         |         | 16,984  |  |         |         | 12,179  | 
|Property and equipment, net              |                                                                                                                                                          |                                            | 26,889  |         |         |  | 25,817  |        
|Intangible assets, net                   |                                                                                                                                                          |                                            | 238,706 |         |         |  | 253,643 |        
|Goodwill, net                            |                                                                                                                                                          |                                            | 24,200  |         |         |  | 12,777  |        
|Other assets                             |                                                                                                                                                          |                                            | 1,251   |         |         |  | 1,940   |        
|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         |                                                                                                                                                          | Total assets                               |         | $       | 308,030 |  |         | $       | 306,356 | 
|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                        
|LIABILITIES AND STOCKHOLDERS
    EQUITY |                                                                                                                                                          |                                            |         |        
|Current liabilities:                     |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         | Accounts payable                                                                                                                                         |                                            | $       | 2,050   |         |  | $       | 2,044   |        
|                                         | Accrued compensation                                                                                                                                     |                                            |         | 2,158   |         |  |         | 1,000   |        
|                                         | Other current liabilities                                                                                                                                |                                            |         | 3,740   |         |  |         | 3,010   |        
|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         |                                                                                                                                                          | Total current liabilities                  |         |         | 7,948   |  |         |         | 6,054   | 
|Long-term debt, less current portion     |                                                                                                                                                          |                                            | 11,359  |         |         |  | 87,019  |        
|Other long-term liabilities              |                                                                                                                                                          |                                            | 90      |         |         |  | 75      |        
|Deferred taxes                           |                                                                                                                                                          |                                            | 10,143  |         |         |  | 4,870   |        
|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         |                                                                                                                                                          | Total liabilities                          |         |         | 29,540  |  |         |         | 98,018  | 
|Commitments and Contingencies (Note 12)  |                                                                                                                                                          |                                            |         |         |         |  |         |        
|Stockholders equity:                    |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         | Common stock, $.01 par value, 100,000,000 shares
    authorized; 48,047,382 and 36,948,362 shares issued at
    December 31, 2002 and 2001, respectively |                                            |         | 480     |         |  |         | 369     |        
|                                         | Treasury shares, 1,488,556 and 1,308,173 shares,
    at cost at December 31, 2002 and 2001, respectively                                                 |                                            |         | (7,575  | )       |  |         | (6,757  | )      
|                                         | Additional paid-in capital                                                                                                                               |                                            |         | 348,033 |         |  |         | 270,694 |        
|                                         | Accumulated deficit                                                                                                                                      |                                            |         | (62,448 | )       |  |         | (55,968 | )      
|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         |                                                                                                                                                          | Total stockholders equity                 |         |         | 278,490 |  |         |         | 208,338 | 
|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |        
|                                         |                                                                                                                                                          | Total liabilities and stockholders equity |         | $       | 308,030 |  |         | $       | 306,356 | 
|                                         |                                                                                                                                                          |                                            |         |         |         |  |         |        

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

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REGENT COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(In thousands)


|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |          |         |  
|------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------ | ------- | ------ | ---- | ------- | ------- | ------ | - | -------- | -------- | ------- | -
|                                                                          |                                                                                                       |                                                                           
|                                                                          |                                                                                                       | Year Ended December 31,                                                   
|                                                                          |                                                                                                       |                                                                           
|                                                                          |                                                                                                       | 2002                                                                       |        | 2001    |        | 2000
|                                                                          |                                                                                                       |                                                                            |        |         |        |     
|Cash flows from operating
    activities:                                 |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Net (loss) income                                                         |                                                                                                       | $                                                                          | (6,480 | )       |        | $    | (1,713  | )       |        | $ | 13,852   |         
|                                                                          | Adjustments to reconcile net (loss) income to net
    cash provided by operating activities:          |                                                                            |        |         |        |      |         |         |        |   |          |          |        
|                                                                          |                                                                                                       | Cumulative effect of accounting change, net of
    applicable income taxes |        |         | 6,138  |      |         |         |       |   |          |          |        |  
|                                                                          |                                                                                                       | Depreciation and amortization                                              |        |         | 3,360  |      |         |         | 13,436 |   |          |          | 8,602   |  
|                                                                          |                                                                                                       | Provision for doubtful accounts                                            |        |         | 819    |      |         |         | 822    |   |          |          | 725     |  
|                                                                          |                                                                                                       | Deferred income tax expense (benefit) and
    valuation allowance          |        |         | 7,114  |      |         |         | (847   | ) |          |          |        |  
|                                                                          |                                                                                                       | Non-cash interest expense                                                  |        |         | 281    |      |         |         | 283    |   |          |          | 1,579   |  
|                                                                          |                                                                                                       | Non-cash charge for debt extinguishments                                   |        |         |       |      |         |         |       |   |          |          | 1,114   |  
|                                                                          |                                                                                                       | Non-cash charge for compensation                                           |        |         | 499    |      |         |         | 491    |   |          |          |        |  
|                                                                          |                                                                                                       | Gain on sale of radio stations, net                                        |        |         |       |      |         |         | (4,444 | ) |          |          | (17,504 | )
|                                                                          |                                                                                                       | Gain on sale of long-lived assets                                          |        |         | (442   | )    |         |         |       |   |          |          |        |  
|                                                                          |                                                                                                       | Impairment of goodwill                                                     |        |         | 2,900  |      |         |         |       |   |          |          |        |  
|                                                                          |                                                                                                       | Other, net                                                                 |        |         | (422   | )    |         |         | 160    |   |          |          |        |  
|                                                                          | Changes in operating assets and liabilities, net
    of acquisitions:                                 |                                                                            |        |         |        |      |         |         |        |   |          |          |        
|                                                                          |                                                                                                       | Accounts receivable                                                        |        |         | (4,576 | )    |         |         | (328   | ) |          |          | (6,249  | )
|                                                                          |                                                                                                       | Other assets                                                               |        |         | (204   | )    |         |         | (107   | ) |          |          | (358    | )
|                                                                          |                                                                                                       | Current and long-term liabilities                                          |        |         | 1,996  |      |         |         | 597    |   |          |          | 1,377   |  
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Net cash provided by operating activities                                 |                                                                                                       |                                                                            | 10,983 |         |        |      | 8,350   |         |        |   | 3,138    |         
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Cash flows from investing
    activities:                                 |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|                                                                          | Acquisitions of radio stations, net of cash
    acquired, and escrow deposits on pending acquisitions |                                                                            |        | (6,248  | )      |      |         | (63,450 | )      |   |          | (148,940 | )      
|                                                                          | Capital expenditures                                                                                  |                                                                            |        | (3,856  | )      |      |         | (3,161  | )      |   |          | (1,719   | )      
|                                                                          | Net proceeds from sale of radio stations                                                              |                                                                            |        |        |        |      |         | 13,393  |        |   |          | 2,000    |        
|                                                                          | Net proceeds from sale of long-lived assets                                                           |                                                                            |        | 1,829   |        |      |         |        |        |   |          |         |        
|                                                                          | Proceeds from sale of fixed assets and other                                                          |                                                                            |        |        |        |      |         | 27      |        |   |          |         |        
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Net cash used in investing activities                                     |                                                                                                       |                                                                            | (8,275 | )       |        |      | (53,191 | )       |        |   | (148,659 | )       
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Cash flows from financing
    activities:                                 |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|                                                                          | Proceeds from issuance of common stock                                                                |                                                                            |        | 75,785  |        |      |         | 4,068   |        |   |          | 156,939  |        
|                                                                          | Proceeds from long-term debt                                                                          |                                                                            |        | 5,000   |        |      |         | 60,500  |        |   |          | 48,500   |        
|                                                                          | Principal payments on long-term debt                                                                  |                                                                            |        | (80,660 | )      |      |         | (18,491 | )      |   |          | (28,824  | )      
|                                                                          | Payment of financing costs                                                                            |                                                                            |        |        |        |      |         |        |        |   |          | (1,904   | )      
|                                                                          | Payment of issuance costs                                                                             |                                                                            |        | (820    | )      |      |         | (249    | )      |   |          | (11,606  | )      
|                                                                          | Treasury stock purchases                                                                              |                                                                            |        | (1,122  | )      |      |         |        |        |   |          | (7,063   | )      
|                                                                          | Dividends paid on all series of preferred stock                                                       |                                                                            |        |        |        |      |         |        |        |   |          | (8,153   | )      
|                                                                          | Redemption of Series B preferred stock                                                                |                                                                            |        |        |        |      |         |        |        |   |          | (5,000   | )      
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Net cash (used in) provided by financing
    activities                   |                                                                                                       |                                                                            | (1,817 | )       |        |      | 45,828  |         |        |   | 142,889  |         
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Net increase (decrease) in cash and cash
    equivalents                  |                                                                                                       |                                                                            | 891    |         |        |      | 987     |         |        |   | (2,632   | )       
|Cash and cash equivalents at beginning of period                          |                                                                                                       |                                                                            | 1,765  |         |        |      | 778     |         |        |   | 3,410    |         
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Cash and cash equivalents at end of
    period                            |                                                                                                       | $                                                                          | 2,656  |         |        | $    | 1,765   |         |        | $ | 778      |         
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Supplemental schedule of non-cash investing and
    financing activities: |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|                                                                          | Common stock issued in conjunction with the
    acquisitions of radio stations                        |                                                                            | $      | 2,445   |        |      | $       | 7,459   |        |   | $        | 3,537    |        
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|                                                                          | Employer match on 401(k) plan                                                                         |                                                                            | $      | 294     |        |      | $       | 307     |        |   | $        | 69       |        
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|Supplemental data:                                                        |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|                                                                          | Cash paid for interest                                                                                |                                                                            | $      | 2,082   |        |      | $       | 3,077   |        |   | $        | 2,115    |        
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         
|                                                                          | Cash paid for income taxes                                                                            |                                                                            | $      | 85      |        |      | $       | 128     |        |   | $        |         |        
|                                                                          |                                                                                                       |                                                                            |        |         |        |      |         |         |        |   |          |         

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

39



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##### Table of Contents






REGENT COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY (DEFICIT)

(In thousands, except share amounts)


|                                                                                                  |  |                |        |        |  |          |     |            |  |             |        |               |  |   |         |   |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------- |  | -------------- | ------ | ------ |  | -------- | --- | ---------- |  | ----------- | ------ | ------------- |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                  |  | Series C and E |        |        |  |          |     |            |  |             |        | Total        
|                                                                                                  |  | Convertible    |        |        |  |          |     | Additional |  |             |        | Stockholders
|                                                                                                  |  | Preferred      |        | Common |  | Treasury |     | Paid-In    |  | Accumulated |        | Equity       
|                                                                                                  |  | Stock          |        | Stock  |  | Stock    |     | Capital    |  | Deficit     |        | (Deficit)    
|                                                                                                  |  |                |        |        |  |          |     |            |  |             |        |              
|Balance, December 31, 1999                                                                        |  | $              | 3,684  |        |  | $        | 2   |            |  | $           |       |               |  | $ |        |   |  | $ | (41,496 | ) |  | $ | (37,810 | )
|Issuance of 18,400,000 shares of common stock,
    net of issuance costs of $12,460               |  |                |       |        |  |          | 184 |            |  |             |       |               |  |   | 143,756 |   |  |   |        |   |  |   | 143,940 |  
|Issuance of 333,000 shares of common stock in
    conjunction with acquisitions                   |  |                |       |        |  |          | 3   |            |  |             |       |               |  |   | 3,534   |   |  |   |        |   |  |   | 3,537   |  
|Adjustment of converted redeemable preferred
    stock to market                                  |  |                |       |        |  |          |    |            |  |             |       |               |  |   |        |   |  |   | (26,611 | ) |  |   | (26,611 | )
|Purchase of 1,364,000 shares of treasury stock                                                    |  |                |       |        |  |          |    |            |  |             | (7,063 | )             |  |   |        |   |  |   |        |   |  |   | (7,063  | )
|Conversion of Series C and E preferred stock
    to 3,831,000 shares of common stock              |  |                | (3,684 | )      |  |          | 38  |            |  |             |       |               |  |   | 3,646   |   |  |   |        |   |  |   |        |  
|Conversion of Series A,D,F,G,H,K redeemable
    preferred stock                                   |  |                |       |        |  |          | 124 |            |  |             |       |               |  |   | 110,745 |   |  |   |        |   |  |   | 110,869 |  
|Reclassification of liability associated with
    Series F convertible preferred stock put rights |  |                |       |        |  |          |    |            |  |             |       |               |  |   | 5,239   |   |  |   |        |   |  |   | 5,239   |  
|Exercise of 34,095 stock options and 100,000
    stock warrants                                   |  |                |       |        |  |          | 1   |            |  |             |       |               |  |   | 619     |   |  |   |        |   |  |   | 620     |  
|Preferred stock dividends paid                                                                    |  |                |       |        |  |          |    |            |  |             |       |               |  |   | (8,153  | ) |  |   |        |   |  |   | (8,153  | )
|Net income                                                                                        |  |                |       |        |  |          |    |            |  |             |       |               |  |   |        |   |  |   | 13,852  |   |  |   | 13,852  |  
|                                                                                                  |  |                |        |        |  |          |     |            |  |             |        |               |  |   |         |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2000                                                                        |  |                |       |        |  |          | 352 |            |  |             | (7,063 | )             |  |   | 259,386 |   |  |   | (54,255 | ) |  |   | 198,420 |  
|Issuance of 700,000 shares of common stock, net
    of issuance costs of $373                     |  |                |       |        |  |          | 7   |            |  |             |       |               |  |   | 3,644   |   |  |   |        |   |  |   | 3,651   |  
|Exercise of 28,468 stock options and 37,230 stock
    warrants                                    |  |                |       |        |  |          |    |            |  |             |       |               |  |   | 30      |   |  |   |        |   |  |   | 30      |  
|Issuance of 1,001,969 shares of common stock in
    conjunction with acquisitions                 |  |                |       |        |  |          | 10  |            |  |             |       |               |  |   | 7,449   |   |  |   |        |   |  |   | 7,459   |  
|Stock bonus award (22,825 shares)                                                                 |  |                |       |        |  |          |    |            |  |             |       |               |  |   | 170     |   |  |   |        |   |  |   | 170     |  
|Issuance of 55,579 shares of treasury stock for
    401(k) match                                  |  |                |       |        |  |          |    |            |  |             | 306    |               |  |   | 15      |   |  |   |        |   |  |   | 321     |  
|Net loss                                                                                          |  |                |       |        |  |          |    |            |  |             |       |               |  |   |        |   |  |   | (1,713  | ) |  |   | (1,713  | )
|                                                                                                  |  |                |        |        |  |          |     |            |  |             |        |               |  |   |         |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2001                                                                        |  |                |       |        |  |          | 369 |            |  |             | (6,757 | )             |  |   | 270,694 |   |  |   | (55,968 | ) |  |   | 208,338 |  
|Issuance of 10,700,000 shares of common stock,
    net of issuance costs of $4,832                |  |                |       |        |  |          | 107 |            |  |             |       |               |  |   | 74,961  |   |  |   |        |   |  |   | 75,068  |  
|Issuance of 384,453 shares of common stock in
    conjunction with acquisitions                   |  |                |       |        |  |          | 4   |            |  |             |       |               |  |   | 2,290   |   |  |   |        |   |  |   | 2,294   |  
|Exercise of 16,074 stock options                                                                  |  |                |       |        |  |          |    |            |  |             |       |               |  |   | 20      |   |  |   |        |   |  |   | 20      |  
|Issuance of 42,706 shares of treasury stock for
    401(k) match, net of forfeitures              |  |                |       |        |  |          |    |            |  |             | 235    |               |  |   | 38      |   |  |   |        |   |  |   | 273     |  
|Issuance of 12,571 shares of treasury stock for
    employee stock purchase plan                  |  |                |       |        |  |          |    |            |  |             | 69     |               |  |   | 8       |   |  |   |        |   |  |   | 77      |  
|Purchase of 235,660 shares of treasury stock                                                      |  |                |       |        |  |          |    |            |  |             | (1,122 | )             |  |   |        |   |  |   |        |   |  |   | (1,122  | )
|Stock compensation expense                                                                        |  |                |       |        |  |          |    |            |  |             |       |               |  |   | 22      |   |  |   |        |   |  |   | 22      |  
|Net loss                                                                                          |  |                |       |        |  |          |    |            |  |             |       |               |  |   |        |   |  |   | (6,480  | ) |  |   | (6,480  | )
|                                                                                                  |  |                |        |        |  |          |     |            |  |             |        |               |  |   |         |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2002                                                                        |  | $              |       |        |  | $        | 480 |            |  | $           | (7,575 | )             |  | $ | 348,033 |   |  | $ | (62,448 | ) |  | $ | 278,490 |  
|                                                                                                  |  |                |        |        |  |          |     |            |  |             |        |               |  |   |         |   |  |   |         |   |  |   |         |  

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

40



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##### Table of Contents



REGENT COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

1.     Summary of
Accounting Policies



|   |                       
|-- | ----------------------
|a. | Basis of Presentation:

Regent Communications, Inc. (including its
wholly-owned subsidiaries, the Company or
Regent) was formed to acquire, own and operate radio
stations in small and medium-sized markets in the United States.
On June 15, 1998, the Company acquired, pursuant to an
agreement of merger, all of the outstanding common stock of
Faircom Inc. (Faircom). The acquisition was treated
for accounting purposes as the acquisition of the Company by
Faircom under the purchase method of accounting, with Faircom as
the accounting acquirer. Consequently, the historical financial
statements prior to June 15, 1998, the date of merger, are
those of Faircom.



|   |               
|-- | --------------
|b. | Consolidation:

The consolidated financial statements include the
accounts of the Company and its subsidiaries, all of which are
wholly owned. All significant intercompany transactions and
balances have been eliminated in consolidation. Certain prior
year amounts and balances have been reclassified to conform to
the current classifications with no effect on financial results.



|   |                  
|-- | -----------------
|c. | 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 revenues
and expenses during the reporting period. Actual results could
differ from those estimates.



|   |                           
|-- | --------------------------
|d. | Cash and Cash Equivalents:

Cash and cash equivalents include all highly
liquid investments with an original maturity of three months or
less.



|   |                        
|-- | -----------------------
|e. | Property and Equipment:

Property and equipment are stated at cost and
depreciated on the straight-line basis over the estimated useful
life of the assets. Buildings are depreciated over forty years,
broadcasting equipment over a six-to-thirteen year life and
furniture and fixtures generally over a five-year life.
Leasehold improvements are amortized over the shorter of their
useful lives or the terms of the related leases.



|   |                                          
|-- | -----------------------------------------
|f. | Goodwill and Other Intangible
    Assets:

Intangible assets consist principally of the
value of FCC licenses and the excess of the purchase price over
the fair value of net assets of acquired radio stations
(goodwill). On January 1, 2002, the Company adopted the
provisions of Statement of Financial Accounting Standards
No. 142 Goodwill and Other Intangible Assets
(SFAS 142) (See Note 8). SFAS 142
requires that a Company no longer amortize goodwill and
intangible assets determined to have an indefinite life and also
requires an annual impairment testing of those assets. Prior to
the implementation of SFAS 142, FCC licenses and goodwill
acquired through acquisitions prior to July 1, 2001, were
amortized on a straight-line basis over lives ranging from 15 to
40 years. Non-competition agreements are amortized over the
life of the agreement.

41



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                   
|-- | ------------------
|g. | Long-Lived Assets:

Long-lived assets (including property, equipment,
and intangible assets subject to amortization) to be held and
used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. The carrying amount of a long-lived asset is
not recoverable if it exceeds the sum of the undiscounted cash
flows expected to result from the use and eventual disposal of
the asset. If it were determined that the carrying amount of an
asset was not recoverable, an impairment loss would be recorded
for the difference between the carrying amount and the fair
value of the asset. The Company determines the fair value of its
long-lived assets based upon the market value of similar assets,
if available, or independent appraisals if necessary. Long-lived
assets to be disposed of and/or held for sale are reported at
the lower of carrying amount or fair value, less cost to sell.
The fair value of assets held for sale is determined in the same
manner as described for assets held and used.



|   |                          
|-- | -------------------------
|h. | Deferred Financing Costs:

Deferred financing costs are amortized over the
term of the related debt.



|   |                                   
|-- | ----------------------------------
|i. | Concentrations of Credit
    Risk:

Financial instruments which potentially subject
the Company to concentrations of credit risk consist primarily
of accounts receivable. The credit risk is limited due to the
large number of customers comprising the Companys customer
base and their dispersion across several different geographic
areas of the country. The Company also maintains cash in bank
accounts at financial institutions where the balance, at times,
exceeds federally insured limits.



|   |                     
|-- | --------------------
|j. | Revenue Recognition:



| |                  
| | -----------------
| | Broadcast Revenue

Broadcast revenue for commercial broadcasting
advertisements is recognized when the commercial is broadcast.
Revenue is reported net of agency commissions. Agency
commissions are calculated based on a stated percentage applied
to gross billing revenue for advertisers that use agencies.
Agency commissions were $7.3 million, $5.6 million and
$4.2 million for the years ended December 31, 2002,
2001 and 2000, respectively.



| |                    
| | -------------------
| | Barter Transactions

Barter transactions (advertising provided in
exchange for goods and services) are reported at the estimated
fair value of the products or services received. Revenue from
barter transactions is recognized when advertisements are
broadcast, and merchandise or services received are charged to
expense when received or used. If merchandise or services are
received prior to the broadcast of the advertising, a liability
(deferred barter revenue) is recorded. If advertising is
broadcast before the receipt of the goods or services, a
receivable is recorded. Barter revenue was approximately
$4.5 million, $3.7 million, and $3.2 million and
barter expense was approximately $4.1 million,
$3.7 million, and $3.1 million for the years ended
December 31, 2002, 2001, and 2000, respectively.



| |                          
| | -------------------------
| | Time Brokerage Agreements

At December 31, 2002, the Company operated
twelve stations under the terms of time brokerage agreements
(TBAs). Revenues and expenses related to such
stations are included in operations since the effective dates of
the TBAs. Fees paid under such TBAs are included in Other
(expense) income, net in the accompanying Consolidated
Statements of Operations.

