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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K

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<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES
           EXCHANGE ACT OF 1934
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                    FOR FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

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<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE
           SECURITIES EXCHANGE ACT OF 1934
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      FOR THE TRANSITION PERIOD FROM TO ______________ TO ______________.

                        COMMISSION FILE NUMBER 001-13715

                            ------------------------

                              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 offices)                        (Zip Code)
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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
</TABLE>

          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, 2000 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 $40,135,880.25.

    The number of shares of the Registrant's Class A Common Stock and Class B
Common Stock outstanding as of March 8, 2000 was 6,218,817 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 18, 2000 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, 1999

                               TABLE OF CONTENTS

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      ITEM NO.                                  DESCRIPTION                             PAGE
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                                                   PART I

Item 1.                 Business....................................................         3

Item 2.                 Properties..................................................        17

Item 3.                 Legal Proceedings...........................................        18

Item 4.                 Submission of Matters to a Vote of Security Holders.........        18

                                                  PART II

Item 5.                 Market for Registrant's Common Equity and Related
                          Stockholder Matters.......................................        19

Item 6.                 Selected Financial Data.....................................        20

Item 7.                 Management's Discussion and Analysis of Financial Condition
                          and Results of Operations.................................        21

Item 7A.                Quantitative and Qualitative Disclosures About Market
                          Risk......................................................        28

Item 8.                 Financial Statements and Supplementary Data.................        29

Item 9.                 Changes in and Disagreements with Accountants on Accounting
                          and Financial Disclosure..................................        56

                                                  PART III

Item 10.                Directors and Executive Officers of the Registrant..........        57

Item 11.                Executive Compensation......................................        57

Item 12.                Security Ownership of Certain Beneficial Owners and
                          Management................................................        57

Item 13.                Certain Relationships and Related Transactions..............        57

                                                  PART IV

Item 14.                Exhibits, Financial Statement Schedules and Reports on Form
                          8-K.......................................................        58
</TABLE>

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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, Los Angeles, and Phoenix, and two
STMC-TM- station combinations in Chicago. The Company also owns and operates one
stand-alone radio station in Phoenix. New York, Los Angeles, Chicago, and
Phoenix are four of the 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 Viva 107.1, featuring
a Hispanic contemporary hit radio format on the 107.1-FM frequency (the "Los
Angeles Stations"). Viva 107.1 covers 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 an increase in its tranmission power
authorized by the FCC, which the Company implemented in the first quarter of
1998. The Company debuted Viva 107.1 in December 1999 as its first Hispanic
station. The Company acquired 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
Telecommunications Act of 1996 (the "Telecom Act.") See "Business Strategy"
below.

    The Company's four stations in the New York MSA collectively broadcast as
Y-107 ("Y-107 NY") on the 107.1-FM frequency (the "New York Stations"). 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 1999 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 authorized by the FCC and implementation of other technical
improvements, which the Company implemented during the third quarter of 1998.
The Company acquired the four 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, forming its
first duopoly (the "Chicago Stations"). Two stations collectively broadcast as
"The EightiesChannel" on the 103.1-FM frequency. The EightiesChannel commenced
operations in August 1999, broadcasting its current format of Eighties music.
The EightiesChannel earned a 1.3% share in the 12+category as of the Fall 1999
Arbitron

                                       3
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book. The EightiesChannel currently covers approximately 85% of the Arbitron
diaries in the Chicago MSA as a result of an increase in its transmission power
authorized by the FCC and implementation of other technical improvements, which
the Company implemented during the third quarter of 1999. This coverage is
anticipated to approach 90% when further engineering enhancements that would be
permitted by certain rate changes under consideration by the FCC take effect.
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 and 92.5 FM
frequencies. 92 KISS FM commenced operations in November 1998 broadcasting a
contemporary hit radio format. 92 KISS FM earned a 1.5% share in the 12+category
as of the Fall 1999 Arbitron book. 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. The Company added WDEK-FM, which broadcasts on the 92.5 FM
frequency, to the 92 KISS FM stations. Together with the 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 was 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. The Company entered into an asset
purchase agreement for the sale of those assets on December 1, 1999. 92 KISS FM
currently covers approximately 90% of the Arbitron diaries in the Chicago MSA
and is expected to increase its coverage to above this as a result of further
engineering enhancements, subject to FCC approval.

    The Company operates two formats in the Phoenix MSA (the "Phoenix
Stations"). The first format is broadcast on a group comprising three stations,
KEDJ-FM on 106.3 FM, KDDJ-FM on 100.3 FM, and KBZR-FM on 106.5, all
trimulcasting the modern rock format known as "The Edge" with the Howard Stern
morning show. "The Edge" earned a 2.4% share in the 12+category as of the Fall
1999 Arbitron book. "The Edge" currently covers approximately 95% of the
Arbitron diaries in the Phoenix MSA. The Company acquired KEDJ-FM and KDDJ-FM on
July 30, 1999. On September 22, 1999 the Company acquired KBZR-FM and added it
to "The Edge" station group.

    The second format in the Phoenix area is currently broadcast on KSSL-FM. It
is a Hispanic contemporary hit radio format, known as "Que Buena Phoenix", on
the 105.3 FM frequency. KSSL-FM commenced operations in February 2000. The
Company acquired KSSL-FM on September 28, 1999. KSSL-FM currently covers
approximately 65% of the Arbitron diaries in the Phoenix MSA and will increase
its coverage to approximately 90% as a result of the planned increase in its
transmission power and other technical improvements, which the Company plans to
implement by the fourth quarter in 2000 pending receipt of FCC approval. The
Company has plans to effect engineering enhancements to the KBZR-FM signal.
These improvements are subject to FCC approval, but are anticipated to occur in
the year 2000. After these changes, KDDJ-FM 100.3 FM will broadcast the "Que
Buena" format, forming a simulcast combo in Phoenix whose signal will cover
approximately 90% of the Arbitron diaries in the Phoenix MSA. The Company
acquired the four stations in Phoenix for a combined purchase price
significantly less than the reported purchase price of a Class C station combo
in the Phoenix MSA as evidenced by 1999 transactions.

    On November 1, 1999 the Company entered into a merger and registration
rights agreement (the"Agreement") in which the Company acquired, in an all stock
transaction, all the issued and outstanding stock of Hispanic Internet
Holdings, Inc. ("The Internet Company"), a privately held bilingual Online
Service Provider for the U.S. Hispanic and Latin American markets. The
transaction was accounted for as a purchase. The Company issued 400,000 shares
of its Class A Common Stock at a value of $4 per share. Under the terms of the
Agreement, an additional 600,000 shares will be issued, (i) Over the next five
years contingent upon the successful achievement of certain annual revenue
goals, or (ii) In

                                       4
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the event of a sale or spin-off of the Internet company, prior to the fifth
anniversary of the merger, for a valuation of at least $10 million, or (iii) In
the event of a sale of Big City Radio prior to the fifth anniversary of the
merger at a price of at least $4.00 per share. The Company, through the
acquisition of Hispanic Internet Holdings, Inc., owns TodoAhora.com, a bilingual
Internet portal, which will deliver a full range of Internet programming to the
Hispanic community including news, entertainment, finance, culture, and
e-commerce opportunities. TodoAhora.com will serve the Hispanic community both
in the U.S. and overseas.

    The Company is controlled by Stuart Subotnick, a general partner of
Metromedia Company, a Delaware general partnership ("Metromedia"), who, through
the beneficial ownership of 100% of the Company's Class B Common Stock, par
value $.01 per share (the "Class B Common Stock"), owns approximately 57% of the
Company's outstanding common stock, representing 93% of the voting power of the
Company's outstanding 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") or the conversion of the Class B Common
Stock which is convertible into shares of Class A common Stock on a one for one
basis).

MANAGEMENT

    Mr. Stuart Subotnick, Chairman, is a founder of the Company. 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. On November 1, 1999, the Company announced the
appointment of Charles M. Fernandez as President and Chief Executive Officer of
the Company. Mr. Fernandez has also served as a director of the Company since
November 1999. Previously, Mr. Fernandez served as Chairman of Hispanic Internet
Holdings, Inc. from 1998 until its merger with Big City Radio, Inc.
Mr. Fernandez served as Executive Vice President and Director of Heftel
Broadcasting Corp up until its purchase by Clear Channel in late 1995. In
addition to Mr. Subotnick and Mr. Fernandez, 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, Chicago,
and Phoenix, four of the largest markets in the United States in terms of
aggregate radio revenues and the top three U.S. markets. Y-107 NY, The
EightiesChannel, and 92 KISS FM have each exhibited significant increases in
Arbitron ratings and net revenue since their respective launches. In
December 1999 the Company launched Viva 107.1, a Hispanic contemporary hit radio
format in Los Angeles, and in February 2000 it launched "Que Buena, Phoenix",
another Hispanic contemporary hit radio format.

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 1999 revenues of $712 million. From 1995 to 1999, radio
advertising revenue in the Los Angeles MSA grew from $467 million to
$712 million, a compound annual growth rate of 11.1%. Los Angeles is the first
market in which the Company implemented STMC-TM-, with its acquisitions of three
radio stations for an aggregate purchase price of $26.8 million. Viva 107.1
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

                                       5
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the first quarter of 1998, Viva 107.1 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, Viva 107.1
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 an
extensive updated research study of the Los Angeles market in 1999, the Company
launched a Hispanic contemporary hit radio format, as it believes that there is
no comparable station offering this energetic Hispanic music and entertainment
that primarily targets the important 18-49 demographic.

