U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)
     [X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
           ACT OF 1934

For the fiscal year ended March 31, 1998
                                             OR

     [  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
          ACT OF 1934
                           Commission file number: 33-80321

                           REDWOOD BROADCASTING, INC.
                 (Name of Small Business Issuer in Its Charter)

                Colorado                                        84-1295270
      (State or Other Jurisdiction                           (I.R.S. Employer
            of Incorporation)                               Identification No.)

                            11 Sundial Circle, Suite #17
                                    P.O. Box 3463
                                    Carefree, AZ                   85377
                       (Address of Principal Executive Offices)   (Zip Code)

Issuer's telephone number, including area code:  (602) 488-2596

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:

                                      COMMON STOCK, $.004 PAR VALUE
                                             (Title of Class)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 [ ].

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B is not contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements  incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     The  registrant's  gross revenues for the fiscal  year-ended March 31, 1997
were $545,185.

     The aggregate market value of the Common Stock (one vote per share) held by
non-affiliates as of July 14, 1998 was $598,332.

     The  number of  shares of the  registrant's  .004 par  value  Common  Stock
outstanding as of July 14, 1998 was 1,410,000.

Transitional Small Business Disclosure Format (check one):  Yes [   ]  No [ X ]


<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

     Redwood Broadcasting, Inc., f/k/a Intelligent Financial Holding Corporation
(the "Company" or "RBI") and its subsidiaries operate in the  rapidly-developing
and expanding radio  broadcasting  industry.  Organized as a holding company for
the  purpose of  acquiring  and/or  developing  undervalued  radio  broadcasting
properties  located in small to medium sized  markets,  the Company has embarked
upon an aggressive  acquisition  and  development  program and continues to seek
acquisition and development opportunities in the broadcast industry.

HISTORY

     Formation of the Company

     By agreement  dated December 12, 1994,  Cell Robotics  International,  Inc.
f/k/a  Intelligent  Financial  Corporation  ("CRI")  executed and entered into a
definitive  Agreement  and Plan of  Reorganization  between and among CRI,  Cell
Robotics,  Inc.,  a New Mexico  corporation  ("Cell"),  MiCEL,  Inc., a Delaware
corporation,  Bridgeworks  Investors  I,  L.L.C.,  an Oregon  limited  liability
company and Ronald K. Lohrding,  individually (the "CRI  Agreement"),  providing
inter alia,  for the  acquisition  by CRI of 100% of the issued and  outstanding
equity  securities of Cell. The CRI Agreement also provided for the formation of
a new  wholly-owned  subsidiary  of CRI and the  transfer to the  subsidiary  of
certain assets of CRI, subject to certain liabilities.

     The  Company was formed on December 1, 1994,  and in  February,  1995,  CRI
transferred  to the  Company  in a  tax-free  reorganization  ("Reorganization")
undertaken  in  reliance  upon the  provisions  of Section  351 of the  Internal
Revenue Code of 1986, as amended,  one hundred  percent (100%) of CRI's real and
personal property ("Property"),  subject to certain liabilities ("Liabilities"),
saving and excepting cash, cash equivalents or marketable  securities  having an
aggregate  fair  market  value  of not  less  than  $250,000  (collectively  the
"Retained Assets"), solely in exchange for 300,008 shares of the Company's $.004
par  value  common  stock  ("Spin-Off   Shares").   Immediately   following  the
Reorganization,  CRI's assets consisted  entirely of the Retained Assets and the
Spin-Off Shares, and the Company became a wholly-owned subsidiary of CRI, owning
the Property, subject to the Liabilities.

     Pursuant  to  the  terms  of the  CRI  Agreement,  CRI  further  agreed  to
distribute  the  Spin-Off  Shares  to the  shareholders  of  record of CRI ("CRI
Shareholders") as of December 16, 1994 upon the effective date of a Registration
Statement.

     Redwood Broadcasting, Inc.

     By agreement dated June 16, 1995, the Company  acquired one hundred percent
(100%)  of the  issued  and  outstanding  shares  of  Common  Stock  of  Redwood
Broadcasting,  Inc.  ("Broadcasting")  in exchange for 300,000  shares of Common
Stock of the Company.  Subsequent to the  acquisition,  Broadcasting  was merged
with and into the Company,  with the Company  remaining as the surviving entity.
Thereafter, at a special meeting of the Company's shareholders,  an amendment of
the Company's  Article of Incorporation was approved changing the Company's name
to Redwood Broadcasting, Inc.

     Broadcasting was formed in 1993 as a  majority-owned  subsidiary of Redwood
MicroCap Fund,  Inc.  (MicroCap) to pursue the acquisition of radio station KNBA
(1190 AM)  licensed to Vallejo,  California.  Broadcasting  entered into a joint
venture with Quick Broadcasting,  Inc., an established broadcaster, and acquired
KNBA in  October,  1993.  KNBA was  attractive  to  Broadcasting  because it was
eligible for the "Expanded Band" which, if granted, would increase the station's
broadcast  capability.  Greater signal  strength would  encompass more listeners
which, in turn, would attract more advertising  clients.  In 1994,  Broadcasting
sold its 50% ownership interest in the joint venture to Quick Broadcasting, Inc.
for $180,000 in cash and a three (3) year,  pre-paid,  agreement  not to compete
valued at $70,000.  Broadcasting sold its interest in KNBA in order to focus its
resources on wholly and majority-owned radio properties.

     KESP-FM

     During the year ended March 31, 1998, the Company was issued a construction
permit for KESP-FM  licensed to Payson,  Arizona and began  construction  of the
station.  On March 31, 1998, the Company  signed an agreement  with  Brentlinger
Broadcasting,  Inc.  (Brentlinger)  under  which  Brentlinger  has the option to
purchase the station  assets for a period of three years after  commencement  of
program test operations. The option price is $1.5 million within two years after
commencement of program test operations or $1.75 million thereafter.

<PAGE>



     Alta California Broadcasting, Inc.

     In  1994,  Broadcasting  formed  its  own  wholly-owned  subsidiary,   Alta
California   Broadcasting,   Inc.   ("Alta"),   to  pursue   radio   acquisition
opportunities it had determined were available in northern California.

     KHSL-AM\FM

     In June,  1994,  Alta entered into an Asset  Purchase  Agreement to acquire
radio  stations   KHSL-AM\FM   licensed  to  Chico  and  Paradise,   California,
respectively  ("KHSL  Agreement").  The  acquisition,  valued at $1.15  million,
included  furniture and fixtures,  broadcast  equipment,  broadcast licenses and
11.70 acres of real property located in Chico, California, zoned for residential
housing  development.  On February 15, 1995, Alta commenced operating KHSL-AM\FM
under a Local Management  Agreement  ("LMA"),  while transfer  applications were
filed with the FCC to approve the change in  ownership.  On June 19, 1995,  Alta
completed the acquisition of KHSL-AM\FM  ("KHSL  Acquisition")  resulting in the
termination of the LMA.

     KHSL-FM  has a country  format and is located at 103.5 on the FM band.  All
programming  for KHSL-FM  originates  at its studio in Chico.  Subsequent to its
acquisition by Alta,  KHSL-AM changed its call letters and format.  The new call
letters are KNSN-AM.  The new format is "Talk", and its programming is primarily
originated through satellite delivery companies.

     In March,  1996,  Alta entered into separate Asset Sale  Agreements to sell
the  assets of both  KNSN-AM  and  KHSL-FM,  excluding  the 11.70  acres of real
property, in a transaction valued at $1.47 million.  Concurrently  with  signing
the Asset  Purchase  Agreements,  Alta entered into an LMA with the  prospective
purchaser until the sale closes, at which time the LMA would terminate.  Closing
took place March 31, 1997. In April,  1996, the 11.70 acres of real property was
sold to an unrelated party for $370,000.

     KRDG-FM (f/k/a KHZL and KCFM)

     In March,  1995,  Alta entered into an LMA with an option to purchase radio
station KCFM-FM  licensed to  Shingletown,  California,  which began  commercial
broadcasting,  with a "Country"  music format at 105.3 on the FM band in August,
1995. The source of its programming was simulcasting  with KHSL-FM,  through the
use of high speed data transmission lines. KCFM-FM primarily serves the Redding,
California  market.  In  September,  1995,  KCFM-FM  changed its call letters to
KHZL-FM. During the Company's review of KHZL-FM's performance, it was determined
that a format  change  would best serve the goal of revenue  enhancement.  A new
music format was developed using a satellite  delivered "Oldies" format. In May,
1996,  the Company  filed for an upgrade to  increase  the  station's  broadcast
power.  In July,  1996,  Alta  completed  the  acquisition  of KHZL-FM,  thereby
terminating the LMA.  Effective  September 27, 1996, Alta changed KHZL-FM's call
letters to KRDG-FM.

     KNNN-FM

     In May,  1996,  Alta  entered into an Asset  Purchase  Agreement to acquire
radio station KNNN-FM licensed to Central Valley, California. The Asset Purchase
Agreement was subsequently assigned to Alta's wholly-owned subsidiary,  Northern
California Broadcasting,  Inc. KNNN-FM primarily serves the Redding,  California
market and broadcasts an "Adult  Contemporary" format at 99.3 on the FM band. In
August,  1996,Northern  began operating KNNN-FM under an LMA pending approval of
the transfer of ownership by the FCC. In September, 1996. Northern completed the
acquistion of KNNN-FM,  thereby  terminating the LMA. The Company has filed with
the FCC for an upgrade to increase the station's  broadcast  power. The purchase
price for KNNN was $825,000,  $325,000 of which was paid in cash at closing, and
the  balance  was paid in the form of a  promissory  note  secured by the common
stock of Northern California Broadcasting, Inc. and guaranteed by the Company.

     KLXR-AM

     In May,  1996,  Alta  entered into an Asset  Purchase  Agreement to acquire
radio station KLXR-AM Licensed to Redding,  California for $100,000. In February
1997,  Alta  entered  into an LMA with the  seller  and,  in  April  1998,  Alta
completed the purchase of KLXR-AM for $100,000 cash.




<PAGE>

KRRX-FM (f/k/a KARZ-FM) and KNRO-AM

     Effective  April 1, 1997,  the Company,  through Alta,  acquired from Power
Surge, Inc. a Delaware  corporation  ("Power Surge") an option to purchase radio
broadcast stations KRRX-FM,  licensed to Burney, California and KNRO-AM licensed
to Redding,  California (the "Power Surge  Stations") (the "Option").  Under the
terms of the Option,  the Company could either (1) purchase KNRO/KARZ on January
31,  1997 for  $1,200,000  in cash or (2) issue  1,000,000  shares of its common
stock in exchange for all of the issued and  outstanding  shares of common stock
of Power Surge. The option was due to expire on September 30, 1997.  However, by
mutual agreement, the Company and Power Surge extended the date of the Option to
March 31, 1998. In addition to extending the Option exercise period, the parties
agreed to amend the  terms of  purchase  to  include a  combination  of cash and
stock.  The  Company was unable to exercise  the Option by March 31,  1998.  The
Option was extended again,  by mutual  consent,  until June 30, 1998 in exchange
for an increase in the  purchase  price to  $1,235,000  (the  increase  reflects
additional costs borne by Power Surge related to the  acquisition).  As of March
31, 1998 the Company had deposited  $973,000  (comprised of $733,000 in cash and
$240,000 in common stock) toward the purchase of the stations.  On June 15, 1998
the Company exercised its option.  Immediately thereafter,  the stations,  along
with KRDG-FM and KNNN-FM were sold the Regent Communications, Inc. (Regent)-(see
below).

     Power Surge is a controlled  corporation  of John C. Power,  the  Company's
President,  Director and  principal  shareholder  through his  affiliation  with
Redwood  Microcap  Fund,  Inc.  ("MicroCap").  The  Power  Surge  Stations  were
purchased by Mr. Power through another controlled corporation, Power Curve, Inc.
("Power Curve"),  from  non-affiliated  third parties on January 31, 1997. Power
Curve purchased the Power Surge Stations for $1,200,000,  the same as the option
price granted to the Company by Power Surge. Under the terms of the acquisition,
Power Curve paid to the seller of the Power Surge  Stations  $480,000 in cash at
closing  and  executed  a 10-year  promissory  note in the  principal  amount of
$720,000.  The  promissory  note  issued to the Seller by Power  Curve,  Inc. is
secured  by other  assets  and  securities  owned by Power  Curve.  Power  Curve
transferred  the Power Surge Stations to Power Surge effective March 31, 1997 in
order to facilitate the Option being granted to the Company more fully described
herein.

   When the Company's  management  learned of the  opportunity to purchase the
Power Surge Stations,  it recognized that those stations represented a potential
opportunity for the Company.  However, at the time the Company lacked sufficient
working capital to take advantage of the opportunity.  In order to perserve that
opportunity  on behalf of the Company,  Mr. Power through Power Curve  purchased
the Power Surge Stations with the intent to give the Company the  opportunity to
acquire  the  Power  Surge  Stations  at a later  date  when it had the  capital
necesary to do so.  Through  Power Surge,  Mr.  Power has made  available to the
Company the  opportunity  to acquire the Power Surge Stations upon terms no less
favorable  than the terms upon which Mr. Power  initially  acquired those assets
through Power Curve in January 1997.

     Effective April 1, 1997, Power Surge and the Company, through Alta, entered
into a Time Brokerage Agreement (Local Management Agreement) ("LMA") pursuant to
which during the Option Period Alta will provide programming for the Power Surge
Stations in  conformity  with rules and policies of the FCC.  Under the terms of
the LMA,  Alta will pay Power  Surge an LMA fee of $5,000  per  month.  Further,
under the terms of the LMA,  Alta will be  responsible  for  operating the Power
Surge Stations and will effectively bear the economic risk and benefit of owning
the Power Surge Stations during the LMA and Option Period.  Power Surge shall be
responsible for maintaining in effect the FCC licenses  covering the Power Surge
Stations.  Since  entering into the LMA on April 1, 1997,  Alta changed the call
letters of KARZ-FM to  KRRX-FM.  Concurrent  with the call  letter  change,  the
format of KRRX-FM was changed from  Adult-Contemporary  to Album  Oriented  Rock
("AOR").  The LMA  terminated  on June 15, 1998 when the Company  exercised  its
Option.