42



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                                         
|-- | ----------------------------------------
|k. | Fair Value of Financial
    Instruments:



| |                       
| | ----------------------
| | Short-Term Instruments

Due to their short-term maturity, the carrying
amount of accounts receivable, accounts payable and accrued
expenses approximated their fair value at December 31, 2002
and 2001.



| |               
| | --------------
| | Long-Term Debt

The fair value of the Companys long-term
debt is estimated based on the current rates offered to the
Company for debt of the same remaining maturities. Based on
borrowing rates currently available, the fair value of long-term
debt approximates its carrying value at December 31, 2002
and 2001.



|   |              
|-- | -------------
|l. | Income Taxes:

Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax
bases of assets and liabilities and their financial reporting
amounts based on enacted tax laws and statutory tax rates.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amount more likely than not to be
realized.



|   |                                     
|-- | ------------------------------------
|m. | Advertising and Promotion
    Costs:

Costs of media advertising and associated
production costs are expensed the first time the advertising
takes place.



|   |                                     
|-- | ------------------------------------
|n. | Allowance for Doubtful
    Accounts:

The Company maintains an allowance for doubtful
accounts for estimated losses resulting from the inability of
our customers to make required payments. The allowance is
calculated based on a percentage of cash revenue, and includes a
provision for known issues. Customer account activity is
routinely reviewed to assess the adequacy of the allowance
provided for potential losses.



|   |                                    
|-- | -----------------------------------
|o. | Stock-Based Compensation
    Plans:

At December 31, 2002, the Company had four
stock-based employee compensation plans, which are described
more fully in Note 6. The Company accounts for those plans
under the recognition and measurement principles of APB Opinion
No. 25, Accounting for Stock Issued to
Employees, and related Interpretations, under which
compensation expense is recorded only to the extent that the
market price of the underlying common stock on the date of grant
exceeds the exercise price. The following table illustrates the
effect on net (loss) income and loss per share if the Company
had applied the fair value recognition provisions

43



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

of FASB Statement No. 123, Accounting
for Stock-Based Compensation (SFAS 123),
to stock-based employee compensation (in thousands except per
share information).

|                                                                                                                                                    |             |                         |        |             |   |      |        |       |   |   |         |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ----------------------- | ------ | ----------- | - | ---- | ------ | ----- | - | - | ------- | ----- | -
|                                                                                                                                                    |             |                        
|                                                                                                                                                    |             | Year Ended December 31,
|                                                                                                                                                    |             |                        
|                                                                                                                                                    |             | 2002                    |        | 2001        |   | 2000
|                                                                                                                                                    |             |                         |        |             |   |     
|                                                                                                                                                    |             |                         |        | (Unaudited) |   |     
|Net (loss) income, as reported                                                                                                                      |             | $                       | (6,480 | )           |   | $    | (1,713 | )     |   | $ | 13,852  |      
|Deduct: Total stock-based employee compensation
    expense determined under fair value based method for all awards,
    net of related tax effects |             |                         | (1,546 | )           |   |      | (1,409 | )     |   |   | (720    | )    
|                                                                                                                                                    |             |                         |        |             |   |      |        |       |   |   |         |      
|Pro forma net (loss) income                                                                                                                         |             | $                       | (8,026 | )           |   | $    | (3,122 | )     |   | $ | 13,132  |      
|                                                                                                                                                    |             |                         |        |             |   |      |        |       |   |   |         |      
|Pro forma loss applicable to common shares                                                                                                          |             | $                       | (8,026 | )           |   | $    | (3,122 | )     |   | $ | (14,108 | )    
|                                                                                                                                                    |             |                         |        |             |   |      |        |       |   |   |         |      
|Basic and diluted loss per share:                                                                                                                   |             |                         |        |             |   |      |        |       |   |   |         |      
|                                                                                                                                                    | As reported |                         | $      | (0.15       | ) |      | $      | (0.05 | ) |   | $       | (0.42 | )
|                                                                                                                                                    | Pro forma   |                         | $      | (0.19       | ) |      | $      | (0.09 | ) |   | $       | (0.44 | )



|   |                              
|-- | -----------------------------
|2. | Acquisitions and Dispositions



| |                                          
| | -----------------------------------------
| | Pending Acquisitions and
    Dispositions

On January 10, 2003, Regent entered into an
agreement to purchase substantially all of the assets of KKPL-FM
and KARS-FM, serving the Fort Collins-Greeley, Colorado
market from AGM-Nevada, L.L.C. for $7.75 million. The
purchase price is payable in a combination of $5.0 million
in cash and $2.75 million in Regent common stock, based on
a per share price equal to the average daily closing price for
the ten consecutive trading days ending on the second trading
day immediately preceding the closing date. In the event the
average share price of Regent common stock for that period is
less than $7.50 per share Regent may, at its sole discretion,
reallocate the purchase price to increase the amount of cash
consideration and reduce the portion paid in Regent common
stock. On February 1, 2003, the Company began providing
programming and other services to KKPL-FM under a time brokerage
agreement. The Company has placed $387,500 in escrow to secure
its obligations under this agreement. The FCC has indicated that
it will subject this acquisition to heightened scrutiny based on
the competitive conditions in this market. Based on this review,
the Company cannot predict when, or if, this transaction will be
completed.

On February 27, 2003, Regent entered into an
agreement with Clear Channel Broadcasting, Inc. and its
affiliates (Clear Channel) to exchange four stations
(KKCB-FM, KLDJ-FM, KBMX-FM and WEBC-AM) serving the Duluth,
Minnesota market, which Regent acquired on February 25,
2003, and $2.7 million in cash, for five radio stations
(WYNG-FM, WDKS-FM, WKRI-FM, WGBF-FM, and WGBF-AM) serving the
Evansville, Indiana market. On March 1, 2003, Regent began
providing programming and other services to the Evansville
stations, and Clear Channel began providing the same such
services to the Duluth stations. The FCC has indicated that it
will subject this acquisition to heightened scrutiny based on
the competitive conditions in this market. Based on this review,
the Company cannot predict when, or if, this transaction will be
completed.



| |                                        
| | ---------------------------------------
| | Subsequently Completed
    Acquisitions

On February 25, 2003, the Company completed
the acquisition of 12 radio stations from Brill Media
Company LLC and its related entities. Regent had been providing
programming and other services to the

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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

stations under a time brokerage agreement, which
began on September 11, 2002. The stations acquired and the
markets they serve are as follows:



| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | WIOV-FM and WIOV-AM, serving the
    Lancaster-Reading, Pennsylvania market                                                                                                                 
|
| |  | WKDQ-FM, WBKR-FM and WOMI-AM, serving the
    Evansville, Indiana and Owensboro, Kentucky markets                                                                                           
|
| |  | KTRR-FM, KUAD-FM and KKQZ-FM (formerly a
    construction permit prior to commencing broadcast operations on
    November 1, 2002) serving the Ft. Collins-Greeley,
    Colorado market, and
|
| |  | KKCB-FM, KLDJ-FM, KBMX-FM and WEBC-AM, serving
    the Duluth, Minnesota market                                                                                                             

The purchase price of these assets was
approximately $62.0 million, which Regent funded through
borrowings under its credit facility. The allocation of the
purchase price will be performed when the Company receives an
independent appraisal for the purchase.



| |                                       
| | --------------------------------------
| | 2002 Acquisitions and
    Dispositions

On March 12, 2002, the Company completed the
disposition of substantially all the operating assets of
WGNA-AM, serving the Albany, New York market, for
$2.0 million in cash to ABC, Inc. On February 15,
2002, ABC, Inc. began providing programming and other services
to the station under a time brokerage agreement. The Company
recognized a pre-tax gain of approximately $442,000 on the sale.
The Company treated the disposal of WGNA-AM as the disposal of
long-lived assets, rather than a business or a component of a
business, due to the fact that the station had no independent
revenue stream from its operations.

On June 1, 2002, the Company acquired,
through a subsidiary merger with The Frankenmuth Radio Co.,
Inc., WRCL-FM (formerly WZRZ-FM) serving the Flint, Michigan
market, for 209,536 shares of Regent common stock, valued at
approximately $1.4 million. The Company also purchased the
land and broadcasting assets used by WRCL-FM from MTE
Corporation, a related entity, for approximately
$0.6 million in cash, net of $125,000 that the Company
placed in escrow in 2001 to secure its obligations under these
agreements. Prior to the closing, the Company provided
programming and other services to the station under a time
brokerage agreement, which began January 1, 2002. The
Company has allocated approximately $0.6 million of the
total purchase price to fixed assets and approximately
$1.4 million to FCC licenses. Additionally, the Company
recorded approximately $0.5 million of goodwill and
deferred taxes due to the difference between the fair market
value and book value of the assets and liabilities acquired
through the merger. The cash portion of the purchase price was
funded primarily through proceeds received from our April 2002
common stock offering.

Also on June 1, 2002, the Company purchased
the outstanding stock of Haith Broadcasting Corporation, owner
of WFGR-FM serving the Grand Rapids, Michigan market for
approximately $3.9 million. The purchase price was paid in
cash, net of $250,000 that the Company placed in escrow in 2001
to secure its obligations under this agreement. In conjunction
with the above stock purchase, on February 4, 2002, the
Company purchased the option to buy WFGR-FM from Connoisseur
Communications of Flint, L.L.P., paid by the issuance of 174,917
shares of Regent common stock, valued at approximately
$1.0 million. Prior to the closing of the agreement, the
Company provided programming and other services to the station
under a time brokerage agreement, which began January 1,
2002. The Company has allocated approximately $38,000 of the
purchase price to fixed assets and approximately
$4.9 million to FCC licenses. Additionally, the Company
recorded approximately $1.4 million of goodwill and
deferred taxes due to the difference between the fair market
value and book value of the assets and liabilities acquired
through the purchase. The cash portion of the purchase price was
funded primarily through proceeds received from our April 2002
common stock offering.

On October 1, 2002, the Company purchased
substantially all of the broadcasting assets of WQUS-FM
(formerly WRXF-FM) and WLSP-AM, serving the Flint, Michigan
market, from Covenant Communica-

45



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

tions Corporation. Regent began providing
programming and other services to the stations under a time
brokerage agreement on December 3, 2001. The
$1.3 million purchase price, net of $65,000 that was placed
in escrow in 2001 to secure the Companys obligations under
this agreement, was paid using cash from current operations. The
Company has allocated approximately $0.1 million of the
purchase price to fixed assets and approximately
$1.2 million to FCC licenses.



| |                                       
| | --------------------------------------
| | 2001 Acquisitions and
    Dispositions

On May 9, 2001, the Company completed the
acquisition by merger with StarCom, Inc. of one AM and two FM
radio stations (KXSS-AM, KKSR-FM and KLZZ-FM) serving the
St. Cloud, Minnesota market for approximately
$5.0 million in cash. Concurrent with the purchase, the
Company entered into a $500,000 non-compete agreement with a
former shareholder of StarCom, Inc., to be paid ratably over a
five-year period. The purchase was funded from borrowings under
Regents bank credit facility. Prior to the closing of the
purchase, the Company provided programming and other services to
the stations under a time brokerage agreement, which began in
July 2000. The Company has allocated approximately
$4.9 million of the purchase price to FCC licenses and
approximately $0.1 million to fixed assets.

On June 1, 2001, the Company completed the
sale of substantially all the assets of its three radio stations
serving the Palmdale, California market (KTPI-FM, KAVC-AM and
KOSS-FM) to Concord Media Group, Inc. for approximately
$13.5 million in cash. The Company recognized a pre-tax
gain of approximately $4.4 million on the sale.

On August 29, 2001, the Company completed an
acquisition from Two Petaz, Inc.; WFYR, Inc.; Winston
Communications, Inc. of Illinois; and the Cromwell Group, Inc.,
of (i) substantially all the assets of radio stations
WGLO-FM, WPPY-FM, WRVP-FM and WVEL-AM, serving the Peoria,
Illinois market, for a purchase price of approximately
$14.0 million in cash and (ii) substantially all the
assets of radio stations WFYR-FM and WIXO-FM, also serving the
Peoria market, in exchange for 786,141 shares of Regent common
stock, valued at approximately $5.8 million. Prior to the
closing of the purchase, the Company provided programming and
other services to the stations under time brokerage agreements,
which began in May 2001. The Company received a final appraisal
for this purchase in 2002, and accordingly re-allocated the
purchase price to conform to the appraisal. Based on the final
appraisal, the Company has allocated approximately
$14.3 million of the purchase price to FCC licenses,
approximately $3.9 million to goodwill, $10,000 to
non-compete agreements and approximately $1.6 million to
fixed assets.

On October 15, 2001, the Company completed
the acquisition of substantially all of the assets of WQHZ-FM
(formerly WJET-FM), serving the Erie, Pennsylvania market, from
NextMedia Group II, Inc. for $4.9 million in cash. The
Company has allocated substantially all of the purchase price to
FCC licenses.

On December 8, 2001 the Company completed
the acquisition of substantially all of the assets of seven
radio stations serving the Lafayette, Louisiana market (KMDL-FM,
KRKA-FM, KFTE-FM, KTDY-FM, KPEL-FM, KPEL-AM and KROF-AM) from
ComCorp of Lafayette, Inc. and its affiliates for approximately
$38.1 million in cash and 215,828 shares of Regent common
stock, valued at approximately $1.5 million. The Company
received a final appraisal for this purchase in 2002, and
accordingly re-allocated the purchase price to conform to the
appraisal. Based on the final appraisal, the Company has
allocated approximately $27.8 million of the purchase price
to FCC licenses, approximately $7.9 million to goodwill,
and approximately $3.9 million to fixed assets.



| |                                       
| | --------------------------------------
| | 2000 Acquisitions and
    Dispositions

On January 28, 2000, Regent purchased the
FCC licenses and related assets used in the operations of radio
stations WODZ-FM, WLZW-FM, WFRG-FM, WIBX-AM and WRUN-AM in
Utica-Rome, New York and WCIZ-FM, WFRY-FM, WTNY-AM and WNER-AM
in Watertown, New York for approxi-

46



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

mately $43.8 million in cash and 100,000
shares of Regents common stock. Approximately
$40.9 million of the total purchase price was allocated to
FCC licenses and goodwill and the remaining $3.8 million
was allocated to property and equipment.

On January 31, 2000, Regent purchased the
FCC licenses and related assets used in the operations of radio
stations KLAQ-FM, KSII-FM and KROD-AM in El Paso, Texas for
approximately $23.5 million in cash. Approximately
$21.8 million of the purchase price was allocated to FCC
licenses and goodwill and the remaining $1.7 million of the
purchase price was allocated to property and equipment.

On August 24, 2000, Regent completed an
exchange agreement entered into with Clear Channel Broadcasting,
Inc., Capstar Radio Operating Company and their affiliates.
Under the agreement, Regent exchanged its eight stations serving
the Mansfield, Ohio (2 FM/1 AM) and Victorville,
California (3 FM/2 AM) markets plus approximately
$80.5 million in cash for ten stations serving the Grand
Rapids, Michigan (3 FM/1 AM) and Albany, New York
(4 FM/2 AM) markets. Approximately $110.1 million
of the purchase price was allocated to FCC licenses and goodwill
and the remaining $5.2 million of the purchase price was
allocated to property and equipment. As a result of this
transaction, Regent recognized a gain on this exchange of
approximately $17.8 million, which is reflected in the
accompanying Consolidated Statements of Operations for the year
ended December 31, 2000.

On September 29, 2000, Regent acquired radio
station KZAP-FM in Chico, California, by acquiring the stock of
KZAP, Inc. in exchange for 233,333 shares of Regents
common stock with a market value of approximately
$2.7 million at March 29, 2000, the date of
Regents agreement to acquire the station. Approximately
$2.4 million of the purchase price was allocated to FCC
licenses and the remaining $0.3 million of the purchase
price was allocated to property and equipment. Regent provided
programming and other services to KZAP-FM under a time brokerage
agreement commencing December 1, 1999.

Also on September 29, 2000, Regent completed
the sale of radio stations KZGL-FM, KVNA-AM and KVNA-FM in
Flagstaff, Arizona to Yavapai Broadcasting Corporation for
approximately $2.0 million in cash. Regent recognized a
note receivable for the purchase price at September 30,
2000, which was collected on October 5, 2000. Yavapai had
previously been operating the Flagstaff stations under a time
brokerage agreement since May 1, 2000. The Company
recognized a loss on this sale of approximately
$0.1 million, which is reflected in the accompanying
Consolidated Statements of Operations for the year ended
December 31, 2000.

The Company accounted for all of its 2002, 2001
and 2000 acquisitions using the purchase method of accounting.
The Company allocated the aggregate purchase price from all
acquisitions in 2002 and 2001 as follows (in thousands):

|                           |  |      |        |      |  |   |        | 
|-------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                           |  | 2002 |        | 2001
|                           |  |      |        |     
|Property and equipment     |  | $    | 723    |      |  | $ | 5,613  | 
|FCC licenses               |  |      | 7,486  |      |  |   | 51,878 | 
|Goodwill                   |  |      | 1,921  |      |  |   | 11,807 | 
|Non-competition agreements |  |      |       |      |  |   | 510    | 
|                           |  |      |        |      |  |   |        | 
|                           |  | $    | 10,130 |      |  | $ | 69,808 | 
|                           |  |      |        |      |  |   |        | 

The Company uses independent valuations to
determine the fair values of significant assets acquired. The
results of operations of the acquired businesses are included in
the Companys consolidated financial statements since their
respective dates of acquisition or operation under time
brokerage agreements.

The following unaudited pro forma data summarize
the combined results of operations of Regent, together with the
operations of the significant stations acquired in 2002 and
2001, but excluding the operations

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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

of the Palmdale, California stations disposed of
in the second quarter of 2001, as though those transactions had
occurred on January 1, 2001.

|                                    |         |                |        |      |  |   |        |      | 
|----------------------------------- | ------- | -------------- | ------ | ---- |  | - | ------ | ---- | 
|                                    |         |               
|                                    |         | Pro Forma     
|                                    |         | (Unaudited)   
|                                    |         |               
|                                    |         | 2002           |        | 2001
|                                    |         |                |        |     
|                                    |         |               
|                                    |         | (In thousands)
|Net broadcast revenues              |         | $              | 70,390 |      |  | $ | 61,560 |     
|Net (loss) income                   |         | $              | (107   | )    |  | $ | 4,326  |     
|Net (loss) income per common share: |         |                |        |      |  |   |        |     
|                                    | Basic   |                | $      | 0.00 |  |   | $      | 0.13 | 
|                                    | Diluted |                | $      | 0.00 |  |   | $      | 0.12 | 

These unaudited pro forma amounts do not purport
to be indicative of the results that might have occurred if the
foregoing transactions had been consummated on the indicated
dates, nor is it indicative of future results of operations.

