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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2007

OR



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------

For the transition period from
                     to

Commission file number 000-28395



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INTEREP NATIONAL RADIO SALES, INC.

(Exact Name of Registrant as Specified in Its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|New York                                                       |  | 13-1865151                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|100 Park Avenue, New York, New York                            |  | 10017                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

(212) 916-0700

(Registrants Telephone Number, Including Area Code)



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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  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark whether the
registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes ̈No  x

The number of shares of the registrants Common
Stock outstanding as of the close of business on May 9, 2007, was 7,571,901 shares of Class A Common Stock, and 3,723,975 shares of Class B Common Stock.



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PART I

FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share information)



|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | -------- | - | ----------------- | - | -------- | -
|                                                                                                                                                                                                                         |  | March 31, 2007 |          |   | December 31, 2006 |  
|                                                                                                                                                                                                                         |  | (unaudited)    |          |   |                   |  
|ASSETS                                                                                                                                                                                                                   |  |                |          |   |                   |   |          |  
|Current assets:                                                                                                                                                                                                          |  |                |          |   |                   |   |          |  
|Cash                                                                                                                                                                                                                     |  | $              | 6,957    |   |                   | $ | 10,426   |  
|Receivables, less allowance for doubtful accounts of $580                                                                                                                                                                |  |                | 19,070   |   |                   |   | 22,631   |  
|Representation contract buyouts receivable                                                                                                                                                                               |  |                | 863      |   |                   |   | 7,054    |  
|Current portion of deferred representation contract costs                                                                                                                                                                |  |                | 8,258    |   |                   |   | 8,654    |  
|Prepaid expenses and other current assets                                                                                                                                                                                |  |                | 1,121    |   |                   |   | 1,257    |  
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|Total current assets                                                                                                                                                                                                     |  |                | 36,269   |   |                   |   | 50,022   |  
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|Fixed assets, net                                                                                                                                                                                                        |  |                | 2,998    |   |                   |   | 3,170    |  
|Deferred representation contract costs                                                                                                                                                                                   |  |                | 15,663   |   |                   |   | 16,649   |  
|Representation contract buyouts receivable                                                                                                                                                                               |  |                | 53       |   |                   |   | 47       |  
|Investments and other assets                                                                                                                                                                                             |  |                | 3,445    |   |                   |   | 3,568    |  
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|                                                                                                                                                                                                                         |  | $              | 58,428   |   |                   | $ | 73,456   |  
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|LIABILITIES AND CAPITAL DEFICIT                                                                                                                                                                                          |  |                |          |   |                   |   |          |  
|Current liabilities:                                                                                                                                                                                                     |  |                |          |   |                   |   |          |  
|Accounts payable and accrued expenses                                                                                                                                                                                    |  | $              | 14,062   |   |                   | $ | 17,669   |  
|Accrued interest                                                                                                                                                                                                         |  |                | 2,475    |   |                   |   | 4,950    |  
|Representation contract buyouts payable                                                                                                                                                                                  |  |                | 2,187    |   |                   |   | 1,758    |  
|Accrued employee-related liabilities                                                                                                                                                                                     |  |                | 3,377    |   |                   |   | 5,297    |  
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|Total current liabilities                                                                                                                                                                                                |  |                | 22,101   |   |                   |   | 29,674   |  
|Long-term debt                                                                                                                                                                                                           |  |                | 99,000   |   |                   |   | 99,000   |  
|Representation contract buyouts payable                                                                                                                                                                                  |  |                | 767      |   |                   |   | 697      |  
|Other noncurrent liabilities                                                                                                                                                                                             |  |                | 6,698    |   |                   |   | 6,777    |  
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|Total liabilities                                                                                                                                                                                                        |  |                | 128,566  |   |                   |   | 136,148  |  
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|Capital deficit:                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|4% Series A cumulative convertible preferred stock, $0.01 par value400,000 shares authorized, 128,276 shares issued and outstanding at
March 31, 2007 and December 31, 2006) (aggregate liquidation preference$12,828) |  |                | 1        |   |                   |   | 1        |  
|Class A common stock, $0.01 par value20,000,000 shares authorized, 7,563,905 and 7,347,262 shares issued and outstanding at
March 31, 2007 and December 31, 2006                                                        |  |                | 76       |   |                   |   | 74       |  
|Class B common stock, $0.01 par value10,000,000 shares authorized, 3,731,971 and 3,948,614 shares issued and outstanding at
March 31, 2007 and December 31, 2006, convertible into Class A common stock                 |  |                | 37       |   |                   |   | 39       |  
|Additional paid-in-capital                                                                                                                                                                                               |  |                | 52,427   |   |                   |   | 52,545   |  
|Accumulated deficit                                                                                                                                                                                                      |  |                | (122,679 | ) |                   |   | (115,351 | )
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|Total capital deficit                                                                                                                                                                                                    |  |                | (70,138  | ) |                   |   | (62,692  | )
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  
|                                                                                                                                                                                                                         |  | $              | 58,428   |   |                   | $ | 73,456   |  
|                                                                                                                                                                                                                         |  |                |          |   |                   |   |          |  

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



1



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INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)



|                                                                   |  |                                      |        |   |      |   |        |  
|------------------------------------------------------------------ |  | ------------------------------------ | ------ | - | ---- | - | ------ | -
|                                                                   |  | For the Three Months Ended March 31, |       
|                                                                   |  | 2007                                 |        |   | 2006 |  
|Commission revenues                                                |  | $                                    | 13,356 |   |      | $ | 15,135 |  
|Contract termination revenue                                       |  |                                      | 739    |   |      |   | 110    |  
|                                                                   |  |                                      |        |   |      |   |        |  
|Total revenues                                                     |  |                                      | 14,095 |   |      |   | 15,245 |  
|                                                                   |  |                                      |        |   |      |   |        |  
|Operating expenses:                                                |  |                                      |        |   |      |   |        |  
|Selling expenses                                                   |  |                                      | 13,939 |   |      |   | 15,456 |  
|General and administrative expenses                                |  |                                      | 2,268  |   |      |   | 2,782  |  
|Depreciation and amortization expense                              |  |                                      | 2,449  |   |      |   | 3,547  |  
|                                                                   |  |                                      |        |   |      |   |        |  
|Total operating expenses                                           |  |                                      | 18,656 |   |      |   | 21,785 |  
|                                                                   |  |                                      |        |   |      |   |        |  
|Operating loss                                                     |  |                                      | (4,561 | ) |      |   | (6,540 | )
|Net undistributed earnings of equity investee                      |  |                                      |       |   |      |   | 93     |  
|Interest expense, net                                              |  |                                      | (2,544 | ) |      |   | (2,541 | )
|                                                                   |  |                                      |        |   |      |   |        |  
|Loss before income taxes                                           |  |                                      | (7,105 | ) |      |   | (8,988 | )
|Income taxes                                                       |  |                                      | 223    |   |      |   | 82     |  
|                                                                   |  |                                      |        |   |      |   |        |  
|Net loss                                                           |  |                                      | (7,328 | ) |      |   | (9,070 | )
|Preferred stock dividend                                           |  |                                      | 128    |   |      |   | 123    |  
|                                                                   |  |                                      |        |   |      |   |        |  
|Net loss applicable to common shareholders                         |  | $                                    | (7,456 | ) |      | $ | (9,193 | )
|                                                                   |  |                                      |        |   |      |   |        |  
|Basic and diluted loss per share applicable to common shareholders |  | $                                    | (0.66  | ) |      | $ | (0.81  | )
|                                                                   |  |                                      |        |   |      |   |        |  