<PAGE>

REGENT COMMUNICATIONS

     On  October  10,  1997  Alta  California  Broadcasting,  Inc.  ("Alta"),  a
wholly-owned  subsidiary of Redwood  Broadcasting,  Inc. (the "Company") entered
into an agreement of Merger (the "Merger") with Regent Communications ("Regent")
whereby Alta would merge into a wholly-owned  subsidiary of Regent formed for
the purposes of effectuating the Merger.

     On June  15,  1998,  the  Company  transferred,  via the  Merger,  KRDG-FM,
KNNN-FM, KNRO-FM, and KRRX-FM to Regent and received approximately $950,000 cash
and  200,000  shares of Regent  Series "E"  Preferred  Stock  (valued at $5.00).
Regent also  assumed  approximately  $1,500,000  of the  Company's  liabilities.
Regent  operated  such  stations  through  June 15,  1998 under an LMA which was
effective on October 15, 1997.

      
 
ACQUISITIONS AND DEVELOPMENT

     The Company's  strategy is to grow by acquiring  additional  radio stations
meeting  specified  criteria and by maximizing  the revenues and Broadcast  Cash
Flow of the  stations it owns and  operates.  Broadcast  Cash Flow is defined as
operating  income (loss),  exclusive of trade  (non-cash)  revenue and expenses,
before deduction for interest, taxes,  depreciation,  amortization and corporate
expense. Although Broadcast Cash Flow is not recognized under Generally Accepted
Accounting  Principles  ("GAAP"),  it is accepted by the broadcast industry as a
generally  recognized  measure of performance and is used by analysts who report
publicly on the condition and performance of broadcast companies. Broadcast Cash
Flow should not,  however,  be considered an alternative to operating  income as
determined in accordance  with GAAP or to cash flows from  operating  activities
(as a measure of liquidity) or other indicators of the Company's  performance as
reported under GAAP.

<PAGE>

     The Company generally intends to acquire established  stations and/or build
stations  in small-  to  medium-sized  media  markets  as  defined  by  industry
standards. The Company defines these markets as those ranked 150 to 250 in terms
of population by the Arbitron Company ("Arbitron").

     In general,  the Company seeks to acquire stations:  (i) located in markets
with  well  established  and  relatively  stable  economies,   which  are  often
characterized  by  the  presence  of  universities,  tourism  or  a  substantial
industrial  base,  (ii) with a  demonstrated  track record of audience share and
(iii) which can be purchased at attractive  prices. The Company believes that it
can most effectively maintain and improve the operating results of stations with
these  characteristics.  Factors  considered  by the  Company in  evaluating  an
acquisition candidate include (i) the size, rates of growth and projected future
rates of growth of the  market's  broadcast  revenue  and  population,  (ii) the
number of competitive  stations in the market,  (iii) the operating  history and
performance of the stations,  (iv) the success of the station's format,  (v) the
quality of and the ability to enhance the station's  broadcast signal,  (vi) the
terms of the purchase and (vii) duopoly (or greater) ownership  possibilities or
other unique synergies with the then existing stations of the Company.

     The  Company  intends  to  pursue  acquisition   opportunities,   including
acquisition   opportunities   made   possible   by  recently   adopted   Federal
Communication Commission ("FCC") rules (the "New FCC Rules") which substantially
increased the number of stations in the same radio service (i.e.,  AM or FM) one
entity may own, both nationally and in a single geographic  market.  The Company
believes  that the  ability  to own  multiple  stations  in a single  geographic
market,  known as a duopoly,  offers the  potential  for both  substantial  cost
savings and increased revenues. For example, a duopoly permits the consolidation
of studios and office space,  thereby reducing  administrative,  engineering and
management  expenses.  Furthermore,  additional  stations in a particular market
enable  the  Company  to  take  advantage  of its  existing  relationships  with
advertisers,  provide  advertisers a larger,  combined audience and permit joint
promotional efforts,  which may result in increased revenues and reduce the risk
of a particular acquisition.




<PAGE>

OPERATIONS

     The Company  believes a large percentage of radio  advertising  dollars are
expended in small- to medium-sized  media markets.  The Company believes that it
can improve  the  financial  performance  and  Broadcast  Cash Flow of small- to
medium-sized stations by enhancing revenues while, at the same time, controlling
costs. The Company seeks to enhance  billings by implementing or expanding:  (i)
targeted  programming  designed  to  increase  audience  share  within  specific
demographic groups considered to be particularly attractive to advertisers, (ii)
sales and marketing  programs  intended to increase both audience  share and the
sale of advertising time, from which substantially all of the Company's revenues
are derived,  and (iii)  effective  advertising  rate  management  and inventory
control.  The Company's  stations employ a variety of programming  formats.  The
Company believes that selling dvertising time in small- to medium-sized  markets
is less dependent upon ratings and more  dependent  upon  aggressive  marketing,
promotional and selling  techniques.  Local advertising and promotional  tie-ins
with local events are  designed to heighten  public  awareness of the  Company's
stations.  Duopoly  ownership  structures  will  enable  the  Company  to  offer
advertisers  a broader  range of creative  advertising  packages  and enable the
Company to derive  increased  benefits from its advertising  rate management and
inventory control techniques.


THE COMPANY'S RADIO STATIONS

     The following table sets forth certain  information  covering the Company's
current and proposed radio stations:

           Stations Currently Owned or Operated as of 7/14/98
                 
           Station        City of License        Station Format     Demographics
          --------        ---------------       ---------------     ------------
          KLXR-AM         Redding, CA          Adult Standards        Adults 50+


           Stations Currently Under Development as of 7/14/98

           Station        City of License        Station Format     Demographics
          --------        ---------------       ---------------     ------------
          KESP-FM         Payson, Arizona            Oldies       Adults 35-64


          The following  table sets forth other Radio & Television  applications
          currently before the FCC:

          Radio
          -----
          Dickson, OK
          Gillette, WY

          Television
          ----------
          Great Falls, MT
          Missoula, MT
          Butte, MT
          Marquette, MI
     
     There  can be no  assurance  that  the  Company  will  be  granted  license
associated with the radio and television  applications currently before the FCC.

     In  developing  its stations,  the Company  utilizes a variety of practices
designed to improve the station's Broadcast Cash Flow, including  implementation
of  strict  financial  reporting  requirements  and  cost  controls,   directing
promotional  activities,  developing programming to improve the station's appeal
to  targeted  audience  groups  and  enhancing  advertising  sales  efforts.  In
particular,  the Company  emphasizes  increasing local  advertising  revenues in
order to reduce dependence on national advertising revenues.

<PAGE>
 
    In operating its stations,  the Company  concentrates on the development of
strong  decentralized local management,  which is responsible for the day-to-day
operations  of the  station and is  compensated,  in part,  based on  incentives
related to the station's financial performance. Local management, in cooperation
with corporate management, is responsible for sales and marketing, hiring on-air
talent and  developing  programming.  Corporate  management is  responsible  for
long-range planning,  establishing policies and procedures,  resource allocation
and maintaining overall control of the stations.

     The Company continues to seek  opportunities to acquire radio stations with
strong  growth  potential  in the  Company's  current  markets,  subject  to the
Communication Act and FCC rules,  which currently limit, among other things, the
maximum  number of radio  stations  that can be owned by the Company in the same
geographic market.  Since the Company has historically grown in part through the
acquisition  of  broadcasting  properties,  current  or  subsequent  limitations
imposed by the FCC on the number of  broadcasting  properties  the  Company  may
acquire could limit the Company's ability to grow in the future.

ADVERTISING

     Substantially all of the Company's  revenues are generated from the sale of
advertising for broadcast on its radio stations.  Depending upon the format of a
particular station, there are a predetermined number of advertisements broadcast
each hour.  The  Company  attempts  to  maximize  the  number of  advertisements
broadcast  hourly  without  jeopardizing  listening  levels.  Any  change in the
Company's  revenues,  with the exception of those  instances  where stations are
acquired or sold, is generally the result of additional advertising revenues and
pricing  adjustments  which are made to ensure that the station  fully  utilizes
available inventory.

     The   Company   believes   that  radio  is  one  of  the  most   efficient,
cost-effective  means for advertisers to reach specific  demographic groups. The
Company  also  believes  that  radio in general is more  resistant  to  economic
downturns that other  advertising-supported  media due to its  relatively  lower
rates and lower commercial production costs.

     Depending on the programming  format of a particular  station,  the Company
estimates the optimum number of advertisements  available for sale. Accordingly,
changes in the Company's net revenues  (except to give effect to the acquisition
or  disposition  of a  radio  station)  are  generally  the  result  of  pricing
adjustments or an increase in the number of commercials sold.

     Advertising  rates  charged  by radio  stations  are based  primarily  on a
station's  ability to attract  audiences in the  demographic  groups targeted by
advertisers.  The number of listeners  of a station is often  reported by rating
service  surveys such as  Arbitron,  although  most small radio  markets are not
serviced by Arbitron.  Advertising  rates are also  dependent upon the number of
stations  in the  market  competing  for the same  demographic  group and on the
supply of and demand for radio  advertising  time.  Rates are generally  highest
during the morning and afternoon drive-time hours.

     Substantially all of the revenues  generated by a radio station,  including
the  Company's  radio  stations,  are derived from local,  regional and national
advertising.  Local and regional sales  generally are made by a station's  sales
staff.  National  sales  are  made by  "national  representative"  firms,  which
specialize in radio  advertising  sales on the national  level.  These firms are
compensated  on  a  commission-only   basis.  Most  advertising   contracts  are
short-term, generally running for only a few weeks.

<PAGE>

COMPETITION

     Radio  broadcasting  is an extremely  competitive  business.  The Company's
radio  stations  compete for listeners and  advertising  revenues  directly with
other radio stations  within their markets,  many of which have more  experience
and greater  resources than the Company.  Radio  stations  compete for listeners
primarily on the basis of program content and by hiring high-profile talent that
appeals to a particular  demographic group. The Company competes for advertising
revenues  principally  through  effective  promotion of its  stations'  listener
demographics  and  audience  shares,  and through the number of  listeners  in a
target  group that can be reached  for the price  charged for the  airtime.  The
Company's stations also compete for advertising revenues with other media within
their markets,  including broadcast  television,  cable television,  newspapers,
magazines,  direct mail, coupons and billboard advertising. By building a strong
listening base comprised of a specific demographic group in each of its markets,
the Company is able to attract  advertisers  seeking to reach  those  listeners.
Other  factors  that  affect  a  station's   competitive  position  include  its
authorized power, terrain, assigned frequency,  audience characteristics,  local
program  acceptance and the number and  characteristics of other stations in the
market area.

     The radio  broadcasting  industry is also subject to  competition  from new
media technologies that are being developed or introduced,  such as the delivery
of  audio  programming  by  cable  television   systems  and  by  digital  audio
broadcasting. The radio broadcasting industry historically has grown despite the
introduction  of  new  technologies  for  the  delivery  of  entertainment   and
information, such as television broadcasting,  cable television, audio tapes and
compact  disks.  There can be no assurance,  however,  that the  development  or
introduction in the future of any new media  technology will not have an adverse
effect on the radio broadcasting  industry. The Company also competes with other
radio station groups to purchase additional stations. Some of these other groups
are owned or operated by companies that have substantially greater financial and
other resources than the Company.

     The  Telecommunications  Act of 1996 will permit  other radio  broadcasting
companies  to enter the markets in which the Company  operates or may operate in
the future,  some of which may be larger and have more financial  resources than
the Company.  There can be no assurance that the Company's existing stations, or
those stations  acquired by the Company in the future,  will be able to maintain
or increase their respective  current  audience  ratings or advertising  revenue
market share.

GOVERNMENT REGULATION

     The  ownership,  operation  and sale of  radio  stations,  including  those
licensed to the Company and its subsidiaries, are subject to the jurisdiction of
the FCC,  which acts under  authority  granted by the  Communication  Act. Among
other things,  the FCC assigns frequency bands for broadcasting;  determines the
particular  frequencies,  locations  and  operating  power of stations;  issues,
renews,  revokes and modifies station  licenses;  determines  whether to approve
changes to ownership or control of station licenses; regulates equipment used by
stations;  adopts and  implements  regulations  and  policies  that  directly or
indirectly affect the ownership, operation and employment practices of stations;
and has the  power  to  impose  penalties  for  violations  of its  rules or the
Communication Act.

     The following is a brief summary of certain provisions of the Communication
Act, including amendments thereto recently effectuated by the Telecommunications
Act of 1996  (the  "1996  Telecom  Act") and of  specific  FCC  regulations  and
policies  that affect the business of the Company.  Reference  should be made to
the  Communication  Act, FCC rules and the public notices and rulings of the FCC
for further  information  concerning the nature and extent of federal regulation
of broadcast stations.

<PAGE>

         License Renewals and Transfers

         Under the 1996 Telecom Act, radio broadcasting licenses are granted for
maximum  terms of eight (8) years.  Such  licenses  are subject to renewal  upon
application  to the FCC.  Under  the  1996  Telecom  Act,  the FCC  shall  adopt
regulations  which  will  implement  a  two-step  procedure,  pursuant  to which
competing  applications for an incumbent licensee's frequency will be explicitly
prohibited, and the FCC shall grant the incumbent licensee's renewal application
if it finds that (I) the  incumbent  licensee  has  served the public  interest,
convenience  and necessity;  (ii) the incumbent  licensee has not engaged in any
serious violations of the Communications Act or the FCC's rules; and (iii) there
have been no other  violations by the incumbent  licensee of the  Communications
Act or the FCC's rules  which,  taken  together,  would  constitute a pattern of
abuse. If, based upon review of the incumbent licensee's renewal application, or
of other facts that are brought to the FCC's  attention in a petition to deny or
other third party filing, the FCC is unable to make the foregoing findings,  the
incumbent  licensee is entitled to a full evidentiary  hearing to establish that
it is  entitled to renewal.  If,  following  the  evidentiary  hearing,  the FCC
determines that the incumbent licensee has failed to meet the basic requirements
for renewal and that no mitigating  factors justify the imposition of a sanction
less than denial of renewal  (such as, for  instance,  a "short" term renewal or
the  imposition  of  forfeitures),  the FCC is  obligated  to deny  the  renewal
application.  Should such denial become final following judicial review, the FCC
may thereafter entertain  applications for the incumbent's licensee's frequency.
The 1996 Telecom Act makes these provisions  retroactively applicable to renewal
applications  filed after May 1, 1995. 

