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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

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

Commission File Number 001-13715

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BIG CITY RADIO, INC.(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)                 |  | 13-3790661(I.R.S. Employer Identification Number)
|-------------------------------------------------------------------------------------- |  | -------------------------------------------------
|110 East 42nd Street, Suite 1305, New York, NY(Address of principal executive offices) |  | 10532(Zip Code)                                  
|Registrant's telephone number, including area code:(212) 599-3510                     
|Securities registered pursuant to Section 12(b) of the Act:                           

|Title of each class:                           |  | Name of each exchange on which registered:
|---------------------------------------------- |  | ------------------------------------------
|Class A Common Stock, par value $.01 per share |  | American Stock Exchange                   

Securities registered pursuant to Section 12(g) of the Act: 111/4% Senior Discount Notes Due 2005, Series B

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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 ý    No o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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. o

The
aggregate market value of the voting stock held by non-affiliates of the registrant, computed on the basis of $1.40 per share, the price at which shares last sold, as of the last
business day of the registrant's most recently completed second fiscal quarter (June 28, 2002), was $6,909,899.

On
March 20, 2003 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 $2,961,385.

The
number of shares of the Registrant's Class A Common Stock and Class B Common Stock outstanding as of March 20, 2003 was 6,226,817 and 8,250,458 respectively.

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BIG CITY RADIO, INC.    ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002    TABLE OF CONTENTS

|ITEM NO. |  | DESCRIPTION                                                                           |  | PAGE
|-------- |  | ------------------------------------------------------------------------------------- |  | ----
|PART I   |  |                                                                                      
|Item 1.  |  | Business                                                                              |  | 3   
|Item 2.  |  | Properties                                                                            |  | 18  
|Item 3.  |  | Legal Proceedings                                                                     |  | 19  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 20  
|PART II  |  |                                                                                      
|Item 5.  |  | Market for Registrant's Common Equity and Related Stockholder Matters                 |  | 20  
|Item 6.  |  | Selected Financial Data                                                               |  | 22  
|Item 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 25  
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 41  
|Item 8.  |  | Financial Statements and Supplementary Data                                           |  | 42  
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 84  
|PART III |  |                                                                                      
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 84  
|Item 11. |  | Executive Compensation                                                                |  | 86  
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 88  
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 91  
|Item 14. |  | Controls and Procedures                                                               |  | 92  
|Item 15. |  | Principal Accountant Fees and Services                                                |  | 92  
|PART IV  |  |                                                                                      
|Item 16. |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 93  

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PART I

ITEM 1. Business

General

Big City Radio, Inc. ("Big City Radio" or the "Company") currently owns and operates radio broadcast station groups in Los Angeles, New York, and Chicago.
Big City Radio 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. To accomplish this objective, Big City Radio has applied a variety of innovative broadcast
engineering techniques to the radio broadcast properties it has acquired, including Synchronized Total Market Coverage, or STMC. STMC involves the acquisition of
two or more stations that broadcast on the same frequency and then simulcasting their signals to achieve broad coverage of a targeted metropolitan market. In addition to STMC, Big City
Radio may employ other broadcast engineering techniques. These engineering techniques include acquiring suburban radio stations and moving the station's broadcast antenna closer to the metropolitan
market and acquiring high-power stations adjacent to major metropolitan markets and focusing such stations' broadcast signals into the metropolitan area.

Big
City Radio's acquisition and engineering strategies have enabled it to provide 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 ("FCC") as those facilities whose signal is predicted to
cover a regional urban area. Big City Radio currently owns and operates one STMCstation combination in each of New York and Los Angeles and two STMC station combinations in
Chicago.

Since
its inception, Big City Radio has incurred substantial net operating losses primarily due to broadcast cash flow deficits associated with the start up of its radio station
operations. As of December 31, 2002, Big City Radio had incurred a cumulative cash flow deficit of approximately $164 million and a cumulative net loss of approximately
$135 million.

On
October 31, 2001, Big City Radio sold its three radio stations in Phoenix for an aggregate purchase price of $34 million.

Big
City Radio is seeking to sell all of its radio stations in an auction process that it announced on November 4, 2002. Between December 24, 2002 and January 2,
2003, Big City Radio signed four separate definitive asset purchase agreements to sell eleven of its twelve FCC FM licenses. The Company also plans to sell the remaining station. Big City Radio is
selling these radio stations to raise the funds necessary to pay all principal of, and accrued and unpaid interest on, its 111/4% Senior Discount Notes ("the senior notes") due 2005.
Noteholders have accelerated payment of the senior notes as a result of defaults by Big City Radio under these notes. None of these transactions is conditioned on the completion of any other
transaction.

Big
City Radio's board of directors has unanimously approved the proposed asset sales and determined that the sales are in the best interests of Big City Radio and its stockholders and
creditors. Big City Radio also has obtained stockholder approval of the asset sales by the written consent of the holders of a majority of the voting power of Big City Radio common stock in accordance
with the requirements of Delaware law and Big City Radio's certificate of incorporation.

The
principal executive offices of the Company are located at 110 East 42nd Street, Suite 1305, New York 10017. Its telephone number is (212) 599-3510.

Information
regarding the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports,
will be made

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available, free of charge, upon request. Any such requests should be directed to: Big City Radio, Inc., 1888 Century Park East, Suite 212, Los Angeles, California 90067. Attention: Paul R.
Thomson.

Stations Operations

Los Angeles, New York, and Chicago are the three largest markets in the United States in terms of aggregate radio revenues. Big City Radio has chosen formats for
its radio station properties in these markets that it believes offer the greatest ratings and revenue potential and have a strong competitive
position. Historically, Big City Radio has derived the largest portion of its revenues from its Los Angeles area radio stations.

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 estimated 2002 revenues of $845 million. The Arbitron Company provides advertisers with the industry-accepted
measure or ratings of listening audience classified by demographic segment and time of day that the audience listens to particular radio stations. Arbitration provides "diaries," or listening logs, to
listeners in each significant radio market. These individuals record their listening by time and station, and Arbitron compiles their responses to produce ratings. An Arbitron market is the geographic
area in which Arbitron performs its radio audience studies and for which it produces periodic reports of radio audience listening data. From 1998 to 2002, estimated radio advertising revenue in the
Los Angeles Arbitron Metro Survey Area, or MSA, grew from $656 million to $845 million, representing a compound annual growth rate of 6.5%.

Until
January 15, 2003, when the Company entered into a time brokerage agreement with Entravision in Communications Corporation ("Entravision") in connection with the pending sale
of its Los Angeles area radio stations to Entravision, Big City Radio operated three Los Angeles stations, as Viva 107.1. Viva 107.1 featured a Hispanic contemporary hit radio format on the 107.1 FM
frequency. The Los Angeles stations cover approximately 90% of the Arbitron diaries in the Los Angeles MSA as a result of an increase in transmission power which Big City Radio implemented in the
first quarter of 1998. Big City Radio believes that this coverage is substantially similar to the Arbitron diary coverage of many of the highest-ranked Los Angeles Class B stations. Big City
Radio debuted Viva 107.1 in December 1999 as its first Hispanic station, and it earned a 1.1% share in the 12+ category as of the Fall 2002 Arbitron book. Big City Radio acquired the Los
Angeles area radio stations in May 1996 for a combined purchase price which is significantly lower than the reported purchase prices of Class B stations in the Los Angeles MSA before
such acquisition, as evidenced by reported transactions consummated after the deregulation initiated by the passage of the Telecommunications Act of 1996 (the "Telecom Act"). See "Acquisitions" below
for more information about these acquisitions. 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. Entravision is currently providing programming and related services for the Los Angeles stations under the time brokerage agreement, which remain under the Company's ultimate control pending
completion of sale of the stations to Entravision.

Big
City Radio believes that identifying the appropriate format in a particular market for a station is crucial to the station's ability to achieve meaningful penetration of the market's
listening audience and aggregate advertising revenues. Big City Radio launched its current Hispanic contemporary hit radio format after an extensive updated research study of the Los Angeles market in
1999.

Big
City Radio believes that extensive engineering expertise is required to achieve Class B station equivalent Arbitron coverage and broadcast quality. In Los Angeles, Big City
Radio uses several advanced techniques to achieve what Big City Radio believes to be substantially full coverage. In addition to the three stations, Big City Radio uses a booster located in the San
Fernando Valley to enhance its coverage of the market. Big City Radio believes these engineering solutions have resulted in significantly broader coverage than traditional simulcasting.

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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 estimated 2002 revenues of $754 million. From 1998 to 2002, radio advertising revenue in the New York MSA grew
from an estimated $611 million to an estimated $754 million, representing a compound annual growth rate of 5.4%.

Big
City Radio entered the New York market with its acquisitions of four radio stations. Big City Radio has implemented STMC in New York and believes that it has created the
equivalent of a New York Class B station. Big City Radio's four stations in the New York MSA collectively broadcast on the 107.1 FM frequency and, since May 2002, have been programmed as
"Rumba 107.1," which features a Hispanic contemporary hit radio format. In the Fall 2002 Arbitron book, Rumba 107.1 did not report an audience share. Prior to May 2002, the four stations were
programmed as New Country Y-107, a country music format. Rumba 107.1 currently covers approximately 90% of the Arbitron diaries in the New York MSA as a result of an increase in its
transmission power pursuant to a power increase and other technical improvements, which Big City Radio implemented during the third quarter of 1998. Big City Radio believes that this coverage is
substantially similar to the Arbitron diary coverage of many of the highest-ranked New York Class B stations. Big City Radio 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 prior to such acquisitions, as evidenced by reported transactions consummated after the passage of
the Telecom Act. See "Acquisitions" below for more information about these acquisitions.

Chicago.Big City Radio owns two groups of stations in the Chicago MSA. The Chicago MSA is the third
largest Arbitron market in terms of population and aggregate radio market revenues in the United States with estimated 2002 revenues of $519 million. From 1998 to 2002, estimated radio
advertising revenue in the Chicago MSA grew from $510 million to $519 million, representing a compound annual growth rate of 0.4%.

Until
January 15, 2003 when the Company entered into a time brokerage agreement with Hispanic Broadcasting Corporation ("Hispanic Broadcasting"), which has agreed to purchase one
of the stations, two of Big City Radio's stations collectively broadcast as Viva 103.1 on the 103.1 FM frequency. Viva 103.1 commenced operations in January 2001, broadcasting a Hispanic
contemporary hit radio format. Throughout 2000, it operated as The Eighties Channel, an Eighties music format. Viva 103.1 earned a 0.7% share in the 12+ category as of the Fall 2002 Arbitron book.
These two stations currently cover approximately 85% of the Arbitron diaries in the Chicago MSA as a result of an increase in transmission power pursuant to a power increase and other technical
improvements, which Big City Radio implemented during the third quarter of 1999. Big City Radio acquired these two stations for a combined purchase price 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 "Acquisitions" below for more information about these
acquisitions. Hispanic Broadcasting is currently providing programming and related services for the station it has agreed to purchase, which remains
under the Company's ultimate control pending completion of the sale to Hispanic Broadcasting. Hispanic Broadcasting paid Big City Radio a $75,000 fee on the commencement of the term of the time
brokerage agreement and will pay this amount on each succeeding monthly anniversary thereof, with the final month pro-rated based on the actual number of calendar days elapsed.

The
second group of stations in the Chicago area currently comprises three stations. Until January 6, 2003 when the Company entered into a time brokerage agreement with Spanish
Broadcasting System, Inc. ("Spanish Broadcasting"), which has agreed to purchase the stations, these stations collectively broadcast as Energy 92.7/5, or Energy 92, on the 92.7
and 92.5 FM frequencies. Energy 92 commenced operations in January 2001, broadcasting a contemporary dance hit radio format. Energy 92 earned a 0.8% share in the 12+ category as of the Fall
2002 Arbitron book. Throughout 2000, this station group operated as 92 KISS FM, broadcasting a contemporary hit radio

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format. In February 1999, Big City Radio completed the acquisition of substantially all the assets of WDEK-FM and WLBK-AM, DeKalb, Illinois. Big City Radio added
WDEK-FM, which broadcasts on the 92.5 FM frequency, to the 92.7 stations. Through use of Big City Radio's STMC technology, WDEK-FM 92.5 was engineered to form part
of the Energy 92 synchronized station group together with the 92.7 FM frequency stations. This station group currently covers approximately 90% of the Arbitron diaries in the Chicago MSA. Spanish
Broadcasting is currently providing programming and related services for this station group, which remain under the Company's ultimate control pending completion of the sale to Spanish Broadcasting.
Spanish Broadcasting paid Big City Radio a $149,333.33 fee on the commencement of the term of the time brokerage agreement and will pay this amount on each succeeding monthly anniversary thereof, with
the final month pro-rated based on the actual number of calendar days elapsed

Station Advertising Sales

The advertising 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. Big City Radio 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 which it enters, Big City Radio performs an extensive competitive analysis to select the format with the greatest
audience and revenue potential.

Big
City Radio generates virtually all of its revenues from the sale of local and national advertising for broadcast on its radio stations. Big City Radio 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 a station's share of the
audience in the demographic groups targeted by advertisers, the number of stations in the market competing for the same demographic groups, and 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. Big City
Radio'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 cash. Big City Radio minimizes its
use of trade agreements, as do the parties to the time brokerage agreements referred to above. Big City Radio 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, Big City Radio'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. Of its gross revenue, Big City Radio generated approximately 83% of its revenue from local advertising
in the year ended December 31, 2001 and approximately 73% from local advertising in the year ended December 31, 2002. Local advertising is sold primarily by a station's sales staff. To
achieve greater control over advertising revenue, Big City Radio's sales force focuses on establishing direct relationships with local advertisers. Big City Radio formed Independent Radio Reps, LLC in
November 2000, and used this in-house firm of sales personnel to represent it in generating national radio advertising business. Big City Radio completed disbanding this
in-house agency in February 2003.

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Internet and Publishing Operations

Big City Radio ceased its internet operations in December 2001 and discontinued its publishing operations in June 2002.

Big
City Radio launched a bilingual internet portal, TodoAhora.com, in May 2000 following the November 1, 1999 acquisition of Hispanic Internet Holdings, Inc.
TodoAhora.com delivered a range of world wide web programming to the Hispanic community, including news, entertainment, finance, culture, and e-commerce opportunities. During the second
half of 2000, and continuing throughout 2001, there was a severe contraction in the internet sector as many actual and potential advertisers reduced internet spending. In general, portal sites rely on
advertising for revenue. Many of TodoAhora.com's competitors, as well as a number of potential new competitors, had significantly greater financial, technical, marketing and distribution resources. As
a result of the economic environment affecting the internet sector, and the existence of many competitors with greater resources, during 2001 Big City Radio decided to cease the development and
operation of TodoAhora.com. The decision was based upon management's evaluation of future revenue generation potential and the current resources needed to continue to develop and operate the portal.

In
November 2000, Big City Radio acquired magazine publishing operations, which included a Hispanic music trade magazine, "Disco," a graphic design business, and a website
maintained as LatinMusicTrends.com which was designed to complement the information provided to Latin music industry professionals. In June 2002, in response to the continued downturn in the
music industry advertising marketplace, Big City Radio discontinued these operations.

Competition

Radio broadcasting is a highly competitive business. Within their respective markets, each of Big City Radio'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. Companies with greater financial
resources than Big City Radio, including Clear Channel Communications, Inc., Infinity Broadcasting Corporation, and Hispanic Broadcasting, compete in the same geographic markets as Big City
Radio. In addition, the radio industry recently has experienced significant consolidation which has resulted in the formation of several radio station groups that have a large number of radio stations
throughout the United States and significantly greater financial resources and access to capital than Big City Radio.

The
financial success of each of Big City Radio's radio stations depends principally upon its share of the overall radio advertising revenue within its geographic market, its promotional
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 Big
City Radio's affected station could decrease due to increased promotional and other expenses, lower advertising revenues resulting from lower ratings, or both. Big City Radio has chosen formats which
target Hispanic listeners for each of its radio station groups. Each of the metropolitan areas in which Big City Radio's station groups broadcast have large Hispanic popluations. Big City Radio
believes that competition among radio stations targeting the Hispanic markets in these metropolitan areas is currently less intense than the competition generally among radio stations broadcasting
with other formats. However, Big City Radio believes that competition in the Hispanic markets is increasing. Each of Big City Radio's stations competes for audience share and advertising revenue
directly with both Spanish-language and English-language radio stations in its market, and with other media, such as newspapers, broadcast and cable

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television, magazines, billboard advertising, transit advertising and direct mail advertising. Big City Radio's primary competitors in Spanish-language radio in its market include Hispanic
Broadcasting (whom merger with Univision is currently pending before federal regulators), Spanish Broadcasting and Entravision. Most of the companies with which Big City Radio competes are large
national or regional media companies that have significantly greater resources and longer operating histories than Big City Radio. Because of its limited financial resources and severe liquidity, Big
City Radio has been unable to devote the needed resources to its programming and promotional activities to compete with other companies for audience share and radio advertising revenue market share.

Big
City Radio believes that its application of a variety of innovative engineering techniques, including SMTC, enable it to achieve broad coverage of a targeted metropolitan market. Big
City Radio believes that this provides a competitive advantage over radio stations utilizing traditional broadcast techniques such as simply simulcasting 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. Big City Radio believes that
most broadcast radio operators that have employed simulcasting have done so on different frequencies. Big City Radio 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. Digital Audio Broadcasting may deliver by satellite or terrestrial means multi-channel, multi-format digital radio
services to nationwide and regional audiences. These services have sound quality equivalent to that provided by compact discs. Big City Radio cannot predict the effect, if any, that any such new
technologies may have on the radio broadcasting industry.

Acquisitions and Dispositions

Since its incorporation in August 1994, Big City Radio has acquired the assets of 20 radio stations, an internet company, and related internet and
publishing businesses. It has disposed of eight stations and ceased internet and publishing operations, has entered into agreements for the disposition of all but one of its remaining stations and is
seeking to dispose of the remaining station. The following is a summary of the completed and pending acquisitions and dispositions of radio stations by Big City Radio since its incorporation. The
completion of each of the pending sales is subject to initial FCC approval and customary closing conditions. None of the pending asset sales is conditioned upon the completion of any other asset sale.
All of these transactions were or are with non-affiliated persons.

New York.In December 1994, Big City Radio acquired the assets of radio station
WRGX-FM (now WYNY-FM), Briarcliff Manor, New York, from West-Land Communicators, Inc. for a purchase price of $2.5 million and the issuance of a
promissory note in the amount of $1 million to West-Land.

In
April 1997, Big City Radio acquired the assets of radio station WWHB-FM (now WWXY-FM), Hampton Bays, New York, from South Fork Broadcasting Corporation
for a purchase price of $4 million.

In
June 1997, Big City Radio 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 million and 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 Big City Radio for a period of three years.

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In
August 1998, Big City Radio acquired all of the stock of Radio New Jersey, owner of the FCC licenses of WRNJ-FM, now WWYY-FM, Belvidere, New Jersey, and
WRNJ-AM, Hackettstown, New Jersey. The aggregate purchase price for WRNJ-FM was $5.4 million excluding acquisition-related expenses, of which $3 million was paid
in cash and the remainder was satisfied by the issuance of two promissory notes. Simultaneously, Big City Radio sold substantially all of the assets of WRNJ-AM to one of the existing
stockholders of Radio New Jersey.

In
December 1994, Big City Radio acquired the assets of radio station WRKL-AM, Pomona, New York, from Rockland Communicators, Inc. for a purchase price of
$1 million. Big City Radio sold this station in March 1999 to Polnet Communications, Ltd. for a price of $1.6 million.

On
December 30, 2002 Nassau Broadcasting agreed to purchase four radio stations owned and operated by Big City Radio in the greater New York City area, which broadcast as
WYNY-FM, WWZY-FM, WWXY-FM and WWYY-FM, and related assets. Nassau Broadcasting will pay $43 million in cash for these assets at the closing.

Los Angeles.In May 1996, Big City Radio acquired four radio stations in the Los Angeles area
from Douglas Broadcasting, Inc. Big City Radio acquired the assets of radio station KMAX-FM (subsequently KLYY-FM and now KSSE-FM), Arcadia, California,
KAXX-FM (subsequently KVYY-FM and now KSSC-FM), Ventura, California, KBAX-FM (subsequently KSYY-FM and now KSSD-FM) Fallbrook,
California, and KWIZ-FM, Santa Ana, California, for an aggregate purchase price of $38 million. Big City Radio also acquired FM Translator station K252BF, Temecula, California,
which rebroadcasts on 98.3 MHz the signal of KSSD-FM, and FM Booster station, KMAX-FM1 (subsequently KLYY-FM1, now KSSE-FM1) Burbank, California, which
boosts on 107.1 MHz the broadcast of the signal of KSSE-FM.

In
December 1996, Big City Radio sold radio station KWIZ-FM to Liberman Broadcasting, Inc. for a price of $11.2 million.

On
December 24, 2002, Big City Radio entered into a definitive agreement to sell its three remaining Los Angeles-area radio stations to Entravision. Entravision will
pay $100 million in cash and 3,766,478 shares of its Class A Common Stock for these assets at the closing.

Chicago.In August 1997, Big City Radio acquired the assets of radio station
WVVX-FM (subsequently WXXY-FM) and now WVIV-FM, Highland Park, Illinois, from WVVX License, Inc., for a purchase price of $9.5 million. Douglas,
WVVX, Inc. and WVVX License, Inc. agreed not to compete for a period of 18 months.

In
August 1997, Big City Radio 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, Big City Radio 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, Big City Radio 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, Big City Radio 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. Big City Radio added WDEK-FM, which operates on the 92.5 FM frequency, to existing 92.7 FM stations in the Chicago
metropolitan area, collectively known as Energy 92. Big City Radio sold the operating assets of WLBK-AM on April 12, 2000. No gain or loss was recorded on this transaction.

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On
December 31, 2002, a subsidiary of Spanish Broadcasting agreed to purchase WDEK-FM, WKIE-FM, and WKIF-FM and related assets. Spanish
Broadcasting will pay $22 million in cash for these assets at the closing.

On
January 2, 2003, a subsidiary of Spanish Broadcasting agreed to purchase WVIV-FM and related assets. Hispanic Broadcasting will pay approximately
$32.9 million in cash for these assets at the closing.

Phoenix.In July 1999, Big City Radio 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 million.

In
September 1999, Big City Radio 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, Big City Radio 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.

On
October 31, 2001, Big City Radio sold its Phoenix radio properties and operating assets to Hispanic Broadcasting Corporation for $34 million. Big City Radio recorded a
gain of $2.3 million on this transaction.

Internet and Publishing Operations.On November 1, 1999, Big City Radio acquired Hispanic
Internet Holdings, Inc., a privately held bilingual web site, for 400,000 shares of Big City Radio's Class A common stock at a value of $4.00 per share. The transaction was accounted for
as a purchase. The assets of this business included TodoAhora.com, the bilingual internet portal operated by Big City Radio until December 2001. In December 2001, when it ceased
development and operation of the portal, Big City Radio wrote off goodwill of $897,000 related to its internet operations.

On
November 8, 2000, Big City Radio completed a transaction in which it acquired substantially all of the assets and properties of United Publishers of Florida, Inc., which
owned and operated a Hispanic music trade magazine, "Disco," a graphic design business and the LatinMusicTrends.com website. Big City Radio paid $250,000 in cash at closing and accounted for this
acquisition as a purchase. In June 2002, when it discontinued its publishing operations, Big City Radio wrote off goodwill of $108,000.

Employees

At December 31, 2002, Big City Radio had approximately 106 full-time employees and 67 part-time employees. Big City Radio believes
that its relations with its employees are satisfactory. None of Big City Radio's employees is represented by a labor union.

Big
City Radio employs several on-air personalities and enters into employment agreements with some of these personalities to protect its interests in those relationships
that it believes to be valuable. The loss of some of these personalities could result in a short-term loss of audience share, but Big City Radio does not believe that any such loss would
have a material adverse effect on Big City Radio.

Patents and Trademarks

Big City Radio owns registered trademark rights for STMC and domestic trademark registrations related to the business of Big City Radio. Big City
Radio does not believe that any of its trademarks
are material to its business or operations. Big City Radio does not own any patents or patent applications.

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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.
Among other things, the FCC:



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 eliminate the
national radio ownership limits, liberalize the local radio ownership limits as specified in the Telecom Act, issue broadcast licenses for periods of up to eight years, and eliminate the opportunity
for the filing of competing applications against broadcast license renewal applications.

In
the Balanced Budget Act of 1997, Congress 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. This action has
resulted in the awarding of construction permits for additional radio stations, some of which might have the potential to compete with Big City Radio's radio stations. Although the 1997 Act exempted
noncommercial applicants from auctions, the FCC had subjected all mutually-exclusive commercial and noncommercial applicants to auction procedures for broadcast authorizations not reserved for
noncommercial use. Following the vacation by the U.S. Court of Appeals for the D.C. Circuit of that policy, the FCC is considering several options to preserve the noncommercial exemption as well as
the directive to award permits with more than one applicant by auction. In the meantime, the FCC has not acted on existing mutually-exclusive broadcast applications where one or more of the applicants
is a noncommercial broadcaster, nor has the FCC opened filing windows for available broadcast frequencies. Big City Radio is not, and has not been, a participant in any broadcast auction proceeding,

License Grants and Renewals.The Communications Act provides that a radio 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 and newspaper properties, and the "character" qualifications of the licensee and those persons holding "attributable" interests in the licensee. Broadcast licenses are
granted for specific periods of time and, upon application, are renewable for additional terms. The Telecom Act amended the Communications Act to provide that broadcast licenses be granted, and
thereafter renewed, for a term not to exceed eight years, if the FCC finds that the public interest, convenience, and necessity would be served.

Generally,
the FCC renews broadcast licenses without a hearing. The Telecom Act amended the Communications Act to require the FCC to grant an application for renewal of a broadcast
license if

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the station has served the public interest, convenience and necessity, there have been no serious violations by the licensee of the Communications Act or the rules and regulations of the FCC, and
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 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
broadcast licenses of Big City Radio's Chicago stations were renewed in 1996 and will expire on December 1, 2004. The broadcast licenses of the Los Angeles area radio stations
were renewed in 1997 and will expire on December 1, 2005. The broadcast licenses of the New York stations were renewed in 1998 and will expire on June 1, 2006. Big City Radio 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 or controlling 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, the impact of the transaction on the diversity of media voices
and 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 FCC is currently considering changes to its local radio ownership rules. The FCC has adopted an interim policy guiding its review of radio transactions, which if certain levels of
radio advertising market shares are present, will result in an FCC analysis of the product and geographic market definitions, market participants, shares and concentration, barriers to entry,
potential adverse competitive effects and efficiencies and other public interest benefits. DOJ also reviews proposed acquisitions of radio stations. In some instances, DOJ has 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 interest therein, may have an attributable interest. Pursuant to the Telecom Act, the FCC has 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 interest. Pursuant to
the Telecom Act, the FCC revised its rules to set the local radio ownership limits as follows:



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As
noted above, the FCC is currently reviewing its local radio ownership rules, and is considering, among other issues, whether the FCC should rely exclusively on these numerical limits
or instead adopt a case-by-case competition analysis in determining compliance with the local radio ownership rules, whether the FCC should revise its definition of the local
radio market, and whether the FCC should revise its treatment of local marketing and joint sales agreements. 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. In September 2001, the
FCC initiated a rulemaking proceeding to determine whether and how to modify its newspaper-broadcast cross-ownership rule. The FCC has proposed several potential modifications of such rule, including
redefining the relevant geographic market or allowing cross-ownership of broadcast stations and a daily newspaper if a certain number of independent voices will remain in the relevant market following
the proposed transaction. A number of commenters have urged the complete elimination of the rule or the retention of the rule only for newspaper-television combinations, so that radio stations and
newspapers may be commonly owned. In September 2002, the FCC issued a notice of proposed rulemaking for the biennial review of broadcast ownership restrictions, including the cross-ownership of
newspapers and broadcast stations. As part of the biennial review process, the FCC commissioned a number of studies on the various impacts of media concentration. Comments on these studies and on the
issues raised by the notice of proposed rulemaking were filed on January 2, 2003. Big City Radio cannot predict whether in such biennial reviews the FCC would eliminate or modify any of its
ownership rules applicable to broadcasting, or, if so, what the new rules would be or how they might affect Big City Radio.