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



2



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INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



|                                                                            |  |                                     |        |   |      |   |        |  
|--------------------------------------------------------------------------- |  | ----------------------------------- | ------ | - | ---- | - | ------ | -
|                                                                            |  | For the Three MonthsEnded March 31, |       
|                                                                            |  | 2007                                |        |   | 2006 |  
|Cash flows from operating activities:                                       |  |                                     |        |   |      |   |        |  
|Net loss                                                                    |  | $                                   | (7,328 | ) |      | $ | (9,070 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                     |        |   |      |   |        |  
|Depreciation and amortization                                               |  |                                     | 2,449  |   |      |   | 3,547  |  
|Amortization of renewal payments                                            |  |                                     | 398    |   |      |   | 57     |  
|Net undistributed earnings of equity investee                               |  |                                     |       |   |      |   | (93    | )
|Non-cash compensation expense                                               |  |                                     | 10     |   |      |   | 18     |  
|Changes in assets and liabilities:                                          |  |                                     |        |   |      |   |        |  
|Receivables                                                                 |  |                                     | 3,561  |   |      |   | 4,394  |  
|Representation contract buyouts receivable                                  |  |                                     | 6,185  |   |      |   | 3,633  |  
|Prepaid expenses and other current assets                                   |  |                                     | 136    |   |      |   | (282   | )
|Other noncurrent assets                                                     |  |                                     | (31    | ) |      |   | (61    | )
|Accounts payable and accrued expenses                                       |  |                                     | (3,735 | ) |      |   | (3,438 | )
|Accrued interest                                                            |  |                                     | (2,475 | ) |      |   | (2,474 | )
|Accrued employee-related liabilities                                        |  |                                     | (1,920 | ) |      |   | (1,690 | )
|Other noncurrent liabilities                                                |  |                                     | (79    | ) |      |   | 486    |  
|                                                                            |  |                                     |        |   |      |   |        |  
|Net cash used in operating activities                                       |  |                                     | (2,829 | ) |      |   | (4,973 | )
|                                                                            |  |                                     |        |   |      |   |        |  
|Cash flows from investing activities:                                       |  |                                     |        |   |      |   |        |  
|Additions to fixed assets                                                   |  |                                     | (19    | ) |      |   | (63    | )
|                                                                            |  |                                     |        |   |      |   |        |  
|Net cash used in investing activities                                       |  |                                     | (19    | ) |      |   | (63    | )
|                                                                            |  |                                     |        |   |      |   |        |  
|Cash flows from financing activities:                                       |  |                                     |        |   |      |   |        |  
|Station representation contract payments                                    |  |                                     | (621   | ) |      |   | (748   | )
|Gross borrowings on credit facility                                         |  |                                     |       |   |      |   | 7,549  |  
|Gross repayments on credit facility                                         |  |                                     |       |   |      |   | (4,436 | )
|                                                                            |  |                                     |        |   |      |   |        |  
|Net cash (used in) provided by financing activities                         |  |                                     | (621   | ) |      |   | 2,365  |  
|                                                                            |  |                                     |        |   |      |   |        |  
|Net decrease in cash and cash equivalents                                   |  |                                     | (3,469 | ) |      |   | (2,671 | )
|Cash and cash equivalents, beginning of period                              |  |                                     | 10,426 |   |      |   | 6,928  |  
|                                                                            |  |                                     |        |   |      |   |        |  
|Cash and cash equivalents, end of period                                    |  | $                                   | 6,957  |   |      | $ | 4,257  |  
|                                                                            |  |                                     |        |   |      |   |        |  
|Supplemental disclosures of cash flow information:                          |  |                                     |        |   |      |   |        |  
|Cash paid during the period for:                                            |  |                                     |        |   |      |   |        |  
|Interest                                                                    |  | $                                   | 5,003  |   |      | $ | 4,956  |  
|Income taxes                                                                |  |                                     | 508    |   |      |   | 82     |  
|Non-cash investing and financing activities:                                |  |                                     |        |   |      |   |        |  
|Station representation contracts acquired                                   |  | $                                   | 1,121  |   |      | $ | 8      |  
|Preferred stock dividend                                                    |  |                                     | 128    |   |      |   | 123    |  

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



3



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INTEREP NATIONAL RADIO SALES, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(in thousands,
except share information)

1. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Interep
National Radio Sales, Inc., together with its subsidiaries (collectively, we or us), and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. All significant intercompany transactions and
balances have been eliminated.

The consolidated financial statements as of March 31, 2007 are unaudited; however, in the opinion of
management, such statements include all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for the periods presented. The interim financial statements should be read in conjunction with the audited
financial statements and notes thereto included in our Consolidated Financial Statements for the year ended December 31, 2006, which are available upon request, at our website, www.interep.com, or at the Securities and Exchange Commission
website, www.sec.gov. Due to the seasonal nature of our business, the results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending
December 31, 2007.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Allowance for doubtful accounts

We provide an
allowance for doubtful accounts equal to our estimated uncollectible accounts receivable. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customers
trade accounts receivable. We write off uncollectible accounts after we have exhausted all avenues of collection.

Revenue Recognition

We are a national representation firm serving radio broadcast clients and certain television stations and internet service providers throughout the
United States. Commission revenues are derived from sales of advertising time for radio stations and television stations under representation contracts. Commissions and fees are recognized in the month the advertisement is broadcast. In connection
with our unwired radio network business, we collect fees for unwired network radio advertising and, after deducting our commissions, remit the fees to the respective radio stations. In instances when we are not legally obligated to pay a station or
service provider until the corresponding receivable is paid, fees payable to stations have been offset against the related receivable from advertising agencies in the accompanying consolidated balance sheets. We record all commission revenues on a
net basis. Commissions are recognized based on the standard broadcast calendar that ends on the last Sunday in each reporting period. The broadcast calendar for the three months ended March 31, 2007 had 12 weeks, while the broadcast calendar
for the three months ended March 31, 2006 had 13 weeks. Some broadcast calendar quarters, such as the third quarter of 2007 have 14 weeks.