         The  following  table sets forth the frequency of each of the Company's
stations and the date on which the FCC license for each such  station   expires,
as well as certain  information  regarding  radio station  licenses that are the
subject of certain acquisition agreements with the Company:

 
           Stations Currently Owned or Operated as of July 14, 1998
                                                                  Expiration
                                                                  Date of FCC
           Station        City of License           Frequency    Authorization
           -------       -----------------         ----------   --------------
           KLXR-AM         Redding, California        1230 Khz     12/01/05


           Stations Currently Under Development as of July 14, 1998
                                                                 Expiration
                                                                  Date of FCC
           Station        City of License           Frequency    Authorization
           -------       -----------------         ----------   --------------
          KESP-FM         Payson, Arizona           101.1 Mhz      12/01/05

          
         Ownership Matters

         The  Communication  Act prohibits the assignment of a broadcast license
or the transfer of control of a broadcast licensee without the prior approval of
the FCC.  To obtain the FCC's  prior  consent to  transfer or assign a broadcast
license,  appropriate  applications  must be filed with the FCC. In  determining
whether to grant or renew a  broadcast  license,  the FCC  considers a number of
factors pertaining to the licensee, including compliance with the Communications
Act  limitations  on alien  ownership,  compliance  with various rules  limiting
common  ownership  of  broadcast,   cable  and  newspaper  properties,  and  the
"character"  of a licensee and those persons  holding  "attributable"  interests
therein.

<PAGE>

         Under the Communications  Act, broadcast licenses may not be granted to
any  corporation  having  more  than  twenty  percent  (20%) of its  issued  and
outstanding   capital  stock  owned  or  voted  by  aliens  (including  non-U.S.
corporations),   foreign  governments  or  their  representatives  (collectively
"aliens").  The  Communications  Act also prohibits a  corporation,  without FCC
waiver,  from holding a broadcast  license if that  corporation  is  controlled,
directly or indirectly,  by another corporation,  in which more than twenty-five
percent (25%) of the issued and  outstanding  capital stock is owned or voted by
Aliens.  The  FCC  has  issued  interpretations  of  existing  law  under  these
restrictions  in modified  form apply to other forms of business  organizations,
including  partnerships.  As a result of these  provisions,  in the absence of a
waiver,  the  Company,  which  serves  as a  holding  company  for  its  various
subsidiaries,  cannot  have more than  twenty-five  (25%) of its stock  owned or
voted by Aliens.

     Under the 1996 Telecom Act, the FCC's national and local multiple ownership
rules were revised.  The FCC's formal rules  prohibited the Company from owning,
operating or controlling, directly or indirectly, more than twenty AM and twenty
FM radio  stations  in the  United  States.  The  1996  Telecom  Act  completely
eliminated  national ownership  limitations.  In addition,  the 1996 Telecom Act
substantially  relaxed  restrictions  on local radio multiple  ownership  (often
referred to as the "duopoly") rules. Under the new law, which was implemented by
the FCC in March 1996,  in markets with  fourteen or fewer radio  stations,  the
Company is  permitted to own up to a total of five (5) radio  stations,  no more
than three (3) of which may be FM, so long as the Company's owned radio stations
represent less than fifty percent (50%) of the radio stations in the market.  In
markets between fifteen (15) and  twenty-nine  (29) radio stations,  the Company
will be permitted to own up to a total of six (6) radio  stations,  no more than
four (4) of which may be FM. In markets with between  thirty (30) and forty-four
(44) radio stations, the Company will be permitted to own up to a total of seven
(7)  radio  stations,  no more than  four (4) of which  may be FM.  Finally,  in
markets with forty-five (45) or more radio stations, the Company may own up to a
total of eight (8) radio stations, no more than five (5) of which may be FM. All
of the Company's current holdings and proposed  acquisitions are consistent with
these new local multiple ownership restrictions.

         The  Communications  Act and FCC rules  also generally limit the common
ownership,  operation or control of a radio  broadcast  station and a television
station serving the same geographic  market and of a radio broadcast station and
a daily newspaper serving the same geographic market.  Under these rules, absent
waiver,  the  Company  would  not be  permitted  to  acquire  any  newspaper  or
television  broadcast station (other than low-power  television) in a geographic
market in which it now owns a broadcast property.  However,  the FCC's policies,
as modified by the 1996 Telecom Act, provide for the liberal grant of waivers of
the rule  prohibiting  ownership  of radio and  television  stations in the same
geographic  market  in  the  top  fifty  television  markets  if  certain  other
conditions are  satisfied.  The FCC has also indicated that it intends to hold a
rule-making  proceeding  looking toward the liberal grant of waivers of the rule
prohibiting  common  ownership  of a radio  station and a newspaper  in the same
market in large markets.

         The FCC  generally  applies  its  ownership  limits  to  "attributable"
interests held by an individual, corporation,  partnership or other association.
In the  case of  corporations  holding  broadcast  licenses,  the  interests  of
officers,  directors and those who,  directly or  indirectly,  have the right to
vote five percent (5%) or more of the corporation's  stock (or ten percent (10%)
or more of such stock in the case of insurance  companies,  investment companies
and bank trust departments that are holding stock for investment  purposes only)
are  generally  attributable,  as are  positions  of an officer or director of a
corporate  parent of a  broadcast  licensee.  Currently,  none of the  Company's
officers,  directors or stockholders has an attributable interest in any company
licensed  to  operate  broadcast  stations  other  than the  Company  and/or its
subsidiaries.

<PAGE>


         Local Marketing Agreements

         Over the past few years,  a number of radio  stations have entered into
what have commonly been referred to as "Local Marketing  Agreements"  or "LMAs".
While these agreements may take different forms, under a typical LMA, separately
owned and licensed radio stations agree to enter into  cooperative  arrangements
of varying sorts,  subject to compliance with the  requirements of the antitrust
laws and the FCC's  rules  and  policies,  including  the  requirement  that the
licensee of each station maintain  independent  control over the programming and
operation  of  its  own  stations.  The  most  prevalent  kind  of LMA is a time
brokerage agreement among two  separately-owned  radio stations serving a common
service area, whereby the licensee of one station programs  substantial parts of
the broadcast day on the other licensee's station, subject to ultimate editorial
and other controls being exercised by the latter licensee, and sells advertising
time during such program  segments.  The FCC has held that such  licensee of the
station  that is being  substantially  programmed  by another  entity  maintains
complete  responsibility  for, and control over, the operations of its broadcast
station, and assured compliance with applicable FCC rules and policies.

        The FCC  rules  specifically  permit  LMAs but  provide  that a station
leasing time and broadcasting  programming on another station servicing the same
market will be  considered  to have an  attributable  ownership  interest in the
other station for purposes of the FCC's multiple  ownership  rules. As a result,
the  Company  would not be  permitted  to enter into an LMA with  another  local
station which it could not own under the FCC's local  ownership rules unless the
Company's  programming  constituted less than fifteen percent (15%) of the other
station's  programming on a weekly basis. Under the 1996 Telecom Act, in markets
with fourteen or fewer radio stations,  such as the Redding,  California market,
the Company is  permitted to own up to a total of five radio  stations,  no more
than three (3) of which may be FM so long as the Company's  owned radio stations
represent  less than fifty  percent of the radio  stations in the  market.  As a
result of the KNNN  acquisition,  the Company can only  acquire or enter into an
LMA  relating  to the  operation  of one (1) more FM  station  that  serves  the
Redding, California market.

         Programming and Operation

     The  Communications   Act  requires   broadcasters  to  serve  the  "public
interest".  Licensees are required to present  programming that is responsive to
community   issues  and  to  maintain   certain   records   demonstrating   such
responsiveness. Complaints from listeners concerning a station's programming may
be considered by the FCC when it evaluates  renewal  applications of a licensee,
although  such  complaints  may be filed at any time.  Stations also must follow
various rules promulgated under the Communication Act that regulate, among other
things, political advertising, sponsorship identifications, and advertisement of
contests and  lotteries  and  technical  operations,  including  limits on radio
frequency  radiation. In addition, licensees must develop and implement programs
designed to promote equal  employment  opportunities  and must submit reports to
the FCC with respect to these matters on an annual basis and in connection  with
a renewal application.

         Failure to observe  these or other rules and policies can result in the
imposition of various  sanctions,  including monetary  forfeitures,  conditional
grants of  licenses,  the grant of  "short"  (less  than the full eight (8) year
term) renewal terms or, for particularly  egregious violations,  the denial of a
license renewal application or the revocation of a license.


<PAGE>
         Proposed Changes

         The  Congress  and the FCC  have  under  consideration,  and may in the
future consider and adopt, new laws, regulations and policies,  regarding a wide
variety of matters that could, directly or indirectly,  affect the operation and
ownership of the Company's radio broadcast properties. Such matters include, for
example,  proposals to impose spectrum use of other governmentally  imposed fees
upon licensees;  the FCC's equal employment  opportunity rules and other matters
relating  to  minority  and  female  involvement  in the  broadcasting  industry
including  enhancement  of  ownership  opportunities;  proposals to change rules
relating  to  political  broadcasting;   proposals  to  change  the  thresholds,
benchmarks or concepts applicable to attributing ownership interest in broadcast
media;  proposals to permit lenders to take a security interest in FCC licenses;
technical and frequency  allocation  matters,  including  those  relative to the
implementation of digital audio broadcasting on both a satellite and terrestrial
basis,  spectrum for which has been  allocated  by the FCC;  proposals to permit
expanded use of FM  translator  stations;  proposals to restrict or prohibit the
advertising of tobacco  products and/or beer, wine or other alcoholic  beverages
on  radio;  and  changes  to  broadcast  technical   requirements  in  frequency
allocation matters. The Company cannot predict whether any such proposed changes
will be  adopted  nor can it judge in  advance  what  impact,  if any,  any such
proposed changes might have on its business.


EMPLOYEES

         The Company presently  has four (4) full  time  and four (4)  part-time
employees.  The Company's  principal executive officers are John C. Power, Chief
Executive Officer and President,  and J. Andrew Moorer, Chief Financial Officer,
Secretary and Treasurer.  The foregoing  individuals  are responsible for all of
the Company's budget,  legal and financial  matters,  as well as for evaluating,
investigating and negotiating all acquisition opportunities.

         The stations have not experienced any significant  labor problems under
the Company's  ownership,  and the Company  considers its labor relations on the
whole to be good.


ITEM 2.  DESCRIPTION OF PROPERTY

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

         The  Company's  corporate   headquarters  are  leased  and  located  in
Carefree,   Arizona.    Principally,   the   Company's   offices,   studio   and
transmitter/antenna  sites are leased with lease terms that expire within one to
five years.  The Company does not anticipate any  difficulties in renewing those
leases  that  expire  within the next five years or in  leasing  other  space if
required.  The Company owns substantially all of the equipment used in its radio
broadcasting business.

         The Company  believes  that its  properties  are in good  condition and
suitable  for  its  operations.  However,  the  Company  continually  looks  for
opportunities to upgrade its properties.


ITEM 3.  LEGAL PROCEEDINGS

         The Company from time to time is involved in litigation in the ordinary
course of  business.  The  Company is not a party to any  lawsuit or  proceeding
which, in the opinion of management, is likely to have a material adverse effect
on the Company.

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

         The Company did not submit any matters to a vote of security holders in
the fourth quarter of fiscal 1998.
  

<PAGE>


                              PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information for Securities

     The  Company's  outstanding  shares of common  stock  are  traded  over the
counter  and  quoted  on the OTC  Electronic  Bulletin  Board on a  limited  and
sporatic  basis under the symbol RWBD.  The reported high and low prices for the
common stock are shown below for the period through March 31, 1998. These prices
reflect  inter-dealer prices and do not include adjustments for retail mark-ups,
mark-downs or commissions and may not represent actual transactions.

                                         High                Low
                                        ------              -----
Fiscal Quarter Ended
June 30, 1997                           $1.50               $1.50

Fiscal Quarter Ended
September 30, 1997                      $1.50               $1.25

Fiscal Quarter Ended                        
December 31, 1997                       $2.00               $1.625

Fiscal Quarter Ended
March 31, 1998                          $1.75               $1.75

     There were  approximately 55  stockholders of record of the Company's $.004
par value common stock as of July 14, 1998.  This amount does not include shares
held in  "street  name" by  various  brokerage/clearing  houses.  The  number of
stockholders  of record  would be  substantially  greater if the  "street  name"
stockholders were included.

     The Company has not declared or paid any cash dividends on its common stock
since its  formation,  and the present  policy of the Board of  Directors  is to
retain  any  earnings  to  provide  for  the   Company's   growth.   Any  future
determination  to pay  dividends  will  be at the  discretion  of the  Board  of
Directors,  and dependent  upon the Company's  financial  condition,  results of
operations,  capital  requirements  and  such  other  factors  as the  Board  of
Directors deems relevant.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The  following  discussion  of the  financial  condition and results of
operations of the Company  should be read in conjunction  with the  consolidated
financial  statements  and  related  notes  thereto.  The  following  discussion
contains   certain   forward-looking   statements   that   involve   risks   and
uncertainties.  The Company's actual results could differ  materially from those
discussed  herein.  Factors that could cause or contribute  to such  differences
include,  but are not limited to, risks and uncertainties  relating to leverage,
the ability to obtain financing,  consummation of acquisitions and divestitures,
the ability of the Company to achieve  certain cost savings,  the  management of
growth,   the  introduction  of  new  technology,   changes  in  the  regulatory
environment,  the popularity of radio as a broadcasting  and advertising  medium
and changing consumer tastes.  The Company  undertakes no obligation to publicly
release the results of any revisions to these  forward-looking  statements  that
may be made to reflect any future events or circumstances.