3.     Long-Term
Debt

Long-term debt consists of the following as of
December 31 (in thousands):

|                                          |  |      |        |      |  |   |        |  
|----------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                          |  | 2002 |        | 2001
|                                          |  |      |        |     
|Senior reducing revolving credit facility |  | $    | 10,969 |      |  | $ | 86,569 |  
|Subordinated promissory note              |  |      | 450    |      |  |   | 510    |  
|                                          |  |      |        |      |  |   |        |  
|                                          |  |      | 11,419 |      |  |   | 87,079 |  
|Less: current portion of long-term debt   |  |      | (60    | )    |  |   | (60    | )
|                                          |  |      |        |      |  |   |        |  
|                                          |  | $    | 11,359 |      |  | $ | 87,019 |  
|                                          |  |      |        |      |  |   |        |  

Based upon our outstanding borrowings under the
credit facility at December 31, 2002, and the balance of
our subordinated promissory note, the payments detailed below
would be required to maintain compliance with the maximum
borrowings allowed under our credit facility over the next five
years (in thousands):

|     |  |   |        | 
|---- |  | - | ------ | 
|2003 |  | $ | 60     | 
|2004 |  |   | 60     | 
|2005 |  |   | 330    | 
|2006 |  |   | 10,969 | 
|     |  |   |        | 
|     |  | $ | 11,419 | 
|     |  |   |        | 



| |                                              
| | ---------------------------------------------
| | Senior Reducing Revolving Credit
    Facility

The Company has a credit agreement with a group
of lenders which provides for a senior reducing revolving credit
facility expiring December 31, 2006, with an initial
aggregate revolving commitment of up to $125.0 million
(including a commitment to issue letters of credit of up to
$25.0 million in aggregate face amount, subject to the
maximum revolving commitment available) and an additional
revolving loan facility with a maximum aggregate amount of
$50.0 million available, subject to the terms of the credit
agreement, which would convert, after two years, to a term loan
maturing December 31, 2006. This additional
$50.0 million borrowing capacity expired unused on
January 27, 2002. Regent incurred approximately
$2.0 million in financing costs related to this credit
facility, which are being amortized over the life of the
agreement. The credit facility is available for working capital
and acquisitions, including related acquisition expenses. In
accordance with the terms of the credit facility, during 2002,
available borrowings under the

48



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

credit facility were permanently reduced in total
by approximately $22.2 million due to scheduled permanent
reductions in available borrowings and provisions of the excess
cash flow calculation. The Company received approximately
$74.6 million in net proceeds from the April 29, 2002
public sale of Regent common stock, and used approximately
$70.6 million of such proceeds to pay down outstanding
indebtedness under the credit facility. Under the terms and
conditions of the credit facility, available borrowings under
the facility would have been permanently reduced by the net
proceeds received from the stock offering. However, the Company
exercised its option to provide a reinvestment notice to the
lender, which will allow Regent to re-borrow substantially all
of the net proceeds received from the common stock offering for
acquisitions and other permitted investments which are complete
and/or for which binding agreements are obtained within
270 days of such repayment. The Brill Media and AGM-Nevada
acquisitions (qualifying acquisitions) qualify for
such treatment under the reinvestment notice and the Company
will re-borrow at least $67.0 million of the purchase price
for these acquisitions, and may, at its option, fund the entire
$69.8 million purchase price of the qualifying acquisitions
through borrowings under the facility. Any difference between
the $74.6 million of net proceeds received from the common
stock offering and the cash paid for the qualifying acquisitions
and their related acquisition costs will be a permanent
reduction in the available borrowings under the credit facility
unless a waiver or modification of the credit facility terms is
obtained. At December 31, 2002 and 2001 there were
borrowings of approximately $11.0 million and
$86.6 million, respectively, outstanding under the credit
facility. Available borrowings were approximately
$76.8 million and $37.4 million, respectively, for
December 31, 2002 and 2001, which included reductions for
commitments under letters of credit of $15.0 million and
$1.0 million, respectively.

Under the credit facility, the Company is
required to maintain a minimum interest rate coverage ratio,
minimum fixed charge coverage ratio, maximum corporate overhead,
and maximum financial leverage ratio and to observe negative
covenants customary for facilities of this type. Borrowings
under the credit facility bear interest at a rate equal to, at
the Companys option, either (a) the higher of the
rate announced or published publicly from time to time by the
agent as its corporate base of interest or the Overnight Federal
Funds Rate plus 0.5%, in either case plus the applicable margin
determined under the credit facility, or (b) the
reserve-adjusted Eurodollar Rate plus the applicable margin
which varies between 1.25% and 2.75% depending upon the
Companys financial leverage. Borrowings under the credit
facility bore interest at an average rate of 2.67% and 3.37% as
of December 31, 2002 and 2001, respectively. The Company is
required to pay certain fees to the agent and the lenders for
the underwriting commitment, which varies between 0.375% and
0.75% depending upon the amount of the facility utilized and the
Companys leverage ratio, and for the administration and
use of the credit facility. The Companys indebtedness
under this credit facility is collateralized by liens on
substantially all of its assets and by a pledge of its operating
and license subsidiaries stock and is guaranteed by these
subsidiaries.

Prior to the credit facility, the Company had an
agreement with a group of lenders that provided for a senior
reducing revolving credit facility with a commitment of up to
$55.0 million expiring in March 2005. On January 28,
2000, Regent paid off the outstanding debt, accrued interest and
related fees totaling approximately $25.1 million under
that credit facility. The pay-off was funded with proceeds from
an initial public offering of Regents common stock, which
was completed on January 28, 2000. This final paydown
resulted in an extraordinary loss of approximately
$1.1 million, net of income tax, from the write-off of
deferred financing costs, which is included in the Consolidated
Statements of Operations for the year ended December 31,
2000.



|   |                                   
|-- | ----------------------------------
|4. | Supplemental Guarantor Information

The Company conducts the majority of its business
through its subsidiaries (Subsidiary Guarantors).
The Subsidiary Guarantors are wholly owned by Regent
Broadcasting, Inc. (RBI), which is a wholly owned
subsidiary of Regent Communications, Inc. (RCI). The
Subsidiary Guarantors are guarantors of any debt securities that
could be issued by RCI or RBI, and are therefore considered
registrants of such securities. RCI

49



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

would also guarantee any debt securities that
could be issued by RBI. All such guarantees will be full and
unconditional and joint and several. No debt securities have
been issued to date by RBI or RCI.

Set forth below are consolidating financial
statements for RCI, RBI and the Subsidiary Guarantors as of
December 31, 2002 and 2001, and the years ended
December 31, 2002, 2001 and 2000. The equity method of
accounting has been used by the Company to report its investment
in subsidiaries. Substantially all of RCIs and RBIs
income and cash flow are generated by their subsidiaries.
Separate financial statements for the Subsidiary Guarantors are
not presented based on managements determination that they
do not provide additional information that is material to
investors.




Condensed Consolidating Statements of
Operations

(in thousands)


for the year ended December 31,
2002


|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |        |   |  |   |        |  
|-------------------------------------------------------------------------------- |  | --- | ------ | --- |  | ---------- | ------ | ------------ |  | ----- | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                                                 |  |     |        |     |  | Subsidiary |        |              |  |      
|                                                                                 |  | RCI |        | RBI |  | Guarantors |        | Eliminations |  | Total
|                                                                                 |  |     |        |     |  |            |        |              |  |      
|Net broadcast revenue                                                            |  | $   |       |     |  | $          |       |              |  | $     | 70,390 |   |  | $ |       |   |  | $ | 70,390 |  
|Station operating expenses                                                       |  |     |       |     |  |            |       |              |  |       | 48,963 |   |  |   |       |   |  |   | 48,963 |  
|Depreciation and amortization                                                    |  |     | 109    |     |  |            |       |              |  |       | 3,251  |   |  |   |       |   |  |   | 3,360  |  
|Corporate general and administrative expenses                                    |  |     | 6,088  |     |  |            | 61     |              |  |       |       |   |  |   |       |   |  |   | 6,149  |  
|Impairment of goodwill                                                           |  |     |       |     |  |            |       |              |  |       | 2,900  |   |  |   |       |   |  |   | 2,900  |  
|Gain on sale of long-lived assets                                                |  |     |       |     |  |            |       |              |  |       | 442    |   |  |   |       |   |  |   | 442    |  
|(Loss in) equity in earnings of subsidiaries                                     |  |     | (286   | )   |  |            | 1,840  |              |  |       |       |   |  |   | (1,554 | ) |  |   |       |  
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |        |   |  |   |        |  
|Operating (loss) income                                                          |  |     | (6,483 | )   |  |            | 1,779  |              |  |       | 15,718 |   |  |   | (1,554 | ) |  |   | 9,460  |  
|Interest expense, net                                                            |  |     | (36    | )   |  |            | (2,172 | )            |  |       |       |   |  |   |       |   |  |   | (2,208 | )
|Other (expense) income, net                                                      |  |     |       |     |  |            | (88    | )            |  |       | (345   | ) |  |   |       |   |  |   | (433   | )
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |        |   |  |   |        |  
|(Loss) income before income taxes and cumulative
    effect of accounting change |  |     | (6,519 | )   |  |            | (481   | )            |  |       | 15,373 |   |  |   | (1,554 | ) |  |   | 6,819  |  
|Income tax benefit (expense)                                                     |  |     | (588   | )   |  |            | 195    |              |  |       | (7,395 | ) |  |   | 627    |   |  |   | (7,161 | )
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |        |   |  |   |        |  
|(Loss) income before cumulative effect of
    accounting change                  |  |     | (7,107 | )   |  |            | (286   | )            |  |       | 7,978  |   |  |   | (927   | ) |  |   | (342   | )
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |        |   |  |   |        |  
|Cumulative effect of accounting change                                           |  |     |       |     |  |            |       |              |  |       | (6,138 | ) |  |   |       |   |  |   | (6,138 | )
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |        |   |  |   |        |  
|Net (loss) income                                                                |  | $   | (7,107 | )   |  | $          | (286   | )            |  | $     | 1,840  |   |  | $ | (927   | ) |  | $ | (6,480 | )
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |        |   |  |   |        |  

50



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Condensed Consolidating Statements of
Operations

(in thousands)


for the year ended December 31,
2001


|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |      |   |  |   |        |  
|-------------------------------------------------------------------------------- |  | --- | ------ | --- |  | ---------- | ------ | ------------ |  | ----- | ------ | - |  | - | ---- | - |  | - | ------ | -
|                                                                                 |  |     |        |     |  | Subsidiary |        |              |  |      
|                                                                                 |  | RCI |        | RBI |  | Guarantors |        | Eliminations |  | Total
|                                                                                 |  |     |        |     |  |            |        |              |  |      
|Net broadcast revenue                                                            |  | $   |       |     |  | $          |       |              |  | $     | 53,745 |   |  | $ |     |   |  | $ | 53,745 |  
|Station operating expenses                                                       |  |     |       |     |  |            |       |              |  |       | 38,530 |   |  |   |     |   |  |   | 38,530 |  
|Depreciation and amortization                                                    |  |     | 92     |     |  |            |       |              |  |       | 13,344 |   |  |   |     |   |  |   | 13,436 |  
|Corporate general and administrative expenses                                    |  |     | 4,808  |     |  |            | 49     |              |  |       |       |   |  |   |     |   |  |   | 4,857  |  
|(Loss in) equity in earnings of subsidiaries                                     |  |     | (1,641 | )   |  |            | 1,012  |              |  |       |       |   |  |   | 629  |   |  |   |       |  
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |      |   |  |   |        |  
|Operating (loss) income                                                          |  |     | (6,541 | )   |  |            | 963    |              |  |       | 1,871  |   |  |   | 629  |   |  |   | (3,078 | )
|Interest expense, net                                                            |  |     | (36    | )   |  |            | (3,243 | )            |  |       |       |   |  |   |     |   |  |   | (3,279 | )
|Gain on exchange/sale of radio stations                                          |  |     | 4,444  |     |  |            |       |              |  |       |       |   |  |   |     |   |  |   | 4,444  |  
|Other expense, net                                                               |  |     |       |     |  |            |       |              |  |       | (465   | ) |  |   |     |   |  |   | (465   | )
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |      |   |  |   |        |  
|(Loss) income before income taxes and cumulative
    effect of accounting change |  |     | (2,133 | )   |  |            | (2,280 | )            |  |       | 1,406  |   |  |   | 629  |   |  |   | (2,378 | )
|Income tax benefit (expense)                                                     |  |     | 597    |     |  |            | 639    |              |  |       | (394   | ) |  |   | (177 | ) |  |   | 665    |  
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |      |   |  |   |        |  
|Net (loss) income                                                                |  | $   | (1,536 | )   |  | $          | (1,641 | )            |  | $     | 1,012  |   |  | $ | 452  |   |  | $ | (1,713 | )
|                                                                                 |  |     |        |     |  |            |        |              |  |       |        |   |  |   |      |   |  |   |        |  




Condensed Consolidating Statements of
Operations

(in thousands)


for the year ended December 31,
2000


|                                                             |  |     |        |     |  |            |        |              |  |       |        |  |  |   |        |   |  |   |        |  
|------------------------------------------------------------ |  | --- | ------ | --- |  | ---------- | ------ | ------------ |  | ----- | ------ |  |  | - | ------ | - |  | - | ------ | -
|                                                             |  |     |        |     |  | Subsidiary |        |              |  |      
|                                                             |  | RCI |        | RBI |  | Guarantors |        | Eliminations |  | Total
|                                                             |  |     |        |     |  |            |        |              |  |      
|Net broadcast revenue                                        |  | $   |       |     |  | $          |       |              |  | $     | 44,107 |  |  | $ |       |   |  | $ | 44,107 |  
|Station operating expenses                                   |  |     |       |     |  |            |       |              |  |       | 30,173 |  |  |   |       |   |  |   | 30,173 |  
|Depreciation and amortization                                |  |     | 56     |     |  |            |       |              |  |       | 8,546  |  |  |   |       |   |  |   | 8,602  |  
|Corporate general and administrative expenses                |  |     | 4,456  |     |  |            | 45     |              |  |       |       |  |  |   |       |   |  |   | 4,501  |  
|Equity in (loss in) earnings of subsidiaries                 |  |     | 896    |     |  |            | 6,248  |              |  |       |       |  |  |   | (7,144 | ) |  |   |       |  
|                                                             |  |     |        |     |  |            |        |              |  |       |        |  |  |   |        |   |  |   |        |  
|Operating (loss) income                                      |  |     | (3,616 | )   |  |            | 6,203  |              |  |       | 5,388  |  |  |   | (7,144 | ) |  |   | 831    |  
|Interest expense, net                                        |  |     | (36    | )   |  |            | (4,193 | )            |  |       |       |  |  |   |       |   |  |   | (4,229 | )
|Gain on sale/exchange of radio stations                      |  |     | 17,504 |     |  |            |       |              |  |       |       |  |  |   |       |   |  |   | 17,504 |  
|Other income, net                                            |  |     |       |     |  |            |       |              |  |       | 860    |  |  |   |       |   |  |   | 860    |  
|                                                             |  |     |        |     |  |            |        |              |  |       |        |  |  |   |        |   |  |   |        |  
|Income (loss) before income taxes and
    extraordinary item |  |     | 13,852 |     |  |            | 2,010  |              |  |       | 6,248  |  |  |   | (7,144 | ) |  |   | 14,966 |  
|Income tax expense                                           |  |     |       |     |  |            |       |              |  |       |       |  |  |   |       |   |  |   |       |  
|                                                             |  |     |        |     |  |            |        |              |  |       |        |  |  |   |        |   |  |   |        |  
|Income (loss) before extraordinary item                      |  |     | 13,852 |     |  |            | 2,010  |              |  |       | 6,248  |  |  |   | (7,144 | ) |  |   | 14,966 |  
|Extraordinary item                                           |  |     |       |     |  |            | (1,114 | )            |  |       |       |  |  |   |       |   |  |   | (1,114 | )
|                                                             |  |     |        |     |  |            |        |              |  |       |        |  |  |   |        |   |  |   |        |  
|Net income (loss)                                            |  | $   | 13,852 |     |  | $          | 896    |              |  | $     | 6,248  |  |  | $ | (7,144 | ) |  | $ | 13,852 |  
|                                                             |  |     |        |     |  |            |        |              |  |       |        |  |  |   |        |   |  |   |        |  

51



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Condensed Consolidating Balance
Sheets

(in thousands)


December 31, 2002


|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |        |         | 
|---------------------------------------------- | ------------------------------------- | ------------------------------------------ | ------- | ----- | ------- | ---------- | ------- | ------------ | ------- | ----- | ------- | ------ | ------- |  | -------- | ------- | -------- | - | ------- | ------ | ------- | 
|                                               |                                       |                                            |         |       |         | Subsidiary |         |              |         |      
|                                               |                                       | RCI                                        |         | RBI   |         | Guarantors |         | Eliminations |         | Total
|                                               |                                       |                                            |         |       |         |            |         |              |         |      
|ASSETS                                         |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|Current assets:                                |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|                                               | Cash and cash equivalents             |                                            | $       |      |         |            | $       | 2,656        |         |       | $       |       |         |  | $        |        |          |   | $       | 2,656  |        
|                                               | Accounts receivable, net              |                                            |         |      |         |            |         |             |         |       |         | 13,517 |         |  |          |        |          |   |         | 13,517 |        
|                                               | Other current assets                  |                                            |         | 297   |         |            |         |             |         |       |         | 514    |         |  |          |        |          |   |         | 811    |        
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|                                               |                                       | Total current assets                       |         |       | 297     |            |         |              | 2,656   |       |         |        | 14,031  |  |          |         |         |   |         |        | 16,984  | 
|Intercompany receivable                        |                                       |                                            |        |       |         |            |        |              |         |       | 28,048  |        |         |  | (28,048  | )       |          |   |        |       
|Investment in subsidiaries                     |                                       |                                            | 269,302 |       |         |            | 304,105 |              |         |       |        |        |         |  | (573,407 | )       |          |   |        |       
|Property and equipment, net                    |                                       |                                            | 464     |       |         |            |        |              |         |       | 26,425  |        |         |  |         |         |          |   | 26,889  |       
|Intangible assets, net                         |                                       |                                            |        |       |         |            |        |              |         |       | 238,706 |        |         |  |         |         |          |   | 238,706 |       
|Goodwill, net                                  |                                       |                                            | 1,754   |       |         |            | 493     |              |         |       | 21,953  |        |         |  |         |         |          |   | 24,200  |       
|Other assets                                   |                                       |                                            | 9,021   |       |         |            | 1,149   |              |         |       | 43      |        |         |  | (8,962   | )       |          |   | 1,251   |       
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|                                               |                                       | Total assets                               |         | $     | 280,838 |            |         | $            | 308,403 |       |         | $      | 329,206 |  |          | $       | (610,417 | ) |         | $      | 308,030 | 
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|LIABILITIES AND
    STOCKHOLDERS EQUITY       |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|Current liabilities:                           |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|                                               | Accounts payable and accrued expenses |                                            | $       | 1,958 |         |            | $       | 84           |         |       | $       | 5,906  |         |  | $        |        |          |   | $       | 7,948  |        
|                                               | Intercompany payable                  |                                            |         |      |         |            |         | 28,048       |         |       |         |       |         |  |          | (28,048 | )        |   |         |       |        
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|                                               |                                       | Total current liabilities                  |         |       | 1,958   |            |         |              | 28,132  |       |         |        | 5,906   |  |          |         | (28,048  | ) |         |        | 7,948   | 
|Long-term debt, less current portion           |                                       |                                            | 390     |       |         |            | 10,969  |              |         |       |        |        |         |  |         |         |          |   | 11,359  |       
|Deferred taxes and other long-term liabilities |                                       |                                            |        |       |         |            |        |              |         |       | 19,195  |        |         |  | (8,962   | )       |          |   | 10,233  |       
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|                                               |                                       | Total liabilities                          |         |       | 2,348   |            |         |              | 39,101  |       |         |        | 25,101  |  |          |         | (37,010  | ) |         |        | 29,540  | 
|Stockholders equity                           |                                       |                                            | 278,490 |       |         |            | 269,302 |              |         |       | 304,105 |        |         |  | (573,407 | )       |          |   | 278,490 |       
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       
|                                               |                                       | Total liabilities and stockholders equity |         | $     | 280,838 |            |         | $            | 308,403 |       |         | $      | 329,206 |  |          | $       | (610,417 | ) |         | $      | 308,030 | 
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |        |         |  |          |         |          |   |         |       

52



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Condensed Consolidating Balance
Sheets

(in thousands)


December 31, 2001


|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |       |         | 
|---------------------------------------------- | ------------------------------------- | ------------------------------------------ | ------- | ----- | ------- | ---------- | ------- | ------------ | ------- | ----- | ------- | ----- | ------- |  | -------- | ------- | -------- | - | ------- | ----- | ------- | 
|                                               |                                       |                                            |         |       |         | Subsidiary |         |              |         |      
|                                               |                                       | RCI                                        |         | RBI   |         | Guarantors |         | Eliminations |         | Total
|                                               |                                       |                                            |         |       |         |            |         |              |         |      
|ASSETS                                         |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|Current assets:                                |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|                                               | Cash and cash equivalents             |                                            | $       |      |         |            | $       | 1,765        |         |       | $       |      |         |  | $        |        |          |   | $       | 1,765 |        
|                                               | Accounts receivable, net              |                                            |         |      |         |            |         |             |         |       |         | 9,772 |         |  |          |        |          |   |         | 9,772 |        
|                                               | Other current assets                  |                                            |         | 237   |         |            |         |             |         |       |         | 405   |         |  |          |        |          |   |         | 642   |        
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|                                               |                                       | Total current assets                       |         |       | 237     |            |         |              | 1,765   |       |         |       | 10,177  |  |          |         |         |   |         |       | 12,179  | 
|Intercompany receivable                        |                                       |                                            |        |       |         |            |        |              |         |       | 14,449  |       |         |  | (14,449  | )       |          |   |        |      
|Investment in subsidiaries                     |                                       |                                            | 197,762 |       |         |            | 296,012 |              |         |       |        |       |         |  | (493,774 | )       |          |   |        |      
|Property and equipment, net                    |                                       |                                            | 403     |       |         |            |        |              |         |       | 25,414  |       |         |  |         |         |          |   | 25,817  |      
|Intangible assets, net                         |                                       |                                            |        |       |         |            |        |              |         |       | 253,643 |       |         |  |         |         |          |   | 253,643 |      
|Goodwill, net                                  |                                       |                                            | 1,754   |       |         |            |        |              |         |       | 11,023  |       |         |  |         |         |          |   | 12,777  |      
|Other assets                                   |                                       |                                            | 10,906  |       |         |            | 1,431   |              |         |       | 450     |       |         |  | (10,847  | )       |          |   | 1,940   |      
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|                                               |                                       | Total assets                               |         | $     | 211,062 |            |         | $            | 299,208 |       |         | $     | 315,156 |  |          | $       | (519,070 | ) |         | $     | 306,356 | 
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|LIABILITIES AND
    STOCKHOLDERS EQUITY       |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|Current liabilities:                           |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|                                               | Accounts payable and accrued expenses |                                            | $       | 2,274 |         |            | $       | 428          |         |       | $       | 3,352 |         |  | $        |        |          |   | $       | 6,054 |        
|                                               | Intercompany payable                  |                                            |         |      |         |            |         | 14,449       |         |       |         |      |         |  |          | (14,449 | )        |   |         |      |        
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|                                               |                                       | Total current liabilities                  |         |       | 2,274   |            |         |              | 14,877  |       |         |       | 3,352   |  |          |         | (14,449  | ) |         |       | 6,054   | 
|Long-term debt, less current portion           |                                       |                                            | 450     |       |         |            | 86,569  |              |         |       |        |       |         |  |         |         |          |   | 87,019  |      
|Deferred taxes and other long-term liabilities |                                       |                                            |        |       |         |            |        |              |         |       | 15,792  |       |         |  | (10,847  | )       |          |   | 4,945   |      
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|                                               |                                       | Total liabilities                          |         |       | 2,724   |            |         |              | 101,446 |       |         |       | 19,144  |  |          |         | (25,296  | ) |         |       | 98,018  | 
|Stockholders equity                           |                                       |                                            | 208,338 |       |         |            | 197,762 |              |         |       | 296,012 |       |         |  | (493,774 | )       |          |   | 208,338 |      
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      
|                                               |                                       | Total liabilities and stockholders equity |         | $     | 211,062 |            |         | $            | 299,208 |       |         | $     | 315,156 |  |          | $       | (519,070 | ) |         | $     | 306,356 | 
|                                               |                                       |                                            |         |       |         |            |         |              |         |       |         |       |         |  |          |         |          |   |         |      