4



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INTEREP NATIONAL RADIO SALES, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Representation Contract Termination Revenue and Contract Acquisition Costs

Our station representation contracts have stated initial terms, and thereafter usually renew automatically from year to year unless either party provides
written notice of termination at least twelve months prior to the next automatic renewal date. In accordance with industry practice, in lieu of termination, an arrangement is normally made for the purchase of such contracts by a successor
representative firm. The purchase price paid by the successor representation firm is generally based upon historic commission income projected over the remaining contract period plus two months. Income earned from the sale of station representation
contracts (contract termination revenue) is recognized on the effective date of the buyout agreement. Costs of obtaining station representation contracts are deferred and amortized over the life of the new contract. Such amortization is included in
the accompanying consolidated statements of operations as a component of depreciation and amortization expense. Amounts which are to be amortized during the next year are included as current assets in the accompanying consolidated balance sheets. We
review the realizability of these deferred costs on a quarterly basis. From time to time, we have paid inducements to extend the life of contracts with our radio groups. These inducement payments are recorded as deferred costs and expensed in the
period benefited.

Loss Per Share

Basic loss per share applicable to common shareholders for each of the respective periods has been computed by dividing the net loss by the weighted average number of common shares outstanding during the period, amounting to 11,295,876 for
both the three months ended March 31, 2007 and 2006. Diluted loss per share would reflect the potential dilution that could occur if the outstanding options to purchase common stock were exercised. For the three months ended March 31, 2007
and 2006, the exercise of outstanding options would have an antidilutive effect and therefore have been excluded from the calculation. Shares issuable under options that have not been included in the fully diluted loss per share calculation because
of their antidilutive effect were 4,163,687 and 4,210,785 at March 31, 2007 and 2006.

Restructuring and Severance Charges

In 2007, we continued to offer an early retirement program, which was accepted by 4 employees, to reduce compensation costs on a going forward basis. We
accrued $420 in the first quarter of 2007 for the 4 terminations. In accordance with Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal Activities,we recorded
this liability at fair value as of the time the liability was incurred. At December 31, 2006, the accompanying consolidated balance sheets include accruals relating to the restructuring program of $5,888. We paid approximately $1,385 and $842
of termination benefits during the three months ended March 31, 2007 and 2006, and accreted approximately $60 and $35 of interest expense. As of March 31, 2007, the remaining accrual related to the restructuring program was $4,983, of
which $2,335 is included in accrued employee related liabilities and $2,648 is included in other noncurrent liabilities.

Stock-Based Compensation

Effective January 1, 2006, we adopted SFAS No. 123(R), Share-Based Payment (SFAS No. 123R), using the
modified prospective application transition method. As described in Note 1 of the December 31, 2006 Consolidated Financial Report, SFAS No. 123R revises SFAS No. 123, Accounting for Stock-Based Compensation (SFAS
No. 123). Under the modified prospective method, we have recorded compensation cost for the unvested portion of previously issued awards that remain outstanding at the initial date of adoption (using the amounts previously measured under
SFAS No. 123 for pro forma disclosure purposes). Since we have chosen the modified prospective application transition method, the financial statements for the prior interim period have not been restated.



5



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INTEREP NATIONAL RADIO SALES, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)



SFAS No. 123R requires us to estimate forfeitures in calculating the expense relating to
stock-based compensation as opposed to recognizing these forfeitures and the corresponding reduction in expense as they occur. In addition, SFAS No. 123R requires the Company to reflect the tax savings resulting from tax deductions in excess of
compensation expense reflected in its financial statements as a cash inflow from financing activities in its statement of cash flows rather than as an operating cash flow as in prior periods.

The fair value of each stock option granted during the three months ended March 31, 2006 was estimated at the date of grant using a Black-Scholes
option pricing model based on the assumptions of expected volatility of 262%, expected dividend yield of 0%, expected term of 5 years and a risk-free interest rate of 3.25%. The expected volatility is based on our consideration of the historical
volatility of our stock based on our historical stock prices. The expected term of an option is based on our historical review of employee exercise behavior based on the employee class (executive or non-executive) and based on our consideration
of the remaining contractual term if limited exercise activity existed for a certain employee class. The risk-free interest rate is the constant maturity interest rate for U.S. Treasury instruments with terms consistent with the expected lives of
the awards.

A summary of stock option activity as of March 31, 2007 and changes during the three months ended March 31, 2007 is
presented below (in thousands except share and per share amounts):



|                                       |  |                 |   |  |                                |      |                                                  |     |                          |   |  
|-------------------------------------- |  | --------------- | - |  | ------------------------------ | ---- | ------------------------------------------------ | --- | ------------------------ | - | -
|                                       |  | Number ofShares |   |  | Weighted-AverageExercise Price |      | Weighted-AverageRemainingContractualTerm (Years) |     | AggregateIntrinsic Value
|Options Outstanding at January 1, 2007 |  | 4,173,385       |   |  | $                              | 2.00 |                                                  |    |                          | $ | 5
|Granted                                |  |                |   |  |                                |     |                                                  |    |                          |   | 
|Exercised                              |  |                |   |  |                                |     |                                                  |    |                          |   | 
|Cancelled                              |  | (9,700          | ) |  |                                | 2.81 |                                                  |    |                          |   | 
|                                       |  |                 |   |  |                                |      |                                                  |     |                          |   |  
|Options Outstanding at March 31, 2007  |  | 4,163,685       |   |  | $                              | 2.00 |                                                  | 5.8 |                          | $ | 5
|                                       |  |                 |   |  |                                |      |                                                  |     |                          |   |  
|Exercisable at March 31, 2007          |  | 4,140,351       |   |  | $                              | 2.01 |                                                  | 5.7 |                          | $ | 4
|                                       |  |                 |   |  |                                |      |                                                  |     |                          |   |  

A summary of stock option activity as of March 31, 2006 and changes during the three months
ended March 31, 2006 is presented below (in thousands except share and per share amounts):



|                                       |  |                 |   |  |                                |      |                                                  |     |                          |  
|-------------------------------------- |  | --------------- | - |  | ------------------------------ | ---- | ------------------------------------------------ | --- | ------------------------ | -
|                                       |  | Number ofShares |   |  | Weighted-AverageExercise Price |      | Weighted-AverageRemainingContractualTerm (Years) |     | AggregateIntrinsic Value
|Options Outstanding at January 1, 2006 |  | 4,508,885       |   |  | $                              | 2.00 |                                                  |    |                          | 
|Granted                                |  | 20,000          |   |  |                                | 0.36 |                                                  |    |                          | 
|Exercised                              |  |                |   |  |                                |     |                                                  |    |                          | 
|Cancelled                              |  | (318,100        | ) |  |                                | 1.86 |                                                  |    |                          | 
|Options Outstanding at March 31, 2006  |  | 4,210,785       |   |  | $                              | 2.00 |                                                  | 6.7 |                          | 
|                                       |  |                 |   |  |                                |      |                                                  |     |                          |  
|Exercisable at March 31, 2006          |  | 4,155,783       |   |  | $                              | 2.02 |                                                  | 6.7 |                          | 
|                                       |  |                 |   |  |                                |      |                                                  |     |                          |  



6



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INTEREP NATIONAL RADIO SALES, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The weighted average grant-date fair value of stock options granted during the three months ended
March 31, 2006 was $0.31.

