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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-K
 
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/X/        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF
           THE SECURITIES EXCHANGE ACT OF 1934
 
                             FOR FISCAL YEAR ENDED DECEMBER 31, 1998
 
                                                OR
 
/ /        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF
           THE SECURITIES EXCHANGE ACT OF 1934
 
                          FOR THE TRANSITION PERIOD FROM      TO      .
 
                                 COMMISSION FILE NUMBER 001-13715
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                            ------------------------
 
                              BIG CITY RADIO, INC.
 
             (Exact name of registrant as specified in its charter)
 
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             DELAWARE                             13-3790661
  (State or other jurisdiction of              (I.R.S. Employer
  incorporation or organization)            Identification Number)
 
 11 SKYLINE DRIVE, HAWTHORNE, N.Y.                  10532
  (Address of principal executive                 (Zip Code)
             offices)
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       Registrant's telephone number, including area code: (914) 592-1071
 
          Securities registered pursuant to Section 12(b) of the Act:
 
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                  TITLE OF EACH CLASS:                           NAME OF EACH EXCHANGE ON WHICH REGISTERED:
--------------------------------------------------------  --------------------------------------------------------
<S>                                                       <C>
     Class A Common Stock, par value $.01 per share                       American Stock Exchange
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          Securities registered pursuant to Section 12(g) of the Act:
                11 1/4% Senior Discount Notes Due 2005, Series B
 
                            ------------------------
 
    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: /X/  NO / /
 
    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 the 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. [  ]
 
    On March 8, 1999 the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the Registrant, using the closing price
of the Registrant's Class A Common Stock, as reported by the American Stock
Exchange on such date, was $19,199,101.25.
 
    The number of shares of the Registrant's Class A Common Stock and Class B
Common Stock outstanding as of March 8, 1999 was 5,818,817 and 8,250,458
respectively.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    Portions of the Definitive Proxy Statement to be used in connection with the
Registrant's Annual Meeting of Stockholders to be held on May 20, 1999 are
incorporated by reference into Part III of this report.
 
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                              BIG CITY RADIO, INC.
        ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998
                               TABLE OF CONTENTS
 
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ITEM NO.                                              DESCRIPTION                                               PAGE
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                                                         PART I
Item 1.     Business.......................................................................................           1
Item 2.     Properties.....................................................................................          14
Item 3.     Legal Proceedings..............................................................................          15
Item 4.     Submission of Matters to a Vote of Security Holders............................................          15
 
                                                        PART II
Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters..........................          16
Item 6.     Selected Financial Data........................................................................          17
Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations..........          18
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.....................................          25
Item 8.     Financial Statements and Supplementary Data....................................................          26
Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........          52
 
                                                        PART III
Item 10.    Directors and Executive Officers of the Registrant.............................................          52
Item 11.    Executive Compensation.........................................................................          52
Item 12.    Security Ownership of Certain Beneficial Owners and Management.................................          52
Item 13.    Certain Relationships and Related Transactions.................................................          52
 
                                                        PART IV
Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K................................          52
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                                     PART I
 
ITEM 1. BUSINESS
 
GENERAL
 
    Big City Radio, Inc. ("Big City Radio" or the "Company") was formed in 1994
to acquire radio broadcast properties in or adjacent to major metropolitan
markets and utilize innovative engineering techniques and low-cost,
ratings-driven operating strategies to develop these properties into successful
metropolitan radio stations. In order to accomplish this objective, the Company
applies a variety of innovative broadcast engineering techniques to the radio
broadcast properties it acquires, including Synchronized Total Market
Coverage-TM- ("STMC-TM-"). STMC-TM- consists of acquiring two or more stations
which broadcast on the same frequency and simulcasting their signals to achieve
broad coverage of a targeted metropolitan market. In addition to STMC-TM-, the
Company intends to employ other broadcast engineering techniques to enter major
metropolitan markets at attractive valuations. These engineering techniques
include acquiring suburban radio stations and moving the station's broadcast
antenna closer to the metropolitan market ("move-ins") and acquiring high-power
stations adjacent to major metropolitan markets and focusing such stations'
broadcast signal into the metropolitan area.
 
    The Company's acquisition and engineering strategies enable it to provide
near seamless coverage of major metropolitan markets at a significantly lower
acquisition cost than is typically required to acquire a major market Class B
station. Class B radio stations are defined by the Federal Communications
Commission (the "FCC") as those facilities whose signal is predicted to cover a
regional urban area. The Company currently owns and operates one STMC-TM-
station combination in each of New York and Los Angeles, and two STMC-TM-
station combinations in Chicago. New York, Los Angeles and Chicago are the three
largest radio markets in the United States in aggregate advertising revenues.
 
    The Company's first targeted market was Los Angeles where the Company
operates a three-station combination, which broadcasts as Y-107 ("Y-107 LA"),
featuring a modern rock format on the 107.1-FM frequency. Y-107 LA covered
approximately 90% of the Arbitron diaries in the Los Angeles Arbitron Metro
Survey Area ("MSA") as a result of an increase in its transmission power
pursuant to the FCC Power Increase (as defined herein) which the Company
implemented in the first quarter of 1998. The Company has demonstrated the
success of its strategy in Los Angeles where Y-107 LA has consistently ranked as
one of the top five most listened to modern rock radio stations in America over
the past year and has achieved a significant share of 0.8% in the 12+ category
as of the Fall 1998 Arbitron book. The Company has successfully translated its
strong listenership into significant revenues as exemplified by the increase in
its power ratio (defined as a station's share of the aggregate radio market
revenues divided by its Arbitron listenership share) from 1.0 in the six-month
period ended March 1998 to 1.5 in the six-month period ended September 1998. The
Company acquired the three Los Angeles stations (the "Los Angeles Stations") in
May 1996 for a combined purchase price significantly lower than the reported
purchase prices of Class B stations in the Los Angeles MSA, as evidenced by
reported transactions consummated since the deregulation initiated by the
passage of the Telecom Act (as defined herein) in 1996. See "Business Strategy"
below.
 
    The Company's four stations in the New York region MSA collectively
broadcast as Y-107 ("Y-107 NY") on the 107.1-FM frequency. Y-107 NY commenced
operations in December 1996 as the only country music station covering the New
York City market. Y-107 NY earned a 0.9% share in the 12+category as of the Fall
1998 Arbitron book. Y-107 NY currently covers approximately 90% of the Arbitron
diaries in the New York MSA as a result of an increase in its transmission power
pursuant to the FCC Power Increase and implementation of other technical
improvements, which the Company implemented during the third quarter of 1998.
The Company acquired the four New York region stations (the "New York Stations")
for a combined purchase price significantly lower than the reported purchase
prices of Class B stations in the New York MSA, as evidenced by reported
transactions consummated since the passage of the Telecom Act. See "Business
Strategy" below.
 
    The Company owns two groups of stations in the Chicago MSA. Two stations
collectively broadcast as FM-103.1("FM-103.1") on the 103.1-FM frequency.
FM-103.1 commenced operations in February 1998, broadcasting an adult
contemporary format. FM-103.1 currently covers approximately 70% of the Arbitron
diaries in the Chicago MSA and will increase its coverage to approximately 90%
as a result of the planned
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increase in its transmission power pursuant to the FCC Power Increase and other
technical improvements, which the Company plans to implement during the second
quarter in 1999 pending receipt of FCC approval. The Company acquired the two
stations comprising FM 103.1 for a combined purchase price which is
significantly less than the reported purchase prices of Class B stations in the
Chicago MSA, as evidenced by transactions consummated since the passage of the
Telecom Act. See "Business Strategy" below.
 
    The second group of stations in the Chicago area currently comprises three
stations, collectively broadcasting as 92 KISS FM on the 92.7 FM and 92.5
frequencies. 92 KISS FM commenced operations in November 1998, broadcasting on
two stations a contemporary hit radio format. In April 1998, the Company signed
a definitive asset purchase agreement to acquire substantially all the assets of
WDEK-FM and WLBK-AM, DeKalb, Illinois. The Company completed the acquisition in
February 1999 (see Note 14 to Consolidated Financial Statements, Subsequent
Events). The Company added WDEK-FM, which broadcasts on the 92.5 FM frequency,
to the 92 KISS FM stations. Together with the two 92.7 FM frequency stations,
WDEK-FM forms 92 KISS FM in the Chicago area. Through use of the Company's
STMC-TM- technology, WDEK-FM 92.5 will be engineered to form part of the 92 KISS
FM synchronized station group. It is the Company's intention to sell the
operating assets of WLBK-AM DeKalb, Illinois. 92 KISS FM currently covers
approximately 70% of the Arbitron diaries in the Chicago MSA and will increase
its coverage to approximately 90% as a result of the planned increase in its
transmission power, subject to FCC approval, which the Company plans to
implement in third quarter 1999.
 
    The Company is controlled by Stuart Subotnick, a general partner of
Metromedia Company ("Metromedia"), who owns approximately 59% of the Company's
common stock, representing 93% of the voting power of the Company's common stock
(without giving effect to the exercise of any options to acquire shares of the
Company's Class A Common Stock, par value $.01 per share (the "Class A Common
Stock")).
 
MANAGEMENT
 
    The Company was formed by its chairman, Stuart Subotnick, and its president
and chief executive officer, Michael Kakoyiannis. Mr. Subotnick contributes his
financial, strategic and operational expertise gained through the development
and operation of the numerous media and communications businesses that he and
longtime partner John W. Kluge have controlled through Metromedia and its
predecessor. Mr. Kakoyiannis has been involved in the radio broadcasting
industry for over 25 years in various functions including sales, marketing and
general management. In addition to Mr. Subotnick and Mr. Kakoyiannis, the
Company has numerous experienced radio executives involved in all aspects of its
operations, including engineering, sales, marketing, programming and finance.
The Company believes that its quality management team will be instrumental in
successfully implementing its business strategy.
 
    The principal executive offices of the Company are located at 11 Skyline
Drive, Hawthorne, New York 10532. Its telephone number is (914) 592-1071.
 
STATIONS OPERATIONS
 
    The Company currently owns station groups in Los Angeles, New York, and
Chicago, the three largest markets in the United States in terms of aggregate
radio revenues. Y-107 LA, Y-107 NY and FM 103.1 have each exhibited significant
increases in Arbitron ratings and net revenue since their respective launches.
In November 1998 the Company launched 92 KISS FM, a contemporary hit radio
format in Chicago.
 
LOS ANGELES
 
    The Los Angeles market is the second largest Arbitron market in terms of
population and the largest in terms of aggregate radio market revenues in the
United States, with 1997 revenues of $575 million. From 1992 to 1997, radio
advertising revenue in the Los Angeles MSA grew from $424 million to $575
million, a compound annual growth rate of 7.9%. Los Angeles is the first market
in which the
 
                                       2
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Company implemented STMC-TM-, with its acquisitions of three radio stations for
an aggregate purchase price of $26.8 million. Y-107 LA initially covered
approximately 75% of the Arbitron diaries in the Los Angeles MSA and, as a
result of an increase in its transmission power, which the Company implemented
in the first quarter of 1998, Y-107 LA increased its coverage to approximately
90%. The Company believes that this coverage is substantially similar to the
Arbitron diary coverage of many of the highest-ranked Los Angeles Class B
stations. In addition to its coverage of the Los Angeles market, Y-107 LA covers
parts of the Ventura, Orange, Riverside-San Bernardino and San Diego markets.
 
    The Company believes that identifying the appropriate format in a particular
market is crucial to the station's ability to achieve meaningful penetration of
the market's listening audience and aggregate advertising revenues. After
extensive research of the Los Angeles market, the Company launched a modern rock
format, as it believed that there was no comparable station that offered a
lively mix of modern rock music that primarily targets the important 25-34
demographic. The Company has demonstrated the success of its strategy in Los
Angeles where Y-107 LA has consistently ranked as one of the top 5 most
listened-to modern rock radio stations in America over the past year and has
achieved a significant share of 0.8% in the 12+ category as of the fall 1998
Arbitron book. The Company has successfully translated its strong listenership
into significant revenues as exemplified by the increase in its power ratio from
1.0 in the six-month period ended March 1998 to 1.5 in the six-month period
ended September 1998. Y-107 LA's cume (the estimated number of different persons
who listened to a station for a minimum of five minutes in a quarter-hour of a
reported daypart) grew from 50,000 to 574,500 in its first six months of
operation.
 
    The Company believes that to achieve Class B station equivalent Arbitron
coverage and broadcast quality requires extensive engineering expertise. In Los
Angeles, the Company uses several advanced techniques to achieve what the
Company believes to be substantially full coverage. In addition to the three
stations, the Company uses a booster located in the San Fernando Valley to
enhance its coverage of the market. The Company believes these engineering
solutions have resulted in significantly broader coverage than traditional
simulcasting.
 
NEW YORK
 
    The New York MSA is the largest Arbitron market in terms of population and
the second largest in terms of aggregate radio market revenues in the United
States, with 1997 revenues of $552 million. From 1992 to 1997, radio advertising
revenue in the New York MSA grew from $348 million to $552 million, a compound
annual growth rate of 9.6%. New York is the second market which the Company
entered with its acquisitions of four radio stations for an aggregate purchase
price of approximately $25 million. The fourth station of the quadrocast,
WRNJ-FM, was acquired in August 1998 for an aggregate purchase price of
approximately $5.4 million. It commenced operations effective April 27, 1998
under a local marketing agreement under the current format. The Company has
implemented STMC-TM- in New York as well and believes that it has created the
equivalent of a New York Class B station. Subsequent to the implementation of
the planned power increase of the New York Stations and implementation of other
technical improvements, which the Company completed by the end of the third
quarter of 1998, the Arbitron diary coverage of Y-107 NY increased to
approximately 90%. The Company believes that this coverage is substantially
similar to the Arbitron diary coverage of many of the highest-ranked New York
Class B stations.
 
    Y-107 NY has an exclusive format presence in New York, as the Company
believes there are no other country music stations covering substantially all of
the New York MSA. Country music is traditionally a very strong 25-54 demographic
format, which routinely generates high power ratios relative to other formats.
Y-107 NY commenced operations on January 1, 1997 and has already earned a share
of 0.9% in the 12+category as of the Fall 1998 Arbitron book.
 
                                       3
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CHICAGO
 
    The Chicago market is the third largest Arbitron market in terms of
population and aggregate radio market revenues in the United States with 1997
revenues of $388 million. From 1992 to 1997, radio advertising revenue in the
Chicago MSA grew from $262 million to $388 million, a compound annual growth
rate of 8.3%. The Company has to date acquired six radio stations in the Chicago
MSA for an aggregate purchase price of $34.6 million. FM-103.1 began
broadcasting an adult contemporary format in February 1998. 92 KISS FM began
broadcasting its contemporary hit radio format in November 1998 to which the
Company added the newly acquired WDEK-FM radio on the 92.5 frequency (see Note
14 to Consolidated Financial Statements, Subsequent Events). FM-103.1 and 92
KISS FM currently cover approximately 70% of the Arbitron diaries in the Chicago
MSA. Subsequent to the implementation of the planned power increase of the
Chicago Stations and other technical improvements, subject to FCC approval,
which the Company expects to complete during 1999, the Chicago Stations will
cover approximately 90% of the Arbitron diaries in the Chicago MSA.
 
ADVERTISING SALES
 
    The rates a station can charge are in large part dictated by the station's
ability to attract audiences in the demographic groups targeted by its
advertisers, as measured principally by Arbitron Radio Market Reports. The
Company believes that identifying the appropriate format in a particular market
is crucial to the station's ability to achieve meaningful penetration of the
listening audience of the market. In each market entered by the Company, the
Company performs an extensive competitive analysis to select the format with the
greatest audience and revenue potential.
 
    The Company generates virtually all of its revenues from the sale of local
and national advertising for broadcast on its radio stations. The Company
believes 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 depend primarily on (i) a station's share of the audience in the
demographic groups targeted by advertisers, (ii) the number of stations in the
market competing for the same demographic groups, and (iii) the supply of and
demand for radio advertising time. Rates are generally highest during morning
and afternoon commuting hours.
 
    The format of a particular station limits, in part, the number of
advertisements that the station can broadcast without jeopardizing listening
levels (and the resulting ratings). The Company's stations strive to maximize
revenue by constantly managing the number of commercials available for sale and
adjusting prices based upon local market conditions. In the broadcasting
industry, radio stations often utilize trade (or barter) agreements to generate
advertising time sales in exchange for goods or services (such as travel and
lodging) instead of for cash. The Company minimizes its use of trade agreements.
The Company determines the number of advertisements broadcast hourly so as to
maximize available revenue dollars without jeopardizing listening levels.
Although the number of advertisements broadcast during a given time period
varies, the total number of advertisements broadcast on a particular station
generally does not vary significantly from year to year. As is typical of the
radio broadcasting industry, the Company's stations respond to changing demand
for advertising inventory by varying prices rather than by varying the target
inventory level for a particular station.
 
    Most advertising contracts are short-term and run only for a few weeks. The
Company generates approximately 84% of its gross revenue from local advertising,
which is sold primarily by a station's sales staff. To achieve greater control
over advertising dollars, the Company's sales force focuses on establishing
direct relationships with local advertisers. The Company has engaged national
representative firms and recruited in-house staff to represent it in generating
national business in the largest national sales markets of Los Angeles, New York
City, Boston, Philadelphia, Chicago, Atlanta, Dallas, Detroit and San Francisco.
 
COMPETITION
 
    Radio broadcasting is a highly competitive business. Within their respective
markets, each of the Company's radio stations competes for audience share and
advertising revenue directly with other radio
 
                                       4
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stations, as well as with other media such as television, print media,
billboards, the internet compact discs and music videos. Several
better-capitalized companies, including Chanceller Media Corporation, Clear
Channel Communications, Inc., and Infinity Broadcasting Corporation, compete in
the same geographic markets as the Company, many of which have greater financial
resources. In addition, recently the radio industry has experienced significant
consolidation which has resulted in several radio station groups that have a
large number of radio stations throughout the United States and vastly greater
financial resources and access to capital than the Company.
 
    The financial success of each of the Company's radio stations depends
principally upon its share of the overall radio advertising revenue within its
geographic market, its promotion and other expenses incurred to obtain that
revenue and the economic health of the geographic market. Radio advertising
revenues are, in turn, highly dependent upon audience share. Radio station
operators are subject to the possibility of another station changing programming
formats to compete directly for listeners and advertisers or launching an
aggressive promotional campaign in support of an already existing competitive
format. If a competitor, particularly one with substantial financial resources,
were to attempt to compete in either of these fashions, the broadcast cash flow
of the Company's affected station could decrease due to increased promotional
and other expenses and/or lower advertising revenues resulting from lower
ratings. There can be no assurance that any one of the Company's radio stations
will be able to maintain or increase its current audience ratings and radio
advertising revenue market share.
 
    The Company will also face competition from other radio stations that
attempt to replicate the engineering techniques of the Company to cover a
metropolitan area and from stations that simply simulcast on the same or first
adjacent frequencies. While simulcasting has been employed by other broadcast
radio operators in the past, the primary purpose has been to reduce programming
costs for the individual stations. The Company believes that most broadcast
radio operators that have employed simulcasting have done so on different
frequencies. The Company believes that few operators have successfully used
simulcasting to effectively cover an entire MSA.
 
    Radio broadcasting is also subject to competition from new media
technologies that are being developed or introduced, such as the delivery of
audio programming by cable television systems and the internet or the
introduction of a new technology known as Digital Audio Broadcasting ("DAB").
DAB may deliver by satellite or terrestrial means multi-channel, multi-format
digital radio services with sound quality equivalent to compact discs to
nationwide and regional audiences. In 1998, USA Digital Radio, Inc. ("USADR")
requested that the FCC propose rules that would address any use of DAB by
terrestrial radio stations. The widespread implementation of DAB by radio
stations may cause new or increased interference to existing broadcast
operations, including those of the Company. The FCC has received comments on
USADR's proposal but has not yet acted on its request for a formal rulemaking
proceeding, in which any interested party would be able to comment on the FCC's
proposed rules. In another proceeding, the FCC granted satellite digital audio
radio service ("DARS") licenses to two entities in 1997, authorizing them to
launch and operate a satellite DARS system. Both DARS licensees are required to
have completed contracting to build their system's satellites by October 1999,
and to begin operation of at least one satellite by October 2001, with full
operation by October 2003. The Company cannot predict the effect, if any, that
any such new technologies may have on the radio broadcasting industry.
 
ACQUISITIONS
 
    Since its incorporation in August 1994, the Company has acquired the assets
of sixteen radio stations and has disposed of two stations. The following is a
summary of the acquisitions and dispositions of radio stations which the Company
has consummated since its incorporation and other planned acquisitions. All of
these transactions were with non-affiliated persons.
 