53



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Condensed Consolidating Statements of Cash
Flows

(in thousands)


For the year ended December 31,
2002


|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |         |  
|------------------------------------------------ | ---------------------------------------------------------------- | --- | - | ------- | - | ---------- | ----- | ------------ | - | ----- | - | ------- | - | - | - | - |  | - | ----- | ------- | -
|                                                 |                                                                  |     |   |         |   | Subsidiary |       |              |   |      
|                                                 |                                                                  | RCI |   | RBI     |   | Guarantors |       | Eliminations |   | Total
|                                                 |                                                                  |     |   |         |   |            |       |              |   |      
|Cash flows from operating
    activities:        |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Cash flows (used in) provided by operating
    activities        |     | $ | (3,094  | ) |            | $     | (2,651       | ) |       | $ | 16,728  |   |   | $ |  |  |   | $     | 10,983  |  
|Cash flows from investing
    activities:        |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Acquisitions of radio stations and related
    acquisition costs |     |   |        |   |            |       | (6,248       | ) |       |   |        |   |   |   |  |  |   |       | (6,248  | )
|                                                 | Capital expenditures                                             |     |   |        |   |            |       | (3,856       | ) |       |   |        |   |   |   |  |  |   |       | (3,856  | )
|                                                 | Net proceeds from sale of radio stations                         |     |   |        |   |            |       |             |   |       |   | 1,829   |   |   |   |  |  |   |       | 1,829   |  
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Net cash (used in) provided by investing
    activities          |     |   |        |   |            |       | (10,104      | ) |       |   | 1,829   |   |   |   |  |  |   |       | (8,275  | )
|Cash flows from financing
    activities:        |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Net proceeds from issuance of common stock                       |     |   | 75,785  |   |            |       |             |   |       |   |        |   |   |   |  |  |   |       | 75,785  |  
|                                                 | Principal payments on long-term debt                             |     |   | (60     | ) |            |       | (80,600      | ) |       |   |        |   |   |   |  |  |   |       | (80,660 | )
|                                                 | Long-term debt borrowings                                        |     |   |        |   |            |       | 5,000        |   |       |   |        |   |   |   |  |  |   |       | 5,000   |  
|                                                 | Purchase of treasury shares                                      |     |   | (1,122  | ) |            |       |             |   |       |   |        |   |   |   |  |  |   |       | (1,122  | )
|                                                 | Payment of equity issuance costs                                 |     |   | (820    | ) |            |       |             |   |       |   |        |   |   |   |  |  |   |       | (820    | )
|                                                 | Net transfers (to)/from subsidiaries                             |     |   | (70,689 | ) |            |       | 89,246       |   |       |   | (18,557 | ) |   |   |  |  |   |       |        |  
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Net cash provided by (used in) financing
    activities          |     |   | 3,094   |   |            |       | 13,646       |   |       |   | (18,557 | ) |   |   |  |  |   |       | (1,817  | )
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|Increase in cash and cash equivalents            |                                                                  |     |  |         |   |            | 891   |              |   |       |  |         |   |   |  |   |  |   | 891   |        
|Cash and cash equivalents at beginning of period |                                                                  |     |  |         |   |            | 1,765 |              |   |       |  |         |   |   |  |   |  |   | 1,765 |        
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|Cash and cash equivalents at end of period       |                                                                  | $   |  |         |   | $          | 2,656 |              |   | $     |  |         |   | $ |  |   |  | $ | 2,656 |        
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        

54



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Condensed Consolidating Statements of Cash
Flows

(in thousands)


For the year ended December 31,
2001


|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |         |  
|------------------------------------------------ | ---------------------------------------------------------------- | --- | - | ------- | - | ---------- | ----- | ------------ | - | ----- | - | ------- | - | - | - | - |  | - | ----- | ------- | -
|                                                 |                                                                  |     |   |         |   | Subsidiary |       |              |   |      
|                                                 |                                                                  | RCI |   | RBI     |   | Guarantors |       | Eliminations |   | Total
|                                                 |                                                                  |     |   |         |   |            |       |              |   |      
|Cash flows from operating
    activities:        |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Cash flows (used in) provided by operating
    activities        |     | $ | (2,463  | ) |            | $     | (2,121       | ) |       | $ | 12,934  |   |   | $ |  |  |   | $     | 8,350   |  
|Cash flows from investing
    activities:        |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Acquisitions of radio stations and related
    acquisition costs |     |   |        |   |            |       | (63,450      | ) |       |   |        |   |   |   |  |  |   |       | (63,450 | )
|                                                 | Capital expenditures                                             |     |   |        |   |            |       | (3,161       | ) |       |   |        |   |   |   |  |  |   |       | (3,161  | )
|                                                 | Proceeds from the sale of fixed assets                           |     |   |        |   |            |       |             |   |       |   | 27      |   |   |   |  |  |   |       | 27      |  
|                                                 | Net proceeds from sale of radio stations                         |     |   | 13,393  |   |            |       |             |   |       |   |        |   |   |   |  |  |   |       | 13,393  |  
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Net cash provided by (used in) investing
    activities          |     |   | 13,393  |   |            |       | (66,611      | ) |       |   | 27      |   |   |   |  |  |   |       | (53,191 | )
|Cash flows from financing
    activities:        |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Net proceeds from issuance of common stock                       |     |   | 4,068   |   |            |       |             |   |       |   |        |   |   |   |  |  |   |       | 4,068   |  
|                                                 | Principal payments on long-term debt                             |     |   | (60     | ) |            |       | (18,431      | ) |       |   |        |   |   |   |  |  |   |       | (18,491 | )
|                                                 | Long-term debt borrowings                                        |     |   |        |   |            |       | 60,500       |   |       |   |        |   |   |   |  |  |   |       | 60,500  |  
|                                                 | Payment of equity issuance costs                                 |     |   | (249    | ) |            |       |             |   |       |   |        |   |   |   |  |  |   |       | (249    | )
|                                                 | Net transfers (to)/from subsidiaries                             |     |   | (14,689 | ) |            |       | 27,650       |   |       |   | (12,961 | ) |   |   |  |  |   |       |        |  
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|                                                 | Net cash (used in) provided by financing
    activities          |     |   | (10,930 | ) |            |       | 69,719       |   |       |   | (12,961 | ) |   |   |  |  |   |       | 45,828  |  
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|Increase in cash and cash equivalents            |                                                                  |     |  |         |   |            | 987   |              |   |       |  |         |   |   |  |   |  |   | 987   |        
|Cash and cash equivalents at beginning of period |                                                                  |     |  |         |   |            | 778   |              |   |       |  |         |   |   |  |   |  |   | 778   |        
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        
|Cash and cash equivalents at end of period       |                                                                  | $   |  |         |   | $          | 1,765 |              |   | $     |  |         |   | $ |  |   |  | $ | 1,765 |        
|                                                 |                                                                  |     |   |         |   |            |       |              |   |       |   |         |   |   |   |   |  |   |       |        

55



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Condensed Consolidating Statements of Cash
Flows

(in thousands)


For the year ended December 31,
2000


|                                                 |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |          |  
|------------------------------------------------ | ---------------------------------------------------------------- | --- | - | -------- | - | ---------- | ------ | ------------ | - | ----- | - | ------ | - | - | - | - |  | - | ------ | -------- | -
|                                                 |                                                                  |     |   |          |   | Subsidiary |        |              |   |      
|                                                 |                                                                  | RCI |   | RBI      |   | Guarantors |        | Eliminations |   | Total
|                                                 |                                                                  |     |   |          |   |            |        |              |   |      
|Cash flows from operating
    activities:        |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |         
|                                                 | Cash flows (used in) provided by operating
    activities        |     | $ | (3,993   | ) |            | $      | (2,671       | ) |       | $ | 9,802  |   |   | $ |  |  |   | $      | 3,138    |  
|Cash flows from investing
    activities:        |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |         
|                                                 | Acquisitions of radio stations and related
    acquisition costs |     |   |         |   |            |        | (148,940     | ) |       |   |       |   |   |   |  |  |   |        | (148,940 | )
|                                                 | Capital expenditures                                             |     |   |         |   |            |        | (1,719       | ) |       |   |       |   |   |   |  |  |   |        | (1,719   | )
|                                                 | Net proceeds from sale of radio stations                         |     |   | 2,000    |   |            |        |             |   |       |   |       |   |   |   |  |  |   |        | 2,000    |  
|                                                 |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |         
|                                                 | Net cash provided by (used in) investing
    activities          |     |   | 2,000    |   |            |        | (150,659     | ) |       |   |       |   |   |   |  |  |   |        | (148,659 | )
|Cash flows from financing
    activities:        |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |         
|                                                 | Proceeds from issuance of common stock                           |     |   | 156,939  |   |            |        |             |   |       |   |       |   |   |   |  |  |   |        | 156,939  |  
|                                                 | Proceeds from long-term debt                                     |     |   |         |   |            |        | 48,500       |   |       |   |       |   |   |   |  |  |   |        | 48,500   |  
|                                                 | Principal payments on long-term debt                             |     |   | (60      | ) |            |        | (28,764      | ) |       |   |       |   |   |   |  |  |   |        | (28,824  | )
|                                                 | Payment of financing costs                                       |     |   |         |   |            |        | (1,904       | ) |       |   |       |   |   |   |  |  |   |        | (1,904   | )
|                                                 | Payment of issuance costs                                        |     |   | (11,606  | ) |            |        |             |   |       |   |       |   |   |   |  |  |   |        | (11,606  | )
|                                                 | Treasury stock purchases                                         |     |   | (7,063   | ) |            |        |             |   |       |   |       |   |   |   |  |  |   |        | (7,063   | )
|                                                 | Dividends paid on all series of preferred stock                  |     |   | (8,153   | ) |            |        |             |   |       |   |       |   |   |   |  |  |   |        | (8,153   | )
|                                                 | Redemption of Series B preferred stock                           |     |   | (5,000   | ) |            |        |             |   |       |   |       |   |   |   |  |  |   |        | (5,000   | )
|                                                 | Net transfers (to)/from subsidiaries                             |     |   | (123,064 | ) |            |        | 132,866      |   |       |   | (9,802 | ) |   |   |  |  |   |        |         |  
|                                                 |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |         
|                                                 | Net cash provided by (used in) financing
    activities          |     |   | 1,993    |   |            |        | 150,698      |   |       |   | (9,802 | ) |   |   |  |  |   |        | 142,889  |  
|                                                 |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |         
|Increase in cash and cash equivalents            |                                                                  |     |  |          |   |            | (2,632 | )            |   |       |  |        |   |   |  |   |  |   | (2,632 | )       
|Cash and cash equivalents at beginning of period |                                                                  |     |  |          |   |            | 3,410  |              |   |       |  |        |   |   |  |   |  |   | 3,410  |         
|                                                 |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |         
|Cash and cash equivalents at end of period       |                                                                  | $   |  |          |   | $          | 778    |              |   | $     |  |        |   | $ |  |   |  | $ | 778    |         
|                                                 |                                                                  |     |   |          |   |            |        |              |   |       |   |        |   |   |   |   |  |   |        |         

56



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                                                                  
|-- | -----------------------------------------------------------------
|5. | Capital Stock, Redeemable Preferred Stock and
    Preferred Stock

On January 28, 2000, Regent consummated an
initial public offering (the IPO) of 16,000,000
shares of its common stock at an initial offering price of $8.50
per share. On February 7, 2000, the underwriters purchased
an additional 2,400,000 shares of Regents common stock
upon exercise of their over-allotment option. Regent received
total proceeds from the completion of the offering, net of
underwriter discounts, commissions and expenses related to the
offering of $143.8 million. Of these proceeds, Regent used:
$67.3 million to fund the acquisitions of stations in
Utica-Rome and Watertown, New York and in El Paso, Texas;
$27.1 million to pay in full the amounts borrowed,
including accrued interest and related fees, under its prior
bank credit facility and fees related to its new bank credit
facility; $7.3 million to pay or reserve for payment
accumulated, unpaid dividends on all series of convertible
preferred stock converted into common stock; $5.9 million
to redeem all outstanding shares of its Series B
convertible preferred stock, including accumulated unpaid
dividends; and $1.5 million to repurchase shares of its
common stock from an affiliate of one of the underwriters in
order to comply with rules of the National Association of
Securities Dealers, Inc. Regent used the balance of the proceeds
for working capital needs and to fund the cash portion of the
purchase price of stations acquired in Albany and Grand Rapids
during 2000.

Regent adjusted the carrying values of its
Series A, C, D, F, G, H, and K convertible preferred stock
to fair value through January 28, 2000. This adjustment was
recognized as a charge of $26.6 million to retained deficit
(since there was no additional paid-in capital) resulting in an
adjustment to loss from continuing operations attributable to
common stockholders.

In conjunction with the IPO, the Company redeemed
1,000,000 shares of its Series B convertible preferred
stock, which constituted all outstanding shares of that series.
Also in conjunction with the IPO, Regent required the conversion
into common stock on a one-for-one basis of approximately
15,800,000 shares of convertible preferred stock in accordance
with the terms of the preferred stock, and paid accumulated,
unpaid dividends on those shares in the total amount of
$7.3 million. These shares represented the balance of
Regents outstanding shares of convertible preferred stock.
Additionally, put rights associated with common
stock purchase warrants issued in connection with the issuance
of Regents Series B and Series F convertible
preferred stock were terminated. Regent had previously
classified approximately $3.7 million in long-term
liabilities due to the associated put rights of the
warrants at December 31, 1999. These warrant liabilities
were reclassified to additional paid-in capital as of
January 28, 2000 along with approximately $1.5 million
of non-cash interest expense that had been recorded to account
for an increase in the fair value of the warrants from
January 1, 2000 to January 28, 2000.

The Companys authorized capital stock
consists of 100,000,000 shares of common stock and 40,000,000
shares of preferred stock. No shares of preferred stock were
issued or outstanding at December 31, 2002 or 2001. The
Company has in the past designated shares of preferred stock in
several different series. Of the available shares of preferred
stock, 6,768,862 remain designated in several of those series
and 33,231,138 shares are currently undesignated.

On February 4, 2002, the Company issued
174,917 shares of common stock to Connoisseur Communications of
Flint, L.L.P., valued at approximately $1.0 million, for
the option to purchase WFGR-FM, serving the Grand Rapids,
Michigan market.

On April 29, 2002, the Company completed the
sale of 10.5 million shares of its common stock at a price
of $7.50 per share. Net cash proceeds to the Company after
underwriting discounts and commissions were approximately
$74.6 million. Approximately $70.6 million of the
proceeds were used to pay down outstanding indebtedness under
the Companys credit facility. The remaining
$4.0 million of proceeds were used to partially fund the
Companys acquisitions of WRCL-FM (formerly WZRZ-FM),
serving the Flint, Michigan market, and WFGR-FM, serving the
Grand Rapids, Michigan market, during the second quarter of 2002.

57



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

On June 1, 2002, the Company issued 209,536
shares of common stock, valued at approximately
$1.4 million, in conjunction with its subsidiary merger
with The Frankenmuth Radio Co., Inc.

At various times during 2002, 16,074 options to
purchase shares of Regent common stock were exercised by three
former directors of Faircom Inc. at prices ranging from $0.89 to
$3.73 per share. The options were issued under the Regent
Communications, Inc. Faircom Conversion Stock Option Plan, which
provided substitute options for those granted under the Faircom
Inc. Stock Option Plan prior to the Companys merger with
Faircom Inc.

Based on approval by Regents Board of
Directors of a program to buy back up to $10.0 million of
its common stock, during the third quarter of 2000, Regent began
buying back shares of its common stock at certain market price
levels. Regent acquired a total of 1,088,600 shares of its
common stock for an aggregate purchase price of approximately
$5.6 million in 2000. No purchases of common stock were
made in 2001. During the third and fourth quarters of 2002, the
Company acquired 235,660 shares of common stock for an aggregate
purchase price of approximately $1.1 million. In October
2002, Regents Board of Directors increased the amount of
stock the Company could buy back by approximately
$6.7 million, providing for an aggregate amount available
for repurchase of $10.0 million at December 31, 2002.

During 2002, Regent reissued 55,277 shares of
treasury stock previously acquired, net of forfeited shares, as
an employer match to employee contributions under the
Companys 401(k) plan, and to employees enrolled in
the Companys employee stock purchase plan. During 2001,
the Company reissued 55,579 shares of treasury stock as an
employer match under the 401(k) plan.

On March 20, 2001, the Company issued 37,230
shares of Regent common stock to River Cities Capital Fund
Limited Partnership upon the exercise in full, on a cashless
net issue basis, of outstanding warrants which
provided for the purchase of a total of 100,000 shares of Regent
common stock at $5.00 per share. These warrants had been issued
in 1998 in connection with the issuance of Series B and F
convertible preferred stock, which converted to Regent common
stock in January 2000. The remaining warrants, previously issued
in connection with the Series A, B, and F convertible
preferred stock, entitling the holders to purchase a total of
790,000 shares of Regents common stock at $5.00 per share
with a five year expiration, remain outstanding.

On March 26, 2001, Regent issued 22,825
shares of its common stock valued at approximately $7.469 per
share as a stock bonus to certain corporate employees.

On August 29, 2001, the Company issued
786,141 shares of Regent common stock to a stockholder of the
selling corporations in connection with the acquisition of six
radio stations in Peoria, Illinois.

On November 26, 2001, Regent issued 900,000
shares of its common stock at a price of $5.75 per share in a
private placement offering to qualified investors. 200,000 of
the shares, sold to a venture capital fund related to one of the
Companys independent directors, and the associated cash
proceeds of approximately $1.2 million, were held in escrow
until February 5, 2002, pending confirmation from Nasdaq
that stockholder approval would not be required for such sale.

On December 8, 2001, the Company issued
215,828 shares of its common stock to the selling corporation in
connection with the acquisition of seven radio stations in
Lafayette, Louisiana.

At various times throughout 2001, 25,968 options
to purchase shares of Regent common stock were exercised by four
former directors of Faircom Inc. at prices ranging from $1.2057
to $1.5603 per share. The options were issued under the Regent
Communications, Inc. Faircom Conversion Stock Option Plan, which
provided substitute options for those granted under the Faircom
Inc. Stock Option Plan prior to the Companys merger with
Faircom Inc.

At various times throughout 2001, three employees
exercised a total of 2,500 stock options in exchange for shares
of Regent common stock at exercise prices between $5.00 and
$5.50 per share.

58



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                               
|-- | ------------------------------
|6. | Stock-Based Compensation Plans



| |                                      
| | -------------------------------------
| | 1998 Management Stock Option
    Plan

The Regent Communications, Inc. 1998 Management
Stock Option Plan, as amended (the 1998 Stock Option
Plan) provides for the issuance of up to an aggregate of
4,000,000 common shares in connection with the issuance of
incentive stock options (ISOs) and
non-qualified stock options (NQSOs). The
Compensation Committee of the Companys Board of Directors
determines eligibility. The exercise price of the options is to
be not less than the fair market value of the underlying common
stock at the grant date and in the case of ISOs granted to
a 10% owner (as defined), the exercise price must be at least
110% of the fair market value of the underlying common stock at
the grant date. Under the terms of the 1998 Stock Option Plan,
the options expire no later than ten years from the date of
grant in the case of ISOs (five years in the case of
ISOs granted to a 10% owner), no later than ten years and
one day in the case of NQSOs, or earlier in either case in
the event a participant ceases to be an employee of the Company.