As of March 31, 2007 and 2006, we had $7 and $51, respectively, of total unrecognized stock-based
compensation expense related to stock options that is expected to be recognized over a weighted average period of 0.5 and 1.3 years, respectively.

New
Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued SFAS Interpretation
No. 48, Accounting for Uncertainty in Income Taxesan interpretation of SFAS Statement No. 109 (FIN 48), and effective January 1, 2007, we adopted FIN 48. FIN 48 applies to all tax positions
accounted for under SFAS 109. FIN 48 refers to tax positions as positions taken in a previously filed tax return or positions expected to be taken in a future tax return which are reflected in measuring current or deferred income tax
assets and liabilities reported in the financial statements. FIN 48 further clarifies a tax position to include, but not limited to, the following:



| |  |  | an allocation or a shift of income between taxing jurisdictions
| | - |  | ---------------------------------------------------------------



| |  |  | the characterization of income or a decision to exclude reporting taxable income in a tax return, or
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | a decision to classify a transaction, entity, or other position in a tax return as tax exempt.
| | - |  | ----------------------------------------------------------------------------------------------

FIN 48 clarifies that a tax benefit may be reflected in the financial statements only if it is more likely than not that a company will be
able to sustain the tax return position, based on its technical merits. If a tax benefit meets this criterion, it should be measured and recognized based on the largest amount of benefit that is cumulatively greater than 50% likely to be realized.
This is a change from occurring practice, whereby companies may recognize a tax benefit only if it is probable a tax position will be sustained.

FIN 48 also requires that we make qualitative and quantitative disclosures, including a discussion of reasonably possible changes that might occur in unrecognized tax benefits over the next 12 months; a description of open tax years by
major jurisdictions and a roll-forward of all unrecognized tax benefits, presented as a reconciliation of the beginning and ending balances of the unrecognized tax benefits on an aggregated basis.

We are subject to tax audits in the U.S. Tax audits by their very nature are often complex and can require several years to complete. Information
relating to our tax examinations by jurisdiction is as follows:



| |  |  | FederalWe are subject to U.S. federal tax examinations by tax authorities for the tax years ended 2003 to 2006.
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | StateWe are subject to state tax examinations by tax authorities for the tax years ended 2003 to 2006.
| | - |  | -------------------------------------------------------------------------------------------------------

The adoption of FIN 48 did not have a material impact on our financial statements or disclosures. As of January 1, 2007 and March 31, 2007 we
did not recognize any assets or liabilities for unrecognized tax benefits relative to uncertain tax positions. We do not currently anticipate that any significant increase or decrease to the gross unrecognized tax benefits will be recorded during
the next 12 months. Any interest or penalties resulting from examinations will continue to be recognized as a component of the income tax provision, however, since there are no unrecognized tax benefits as a result of tax positions taken, there
are no accrued interest and penalties.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159



7



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INTEREP NATIONAL RADIO SALES, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)



permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. We do not expect the adoption of SFAS No. 159 to have a material impact on our financial position or results of operations.

In March 2007, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 06-10 Accounting for Deferred Compensation and Postretirement
Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements (EITF 06-10). EITF 06-10 requires that an employer recognize a liability for the postretirement benefit obligation related to a collateral assignment
arrangementin accordance with SFAS No. 106 Employers Accounting for Postretirement Benefits Other Than Pensions (SFAS 106) (if deemed part of a postretirement plan) or Accounting Principles Board Opinion 12 Omnibus
Opinion-1967 (APB 12) (if not part of a plan). The consensus is applicable if, based on the substantive agreement with the employee, the employer has agreed to (a) maintain a life insurance policy during the postretirement period or
(b) provide a death benefit. The EITF also reached a consensus that an employer should recognize and measure the associated asset on the basis of the terms of the collateral assignment arrangement. We are required to adopt EITF 06-10 effective
January 1, 2008. We are currently assessing the impact of this EITF Issue.

Reclassification

Certain reclassifications have been made to prior period financial statements to conform to the current periods presentation.

2. Stock-Based Employee Compensation

On
January 2, 2006, we granted 20,000 options to an executive at an exercise price of $0.36, which was the fair market value at the date of grant. These options were fully vested on the date of grant. See Note 1 above for additional information on
Stock-based employee compensation. There were no options granted in the first quarter of 2007.

3. Capital Deficit

In May 2002, we amended our restated certificate of incorporation for the purpose of establishing a series of preferred stock referred to as the Series A
Convertible Preferred Stock (the Series A Stock), with the authorization to issue up to 400,000 shares. The Series A Stock has a face value of $100 per share and a liquidation preference in such amount in priority over our Class A
and Class B common stock. Each share of the Series A Stock may be converted at the option of the holder at any time into 25 shares of Class A common stock at an initial conversion price of $4.00 per share (subject to anti-dilution adjustments).
If the market price of our Class A common stock is $8.00 or more for 30 consecutive trading days, the Series A Stock will automatically be converted into shares of Class A common stock at the then applicable conversion price. The Series A
Stock bears a 4% annual cumulative dividend that may be paid in cash or in kind (in additional shares of the Series A Stock) at our discretion. We expect to pay such dividends in kind for the foreseeable future. Holders of shares of the Series A
Stock vote on most matters on an as converted basis, together with the holders of Class A and Class B common stock. During 2002, we completed a series of private placements to issue 110,000 units for an aggregate purchase price of
$11,000. Each unit consists of one share of Series A Stock and 6.25 warrants to acquire an equal number of shares of Class A common stock. The warrants are exercisable at any time from the date of grant and expire at various times in 2007. We
allocated the net proceeds of approximately $10,230 from the sale of Series A Stock between the convertible preferred stock and the warrants, both of which are classified in additional paid in capital. We incurred approximately $770 in legal and
other costs directly related to the private placements. A stock dividend for the Series A Stock in the amount of 4,934 was paid as of May 1, 2006.



8



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INTEREP NATIONAL RADIO SALES, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Each share of Class B common stock is convertible into one share of Class A common stock at the
option of the holder or automatically under certain circumstances. Each share of the Class B common stock is entitled to 10 votes per share in all matters presented to the shareholders, except for certain amendments to the Restated Certificate of
Incorporation, certain going private transactions and as otherwise required by applicable law. The shares of Class A common stock are entitled to one vote per share on all matters.

4. Long-Term Debt

Long-term debt at March 31,
2007 was comprised of $99,000 in 10.0% Senior Subordinated Notes due July 1, 2008 (the Notes). As of March 31, 2007, there was no outstanding balance on the $10,000 senior secured revolving credit facility, as described below.

The Notes are general unsecured obligations of the Company, and the indenture for the Notes provides, among other things, restrictions on
incurring additional indebtedness, payment of dividends, repurchase of equity interests (as defined), creation of liens (as defined), transactions with affiliates (as defined), sales of assets or certain mergers and consolidations. Management
believes that we are in compliance with these covenants. The Notes bear interest at the rate of 10.0% per annum, payable semiannually on January 1 and July 1. The Notes are subject to redemption at the option of the Company, in whole
or in part. All of our subsidiaries are guarantors of the Notes. Each guarantee is full, unconditional and joint and several with the other guarantees. We have no other assets or operations separate from our investment in the subsidiaries.