    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 1999 revenues of $693 million. From 1995 to 1999, radio advertising
revenue in the New York MSA grew from $432 million to $693 million, a compound
annual growth rate of 12.5%. 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.

CHICAGO

    The Chicago MSA is the third largest Arbitron market in terms of population
and aggregate radio market revenues in the United States with 1999 revenues of
$496 million. From 1995 to 1999, radio advertising revenue in the Chicago MSA
grew from $317 million to $496 million, a compound annual growth rate of 11.9%.
The Company has to date acquired six radio stations in the Chicago MSA for an
aggregate purchase price of $34.6 million. The EightiesChannel began
broadcasting its Eighties music format in August 1999. 92 KISS FM began
broadcasting its contemporary hit radio format in November 1998 on two 92.7
frequencies. The Company added to these stations, the newly acquired WDEK-FM
radio on the 92.5 frequency in February 1999. Subsequent to certain technical
improvements, which are subject to FCC approval, the Company expects both
Chicago Stations to cover approximately 90% of the Arbitron diaries in the
Chicago MSA.

                                       6
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PHOENIX

    The Phoenix MSA is the sixteenth largest Arbitron market in terms of
population and fifteenth in aggregate radio market revenues in the United States
with 1999 revenues of $165 million. From 1995 to 1999, radio advertising revenue
in the Phoenix MSA grew from $96 million to $165 million, a compound annual
growth rate of 14.5%. The Company has to date acquired four radio stations in
the Phoenix MSA for an aggregate purchase price of $32 million. The Edge
broadcasts its modern rock format with the Howard Stern morning show. "Que
Buena" 105.3 began broadcasting its Hispanic contemporary hit radio format in
February 2000. The Company has plans to effect engineering enhancements to the
KBZR-FM signal. These improvements are subject to FCC approval, but are
anticipated to occur in the year 2000. After these changes, KDDJ-FM 100.3 FM
will broadcast the "Que Buena" format, forming a simulcast combo in Phoenix
whose signal will cover approximately 90% of the Arbitron diaries in the Phoenix
MSA. The Company acquired the four stations in Phoenix for a combined purchase
price significantly less than the reported purchase price of a Class C station
combo in the Phoenix MSA as evidenced by 1999 transactions.

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 86% 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.

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INTERNET REVENUES

    Internet revenues are derived principally from the sale of various forms of
advertisement, including sponsorships, endorsements and product placements, and
from electronic commerce activities related to its programming on pages
delivered to users of our Internet channel. Advertising programs are generally
delivered on either an "impression" based program or a "performance" based
program. An impression based program earns revenues when an advertisement is
delivered to a user of our Internet network. A performance based program earns
revenues when a user of our Internet network responds to an advertisement by
linking to an advertisers Internet network. Advertising revenues are recognized
in the period in which the advertisements are delivered. The Company expects to
formally launch TodoAhora.com in the second quarter of 2000. Internet revenues
are not expected to be a significant revenue stream for the Company in 2000.

COMPETITION

RADIO BROADCASTING

    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 stations, as well as with other
media such as television, print media, billboards, compact discs and music
videos. Several better-capitalized companies, including Chancellor 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 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. The Company cannot predict the effect, if any, that any such
new technologies may have on the radio broadcasting industry.

                                       8
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INTERNET

    The market for Internet products and services is highly competitive. There
are no substantial barriers to entry in these markets, and TodoAhora.com expects
that competition will continue to intensify. TodoAhora.com will compete with
other Hispanic and bilingual providers of online navigation, information and
community services.

    TodoAhora.com believes that the principal competitive factors in its markets
are:

    - brand recognition;

    - ease of use;

    - comprehensiveness;

    - personalization;

    - independence;

    - quality and responsiveness of search results and other services;

    - the availability of high-quality, targeted content and focused value-added
      products and services;

    - access to end users; and

    - with respect to advertisers and sponsors, the number of users, duration
      and frequency of visits, and user demographics.

    Many of its existing competitors, as well as a number of potential new
competitors, have significantly greater financial, technical, marketing and
distribution resources than TodoAhora.com does.

ACQUISITIONS

    Since its incorporation in August 1994, the Company has acquired the assets
of twenty radio stations and an Internet company, and has disposed of three
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 $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 WWXY-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,
Belvedere, 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,

                                       9
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Pomona, New York, from Rockland Communicators, Inc. for a purchase price of
$1.0 million. The Company sold this station in March 1999 to Polnet
Communications, Ltd. for a price of $1.6 million.

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-FM) 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-FM, 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 Broadcasting, Inc., 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 from Darrel Peters Productions, Inc. and WLRT-FM
(now WKIF-FM), Kankakee, Illinois from STARadio Corp. for an aggregate purchase
price of $19.5 million. In February 1999, the Company acquired substantially all
of the assets of radio stations WDEK-FM and WLBK-AM, DeKalb, Illinois, from
DeKalb Radio Studios, Inc. for a purchase price of $4.5 million. The Company
added 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.

PHOENIX

    In July 1999, the Company acquired the assets of radio stations KEDJ-FM, Sun
City, Arizona and KDDJ-FM, Globe, Arizona from New Century Arizona for a
purchase price of $22.0 million. In September 1999, the Company acquired the
assets of radio station KBZR-FM, Arizona City, Arizona from Brentlinger
Broadcasting, Inc. for a purchase price of $3.9 million. In September 1999, the
Company acquired the assets of radio station KMYL-FM (now KSSL-FM), Wickenburg,
Arizona, from Interstate Broadcasting Systems of Arizona, Inc. for a purchase
price of $5.6 million.

INTERNET

    On November 1, 1999 the Company entered into a merger and registration
rights agreement (the "Agreement") in which the Company acquired, in an all
stock transaction, all the issued and outstanding stock of Hispanic Internet
Holdings, Inc., a privately held bilingual Online Service Provider for the U.S.
Hispanic and Latin American markets. The Company, through the acquisition of
Hispanic Internet Holdings, Inc., owns TodoAhora.com, a bilingual Internet
portal, which will deliver a full range of world wide web programming to the
Hispanic community including news, entertainment, finance, culture, and
e-commerce opportunities. TodoAhora.com will serve the Hispanic community both
in the U.S. and overseas, and is expected to be launched in the second quarter
of 2000.

                                       10
<PAGE>
PROPOSED RADIO STATION DISPOSITION

    The Company plans to dispose of the assets of radio station WLBK-AM, DeKalb
Illinois during 2000.

EMPLOYEES

    At December 31, 1999, the Company had approximately 164 full-time employees
and 104 part-time employees. The Company believes that its relations with its
employees are good. None of the Company's employees is represented by a labor
union.

    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 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.

    Congress, via the Balanced Budget Act of 1997, authorized the FCC to conduct
auctions for the awarding of initial broadcast licenses or construction permits
for commercial radio and television stations. To facilitate the settlement
without auctions of already pending mutually exclusive applications, Congress
directed the FCC to waive existing rules as necessary. While the Company is not
a participant in any such proceeding, this action has resulted in the awarding
of construction permits for additional radio stations, some of which might have
the potential to compete with the Company's radio stations.

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

                                       11
<PAGE>
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 2003. 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 on January 25, 1999 (in 1998 for
WWYY-FM) and will expire on June 1, 2006. The Phoenix Stations' broadcast
licenses were renewed in 1997 and 1999 and will expire on October 1, 2005. The
Company does not anticipate any material difficulty in obtaining license
renewals for full terms in the future.

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. In
reviewing assignment and transfer applications, the FCC has indicated that in
evaluating whether a proposed transaction would serve the public interest, the
FCC may consider, among other things, whether the transaction would result in
the acquiring party obtaining an excessive share of the radio advertising
revenues in a given market or would otherwise result in excessive concentration
of media ownership. The U.S. Department of Justice ("DOJ") also reviews proposed
acquisitions of radio stations. The DOJ has, in some instances, obtained consent
decrees requiring radio station divestitures in a particular market based on
allegations that acquisitions would lead to unacceptable concentration levels.

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

                                       12
<PAGE>
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 limit or
prohibit one party from having attributable interests in a radio station as well
as in a local television station or daily newspaper, although such restrictions
are waived by the FCC under certain circumstances. The FCC is undertaking
biennial reviews of its ownership rules, including a pending reconsideration of
how it defines the number of radio stations in a market for purposes of the
local radio ownership rule. The Company cannot predict whether the FCC will
adopt any changes in its ownership rules or, if so, what the new rules 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 20% or more of such stock. 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. A new FCC rule--termed the "Equity-Debt Plus" or
"EDP" rule--provides for the attribution of otherwise non-attributable equity or
debt interests in a licensee. The EDP rule is triggered when a party holds
equity or debt in excess of 33% of the total assets (defined as equity plus
debt) of a licensee and such party also holds an attributable (non-EDP) interest
in another media entity in the same market or is a major programmer supplier to
another media entity in the market. Subject to the EDP rule, the FCC does not
consider holders of non-voting stock or of minority stock interests when there
is a single majority stockholder to be attributable parties. Moreover, subject
to the EDP rule, holders of 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. 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. 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 (as defined
herein), 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
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. Where the
corporation

                                       13
<PAGE>
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. Recently,
the FCC decided that it is in the public interest to allow up to 100% indirect
Alien ownership by citizens of or corporations organized under the laws of WTO
member nations. 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 by the FCC to be in violation of the
Communications Act or contrary to the public interest. At present, one of the
Company's officers is known by the Company to be an Alien and no other officers,
directors or stockholders are known to be Aliens. 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 EEO 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 and must comply with various rules promulgated under the
Communications Act that regulate political broadcasts and advertisements,
sponsorship identifications, indecent programming and other matters. In
addition, the FCC has recently adopted EEO rules requiring broadcast licensees
to file employment data annually with the FCC and to implement outreach efforts
designed to broaden the pool of employment applicants. 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.