The ISOs vest ratably over a five-year
period and the NQSOs vest ratably over periods ranging
from three to ten years.



| |                                         
| | ----------------------------------------
| | Faircom Conversion Stock Option
    Plan

Upon consummation of the Faircom merger, the
Board of Directors of the Company adopted the Regent
Communications, Inc. Faircom Conversion Stock Option Plan
(Conversion Stock Option Plan) which applies to
those individuals previously participating in the Faircom Inc.
Stock Option Plan (Faircom Plan). In exchange for
relinquishing their options under the Faircom Plan, five former
officers and members of Faircoms Board of Directors were
given, in total, the right to acquire 274,045 shares of the
Companys common stock at exercise prices ranging from
$0.89 to $3.73 per share and expiring from May 11, 1999 to
July 1, 2002 (the Converted Options).



| |                                      
| | -------------------------------------
| | 2001 Directors Stock Option
    Plan

The Regent Communications, Inc. 2001
Directors Stock Option Plan (the 2001
Directors Option Plan) provides for the issuance of
up to an aggregate of 500,000 common shares in connection with
the issuance of NQSOs. Grants in the amount of 10,000
shares are awarded initially to each new outside Director at the
date of his first attendance at a meeting of the Board of
Directors, and thereafter, on each one year anniversary date of
the first attendance at a meeting of the Board of Directors,
each outside Director will be automatically granted a further
option to purchase 5,000 shares. The exercise price of the
options is to be equal to the fair market value of the
underlying common stock at the date of grant. Under the terms of
the 2001 Directors Option Plan, the options are
exercisable six months from the date of grant and expire ten
years from the date of grant.



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

In December 2001, the Company adopted the Regent
Communications, Inc. Employee Stock Purchase Plan (the
Stock Purchase Plan) and reserved 500,000 shares of
common stock for issuance thereunder. Under the Stock Purchase
Plan, participating employees may purchase shares of the
Companys common stock at a price per share that is 90% of
the lesser of the fair market value as of the beginning or the
end of the semi-annual offering period. Effective
January 1, 2003, the offering period was changed to a
quarterly offering period. Under the terms of the Stock Purchase
Plan, eligible employees may elect each offering period to have
between 1 and 10% of their compensation withheld through payroll
deductions. A total of approximately 24,000 shares of common
stock have been issued under the Stock Purchase Plan for the
2002 offering periods.

The Company applies the provisions of APB 25
in accounting for the 1998 Stock Option Plan, the 2001
Directors Option Plan, and the Stock Purchase Plan. Under
APB 25, no compensation expense is recognized

59



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

for options granted to employees or Directors at
exercise prices that are equal to or greater than the fair
market value of the underlying common stock at the grant date,
or for purchases of common stock under the Stock Purchase Plan.
SFAS 123 requires the Company to provide, beginning with
1995 grants, pro forma information regarding net income (loss)
and net income (loss) per common share as if compensation costs
for the Companys stock-based compensation plans had been
determined in accordance with the fair value based method
prescribed in SFAS 123. Such pro forma information is included
in Footnote 1.

The weighted average fair value per share for
options granted under the 1998 Stock Option Plan and 2001
Directors Option Plan was $3.60, $4.10, and $3.42 for
ISOs in 2002, 2001 and 2000, respectively, and $3.57,
$4.12, and $3.71 for NQSOs in 2002, 2001 and 2000,
respectively. The weighted average fair value for options
granted under the Conversion Stock Option Plan was approximately
$230,000 and such amount was recognized at the time of
conversion since the Converted Options are fully vested. The
fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the
following weighted average assumptions:

|                        |  |       |          |        |  |       |          |        |  |       |          |        |  |  |          |  |  |  |          |  |  |  |          | 
|----------------------- |  | ----- | -------- | ------ |  | ----- | -------- | ------ |  | ----- | -------- | ------ |  |  | -------- |  |  |  | -------- |  |  |  | -------- | 
|                        |  |       |          |        |  |      
|                        |  | 2002  |          | 2001   |  | 2000 
|                        |  |       |          |        |  |      
|                        |  | ISOs |          | NQSOs |  | ISOs |          | NQSOs |  | ISOs |          | NQSOs
|                        |  |       |          |        |  |       |          |        |  |       |          |       
|Dividends               |  |       | None     |        |  |       | None     |        |  |       | None     |        |  |  | None     |  |  |  | None     |  |  |  | None     | 
|Volatility              |  |       | 53.5%    |        |  |       | 53.5%    |        |  |       | 55.1%    |        |  |  | 55.1%    |  |  |  | 36.0%    |  |  |  | 36.0%    | 
|Risk-free interest rate |  |       | 4.70%    |        |  |       | 4.68%    |        |  |       | 5.11%    |        |  |  | 5.12%    |  |  |  | 6.51%    |  |  |  | 6.88%    | 
|Expected term           |  |       | 5  years |        |  |       | 5  years |        |  |       | 5  years |        |  |  | 5  years |  |  |  | 5  years |  |  |  | 5  years | 

The weighted average fair value per share for
common stock issued under the Stock Purchase Plan was $1.61,
calculated using an average risk-free interest rate of 1.66%,
volatility of 53.5%, assuming no dividends and an expected term
of six months. Presented below is a summary of the status of
outstanding Company stock options issued to employees and
Directors:

|                                                 |                      |        |  |                  |   |  |   |      | 
|------------------------------------------------ | -------------------- | ------ |  | ---------------- | - |  | - | ---- | 
|                                                 |                      |        |  | Weighted Average
|                                                 |                      | Shares |  | Exercise Price  
|                                                 |                      |        |  |                 
|Company options held by employees and Directors: |                      |        |  |                  |   |  |   |     
|                                                 | At December 31, 1999 |        |  | 1,840,498        |   |  | $ | 4.76 | 
|                                                 | Granted              |        |  | 179,500          |   |  | $ | 7.23 | 
|                                                 | Exercised            |        |  | (34,095          | ) |  | $ | 1.11 | 
|                                                 | Forfeited/ expired   |        |  | (7,500           | ) |  | $ | 6.56 | 
|Company options held by employees and Directors: |                      |        |  |                  |   |  |   |     
|                                                 | At December 31, 2000 |        |  | 1,978,403        |   |  | $ | 5.04 | 
|                                                 | Granted              |        |  | 672,750          |   |  | $ | 7.73 | 
|                                                 | Exercised            |        |  | (28,468          | ) |  | $ | 1.65 | 
|                                                 | Forfeited/ expired   |        |  | (13,000          | ) |  | $ | 5.25 | 
|Company options held by employees and Directors: |                      |        |  |                  |   |  |   |     
|                                                 | At December 31, 2001 |        |  | 2,609,685        |   |  | $ | 5.77 | 
|                                                 | Granted              |        |  | 522,000          |   |  | $ | 6.95 | 
|                                                 | Exercised            |        |  | (16,074          | ) |  | $ | 1.86 | 
|                                                 | Forfeited/ expired   |        |  | (32,750          | ) |  | $ | 7.51 | 
|                                                 |                      |        |  |                  |   |  |   |     
|Company options held by employees and Directors: |                      |        |  |                  |   |  |   |     
|                                                 | At December 31, 2002 |        |  | 3,082,861        |   |  | $ | 5.97 | 
|                                                 |                      |        |  |                  |   |  |   |     

60



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table summarizes the status of
Company options outstanding and exercisable at December 31,
2002 under the 1998 Stock Option Plan, the Conversion Stock
Option Plan, and the 2001 Directors Option Plan:

|               |  |                     |           |                     |  |          |     |        |  |          |      |  |  |  |           |  |  |   |      | 
|-------------- |  | ------------------- | --------- | ------------------- |  | -------- | --- | ------ |  | -------- | ---- |  |  |  | --------- |  |  | - | ---- | 
|               |  |                     |           |                    
|               |  | Options Outstanding |           | Options Exercisable
|               |  |                     |           |                    
|               |  |                     |           | Weighted            |  |          |     |       
|               |  |                     |           | Average             |  |          |     |       
|               |  |                     |           | Remaining           |  | Weighted |     |        |  | Weighted
|               |  |                     |           | Contractual         |  | Average  |     |        |  | Average 
|               |  |                     |           | Life                |  | Exercise |     |        |  | Exercise
|Exercise Price |  | Shares              |           | (Years)             |  | Price    |     | Shares |  | Price   
|               |  |                     |           |                     |  |          |     |        |  |         
|$6.39 - $7.83  |  |                     | 1,314,000 |                     |  |          | 9.5 |        |  | $        | 7.39 |  |  |  | 323,350   |  |  | $ | 7.66 | 
|$5.00 - $5.93  |  |                     | 1,633,666 |                     |  |          | 6.7 |        |  | $        | 5.02 |  |  |  | 1,305,866 |  |  | $ | 5.01 | 
|$0.88 - $3.73  |  |                     | 135,195   |                     |  |          | 0.5 |        |  | $        | 3.73 |  |  |  | 135,195   |  |  | $ | 3.73 | 
|               |  |                     |           |                     |  |          |     |        |  |          |      |  |  |  |           |  |  |   |      | 
|               |  |                     | 3,082,861 |                     |  |          |     |        |  |          |      |  |  |  | 1,764,411 |  |  |   |      | 
|               |  |                     |           |                     |  |          |     |        |  |          |      |  |  |  |           |  |  |   |      | 

There were options exercisable into common stock
of 1,764,411, 1,531,976, and 808,884 shares at weighted average
exercise prices of $5.40, $5.24, and $5.18 per share at
December 31, 2002, 2001, and 2000, respectively.

As of December 31, 2002, the stock options
granted under the 1998 Stock Option Plan entitle the holders to
purchase 2,772,666 shares of the Companys common stock.
Stock options granted under the Conversion Stock Option Plan
entitle the holders to purchase 135,195 shares of the
Companys common stock and stock options granted under the
2001 Directors Option Plan entitle the holders to purchase
175,000 shares of the Companys common stock.



|   |                   
|-- | ------------------
|7. | Earnings Per Share

Statement of Financial Accounting Standards
No. 128 (SFAS 128) calls for the dual
presentation of basic and diluted earnings per share
(EPS). Basic EPS is calculated by dividing net
income by the weighted average number of common shares
outstanding during the reporting period. The calculation of
diluted earnings per share is similar to basic except that the
weighted average number of shares outstanding includes the
additional dilution that would occur if potential common stock,
such as stock options or warrants, were exercised. The number of
additional shares is calculated by assuming that outstanding
stock options and warrants with an exercise price in excess of
the Companys average stock price for the period were
exercised, and that the proceeds from such exercises were used
to acquire shares of common stock at the average market price
during the reporting period. The effects of the assumed exercise
of 1,774,361, 2,609,685, and 1,913,711 outstanding options and
790,000, 790,000, and 890,000 warrants to purchase shares of
common stock are excluded from the calculations of diluted net
loss per share at December 31, 2002, 2001 and 2000,
respectively, as their effect was anti-dilutive.

61



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table sets forth the computation of
basic and diluted net loss per share for the periods indicated
(in thousands except per share data):

|                                                                                           |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |         |       |  
|------------------------------------------------------------------------------------------ | ------------------------------------- | --------------------------------------------------------------------------------- | ------ | ------ | ----- | ---- | ------ | ------ | ----- | - | ------- | ------- | ----- | -
|                                                                                           |                                       |                                                                                  
|                                                                                           |                                       | Year Ended December 31,                                                          
|                                                                                           |                                       |                                                                                  
|                                                                                           |                                       | 2002                                                                              |        | 2001   |       | 2000
|                                                                                           |                                       |                                                                                   |        |        |       |     
|Net (loss) income before extraordinary item and
    cumulative effect of accounting change |                                       | $                                                                                 | (342   | )      |       | $    | (1,713 | )      |       | $ | 14,966  |        
|Extraordinary loss, net of income taxes                                                    |                                       |                                                                                   |       |        |       |      |       |        |       |   | (1,114  | )      
|Cumulative effect of accounting change, net of
    applicable income taxes of $3,762       |                                       |                                                                                   | (6,138 | )      |       |      |       |        |       |   |        |        
|                                                                                           |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |        
|Net (loss) income                                                                          |                                       | $                                                                                 | (6,480 | )      |       | $    | (1,713 | )      |       | $ | 13,852  |        
|                                                                                           |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |        
|(Loss) income applicable to common shares:                                                 |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |        
|                                                                                           | Net (loss) income                     |                                                                                   | $      | (6,480 | )     |      | $      | (1,713 | )     |   | $       | 13,852  |      
|                                                                                           | Preferred stock dividend requirements |                                                                                   |        |       |       |      |        |       |       |   |         | (629    | )    
|                                                                                           | Preferred stock accretion             |                                                                                   |        |       |       |      |        |       |       |   |         | (26,611 | )    
|                                                                                           |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |        
|Loss applicable to common shares                                                           |                                       | $                                                                                 | (6,480 | )      |       | $    | (1,713 | )      |       | $ | (13,388 | )      
|                                                                                           |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |        
|Weighted average shares                                                                    |                                       |                                                                                   | 43,177 |        |       |      | 34,218 |        |       |   | 31,715  |        
|Net loss per common share:                                                                 |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |        
|                                                                                           | Basic and diluted:                    |                                                                                   |        |        |       |      |        |        |       |   |         |         |      
|                                                                                           |                                       | Net loss before extraordinary item and cumulative
    effect of accounting change |        | $      | (0.01 | )    |        | $      | (0.05 | ) |         | $       | (0.39 | )
|                                                                                           |                                       | Extraordinary loss                                                                |        |        |      |      |        |        |      |   |         |         | (0.03 | )
|                                                                                           |                                       | Cumulative effect of accounting change                                            |        |        | (0.14 | )    |        |        |      |   |         |         |      |  
|                                                                                           |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |        
|                                                                                           |                                       | Net loss                                                                          |        | $      | (0.15 | )    |        | $      | (0.05 | ) |         | $       | (0.42 | )
|                                                                                           |                                       |                                                                                   |        |        |       |      |        |        |       |   |         |        



|   |                                     
|-- | ------------------------------------
|8. | Goodwill and Other Intangible Assets

The Companys intangible assets consist
principally of the value of FCC licenses and the excess of the
purchase price over the fair value of net assets of acquired
radio stations (goodwill). On January 1, 2002, the Company
adopted the provisions of SFAS 142, which requires that a
Company no longer amortize goodwill and intangible assets
determined to have an indefinite life and also requires an
annual impairment testing of those assets. Consistent with the
application provisions of SFAS 142, the Company applied a
fair value approach to test impairment of both indefinite-lived
intangible assets and goodwill on a market-by-market basis.
Based on the results of this evaluation, during the first
quarter of 2002, the Company recorded impairment charges against
indefinite-lived intangibles of approximately $3.9 million,
net of income taxes of approximately $2.4 million, and
against goodwill of approximately $2.2 million, net of
income taxes of approximately $1.4 million. Regent has
reflected this charge as a component of cumulative effect of
accounting change in its Consolidated Statements of Operations.
In estimating future cash flows, the Company considered the
impact of the economic slow down in the radio industry at the
end of 2001. These conditions, combined with the change in
methodology for testing for impairment, which previously
employed the utilization of undiscounted cash flow projections,
adversely impacted the cash flow projections used to determine
the fair value of the FCC licenses, as well as each reporting
unit. No impairment charge was appropriate under the FASBs
previous goodwill impairment standard, which was based on
undiscounted cash flows.

62



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

During the fourth quarter of 2002, Regent
performed its annual review of goodwill for impairment. Based on
the Companys methodology of comparing discounted cash flow
projections for a reporting unit to the units carrying
value, it was determined that the carrying amount of goodwill
relating to the Peoria market exceeded the fair value by
$2.9 million. This amount was charged to operations in the
fourth quarter and is reflected in the Consolidated Statements
of Operations as an impairment of goodwill.

Assuming amortization of goodwill and other
indefinite-lived intangible assets had been discontinued at
January 1, 2000, the comparable net (loss) income and net
(loss) income per share (basic and diluted) for the prior-year
periods would have been (in thousands, except per share amounts):

|                                                           |  |                         |        |      |  |      |        |   |  |   |        |  
|---------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                           |  |                        
|                                                           |  | Year Ended December 31,
|                                                           |  |                        
|                                                           |  | 2002                    |        | 2001 |  | 2000
|                                                           |  |                         |        |      |  |     
|Reported net (loss) income                                 |  | $                       | (6,480 | )    |  | $    | (1,713 | ) |  | $ | 13,852 |  
|Add back: Goodwill amortization                            |  |                         |       |      |  |      | 597    |   |  |   | 290    |  
|Add back: FCC license amortization                         |  |                         |       |      |  |      | 6,976  |   |  |   | 3,681  |  
|                                                           |  |                         |        |      |  |      |        |   |  |   |        |  
|Adjusted net (loss) income                                 |  | $                       | (6,480 | )    |  | $    | 5,860  |   |  | $ | 17,823 |  
|                                                           |  |                         |        |      |  |      |        |   |  |   |        |  
|Adjusted net (loss) income applicable to
    common shares |  | $                       | (6,480 | )    |  | $    | 5,860  |   |  | $ | (9,417 | )
|                                                           |  |                         |        |      |  |      |        |   |  |   |        |  
|Basic and diluted (loss) income per share:                 |  |                         |        |      |  |      |        |   |  |   |        |  
|Reported net loss per share                                |  | $                       | (0.15  | )    |  | $    | (0.05  | ) |  | $ | (0.42  | )
|Impact of goodwill amortization                            |  |                         |       |      |  |      | 0.02   |   |  |   | 0.01   |  
|Impact of FCC license amortization                         |  |                         |       |      |  |      | 0.20   |   |  |   | 0.11   |  
|                                                           |  |                         |        |      |  |      |        |   |  |   |        |  
|Adjusted net (loss) income per share                       |  | $                       | (0.15  | )    |  | $    | 0.17   |   |  | $ | (0.30  | )
|                                                           |  |                         |        |      |  |      |        |   |  |   |        |  



| |                                     
| | ------------------------------------
| | Definite-lived Intangible
    Assets

The Company has definite-lived intangible assets
that continue to be amortized in accordance with SFAS 142,
consisting primarily of non-compete agreements. These agreements
are amortized over the life of the agreement. In accordance with
the transition requirements of SFAS 142, the Company reassessed
the useful lives of these intangibles and made no changes to
their useful lives. The following table presents the gross
carrying amount and accumulated amortization for the
Companys definite-lived intangibles at December 31,
2002 and 2001 (in thousands):

|                                 |  |                   |     |                   |  |          |     |              |  |   |     |  |  |   |     | 
|-------------------------------- |  | ----------------- | --- | ----------------- |  | -------- | --- | ------------ |  | - | --- |  |  | - | --- | 
|                                 |  |                   |     |                  
|                                 |  | December 31, 2002 |     | December 31, 2001
|                                 |  |                   |     |                  
|                                 |  | Gross             |     |                   |  | Gross    |     |             
|                                 |  | Carrying          |     | Accumulated       |  | Carrying |     | Accumulated 
|                                 |  | Amount            |     | Amortization      |  | Amount   |     | Amortization
|                                 |  |                   |     |                   |  |          |     |             
|Non-compete agreements and other |  | $                 | 762 |                   |  | $        | 292 |              |  | $ | 862 |  |  | $ | 249 | 
|                                 |  |                   |     |                   |  |          |     |              |  |   |     |  |  |   |     | 
|Total                            |  | $                 | 762 |                   |  | $        | 292 |              |  | $ | 862 |  |  | $ | 249 | 
|                                 |  |                   |     |                   |  |          |     |              |  |   |     |  |  |   |     | 

The aggregate amortization expense related to the
Companys definite-lived intangible assets for the years
ended December 31, 2002, 2001 and 2000, was approximately
$140,000, $35,000, and $21,000, respectively. The estimated
annual amortization expense for the years ending
December 31, 2003, 2004, 2005 and 2006, is approximately
$153,000, $128,000, $105,000 and $83,000, respectively.



| |                                       
| | --------------------------------------
| | Indefinite-lived Intangible
    Assets

The Companys indefinite-lived intangible
assets consist of FCC licenses for radio stations. Upon adoption
of SFAS 142, the Company ceased amortizing these assets, and
instead tests the assets at least

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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

annually for impairment. The following table
presents the carrying amount for the Companys
indefinite-lived intangible assets at December 31, 2002 and
2001 (in thousands):

|             |  |              |         |              |  |   |         | 
|------------ |  | ------------ | ------- | ------------ |  | - | ------- | 
|             |  | December 31, |         | December 31,
|             |  | 2002         |         | 2001        
|             |  |              |         |             
|FCC licenses |  | $            | 238,236 |              |  | $ | 253,030 | 
|             |  |              |         |              |  |   |         | 
|Total        |  | $            | 238,236 |              |  | $ | 253,030 | 
|             |  |              |         |              |  |   |         | 

The change in FCC licenses is due primarily to a
reclassification from FCC licenses to goodwill upon the adoption
of SFAS 142, and reclassifications, primarily between goodwill
and FCC licenses, as the result of final appraisals for the
acquisitions of radio stations in the Peoria, Illinois and
Lafayette, Louisiana markets. The Company also recorded FCC
licenses for the Haith, Frankenmuth and Covenant transactions.



| |         
| | --------
| | Goodwill

SFAS 142 requires the Company to test goodwill
for impairment using a two-step process. Step one identifies
potential impairment, while step two measures the amount of the
impairment. The following table presents the changes in the
carrying amount of goodwill for the year ended December 31,
2002 (in thousands):

|                                                                  |  |          |        |  
|----------------------------------------------------------------- |  | -------- | ------ | -
|                                                                  |  | Goodwill
|                                                                  |  |         
|Balance as of December 31, 2001                                   |  | $        | 12,777 |  
|Adjustments                                                       |  |          | 14,903 |  
|Acquisition related goodwill                                      |  |          | 2,997  |  
|Impairment loss related to the adoption of SFAS
    142 (pre-tax) |  |          | (3,577 | )
|Impairment of goodwill in Peoria                                  |  |          | (2,900 | )
|                                                                  |  |          |        |  
|Balance as of December 31, 2002                                   |  | $        | 24,200 |  
|                                                                  |  |          |        |  

The adjustment to goodwill primarily relates to a
reclassification to goodwill from FCC licenses upon the adoption
of SFAS 142, and reclassifications, primarily between goodwill
and FCC licenses, as a result of final appraisals for the
acquisitions of radio stations in the Peoria, Illinois and
Lafayette, Louisiana markets.