NEW YORK
 
    In December 1994, the Company acquired the assets of radio station WRGX-FM
(now WYNY-FM), Briarcliff Manor, New York, from West-Land Communicators, Inc.
("West-Land") for a purchase price of
 
                                       5
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$2.5 million and the issuance of a promissory note in the amount of $1.0 million
to West-Land. In April 1997, the Company acquired the assets of radio station
WWHB-FM (now WWVY-FM), Hampton Bays, New York, from South Fork Broadcasting
Corporation ("South Fork") for a purchase price of $4.0 million. In June 1997,
the Company acquired the assets of radio station WZVU-FM (now WWZY-FM), Long
Branch, New Jersey, including a radio tower, a radio antenna and a building from
K&K Radio Broadcasting L.L.C. and K&K Tower, L.L.C. for an aggregate purchase
price of $12.0 million and certain payments under existing leases of the
building facilities. K&K Radio Broadcasting, L.L.C., K&K Tower, L.L.C. and each
of their controlling members and the general manager of WZVU-FM entered into a
covenant not to compete with the Company for a period of three years. In August
1998, the Company acquired all of the stock of Radio New Jersey, owner of the
FCC licenses of WRNJ-FM, Belvidere, New Jersey (now WWYY-FM) and WRNJ-AM,
Hackettstown, New Jersey. The aggregate purchase price for WRNJ-FM was $5.4
million excluding acquisition-related expenses, of which $3.0 million was paid
in cash and the remainder was satisfied by the issuance of two promissory notes.
Simultaneously, the Company sold substantially all of the assets of WRNJ-AM to
one of the existing stockholders of Radio New Jersey. Also, in December 1994,
the Company acquired the assets of radio station WRKL-AM, New City, New York,
from Rockland Communicators, Inc. for a purchase price of $1.0 million. The
Company expects to finalize the sale of this station in March 1999.
 
LOS ANGELES
 
    In May 1996, the Company acquired four radio stations in the Los Angeles
area from Douglas Broadcasting, Inc. ("Douglas"). The Company acquired the
assets of radio station KMAX-FM (now KLYY-FM), Arcadia, California, KAXX-FM (now
KVYY-FM), Ventura, California, KBAX-FM (now KSYY-FM1) Fallbrook, California, and
KWIZ-FM, Santa Ana, California, for an aggregate purchase price of $38.0
million. The Company also acquired FM Translator station K252BF, Temecula,
California, which rebroadcasts on 98.3 MHz the signal of KSYY-FM, and FM Booster
station KLYY-FM1, Burbank, California, which boosts on 107.1 MHz the broadcast
of the signal of KLYY-FM. In December 1996, the Company sold radio station
KWIZ-FM to Liberman Broadcasting, Inc. for a price of $11.2 million.
 
CHICAGO
 
    In August 1997, the Company acquired the assets of radio station WVVX-FM
(now WXXY-FM), Highland Park, Illinois, from WVVX License, Inc., for a purchase
price of $9.5 million. Douglas, WVVX, Inc. and WVVX License, Inc. agreed not to
compete for a period of eighteen months. In August 1997, the Company acquired
the assets of radio station WJDK-FM (now WYXX-FM), Morris, Illinois, from DMR
Media, Inc., for a purchase price of $1.1 million. In addition, the Company
agreed not to compete with DMR Media, Inc.'s operations of radio station
WCSJ-AM, Morris, Illinois, for a period of five years. In August 1998, the
Company closed two transactions in which it acquired substantially all of the
assets of WCBR-FM (now WKIE-FM), Arlington Heights, Illinois, and WLRT-FM (now
WKIF-FM) Kankakee, Illinois, for an aggregate purchase price of $19.5 million.
In February 1999, the Company acquired substantially all of the assets of
WDEK-FM and WLBK-AM, DeKalb, Illinois for an aggregate purchase price of $4.5
million. The Company intends to operate WDEK-FM, which operates on the 92.5 FM
frequency, together with the two existing 92.7 FM stations in the Chicago
metropolitan area, collectively known as 92 KISS FM.
 
OTHER PLANNED ACQUISITIONS
 
    The Company's principal business strategy is to add radio station properties
to its existing station groups in order to augment signal strength and Arbitron
diary coverage in these MSAs and to acquire additional station groups to which
the Company may deploy its STMC-TM- concept in existing markets (Los Angeles,
New York and Chicago) and in other top-20 markets throughout the U.S. The
Company is currently actively seeking out such acquisition opportunities and is
in the process of negotiating several transactions. The Company is actively
negotiating other radio station acquisitions in its existing markets and in
other markets.
 
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PROPOSED RADIO STATION DISPOSITION
 
    The Company intends to dispose of the assets of radio station WLBK-AM,
DeKalb, Illinois during 1999 (see Note 14 to Consolidated Financial Statement,
Subsequent Events).
 
    The Company also intends to dispose of the assets of radio station WRKL-AM,
New City, New York during March 1999. On August 19, 1998 the Company and Polnet
Communications, Ltd. ("Polnet") executed an asset purchase agreement for the
sale by Big City Radio of the assets of WRKL-AM to Polnet, for a sale price of
$1.625 million, subject to certain adjustments. Consummation of this proposed
sale remains subject to a number of conditions to closings including, but not
limited to, execution of certain closing documentation and certain other
condition to closing including, but not limited to conveyance of good title to
the assets, free and clear of all liens, claims, mortgages, security interest
and encumbrances except those assumed by Polnet.
 
EMPLOYEES
 
    At December 31, 1998, the Company had approximately 123 full-time employees
and 113 part-time employees. Three full-time employees of radio station WRKL-AM
are represented by a union. The Company believes that its relations with its
employees are good.
 
    The Company employs several on-air personalities and generally enters into
employment agreements with certain of these personalities to protect its
interests in those relationships that it believes to be valuable. The loss of
certain of these personalities could result in a short-term loss of audience
share, but the Company does not believe that any such loss would have a material
adverse effect on the Company.
 
PATENTS AND TRADEMARKS
 
    The Company owns registered trademark rights for STMC-TM- and domestic
trademark registrations related to the business of the Company. The Company does
not believe that any of its trademarks are material to its business or
operations. The Company does not own any patents or patent applications.
 
FEDERAL REGULATION OF RADIO BROADCASTING
 
    The ownership, operation and sale of radio stations are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act of 1934, as amended (the "Communications Act"). Among other
things, the FCC assigns frequency bands for broadcasting; determines the
particular frequencies, locations and power of stations; issues, renews, revokes
and modifies station licenses; determines whether to approve changes in
ownership or control of station licenses; regulates equipment used by stations;
imposes regulations and takes other action to prevent harmful interference
between stations; adopts and implements regulations and policies that directly
or indirectly affect the ownership, management, programming, operation and
employment practices of stations; and has the power to impose penalties for
violations of its rules or the Communications Act. In February 1996, Congress
enacted the Telecommunications Act of 1996 (the "Telecom Act") to amend the
Communications Act. The Telecom Act, among other measures, directed the FCC,
which has since conformed its rules, to (a) eliminate the national radio
ownership limits; (b) liberalize the local radio ownership limits as specified
in the Telecom Act; (c) issue broadcast licenses for periods of up to eight
years; and (d) eliminate the opportunity for the filing of competing
applications against broadcast license renewal applications.
 
                                       7
<PAGE>
LICENSE GRANTS AND RENEWALS
 
    The Communications Act provides that a broadcast license may be granted to
an applicant if the grant would serve the public interest, convenience and
necessity, subject to certain limitations referred to below. In making licensing
determinations, the FCC considers the legal, technical, financial and other
qualifications of the applicant, including compliance with the Communications
Act's limitations on alien ownership, compliance with various rules limiting
common ownership of broadcast, cable and newspaper properties, and the
"character" of the licensee and those persons holding "attributable" interests
in the licensee. Broadcast licenses are granted for specific periods of time
and, upon application, are renewable for additional terms. The Telecom Act
amended the Communications Act to provide that broadcast licenses be granted,
and thereafter renewed, for a term not to exceed eight years, if the FCC finds
that the public interest, convenience, and necessity would be served.
 
    Generally, the FCC renews broadcast licenses without a hearing. The Telecom
Act amended the Communications Act to require the FCC to grant an application
for renewal of a broadcast license if: (1) the station has served the public
interest, convenience and necessity; (2) there have been no serious violations
by the licensee of the Communications Act or the rules and regulations of the
FCC; and (3) there have been no other violations by the licensee of the
Communications Act or the rules and regulations of the FCC which, taken
together, would constitute a pattern of abuse. Competing applications against
broadcast license renewal applications are therefore not entertained. The
Telecom Act provided that if the FCC, after notice and an opportunity for a
hearing, decides that the requirements for renewal have not been met and that no
mitigating factors warrant lesser sanctions, it may deny a renewal application.
Only thereafter may the FCC accept applications by third parties to operate on
the frequency of the former licensee. The Communications Act continues to
authorize the filing of petitions to deny against broadcast license renewal
applications during particular periods of time following the filing of renewal
applications. Petitions to deny can be used by interested parties, including
members of the public, to raise issues concerning the qualifications of the
renewal applicant.
 
    The Company's Chicago Stations' broadcast licenses were renewed in 1996 and
will expire in 2004. The Los Angeles Stations' broadcast licenses were renewed
on November 25, 1997 and will expire on December 31, 2005. The New York
Stations' broadcast licenses were renewed in 1998 and will expire on June 1,
2006. The Company entered into a settlement agreement with Rainbow/PUSH
Coalition (the "Coalition"), whereby the Coalition withdrew its petition to deny
the WYNY-FM, WWVY-FM and WWZY-FM renewal applications, wherein the Coalition had
alleged inadequate equal employment opportunity ("EEO") efforts at these
stations. Pursuant to the settlement agreement, which was approved by the FCC,
the Company committed to undertaking at these stations specific EEO efforts,
such as the notification of at least six minority organizations of full-time job
openings. The commitment remains in effect while the Company owns these stations
and would terminate upon the earlier of final adoption by the FCC of new EEO
rules or November 2006. WRKL-AM's broadcast licenses were renewed on January 20,
1999 and will expire on June 1, 2006. In connection with the grant by the FCC of
the WRKL-AM renewal application, the FCC dismissed two informal objections filed
by former employees of the station. The FCC rejected the requests to deny or
defer grant of the WRKL-AM renewal until the discrimination claims were resolved
by New York State or the courts. The FCC rejected those requests and granted the
WRKL-AM renewal for a full term. The FCC stated that the licensee of WRKL-AM is
to inform the FCC of status changes in the two pending claims of sexual
discrimination. The Company does not anticipate any material difficulty in
obtaining license renewals for full terms in the future.
 
    The action of the FCC or its staff granting a renewal application may be
reconsidered during specified time periods by the FCC or its staff on their own
motion or by request of the petitioner, and the petitioner may also appeal
within a certain period actions by the FCC to the U.S. Court of Appeals. If the
FCC does not, on its own motion, or upon a request by an interested party for
reconsideration or review, review a staff grant or its own action within the
applicable time periods, and if no further reconsideration, review or
 
                                       8
<PAGE>
appeals are sought within the applicable time periods, an action by the FCC or
its staff becomes a "Final Order." All of the Company's current renewals have
become Final Orders.
 
LICENSE ASSIGNMENTS AND TRANSFERS OF CONTROL
 
    The Communications Act prohibits the assignment of an FCC license or the
transfer of control of a corporation holding such a license without the prior
approval of the FCC. Applications to the FCC for such assignments or transfers
are subject to petitions to deny by interested parties and must satisfy
requirements similar to those for renewal and new station applicants. Many
transactions involving radio stations provide, as a waivable pre-condition to
closing, that the FCC consent to the transaction has become a "Final Order."
 
    In 1998, the FCC implemented the practice of requesting public comment on
concentration issues of proposed radio acquisitions where the buyer would
control 50% or more of radio advertising revenues, or the buyer and another
broadcaster would control together 70% or more of radio advertising revenues, as
determined by industry publications. In certain instances, in response to such
an FCC request, third parties have filed petitions to deny the acquisition
application and the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") has filed comments noting competitive
concerns, sometimes suggesting that the FCC initiate a hearing to determine if
the acquisition would serve the public interest. The filing of such petitions
and comments have resulted in delays in the FCC's consideration of such
acquisition applications, and could result in the FCC's denying its consent to
the transaction. Moreover, even when no petitions or comments have been filed,
applicants have experienced delays in the FCC's action on acquisition
applications when the Antitrust Division has the matter under investigation.
Such delays have the potential of allowing the other contracting party to
terminate the acquisition if the contract closing deadline has been passed due
to regulatory delays.
 
OWNERSHIP RULES
 
    Rules of the FCC limit the number and location of broadcast stations in
which one licensee (or any party with a control position or attributable
ownership interest therein) may have an attributable interest. The FCC, pursuant
to the Telecom Act, eliminated the previously existing "national radio ownership
rule." Consequently, there now is no limit imposed by the FCC to the number of
radio stations one party may own nationally.
 
    The "local radio ownership rule" limits the number of stations in a radio
market in which any one individual or entity may have a control position or
attributable ownership interest. Pursuant to the Telecom Act, the FCC revised
its rules to set the local radio ownership limits as follows: (a) in markets
with 45 or more commercial radio stations, a party may own up to eight
commercial radio stations, no more than five of which are in the same service
(AM or FM); (b) in markets with 30-44 commercial radio stations, a party may own
up to seven commercial radio stations, no more than four of which are in the
same service; (c) in markets with 15-29 commercial radio stations, a party may
own up to six commercial radio stations, no more than four of which are in the
same service; and (d) in markets with 14 or fewer commercial radio stations, a
party may own up to five commercial radio stations, no more than three of which
are in the same service, provided that no party may own more than 50% of the
commercial stations in the market. FCC cross-ownership rules also prohibit one
party from having attributable interests in a radio station as well as in a
local television station or daily newspaper, although such limits are waived by
the FCC under certain circumstances. In addition, the FCC has a "cross interest"
policy that may prohibit a party with an attributable interest in one station in
a market from also holding either a "meaningful" non-attributable equity
interest (e.g., non-voting stock, voting stock, limited partnership interests)
or key management position in another station in the same market, or which may
prohibit local stations from combining to build or acquire another local
station. The FCC is presently evaluating its radio/television, radio/newspaper
and cross-interest rules and policies as well as policies governing attributable
ownership interests. The
 
                                       9
<PAGE>
Company cannot predict whether the FCC will adopt any changes in these policies
or, if so, what the new policies will be or how they might affect the Company.
 
ATTRIBUTION RULES
 
    All holders of attributable interests must comply with, or obtain waivers
of, the FCC's multiple and cross-ownership rules. Under the current FCC rules,
an individual or other entity owning or having voting control of 5% or more of a
corporation's voting stock is considered to have an attributable interest in the
corporation and its stations, except that banks holding such stock in their
trust accounts, investment companies, and certain other passive interests are
not considered to have an attributable interest unless they own or have voting
control over 10% or more of such stock. The FCC is currently evaluating whether
to raise the foregoing benchmarks to 10% and 20%, respectively. An officer or
director of a corporation or any general partner of a partnership also is deemed
to hold an attributable interest in the media license. At present, when a single
shareholder holds a majority of the voting stock of a corporate licensee, the
FCC considers other shareholders, unless they are also officers or directors,
exempt from attribution. The FCC has asked for comments as to whether it should
continue the single majority shareholder exemption. Holders of non-voting stock
generally will not be attributed an interest in the issuing entity, and holders
of debt and instruments such as warrants, convertible debentures, options, or
other non-voting interests with rights of conversion to voting interests
generally will not be attributed such an interest unless and until such
conversion is effected. The FCC is currently considering whether it should
expand its attribution rules to reach certain of these interests in certain
circumstances. The Company cannot predict whether the FCC will adopt these or
any other proposals to change its attribution policies.
 
    Under current FCC rules, any stockholder of the Company with 5% or more of
the outstanding votes (except for qualified institutional investors, for which
the 10% benchmark is applicable), will be considered to hold attributable
interests in the Company. Such holders of attributable interests must comply
with or obtain waivers of the FCC's multiple and cross-ownership rules. At
present, none of the attributable stockholders, officers and directors of the
Company have any other media interests besides those of the Company that
implicate the FCC's multiple ownership limits. In the event that the Company
learns of a new attributable stockholder and if such stockholder holds interests
that exceed the FCC limits on media ownership, under the Company's Amended and
Restated Certificate of Incorporation dated December 19, 1997 and filed with the
Secretary of State of the State of Delaware on December 22, 1997 (the "Amended
and Restated Certificate of Incorporation") the Board of Directors of the
Company has the corporate power to redeem stock of the Company's stockholders to
the extent necessary to be in compliance with FCC and Communications Act
requirements, including limits on media ownership by attributable parties.
 
    The FCC will consider a radio station providing programming and sales on
another local radio station pursuant to a LMA (as defined herein) to have an
attributable ownership interest in the other station for purposes of the FCC's
radio multiple ownership rules. In particular, a radio station is not permitted
to enter into a LMA giving it the right to program more than 15% of the
broadcast time, on a weekly basis, of another local radio station which it could
not own under the FCC's local radio ownership rules.
 
ALIEN OWNERSHIP LIMITS
 
    Under the Communications Act, broadcast licenses may not be granted,
transferred or assigned to any corporation of which more than one-fifth of the
capital stock is owned of record or voted by non-U.S. citizens or foreign
governments or their representatives or by foreign corporations ("Aliens").
Where the corporation owning the license is controlled by another corporation,
the parent corporation cannot have more than one-fourth of the capital stock
owned of record or voted by Aliens, unless the FCC finds it in the public
interest to allow otherwise. The FCC has issued interpretations of existing law
under which the Alien ownership restrictions in slightly modified form apply to
other forms of business organizations, including general and limited
partnerships. The FCC also prohibits a licensee from continuing to control
broadcast licenses if the licensee otherwise falls under Alien influence or
control in a manner determined
 
                                       10
<PAGE>
by the FCC to be in violation of the Communications Act or contrary to the
public interest. The Company believes that Aliens control or vote less than
one-fourth of the Company's capital stock. In the event that the Company learns
that Aliens own, control or vote stock in the Company in excess of the limits
set in the Communications Act and the FCC's rules, under the Amended and
Restated Certificate of Incorporation, the Board of Directors of the Company has
the corporate power to redeem stock of the Company's stockholders to the extent
necessary to be in compliance with FCC and Communications Act requirements on
alien ownership.
 
PROGRAMMING AND OPERATIONAL REQUIREMENTS
 
    While the FCC has relaxed or eliminated many of its regulatory requirements
related to programming and content, radio stations are still required to
broadcast programming responsive to the problems, needs and interests of the
stations' service areas, must maintain local studios and public inspection files
and must comply with various rules promulgated under the Communications Act that
regulate political broadcasts and advertisements, sponsorship identifications,
indecent programming and other matters. Failure to observe these or other FCC
rules can result in the imposition of monetary forfeitures, in the grant of a
"short" (less than full term) license term or, where there have been serious or
a pattern of violations, license revocation. The FCC also traditionally enforced
its EEO rules vigorously, by requiring stations to implement minority and female
outreach plans and by prohibiting employment discrimination. In 1998, the U.S.
Court of Appeals for the D.C. Circuit struck down the FCC's outreach
requirements as unconstitutional, and remanded to the FCC the question of
whether it has the jurisdiction to enforce its anti-discrimination rule. The FCC
currently is conducting a rulemaking proceeding to formulate new EEO outreach
rules in a manner consistent with the court's ruling. The FCC has tentatively
determined that its anti-discrimination rule is enforceable. The Company cannot
predict whether adverse final adjudications of the two pending discrimination
claims relating to WRKL-AM would adversely impact its current FCC licenses or
any proposed acquisition of additional stations.
 