We capitalized $4,689 of costs incurred in the offering of the Notes which is being amortized over the ten year life of the Notes. At
March 31, 2007, the remaining balance is $585.

We have a $10,000 senior secured revolving credit facility with Commerce Bank, N.A.
that enables us to efficiently manage our cash, as we may borrow, repay and re-borrow funds as needed. The term of the credit facility expires on December 31, 2007. The credit facility is secured by a first priority lien on all of our and our
subsidiaries property and assets, tangible and intangible. Interest is payable monthly on the borrowings at rates based on either a prime rate or LIBOR, plus a premium of 1% for prime rate borrowings, and 4% for LIBOR borrowings. In addition
to covenants similar to those in the indenture governing the Notes, the credit facility requires, among other things, that we (i) maintain certain 12-month trailing Operating EBITDA levels (Operating EBITDA, defined in the Loan and
Security Agreement for any period as: (a) Net Income (Loss), plus (b) all taxes on income plus state and local franchise and corporation taxes paid by the Borrower and any of its Subsidiaries plus (c) all interest expense deducted in
determining such Net Income, plus (d) all depreciation and amortization expense and other non-cash charges (including, without limitation, non-cash charges resulting from the repricing of employee stock options), plus (e) severance costs
expensed but not yet paid in cash, less (f) extraordinary gains, plus (g) extraordinary losses, less (h) Contract Termination Revenue, but plus Contract Termination Revenue received in cash and (i) less Contract Acquisition
Payments, in each case for such period, in each case in connection with Borrower and its Subsidiaries, on a consolidated basis); (ii) have a certain minimum accounts receivable balance as of the end of each quarter; (iii) have not less
than $200,000 of representation contract value (as defined) as of the end of each quarter; and (iv) have not less than $2,000 of cash and cash equivalents as of the end of each quarter. Management believes that we are in compliance with these
covenants. We incurred approximately $500 in legal and other costs directly related to the revolving credit facility and an additional $200 of such costs related to an amendment of the revolving credit facility in July 2005, which are being
amortized as interest expense over the life of the extended facility. Substantially all of our subsidiaries, jointly, severally and unconditionally guarantee the credit facility. At March 31, 2007, we had $10,000 available under our credit
facility.



9



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INTEREP NATIONAL RADIO SALES, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The amendment was entered into on July 21, 2005. The principal change effected by it was to
extend the term of our revolving credit facility from September 25, 2006 through December 31, 2007. The amendment also revised certain of the financial covenants to more appropriately reflect our current business operations and it revised
the definition of Operating EBITDA to read as set forth above.

5. Commitments and Contingencies

We are involved in various legal actions from time to time arising in the normal course of business. In the opinion of management, there are no matters
outstanding that would have a material adverse effect on the consolidated financial position or results of our operations.

We maintain
some of our cash in bank deposit accounts, money market funds and certificates of deposits, which at March 31, 2007 exceeded federally insured limits by approximately $6,121. These accounts are maintained in high credit quality financial
institutions in order to reduce the risk of potential losses. We have not experienced any losses in these accounts.

6. Subsequent Events

As previously disclosed in our 2006 Annual Report on Form 10-K, in February 2007, David Kennedy was appointed as our Chief Executive
Officer and Vice Chairman of the Board. Mr. Kennedy has over 35 years of experience in the radio industry, most recently as the President and CEO of Susquehanna Media Co., a position he held since December 2004. Mr. Kennedy succeeded Ralph
C. Guild as our Chief Executive Officer. At the request of the Board, effective April 1, 2007, Mr. Guild retired from that position and will continue to act as Chairman of the Board of Directors, now a non-executive position.
Mr. Guild will receive severance compensation in accordance with the provisions of his employment contract. The present value severance costs of approximately $6,400 related to Mr. Guilds termination of employment will be expensed in
the second quarter of 2007 and paid through February 2012.



10



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|Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

The following discussion should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, included elsewhere in this
Report.

Throughout this Quarterly Report, when we refer to Interep or the Company, we refer collectively to
Interep National Radio Sales, Inc. and all of our subsidiaries unless the context indicates otherwise or as otherwise noted.

Important Note Regarding
Forward Looking Statements

Some of the statements made in this Quarterly Report are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These statements are not statements of historical fact, but instead represent our belief about future events. In some cases, you can identify forward-looking statements by terminology
such as may, will, should, expects, plans, anticipates, believes, estimates, predicts, potential, continue, or the
negative of these terms or other comparable terminology. These statements are based on many assumptions and involve known and unknown risks and uncertainties that are inherently uncertain and beyond our control. These risks and uncertainties may
cause our or our industrys actual results, levels of activity, performance or achievements to be materially different than any expressed or implied by these forward-looking statements. Although we believe that the expectations in the
forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should review the factors noted in Managements Discussion and Analysis of Financial Condition and Results of
OperationCertain Factors That May Affect Our Results of Operations below for a discussion of some of the things that could cause actual results to differ from those expressed in our forward-looking statements.

Overview

We derive a substantial majority of our
revenues from commissions on sales of national spot radio advertising airtime for the radio stations we represent. Generally, advertising agencies or media buying services retained by advertisers purchase national spot advertising time. We receive
commissions from our client radio stations based on the national spot radio advertising billings of the station, net of agency commissions, generally 15%. We enter into written representation contracts with our clients, which include negotiated
commission rates. Because commissions are based on the prices paid to radio stations for spots, our revenue base is essentially adjusted for inflation.

Our operating results generally depend on:



| |  |  | changes in advertising expenditures;
| | - |  | ------------------------------------



| |  |  | increases and decreases in the size of the total national spot radio advertising market;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | changes in our share of this market;
| | - |  | ------------------------------------



| |  |  | acquisitions and terminations of representation contracts; and
| | - |  | --------------------------------------------------------------



| |  |  | operating expense levels.
| | - |  | -------------------------

The
effect of these factors on our financial condition and results of operations varies from period to period.

A number of factors influence
the performance of the national spot radio advertising market, including, but not limited to, general economic conditions, consumer attitudes and spending patterns, the amount spent on advertising generally, the share of total advertising spent on
radio and the share of total radio advertising represented by national spot radio.



11



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Our share of the national spot advertising market changes as a result of increases and decreases in the
amount of national spot advertising broadcast by our clients. Moreover, our market share increases as we acquire representation contracts with new client stations and decreases if current client representation contracts are terminated. Thus, our
ability to attract new clients and to retain existing clients affects our market share.