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

                                       14
<PAGE>
separation rule when the station demonstrates that the service contours of
neighboring radio stations will 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 grandfathered status.

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. The FCC has granted applications for modifications of WYNY-FM,
Briarcliff Manor, New York, WWXY-FM, Hampton Bays, New York, and WWZY-FM, Long
Branch, New Jersey, KLYY, Arcadia, California, WXXY-FM, Highland Park, Illinois,
and WYXX, Morris, Illinois. Each of these stations requested increases in the
authorized power of the stations from the previous three-kilowatt ERP level to
the present six-kilowatt ERP level. These changes were implemented as a result
of the FCC adoption of a change in policy in August 1997 dealing with
grandfathered short-spaced FM radio stations. Grandfathered short-spaced
stations are those that do not meet the FCC's current requirements for distance
separation of FM radio stations operating on the same or adjacent frequencies as
the stations were authorized before the adoption of the current rules. In the
past, power increases or relocations of such grandfathered stations often did
not comply with the FCC's technical rules, and would be authorized by the FCC
only in limited circumstances.

    Pending before the FCC is a proposed change in the current rules that would
allow certain other of the Company's stations to increase their power or move
their transmitter sites to provide improved coverage within the desired metro
area. Until the FCC adoption of such a change and the approval of the license
modifications is granted, the Company cannot be certain that the new policy will
serve to permit the increases in the Company's coverage areas.

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. As in the case of the
Company, 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.

    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 AND RECENT DEVELOPMENTS

    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

                                       15
<PAGE>
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; spectrum use fees; revisions
of the FCC's equal employment opportunity rules and other matters relating to
minority and female involvement in broadcasting; proposals to change rules or
policies relating to political broadcasting; proposals to restrict or prohibit
the advertising of beer, wine and other alcoholic beverages on radio; proposals
to allow telephone companies to deliver audio and video programming to the home
through existing phone lines; changes in the FCC's multiple ownership, alien
ownership and cross-ownership policies; and proposals to limit the tax
deductibility of advertising expenses by advertisers.

    Other matters that could affect the Company include technological
innovations and developments generally affecting competition in the mass
communications industry. The FCC has licensed two entities to provide a new
technology, digital audio radio service or DARS, to deliver audio programming by
satellite. The FCC is also considering various proposals for terrestrial DARS.
DARS may provide a medium for the delivery of multiple new audio programming
formats to local and national audiences with sound quality equivalent to compact
discs. It is not known at this time whether this technology also may be used in
the future by existing radio broadcast stations either on existing or alternate
broadcasting frequencies. The FCC currently is also considering authorizing the
use of in-band, on-channel, or IBOC technology for radio stations. IBOC
technology would permit an AM or FM station to transmit radio programming in
both analog and digital formats, or in digital only formats, using the bandwidth
that the radio station is currently licensed to use. Such IBOC operations might
not be consistent with STMC operations. It is unclear what regulations the FCC
will adopt regarding IBOC technology and what effect such regulations would have
on the Company's business or the operations of its radio stations. The FCC has
recently adopted new rules authorizing the operation of low power radio stations
within the existing FM band. Low power radio stations will operate at power
levels below that of full power FM radio stations, such as those owned by the
Company. It is not possible to predict what effect, including interference
effect, low power radio stations will have on the operations of the Company's
radio stations.

    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 the areas effectively served by TodoAhora.com, 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

                                       16
<PAGE>
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 Company's competitors, (ii) changes in the regulatory
framework, including the possibility that U.S. or non-U.S. governments will
increase regulation of the Internet, (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.

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) 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, 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 leases facilities for the Phoenix
Stations in Phoenix (approximately 8,700 square feet), Apache Junction
(approximately 600 square feet), Casa Grande (approximately 1,200 square feet),
Globe, Arizona City and Wickenberg. 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, Morris, IL and DeKalb, IL. The towers, antennae
and other transmission equipment used in the Company's stations are generally in
good condition.

                                       17
<PAGE>
    The following table sets forth the location of the Company's principal
properties:

<TABLE>
<CAPTION>
LOCATION                               FACILITY
--------                               --------
<S>                                    <C>
LOS ANGELES
Arcadia, CA..........................  FM tower(3)
Fallbrook, CA........................  FM tower, studio, transmitter site(1)
Ventura, CA..........................  FM tower(3), studio, transmitter
                                       site(1)
Temecula, CA.........................  Translator site(1)
Century City, CA.....................  Studio, business offices(1)
Burbank, CA..........................  Booster site(1)

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)

CHICAGO
Highland Park, IL....................  FM tower(3), studio(1)
Morris, IL...........................  FM tower, transmitter site(2)
Arlington Heights, IL................  Studio, FM tower(1)
Kankakee, IL.........................  Studio, antenna(1)
Chicago, IL..........................  Studio, business offices(1)
Arlington Heights, IL................  FM tower(1)
DeKalb, IL...........................  Tower, studio, business offices(2)

PHOENIX
Globe, AZ............................  Tower(1)
Phoenix, AZ..........................  Studio, business offices(1)
Arizona City, AZ.....................  Tower(1)
Wickenberg, AZ.......................  Tower(1)
Apache Junction, AZ..................  Studio(1)
Casa Grande, AZ......................  Studio(1)
</TABLE>

------------------------

(1) Leased.

(2) Owned.

(3) Tower owned by the Company on leased property.

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, 1999.

                                       18
<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. The following table sets forth the high and low sales prices per share of
the Class A Common Stock as reported by the AMEX for each quarterly periods
during the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                HIGH         LOW
                                                              ---------   ----------
<S>                                                           <C>         <C>
1999:
First Quarter...............................................   5 1/2      3 3/16
Second Quarter..............................................   4 5/8      3 3/8
Third Quarter...............................................   4 5/8      3 1/4
Fourth Quarter..............................................   5 3/8      3 3/8

<CAPTION>
                                                                HIGH         LOW
                                                              ---------   ----------
1998:
<S>                                                           <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, 2000, the last reported sales price for the Company's Class A
Common Stock by the AMEX was $7.625 per share. As of March 8, 2000, there were
approximately 34 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 Delaware General
Corporations Law, general economic conditions and such other factors considered
relevant by the Company's Board of Directors. The Company's Revolving Credit
Facility (defined below) 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").

                                       19
<PAGE>
    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.

    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 statement of operations data for the year ended
December 31, 1995 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, 1998 and 1999 and
statement of operations data for the years ended December 31, 1996, 1997, 1998
and 1999 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>
                                                               YEARS ENDED DECEMBER 31,
                                              ----------------------------------------------------------
                                              1995(1)    1996(2)(3)   1997(4)    1998(5)(6)   1999(7)(8)
                                              --------   ----------   --------   ----------   ----------
                                                                    (IN THOUSANDS)
<S>                                           <C>        <C>          <C>        <C>          <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues..............................  $ 5,655      $ 8,567    $ 11,731    $ 15,883     $ 23,296
Net revenues................................    5,225        7,944      10,460      14,202       20,604
Station operating expenses..................    7,185       12,253      12,979      17,525       23,617
Corporate, general and administrative
  expenses..................................      425        1,201       1,745       2,527        4,371
Employment incentives.......................       --           --       3,863         808           --
Depreciation and amortization...............      798        1,326       1,791       2,528        3,812
Operating loss..............................   (3,183)      (6,836)     (9,918)     (9,186)     (11,196)
Gain on sale of station.....................       --        6,608          --          --          663
Interest expense............................     (842)      (2,889)     (4,488)    (12,608)     (16,953)
Income tax benefit, net.....................       --           --       1,050       1,988           63
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)..................................   (4,005)      (3,098)    (16,918)    (17,449)     (25,808)
BASIC AND DILUTIVE INCOME (LOSS) PER COMMON
  SHARE:....................................    (0.66)       (0.39)      (1.77)      (1.24)       (1.83)
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                                AS OF DECEMBER 31,
                                               ----------------------------------------------------
                                                 1995       1996       1997       1998       1999
                                               --------   --------   --------   --------   --------
<S>                                            <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash.........................................  $ 1,066    $   234    $    80    $  5,285   $  2,431
Intangibles, net.............................    6,040     29,230     54,115      80,309    113,873
Total assets.................................    9,433     38,963     60,108     152,082    144,511
Notes payable to stockholders................   13,477     12,544         --          --         --
Long-term liabilities........................       --     28,200     30,142     138,227    153,094
Stockholder's equity (deficiency)............   (5,821)    (3,800)    25,032       8,391    (15,935)
</TABLE>

------------------------

(1) 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.

(2) 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.

(3) 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.

(4) 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.

(5) 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.

(6) 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.

(7) The Company acquired substantially all of the assets of WDEK-FM and WLBK-AM
    on February 25, 1999. The financial statements include the operations of
    these stations since February 25, 1999.