Liquidity and Capital Resources - March 31, 1998 Compared to March 31, 1997

     The Company's  balance sheet at March 31, 1998 reflects an  improvement  in
the overall financial  condition of the Company compared to the balance sheet at
March 31, 1997.  Total assets  increased  $166,807 to $2,613,630 as of March 31,
1998  compared to  $2,446,823 as of March 31, 1997;  total  liabilities  for the
current period decreased  significantly  from $1,916,075 as of March 31, 1997 to
$1,109,301,  a reduction of over $800,000;  total stockholders' equity increased
to $714,329 from $226,236 a year ago, an increase of $488,093 or 216%


     Total current  assets at March 31, 1998 were $299,317 and consisted of cash
of $55,695, net accounts receivable of $93,024, receivables from related parties
of $133,839 and other current assets of $16,759. Total current liabilities as of
March 31, 1998 were $615,930 comprised  primarily of vendor accounts payable and
accrued expenses of $200,121,  accounts payable and the current portion of notes
payable to related  parties of $317,869 and the current portion of notes payable
to unrelated  third  parties of $97,940.  The Company  posted a working  capital
deficiency of  ($316,613)  as of March 31, 1998  compared to working  capital of
$234,386 as of March 31, 1997.






<PAGE>



Contributing  to the  decrease  in  working  capital  for  the  period  was  the
following:

1.)  The collection,  during the current period,  of a $633,000  receivable from
     the sale of a radio station  (decrease in current assets during the current
     period) was used to repay the long term portion of notes payable to related
     parties (decrease in long term liability during the current period).

     At March 31,  1998,  the  Company  reported  total  assets  of  $2,613,630,
including property and equipment of $227,249 net of accumulated depreciation and
amortization   of  $90,675  and  $915,716   (net  of  $134,773  in   accumulated
amortization)  of  intangibles   (radio   broadcast   licenses  and  non-compete
agreements)  attributable to KRDG-FM  acquired in July 1996 and KNNN-FM acquired
in  September  1996, a deposit of $973,000  associated  with the purchase of two
radio stations, and other assets of $198,348.

     Total liabilities as of March 31, 1998 of $1,109,301  include,  in addition
to current  liabilities of $615,930  referred to above, the long term portion of
notes payable of $443,371 and notes payable to related  parties of $50,000.  The
long term portion of notes payable is  comprised  primarily  of $412,640 in term
debt  associated  with the  acquisition  of KNNN-FM.  This  compares  with total
liabilities  of  $1,916,075  as of March 31, 1997 and  represents  a decrease of
$806,774.

     As of March 31, 1998 the Company reported stockholders' equity of $714,329.
This represents an increase of $488,093 over March 31, 1998 stockholders' equity
of  $226,236.  Contributing  to the  increase in  stockholders'  cquity were the
following:

1.)  An  increase  in common  stock and  additional  paid in capital  during the
     current  year of  $635,511  associated  with  several  equity  transactions
     involving the  issuance of common stock  pursuant to the  Company's  public
     offering,   in  private  placement   transactions,   in  exchange  for  the
     forgiveness of debt and in exchange for services rendered.

2.)  The  aforementioned  was partiallly  offset by an increase in the Company's
     accumulated  deficit of  $147,418  attributable  to the  company's  current
     period loss.

     The  increase  in  common  stock  and  paid in  capital  resulted  from the
following transactions during the year:

1.)  At March 31, 1997,  203,008 common stock put options were outstanding.  The
     put options granted the  optionholders  the right to sell the Company their
     share  of  common  stock  at a price  of $1.50  per  share.  The  Company's
     potential  obligation  under the put options of $304,512 was  classified as
     redeemable  common stock in the balance  sheet at March 31,  1997.  The put
     options expired June 13, 1997; however,  prior to such expiration,  102,946
     options were exercised by the optionholders  and accordingly,  these shares
     were  acquired  for  $154,419.  As the Company  did not have the  financial
     resources to effect the exercise of the options, these shares were acquired
     by affiliates of the Company.  The remaining  unexercised  put options were
     offered to outside third parties for  purchase.  The remaining  unexercised
     put options were forfeited.  The value of the forfeited options of $150,093
     was credited to additional paid in capital at the time of forfeiture.

2.)  The  issuance of 50,000  shares of common stock  pursuant to the  Company's
     public offering at $2.00 per share generated $100,000 of additioal capital.

3.)  The  issuance  of  75,000  shares  of  common  stock  at  $1.10  per  share
     (restricted stock) in exchange for the forgiveness of $82,500 in debt.

4.)  The  issuance  of  10,000  shares  of  common  stock at $2.00  per share in
     exchange for services rendered to the Company.

5.)  The  issuance  of  200,000  shares  of  common  stock  at $1.20  per  share
     (restricted  stock)  representing  a  deposit  in Power  Surge,  Inc.,  the
     license-holder  of radio  stations  KARZ-FM  and  KNRO-AM  which  are to be
     acquired by the Company.


 
<PAGE>


 
     Results  of  Operations  - Year Ended March 31,  1998  Compared to the Year
Ended March 31, 1997

     Net revenues  (gross revenues less agency  commissions)  for the year ended
March 31, 1998 were  $757,086  compared to $507,917 for the year ended March 31,
1997  representing  an  increase  of  $249,169.   The  increase  in  revenue  is
attributable  entirely to increased volume in radio advertising over a larger of
radio  stations  owned or  operated by the  Company  during the current  year as
compared to the same period a year ago.  Revenues  for the 12 months ended March
31, 1998 were  generated by the Company's  four radio stations owned or operated
in   the   Redding,    California    market    (KRDG-FM-owned,    KNNN-FM-owned,
KRRX-FM-operated  under LMA and  KNRO-AM-operated  under LMA).  Revenues for the
previous  twelve-month  period were comprised of KRDG-FM (from July 1996 through
March 1997) and KNNN-FM (from August 1996 through March 1997).
 
     Operating  expenses  for the year  ended  March 31,  1998  were  $1,006,520
comprised  of station  operating  expenses  of  $333,110,  selling  expenses  of
$103,552,  general and administrative expenses of $435,981, and depreciation and
amortization  of $133,877.  Operating  expenses last year were  $1,066,225.  The
decrease in operating  expenses during the twelve months ended March 31, 1998 of
$59,705 is attributed to the following:

1.)  A one-time corporate  restructuring  charge of $122,747 recorded last year.
     The charge was  associated  with legal and  accounting  costs  incurred  in
     completing  the Company's  Registration  Statement on Form SB-2  (effective
     February 1997). No such cost were incurred during the current year.

2.)  A decrease in depreciation  and  amortization of $18,298 during the current
     year.

3.)  Partially  offsetting the decreases in items 1 & 2 above was an increase in
     general and  administrative  costs of $88,346 during the current year (from
     $347,635 to  $435,981)  as the Company  increased  administrative  staff to
     handle the increase in number of stations being operated (from two stations
     to four).  In addition,  the Company  incurred higher legal expenses during
     the year associated with various purchase and sale transactions. The higher
     legal  costs   contributed   to  the   overall   increase  in  general  and
     administrative costs.

     Although  the Company  sustained an  operating  loss for the twelve  months
ended March 31, 1998;  the  increase in  revenues,  coupled with the decrease in
operating  expenses,  reduced the operating loss by $308,874 or 55%; from a loss
of ($558,308) last year to a loss of ($249,434) during the current year.

     The Company incurred interest expense for the twelve months ended March 31,
1998 of $70,452  comprised  of financing  costs  associated  with the  Company's
acquisition of KRDG-FM and KNNN-FM.  Offsetting the Company's interest costs for
the current  period was  $172,468 of other  income.  Other  income is  comprised
primarily of option  income of $70,000  attributable  to the sale of KNSN-AM and
auction  settlement income of $36,000 received from the settlement,  via private
auction, of the Company's pending application for a construction permit to build
an FM radio  station  licensed  to Shasta  Lake  City,  California.  There  were
multiple  participants  in the auction.  The Company was not the winning bidder,
but will receive a  proportionate  share of the winning bid price.  In addition,
the Company posted $14,600 in interest income on notes receivable and recognized
$9,722 in deferred revenue.

     As a  result  of  the  foregoing,  the  Company  sustained  a net  loss  of
($147,418)  or ($0.15)  per share for the twelve  months  ended  March 31,  1998
compared to a net loss of  ($20,175)  or ($0.03) per share for the same period a
year ago.


<PAGE>

Liquidity and Capital Resources - March 31, 1997 Compared to March 31, 1996

     The  Company's  balance  sheet at March 31,  1997  reflects  a  significant
improvement  in financial  condition  when compared  with the Company's  balance
sheet at March 31, 1996.  Total assets increased from $1,545,105 as of March 31,
1996 to  $2,446,823 as of March 31, 1997,  an increase of over  $900,000;  total
liabilities during the current period increased $613,503 and total stockholders'
equity  increased  to  $226,236  from a  stockholders'  deficit  of  $61,979  an
improvement of $288,215.

     Total current  assets at March 31, 1997 were $879,804 and consisted of cash
of $40,791, net accounts receivable of $121,560, a receivable from the sale of a
radio  station of $633,000 and other  current  assets of $84,453.  Total current
liabilities  at March 31, 1997 were  $645,418,  resulting in working  capital of
$234,386.  This compares favorably to a working capital deficit of $1,120,129 at
March 31, 1996.  Overall,  the Company's  working capital  position  improved by
$1,354,515  during  the  current  period.  Contributing  significantly  to  this
improved working capital position were the following:

          *    An increase in net accounts receivable  of $34,726 resulting from
               increased radio revenues.

          *    An increase in other receivables of $633,000  attributable to the
               sale during fiscal 1997 of KNSN-AM.

          *    A reduction in the current  portion of notes  payable of $640,290
               generated  by the  application  of $370,000 in proceeds  from the
               $633,000 in proceeds from the sale of KHSL-FM  during the current
               period.

     At March  31,  1997,  the  Company  reported  total  assets  of  $2,446,823
including property and equipment of $251,138 net of accumulated  depreciation of
$37,666 and $996,584 (net of $53,905 in accumulated amortization) of intangibles
(radio broadcast  licenses and non-compete  agreements)  attributable to KRDG-FM
acquired in July,  1996 and KNNN-FM  acquired in September,  1996. The effect of
the  increase in total assets  associated  with the  acquisition  of KRDG-FM and
KNNN-FM was partially offset by the sale of land, KHSL-FM and KNSN-AM during the
current  period.  The net book value of intangibles  associated with KHSL-FM and
KNSN-AM was $489,333 at March 31, 1996.

     Total liabilities of $1,916,075 (excluding $304,512 in put option liability
classified below  liabilities)  include,  in addition to current  liabilities of
$645,418  referred to above,  the long term portion of notes payable of $605,208
associated  with the  acquisitions  of KRDG-FM and KNNN-FM and notes  payable to
related parties of $665,449.  This compares with total liabilities of $1,302,572
(excluding  the put  option  liability)  at March  31,  1996 and  represents  an
increase of $613,503.

     As of  March  31,  1997,  the  Company  reported  stockholders'  equity  of
$226,236.  This compares  favorably to a stockholders'  deficit of $61,979 as of
March 31, 1996. Contributing to the increase in stockholders' equity of $288,215
were the following:

*    An  increase  in common  stock and  additional  paid in capital  during the
     current  period of $308,390  associated  with several  equity  transactions
     involving the issuance of common stock in private  placement  transactions,
     in  exchange  for the  forgiveness  of debt and in  exchange  for  services
     rendered.

*    The  aforementioned  was  partially  offset by an increase in the Company's
     accumulated deficit of $20,175 associated with the Company's current period
     net loss.

     Subsequent to year end, the Company has issued  50,000  shares  pursuant to
its public  offering at $2.00 per share  generating  proceeds of $100,000.  This
capital infusion further enhances the liquidity of the Company.

<PAGE>


     Results of  Operations  - Year Ended March 31,  1997  Compared to the Eight
Months Ended March 31, 1996

     Net revenues  (gross revenues less agency  commissions)  for the year ended
March 31, 1997 were $507,917 compared to annualized revenues associated with the
eight  months  ended  March 31, 1996 of $644,079  represents  a decrease,  on an
adjusted  annualized  basis,  of  $136,162.  Revenues for the eight months ended
March 31, 1996,  were comprised  entirely of sales  associated  with KHSL-FM and
KNSN-AM. Effective March 15, 1996, the Company entered into an LMA agreement for
these stations in conjunction  with their impending sale  agreements.  The LMA's
effectively  transferred  operational  control  of the  stations  to the  buyer.
Therefore  during  fiscal 1997,  no revenues and only limited  expenditures  are
reflected  in the  consolidated  financial  statemenst  for KHSL-FM and KNSN-AM.
Revenues for the current  year were  entirely  generated by KRDG-FM  (from July,
1996 through March, 1997) and KNNN-FM (from August, 1996 through March, 1997).

     Operating  expenses  for the year  ended  March 31,  1997  were  $1,066,225
comprised  of  station  operating  expenses  of  $339,499  selling  expenses  of
$104,169,  general and  administrative  expenses of $347,635,  depreciation  and
amortization of $152,175 and a charge for corporate  restructuring of $$122,747.
This  represents  an increase in operating  expenses  over the previous  year of
$273,718. This increase is attributable primarily to the restructuring charge of
$122,747  associated with legal and accounting  costs incurred in completing the
Company's  Registration  Statement  on Form  SB-2  (effective  February,  1997),
coupled with an increase in  depreciation  and  amortization  of $74,526.  On an
annualized basis, broadcasting, selling, and general and administrative expenses
for the period ended March 31, 1996 were $1,072,287  compared to$791,303 for the
year ended March 31, 1997,  resulting in a decrease of $280,984.  As  previously
stated,  prior year costs were  generated by KHSL-FM and  KNSN-AM.  Current year
expenses  were  generated  by the  operations  of  KRDG-FM,  KNNN-FM and certain
residual operating expenses associated with KHSL-FM and KNSN-AM.
 