TECHNICAL AND INTERFERENCE RULES
 
    FCC rules specify technical and interference requirements and parameters
that govern the signal strength and coverage area of radio stations, and which,
unless waived, must be complied with in order to obtain FCC consent to modify a
station's service area or other technical operations. The FCC allots specific FM
radio frequencies and class designations to particular communities of license.
The FM class designations, which vary by geographic location, include (in order
of increasing potential coverage area) Class A, B1, C3, B, C2, C1 and C. (The C
Class designations are generally not allocated to communities in the more
densely-populated regions of the United States, such as the Northeast and
California.) Each FM class has minimum and maximum power specifications and must
not cause interference to the protected service areas of other radio stations,
domestic or international, operating on the same or adjacent frequencies. Under
FCC rules, a radio station must transmit a minimum predicted signal strength to
its allocated community of license, and therefore must locate its transmitting
antenna at a site providing such coverage while also being within a specified
power and height range for that station's class designation, and at specified
minimum distances from the transmitting sites of nearby radio stations operating
on the same or adjacent frequencies. The Company must also comply with certain
technical, reporting, and notification requirements imposed by the FAA with
respect to the installation, location, lighting, and painting of the transmitter
antennas used by the Company's radio stations. The combination of these
requirements sets limits on the ability of a particular radio station to
relocate in certain directions and to increase signal coverage. Stations may
petition the FCC to change a particular station's community of license and/or
class, which changes are granted by the FCC when its service priorities are met
and conflicting re-allotment proposals, if any, are resolved. As to minimum
distance separation requirements designed to afford interference protection to
other FM stations, the FCC rarely waives such specifications. However, the FCC
permits radio stations in certain circumstances to relocate to a site not
meeting the minimum distance separation rule when the station demonstrates that
the service contours of neighboring radio stations will
 
                                       11
<PAGE>
be protected from interference. Because STMC-TM- uses radio stations that
operate on the same or adjacent frequencies, the STMC-TM- stations' transmitting
sites must be sufficiently distant from each other to comply with the FCC's
interference protection guidelines, unless such stations are exempt from
compliance by their grand fathered status.
 
    Moreover, the FCC has proposed rules or is considering proposing new rules
with regard to several other technical issues that could affect the operations
of the Company's radio stations. In June 1998, the FCC proposed new rules that,
among other changes, would enable FM radio stations to agree to accept certain
types of interference resulting from technical changes to be made by other FM
radio stations in exchange for monetary or other consideration. Such
interference agreements could offer new opportunities for the Company to reach
more listeners, but may pose an increased possibility of interference. Also, the
FCC is considering whether to propose rules that would authorize certain
lower-power AM radio stations to use FM translators to broadcast the AM radio
station's nighttime programming. Such rules, if adopted, could result in
improved nighttime broadcast quality for certain AM radio stations that may
compete with the Company's radio stations. Finally, in January 1999, the FCC
proposed new rules that would enable certain parties to obtain licenses to build
and operate new low-power FM radio stations, known as "micro-radio" that would
not be subject to certain of the Commission's spacing requirements and other
rules, and may or may not be restricted to non-commercial operations. If the
proposed rules are adopted, such new micro-radio stations may compete with the
Company's radio stations for listeners and revenues. Also, such micro-radio
stations may create additional risks of interference to the Company's radio
stations and may limit, in certain areas, the ability of the Company to
construct new full-power radio stations or modify its current stations. The
Company cannot predict what effect, if any, the FCC's actions with regard to any
of these matters may have on the Company's radio stations.
 
FCC POWER INCREASE
 
    In most instances, changes to the technical specifications of radio
stations, such as increases in the power (effective radiated power, or "ERP")
and subsequent increased coverage area, may be made only after application to
the FCC, and grant by the FCC of a construction permit for the modification of
the station. In 1998, the Company implemented at WYNY-FM, WWVY-FM, WWZY-FM and
KLYY-FM FCC-authorized increases in each stations's power from three kilowatts
to the maximum six kilowatt equivalent level permitted for such station's class
(the "FCC Power Increase"). Pending before the FCC are applications for FCC
Power Increases for WYXX-FM and WXXY-FM. There can be no assurance that the FCC
will grant these pending applications, but the Company anticipates such grants
and implementation during the second quarter of 1999. The Company also has
received approval for its application to the FCC and the grant by the FCC of a
construction permit for the modification of WRKL-AM, New City, New York.
 
AGREEMENTS WITH OTHER BROADCASTERS
 
    Over the past several years a significant number of broadcast licensees,
including the Company, have entered into cooperative agreements with other
stations in their markets. One typical example is a local marketing agreement
("LMA") between two separately or co-owned stations, whereby the licensee of one
station programs substantial portions or all of the broadcast day on the other
licensee's station, subject to ultimate editorial and other controls being
exercised by the latter licensee, and sells advertising time during such program
segments for its own account. The FCC has held that LMAs do not per se
constitute a transfer of control and are not contrary to the Communications Act
provided that the licensee of the station maintains ultimate responsibility for
and control over operations of its broadcast station. Typically licensees enter
into the LMA in anticipation of the sale of the station, with the proposed
acquirer providing programming for the station while the parties are awaiting
the necessary regulatory approvals to the transaction.
 
                                       12
<PAGE>
    The FCC's rules also prohibit a radio licensee from simulcasting more than
25% of its programming on other radio stations in the same broadcast service
(i.e., AM-AM or FM-FM), whether it owns both stations or operates one or both
through a LMA, where such stations serve substantially the same geographic area
as defined by the stations' principal community contours. The Company's stations
are not subject to this limitation.
 
PROPOSED REGULATORY CHANGES
 
    The FCC has not yet formally implemented certain of the changes to its rules
necessitated by the Telecom Act. Moreover, the Congress and the FCC have under
consideration, and may in the future consider and adopt new laws, regulations
and policies regarding a wide variety of matters that could, directly or
indirectly, (i) affect the operation, programming, technical requirements,
ownership and profitability of the Company and its radio broadcast stations,
(ii) result in the loss of audience share and advertising revenues of the
Company's radio broadcast stations, (iii) affect the ability of the Company to
acquire additional radio broadcast stations or finance such acquisitions, (iv)
affect cooperative agreements and/or financing arrangements with other radio
broadcast licensees, (v) affect the Company's competitive position in
relationship to other advertising media in its markets, or (vi) affect the
Company's ability to exploit its unique technical capabilities and innovative
approach to acquiring and using radio broadcast stations. Such matters include,
for example, changes to the license, authorization and renewal process;
proposals to revise the FCC's EEO rules and other matters relating to minority
and female involvement in broadcasting; proposals to alter the benchmarks or
thresholds for attributing ownership interest in broadcast media; proposals to
change rules or policies relating to political broadcasting; changes to
technical and frequency allocation matters, including those relative to DAB,
micro-radio, AM broadcast on FM translator stations and FM interference
acceptance; proposals to restrict or prohibit, the advertising of beer, wine and
other alcoholic beverages on radio; changes in the FCC's cross-interest,
multiple ownership, alien ownership and cross-ownership policies; and proposals
to limit the tax deductibility of advertising expenses by advertisers.
 
    Although the Company believes the foregoing discussion is sufficient to
provide the reader with a general understanding of all material aspects of FCC
regulations that affect the Company, it does not purport to be a complete
summary of all provisions of the Communications Act or FCC rules and policies.
Reference is made to the Communications Act, FCC rules, and the public notices
and rulings of the FCC for further information.
 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
    Certain statements in this report, including those utilizing the phrases
"will," "expects," "intends," "estimates," "contemplates," and similar phrases,
are "forward-looking" statements (as such term is defined in Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), including
statements regarding, among other items, (i) the Company's growth strategy, (ii)
the Company's intention to acquire additional radio stations and to enter
additional markets, including its ability to do so at attractive valuations,
(iii) the Company's expectation of improving the coverage areas of its radio
stations, and (iv) the Company's ability to successfully implement its business
strategy. Certain, but not necessarily all, of such forward-looking statements
can be identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance and achievements of the Company and its
subsidiaries to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, but are not limited to, the following: (i) changes in the
competitive market place, including the introduction of new technologies or
formatting changes by the
 
                                       13
<PAGE>
Company's competitors, (ii) changes in the regulatory framework, (iii) changes
in audience tastes, and (iv) changes in the economic conditions of local
markets. Other factors which may materially affect actual results include, among
others, the following: general economic and business conditions, industry
capacity, demographic changes, changes in political, social and economic
conditions and various other factors beyond the Company's control. The Company
does not undertake and specifically declines any obligation to publicly release
the results of any revisions which may be made to any forward-looking statements
to reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events. The Company's
ability to avoid interruptions due to Year 2000 problems involves risks and
uncertainties, including, but not limited to, suppliers', customers' and the
Company's ability to complete remediation which could be affected by factors
such as delays and increased costs.
 
ITEM 2. PROPERTIES
 
    The Company leases approximately 3,200 square feet in Hawthorne, New York,
where its corporate offices are located.
 
    The type of properties required to support each of the Company's radio
stations includes offices, studios, transmitter sites, booster sites, translator
sites and antenna sites. The Company owns, leases or licenses the properties
required to operate its radio stations. The Company owns facilities for the New
York Stations in Long Branch (approximately 6,500 square feet), for WRKL-AM in
Pomona (approximately 5,100 square feet) and for WDEK-FM and WLBK-AM in DeKalb,
Illinois (approximately 4,500 square feet). The Company leases or licenses
facilities for the Los Angeles Stations in Century City (approximately 16,048
square feet), Arcadia, Fallbrook, Pasadena (approximately 4,896 square feet),
Ventura (approximately 758 square feet), Temecula and Burbank. The Company
leases facilities for the New York Stations in Hampton Bays (approximately 1,260
square feet), Hawthorne, New York, East Quogue and Westchester. The Company
leases facilities for the Chicago Stations in Chicago (approximately 18,698
square feet), Highland Park (approximately 2,120 square feet), Arlington Heights
(approximately 2,800 square feet), Kankakee, and Morris. The Company considers
its facilities to be suitable and of adequate sizes for its current and intended
purposes and does not anticipate any difficulties in renewing those leases or
licenses or in leasing or licensing additional space, if required.
 
    The Company owns substantially all of its other equipment, consisting
principally of transmitting antennae, transmitters, studio equipment and general
office equipment. The Company owns towers in Arcadia, CA, Ventura, CA, Long
Branch, NJ, Highland Park, IL, and Morris, IL. The towers, antennae and other
transmission equipment used in the Company's stations are generally in good
condition.
 
                                       14
<PAGE>
    The following table sets forth the location of the Company's principal
properties:
 
<TABLE>
<CAPTION>
LOCATION                                                                          FACILITY
--------------------------------------------------------  --------------------------------------------------------
<S>                                                       <C>
Y-107 LOS ANGELES
Arcadia, CA.............................................  FM tower(4)
Fallbrook, CA...........................................  FM tower, studio, transmitter site(1)
Pasadena, CA............................................  Studio, business offices(1)
Ventura, CA.............................................  FM tower(4), studio, transmitter site(1)
Temecula, CA............................................  Translator site(1)
Century City, CA........................................  Studio, business offices(1)
Burbank, CA.............................................  Booster site(1)
 
Y-107 NEW YORK
Hampton Bays, NY........................................  Business offices(1)
Hawthorne, NY...........................................  Studio, corporate offices(1)
New York, NY............................................  Sales Office(1)
Long Branch, NJ.........................................  FM tower, studio(2)
Westchester, NY.........................................  FM tower(1)
East Quogue, NY.........................................  FM tower, transmitter site(1)
 
FM-103.1 CHICAGO
Highland Park, IL.......................................  FM tower(4), studio(1)
Morris, IL..............................................  FM tower, transmitter site(2)
Arlington Heights, IL...................................  FM tower (1)
DeKalb, IL..............................................  Tower, studio, business offices(2)
Chicago, IL.............................................  Studio, business offices(1)
 
92 KISS FM
Kankakee, IL............................................  Studio, antenna(1)
Arlington Heights, IL...................................  Studio, FM tower(1)
Chicago, IL.............................................  Studio, business offices(1)
Arlington Heights, IL...................................  FM tower(1)
 
WRKL-AM
Pomona, NY..............................................  Tower, studio(3)
</TABLE>
 
------------------------
 
(1) Leased.
 
(2) Owned.
 
(3) Held for sale--See "Proposed Radio Station Disposition."
 
(4) Tower owned by the Company while the property is leased.
 
ITEM 3. LEGAL PROCEEDINGS
 
    The Company is involved in litigation from time to time in the ordinary
course of its business. In management's opinion, the outcome of all pending
legal proceedings, individually and in the aggregate, will not have a material
adverse effect on the Company.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    No matters were submitted to a vote of the Company's stockholders, through
the solicitation of proxies or otherwise, during the fourth quarter of the year
ended December 31, 1998.
 
                                       15
<PAGE>
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    The Company's Class A Common Stock is listed and traded on the American
Stock Exchange (the "AMEX") under the symbol "YFM" since December 19, 1997.
There is no established public trading market for the Company's Class B Common
Stock, par value $.01 per share (the "Class B Common Stock"). The following
table sets forth the high and low sales prices per share of the Class A Common
Stock as reported by the AMEX since January 1, 1998:
 
<TABLE>
<CAPTION>
                                                                                         HIGH                  LOW
                                                                                        -----                 -----
<S>                                                                              <C>        <C>        <C>        <C>
First Quarter..................................................................         13  1/8                6  1/2
Second Quarter.................................................................         13  3/8                7  15/16
Third Quarter..................................................................          9  7/8                3  1/2
Fourth Quarter.................................................................          6  3/8                3
</TABLE>
 
    On March 8, 1999, the last reported sales price for the Company's Class A
Common Stock by the AMEX was $4.1875 per share. As of March 8, 1999, there were
approximately 38 registered holders of record of Class A Common Stock, which
number includes nominees for an undeterminable number of beneficial owners, and
3 holders of Class B Common Stock.
 
    The Company has never declared or paid any cash dividends on its Common
Stock and does not expect to do so in the foreseeable future. The Company
anticipates that all future earnings, if any, generated from operations will be
retained to finance the expansion and continued development of its business. Any
future determination with respect to the payment of dividends will be within the
sole discretion of the Company's Board of Directors and will depend upon, among
other things, the Company's earnings, capital requirements, the terms of then
existing indebtedness, applicable requirements of the DGCL, general economic
conditions and such other factors considered relevant by the Company's Board of
Directors. The Company's Revolving Credit Facility and its 11 1/4% Senior
Discount Notes due 2005 (the "Notes") also contain certain restrictions on the
payment of dividends. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources."
 
    On December 24, 1997, the Company successfully completed the initial public
offering (the "Initial Public Offering" or "IPO") of 4,600,000 shares of Class A
Common Stock at an offering price of $7.00 per share, lead managed by Donaldson,
Lufkin, & Jenrette Securities Corporation and Furman Selz LLC, generating $28.5
million of net proceeds. In connection with the IPO, the Company filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-1 (file no. 333-36449) for the registration of shares of Class A
Common Stock for an aggregate offering price of $46,000,000, which registration
statement was declared effective by the Commission on December 18, 1997. The
Company paid $1,960,000 ($0.49 per share) in underwriting discounts and
commissions and approximately $1,400,000 in registration fees, NASD filing fees,
AMEX listing fees, printing, engraving, legal, accounting, Blue Sky and other
fees and expenses for the offering. The net proceeds of $28.5 million after
deducting underwriting discounts and commissions and offering expenses were used
to repay certain outstanding indebtedness of the Company under its credit
agreement dated as of May 30, 1996 with The Chase Manhattan Bank (as amended,
the "Old Credit Facility").
 
    On December 19, 1997, the Company's Old Common Stock was reclassified into
Class A Common Stock and Class B Common Stock and Stuart and Anita Subotnick
(the "Principal Stockholders") contributed approximately $13.3 million of
stockholder loans to the Company (the "Equity Contribution"), and the Principal
Stockholders exchanged all their shares of Class A Common Stock for a like
number of shares of Class B Common Stock (collectively, the "Reclassification").
These transactions were effected without registration under the Securities Act
in reliance on the exemption from registration provided pursuant to Section
3(a)(9) or Section 4(2) and Regulation D promulgated thereunder.
 
                                       16
<PAGE>
    The rights of holders of Class A Common Stock and Class B Common Stock are
identical, except that each share of Class A Common Stock entitles its holder to
one vote per share on all matters voted upon by the Company's stockholders,
whereas each share of Class B Common Stock entitles its holder to ten votes per
share on all matters voted upon by the Company's stockholders. In addition,
holders of Class B Common Stock vote as a separate class to elect up to 75% of
the members of the Company's Board of Directors. Each share of Class B Common
Stock is convertible at any time into one share of Class A Common Stock. The
Principal Stockholders own all of the outstanding shares of Class B Common
Stock.
 
ITEM 6. SELECTED FINANCIAL DATA
 
    The following table presents selected financial data and should be read in
conjunction with the Company's financial statements and the related notes
thereto and with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein. The selected balance sheet
data as of December 31, 1995 and 1994, and September 30, 1994 and statement of
operations data for the year ended December 31, 1995, the three months ended
December 31, 1994 and the year ended September 30, 1994 are derived from the
Company's financial statements which have been audited by Holtz Rubenstein &
Co., LLP, Certified Public Accountants. The selected balance sheet data as of
December 31, 1996, 1997 and 1998 and statement of operations data for the years
ended December 31, 1996, 1997 and 1998 are derived from the Company's financial
statements which have been audited by KPMG LLP, Independent Certified Public
Accountants. The historical financial results of the Company are not comparable
from period to period because of the acquisition and sale of various
broadcasting properties by the Company during the periods covered.
 
<TABLE>
<CAPTION>
                                                               THREE MONTHS
                                                YEAR ENDED         ENDED                   YEARS ENDED DECEMBER 31,
                                               SEPTEMBER 30,   DECEMBER 31,    ------------------------------------------------
                                                   1994           1994(1)      1995(1)(2)   1996(3)(4)    1997(5)   1998(6)(7)
                                               -------------  ---------------  -----------  -----------  ---------  -----------
                                                                                                (IN THOUSANDS)
<S>                                            <C>            <C>              <C>          <C>          <C>        <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues...............................    $   2,267       $     654      $   5,655    $   8,567   $  11,731   $  15,883
Net revenues.................................        2,074             604          5,225        7,944      10,460      14,202
Station operating expenses...................        2,326             687          7,185       12,253      12,979      17,525
Corporate, general and administrative
  expenses...................................           --              --            425        1,201       1,745       2,527
Employment incentives........................           --              --             --           --       3,863         808
Depreciation and amortization................          524             113            798        1,326       1,791       2,528
Operating loss...............................         (776)           (196)        (3,183)      (6,836)     (9,918)     (9,186)
Gain on sale.................................           --              --             --        6,608          --          --
Interest expense.............................          439             120            842        2,889       4,488      12,608
Income tax benefit, net......................           --              --             --           --       1,050       1,988
Deferred income taxes resulting from
  conversion to C corporation status.........           --              --             --           --      (3,350)         --
Extraordinary loss on extinguishment of debt,
  net of income taxes........................           --              --             --           --        (313)       (495)
Net (loss)...................................       (1,163)           (298)        (4,005)      (3,098)    (16,918)    (17,449)
BASIC AND DILUTIVE INCOME (LOSS) PER COMMON
  SHARE:.....................................        (0.19)          (0.05)         (0.66)       (0.39)      (1.77)      (1.24)
</TABLE>
 
                                       17
<PAGE>
 
<TABLE>
<CAPTION>
                                                       AS OF                       AS OF DECEMBER 31,
                                                   SEPTEMBER 30,  -----------------------------------------------------
                                                       1994         1994       1995       1996       1997       1998
                                                   -------------  ---------  ---------  ---------  ---------  ---------
<S>                                                <C>            <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................    $      56    $      --  $   1,066  $     234  $      80  $   5,285
Intangibles, net.................................        2,666        2,600      6,040     29,230     54,115     80,309
Total assets.....................................        4,044        3,863      9,433     38,963     60,108    152,082
Notes payable to stockholders....................        6,028        6,219     13,477     12,544         --         --
Long-term liabilities............................           --           --         --     28,200     30,142    138,227
Stockholder's equity (deficit)...................       (2,185)      (3,484)    (5,821)    (3,800)    25,032      8,391
</TABLE>
 
------------------------
 
(1) The financial statements for the 12 months ended December 31, 1995 include
    three months (October, November and December 1994) of operations of Q
    Broadcasting, Inc. that were included in the three months ended December 31,
    1994 financial statements. Revenues and net income for the duplicate period
    are $604,000 and $298,000, respectively.
 
(2) The Company acquired substantially all of the assets of WRGX-FM and WRKL-AM
    effective December 31, 1994 and commenced operations on January 1, 1995. The
    financial statements include the operations of these stations since January
    1, 1995.
 
(3) The Company acquired substantially all of the assets of the Los Angeles
    Stations and KWIZ-FM on May 30, 1996 and commenced operations of these
    stations under a LMA on March 26, 1996. The financial statements include the
    operations of these stations from commencement of the LMA period. KWIZ-FM
    was sold on December 20, 1996. No gain or loss was recognized on the sale of
    KWIZ-FM.
 
(4) The Company acquired WSTC-AM and WKHL-FM during 1992. The financial
    statements include the operations of these stations from their date of
    acquisition to May 30, 1996, the date on which they were sold. For the year
    ended December 31, 1996, the gain on sale of stations represents the gain on
    sale of WSTC-AM and WKHL-FM.
 