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, its subsidiaries and their stations, except that investment companies, insurance companies and banks holding such stock in their trust accounts are not
considered to have an attributable interest unless they own or have voting control over 20% or more of such stock, provided that none of the officers or directors of the broadcast licensee are
representatives of the investment company, insurance company or bank concerned. 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. Furthermore, under the FCC's Equity-Debt Plus, or EDP, rule, otherwise non-attributable equity or debt interests in a licensee are deemed to be
attributable interests when a party holds equity and/or debt in excess of 33% of the total assets, which is defined as equity plus debt, of a licensee or its parent 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. To Big City Radio's knowledge, no person
or entity qualifies as an attributable party to Big City Radio
under the EDP rule. 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. Although the FCC had decided to eliminate the "single majority shareholder exemption," following the
reversal by the U.S. Court of Appeals for the D.C. Circuit of the FCC's elimination of this exemption in the cable context, the FCC has suspended its repeal of the single majority shareholder
exemption. As a result, minority voting interests currently

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are not attributable if there is a single holder of more than 50% of the outstanding voting stock of a corporate broadcast licensee, unless such stockholder is otherwise attributable as an officer,
director or EDP holder. Holders of attributable interests must comply with or obtain waivers of the FCC's multiple and cross-ownership rules. Also, holders of attributable interests must possess
"character qualifications" to be parties to a broadcast license. Character disqualification is reserved generally for adjudicated instances of intentional misrepresentation to or lack of candor with
governmental agencies or convictions for serious crimes. At present, none of Big City Radio's attributable parties has any other media interests besides those of Big City Radio that implicate the
FCC's multiple ownership limits, and each of the attributable parties meets the FCC character qualification criteria. If Big City Radio learns of a new attributable party and if such party holds
interests that exceed the FCC limits on media ownership or is unqualified, under Big City Radio's certificate of incorporation, the board of directors of Big City Radio has the corporate power to
redeem capital stock of Big City Radio's stockholders to the extent necessary to be in compliance with FCC and Communications Act requirements.

The
FCC will consider a radio station providing programming and sales on another local radio station pursuant to a local marketing agreement 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 local marketing agreement 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. Joint sales agreements, which involve the sale of time
on, but not the provision of programming to, another broadcaster's station, have not been subject to the multiple ownership limits. The FCC is currently considering whether to revise its treatment of
local marketing agreements and joint sales agreements.

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 owning the license is controlled by another corporation, the parent corporation cannot have more than one-fourth of the
capital stock owned of record or voted by aliens, unless the FCC finds it in the public interest to allow otherwise. The FCC has issued interpretations of existing law under which the alien ownership
restrictions in slightly modified form apply to other forms of business organizations, including general and limited partnerships. The FCC also prohibits a licensee from continuing to control
broadcast licenses if the licensee otherwise falls under alien influence or control in a manner determined by the FCC to be in violation of the Communications Act or contrary to the public interest.
At present, two of Big City Radio's officers are known by Big City Radio to be aliens. To Big City Radio's knowledge, less than one-fourth of the capital stock of Big City Radio is owned
of record or is voted by aliens. In the event that Big City Radio learns that aliens own, control or vote stock in Big City Radio in excess of the limits set in the Communications Act and the FCC's
rules, under Big City Radio's certificate of incorporation, the
board of directors of Big City Radio has the corporate power to redeem capital stock of Big City Radio'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, while the U.S. Court of Appeals for the D.C. Circuit has twice overturned the FCC's equal employment opportunity, or EEO, rules, the FCC has adopted new EEO rules, which require broadcast
licensees 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

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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, C0 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. Big City Radio 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 towers used by Big City Radio's radio stations. The combination of
these requirements sets limits on the ability of a particular radio station to relocate in certain directions and to increase signal coverage. Stations may petition the FCC to change a particular
station's community of license and/or class, which changes are granted by the FCC when its service priorities are met and conflicting re-allotment proposals, if any, are resolved. As to
minimum distance separation requirements designed to afford interference protection to other FM stations, the FCC rarely waives such specifications. However, the FCC permits radio stations in certain
circumstances to relocate to a site not meeting the minimum distance separation rule when the station demonstrates that the service contours of neighboring radio stations will be protected from
interference. Because STMC uses radio stations that operate on the same or adjacent frequencies, the STMC 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 or Class Increases and Other Engineering Enhancements.In most instances, changes to the
technical specifications of radio stations, such as increases in the 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. Big City Radio implemented in 2002 an authorized modification of WWZY-FM, Long Branch, New Jersey, to relocate its
transmitting facilities closer to New York City. In 1998, WYNY-FM, Briarcliff Manor, New York, WWXY-FM, Hampton Bays, New York, and KLYY-FM, Arcadia, California,
implemented increases in their power levels which have resulted in larger service areas. These changes were authorized following the FCC's adoption, in 1997, of rule changes governing power increases
and other modifications by 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 spacing rules.

There
is currently pending before the FCC a proposed change in the current rules that could allow some of Big City Radio's stations to increase their power or move their transmitter
sites to provide improved coverage within the desired metro area pursuant to "negotiated interference" agreements. Big City Radio cannot predict whether the FCC will adopt such a rule change, and
unless and until the FCC changes its rules to permit negotiated interference and the approval of the station modifications are granted, Big City Radio cannot be certain that the new policy would serve
to permit increases in Big City Radio's station's coverage areas.

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Changes
may be made in a broadcast station's channel, station class, which sets the maximum service area of the station, and/or community of license through a request to change the FCC's
"Table of Allotments." Big City Radio requested that the FCC change the class of KLYY-FM (now KSSE-FM), Arcadia, California, from class A to B1, which would authorize a
larger service area, and to change the frequency of KSYY-FM (now KSSD-FM), Fallbrook, California, from 107.1 MHz to 96.9 MHz. Such changes might require the relocation of the
transmitting facilities of these stations. The requested upgrade in class for KLYY-FM (now KSSE-FM) is contingent upon the Fallbrook frequency change and other contingencies.
The Media Division of the FCC in October 2002 denied Big City Radio's request to change the class of Arcadia, and Big City Radio has appealed this decision to the FCC commissioners. Big City
Radio cannot predict whether the FCC commissioners will grant the request that they review and reverse this decision or if the other contingencies will occur.

Agreements with Other Broadcasters.Over the past several years, a significant number of broadcast
licensees, including Big City Radio, have entered into cooperative agreements with other stations in their markets. One typical example is a local marketing agreement 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 local marketing agreements 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 Big City Radio, typically licensees enter into the local marketing agreement 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, such as AM AM or FM FM, whether
it owns both stations or operates one or both through a local marketing agreement, where such stations serve substantially the same geographic area as defined by the stations' principal community
contours. Big City Radio's stations are not subject to this limitation.

Proposed Regulatory Changes and Recent Developments.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:



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

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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 Big City Radio include technological innovations and developments generally affecting competition in the mass communications industry. Digital audio radio
service, or DARS, provides a medium for the digital delivery of multiple audio programming formats to local and national audiences with sound quality potentially equivalent to compact discs. Satellite
DARS employs digital transmissions from satellites directly to fixed, mobile, and/or portable receivers. The FCC has licensed two entities, XM Radio, Inc. and Sirius Satellite
Radio, Inc., to provide DARS by satellite, and both companies are presently offering service in selected markets. The FCC is considering what permanent rules to impose on the use of terrestrial
repeaters by satellite DARS operators to overcome satellite signal blockage and/or multipath interference. Big City Radio cannot predict what regulations the FCC will adopt regarding terrestrial
repeaters and what effect such regulations would have on Big City Radio's business or the operations of its radio stations. Nor can Big City Radio predict the impact of satellite DARS operations by XM
Radio and Sirius Satellite Radio on its business. The FCC is also considering various proposals for non-satellite delivered DARS. In October 2002, the FCC adopted a policy
authorizing on an interim basis and subject to certain qualifications the use of in-band, on-channel, or IBOC technology for radio stations. IBOC technology permits 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 uncertain what final standards and regulations the FCC will adopt regarding IBOC technology and what effect such standards and regulations would
have on Big City Radio's business or the operations of its radio stations. Following its adoption of rules establishing the low-power radio service within the existing FM band, the FCC has
begun to authorize low-power radio stations, including stations in California, Illinois and New York. Low-power radio stations operate on a non-commercial basis at
power levels below that of full-power FM radio stations, such as those owned by Big City Radio, and low-power radio stations are required to meet specified interference
criteria in regards to full-power FM radio stations. Ownership of low-power radio stations is restricted to entities that have no attributable interests in any other broadcast
station or other media subject to the FCC's ownership rules. It is not possible to predict what effect, including interference effect, low-power radio stations might have on the operations
of Big City Radio's radio stations.

Streaming of Broadcasts Over the Internet.Big City Radio does not currently makes available or
"stream" over its internet websites the programming its stations broadcast over the air, although it has done so in the past. In 2002, the Copyright Arbitration Royalty Panel issued a report
recommending that the U.S. Copyright Office adopt specified royalty performance fees (retroactive to October 1998) to be paid to the recording industry for streaming by broadcasters and for
webcasting by non-broadcasters. The Librarian of Congress adopted a modified royalty payment requirement for streaming and webcasts, with the first payments collected in
October 2002. Several broadcasters have appealed the royalty payment requirements, arguing that the rates and terms are confiscatory and unreasonable, and are forcing some broadcasters to cease
streaming their programming. Congress has also conducted hearings and has proposed legislation impacting royalty payments. In December 2002, federal legislation was signed into law that
authorizes the music industry's principal royalty collector to negotiate binding royalty contracts with small webcasters on behalf of all artists and record labels. It is not possible to predict how
the outstanding royalty payment issues involving streaming and webcasting will be resolved or how such resolution would affect Big City Radio's business.

Although
Big City Radio believes the foregoing discussion is sufficient to provide the reader with a general understanding of all material aspects of FCC regulations that affect Big City
Radio, it does not

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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

This annual report on Form 10-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Exchange Act. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, plans, assumptions, risks and uncertainties that could cause
actual results or outcomes to differ materially from those expressed in a forward-looking statement. Forward-looking statements often include words or phrases such as "believes," "expects," "may,"
"will," "should," "anticipates," "estimates," "intends," "plans," or "projects" or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance and achievements of Big City Radio 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, those discussed in this report under "Item 1. Business." These factors do not include all factors that might affect Big City
Radio's business and financial condition and its ability to complete the asset sales and the other Big City Radio station sales. Big City Radio cautions you not to place undue reliance on these
forward-looking statements, which reflect its management's view only as of the date of this annual report on form 10-K. Big City Radio does not intend, and undertakes no obligation,
to update any forward-looking statement, except to the extent required by law.

Market
and other industry information contained in this annual report on form 10-K is based in part on independent industry publications, government publications,
reports by market research firms or other published independent sources. Some of this information is also based on Big City Radio's good faith estimates, which are derived from a review of internal
surveys, as well as the independent sources referred to above. Although Big City Radio believes that these sources are reliable, Big City Radio has not independently verified the information derived
from these sources and cannot guarantee its accuracy or completeness.

ITEM 2. Properties

The Company leases approximately 6,000 square feet in New York, 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 WDEK-FM DeKalb, Illinois (approximately 4,500 square feet). The
Company leases or licenses facilities for the Los Angeles stations in Century City (approximately 16,000 square feet), Arcadia, Fallbrook, Ventura (approximately 750 square feet), Temecula and
Burbank. The Company leases facilities for the New York stations in Hampton Bays (approximately 1,250 square feet), 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), Kankakee, and Morris. The Company leases facilities for the discontinued internet and
publishing operations in Coral Gable (approximately 12,600 square feet). 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, 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.

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The following table sets forth the location of the Company's principal properties:

|Location               |  | Facility                                  
|---------------------- |  | ------------------------------------------
|Los Angeles            |  |                                           
|Arcadia, CA            |  | FM tower, transmitter site (1)            
|Fallbrook, CA          |  | FM tower, studio, transmitter site (2)    
|Ventura, CA            |  | FM tower (2), studio, transmitter site (2)
|Temecula, CA           |  | Translator site (2)                       
|Century City, CA       |  | Studio, business offices (2)              
|Burbank, CA            |  | Booster site (2)                          
|New York               |  |                                           
|Atlantic Highlands, NJ |  | FM Tower, transmitter site (2)            
|Hampton Bays, NY       |  | Business office (2)                       
|New York, NY           |  | Studio, corporate offices (2)             
|Long Branch, NJ        |  | FM tower (2), building (3)                
|Westchester, NY        |  | FM tower, transmitter site (2)            
|East Quogue, NY        |  | FM tower, transmitter site (2)            
|Stroudsberg, PA        |  | FM Tower (2), transmitter building (4)    
|Chicago                |  |                                           
|Highland Park, IL      |  | FM tower (1)                              
|Morris, IL             |  | FM tower, transmitter site (4)            
|Arlington Heights, IL  |  | FM tower, transmitter site (2)            
|Kankakee, IL           |  | Studio, FM tower, transmitter site (2)    
|Chicago, IL            |  | Studio, business offices (2)              
|DeKalb, IL             |  | FM Tower, studio, business offices (4)    
|Florida                |  |                                           
|Coral Gable, FL        |  | Business offices (2)                      

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ITEM 3. Legal Proceedings

Big City Radio is a defendant inA.L., a minor by her guardian ad litem, Antonio L.;C.V., a minor by her guardian ad litem, Sophia A. v.
Big City Radio, Inc., Firmo Martin Rosetti, aka Hector Rocksetti, aka Hector Rosetti; KSYY-FM; KLYY-FM; KVYY-FM; VIVA 107.1.The case
commenced in Superior Court for the County of Los Angeles on August 15, 2002 and was subsequent removed to the United States District Court for the Southern District of California. The
complaint alleges causes of action for negligence, sexual assault, battery, negligent infliction of emotional distress and intentional infliction of emotional distress arising from actions alleged to
have been perpetrated by Hector Rosetti, a former employee of Big City Radio. Mr. Rosetti is currently incarcerated in a California state prison for the actions that are the subject to this
lawsuit. The plaintiffs have not specified the damages they seek, except that they have stated that they seek damages in excess of the $75,000 jurisdictional amount for the federal district courts.
Big City Radio is vigorously contesting its liability based upon its contentions that Mr. Rosetti's conduct, if any, was outside the scope of his employment, done without the knowledge of Big
City Radio or its officers and contrary to its policies and procedures. Big City Radio

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believes that any liability it bears will not result in a material adverse effect on its financial condition or results of operations.

ITEM 4. Submission of Matters to a Vote of Security Holders

Except as set forth below, 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, 2002.

On
December 23, 2002, Stuart Subotnick, Anita Subotnick and Subotnick Partners, L.P. (the"Consenting Holders") executed and delivered to Big City Radio a written consent approving
the asset sale to Entravision and approving and adopting the related asset purchase agreement. On December 30, 2002, the Consenting Holders executed and delivered to Big City Radio a written
consent approving the asset sale to Nassau Broadcasting and approving and adopting the related asset purchase agreement. On January 2, 2003, the Consenting Holders executed and delivered to Big
City Radio a written consent approving the asset sales to Spanish Broadcasting and Hispanic Broadcasting and approving and adopting the related asset purchase agreements. As of those dates, Big City
Radio had outstanding 6,226,817 shares of Class A common stock and 8,250,458 shares of Class B common stock. The Consenting Holders consented in respect of the 8,250,458 shares of
Class B common stock owned by them, which represented approximately 92.4% of the combined voting power of the Class A common stock and Class B common stock. The stockholder
approvals will become effective 20 days after Big City Radio first mails information statements in respect thereof to its stockholders.

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, 2002 and 2001:

|               |  | High |  | Low 
|-------------- |  | ---- |  | ----
|2002:          |  |      |  |     
|First Quarter  |  | 1.50 |  | 0.77
|Second Quarter |  | 1.40 |  | 0.90
|Third Quarter  |  | 1.55 |  | 0.97
|Fourth Quarter |  | 2.50 |  | 0.10

|               |  | High |  | Low 
|-------------- |  | ---- |  | ----
|2001:          |  |      |  |     
|First Quarter  |  | 5.00 |  | 1.75
|Second Quarter |  | 4.00 |  | 1.70
|Third Quarter  |  | 3.50 |  | 1.50
|Fourth Quarter |  | 2.34 |  | 1.10

On
March 20, 2003, the last reported sales price for the Company's Class A Common Stock by the AMEX was $0.60 per share. As of March 20, 2003, there were
approximately 35 registered holders of record of Class A Common Stock, which number includes nominees for an undeterminable number of beneficial owners, and 8 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. Any future determination with respect to the payment
of

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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 111/4% Senior Discount Notes due 2005 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."

Possible Delisting of Big City Radio Class A Common Stock

During 2002, Big City Radio's Class A Common Stock, which is listed on the American Stock Exchange, was subject to a listing review and related proceedings
by the Exchange.

Under
the Exchange's requirements as communicated to Big City Radio in connection with these proceedings, Big City Radio's Class A common stock remains subject to delisting due to
the fact that after the completion of the auction sale of its radio station properties, Big City Radio would not retain any of its existing assets and, for a period of time, may not continue to be an
operating company. Moreover, if Big City Radio



then
Big City Radio will not satisfy the Exchange's requirements, and its Class A common stock may be subject to delisting. If the Exchange delists Big City Radio's Class A Common Stock,
the liquidity and the market price of its Class A Common Stock would be adversely affected.

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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, 2001 and 2002 and statement of operations
data for the years ended December 31, 2000, 2001 and 2002 are derived from the Company's financial statements, which have been audited by KPMG LLP, independent auditors.

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.

|                                                                                               |                         | Year Ended December 31, |        
|---------------------------------------------------------------------------------------------- | ----------------------- | ----------------------- | -------
|
|Statement of Operations Data:                                                                  |                         |                         |        
|Gross revenues                                                                                 |                         | $                       | 1,595  
|Net revenues                                                                                   |                         |                         | 1,517  
|Station operating expenses                                                                     |                         |                         | 1,767  
|Internet operating expenses                                                                    |                         |                         |       
|Corporate, general and administrative expenses                                                 |                         |                         | 2,527  
|Employment incentives                                                                          |                         |                         | 808    
|Cost of abandonment of station acquisition agreement                                           |                         |                         |       
|Impairment loss on goodwill                                                                    |                         |                         |       
|Depreciation and amortization                                                                  |                         |                         | 32     
|Operating loss from continuing operations                                                      |                         |                         | (3,617 
|Gain on sale of stations                                                                       |                         |                         |       
|Other, net                                                                                     |                         |                         | (140   
|Loss from continuing operations before income taxes                                            |                         |                         | (681   
|Income tax benefit, net                                                                        |                         |                         | 1,988  
|Income (loss) from continuing operations before discontinued operations and extraordinary loss |                         |                         | 1,307  
|Loss from discontinued operations, net of income tax expense of $2,000 in 2002                 |                         |                         | (18,261
|Extraordinary loss on extinguishment of debt, net of income taxes                              |                         |                         | (495   
|Net loss                                                                                       |                         | $                       | (17,449
|Basic and Dilutive Income (loss) per Common Share:                                             |                         |                         |        
|                                                                                               | Continuing operations   |                         | $      
|                                                                                               | Discontinued operations |                         |        
|                                                                                               | Extraordinary loss      |                         |        
|                                                                                               |                         |                         |        
|                                                                                               |                         | Net loss                |        
|                                                                                               |                         |                         |        

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|                                  |  | As of December 31, |        
|--------------------------------- |  | ------------------ | -------
|
|Balance Sheet Data:               |  |                    |        
|Cash                              |  | $                  | 5,285  
|Assets held for sale              |  |                    |       
|Intangibles, net                  |  |                    | 80,309 
|Total assets                      |  |                    | 152,082
|Interest payable                  |  |                    |       
|Short-term debt                   |  |                    | 1,287  
|Long-term liabilities             |  |                    | 138,227
|Stockholders' equity (deficiency) |  |                    | 8,391  

Goodwill and other Intangible AssetsAdoption of SFAS No. 142

See Note 2 of Notes to Big City's financial statements as of December 31, 2002 and 2001, and the three year period ended December 31, 2002
regarding the effects of Big City Radio's adoption of SFAS No. 142. The following table presents an unaudited reconciliation of previously reported net loss applicable to common stock and basic
diluted loss per share to the amounts adjusted for the exclusion of the amortization of goodwill and Big City Radio's indefinite life intangible assets as if SFAS No. 142 had been adopted as of
January 1, 1998.

|                                         |  | Year Ended December 31, |        
|---------------------------------------- |  | ----------------------- | -------
|
|Reported net loss                        |  | $                       | (17,449
|Add back: Goodwill amortization          |  |                         |       
|Add back: Broadcast license amortization |  |                         | 1,679  
|                                         |  |                         |        
|Adjusted net loss                        |  | $                       | (15,770
|                                         |  |                         |        
|Basic and diluted net loss per share:    |  |                         |        
|Reported net loss                        |  | $                       | (1.24  
|Add back: Goodwill amortization          |  |                         |       
|Add back: Broadcast license amortization |  |                         | 0.12   
|                                         |  |                         |        
|Adjusted net loss                        |  | $                       | (1.12  
|                                         |  |                         |        

---

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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" for a discussion of considerations relating to such statements.

General

Throughout the period beginning on January 1, 2000, Big City Radio owned and operated radio stations in three of the largest radio markets in the United
States. Big City Radio's radio broadcast properties are located 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.

Big
City Radio'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 to other advertising media, governmental regulation and policies, and Big City Radio's ability to provide popular programming.

Big
City Radio's primary source of revenue is the sale of advertising. Each station's total revenue is determined by the number of advertisements aired by the station and the advertising
rates that the station is able to charge. Until it discontinued its publishing operations in June 2002, Big City Radio derived publishing revenues principally from the sale of advertising
announcements and from contract graphic design projects.

Because
Big City Radio's strategy has involved developing brand new metropolitan area radio stations, the initial revenue base was zero and subject to factors other than ratings and
radio broadcasting seasonality. After a station start-up period, as is typical in the radio broadcasting industry, Big City Radio's first calendar quarter generally would produce the
lowest revenues for the year, and the fourth quarter generally would produce the highest revenues for the year. Big City Radio's operating results in
any period are affected by the incurrence of advertising and promotional expenses that do not produce commensurate revenues in the period in which the expenses are incurred.

In
each of its markets, Big City Radio seeks to maximize the operating results of its broadcast properties by selecting the most competitively viable formats, engaging experienced and
talented management, and optimizing the signal coverages of its transmitting facilities.

The
independent auditor's reports on Big City Radio's financial statements for each of the last three fiscal years have stated that Big City Radio's recurring losses from operations,
negative cash flows from operations, stockholders' deficiency and default under the terms of its senior notes raise substantial doubt about Big City Radio's ability to continue as a going concern.
Because of the severe constraints on its liquidity, Big City Radio is in default on $174,000,000 principal amount of senior notes. As a result, holders of the requisite amount of the notes have
declared the principal and interest on the senior notes to be due and payable, and Big City Radio has agreed with the holders of approximately 75% of the notes to conduct an auction sale of
substantially all of its operation properties as soon as practicable for net cash consideration in an amount at least sufficient to pay all principal of, and accrued and unpaid interest on, the senior
notes. As of March 12, 2003, Big City Radio owed holders of the senior notes payment of a total of approximately $193,500,000.

The
majority of Big City Radio's broadcast properties are in various stages of development, either as a result of recently granted or pending requests to the FCC for enhancements or
upgrades or as a result of having recently changed formats. As a result, since its inception, Big City Radio has incurred substantial net operating losses primarily due to broadcast cash flow deficits
associated with the start up

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of its radio station operations. Big City Radio's original business plan envisaged that Big City Radio would generate sufficient cash flows from operations to fund its operating requirements and
capital needs and to service interest payments on the senior notes when those interest payments first became due. Although Big City Radio sold the senior notes in March 1998, the senior notes
were issued at an original issue discount, and no note interest was payable in cash until September 15, 2001. Big City Radio's inability to generate sufficient cash flows from operations to
meet all of its cash needs was attributable to a number of factors, including an adverse competitive environment, a downturn in the demand for music industry advertising, which resulted in
discontinuation of the internet and publishing businesses, and the reduction in listening levels and resulting ratings for some of Big City Radio's original station formats. Although a change in
station formats produced an improvement in net revenues, the enhanced revenues were not sufficient in most markets to offset station operating expenses and other costs.

Big
City Radio's liquidity crisis was precipitated by its lack of ability to generate operating income and its obligation to make semi-annual interest payments of
$9.8 million on its senior notes beginning on March 31, 2001. Although it was able to make the first two such interest payments, Big City Radio had to fund those payments from the
proceeds of additional borrowings and the sale of its four Phoenix stations in October 2001. To address its liquidity problems, Big City Radio has sought to reduce expenses by decreasing
capital expenditures and expenditures for promotional and programming activities and by reducing corporate, general and administrative expenses through employee terminations. These measures to
decrease
operating expenses have further limited Big City Radio's ability to compete effectively during a time of industry-wide consolidation and the exposure of smaller, less
well-capitalized companies to continued deterioration in the national and regional advertising markets.

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001

Net revenuesin the year ended December 31, 2002 were $0 compared with $4,125,000 for the year ended
December 31, 2001. This decrease was due to the Company's decision in 2002 to discontinue its publishing and radio station operations. As noted elsewhere in this report, all publishing and
radio station operations discontinued in 2002 have been classified asLosses from discontinued operations. The net revenues in 2001 represent net
revenues from the Phoenix radio stations in the ten months ended October 31, 2001, the date of their disposal.

Station operating expensesexcluding depreciation and amortization for the year ended December 31, 2002 were $0 compared with
$4,272,000 in the year ended December 31, 2001 because of the discontinuation of all publishing and radio station operations. The station operating expenses in 2001 were attributable to the
Phoenix radio station operations for the ten months ended October 31, 2001, which was the date Big City Radio sold these stations.

Internet operating expenses excluding depreciation and amortizationfor the year ended December 31, 2002 were $0 compared with
$436,000 in the year ended December 31, 2001. This decrease was due to the Company's decision in the second half of 2001 to cease its internet operations.

Corporate, general and administrative expensesfor the year ended December 31, 2002 were $4,717,000 compared with $3,610,000 for
the year ended December 31, 2001, which represented an increase of $1,107,000 or 30.7%. This increase was primarily attributable to the following factors:



This
increase was partially offset by lower personnel costs in 2002.

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Impairment loss on goodwillfor the year ended December 31, 2001 was $897,000. During 2001, the Company decided to cease the
development and operation of its internet portal, TodoAhora.com. The impairment loss represented the write-off on the remaining internet goodwill balances.

Depreciation and amortization expensesfor the year ended December 31, 2002 were $120,000 compared with $1,263,000 for the year
ended December 31, 2001, which represented a decrease of $1,143,000 or 90.5%. This decrease was primarily attributable to the following factors:



Gain on sale of stationfor the year ended December 31, 2002 was $0 compared to $2,275,000 for the year ended December 31,
2001. The gain on sale in 2001 was attributable to the sale of the Phoenix radio stations in October 2001. There were no station sales in 2002.

Interest incomefor the year ended December 31, 2002 was $152,000 compared to $111,000 for the year ended December 31, 2001,
which represented an increase of $41,000 or 36.9%. This increase was primarily attributable to higher marketable securities balances as a result of the sale of Phoenix radio stations in
October 2001.

Income tax benefitfor the year ended December 31, 2002 was $4,284,000 compared with $63,000 for the year ended December 31,
2001, which represented an increase of $4,221,000. This increase was attributable to a reduction in the valuation allowance at December 31, 2002 as a result of Big City Radio's adoption of a
plan to sell its radio stations and the impact of this plan on the timing of the reversal of certain deferred tax liabilities.

Loss from discontinued operationsfor the year ended December 31, 2002 was $27,300,000 compared with $26,630,000 for the year ended
December 31, 2001, which represented an increase of $670,000 or 2.5%. This increase was primarily attributable to an income tax provision expense of approximately $2,000,000 in 2002 related to
the difference between book and tax amortization of the FCC licenses. The increase
was partially offset by decreased interest expense resulting from a reduction of average total debt balances during 2002 compared to 2001, and facility fees paid to obtain a $15,000,000 bridge loan in
October 2001.

Net lossfor the year ended December 31, 2002 was $27,722,000 compared with $30,707,000 for the year ended December 31,
2001, which represented a decrease of $2,985,000 or 9.7%. This decrease was primarily attributable to reduced station operating expenses, reduced internet operating expenses, reduced depreciation and
amortization expenses, loss from discontinued operations, the lack of impairment losses on goodwill and the increased income tax benefit. The decrease was partially offset by reduced net revenues,
increased corporate, general and administrative expenses, and the lack of a gain on radio station sale in 2002 compared to 2001.

Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

Net revenuesin the year ended December 31, 2001 were $4,125,000 compared with $5,966,000 for the year
ended December 31, 2000, which represents a decrease of $1,841,000 or 31%. This decrease was attributable to reduced net revenues at the Phoenix Stations in 2001 compared to 2000 as a result of
the sale of these properties on October 31, 2001.