     During the twelve months ended March 31, 1997, the Company  generated other
income (net of other  expense) of $538,133  compared to other  expense of $5,538
incurred  during the eight  month  period  ended  March 31,  1996  ($8,307 on an
annualized basis). Other income for fiscal 1997 was comprised of the following:

     *    A gain on the sale of KHSL-FM and KNSN-AM of $678,206.

     *    LMA fee income (associated with  the sale of KHSL-FM and KNSN-AM)  and
          other miscellaneous income totaling $87,857.

     *    A loss on the sale of land in the amount of $80,000.

     *    Interest expense of $147,930.

     As a result  of the  foregoing,  the  Company  incurred  a net loss for the
twelve  months  ended  March 31,  1997 of $20,175 or $0.03 per share  based on a
weighted average number of shares  outstanding of 732,201 compared to a net loss
of  $368,659  or $0.76 per share based on a  weighted  average  number of shares
outstanding  of  487,250  for the eight  month  period  ended  March  31,  1996.
Annualizing  the March 31, 1996 loss  represents  an  improvement  in net income
during the current period of $532,812 or $1.11 per share.


ITEM 7.  FINANCIAL STATEMENTS

         See Financial Statements on page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.

         None 
     

<PAGE>


                            PART III

 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS,
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

         The directors and executive officers of the Company are as follows:

                                Director/Officer
           Name                   Age           Position                Since

       John C. Power              35        Chairman of the Board
                                            Chief Executive Officer,
                                            President                    1995

       J. Andrew Moorer           36        Chief Financial Officer,
                                            Secretary, Treasurer,
                                            and Director                 1995

     CERTAIN INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS

     John C. Power.  Mr. Power began his service as President,  Chief  Executive
Officer and Chairman of the Board of the Company in June, 1995 upon consummation
of the  Company's  acquisition  of  Broadcasting.  Mr.  Power has also served as
President  and  Chief   Executive   Officer  of  Redwood   MicroCap  Fund,  Inc.
("MicroCap")  since  February,  1992.  MicroCap is  registered  as an Investment
Company  under the  Investment  Company Act of 1940,  as amended (the "40 Act").
MicroCap  has majority and  minority-owned  subsidiaries  engaged in oil and gas
exploration,  production and  management,  radio  broadcasting,  real estate and
hotel  development.  Since November 1996, Mr. Power has been the Managing Member
of Northern Lights Broadcasting,  L.L.C., a limited liability company engaged in
the  acquisition  and development of radio stations in Montana and North Dakota.
Since November 1996, Mr. Power has also been President of Power Surge,  Inc. Mr.
Power has also served as president of Power  Curve,  Inc., a private  investment
and  consulting  firm since 1986,  and as an officer and  director of  Signature
Wines of Napa Valley,  Inc. from  September,  1995 to June 1996.  Since February
1997,  Mr. Power has been an officer and director of a  privately-held  Vineyard
Project:  Love Oak  Vineyards,  Inc.  Since  November 1997, Mr. Power has been a
managing  member of Sea Ranch Lodge & Village,  LLC. Since March 1998, Mr. Power
has been a director of Guardian Technologies (NASDAQ: GRDN). From March, 1994 to
September,  1995,  Mr. Power served as a general  partner of Signature  Wines, a
California partnership,  a predecessor entity of Signature Wines of Napa Valley,
Inc. Mr. Power served as a director of Biosource  International,  Inc.  (NASDAQ:
BIOI) from August, 1993 to December, 1994, of Optimax Industries,  Inc. (NASDAQ:
OPMX)  from  April,  1993  to  March,  1995,  and  of  AirSoft  Corporation,   a
manufacturer of network communications  software and systems, from 1993 to June,
1996. Mr. Power received his formal  education at Occidental  College and at the
University of California at Davis.

     J. Andrew Moorer.  Mr. Moorer,  like Mr. Power,  began his service with the
Company upon consummation of the Company's  acquisition of Broadcasting in June,
1995, and currently serves as the Company's Chief Financial Officer,  Secretary,
Treasurer,  and as a member of the Company's Board of Directors.  Mr. Moorer has
also  served as a  Director  of  MicroCap  since  December,  1993,  and as Chief
Financial Officer of MicroCap since July, 1994. From May, 1990 to May, 1994, Mr.
Moorer  held the  position  of  Chief  Financial  Officer  of  Applied  Research
Corporation,  a large,  publicly  traded,  scientific  research and  development
company based in Landover,  Maryland.  From March, 1987 to May, 1990, Mr. Moorer
was  employed  as a  business  analyst  with  Compudyne  Corporation,  a defense
electronics  manufacturer  located in  Annapolis,  Maryland.  Prior to accepting
employment  with  Compudyne,  Mr.  Moorer was  employed  as a  Certified  Public
Accountant with the international  accounting firm of Coopers & Lybrand where he
worked in the Audit and Emerging Business  Services Group from January,  1985 to
March,  1987.  Mr.  Moorer  received  his formal  education  at Loyola  College,
Baltimore, Maryland.

     

<PAGE>



         Each  Director is elected to serve for a term of one (1) year until the
next Annual  Meeting of  Shareholders  or until a successor  is duly elected and
qualified.

         Directors  who are also  executive  officers of the Company  receive no
additional compensation for their services as Directors.

         In December,  1996, the Company formed an Audit  Committee of the Board
of  Directors  comprised  of Messrs.  Power and  Moorer.  No member of the Audit
Committee will receive  additional  compensation  for his service as a member of
that Committee.  The Audit Committee is responsible for providing assurance that
financial  disclosures  made by  Management  reasonably  portray  the  Company's
financial condition,  results of operations,  plan and long-term commitments. To
accomplish  this,  the Audit  Committee  oversees the external  audit  coverage,
including the annual nomination of the independent  public  accountants,  review
accounting  policies  and policy  decisions,  review the  financial  statements,
including interim financial statements and annual financial statements, together
with  auditor's  opinions,  inquire  about the  existence  and  substance of any
significant  accounting  accruals,  reserves or  estimates  made by  Management,
review with Management the  Management's  Discussion and Analysis section of the
Annual  Report,  review the letter of  Management  representations  given to the
independent  public  accountants,  meet  privately with the  independent  public
accountants to discuss all pertinent matters,  and report regularly to the Board
of Directors regarding its activities.

         During the twelve (12) months ended March 31, 1998, the Company did not
have standing compensation or nominating committees of the Board of Directors.

         Any  transaction  between  the  Company  and its  officers,  directors,
principal  shareholders,  or other  affiliates have been and will be on terms no
less  favorable to the Company than could be obtained  from  unaffiliated  third
parties on an arms-length basis.

SECTION 16(A) BENEFICIAL OWNERSHIP OF REPORTING COMPLIANCE

         Section 16(a) of the Exchange Act requires the Company's  directors and
executive officers,  and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities (collectively,  the "Covered
Shareholders"),  to file with the  Commission  initial  reports of ownership and
reports of changes of ownership  of certain  equity  securities  of the Company.
Covered Shareholders are required by the Commission's regulations to furnish the
Company with copies of all Section  16(a) forms they file.  Section 16(b) of the
Exchange  Act  requires  the Covered  Shareholders  to return to the Company any
profit  resulting  from  the  purchase  and  sale  of the  Company's  securities
consummated within a period of less than six months.

         Based solely on a review of the copies of such reports furnished to the
Company or written  representations  that no other  reports were  required,  the
Company   believes  that,   during  the  Transition   Period  1996,  all  filing
requirements applicable to its Covered Shareholders were complied with.

ITEM 10.  EXECUTIVE COMPENSATION

         The following table and discussion sets forth  information with respect
to all plan and non-plan compensation awarded to, earned by or paid to the Chief
Executive  Officer ("CEO"),  and the Company's four (4) most highly  compensated
executive  officers  other  than  the  CEO,  for all  services  rendered  in all
capacities to the Company and its subsidiaries for the periods covered by this
Form  10-KSB;  provided,  however,  that no  disclosure  has  been  made for any
executive officer,  other than the CEO, whose total annual salary and bonus does
not exceed $100,000.





<PAGE>


                   SUMMARY COMPENSATION TABLE

                             Long Term Compensation
             Annual Compensation (1)              Awards   Payouts
--------------------------------------------------------------------------------
                                  Other
                                 Annual   Restricted                   All Other
 Name and                        Compen-    Stock               LTIP     Compen-
 Principal  Year  Salary  Bonus  sation    Award(s)  Options/  Payouts   sation
 Position          ($)     ($)    ($)(1)    ($)        SARS      ($)       ($)
--------------------------------------------------------------------------------
John C. Power
 President, 1998  $-0-    $-0-     $-0-     $-0-       $-0-     $-0-       $-0-
 CEO and
 Chairman   1997(2)-0-    $-0-     $-0-     $-0-       $-0-     $-0-       $-0-
 of the
 Board     

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

(1)  No executive  officer  received  perquisites  and other  personal  benefits
     which,  in the  aggregate,  exceeded the lesser of either $50,000 or 10% of
     the total of annual  salary and bonus paid  during  the  respective  fiscal
     years.


1995 INCENTIVE STOCK OPTION PLAN

     On  December 5, 1995,  the Board of  Directors  of the Company  adopted the
Redwood  Broadcasting,  Inc.  1995  Incentive  Stock  Option Plan (the  "ISOP").
Pursuant to the ISOP,  the  Company's  Board of Directors is authorized to issue
options for the purchase of up to 150,000  shares of the Company's  Common Stock
to key  employees of the  Company.  Options  granted  under the ISOP to eligible
participants may take the form of Incentive Stock Options ("ISOs") under Section
422 of the  Internal  Revenue  Code of 1986,  as amended (the "Code") or options
which do not  qualify  as ISOs  (Non-Qualified  Stock  Options or  "NQSOs").  As
required by Section 422 of the Code, the aggregate fair market value (as defined
in the ISOP) of the Company's  Common Stock  (determined as of the date of grant
of the ISO) with respect to which ISOs  granted to an employee  are  exercisable
for the first time in any calendar year may not exceed  $100,000.  The foregoing
limitation does not apply to NQSOs. The exercise price of an ISO may not be less
than 100% of the fair market value of the shares of the  Company's  Common Stock
(or 110% of the fair market value if granted to a person who owns 10% or more of
the Company's  outstanding shares) on the date of grant. The exercise price of a
NQSO may be set by the  administrator  of the ISOP. The exercise price under any
option will be adjusted  as  provided  in the ISOP to reflect  stock  dividends,
splits,  other  recapitalizations  or reclassifications or changes affecting the
number or kind of outstanding  shares. Fair market value of the Company's Common
Stock is defined in the ISO as the closing sale price of the Common Stock on the
OTC Electronic  Bulletin  Board System or any  securities  exchange on which the
shares of Common Stock are then listed.

         The ISOP is  administered  by a  committee  made up of  members  of the
Company's  Board of  Directors  (the  "Committee"),  which  determines  eligible
employees,  the time and number of options to be  granted,  and the  periods for
which such options are granted.  There are  limitations on the number of options
which can be granted and the  aggregate  fair  market  value of the stock in any
given year. All options granted under the ISOP can be made subject to vesting by
the Committee in its discretion.

     During the year ended March 31, 1997, the Company  issued  100,000  options
under the plan to an employee.  The options  expired in 1997 upon the  employees
termination.  No options had vested  prior to the termination  and there were no
options outstanding as of March 31, 1998.



<PAGE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT       

         The following table sets forth certain  information with respect to the
beneficial ownership of the Company's Common Stock by: (i) each of the directors
and  executive  officers of the Company,  (ii) all officers and directors of the
Company  as a group,  and (iii)  holders of 5% or more of the  Company's  Common
Stock.  Each person has sole  voting and  investment  power with  respect to the
shares shown, except as noted.

Name and Address                        Number of Shares
of Beneficial Owner                     Beneficially Owned

Officers, Directors,
and Principal Shareholders

John C. Power (1)                              813,204               57.7%
P.O. Box 3458
Carefree, AZ  85377

J. Andrew Moorer (2)                           743,970               52.8%
4528 E. Duane Lane
Cave Creek, AZ  85331

Redwood MicroCap Fund, Inc. (3)(4)             700,454               49.7%
P.O. Box 3463
Carefree, AZ  85377

Combined Penny Stock Fund, Inc. (5)            130,608                9.26%
2055 Anglo Drive, Suite 105
Colorado Springs, CO  80918

Brian Power (6)                                144,984               10.30%
Nut Tree Ranch
Nut Tree, CA  95690

Rockies Fund, Inc.                             200,000               14.2%
4465 Northpark Drive
Colorado Springs, CO 80907

Officer and Directors
as a Group (two (2) individuals)               856,720               60.8%


     (1)  Includes  700,454  shares  held of record by  Redwood  MicroCap  Fund,
          Inc.,a  Colorado  corporation,  of  which  Mr.  Power  is an  officer,
          director and shareholder and, as such, would be deemed to exercise the
          shared voting and  investment  power with respect to such  securities.
          Mr.  Power  disclaims  beneficial  ownership  of  the  securities  for
          purposes of Section 16 under the Exchange  Act.  Assumes no shares are
          sold by MicroCap in the Selling Shareholders' Offering. Also, includes
          7,750 shares held of record by the John C. Power Profit  Sharing Plan.
          Mr.  Power  currently  serves  as  the  Plan's  administrator  and  is
          beneficiary  and as such,  would be  deemed  to  exercise  voting  and
          investment  power  with  respect  to such  securities.  Also  includes
          81,250  shares  held  of record by Power  Curve,  Inc.,  a  controlled
          corporation of Mr. Power.