The value of representation contracts that have
been acquired or terminated during the last few years has tended to increase due to a number of factors, including the consolidation of ownership in the radio broadcast industry following the passage of the Telecommunications Act of 1996. In the
period following that legislation, we increased our representation contract acquisition activity and devoted a significant amount of our resources to these acquisitions. We base our decisions to acquire a representation contract on the market share
opportunity presented and an analysis of the costs and net benefits to be derived. We continuously seek opportunities to acquire additional representation contracts on attractive terms, while maintaining our current clients. Our ability to acquire
and maintain representation contracts has had, and will continue to have, a significant impact on our revenues and cash flows.

We
recognize revenues on a contract termination as of the effective date of the termination, except in the case of a material dispute. In that event, revenue is recognized when the dispute is resolved. When a contract is terminated, we write off in
full the unamortized portion, if any, of the cost we originally incurred on our acquisition of the contract. When we enter into a representation contract with a new client, we amortize the contract acquisition cost in equal monthly installments over
the life of the new contract. As a result, our operating income is affected, negatively or positively, by the acquisition or loss of client stations. We are unable to forecast any trends in contract buyout activity, or in the amount of revenues or
expenses that will likely be associated with buyouts during a particular period. Generally, the amount of revenue resulting from the buyout of a representation contract depends on the length of the remaining term of the contract and the revenue
generated under the contract during the 12-month trailing period preceding the date of termination. The amount recognized by us as contract termination revenue in any period is not, however, indicative of contract termination revenue
that may be realized in any future period. Historically, the level of buyout activity has varied from period to period. Additionally, the length of the remaining terms, and the commission revenue generation, of the contracts which are terminated in
any period vary to a considerable extent. Accordingly, while buyout activity and the size of buyout payments generally increased after 1996, their impact on our revenues and income is expected to be uncertain, due to the variables of contract length
and commission generation.

Similar to radio representation, we sell advertising on behalf of Internet website clients. Revenues and
expenses from this portion of our business are affected generally by the level of advertising on the Internet, and the portion of that advertising that we can direct to our clients websites, the prices obtained for advertising on the Internet
and our ability to obtain contracts from high-traffic Internet websites and from Internet advertisers. See a further discussion of our Internet investments in Liquidity and Capital Resources, below.

In November 2005, we entered into the television representation business by organizing Azteca America Spot Television Sales, Inc. (Azteca
Television Sales), a dedicated television representation company for the Azteca America network. As with radio representation, we sell advertising on behalf of our television clients.

Our selling and corporate expense levels are dependent on management decisions regarding operating and staffing levels and inflation. Selling expenses
represent all costs associated with our marketing, sales and sales support functions. Corporate expenses include items such as corporate management, corporate communications, financial services, advertising and promotion expenses and employee
benefit plan contributions.

Our business generally follows the pattern of advertising expenditures. It is seasonal to the extent that
radio advertising spending increases during the fourth calendar quarter in connection with the Christmas season and tends to be weaker during the first calendar quarter. Radio advertising also generally increases during the second and third quarters
due to holiday-related advertising, school vacations and back-to-school sales. Additionally, radio tends to experience increases in the amount of advertising revenues as a result of special events such as



12



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political election campaigns. Furthermore, the level of advertising revenues of radio stations, and therefore our level of revenues, is susceptible to
prevailing general and local economic conditions and the corresponding increases or decreases in the budgets of advertisers, as well as market conditions and trends affecting advertising expenditures in specific industries.

Results of Operations

Three Months Ended March 31, 2007
Compared to Three Months Ended March 31, 2006

Commission revenues. Commission revenues for the first quarter of 2007
decreased to $13.4 million from $15.1 million for the first quarter of 2006, or approximately 11.8%. The majority of this $1.7 million decrease is attributable to the termination of our rep contract with the former Susquehanna stations after their
acquisition by Cumulus Broadcasting in 2006 and a 12-week broadcast calendar quarter in 2007 as compared to a 13-week broadcast calendar quarter in 2006.

Contract termination revenue. Contract termination revenue of $0.7 million for the first quarter of 2007 increased $0.6 million, from $0.1 million in the comparable period of 2006.

Selling expenses. Selling expenses for the first quarter of 2007 decreased to $13.9 million from $15.5 million in the first quarter of 2006. The
$1.6 million, or 9.8%, decrease was, in large part, attributable to lower compensation costs in 2007 as compared to 2006 resulting from the effect of severance programs implemented in 2006 and 2007 and lower severance costs than in 2006.

General and administrative expenses. General and administrative expenses for the first quarter of 2007 decreased to $2.3 million for the first
quarter of 2007 from $2.8 million in the first quarter of 2006. The $0.5 million, or 18.5%, decrease was due to lower legal expenses, as 2006 expenses were higher due to an unconsummated transaction with Oaktree Capital Management in that period.

Operating loss before depreciation and amortization. For the first three months of 2007, we had an operating loss before
depreciation and amortization of $2.1 million as compared to $3.0 million for the comparable period of 2006, a decrease of $0.9 million, for the reasons discussed above. Included in operating income before depreciation and amortization in 2007 was
$0.7 million of non-recurring contract termination revenue as compared to contract termination revenue of $0.1 million in 2006. Operating (loss) income before depreciation and amortization is not a measure of performance calculated in accordance
with Generally Accepted Accounting Principles (GAAP) and should not be considered in isolation from or as a substitute for operating income (loss), net income (loss), cash flow or other GAAP measurements. We believe it is useful in
evaluating our performance, in addition to the GAAP data presented, as it is commonly used by lenders and the investment community to evaluate the performance of companies in our industry.

Reconciliation of net loss to operating loss before depreciation and amortization



|                                                    |  |                        |        |   |               |   |        |  
|--------------------------------------------------- |  | ---------------------- | ------ | - | ------------- | - | ------ | -
|                                                    |  | March 31,2007          |        |   | March 31,2006 |  
|                                                    |  | (dollars in thousands) |       
|Net loss                                            |  | $                      | (7,328 | ) |               | $ | (9,070 | )
|Add back:                                           |  |                        |        |   |               |   |        |  
|Depreciation and amortization                       |  |                        | 2,449  |   |               |   | 3,547  |  
|Tax provision                                       |  |                        | 223    |   |               |   | 82     |  
|Net undistributed income of equity investee         |  |                        |       |   |               |   | (93    | )
|Interest expense, net                               |  |                        | 2,544  |   |               |   | 2,541  |  
|                                                    |  |                        |        |   |               |   |        |  
|Operating loss before depreciation and amortization |  | $                      | (2,112 | ) |               | $ | (2,993 | )
|                                                    |  |                        |        |   |               |   |        |  



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Depreciation and amortization expense. Depreciation and amortization expense decreased $1.1
million, or 31.0%, during the first quarter of 2007, to $2.4 million from $3.5 million in the first quarter of 2006. This decrease was primarily the result of lower contract acquisition cost amortization in 2007.

Operating loss. Operating loss decreased by $1.9 million, or 30.2%, for the first quarter of 2007 to $4.6 million, as compared to $6.5 million for
the first quarter of 2006, for the reasons discussed above.

Interest expense, net. Interest expense, net, of $2.5 million in the
first quarter 2007 was essentially the same as in the comparable period of 2006.