(8) The Company acquired substantially all of the assets of KEDJ-FM and KDDJ-FM
    on July 30, 1999, KBZR-FM on September 22, 1999 and KMYL-FM on
    September 28, 1999. The operations of these stations have been included in
    the consolidated statements of operations from these dates. The Company sold
    radio station WRKL-AM in March 1999.

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."

                                       21
<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, Pomona, 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. The Los Angeles stations, 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. In
December 1999, the Los Angeles Stations began broadcasting as Viva 107.1 under
its current format of Hispanic contemporary hit radio. 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, WYNY-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 WWXY-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 WWXY-FM and WWZY-FM on April 1, 1997
and June 5, 1997, respectively. On April 27, 1998, the Company commenced
operations of WWYY-FM (formerly WRNJ-FM) under a LMA as part of the Y-107 NY
country music station. The Company completed its acquisition of WWYY-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. In August 1999, 103.1 FM began
broadcasting its current format of "The EightiesChannel". 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. In February 1999, the Company acquired WDEK-FM and
WLBK-AM, DeKalb, Illinois and added WDEK-FM to the existing 92 KISS FM stations.

    On July 30, 1999, the Company completed the acquisition of KEDJ-FM, Sun
City, Arizona and KDDJ-FM, Globe, Arizona. The Company operated KEDJ-FM and
KDDJ-FM, simulcasting as The Edge with its modern rock format and Howard Stern
morning show. On September 22, 1999, the Company

                                       22
<PAGE>
acquired KBZR-FM, Arizona City, Arizona, which was added to The Edge stations to
form a trimulcast. On September 28, 1999, the Company acquired KSSL-FM (formerly
KMYL-FM), Wickenberg, Arizona. In February 2000, the Company began operating
KSSL-FM as a stand-alone radio station broadcasting its Hispanic contemporary
hit radio format.

    On November 1, 1999 the Company entered into a merger and registration
rights agreement (the "Agreement") in which the Company acquired, in an all
stock transaction, all the issued and outstanding stock of Hispanic Internet
Holdings, Inc., a privately held bilingual Online Service Provider for the U.S.
Hispanic and Latin American markets. The Company, through the acquisition of
Hispanic Internet Holdings, Inc., owns TodoAhora.com, a bilingual Internet
portal, which will deliver a full range of world wide web programming to the
Hispanic community including news, entertainment, finance, culture, and
e-commerce opportunities. TodoAhora.com will serve the Hispanic community both
in the U.S. and overseas, and is expected to be launched in the second quarter
of 2000. TodoAhora.com had no significant operations in 1999 or prior years.

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 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, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

    NET REVENUES in the year ended December 31, 1999 were $20,604,000 compared
with $14,202,000 for the year ended December 31, 1998, an increase of $6,402,000
or 45%. This increase was due primarily to increases in the net revenues of
Y-107 NY, the Chicago stations, and the acquisition of "The Edge" in Phoenix.
These increases in revenues were partially offset by the decrease in net
revenues of $1,368,000 for WRKL-AM which was sold by the Company in March 1999.
The existing radio stations' (owned for all of 1999 and 1998) net revenue growth
compared with the corresponding period in the prior year was $2,437,000 or 19%.

    STATION OPERATING EXPENSES excluding depreciation and amortization for the
year ended December 31, 1999 were $23,617,000 compared with $17,525,000 in the
year ended December 31, 1998, an increase of $6,092,000 or 35%. This increase
was due principally to the start-up operations of 92 KISS FM in

                                       23
<PAGE>
November 1998 and "The Edge" in July 1999 and the increased station operating
expenses of the "The EightiesChannel" throughout the twelve months ended
December 31, 1999, offset by a decrease in station operating expenses at WRKL-AM
of $1,531,000 for the corresponding twelve month period in 1999 due to its sale
in March 1999.

    DEPRECIATION AND AMORTIZATION EXPENSES for the year ended December 31, 1999
were $3,812,000 compared with $2,528,000 for the year ended December 31, 1998,
an increase of $1,284,000 or 51%. This increase was due primarily to the
amortization of intangibles and depreciation of capital assets of the Phoenix
Stations which were acquired in July and September 1999 and Chicago Stations
which were acquired in August 1998 and February 1999.

    CORPORATE, GENERAL AND ADMINISTRATIVE EXPENSES for the year ended
December 31, 1999 were $4,371,000 compared with $2,527,000 for the year ended
December 31, 1998, an increase of $1,844,000 or 73%. This increase was due
primarily to a severance payment to the Company's prior Chief Executive Officer
and increased administrative expenses to support the growth of the company.

    INTEREST EXPENSE for the year ended December 31, 1999 was $16,953,000
compared with $12,608,000 for the year ended December 31, 1998, an increase of
$4,345,000 or 34%. This increase reflects additional interest resulting from the
issuance of the Notes on March 17, 1998 (the "Notes Offering") and its accreted
principal amount for the year ended December 31, 1999 when compared to the
corresponding period in 1998, offset by a decrease of $2,971,000 resulting from
the pay off of the long-term debt in March 1998. In the years ended
December 31, 1999 and 1998, the weighted average outstanding total debt for the
Company was $146,540,000 and $111,399,000, respectively. The weighted average
rate of interest on the outstanding debt was 11.32% and 11.31%, respectively.
Interest income for the year ended December 31, 1999 was $1,952,000 as compared
to $3,076,000 for the year ended December 31, 1998.

    NET LOSSES for the year ended December 31, 1999 were $25,808,000 compared
with $17,449,000 for the year ended December 31, 1998, an increase of $8,359,000
or 48%. The increase was primarily attributable to higher station operating
expenses, depreciation and amortization expenses, corporate, general and
administrative expenses, and net interest expense as well as the reduction in
income tax benefit of $1,925,000. These increases were offset by a gain on sale
of a station of $663,000, no extraordinary loss on extinguishment of debt, net
of income taxes of $495,000 or employment stock incentive of $808,000 and
increased net revenues for the twelve months ended December 31, 1999.

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 the Los Angeles Stations and the commencement of operations of
Chicago Stations in February 1998. Same stations' revenue growth compared with
the prior year was $2,604,000, or 25%.

    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 the Chicago Stations 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

                                       24
<PAGE>
increase is due to increased expenses resulting from the Company becoming a
public entity 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 on
the Notes 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 weighted
average outstanding total debt for the Company was $111,399,000 and $56,898,000,
respectively. The weighted 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 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.

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 the Los Angeles
Stations, the NY Stations, and the Chicago Stations, 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), under the Old Credit
Facility and the issuance of the Notes. The Company has entered into employment
contracts with 24 individuals, 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 $2,908,000 in 2000,
$888,000 in 2001 and $442,000 in 2002.

    The Company has never paid cash or stock dividends. The Company will
continue to report net losses throughout the start up period for the Los
Angeles, Chicago and Phoenix 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, 1997, 1998 and 1999, the Company
reported cash used in operations. 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 years ended
December 31, 1998 and 1999 the negative cash flow was predominantly due to the
funding of start-up operations at New York, "The EightiesChannel", and 92 KISS
FM Chicago.

CASH FLOWS FROM INVESTING ACTIVITIES

    Capital expenditures (excluding acquisitions of radio stations) were
$488,000, $2,441,000 and $2,941,000 in the years ended December 31, 1997, 1998
and 1999, respectively. These expenditures

                                       25
<PAGE>
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. In the year
ended 1998, the Company purchased $125,609,000 in marketable securities with
proceeds from the Notes Offering of which $77,193,000 were sold during the year.
In the year ended 1999, the Company purchased $34,508,000 in marketable
securities and sold $74,916,000 to generate cash for the purchase of radio
stations. Cash paid and advanced for assets of radio stations acquired were
$21,967,000, $23,244,000 and $36,177,000 in the years ended December 31, 1997,
1998 and 1999, respectively. See note 3 on acquisitions.

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.

    The Company completed a private placement of $174.0 million aggregate
principal amount at maturity of Notes on March 17, 1998 (the "issue date"),
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 has used the proceeds of
the Notes Offering to finance the acquisition costs of radio station properties
and intends to use the remaining proceeds 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, as defined in the Indenture governing the
Notes; as of December 31, 1999, all of the Company's subsidiaries were
Restricted Subsidiaries. The Notes contain certain financial and operational
covenants and other restrictions with which the Company and its Restricted
Subsidiaries must comply,

                                       26
<PAGE>
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. At December 31, 1999 the Company is in compliance
with all covenants and other restrictions under the Notes.

    On July 6, 1998, the Company completed an exchange offer for the Notes, in
which the holders of substantially all 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 a revolving credit facility (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 and any other
Stations' cash flow as agreed to from time to time. The Revolving Credit
Facility will mature on the fifth anniversary of the issue date and amounts
outstanding under the Revolving Credit 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, limitations on 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 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, as defined. As of the date of this report, the Company has no binding
commitments for any transactions that would result in a "change of control".

    After giving effect to the Notes Offering and application of the net
proceeds therefrom, the Company had available approximately $10.3 million of
cash and cash equivalents on hand and marketable securities at December 31, 1999
and has unused borrowing capacity of $4.2 million under the Revolving Credit

                                       27
<PAGE>
Facility, which can be used for working capital purposes, including financing
any such 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 remaining 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, 2000. 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 to successfully 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.

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.