Station operating expensesexcluding depreciation and amortization for the year ended December 31, 2001 were $4,272,000 compared
with $5,538,000 in the year ended December 31, 2000, which represented a decrease of $1,266,000 or 23%. This decrease was due to reduced operating

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expenses at the Phoenix Stations in 2001 compared to 2000 as a result of the sale of these properties on October 31, 2001.

Internet operating expenses excluding depreciation and amortizationfor the year ended December 31, 2001 were $436,000 compared
with $1,457,000 in the year ended December 31, 2000, which represented a decrease of $1,021,000 or 70%. In the second half of 2001, the Company ceased its internet operations.

Corporate, general and administrative expensesfor the year ended December 31, 2001 were $3,610,000 compared with $3,845,000 for
the year ended December 31, 2000, which represented a decrease of $235,000 or 6%. This decrease was primarily attributable to lower personnel costs in 2001.

Cost of abandonment on station acquisition agreementwas the result of the cancellation of a signed agreement under which the assets of
radio station KLVA-FM, Casa Grande, Arizona would have been exchanged for the assets of radio station KDDJ-FM, Globe, Arizona. Upon execution of the acquisition agreement, the
Company deposited $275,000 into an escrow account in April 1999. In February 2000, the
Company paid the balance in the escrow account and an additional amount of $275,000, for a total of $550,000, to terminate the agreement. The Company decided to abandon the acquisition in response to
a change in the engineering enhancement plan for the Company's Phoenix radio licenses. There were no such expenses in 2001.

Impairment loss on goodwillfor the year ended December 31, 2001 was $897,000. During 2001, the Company decided to cease the
development and operation of its internet portal, TodoAhora.com. The impairment loss represented the write-off on the remaining internet goodwill balances.

Depreciation and amortization expensesfor the year ended December 31, 2001 were $1,263,000 compared with $1,312,000 for the year
ended December 31, 2000, which represented a decrease of $49,000 or 4%. This decrease was due to decreased depreciation and amortization expenses relating to the Phoenix Stations, which were
sold on October 31, 2001.

Gain on sale of stationfor the year ended December 31, 2001 was $2,275,000 for the year ended December 31, 2001. The gain
on sale resulted from the sale of the Phoenix radio stations in October 2001.

Interest incomefor the year ended December 31, 2001 was $111,000 as compared to $281,000 for the year ended December 31,
2000, which represented a decrease of $170,000 or 60%. This decrease was due primarily to a decline in marketable securities balances as a result of the application of previously invested funds to
operations.

Loss from Discontinued Operationsfor the year ended December 31, 2001 was $26,630,000 compared with $24,661,000 for the year ended
December 31, 2000, which represented an increase of $1,969,000 or 8.0%. This increase was primarily attributable to an increase in interest expense resulting from an increased average total
debt during 2001 and facility fees paid to obtain a bridge loan in October 2001, and increased operating losses at the New York radio station. This increase was partially offset by increased
operating income from the Los Angeles and Chicago radio stations

Net lossfor the year ended December 31, 2001 was $30,707,000 compared with $31,168,000 for the year ended December 31,
2000, which represented a decrease of $461,000 or 1.5%. This decrease was primarily attributable to the gain on the sale of the Phoenix stations, a reduced loss from discontinued operations, reduced
station operating expenses, reduced internet operating expenses, the absence of the $550,000 cancellation charge related to the KLVA-FM acquisition, and reduced corporate, general and
administrative expenses. The decrease was partially offset by reduced net revenues, an impairment loss on internet goodwill and reduced interest income.

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Inflation

Inflation did not have a material impact on Big City Radio's operating results in 2000, 2001 or 2002.

Liquidity and Capital Resources

As of February 1, 2003, Big City Radio had available approximately $0.9 million of cash, cash equivalents and marketable securities. Big City
Radio's existing sources of liquidity are insufficient to enable it to service its current indebtedness and to meet its operating requirements and capital needs. The independent auditors' report on
Big City Radio's financial statements for the year ended December 31, 2002 notes that recurring losses from operations and negative cash flows from operations raise substantial doubt about Big
City Radio's ability to continue as a going concern. As discussed below and elsewhere in this annual report on Form 10-K, because of the severe constraints on its liquidity, Big
City Radio has failed to make payments due on the senior notes. As a result, holders of the requisite amount of the notes have declared the principal and interest on the senior notes to be due and
payable, and Big City Radio has agreed with the holders of approximately 75% of the notes to conduct an auction sale of its radio stations as soon as practicable for net cash consideration in an
amount at least sufficient to pay all principal of, and accrued and unpaid interest on, the senior notes.

Big
City Radio has incurred substantial net losses since inception primarily due to broadcast cash flow deficits characteristic of the start up of radio stations. In addition, since the
majority of its broadcast properties are in various stages of development, either as a result of pending FCC applications and their appeals that, if granted, will permit Big City Radio to effect
engineering enhancements or upgrades, or as a result of having recently changed formats, Big City Radio expects to generate significant net losses for the foreseeable future.

As
a result of these factors, Big City Radio has met its working capital needs primarily through borrowings, including loans from Big City Radio's principal stockholders, Stuart and
Anita Subotnick, loans under credit facilities, and proceeds from the issuance of the senior notes in March 1998. Since October 31, 2001, Big City Radio has met its working capital needs
primarily from the proceeds of the sale of Big City Radio's Phoenix radio stations, which it completed on that date.

Cash Flows from Operating Activities.In each of the years ended December 31, 2002, 2001 and
2000 Big City Radio used cash in its operations. In the year ended December 31, 2002, cash used in operations related primarily to corporate, general and administrative activities and was
offset by the collection of receivables, less payments to creditors relating to the operations of the Phoenix radio stations, which were sold on October 31, 2001. In the year ended
December 31, 2001, cash used in operations related primarily to corporate, general and administrative activities, losses from the internet operations, and operating losses of the Phoenix radio
stations in the ten months ended October 31, 2001. In the year ended December 31, 2000, cash used in operations related predominantly to corporate, general and
administrative activities, losses from the internet operations and the cost of abandonment of a radio station purchase, and was partially offset by operating income from the Phoenix radio stations.

Cash Flows from Investing Activities.Capital expenditures made in continuing operations, excluding
acquisitions of radio stations, were $0 in the year ended December 31, 2002, $121,000 in the year ended December 31, 2001 and $895,000 in the year ended December 31, 2000. In the
year ended December 31, 2001, capital expenditures primarily consisted of the replacement of studio, transmission and computer equipment. In the year ended December 31, 2000, capital
expenditures primarily reflected costs incurred at the Phoenix stations for technical improvements, the upgrade and expansion of the studio broadcast facilities, and the purchase of promotional
vehicles. Capital expenditures in 2000 were also applied to the purchase of furniture, fixtures and computer equipment for the internet and publishing operations. In the year ended December 31,
2002, the Company sold $13,139,000 of marketable securities to generate cash for general working capital purposes and interest payments on

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the senior notes. In the year ended December 31, 2001, the Company purchased $15,000,000 in marketable securities, sold $1,895,000 to generate cash for general working capital purposes and
sold its Phoenix radio stations for $32,692,000. In the year ended December 31, 2000, the Company sold $5,964,000 in marketable securities to generate cash for general working capital purposes.

Cash Flows from Financing Activities.Big City Radio completed a sale of $174,000,000 aggregate
principal amount at maturity of 111/4% senior discount notes due 2005 on March 17, 1998, generating approximately $125,400,000 of gross proceeds. Big City Radio used
approximately $32,600,000 of these proceeds to repay outstanding indebtedness under a credit facility with The Chase Manhattan Bank entered into in 1996. Big City Radio used the proceeds of the senior
notes offering to finance the acquisition costs of radio station properties and for general working capital purposes.

The
senior notes were issued at an original issue discount and accreted in value until March 15, 2001 at a rate of 111/4% per annum, compounded
semi-annually to an aggregate principal amount of $174,000,000. Cash interest began accruing on the senior notes on March 15, 2001 at a rate of 111/4% per annum and
is payable in cash semi-annually, each March 15 and September 15 through and including March 15, 2005. The senior notes will mature on March 15, 2005, but may
be redeemed at the option of Big City Radio, 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, 2002, March 15, 2003 and on and after March 15, 2004, respectively.

Holders
of the senior notes have the right to require Big City Radio to repurchase their senior notes upon a "change of control" of Big City Radio, as defined in the indenture governing
the senior notes, at a price equal to 101% of the principal amount of such notes. A "change of control" for purposes of the senior notes is deemed to occur:



Payments
under the senior notes are guaranteed on a senior unsecured basis by Big City Radio's "restricted subsidiaries," as defined in the indenture governing the senior notes. As of
December 31, 2002, all of Big City Radio's subsidiaries were restricted subsidiaries. The senior notes contain financial and operational covenants with which Big City Radio and its restricted
subsidiaries must comply, including covenants restricting the incurrence of additional indebtedness, investments, payment of dividends on and redemption of capital stock, redemption of specified
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 Big City Radio 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 Big City Radio's
assets. The senior notes contain customary events of default, including payment defaults and default in the performance of other covenants, specified bankruptcy defaults, cross defaults to other
indebtedness and to judgments, and failure of a subsidiary guarantee to be in full force and effect.

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In
connection with the consummation of the senior notes offering, Big City Radio entered into a revolving credit facility with The Chase Manhattan Bank providing for up to $15,000,000 of
borrowings based upon a multiple of the positive rolling four-quarter broadcast cash flow of Big City Radio's stations and subject to compliance with specified financial and operational
covenants. The revolving credit facility was to mature on March 17, 2003. At December 31, 2000, Big City Radio was in compliance with all material covenants and restrictions under the
revolving credit facility, with the exception that, in violation of one such covenant, because the independent auditors' report on Big City Radio's financial statements for the year ended
December 31, 2000 included a "going concern" paragraph. In April 2001, the lender declined to permit Big City Radio to draw under the revolving credit facility due to Big City Radio's
violation of the foregoing covenant. As a result of its inability to draw under the revolving credit facility, Big City Radio issued a promissory note in May 2001 to borrow up to $5,000,000
from Stuart Subotnick, a principal stockholder, in order to meet its short-term working capital needs. The amount outstanding under this note, which was payable on demand, bore interest
equal to JP Morgan Chase Bank's prime rate plus 2.0%.

Cash
interest commenced accruing on the senior notes on March 15, 2001 and semi-annual cash interest payments of $9,800,000 commenced on September 15, 2001. Big
City Radio failed to make the initial semi-annual interest payment when due on September 15, 2001. In order to obtain the funds to make this payment within the 30-day
grace period provided under the indenture, Big City Radio obtained a bridge loan in the amount of $15,000,000 by the assignment of Big City Radio's revolving credit facility from the lender thereunder
to a new lender. The bridge loan was secured to the same extent as the revolving credit facility and bore interest at the rate of LIBOR plus 3.0%, or a base rate plus 2.0%, at the option of Big City
Radio. Big City Radio used the net proceeds of the bridge loan to pay the semi-annual interest on the senior notes due on September 15, 2001, together with applicable additional
interest thereon, and to repay $2,235,000 of principal indebtedness and $51,000 of interest incurred under the promissory note issued to Mr. Subotnick in May 2001. Big City Radio repaid
the bridge loan on October 31, 2001 with a portion of the proceeds from the sale of the Phoenix radio station properties, as discussed below. Big City Radio currently does not have a credit
facility.

On
October 31, 2001, Big City Radio completed the sale of its four Phoenix radio properties to Hispanic Broadcasting Corporation for a cash price of $34,000,000. The indenture
governing the senior notes permits the Company to reinvest the approximately $18,000,000 of proceeds which remained from the sale of the Phoenix stations, after the repayment of the bridge loan, in
broadcast assets for a period of up to one year from the date of these asset sales. Thereafter, any net proceeds that are not timely reinvested in broadcast assets, must be used to make an offer to
repurchase senior notes. As described above, Big City Radio used a portion of the proceeds to repay indebtedness under the bridge loan and to fund the semi-annual interest payment due on
the senior notes on March 15, 2002. Big City Radio has been using the remaining proceeds to fund its ongoing operations, and has not reinvested such proceeds in broadcast assets. Big City Radio
has not made the required offer to repurchase senior notes, because it does not have sufficient cash resources to consummate such an offer. Its failure to make an offer to repurchase constitutes an
event of default under the indenture.

The
Company failed to make the semi-annual interest payment of $9,800,000 due on the senior notes on September 15, 2002. Big City Radio's cash resources were
insufficient to enable it to make the semi-annual interest payment within the 30-day grace period provided under the indenture. The grace period expired on October 15,
2002, thereby resulting in an additional event of default under the indenture. On October 17, 2002, pursuant to the indenture, holders of the senior notes delivered an acceleration notice to
the Company declaring the principal and interest on all of the senior notes to be immediately due and payable.

The
Company has evaluated its strategic alternatives and the most efficient use of its capital. These alternatives include the sale of its broadcast assets and, depending on market
conditions, debt and/or equity financing, and purchasing, restructuring, recapitalizing, refinancing or otherwise retiring

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some of its securities in the open market or by other means. In each case, these strategic alternatives are subject to the restrictions contained in the indenture governing the senior notes. On
November 4, 2002, Big City Radio announced it had retained Jorgenson Broadcast Brokerage to market and conduct an auction sale of all of its radio stations. As discussed below, proceeds from
any sales of the stations will be applied first to repay the senior notes.

Big
City Radio, the subsidiary guarantors of the senior notes, and the holders of approximately $128,000,000 in principal amount of the senior notes acting through an ad hoc committee of
noteholders, entered into a forbearance agreement on November 13, 2002. Under the forbearance agreement, the signatory noteholders have agreed to forbear, through January 31, 2003 (later
extended to March 31, 2003), from taking, initiating or continuing any action to enforce Big City Radio's payment obligations under the senior notes, including, without limitation, any
involuntary bankruptcy filing against Big City Radio, or against any property, officers, directors, employees or agents of Big City Radio to collect on or enforce payment of any indebtedness or
obligations, or to otherwise assert any claims or causes of action seeking payment under the senior notes, in each case arising under or relating to the payment default or the default arising from the
failure to make the required offer to repurchase senior notes or other existing defaults known to the signatory noteholders as of November 13, 2002. Under the forbearance agreement, Big City
Radio agreed to conduct the auction of its radio stations in a good faith manner designed to sell the assets as soon as practicable for net cash consideration in an amount at least sufficient to pay
all principal of, and accrued and unpaid interest on, the senior notes. If signatory noteholders reasonably believe that Big City Radio is not conducting the auction process in good faith or is not
operating or managing the business and financial affairs of Big City Radio in good faith in the ordinary course and consistent with past practices, they may notify Big City Radio in writing and may
elect to terminate the forbearance agreement. Big City Radio further has agreed not to pay, discharge or satisfy any liability or obligation except for obligations reflected on Big City Radio's
balance sheet as of December 31, 2001 or incurred in the ordinary course since that date which are paid, discharged or satisfied for fair and equivalent value in the ordinary course of business
and consistent with past practices. The forbearance agreement will not prevent the trustee under the indenture or noteholders that are not parties to the forbearance agreement from pursuing remedies
under the indenture.

Big
City Radio and the noteholders executed an amendment to the forbearance agreement as of January 14, 2003, in which the expiration date of the forbearance period was extended
from January 31, 2003 through and including March 31, 2003. The forbearance agreement was further amended to provide that:



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In
addition, the forbearance agreement provides that it will automatically terminate upon the filing of a voluntary or involuntary petition under the insolvency or bankruptcy laws of the
United States or any state with respect to Big City Radio, except that, upon the filing of an involuntary bankruptcy petition by unaffiliated, arm's length creditors, Big City Radio will have a period
of ten days to obtain the dismissal or withdrawal of such a petition before the forbearance agreement terminates as a result of the filing.

If
Big City Radio completes the asset sale to Entravision and the other station sales, it will receive gross cash proceeds of approximately $197,900,000. Under the senior notes
forbearance agreement described above, Big City Radio will be obligated to apply the net proceeds of the asset sales first to pay the principal amount of the senior notes and all accrued and unpaid
interest thereon through the date of such payment. As of the date of this annual report on form 10-K, Big City Radio owed holders of the senior notes payment of a total of
approximately $193,500,000, consisting of $174,000,000 of principal and approximately $19,500,000 of accrued and unpaid interest.

Big
City Radio will apply any remaining net proceeds from the asset sales, together with its other liquidity sources, to pay expenses relating to the asset sales, including employee
severance amounts, tax liabilities and expenses associated with termination of contracts not assumed by the buyers, as well as trade payables and other operating expenses.

If
Big City Radio completes its pending station sales and sells the sole station that was not subject to a binding purchase agreement as of the date of this annual report on
form 10-K, it will have disposed of substantially all of its operating properties. Its principal sources of liquidity will then consist of cash on hand, including any remaining
proceeds of the station sales, and amounts earned on its investment of such cash, and collections of trade receivables, which amounted to approximately $1,900,000 as of December 31, 2002. Big
City Radio also may seek to obtain additional liquidity by selling shares of the Entravision Class A common stock it will receive upon completion of the asset sale. Assuming the closing of its
pending station sales, Big City Radio believes that these liquidity sources will be sufficient to meet its short-term cash needs. The amount and nature of Big City Radio's
long-term liquidity needs will depend on, among other things, a decision by the board of directors regarding future operations, if any, of Big City Radio. As of the date of this annual
report on form 10-K, the board of directors has not determined the uses to which Big City Radio will apply any cash or other assets remaining after it has repaid the senior notes
and its other liabilities. This determination will depend on various factors, a number of which are not within Big City Radio's control, including whether the asset sales are completed, the dates on
which the sales are completed and the amount of Big City Radio's obligations that must be paid with the proceeds of the sales.

If
some of the radio station sales are not completed, and the holders of the senior notes continue to forbear from exercise their remedies, Big City Radio will attempt to continue to
finance its operations and obligations while it seeks new buyers for its unsold stations. Big City Radio's principal sources of liquidity would then consist of cash on hand and operation revenues of
stations no longer subject to time brokerage agreements with potential purchasers. Big City Radio would seek to manage its operating expense levels by further reducing corporate, general and
administrative expenses and expenditures for promotional and programming activities.

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If Big City Radio is not successful in selling the stations at all or selling the stations at prices sufficient to pay all principal of, and accrued and unpaid interest on, the senior
notes, Big City Radio will consider other strategic alternatives, including filing for protection from its creditors under the United States bankruptcy code. Because events of default exist under the
indenture governing the senior notes, Big City Radio also could be subject to an involuntary filing under the bankruptcy code initiated by noteholders or other creditors.

Cash used in discontinued operationsThe Company used cash in its discontinued operations in each of
the years ended December 31, 2002, 2001 and 2000. In the years ended December 31, 2002 and 2001, the Company used the cash primarily to make interest payment on the senior notes and to
fund operating cash deficits in the New York and Chicago station operations. In the year ended December 31, 2000, the Company used the cash to fund operating cash deficits in the Los Angeles,
New York and Chicago station operations.

Application of Asset Sale Proceeds; Future Operations of Big City Radio

Under its purchase agreements with Entravision, Nassau, Spanish Broadcasting and Hispanic Broadcasting, pursuant to which Big City Radio has committed to sell 11
of its 12 radio stations, Big City Radio will receive gross cash proceeds of approximately $197.9 million, if all of these asset sales are completed. The table below summarizes information
about the pending asset sales.

|Buyer                                         |  | Stations                              |  | Purchase
Price (1)
in millions
|--------------------------------------------- |  | ------------------------------------- |  | ------------------------------
|Entravision Communications Corporation        |  | KVYY-FM (Ventura, California)         |  | $                             
|                                              |  | KLYY-FM (Arcadia, California)         |  |                               
|                                              |  | KSYY-FM (Fallbrook, California)       |  |                               
|Nassau Broadcasting Holdings, Inc.            |  | WYNY-FM (Briarcliff Manor, New York)  |  |                               
|                                              |  | WWZY-FM (Long Branch, New Jersey)     |  |                               
|                                              |  | WWXY-FM (Hampton Bays, New York)      |  |                               
|                                              |  | WWYY-FM (Belvidere, New Jersey)       |  |                               
|Spanish Broadcasting System of Illinois, Inc. |  | WDEK-FM (De Kalb, Illinois)           |  |                               
|                                              |  | WKIE-FM (Arlington Heights, Illinois) |  |                               
|                                              |  | WKIF-FM (Kankakee, Illinois)          |  |                               
|HBC Illinois, Inc.                            |  | WXXY-FM (Highland Park, Illinois)     |  |                               
|                                              |  |                                       |  |                               
|                                              |  |                                       |  | $                             
|                                              |  |                                       |  |                               

---

In
addition, Entravision will issue 3,766,478 shares of Entravision's Class A common stock to Big City Radio in connection with the asset sale to Entravision. Based on the closing
sale price of the Class A
common stock as reported by The New York Stock Exchange on the date of this annual report on Form 10-K, the shares to be issued to Big City Radio had an aggregate value of
approximately $21.8 million. The purchase agreement for the sale to Entravision does not contain any price adjustment provisions designed to protect Big City Radio against a decline in the
value of Entravision's

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Class A common stock before it receives the stock upon the closing of the asset sale. After the closing, Big City Radio may have to sell at least a portion of its Entravision shares to obtain
sufficient cash to repay its senior notes and satisfy its other liabilities and obligations. If and when Big City Radio seeks to sell its shares of Entravision's Class A common stock, it may
not be able to do so for proceeds that approximate the closing date value or that are sufficient to meet its cash needs.

Big
City Radio currently estimates that it will incur federal, state and local income taxes of approximately $9.0 million in connection with the asset sales and other matters,
after the application of available net operating loss carryforwards. Big City Radio estimates that the brokerage, legal and accounting fees payable by it relating to the transactions will total
approximately $3 million. Big City Radio will incur other transaction costs, including payments to its executive officers and directors, severance payments, lease termination expense and other
similar expenses associated with the termination of contracts which are not being assumed by Entravision and the other buyers.

Under
its forbearance agreement with holders of its senior notes, Big City Radio is obligated to apply the aggregate net cash proceeds of the asset sales first to pay the principal
amount of the senior notes and all accrued and unpaid interest thereon through the date of such payment. As of March 12, 2003, Big City Radio owed holders of the senior notes approximately
$193.5 million, consisting of $174 million of principal and approximately $19.5 million of accrued and unpaid interest.

In
connection with the asset sale to Entravision and the other station sales, Big City Radio will retain specified assets and liabilities. For a description of the specific assets and
liabilities Big City Radio will retain in connection with the asset sale to Entravision, see "Terms of the Asset Purchase Agreement."

If
Big City Radio completes its asset sale to Entravision and its other pending station sales, it will have sold substantially all of its operating assets. At such time, Big City Radio's
board of directors would determine whether it would then be in the best interests of Big City Radio and its stockholders for Big City Radio to distribute any available proceeds to the stockholders,
whether under a plan of dissolution or otherwise. If Big City Radio is unable to complete the asset sale to Entravision or any of the other Big City Radio station sales, it will not be in a position
to make such a distribution. Accordingly, Big City Radio's board of directors will be in a position only at a later date to determine whether Big City Radio should make a distribution of available
proceeds of the asset sales to its stockholders and, if it determines to make a distribution, the amount thereof. These determinations will depend on various factors, a number of which are not within
Big City Radio's control, including the following:



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One
alternative Big City Radio's board of directors would consider following completion of the asset sales is adoption of a plan for the dissolution of Big City Radio. A plan of
dissolution would require approval by Big City Radio's stockholders under Delaware law. If it were to adopt a plan of dissolution, the Big City Radio board of directors would determine the terms of
such a plan at the time of adoption consistent with the requirements of Delaware law. Big City Radio expects that such a plan generally would provide that Big City Radio would sell or otherwise
dispose of all of its remaining property and assets, with such exceptions as its board of directors may approve at the time, such as retention of property and assets that the board of directors may
deem necessary or advisable to enable Big City Radio to pursue any claims and causes of action. Following the liquidation of its remaining assets, Big City Radio would pay, or provide for the payment
of, its remaining liabilities and obligations to the extent possible, as required by Delaware law. Subject to the payment, or the provision for payment, of Big City Radio's liabilities and
obligations, any remaining assets would be available for distribution from time to time on a pro rata basis to stockholders. Big City Radio may not be able to determine for a significant period
following adoption of a plan of dissolution whether any assets would
be available for distribution to its stockholders. Such a determination would be made only after Big City Radio's creditors have received legally required notices concerning the plan and after
adequate provision has been made for contingent as well as known liabilities. Big City Radio cannot provide any assurance that there would ultimately be sufficient proceeds from the asset sales to
provide for Big City Radio's liabilities and obligations or to make distributions to Big City Radio's stockholders under a plan of dissolution.

Even
if Big City Radio is able to repay its senior notes and other liabilities and has additional proceeds from the asset sales, its board of directors may determine not to approve a
plan of dissolution or otherwise authorize a distribution of such proceeds to its stockholders, but instead may approve use of the proceeds for investment in opportunities for new operations for Big
City Radio. Big City Radio does not know whether, if it does have available assets and determines to seek new opportunities, it will have any success in establishing any new operations. In addition,
Big City Radio expects that for some period following completion of the auction sale of all of its radio station properties, during which it may seek to identify new opportunities, it would not be
engaged in operating activities.

Whether
or not Big City Radio's board of directors adopts a plan of dissolution, Big City Radio will be obligated to continue to comply with the applicable reporting requirements of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, even though compliance with such reporting requirements is financially burdensome. If the dissolution of Big City Radio pursuant to a
plan of dissolution is approved, in order to curtail expenses, Big City Radio may seek relief from the SEC from the reporting requirements under the Exchange Act.

Because
of the uncertainties discussed above, Big City Radio cannot provide any assurance that it will have any assets available for distribution to its stockholders from proceeds of the
asset sales or, if it does have assets available for distribution, that it will make a distribution of any or all of such assets.

Contractual Obligations and Commitments

If Big City Radio is not successful in selling the stations at all or selling the stations at prices sufficient to pay all principal of, and accrued and unpaid
interest on, the senior notes, Big City Radio will consider other strategic alternatives, including filing for protection from its creditors under the United States bankruptcy code. Because events of
default exist under the indenture governing the senior notes, Big City Radio also could be subject to an involuntary filing under the bankruptcy code initiated by noteholders or other creditors.

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As
of December 31, 2002, Big City Radio's contractual obligations and commitments were as follows:

|           |  | Senior Notes
(Principal and
Interest) |             | Operating
Leases |   | Employment
Contracts |  | Total
|---------- |  | ------------------------------------- | ----------- | ---------------- | - | -------------------- |  | -----
|2003       |  | $                                     | 189,983,000 |                  |   | 1,652,000            |  |      
|2004       |  |                                       |            |                  |   | 1,089,000            |  |      
|2005       |  |                                       |            |                  |   | 649,000              |  |      
|2006       |  |                                       |            |                  |   | 446,000              |  |      
|2007       |  |                                       |            |                  |   | 400,000              |  |      
|Thereafter |  |                                       |            |                  |   | 304,000              |  |      
|           |  |                                       |             |                  |   |                      |  |      
|           |  | $                                     | 189,983,000 |                  | $ | 4,540,000            |  | $    
|           |  |                                       |             |                  |   |                      |  |      

Factors that May Affect Future Results and Financial Condition

The following factors (in addition to others) could have a material and adverse impact on the Company's business:

If
the proposed asset sales do not occur, Big City Radio will have to re-commence operations at its Los Angeles and Chicago radio stations which have been operated by the
proposed purchasers since January 2003 under time brokerage agreements. The Los Angeles and Chicago radio stations have been reformatted by the prospective buyers. Big City Radio would have to
attempt to re-hire employees, re-build its previous revenue base and advertise in order to inform the radio audience in each market of such changes.

Big
City Radio's highly leveraged financial position poses the following risks to stockholders:



Big
City Radio derives substantially all of its revenues from advertisers in diverse industries. If a number of Big City Radio's advertisers reduce their expenditures because of a
general economic downturn, or an economic downturn in one or more industries or regions, or for any other reason, Big City Radio's results of operations would be materially and adversely affected.

Cash
on hand is insufficient to meet Big City Radio's obligations and commitments. Big City Radio's debt has been accelerated under the indentures. In addition, because the Company is
highly leveraged, its ability to respond to market conditions or meet extraordinary capital needs is limited. Big City Radio is unable to generate sufficient cash flow from operations to meet its
obligations and commitments, as such it is required to refinance or restructure its indebtedness or raise additional debt or equity capital, or seek protection under the Bankruptcy laws. Big City
Radio may be required to sell material assets or operations. These alternative strategies might not be effected on satisfactory terms, if at all.