Provision for income taxes. Our current and
deferred income taxes, and associated valuation allowances, are affected by events and transactions arising in the normal course of business as well as in connection with special and non-recurring items. Assessment of the appropriate amount and
classification of income taxes is dependent on several factors, including estimates of the timing and realization of deferred income tax assets and the timing of income tax payments. Actual collections and payments may differ from these estimates as
a result of changes in tax laws as well as unanticipated future transactions affecting related income tax balances. The provision for income taxes for the first quarter of 2007 of $0.2 million increased $0.1 million, or 172.0%, from $0.1 million in
the comparable 2006 period.

Preferred stock dividend.We accrued $0.1 million for preferred stock dividends in the first
quarter of 2007 and 2006. All dividends are paid in additional shares of preferred stock and not in cash.

Net loss applicable to common
shareholders. Our net loss applicable to common shareholders decreased $1.7 million, or 18.9%, to $7.5 million for the first quarter of 2007, from $9.2 million for the first quarter of 2006, for the reasons discussed above.

Liquidity and Capital Resources

Our cash
requirements have been primarily funded by cash used in operations and financing transactions. At March 31, 2007, we had cash and cash equivalents of $7.0 million and working capital of $14.2 million and availability under our senior
secured revolving credit facility of $10.0 million.

Net cash used in operating activities during the first quarter of 2007 was $2.8
million as compared to $5.0 million during the first quarter of 2006. This fluctuation was primarily attributable to working capital components, including decreases in representation contracts receivable of $6.2 million and accounts payable and
accrued expenses of $3.7 million.

Net cash used in investing activities was attributable to capital expenditures. Net cash used in
investing activities during the first quarter of 2007 and 2006 was less than $0.1 million. The payments made in 2006 included $0.1 million, which was capitalized in 2003.

Net cash used in financing activities was $0.6 million during the first quarter of 2007 which consisted of representation contract acquisition payments. Net cash provided by financing activities was $2.4 million
during the first quarter of 2006 and consisted of $3.1 million of net borrowings under our credit facility, offset by $0.7 million of representation contract acquisition payments.

In general, as we acquire new representation contracts, we use more cash and, as our contracts are terminated, we receive additional cash. For the
reasons noted above in Overview, we are not able to predict the amount of cash we will require for contract acquisitions, or the cash we will receive on contract terminations, from period to period.

We do not have any written options on financial assets, nor do we have any special purpose entities. We have not guaranteed any obligations of our
unconsolidated investments.

The Senior Subordinated Notes were issued under an indenture that limits our ability to engage in various
activities. Among other things, we are generally not able to pay any dividends to our shareholders, other than



14



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dividends payable in shares of common stock; we can only incur additional indebtedness under limited circumstances, and certain types of mergers, asset sales
and changes of control either are not permitted or permit the note holders to demand immediate redemption of their Senior Subordinated Notes. Management believes that we are in compliance with these covenants.

Our Senior Subordinated Notes are redeemable at our option. If certain events occurred which would be deemed to involve a change of control under the
indenture, we would be required to offer to repurchase all of the Senior Subordinated Notes at a price equal to 101% of their aggregate principal, plus unpaid interest.

We have a $10 million senior secured revolving credit facility with Commerce Bank, N.A. that enables us to efficiently manage our cash, as we may borrow, repay and re-borrow funds as needed. The term of the
credit facility expires on December 31, 2007. The credit facility is secured by a first priority lien on all of our and our subsidiaries property and assets, tangible and intangible. Interest is payable monthly on the borrowings at rates
based on either a prime rate or LIBOR, plus a premium of 1% for prime rate borrowings, and 4% for LIBOR borrowings. In addition to covenants similar to those in the indenture governing the Notes, the credit facility requires, among other things,
that we (i) maintain certain 12-month trailing Operating EBITDA levels (Operating EBITDA, defined in the Loan and Security Agreement for any period as: (a) Net Income (Loss), plus (b) all taxes on income plus state and
local franchise and corporation taxes paid by the Borrower and any of its Subsidiaries plus (c) all interest expense deducted in determining such Net Income, plus (d) all depreciation and amortization expense and other non-cash charges
(including, without limitation, non-cash charges resulting from the repricing of employee stock options), plus (e) severance costs expensed but not yet paid in cash, less (f) extraordinary gains, plus (g) extraordinary losses, less
(h) Contract Termination Revenue, but plus Contract Termination Revenue received in cash and (i) less Contract Acquisition Payments, in each case for such period, in each case in connection with Borrower and its Subsidiaries, on a
consolidated basis); (ii) have a certain minimum accounts receivable balance as of the end of each quarter; (iii) have not less than $200 million of representation contract value (as defined) as of the end of each quarter; and
(iv) have not less than $2 million of cash and cash equivalents as of the end of each quarter. Management believes that we are in compliance with these covenants. We incurred approximately $0.5 million in legal and other costs
directly related to the revolving credit facility and an additional $0.2 million of such costs related to an amendment of the revolving credit facility in July 2005, which are being amortized as interest expense over the life of the extended
facility. Substantially all of our subsidiaries, jointly, severally and unconditionally guarantee the credit facility. At March 31, 2007, we had $10.0 million available under our credit facility.

The amendment was entered into on July 21, 2005. The principal change effected by it was to extend the term of our revolving credit facility from
September 25, 2006 through December 31, 2007. The amendment also revised certain of the financial covenants to more appropriately reflect our current business operations and it also revised the definition of Operating EBITDA to
read as set forth above.

We believe that the liquidity resulting from the transactions described above, together with anticipated cash
from continuing operations, should be sufficient to fund our operations and anticipated needs for required representation contract acquisition payments, and to make the required 10% annual interest payments on the Senior Subordinated Notes, as well
as the monthly interest payments under our senior secured revolving loan facility, for at least the next 12 months. We may not, however, generate sufficient cash flow for these purposes or to repay the notes at maturity.

Our ability to fund our operations and required contract acquisition payments and to make scheduled principal and interest payments will depend on our
future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Given the scheduled maturity of our Senior Subordinated Notes in July
2008, we continue to actively explore alternatives to repay or refinance them. There is no assurance that we will be able to do so on commercially acceptable terms, if at all. We cannot currently predict the effect of our failure to satisfy our
obligations under our Senior Subordinated Notes on a timely basis, including the effect on our ability to continue as a going concern.



15



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In June 2006, we agreed with Katz Communications, Inc. to accelerate the payment of certain
representation contract buyout receivables, net of certain representation contract buyout payables. This lump sum payment was discounted approximately $0.4 million.

During 2006, 2005 and 2004, we implemented various cost efficiency measures, including the termination of several employees. Our liquidity and cash flows will be positively affected by these reductions. It is
anticipated that our operations over the long term will further benefit from these terminations as well as the other material cost efficiency measures such as lease renegotiations and reductions in consulting, which were implemented in 2006, 2005
and 2004.