9.     Income
Taxes

The Companys income tax expense (benefit)
consists of the following for the years ended December 31
(in thousands):

|                                 |  |      |       |      |  |      |      |   |  |   |   | 
|-------------------------------- |  | ---- | ----- | ---- |  | ---- | ---- | - |  | - | - | 
|                                 |  | 2002 |       | 2001 |  | 2000
|                                 |  |      |       |      |  |     
|Current federal                  |  | $    | (46   | )    |  | $    | 47   |   |  | $ |  | 
|Current state                    |  |      | 93    |      |  |      | 135  |   |  |   |  | 
|                                 |  |      |       |      |  |      |      |   |  |   |   | 
|Total current                    |  | $    | 47    |      |  | $    | 182  |   |  | $ |  | 
|                                 |  |      |       |      |  |      |      |   |  |   |   | 
|Deferred federal                 |  | $    | 2,442 |      |  | $    | (640 | ) |  | $ |  | 
|Deferred state                   |  |      | 267   |      |  |      | (207 | ) |  |   |  | 
|                                 |  |      |       |      |  |      |      |   |  |   |   | 
|Total deferred                   |  | $    | 2,709 |      |  | $    | (847 | ) |  | $ |  | 
|                                 |  |      |       |      |  |      |      |   |  |   |   | 
|Valuation allowance              |  | $    | 4,405 |      |  | $    |     |   |  | $ |  | 
|                                 |  |      |       |      |  |      |      |   |  |   |   | 
|Net income tax expense (benefit) |  | $    | 7,161 |      |  | $    | (665 | ) |  | $ |  | 
|                                 |  |      |       |      |  |      |      |   |  |   |   | 

64



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Additionally, the Company recorded an income tax
    benefit of $3.8 million as a component of the cumulative
    effect of accounting change as of January 1, 2002.

The components of the Companys deferred tax
assets and liabilities are as follows as of December 31
(in thousands):

|                          |                                    |                                |   |         |         |   |   |         |         |  
|------------------------- | ---------------------------------- | ------------------------------ | - | ------- | ------- | - | - | ------- | ------- | -
|                          |                                    | 2002                           |   | 2001   
|                          |                                    |                                |   |        
|Deferred tax assets:      |                                    |                                |   |         |         |   |   |        
|                          | Net operating loss carryforwards   |                                | $ | 12,590  |         |   | $ | 10,374  |        
|                          | Miscellaneous accruals and credits |                                |   | 453     |         |   |   | 200     |        
|                          | Accounts receivable reserve        |                                |   | 324     |         |   |   | 273     |        
|                          |                                    |                                |   |         |         |   |   |        
|                          |                                    | Total deferred tax assets      |   |         | 13,367  |   |   |         | 10,847  |  
|                          |                                    |                                |   |         |         |   |   |        
|                          | Valuation allowance                |                                |   | (4,405  | )       |   |   |        |        
|                          |                                    |                                |   |         |         |   |   |        
|                          | Net deferred tax assets            |                                |   | 8,962   |         |   |   | 10,847  |        
|                          |                                    |                                |   |         |         |   |   |        
|Deferred tax liabilities: |                                    |                                |   |         |         |   |   |        
|                          | Property and equipment             |                                |   | (1,656  | )       |   |   | (2,059  | )      
|                          | Intangible assets                  |                                |   | (17,449 | )       |   |   | (13,658 | )      
|                          |                                    |                                |   |         |         |   |   |        
|                          |                                    | Total deferred tax liabilities |   |         | (19,105 | ) |   |         | (15,717 | )
|                          |                                    |                                |   |         |         |   |   |        
|                          |                                    | Net deferred tax liabilities   |   | $       | (10,143 | ) |   | $       | (4,870  | )
|                          |                                    |                                |   |         |         |   |   |        

The Company has cumulative federal and state tax
loss carryforwards of approximately $49.8 million at
December 31, 2002. These loss carryforwards will expire in
years 2003 through 2022. The utilization of a portion of these
net operating loss carryforwards for federal income tax purposes
is limited pursuant to the annual utilization limitations
provided under the provisions of Internal Revenue Code
Section 382.

In the third quarter of 2000, the Company
considered the impact of deferred tax liabilities resulting from
purchase transactions, statutory restrictions on the use of
operating losses, and a tax planning strategy available to the
Company. Consequently, the Company determined that no valuation
allowance was required for the year ended December 31,
2000, and released the entire valuation allowance. Similarly,
there was no valuation allowance recorded for the year ended
December 31, 2001. During the second half of 2002, the
Companys ability to implement its tax planning strategy to
utilize net operating loss carryforwards was reevaluated based
on the current state of private market values for radio station
assets and the Company determined that it was more likely than
not that certain deferred tax assets would not be utilized in
the foreseeable future. Consequently, the Company recorded a
valuation allowance of approximately $4.4 million in 2002.

The difference between the Companys
effective tax rate on (loss) income before income taxes and the
federal statutory tax rate arise from the following:

|                                                                  |  |      |       |      |  |      |       |    |  |  |       |  
|----------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | -- |  |  | ----- | -
|                                                                  |  | 2002 |       | 2001 |  | 2000
|                                                                  |  |      |       |      |  |     
|Federal tax expense at statutory rate                             |  |      | 34.0  | %    |  |      | (34.0 | )% |  |  | 34.0  | %
|Amortization of intangibles and other
    non-deductible expenses |  |      | 0.5   |      |  |      | 5.8   |    |  |  | 1.0   |  
|Increase (decrease) of valuation allowance                        |  |      | 64.6  |      |  |      | 0.0   |    |  |  | (38.0 | )
|State tax, net of federal tax benefit                             |  |      | 4.8   |      |  |      | (2.7  | )  |  |  | 3.0   |  
|Other                                                             |  |      | 1.1   |      |  |      | 3.0   |    |  |  | 0.0   |  
|                                                                  |  |      |       |      |  |      |       |    |  |  |       |  
|Effective tax rate                                                |  |      | 105.0 | %    |  |      | (27.9 | )% |  |  | 0     | %
|                                                                  |  |      |       |      |  |      |       |    |  |  |       |  

65



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

10.     Savings
Plans



| |                                                           
| | ----------------------------------------------------------
| | Regent Communications, Inc. 401(k) Profit
    Sharing Plan

The Company sponsors a defined contribution plan
covering substantially all employees. Both the employee and the
Company can make voluntary contributions to the plan. In the
third quarter of 2000, the Company added a matching feature to
its contribution plan, in which the Company will match
participant contributions in the form of employer stock. The
matching formula is 50 cents for every dollar contributed
up to the first 6% of compensation. Company matched
contributions vest to the employees over a three-year period
after one year of service. Contribution expense was
approximately $294,000, $307,000 and $69,000 in 2002, 2001 and
2000, respectively.



| |                                                           
| | ----------------------------------------------------------
| | Regent Communications, Inc. Deferred
    Compensation Plan

On October 1, 2002, the Company implemented
the Regent Communications, Inc. Deferred Compensation Plan as a
vehicle for highly compensated employees to defer compensation
that they could not otherwise defer due to the limitations
applicable to the Regent Communications, Inc. 401(k) Profit
Sharing Plan and to provide an opportunity to share in matching
contributions on a portion of such deferrals. The Board of
Directors determines the Companys matching cash
contribution, if any, within 60 days after the end of the
calendar year for which deferrals were made. For the short plan
year period of October 1 through December 31, 2002,
the matching contribution was 100% of the first 4% of deferrals
contributed by participants. Contribution expense was
approximately $5,000 for the year ended December 31, 2002.
Participants are immediately vested in all of their deferral
contributions. Matching contributions vest after attainment of
age 65, termination of employment due to disability, a change in
control of the Company, or if sooner, based on a vesting
schedule of 33.3% after one year of service, 66.6% after two
years of service, and 100% after three years of service.



|    |                            
|--- | ---------------------------
|11. | Other Financial Information



| |                        
| | -----------------------
| | Property and Equipment:

Property and equipment consists of the following
as of December 31 (in thousands):

|                              |                            |      |         |        |  |   |         |        | 
|----------------------------- | -------------------------- | ---- | ------- | ------ |  | - | ------- | ------ | 
|                              |                            | 2002 |         | 2001  
|                              |                            |      |         |       
|Equipment                     |                            | $    | 29,949  |        |  | $ | 27,765  |       
|Furniture and fixtures        |                            |      | 1,699   |        |  |   | 1,271   |       
|Building and improvements     |                            |      | 5,822   |        |  |   | 4,744   |       
|Land                          |                            |      | 3,658   |        |  |   | 3,139   |       
|                              |                            |      |         |        |  |   |         |       
|                              |                            |      | 41,128  |        |  |   | 36,919  |       
|Less accumulated depreciation |                            |      | (14,239 | )      |  |   | (11,102 | )     
|                              |                            |      |         |        |  |   |         |       
|                              | Net property and equipment |      | $       | 26,889 |  |   | $       | 25,817 | 
|                              |                            |      |         |        |  |   |         |       

Depreciation expense was approximately
$3.2 million, $2.9 million, and $2.2 million for
the years ended December 31, 2002, 2001 and 2000.

66



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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                           
| | --------------------------
| | Other Current Liabilities:

Other current liabilities consist of the
following as of December 31 (in thousands):

|               |                                                           |      |       |       |  |   |       |       | 
|-------------- | --------------------------------------------------------- | ---- | ----- | ----- |  | - | ----- | ----- | 
|               |                                                           | 2002 |       | 2001 
|               |                                                           |      |       |      
|Balance Sheet: |                                                           |      |       |       |  |   |       |      
|               | Accrued interest                                          |      | $     | 90    |  |   | $     | 351   | 
|               | Current portion of long-term debt                         |      |       | 60    |  |   |       | 60    | 
|               | Accrued professional fees                                 |      |       | 327   |  |   |       | 336   | 
|               | Accrued non-compete payments                              |      |       | 300   |  |   |       | 400   | 
|               | Due to seller for collection of receivables and
    other |      |       | 349   |  |   |       | 361   | 
|               | Accrued other                                             |      |       | 2,614 |  |   |       | 1,502 | 
|               |                                                           |      |       |       |  |   |       |      
|               |                                                           | $    | 3,740 |       |  | $ | 3,010 |      
|               |                                                           |      |       |       |  |   |       |      



|    |                              
|--- | -----------------------------
|12. | Commitments and Contingencies

In the normal course of business, the Company is
subject to various regulatory proceedings, lawsuits, claims and
other matters. Such matters are subject to many uncertainties
and outcomes are not predictable with assurance. In the opinion
of the Companys management, the eventual resolution of
such matters for amounts above those reflected in the
consolidated financial statements would not likely have a
materially adverse effect on the financial condition of the
Company.

The Company leases certain facilities and
equipment used in its operations. Certain of the Companys
operating leases contain renewal options and/or escalating rent
provisions. Total rental expenses were approximately $2,043,000,
$1,246,000, and $801,000 in 2002, 2001, and 2000, respectively.

At December 31, 2002, the total minimum
annual rental commitments under noncancelable leases are as
follows (in thousands):

|                                            |  |           |       |         |  |   |     | 
|------------------------------------------- |  | --------- | ----- | ------- |  | - | --- | 
|                                            |  | Operating |       | Capital
|                                            |  | Leases    |       | Leases 
|                                            |  |           |       |        
|2003                                        |  | $         | 1,271 |         |  | $ | 63  | 
|2004                                        |  |           | 1,022 |         |  |   | 52  | 
|2005                                        |  |           | 929   |         |  |   | 22  | 
|2006                                        |  |           | 904   |         |  |   | 7   | 
|2007                                        |  |           | 877   |         |  |   |    | 
|Thereafter                                  |  |           | 4,844 |         |  |   |    | 
|                                            |  |           |       |         |  |   |     | 
|Total minimum payments                      |  | $         | 9,847 |         |  | $ | 144 | 
|                                            |  |           |       |         |  |   |     | 
|Amount representing interest                |  |           |       |         |  |   | 9   | 
|                                            |  |           |       |         |  |   |     | 
|Present value of net minimum lease payments |  |           |       |         |  | $ | 135 | 
|                                            |  |           |       |         |  |   |     | 

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##### Table of Contents



REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|    |                                                 
|--- | ------------------------------------------------
|13. | Quarterly Financial Information
    (Unaudited):

All adjustments necessary for a fair statement of
income for each period have been included (in thousands, except
per share amounts):

|     |                                                                 |          |   |         |   |          |   |         |  |       |   |        |   |  |   |        |   |  |   |        |  
|---- | --------------------------------------------------------------- | -------- | - | ------- | - | -------- | - | ------- |  | ----- | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|     |                                                                 | 1st      |   | 2nd     |   | 3rd      |   | 4th     |  |      
|     |                                                                 | Quarter  |   | Quarter |   | Quarter  |   | Quarter |  |      
|     |                                                                 | ended    |   | ended   |   | ended    |   | ended   |  | Total
|     |                                                                 | March 31 |   | June 30 |   | Sept. 30 |   | Dec. 31 |  | Year 
|     |                                                                 |          |   |         |   |          |   |         |  |      
|2002 |                                                                 |          |   |         |   |          |   |         |  |       |   |        |   |  |   |        |   |  |   |       
|     | Net broadcast revenues                                          |          | $ | 12,986  |   |          | $ | 17,262  |  |       | $ | 18,710 |   |  | $ | 21,432 |   |  | $ | 70,390 |  
|     | Operating income(1)                                             |          |   | 1,111   |   |          |   | 3,400   |  |       |   | 3,670  |   |  |   | 1,279  |   |  |   | 9,460  |  
|     | Cumulative effect of accounting change, net of
    taxes(2)     |          |   | (6,138  | ) |          |   |        |  |       |   |       |   |  |   |       |   |  |   | (6,138 | )
|     | NET (LOSS) INCOME:                                              |          |   | (6,070  | ) |          |   | 1,674   |  |       |   | 1,817  |   |  |   | (3,901 | ) |  |   | (6,480 | )
|     | BASIC AND DILUTED NET (LOSS) INCOME PER COMMON
    SHARE(3)(4): |          |   |         |   |          |   |         |  |       |   |        |   |  |   |        |   |  |   |        |  
|     | Before cumulative effect of accounting change                   |          | $ | 0.00    |   |          | $ | 0.04    |  |       | $ | 0.04   |   |  | $ | (0.08  | ) |  | $ | (0.01  | )
|     | Net (loss) income per common share                              |          | $ | (0.17   | ) |          | $ | 0.04    |  |       | $ | 0.04   |   |  | $ | (0.08  | ) |  | $ | (0.15  | )
|    
|2001 |                                                                 |          |   |         |   |          |   |         |  |       |   |        |   |  |   |        |   |  |   |       
|     | Net broadcast revenues                                          |          | $ | 11,334  |   |          | $ | 14,658  |  |       | $ | 14,029 |   |  | $ | 13,724 |   |  | $ | 53,745 |  
|     | Operating (loss) income                                         |          |   | (1,785  | ) |          |   | 262     |  |       |   | (429   | ) |  |   | (1,126 | ) |  |   | (3,078 | )
|     | NET (LOSS) INCOME:                                              |          |   | (1,008  | ) |          |   | 2,498   |  |       |   | (992   | ) |  |   | (2,211 | ) |  |   | (1,713 | )
|     | BASIC AND DILUTED NET (LOSS) INCOME PER COMMON
    SHARE(3)(4): |          |   |         |   |          |   |         |  |       |   |        |   |  |   |        |   |  |   |        |  
|     | Net (loss) income per common share                              |          | $ | (0.03   | ) |          | $ | 0.07    |  |       | $ | (0.03  | ) |  | $ | (0.06  | ) |  | $ | (0.05  | )



---



|    |                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Results for the fourth quarter of 2002 include a
    charge of $2.9 million to operating income for the
    impairment of goodwill related to the Companys Peoria
    market. Refer to Note 8 for further disclosures.
|   
|(2) | Refer to Note 8 for information regarding
    the cumulative effect of accounting change.                                                                                                                              
|   
|(3) | The sum of the quarterly net (loss) income per
    share amounts may not equal the annual amount reported, as per
    share amounts are computed independently for each quarter.                                       
|   
|(4) | Despite net income in the second and third
    quarters of 2002 and the second quarter of 2001, net income per
    common share was the same for both the basic and diluted
    calculation.                           



|    |                                              
|--- | ---------------------------------------------
|14. | Recently Issued Accounting
    Pronouncements

In December 2002, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 148, Accounting for
Stock-Based Compensation  Transition and
Disclosure  an amendment of FASB Statement
No. 123 (SFAS 148). SFAS 148 amends FASB
Statement No. 123, Accounting for Stock-Based
Compensation to provide alternative methods of transition
for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition,
SFAS 148 amends the disclosure requirements of Statement
No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method
used on reported results. The transition guidance and annual
disclosure provisions of SFAS 148 are effective for fiscal
years ending after December 15, 2002, with earlier
application permitted in certain circumstances. The interim
disclosure provisions are effective for financial reports
containing financial statements for interim periods beginning
after December 15, 2002. Regent has adopted

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REGENT COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the annual financial statement disclosure
provisions of SFAS 148 and has reflected such disclosures in
Note 1. The Company has not yet determined the impact, if
any, of the transition and interim financial statement
disclosure provisions of SFAS 148.

In November 2002, the FASB issued Financial
Accounting Series Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of
Others (FIN 45), which provides for an
interpretation of FASB Statement of Financial Accounting
Standards Nos. 5, 57, and 107 and rescission of FASB
Interpretation No. 34. FIN 45 elaborates on the disclosures
to be made by a guarantor in its financial statements about its
obligations under certain guarantees that it has issued. This
interpretation also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the
guarantee. The Company will adopt FIN 45 effective
January 1, 2003 and does not believe that adoption will
materially impact the Companys financial position, cash
flows, or results of operations.

In June 2002, the FASB issued Statement of
Financial Accounting Standards No. 146, Accounting
for Exit or Disposal Activities (SFAS 146).
SFAS 146 addresses the recognition, measurement, and
reporting of costs that are associated with exit and disposal
activities, including costs related to terminating contracts
that are not capital leases and termination benefits that
employees who are involuntarily terminated receive in certain
instances. SFAS 146 supersedes Emerging Issues Task Force
Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a
Restructuring) (EITF 94-3) and requires
liabilities associated with exit and disposal activities to be
expensed as incurred. SFAS 146 is effective for exit or
disposal activities of the Company that are initiated after
December 31, 2002, and will be implemented accordingly.

In April 2002, the FASB issued Statement of
Financial Accounting Standards No. 145, Rescission of
SFAS Nos. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections
(SFAS 145). SFAS 145 rescinds FASB
Statement No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that
Statement, FASB Statement No. 64, Extinguishments of
Debt Made to Satisfy Sinking-Fund Requirements. As a
result, gains and losses from extinguishments of debt should be
classified as extraordinary items only if they meet the criteria
in APB Opinion No. 30, Reporting the Results of
Operations, Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions (APB 30). Applying the
provisions of APB 30 will distinguish transactions that are part
of an entitys recurring operations from those that are
unusual or infrequent or that meet the criteria for
classification as an extraordinary item. SFAS 145 also
amends FASB Statement No. 13, Accounting for
Leases, to eliminate inconsistency between the required
accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. This
statement also rescinds FASB Statement No. 44,
Accounting for Intangible Assets of Motor Carriers
and amends other existing authoritative pronouncements to make
various technical corrections, clarify meanings or describe
their applicability under changed conditions. The Company has
adopted this standard for lease transactions entered into after
May 15, 2002, and have determined the impact of adoption to
be immaterial. The provisions of SFAS 145 related to debt
extinguishments will be adopted on January 1, 2003, and
could have an impact on the Company, to the extent that any
changes are made to the Companys credit facility. There
were no debt extinguishments during the year ended
December 31, 2002.

In June 2001, the FASB issued Statement of
Financial Accounting Standards No. 143, Accounting
for Asset Retirement Obligations that addresses the
recognition of asset retirement obligations. The objective of
SFAS 143 is to provide guidance for legal obligations
associated with the retirement of tangible long-lived assets.
The statement is effective for fiscal years beginning after
June 15, 2002. The Company will adopt SFAS 143 as
required in the year 2003, and have determined the impact of
adoption to be immaterial.