(5) The Company acquired substantially all of the assets of WWHB-FM on April 1,
    1997 and WZVU-FM on June 5, 1997 and commenced operations of these stations
    under a LMA during December 1996. WWHB-FM and WZVU-FM together with WRGX-FM
    form Y-107 NY. The financial statements include the operations of Y-107 NY
    since December 1996.
 
(6) The Company acquired all of the stock of Radio New Jersey, owner of the FCC
    licenses of WRNJ-FM, Belvedere, NJ and WRNJ-AM, Hackettstown, NJ on August
    14, 1998. Simultaneously at the closing, the Company sold substantially all
    of the assets of WRNJ-AM to one of the existing stockholders of Radio New
    Jersey. The remaining WRNJ-FM operates on 107.1 FM and was added to the
    Company's New Country Y-107 trimulcast under a LMA, effective April 28,
    1998. The financial statements include the operations of WRNJ-FM since April
    1998.
 
(7) The Company acquired substantially all of the assets of WCBR-FM, Arlington
    Heights, Illinois and WLRT-FM, Kankakee, Illinois on August 4 and 7, 1998,
    respectively. The operations of these stations have been included in the
    consolidated statements of operations from these dates.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATION
 
    The following discussion should be read in conjunction with "Selected
Financial Data" and the other financial data appearing elsewhere in this report.
Certain information included herein contains statements that constitute
"forward-looking statements" containing certain risks and uncertainties. See
"Business-- Special Note Regarding Forward-Looking Statements."
 
                                       18
<PAGE>
GENERAL
 
    The Company was incorporated in August 1994 and commenced operations on
January 1, 1995, having acquired WRGX-FM, Briarcliff Manor, New York, and
WRKL-AM, New City, New York (together, the "Original New York Stations"), on
December 31, 1994. On May 30, 1996 the Company merged with Q Broadcasting, Inc.
("Q") in a transaction accounted for as a combination of entities under common
control. As a result of this merger the two entities are deemed to be combined
since inception (see the Notes to Consolidated Financial Statements included
elsewhere in this report). Q owned and operated the Q stations in Stamford,
Connecticut, from July 1992 up to the date of the combination with the Company.
The Company reports on the basis of a December 31 year-end and Q reported on the
basis of a September 30 year-end. As a result, the December 31, 1996 financial
statements reflect the operations of Q on the basis of the eight-month period
ended May 30, 1996 (the date of sale of the Q stations).
 
    The Q stations were operated in one facility, with one sales and support
staff. Their financial performance is combined for purposes of the discussions
that follow. Y-107 LA, WRKL-AM, and the stand-alone operations of WRGX-FM were
operated with separate staffs and facilities, therefore their performance is
separately identified.
 
    Between March 26, 1996 and May 30, 1996, when the stations were acquired,
the Company operated the Los Angeles Stations and KWIZ-FM under a LMA. On March
26, 1996 all of the existing operations of the Los Angeles Stations were
terminated, and the Company debuted Y-107 LA under a modern rock format with new
staffing and no existing advertiser base. Although it commenced operation with
no revenues, Y-107 LA revenues had surpassed all other Company revenues combined
by November 1996. During the LMA period, station operating expenses included
significant LMA fees and other reimbursed expenses to the seller. The Company
sold KWIZ-FM on December 20, 1996.
 
    On December 5, 1996, the Company commenced operation of WWZY-FM (formerly,
WZVU-FM), Long Branch, New Jersey, under a LMA, changing its format to country
music. On that date, WWXY-FM (formerly, WRGX-FM), Briarcliff Manor, New York,
which the Company had operated as a stand-alone FM station since its acquisition
on January 1, 1995, changed format to broadcast Y-107 NY as a new country music
station with WWZY-FM. Furthermore, on December 30, 1996 the Company began
operating WWVY-FM (formerly, WWHB-FM), Hampton Bays, New York, under a LMA.
Since that date, the New York Stations have operated as Y-107 NY. Y-107 NY
retained certain advertisers and staff from all three of the previously
stand-alone stations. The Company acquired WWVY-FM and WWZY-FM on April 1, 1997
and June 5, 1997, respectively. On April 27, 1998, the Company commenced
operations of WRNJ-FM under a LMA as part of the Y-107 NY country music station.
The Company completed its acquisition of WRNJ-FM on August 14, 1998.
 
    On August 8, 1997 the Company acquired WXXY-FM (formerly WVVX-FM), Highland
Park, Illinois and WYXX-FM (formerly WJDK-FM) Morris, Illinois. The Company
operated WXXY-FM as a stand-alone, brokered-programming FM station and leased
WYXX-FM to a previous owner under a LMA until "FM 103.1 Chicago Heart and Soul"
commenced operation in early February 1998. On August 4 and 7, 1998, the Company
completed the acquisitions of WKIE-FM (formerly WCBR-FM) and WKIF-FM (formerly
WLRT-FM) and launched its second station group in the Chicago area. These
stations commenced operation as 92 KISS FM, a contemporary hit radio format in
November 1998. On February 25, 1999 the Company completed the acquisitions of
WDEK-FM and WLBK-AM, Dekalb, Illinois. The Company added WDEK-FM to the 92 KISS
FM Stations.
 
RESULTS OF OPERATIONS
 
    The Company's financial results are dependent on a number of factors,
including the general strength of the local and national economies, local market
competition, the relative efficiency and effectiveness of radio broadcasting
compared with other advertising media, government regulation and policies and
the
Company's ability to provide popular programming. The performance of a radio
station group is customarily measured by its ability to generate broadcast cash
flow, calculated as station operating income or loss
 
                                       19
<PAGE>
excluding depreciation and amortization and corporate overhead. This measure,
although widely used in the broadcast industry as a measure of operating
performance, is not calculated in accordance with generally accepted accounting
principles. Broadcast cash flow should not be considered in isolation or as a
substitute for operating income, net income, cash flows from operating
activities, or any other measure for determining the Company's operating
performance or liquidity calculated in accordance with generally accepted
accounting principles.
 
    The Company's primary source of revenue is the sale of advertising. Total
revenue is determined by the number of advertisements aired by the station and
the advertising rates that the stations are able to charge. See
"Business--Advertising Sales."
 
    Given the fact that the Company's strategy involves developing brand new
metropolitan area radio stations, the initial revenue base is zero and subject
to factors other than ratings and radio broadcasting seasonality. After the
start-up period, as is typical in the radio broadcasting industry, a station's
first calendar quarter generally will produce the lowest revenues for the year,
and the fourth quarter generally will produce the highest revenues for the year.
The Company's operating results in any period may be affected by the incurrence
of advertising and promotion expenses that do not produce commensurate revenues
in the period in which the expenses are incurred.
 
YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997
 
    NET REVENUES in the year ended December 31, 1998 were $14,202,000 compared
with $10,460,000 for the year ended December 31, 1997, an increase of $3,742,000
or 36%. This increase was primarily due to increases in the net revenues of
Y-107 NY and Y-107 LA and the commencement of operations of FM 103.1 Chicago
Heart and Soul in February 1998. Same stations' revenue growth compared with the
prior year was $2,604,000, or 25.3%.
 
    STATION OPERATING EXPENSES excluding depreciation and amortization for the
year ended December 31, 1998 were $17,525,000 compared with $12,979,000 in the
year ended December 31, 1997, an increase of $4,546,000 or 35%. This increase
was due principally to FM 103.1 Chicago Heart and Soul commencing operations in
early February 1998.
 
    DEPRECIATION AND AMORTIZATION EXPENSES for the year ended December 31, 1998
were $2,528,000 compared with $1,791,000 for the year ended December 31, 1997,
an increase of $737,000 or 41%. This increase was due primarily to the
amortization of intangibles and the depreciation of capital assets of the
Chicago stations and two of three Y-107 NY stations, all of which were acquired
after March 31, 1997.
 
    CORPORATE, GENERAL AND ADMINISTRATIVE EXPENSES for the year ended December
31, 1998 were $2,527,000 compared with $1,745,000 for the year ended December
31, 1997, an increase of $782,000 or 45%. This increase is due to increased
expenses resulting from the Company's IPO on December 24, 1997, such as
directors' and officers' liability insurance of $160,000, professional and legal
fees of $210,000, audit and tax fees of $116,000, and printing and filing fees
of $121,000, and increased administrative expenses of $200,000 to support the
growth of the Company.
 
    INTEREST EXPENSE for the year ended December 31, 1998 was $12,608,000
compared with $4,488,000 for the year ended December 31, 1997, an increase of
$8,120,000 or 181%. This increase reflects additional interest of $11,948,000
resulting from the issuance of the Notes on March 17, 1998 offset by a decrease
of $2,971,000 resulting from pay off of the long-term debt. In the years ended
December 31, 1998 and 1997, the average outstanding total debt for the Company
were $111,321,000 and $56,898,000, respectively. The average rate of interest on
the outstanding debt was 11.3% and 7.6%, respectively. Interest income for the
year ended December 31, 1998 was $3,076,000 as compared to $20,000 for the year
ended December 31, 1997. This increase was a result of investing the proceeds
from the issuance of the Notes on March 17, 1998.
 
    NET LOSSES for the year ended December 31, 1998 were $17,449,000 compared
with $16,918,000 for the year ended December 31, 1997, an increase of $531,000
or 3%. The increase is primarily attributable to
 
                                       20
<PAGE>
higher station operating expenses, depreciation and amortization expenses,
corporate, general and administrative expenses, and interest expense, offset by
(a) increased net revenues, (b) increased net tax benefit of $825,000, (c) a
one-time income tax charge in 1997 of $3,350,000 and (d) a reduction of
$3,055,000 in employment stock incentives.
 
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR END DECEMBER 31, 1996
 
    NET REVENUES in the year ended December 31, 1997 were $10,460,000 compared
with $7,944,000 for the year ended December 31, 1996, an increase of $2,516,000,
or 32%. This increase was due primarily to an increase of $4,647,000 in the net
revenues of Y-107 LA compared with the prior year and an increase of the Y-107
NY net revenues in the year ended December 31, 1997 of $1,120,000, or 67%,
compared with the net revenues of the stand-alone WWXY-FM in 1996. These
increases in net revenues were partially offset by (a) the absence of net
revenues for the Q stations and KWIZ-FM in the year ended December 31, 1997
compared with $2,050,000 and $1,106,000 net revenues for such stations,
respectively, for the year ended December 31, 1996, and (b) the fact that
WRKL-AM net revenues in the year ended December 31, 1997 were down $249,000, or
16%, when compared with 1996. The Y-107 LA increase was principally due to the
fact that (a) the 1997 net revenues include twelve months of Y-107 LA
operations, whereas the 1996 net revenues include only nine months of Y-107 LA
operations, and (b) the 1996 period net revenues reflected the first nine months
of operation of the Los Angeles Stations, which commenced with no existing
business. The Y-107 NY increase reflects growth resulting from the commencement
of the broadcasting by Y-107 NY in January 1997.
 
    STATION OPERATING EXPENSES excluding depreciation and amortization in the
year ended December 31, 1997 were $12,979,000, compared with $12,253,000 in the
year ended December 31, 1996, an increase of $726,000, or 6%. This increase was
due to the inclusion of the expenses of Y-107 LA and Y-107 NY offset by the
absence of operating expenses of the Q Stations. The increase in Y-107 LA
operating expenses reflects the fact that (a) the 1997 station operating
expenses represent twelve months of operations compared with nine months
operations in 1996, and (b) the nine month operations in 1996 were the first
nine months of operation of the station, reflecting incomplete staffing and the
absence of significant marketing initiatives, offset by the expense of LMA fees
and expenses of $593,000 incurred in 1996. The increase in the Y-107 NY
operating expenses when compared with the prior year operating expenses of the
stand-alone WWXY-FM were due to (a) $540,000 of non-recurring LMA fees and
expenses for WWZY-FM and WWVY-FM, (b) significantly increased advertising and
promotional expenditures incurred to launch Y-107 NY and (c) increased selling
and general and administrative expenses in developing the Y-107 NY
infrastructure.
 
    DEPRECIATION AND AMORTIZATION EXPENSES for the year ended December 31, 1997
were $1,791,000, compared with $1,326,000 for the prior year, an increase of
$465,000, or 35%. This increase was due primarily to the amortization of
intangibles and depreciation of capital assets related to the acquired stations.
 
    CORPORATE, GENERAL AND ADMINISTRATIVE EXPENSES for the year ended December
31, 1997 were $1,745,000, compared with $1,201,000 for the prior year, an
increase of $544,000, or 45%. This increase was primarily due to increases in
administrative staff to support the growth of the Company.
 
    INTEREST EXPENSE for the year ended December 31, 1997 was $4,488,000
compared with $2,889,000 for the prior year, an increase of $1,599,000, or 55%.
This increase reflects borrowings under the Old Credit Facility made to fund the
Company's acquisitions, and (b) increased stockholders' loans throughout 1997
compared with 1996. In the years ended December 31, 1997 and 1996, the average
outstanding total debt for the Company were $56,898,000 and $37,026,000,
respectively. The average rate of interest on the outstanding debt was 7.6% in
both periods.
 
    NET LOSSES for the year ended December 31, 1997 were $16,918,000, compared
with $3,098,000 for the prior year. The increase in the net loss of $13,820,000
was primarily attributable to (a) 1996 period gain of $6,608,000 on the sale of
the Q stations, (b) higher interest expense and depreciation and amortization
 
                                       21
<PAGE>
expenses incurred as part of the radio station acquisitions of the Company, (c)
a charge of $3,863,000 in 1997 relating to awards under the employment incentive
arrangements, and (d) a one-time income tax charge of $3,350,000 relating to the
change in taxable status of the Company from an S corporation to a C
corporation, offset by the absence of the Q stations operations in 1997 and
improvement in the Y-107 LA performance.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    The Company has reported net losses since inception primarily due to
broadcast cash flow deficits characteristic of the start up of Y-107 LA, Y-107
NY, FM 103.1 Chicago, and 92 KISS FM, and depreciation and amortization charges
relating to the Company's acquisition of radio stations, as well as interest
charges on its outstanding debt. In addition, because its broadcast properties
are in the early stages of development, the Company expects to generate
significant net losses as it continues to expand its presence in major markets
for the foreseeable future. As a result, working capital needs have been met by
borrowings, including loans from the Principal Stockholders (which borrowings
were contributed to the capital of the Company immediately prior to the
consummation of the Initial Public Offering), borrowings under the Old Credit
Facility and the issuance of the Notes. The Company has entered into various
employment contracts with nineteen individuals comprised of mainly officers and
senior management that provide for minimum salaries and incentives based upon
specified levels of performance. The minimum payments under these contracts are
$2,332,000 in 1999 and $1,961,000 in 2000.
 
    The Company has never paid cash or stock dividends on shares of its common
stock. The Company will continue to report net losses throughout the start up
period for the Chicago Stations. Furthermore, it intends to retain future
earnings for use in its business and does not anticipate paying dividends on
shares of its Common Stock in the foreseeable future.
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
    In each of the years ended December 31, 1996, 1997 and 1998, the Company
reported cash used in operations. In the year ended December 31, 1996 the
negative cash flow was predominantly due to the funding of start-up operations
at Y-107 LA, together with an increase in interest expense, as borrowings under
the Old Credit Facility were used to fund the Y-107 LA radio station
acquisition. In the year ended December 31, 1997, the deficit was predominantly
due to the start-up operating losses of Y-107 NY and increased interest expense
for borrowings under the Old Credit Facility to finance the Y-107 NY and Chicago
radio station acquisitions. In the year ended December 31, 1998 the negative
cash flow was predominantly due to the funding of start-up operations at New
York, FM 103.1 Chicago, and 92 KISS FM Chicago.
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
    Capital expenditures (excluding acquisitions of radio stations) were
$653,000, $488,000 and $2,441,000 in the years ended December 31, 1996, 1997 and
1998, respectively. These expenditures primarily reflect costs associated with
the FCC Power Increases and other technical improvements at the Company's
stations, the upgrade and expansion of the studio and broadcast facilities,
computer support equipment, and the purchase of promotional vehicles for the new
station properties.
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
    Under the terms of the Old Credit Facility, the Company had a $35.0 million
reducing revolving loan facility, of which amount Mr. Subotnick had guaranteed
the payment of up to $6.0 million. At December 31, 1997, the Company had $30.1
million outstanding under the Old Credit Facility. The amounts outstanding under
the Old Credit Facility were repaid with the proceeds of the Notes Offering on
March 17, 1998.
 
                                       22
<PAGE>
    The Company completed a private placement of $174.0 million aggregate
principal amount at maturity of Notes on March 17, 1998, generating
approximately $125.4 million of gross proceeds for the Company of which the
Company used approximately $32.8 million to repay outstanding indebtedness under
its Old Credit Facility. The Company intends to use the remaining proceeds of
the Notes Offering to finance the acquisition costs of radio station properties
and for general working capital purposes.
 
    The Notes were issued at an original issue discount and will accrete in
value until March 15, 2001 at a rate of 11 1/4% per annum, compounded
semi-annually to an aggregate principal amount of $174.0 million. Cash interest
will not accrue on the Notes prior to March 15, 2001. Thereafter, interest on
the Notes will accrue at a rate of 11 1/4% per annum and will be payable in cash
semi-annually, commencing September 15, 2001. The Notes will mature on March 15,
2005 but may be redeemed after March 15, 2001 at the option of the Company, in
whole or in part at a redemption price of 105.625%, 102.813% or 100.000% if
redeemed during the 12-month period commencing on March 15 of 2002, 2003 and on
and after 2004, respectively. In addition, up to 33 1/3%of the original
principal amount of the Notes may be redeemed at the option of the Company prior
to March 15, 2001 at a redemption price equal to 111.25% of the accreted value
of the Notes with net cash proceeds of one or more equity offerings of the
Company so long as there is a public market for the Class A Common Stock at the
time of such redemption and provided that at least 66 2/3%of the original
principal amount of the Notes remains outstanding.
 
    Holders of the Notes have the right to require the Company to repurchase
their Notes upon a "change of control" of the Company, at a price equal to 101%
of the accreted value of the Notes if such repurchase occurs prior to March 15,
2001 or of the principal amount of such Notes if such repurchase occurs
thereafter. A "change of control" for purposes of the Notes is deemed to occur
(i) when any person other than the Principal Stockholders, the management and
their affiliates (the "Permitted Holders"), becomes the owner of more than 35%
of the total voting power of the Company's stock and the Permitted Holders own
in the aggregate a lesser percentage of such voting power and do not have the
right or ability to elect a majority of the Board of Directors, (ii) when the
Board of Directors does not consist of a majority of continuing directors, (iii)
upon the occurrence of a sale or transfer of all or substantially all of the
assets of the Company taken as a whole, or (iv) upon the adoption by the
stockholders of a plan for the liquidation or dissolution of the Company.
 
    Payments under the Notes are guaranteed on a senior unsecured basis by the
Company's restricted subsidiaries. The Notes contain certain financial and
operational covenants and other restrictions with which the Company and its
restricted subsidiaries must comply, including restrictions on the incurrence of
additional indebtedness, investments, payment of dividends on and redemption of
capital stock and the redemption of certain subordinated obligations, sales of
assets and the use of proceeds therefrom, transactions with affiliates, creation
and existence of liens, the types of businesses in which the Company may
operate, asset swaps, distributions from restricted subsidiaries, sales of
capital stock of restricted subsidiaries and consolidations, mergers and
transfers of all or substantially all of the Company's assets. The Company is
currently in compliance with all covenants and other restrictions under the
Notes and anticipates that it will continue to meet the requirements of the
Notes.
 
    On July 6, 1998, the Company completed an exchange offer for the Notes, in
which all but one of the holders of outstanding Notes exchanged their Notes for
newly-issued Notes registered under the Securities Act of 1933. The new Notes
have the same terms as the exchanged Notes, except that the new Notes are so
registered. The amount exchanged was $172,500,000 aggregate principal amount at
maturity of Notes.
 
    The Notes contain customary events of default including payment defaults and
default in the performance of other covenants, certain bankruptcy defaults,
judgment and cross defaults, and failure of a subsidiary guarantee to be in full
force and effect.
 
    In connection with the consummation of the Notes Offering, the Company
entered into the Revolving Credit Facility with The Chase Manhattan Bank
("Chase") providing for up to $15.0 million of availability, based upon a
multiple of the Company's Los Angeles Stations' cash flow. The Revolving Credit
Facility will mature on the fifth anniversary of the issue date and amounts
outstanding under the Revolving Credit
 
                                       23
<PAGE>
Facility will bear interest at an applicable margin plus, at the Company's
option, Chase's prime rate (in which case the applicable margin will initially
be 2.00% subject to reduction upon obtaining performance criteria based on the
Company's leverage ratio) or the London Interbank Borrowing Rate (in which case
the applicable margin will initially be 3.00% subject to reduction upon
obtaining performance criteria based on the Company's leverage ratio). The
Company's obligations under the Revolving Credit Facility are secured by a
pledge of substantially all of the Company's and its restricted subsidiaries'
assets. The Company will pay fees of 0.5 percent per annum, on the aggregate
unused portion of the facility.
 