                                       28
<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....................     30
Consolidated Balance Sheets as of December 31, 1998 and
  1999......................................................     31
Consolidated Statements of Operations for the years ended
  December 31, 1997, 1998 and 1999..........................     32
Consolidated Statement of Stockholders' Equity
  (Deficiency)..............................................     33
Consolidated Statements of Cash Flows for the years ended
  December 31, 1997, 1998 and 1999..........................     34
Notes to Consolidated Financial Statements..................     35
</TABLE>

                                       29
<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, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity (deficiency) and
cash flows for each of the years in the three-year period ended December 31,
1999. In connection with our audits of the consolidated financial statements, we
also have audited Schedule II, Valuation and Qualifying Accounts for each of the
years in the three-year period ended December 31, 1999. 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, 1999 and 1998, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999 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 10, 2000

                                       30
<PAGE>
                              BIG CITY RADIO, INC.

                          CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1998 AND 1999

<TABLE>
<CAPTION>
                                                                  1998           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
                                         ASSETS
Current assets:
  Cash and cash equivalents.................................  $  5,285,000   $  2,431,000
  Cash held in escrow (note 3)..............................       450,000        275,000
  Cash held in investment, restricted (note 4)..............     3,350,000      1,934,000
  Marketable securities (note 2)............................    48,416,000      7,859,000
  Accounts receivable, net of allowance of $119,000 and
    $235,000 in 1998 and 1999, respectively.................     3,362,000      6,090,000
  Interest receivable.......................................     1,574,000        526,000
  Prepaid expenses and other current assets.................       603,000        920,000
                                                              ------------   ------------
Total current assets........................................    63,040,000     20,035,000
Property and equipment, net (note 5)........................     4,512,000      7,145,000
Intangibles, net (note 6)...................................    80,309,000    113,873,000
Deferred financing fees, net................................     4,052,000      3,399,000
Other assets................................................       169,000         59,000
                                                              ------------   ------------
Total assets................................................  $152,082,000   $144,511,000
                                                              ============   ============

                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $    518,000   $    822,000
  Accrued expenses..........................................     1,186,000      3,146,000
  Promissory notes (note 8).................................     1,175,000        881,000
  Other current liabilities.................................       112,000         93,000
                                                              ------------   ------------
Total current liabilities...................................     2,991,000      4,942,000
                                                              ============   ============
Long-term liabilities:
  Senior discount notes (note 7)............................   136,776,000    152,596,000
  Promissory notes (note 8).................................       881,000             --
  Other long-term liabilities...............................       570,000        498,000
  Deferred income tax liabilities (note 12).................     2,473,000      2,410,000
Stockholders' equity (deficiency) (note 13):
  Preferred stock, $.01 par value. Authorized 20,000,000
    shares; zero shares issued and outstanding in 1998 and
    1999....................................................            --             --
  Common stock, Class A, $.01 par value. Authorized
    80,000,000 shares; issued and outstanding 5,818,817
    shares and 6,218,817 shares in 1998 and 1999,
    respectively............................................        58,000         62,000
  Common stock, Class B, $.01 par value. Authorized
    20,000,000 shares; issued and outstanding 8,250,458
    shares in 1998 and 1999.................................        83,000         83,000
  Additional paid-in capital................................    27,831,000     29,458,000
  Other comprehensive loss (note 2).........................            --       (149,000)
  Accumulated deficit.......................................   (19,581,000)   (45,389,000)
                                                              ------------   ------------
                                                                 8,391,000    (15,935,000)
                                                              ------------   ------------
Total liabilities and stockholders' equity (deficiency).....  $152,082,000   $144,511,000
                                                              ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       31
<PAGE>
                              BIG CITY RADIO, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                  YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
                                                          1997           1998           1999
                                                      ------------   ------------   ------------
<S>                                                   <C>            <C>            <C>
Gross revenues......................................  $ 11,731,000   $ 15,883,000   $ 23,296,000
Less commissions and fees...........................     1,271,000      1,681,000      2,692,000
                                                      ------------   ------------   ------------
  Net revenues......................................    10,460,000     14,202,000     20,604,000
                                                      ------------   ------------   ------------
Operating expenses:
Station operating expenses, excluding depreciation
  and amortization..................................    12,979,000     17,525,000     23,617,000
Corporate, general and administrative expenses......     1,745,000      2,527,000      4,371,000
Employment stock incentives (note 13)...............     3,863,000        808,000             --
Depreciation and amortization.......................     1,791,000      2,528,000      3,812,000
                                                      ------------   ------------   ------------
  Total operating expenses..........................    20,378,000     23,388,000     31,800,000
                                                      ------------   ------------   ------------
  Operating loss....................................    (9,918,000)    (9,186,000)   (11,196,000)

Other income (expenses):
Gain on sale of station (note 3)....................            --             --        663,000
Interest income.....................................        20,000      3,076,000      1,952,000
Interest expense....................................    (4,488,000)   (12,608,000)   (16,953,000)
Other, net..........................................        81,000       (224,000)      (337,000)
                                                      ------------   ------------   ------------
  Total other (expenses)............................    (4,387,000)    (9,756,000)   (14,675,000)
                                                      ------------   ------------   ------------
Loss before benefit from income taxes and
  extraordinary loss................................   (14,305,000)   (18,942,000)   (25,871,000)
Income tax benefit, net (notes 2 and 12)............     1,050,000      1,988,000         63,000
Deferred income taxes resulting from conversion to
  C Corporation status (notes 2 and 12).............    (3,350,000)            --             --
                                                      ------------   ------------   ------------
  Loss before extraordinary loss....................   (16,605,000)   (16,954,000)   (25,808,000)
Extraordinary loss on extinguishment of debt, net of
  income taxes (notes 7 and 9)......................      (313,000)      (495,000)            --
                                                      ------------   ------------   ------------
  Net loss..........................................   (16,918,000)   (17,449,000)   (25,808,000)
                                                      ============   ============   ============

Basic and diluted loss per share:
Loss before extraordinary item......................  $      (1.74)  $      (1.21)  $      (1.83)
Extraordinary item..................................         (0.03)         (0.03)            --
                                                      ------------   ------------   ------------
  Net loss..........................................  $      (1.77)  $      (1.24)  $      (1.83)
                                                      ============   ============   ============

Weighted average shares outstanding.................     9,539,000     14,026,000     14,136,000
                                                      ============   ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       32
<PAGE>
                              BIG CITY RADIO, INC.

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                  YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
                                     COMMON STOCK         ADDITIONAL        OTHER
                                 ---------------------     PAID-IN      COMPREHENSIVE   ACCUMULATED
                                   SHARES      AMOUNT      CAPITAL          LOSS          DEFICIT         TOTAL
                                 ----------   --------   ------------   -------------   ------------   -----------
<S>                              <C>          <C>        <C>            <C>             <C>            <C>
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
Capital contribution related to
  employment incentive
  (note 13)....................          --         --         31,000             --              --        31,000
Unrealized loss on marketable
  securities...................          --         --             --       (149,000)             --      (149,000)
Acquisition of Hispanic
  Internet Holdings
  (note 3).....................     400,000      4,000      1,596,000             --              --     1,600,000
Net loss.......................          --         --             --             --     (25,808,000)  (25,808,000)
                                 ----------   --------   ------------   ------------    ------------   -----------
Balance at December 31, 1999...  14,469,275   $145,000     29,458,000       (149,000)    (45,389,000)  (15,935,000)
                                 ==========   ========   ============   ============    ============   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       33
<PAGE>
                              BIG CITY RADIO, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
                                                                1997           1998          1999
                                                             -----------   ------------   -----------
<S>                                                          <C>           <C>            <C>
Cash flows from operating activities:
  Net loss.................................................  (16,918,000)   (17,449,000)  (25,808,000)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
  Depreciation and amortization............................    1,791,000      2,528,000     3,812,000
  Deferred income taxes (notes 2 and 12)...................    2,100,000     (2,100,000)      (63,000)
  Non cash interest........................................      140,000     11,948,000    16,504,000
  Gain on sale of station (note 3).........................           --             --      (663,000)
  Loss on disposal of fixed assets.........................           --             --        11,000
  Disposal of fixed assets.................................           --             --        33,000
  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......................................     (788,000)    (1,037,000)   (2,728,000)
  Interest receivable......................................           --     (1,574,000)    1,048,000
  Prepaid expenses and other current assets................     (210,000)      (351,000)      (67,000)
  Other assets.............................................       (9,000)      (124,000)      110,000
    Increase (decrease) in liabilities:
  Accounts payable.........................................      295,000       (607,000)      304,000
  Accrued expenses.........................................      929,000       (197,000)    1,960,000
  Other liabilities........................................     (367,000)      (185,000)      (91,000)
                                                             -----------   ------------   -----------
    Net cash used in operating activities..................   (8,661,000)    (7,758,000)   (5,638,000)
                                                             -----------   ------------   -----------
Cash flows from investing activities:
  Purchase of property and equipment.......................     (488,000)    (2,441,000)   (2,941,000)
  Purchase of marketable securities........................           --   (125,609,000)  (34,508,000)
  Sale of marketable securities............................           --     77,193,000    74,916,000
  Cash paid and advanced for assets of radio stations
    acquired...............................................  (21,967,000)   (23,244,000)  (36,177,000)
  Cash held in restricted investment.......................           --     (3,350,000)    1,416,000
  Cash received for disposal of fixed assets...............           --             --        58,000
  Cash received for radio station sold.....................      513,000             --     1,195,000
                                                             -----------   ------------   -----------
    Net cash provided by (used in) investing activities....  (21,942,000)   (77,451,000)    3,959,000
                                                             -----------   ------------   -----------
Cash flows from financing activities:
  Loans from stockholders..................................      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
    $793,000, $0 and $0 in 1997, 1998, and 1999,
    respectively...........................................   30,007,000      2,500,000            --
  Repayment of existing credit facility....................  (28,900,000)   (32,600,000)           --
  Repayment of promissory notes............................           --       (294,000)   (1,175,000)
  Proceeds from initial public offering....................   28,541,000             --            --
                                                             -----------   ------------   -----------
    Net cash provided by (used in) financing activities....   30,449,000     90,414,000    (1,175,000)
                                                             -----------   ------------   -----------
    Change in cash and cash equivalents....................     (154,000)     5,205,000    (2,854,000)
Cash and cash equivalents at beginning of year.............      234,000         80,000     5,285,000
                                                             -----------   ------------   -----------
Cash and cash equivalents at end of year...................       80,000      5,285,000     2,431,000
                                                             ===========   ============   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       34
<PAGE>
                              BIG CITY RADIO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1999