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SCHEDULE II  VALUATION AND
QUALIFYING ACCOUNTS

(In thousands)


|                                        |      |            |   |            |  |            |  |               |     |            |  |   |  |  |  |        |      |  |   |       | 
|--------------------------------------- | ---- | ---------- | - | ---------- |  | ---------- |  | ------------- | --- | ---------- |  | - |  |  |  | ------ | ---- |  | - | ----- | 
|                                        |      |            |   |            |  |            |  |              
|                                        |      |            |   | Additions  |  |            |  |              
|                                        |      |            |   |            |  |            |  |              
|                                        |      | Balance at |   | Charged to |  | Charged to |  |               |     | Balance at
|                                        |      | Beginning  |   | Costs and  |  | Other      |  |               |     | the End   
|                                        |      | of Period  |   | Expenses   |  | Accounts   |  | Deductions(1) |     | of Period 
|                                        |      |            |   |            |  |            |  |               |     |           
|Allowance for doubtful accounts:        |      |            |   |            |  |            |  |               |     |            |  |   |  |  |  |        |      |  |   |      
|Years ended December 31,                |      |            |   |            |  |            |  |               |     |            |  |   |  |  |  |        |      |  |   |      
|                                        | 2002 |            | $ | 719        |  |            |  | 819           |     |            |  |  |  |  |  | 684    |      |  | $ | 854   | 
|                                        | 2001 |            | $ | 403        |  |            |  | 822           |     |            |  |  |  |  |  | 506    |      |  | $ | 719   | 
|                                        | 2000 |            | $ | 231        |  |            |  | 725           |     |            |  |  |  |  |  | 553    |      |  | $ | 403   | 
|Deferred tax asset valuation allowance: |      |            |   |            |  |            |  |               |     |            |  |   |  |  |  |        |      |  |   |      
|Years ended December 31,                |      |            |   |            |  |            |  |               |     |            |  |   |  |  |  |        |      |  |   |      
|                                        | 2002 |            | $ |           |  |            |  | 4,405         | (2) |            |  |  |  |  |  |       |      |  | $ | 4,405 | 
|                                        | 2001 |            | $ |           |  |            |  |              |     |            |  |  |  |  |  |       |      |  | $ |      | 
|                                        | 2000 |            | $ | 9,300      |  |            |  |              |     |            |  |  |  |  |  | (9,300 | )(2) |  | $ |      | 



---



|    |                                                                  
|--- | -----------------------------------------------------------------
|(1) | Represents accounts written off to the reserve.                  
|   
|(2) | See Note 9 in the Notes to Consolidated
    Financial Statements.

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|        |                                                                                              
|------- | ---------------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with
    Accountants on Accounting and Financial
    Disclosure.

Not applicable.




PART III






Item 10.     Directors
and Executive Officers of the Registrant.


The information required by this Item 10 is
hereby incorporated by reference from our definitive Proxy
Statement, and specifically from the portions thereof captioned
Section 16 (a) Beneficial Ownership Reporting
Compliance, Election of Directors and
Executive Officers, to be filed in April 2003 in
connection with the 2003 Annual Meeting of Stockholders
presently scheduled to be held on May 14, 2003.




Item
11.     Executive
Compensation.

The information required by this Item 11 are
hereby incorporated by reference from our definitive Proxy
Statement to be filed in April 2003 in connection with the 2003
Annual Meeting of Stockholders, presently scheduled to be held
on May 14, 2003, and specifically from the portions thereof
captioned Executive Compensation and Stock
Performance Graph, except that the information required by
Items 402(k) and (l) of Regulation S-K which
appear within such caption under the sub-heading
Compensation Committee Report are specifically not
incorporated by reference into this Form 10-K or into any
other filing by Regent under the Securities Act of 1933 or the
Securities Exchange Act of 1934.




Item 12.     Security
Ownership of Certain Beneficial Owners and
Management.

Except for the information required by
Item 201(d) of Regulation S-K, which is included
below, the information required by this Item 12 is hereby
incorporated by reference from our definitive Proxy Statement,
and specifically from the portion thereof captioned
Security Ownership of Certain Beneficial Owners and
Management, to be filed in April 2003, in connection with
the 2003 Annual Meeting of Stockholders, presently scheduled to
be held on May 14, 2003.

|                                                               |  |                      |           |                     |  |                      |      |  |  |  |           | 
|-------------------------------------------------------------- |  | -------------------- | --------- | ------------------- |  | -------------------- | ---- |  |  |  | --------- | 
|                                                               |  |                      |           |                     |  | Number of           
|                                                               |  |                      |           |                     |  | securities          
|                                                               |  |                      |           |                     |  | remaining available 
|                                                               |  | Number of securities |           | Weighted average    |  | for issuance under  
|                                                               |  | to be issued upon    |           | exercise price of   |  | equity compensation 
|                                                               |  | exercise of          |           | outstanding         |  | plans (excluding    
|                                                               |  | outstanding options, |           | options,            |  | securities reflected
|                                                               |  | warrants and rights  |           | warrants and rights |  | in column (a))      
|                                                               |  | (a)                  |           | (b)                 |  | (c)                 
|                                                               |  |                      |           |                     |  |                     
|Equity compensation plans approved by security
    holders     |  |                      | 3,122,092 |                     |  | $                    | 5.97 |  |  |  | 2,248,032 | 
|Equity compensation plans not approved by
    security holders |  |                      |          |                     |  |                      |     |  |  |  |          | 
|                                                               |  |                      |           |                     |  |                      |      |  |  |  |           | 
|Total                                                          |  |                      | 3,122,092 |                     |  | $                    | 5.97 |  |  |  | 2,248,032 | 
|                                                               |  |                      |           |                     |  |                      |      |  |  |  |           | 




Item 13.     Certain
Relationships and Related Transactions.

The information required by this Item 13 is
hereby incorporated by reference from our definitive Proxy
Statement, and specifically from the portion thereof captioned
Certain Relationships and Related Transactions, to
be filed in April 2003 in connection with the 2003 Annual
Meeting of Stockholders, presently scheduled to be held on
May 14, 2003.




Item 14.     Controls
and Procedures.

The Company maintains disclosure controls and
procedures that are designed to ensure that information required
to be disclosed in the Companys Exchange Act reports is
recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that
such information is

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accumulated and communicated to the
Companys management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure based closely on the
definition of disclosure controls and procedures in
Rule 13a-14c. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls
and procedures, no matter how well designed and operated can
provide only reasonable assurance of achieving the desired
control objectives, and management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship
of possible controls and procedures.


Within 90 days prior to the date of this
report, the Company carried out an evaluation, under the
supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer
and the Companys Chief Financial Officer, of the
effectiveness of the design and operation of the Companys
disclosure controls and procedures. Based on the foregoing, the
Companys Chief Executive Officer and Chief Financial
Officer concluded that the Companys disclosure controls
and procedures were effective.

There have been no significant changes to the
Companys internal controls or in other factors that could
significantly affect the internal controls subsequent to the
date the Company completed its evaluation. Therefore, no
corrective actions were taken.




PART IV




Item 15.     Exhibits,
Financial Statement Schedules, and Reports on
Form 8-K.

(a)1. Financial Statements.

The consolidated financial statements of Regent
Communications, Inc. and subsidiaries filed as part of this
Annual Report on Form 10-K are set forth under Item 8.

2. Financial Statement
Schedules.

The financial statement schedule filed as part of
this Annual Report on Form 10-K is set forth under
Item 8.

3. Exhibits.

A list of the exhibits filed or incorporated by
reference as part of this Annual Report on Form 10-K is set
forth in the Index to Exhibits which immediately precedes such
exhibits and is incorporated herein by this reference.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the
fourth quarter of 2002.

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SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, Regent
Communications, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



| |                            
| | ---------------------------
| | REGENT COMMUNICATIONS, INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ TERRY S. JACOBS

| |                                                                 
| | ----------------------------------------------------------------
| |                                                                 
| | Terry S. Jacobs,                                                
| | Chairman of the Board, Chief Executive Officer
    and Treasurer

Date: March 27, 2003

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|                                                   |  |                                                                                                              |  |                |  | 
|-------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | -------------- |  | 
|                                                   |  |                                                                                                              |  |               
|Signature                                          |  | Title                                                                                                        |  | Date          
|                                                   |  |                                                                                                              |  |               
|                                                  
|/s/ TERRY S. JACOBSTerry S. Jacobs                 |  | Chairman of the Board, Chief Executive Officer,
    Treasurer and Director (Principal Executive Officer)     |  | March 27, 2003
|                                                  
|/s/ WILLIAM L. STAKELINWilliam L. Stakelin         |  | President, Chief Operating Officer, Secretary and
    Director                                               |  | March 27, 2003
|                                                  
|/s/ ANTHONY A. VASCONCELLOSAnthony A. Vasconcellos |  | Senior Vice President and Chief Financial Officer
    (Principal Financial and Principal Accounting Officer) |  | March 27, 2003
|                                                  
|/s/ JOEL M. FAIRMANJoel M. Fairman                 |  | Director                                                                                                     |  | March 27, 2003
|                                                  
|/s/ HENDRIK J. HARTONG, JR.Hendrik J. Hartong, Jr. |  | Director                                                                                                     |  | March 27, 2003
|                                                  
|/s/ WILLIAM H. INGRAMWilliam H. Ingram             |  | Director                                                                                                     |  | March 27, 2003
|                                                  
|/s/ R. GLEN MAYFIELDR. Glen Mayfield               |  | Director                                                                                                     |  | March 27, 2003
|                                                  
|/s/ RICHARD H. PATTERSONRichard H. Patterson       |  | Director                                                                                                     |  | March 27, 2003

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|                                                 |  |          |  |                |  | 
|------------------------------------------------ |  | -------- |  | -------------- |  | 
|                                                 |  |          |  |               
|Signature                                        |  | Title    |  | Date          
|                                                 |  |          |  |               
|                                                
|/s/ WILLIAM P. SUTTER, JR.William P. Sutter, Jr. |  | Director |  | March 27, 2003
|                                                
|/s/ JOHN H. WYANTJohn H. Wyant                   |  | Director |  | March 27, 2003

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CERTIFICATIONS

I, Terry S. Jacobs, certify that:



| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. I have reviewed this annual report on
    Form 10-K of Regent Communications, Inc.;                                                                                                                                                                                                                                                         
|
| | 2. Based on my knowledge, this annual report
    does not contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements made,
    in light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. Based on my knowledge, the financial
    statements, and other financial information included in this
    annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this annual
    report;                   
|
| | 4. The registrants other certifying
    officers and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                       



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. The registrants other certifying
    officers and I have disclosed, based on our most recent
    evaluation, to the registrants auditors and the audit
    committee of registrants board of directors (or persons
    performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. The registrants other certifying
    officers and I have indicated in this annual report whether or
    not there were significant changes in internal controls or in
    other factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                          
| | -------------------------
| | /s/ TERRY S. JACOBS      
| |                          
| | Chairman of the Board and
| | Chief Executive Officer  

Date: March 27, 2003

75



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##### Table of Contents



CERTIFICATIONS

I, Anthony A. Vasconcellos, certify that:



| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. I have reviewed this annual report on
    Form 10-K of Regent Communications, Inc.;                                                                                                                                                                                                                                                         
|
| | 2. Based on my knowledge, this annual report
    does not contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements made,
    in light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. Based on my knowledge, the financial
    statements, and other financial information included in this
    annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this annual
    report;                   
|
| | 4. The registrants other certifying
    officers and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                       



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. The registrants other certifying
    officers and I have disclosed, based on our most recent
    evaluation, to the registrants auditors and the audit
    committee of registrants board of directors (or persons
    performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. The registrants other certifying
    officers and I have indicated in this annual report whether or
    not there were significant changes in internal controls or in
    other factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                            
| | ---------------------------
| | /s/ ANTHONY A. VASCONCELLOS
| |                            
| | Chief Financial Officer    
| | and Senior Vice President  

Date: March 27, 2003

76



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##### Table of Contents






EXHIBIT INDEX

The following exhibits are filed, or incorporated
by reference where indicated, as part of Part IV of this
Annual Report on Form 10-K:

|        |       |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ----- | ------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 2(a)* |                     |  | Asset Exchange Agreement dated as of
    March 12, 2000 by and among Clear Channel Broadcasting,
    Inc., Clear Channel Broadcasting Licenses, Inc., Capstar Radio
    Operating Company, Capstar TX Limited Partnership, Regent
    Broadcasting of Victorville, Inc., Regent Licensee of
    Victorville, Inc., Regent Broadcasting of Palmdale, Inc., Regent
    Licensee of Palmdale, Inc., Regent Broadcasting of Mansfield,
    Inc. and Regent Licensee of Mansfield, Inc. (previously filed as
    Exhibit 2(g) to the Registrants Form 10-K for
    the year ended December 31, 1999 and incorporated herein by
    this reference)             
|        | 2(b)* |                     |  | First Amendment to Asset Exchange Agreement made
    on May 31, 2000 by and among Clear Channel Broadcasting,
    Inc., Clear Channel Broadcasting Licenses, Inc., Capstar Radio
    Operating Company, Capstar TX Limited Partnership, Regent
    Broadcasting of Victorville, Inc., Regent Licensee of
    Victorville, Inc., Regent Broadcasting of Palmdale, Inc., Regent
    Licensee of Palmdale, Inc., Regent Broadcasting of Mansfield,
    Inc. and Regent Licensee of Mansfield, Inc. (previously filed as
    Exhibit 2(b) to the Registrants Form 10-Q for
    the quarter ended June 30, 2000 and incorporated herein by
    this reference) 
|        | 2(c)* |                     |  | Second Amendment to Asset Exchange Agreement made
    on June 2, 2000 by and among Clear Channel Broadcasting,
    Inc., Clear Channel Broadcasting Licenses, Inc., Capstar Radio
    Operating Company, Capstar TX Limited Partnership, Regent
    Broadcasting of Victorville, Inc., Regent Licensee of
    Victorville, Inc., Regent Broadcasting of Palmdale, Inc., Regent
    Licensee of Palmdale, Inc., Regent Broadcasting of Mansfield,
    Inc. and Regent Licensee of Mansfield, Inc. (previously filed as
    Exhibit 2(c) to the Registrants Form 10-Q for
    the quarter ended June 30, 2000 and incorporated herein by
    this reference)
|        | 2(d)* |                     |  | Agreement of Merger dated March 29, 2000 by
    and among Regent Communications, Inc., Regent Broadcasting,
    Inc., KZAP, Inc. and Rob Cheal (previously filed as
    Exhibit 2(h) to the Registrants Form 10-K for
    the year ended December 31, 1999 and incorporated herein by
    this reference)                                                                                                                                                                                                                                                                                                                                                 
|        | 2(e)* |                     |  | Asset Purchase Agreement dated March 29,
    2000 by and between Yavapai Broadcasting Corporation, Regent
    Broadcasting of Flagstaff, Inc. and Regent Licensee of
    Flagstaff, Inc. (previously filed as Exhibit 2(i) to the
    Registrants Form 10-K for the year ended
    December 31, 1999 and incorporated herein by this reference)                                                                                                                                                                                                                                                                                                           
|        | 2(f)* |                     |  | Asset Purchase Agreement made as of
    October 31, 2000 among Concord Media Group of California,
    Inc., Regent Broadcasting of Palmdale, Inc. and Regent Licensee
    of Palmdale, Inc. (previously filed as Exhibit 2(d) to the
    Registrants Form 10-Q for the quarter ended
    September 30, 2000 and incorporated herein by this
    reference)                                                                                                                                                                                                                                                                                                
|        | 2(g)* |                     |  | Asset Purchase Agreement made December 28,
    2000 among NextMedia Group II, Inc., NextMedia Licensing, Inc.,
    Regent Broadcasting of Erie, Inc. and Regent Licensee of Erie,
    Inc. (excluding exhibits not deemed material or filed separately
    in executed form)(previously filed as Exhibit 2(g) to the
    Registrants 10-K for the year ended December 31, 2000
    and incorporated herein by this reference)                                                                                                                                                                                                                             
|        | 2(h)* |                     |  | Agreement of Merger dated June 15, 2000
    among StarCom, Inc., Dennis Carpenter and Regent Broadcasting,
    Inc., as amended by an Amendment, dated as of July 27,
    2000, to Agreement of Merger, and as further amended by a Second
    Amendment, dated as of February 19, 2001, to Agreement of
    Merger (excluding exhibits not deemed material or filed
    separately in executed form)(previously filed as
    Exhibit 2(h) to the Registrants Form 10-K for
    the year ended December 31, 2000 and incorporated herein by
    this reference)                                                                                           
|        | 2(i)* |                     |  | Asset Purchase Agreement made by and among Regent
    Communications, Inc. and Brill Media Company L.L.C. and certain
    of its subsidiaries dated August 22, 2002 (excluding
    exhibits not deemed material or filed separately in executed
    form) (previously filed as Exhibit 2.1 to the
    Registrants Form 8-K dated March 11, 2003 and
    incorporated herein by this reference)                                                                                                                                                                                                                                                            

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|        |       |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | ----- | ------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 3(a)* |                     |  | Amended and Restated Certificate of Incorporation
    of Regent Communications, Inc., as amended by a Certificate of
    Designation, Number, Powers, Preferences and Relative,
    Participating, Optional and Other Special Rights and the
    Qualifications, Limitations, Restrictions, and Other
    Distinguishing Characteristics of Series G Preferred Stock
    of Regent Communications, Inc., filed January 21, 1999
    (previously filed as Exhibit 3(a) to the Registrants
    Form 10-K for the year ended December 31, 1998 and
    incorporated herein by this reference)                                                                                                    
|        | 3(b)* |                     |  | Certificate of Amendment of Amended and Restated
    Certificate of Incorporation of Regent Communications, Inc.
    filed with the Delaware Secretary of State on November 19,
    1999 (previously filed as Exhibit 3(b) to the
    Registrants Form 10-Q for the quarter ended
    June 30, 2001 and incorporated herein by this reference)                                                                                                                                                                                                                                                                                                                                                
|        | 3(c)* |                     |  | Certificate of Decrease of Shares Designated as
    Series G Convertible Preferred Stock of Regent
    Communications, Inc., filed with the Delaware Secretary of State
    on June 21, 1999 amending the Amended and Restated
    Certificate of Incorporation of Regent Communications, Inc., as
    amended (previously filed as Exhibit 3(c) to the
    Registrants Form 10-Q for the quarter ended
    June 30, 1999 and incorporated herein by this reference)                                                                                                                                                                                                                          
|        | 3(d)* |                     |  | Certificate of Designation, Number, Powers,
    Preferences and Relative, Participating, Optional and Other
    Special Rights and the Qualifications, Limitations,
    Restrictions, and Other Distinguishing Characteristics of
    Series H Preferred Stock of Regent Communications, Inc.,
    filed with the Delaware Secretary of State on June 21, 1999
    amending the Amended and Restated Certificate of Incorporation
    of Regent Communications, Inc., as amended (previously filed as
    Exhibit 3(d) to the Registrants Form 10-Q for
    the quarter ended June 30, 1999 and incorporated herein by
    this reference)                                                    
|        | 3(e)* |                     |  | Certificate of Decrease of Shares Designated as
    Series G Convertible Preferred Stock of Regent
    Communications, Inc., filed with the Delaware Secretary of State
    on August 23, 1999 amending the Amended and Restated
    Certificate of Incorporation of Regent Communications, Inc., as
    amended (previously filed as Exhibit 3(e) to the
    Registrants Form 10-Q for the quarter ended on
    September 30, 1999 and incorporated herein by this
    reference)                                                                                                                                                                                                            
|        | 3(f)* |                     |  | Certificate of Increase of Shares Designated as
    Series H Convertible Preferred Stock of Regent
    Communications, Inc., filed with the Delaware Secretary of State
    on August 23, 1999 amending the Amended and Restated
    Certificate of Incorporation of Regent Communications, Inc., as
    amended (previously filed as Exhibit 3(f) to the
    Registrants Form 10-Q for the quarter ended on
    September 30, 1999 and incorporated herein by this
    reference)                                                                                                                                                                                                            
|        | 3(g)* |                     |  | Certificate of Designation, Number, Powers,
    Preferences and Relative, Participating, Optional, and Other
    Special Rights and the Qualifications, Limitations,
    Restrictions, and Other Distinguishing Characteristics of
    Series K Preferred Stock of Regent Communications, Inc.,
    filed with the Delaware Secretary of State on December 13,
    1999 amending the Amended and Restated Certificate of
    Incorporation of Regent Communications, Inc., as amended
    (previously filed as Exhibit 3(g) to Amendment No. 1
    to the Registrants Form S-1 Registration Statement
    No. 333-91703 filed December 29, 1999 and incorporated
    herein by this reference)
|        | 3(h)* |                     |  | Certificate of Amendment of Amended and Restated
    Certificate of Incorporation of Regent Communications, Inc.
    filed with the Delaware Secretary of State on March 13,
    2002 (previously filed as Exhibit 3(h) to the
    Registrants Form 10-K for the year ended
    December 31, 2001 and incorporated herein by this reference)                                                                                                                                                                                                                                                                                                                                                  
|        | 3(i)* |                     |  | Amended and Restated By-Laws of Regent
    Communications, Inc. (previously filed as Exhibit 3(b) to
    the Amendment No. 1 to the Registrants Form S-4
    Registration Statement No. 333-46435 filed April 8,
    1999 and incorporated herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 3(j)* |                     |  | Amendments to By-Laws of Regent Communications,
    Inc. adopted December 13, 1999 (previously filed as
    Exhibit 3(h) to Amendment No. 1 to the
    Registrants Form S-1 Registration Statement
    No. 333-91703 filed December 29, 1999 and incorporated
    herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                   