    The Revolving Credit Facility contains certain financial and operational
covenants and other restrictions with which the Company must comply, including,
among others, limitations on capital expenditures, the incurrence of additional
indebtedness, restrictions on sales of assets, restrictions on the use of
borrowings, limitations on paying cash dividends and redeeming or repurchasing
capital stock of the Company or the Notes, and requirements to maintain certain
minimum interest coverage ratios. The Company is currently in compliance with
all covenants and other restrictions under the Revolving Credit Facility and
anticipates that it will continue to meet the requirements of the Revolving
Credit Facility.
 
    The Revolving Credit Facility contains customary events of default,
including material misrepresentations, payment defaults and default in the
performance of other covenants, certain bankruptcy and ERISA defaults, judgment
and cross defaults, revocation of any of the Company's broadcast licenses and
change in control. The Revolving Credit Facility also provides that an event of
default will occur upon the occurrence of a "change of control" as defined in
the Revolving Credit Facility. For purposes of the Revolving Credit Facility, a
change of control will occur when (i) any person or group other than the
Principal Stockholders and their affiliates obtains the power to elect a
majority of the Board of Directors, (ii) the Company fails to own 100% of the
capital stock of its subsidiaries owning any of the FCC broadcast licenses, or
when (iii) the Board of Directors does not consist of a majority of continuing
directors.
 
    The Company is actively reviewing potential STMC-TM-, and other station
acquisition candidates. As of the date of this report, the Company has no
binding commitments for any such acquisitions. See "Business--Acquisitions."
After giving effect to the Notes Offering and application of the net proceeds
therefrom, the Company has available approximately $53.7 million of cash and
cash equivalents on hand and marketable securities at December 31, 1998 and up
to $14.5 million of borrowing capacity under the Revolving Credit Facility,
which can be used for working capital purposes, including financing these
acquisitions. Cash on hand and amounts available under the Revolving Credit
Facility may not be sufficient to support the Company's growth strategy and as a
result the Company may require additional debt or equity financing in order to
acquire additional radio stations and accomplish its long-term business
strategies. There can be no assurance that any such financing will be available
or available on acceptable terms. In addition, because of the Company's
substantial indebtedness, a significant portion of the Company's broadcast cash
flow will be required for debt service.
 
    The Company anticipates that the net proceeds of the Notes Offering, its
available borrowing capacity and its broadcast cash flow from operations will be
sufficient to finance its capital expenditure programs, as well as existing
operational and debt service requirements, through December 31, 1999. Management
believes that its long term liquidity needs will be satisfied through a
combination of (i) the Company's successful implementation and execution of its
growth strategy to acquire and build a major market broadcast group; and (ii)
the Company's properties achieving positive operating results and cash flows
through revenue growth and control of operating expenses. If the Company is
unable successfully to implement its strategy, the Company may be required to
obtain additional financing through public or private sale of debt or equity
securities of the Company or otherwise restructure its capitalization.
 
YEAR 2000
 
    The Company is currently working to evaluate and resolve the potential
impact of the Year 2000 on the processing of date-sensitive information and
network systems. The Year 2000 problem is the result of computer programs being
written using two digits (rather than four) to define the Year 2000, which could
 
                                       24
<PAGE>
result in miscalculations or system failures resulting from recognition of a
date using "00" as the year 1900 rather than the year 2000.
 
    The Company has delegated responsibility to a group of executives to
coordinate the identification, evaluation and implementation of changes to
computer systems and applications necessary to achieve the Company's goal of a
Year 2000 date conversion which would minimize the effect on its customers and
avoid disruption to business operations. The Company is also focusing on
hardware and software tools, programming and outside forces that may affect the
Company's operations, including the Company's vendors, banks and utility
companies. The Company's analysis of the Year 2000 threat is on-going and will
be continuously updated throughout 1999 as necessary.
 
    The Company has written and distributed a questionnaire and project plan to
the Company's systems and operating personnel to identify all business and
computer applications, so the Company can identify potential compliance
problems. The Company has initiated communications with all of its significant
suppliers and contractors to determine their plans for remediating any Year 2000
issues that arise in the interface with the Company. The Company is currently
compiling a database of information based upon these responses, which is
expected to be completed by March 31, 1999. To the extent problems are
identified, the Company will implement corrective procedures where necessary,
then test the applications for Year 2000 compliance. The Company expects to
complete this project prior to January 1, 2000. The Company is, in addition,
developing a contingency plan should the planned Year 2000 remedial measures
prove to be less than comprehensive.
 
    Based on the preliminary data, the Company's estimate is that the Year 2000
effort will cost $50,000,
covering the period from January 1, 1998 through December 31, 2000, out of a
total expected cost of information systems of $200,000 for this period, although
there can be no assurance as to the ultimate cost of the Year 2000 effort or the
total cost of information systems. Such costs will be expensed as incurred,
except to the extent such costs are incurred for the purchase or lease of
capital equipment. The Company expects to make some of the necessary
modifications through its ongoing investment in system upgrades. The Company
believes that its exposure to this issue, based on its internal systems, is
somewhat limited by the fact that the majority of its existing systems have been
purchased or replaced since 1996 or currently remain under development.
 
    As of December 31, 1998, the Company incurred minimal expenses in respect of
its Year 2000 conversion effort. No other information system projects of the
Company have been deferred due to the Year 2000 efforts. The Company expects
that the source of funds for Year 2000 costs will be cash on hand.
 
    If the Company, its customers or its vendors are unable to resolve Year 2000
processing issues in a timely manner, a material adverse effect on the Company's
results of operations and financial condition could result. Accordingly, the
Company plans to devote the necessary resources to resolve all significant Year
2000 issues.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
    The Company is exposed to the impact of interest rate changes and the change
in the market values of its investments.
 
    The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's investment portfolio. The Company has not
used derivative financial instruments in its investment portfolio. The Company
invests its excess cash in debt instruments of the U.S. Government and its
agencies and, by policy, limits the amount of credit exposure to any one issuer.
The Company protects and preserves its invested funds by limiting default,
market and reinvestment risk.
 
    Investments in fixed rate interest earning instruments carry a degree of
interest rate risk. Fixed rate securities may have their fair market value
adversely impacted due to a rise in interest rates. The Company may suffer
losses in principal if forced to sell securities which have declined in market
value due to changes in interest rates.
 
                                       25
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                              BIG CITY RADIO, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                -----
<S>                                                                                                          <C>
BIG CITY RADIO, INC.
Report of KPMG LLP, Independent Auditors...................................................................          27
Consolidated Balance Sheets as of December 31, 1997 and 1998...............................................          28
Consolidated Statements of Operations for the years ended December 31, 1996, 1997 and 1998.................          29
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1997 and 1998.................          30
Consolidated Statement of Stockholders' Equity (Deficit)...................................................          31
Notes to Consolidated Financial Statements.................................................................          32
</TABLE>
 
                                       26
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors and Stockholders
of Big City Radio, Inc.:
 
    We have audited the accompanying consolidated balance sheets of Big City
Radio, Inc. and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the years in the three year period ended December 31, 1998. In
connection with our audits of the consolidated financial statements, we also
have audited Schedule II, Valuation and Qualifying Accounts for the years ended
December 31, 1998, 1997 and 1996. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Big City
Radio, Inc. and subsidiaries as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the three year
period ended December 31, 1998 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
 
KPMG LLP
 
Los Angeles, California
March 12, 1999
 
                                       27
<PAGE>
                              BIG CITY RADIO, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
                           DECEMBER 31, 1997 AND 1998
 
<TABLE>
<CAPTION>
                                                                                        1997            1998
                                                                                    -------------  --------------
<S>                                                                                 <C>            <C>
                                                     ASSETS
Current assets:
  Cash and cash equivalents.......................................................  $      80,000  $    5,285,000
  Cash held in escrow (note 3)....................................................             --         450,000
  Cash held in investment, restricted (note 4)....................................             --       3,350,000
  Marketable securities (note 2)..................................................             --      48,416,000
  Accounts receivable, net of allowance of $213,000 and $119,000 in 1997 and 1998,
    respectively..................................................................      2,325,000       3,362,000
  Interest receivable.............................................................             --       1,574,000
  Prepaid expenses and other current assets.......................................        252,000         603,000
                                                                                    -------------  --------------
Total current assets..............................................................      2,657,000      63,040,000
Property and equipment, net (note 5)..............................................      2,679,000       4,512,000
Intangibles, net (note 6).........................................................     54,115,000      80,309,000
Deferred financing fees...........................................................        612,000       4,052,000
Other assets......................................................................         45,000         169,000
                                                                                    -------------  --------------
    Total assets..................................................................  $  60,108,000  $  152,082,000
                                                                                    -------------  --------------
                                                                                    -------------  --------------
                                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable................................................................  $   1,125,000  $      518,000
  Accrued expenses................................................................      1,383,000       1,186,000
  Promissory notes (note 8).......................................................             --       1,175,000
  Other current liabilities.......................................................        326,000         112,000
                                                                                    -------------  --------------
  Total current liabilities.......................................................      2,834,000       2,991,000
                                                                                    -------------  --------------
Long-term liabilities:
  Senior discount notes (note 7)..................................................             --     136,776,000
  Promissory notes (note 8).......................................................             --         881,000
  Long-term debt (note 9).........................................................     30,100,000              --
  Other long-term liabilities.....................................................         42,000         570,000
Deferred income tax liabilities (note 12).........................................      2,100,000       2,473,000
Stockholders' equity (note 13):
  Preferred stock, $.01 par value. Authorized 20,000,000 shares; zero shares
    issued and outstanding in 1997 and 1998.......................................             --              --
  Common stock, Class A, $.01 par value. Authorized 80,000,000 shares; issued and
    outstanding 5,725,062 shares and 5,818,817 shares in 1997 and 1998,
    respectively..................................................................         57,000          58,000
  Common stock, Class B, $.01 par value. Authorized 20,000,000 shares; issued and
    outstanding 8,250,458 shares in 1997 and 1998.................................         83,000          83,000
  Additional paid-in capital......................................................     27,024,000      27,831,000
  Deficit.........................................................................     (2,132,000)    (19,581,000)
                                                                                    -------------  --------------
                                                                                       25,032,000       8,391,000
                                                                                    -------------  --------------
    Total liabilities and stockholders' equity....................................  $  60,108,000  $  152,082,000
                                                                                    -------------  --------------
                                                                                    -------------  --------------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       28
<PAGE>
                              BIG CITY RADIO, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
                  YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
 
<TABLE>
<CAPTION>
                                                                           1996           1997           1998
                                                                       -------------  -------------  -------------
<S>                                                                    <C>            <C>            <C>
Gross revenues.......................................................  $   8,567,000     11,731,000     15,883,000
Less commissions and fees............................................        623,000      1,271,000      1,681,000
                                                                       -------------  -------------  -------------
  Net revenues.......................................................      7,944,000     10,460,000     14,202,000
                                                                       -------------  -------------  -------------
Operating expenses:
Station operating expenses, excluding depreciation and
  amortization.......................................................     12,253,000     12,979,000     17,525,000
Corporate, general and administrative expenses.......................      1,201,000      1,745,000      2,527,000
Employment stock incentives (note 13)................................             --      3,863,000        808,000
Depreciation and amortization........................................      1,326,000      1,791,000      2,528,000
                                                                       -------------  -------------  -------------
  Total operating expenses...........................................     14,780,000     20,378,000     23,388,000
                                                                       -------------  -------------  -------------
  Operating loss.....................................................     (6,836,000)    (9,918,000)    (9,186,000)
Other income (expenses):
Gain on sale of stations (note 3)....................................      6,608,000             --             --
Interest income......................................................         29,000         20,000      3,076,000
Interest expense.....................................................     (2,889,000)    (4,488,000)   (12,608,000)
Other, net...........................................................        (10,000)        81,000       (224,000)
                                                                       -------------  -------------  -------------
  Total other income (expenses)......................................      3,738,000     (4,387,000)    (9,756,000)
                                                                       -------------  -------------  -------------
Loss before benefit from income taxes and
  extraordinary loss.................................................     (3,098,000)   (14,305,000)   (18,942,000)
Income tax benefit, net (notes 2 and 12).............................             --      1,050,000      1,988,000
Deferred income taxes resulting from conversion to
  C Corporation status (notes 2 and 12)..............................             --     (3,350,000)            --
                                                                       -------------  -------------  -------------
  Loss before extraordinary loss.....................................     (3,098,000)   (16,605,000)   (16,954,000)
Extraordinary loss on extinguishment of debt,
  net of income taxes (notes 7 and 9)................................             --       (313,000)      (495,000)
                                                                       -------------  -------------  -------------
  Net loss...........................................................  $  (3,098,000)   (16,918,000)   (17,449,000)
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
Basic and diluted loss per share:
Loss before extraordinary item.......................................  $       (0.39)         (1.74)         (1.21)
Extraordinary item...................................................             --          (0.03)         (0.03)
                                                                       -------------  -------------  -------------
  Net loss...........................................................  $       (0.39)         (1.77)         (1.24)
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
Weighted average shares outstanding..................................      8,024,000      9,539,000     14,026,000
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       29
<PAGE>
                              BIG CITY RADIO, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                  YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
 
<TABLE>
<CAPTION>
                                                                                  1996         1997          1998
                                                                               -----------  -----------  ------------
<S>                                                                            <C>          <C>          <C>
Cash flows from operating activities:
  Net loss...................................................................  $(3,098,000) (16,918,000)  (17,449,000)
  Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization..........................................    1,326,000    1,791,000     2,528,000
      Deferred income taxes (notes 2 and 12).................................           --    2,100,000    (2,100,000)
      Non cash interest......................................................       62,000      140,000    11,948,000
      Gain on sale of stations (note 3)......................................   (6,608,000)          --            --
      Employment stock incentives (note 13)..................................           --    3,863,000       808,000
      Extraordinary loss on extinguishment of debt (notes 7 and 9)...........           --      513,000       582,000
      Changes in operating assets and liabilities, net of acquisitions:
        (Increase) decrease in assets:
          Accounts receivable................................................     (456,000)    (788,000)   (1,037,000)
          Interest receivable................................................           --           --    (1,574,000)
          Prepaid expenses and other current assets..........................       30,000     (210,000)     (351,000)
          Other assets.......................................................       54,000       (9,000)     (124,000)
        Increase (decrease) in liabilities:
          Accounts payable...................................................      458,000      295,000      (607,000)
          Accrued expenses...................................................       84,000      929,000      (197,000)
          Other liabilities..................................................      700,000     (367,000)     (185,000)
                                                                               -----------  -----------  ------------
            Net cash used in operating activities............................   (7,448,000)  (8,661,000)   (7,758,000)
                                                                               -----------  -----------  ------------
Cash flows from investing activities:
  Purchase of property and equipment.........................................     (653,000)    (488,000)   (2,441,000)
  Purchase of marketable securities..........................................           --           --  (125,609,000)
  Sale of marketable securities..............................................           --           --    77,193,000
  Cash paid and advanced for assets of radio stations acquired...............  (38,173,000) (21,967,000)  (23,538,000)
  Cash held in restricted investment.........................................           --           --    (3,350,000)
  Cash received for radio stations sold......................................   20,025,000      513,000            --
  Net advances to purchase stations..........................................   (5,434,000)          --            --
                                                                               -----------  -----------  ------------
            Net cash used in investing activities............................  (24,235,000) (21,942,000)  (77,745,000)
                                                                               -----------  -----------  ------------
Cash flows from financing activities:
  Loans from stockholders....................................................    4,186,000      801,000            --
  Proceeds from offering of Senior Discount Notes, net of discount and fees
    of $4,568,000............................................................           --           --   120,808,000
  Drawdown on credit facility, net of fees paid of $535,000, $793,000 and $0
    in 1996, 1997, and 1998, respectively....................................   38,865,000   30,007,000     2,500,000
  Repayment of existing credit facility......................................  (11,200,000) (28,900,000)  (32,600,000)
  Repayment of note payable..................................................   (1,000,000)          --            --
  Proceeds from initial public offering......................................           --   28,541,000            --
                                                                               -----------  -----------  ------------
            Net cash provided by financing activities........................   30,851,000   30,449,000    90,708,000
                                                                               -----------  -----------  ------------
            Change in cash and cash equivalents..............................     (832,000)    (154,000)    5,205,000
Cash and cash equivalents at beginning of year...............................    1,066,000      234,000        80,000
                                                                               -----------  -----------  ------------
Cash and cash equivalents at end of year.....................................  $   234,000       80,000     5,285,000
                                                                               -----------  -----------  ------------
                                                                               -----------  -----------  ------------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       30
<PAGE>
                              BIG CITY RADIO, INC.
 
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 
                  YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
 
<TABLE>
<CAPTION>
                                                      COMMON STOCK         ADDITIONAL
                                                ------------------------     PAID-IN      ACCUMULATED
                                                   SHARES       AMOUNT       CAPITAL        DEFICIT         TOTAL
                                                ------------  ----------  -------------  -------------  -------------
<S>                                             <C>           <C>         <C>            <C>            <C>
Balance at December 31, 1995..................     6,088,000  $   61,000      1,309,000     (7,191,000)    (5,821,000)
Contribution of stockholders' loans to equity
  (note 3)....................................     3,287,520      33,000      5,086,000             --      5,119,000
Net loss......................................            --          --             --     (3,098,000)    (3,098,000)
                                                ------------  ----------  -------------  -------------  -------------
Balance at December 31, 1996..................     9,375,520      94,000      6,395,000    (10,289,000)    (3,800,000)
Capital contribution related to employment
  incentive (note 13).........................            --          --      3,713,000             --      3,713,000
Net loss in the period January 1, 1997 to the
  date of the change in tax status, October 1,
  1997........................................            --          --             --    (11,435,000)   (11,435,000)
Reinstatement of deferred income taxes
  relating to conversion to C Corporation
  status (notes 2 and 12).....................            --          --             --     (3,350,000)    (3,350,000)
Reclassification of accumulated deficit to
  paid-in capital in connection with the
  termination of S Corporation status.........            --          --    (25,074,000)    25,074,000             --
Stock option awards (note 13).................            --          --        150,000             --        150,000
Equity contribution and reclassification (note
  13).........................................            --          --     13,345,000             --     13,345,000
Initial public offering (note 13).............     4,600,000      46,000     28,495,000             --     28,541,000
Net loss in the period following conversion to
  C Corporation...............................            --          --             --     (2,132,000)    (2,132,000)
                                                ------------  ----------  -------------  -------------  -------------
Balance at December 31, 1997..................    13,975,520     140,000     27,024,000     (2,132,000)    25,032,000
Capital contribution related to employment
  incentive (note 13).........................        93,755       1,000        807,000             --        808,000
Net loss......................................            --          --             --    (17,449,000)   (17,449,000)
                                                ------------  ----------  -------------  -------------  -------------
Balance at December 31, 1998..................    14,069,275  $  141,000     27,831,000    (19,581,000)     8,391,000
                                                ------------  ----------  -------------  -------------  -------------
                                                ------------  ----------  -------------  -------------  -------------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       31
<PAGE>
                              BIG CITY RADIO, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                           DECEMBER 31, 1997 AND 1998
 
(1) ORGANIZATION AND BUSINESS
 
    Big City Radio, Inc. (formerly Odyssey Communications, Inc.) ("Big City
Radio") was incorporated in Delaware on August 2, 1994 and commenced operations
on January 1, 1995. On May 30, 1996, Big City Radio merged with Q Broadcasting,
Inc. ("Q", and together with Big City Radio, the "Company"), with Big City Radio
being the surviving company. Big City Radio and Q were owned 94% and 100% by
Stuart and Anita Subotnick (the "Principal Stockholders"). Accordingly, the
merger has been accounted for as a combination of entities under common control.
As a result, the combination of Big City Radio and Q was effected utilizing
historical costs. At the date of conversion from S Corporation status to C
Corporation status (see Note 2), the Company formed five wholly owned
subsidiaries, Big City Radio--LA, LLC; Big City Radio--NYC, LLC; Big City
Radio--CHI, LLC; WRKL Rockland Radio, LLC; and Odyssey Traveling Billboards,
Inc.
 