(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, 1999, the Company owned three FM stations in Southern California,
KLYY-FM Arcadia, KVYY-FM Ventura and KSYY-FM Fallbrook (programmed as "Viva
107.1"). In the New York area, the Company owns four radio properties, WYNY-FM
Westchester County, New York (the "Original New York Stations"), WWZY-FM
Monmouth, New Jersey, WWXY-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, WYXX-FM Morris, Illinois (programmed as "FM
103.1"), WKIE-FM Arlington Heights, Illinois, WKIF-FM Kankakee, Illinois,
WDEK-FM DeKalb, Illinois (programmed as "92 KISS FM") and WLBK-AM DeKalb,
Illinois. In the Phoenix area, the Company owns four radio properties, KEDJ-FM
Sun City, Arizona, KDDJ-FM Globe, Arizona, KBZR-FM Arizona City, Arizona
(programmed as "The Edge") and KSSL-FM Wickenburg, Arizona (programmed as "Que
Buena").

    The Company also owns Hispanic Internet Holdings, Inc. which owns
TodoAhora.com, a bilingual Internet portal, which will deliver a full range of
Internet programming to the Hispanic community including news, entertainment,
finance, culture, and e-commerce opportunities.

    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 and in
developing the Internet portal site. 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 $120,808,000 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 develop and operate existing properties through at least
December 31, 2000.

                                       35
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

    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 $1.9 million with maturities less than three months were
included in cash and cash equivalents at December 31, 1999.

MARKETABLE SECURITIES

    Marketable securities at December 31, 1998 and 1999 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, 1999, $0.1 million of unrealized holding losses were
recorded. Proceeds from the sale of securities were $74.9 million in 1999. Gross
realized losses were $0.3 million in 1999 and has been included in interest
income, net.

    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 charge 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

                                       36
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
acquisition agreements, are amortized over the period of the agreements,
generally three years. Goodwill resulting from the acquisition of the Hispanic
Internet Holdings, Inc. is amortized over five years.

    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 fair market value. The Company
has determined that intangibles are fairly stated at December 31, 1999.

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.

                                       37
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(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 and fair value of Senior Discount Notes are
$152.6 million and $112.2 million, respectively, at December 31, 1999. 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 estimates uncollectible accounts on a periodic basis. The
Company has not experienced significant losses relating to accounts receivable.
For periods ended December 31, 1997, 1998 and 1999, 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 $1,275,000, $1,484,000 and $1,326,000 for the years ended
December 31, 1997, 1998 and 1999, respectively.

LOSS PER SHARE

    The Company calculates loss per share in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share". Under SFAS
No. 128 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. 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. Stock options issued
under the Company's 1997, 1998 and 1999 Incentive Stock Plan amounting to
572,500, 924,800 and 2,193,300 at December 31, 1997, 1998 and 1999,
respectively, were not included in the computation of diluted EPS because to do
so would have been antidilutive.

                                       38
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 fiscal 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS No. 130").
The statement required that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in-capital in the equity section of a statement of
financial position. Accumulated other comprehensive income of the Company
consists solely of net unrealized gains (losses) on available for sale
investments.

(3) ACQUISITIONS AND DISPOSITIONS

    On November 1, 1999 the Company entered into a merger and registration
rights agreement (the "Agreement") in which the Company acquired, in an all
stock transaction, all the issued and outstanding stock of Hispanic Internet
Holdings, Inc., a privately held bilingual Online Service Provider for the U.S.
Hispanic and Latin American markets. The transaction was accounted for as a
purchase. The Company issued 400,000 shares of its Class A Common Stock with a
fair market value of $4 per share. Under the terms of the Agreement, an
additional 600,000 shares may be issued, (i) Over the next five years contingent
upon the successful achievement of certain annual revenue goals, or (ii) In the
event of a sale or spin-off of the Internet company, prior to the fifth
anniversary of the merger, for a valuation of at least $10 million, or (iii) In
the event of a sale of Big City Radio prior to the fifth anniversary of the
merger at a price of at least $4.00 per share.

    On September 28, 1999, the Company completed the acquisition of KSSL-FM
(formerly KMYL-FM), Wickenburg, Arizona. The operations of this station have
been included in the consolidated statements of operations from that date. The
purchase price for this station was $5,600,000 excluding acquisition related
expenses and was paid in cash. Management's preliminary estimate of the fair
value of the assets acquired in this transaction, subject to further review and
appraisal is as follows:

<TABLE>
<S>                                                           <C>
Building....................................................  $    8,000
Fixed assets................................................      92,000
FCC broadcast license.......................................   5,500,000
</TABLE>

    On September 22, 1999, the Company completed the acquisition of KBZR-FM,
Arizona City, Arizona. The operations of this station have been included in the
consolidated statements of operations from that date. The purchase price for
this station was $3,900,000 excluding acquisition related expenses

                                       39
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
and was paid in cash. Management's preliminary estimate of the fair value of the
assets acquired in this transaction, subject to further review and appraisal is
as follows:

<TABLE>
<S>                                                           <C>
Land........................................................  $   20,000
Fixed assets................................................      73,000
FCC broadcast license.......................................   3,807,000
</TABLE>

    On July 30, 1999, the Company completed the acquisition of the simulcast
stations, KEDJ-FM, Sun City, Arizona and KDDJ-FM, Globe, Arizona. The operations
of these stations have been included in the consolidated statements of
operations from that date. The purchase price for these stations was $22,000,000
excluding acquisition related expenses and was paid in cash. Management's
preliminary estimate of the fair value of the assets acquired in this
transaction, subject to further review and appraisal is as follows:

<TABLE>
<S>                                                           <C>
Building....................................................  $   461,000
Fixed assets................................................      227,000
FCC broadcast license.......................................   21,312,000
</TABLE>

    On April 30, 1999 the Company signed an acquisition agreement whereby the
assets of radio station KLVA-FM, Casa Grande, Arizona would be exchanged for the
assets of radio station KDDJ-FM, Globe, Arizona, subject to the consummation of
its purchase which occurred on July 30, 1999. Accordingly, in April 1999 the
Company deposited into an escrow account the amount of $275,000 in good faith
consideration. In February 2000, the Company paid the balance in the escrow
account and an additional amount, totaling $550,000 to cancel the signed KLVA-FM
acquisition.

    On March 26, 1999, the Company sold the assets of radio station WRKL-AM, New
City, New York to Polnet Communications, Ltd. for a sale price of
$1.625 million. A gain of $663,000 on the sale of the station was recognized
during the period.

    On February 25, 1999, the Company completed the acquisition of WDEK-FM and
WLBK-AM, DeKalb, Illinois. The operations of these stations have been included
in the consolidated statements of operations from that date. The purchase price
for these stations was $4,500,000, excluding acquisition related expenses, of
which $450,000 was deposited into an escrow account in April 1998 in
anticipation of this purchase. Management's preliminary estimate of the fair
value of the assets acquired in these transactions, subject to further review
and appraisal, is as follows:

<TABLE>
<CAPTION>
                                                         WDEK-FM     WLBK-AM
                                                        ----------   --------
<S>                                                     <C>          <C>
Building..............................................  $       --   $150,000
Fixed assets..........................................     165,000    141,000
FCC broadcast license.................................   3,735,000    309,000
</TABLE>

    On August 4 and 7, 1998, the Company completed the acquisitions of WKIE-FM,
Arlington Heights, Illinois (formerly WCBR-FM) and WKIF-FM (formerly WLRT-FM),
Kankakee, Illinois. The operations of these stations have been included in the
consolidated statements of operations from these dates. The purchase price for
these stations was $19,500,000 excluding acquisition related expenses, of which

                                       40
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
$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      WKIF-FM
                                                       -----------   ---------
<S>                                                    <C>           <C>
Fixed assets.........................................  $   100,000     102,000
FCC broadcast license................................   14,400,000   4,898,000
</TABLE>

    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 WWYY-FM (formerly
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 WWYY-FM to its Subsidiary
Guarantor, Big City Radio-NYC, L.L.C. The aggregate purchase price for WWYY-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 WWYY-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
WWYY-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 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>

    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

                                       41
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(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>

    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 WWXY-
FM Hampton Bays, New York, for a purchase price of $4,000,000. The Company
managed the operations of WWXY-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 WWXY-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>

    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 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

                                       42
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(3) ACQUISITIONS AND DISPOSITIONS (CONTINUED)
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>

    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 WKIE-FM, WKIF-FM and WWYY-FM during 1998 and
WDEK-FM, KEDJ-FM, KDDJ-FM, KBZR-FM and KSSL-FM during 1999 and assumes that the
acquisitions occurred at the beginning of the fiscal year 1998:

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                                     -------------------------
                                                        1998          1999
                                                     -----------   -----------
<S>                                                  <C>           <C>
Net revenues.......................................   16,466,000    20,901,000
Income (loss) before extraordinary items...........  (18,157,000)  (26,259,000)
Net income (loss)..................................  (18,652,000)  (26,259,000)
Pro forma loss per share...........................        (1.33)        (1.86)
</TABLE>

(4) CASH HELD IN INVESTMENT, RESTRICTED

    The restricted cash balance collateralizes three letters of credit
outstanding at December 31, 1999. Two of the letters of credit relate to the
promissory notes issued in conjunction with the acquisition of WWYY-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 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 $200,000 each year over 5 years.