Big
City Radio's Senior Discount Notes Indenture contains restrictive covenants that may limit its ability to:



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Big
City Radio currently does not have a credit agreement. The Company may not be able to obtain a new credit agreement.

If
Big City Radio experiences a change of control, with respect to the Senior Discount Notes, the Company does not have sufficient funds to repurchase the notes, as may be required.

Big
City Radio has incurred losses from continuing operations in each of its fiscal years since inception and expects to continue to experience net losses in the foreseeable future.
These net losses, which may be greater than its net losses in the past, are principally a result of interest expense on its outstanding debt and non-cash charges for depreciation expense
related to long-term assets.

If
Big City Radio cannot consummate one or more of the pending or planned dispositions, the Company's ability to improve operating results could be limited, by amongst other reasons, its
inability to successfully implement its engineering enhancement plans, or if it is forced to change formats at its radio properties in response to competitor format changes. The Company's ability to
improve operating results is affected, amongst other reasons, by the following;



Critical Accounting Policies and Material Estimates

Big City Radio's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have
been prepared in accordance with the accounting principles generally accepted in the United States. The preparation of these financial statements requires Big City Radio to make estimates and
judgments that affected the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Big City
Radio evaluates its estimates, including those to broadcast rights, bad debts, intangible assets, income taxes, and contingencies and litigation. Big City Radio bases its estimates on historical
experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Big City Radio believes the following critical
accounting policies affect its more significant judgment and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition.Big City Radio records revenue from the sale of airtime related to advertising
and contracted time at the time of broadcast. Big City Radio maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments.
Big City Radio utilizes information available to Big City Radio, including the timing of payments and the financial condition of its customers to estimate the allowance for doubtful accounts. If the
financial condition of Big City Radio's customers were to deteriorate, resulting in an impairment

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of their ability to make payments, additional allowances may be required. Big City Radio does not have a significant concentration of accounts receivable from one customer or industry segment.

Business Combinations and Goodwill and other Intangible Assets.In July 2001, the Financial
Accounting Standards Board, or FASB, issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. SFAS
No. 141 also specifies criteria that intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase
price allocable to an assembled workforce may not be accounted for separately. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but
instead be tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 requires that intangible assets with definite useful lives be amortized
over their respective estimated useful lives to their estimated residual
values, and reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Big
City Radio adopted SFAS No. 141 and SFAS No. 142 effective January 1, 2002. Any goodwill and any intangible asset determined to have an indefinite useful life
that was acquired in a purchase business combination completed after June 30, 2001 will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate
pre-SFAS No. 142 accounting literature. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 have been amortized through
December 31, 2001.

SFAS
No. 141 requires that upon adoption of SFAS No. 142, Big City Radio evaluate its existing intangible assets and goodwill that was acquired in a prior purchase business
combination, and make any necessary reclassifications in order to conform with the new criteria in SFAS No. 141 for recognition apart from goodwill. Upon adoption of SFAS No. 142, Big
City Radio reassessed the useful lives and residual values of all intangible assets acquired in business combinations accounted for using the purchase method. In addition, to the extent Big City Radio
identified an intangible asset as having an indefinite useful life, Big City Radio was required to test the intangible asset for impairment in accordance with the provisions of SFAS No. 142
within the first interim period. Any impairment loss would have been measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle. No significant
adjustments or impairment losses resulted from the adoption of SFAS No. 141 and SFAS No. 142.

In
connection with the transitional goodwill impairment evaluation, SFAS No. 142 required Big City Radio to perform an assessment of whether there was an indication that goodwill
was impaired as of the date of adoption. To accomplish this, Big City Radio identified its reporting units and determined the carrying value of each reporting unit by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. As each reporting unit's carrying amount did not exceed its fair value, there
was no indication that the reporting unit's goodwill may be impaired and Big City Radio was not required to perform the second step of the transitional impairment test. In the second step, Big City
Radio would compare the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of its assets, recognized and unrecognized, and liabilities
in a manner similar to a purchase price allocation in accordance with SFAS No. 141, to its carrying amount, both of which would be measured as of the date of adoption. Any transitional
impairment loss was required to be recognized as the cumulative effect of a change in accounting principle in Big City Radio's statement of earnings. No such loss resulted from Big City Radio's
adoption of SFAS No. 142.

In
accordance with SFAS No. 142, Big City Radio discontinued the amortization of goodwill and intangible assets, consisting of a broadcast license (intangible asset with an
indefinite useful life),

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effective January 1, 2002. During the quarter ended March 31, 2002, Big City Radio completed the transitional impairment test, which did not result in impairment of recorded intangible
assets. In June 2002, Big City Radio ceased the operation of its publishing operations, and wrote off the remaining $108,000 of goodwill associated with such operations. During the fourth
quarter of 2002, the
Company made the decision to sell its broadcast licenses. In accordance with SFAS No.144, these licenses are reported as assets held for sale. The Company compared the licenses' carrying value to
their fair value, less the estimated cost to sell them. The fair value of the stations were based on asset sale agreements for 11 of the 12 stations, and an estimate for the remaining station based on
offers received during the auction process. This review of the carrying value of its intangible assets resulted in a charge of $630,000 relating to the impairment in value of some of its FCC broadcast
licenses. As of December 31, 2002, Big City Radio has no remaining un-amortized goodwill, and has un-amortized broadcast licenses in the amount of $76,325,000.

Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of.In August 2001, the
FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"), which supersedes both SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of ("SFAS No. 121"), and the accounting and reporting provisions of APB Opinion No. 30,
Reporting the Results of OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("Opinion
30"), for the disposal of a segment of a business (as previously defined in that Opinion). SFAS No. 144 retains the fundamental provisions in SFAS No. 121 for recognizing and measuring
impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with SFAS
No. 121. For example, SFAS No. 144 provides guidance on how a long-lived asset that is used as part of a group should be evaluated for impairment, establishes criteria for
when a long-lived asset is held for sale, and prescribes the accounting for a long-lived asset that will be disposed of other than by sale. SFAS No. 144 retains the
basic provisions of Opinion 30 on how to present discontinued operations in the income statement but broadens that presentation to include a component of an entity, rather than a segment of a
business. Unlike SFAS No. 121, an impairment assessment under SFAS No. 144 will never result in a write-down of goodwill. Rather, goodwill is evaluated for impairment under
SFAS No. 142, Goodwill and Other Intangible Assets.

Big
City Radio adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not have a material impact on the financial position, cash flows, or results
of operations of Big City Radio. Big City Radio discontinued its publishing operations during June 2002. This was treated as a discontinued operation under SFAS No. 144. In
December 2002, the Company announced sales of eleven of its twelve radio stations in Los Angeles, New York, and Chicago. The Company also intends to sell its remaining station. Big City Radio's
consolidated financial statements for all periods presented have been adjusted to reflect the radio station sales and ceased publishing operations as discontinued operations in accordance with SFAS
No. 144.

Accounting for Cost Associated with Exit or Disposal Activities.In June 2002, the Financial
Accounting Standards Board issued FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS No. 146"), which nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3 Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)
("Issue 94-3").

The
principal difference between SFAS No. 146 and Issue 94-3 relates to its requirements for recognition of a liability for a cost associated with an exit or disposal
activity. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under
Issue 94-3, a liability for an exit cost as defined in Issue 94-3 was recognized at the date of an entity's commitment to an exit plan. Under SFAS No. 146, a commitment
to a plan, by itself,

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does not create a present obligation to others that meets the definition of a liability. SFAS No. 146 also establishes that fair value is the objective for initial measurement of the
liability.

Big
City Radio is required to adopt SFAS No. 146 on exit and disposal activities that are initiated after December 31, 2002, with early application encouraged. Big City
Radio has adopted SFAS No. 146 in relation to exit and disposal activities initiated after September 30, 2002.

Off Balance Sheet Transactions

The Company did not have any off-balance sheet transaction as of December 31, 2002.

Quantitative and Qualitative Disclosures About Market Risk

Big City Radio is exposed to the impact of interest rate changes and the change in the market values of its investments.

Big
City Radio's exposure to market rate risk for changes in interest rates relates primarily to Big City Radio's investment portfolio. Big City Radio has not used derivative financial
instruments in its investment portfolio. Big City Radio 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. Big City Radio 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. The fair value of fixed-rate securities may be adversely affected by
a rise in interest rates. Big City Radio may suffer losses in principal if forced to sell securities which have declined in market value due to changes in interest rates.

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ITEM 8. Financial Statements and Supplementary Data

BIG CITY RADIO, INC.    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                           |  | Page
|------------------------------------------------------------------------------------------ |  | ----
|BIG CITY RADIO, INC.                                                                       |  |     
|Report of KPMG LLP, Independent Auditors                                                   |  | 43  
|Consolidated Balance Sheets as of December 31, 2001 and 2002                               |  | 44  
|Consolidated Statements of Operations for the years ended December 31, 2000, 2001 and 2002 |  | 45  
|Consolidated Statements of Cash Flows for the years ended December 31, 2000, 2001 and 2002 |  | 46  
|Consolidated Statement of Stockholders' Equity (Deficiency)                                |  | 47  
|Notes to Consolidated Financial Statements                                                 |  | 48  

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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, 2001 and 2002, 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, 2002. 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, 2002. 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 auditing standards generally accepted in the United States of America. 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, 2001 and 2002, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America. 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.

The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated
financial statements, the Company has suffered recurring losses and cash deficits, has a stockholders' deficiency of $105,357,000 at December 31, 2002 and was in default under the terms of its
Senior Discount Notes that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As
discussed in Note 1 to the consolidated financial statements, effective January 1, 2002, the Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."

KPMG
LLP

Los
Angeles, California
February 14, 2003

43

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Part 1Financial Information

Item 1. Financial Statements

BIG CITY RADIO, INC.  Consolidated Balance Sheets

|                                                        |                                                                                                                               | December 31,
2001 |             | December 31,
2002 |  
|------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ----------------- | ----------- | ----------------- | -
|Assets                                                  |                                                                                                                              
|Current assets:                                         |                                                                                                                               |                   |             |                   |  
|                                                        | Cash and cash equivalents                                                                                                     |                   | $           | 3,194,000         |  
|                                                        | Cash held in investment, restricted                                                                                           |                   |             | 1,336,000         |  
|                                                        | Marketable securities                                                                                                         |                   |             | 15,000,000        |  
|                                                        | Accounts receivable, net of allowance of $458,000 and $362,000 in 2001 and 2002, respectively                                 |                   |             | 3,817,000         |  
|                                                        | Interest receivable                                                                                                           |                   |             | 21,000            |  
|                                                        | Assets held for sale (note 4)                                                                                                 |                   |             |                  |  
|                                                        | Prepaid expenses and other current assets                                                                                     |                   |             | 602,000           |  
|                                                        |                                                                                                                               |                   |             |                   |  
|Total current assets                                    |                                                                                                                               |                   | 23,970,000  |                   |  
|Property and equipment, net (note 7)                    |                                                                                                                               |                   | 5,206,000   |                   |  
|Intangibles, net (note 8)                               |                                                                                                                               |                   | 77,063,000  |                   |  
|Deferred financing fees, net                            |                                                                                                                               |                   | 2,094,000   |                   |  
|Other assets                                            |                                                                                                                               |                   | 112,000     |                   |  
|                                                        |                                                                                                                               |                   |             |                   |  
|Total assets                                            |                                                                                                                               | $                 | 108,445,000 |                   | $
|                                                        |                                                                                                                               |                   |             |                   |  
|Liabilities and Stockholders' Equity (Deficiency)       |                                                                                                                              
|Current liabilities:                                    |                                                                                                                               |                   |             |                   |  
|                                                        | Accounts payable                                                                                                              |                   | $           | 1,428,000         |  
|                                                        | Accrued expenses                                                                                                              |                   |             | 1,988,000         |  
|                                                        | Interest payable                                                                                                              |                   |             | 5,873,000         |  
|                                                        | Senior discount notes (note 9)                                                                                                |                   |             |                  |  
|                                                        | Other current liabilities                                                                                                     |                   |             | 79,000            |  
|                                                        |                                                                                                                               |                   |             |                   |  
|Total current liabilities                               |                                                                                                                               |                   | 9,368,000   |                   |  
|                                                        |                                                                                                                               |                   |             |                   |  
|Long-term liabilities:                                  |                                                                                                                               |                   |             |                   |  
|                                                        | Senior discount notes                                                                                                         |                   |             | 174,000,000       |  
|                                                        | Other long-term liabilities                                                                                                   |                   |             | 420,000           |  
|                                                        | Deferred income tax liabilities                                                                                               |                   |             | 2,284,000         |  
|Commitments and contingencies                           |                                                                                                                               |                   |            |                   |  
|Stockholders' equity (deficiency):                      |                                                                                                                               |                   |             |                   |  
|                                                        | Preferred stock, $.01 par value. Authorized 20,000,000 shares; zero shares issued and outstanding in 2001 and 2002            |                   |             |                  |  
|                                                        | Common stock, Class A, $.01 par value. Authorized 80,000,000 shares; issued and outstanding 6,226,817 shares in 2001 and 2002 |                   |             | 62,000            |  
|                                                        | Common stock, Class B, $.01 par value. Authorized 20,000,000 shares; issued and outstanding 8,250,458 shares in 2001 and 2002 |                   |             | 83,000            |  
|                                                        | Additional paid-in capital                                                                                                    |                   |             | 29,492,000        |  
|                                                        | Other comprehensive loss (note 2)                                                                                             |                   |             |                  |  
|                                                        | Accumulated deficit                                                                                                           |                   |             | (107,264,000      | )
|                                                        |                                                                                                                               |                   |             |                   |  
|                                                        |                                                                                                                               |                   | (77,627,000 | )                 |  
|                                                        |                                                                                                                               |                   |             |                   |  
|Total liabilities and stockholders' equity (deficiency) |                                                                                                                               | $                 | 108,445,000 |                   | $
|                                                        |                                                                                                                               |                   |             |                   |  

See accompanying notes to consolidated financial statements.

44

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BIG CITY RADIO, INC.  Consolidated Statements of Operations  Years ended December 31, 2000, 2001 and 2002

|                                                                     |                                           | 2000                                                                               |             | 2001        |             | 2002        |            
|-------------------------------------------------------------------- | ----------------------------------------- | ---------------------------------------------------------------------------------- | ----------- | ----------- | ----------- | ----------- | -----------
|Gross revenues from continuing operations                            |                                           | $                                                                                  | 6,679,000   |             | $           | 4,622,000   |            
|Less commissions and fees                                            |                                           |                                                                                    | 713,000     |             |             | 497,000     |            
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|                                                                     | Net revenues                              |                                                                                    |             | 5,966,000   |             |             | 4,125,000  
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|Operating expenses:                                                  |                                           |                                                                                    |             |             |             |             |            
|Station operating expenses, excluding depreciation and amortization  |                                           |                                                                                    | 5,538,000   |             |             | 4,272,000   |            
|Internet operating expenses, excluding depreciation and amortization |                                           |                                                                                    | 1,457,000   |             |             | 436,000     |            
|Corporate, general and administrative expenses                       |                                           |                                                                                    | 3,845,000   |             |             | 3,610,000   |            
|Cost of abandonment of station acquisition agreement                 |                                           |                                                                                    | 550,000     |             |             |            |            
|Impairment loss on goodwill                                          |                                           |                                                                                    |            |             |             | 897,000     |            
|Depreciation and amortization                                        |                                           |                                                                                    | 1,312,000   |             |             | 1,263,000   |            
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|                                                                     | Total operating expenses                  |                                                                                    |             | 12,702,000  |             |             | 10,478,000 
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|                                                                     | Operating loss from continuing operations |                                                                                    |             | (6,736,000  | )           |             | (6,353,000 
|Other income (expenses):                                             |                                           |                                                                                    |             |             |             |             |            
|Gain on sale of station (note 5)                                     |                                           |                                                                                    |            |             |             | 2,275,000   |            
|Interest income                                                      |                                           |                                                                                    | 281,000     |             |             | 111,000     |            
|Other, net                                                           |                                           |                                                                                    | (115,000    | )           |             | (173,000    | )          
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|                                                                     | Total other income                        |                                                                                    |             | 166,000     |             |             | 2,213,000  
|Loss from continuing operations before income taxes                  |                                           |                                                                                    | (6,570,000  | )           |             | (4,140,000  | )          
|Income tax benefit, net (notes 2 and 14)                             |                                           |                                                                                    | 63,000      |             |             | 63,000      |            
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|Loss from continuing operations                                      |                                           |                                                                                    | (6,507,000  | )           |             | (4,077,000  | )          
|Discontinued operations: (note 4)                                    |                                           |                                                                                    |             |             |             |             |            
|                                                                     | Radio operations                          |                                                                                    |             | (24,620,000 | )           |             | (25,985,000
|                                                                     | Publishing operations                     |                                                                                    |             | (41,000     | )           |             | (645,000   
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|                                                                     |                                           | Loss from discontinued operations, net of income tax expense of $2,000,000 in 2002 |             |             | (24,661,000 | )           |            
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|Net loss                                                             |                                           | $                                                                                  | (31,168,000 | )           | $           | (30,707,000 | )          
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|Basic and diluted loss per share:                                    |                                           |                                                                                    |             |             |             |             |            
|                                                                     | Loss from continuing operations           |                                                                                    | $           | (0.45       | )           | $           | (0.28      
|                                                                     | Loss from discontinued operations         |                                                                                    |             | (1.70       | )           |             | (1.84      
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|                                                                     | Net loss                                  |                                                                                    | $           | (2.15       | )           | $           | (2.12      
|                                                                     |                                           |                                                                                    |             |             |             |             |            
|Weighted average shares outstanding                                  |                                           |                                                                                    | 14,475,000  |             |             | 14,477,000  |            
|                                                                     |                                           |                                                                                    |             |             |             |             |            

See
accompanying notes to consolidated financial statements.

45

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BIG CITY RADIO, INC.  Consolidated Statements of Cash Flows  Years ended December 31, 2000, 2001 and 2002

|                                               |                                                                                                  | 2000                                      |            | 2001       |            | 2002        |            
|---------------------------------------------- | ------------------------------------------------------------------------------------------------ | ----------------------------------------- | ---------- | ---------- | ---------- | ----------- | -----------
|Cash flows from operating activities:          |                                                                                                  |                                           |            |            |            |             |            
|                                               | Net loss from continuing operations                                                              |                                           | $          | (6,507,000 | )          | $           | (4,077,000 
|                                               | Adjustments to reconcile net loss to net cash used in operating activities:                      |                                           |            |            |            |             |            
|                                               | Depreciation and amortization                                                                    |                                           |            | 1,312,000  |            |             | 1,263,000  
|                                               | Deferred income taxes                                                                            |                                           |            | (63,000    | )          |             | (63,000    
|                                               | Non cash change in other comprehensive loss                                                      |                                           |            | 140,000    |            |             | 9,000      
|                                               | Gain on sale of station                                                                          |                                           |            |           |            |             | (2,275,000 
|                                               | Impairment loss on goodwill                                                                      |                                           |            |           |            |             | 897,000    
|                                               | Employment stock incentives                                                                      |                                           |            | 34,000     |            |             |           
|                                               | Changes in operating assets and liabilities, net of acquisitions: (Increase) decrease in assets: |                                           |            |            |            |             |            
|                                               | Accounts receivable                                                                              |                                           |            | 141,000    |            |             | 686,000    
|                                               | Interest receivable                                                                              |                                           |            | 488,000    |            |             | 17,000     
|                                               | Prepaid expenses and other current assets                                                        |                                           |            | 463,000    |            |             | (240,000   
|                                               | Other assets                                                                                     |                                           |            | (3,000     | )          |             | 6,000      
|                                               |                                                                                                  | Increase (decrease) in liabilities:       |            |            |            |             |            
|                                               | Accounts payable                                                                                 |                                           |            | 188,000    |            |             | 52,000     
|                                               | Accrued expenses                                                                                 |                                           |            | (941,000   | )          |             | 394,000    
|                                               | Other liabilities                                                                                |                                           |            | (36,000    | )          |             |           
|                                               |                                                                                                  |                                           |            |            |            |             |            
|                                               |                                                                                                  | Net cash used in operating activities     |            |            | (4,784,000 | )           |            
|                                               |                                                                                                  |                                           |            |            |            |             |            
|Cash flows from investing activities:          |                                                                                                  |                                           |            |            |            |             |            
|                                               | Purchase of property and equipment                                                               |                                           |            | (895,000   | )          |             | (121,000   
|                                               | Purchase of marketable securities                                                                |                                           |            |           |            |             | (15,000,000
|                                               | Sale of marketable securities                                                                    |                                           |            | 5,964,000  |            |             | 1,895,000  
|                                               | Decrease in cash held in restricted investment                                                   |                                           |            | 1,132,000  |            |             | (534,000   
|                                               | Decrease in cash held in escrow                                                                  |                                           |            | 275,000    |            |             |           
|                                               | Cash received for disposal of fixed assets                                                       |                                           |            | 10,000     |            |             |           
|                                               | Cash received for radio station sold                                                             |                                           |            | 352,000    |            |             | 32,692,000 
|                                               |                                                                                                  |                                           |            |            |            |             |            
|                                               |                                                                                                  | Net cash provided by investing activities |            |            | 6,838,000  |             |            
|                                               |                                                                                                  |                                           |            |            |            |             |            
|Cash flows from financing activities:          |                                                                                                  |                                           |            |            |            |             |            
|                                               | Cash received from issuance of promissory note to related party                                  |                                           |            |           |            |             | 2,235,000  
|                                               | Cash received from bridge loan                                                                   |                                           |            |           |            |             | 15,000,000 
|                                               | Repayment of promissory note to related party                                                    |                                           |            |           |            |             | (2,235,000 
|                                               | Repayment of bridge loan                                                                         |                                           |            |           |            |             | (15,000,000
|                                               | Repayment of promissory notes                                                                    |                                           |            | (881,000   | )          |             |           
|                                               |                                                                                                  |                                           |            |            |            |             |            
|                                               |                                                                                                  | Net cash used in financing activities     |            |            | (881,000   | )           |            
|                                               |                                                                                                  |                                           |            |            |            |             |            
|Cash used in discontinued operations           |                                                                                                  |                                           | (2,742,000 | )          |            | (13,269,000 | )          
|                                               |                                                                                                  |                                           |            |            |            |             |            
|                                               |                                                                                                  | Change in cash and cash equivalents       |            |            | (1,569,000 | )           |            
|Cash and cash equivalents at beginning of year |                                                                                                  |                                           | 2,431,000  |            |            | 862,000     |            
|                                               |                                                                                                  |                                           |            |            |            |             |            
|Cash and cash equivalents at end of year       |                                                                                                  |                                           | 862,000    |            |            | 3,194,000   |            
|                                               |                                                                                                  |                                           |            |            |            |             |            

See
accompanying notes to consolidated financial statements.

46

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BIG CITY RADIO, INC.  Consolidated Statements of Stockholders' Equity (Deficiency)  Years Ended December 31, 2000, 2001 and 2002

|                                           |  | Common stock |  |   |         |  |   |            |  |   |         
|------------------------------------------ |  | ------------ |  | - | ------- |  | - | ---------- |  | - | --------
|
|
|Balance at December 31, 1999               |  | 14,469,275   |  | $ | 145,000 |  | $ | 29,458,000 |  | $ | (149,000
|Employee stock options                     |  | 8,000        |  |   |        |  |   | 34,000     |  |   |        
|Unrealized income on marketable securities |  |             |  |   |        |  |   |           |  |   | 140,000 
|Net loss                                   |  |             |  |   |        |  |   |           |  |   |        
|                                           |  |              |  |   |         |  |   |            |  |   |         
|Total comprehensive loss                   |  |             |  |   |        |  |   |           |  |   | 140,000 
|                                           |  |              |  |   |         |  |   |            |  |   |         
|Balance at December 31, 2000               |  | 14,477,275   |  |   | 145,000 |  |   | 29,492,000 |  |   | (9,000  
|Unrealized income on marketable securities |  |             |  |   |        |  |   |           |  |   | 9,000   
|Net loss                                   |  |             |  |   |        |  |   |           |  |   |        
|                                           |  |              |  |   |         |  |   |            |  |   |         
|Total comprehensive loss                   |  |             |  |   |        |  |   |           |  |   | 9,000   
|                                           |  |              |  |   |         |  |   |            |  |   |         
|Balance at December 31, 2001               |  | 14,477,275   |  |   | 145,000 |  |   | 29,492,000 |  |   |        
|Unrealized loss on marketable securities   |  |              |  |   |         |  |   |            |  |   | (8,000  
|Net loss                                   |  |             |  |   |        |  |   |           |  |   |        
|                                           |  |              |  |   |         |  |   |            |  |   |         
|Total comprehensive loss                   |  |             |  |   |        |  |   |           |  |   | (8,000  
|                                           |  |              |  |   |         |  |   |            |  |   |         
|Balance at December 31, 2002               |  | 14,477,275   |  | $ | 145,000 |  | $ | 29,492,000 |  | $ | (8,000  
|                                           |  |              |  |   |         |  |   |            |  |   |         

See accompanying notes to consolidated financial statements

47

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BIG CITY RADIO, INC.        Notes to Consolidated Financial Statements        December 31, 2001 and 2002

(1)    Organization and Business

Big City Radio, Inc. ("Big City Radio" or the "Company", formerly Odyssey Communications, Inc.) 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., with Big City Radio being the surviving company. Big City Radio
and Q were owned 94% and 100%, respectively by Stuart and Anita Subotnick. 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, 2002, 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 owned four radio properties, WYNY-FM, Briarcliff Manor, New
York, WWZY-FM, Long Branch, New Jersey, WWXY-FM, Hampton Bays, New York and WWYY-FM, Belvidire, New Jersey. WYNY-FM, WWZY-FM,
WWXY-FM, and WWYY-FM are programmed as "Rumba 107." In the Chicago area, the Company owned five radio properties, WXXY-FM Highland Park, Illinois,
WYXX-FM Morris, Illinois (programmed as "Viva 103.1"), WKIE-FM Arlington Heights, Illinois, WKIF-FM Kankakee, Illinois, and WDEK-FM DeKalb, Illinois
(programmed as "Energy92"). Big City Radio is seeking to sell all of its radio stations in an auction process that it announced on November 4, 2002. Between December 24, 2002 and
January 2, 2003, Big City Radio signed four, separate definitive asset purchase agreements to sell eleven of its twelve FCC FM licenses. The Company also plans to sell the remaining station.
Big City Radio is selling these radio stations to raise the funds necessary to pay all principal of, and accrued and unpaid interest on, its 111/4% senior discount notes due 2005.
Noteholders have accelerated
payment of the senior notes as a result of defaults by Big City Radio under these notes. None of these transactions is conditioned on the completion of any other transaction. As discussed in
note 4, the radio station operations have been treated as discontinued operations.

The
Company owns HIH Acquisition, Inc. ("HIH") which owns the TodoAhora.com website, and also in turn owns United Publishers of Florida, Inc., ("UPF") which published the
Hispanic music trade magazine, "Disco," operated a graphic design business, and owns the LatinMusicTrends.com website. In response to the continued downturn in the music industry advertising
marketplace, during December 2001 the Company ceased its internet operations, and during June 2002 the Company ceased the operation of UPF, and wrote-off the remaining
$108,000 of goodwill associated with UPF. As discussed in Note 4, this was treated as discontinued operations. The Company also owns Independent Radio Reps, LLC, an in-house rep
firm to represent it in generating national Hispanic radio business.

2)    Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Big City Radio and all its subsidiaries. All significant intercompany accounts and
transactions have been eliminated. As a result of the Company's decisions during 2002 to close down publishing operations and to sell the radio stations, the publishing and radio station operations of
the Company have been presented as discontinued operations (see note 4).

48

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Cash Equivalents

Cash equivalents of $73,000 with maturities less than three months were included in cash and cash equivalents at December 31, 2002.

Marketable Securities

Marketable securities at December 31, 2001 and 2002 consist of U.S. Treasury, mortgage-backed, and 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, 2002, unrealized holding losses were $8,000. Proceeds from the sale of securities were $13 million in 2002.

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. As of December 31, 2002, substantially all of the property and equipment owned by the Company are presented as assets held for sale, as a result of the Company
announcing the auction sale of its radio station assets and entering into four asset purchase agreements in the period between December 23, 2002 and January 3, 2003. (see note 4)

Business Combinations and Goodwill and Other Intangible Assets

In July 2001, the Financial Accounting Standards Board or FASB issued SFAS No.141,Business Combinations,
and SFAS No. 142,Goodwill and Other Intangible Assets. SFAS No.141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. SFAS No.141 also specifies criteria that intangible assets
acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted
for separately. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in
accordance with the provisions of SFAS No. 142. SFAS No. 142 requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for impairment in accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets.