    The Company owns and operates radio broadcasting stations. As of December
31, 1998, the Company owned three FM stations in Southern California, KLYY-FM
Arcadia, KVYY-FM Ventura and KSYY-FM Fallbrook (programmed as "Y-107 LA"). In
the New York area, the Company owns five radio properties, WWXY-FM Westchester
County, New York and WRKL-AM New City, New York (the "Original New York
Stations") and WWZY-FM Monmouth, New Jersey and WWVY-FM Hampton Bays, New York
and WWYY-FM Hackettstown, New Jersey. WWXY-FM, WWZY-FM, WWVY-FM, and WWYY-FM are
programmed as "New Country Y-107." In the Chicago area, the Company owns six
radio properties, WXXY-FM Highland Park, Illinois and WYXX-FM Morris, Illinois
(programmed as "FM 103.1") and WKIE-FM Arlington Heights, Illinois, WKIF-FM
Kankakee, Illinois, and WDEK-FM DeKalb, Illinois (programmed as "92 KISS FM")
and WLBK-AM DeKalb, Illinois.
 
    Since inception, the Company has incurred substantial losses and has never
generated positive cash flows from operations. The Company's recent purchases
and reformatting of radio stations in its markets are currently contributing to
the Company's losses. The Company believes that losses will continue while the
Company pursues its strategy of acquiring and developing radio stations. In
March 1998, the Company successfully completed the offering (the "Note
Offering") of $174,000,000 aggregate principal amount at maturity of the
Company's 11 1/4% Senior Discount Notes due 2005 (the "Notes," see Note 7). The
net proceeds of approximately $125,400,000 from this offering were used to repay
approximately $32,800,000 of the Old Credit Facility (as hereinafter defined;
see Note 7). Simultaneously with the completion of the Note Offering, the
Company obtained a revolving credit facility (the "Revolving Credit Facility")
with The Chase Manhattan Bank ("Chase") in the amount of $15 million (see Note
7). The Company believes the proceeds from the Note Offering, together with the
Revolving Credit Facility, will be sufficient to permit it to acquire, develop
and operate new and existing properties through at least December 31, 1999.
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
BASIS OF PRESENTATION
 
    In connection with the merger discussed in Note 1, Big City Radio and Q are
deemed to be combined since inception for financial reporting purposes. Big City
Radio reports on the basis of a December 31 year-end and Q reported on the basis
of a September 30 year-end. As a result, the December 31, 1996 financial
statements include the operations of Q on the basis of an eight-month period
ended May 30, 1996 (the date of sale of the Q Stations).
 
                                       32
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    The accompanying consolidated financial statements include the accounts of
Big City Radio, Inc. and all its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
 
CASH EQUIVALENTS
 
    Cash equivalents of $5.1 million with maturities less than three months were
included in cash and cash equivalents at December 31, 1998.
 
MARKETABLE SECURITIES
 
    Marketable securities at December 31, 1998 consist of U.S. Treasury,
mortgage-backed, corporate debt securities. The Company classifies its debt
securities as available-for-sale. Securities are recorded at fair value with the
unrealized holding gain or loss, net of the related tax effect, excluded from
earnings and reported as a separate component of other comprehensive income
until realized. Realized gains and losses from the sale of available-for-sale
securities are determined on a specific identification basis. As of December 31,
1998, there were no material unrealized holding gains or losses. Proceeds from
the sale of securities were $77.2 million in 1998. Gross realized gains and
losses were immaterial in 1998.
 
    A decline in the market value of any available-for-sale security below cost
that is deemed to be other than temporary results in a reduction in carrying
amount to fair value. The impairment is charged to earnings and a new cost basis
for the security is established. Premiums and discounts are amortized or
accreted over the life of the related security as an adjustment to yield using
the effective interest method. Dividend and interest income are recognized when
earned.
 
PROPERTY AND EQUIPMENT
 
    Property and equipment are stated at cost. Depreciation is calculated on the
straight-line method over the estimated useful lives of the assets ranging from
5 to 7 years for transmission equipment, vehicles and furniture and office
equipment to 39 years for buildings and leasehold improvements over the lesser
of the useful life or the term of the lease.
 
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
 
    The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value, less costs to
sell.
 
INTANGIBLE ASSETS
 
    Intangible assets include the portion of the purchase price allocable to FCC
broadcast licenses, which are amortized on a straight-line method over 40 years.
Covenants not to compete, signed as part of station acquisition agreements, are
amortized over the period of the agreements, generally three years.
 
                                       33
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    It is the Company's policy to account for intangible assets at the lower of
amortized cost or fair market value. As part of an ongoing review of the
valuation and amortization of intangible assets, management assesses the
carrying value of the Company's intangible assets if facts and circumstances
suggest that they are impaired. If this review indicates that the intangibles
will not be recoverable as determined by a non-discounted cash flow analysis
over the remaining amortization period, the carrying value of the Company's
intangibles will be reduced to their estimated realizable value. The Company has
determined that intangibles are fairly stated at December 31, 1998.
 
DEFERRED FINANCING FEES
 
    Deferred finance costs and loan origination fees are amortized over the
period of the relevant facility.
 
REVENUE RECOGNITION
 
    Broadcasting revenue is recognized when commercials are aired. Net revenues
represent gross revenues, less direct fees and commissions paid to independent
advertising agencies.
 
INCOME TAXES
 
    The Company previously elected to be treated as an S Corporation for federal
and certain state income tax purposes. As an S Corporation, the earnings and
losses of the Company were reported by the individual stockholders, and the
Company was not responsible for federal or certain state income taxes. The
Company terminated its S Corporation election effective October 1, 1997.
Accordingly, no provision for income taxes is included in the accompanying
consolidated financial statements for the year ended December 31, 1996.
 
    Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
 
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
disclosures 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.
 
                                       34
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    The following methods and assumptions were used in estimating the fair value
disclosures for financial instruments:
 
    The carrying amounts reported in the balance sheets for cash, current
receivables, accounts payable and accrued expenses approximate fair value.
 
    The carrying value of the long-term debt approximates fair value because it
is a floating rate instrument. The carrying value and fair value of Senior
Discount Notes are $136.8 million and $113.8 million, respectively, at December
31, 1998. Fair values of Senior Discount Notes are based on market prices.
 
CONCENTRATION OF CREDIT RISK
 
    Financial instruments which potentially subject the Company to concentration
of credit risk consist primarily of accounts receivable. The Company believes
that concentration of credit risk with respect to accounts receivable, which are
unsecured, are limited due to the Company's ongoing relationship with its
clients. The Company provides for its estimate of uncollectible accounts on a
periodic basis. The Company has not experienced significant losses relating to
accounts receivable. For periods ended December 31, 1996, 1997 and 1998, no
customer accounted for more than 10% of revenues.
 
BARTER TRANSACTIONS
 
    The Company trades commercial air time for goods and services used
principally for promotional, sales and other business activities. An asset and a
liability are recorded at the fair market value of the goods or services
received. Barter revenue is recorded and the liability is relieved when the
commercials are broadcast, and barter expense is recorded and the assets are
relieved when the goods or services are received or used.
 
ADVERTISING
 
    The Company charges advertising costs, as incurred, to expense. Advertising
costs amounted to $550,000, $1,275,000 and $1,484,000 for the years ended
December 31, 1996, 1997 and 1998, respectively.
 
EARNINGS PER SHARE
 
    Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," is effective for financial statements issued for periods ending after
December 15, 1997. SFAS No. 128 replaces Accounting Principles Board Opinion
(APB) No. 15 and simplifies the computation of earnings per share (EPS) by
replacing the presentation of primary EPS with a presentation of basic EPS and
diluted EPS. Basic EPS includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution from
securities that could share in the earnings of the Company, similar to fully
diluted EPS under APB No. 15. In calculating diluted EPS, no potential shares of
common stock are to be included in the computation when a loss from continuing
operations available to common stockholders exists. The statement requires dual
presentation of basic and diluted EPS by entities with complex capital
structures. The Company adopted SFAS No. 128 for the financial statements ended
December 31, 1997 and 1998.
 
                                       35
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock options issued under the Company's 1997 and 1998 Incentive Stock Plan
amounting to 572,500 and 963,550 at December 31, 1997 and 1998, respectively,
were not included in the computation of diluted EPS because to do so would have
been antidilutive.
 
ACCOUNTING FOR STOCK OPTIONS
 
    On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," which
permits entities to recognize as expense over the vesting period the fair value
of all stock-based awards on the date of grant. Alternatively, SFAS No. 123
allows entities to continue to apply the provisions of APB Opinion No. 25 and
provide pro forma net income and disclosure for employee stock option grants
made in 1995, 1996 and future years as if the fair-value-based method defined in
SFAS No. 123 had been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions
of SFAS No. 123.
 
REPORTING COMPREHENSIVE INCOME
 
    In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement, which establishes standards for reporting and
disclosure of comprehensive income, is effective for interim and annual periods
beginning after December 15, 1997, although earlier adoption is permitted.
Reclassification of financial information for earlier periods presented for
comparative purposes is required under SFAS No. 130. The Company adopted SFAS
No. 130 effective January 1, 1998. Adoption had no impact on the Company's
consolidated financial position or results of operations.
 
(3) ACQUISITIONS AND DISPOSITIONS
 
    On August 4 and 7, 1998, the Company completed the acquisitions of WKIE-FM,
Arlington Heights, Illinois (formerly WCBR-FM) and WKIF-FM, Kankakee, Illinois
(formerly WLRT-FM). The operations of these stations have been included in the
consolidated statements of operations from these dates. The aggregate purchase
price for these stations was $19,500,000 excluding acquisition related expenses,
of which $19,000,000 was paid in cash. The fair value of the WKIE-FM and WKIF-FM
assets acquired, exclusive of acquisition costs, is as follows:
 
<TABLE>
<CAPTION>
                                                                       WKIE-FM      WLRT-FM
                                                                    -------------  ----------
<S>                                                                 <C>            <C>
Fixed assets......................................................  $     100,000     102,000
FCC broadcast license.............................................     14,400,000   4,898,000
</TABLE>
 
    The fair value of the fixed assets acquired is determined by reference to
replacement value on an individual asset basis and comparable property. The
remaining purchase price is assigned to the FCC license.
 
    On April 27, 1998, the Company signed an agreement to acquire all of the
stock of Radio New Jersey, owner of the FCC licenses of WRNJ-FM and WRNJ-AM, New
Jersey. Simultaneously with the execution of this acquisition agreement, the
Company agreed to sell substantially all of the assets of WRNJ-AM to one of the
existing stockholders of Radio New Jersey. These acquisitions and sale were
completed on August 14, 1998. The Company liquidated Radio New Jersey and
transferred the FCC license of
 
                                       36
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
WRNJ-FM to its Subsidiary Guarantor, Big City Radio-NYC, L.L.C. The aggregate
purchase price for WRNJ-FM was $5,350,000 excluding acquisition related
expenses, of which $3,000,000 was paid in cash and the remainder was satisfied
by the issuance of two promissory notes totaling $2,350,000, bearing interest at
8.5% per annum. The Company managed the operations of WRNJ-FM for a fee from
April 27, 1998 up to the effective date under a local marketing agreement
("LMA"). Revenue, programming expenses and other reimbursable expenses pursuant
to the LMA have been included in the accompanying consolidated financial
statements as have LMA fees of approximately $54,000. Upon final review and
appraisal, the fair value of the WRNJ-FM assets acquired in these transactions,
exclusive of acquisition costs, is determined to be as follows:
 
<TABLE>
<S>                                                               <C>
Fixed assets....................................................  $  25,000
FCC broadcast license...........................................  7,798,000
</TABLE>
 
    The fair value of the fixed assets is determined by reference to replacement
value on an individual asset basis and comparable property. The remaining
purchase price, together with the net deferred tax liability resulting from the
stock purchase, is assigned to the FCC license (see Note 12).
 
    LMA fees are reflected in the accompanying consolidated financial statements
as station operating expenses.
 
    On April 15, 1998, the Company signed an agreement to acquire substantially
all of the assets of two radio stations licensed to operate in DeKalb, Illinois
(WDEK-FM and WLBK-AM) at which time the Company deposited into an escrow account
the amount of $450,000 until February 1999 when the acquisition was completed.
The Company added WDEK-FM, which broadcasts on the 92.5 FM frequency, to the 92
KISS FM Chicago stations. The Company began its trimulcast of this station
immediately upon completion of the acquisition. It is the Company's intention to
sell the operating assets of WLBK-AM DeKalb, Illinois.
 
    On August 8, 1997, the Company acquired substantially all of the assets of
WXXY-FM Chicago for a purchase price of $9,500,000 and WYXX-FM Chicago for a
purchase price of $1,100,000. The fair value of the WXXY-FM and WYXX-FM assets
acquired, exclusive of acquisition costs, is as follows:
 
<TABLE>
<CAPTION>
                                                                        WXXY-FM       WYXX-FM
                                                                      ------------  -----------
<S>                                                                   <C>           <C>
Fixed assets........................................................  $    119,000     154,000
FCC broadcast license...............................................     9,381,000     946,000
</TABLE>
 
    The fair value of the fixed assets and land acquired is determined by
reference to replacement value on an individual-asset basis and comparable
property, respectively. The remaining purchase price is assigned to the FCC
license.
 
    On June 5, 1997, the Company acquired substantially all of the assets of
WWZY-FM Monmouth, New Jersey, for a purchase price of $12,000,000. At that date,
the seller's loan payable to the Company in the amount of $5,434,000 plus
accrued interest of $103,000 was paid in full. This loan payable originated on
the date the Company entered into an agreement to acquire WWZY- FM, November 7,
1996. The loan bore interest at prime rate plus 2% and was collateralized by
substantially all the assets of the seller. The Company managed the operations
of WWZY-FM for a fee from December 5, 1996 up to the effective
 
                                       37
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
acquisition date under a local marketing agreement ("LMA"). Revenue, programming
expenses and other reimbursable expenses pursuant to the LMA have been included
in the accompanying consolidated financial statements as have LMA fees of
approximately $100,000 and $375,000 for the years ended December 31, 1996 and
1997, respectively. The fair value of WWZY-FM assets acquired, exclusive of
acquisition costs, is as follows:
 
<TABLE>
<S>                                                              <C>
Fixed assets...................................................  $  833,000
FCC broadcast license..........................................  11,157,000
Covenant not to compete........................................      10,000
</TABLE>
 
    The fair value of the fixed assets acquired is determined by reference to
replacement value on an individual-asset basis. The fair value of the covenant
not to compete is determined by reference to the covenant agreement, and the
remaining purchase price is assigned to the FCC license.
 
    LMA fees are reflected in the accompanying consolidated financial statements
as station operating expenses.
 
    On April 1, 1997, the Company acquired substantially all the assets of WWVY-
FM Hampton Bays, New York, for a purchase price of $4,000,000. The Company
managed the operations of WWVY-FM for a fee from December 31, 1996 up to the
effective acquisition date under a LMA. Revenue, programming expenses and other
reimbursable expenses pursuant to the LMA have been included in the accompanying
consolidated financial statements as have LMA fees of $165,000 for the year
ended December 31, 1997. The fair value of WWVY-FM assets acquired, exclusive of
acquisition costs, is as follows:
 
<TABLE>
<S>                                                               <C>
Fixed assets....................................................  $  55,000
FCC broadcast license...........................................  3,795,000
Consulting agreement............................................    150,000
</TABLE>
 
    The fair value of the fixed assets acquired is determined by reference to
replacement value on an individual-asset basis. The fair value of the consulting
agreement is determined by reference to the agreement, and the remaining
purchase price is assigned to the FCC license.
 
    LMA fees are reflected in the accompanying consolidated financial statements
as station operating expenses.
 
    On May 30, 1996, the Company acquired substantially all of the assets of
KLYY-FM, Arcadia, KVYY-FM, Ventura, KSYY-FM, Fallbrook (the "Los Angeles
Stations") and KWIZ-FM, Santa Ana, in a simultaneous purchase and multiparty,
tax-free exchange through the use of a third party serving as a "qualified
intermediary." The aggregate purchase price of the four stations was
approximately $38,000,000. The acquisitions were recorded using the purchase
method of accounting. In connection with the acquisition of the Los Angeles
Stations and KWIZ-FM, the Company borrowed $31,000,000 under the Old Credit
Facility (see Note 6). On December 20, 1996, the Company completed the sale of
KWIZ-FM, Santa Ana, California, for a sale price of $11,200,000 and
simultaneously paid down the Old Credit Facility in the same amount. No gain or
loss was recorded in connection with the sale of KWIZ-FM.
 
    Immediately before the simultaneous purchase and multiparty tax-free
exchange, Q was merged into Big City Radio (see Note 1). Two Connecticut radio
stations (WSTC-AM and WKHL-FM), which
 
                                       38
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
comprised the sole operating assets of Q (the "Q stations") were transferred to
the acquirer of the Q stations for $9,500,000, of which $500,000 was held in
escrow until May 31, 1997. Substantially all of the cash received from such
acquirer plus cash provided by Big City Radio was transferred by the "qualified
intermediary" to the third party disposing of the Los Angeles Stations in
connection with the tax-free exchange of the Q stations for the Los Angeles
Stations and the purchase of the assets of KWIZ-FM. For financial reporting
purposes, the Company accounted for the transfer of the Q stations as a sale and
recorded a gain of $6,608,000. In connection with the merger of Q and Big City
Radio, the stockholders contributed $5,119,000 of loans payable by the Company
to equity and received 3,287,520 additional shares of Common Stock.
 
    The Company managed the operations of the Los Angeles Stations and KWIZ-FM
for a fee from March 26, 1996 up to the effective acquisition date under the
LMA. Revenue, programming expenses and other reimbursable expenses pursuant to
the LMA, including rent and utilities, have been included in the accompanying
consolidated financial statements from March 26, 1996 as have LMA fees of
approximately $593,000. The acquisitions were recorded using the purchase method
of accounting. The fair value of the Los Angeles Stations' assets acquired,
exclusive of acquisition costs, is as follows:
 
<TABLE>
<S>                                                              <C>
Fixed assets...................................................  $  437,000
FCC broadcast licenses.........................................  26,085,000
Covenant not to compete........................................      68,000
</TABLE>
 
    The fair value of the fixed assets acquired is determined by reference to
replacement value on an individual-asset basis. The fair value of covenants not
to compete is determined by reference to the covenant agreement, and the
remaining purchase price is assigned to the FCC licenses.
 
    LMA fees are reflected in the accompanying consolidated statements of
operations as station operating expenses.
 
    The following unaudited pro forma results of operations illustrate the
effect of the acquisition of WWVY-FM, WWZY-FM, WXXY-FM, and WYXX-FM during 1997
and WKIE-FM, WKIF-FM and WWYY-FM during 1998 and assumes that the acquisitions
occurred at the beginning of each of the periods presented:
 
<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                                 -----------------------------
<S>                                                              <C>             <C>
                                                                      1997           1998
                                                                 --------------  -------------
Net revenues...................................................  $   11,495,000     15,543,000
Income (loss) before extraordinary items.......................     (18,387,000)   (17,755,000)
Net income (loss)..............................................     (18,700,000)   (18,250,000)
Pro forma loss per share.......................................           (1.96)         (1.30)
</TABLE>
 
(4) RESTRICTED CASH
 
    The restricted cash balance collateralizes three letters of credit
outstanding at December 31, 1998. Two of the letters of credit relate to the
promissory notes issued in conjunction with the acquisition of WRNJ-FM (see Note
3 of consolidated financial statements, Acquisitions & Dispositions). The other
letter of credit relates to the Chicago office lease. According to the lease
agreement, the Company agreed
 
                                       39
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(4) RESTRICTED CASH (CONTINUED)
to deposit the sum of $1,000,000 as security in the form of an unconditional and
irrevocable letter of credit. The amount of the letter of credit will decrease
over 5 years.
 
(5) PROPERTY AND EQUIPMENT
 
    Property and equipment at December 31, 1997 and 1998 were as follows:
 
<TABLE>
<CAPTION>
                                                                         1997         1998
                                                                     ------------  ----------
<S>                                                                  <C>           <C>
Land...............................................................  $    377,000     377,000
Building and improvements..........................................       561,000   1,117,000
Transmitter equipment..............................................     1,925,000   3,293,000
Furniture and office equipment.....................................       422,000     921,000
Vehicles...........................................................       219,000     464,000
                                                                     ------------  ----------
                                                                        3,504,000   6,172,000
Less accumulated depreciation......................................       825,000   1,660,000
                                                                     ------------  ----------
                                                                     $  2,679,000   4,512,000
                                                                     ------------  ----------
                                                                     ------------  ----------
</TABLE>
 
(6) INTANGIBLES
 
    Intangibles at December 31, 1997 and 1998 are as follows:
 
<TABLE>
<CAPTION>
                                                                       1997           1998
                                                                   -------------  ------------
<S>                                                                <C>            <C>
FCC broadcast licenses...........................................  $  55,788,000    83,675,000
Covenants not to compete.........................................        678,000       678,000
                                                                   -------------  ------------
                                                                      56,466,000    84,353,000
Less accumulated amortization....................................      2,351,000     4,044,000
                                                                   -------------  ------------
                                                                   $  54,115,000    80,309,000
                                                                   -------------  ------------
                                                                   -------------  ------------
</TABLE>
 
(7) SENIOR DISCOUNT NOTES
 
OFFERING OF SENIOR DISCOUNT NOTES
 
    On March 17, 1998 (the "issue date"), the Company completed the Note
Offering. The $174,000,000 aggregate principal amount at maturity of Notes were
issued at a discount generating gross proceeds to the Company of approximately
$125.4 million. They mature on March 15, 2005. The Notes will accrete in value
until March 15, 2001 at a rate of 11.25% per annum, compounded semiannually, to
an aggregate principal amount of $174.0 million. Cash interest will not accrue
on the Notes prior to March 15, 2001. Thereafter, interest on the Notes will
accrue at a rate of 11.25% per annum and will be payable semiannually in cash on
March 15 and September 15 of each year, commencing on September 15, 2001.
 