                                       43
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(5) PROPERTY AND EQUIPMENT

    Property and equipment at December 31, 1998 and 1999 were as follows:

<TABLE>
<CAPTION>
                                                           1998        1999
                                                         ---------   ---------
<S>                                                      <C>         <C>
Land...................................................    377,000     347,000
Building and improvements..............................  1,117,000   1,611,000
Transmitter equipment..................................  3,293,000   6,044,000
Furniture and office equipment.........................    921,000   1,340,000
Vehicles...............................................    464,000     466,000
                                                         ---------   ---------
                                                         6,172,000   9,808,000
Less accumulated depreciation..........................  1,660,000   2,663,000
                                                         ---------   ---------
                                                         4,512,000   7,145,000
                                                         =========   =========
</TABLE>

(6) INTANGIBLES

    Intangibles at December 31, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                         1998         1999
                                                      ----------   -----------
<S>                                                   <C>          <C>
FCC broadcast licenses..............................  83,675,000   118,152,000
Covenants not to compete............................     678,000       678,000
Goodwill............................................          --     1,594,000
                                                      ----------   -----------
                                                      84,353,000   120,424,000
Less accumulated amortization.......................   4,044,000     6,551,000
                                                      ----------   -----------
                                                      80,309,000   113,873,000
                                                      ==========   ===========
</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. Commencing on March 16, 2001,
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 1/3% of the 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

                                       44
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(7) SENIOR DISCOUNT NOTES (CONTINUED)
the date of redemption; provided that at least 66 2/3% 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,
subject to certain available borrowing calculations. 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, limitations on 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, 1999 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.

    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

                                       45
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(7) SENIOR DISCOUNT NOTES (CONTINUED)
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 relating 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 Big City Radio-Phoenix, 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 then existing 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, 1998 and 1999 and

                                       46
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(7) SENIOR DISCOUNT NOTES (CONTINUED)
for the year ended, December 31, 1998 and 1999 on an "as if pooling" basis given
the common control relationship of Big City Radio, Inc. and the Subsidiary
Guarantors.

<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                     -------------------------
                                                        1998          1999
                                                     -----------   -----------
<S>                                                  <C>           <C>
Current assets.....................................           --            --
Noncurrent assets..................................  $80,295,000   112,331,000
Current liabilities................................           --            --
Noncurrent liabilities.............................           --            --
</TABLE>

<TABLE>
<CAPTION>
                                                         FOR THE YEAR ENDED
                                                            DECEMBER 31,
                                                      ------------------------
                                                         1998          1999
                                                      -----------   ----------
<S>                                                   <C>           <C>
Net sales...........................................           --           --
Costs and expenses..................................           --           --
Depreciation and amortization.......................  $ 1,679,000    2,499,000
Net loss............................................   (1,679,000)  (2,499,000)
</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 WWYY-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 at December 31, 1999 for
the remainder of the term, excluding interest, is $881,000.

    The principal amount and interest paid on these promissory notes during 1999
was $1,175,000 and $137,000, respectively. The principal amount and interest
paid on these promissory notes during 1998 was $294,000 and $43,000,
respectively.

                                       47
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(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 credit 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 Old 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, 1997,
and 1998 was $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, limitations on 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 and terminated the Facility (see Note 7).

                                       48
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(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>
2000........................................................  $1,310,000
2001........................................................   1,226,000
2002........................................................   1,133,000
2003........................................................   1,000,000
2004........................................................     299,000
Thereafter..................................................      86,000
                                                              ----------
                                                              $5,054,000
                                                              ==========
</TABLE>

    Rent expense for the years ended December 31, 1997, 1998 and 1999 was
approximately $383,000, $651,000 and $1,382,000, respectively.

EMPLOYMENT CONTRACTS

    The Company has entered into various employment contracts with 24
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>
2000........................................................  $2,908,000
2001........................................................     888,000
2002........................................................     442,000
                                                              ----------
                                                              $4,238,000
                                                              ==========
</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, 1997 and
1998 through issuance of notes payable amounting to $33,000, and $39,000,
respectively.

    Barter transactions resulted in sales of $850,000, $1,560,000 and $841,000
and related expenses of $797,000, $1,514,000 and $947,000 for the years ended
December 31, 1997, 1998 and 1999, respectively.

    Cash paid for interest during the years ended December 31, 1997, 1998 and
1999 amounted to $4,395,000, $931,000 and $137,000, respectively.

                                       49
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(11) SUPPLEMENTARY INFORMATION--STATEMENT OF CASH FLOWS (CONTINUED)
    During the year ended December 31, 1997, the Principal Stockholders
contributed notes payable of $13,345,000 to the Company's capital.

(12) INCOME TAXES

    Income tax expense for the year ended December 31, 1997, 1998 and 1999 is
comprised of the following:

<TABLE>
<CAPTION>
                                                 1997          1998        1999
                                              -----------   ----------   --------
<S>                                           <C>           <C>          <C>
Deferred tax expense resulting from
  conversion to C Corporation...............  $ 3,350,000           --        --
Deferred tax benefit........................   (1,050,000)  (2,013,000)  (63,000)
Tax benefit resulting from extraordinary
  loss......................................     (200,000)     (87,000)       --
Other.......................................           --       25,000        --
                                              -----------   ----------   -------
                                              $ 2,100,000   (2,075,000)  (63,000)
                                              ===========   ==========   =======
</TABLE>

    The provision for income taxes differs from the amount computed by applying
the statutory Federal income tax rate in 1997, 1998 and 1999 due to the
following:

<TABLE>
<CAPTION>
                                              1997          1998         1999
                                           -----------   ----------   ----------
<S>                                        <C>           <C>          <C>
Federal income taxes at the statutory
  rate...................................  $(4,864,000)  (6,833,000)  (9,055,000)
State income taxes net of any amount of
  Federal income tax benefit.............      (84,000)    (939,000)  (1,322,000)
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   10,279,000
Other....................................       10,000      213,000       35,000
                                           -----------   ----------   ----------
                                           $ 2,100,000   (2,075,000)     (63,000)
                                           ===========   ==========   ==========
</TABLE>

                                       50
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(12) INCOME TAXES (CONTINUED)
    The components of deferred taxes at December 31, 1997, 1998 and 1999 are as
follows:

<TABLE>
<CAPTION>
                                             1997          1998         1999
                                          -----------   ----------   -----------
<S>                                       <C>           <C>          <C>
Deferred tax assets:
  Net operating loss....................  $ 1,603,000    6,030,000    10,077,000
  Other.................................      287,000      222,000       206,000
  Book interest expense/Tax OID 11.25%
    Senior Notes........................           --    4,902,000    11,950,000
                                          -----------   ----------   -----------
                                            1,890,000   11,154,000    22,233,000
                                          -----------   ----------   -----------
Deferred tax liabilities:
  Deferred gain.........................   (2,946,000)  (2,771,000)   (2,831,000)
  Book/Tax basis difference from WRNJ-FM
    stock purchase......................           --   (2,473,000)   (2,410,000)
  Depreciation and amortization.........   (1,044,000)  (2,307,000)   (2,490,000)
  Other.................................           --     (505,000)   (1,062,000)
                                          -----------   ----------   -----------
                                           (3,990,000)  (8,056,000)   (8,793,000)
                                          -----------   ----------   -----------
Sub-Total before valuation allowance....   (2,100,000)   3,098,000    13,440,000
Valuation Allowance.....................           --   (5,571,000)  (15,850,000)
                                          -----------   ----------   -----------
Net deferred tax asset (liability)......  $(2,100,000)  (2,473,000)   (2,410,000)
                                          ===========   ==========   ===========
</TABLE>

    The Company has approximately $24,337,000 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, 1999, based on projections for future taxable income
over the periods in which the level of deferred tax assets are deductible,
management believes that it is unlikely that the Company will realize the
benefits of all these deductible differences. Accordingly, a valuation allowance
of $15,850,000 has been provided for the deferred tax assets for the year ended
December 31, 1999.

(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

                                       51
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(13) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
per share (the "Old Common Stock"), was reclassified into 7,610 shares of
Class A Common Stock and the 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, 1999, 6,218,817
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 then 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 then 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.

                                       52
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(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 and directors 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 33,000 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.