The
Company adopted SFAS No.141 and SFAS No. 142 effective January 1, 2002. Any goodwill and any intangible asset determined to have an indefinite useful life that was
acquired in a purchase business combination completed after June 30, 2001 will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate
pre-SFAS No. 142 accounting literature.

49

---

Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 have been amortized through December 31, 2001.

SFAS
No.141 requires that upon adoption of SFAS No. 142, the Company evaluate its existing intangible assets and goodwill that was acquired in a prior purchase business
combination, and make any necessary reclassifications in order to conform with the new criteria in SFAS No.141 for recognition apart from goodwill. Upon adoption of SFAS No. 142, the Company
reassessed the useful lives and residual values of all intangible assets acquired in business combinations accounted for using the purchase method. In addition, to the extent the Company identified an
intangible asset as having an indefinite useful life, the Company was required to test the intangible asset for impairment in accordance with the provisions of SFAS No. 142 within the first
interim period. Any impairment loss would have been measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle. No significant adjustments or
impairment losses resulted from the adoption of SFAS No. 141 and SFAS No. 142.

In
connection with the transitional goodwill impairment evaluation, SFAS No. 142 required the Company to perform an assessment of whether there was an indication that goodwill was
impaired as of the date of adoption. To accomplish this the Company identified its reporting units and determined the carrying value of each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. To the extent a reporting unit's carrying amount exceeds its fair value, an indication
exists that the reporting unit's goodwill may be impaired and the Company must perform the second step of the transitional impairment test. In the second step, the Company compared the implied fair
value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of it assets (recognized and unrecognized) and liabilities in a manner similar to a purchase
price allocation in accordance with SFAS No.141, to its carrying amount, both of which would be measured as of the date of adoption. Any transitional impairment loss was required to be recognized as
the cumulative effect of a change in accounting principle in the Company's statement of earnings. No such loss resulted from the Company's adoption of SFAS No. 142.

In
accordance with SFAS No. 142, the Company discontinued the amortization of goodwill and intangible assets (comprised solely of broadcast license) effective January 1,
2002. During the quarter ended March 31, 2002, the Company completed the transitional impairment test, which did not result in impairment of recorded intangible assets. In June 2002, the
Company ceased the operation of UPF, and wrote off the remaining $108,000 of goodwill associated with UPF. During the fourth quarter of 2002, the Company made the decision to sell its broadcast
licenses. In accordance with SFAS No.144, these licenses are reported as assets held for sale. The Company compared the licenses' carrying value to their fair value, less the estimated cost to sell
them. This review of the carrying value of its intangible assets resulted in a charge of $630,000 relating to the impairment in value of some of its FCC broadcast licenses. As of December 31,
2002, the Company has no remaining un-amortized goodwill and un-amortized broadcast licenses in the amount of $76,325,000.

At
December 31, 2002, all the intangible assets of the Company are the subject of asset purchase agreements entered into between December 24, 2002 and January 2,
2003 and are presented as assets

50

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held for sale. The carrying amount of un-amortized intangible assets at December 31, 2001 and 2002 is as follows:

2001

2002Broadcast licenses

$
76,955,000

$
76,325,000Goodwill


108,000


$
77,063,000

$
76,325,000


The
amortization expense on broadcast license was $2,970,000, $2,813,000 and $0 for the year ended December 31, 2000, 2001 and 2002 respectively. The amortization expense on
goodwill was $321,000, $319,000 and $0 for the year ended December 31, 2000, 2001 and 2002, respectively.

The
following table presents net loss and basic and diluted net loss per share as if the broadcast licenses and goodwill had not been amortized during the periods presented.

|                                         |  | Year Ended December 31, |            
|---------------------------------------- |  | ----------------------- | -----------
|
|Reported net loss                        |  | $                       | (31,168,000
|Add back: Goodwill amortization          |  |                         | 321,000    
|Add back: Broadcast license amortization |  |                         | 2,970,000  
|                                         |  |                         |            
|Adjusted net loss                        |  | $                       | (27,877,000
|                                         |  |                         |            
|Basic and diluted net loss per share:    |  |                         |            
|Reported net loss                        |  | $                       | (2.15      
|Add back: Goodwill amortization          |  |                         | 0.02       
|Add back: Broadcast license amortization |  |                         | 0.20       
|                                         |  |                         |            
|Adjusted net loss                        |  | $                       | (1.93      
|                                         |  |                         |            

Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

In August 2001, the FASB issued SFAS No.144,Accounting for the Impairment or Disposal of Long-Lived
Assets("SFAS No.144"), which supersedes both SFAS No.121,Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of("SFAS No.121"), and the accounting and reporting provisions of APB Opinion No.30,Reporting the Results of
OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions("Opinion
30"), for the disposal of a segment of a business (as previously defined in that Opinion). SFAS No.144 retains the fundamental provisions in SFAS No.121 for recognizing and measuring impairment losses
on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with SFAS No.121. For
example,
SFAS No.144 provides guidance on how a long-lived asset that is used as part of a group should be evaluated for impairment, establishes criteria for when a long-lived asset is
held for sale, and prescribes the accounting for a long-lived asset that will be disposed of other than by sale. SFAS No.144 retains the basic provisions of Opinion 30 on how to present
discontinued operations in the income statement but broadens that presentation to include a component of an entity (rather than a segment of a business). Unlike SFAS No.121, an impairment assessment
under SFAS No.144 will

51

---

never result in a write-down of goodwill. Rather, goodwill is evaluated for impairment under SFAS No. 142,Goodwill and Other Intangible
Assets.

The
Company adopted SFAS No.144 on January 1, 2002. The adoption of SFAS No.144 did not have a material impact on the financial position, cash flows, or results of operations of
the Company. The Company discontinued its publishing operations during June 2002. This was treated as a discontinued operation under SFAS No.144. In December 2002, the Company announced
sales of eleven of its twelve radio stations in Los Angeles, New York, and Chicago. The Company also intends to sell its remaining station. Big City Radio's consolidated financial statements for all
periods presented have been adjusted to reflect the radio station sales and ceased publishing operations as discontinued operations in accordance with SFAS No. 144.

Accounting for Costs Associated with Exit and Disposal Activities

In June 2002, the Financial Accounting Standards Board issued FASB Statement No.146,Accounting for Costs Associated with Exit or
Disposal Activities ("SFAS No.146")which nullifies Emerging Issues Task Force (EITF) Issue No. 94-3Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity(including Certain Costs Incurred in a Restructuring) ("Issue 94-3").

The
principal difference between this Statement and Issue 94-3 relates to its requirements for recognition of a liability for a cost associated with an exit or disposal
activity. This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under Issue 94-3, a liability for
an exit cost as defined in Issue 94-3 was recognized at the date of an entity's commitment to an exit plan. Under SFAS No.146, a commitment to a plan, by itself, does not create a present
obligation to others that meets the definition of a liability. SFAS No.146 also establishes that fair value is the objective for initial measurement of the liability.

The
Company is required to adopt SFAS No.146 on exit and disposal activities that are initiated after December 31, 2002, with early application encouraged. The Company has adopted
SFAS No.146 for exit and disposal activities initiated after September 30, 2002.

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

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

52

---

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.

Fair Value of Financial Instruments

The following methods and assumptions were used in estimating the fair value disclosures for financial instruments:

The
carrying amounts reported in the balance sheets for cash, current receivables, accounts payable and accrued expenses approximate fair value.

The
carrying value of Senior Discount Notes are $174 million at December 31, 2001 and 2002. The fair values of Senior Discount Notes are $88.7 million and
$104.4 million at December 31, 2001 and 2002, respectively. 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, 2000, 2001 and 2002, 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. Barter transactions resulted in sales of $1,107,000, $1,046,000 and $930,000 and related expenses of $1,061,000, $910,000 and
$828,000 for the years ended December 31, 2000, 2001 and 2002, respectively.

Advertising

The Company charges advertising costs, as incurred, to expense. Advertising costs amounted to $1,703,000, $675,000 and $281,000 for the years ended
December 31, 2000, 2001 and 2002, 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

53

---

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 1,964,100, 1,870,250 and 1,320,000 at December 31, 2000, 2001 and 2002, respectively, were not included in the computation of diluted EPS because
to do so would have been anti-dilutive.

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.

In
2000, 2001 and 2002, 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:

2000

2001

2002Net loss:As reported

$
(31,168,000
)
$
(30,707,000
)
$
(27,722,000
)Pro forma


(32,869,000
)

(32,804,000
)

(31,322,000
)Loss per share:As reported

$
(2.15
)
$
(2.12
)
$
(1.91
)Pro forma


(2.27
)

(2.27
)

(2.16
)


At
December 31, 2000 and 2001, the per share weighted average fair value of stock options granted was $1.99 and $2.14, 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 4.93%, expected volatility of 50% and an
expected life of 10 years for options granted in 2000; expected dividend yield of 0%, risk-free interest rate of 5.0%, expected volatility of 95% and an expected life of
10 years for options granted in February 2001; expected dividend yield of 0%, risk-free interest rate of 3.25%, expected volatility of 105% and an expected life of
10 years for options granted in July 2001. There were no options granted during 2002.

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

54

---

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.

Accounting for Derivatives

In June 1998, Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" was
issued. SFAS 133 established accounting and reporting standards for derivative instruments and for hedging activities. SFAS 133 requires that an entity recognize all derivatives as
either assets or liabilities and measure those instruments at fair value. The accounting for the gain or loss due to changes in fair value of the derivative instrument depends on whether the
derivative instrument qualifies as a hedge. In June 2000, SFAS 138 was issued which addresses a limited number of issues causing implementation difficulties for numerous entities that
have applied SFAS 133. SFAS 133 and SFAS 138 are effective for all fiscal quarters of fiscal years beginning after June 15, 2000. SFAS 133 can not be applied
retroactively to financial statements of prior periods.
The Company adopted SFAS No. 133 and 138 as of January 1, 2001. The adoption of SFAS No. 133 and 138 did not have a material impact on the financial position or results of
operations of the Company.

Impact of Recent Accounting Pronouncements

In November 2002, the FASB issued Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others("FIN 45"),which addresses the disclosure to be made by a guarantor in
its interim and annual financial statements about its obligations under guarantees. The disclosure requirements are effective for interim and annual financial statements ending after
December 15, 2002.

FIN
45 also requires the recognition of a liability by a guarantor at the inception of certain guarantees. FIN 45 requires the guarantor to recognize a liability for the
non-contingent component of a guarantee, which is the obligation to stand ready to perform in the event that specified triggering events or conditions occur. The initial measurement of
this liability is the fair value of the guarantee at inception. The recognition of the liability is required even if it is not probable that payments will be required under the guarantee or if the
guarantee was issued with a premium payment or as part of a transaction with multiple elements. The initial recognition and measurement provisions are effective for all guarantees within the scope of
FIN 45 issued or modified after December 31, 2002.

As
noted above we have adopted the disclosure requirements of FIN 45 and will apply the recognition and measurement provisions for all guarantees entered into or modified after
December 31, 2002. To date we have not entered into any guarantees.

In
February 2003, the FASB issued Interpretation No. 46,Consolidation of Variable Interest Entities("FIN 46"), which
addresses the consolidation by business enterprises of variable interest entities, which have one or both of the following characteristics: (1) the equity investment at risk is not sufficient
to permit the entity to finance its activities without additional financial support from other parties, or (2) the equity investors lack one or more of the following essential characteristics
of a controlling financial interest: (a) the direct or indirect ability to make decisions about the entity's activities through voting or similar rights, (b) the obligation to absorb the
expected losses of the entity

55

---

if they occur, or (c) the right to receive the expected residual returns of the entity if they occur. FIN 46 will have a significant effect on existing practice because it requires existing
variable interest entities to be consolidated if those entities do not effectively disburse risks among parties involved. In addition, FIN 46 contains detailed disclosure requirements. FIN 46 applies
immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. This
Interpretation may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years
with a cumulative-effect adjustment as of the beginning of the first year restated.

(3)    Liquidity and Going Concern

Big City Radio has incurred substantial net losses since inception primarily due to broadcast cash flow deficits characteristic of the start up of radio stations.
In addition, since the majority of its broadcast properties are in various stages of development, either as a result of pending FCC applications and their appeals that, if granted, will permit Big
City Radio to effect engineering enhancements or upgrades, or a result of having recently changed formats, Big City Radio expects to generate significant net losses for the foreseeable future.

As
a result of these factors, Big City Radio has met its working capital needs primarily through borrowings, including loans from Big City Radio's principal stockholders, Stuart and
Anita Subotnick, loans under credit facilities, and proceeds from the issuance of the senior notes in March 1998. Since October 31, 2001, Big City Radio has met its working capital needs
primarily from the proceeds of the sale of Big City Radio's Phoenix radio stations which it completed on that date.

Big
City Radio completed a sale of $174,000,000 aggregate principal amount at maturity of senior notes on March 17, 1998, generating approximately $125,400,000 of gross proceeds.
Big City Radio used approximately $32,600,000 of these proceeds to repay outstanding indebtedness under a credit facility with The Chase Manhattan Bank entered into in 1996. Big City Radio has used
the proceeds of the senior notes offering to finance the acquisition costs of radio station properties and for general working capital purpose.

Cash
interest commenced accruing on the senior notes on March 15, 2001 and semi-annual cash interest payments of $9,800,000 commenced on September 15, 2001. Big
City Radio failed to make the initial semi-annual interest payment when due on September 15, 2001. In order to obtain the funds to make this payment within the 30-day
grace period provided under the indenture, Big City Radio obtained a bridge loan in the amount of $15,000,000 by the assignment of Big City Radio's revolving credit facility from the lender thereunder
to a new lender. The bridge loan was secured to the same extent as the revolving credit facility and bore interest at the rate of LIBOR plus 3.0%, or a base rate plus 2.0%, at the option of Big City
Radio. Big City Radio used the net proceeds of the bridge loan to pay the semi-annual interest on the senior notes due on September 15, 2001, together with applicable additional
interest thereon, and to repay $2,235,000 of principal indebtedness and $51,000 of interest incurred under the promissory note issued to Mr. Subotnick in May 2001. Big City Radio repaid
the bridge loan on October 31, 2001 with a portion of the proceeds from the sale of the Phoenix radio station properties, as discussed below. Big City Radio currently does not have a credit
facility.

56

---

On
October 31, 2001, the Company completed the sale of its four Phoenix radio stations to Hispanic Broadcasting Corporation for a cash purchase price of $34,000,000. The indenture
governing the senior
notes permits Big City Radio to reinvest the approximately $18,000,000 of proceeds which remained from the sale of the Phoenix stations after the repayment of the bridge loan in broadcast assets for a
period up to one year from the date of these asset sales. Thereafter, any net proceeds that are not timely reinvested in broadcast assets must be used to make an offer to repurchase senior notes. As
described above, Big City Radio used a portion of the proceeds to repay indebtedness under the bridge loan and to fund the semi-annual interest payment due on the senior notes on
March 15, 2002. Big City Radio has been using the remaining proceeds to fund its ongoing operations, and has not reinvested such proceeds in broadcast assets. Big City Radio has not made the
required offer to repurchase senior notes, because it does not have sufficient cash resources to consummate such an offer. Its failure to make an offer to repurchase constitutes an event of default
under the indenture.

The
Company failed to make the semi-annual interest payment of $9,800,000 due on the senior notes on September 15, 2002. Big City Radio's cash resources were
insufficient to enable Big City Radio to make the semi-annual interest payment within the 30-day grace period provided under the indenture. The grace period expired on
October 15, 2002, thereby resulting in an additional event of default under the indenture. On October 17, 2002, pursuant to the indenture, holders of the senior notes delivered an
acceleration notice to Big City Radio declaring notice to Big City Radio declaring the principal and interest on all of the senior notes to be immediately due and payable.

In
light of these developments, the Company evaluated its strategic alternatives and the most efficient use of its capital. On November 4, 2002, Big City Radio announced it had
retained Jorgenson Broadcast Brokerage to market and conduct an auction sale of all of Big City Radio's radio stations.

On
November 13, 2002, Big City Radio, and the holders of approximately $128,000,000 in principal amount of the senior notes acting through an ad hoc committee of noteholders,
entered into a forbearance agreement on November 13, 2002. Under the forbearance agreement, the signatory noteholders agreed to forebear, through January 31, 2003 (later extended to
March 31, 2003), from taking, initiating or continuing any action to enforce the Company's payment obligations under the senior notes, including, without limitation, any involuntary bankruptcy
filing against the Company, or against any property, officers, directors, employees or agents of the Company to collect on or enforce payment of any indebtedness or obligations, or to otherwise assert
any claims or causes of action seeking payment under the senior notes, in each case arising under or relating to the payment default or the default arising from the failure to make the required offer
to repurchase senior notes or other existing defaults known to the signatory noteholders as of November 13, 2002. Under the forbearance agreement, the Company agreed to conduct the auction of
its radio stations in a good faith manner designed to sell the assets as soon as practicable for net cash consideration in an amount at least sufficient to pay all principal of, and accrued and unpaid
interest on, the senior notes. If signatory noteholders reasonably believe that the Company is not conducting the auction process in good faith or is not operating or managing the business and
financial affairs of the Company in good faith in the ordinary course and consistent with past practices, they may notify the Company in writing and may elect to terminate the forbearance agreement.
The Company further has agreed not to pay, discharge or satisfy any liability or obligation except for obligations reflected on the Company's balance sheet as of December 31, 2001 or incurred
in the ordinary course since that date which are paid, discharged or satisfied for fair and equivalent valued in the ordinary course of business and consistent with past

57

---

practices. The forbearance agreement will not prevent the trustee under the indenture or noteholders that are not parties to the forbearance agreement from pursuing remedies under the indenture.

Big
City Radio and the noteholders executed an amendment to the forbearance agreement as of January 14, 2003, in which the expiration date of the forbearance period was extended
from January 31, 2003 through and including March 31, 2003. The forbearance agreement was further amended to provide that:

In
addition, the forbearance agreement provides that it will automatically terminate upon the filing of a voluntary or involuntary petition under the insolvency or bankruptcy laws of the
United States or any state with respect to Big City Radio, except that, upon the filing of an involuntary bankruptcy petition by unaffiliated, arm's length creditors, Big City Radio will have a period
of ten days to obtain the dismissal or withdrawal of such a petition before the forbearance agreement terminates as a result of the filing.

Between
December 23, 2002 and January 2, 2003, Big City Radio signed asset purchase agreements to sell eleven of the twelve FCC radio stations that it owns (see
note 4). If Big City Radio completes the asset sales, it will receive gross cash proceeds of approximately $197,900,000 and 3,766,478 shares of Entravision Communications Corporation's
Class A Common Stock. Under the senior notes forbearance agreement described above, Big City Radio will be obligated to apply the net proceeds of the asset sales first to pay the principal
amount of the senior notes and all accrued and unpaid interest thereon through the date of such payment.

Big
City will apply any remaining net proceeds from the asset sales, together with its other liquidity sources, to pay expenses relating to the asset sales, including employee severance
amounts, tax

58

---

liabilities and expenses associated with termination of contracts not assumed by the buyers, as well as trade payables and other operating expenses.

If
Big City Radio completes its pending station sales and sells the sole station that is not subject to a binding purchase agreement as of this date, it will have disposed of
substantially all of its operating properties. Its principal sources of liquidity will then consist of cash on hand, including any remaining proceeds of the station sales, and amounts earned on the
investment of such cash, and collections of trade receivables, which amounted to $1,997,000 as of December 31, 2002. Big City Radio also may seek to obtain additional liquidity by selling
shares of the Entravision Class A common stock it will receive upon completion of the Los Angeles radio stations asset sale. Assuming the closing of its pending station sales, Big City Radio
believes that these liquidity sources will be sufficient to meet its short-term cash needs. The amount and nature of Big City Radio's long-term liquidity needs will depend on,
among other things, a decision by the board of directors regarding future operations, if any, of Big City Radio.

(4)    Discontinued Operations

As described more fully in Note 3, on November 4, 2002, Big City Radio announced its intention to undertake an auction sale of all of its radio
stations. This auction process has, to date, resulted in the asset disposition transactions detailed below, which will result in the sale of eleven of the twelve FCC licenses owned by the Company. It
is the intention of the Company to sell the remaining FCC license. Big City Radio has discontinued its radio station operations. The Company's consolidated financial
statements for all periods presented have been adjusted to reflect the radio station operations as discontinued operations in accordance with SFAS No.144.

Summarized
financial information for the discontinued radio operations is as follows:



|                                         |  | December 31,
|---------------------------------------- |  | ------------
|
|Property and equipment, net              |  | $           
|Intangible, net                          |  |             
|                                         |  |             
|Net assets-discontinued radio operations |  | $           
|                                         |  |             

59

---

|                                                                     |                          | For the Year Ended December 31,             |            
|-------------------------------------------------------------------- | ------------------------ | ------------------------------------------- | -----------
|
|Gross revenues                                                       |                          | $                                           | 20,141,000 
|Less commissions and fees                                            |                          |                                             | 2,341,000  
|                                                                     |                          |                                             |            
|Net revenues                                                         |                          |                                             | 17,800,000 
|                                                                     |                          |                                             |            
|Operating expenses:                                                  |                          |                                             |            
|Stations operating expenses, excluding depreciation and amortization |                          |                                             | 20,508,000 
|Impairment loss on broadcast licenses                                |                          |                                             |           
|Depreciation and amortization                                        |                          |                                             | 3,552,000  
|                                                                     |                          |                                             |            
|                                                                     | Total operating expenses |                                             |            
|                                                                     |                          |                                             |            
|                                                                     |                          | Operating loss from discontinued operations |            
|Other income (expenses):                                             |                          |                                             |            
|Interest expense                                                     |                          |                                             | (18,392,000
|Other, net                                                           |                          |                                             | 32,000     
|                                                                     |                          |                                             |            
|Total other expense                                                  |                          |                                             | (18,360,000
|Loss before income tax                                               |                          |                                             | (24,620,000
|Income tax expense                                                   |                          |                                             |           
|                                                                     |                          |                                             |            
|Loss from discontinued operations                                    |                          | $                                           | (24,620,000
|                                                                     |                          |                                             |            

At
December 31, 2002, the Company's property and equipment and intangible assets from the discontinued operations were reported as assets held for sale.

On
December 23, 2002, the Company entered into an asset purchase agreement to sell its radio stations KLYY-FM Arcadia, California, KSYY-FM Fallbrook,
California and KVYY-FM Ventura, California to Entravision Communications Corporation for a combined purchase consideration of $100 million in cash and 3,766,478 shares of
Entravision's Class A Common Stock. The sale is subject to initial FCC approval for the assignment of the FCC licenses. On January 15, 2003, Entravision and Big City Radio entered into a
time brokerage agreement following clearance of the asset sale under federal antitrust law. Under the agreement, Entravision is providing programming and related services to the stations it is
purchasing from Big City Radio until the asset sale is completed or the asset purchase agreement is terminated.

On
December 30, 2002, the Company entered into an asset purchase agreement to sell its radio stations WYNY-FM Briarcliff Manor, New York, WWXY-FM Hampton
Bays, New York, WWYY-FM Belvidere, New Jersey and WWZY-FM Long Branch, New Jersey to Nassau Broadcasting Holdings, Inc. for a total consideration of $43 million
in cash. The sale is subject to initial FCC approval for the assignment of the FCC licenses.

On
December 31, 2002, the Company entered into an asset purchase agreement to sell its radio stations WDEK-FM DeKalb, Illinois, WKIE-FM Arlington Heights,
Illinois and WKIF-FM Kankakee, Illinois to Spanish Broadcasting Systems, Inc. (SBS) for a total consideration of $22 million in cash. The sale is subject to initial FCC
approval for the assignment of the FCC licenses. On the same date, SBS and Big City Radio entered into a time brokerage agreement. Under the agreement, SBS is

60

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providing programming and related services to the stations it is purchasing from Big City Radio until the asset sale is completed or the asset purchase agreement is terminated.

On
January 2, 2003, the Company entered into an asset purchase agreement to sell its radio station WXXY-FM Highland Park, Illinois to Hispanic Broadcasting Corporation
(HBC) for a total consideration of $32.875 million in cash. The sale is subject to initial FCC approval for the assignment of the FCC licenses. On January 10, 2003, HBC and Big City
Radio entered into a time brokerage agreement. Under the agreement, HBC is providing programming and related services to the stations it is purchasing from Big City Radio until the asset sale is
completed or the asset purchase agreement is terminated.

During
June 2002, the Company discontinued the operation of United Publishing of Florida (UPF) (which was comprised solely of publishing operations), and wrote-off the
remaining $108,000 of goodwill associated with its acquisition. The decision to terminate publishing operations was made in response to the continued downturn in the music industry, advertising
marketplace. As UPF's publishing operation represented the only publishing operations of Big City Radio, Inc., the Company's consolidated financial statements for all periods presented have
been adjusted to reflect the publishing operations as discontinued operations in accordance with SFAS No.144.

Summarized
financial information for the discontinued publishing operations is as follows:

|                                  |  | For the year ended December 31, |        
|--------------------------------- |  | ------------------------------- | -------
|
|
|Net revenues                      |  | $                               | 75,000 
|Operating expenses                |  |                                 | 116,000
|                                  |  |                                 |        
|Loss from discontinued operations |  | $                               | (41,000
|                                  |  |                                 |        

|                                              |  | December 31, |         | 
|--------------------------------------------- |  | ------------ | ------- | 
|
|Property and equipment, net                   |  | $            | 90,000  | 
|Intangible, net                               |  |              | 108,000 | 
|                                              |  |              |         | 
|Net assetsdiscontinued publishing operations |  | $            | 198,000 | 
|                                              |  |              |         | 

During
the quarter ended June 30, 2002, the Company transferred $78,000 of property and equipment previously used in its publishing operations to its radio
operations, and no liabilities of the discontinued publishing operations remained.

61

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(4)    Discontinued Operations (Continued)

The
following table summarizes the cash flow informations from the discontinued radio and publishing operations:

|                                                                            |                                            | For the Year Ended December 31,       |           
|--------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------------- | ----------
|
|Cash flows from operating activities:                                       |                                            |                                       |           
|                                                                            | Net loss from discontinued operations      |                                       | $         
|Adjustments to reconcile net loss to net cash used in operating activities: |                                            |                                       |           
|                                                                            | Depreciation and amortization              |                                       |           
|                                                                            | Deferred income tax expense                |                                       |           
|                                                                            | Non cash interest                          |                                       |           
|                                                                            | Loss on disposal of fixed assets           |                                       |           
|                                                                            | Impairment loss on broadcast license       |                                       |           
|                                                                            | Impairment loss on goodwill                |                                       |           
|Changes in operating assets and liabilities, net of acquisitions:           |                                            |                                       |           
|(Increase) decrease in assets:                                              |                                            |                                       |           
|                                                                            | Accounts receivable                        |                                       |           
|                                                                            | Prepaid expenses and other current assets  |                                       |           
|                                                                            | Other assets                               |                                       |           
|Increase (decrease) in liabilities:                                         |                                            |                                       |           
|                                                                            | Acounts payable                            |                                       |           
|                                                                            | Interest payable                           |                                       |           
|                                                                            | Other accrual                              |                                       |           
|                                                                            |                                            |                                       |           
|                                                                            | Net cash used in operating activities      |                                       |           
|Cash flows from investing activities:                                       |                                            |                                       |           
|                                                                            | Purchase of property and equipment         |                                       |           
|                                                                            | Cash received for disposal of fixed assets |                                       |           
|                                                                            | Purchase of publishing operation           |                                       |           
|                                                                            |                                            |                                       |           
|                                                                            |                                            | Net cash used in investing activities |           
|Cash flow from financing activities:                                        |                                            |                                       |           
|                                                                            | Net cash used in financing activities      |                                       |           
|                                                                            |                                            |                                       |           
|Cash used in discontinued operations                                        |                                            | $                                     | (2,742,000
|                                                                            |                                            |                                       |           

(5) Acquisitions and Disposals

On October 31, 2001 the Company sold the assets of radio stations KEDJ-FM, KDDJ-FM, KBZR-FM, and KSSL-FM to
Hispanic Broadcasting Corporation for a sales price of $34.0 million. A gain of $2.28 million on the sale of the stations was recognized during the period.

62

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During
2001, the Company ceased the development and operation of its internet portal site. The Company wrote-off all internet-related goodwill. An impairment loss of $897,000
was recognized during the period.