Certain Factors That May Affect Our Results of Operations

The following factors are some, but not all, of the variables that may have an impact on our results of operations:



| |  |  | Changes in the ownership of our radio station clients, in the demand for radio advertising, in our expenses, in the types of services offered by our competitors,
and in general economic factors may adversely affect our ability to generate the same levels of revenue and operating results.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Advertising tends to be seasonal in nature as advertisers typically spend less on radio advertising during the first calendar quarter.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The termination of a representation contract will increase our results of operations for the fiscal quarter in which the termination occurs due to the termination
payments that are usually required to be paid, but will negatively affect our results in later quarters due to the loss of commission revenues. Hence, our results of operations on a quarterly basis are not predictable and are subject to significant
fluctuations.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We depend heavily on the services of David E. Kennedy, our new Chief Executive Officer, and Ralph C. Guild, our Chairman of the Board and former Chief Executive
Officer, and our inability to retain or replace them could adversely affect our business.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We rely on a limited number of clients for a significant portion of our revenues.
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Our significant indebtedness may burden our operations, which could make us more vulnerable to general adverse economic and industry conditions, make it more
difficult to obtain additional financing when needed, reduce our cash flow from operations to make payments of principal and interest and make it more difficult to react to changes in our business and industry.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may need additional financing for our future capital needs, which may not be available on favorable terms, if at all.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Competition could harm our business. Our only significant competitor is Katz Radio Group, Inc., which is a subsidiary of a major radio station group that has
significantly greater financial and other resources than do we. In addition, radio must compete for a share of advertisers total advertising budgets with other advertising media such as television, cable, print, outdoor advertising and the
Internet.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires management to make
judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. A summary of significant accounting policies and a description of accounting policies that are considered critical may be
found in our 2006 Annual Report on Form 10-K, filed on April 2, 2007, in the Notes to the Consolidated Financial Statements, Note 1, and the Critical Accounting Policies section of Item 7 of Part II.



16



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Critical Accounting Estimates for Share-Based Payments

In December 2004, the FASB issued SFAS No. 123R, which revised SFAS No. 123 and supersedes APB 25. In March 2005, the Securities and
Exchange Commission (SEC) issued SAB 107, which provides interpretive guidance on SFAS No. 123R. Accounting and reporting under SFAS No. 123R is generally similar to the SFAS No. 123 approach. We adopted SFAS 123R on
January 1, 2006, under the modified prospective method. For additional information related to No. SFAS 123R, see the Notes to the Unaudited Interim Consolidated Financial Statements of this Form 10Q.

Off Balance Sheet Arrangements

We have no off
balance sheet arrangements as defined by Item 303 (a) (4) of Regulation S-K.

Contractual Obligations and Other Commercial Commitments



|                                    |  |                        |       |               |   |           |  |           |       |                 |   |     |  |   |     
|----------------------------------- |  | ---------------------- | ----- | ------------- | - | --------- |  | --------- | ----- | --------------- | - | --- |  | - | ----
|                                    |  | Payments Due by Period
|                                    |  | Total                  |       | Remainder2007 |   | 2008-2009 |  | 2010-2011 |       | 2012-Thereafter
|                                    |  | (Dollars in Millions) 
|Long term debt                      |  | $                      | 99.0  |               | $ |          |  | $         | 99.0  |                 | $ |    |  | $ |    
|Operating leases                    |  |                        | 39.7  |               |   | 3.5       |  |           | 7.9   |                 |   | 5.7 |  |   | 22.6
|Interest expense                    |  |                        | 14.8  |               |   | 4.9       |  |           | 9.9   |                 |   |    |  |   |    
|Annual fees for accounting services |  |                        | 11.8  |               |   | 2.7       |  |           | 7.5   |                 |   | 1.6 |  |   |    
|Representation contract buyouts     |  |                        | 3.0   |               |   | 1.8       |  |           | 1.0   |                 |   | 0.2 |  |   |    
|                                    |  |                        |       |               |   |           |  |           |       |                 |   |     |  |   |     
|Total                               |  | $                      | 168.3 |               | $ | 12.9      |  | $         | 125.3 |                 | $ | 7.5 |  | $ | 22.6
|                                    |  |                        |       |               |   |           |  |           |       |                 |   |     |  |   |     

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in interest rates that may adversely affect our results of operations and financial condition. We seek to
minimize the risks from these interest rate fluctuations through our regular operating and financing activities. Our policy is not to use financial instruments for trading or other speculative purposes. We are not currently a party to any financial
instruments.

Because our obligation under the senior secured revolving credit facility bears interest at a variable rate, we are sensitive
to changes in prevailing interest rates. A one-point fluctuation in market rates would not have had a material impact on 2007 earnings to date.

Item 4.
CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, our management, under the supervision of our Chief Executive Officer
and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(c) under that Act) as of the end of the period covered by this
quarterly report. Based upon that evaluation, our Chairman and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2007.

(b) Changes in Internal Controls over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter of 2007 covered by this
Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our control over financial reporting.



17



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PART II

OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are involved in judicial and administrative proceedings from time to time concerning matters arising in connection with the conduct of our business. We
believe, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on our financial condition or operations.

Item 1A. RISK FACTORS

See Certain Risk
Factors That May Affect Our Results of OperationsManagements Discussion and Analysis of Financial Condition and Results of Operations. There have been no material changes in risk factors relevant to us from those set forth in our
Annual Report on Form 10-K for the year ended December 31, 2006.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR
SECURITIES

None.

Item 4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K.

(A)Documents Filed as Part of this Report



|            |  |                                                                                                                                                                       
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                           
|31.1        |  | Certification of Chief Executive Officer pursuant to Rule 15d-14(a) (filed herewith)                                                                                  
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Rule 15d-14(a) (filed herewith)                                                                                  
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350(a), (b)) (furnished herewith)*
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350(a), (b)) (furnished herewith)*

---

|* | The information furnished in Exhibit 32.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general
incorporation language in such filing.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



18



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(B)Reports on Form 8-K

We filed the following current reports on Form 8-K during our first fiscal quarter:



|                 |  |                     |  |                          
|---------------- |  | ------------------- |  | -------------------------
|Date of Report   |  | Items Reported      |  | FinancialStatements Filed
|February 8, 2007 |  | Items 5.02 and 9.01 |  | No                       



19



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SIGNATURES

Pursuant to the requirements 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 the City of New York, State
of New York.

May 15, 2007



INTEREP NATIONAL RADIO SALES, INC.By:

/s/ WILLIAM J. MCENTEE, JR.William J. McEntee, Jr.Senior Vice President andChief Financial Officer(Principle Financial and Accounting Officer)




20



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Exhibit Index



|            |  |                                                                                                                                                                       
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                           
|31.1        |  | Certification of Chief Executive Officer pursuant to Rule 15d-14(a) (filed herewith)                                                                                  
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Rule 15d-14(a) (filed herewith)                                                                                  
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350(a), (b)) (furnished herewith)*
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350(a), (b)) (furnished herewith)*

---

|* | The information furnished in Exhibit 32.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general
incorporation language in such filing.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------