    On January 28, 1999, the Board of Directors granted stock options to
purchase an aggregate of 75,000 shares of Class A Common Stock under the 1999
Incentive Stock Plan to certain employees and officers of the Company, at an
exercise price of the then market value of $3.4375 per share. On March 11, 1999,
the Company granted stock options to purchase an aggregate of 25,000 shares of
Class A Common Stock to certain employees of the Company at an exercise price of
$4.313 per share. On July 19, 1999, the Board of

                                       53
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(13) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
Directors granted stock options to purchase an aggregate of 6,500 shares of
Class A Common Stock under the 1999 Incentive Stock Plan to certain employees of
the Company, at an exercise price of the then market value of $3.625 per share.
On August 20, 1999, the Board of Directors granted stock options to purchase an
aggregate of 10,000 shares of Class A Common Stock under the 1999 Incentive
Stock Plan to certain employees and officers of the Company, at an exercise
price of the then market value of $4.0625 per share. On October 20, 1999, the
Board of Directors granted stock options to purchase an aggregate of 151,000
shares of Class A Common Stock under the 1999 Incentive Stock Plan to certain
employees and officers of the Company, at an exercise price of the then market
value of $3.4375 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. At November 1, 1999, there were
only 222,500 shares of common stock available for the grant of options under its
1999 Incentive Stock Plan. After examining the overall employee compensation,
the Board of Directors concluded that additional shares of common stock be made
available for the grant of options under the plan. Accordingly, the Board
approved an amendment to the 1999 Incentive Stock Plan to increase the total
number of shares of common stock that may be issued pursuant to options granted
under the plan to 2,500,000 and to increase the aggregate number of shares of
Class A Common Stock that may be issued to any one optionee under the plan from
100,000 to 1,000,000.

    On November 1, 1999, the Board of Directors granted stock options to
purchase an aggregate of 770,000 shares of Class A Common Stock under the
amended 1999 Incentive Stock Plan to certain employees and officers of the
Company and certain other directors and advisors of the Company, at an exercise
price of the then market value of $3.5625 per share. Also on November 1, 1999,
the Board of Directors granted stock options to purchase an aggregate of 250,000
shares of Class A Common Stock under the amended 1999 Incentive Stock Plan to
the new Chief Executive Officer of the Company, at an exercise price of $4 per
share. On November 22, 1999, the Board of Directors granted stock options to
purchase an aggregate of 25,000 shares of Class A Common Stock under the amended
1999 Incentive Stock Plan to a key employee of the Company, at an exercise price
of $5 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.

    Summary information pertaining to the plan for the year ended December 31,
1999 is as follows:

<TABLE>
<CAPTION>
                                                                         WEIGHTED
                                       NUMBER OF    EXERCISE PRICE       AVERAGE
                                        SHARES        PER SHARE       EXERCISE PRICE
                                       ---------   ----------------   --------------
<S>                                    <C>         <C>                <C>
Outstanding at beginning of year.....         --   $ 4.375 - 7.8125        $7.00
Granted..............................  1,312,500      3.4375 - 5.00         3.67
Exercised............................         --                 --           --
Cancelled............................     44,000     4.375 - 7.8125         7.42
Outstanding at end of year...........  2,193,300    3.4375 - 7.8125         5.00
Exercisable at end of year...........  1,001,550    3.4375 - 7.8125         5.15
Available for grant at end of year...  1,306,700                              --
</TABLE>

    At December 31, 1999, the weighted average remaining contractual life of all
outstanding options was 9.14 years.

                                       54
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(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 OF   EXERCISE PRICE       AVERAGE
                                         SHARES        PER SHARE      EXERCISE PRICE
                                        ---------   ---------------   --------------
<S>                                     <C>         <C>               <C>
Outstanding at beginning of year......        --    $   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>
                                                                            WEIGHTED
                                            NUMBER OF   EXERCISE PRICE      AVERAGE
                                             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 options 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 was recorded for options
granted below fair market value.

                                       55
<PAGE>
                              BIG CITY RADIO, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1998 AND 1999

(13) INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (CONTINUED)
    In 1997, 1998 and 1999, 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 loss would have been increased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                          1997           1998           1999
                                      ------------   ------------   ------------
<S>                                   <C>            <C>            <C>
Net income (loss):
As reported.........................  $(16,918,000)  $(17,449,000)  $(25,808,000)
Pro forma...........................   (17,524,000)   (18,379,000)   (27,825,000)
Earnings (loss) per share:
As reported.........................         (1.77)         (1.24)         (1.83)
Pro forma...........................         (1.84)         (1.31)         (1.97)
</TABLE>

    At December 31, 1997, 1998, and 1999 the per share weighted average fair
value of stock options granted was $4.83, $4.98 and $2.41, respectively, 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 for options granted in 1997 and 1998; expected dividend yield of 0%,
risk-free interest rate of 5.85%, expected volatility of 50% and an expected
life of 10 years for options granted in 1999.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

    Not Applicable.

                                       56
<PAGE>
                                    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 18, 2000.

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 18, 2000.

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 18, 2000.

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 18, 2000.

                                       57
<PAGE>
                                    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....................     30
Consolidated Balance Sheets as of December 31, 1998 and
  1999......................................................     31
Consolidated Statements of Operations for the years ended
  December 31, 1997, 1998 and 1999..........................     32
Consolidated Statement of Stockholders' Equity
  (Deficiency)..............................................     33
Consolidated Statements of Cash Flows for the years ended
  December 31, 1997, 1998 and 1999..........................     34
Notes to Consolidated Financial Statements..................     35
</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.

<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)).
</TABLE>

                                       58
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                               DESCRIPTION OF EXHIBITS
-----------                               -----------------------
<C>                     <S>
        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)).

        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).
</TABLE>

                                       59
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                               DESCRIPTION OF EXHIBITS
-----------                               -----------------------
<C>                     <S>
        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).

        21.1            List of Subsidiaries of Big City Radio, Inc. (incorporated
                          by reference to Exhibit 21.1 to the Company's Annual
                          Report on Form 10-K for the fiscal year ended
                          December 31, 1999).

        24.1            Power of Attorney (contained in the Company's Annual Report
                          on Form 10-K for the fiscal year ended December 31, 1999).

        27.1            Financial Data Schedule.
</TABLE>

    (b) Reports on Form 8-K:

    During the period from October 1, 1999 to December 31, 1999, the Company did
not file any reports on Form 8-K.

    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.

                                       60
<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 30th day of March, 2000.

<TABLE>
<S>                                                    <C>  <C>
                                                       BIG CITY RADIO, INC.

                                                       By:               /s/ PAUL THOMSON
                                                            -----------------------------------------
                                                                        Name: Paul Thomson
                                                                      Title: VICE PRESIDENT,
                                                              CHIEF FINANCIAL OFFICER AND TREASURER
</TABLE>

    We, the undersigned officers and directors of Big City Radio, Inc., hereby
severally constitute Arnold L. Wadler, Silvia Kessel, Paul R. Thomson and
Charles M. Fernandez, 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
     -------------------------------------------         Directors                     March 30, 2000
                  Stuart Subotnick

              /s/ CHARLES M. FERNANDEZ                 President, Chief Executive
     -------------------------------------------         Officer and Director          March 30, 2000
                Charles M. Fernandez

                                                       Vice President, Chief
                 /s/ PAUL R. THOMSON                     Financial Officer and
     -------------------------------------------         Treasurer (Principal          March 30, 2000
                   Paul R. Thomson                       Financial and Accounting
                                                         Officer)

                 /s/ ANITA SUBOTNICK                   Director
     -------------------------------------------                                       March 30, 2000
                   Anita Subotnick
</TABLE>

                                       61
<PAGE>

<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                    DATE
                      ---------                                    -----                    ----
<C>                                                    <S>                             <C>
                  /s/ SILVIA KESSEL                    Executive Vice President and
     -------------------------------------------         Director                      March 30, 2000
                    Silvia Kessel

                /s/ ARNOLD L. WADLER                   Executive Vice President,
     -------------------------------------------         General Counsel, Secretary    March 30, 2000
                  Arnold L. Wadler                       and Director

                                                       Director
     -------------------------------------------                                       March 30, 2000
                  Leonard L. White

                /s/ MICHAEL H. BOYER                   Director
     -------------------------------------------                                       March 30, 2000
                  Michael H. Boyer
</TABLE>

                                       62
<PAGE>
SCHEDULE II

                              BIG CITY RADIO, INC.

                       VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                           BALANCE AT                                         BALANCE AT
                                           BEGINNING     CHARGED      OTHER     DEDUCTIONS/      END
                                           OF PERIOD    TO EXPENSE   CHARGES    WRITE-OFFS    OF PERIOD
                                           ----------   ----------   --------   -----------   ----------
<S>                                        <C>          <C>          <C>        <C>           <C>
Allowances for doubtful accounts, etc.
  (deducted from current receivables):

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

Year ended December 31, 1999.............   $119,000     $241,000    $           $(125,000)    $235,000
</TABLE>

                                       63
<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)).
</TABLE>

                                       64
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
         NO.                              DESCRIPTION OF EXHIBITS
---------------------                     -----------------------
<C>                     <S>
        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)).

        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).

        21.1            List of Subsidiaries of Big City Radio, Inc. (incorporated
                          by reference to Exhibit 21.1 to the Company's Annual
                          Report on Form 10-K for the fiscal year ended December 31,
                          1999).

        24.1            Power of Attorney (contained in the Company's Annual Report
                          on Form 10-K for the fiscal year ended December 31, 1999).

        27.1            Financial Data Schedule.
</TABLE>

                                       65