On
November 8, 2000 the Company entered into an asset purchase agreement in which the Company acquired substantially all of the assets and properties of UPF, which owned and
operated a Hispanic music trade magazine, "Disco", a graphic design business and the LatinMusicTrends.com website. The purchase price for the acquired business was $250,000 excluding acquisition
related expenses and was paid in cash. Under the terms of the purchase agreement a second installment of up to $250,000 is due at the one year anniversary of the acquisition, subject to certain
operating cash flow targets to be attained by the acquired business. The cash flow target was not met and accordingly no additional payment was made. In June 2002, the Company discontinued its
publishing operations. The fair value of the assets acquired in this transaction is as follows:

Fixed assets

$
118,000Goodwill


132,000


On
April 12, 2000, the Company sold the assets of radio station WLBK-AM, DeKalb, Illinois for a sale price of $416,000. No gain or loss was recorded on this
transaction.

(6) Cash Held in Investment, Restricted

The restricted cash balance collateralizes four letters of credit outstanding at December 31, 2002. The letters of credit relate to the Chicago, Phoenix,
LA office leases and the LA Stations signal upgrade. According to the Chicago 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. The balance was $200,000 at December 31, 2002. According to the Phoenix
lease agreement, the Company agreed to deposit the sum of $269,000 as security in the form of an unconditional and irrevocable letter of credit. The amount of the letter of credit will decrease
$51,000 each year over 5 years. The balance was $125,000 at December 31, 2002. On September 14, 2001, the Company entered into a Cash Collateral Agreement with JPMorgan Chase.
Under the agreement, the Company agreed to deposit the sum of $760,000 to secure its two existing letters of credit relate to the LA office leases and the LA Stations signal upgrade.

63

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(7) Property and Equipment

Property and equipment at December 31, 2001 and 2002 were as follows:

2001

2002Land

225,000

Building and improvements

1,941,000

237,000Transmitter equipment

5,914,000

Furniture and office equipment

1,987,000

531,000Vehicles

709,000

10,776,000

768,000Less accumulated depreciation

5,570,000

392,0005,206,000

376,000


As
discussed more fully in notes 3 and 4, the property and equipment related to the radio stations to be sold are reported as assets held for sale at December 31, 2002.

(8) Intangibles

Intangibles at December 31, 2001 are as follows:

2001FCC broadcast licenses

86,839,000Covenants not to compete

678,000Goodwill

132,00087,649,000Less accumulated amortization

10,586,00077,063,000


During
June 2002, the Company wrote off the remaining $108,000 of goodwill associated with its discontinued publishing operations. The impairment loss on goodwill associated with
the internet operations was $897,000 for the year ended December 31, 2001.

As
discussed more fully in notes 3 and 4, the FCC broadcast licenses related to the radio stations to be sold are reported as assets held for sale at December 31, 2002.

(9) Senior Discount Notes

Offering of Senior Discount Notes

On March 17, 1998, the Company completed the offering of its 11.25% Senior Discount Notes. 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 accreted 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,

64

---

interest on the Notes began accruing at a rate of 11.25% per annum and is payable semiannually in cash on March 15 and September 15 through March 15, 2005.

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 specified redemption prices together
with accrued and unpaid interest, if any, to the date of 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 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 rankpari passuin 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 issuance 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 was due to mature on March 17, 2003, the fifth
anniversary of the issue date of the Senior Discount Notes, and amounts outstanding under the Revolving Credit Facility bore interest at an applicable margin plus, at the Company's option, Chase's
prime rate (in which case the applicable margin was 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 was 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 were secured by a pledge of substantially all of the Company and its subsidiaries' assets. The Company paid fees of .5% per annum, on the aggregate unused portion of the facility. As
more fully described in Note 3 and 10, Big City Radio obtained a bridge loan in October 2001 by arranging for the assignment of the Revolving Credit Facility. The Bridge Loan was repaid
on October 31, 2001 with a portion of the proceeds from the sale of the Phoenix Stations. The Company currently does not have a credit facility.

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.

65

---

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 Revolving Credit Facility for the sole purpose of facilitating the Revolving 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 and the Indenture do not restrict the ability of the Station Subsidiaries to make cash distributions to the Company.

Set
forth below is certain condensed consolidating financial information for the parent company of Big City Radio, Inc. and its Subsidiary Guarantors, as of December 31,
2001 and 2002, and for the years ended December 31, 2000, 2001 and 2002.

66

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Consolidating Balance Sheet for the year ended December 31, 2001

|                                                        |                                                            | Parent                      |             | Subsidiary
Guarantors |             | Sub-total   |             | Consolidation
Adjustments |             | Consolidated |            
|------------------------------------------------------- | ---------------------------------------------------------- | --------------------------- | ----------- | --------------------- | ----------- | ----------- | ----------- | ------------------------- | ----------- | ------------ | -----------
|Assets                                                  |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|Current assets                                          |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|                                                        | Cash and cash equivalents                                  |                             | $           | 3,194,000             |             | $           |            |                           | $           | 3,194,000    |            
|                                                        | Cash held in investment, restricted                        |                             |             | 1,336,000             |             |             |            |                           |             | 1,336,000    |            
|                                                        | Marketable securities                                      |                             |             | 15,000,000            |             |             |            |                           |             | 15,000,000   |            
|                                                        | Accounts receivable, net of allowance                      |                             |             | 3,817,000             |             |             |            |                           |             | 3,817,000    |            
|                                                        | Interest receivable                                        |                             |             | 21,000                |             |             |            |                           |             | 21,000       |            
|                                                        | Prepaid expenses and other current assets                  |                             |             | 602,000               |             |             |            |                           |             | 602,000      |            
|                                                        |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|                                                        |                                                            | Total current assets        |             |                       | 23,970,000  |             |             |                          |             |              | 23,970,000 
|Property and equipment, net                             |                                                            |                             | 5,206,000   |                       |             |            |             |                           | 5,206,000   |              |            
|Investment in, and advances to, subsidiaries            |                                                            |                             | 76,955,000  |                       |             |            |             |                           | 76,955,000  |              |            
|Intangibles, net                                        |                                                            |                             | 108,000     |                       |             | 76,955,000  |             |                           | 77,063,000  |              |            
|Deferred financing fees, net                            |                                                            |                             | 2,094,000   |                       |             |            |             |                           | 2,094,000   |              |            
|Other assets                                            |                                                            |                             | 112,000     |                       |             |            |             |                           | 112,000     |              |            
|                                                        |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|Total assets                                            |                                                            | $                           | 108,445,000 |                       | $           | 76,955,000  |             | $                         | 185,400,000 |              | $          
|                                                        |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|Liabilities and stockholders' equity (Deficiency)       |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|                                                        | Accounts payable                                           |                             | $           | 1,428,000             |             | $           |            |                           | $           | 1,428,000    |            
|                                                        | Accrued expenses                                           |                             |             | 1,988,000             |             |             |            |                           |             | 1,988,000    |            
|                                                        | Interest payable                                           |                             |             | 5,873,000             |             |             |            |                           |             | 5,873,000    |            
|                                                        | Other current liabilities                                  |                             |             | 79,000                |             |             |            |                           |             | 79,000       |            
|                                                        |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|                                                        |                                                            | Total current liabilities   |             |                       | 9,368,000   |             |             |                          |             |              | 9,368,000  
|Long-term liabilities                                   |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|                                                        | Senior discount notes                                      |                             |             | 174,000,000           |             |             |            |                           |             | 174,000,000  |            
|                                                        | Deferred income tax liabilities and other                  |                             |             |                      |             |             |            |                           |             |             |            
|                                                        | Long-term liabilities                                      |                             |             | 2,704,000             |             |             |            |                           |             | 2,704,000    |            
|                                                        | Intercompany balances                                      |                             |             |                      |             |             | 88,558,000  |                           |             | 88,558,000   |            
|                                                        |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|                                                        |                                                            | Total long-term liabilities |             |                       | 176,704,000 |             |             | 88,558,000                |             |              | 265,262,000
|Stockholders' equity/(deficit)                          |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|                                                        | Preferred and common stock, and additional paid-in capital |                             |             | 29,637,000            |             |             |            |                           |             | 29,637,000   |            
|                                                        | Other comprehensive loss                                   |                             |             |                      |             |             |            |                           |             |             |            
|                                                        | Accumulated deficit                                        |                             |             | (107,264,000          | )           |             | (11,603,000 | )                         |             | (118,867,000 | )          
|                                                        |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|                                                        |                                                            |                             | (77,627,000 | )                     |             | (11,603,000 | )           |                           | (89,230,000 | )            |            
|                                                        |                                                            |                             |             |                       |             |             |             |                           |             |              |            
|Total liabilities and stockholders' equity (deficiency) |                                                            | $                           | 108,445,000 |                       | $           | 76,955,000  |             | $                         | 185,400,000 |              | $          
|                                                        |                                                            |                             |             |                       |             |             |             |                           |             |              |            

67

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Consolidating Balance Sheet for the year ended December 31, 2002

|                                                        |                                                                 | Parent                      |              | Subsidiary
Guarantors |             | Sub-total   |             | Consolidation
Adjustments |              | Consolidated |            
|------------------------------------------------------- | --------------------------------------------------------------- | --------------------------- | ------------ | --------------------- | ----------- | ----------- | ----------- | ------------------------- | ------------ | ------------ | -----------
|Assets                                                  |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|Current assets                                          |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|                                                        | Cash and cash equivalents                                       |                             | $            | 732,000               |             | $           |            |                           | $            | 732,000      |            
|                                                        | Cash held in investment, restricted                             |                             |              | 1,085,000             |             |             |            |                           |              | 1,085,000    |            
|                                                        | Marketable securities                                           |                             |              | 1,861,000             |             |             |            |                           |              | 1,861,000    |            
|                                                        | Accounts receivable, net of allowance                           |                             |              | 1,997,000             |             |             |            |                           |              | 1,997,000    |            
|                                                        | Interest receivable                                             |                             |              | 6,000                 |             |             |            |                           |              | 6,000        |            
|                                                        | Assets held for sale                                            |                             |              | 3, 246,000            |             |             | 76,325,000  |                           |              | 79,571,000   |            
|                                                        | Prepaid expenses and other current assets                       |                             |              | 289,000               |             |             |            |                           |              | 289,000      |            
|                                                        |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|                                                        |                                                                 | Total current assets        |              |                       | 9,216,000   |             |             | 76,325,000                |              |              | 85,541,000 
|Property and equipment, net                             |                                                                 |                             | 376,000      |                       |             |            |             |                           | 376,000      |              |            
|Investment in, and advances to, subsidiaries            |                                                                 |                             | 76,325,000   |                       |             |            |             |                           | 76,325,000   |              |            
|Deferred financing fees, net                            |                                                                 |                             | 1,441,000    |                       |             |            |             |                           | 1,441,000    |              |            
|Other assets                                            |                                                                 |                             | 170,000      |                       |             |            |             |                           | 170,000      |              |            
|                                                        |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|Total assets                                            |                                                                 | $                           | 87,528,000   |                       | $           | 76,325,000  |             | $                         | 163,853,000  |              | $          
|                                                        |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|Liabilities and stockholders' equity (Deficiency)       |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|                                                        | Accounts payable                                                |                             | $            | 883,000               |             | $           |            |                           | $            | 883,000      |            
|                                                        | Accrued expenses                                                |                             |              | 1,644,000             |             |             |            |                           |              | 1,644,000    |            
|                                                        | Senior discount notes                                           |                             |              | 174,000,000           |             |             |            |                           |              | 174,000,000  |            
|                                                        | Interest payable                                                |                             |              | 15,983,000            |             |             |            |                           |              | 15,983,000   |            
|                                                        | Other current liabilities                                       |                             |              | 74,000                |             |             |            |                           |              | 74,000       |            
|                                                        |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|                                                        |                                                                 | Total current liabilities   |              |                       | 192,584,000 |             |             |                          |              |              | 192,584,000
|Long-term liabilities                                   |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|                                                        | Deferred income tax liabilities and other long term liabilities |                             |              | 301,000               |             |             |            |                           |              | 301,000      |            
|                                                        | Intercompany balances                                           |                             |              |                      |             |             | 88,558,000  |                           |              | 88,558,000   |            
|                                                        |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|                                                        |                                                                 | Total long-term liabilities |              |                       | 301,000     |             |             | 88,558,000                |              |              | 88,859,000 
|Stockholders' equity/(deficit)                          |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|                                                        | Preferred and common stock, and additional paid-in capital      |                             |              | 29,637,000            |             |             |            |                           |              | 29,637,000   |            
|                                                        | Other comprehensive loss                                        |                             |              | (8,000                | )           |             |            |                           |              | (8,000       | )          
|                                                        | Accumulated deficit                                             |                             |              | (134,986,000          | )           |             | (12,233,000 | )                         |              | (147,219,000 | )          
|                                                        |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|                                                        |                                                                 |                             | (105,357,000 | )                     |             | (12,233,000 | )           |                           | (117,590,000 | )            |            
|                                                        |                                                                 |                             |              |                       |             |             |             |                           |              |              |            
|Total liabilities and stockholders' equity (deficiency) |                                                                 | $                           | 87,528,000   |                       | $           | 76,325,000  |             | $                         | 163,853,000  |              | $          
|                                                        |                                                                 |                             |              |                       |             |             |             |                           |              |              |            

68

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(9) Senior Discount Notes (Continued)

Consolidating Statement of Operations for the year ended December 31, 2000

|                                                                              |                                                                     | Parent                   |             | Subsidiary
Guarantors |            | Sub-total  |   | Consolidation
Adjustments |             | Consolidated |           
|----------------------------------------------------------------------------- | ------------------------------------------------------------------- | ------------------------ | ----------- | --------------------- | ---------- | ---------- | - | ------------------------- | ----------- | ------------ | ----------
|Gross revenues                                                                |                                                                     | $                        | 6,679,000   |                       | $          |           |   | $                         | 6,679,000   |              | $         
|Less commissions and fees                                                     |                                                                     |                          | 713,000     |                       |            |           |   |                           | 713,000     |              |           
|                                                                              |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|Net revenues                                                                  |                                                                     |                          | 5,966,000   |                       |            |           |   |                           | 5,966,000   |              |           
|Operating expenses:                                                           |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              | Station operating expenses, excluding depreciation and amortization |                          |             | 5,538,000             |            |            |  |                           |             | 5,538,000    |           
|                                                                              | Internet and publishing, excluding depreciation and amortization    |                          |             | 1,457,000             |            |            |  |                           |             | 1,457,000    |           
|                                                                              | Corporate, general and administrative expenses                      |                          |             | 3,845,000             |            |            |  |                           |             | 3,845,000    |           
|                                                                              | Cost of abandonment of station acquisition agreement                |                          |             | 550,000               |            |            |  |                           |             | 550,000      |           
|                                                                              | Depreciation and amortization                                       |                          |             | 1,312,000             |            |            |  |                           |             | 1,312,000    |           
|                                                                              |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              |                                                                     | Total operating expenses |             |                       | 12,702,000 |            |   |                          |             |              | 12,702,000
|                                                                              |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              |                                                                     | Operating loss           |             |                       | (6,736,000 | )          |   |                          |             |              | (6,736,000
|Other income (expenses):                                                      |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              | Interest income                                                     |                          |             | 281,000               |            |            |  |                           |             | 281,000      |           
|                                                                              | Other, net                                                          |                          |             | (115,000              | )          |            |  |                           |             | (115,000     | )         
|                                                                              |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              |                                                                     | Total other (expenses)   |             |                       | 166,000    |            |   |                          |             |              | 166,000   
|                                                                              |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|Loss before income tax benefit, and equity in losses of Subsidiary Guarantors |                                                                     |                          | (6,570,000  | )                     |            |           |   |                           | (6,570,000  | )            |           
|Income tax benefit, net                                                       |                                                                     |                          | 63,000      |                       |            |           |   |                           | 63,000      |              |           
|                                                                              |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|Loss before equity in losses of Subsidiary Guarantors                         |                                                                     |                          | (6,507,000  | )                     |            |           |   |                           | (6,507,000  | )            |           
|Equity in net losses of Subsidiary Guarantors                                 |                                                                     |                          | (2,969,000  | )                     |            |           |   |                           | (2,969,000  | )            |           
|Loss on discontinued operations                                               |                                                                     |                          | (21,692,000 | )                     |            | (2,969,000 | ) |                           | (24,661,000 | )            |           
|                                                                              |                                                                     |                          |             |                       |            |            |   |                           |             |              |           
|Net loss                                                                      |                                                                     | $                        | (31,168,000 | )                     | $          | (2,969,000 | ) | $                         | (34,137,000 | )            | $         
|                                                                              |                                                                     |                          |             |                       |            |            |   |                           |             |              |           

69

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Consolidating Statement of Operations for the year ended December 31, 2001

|                                                                              |                                                                      | Parent                   |             | Subsidiary
Guarantors |            | Sub-total  |   | Consolidation
Adjustments |             | Consolidated |           
|----------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------ | ----------- | --------------------- | ---------- | ---------- | - | ------------------------- | ----------- | ------------ | ----------
|Gross revenues                                                                |                                                                      | $                        | 4,622,000   |                       | $          |           |   | $                         | 4,622,000   |              | $         
|Less commissions and fees                                                     |                                                                      |                          | 497,000     |                       |            |           |   |                           | 497,000     |              |           
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|Net revenues                                                                  |                                                                      |                          | 4,125,000   |                       |            |           |   |                           | 4,125,000   |              |           
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|Operating expenses:                                                           |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              | Station operating expenses, excluding depreciation and amortization  |                          |             | 4,272,000             |            |            |  |                           |             | 4,272,000    |           
|                                                                              | Internet operating expenses, excluding depreciation and amortization |                          |             | 436,000               |            |            |  |                           |             | 436,000      |           
|                                                                              | Corporate, general and administrative expenses                       |                          |             | 3,610,000             |            |            |  |                           |             | 3,610,000    |           
|                                                                              | Impairment loss on goodwill                                          |                          |             | 897,000               |            |            |  |                           |             | 897,000      |           
|                                                                              | Depreciation and amortization                                        |                          |             | 1,263,000             |            |            |  |                           |             | 1,263,000    |           
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              |                                                                      | Total operating expenses |             |                       | 10,478,000 |            |   |                          |             |              | 10,478,000
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              |                                                                      | Operating loss           |             |                       | (6,353,000 | )          |   |                          |             |              | (6,353,000
|Other income (expenses):                                                      |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              | Gain on sale of stations                                             |                          |             | 2,275,000             |            |            |  |                           |             | 2,275,000    |           
|                                                                              | Interest income                                                      |                          |             | 111,000               |            |            |  |                           |             | 111,000      |           
|                                                                              | Other, net                                                           |                          |             | (173,000              | )          |            |  |                           |             | (173,000     | )         
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|                                                                              |                                                                      | Total other income       |             |                       | 2,213,000  |            |   |                          |             |              | 2,213,000 
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|Loss before income tax benefit, and equity in losses of Subsidiary Guarantors |                                                                      |                          | (4,140,000  | )                     |            |           |   |                           | (4,140,000  | )            |           
|Income tax benefit, net                                                       |                                                                      |                          | 63,000      |                       |            |           |   |                           | 63,000      |              |           
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|Loss before equity in losses of Subsidiary Guarantors                         |                                                                      |                          | (4,077,000  | )                     |            |           |   |                           | (4,077,000  | )            |           
|Equity in net losses of Subsidiary Guarantors                                 |                                                                      |                          | (2,813,000  | )                     |            |           |   |                           | (2,813,000  | )            |           
|Loss on discontinued operations                                               |                                                                      |                          | (23,817,000 | )                     |            | (2,813,000 | ) |                           | (26,630,000 | )            |           
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           
|Net loss                                                                      |                                                                      | $                        | (30,707,000 | )                     | $          | (2,813,000 | ) | $                         | (33,520,000 | )            | $         
|                                                                              |                                                                      |                          |             |                       |            |            |   |                           |             |              |           

70

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Consolidating for the year ended December 31, 2002

|                                                                              |                                                | Parent                   |             | Subsidiary
Guarantors |            | Sub-total |   | Consolidation
Adjustments |             | Consolidated |           
|----------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------ | ----------- | --------------------- | ---------- | --------- | - | ------------------------- | ----------- | ------------ | ----------
|Net revenues                                                                  |                                                | $                        |            |                       | $          |          |   | $                         |            |              | $         
|                                                                              |                                                |                          |             |                       |            |           |   |                           |             |              |           
|Operating expenses:                                                           |                                                |                          |             |                       |            |           |   |                           |             |              |           
|                                                                              | Corporate, general and administrative expenses |                          |             | 4,717,000             |            |           |  |                           |             | 4,717,000    |           
|                                                                              | Depreciation and amortization                  |                          |             | 120,000               |            |           |  |                           |             | 120,000      |           
|                                                                              |                                                |                          |             |                       |            |           |   |                           |             |              |           
|                                                                              |                                                | Total operating expenses |             |                       | 4,837,000  |           |   |                          |             |              | 4,837,000 
|                                                                              |                                                |                          |             |                       |            |           |   |                           |             |              |           
|                                                                              |                                                | Operating loss           |             |                       | (4,837,000 | )         |   |                          |             |              | (4,837,000
|Other income (expenses):                                                      |                                                |                          |             |                       |            |           |   |                           |             |              |           
|                                                                              | Interest income                                |                          |             | 152,000               |            |           |  |                           |             | 152,000      |           
|                                                                              | Other, net                                     |                          |             | (21,000               | )          |           |  |                           |             | (21,000      | )         
|                                                                              |                                                |                          |             |                       |            |           |   |                           |             |              |           
|                                                                              |                                                | Total other income       |             |                       | 131,000    |           |   |                          |             |              | 131,000   
|                                                                              |                                                |                          |             |                       |            |           |   |                           |             |              |           
|Loss before income tax benefit, and equity in losses of Subsidiary Guarantors |                                                |                          | (4,706,000  | )                     |            |          |   |                           | (4,706,000  | )            |           
|Income tax benefit, net                                                       |                                                |                          | 4,284,000   |                       |            |          |   |                           | 4,284,000   |              |           
|                                                                              |                                                |                          |             |                       |            |           |   |                           |             |              |           
|Loss before equity in losses of Subsidiary Guarantors                         |                                                |                          | (422,000    | )                     |            |          |   |                           | (422,000    | )            |           
|Equity in net losses of Subsidiary Guarantors                                 |                                                |                          | (630,000    | )                     |            |          |   |                           | (630,000    | )            |           
|Loss on discontinued operations                                               |                                                |                          | (26,670,000 | )                     |            | (630,000  | ) |                           | (27,300,000 | )            |           
|                                                                              |                                                |                          |             |                       |            |           |   |                           |             |              |           
|Net loss                                                                      |                                                | $                        | (27,722,000 | )                     | $          | (630,000  | ) | $                         | (28,352,000 | )            | $         
|                                                                              |                                                |                          |             |                       |            |           |   |                           |             |              |           

71

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Consolidating Statement of Cash Flows for the year ended December 31, 2000

|                                               |                                                | Parent |            | Subsidiary
Guarantors |   | Sub-total |          | Consolidation
Adjustments |            | Consolidated |  
|---------------------------------------------- | ---------------------------------------------- | ------ | ---------- | --------------------- | - | --------- | -------- | ------------------------- | ---------- | ------------ | -
|Net cash used in operating activities          |                                                | $      | (4,784,000 | )                     | $ |          |          | $                         | (4,784,000 | )            | $
|                                               |                                                |        |            |                       |   |           |          |                           |            |              |  
|Cash flows from investing activities:          |                                                |        |            |                       |   |           |          |                           |            |              |  
|                                               | Purchase of property and equipment             |        |            | (895,000              | ) |           |         |                           |            | (895,000     | )
|                                               | Sale of marketable securities                  |        |            | 5,964,000             |   |           |         |                           |            | 5,964,000    |  
|                                               | Decrease in cash held in escrow                |        |            | 275,000               |   |           |         |                           |            | 275,000      |  
|                                               | Increase in cash held in restricted investment |        |            | 1,132,000             |   |           |         |                           |            | 1,132,000    |  
|                                               | Cash received for disposal of fixed assets     |        |            | 10,000                |   |           |         |                           |            | 10,000       |  
|                                               | Cash received for radio station sold           |        |            |                      |   |           | 352,000  |                           |            | 352,000      |  
|                                               | Investment in, and advances to, subsidiaries   |        |            | 352,000               |   |           | (352,000 | )                         |            |             |  
|                                               |                                                |        |            |                       |   |           |          |                           |            |              |  
|Net cash provided by investing activities      |                                                |        | 6,838,000  |                       |   |          |          |                           | 6,838,000  |              |  
|Cash flows from financing activities:          |                                                |        |            |                       |   |           |          |                           |            |              |  
|                                               | Repayment of promissory notes                  |        |            | (881,000              | ) |           |         |                           |            | (881,000     | )
|                                               |                                                |        |            |                       |   |           |          |                           |            |              |  
|Net cash used in financing activities          |                                                |        | (881,000   | )                     |   |          |          |                           | (881,000   | )            |  
|Cash flows used in discontinuing operations    |                                                |        | (2,742,000 | )                     |   |          |          |                           | (2,742,000 | )            |  
|                                               |                                                |        |            |                       |   |           |          |                           |            |              |  
|                                               | Change in cash and cash equivalents            |        |            | (1,569,000            | ) |           |         |                           |            | (1,569,000   | )
|Cash and cash equivalents at beginning of year |                                                |        | 2,431,000  |                       |   |          |          |                           | 2,431,000  |              |  
|                                               |                                                |        |            |                       |   |           |          |                           |            |              |  
|Cash and cash equivalents at end of year       |                                                | $      | 862,000    |                       | $ |          |          | $                         | 862,000    |              | $
|                                               |                                                |        |            |                       |   |           |          |                           |            |              |  

72

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Consolidating Statement of Cash Flows for the year ended December 31, 2001

|                                               |                                                                 | Parent |             | Subsidiary
Guarantors |   | Sub-total |             | Consolidation
Adjustments |             | Consolidated |  
|---------------------------------------------- | --------------------------------------------------------------- | ------ | ----------- | --------------------- | - | --------- | ----------- | ------------------------- | ----------- | ------------ | -
|Net cash used in operating activities          |                                                                 | $      | (3,331,000  | )                     | $ |          |             | $                         | (3,331,000  | )            | $
|                                               |                                                                 |        |             |                       |   |           |             |                           |             |              |  
|Cash flows from investing activities:          |                                                                 |        |             |                       |   |           |             |                           |             |              |  
|                                               | Purchase of property and equipment                              |        |             | (121,000              | ) |           |            |                           |             | (121,000     | )
|                                               | Sale of marketable securities                                   |        |             | 1,895,000             |   |           |            |                           |             | 1,895,000    |  
|                                               | Purchase of marketable securities                               |        |             | (15,000,000           | ) |           |            |                           |             | (15,000,000  | )
|                                               | Increase in cash held in restricted investment                  |        |             | (534,000              | ) |           |            |                           |             | (534,000     | )
|                                               | Cash received for radio stations sold                           |        |             |                      |   |           | 32,692,000  |                           |             | 32,692,000   |  
|                                               | Investment in, and advances to, subsidiaries                    |        |             | 32,692,000            |   |           | (32,692,000 | )                         |             |             |  
|                                               |                                                                 |        |             |                       |   |           |             |                           |             |              |  
|Net cash provided by investing activities      |                                                                 |        | 18,932,000  |                       |   |          |             |                           | 18,932,000  |              |  
|Cash flows from financing activities:          |                                                                 |        |             |                       |   |           |             |                           |             |              |  
|                                               | Cash received from bridge loan                                  |        |             | 15,000,000            |   |           |            |                           |             | 15,000,000   |  
|                                               | Cash received from issuance of promissory note to related party |        |             | 2,235,000             |   |           |            |                           |             | 2,235,000    |  
|                                               | Repayment of bridge loan                                        |        |             | (15,000,000           | ) |           |            |                           |             | (15,000,000  | )
|                                               | Repayment of promissory notes                                   |        |             | (2,235,000            | ) |           |            |                           |             | (2,235,000   | )
|                                               |                                                                 |        |             |                       |   |           |             |                           |             |              |  
|Net cash provided by financing activities      |                                                                 |        |            |                       |   |          |             |                           |            |              |  
|Cash flows used in discontinuing operations    |                                                                 |        | (13,269,000 | )                     |   |          |             |                           | (13,269,000 | )            |  
|                                               |                                                                 |        |             |                       |   |           |             |                           |             |              |  
|                                               | Change in cash and cash equivalents                             |        |             | 2,332,000             |   |           |            |                           |             | 2,332,000    |  
|Cash and cash equivalents at beginning of year |                                                                 |        | 862,000     |                       |   |          |             |                           | 862,000     |              |  
|                                               |                                                                 |        |             |                       |   |           |             |                           |             |              |  
|Cash and cash equivalents at end of year       |                                                                 | $      | 3,194,000   |                       | $ |          |             | $                         | 3,194,000   |              | $
|                                               |                                                                 |        |             |                       |   |           |             |                           |             |              |  

73

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Consolidating Statement of Cash Flows for the year ended December 31, 2002

|                                               |                                                | Parent |             | Subsidiary
Guarantors |   | Sub-total |   | Consolidation
Adjustments |             | Consolidated |  
|---------------------------------------------- | ---------------------------------------------- | ------ | ----------- | --------------------- | - | --------- | - | ------------------------- | ----------- | ------------ | -
|Net cash used in operating activities          |                                                | $      | (3,857,000  | )                     | $ |          |   | $                         | (3,857,000  | )            | $
|                                               |                                                |        |             |                       |   |           |   |                           |             |              |  
|Cash flows from investing activities:          |                                                |        |             |                       |   |           |   |                           |             |              |  
|                                               | Sale of marketable securities                  |        |             | 13,139,000            |   |           |  |                           |             | 13,139,000   |  
|                                               | Decrease in cash held in restricted investment |        |             | 251,000               |   |           |  |                           |             | 251,000      |  
|                                               |                                                |        |             |                       |   |           |   |                           |             |              |  
|Net cash provided by investing activities      |                                                |        | 13,390,000  |                       |   |          |   |                           | 13,390,000  |              |  
|                                               |                                                |        |             |                       |   |           |   |                           |             |              |  
|Net cash provided by financing activities      |                                                |        |            |                       |   |          |   |                           |            |              |  
|Cash flows used in discontinuing operations    |                                                |        | (11,995,000 | )                     |   |          |   |                           | (11,995,000 | )            |  
|                                               |                                                |        |             |                       |   |           |   |                           |             |              |  
|                                               | Change in cash and cash equivalents            |        |             | (2,462,000            | ) |           |  |                           |             | (2,462,000   | )
|Cash and cash equivalents at beginning of year |                                                |        | 3,194,000   |                       |   |          |   |                           | 3,194,000   |              |  
|                                               |                                                |        |             |                       |   |           |   |                           |             |              |  
|Cash and cash equivalents at end of year       |                                                | $      | 732,000     |                       | $ |          |   | $                         | 732,000     |              | $
|                                               |                                                |        |             |                       |   |           |   |                           |             |              |  

The
condensed consolidating financial information has been prepared from the books and records maintained by the Subsidiary Guarantors and the Company. This summarized financial
information may
not necessarily be indicative of the results of operations or financial position had the Subsidiary Guarantors operated as independent entities.