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|        |         |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ------- | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                    
|Number  |         | Exhibit Description
|        |         |                    
|        | 4(a)*   |                     |  | Credit Agreement dated as of January 27,
    2000 among Regent Broadcasting, Inc., Regent Communications,
    Inc., Fleet National Bank, as administrative agent, Fleet
    National Bank, as issuing lender, General Electric Capital
    Corporation, as syndication agent, Dresdner Bank AG, New York
    and Grand Cayman Branches, as document agent, and the several
    lenders party thereto (excluding exhibits not deemed material or
    filed separately in executed form) (previously filed as
    Exhibit 4(a) to the Registrants Form 8-K filed
    February 10, 2000 and incorporated herein by this reference)                  
|        | 4(b)*   |                     |  | Omnibus Amendment No. 1 and Amendment
    No. 1 to Credit Agreement dated as of February 4, 2000
    among Regent Broadcasting, Inc., Regent Communications, Inc.,
    Fleet National Bank, as administrative agent, Fleet National
    Bank, as issuing lender, General Electric Capital Corporation,
    as syndication agent, Dresdner Bank AG, New York and Grand
    Cayman Branches, as document agent, and the several lenders
    party thereto (previously filed as Exhibit 4(e) to the
    Registrants Form 8-K filed February 10, 2000 and
    incorporated herein by this reference)                                                 
|        | 4(c)*   |                     |  | Amendment No. 2 and Consent, dated as of
    August 23, 2000, to the Credit Agreement dated as of
    January 27, 2000, as amended, among Regent Broadcasting,
    Inc., Regent Communications, Inc., Fleet National Bank, as
    administrative agent, Fleet National Bank, as issuing lender,
    General Electric Capital Corporation, as syndication agent,
    Dresdner Bank AG, New York and Grand Cayman Branches, as
    document agent, and the several lenders party thereto
    (previously filed as Exhibit 4(c) to the Registrants
    Form 10-K for the year ended December 31, 2000 and
    incorporated herein by this reference)
|        | 4(d)*   |                     |  | Amendment No. 3 dated as of December 1,
    2000, to the Credit Agreement dated as of January 27, 2000,
    as amended, among Regent Broadcasting, Inc., Regent
    Communications, Inc., Fleet National Bank, as administrative
    agent, Fleet National Bank, as issuing lender, General Electric
    Capital Corporation, as syndication agent, Dresdner Bank AG, New
    York and Grand Cayman Branches, as document agent, and the
    several lenders party thereto (previously filed as
    Exhibit 4(d) to the Registrants Form 10-K for
    the year ended December 31, 2000 and incorporated herein by
    this reference)            
|        | 4(e)    |                     |  | Amendment Agreement dated as of February 14,
    2003 to the Credit Agreement dated as of January 27, 2000,
    as amended, among Regent Broadcasting, Inc., Regent
    Communications, Inc., Fleet National Bank, as administrative
    agent, Fleet National Bank, as issuing lender, General Electric
    Capital Corporation, as syndication agent, Dresdner Bank AG, New
    York and Grand Cayman Branches, as document agent, and the
    several lenders party thereto                                                                                                                                                                    
|        | 4(f)*   |                     |  | Revolving Credit Note dated as of
    February 7, 2000 made by Regent Broadcasting, Inc. in favor
    of Fleet National Bank in the original principal amount of
    $25 million (previously filed as Exhibit 4(f) to the
    Registrants Form 8-K filed February 10, 2000 and
    incorporated herein by this reference) (See Note 1 below)                                                                                                                                                                                                                                                                                                     
|        | 4(g)*   |                     |  | Subsidiary Guaranty Agreement dated as of
    January 27, 2000 among Regent Broadcasting, Inc., Regent
    Communications, Inc. and each of their subsidiaries and Fleet
    National Bank, as collateral agent (previously filed as
    Exhibit 4(c) to the Registrants Form 8-K filed
    February 10, 2000 and incorporated herein by this reference)                                                                                                                                                                                                                                                                                         
|        | 4(h)*   |                     |  | Pledge Agreement dated as of January 27,
    2000 among Regent Broadcasting, Inc., Regent Communications,
    Inc. and each of their subsidiaries and Fleet National Bank, as
    collateral agent (previously filed as Exhibit 4(d) to the
    Registrants Form 8-K filed February 10, 2000 and
    incorporated herein by this reference)                                                                                                                                                                                                                                                                                                      
|        | 4(i)*   |                     |  | Security Agreement dated as of January 27,
    2000 among Regent Broadcasting, Inc., Regent Communications,
    Inc. and each of their subsidiaries and Fleet National Bank, as
    collateral agent (previously filed as Exhibit 4(b) to the
    Registrants Form 8-K filed February 10, 2000 and
    incorporated herein by this reference)                                                                                                                                                                                                                                                                                                    
|        | 10(a)*# |                     |  | Regent Communications, Inc. Faircom Conversion
    Stock Option Plan (previously filed as Exhibit 10(f) to the
    Registrants Form S-4 Registration Statement filed
    February 17, 1998 and incorporated herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                            

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|        |         |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | ------- | ------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                    
|Number  |         | Exhibit Description
|        |         |                    
|        | 10(b)*# |                     |  | Regent Communications, Inc. 1998 Management Stock
    Option Plan, as amended through May 17, 2001 and restated
    as of October 24, 2002 (previously filed as
    Exhibit 10(b) to the Registrants Form 10-Q for
    the quarter ended September 30, 2002 and incorporated
    herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 10(c)*# |                     |  | Regent Communications, Inc. 2001 Directors
    Stock Option Plan dated May 17, 2001 (previously filed as
    Exhibit 10(b) to the Registrants Form 10-Q for
    the quarter ended June 30, 2001 and incorporated herein by
    this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10(d)*# |                     |  | Regent Communications, Inc. Employee Stock
    Purchase Plan, as amended on October 24, 2002 and effective
    January 1, 2003 (previously filed as Exhibit 10(a) to
    the Registrants Form 10-Q for the quarter ended
    September 30, 2002 and incorporated herein by this
    reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10(e)   |                     |  | Regent Communications, Inc. Deferred Compensation
    Plan dated July 25, 2002 and effective October 1, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10(f)*# |                     |  | Employment Agreement between Regent
    Communications, Inc. and Terry S. Jacobs (previously filed as
    Exhibit 10(b) to the Registrants Form 10-Q for
    the quarter ended March 31, 2001 and incorporated herein by
    this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10(g)*# |                     |  | Employment Agreement between Regent
    Communications, Inc. and William L. Stakelin (previously filed
    as Exhibit 10(c) to the Registrants Form 10-Q
    for the quarter ended March 31, 2001 and incorporated
    herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10(h)*  |                     |  | Lease Agreement dated January 17, 1994
    between CPX  RiverCenter Development Corporation and
    Regent Communications, Inc. (previously filed as
    Exhibit 10(z) to the Registrants S-4 filed on
    February 17, 1998 and incorporated herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10(i)*  |                     |  | Stock Purchase Agreement dated June 15, 1998
    among Regent Communications, Inc., Waller-Sutton Media Partners,
    L.P., WPG Corporate Development Associates V, L.C.C., WPG
    Corporate Development Associates (Overseas) V, L.P., General
    Electric Capital Corporation, River Cities Capital Fund Limited
    Partnership and William H. Ingram (excluding exhibits not deemed
    material or filed separately in executed form) (previously filed
    as Exhibit 4(d) to the Registrants Form 8-K
    filed June 30, 1998 and incorporated herein by this
    reference)                                                                                                                                                                                                   
|        | 10(j)*  |                     |  | Registration Rights Agreement dated June 15,
    1998 among Regent Communications, Inc., PNC Bank, N.A., Trustee,
    Waller-Sutton Media Partners, L.P., WPG Corporate Development
    Associates V, L.C.C., WPG Corporate Development Associates
    (Overseas) V, L.P., BMO Financial, Inc., General Electric
    Capital Corporation, River Cities Capital Fund Limited
    Partnership, Terry S. Jacobs, William L. Stakelin, William H.
    Ingram, Blue Chip Capital Fund II Limited Partnership, Miami
    Valley Venture Fund L.P. and Thomas Gammon (excluding exhibits
    not deemed material or filed separately in executed form)
    (previously filed as Exhibit 4(e) to the Registrants
    Form 8-K filed June 30, 1998 and incorporated herein
    by this reference)
|        | 10(k)*  |                     |  | Warrant for the Purchase of 650,000 Shares of
    Common Stock issued by Regent Communications, Inc. to
    Waller-Sutton Media Partners, L.P. dated June 15, 1998 (See
    Note 2 below) (previously filed as Exhibit 4(f) to the
    Registrants Form 8-K filed June 30, 1998 and
    incorporated herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10(l)*  |                     |  | Stock Purchase Agreement dated June 21, 1999
    between Regent Communications, Inc. and Waller-Sutton Media
    Partners, L.P. relating to the purchase of 90,909 shares of
    Regent Communications, Inc. Series H convertible preferred
    stock (See Note 3 below) (excluding exhibits not deemed
    material or filed separately in executed form) (previously filed
    as Exhibit 4(aa) to the Registrants Form 10-Q
    for the quarter ended June 30,1999 and incorporated herein
    by this reference)                                                                                                                                                                                                                                                                    
|        | 10(m)*  |                     |  | Stock Purchase Agreement dated June 21,
    1999, among Regent Communications, Inc., WPG Corporate
    Development Associates V, L.L.C. and WPG Corporate Development
    Associates V (Overseas), L.P. relating to the purchase of
    1,180,909 and 182,727 shares, respectively, of Regent
    Communications, Inc. Series H convertible preferred stock
    (excluding exhibits not deemed material or filed separately in
    executed form)(previously filed as Exhibit 4(bb) to the
    Registrants Form 10-Q for the quarter ended
    June 30, 1999 and incorporated herein by this reference)                                                                                                                                                                                 

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|        |        |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | ------ | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                    
|Number  |        | Exhibit Description
|        |        |                    
|        | 10(n)* |                     |  | Stock Purchase Agreement dated as of
    August 31, 1999 among Regent Communications, Inc., The
    Roman Arch Fund L.P. and The Roman Arch Fund II L.P. relating to
    the purchase of 109,091 and 72,727 shares, respectively, of
    Regent Communications, Inc. Series H convertible preferred
    stock (excluding exhibits not deemed material or filed
    separately in executed form) (previously filed as
    Exhibit 4(ee) to the Registrants Form 10-Q for
    the quarter ended on September 30, 1999 and incorporated
    herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10(o)* |                     |  | First Amendment to Registration Rights Agreement
    dated as of August 31, 1999 among Regent Communications,
    Inc., PNC Bank, N.A., as trustee, Waller-Sutton Media Partners,
    L.P., WPG Corporate Development Associates V, L.L.C., WPG
    Corporate Development Associates (Overseas) V, L.P., BMO
    Financial, Inc., General Electric Capital Corporation, River
    Cities Capital Fund Limited Partnership, Terry S. Jacobs,
    William L. Stakelin, William H. Ingram, Blue Chip Capital Fund
    II Limited Partnership, Miami Valley Venture Fund L.P. and
    Thomas P. Gammon (excluding exhibits not deemed material or
    filed separately in executed form) (previously filed as
    Exhibit 4(gg) to the Registrants Form 10-Q for
    the quarter ended on September 30, 1999 and incorporated
    herein by this reference)                                                                                                                                                             
|        | 10(p)* |                     |  | Second Amendment to Registration Rights Agreement
    dated as of December 13, 1999, among Regent Communications,
    Inc., Terry S. Jacobs, William L. Stakelin, Blue Chip Capital
    Fund II Limited Partnership, Blue Chip Capital Fund III Limited
    Partnership, Miami Valley Venture Fund, L.P., PNC Bank, N.A., as
    trustee, PNC Bank, N.A., Custodian, Waller-Sutton Media
    Partners, L.P., River Cities Capital Fund Limited Partnership,
    Mesirow Capital Partners VII, WPG Corporate Development
    Associates V, L.L.C., WPG Corporate Development Associates V
    (Overseas) L.P., General Electric Capital Corporation, William
    H. Ingram, The Roman Arch Fund L.P., The Roman Arch Fund II L.P.
    and The Prudential Insurance Company of America (previously
    filed as Exhibit 4(hh) to Amendment No. 1 to the
    Registrants Form S-1 Registration Statement
    No. 333-91703 filed December 29, 1999 and incorporated
    herein by this reference)                      
|        | 10(q)* |                     |  | Third Amended and Restated Stockholders
    Agreement dated as of December 13, 1999, among Regent
    Communications, Inc., Terry S. Jacobs, William L. Stakelin, Blue
    Chip Capital Fund II Limited Partnership, Blue Chip Capital Fund
    III Limited Partnership, Miami Valley Venture Fund, L.P., PNC
    Bank, N.A., as trustee, PNC Bank, N.A., Custodian, Waller-Sutton
    Media Partners, L.P., River Cities Capital Fund Limited
    Partnership, Mesirow Capital Partners VII, WPG Corporate
    Development Associates V, L.L.C., WPG Corporate Development
    Associates V (Overseas) L.P., General Electric Capital
    Corporation, William H. Ingram, Joel M. Fairman, The Roman Arch
    Fund L.P., The Roman Arch Fund II L.P. and the Prudential
    Insurance Company of America (previously filed as
    Exhibit 4(ii) to Amendment No. 1 to the
    Registrants Form S-1 Registration Statement
    No. 333-91703 filed December 29, 1999 and incorporated
    herein by this reference)
|        | 10(r)* |                     |  | Stock Purchase Agreement dated as of
    November 24, 1999, between Regent Communications, Inc. and
    Blue Chip Capital Fund III Limited Partnership (see Note 4
    below) (previously filed as Exhibit (jj) to Amendment No. 1
    to the Registrants Form S-1 Registration Statement
    filed December 29, 1999 and incorporated herein by this
    reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10(s)* |                     |  | Registration Rights Agreement, dated as of
    August 28, 2001, between Regent Communications, Inc. and
    Bayard H. Walters (previously filed as Exhibit 10(a) to the
    Registrants Form 10-Q for the quarter ended
    September 30, 2001 and incorporated herein by this
    reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10(t)* |                     |  | Third Amendment to Registration Rights Agreement,
    dated August 28, 2001, among Regent Communications, Inc.
    and the Stockholders who are signatories thereto (previously
    filed as Exhibit 10(b) to the Registrants
    Form 10-Q for the quarter ended September 30, 2001 and
    incorporated herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10(u)* |                     |  | Form of Stock Purchase Agreement dated as of
    November 26, 2001 (see Note 5 below)(previously filed
    as Exhibit 10.1 to the Registrants Form S-3
    Registration Statement No. 333-74704 filed December 6,
    2001 and incorporated herein by this reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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##### Table of Contents



|        |        |                     |  |                                                                                                                                                                                                                                                                                                                                          
|------- | ------ | ------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                    
|Number  |        | Exhibit Description
|        |        |                    
|        | 10(v)* |                     |  | Fourth Amendment to Registration Rights
    Agreement, dated as of November 26, 2001, among Regent
    Communications, Inc. and the Stockholders who are signatories
    thereto (previously filed as Exhibit 10(t) to the
    Registrants Form 10-K for the year ended
    December 31, 2001 and incorporated herein by this reference)
|        | 10(w)* |                     |  | Registration Rights Agreement dated as of
    January 7, 2002, between Regent Communications, Inc. and
    ComCorp of Lafayette, Inc. (previously filed as
    Exhibit 10(u) to the Registrants Form 10-K for
    the year ended December 31, 2001 and incorporated herein by
    this reference)                                       
|        | 10(x)* |                     |  | Registration Rights Agreement dated as of
    January 7, 2002 between Regent Communications, Inc. and
    Abbeville Broadcasting Service, Inc. (previously filed as
    Exhibit 10(v) to the Registrants Form 10-K for
    the year ended December 31, 2001 and incorporated herein by
    this reference)                              
|        | 21     |                     |  | Subsidiaries of Registrant                                                                                                                                                                                                                                                                                                               
|        | 23     |                     |  | Consent of Independent Accountants                                                                                                                                                                                                                                                                                                       
|        | 99.1   |                     |  | Certificate of Chief Executive Officer pursuant
    to 18 U.S.C. Section 1350 as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                   
|        | 99.2   |                     |  | Certificate of Chief Financial Officer pursuant
    to 18 U.S.C. Section 1350 as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                   



---



|  |                           
|- | --------------------------
|* | Incorporated by reference.



|  |                                                                           
|- | --------------------------------------------------------------------------
|# | Constitutes a management contract or compensatory
    plan or arrangement.

Notes:



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | 1. Seven substantially identical notes were
    made by Regent Broadcasting, Inc. as follows:

|                                                          |  |                  |            | 
|--------------------------------------------------------- |  | ---------------- | ---------- | 
|Original Holder                                           |  | Principal Amount
|                                                          |  |                 
|General Electric Capital Corporation                      |  | $                | 22,000,000 | 
|Dresdner Bank AG, New York and Cayman Island
    Branches |  | $                | 22,000,000 | 
|Mercantile Bank National Association                      |  | $                | 16,000,000 | 
|U.S. Bank National Association                            |  | $                | 10,000,000 | 
|Summit Bank                                               |  | $                | 10,000,000 | 
|Michigan National Bank                                    |  | $                | 10,000,000 | 
|The CIT Group Equipment Financing, Inc.                   |  | $                | 10,000,000 | 



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | 2. Six substantially identical warrants for
    the purchase of shares of Registrants common stock were
    issued as follows:

|                                                            |  |        |         | 
|----------------------------------------------------------- |  | ------ | ------- | 
|                                                            |  | Shares
|                                                            |  |       
|Waller-Sutton Media Partners, L.P.                          |  |        | 650,000 | 
|WPG Corporate Development Associates V, L.L.C               |  |        | 112,580 | 
|WPG Corporate Development Associates (Overseas)
    V, L.P. |  |        | 17,420  | 
|General Electric Capital Corporation                        |  |        | 50,000  | 
|River Cities Capital Fund Limited Partnership               |  |        | 20,000  | 
|William H. Ingram                                           |  |        | 10,000  | 



| |                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3. Two substantially identical stock
    purchase agreements were entered into for the purchase of
    Series H convertible preferred stock as follows:

|                                              |  |  |                | 
|--------------------------------------------- |  |  | -------------- | 
|Blue Chip Capital Fund II Limited Partnership |  |  | 363,636 shares | 
|PNC Bank, N.A., as trustee                    |  |  | 181,818 shares | 

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##### Table of Contents





| |                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4. Four substantially identical stock
    purchase agreements were entered into for the purchase of
    Series K convertible preferred stock as follows:

|                                                                                                               |  |  |                  | 
|-------------------------------------------------------------------------------------------------------------- |  |  | ---------------- | 
|WPG Corporate Development Associates V, L.L.C.
    and WPG Corporate Development Associates V (Overseas), L.P. |  |  | 181,818 shares   | 
|PNC Bank, N.A., Custodian                                                                                      |  |  | 181,818 shares   | 
|Mesirow Capital Partners VII                                                                                   |  |  | 818,181 shares   | 
|The Prudential Insurance Company of America                                                                    |  |  | 1,000,000 shares | 



| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | 5. Twenty-two substantially identical stock
    purchase agreements were entered into for the purchase of common
    stock as follows:

|                                                                                             |  |        |         | 
|-------------------------------------------------------------------------------------------- |  | ------ | ------- | 
|Purchaser                                                                                    |  | Shares
|                                                                                             |  |       
|U.S. Bancorp Piper Jaffray Asset Management
    for benefit of Milwaukee Foundation MicroCap |  |        | 3,900   | 
|U.S. Bancorp Piper Jaffray Asset Management
    for benefit of WM Chester Small Cap          |  |        | 400     | 
|U.S. Bancorp Piper Jaffray Asset Management
    for benefit of First American MicroCap Fund  |  |        | 211,500 | 
|U.S. Bancorp Piper Jaffray Asset Management
    for benefit of Frantschi MicroCap            |  |        | 11,300  | 
|U.S. Bancorp Piper Jaffray Asset Management
    for benefit of ES Tallmadge Res              |  |        | 500     | 
|U.S. Bancorp Piper Jaffray Asset Management
    for benefit of Posner Partners MicroCap      |  |        | 5,600   | 
|U.S. Bancorp Piper Jaffray Asset Management
    for benefit of Jane Petit MicroCap           |  |        | 500     | 
|Firstar Bank NA, Agent Lyndhurst Associates
    MicroCap Fund                                |  |        | 13,300  | 
|Marshall & Isley Trust Company Custodian for
    the Milwaukee Jewish Federation             |  |        | 3,000   | 
|Edge Capital, L.P.                                                                           |  |        | 100,000 | 
|Pogue Capital International, LTD.                                                            |  |        | 52,000  | 
|Oxa Trade & Finance, Inc.                                                                    |  |        | 35,000  | 
|Coditec International LTD 
    E  VBL                                                      |  |        | 13,000  | 
|Blue Chip Capital Fund III Limited Partnership                                               |  |        | 200,000 | 
|Silverfin & Company                                                                          |  |        | 12,800  | 
|Capital Blue Cross Retirement Plan                                                           |  |        | 3,200   | 
|Clippership & Company                                                                        |  |        | 90,800  | 
|Pitt & Company                                                                               |  |        | 83,000  | 
|Mellon Trust Company, Trustee for NYNEX Master
    Pension Trust                             |  |        | 45,900  | 
|Capital Blue Cross                                                                           |  |        | 3,800   | 
|Silverbass & Company                                                                         |  |        | 4,900   | 
|Palmsail & Company                                                                           |  |        | 5,600   | 

E-7