     (2)  Includes 700,454 shares held of record by Redwood MicroCap Fund, Inc.,
          a Colorado  corporation of which Mr. Moorer is an officer and director
          and,  as such,  would be deemed to  exercise  the  shared  voting  and
          investment power with respect to such securities. Mr. Moorer disclaims
          beneficial  ownership  of the  securities  for  purposes of Section 16
          under the Exchange Act.  Assumes no shares are sold by MicroCap in the
          Selling Shareholders' Offering.

     (3)  Includes 195,371 shares of Common Stock acquired pursuant to the terms
          of the RBI Agreement.  (See "CERTAIN  TRANSACTIONS - RBI  Agreement"),
          216,559 shares of the Common Stock issued to MicroCap in  satisfaction
          of $259,371 in debt owed to MicroCap by the Company, 143,204 shares of
          Common Stock  acquired  from certain CRI  Shareholders,  25,000 shares
          acquired during the Company's Public Offering,  and 75,000 shares held
          by a wholly-owned subsidiary of MicroCap.

<PAGE>


     (4)  Redwood MicroCap Fund, Inc. is  a diversified, closed-end, mutual fund
          registered under the Investment  Company Act of 1940 (the "1940 Act").
          Voting and  investment  power  with  respect  to these  securities  is
          exercised by the company's Board of Directors,  whose members are John
          C. Power, Joseph O. Smith, and J. Andrew Moorer.

     (5)  Combined  Penny  Stock  Fund,  Inc.  is  a   Colorado-based   business
          development company located in Colorado Springs,  Colorado. Voting and
          investment  power with respect to these securities is exercised by the
          Company's Board of Directors whose members include Jeff Kormos, Dr. A.
          Leonard Nacht, Brian Power and John Overturf.

     (6)  Includes 130,608  shares of Common  Stock  owned of record by Combined
          Penny Stock Fund,  Inc.,  on which Mr. Power serves as a member of the
          Board of Directors.  Mr. Power disclaims  beneficial  ownership of the
          shares held of record by Combined Penny Stock Fund,  Inc. for purposes
          of Section 16 of the Exchange Act.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RBI AGREEMENT

         In  connection  with the Company's  acquisition  of  Broadcasting  (See
"BUSINESS - History-Redwood  Broadcasting,  Inc."),  the Company issued to RBI's
shareholders  300,000  shares of the Company  Common  Stock in exchange  for one
hundred percent (100%) of the issued and  outstanding  shares of Common Stock of
Broadcasting.  Subsequent to the  acquisition,  Broadcasting was merged with and
into the Company, with the Company remaining as the surviving entity.

     In connection  with the  acquisition of  Broadcasting,  the Company did not
obtain an opinion of an investment banker,  accountant or other third party that
the terms of the transaction were fair to the Company's future  shareholders who
would receive their shares in this shares in the Spin-Off.  In lieu of obtaining
such opinions,  MicroCap  (Broadcasting's parent corporation) agreed to purchase
from  certain  of the CRI  Shareholders  the right to  receive a total of 97,000
Spin-Off  Shares at a price of $1.20 per share. As MicroCap lacked the resources
and capital to extend the same offer and  opportunity  to all CRI  Shareholders,
the Company  required as a condition to closing the  transaction  that  MicroCap
guarantee  its  obligations  under the Put Options being issued to the remaining
CRI  Shareholders.  The Puts required the Company to purchase and redeem any and
all shares tendered at a price of $1.50 per share. The Puts were exercisable for
a period of ninety  (90) days  following  the  effective  date of the  Company's
Registration Statement. The Putholders were not charged or assessed for Puts and
the  Company did not receive any  proceeds  from the  proceeds of the Puts.  The
Company bore the cost of the distribution of the Puts.

     In  February  1997,  the  Company  completed  the filing of a  Registration
Statement  Form SB-2 under the  Securities  Act of 1933, as amended.  The filing
effectively   registered  for  sale  all  shares  of  common  stock  issued  and
outstanding  at  that  time,   203,008  common  stock  put  options  which  were
subsequently issued to certain stockholders, 203,008 put option guarantees under
which  MicroCap  guaranteed  the  Company's  obligation  under the puts,  and an
additional  400,000  shares of the  Company's  common stock to be offered to the
public. The registration of the outstanding  shares, the put options and the put
option   guarantees  was  required   pursuant  to  the  Agreement  and  Plan  of
Reorganization dated June 16, 1995.

     At  March  31,  1997,  the  203,008  common  stock  put  options   remained
outstanding.  The put options  granted the  putholders  the right to sell to the
Company  their  shares  of  common  stock  at a price of $1.50  per  share.  The
Company's potential  obligation under the put options of $304,512 was classified
as redeemable  common stock at March 31, 1997.  The put options  expired on June
13, 1997; however, prior to their expiration,  102,946 options were exercised by
the  optionholders and the shares were acquired by affiliates of the Company for
$154,419. The remaining put options were forfeited.

<PAGE>


MICROCAP DEBT CONVERSION

     During the year ended March 31, 1997,  the Company  issued 71,559 shares of
common stock to MicroCap to retire notes and accounts payable totalling $85,871.

TRIPOWER RESOURCES, INC., DEBT OBLIGATION

     In conjunction  with the  acquisition of KHSL-AM\FM by Alta,  Alta borrowed
the sum of $375,000  from  TriPower  Resources,  Inc.,  which  indebtedness  was
evidenced by Alta's  promissory note (the "Note") and was originally  secured by
the Chico Property,  which was sold by the Company in April,  1996. The TriPower
Note was then  collateralized  by a pledge of 100% of the shares of Alta  Common
Stock.  TriPower  Resources,  Inc. is a controlled  corporation of the Company's
President,  John C. Power. Pursuant to the terms of the Note, Alta has agreed to
pay TriPower  Resources,  Inc.  interest on the unpaid principal  balance at the
rate of  fourteen  percent  (14%) per annum.  During the eight (8) months  ended
March 31,  1996,  the  Company  made a principal  reduction  payment of $75,000,
leaving a principal  balance of  $300,000.  The  TriPower  Note was paid in full
during the year ended  March 31,  1997 and all  collateral  was  returned to the
Company.

MICROCAP BORROWINGS

     The Company has received  approximately  $108,957 from MicroCap in the form
of inter-Company  borrowings,  which  indebtedness is unsecured and had not been
repaid as of March 31, 1998. The funds received were used for working capital.

POWER CURVE, INC. STOCK PURCHASE

     During  the year  ended  March  31,  1997,  the  Company  received  private
placement proceeds of $97,500 in exchange for the issuance of $81,250 shares of
common stock at $1.20 per share to Power Curve,  Inc., a corporation  controlled
by John C. Power, an officer and director of the Company.

MICROCAP PREFERRED STOCK

     During the year ended March 31, 1998, the Company issued 790,000 shares of 
its preferred stock to MicroCap for $790,000.

NOTES RECEIVABLE OFFICER

     The Company has a $45,000 note receivable from an officer of the Company as
of March 31, 1998  relating to a purchase by the officer of 31,500 shares of the
Company's common stock. The note bears interest at 7%, matures on August 1, 2002
and is  collateralized  by a  second  deed of trust  on the  officer's  personal
residence.

MICROCAP STOCK PURCHASE

     During the year ended March 31, 1998  MicroCap  purchased  25,000 shares of
Common Stock pursuant to the Company's  Public  offering.  The Company  received
proceeds of $50,000 from this transaction.

ROCKIES FUND STOCK ISSUANCE

     During the year ended March 31, 1998 the Company  issued  200,000 shares of
Common  Stock to the Rockies  Fund,  Inc.  to  purchase a 20%  interest in Power
Surge, Inc. (a wholly-owned subsidiary of Power Curve, Inc. which is 100% owned
by the President of the Company).









<PAGE>

ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

      (a)  Exhibits

          The exhibits as indexed below are included as part of this Form 10-KSB

          The  following  Exhibits  have  previously  been  filed  as  part of a
     Registration Statement pursuant to item 601 of Regulation S-B:

                         Index to Exhibits
                         -----------------

     Exhibit No.    Description

          2.0       Agreement and Plan or Reorganization Dated as of December 5,
                    1994,  between  and  among  Cell Robotics, Inc., Intellegent
                    Financial  Corporation,  Micel, Inc., Bridgeworks  Investors
                    1, LLC, and Ronald K. Lohrding

          2.1       Agreement  and  Plan of  Reorganization  Date as of June 16,
                    1995,  between  and  among  Intelligent   Financial  Holding
                    Corporation,   Redwood  Microcap  Fund,  Inc.,  and  Redwood
                    Broadcasting Inc.

          3.0(i)    Articles of  Incorporation  of Intelligent Financial Holding
                    Corporation

          3.0(ii)   By-laws of Intelligent Financial Holding Corporation

          4.1       Specimen Certificate of Common Stock

          4.2       Specimen Put Option Certificate

          4.3       Redwood Broadcasting Inc. 1995 Incentive Stock Option Plan

          5.0       Opinion  of  Newman & Cobb  regarding  the  legality  of the
                    securities being registered

         10.0       KHSL-AM/FM Asset Purchase Agreement dated February 3, 1995

         10.1       KHSL Local Management Agreement

         10.3       Agreement  to  Convert Debt dated September 30, 1995 between
                    Intelligent   Financial  Holding   Corporation  and  Redwood
                    MicroCap Fund, Inc.

         10.4       KNNN Letter of Intent

         10.5       KNNN Asset Purchase Agreement

         10.6       KNSN-AM and KHSL-FM Asset Purchase Agreement dated March 12,
                    1996

         10.7       Redwood MicroCap Fund Inc. Consultation Agreement

         10.8       Selected Dealer Agreement

<PAGE>


         16.0       Letter on Change and Certifying Accountant

         21.0       Subsidiaries

         23.1       Consent of Neuman & Cobb

         23.2       Consent  of  Schumacher & Associates, Inc., Certified Public
                    Accountants

         23.3       Consent of Stockman, Kast, Ryan & Scruggs, P.C.

         *          Incorporated  by  referenced from  Registrant's  Registation
                    Statement on Form  SB-2, S.E.C.  File No. 33-80321, as filed
                    with the Commission on December 12, 1995.

         **         Incorporated by  referenced  from Registrant's Pre-Effective
                    Amendment No.1 to Registration Statement on Form SB-2 S.E.C.
                    File No.33-80321, as filed with the Commission on October 3,
                    1996.

         ***        Incorporated  by  referenced from Registrant's Pre-Effective
                    Amendment No.2 to Registration Statement on Form SB-2 S.E.C.
                    File No.33-80321, as filed with the Commission on January 2,
                    1997.


<PAGE>



                                   SIGNATURES


DATED:  07/14/97                    REDWOOD BROADCASTING

                            By: /s/ JOHN C. POWER
                                    John C. Power
                                    President and Chief Executive Officer


                            By: /s/ J. ANDREW MOORER
                                    J. Andrew Moorer
                                    Chief Financial Officer

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  Registrant and in the capacities and
on the dates indicated.

     Signature                            Title                          Date

/s/ John C. Power            President and Chief Executive Officer     07/14/98
JOHN C. POWER                 Chairman of the Board of Directors


/s/ J. Andrew Moorer         Chief Financial Officer and Director      07/14/98
J. ANDREW MOORER







<PAGE>




REDWOOD BROADCASTING, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

                                                                 Page

INDEPENDENT AUDITORS' REPORT                                       2

CONSOLIDATED  FINANCIAL  STATEMENTS
Consolidated  Balance  Sheet                                       3
Consolidated Statements of Operations                              4
Consolidated Statements of Stockholders' Equity                    5
Consolidated Statements of Cash Flows                              6
Notes to Consolidated Financial Statements                         7




                                         - 1 -

<PAGE>



INDEPENDENT AUDITORS' REPORT


Redwood Broadcasting, Inc.
Carefree, Arizona


We  have  audited  the  accompanying   consolidated  balance  sheet  of  Redwood
Broadcasting,  Inc.  and  subsidiaries  as of March  31,  1998  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years ended  March 31, 1998 and 1997.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial  position of Redwood  Broadcasting,  Inc. and
subsidiaries as of March 31, 1998, and the results of their operations and their
cash  flows  for the years  ended  March 31,  1998 and 1997 in  conformity  with
generally accepted accounting principles.





STOCKMAN KAST RYAN & SCRUGGS, P.C.
Colorado Springs, Colorado
July 10, 1998





                                                       - 2 -

<PAGE>

 





REDWOOD BROADCASTING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
MARCH 31, 1998                                                                 
                                                                              
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6)                                   $   55,695
Accounts receivable, net (Note 1)                                        48,024
Receivables from related parties (Note 5)                               133,839
Receivable from bid settlement                                           45,000
Other current assets                                                     16,759
                                                                      ---------
Total current assets                                                    299,317

Property and equipment, net (Notes 3 and 6)                             227,249
Intangible assets, net (Note 4)                                         915,716
Deposit on purchase of stations (Note 2)                                973,000
Other assets                                                            198,348
                                                                      ---------
TOTAL                                                                $2,613,630
                                                                      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses                                $  200,121
Payables to related parties (Note 5)                                    152,805
Current portion of notes payable (Note 6)                                97,940
Current portion of notes payable to related parties (Note 5)            165,064
                                                                      ---------
Total current liabilities                                               615,930

Notes payable (Note 6)                                                  443,371
Notes payable to related parties (Note 5)                                50,000
                                                                      ---------
Total liabilities                                                     1,109,301
                                                                      ---------

REDEEMABLE PREFERRED STOCK, par value $.04; 2,500,000
  shares authorized; 790,000 issued and outstanding (Notes 8 and 11)    790,000
                                                                      ---------

STOCKHOLDERS' EQUITY (Note 8)
Common stock, par value $.004; 12,500,000 shares authorized;
    1,410,000 shares issued and outstanding                               5,640 
Additional paid-in capital                                            1,453,506
Accumulated deficit                                                    (699,817)
Note receivable from stockholder                                        (45,000)
                                                                      ---------
Total stockholders' equity                                              714,329
                                                                      ---------
TOTAL                                                                $2,613,630
                                                                      =========




See notes to consolidated financial statements.