    Except as described below, the Company may not redeem the Notes prior to
March 15, 2002. On or after such date, the Company may redeem the Notes, in
whole or in part, at certain redemption prices together with accrued and unpaid
interest, if any, to the date of redemption. In addition, at any time on or
prior to March 15, 2001, the Company may, at its option, redeem in the aggregate
up to 33 1/33% of the
 
                                       40
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(7) SENIOR DISCOUNT NOTES (CONTINUED)
original principal amount of the Notes with net cash proceeds of one or more
Equity Offerings received by the Company so long as there is a public market for
the Company's Class A Common Stock at the time of such redemption, at a
redemption price equal to 111.25% of the accreted value thereof to be redeemed,
to the date of redemption; provided that at least 66 2/33% of the original
principal amount of the Notes remains outstanding immediately after each such
redemption. The Notes are not subject to any sinking fund requirement. Upon a
Change of Control (as such term is defined in the Notes), each holder of Notes
has the right to require the Company to make an offer to purchase the Notes at a
price equal to 101% of the accreted value of such Notes prior to March 15, 2001,
or 101% of the principal amount of such Notes thereafter, together with accrued
and unpaid interest, if any, to the date of the purchase.
 
    The Notes are unsecured, senior obligations of the Company and rank PARI
PASSU in right of payment to all existing and future senior indebtedness of the
Company and senior to all existing and future subordinated indebtedness of the
Company. The Notes are guaranteed on a senior unsecured basis by each of the
Company's subsidiaries. The indenture does not restrict the ability of the
Company or its subsidiaries to create, acquire or capitalize subsidiaries in the
future. The Notes will be effectively subordinated to all existing and future
indebtedness of the Company's subsidiaries. Approximately $4.6 million of costs
associated with the issuance of the Notes, including the underwriters fees and
related professional fees are included in deferred financing fees and will be
amortized over the term of the Notes.
 
    Simultaneously with the consummation of the Notes, the Company entered into
the Revolving Credit Facility providing for up to $15 million of availability.
The Revolving Credit Facility matures on the fifth anniversary of the issue date
and amounts outstanding under the Revolving Credit Facility bear interest at an
applicable margin plus, at the Company's option, Chase's prime rate (in which
case the applicable margin is 2.00% subject to reduction upon obtaining
performance criteria based on the Company's leverage ratio) or the London
Inter-Bank Borrowing Rate (in which case the applicable margin is 3.00% subject
to reduction upon obtaining performance criteria based on the Company's leverage
ratio). The Company's obligations under the Revolving Credit Facility are
secured by a pledge of substantially all of the Company and its subsidiaries'
assets. The Company will pay fees of .5% per annum, on the aggregate unused
portion of the facility. Upon entering into the Revolving Credit Facility, the
Company recorded a loss on extinguishment of the Old Credit Facility which
consisted of the unamortized deferred financing fees of $582,000. This expense
is reported, net of its tax effect of $87,000, as an extraordinary loss in the
consolidated statement of operations for the year ended December 31, 1998.
 
    The Revolving Credit Facility contains certain financial and operational
covenants and other restrictions with which the Company must comply, including,
among others, limitations on capital expenditures, the incurrence of additional
indebtedness, restrictions on sale of assets, restrictions on the use of
borrowings, limitations on paying cash dividends and redeeming or repurchasing
capital stock of the Company or the Notes, and requirements to maintain certain
financial ratios, maximum total leverage, minimum interest coverage and minimum
fixed charge coverage. As of December 31, 1998 no amounts were drawn down on the
Revolving Credit Facility. However, a $509,000 letter of credit related to the
Century City office lease was issued under the Revolving Credit Facility.
 
                                       41
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(7) SENIOR DISCOUNT NOTES (CONTINUED)
 
    The Revolving Credit Facility contains customary events of default,
including material misrepresentations, payment defaults and default in the
performance of other covenants, certain bankruptcy and ERISA defaults, judgment
and cross defaults and revocation of any of the Company's broadcast licenses.
The Revolving Credit Facility also provides that an event of default will occur
upon the occurrence of a "change of control." For purposes of the Revolving
Credit Facility, a change of control will occur when (i) any person or group
other than the Principal Stockholders and their affiliates obtains the power to
elect a majority of the Board of Directors, (ii) the Company fails to own 100%
of the capital stock of its subsidiaries owning any of the FCC broadcast
licenses or (iii) the Board of Directors does not consist of a majority of
continuing directors.
 
SUBSIDIARY GUARANTORS
 
    Pursuant to the terms of the indenture with respect to the Notes (the
"Indenture") the direct subsidiaries of Big City Radio, Inc.--consisting of
Odyssey Traveling Billboards, Inc., Big City Radio-- NYC, L.L.C., Big City
Radio--LA, L.L.C., Big City Radio--CHI, L.L.C., and WRKL Rockland Radio, L.L.C.
(collectively, the Subsidiary Guarantors)--have, jointly and severally, fully
and unconditionally guaranteed the obligations of Big City Radio, Inc. with
respect to the Notes.
 
    All of the Subsidiary Guarantors except Odyssey Traveling Billboards, Inc.
(the "Station Subsidiaries"), were created in December 1997 as special purpose
Delaware limited liability companies formed at the request of the lenders under
the Credit Facility for the sole purpose of facilitating the Credit Facility by
holding the Company's Federal Communications Commission ("FCC") radio licenses.
The operating agreements for the Station subsidiaries limit the activities of
these companies to holding the FCC radio licenses. Odyssey Traveling Billboards,
Inc. ("Odyssey") owns and operates certain vehicles used to advertise for the
Company's radio stations. Because the Station Subsidiaries have entered into
assignment and use agreements with the Company whereby the Company manages and
directs the day-to-day operations of the radio stations, pays all expenses and
capital costs incurred in operating the radio stations, and retains all
advertising and other receipts collected in operating the radio stations, the
Station Subsidiaries have no income or expenses other than the amortization of
the FCC licenses. Odyssey is similarly a special purpose corporation with no
income and only expenses.
 
    The covenants in the Notes, the Indenture and the Revolving Credit Facility
do not restrict the ability of the Station Subsidiaries to make cash
distributions to the Company.
 
    Accordingly, set forth below is certain summarized financial information
(within the meaning of Section 1-02(bb) of Regulation S-X) for the Subsidiary
Guarantors, as of December 31, 1997 and 1998 and
 
                                       42
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(7) SENIOR DISCOUNT NOTES (CONTINUED)
for the year ended, December 31, 1997 and 1998 on an "as if pooling" basis given
the common control relationship of Big City Radio, Inc. and the Subsidiary
Guarantors.
 
<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                                   ---------------------------
<S>                                                                <C>            <C>
                                                                       1997           1998
                                                                   -------------  ------------
Current assets...................................................             --            --
Noncurrent assets................................................  $  54,087,000    80,295,000
Current liabilities..............................................             --            --
Noncurrent liabilities...........................................             --            --
</TABLE>
 
<TABLE>
<CAPTION>
                                                                       FOR THE YEAR ENDED
                                                                          DECEMBER 31,
                                                                   --------------------------
<S>                                                                <C>            <C>
                                                                       1997          1998
                                                                   -------------  -----------
Net sales........................................................             --           --
Costs and expenses...............................................             --           --
Depreciation and amortization....................................  $   1,327,000    1,679,000
Net loss.........................................................  $  (1,327,000)  (1,679,000)
</TABLE>
 
    The summarized financial information for the Subsidiary Guarantors has been
prepared from the books and records maintained by the Subsidiary Guarantors and
the Company. The summarized financial information may not necessarily be
indicative of the results of operations or financial position had the Subsidiary
Guarantors operated as independent entities.
 
(8) PROMISSORY NOTES
 
    In August 1998, the Company acquired all of the stock of Radio New Jersey,
owner of the FCC licenses of WRNJ-FM and WRNJ-AM. The aggregate purchase price
was $5.4 million excluding acquisition-related expenses, of which $3.0 million
was paid in cash and the remainder was satisfied by the issuance of two
promissory notes.
 
    The principal amount of these Notes are due and payable in eight equal
consecutive quarterly installments of $147,000 each, commencing on November 1,
1998, together with interest in arrears on the unpaid principal balance at an
annual rate equal to 8.5%. Future minimum note payments for the remainder of the
terms, excluding interest are as follows:
 
<TABLE>
<S>                                                               <C>
1999............................................................  $1,175,000
2000............................................................    881,000
                                                                  ---------
                                                                  2,056,000
                                                                  ---------
                                                                  ---------
</TABLE>
 
    The principal amount and interest paid on these promissory notes during 1998
was $294,000 and $26,000, respectively.
 
                                       43
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(9) LONG-TERM DEBT
 
    On May 30, 1996, the Company entered into a credit agreement (as amended,
the Old Credit Facility) with Chase. The Old Credit Facility provided revolving
credit commitments in the form of loans and/or letters of credit in an aggregate
principal amount of $40 million. A significant portion of the debt was
guaranteed by a Principal Stockholder. This facility was subsequently amended in
November 1996, May 1997 and August 1997 to primarily change the available
borrowings.
 
    On December 24, 1997, following the initial public offering of the Company's
Class A Common Stock, the Old Credit Facility was substantially amended to
comprise a new $35 million reducing revolving facility. Outstanding amounts
under the Old Credit Facility as so amended bore interest at a rate based, at
the option of the Company, on the participating bank's prime rate, plus 1.5% to
2.0% or the London Inter-Bank Borrowing Rate, plus 2.5% to 3.0%, except for
guaranteed amounts which bear interest at 1% less. A Principal Stockholder of
the Company had guaranteed $6 million of the outstanding amounts. As
consideration for agreeing to the amendment of the Old Credit Agreement, the
Company paid financing fees of $612,000. These fees were to be amortized over
the period of the Credit Agreement. In addition, the Company agreed to pay a
commitment fee quarterly equal to 0.5% per annum on the average unused available
credit. Upon entering into the Old Credit Facility as so amended, the Company
recorded a loss on extinguishment of the Old Credit Facility as in effect prior
to such amendment which consisted of the existing unamortized deferred financing
fees of $513,000. This expense is reported, net of its tax effect of $200,000,
as an extraordinary loss in the consolidated statement of operations for the
year ended December 31, 1997.
 
    The interest rates for the guaranteed and non-guaranteed portions of the Old
Credit Facility as of December 31, 1997 were 8.9% and 9.9%, respectively.
Interest expense on the above facilities for the years ended December 31, 1996,
1997, and 1998 was $1,794,000, $3,547,000, and $576,000, respectively.
 
    The Old Credit Facility contained certain financial and operational
covenants and other restrictions with which the Company had to comply,
including, among others, limitations on capital expenditures, the incurrence of
additional indebtedness, restrictions on the use of borrowings, limitations on
paying cash dividends and redeeming or repurchasing capital stock of the
Company, and requirements to maintain certain financial ratios. The Company was
also prohibited from making acquisitions without the prior consent of Chase. All
of the Company's obligations under the Old Credit Facility were secured by a
first priority security interest in all of the Company's tangible and intangible
property and assets.
 
    In March 1998, the Company repaid all amounts outstanding under the Old
Credit Facility (see Note 7).
 
                                       44
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(10) COMMITMENTS AND CONTINGENCIES
 
LEASES
 
    The Company leases studio and office space, transmitter tower sites and
office equipment under operating leases. Future minimum rental commitments for
the remainder of the operating leases are as follows:
 
<TABLE>
<S>                                                               <C>
1999............................................................  $1,110,000
2000............................................................  1,039,000
2001............................................................    980,000
2002............................................................    890,000
2002............................................................    771,000
Thereafter......................................................  1,792,000
                                                                  ---------
                                                                  $6,582,000
                                                                  ---------
                                                                  ---------
</TABLE>
 
    Rent expense for the years ended December 31, 1996, 1997 and 1998 was
approximately $325,000, $383,000 and $651,000, respectively.
 
EMPLOYMENT CONTRACTS
 
    The Company has entered into various employment contracts with 19
individuals comprised of mainly officers and senior management that provide for
minimum salaries and incentives based upon specified levels of performance. The
minimum payments under these contracts are as follows:
 
<TABLE>
<S>                                                               <C>
1999............................................................  $2,332,000
2000............................................................  1,961,000
                                                                  ---------
                                                                  $4,293,000
                                                                  ---------
                                                                  ---------
</TABLE>
 
CONTINGENT LIABILITIES
 
    The Company has certain contingent liabilities resulting from litigation and
claims incident to the ordinary course of business. Management believes that the
probable resolution of such contingencies will not materially affect the
financial position, results of operations, or liquidity of the Company.
 
(11) SUPPLEMENTARY INFORMATION--STATEMENT OF CASH FLOWS
 
    The Company acquired vehicles during the years ended December 31, 1996,
1997, and 1998 through issuances of notes payable amounting to $51,000, $33,000
and $39,000, respectively.
 
    Barter transactions resulted in sales of $875,000, $850,000 and $1,560,000
and related expenses of $962,000, $797,000 and $1,514,000 for the years ended
December 31, 1996, 1997 and 1998, respectively.
 
    Cash paid for interest during the years ended December 31, 1996, 1997 and
1998 amounted to $2,454,000, $4,395,000 and $931,000, respectively.
 
    During the years ended December 31, 1997 and 1998, the Principal
Stockholders contributed notes payable of $13,345,000 and $0, respectively, to
the Company's capital.
 
                                       45
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(12) INCOME TAXES
 
    The Company did not incur income taxes during the year ended December 31,
1996 and the period ended September 30, 1997 due to its election to be treated
as an S Corporation. Income tax expense for the year ended December 31, 1997 and
1998 is comprised of the following:
 
<TABLE>
<CAPTION>
                                                                       1997          1998
                                                                   -------------  -----------
<S>                                                                <C>            <C>
Deferred tax expense resulting from conversion to
  C Corporation..................................................  $   3,350,000           --
Deferred tax benefit.............................................     (1,050,000)  (2,013,000)
Tax benefit resulting from extraordinary loss....................       (200,000)     (87,000)
Other............................................................             --       25,000
                                                                   -------------  -----------
                                                                   $   2,100,000   (2,075,000)
                                                                   -------------  -----------
                                                                   -------------  -----------
</TABLE>
 
    The provision for income taxes differs from the amount computed by applying
the statutory Federal income tax rate in 1997 and 1998 due to the following:
 
<TABLE>
<CAPTION>
                                                                       1997          1998
                                                                   -------------  -----------
<S>                                                                <C>            <C>
Federal income taxes at the statutory rate.......................  $  (4,864,000)  (6,833,000)
State income taxes net of any amount of Federal
  income tax benefit.............................................        (84,000)    (939,000)
Extraordinary loss...............................................       (200,000)     (87,000)
Losses during status as an S Corporation.........................      3,888,000           --
Conversion to C Corporation......................................      3,350,000           --
Valuation Allowance..............................................             --    5,571,000
Other............................................................         10,000      213,000
                                                                   -------------  -----------
                                                                   $   2,100,000   (2,075,000)
                                                                   -------------  -----------
                                                                   -------------  -----------
</TABLE>
 
                                       46
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(12) INCOME TAXES (CONTINUED)
    The components of deferred taxes at December 31, 1997 and 1998 are as
follows:
 
<TABLE>
<CAPTION>
                                                                       1997           1998
                                                                   -------------  ------------
<S>                                                                <C>            <C>
Deferred tax assets:
  Net operating loss.............................................  $   1,603,000     6,030,000
  Other..........................................................        287,000       222,000
  Book interest expense/Tax OID 11.25% Senior Notes..............             --     4,902,000
                                                                   -------------  ------------
                                                                       1,890,000    11,154,000
                                                                   -------------  ------------
Deferred tax liabilities:
  Deferred gain..................................................     (2,946,000)   (2,771,000)
  Book/Tax basis difference from WRNJ-FM stock purchase..........             --    (2,473,000)
  Depreciation and amortization..................................     (1,044,000)   (2,307,000)
  Other..........................................................             --      (505,000)
                                                                   -------------  ------------
                                                                      (3,990,000)   (8,056,000)
                                                                   -------------  ------------
Sub-Total before valuation allowance.............................     (2,100,000)    3,098,000
Valuation Allowance..............................................             --    (5,571,000)
                                                                   -------------  ------------
Net deferred tax asset (liability)...............................  $  (2,100,000)   (2,473,000)
                                                                   -------------  ------------
                                                                   -------------  ------------
</TABLE>
 
    The Company has approximately $14,562,000 of net operating loss
carryforwards for Federal income tax purposes. These NOLs begin to expire in
2017.
 
    In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers
projected future taxable income and tax planning strategies in making this
assessment. At December 31, 1998, based on projections for future taxable income
over the periods in which the deferred tax assets are deductible, management
believes that it is unlikely that the Company will realize the benefits of these
deductible differences. Accordingly, a valuation allowance of $5,571,000 has
been provided for the deferred tax assets for the year ended December 31, 1998.
 
(13) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS
 
    On December 24, 1997, the Company completed an initial public offering ("the
Offering") of 4,600,000 shares of its Class A Common Stock, at an offering price
of $7.00 per share. Simultaneously with the Offering, certain related
transactions occurred.
 
    EQUITY CONTRIBUTION AND RECLASSIFICATION--Immediately prior to the
consummation of the Offering, the Principal Stockholders contributed the entire
amount of certain outstanding stockholders' loans in the amount of $13,345,000
made to the Company to the Company's capital (the "Equity Contribution").
Simultaneously with the Equity Contribution, each share of the Company's Common
Stock, par value $.01 per share (the "Old Common Stock"), was reclassified into
7,610 shares of Class A Common Stock and the
 
                                       47
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(13) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
Principal Stockholders exchanged each share of Class A Common Stock held by them
for one share of Class B Common Stock (the foregoing reclassification and
exchange is hereinafter referred to as the "Reclassification"). In addition, the
Company converted from an S Corporation to a C Corporation.
 
    DESCRIPTION OF CAPITAL STOCK--The authorized capital stock of the Company
consists of 120,000,000 shares of capital stock, par value $.01 per share, of
which 80,000,000 shares are designated as Class A Common Stock and 20,000,000
shares are designated as Class B Common Stock. At December 31, 1998 5,818,817
shares of Class A Common Stock were issued and outstanding and 8,250,458 shares
of Class B Common Stock were issued and outstanding. In addition, 8,250,458
shares of Class A Common Stock are reserved for issuance upon conversion of the
Class B Common Stock. Immediately prior to the consummation of the Offering,
there was one holder of Class A Common Stock and two holders of Class B Common
Stock.
 
    The shares of Class A Common Stock and Class B Common Stock are identical in
all respects, except for voting rights and certain conversion rights and
transfer restrictions in respect to the shares of the Class B Common Stock.
 
    The holders of Class A Common Stock are entitled to one vote per share.
Holders of Class B Common Stock are entitled to ten votes per share. Holders of
all classes of Common Stock vote together as a single class on all matters
presented to the stockholders for their vote or approval except for the election
and removal of directors as described below and as otherwise required by
applicable law. With respect to the election of directors, the Company's Amended
and Restated Certificate of Incorporation provides that holders of Class B
Common Stock vote as a separate class to elect up to 75% of the members of the
Company's Board of Directors. Stockholders have no cumulative voting rights.
 
    EMPLOYMENT INCENTIVE--On July 1, 1997, the Principal Stockholders
transferred 68 shares of Old Common Stock to the Chief Executive Officer as an
employment incentive. The consolidated statement of operations for the year
ended December 31, 1997 reflects a charge of $3,713,000 relating to the award.
The charge represents the fair market value of the stock transferred and it has
been reflected as a capital contribution in the accompanying consolidated
financial statements.
 