(10) Promissory Note

During April 2001, the Company made a request of its bank lender that the Company be permitted to draw down on its Revolving Credit Facility. The lender
declined to permit the Company to draw on the Revolving Credit Facility due to the Company's lack of compliance with a covenant that required that the Company's consolidated financial statements for
the year ended December 31, 2000 be reported on by the Company's independent accountants without a "going concern or like qualification or exception." As a result of its inability to draw on
the Revolving Credit Facility, the Company issued a promissory note (the "Affiliate Promissory Note") on May 8, 2001 to borrow up to $5,000,000 from an affiliate of the Company in order to meet
the Company's short-term capital needs. The amount outstanding under the Affiliate Promissory Note bore interest equal to the lower of (i) JPMorgan Chase's prime rate plus 2.0% or
(ii) the highest rate permitted by New York law, and it was due upon demand. The Company borrowed $2,235,000 under the Affiliate Promissory Note, and

74

---

interest expense on the Affiliate Promissory Note during 2001 was $51,000. All amounts payable under the Affiliate Promissory Note were repaid on October 12, 2001 using the proceeds from the
Bridge Loan (see Note 11).

(11) Bridge Loan

On October 12, 2001, the Company obtained a new term loan facility (the "Bridge Loan") in the amount of $15,000,000. The Bridge Loan was obtained by the
assignment of the Company's Revolving Credit Facility (the "Existing Credit Facility") from the Company's existing bank lender to a new lender. The Bridge Loan, which was repaid on October 31,
2001, bore interest at the rate of LIBOR plus 3%, or a Base Rate plus 2%, at the option of the Company. Net proceeds of the Bridge Loan were used to pay the semi-annual interest on its
Senior Discount Notes, and to repay indebtedness under the Affiliate Promissory Note (see note 10).

On
October 31, 2001, the Company completed the sale of its four Phoenix radio station properties, KEDJ-FM, KDDJ-FM, KBZR-FM and
KSSL-FM, to Hispanic Broadcasting Corporation for an aggregate cash purchase price of $34,000,000. Proceeds from this sale were used to repay indebtedness under the Bridge Loan. For the
year ended December 31, 2001, the Company paid interest and loan fees of $76,000 and $1,300,000, respectively.

(12) Contractual Obligations, Commitments and Contingencies



If Big City Radio is not successful in selling the stations at all or selling the stations at prices sufficient to pay all principal of, and accrued and unpaid
interest on, the senior notes, Big City Radio will consider other strategic alternatives, including filing for protection from its creditors under the United States bankruptcy code. Because events of
default exist under the indenture governing the senior notes, Big City Radio also could be subject to an involuntary filing under the bankruptcy code initiated by noteholders or other creditors.

As
of December 31, 2002, Big City Radio's contractual obligations and commitments were as follows:

Senior Notes
(Principal and
Interest)

Operating
Leases

Employment
Contracts

Total2003

$
189,983,000


1,652,000


804,000


192,439,0002004





1,089,000


46,000


1,135,0002005





649,000





649,0002006





446,000





446,0002007





400,000





400,000Thereafter





304,000





304,000$
189,983,000

$
4,540,000

$
850,000

$
195,373,000


Rent
expense for the years ended December 31, 2000, 2001 and 2002 was approximately $1,960,000, $2,267,000 and $2,016,000 respectively.

75

---

The
Company has entered into various employment contracts with 5 individuals comprised mainly of officers and senior management that provide for minimum salaries and incentives based
upon specified levels of performance.



The Company has 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.

(13) Supplementary InformationStatement of Cash Flows

The Company acquired vehicles during the years ended December 31, 2000, 2001 and 2002 through issuance of notes payable amounting to $50,000, $78,000 and
$0 respectively.

Barter
transactions resulted in sales of $1,107,000, $1,046,000 and $930,000 and related expenses of $1,061,000, $910,000 and $828,000 for the years ended December 31, 2000, 2001
and 2002, respectively.

Cash
paid for interest during the years ended December 31, 2000, 2001 and 2002 amounted to $40,000, $17,183,000, and $9,807,000 respectively.

(14) Income Taxes

Income tax expense (benefit) for the year ended December 31, 2000, 2001 and 2002 is comprised of the following:

|                         |                      | 2000 |         | 2001    |   | 2002    |        
|------------------------ | -------------------- | ---- | ------- | ------- | - | ------- | -------
|Continuing operations:   |                      |      |         |         |   |         |        
|                         | Deferred tax benefit |      | $       | (63,000 | ) | $       | (63,000
|Discontinued operations: |                      |      |         |         |   |         |        
|                         | Deferred tax expense |      |         |        |   |         |       
|                         |                      |      |         |         |   |         |        
|                         |                      | $    | (63,000 | )       | $ | (63,000 | )      
|                         |                      |      |         |         |   |         |        

The
tax benefit from continuing operations differs from the amount computed by applying the statutory Federal income tax rate in 2000, 2001 and 2002 due to the following:

|                                                                   |  | 2000 |             | 2001 |   | 2002        |  
|------------------------------------------------------------------ |  | ---- | ----------- | ---- | - | ----------- | -
|Federal income taxes at the statutory rate                         |  | $    | (10,899,000 | )    | $ | (10,770,000 | )
|State income taxes net of any amount of Federal income tax benefit |  |      | (1,523,000  | )    |   | (1,480,000  | )
|Valuation allowance                                                |  |      | 12,327,000  |      |   | 12,198,000  |  
|Other                                                              |  |      | 32,000      |      |   | (11,000     | )
|                                                                   |  |      |             |      |   |             |  
|                                                                   |  | $    | (63,000     | )    | $ | (63,000     | )
|                                                                   |  |      |             |      |   |             |  

76

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The
components of deferred taxes at December 31, 2000, 2001 and 2002 are as follows:

|                                     |                                                                               | 2000 |             | 2001       |   | 2002        |           
|------------------------------------ | ----------------------------------------------------------------------------- | ---- | ----------- | ---------- | - | ----------- | ----------
|Deferred tax assets:                 |                                                                               |      |             |            |   |             |           
|                                     | Net operating loss                                                            |      | $           | 16,794,000 |   | $           | 23,523,000
|                                     | Other                                                                         |      |             | 240,000    |   |             | 2,615,000 
|                                     | Book interest expense/Tax original issue discount ("OID") 11.25% Senior Notes |      |             | 19,823,000 |   |             | 27,695,000
|                                     |                                                                               |      |             |            |   |             |           
|                                     |                                                                               |      | 36,857,000  |            |   | 53,833,000  |           
|                                     |                                                                               |      |             |            |   |             |           
|Deferred tax liabilities:            |                                                                               |      |             |            |   |             |           
|                                     | Deferred gain                                                                 |      |             | (2,679,000 | ) |             | (2,619,000
|                                     | Book/Tax basis difference from WRNJ-FM stock purchase                         |      |             | (2,348,000 | ) |             | (2,285,000
|                                     | Depreciation and amortization                                                 |      |             | (4,129,000 | ) |             | (3,878,000
|                                     | Payment on Senior Discount Notes                                              |      |             |           |   |             | (4,294,000
|                                     | Other                                                                         |      |             | (1,871,000 | ) |             | (2,668,000
|                                     |                                                                               |      |             |            |   |             |           
|                                     |                                                                               |      | (11,027,000 | )          |   | (15,774,000 | )         
|                                     |                                                                               |      |             |            |   |             |           
|Sub-Total before valuation allowance |                                                                               |      | 25,830,000  |            |   | 38,089,000  |           
|Valuation Allowance                  |                                                                               |      | (28,177,000 | )          |   | (40,373,000 | )         
|                                     |                                                                               |      |             |            |   |             |           
|Net deferred tax asset (liability)   |                                                                               | $    | (2,347,000  | )          | $ | (2,284,000  | )         
|                                     |                                                                               |      |             |            |   |             |           

The
Company has approximately $88,500,000 of net operating loss carryforwards ("NOLs") 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. The sale of its Los Angeles, New York, and Chicago radio stations has not been taken into consideration in calculating the current year statement
of operations. Accordingly, a valuation allowance of $49,731,000 has been provided for the deferred tax assets for the year ended December 31, 2002. If the sales described above are
consummated, the valuation allowance will be eliminated.

(15) Capital Stock and Related Transactions

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, 2002, 6,226,817 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 initial public offering of
Big City Radio Common Stock, there was one holder of Class A Common Stock and there were two holders of Class B Common Stock.

77

---

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.

(16) Stock Option Plans

Under the Company's 1997, 1998 and 1999 Incentive Stock Plan (the "Incentive Stock Plan"), as amended in November 1999, 700,000, 311,500 and 2,500,000
shares, respectively of the Company's Class A Common Stock are reserved for issuance. The types of awards that may be granted pursuant to the 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. Incentive stock options granted under both Plans are
exercisable for a period of up to ten years. The following is a summary of the material features of the Incentive Stock Plan.

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
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.

78

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(16) Stock Option Plans (Continued)

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 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

79

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under the amended 1999 Incentive Stock Plan to the new Chief Executive Officer of the Company, at an exercise price of $4.00 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.

On
September 6, 2000, 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 the then market value of $4.00 per share. On October 19, 2000, the Board of Directors granted stock options to purchase an
aggregate of 20,000 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 the then market value of $3.375 per
share. On November 20, 2000, the Board of Directors granted stock options to purchase an aggregate of 100,000 shares of Class A Common Stock under the amended 1999 Incentive Stock Plan
to certain employees of the Company, at an exercise price of the then market value of $2.875 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
February 15, 2001, the Board of Directors granted stock options to purchase an aggregate of 15,000 shares of Class A Common Stock under the amended 1999 Incentive Stock
Plan to certain employees of the Company, at an exercise price of the then market value of $4.50 per share. On July 17, 2001, the Board of Directors granted stock options to purchase an
aggregate of 65,000 shares of Class A Common Stock under the amended 1999 Incentive Stock Plan to certain employees of the Company, at an exercise price of the then market value of $3.15 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, 2002 is as follow:

|                                   |  | Number of
Shares |   | Exercise Price
Per Share |                | Weighted
Average
Exercise Price
|---------------------------------- |  | ---------------- | - | ------------------------ | -------------- | -------------------------------
|Outstanding at beginning of year   |  | 1,870,250        |   | $                        | 2.875 - 7.8125 |                                
|Cancelled                          |  | (550,250         | ) | $                        | 2.875 - 7.8125 |                                
|                                   |  |                  |   |                          |                |                                
|Outstanding at end of year         |  | 1,320,000        |   | $                        | 3.15 - 7.8125  |                                
|                                   |  |                  |   |                          |                |                                
|Exercisable at end of year         |  | 1,161,500        |   | $                        | 3.15 - 7.8125  |                                
|                                   |  |                  |   |                          |                |                                
|Available for grant at end of year |  | 2,180,000        |   |                          |                |                                
|                                   |  |                  |   |                          |                |                                

At
December 31, 2002, the weighted average remaining contractual life of all outstanding options was 6.43 years.

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The
following table summarizes information concerning currently outstanding and exercisable stock options as of December 31, 2002:

|              |  | Options Outstanding at
December 31, 2002 |  | Options Exercisable at
December 31, 2002
|------------- |  | ---------------------------------------- |  | ----------------------------------------
|
|$3.15 - 4.00  |  | 985,000                                  |  | $                                       
|4.0625 - 4.50 |  | 30,000                                   |  |                                         
|6.00 - 7.8125 |  | 305,000                                  |  |                                         
|              |  |                                          |  |                                         
|              |  | 1,320,000                                |  |                                         
|              |  |                                          |  |                                         

Summary
information pertaining to the plan for the year ended December 31, 2001 is as follows:

|                                   |  | Number of
Shares |   | Exercise Price
Per Share |                 | Weighted
Average
Exercise Price
|---------------------------------- |  | ---------------- | - | ------------------------ | --------------- | -------------------------------
|Outstanding at beginning of year   |  | 1,964,100        |   | $                        | 2.875 - 7.8125  |                                
|Granted                            |  | 80,000           |   |                          | 3.15 - 4.50     |                                
|Cancelled                          |  | (173,850         | ) |                          | 3.4375 - 7.8125 |                                
|                                   |  |                  |   |                          |                 |                                
|Outstanding at end of year         |  | 1,870,250        |   |                          | 2.875 - 7.8125  |                                
|                                   |  |                  |   |                          |                 |                                
|Exercisable at end of year         |  | 1,369,917        |   |                          | 2.875 - 7.8125  |                                
|                                   |  |                  |   |                          |                 |                                
|Available for grant at end of year |  | 1,629,750        |   |                          |                 |                                
|                                   |  |                  |   |                          |                 |                                

At
December 31, 2001, the weighted average remaining contractual life of all outstanding options was 7.43 years.

Summary
information pertaining to the plan for the year ended December 31, 2000 is as follows:

|                                   |  | Number of
Shares |   | Price Exercise
Per Share |                 | Weighted
Average
Price Exercise
|---------------------------------- |  | ---------------- | - | ------------------------ | --------------- | -------------------------------
|Outstanding at beginning of year   |  | 2,193,300        |   | $                        | 4.375 - 7.8125  |                                
|Granted                            |  | 145,000          |   |                          | 2.875 - 4.00    |                                
|Exercised                          |  | (8,000           | ) |                          | 3.5625 - 4.375  |                                
|Cancelled                          |  | (366,200         | ) |                          | 3.4375 - 7.8125 |                                
|                                   |  |                  |   |                          |                 |                                
|Outstanding at end of year         |  | 1,964,100        |   |                          | 2.875 - 7.8125  |                                
|                                   |  |                  |   |                          |                 |                                
|Exercisable at end of year         |  | 1,133,400        |   |                          | 2.875 - 7.8125  |                                
|                                   |  |                  |   |                          |                 |                                
|Available for grant at end of year |  | 1,535,900        |   |                          |                 |                                
|                                   |  |                  |   |                          |                 |                                

At
December 31, 2000, the weighted average remaining contractual life of all outstanding options was 8.34 years.

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The
Company accounts for its stock option plan in accordance with the provisions of Accounting Principles Board (APB) Option No. 25, "Accounting for Stock Issued to Employees,"
and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation," which permits entities
to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants made in 1995 and future years as if the
fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected to continue to apply the provisions of APB Opinion No. 25 in accounting for its
Plan, and accordingly, no compensation cost has been recognized for its stock options granted at fair market value in the consolidated financial statements. Compensation cost will be recorded for
options granted below fair market value.

In
2000, 2001 and 2002, 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:

|                |  | 2000 |             | 2001 |   | 2002        |  
|--------------- |  | ---- | ----------- | ---- | - | ----------- | -
|Net loss:       |  |      |             |      |   |             |  
|As reported     |  | $    | (31,168,000 | )    | $ | (30,707,000 | )
|Pro forma       |  |      | (32,869,000 | )    |   | (32,804,000 | )
|Loss per share: |  |      |             |      |   |             |  
|As reported     |  | $    | (2.15       | )    | $ | (2.12       | )
|Pro forma       |  |      | (2.27       | )    |   | (2.27       | )

At
December 31, 2000 and 2001, the per share weighted average fair value of stock options granted was $1.99 and $2.14, 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 4.93%, expected volatility of 50% and an
expected life of 10 years for options granted in 2000; expected dividend yield of 0%, risk-free interest rate of 5.0%, expected volatility of 95% and an expected life of
10 years for options granted in February 2001; expected dividend yield of 0%, risk-free
interest rate of 3.25%, expected volatility of 105% and an expected life of 10 years for options granted in July 2001. There were no options granted during 2002.

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(17) Unaudited Quarterly Results

The following tables contain selected unaudited consolidated statement of operations for each quarter of fiscal years 2001 and 2002. This quarterly information
has been restated to reflect the reclassification of the Company's radio station assets as discontinued operations (see note 4).

|                                    |  | Fiscal Year 2001 |       
|----------------------------------- |  | ---------------- | ------
|
|
|Net revenues                        |  | $                | 1,105 
|Net loss                            |  |                  | (8,795
|Net loss per common share           |  | $                | (0.61 
|Weighted average share outstanding: |  |                  |       
|Basic and diluted                   |  |                  | 14,477

|                                    |  | Fiscal Year 2002
|----------------------------------- |  | ----------------
|
|
|Net revenues                        |  | $               
|Net income (loss)                   |  |                 
|Net income (loss) per common share  |  | $               
|Weighted average share outstanding: |  |                 
|Basic and diluted                   |  |                 

On
January 1, 2002, the Company adopted provisions of SFAS 142 and stopped amortizing its FCC broadcast licenses as these intangible assets were determined to have an
indefinite useful life. Accordingly, deferred tax liabilities related to these intangible assets could no longer be utilized to support the realization of deferred tax benefits. The Company has
restated its quarterly results to record an additional deferred tax valuation allowance of approximately $8.6 million during the quarter ended March 31, 2002 and additional tax expense
relating to the increase in the deferred tax liability of approximately $.5 million during the quarters ended March 31, 2002, June 30, 2002, September 30, 2002.

|                               |  | Fiscal Year 2002 |        
|------------------------------ |  | ---------------- | -------
|
|
|Net income (loss) as reported  |  | $                | (7,359 
|Net income (loss), as restated |  |                  | (16,506
|Loss per common share:         |  |                  |        
|Income (loss), as reported     |  | $                | (0.51  
|Net income (loss), as restated |  | $                | (1.14  

Late
in the quarter ended December 31, 2002, as a result of the Company's decision to auction its radio stations and its implementation thereof, certain deferred tax liabilities
can be utilized to support the realization of deferred tax benefits, and the Company recorded a reduction of the deferred tax valuation allowance of $12.9 million.

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

Not Applicable.

PART III

ITEM 10. Directors and Executive Officers of the Registrant

The following table sets forth certain information regarding our directors and executive officers as of the date of this report.

|Name                 |  | Age |  | Office or Position Held                                          
|-------------------- |  | --- |  | -----------------------------------------------------------------
|Stuart Subotnick     |  | 61  |  | Chairman of the Board of Directors                               
|Anita Subotnick      |  | 59  |  | Director                                                         
|Leonard White        |  | 63  |  | Director                                                         
|Michael H. Boyer     |  | 53  |  | Director                                                         
|Charles M. Fernandez |  | 40  |  | President, Chief Executive Officer and Director                  
|Silvia Kessel        |  | 52  |  | Executive Vice President and Director                            
|David A. Persing     |  | 45  |  | Executive Vice President, General Counsel, Secretary and Director
|Bryan Subotnick      |  | 39  |  | Executive Vice PresidentCorporate Development                   
|Paul R. Thomson      |  | 46  |  | Vice President, Chief Financial Officer and Treasurer            

Set
forth below is the background of each of our directors and executive officers.

STUART
SUBOTNICK co-founded Big City Radio, Inc. in 1994 and has served as Chairman of the board of directors since our inception. Mr. Subotnick has spent more
than 30 years at Metromedia Company (and its predecessor) and together with long-time partner John W. Kluge, has overseen Metromedia Company's investments in numerous media,
entertainment and communications businesses. Mr. Subotnick served from 1996 to November 2001 as Vice Chairman, President and Chief Executive Officer of Metromedia International
Group, Inc., an international telecommunications and media company ("MMG"). Mr. Subotnick has also served as Executive Vice President of Metromedia Company and its predecessor for over
five years. Metromedia Company and its predecessor owned and operated radio stations, television stations, an outdoor advertising business, and cellular telephone and paging operations throughout the
United States. Mr. Subotnick is also a director of Carnival Cruise Lines, Inc., a cruise line company, MMG and Metromedia Fiber Network, Inc., a provider of high
bandwidth, fiber optic transmission capacity ("MFN"). Mr. Subotnick is married to Anita Subotnick. Stuart and Anita Subotnick are the parents of Bryan Subotnick.

ANITA
SUBOTNICK co-founded the Company in 1994 and has been serving as a Director since our inception. Ms. Subotnick has been a private investor for over five years.
Ms. Subotnick is married to Stuart Subotnick. Anita Subotnick and Stuart Subotnick are the parents of Bryan Subotnick.

LEONARD
WHITE has served as a Director of the Company since December 1997. Mr. White is President and Chief Executive Officer of Rigel Enterprises Inc., a private
investment management firm, since July 1997. Mr. White served as President and Chief Executive Officer of Orion Pictures Corporation ("Orion"), a motion picture production and
distribution company, from 1992 until 1997 and as President and Chief Executive Officer of Orion Home Entertainment Corporation from 1987 to 1992. Mr. White is also a Director of MMG, and MFN.
Mr. White is a member of the Audit and Compensation Committees.

MICHAEL
BOYER was elected a Director of the Company as of January 1998. Mr. Boyer is currently Chief Financial Officer of American Saw & Mfg, a manufacturer and
distributor of products for materials separation. Until February 2001, Mr. Boyer was Senior Vice President and Chief Financial Officer of Stanadyne Automotive Corp., a manufacturer of
diesel fuel injection equipment and

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hydraulic valve lifters, where he had been employed since July 1978. Mr. Boyer is a member of the Audit and Compensation Committees.

CHARLES
M. FERNANDEZ has served as President and Chief Executive Officer of the Company and a Director since November 1999. 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. from 1989
to 1996. Mr. Fernandez has also served as Chairman of the Board of Directors of Continucare Corp. since 1996, a managed care company, and is a member of the Board of Directors and Chairman of
the Audit Committee of Ivax Corp., a pharmaceutical company.

SILVIA
KESSEL has served as a Director of the Company since December 1997 and has served as Executive Vice President of the Company since September 1997. Ms. Kessel
served as Executive Vice President of MFN from October 1997 to February 2002, Chief Financial Officer and Treasurer of MMG from 1995 to November 2001 and Executive Vice President
of MMG from 1996 to November 2001. In addition, Ms. Kessel served as Executive Vice President of Orion from January 1993 through July 1997, Senior Vice President of
Metromedia Company since 1994 and President of Kluge & Company since January 1994. Ms. Kessel is a member of the board of directors of MFN.

DAVID
A. PERSING has served as a Director and Executive Vice President, Secretary and General Counsel since January 2001. From January 2001 to November 2001,
Mr. Persing served as Executive Vice President, General Counsel and Secretary of MMG. Since January 2001, Mr. Persing has served as a Director of MFN and Senior Vice President,
Secretary and General Counsel of Metromedia Company. Prior to joining Metromedia Company and its affiliated companies, Mr. Persing served as Senior Vice President and General Counsel of Smith
Management LLC, a private investment firm for more than five years preceding November 2000.

BRYAN
SUBOTNICK has served as Executive Vice President-Corporate Development since September 1997. Mr. Subotnick served as Vice President from January 1997 and
Director of Operations from May 1995 to December 1996. Prior to joining us, Mr. Subotnick was Vice President and General Counsel of Papamarkou & Company, an international
finance and investment company, in 1995, and a General Partner in the law firm of Shanker & Subotnick, which specialized in entertainment law, from 1992 to 1994. Mr. Subotnick is the son
of Stuart Subotnick, our Chairman of the board of directors, and of Anita Subotnick, one of our directors.

PAUL
R. THOMSON has served as Vice President since September 1997 and as Chief Financial Officer since January 1996. Prior to joining us, Mr. Thomson served as
Corporate Controller of Herbalife International, Inc. from 1993 to 1996, as Chief Financial Officer of Barnard Salick Companies from 1992 to 1993 and as Controller of the Radio Stations Group
of Westwood One, Inc. from 1989 to 1992. Prior to 1989, Mr. Thomson worked with Price Waterhouse LLP for 12 years in London, Caracas and Los Angeles. He is a certified public
accountant and a member of the Institute of Chartered Accountants in England and Wales.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires Big City Radio's directors and executive officers, and persons who beneficially own more than 10% of the
outstanding class A common stock, to file with the Securities and Exchange Commission and the American Stock Exchange initial reports of ownership and reports of changes in ownership of the
class A common stock. Such officers, directors and greater than 10% stockholders are required by the regulations of the Securities and Exchange Commission to furnish Big City Radio with copies
of all reports that they file under Section 16(a). To Big City Radio's knowledge, based solely on a review of the copies of such reports furnished to Big City Radio and written representations
that no other reports were required, all Section 16(a) filing requirements

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applicable to Big City Radio's officers, directors and greater than 10% beneficial owners were complied with by such persons during the fiscal year ended December 31, 2002.

ITEM 11. Executive Compensation

The following Summary Compensation Table sets forth information on compensation awarded to, earned by or paid to our Chief Executive Officer and our four other
most highly compensated executive officers whose individual compensation exceeded $100,000 during the years ended December 31, 2002, 2001 and 2000 for services rendered in all capacities to Big
City Radio and its subsidiaries. The persons listed in the table below are referred to as the "Named Executive Officers."

SUMMARY COMPENSATION TABLE

|                     |                          |      |      | Annual
Compensation |         | Long Term Compensation Awards |        |  
|-------------------- | ------------------------ | ---- | ---- | ------------------- | ------- | ----------------------------- | ------ | -
|
|
|Charles M. Fernandez |                          | 2002 |      | 520,900             |         |                              |        | 
|                     | President and Chief      |      | 2001 |                     | 472,500 |                               | 50,000 |  
|                     | Executive Officer(1)     |      | 2000 |                     | 450,000 |                               |       |  
|Paul R. Thomson      |                          | 2002 |      | 287,500             |         |                              |        | 
|                     | Vice President and       |      | 2001 |                     | 262,500 |                               |       |  
|                     | Chief Financial Officer  |      | 2000 |                     | 237,500 |                               | 30,000 |  
|Bryan Subotnick      |                          | 2002 |      | 250,000             |         |                              |        | 
|                     | Executive Vice President |      | 2001 |                     | 215,000 |                               |       |  
|                     | Corporate Development    |      | 2000 |                     | 185,000 |                               | 25,000 |  

No
stock options to purchase shares of our common stock were granted to the named executive officers during fiscal year 2002.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR  AND FISCAL YEAR END OPTION VALUES

The following table sets forth the exercise of stock options during the year ended December 31, 2002, by each of the named executive officers and the
year-end value of unexercised options.

|                     |  | Shares Acquired
on Exercise(#) |  | Value
Realized($) |  | Number of
unexercised options at
fiscal year-end(#)
exercisable/unexercisable |  | value of unexercised
in-the-money options at
fiscal year-end($)
exercisable/unexercisable(1)
|-------------------- |  | ------------------------------ |  | ----------------- |  | ----------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------
|Charles M. Fernandez |  |                               |  |                  |  | 250,000/0                                                                     |  | /                                                                                         
|Paul R. Thomson      |  |                               |  |                  |  | 181,000/24,000                                                                |  | /                                                                                         
|Bryan Subotnick      |  |                               |  |                  |  | 181,000/24,000                                                                |  | /                                                                                         

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EMPLOYMENT AGREEMENTS OF NAMED EXECUTIVE OFFICERS

We have entered into employment agreements with the following named executive officers: Messrs. Charles M. Fernandez, Paul R. Thomson and Bryan Subotnick.