                                              - 3 -

<PAGE>



REDWOOD BROADCASTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
                                                   
                                                                               
                                                          1998             1997
REVENUE
Broadcast revenue                                    $ 830,724        $ 545,185
Less agency commissions                                 73,638           37,268
                                                     ---------        ---------
Net revenue                                            757,086          507,917
                                                     ---------        ---------
OPERATING EXPENSE
General and administrative                             435,981          347,635
Broadcasting                                           333,110          339,499
Selling                                                103,552          104,169
Depreciation and amortization                          133,877          152,175
Corporate restructuring (Note 8)                             -          122,747
                                                     ---------        ---------
Total                                                1,006,520        1,066,225
                                                     ---------        ---------
LOSS FROM OPERATIONS                                  (249,434)        (558,308)
                                                     ---------        ---------

OTHER INCOME (EXPENSE)
Interest expense                                       (70,452)        (147,930)
Gain on sale of radio
  stations (Note 2)                                                     678,206
Loss on sale of land (Note 2)                                           (80,000)
Other income - net (Notes 2 and 10)                    172,468           87,857
                                                     ---------        ---------
OTHER INCOME, NET                                      102,016          538,133 
                                                     ---------        ---------
NET LOSS                                             $(147,418)       $ (20,175)
                                                     =========        =========
NET LOSS PER COMMON SHARE                            $    (.15)       $    (.03)
                                                     =========        =========
WEIGHTED AVERAGE COMMON
    SHARES OUTSTANDING                               1,015,082          732,201
                                                     =========        =========









See notes to consolidated financial statements.


                                                       - 4 -

<PAGE>


REDWOOD BROADCASTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                             Note
                                     Additional           Receivable   Total
                       Common Stock   Paid-In  Accumulated   from  Stockholders'
                      Shares  Amount  Capital    Deficit  Stockholder  Equity

BALANCES,
    APRIL 1, 1996     577,500 $2,310   $467,935 $(532,224)           $ (61,979)

Issuance of stock in
  private placements
  (Note 8)            132,750    531    158,769                        159,300
Issuance of common
  stock to repay debt
  (Note 8)             71,559    286     85,585                         85,871
Issuance of common
  stock for services
  (Note 8)             46,016    184     55,035                         55,219
Issuance of common
  stock to officer
  (Note 8)             37,500    150     44,850             $(45,000)
Issuance of common
  stock for investment  6,667     27      7,973                          8,000
Net loss                                          (20,175)             (20,175)
                       ------  -----     ------   --------   --------  --------
BALANCES,
    MARCH 31, 1997    871,992  3,488    820,147  (552,399)   (45,000)  226,236
                                                                      

Satisfaction or
  forfeiture of common 
  stock put options
  (Note 8)            203,008    812    303,700                        304,512
Issuance of common
  stock to repay 
  debt(Note 8)         75,000    300     82,200                         82,500
Issuance of common  
  stock for cash and
  services (Note 8)    60,000    240      8,259                          8,499 
Issuance of common
  stock for 
  investment(Note 2)  200,000    800    239,200                        240,000
Net loss                                         (147,418)            (147,418) 
                    ---------   ----  ---------  --------  --------- ----------
BALANCES,
    MARCH 31, 1998  1,410,000 $5,640 $1,453,506 $(699,817)  $(45,000) $714,329
                    ========= ====== ==========  ========  =========  ========  



See notes to consolidated financial statements.






                                          - 5 -



<PAGE>




REDWOOD BROADCASTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
                                                         
                                              
                                                               1998        1997
OPERATING ACTIVITIES
Net loss                                                  $(147,418)  $ (20,175)
Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization                           133,877     152,175
    Gain on bid settlement                                  (36,205)
    Gain on sale of stations                                           (678,206)
    Loss on sale of land                                                 80,000
    Loss on disposals of equipment                                        5,942
    Changes in operating assets and liabilities:
       Accounts receivable                                   73,536     (42,226)
       Other current assets                                  (3,852)     10,986
       Accounts payable and accrued expenses               (188,544)     10,008
       Other assets                                        (112,180)      7,901 
                                                           --------    --------
Net cash used in operating activities                      (280,786)   (473,595)
                                                           --------    --------
INVESTING ACTIVITIES
Collection of receivables from sales of stations            833,000
Cash deposit on purchase of stations                       (733,000)
Proceeds from sale of radio stations, 
  net of commissions paid                                               588,333
Proceeds from sale of land                                              370,000
Purchases of station assets                                 (66,786)   (448,920)
                                                           --------    --------
Net cash provided by investing activities                    33,214     509,413 
                                                           --------    --------
FINANCING ACTIVITIES
Proceeds from borrowings under                                                 
  related party notes                                       205,000   1,198,808 
Proceeds from borrowings under notes                         97,403     465,000
Principal payments on notes to
  related parties                                          (580,385)   (848,533)
Principal payments on notes                                (224,184)   (761,908)
Decrease in net payable to related parties                  (83,863)   (132,030)
Payments on capital lease obligations                       (11,994)    (13,664)
Proceeds from issuance of common stock                      100,000     159,300
Proceeds from issuance of redeemable preferred stock        790,000
Increase in common stock offering costs                     (29,501)    (62,000)
                                                           --------    --------
Net cash provided by financing activities                   262,476       4,973
                                                           --------    --------
NET INCREASE IN CASH AND CASH EQUIVALENTS                    14,904      40,791
CASH AND CASH EQUIVALENTS, Beginning of year                 40,791            
                                                           --------    --------
CASH AND CASH EQUIVALENTS, End of year                      $55,695    $ 40,791
                                                           ========    ========
SUPPLEMENTAL NONCASH INVESTING  ACTIVITIES
Promissory note received for sale of stations                         $ 200,000
Receivable received for sale of stations                                633,000
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES
Satisfaction or forfeiture of common stock put options    $ 304,512
Issuance of common stock for services                        20,000   $  55,219
Issuance of common stock to repay debt                       82,500      85,871
Issuance of common stock for investment                     240,000       8,000
Issuance of common stock to officer in exchange for 
  note receivable from officer                                           45,000
Note issued in acquisition of 
  station assets                                                        655,000

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest                                    $ 113,048   $ 115,689






See notes to consolidated financial statements.



                                             - 6 -

<PAGE>




REDWOOD BROADCASTING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Organization   --  Redwood   Broadcasting,   Inc.   ("RBI")   and  its
          subsidiaries   Alta   California   Broadcasting,   Inc.  and  Northern
          California Broadcasting, Inc. (collectively,  the Company), operate in
          the radio broadcasting industry. RBI is a majority-owned subsidiary of
          Redwood  MicroCap  Fund,  Inc.  ("MicroCap").  Organized  as a holding
          company for the purpose of acquiring  and/or   developing  undervalued
          radio  broadcasting  properties  located  in  small  to  medium  sized
          markets,  the Company has embarked upon an aggressive  acquisition and
          development  program and continues to seek acquisition and development
          opportunities  in  the  broadcast  industry.   The  Company  currently
          operates  radio  stations in Northern  California.  Management  of the
          Company is performed by employees of MicroCap.

          Principles of Consolidation -- The consolidated  financial  statements
          include the  accounts of RBI and its  wholly-owned  subsidiaries.  All
          significant   intercompany   accounts  and   transactions   have  been
          eliminated in consolidation.

          Accounts Receivable -- The Company maintains an allowance for doubtful
          accounts  based  upon  the  expected  collectibility  of all  accounts
          receivable. At March 31, 1998, the allowance was $8,250.

          Property and  Equipment -- Property and equipment are recorded at fair
          value as of the date of aquisition  of the related  station or cost if
          purchased  subsequently.  Depreciation  is provided on a straight-line
          basis  over the  estimated  useful  lives of the  assets  as  follows:
          buildings  and  improvements  - 10  years;  transmitters  - 20  years;
          computer  equipment - 3 years;  and technical  equipment and furniture
          and fixtures - 5 to 7 years. The  recoverability of the carrying value
          of property and equipment is evaluated periodically in relation to the
          estimated  value  of the  radio  stations  based  on  their  operating
          performance and cash flows.

          Intangible  Assets -- Intangible assets include radio station purchase
          price  allocations  to  license  costs and the  noncompete  agreement.
          License costs are amortized  over a period of 20 years and  noncompete
          agreement  is amortized  over the three year period of the  agreement.
          The  recoverability  of the  carrying  value of  intangible  assets is
          evaluated periodically in relation to the estimated value of the radio
          stations based on their operating performance and cash flows.

          Revenue  Recognition -- The Company's primary source of revenue is the
          sale of air time to advertisers.  Revenue from the sale of air time is
          recorded when the advertisements are broadcast.

          Barter Transactions -- Revenue from barter  transactions  (advertising
          provided in exchange for goods and  services) is  recognized  based on
          the  fair  value  of  the  goods  or   services   received   when  the
          advertisements  are broadcast.  Goods and services are recognized when
          used.

                                         - 7 -

<PAGE>



1.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

          Income Taxes -- The Company  accounts  for income taxes in  accordance
          with Statement of Financial  Accounting  Standards No. 109, which uses
          the asset and liability  method of accounting for income taxes.  Under
          the asset and liability  method,  deferred income taxes are recognized
          for the tax consequences of temporary  differences by applying enacted
          statutory tax rates to  differences  between the  financial  statement
          carrying amounts and the tax bases of existing assets and liabilities.
          The effect on deferred  taxes of a change in tax rate is recognized in
          the period that includes the enactment date.

          Loss Per Common  Share -- Loss per common  share is based upon the net
          loss  applicable  to common  shares and upon the  weighted  average of
          common shares  outstanding  during the period.  The exercise of common
          stock  warrants was not assumed in the  calculation of loss per common
          share because the effect would be  antidilutive.  The weighted average
          common  shares  outstanding  excludes  shares  which  are  treated  as
          redeemable common stock.

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

          Statement  of Cash  Flows -- For  purposes  of the  statement  of cash
          flows,  highly  liquid  investments,  maturing  within three months of
          acquisition, are considered to be cash equivalents.

          Concentrations  of Risk --  Financial  instruments  which  potentially
          subject the Company to concentrations of credit risk consist primarily
          of cash and cash equivalents and receivables.

          The Company's radio stations  broadcast in Northern  California.  This
          results  in a risk  to the  Company  due to the  concentration  in one
          geographic area.

          Reclassifications  -- Certain amounts in the 1997 financial statements
          have been reclassified to conform with the 1998 presentation.


2.        RADIO STATION ACQUISITIONS AND DISPOSITIONS

          In  1994,  RBI  formed  a  wholly-owned  subsidiary,  Alta  California
          Broadcasting,  Inc. (Alta), to  pursue radio acquisition opportunities
          it had determined were available in Northern California. A description
          of such stations follows:

          KHSL  AM/FM  -- In  1994,  Alta  acquired  radio  stations  KHSL-AM/FM
          licensed to Chico and Paradise, California,  respectively.  Subsequent
          to its  acquisition  by Alta,  KHSL-AM  changed  its call  letters  to
          KNSN-AM.

                                                         - 8 -

<PAGE>



2.        RADIO STATION ACQUISITIONS AND DISPOSITIONS, continued

          In March 1996,  Alta entered into  separate  Asset Sale  Agreements to
          sell the assets of both  KNSN-AM  and  KHSL-FM,  excluding a parcel of
          land,  for  $1,466,333.  Concurrently  with  signing  the  Asset  Sale
          Agreements,  Alta entered into a Local Management Agreement (LMA) with
          the prospective  purchaser until the sale closed on March 31, 1997, at
          which time the LMA  terminated.  Included in other income for the year
          ended  March  31,  1997 is  $46,033  resulting  from LMA fees from the
          prospective purchaser.

          Alta received $633,333 in cash and a $200,000  promissory note bearing
          interest at a rate of 7%. Alta was also to receive $633,000 in cash no
          later than April 30, 1997 for KNSN-AM;  however, pursuant to the Asset
          Purchase  Agreement,  the  buyer of  KNSN-AM  had the  option to defer
          payment of such amount for monthly  option fees of $10,000 or $15,000.
          Included in other  income for the year ended March 31, 1998 is $70,000
          resulting  from monthly option fees  collected.  As of March 31, 1998,
          all amounts receivable from the sale of KHSL-AM/FM had been collected.
          A gain on the sale of $678,206 has been  recorded in the  accompanying
          statement of operations for the year ended March 31, 1997.
        
          In April 1996,  the parcel of land was sold to an unrelated  party for
          $370,000.  A loss on the  sale of  $80,000  has been  recorded  in the
          accompanying  statement  of  operations  for the year ended  March 31,
          1997.

          KRDG-FM  (f/k/a KHZL and KCFM) -- In March 1995,  Alta  entered into a
          LMA with an option to  purchase  radio  station  KCFM-FM  licensed  to
          Shingletown, California, which began commercial broadcasting in August
          1995.  KCFM-FM  primarily serves the Redding,  California  market.  In
          September 1995,  KCFM-FM changed its call letters to KHZL-FM.  In July
          1996, Alta completed the acquisition of KHZL-FM,  thereby  terminating
          the LMA. Alta paid $65,000 cash and issued a $155,000  promissory note
          as  consideration  for  KHZL-FM  (see  Note 6).  The  acquisition  was
          recorded using the purchase method and the $220,000 purchase price was
          recorded as license costs as no other assets of KHZL-FM were acquired.
          Effective  September 27, 1996, Alta changed  KHZL-FM's call letters to
          KRDG-FM.

          KNNN-FM -- In May 1996, Alta entered into an Asset Purchase  Agreement
          to acquire KNNN-FM licensed to Central Valley,  California.  The Asset
          Purchase  Agreement was subsequently  assigned to Alta's  wholly-owned
          subsidiary,  Northern California Broadcasting,  Inc. KNNN-FM primarily
          serves the Redding,  California  market.  In August  1996,  Alta began
          operating  KNNN-FM  under a LMA pending  approval  of the  transfer of
          ownership  by the FCC. The  purchase  price for KNNN-FM was  $825,000,
          $325,000  of which was paid in cash at  closing,  and the  balance  of
          which was in the form of a promissory  note (see Note 6).  Pursuant to
          the Asset  Purchase  Agreement,  the seller of  KNNN-FM  agreed to not
          compete in the Redding, California market for a period of three years.
          The  acquisition  was  recorded  using  the  purchase  method  and the
          purchase price was allocated to property and equipment, the noncompete
          agreement and license costs, based on estimated fair values.