    On June 18, 1998, the Company issued 93,755 shares of Class A Common Stock
to the Chief Executive Officer an as employment incentive, as required by an
agreement executed prior to the Offering. The consolidated statement of
operations for the year ended December 31, 1998 reflect a charge of $808,000
relating to the award. The charge represents the fair market value of the stock
and it has been reflected as a capital contribution in the accompanying
consolidated financial statements.
 
    STOCK OPTION PLAN--On December 1, 1997, the Company adopted the Big City
Radio, Inc. 1997 Incentive Stock Plan (the "1997 Incentive Stock Plan"). The
following is a summary of the material features of the 1997 Incentive Stock
Plan.
 
    The types of awards that may be granted pursuant to the 1997 Incentive Stock
Plan include (i) incentive stock options ("ISOs") and (ii) nonqualified stock
options ("NQSOs" and together with ISOs, "Stock Options" and "Awards").
 
    Stock Option grants will consist of the maximum number of ISOs that may be
granted to a particular grantee under applicable law with the balance of the
Stock Options being NQSOs.
 
                                       48
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(13) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
    Subject to certain exceptions set forth in the 1997 Incentive Stock Plan, up
to 700,000 shares of the Class A Common Stock may be the subject of Awards under
the 1997 Incentive Stock Plan. Up to 100,000 shares of Class A Common Stock are
available with respect to Awards granted to any one grantee. Shares of Class A
Common Stock granted under the 1997 Incentive Stock Plan may either be
authorized but unissued shares of Class A Common Stock not reserved for any
other purpose or shares of Class A Common Stock held in or acquired for the
treasury of the Company.
 
    On December 1, 1997, options to purchase an aggregate of 150,000 shares of
Class A Common Stock were granted to certain officers of the Company, at an
exercise price of $6.00 per share. These options vested immediately, resulting
in a charge of $150,000. On the date of the Offering, the Company granted
options to purchase an aggregate of 422,500 shares of Class A Common Stock to
certain officers, directors and advisors of the Company, at an exercise price
per share equal to the initial public offering price per share in the Offering.
On January 16, 1998, the Company granted options to purchase an aggregate of
2,500 shares of Class A Common Stock to a certain director of the Company, at an
exercise price of $7.125 per share.
 
    On April 8, 1998, the Board of Directors approved the Big City Radio, Inc.
1998 Incentive Stock Plan (the "1998 Incentive Stock Plan"). Subject to certain
adjustments set forth in the 1998 Incentive Stock Plan, up to 300,000 shares of
the Class A Common Stock may be the subject of Awards under the 1998 Incentive
Stock Plan. Up to 100,000 shares of Class A Common Stock are available with
respect to Awards granted to any one grantee. Shares of Class A Common Stock
subject to Awards granted under the 1998 Incentive Stock Plan may either be
authorized but unissued shares of Class A Common Stock not reserved for any
other purpose or shares of Class A Common Stock held in or acquired for the
treasury of the Company.
 
    Shares of Class A Common Stock subject to an Award which terminates
unexercised may again be subject to an Award under the 1998 Incentive Stock
Plan. In addition, shares of Class A Common Stock surrendered to the Company in
payment of the exercise price of applicable taxes upon exercise of an Award may
also be used thereafter for additional Awards.
 
    On July 6, 1998, the Board of Directors granted stock options to purchase an
aggregate of 311,500 shares of Class A Common Stock under the 1998 Incentive
Stock Plan to certain employees and officers of the Company, at an exercise
price of the then market value of $7.8125 per share. On July 22, 1998, the
Company granted stock options to purchase an aggregate of 30,000 shares of Class
A Common Stock to certain employees of the Company at an exercise price of
$7.8125 per share. On November 30, 1998, the Board of Directors granted stock
options to purchase an aggregate of 47,500 shares of Class A Common Stock under
the 1998 Incentive Stock Plan to certain employees of the Company, at an
exercise price of the then market value of $4.375 per share. The majority of
these awards vest over a four-year period, with the first 20% vesting
immediately at the date of the grant and the remainder vesting 20% per annum,
thereafter.
 
                                       49
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(13) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
    Summary information pertaining to the plan for the year ended December 31,
1998 is as follows:
 
<TABLE>
<CAPTION>
                                                                                    WEIGHTED
                                                      NUMBER    EXERCISE PRICE       AVERAGE
                                                     OF SHARES     PER SHARE     EXERCISE PRICE
                                                     ---------  ---------------  ---------------
<S>                                                  <C>        <C>              <C>
Outstanding at beginning of year...................    572,500  $     6.00-7.00     $    6.74
Granted............................................    391,500     4.375-7.8125          7.39
Exercised..........................................         --               --            --
Cancelled..........................................     39,200      7.00-7.8125          7.19
Outstanding at end of year.........................    924,800     4.375-7.8125          7.00
Exercisable at end of year.........................    322,300     4.375-7.8125          6.62
Available for grant at end of year.................     75,200                             --
</TABLE>
 
    At December 31, 1998, the weighted average remaining contractual life of all
outstanding options was 9.21 years.
 
    Summary information pertaining to the plan for the year ended December 31,
1997 is as follows:
 
<TABLE>
<CAPTION>
                                                                    EXERCISE        WEIGHTED
                                                        NUMBER        PRICE          AVERAGE
                                                       OF SHARES    PER SHARE    EXERCISE PRICE
                                                       ---------  -------------  ---------------
<S>                                                    <C>        <C>            <C>
Outstanding at beginning of year.....................         --            --             --
Granted..............................................    572,500     6.00-7.00           6.74
Exercised............................................         --            --             --
Outstanding at end of year...........................    572,500     6.00-7.00           6.74
Exercisable at end of year...........................    150,000          6.00           6.00
Available for grant at end of year...................    127,500                           --
</TABLE>
 
    At December 31, 1997, the weighted average remaining contractual life of all
outstanding option was 10 years.
 
    Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board (APB) Option No.
25, "Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 in accounting for its Plan, and accordingly, no compensation cost
has been recognized for its stock options granted at fair market value in the
consolidated financial statements. Compensation cost will be recorded for
options granted below fair market value.
 
    In 1996, the Company did not grant any stock options nor did it have any
previously granted options outstanding. Accordingly, for 1996, there would have
been no pro forma impact on earnings had SFAS
 
                                       50
<PAGE>
                              BIG CITY RADIO, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1997 AND 1998
 
(13) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
No. 123 fair value methods been used. In 1997 and 1998, had the Company
determined compensation cost based on the fair value at the grant date for its
stock options under SFAS No. 123, the Company's net income would have been
reduced to the pro forma amounts indicated below:
 
<TABLE>
<CAPTION>
                                                                     1997            1998
                                                                --------------  --------------
<S>                                                             <C>             <C>
Net income (loss):
As reported...................................................  $  (16,918,000) $  (17,449,000)
Pro forma.....................................................     (17,515,000)    (18,844,000)
Earnings (loss) per share:
As reported...................................................           (1.77)          (1.24)
Pro forma.....................................................           (1.84)          (1.34)
</TABLE>
 
    At December 31, 1997 and 1998, the per share weighted average fair value of
stock options granted was $4.83 on the date of grant using the modified
Black-Scholes option-pricing model with the following weighted average
assumptions: expected dividend yield of 0%, risk-free interest rate of 5.57%,
expected volatility of 50% and an expected life of 10 years.
 
(14) SUBSEQUENT EVENTS
 
    On February 25, 1999, the Company completed the acquisition of WDEK-FM and
WLBK-AM DeKalb, Illinois, for a purchase price of $4,500,000. The Company added
WDEK-FM, which broadcasts on the 92.5 FM frequency, to the 92 KISS FM Chicago
stations. The Company began its trimulcast of this station immediately upon
completion of the acquisition. It is the Company's intention to sell the
operating assets of WLBK-AM DeKalb, Illinois.
 
                                       51
<PAGE>
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 is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual Meeting
of Stockholders to be held on May 20, 1999.
 
ITEM 11. EXECUTIVE COMPENSATION
 
    The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual Meeting
of Stockholders to be held on May 20, 1999.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual Meeting
of Stockholders to be held on May 20, 1999.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual Meeting
of Stockholders to be held on May 20, 1999.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
    (a) Financial Statement, Financial Statement Schedules and Exhibits
 
1. FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                -----
<S>                                                                                                          <C>
Report of KPMG LLP, Independent Auditors...................................................................          27
Consolidated Balance Sheets as of December 31, 1997 and 1998...............................................          28
Consolidated Statements of Operations for the years ended December 31, 1996,
  1997 and 1998............................................................................................          29
Consolidated Statements of Cash Flows for the years ended December 31, 1996,
  1997 and 1998............................................................................................          30
Consolidated Statement of Stockholders' Equity (Deficit)...................................................          31
Notes to Consolidated Financial Statements.................................................................          32
</TABLE>
 
2. FINANCIAL STATEMENT SCHEDULES
 
    Schedule II--Valuation and Qualifying Accounts
 
3. EXHIBITS
 
    All Exhibits listed below are filed with this Annual Report on Form 10-K
unless specifically stated to be incorporated by reference to other documents
previously filed with the Securities and Exchange Commission.
 
                                       52
<PAGE>
 
<TABLE>
<CAPTION>
EXHIBIT NO.                                           DESCRIPTION OF EXHIBITS
-------------  -----------------------------------------------------------------------------------------------------
<C>            <S>
 
        3.1    Form of Amended and Restated Certificate of Incorporation of Big City Radio, Inc. (incorporated by
               reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
        3.2    Form of Amended and Restated Bylaws of Big City Radio, Inc. (incorporated by reference to Exhibit 3.2
               to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
        4.1    Specimen Class A Common Stock Certificate of Big City Radio, Inc. (incorporated by reference to
               Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
        4.2    Indenture, dated as of March 17, 1998, among the Company, the Subsidiary Guarantors named therein and
               First Trust National Association as Trustee (incorporated by reference to Exhibit 4.2 to the
               Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997).
 
        4.3    Form of 11 1/4% Senior Discount Note due 2005 (incorporated by reference to Exhibit 4.3 to the
               Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
 
       10.1    Big City Radio, Inc. 1997 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the
               Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
       10.2    Big City Radio, Inc. 1998 Incentive Stock Plan (incorporated by reference to Appendix A to the
               Company's Proxy Statement for the May 12, 1998 Annual Meeting (File No. 001-13715)).
 
       10.3    Employment Agreement, between Big City Radio, Inc. and Michael Kakoyiannis (incorporated by reference
               to Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
       10.4    Form of Employment Agreement, between Big City Radio, Inc. and Paul R. Thomson (incorporated by
               reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
       10.5    Form of Employment Agreement, between Big City Radio, Inc. and Steven G. Blatter (incorporated by
               reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
       10.6    Form of Employment Agreement, between Big City Radio, Inc. and Alan D. Kirschner (incorporated by
               reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
       10.7    Agreement and Plan of Merger, dated May 20, 1996, between Q Broadcasting, Inc. and Odyssey
               Communications, Inc. (incorporated by reference to Exhibit 10.6 to the Company's Registration
               Statement on Form S-1 (File No. 333-36449)).
 
       10.8    Amended and Restated Credit Agreement between Big City Radio, Inc. and The Chase Manhattan Bank
               (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File
               No. 333-36449)).
 
       10.9    Form of Registration Rights Agreement between Big City Radio, Inc. and Michael Kakoyiannis
               (incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File
               No. 333-36449)).
 
      10.10    Form of Registration Rights Agreement between Big City Radio, Inc., Stuart Subotnick and Anita
               Subotnick (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form
               S-1 (File No. 333-36449)).
</TABLE>
 
                                       53
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO.                                           DESCRIPTION OF EXHIBITS
-------------  -----------------------------------------------------------------------------------------------------
<C>            <S>
      10.11    Second Amended and Restated Credit Agreement, dated as of March 17, 1998, among the Company, the
               Subsidiary Guarantors named therein, the lenders named therein and The Chase Manhattan Bank
               (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the
               fiscal year ended December 31, 1997).
 
      10.12    Purchase Agreement, dated March 12, 1998, among the Company, the Subsidiary Guarantors named therein
               and Chase Securities, Inc., Donaldson, Lufkin & Jenrette Securities Corporation, BT Alex Brown
               Incorporated and ING Barings (U.S.) Securities, Inc. as initial purchasers (incorporated by reference
               to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
               1997).
 
      10.13    Exchange and Registration Rights Agreement, dated as of March 17, 1998, among the Company, the
               Subsidiary Guarantors named therein and Chase Securities Inc., Donaldson, Lufkin & Jenrette
               Securities Corporation, BT Alex Brown Incorporated and ING Barings (U.S.) Securities, Inc. as initial
               purchasers (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K
               for the fiscal year ended December 31, 1997).
 
      10.14    Asset Purchase Agreement, dated April 20, 1998, between the Company and Darrel peters Productions,
               Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on
               October 14, 1998).
 
      10.15    Trade Agreement, dated April 20, 1998, between the Company and Darrel Peters Productions, Inc.
               (incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on
               October 14, 1998).
 
       11.1    Statement re computation of per share earnings.
 
       21.1    List of Subsidiaries of Big City Radio, Inc.
 
       27.1    Financial Data Schedule.
</TABLE>
 
    (b) Reports on Form 8-K:
 
    The registrant filed a Current Report on Form 8-K on October 14, 1998,
reporting the acquisition of substantially all of the assets of WCBR-FM,
Arlington Heights, Illinois, a Chicago area radio station. The Report included
the pro forma financial information of the business acquired.
 
    As of the date of the filing of this Annual Report on Form 10-K no proxy
materials have been furnished to security holders. Copies of all proxy materials
will be sent to the Commission in compliance with its rules.
 
                                       54
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in East Rutherford,
New Jersey, on this 12th day of March, 1999.
 
<TABLE>
<S>                             <C>  <C>
                                BIG CITY RADIO, INC.
 
                                By:  /s/ MICHAEL KAKOYIANNIS
                                     -----------------------------------------
                                     Name: Michael Kakoyiannis
                                     Title: President and Chief Executive
                                     Officer
</TABLE>
 
    We, the undersigned officers and directors of Big City Radio, Inc., hereby
severally constitute Arnold L. Wadler, Silvia Kessel, Paul R. Thomson and
Michael Kakoyiannis, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, any and all reports (including any amendments
thereto), with all exhibits thereto and any and all documents in connection
therewith, and generally do all such things in our name and on our behalf in
such capacities to enable Big City Radio, Inc. to comply with the applicable
provisions of the Securities Exchange Act of 1934, as amended, and all
requirements of the Securities Exchange Commission, and we hereby ratify and
confirm our signatures as they may be signed by our said attorneys, or either of
them, to any and all such reports (including any amendments thereto) and other
documents in connection therewith.
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------
<C>                             <S>                         <C>
     /s/ STUART SUBOTNICK
------------------------------  Chairman of the Board of      March 12, 1999
       Stuart Subotnick           Directors
 
   /s/ MICHAEL KAKOYIANNIS
------------------------------  President, Chief Executive    March 12, 1999
     Michael Kakoyiannis          Officer and Director
 
                                Vice President, Chief
     /s/ PAUL R. THOMSON          Financial Officer and
------------------------------    Treasurer                   March 12, 1999
       Paul R. Thomson            (Principal Financial and
                                  Accounting Officer)
 
     /s/ ANITA SUBOTNICK
------------------------------  Director                      March 12, 1999
       Anita Subotnick
 
      /s/ SILVIA KESSEL
------------------------------  Executive Vice President      March 12, 1999
        Silvia Kessel             and Director
 
     /s/ ARNOLD L. WADLER       Executive Vice President,
------------------------------    General Counsel,            March 12, 1999
       Arnold L. Wadler           Secretary and Director
 
     /s/ LEONARD L. WHITE
------------------------------  Director                      March 12, 1999
       Leonard L. White
 
     /s/ MICHAEL H. BOYER
------------------------------  Director                      March 12, 1999
       Michael H. Boyer
</TABLE>
 
                                       55
<PAGE>
                                                                     SCHEDULE II
 
                              BIG CITY RADIO, INC.
 
                       VALUATION AND QUALIFYING ACCOUNTS
 
<TABLE>
<CAPTION>
                                                    BALANCE AT    CHARGED                              BALANCE AT
                                                    BEGINNING   TO COSTS AND    OTHER     DEDUCTIONS/     END
                                                    OF PERIOD    PURCHASES     CHARGES    WRITE-OFFS   OF PERIOD
                                                    ----------  ------------  ----------  -----------  ----------
<S>                                                 <C>         <C>           <C>         <C>          <C>
Allowances for doubtful accounts, etc. (deducted
  from current receivables):
 
Year ended December 31, 1996......................  $   58,000   $  190,000   $           $   (36,000) $  212,000
 
Year ended December 31, 1997......................  $  212,000   $  304,000   $           $  (303,000) $  213,000
 
Year ended December 31, 1998......................  $  213,000   $  138,000   $           $  (232,000) $  119,000
</TABLE>
 
                                       56
<PAGE>
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
  EXHIBIT
    NO.                                               DESCRIPTION OF EXHIBITS
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
       3.1   Form of Amended and Restated Certificate of Incorporation of Big City Radio, Inc. (incorporated by
             reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
       3.2   Form of Amended and Restated Bylaws of Big City Radio, Inc. (incorporated by reference to Exhibit 3.2 to
             the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
       4.1   Specimen Class A Common Stock Certificate of Big City Radio, Inc. (incorporated by reference to Exhibit
             4.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
       4.2   Indenture, dated as of March 17, 1998, among the Company, the Subsidiary Guarantors named therein and
             First Trust National Association as Trustee (incorporated by reference to Exhibit 4.2 to the Company's
             Annual Report on Form 10-K for the fiscal year ended December 31, 1997).
 
       4.3   Form of 11 1/4% Senior Discount Note due 2005 (incorporated by reference to Exhibit 4.3 to the Company's
             Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
 
      10.1   Big City Radio, Inc. 1997 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the
             Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
      10.2   Big City Radio, Inc. 1998 Incentive Stock Plan (incorporated by reference to Appendix A to the Company's
             Proxy Statement for the May 12, 1998 Annual Meeting (File No. 001-13715)).
 
      10.3   Employment Agreement, between Big City Radio, Inc. and Michael Kakoyiannis (incorporated by reference to
             Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
      10.4   Form of Employment Agreement, between Big City Radio, Inc. and Paul R. Thomson (incorporated by reference
             to Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
      10.5   Form of Employment Agreement, between Big City Radio, Inc. and Steven G. Blatter (incorporated by
             reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
      10.6   Form of Employment Agreement, between Big City Radio, Inc. and Alan D. Kirschner (incorporated by
             reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
      10.7   Agreement and Plan of Merger, dated May 20, 1996, between Q Broadcasting, Inc. and Odyssey
             Communications, Inc. (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement
             on Form S-1 (File No. 333-36449)).
 
      10.8   Amended and Restated Credit Agreement between Big City Radio, Inc. and The Chase Manhattan Bank
             (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File No.
             333-36449)).
 
      10.9   Form of Registration Rights Agreement between Big City Radio, Inc. and Michael Kakoyiannis (incorporated
             by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).
 
      10.10  Form of Registration Rights Agreement between Big City Radio, Inc., Stuart Subotnick and Anita Subotnick
             (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1 (File No.
             333-36449)).
</TABLE>
 
                                       57
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
    NO.                                               DESCRIPTION OF EXHIBITS
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
      10.11  Second Amended and Restated Credit Agreement, dated as of March 17, 1998, among the Company, the
             Subsidiary Guarantors named therein, the lenders named therein and The Chase Manhattan Bank (incorporated
             by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended
             December 31, 1997).
 
      10.12  Purchase Agreement, dated March 12, 1998, among the Company, the Subsidiary Guarantors named therein and
             Chase Securities, Inc., Donaldson, Lufkin & Jenrette Securities Corporation, BT Alex Brown Incorporated
             and ING Barings (U.S.) Securities, Inc. as initial purchasers (incorporated by reference to Exhibit 10.11
             to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997).
 
      10.13  Exchange and Registration Rights Agreement, dated as of March 17, 1998, among the Company, the Subsidiary
             Guarantors named therein and Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation,
             BT Alex Brown Incorporated and ING Barings (U.S.) Securities, Inc. as initial purchasers (incorporated by
             reference to Exhibit 10.12 to the Company's annual Report on Form 10-K for the fiscal year ended December
             31, 1997).
 
      10.14  Asset Purchase Agreement, dated April 20, 1998, between the Company and Darrel peters Productions, Inc.
             (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on October
             14, 1998).
 
      10.15  Trade Agreement, dated April 20, 1998, between the Company and Darrel Peters Productions, Inc.
             (incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on October
             14, 1998).
 
      11.1   Statement re computation of per share earnings.
 
      21.1   List of Subsidiaries of Big City Radio, Inc.
 
      27.1   Financial Data Schedule.
</TABLE>
 
                                       58