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EMPLOYMENT AGREEMENT WITH CHARLES M. FERNANDEZ

We are party to an employment agreement with Mr. Fernandez that provides for Mr. Fernandez's employment as President and Chief Executive Officer
through October 31, 2003. Mr. Fernandez's employment agreement provides for an annual base salary of $450,000, subject to cost of living increases in each subsequent contract year of not
less than 5% of the annual base salary in the immediate preceding year. Mr. Fernandez is entitled to participate in all benefits generally made available to senior executives and to receive
annual bonus compensation as determined by the compensation committee in its discretion. In addition, Mr. Fernandez is entitled to receive stock options to purchase up to an additional 750,000
shares of class A common stock, if certain performance targets are met and subject to certain other conditions as set forth in his employment agreement. If we terminate Mr. Fernandez's
employment without cause or upon the occurrence of a "change of control" (as defined in Mr. Fernandez's employment agreement), we will be obligated to make severance payments in an amount equal
to the greater of (i) the product of the annual base salary then in effect multiplied by two, or (ii) the net present value of the annual base salary then in effect multiplied by the
number of years remaining in the term. In addition, upon any such termination, Mr. Fernandez will automatically be vested in all stock options granted to him pursuant to his employment
agreement. During the term of the agreement and following the termination of his employment with us for any reason, Mr. Fernandez will not be permitted to engage in or have an interest in any
person or entity that engages in competition with us in any "territory" (as such term is defined in the employment agreement) in which we or any of our subsidiaries conduct business during or within
one year following the term of the agreement.

EMPLOYMENT AGREEMENT WITH PAUL R. THOMSON

We are party to an employment agreement with Mr. Thomson that provides for Mr. Thomson's employment as Vice President and Chief Financial Officer
through June 30, 2003. Mr. Thomson's employment agreement provides for an annual base salary of $250,000 for the period from July 1, 2000
through June 30, 2001 ("Year 1"), $275,000 for the period from July 1, 2001 through June 30, 2002 ("Year 2"), and $300,000 for the period from July 1, 2002 through
June 30, 2003 ("Year 3"). Mr. Thomson is entitled to participate in all benefits generally made available to senior executives and to receive annual bonus compensation subject to our
achieving certain goals established by our Compensation Committee. Such bonus compensation will be paid to Mr. Thomson as follows: $40,000 for Year 1, $50,000 for Year 2 and $60,000 for Year 3.
If we terminate Mr. Thomson's employment without cause or upon the occurrence of a "change of control" (as defined in Mr. Thomson's employment agreement), we will be obligated to make
severance payments in an amount equal to the aggregate amount of Mr. Thomson's base monthly salary for the lesser of (i) twelve months or (ii) the remaining term of his employment
pursuant to the agreement. In addition, if upon a change in control Mr. Thomson does not remain as our or our successor's Chief Financial Officer or a similar position is not created,
Mr. Thomson shall have the right, at any time within ninety (90) days following the change of control, to terminate his employment with us in which case Mr. Thomson will be
entitled to a lump sum payment equal to the net present value of the remaining term of his employment pursuant to the terms of his employment agreement. Following the termination of his employment
with us for any reason, Mr. Thomson shall not serve in any accounting or financial capacity for, or otherwise be involved in the accounting and financial functions of any radio station with a
rock-based format within 50 miles of the transmitter of any of our radio stations for a period of six months following the termination of Mr. Thomson's employment agreement.

Payments Based on Stock Options.All options to purchase shares of Big City Radio's Class A common stock awarded to
Mr. Thomson and Bryan Subotnick, Big City Radio's Executive Vice President-Corporate Development will become immediately vested upon any sale or change in control of Big City Radio. If upon any
such immediate vesting the in-the-money value of such stock options

87

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held by Mr. Thomson and Bryan Subotnick is less than the amount equal to two years of such officer's annual compensation, which is defined as the officer's gross compensation reported to the
Internal Revenue Service for the most recently completed fiscal year at the date of completion of the sale, Big City Radio would be obligated to make a cash payment equal to the difference between the
value of such in-the-money stock options and two years' annual compensation. In the case of Mr. Thomson, this payment would be in addition to any payment to which he is
entitled pursuant to his employment agreement, as described above. Because the stock options held by Mr. Thomson and Bryan Subotnick are not in the money, Big City Radio anticipates that
Mr. Thomson may be entitled to a cash payment of $589,877 and Bryan Subotnick may be entitled to a cash payment of $500,427, assuming that a sale or change in control of Big City Radio occurs
as of March 31, 2003. Bryan Subotnick is the son of Stuart Subotnick, Big City Radio's chairman of the board of directors, and of Anita Subotnick, a Big City Radio director.

Accelerated Vesting of Stock Options.The completion of the asset sales to Nassau Broadcasting, Spanish Broadcasting and
Hispanic Broadcasting and the other Big City Radio station sales would constitute a change of control for purposes of Big City Radio's stock option plans. The compensation committee of Big City
Radio's board of directors has the discretion under Big City Radio's stock option plans to approve immediate vesting of outstanding stock options to purchase Class A common stock effective upon
the occurrence of a change of control. As of the date of this report, the compensation committee has not approved immediate vesting of any stock options. Unvested stock options are held by the
following executive officers and directors: Paul Thomson (21,000 shares), Bryan Subotnick (21,000 shares), Stuart and Anita Subotnick (45,000 shares) and Silvia Kessel (10,000 shares). The exercise
prices of the foregoing options held by these executive officers and directors, which provide the holders
the right to purchase a total of 97,000 shares of Class A common stock, range from $3.4375 to $4.313 per share.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners and Management

The table presented on the following page shows information regarding the beneficial ownership of Big City Radio's two outstanding classes of voting securities as
of March 24, 2003 by:



Big
City Radio's outstanding voting securities consist of its Class A common stock and Class B common stock. As of March 24, 2003, 6,226,817 shares of Class A
common stock and 8,250,458 shares of Class B common stock were outstanding.

Stockholders
of Big City Radio are entitled to one vote for each share of Class A common stock held and to ten votes for each share of Class B common stock held. In
addition, holders of Big City Radio's Class B common stock are entitled to vote as a separate class to elect a majority of the members of Big City Radio's board of directors.

The
information presented below regarding beneficial ownership of Big City Radio's voting securities has been presented in accordance with the rules of the SEC and is not necessarily
indicative of
ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or
the

88

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power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment
power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same
securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of
shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to
which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial
owner. Except as otherwise indicated below and under applicable community property laws, Big City Radio believes that the beneficial owners of Big City Radio's common stock listed below have sole
voting and investment power with respect to the shares shown. Except as otherwise indicated below, the address for each 5% stockholder is c/o Big City Radio, Inc., 1888 Century Park East, Suite
212, Los Angeles, California 90067.

The
number of shares of Class A common stock shown as beneficially owned by a Big City Radio stockholder as of March 24, 2003 includes the number of shares of
Class A common stock the stockholder would acquire as a result of the conversion of the shares of Class B common stock beneficially owned by the stockholder as of that date. Shares of
Big City Radio's Class B common stock are convertible at any time into shares of Class A common stock on a one-for-one basis at the holder's option.

All
of the options included in the beneficial ownership of the Big City Radio directors and executive officers below are exercisable at a price equal to or greater than $3.5625 per
share.

|                                                              |  | Big City Radio Common Stock |  |      |  |          
|------------------------------------------------------------- |  | --------------------------- |  | ---- |  | ---------
|
|
|
|Directors and Executive Officers:                             |  |                             |  |      |  |          
|Charles M. Fernandez                                          |  | 530,000                     |  | 8.2  |  |         
|Michael H. Boyer                                              |  | 25,000                      |  | *    |  |         
|Silvia Kessel                                                 |  | 102,140                     |  | 1.6  |  |         
|David A. Persing                                              |  |                            |  |     |  |         
|Anita and Stuart Subotnick                                    |  | 8,424,493                   |  | 57.7 |  | 8,200,458
|Bryan Subotnick                                               |  | 195,000                     |  | 3.0  |  | 10,000   
|Paul R. Thomson                                               |  | 190,000                     |  | 3.0  |  |         
|Leonard White                                                 |  | 25,000                      |  | *    |  |         
|All directors and executive officers as a group (9 persons)   |  | 9,491,633                   |  | 61.7 |  | 8,210,458
|Other Stockholders:                                           |  |                             |  |      |  |          
|Farallon Capital Management, L.L.C & Farallon Partners L.L.C. |  | 319,000                     |  | 5.1  |  |         
|Phillip Frost, M.D                                            |  | 550,400                     |  | 8.8  |  |         
|Gilder, Gagnon, Howe & Co                                     |  | 516,575                     |  | 8.3  |  |         
|Michael Kakoyiannis                                           |  | 871,700                     |  | 14.0 |  |         
|Earle I. Mack                                                 |  | 1,465,700                   |  | 23.5 |  |         

---

89

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The
shares of Class A common stock shown as beneficially owned by Charles M. Fernandez include 250,000 shares that Mr. Fernandez has the right to purchase within
60 days after March 24, 2003 pursuant to the exercise of stock options.

The
shares of Class A common stock shown as beneficially owned by Michael H. Boyer include 25,000 shares that Mr. Boyer has the right to purchase within 60 days
after March 24, 2003 pursuant to the exercise of stock options.

The
shares of Class A common stock shown as beneficially owned by Silvia Kessel include 95,000 shares that Ms. Kessel has the right to purchase within 60 days after
March 24, 2003 pursuant to the exercise of stock options.

The
shares of Class A common stock shown as beneficially owned by each of Anita Subotnick and Stuart Subotnick include 38,300 shares of Class A common stock, 8,200,458
shares of Class B common stock beneficially owned by Mr. and Mrs. Subotnick that are convertible into shares of Class A common stock on a
one-for-one basis, 180,000 shares of Class A common stock that Mr. and Mrs. Subotnick have the right to purchase within 60 days after
March 24, 2003 pursuant to the exercise of stock options and 5,735 shares of Class A common stock held by Mr. and Mrs. Subotnick as custodian for their grandchildren's
account pursuant to the New York Uniform Gift to Minors Act. Of the shares of Class B common stock shown as beneficially owned by Mr. and Mrs. Subotnick, 2,000,000 shares are held
of record by Subotnick Partners, L.P., of which Mrs. Subotnick is general partner and Mr. Subotnick is a limited partner. Mr. and Mrs. Subotnick share voting and investment
power with respect to all of the shares shown.

The
shares of Class A common stock shown as beneficially owned by Bryan Subotnick include 10,000 shares of Class B common stock beneficially owned by Mr. Subotnick
that are convertible into shares of
Class A common stock on a one-for-one basis and a total of 185,000 shares of Class A common stock that Mr. Subotnick has the right to purchase within
60 days after March 24, 2003 pursuant to the exercise of stock options.

The
shares of Class A common stock shown as beneficially owned by Paul R. Thomson include 184,000 shares that Mr. Thomson has the right to purchase within 60 days
after March 24, 2003 pursuant to the exercise of stock options.

The
shares of Class A common stock shown as beneficially owned by Leonard White include 25,000 shares that Mr. White has the right to purchase within 60 days after
March 24, 2003 pursuant to the exercise of stock options.

The
shares shown as beneficially owned by all directors and executive officers as a group include the following: 8,210,458 shares of Class B common stock that are beneficially
owned by all directors and executive officers and that are convertible into shares of Class A common stock on a one-for-one basis; and 943,000 shares which all directors
and executive officers as a group have the right to purchase within 60 days after March 24, 2003 pursuant to the exercise of stock options.

The
information concerning Farallon Partners, L.L.C. and Farallon Capital Management, L.L.C. is based upon a statement on Schedule 13G filed with the SEC on February 6,
2003. The number of shares includes 153,700 shares held by accounts managed by Farallon Capital Management, L.L.C. and 165,300 shares held by limited partnerships for which Farallon Partners, L.L.C.
is the general partner. Farallon Capital Management, as the investment advisor to the managed accounts, may be deemed to have shared voting and investment power with respect to the 153,700 shares held
by the managed accounts. Farallon Partners, L.L.C., as the general partner of the limited partnerships, may be deemed to have shared voting and investment power with respect to the 165,300 shares held
by the limited partnerships. David I. Cohen, Joseph F. Downes, William F. Duhamel, Richard B. Fried, Monica R. Landry, William F. Mellin, Stephen L. Millham, Thomas F. Steyer and Mark C. Wehrly, as
managing members of both the general partner and the investment advisor, may be deemed to have shared voting

90

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and investment power with respect to all of such shares. Each of these persons and entities disclaims any beneficial ownership of any such shares. The address of each of these persons and entities is
c/o Farallon Capital Management, L.L.C., One Maritime Plaza, Suite 1325, San Francisco, California 94111.

The
information concerning Phillip Frost, M.D. is based upon a statement on Schedule 13G/A filed with the SEC on February 18, 2003. Dr. Frost shares voting and
investment power with respect to all of the shares shown with Frost Gamma Limited Partnership, Frost Gamma Inc., Frost Nevada Limited Partnership and Frost Nevada Corporation. As the sole
limited partner of Frost Gamma Limited Partnership and Frost Nevada Limited Partnership and the sole shareholder of Frost Gamma Inc. and Frost Nevada Corporation, Dr. Frost may be deemed
to be the beneficial owner of the shares shown. Frost Gamma Inc. is the general partner of Frost Gamma Limited Partnership and Frost Nevada
Corporation is the general partner of Frost Nevada Limited Partnership. Dr. Frost reports that record ownership of the shares shown may be transferred from time to time among any or all of the
foregoing entities. The address of Dr. Frost is 4400 Biscayne Blvd., Miami, Florida 33137.

The
information concerning Gilder, Gagnon, Howe & Co., a broker-dealer registered under Section 15 of the Exchange Act, is based upon a statement on Schedule 13G
filed with the SEC on February 15, 2000. The address of Gilder, Gagnon, Howe & Co is 1775 Broadway, 26th Floor, New York, New York 10019.

The
information concerning Michael Kakoyiannis is based upon a statement on Schedule 13G/A filed with the SEC on February 14, 2001 and subsequent Form 144 filings.
The address of Mr. Kakoyiannis is 183 Cambridge Avenue, Garden City, New York 11530.

The
information concerning Earle I. Mack is based upon a statement on Schedule 13G filed with the SEC on January 12, 2001. The address of Mr. Mack is 370 West
Passaic Street, Rochelle Park, New Jersey 07662.

Equity Compensation Plan Information

|Plan category                                              |  | Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights |  | Weighted-average exercise price of
outstanding options,
warrants and rights |      | Number of securities
Remaining available for
Future issuance under
Equity compensation plans
(excluding securities
reflected in column (a))
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | ---- | -------------------------------------------------------------------------------------------------------------------------------------------
|
|Equity compensation plans approved by security holders(1)  |  | 1,161,500                                                                                   |  | $                                                                           | 4.54 |                                                                                                                                            
|                                                           |  |                                                                                             |  |                                                                             |      |                                                                                                                                            
|Equity compensation plans not approved by security holders |  |                                                                                            |  |                                                                             |     |                                                                                                                                            
|                                                           |  |                                                                                             |  |                                                                             |      |                                                                                                                                            
|Total                                                      |  | 1,161,500                                                                                   |  | $                                                                           | 4.54 |                                                                                                                                            
|                                                           |  |                                                                                             |  |                                                                             |      |                                                                                                                                            

---

ITEM 13. Certain Relationships and Related Transactions

MANAGEMENT AGREEMENT. We receive certain legal, accounting, tax and other services from Metromedia Company for which we pay to Metromedia Company an annual
management fee. Stuart Subotnick, the Chairman of our Board of Directors, is a general partner of Metromedia

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Company. For the year ended December 31, 2002, we paid Metromedia Company a management fee of $100,000 under the management agreement.

ITEM 14. Controls and Procedures

Within the 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of management,
including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-14. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in
timely alerting them to material information relating to us (including our consolidated subsidiaries) that is required to be included in our periodic SEC reports. There have been no significant
changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date we carried out this evaluation.

ITEM 15. Principal Accountant Fees and Services

AUDIT FEES. The aggregate fees billed for professional services rendered for the audit of our annual financial statements by KPMG LLP, our principal accountant,
for fiscal year 2002 and for the reviews of the financial statements included in our Forms 10-Q for fiscal year 2002 were $153,000 and the aggregate fees billed for those services during
fiscal year 2001 were $131,500.

AUDIT-RELATED
FEES. There were no fees billed during either of the last two fiscal years by KPMG LLP for assurance or related services.

TAX
FEES. There were no fees billed during either of the last two fiscal years by KPMG LLP for professional services rendered for tax compliance, tax advice, or tax planning.

ALL
OTHER FEES. There were no other fees billed during either of the last two fiscal years for professional services rendered by KPMG LLP other than the audit fees set forth above.

The
Company's Audit Committee has not yet adopted/enacted pre-approval policies and procedures for audit and non-audit services. Therefore, the proxy disclosure
does not include pre-approval policies and procedures and related information. The Company is early-adopting components of the proxy fee disclosure requirements; the requirement does not
become effective until periodic annual filings for the first fiscal year ending after December 15, 2003.

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PART IV

ITEM 16 Exhibits, Financial Statement Schedules and Reports on Form 8-K



1.    Financial Statements

|                                                                                           |  | Page
|------------------------------------------------------------------------------------------ |  | ----
|Report of KPMG LLP, Independent Auditors                                                   |  | 43  
|Consolidated Balance Sheets as of December 31, 2001 and 2002                               |  | 44  
|Consolidated Statements of Operations for the years ended December 31, 2000, 2001 and 2002 |  | 45  
|Consolidated Statements of Cash Flows for the years ended December 31, 2000, 2001 and 2002 |  | 46  
|Consolidated Statement of Stockholders' Equity (Deficiency)                                |  | 47  
|Notes to Consolidated Financial Statements                                                 |  | 48  

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.

|Exhibit No. |  | Description of Exhibits                                                                                                                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 111/4% 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)).                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                      

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|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).                                                                                                                                                                                                                        
|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).                                                                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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|10.16 |  | Promissory Note, dated May 8, 2001, between the Company and Stuart Subotnick.                                                                                                                                                                                            
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.17 |  | Asset Purchase Agreement, dated September 4, 2001, between the Company and HBC Phoenix, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on November 15, 2001).                                                          
|10.18 |  | Assignment and Acceptance Agreement, dated October 12, 2001, between The Chase Manhattan Bank and UBS AG, Stamford Branch.                                                                                                                                               
|10.19 |  | Third Amended and Restated Credit Agreement, dated October 12, 2001, among the Company, the several lenders from time to time parties hereto, and UBS AG, Stamford Branch.                                                                                               
|10.20 |  | Asset Purchase Agreement, dated as of December 23, 2002, among the Company, Big City Radio-LA, L.L.C. and Entravision Communications Corporation (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-k
filed on January 6, 2003).        
|10.21 |  | Asset Purchase Agreement, dated as of December 30, 2002, by and among the Company, Big City RadioNY, L.L.C. and Nassau Broadcasting Holdings, Inc. (incorporated by reference to Exhibit 2.2 to the Company's Current Report on
Form 8-k filed on January 6, 2003).     
|10.22 |  | Asset Purchase Agreement, dated as of December 31, 2002, among the Company, Big City RadioCHI,L.L.C. and Spanish Broadcasting Systems of Illinois, Inc. (incorporated by reference to Exhibit 2.3 to the Company's Current Report on
Form 8-k filed on January 6, 2003).
|10.23 |  | Asset Purchase Agreement, dated as of January 2, 2003, among the Company, Big City RadioCHI,L.L.C. and HBC Illinois, Inc. (incorporated by reference to Exhibit 2.4 to the Company's Current Report on Form 8-k filed on
January 6, 2003).                              
|10.24 |  | Form of Time Brokerage Agreement, dated as of January 15, 2003, between Big City RadioLA,L.L.C. and Entravision Communications Corporation (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-k
filed on January 6, 2003).            
|10.25 |  | Time Brokerage Agreement dated as of December 31, 2002, between Spanish Broadcasting Systems of Illinois, Inc. and Big City RadioCHI, L.L.C. (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-k
filed on January 6, 2003).          
|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, 2000).                                                                                        
|24.1  |  | Power of Attorney (contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000).                                                                                                                                                   

The
registrant filed a Current Report on Form 8-K on January 6, 2003, reporting the sale of stations properties.

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.

95

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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 28th day of March, 2003.

| |  | BIG CITY RADIO, INC.
| |  | --------------------
| |  | By:                 

We,
the undersigned officers and directors of Big City Radio, Inc., hereby severally constitute David A. Persing, 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.

|Signature                                   |  | Title                                                                                              |  | Date          
|------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | --------------
|                                            |  |                                                                                                    |  |               
|/s/STUART SUBOTNICKStuart Subotnick         |  | Chairman of the Board of Directors                                                                 |  | March 28, 2003
|/s/CHARLES M. FERNANDEZCharles M. Fernandez |  | President, Chief Executive Officer and Director (Principal Executive Officer)                      |  | March 28, 2003
|/s/PAUL R. THOMSONPaul R. Thomson           |  | Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |  | March 28, 2003
|/s/ANITA SUBOTNICKAnita Subotnick           |  | Director                                                                                           |  | March 28, 2003
|/s/SILVIA KESSELSilvia Kessel               |  | Executive Vice President and Director                                                              |  | March 28, 2003
|                                            |  |                                                                                                    |  |               

---

|/s/DAVID A. PERSINGDavid A. Persing |  | Executive Vice President, General Counsel, Secretary and Director |  | March 28, 2003
|----------------------------------- |  | ----------------------------------------------------------------- |  | --------------
|/s/LEONARD L. WHITELeonard L. White |  | Director                                                          |  | March 28, 2003
|/s/MICHAEL H. BOYERMichael H. Boyer |  | Director                                                          |  | March 28, 2003

---

CERTIFICATIONS

I,
Charles M. Fernandez, Chief Executive Officer, certify that:





|                     |  |                                                                    
|-------------------- |  | -------------------------------------------------------------------
|Date: March 28, 2003 |  |                                                                    
|                     |  | /s/CHARLES M. FERNANDEZCharles M. Fernandez Chief Executive Officer

---

CERTIFICATIONS

I,
Paul R. Thomson, Chief Financial Officer, certify that:





|                     |  |                                                          
|-------------------- |  | ---------------------------------------------------------
|Date: March 28, 2003 |  |                                                          
|                     |  | /s/PAUL R. THOMSONPaul R. Thomson Chief Financial Officer

---

SCHEDULE II

BIG CITY RADIO, INC.    Valuation and Qualifying Accounts

|                                                                            |                              | Balance at
Beginning
of Period |   | Charged
to Costs and
Purchases |  | Other
Charges |         | Deductions/
Write-offs |   | Balance at
End
of Period
|--------------------------------------------------------------------------- | ---------------------------- | ------------------------------ | - | ------------------------------ |  | ------------- | ------- | ---------------------- | - | ------------------------
|Allowances for doubtful accounts, etc. (deducted from current receivables): |                              |                                |   |                                |  |               |         |                        |   |                         
|                                                                            | Year ended December 31, 2000 |                                | $ | 235,000                        |  | $             | 796,000 |                        | $ |                        
|                                                                            | Year ended December 31, 2001 |                                | $ | 338,000                        |  | $             | 704,000 |                        | $ |                        
|                                                                            | Year ended December 31, 2002 |                                | $ | 458,000                        |  | $             | 488,000 |                        | $ |                        

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Exhibit Index

|Exhibit
No. |  | Description of Exhibits                                                                                                                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 111/4% Senior Discount Note due 2005 (incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998).                                                                                                     
|10.1        |  | Big City Radio, Inc. 1997 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).                                                                                                                 
|10.2        |  | Big City Radio, Inc. 1998 Incentive Stock Plan (incorporated by reference to Appendix A to the Company's Proxy Statement for the May 12, 1998 Annual Meeting (File No. 001-13715)).                                                                                                  
|10.3        |  | Employment Agreement, between Big City Radio, Inc. and Michael Kakoyiannis (incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 333-36449)).                                                                                     
|10.4        |  | Form of Employment Agreement, between Big City Radio, Inc. and Paul R. Thomson (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-36449)
).                                                                                
|10.5        |  | Form of Employment Agreement, between Big City Radio, Inc. and Steven G. Blatter (incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-36449)
).                                                                              
|10.6        |  | Form of Employment Agreement, between Big City Radio, Inc. and Alan D. Kirschner (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 333-36449)
).                                                                              
|10.7        |  | Agreement and Plan of Merger, dated May 20, 1996, between Q Broadcasting, Inc. and Odyssey Communications, Inc. (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1
(File No. 333-36449)).                                                
|10.8        |  | Amended and Restated Credit Agreement between Big City Radio, Inc. and The Chase Manhattan Bank (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File
No. 333-36449)).                                                                
|10.9        |  | Form of Registration Rights Agreement between Big City Radio, Inc. and Michael Kakoyiannis (incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File No. 333-36449)
).                                                                    
|10.10       |  | Form of Registration Rights Agreement between Big City Radio, Inc., Stuart Subotnick and Anita Subotnick (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1 (File
No. 333-36449)).                                                       

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|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).                                                                                                                                                                                                                                 
|10.16 |  | Promissory Note, dated May 8, 2001, between the Company and Stuart Subotnick.                                                                                                                                                                                                                                                                                                                                                                    
|10.17 |  | Asset Purchase Agreement, dated September 4, 2001, between the Company and HBC Phoenix, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on November 15,
2001).                                                                                                                                                                                                                                  
|10.18 |  | Assignment and Acceptance Agreement, dated October 12, 2001, between The Chase Manhattan Bank and UBS AG, Stamford Branch.                                                                                                                                                                                                                                                                                                                       
|10.19 |  | Third Amended and Restated Credit Agreement, dated October 12, 2001, among the Company, the several lenders from time to time parties hereto, and UBS AG, Stamford Branch.                                                                                                                                                                                                                                                                       
|10.20 |  | Asset Purchase Agreement, dated as of December 23, 2002, among the Company, Big City Radio-LA, L.L.C. and Entravision Communications Corporation (incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-k filed on January 6, 2003).                                                                                                                                                                                
|10.21 |  | Asset Purchase Agreement, dated as of December 30, 2002, by and among the Company, Big City RadioNY, L.L.C. and Nassau Broadcasting Holdings, Inc. (incorporated by reference to Exhibit 2.2 to the Company's
Current Report on Form 8-k filed on January 6, 2003).                                                                                                                                                                             
|10.22 |  | Asset Purchase Agreement, dated as of December 31, 2002, among the Company, Big City RadioCHI,L.L.C. and Spanish Broadcasting Systems of Illinois, Inc. (incorporated by reference to Exhibit 2.3 to the
Company's Current Report on Form 8-k filed on January 6, 2003).                                                                                                                                                                        
|10.23 |  | Asset Purchase Agreement, dated as of January 2, 2003, among the Company, Big City RadioCHI,L.L.C. and HBC Illinois, Inc. (incorporated by reference to Exhibit 2.4 to the Company's Current Report on
Form 8-k filed on January 6, 2003).                                                                                                                                                                                                      
|10.24 |  | Form of Time Brokerage Agreement, dated as of January 15, 2003, between Big City RadioLA,L.L.C. and Entravision Communications Corporation (incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-k filed on January 6, 2003).                                                                                                                                                                                    

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|10.25 |  | Time Brokerage Agreement dated as of December 31, 2002, between Spanish Broadcasting Systems of Illinois, Inc. and Big City RadioCHI, L.L.C. (incorporated by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-k filed on January 6, 2003).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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, 2000).                                                                              
|24.1  |  | Power of Attorney (contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000).                                                                                                                                         

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