          
                                                    - 9 -


<PAGE>

          KLXR-FM -- In May 1996, Alta entered into an Asset Purchase  Agreement
          to acquire  KLXR-AM,  licensed  to  Redding,  California,  for a total
          purchase price of $100,000.  In February 1997, Alta entered into a LMA
          with the seller and, in April 1998,  Alta  completed  the  purchase of
          KLXR for $100,000 cash.

          KNRO-AM and KRRX-FM (f/k/a  KARZ-FM) - Effective  April 1, 1997,  Alta
          acquired  an option to  purchase  radio  stations  KNRO-AM and KARZ-FM
          (KNRO/KARZ)  licensed in Redding,  California  from Power Surge,  Inc.
          (Power Surge), a wholly-owned  subsidiary of Power Curve,  Inc. (Power
          Curve).  Power  Surge  and  Power  Curve  are both  controlled  by the
          Company's  President.  Power Curve  acquired  KNRO/KARZ on January 31,
          1997 for $480,000 in cash and a $720,000  promissory note. Power Surge
          operated the stations from February 1, 1997 through March 31, 1997 and
          received  the licenses  from Power Curve on March 31, 1997.  Under the
          terms of the option  agreement,  the Company  can either (1)  purchase
          KNRO/KARZ for $1,200,000 in cash or (2) issue 1,000,000  shares of its
          common stock in exchange for all of the issued and outstanding  shares
          of common  stock of Power Surge.  Also  effective  April 1, 1997,  the
          Company  entered into a LMA with Power Surge for a period of one year.
          The  Company  operated  KNRO/KARZ  through  October  15,  1997 and was
          obligated  to pay Power Surge a monthly fee of $5,000.  Effective  May
          16, 1997, KARZ-FM changed its call letters to KRRX-FM. As of March 31,
          1998,  the Company made cash  payments of $733,000 and issued  200,000
          shares of its common  stock,  with a fair value of $240,000,  to Power
          Curve as deposits on the purchases.  Subsequent to year-end the option
          agreement  and LMA were  extended,  the option price was  increased to
          $1,235,000,   and  Alta   exercised  its  option  on  June  15,  1998.
          Immediately thereafter,  the stations, along with KRDG-FM and KNNN-FM,
          were sold to Regent Communications, Inc. (Regent) (see note 11).
        
          KESP-FM -- During the year ended March 31, 1998, the Company  acquired
          a  construction  permit  for  KESP-FM  in  Payson,  Arizona  and began
          construction  of the station. On March 31, 1998, the Company signed an
          agreement with  Brentlinger  Broadcasting,  Inc.  (Brentlinger)  under
          which  Brentlinger has the option to purchase the station assets for a
          period of three years after  commencement of program test  operations.
          The option price is $1.5 million  within two years after  commencement
          of program test operations or $1.75 million thereafter.




                                    - 10 -

<PAGE>



3.       PROPERTY AND EQUIPMENT

         Property and equipment consists of the following at March 31, 1998:


         Buildings and improvements                                $ 54,098
         Equipment                                                  147,343
         Transmitters                                                72,764
         Furniture and fixtures                                      43,719
                                                                    -------
         Total property and equipment                               317,924
         Less accumulated depreciation                               90,675
                                                                    -------
         Property and equipment-- net                              $227,249
                                                                    =======

4.       INTANGIBLE ASSETS

         Intangible assets consist of the following at March 31, 1998:

         License costs                                           $  950,489
         Noncompete agreement                                       100,000
                                                                  ---------
         Total intangible assets                                  1,050,489
         Less accumulated amortization                              134,773
                                                                  ---------
         Intangible assets-- net                                 $  915,716
                                                                  =========

5.       RELATED PARTY TRANSACTIONS

         Notes payable to related  parties consist of the following at March 31,
          1998:

         Uncollateralized notes payable to related entities with
             interest at 8.25% and principal and interest due on 
             June 30, 1998                                           $155,000

         Uncollateralized notes payable to an employee with
             interest at 15% and principal and interest due 
             on November 21, 2000                                      50,000

         Uncollateralized notes payable to stockholders with
             interest at 8% and principal and interest due 
             on March 31, 1999                                         10,064
                                                                      -------
         Total                                                        215,064
         Less current portion                                         165,064
                                                                      -------
         Total                                                       $ 50,000
                                                                      =======

                                        - 11 -


<PAGE>


5.       RELATED PARTY TRANSACTIONS, continued

         The Company  recorded  interest  expense on  the related party notes of
         approximately  $45,000  and $79,000 for the years  ended March 31, 1998
         and 1997, respectively.

         Management  believes  that the fair  values  of its  notes  payable  to
         related parties are not materially different from their carrying values
         based on the terms and varying characteristics of the notes.

         The Company has receivables  from  and payables to entities  controlled
         by an officer and  stockholder  of the Company  totalling  $133,839 and
         $152,805  respectively, as of March 31, 1998. Such balances do not bear
         interest and have no set repayment terms.

         See Note 8 regarding common stock transactions with related parties.


6.       NOTES PAYABLE

         Notes payable consist of the following at March 31, 1998:

         Note payable to seller of KNNN-FM with interest at 8.5%,
           collateralized by the common  stock of  Northern
           California  Broadcasting, Inc., payable in monthly
           installments of principal and interest of $6,199
           through October 2001 with the remaining balance due
           at that date                                              $ 450,208

         Note payable to bank with interest rates ranging from
           8% to 11%, partially collateralized by cash equivalents
           and equipment, interest payable monthy and principal
           due in varying amounts from  April 1, 1998 through
           September 2, 2000                                            76,103

          Uncollateralized note payable, with interest at 15%, due    
          and payable on November 21, 2000                              15,000
                                                                      --------
          Total                                                        541,311
          Less current portion                                          97,940
                                                                      --------
          Total                                                      $ 443,371
                                                                      ========

          Under the terms of the  promissory  note  agreements,  future  minimum
          annual principal  payments during the fiscal years ending March 31 are
          as follows: 1999 - $97,940; 2000 - $53,621; 2001 - $62,502; and 2002 -
          $327,248.

          Management  believes that the fair values of its notes payable are not
          materially different from their carrying values based on the terms and
          varying characteristics of the notes.




                               - 12 -

<PAGE>




7.        LEASE AGREEMENTS

          The Company leases land and equipment under operating lease agreements
          expiring  in various  years  through  2002.  Lease  expense  under the
          operating lease agreements  totalled $30,263 and $74,039 for the years
          ended  March 31,  1998 and  1997,  respectively.  Pursuant  to the LMA
          agreement  between  Alta and Regent  (see Note 11),  the  Company  was
          reimbursed for all operating lease payments  subsequent to October 15,
          1997. The lease  agreements were assumed by Regent upon the closing of
          the sales agreement with Regent on June 15, 1998.

         
8.        STOCKHOLDERS' EQUITY

          In February 1997,  the Company  completed the filing of a Registration
          Statement Form SB-2 under the Securities Act of 1933, as amended.  The
          filing  effectively  registered  for sale all  shares of common  stock
          issued and outstanding at that time,  203,008 common stock put options
          which were subsequently  issued to certain  stockholders,  203,008 put
          option  guarantees  under  which  MicroCap  guaranteed  the  Company's
          obligation  under the puts,  and an additional  400,000  shares of the
          Company's  common stock to be offered to the public.  The registration
          of the  outstanding  shares,  the  put  options  and  the  put  option
          guarantees  was  required  pursuant  to  the  Agreement  and  Plan  of
          Reorganization dated June 16, 1995.

          In  connection  with the  completion  and  filing of the  registration
          statement,   the  Company  incurred  certain  legal,   accounting  and
          consulting  costs.  The  portion  of such costs  which  related to the
          registration of the previously issued and outstanding  shares, the put
          options and put option  guarantees were charged to operations since no
          proceeds  were  realized   relating  to  the   registration   of  such
          securities.   The  portion  of  such  costs   which   related  to  the
          registration  of the  additional  400,000  shares to be offered to the
          public are  reflected  as a reduction of proceeds  totalling  $111,501
          upon the sale of these  shares.  During the year ended March 31, 1998,
          the Company sold 50,000 shares for $100,000.




                                              - 13 -

<PAGE>


8.        STOCKHOLDERS' EQUITY, continued
          
          At March 31,  1997,  the 203,008  common  stock put  options  remained
          outstanding.  The put options granted the putholders the right to sell
          to the Company  their  shares of common  stock at a price of $1.50 per
          share.  The Company's  potential  obligation  under the put options of
          $304,512 was classified as redeemable  common stock at March 31, 1997.
          The put  options  expired on June 13,  1997;  however,  prior to their
          expiration,  102,946 options were exercised by the  optionholders  and
          the shares were  acquired  by affiliates of  the Company for $154,419.
          The remaining put options were forfeited.

          During the year ended  March 31,  1998,  the  Company  issued  790,000
          shares of its preferred stock to MicroCap for $790,000. Because it was
          management's  intention as of March 31, 1998, to repurchase the shares
          with the  proceeds  from the sale of radio  stations to Regent in June
          1998  (see note  11),  the  preferred  stock  has been  classified  as
          redeemable in the accompanying balance sheet as of March 31, 1998.

          During the year ended March 31, 1997, the Company issued 71,559 shares
          of common stock to MicroCap and a company  controlled by the Company's
          president  in  repayment  of  notes  and  accounts  payable  totalling
          $85,871.  Also,  included  within the  private  placement  proceeds is
          $129,300 received from related parties during the year ended March 31,
          1997 for 107,750 shares of common stock.

          During the year ended March 31, 1998, the Company issued 10,000 shares
          of common stock for legal  services  rendered in  connection  with the
          completion and filing of the registration  statement  described above.
          The  services,  with a value of $20,000,  were  charged to  additional
          paid-in capital.

          During the year ended March 31, 1997, the Company issued 46,016 shares
          of common stock for legal and other services. The estimated fair value
          of the services of $55,219 was charged to operations.

          The Company has a $45,000 note receivable from an officer of RBI as of
          March 31, 1998  relating to a purchase by the officer of 37,500 shares
          of RBI common stock.  The note bears interest at 7%, matures on August
          1,  2002  and is  collateralized  by a  second  deed of  trust  on the
          officer's personal residence.

         




                                          - 14 -

<PAGE>


8.        STOCKHOLDERS'  EQUITY,  continued  

          At March 31, 1998,  the Company had  outstanding  warrants to purchase
          116,666 shares of the Company's common stock at a purchase price equal
          to the  lesser  of $1.50 per share or fifty  percent  of the  offering
          price to the public of the Company's  common stock in connection  with
          the next public  offering of shares by the Company.  The shares became
          exercisable on September 9, 1997 and expire on September 9, 2000.

          On December  5, 1995,  the Company  adopted the 1995  Incentive  Stock
          Option Plan (the Plan).  Pursuant to the Plan, the Company's  Board of
          Directors  is  authorized  to issue  options for the purchase of up to
          150,000  shares of the Company's  common stock to key employees of the
          Company.  Under the Plan, the exercise price of the options may not be
          less than the fair market value of the shares of the Company's  common
          stock on the date of grant.  During the year ended March 31, 1997, the
          Company  issued  100,000  options  under the Plan to an employee;  the
          options expired in December, 1997 upon the employee's termination.  No
          options are outstanding at March 31, 1998.

          In October  1995,  the  Financial  Accounting  Standards  Board issued
          Statement of Financial  Accounting  Standards No. 123, "Accounting for
          Stock  Based  Compensation"  (FAS 123),  which  establishes  financial
          accounting   and  reporting   standards   for  stock  based   employee
          compensation  plans  including  stock purchase  plans,  stock options,
          restricted stock and stock  appreciation  rights.  As permitted by FAS
          123,  the Company has elected to continue  accounting  for stock based
          compensation in accordance with  Accounting  Principles  Board Opinion
          No.  25,  "Accounting  for Stock  Issued  to  Employees"  and  related
          interpretations.  The  Company  estimates  that the  impact of FAS 123
          would not be material to the Company's financial statements.

9.        INCOME TAXES

          The  Company  has   approximately   $540,000  of  net  operating  loss
          carryovers  expiring in various  years  through  2013 which  result in
          deferred income tax assets of approximately $180,000. However, because
          of the uncertainty regarding future realization of the deferred income
          tax assets,  the  Company has  established  a valuation  allowance  of
          $180,000 as of March 31, 1998.  The valuation  allowance  increased by
          $53,000 and $64,000 during the years ended March 31, 1998 and 1997.

10.       OTHER INCOME   

          Included  in other  income  for the year  ended  March  31,  1998 is a
          $36,205  gain  resulting  from a FCC license  auction  and  settlement
          agreement.

11.       SUBSEQUENT EVENTS

          During April 1998,  the Company received  $90,000 for 497 of its 1,000
          shares  in  Channel  31,  Inc.,   a  company   founded  to  acquire  a
          construction permit to build a television station in Pocatello, Idaho.
          The Company has also  granted an option to the  acquiror of the shares
          to purchase the Company's remaining 503 shares for $10,000.

          On June 15, 1998,  the Company sold  KRDG-FM,  KNNN-FM,  KNRO-FM,  and
          KRRX-FM to Regent and received approximately $950,000 cash and 200,000
          shares of Regent's  Series E  preferred  stock.  Regent  also  assumed
          approximately  $1,500,000  of  the  Company's  liabilities.  With  the
          proceeds of the sale, the Company  repurchased  all of its outstanding
          shares of preferred  stock (see note 8) for $790,000.  Regent operated
          such stations through June 15, 1998 under a LMA which was effective on
          October 15, 1997.
          
         




                                             - 15 -