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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2005

OR



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

| | EXCHANGE ACT OF 1934
| | --------------------

For the transition period
from  to

Commission file number 000-28395

INTEREP NATIONAL RADIO SALES, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|New York                                                       |  | 13-1865151                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|100 Park Avenue, New York, New York                            |  | 10017                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(212) 916-0700

(Registrants telephone number, including area code)

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

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



|                                                |  |                                          
|----------------------------------------------- |  | -----------------------------------------
|Title of Each Class                             |  | Name of Each Exchange on Which
Registered
|Class A Common Stock, par value $0.01 per share |  | None                                     

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ̈No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ̈No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ̈

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

Large accelerated filer ̈Accelerated filer ̈Non-accelerated
filer x

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

The aggregate market value of the Class A Common Stock, par value $.01 per share, and Class B Common Stock, par value $.01 per share, held by
non-affiliates of the registrant, based upon the last reported sale price for the registrants Class A Common Stock on The Nasdaq OTC Bulletin Board, was $2,926,542 as of June 30, 2005 (this excludes shares owned beneficially by
directors, executive officers and the registrants Stock Growth Plan).

The number of shares of the registrants Common Stock
outstanding as of the close of business on March 15, 2006 was 7,059,037 shares of Class A Common Stock, and 4,236,839 shares of Class B Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrants proxy statement to be
used in connection with the 2006 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K.





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

IMPORTANT NOTE REGARDING FORWARD LOOKING STATEMENTS

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

PART I

Item 1.    BUSINESS

General

Interep is the largest independent national spot radio representation or rep firm in the United States. We are the exclusive rep firm for over
1,500 radio stations nationwide, including radio stations owned by three of the five largest radio groups by revenue. In the ten largest U.S. radio markets (as defined by Arbitron), each week our represented stations reach an estimated 78% of
persons 12 years and over. We serve innovative radio station groups, while still meeting the needs of independent stations nationwide. We have grown to be a leader in radio advertising by improving our clients advertising revenues, acquiring
station representation contracts, creating and acquiring other rep firms and offering advertisers creative marketing solutions to achieve their goals. Today, our solutions include not only radio, but also other media, including television and the
Internet.

Interep is an advertising sales and marketing company that is a preeminent leader in the radio industry. Our 17 offices across
the country enable us to serve our radio station clients and advertisers in all 50 states and portions of Mexico and Canada. We provide national sales representation for clients whose diverse formats include country, rock, sports, Hispanic,
classical, urban, news, talk, oldies, adult contemporary, jazz, contemporary hits, etc. We have developed strong relationships with our clients and the agencies and buying services that purchase advertising. We believe we can extend our success in
radio to other types of media that we integrate into our roster of marketing and sales services. Our intention is to enable our clients to exploit strong overlap in demographic composition and usage patterns between radio listeners and users of the
Internet and other media.



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Radio stations generally retain national rep firms on an exclusive basis to sell national spot commercial
air time on their stations to advertisers outside of their local markets. The stations own sales force handles sales of air time to local advertisers. National spot radio advertising is placed or spotted in one or more broadcast
markets, in contrast to network advertising, which is broadcast simultaneously on network affiliated stations. National spot radio advertising typically accounts for approximately 20% of a radio stations revenues.

A rep firm promotes the benefits of buying advertising time on its client radio stations to advertising agencies and media buying services and arranges
for the placement of specific advertisements. Rep firms generate revenues by earning commissions on the sale of advertising time on client stations. Radio stations outsource their national spot advertising sales to rep firms to benefit from the rep
firms professional sales staff, multiple sales offices, national coverage presence, proprietary research and established relationships with advertisers and agencies.

We believe the following factors have contributed to our position as an industry leader in radio advertising and provide a strong foundation for further
growth as an advertising sales and marketing services company:

Strong Relationships with Advertisers; National
Presence.    Our strong relationships with advertisers, advertising agencies and media buying services nationwide enable us to promote our client stations effectively. We understand the markets and the advertisers
needs. We work closely with advertisers to help them develop and refine radio advertising strategies and to support their purchases of advertising time on our client stations. Our sales force is strategically located across the country to provide
effective coverage of all major media buying centers. Our market leadership enhances our value to advertisers, increases our ability to sell air time for clients and allows us to package national spot time on multiple radio stations creatively to
meet advertisers special needs. We believe that our market leadership will enable us to integrate Internet and other forms of advertising media into our business.

Innovative Solutions.    We have pioneered a variety of innovative solutions for the radio industry. For example, we were the first to package and market unaffiliated portfolios of client
stations by grouping them together as unwired networks to meet advertisers particular needs. Unwired networks enable radio advertisers and advertising agencies to target specific groups or markets by placing advertisements on as
few as two stations or as many as all of the over 1,500 stations represented by us. Advertising agencies and media buyers derive additional benefits from our unwired networks as we often perform research, scheduling, billing, payment, pre-analysis
and post-analysis functions relating to the advertising time purchase. We also use promotions and specialized agency sales targeted at boutique agencies. We developed the use of dedicated radio sales representation firms, such as ABC Radio Sales and
Infinity Radio Sales, which enable a client to benefit from our comprehensive services while still projecting its corporate identity to advertisers.

We Continue to Innovate.    We formed Interep Interactive, our interactive representation and web publishing division specializing in the sales and marketing of on-line advertising,
including streaming media. Interep Interactive includes Winstar Interactive and Perfect Circle Media. We also provide online marketing research on a secure basis to clients and advertisers.

Our Interep Marketing Group is another example of our proactive, innovative approach to sales. This Group advances the ongoing growth of radio
advertising by focusing on advertisers who do not use or who underutilize radio advertising. The Groups sales force works with these advertisers to



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demonstrate how radio can help them achieve their goals and create marketing opportunities. We believe that the Group has contributed to the growth of radio
advertising revenues in the aggregate and, by extension, our own growth.

RadioExchange, a proprietary system, is the radio industrys
first national spot radio web-based order management, electronic invoicing and electronic ordering system. This system significantly reduces the overall burden of administering the process of buying radio by reducing data entry and facilitating the
reconciliation of discrepancies, while providing greater accountability to advertisers and expediting payments to radio stations. The system has been developed in conjunction with two software and technology companies with extensive experience in
the media industry. In 2005, we began aggressively to deploy some of the advanced functionality of RadioExchange with our business partners. We currently have three of the advertising industrys largest radio buyers sending their orders
electronically and we expect to continue to add RadioExchange customers throughout 2006. We have only begun to realize the advantages that the RadioExchange infrastructure affords and we eagerly look forward to its future.

Highly Skilled Sales Force and Sophisticated Sales Support.    We have a highly skilled, professional sales force. Our sales
force has a team-oriented approach to sales, marketing and client relationships instilled through incentive programs and the continuous, in-house training programs of the Interep Radio University. Most of our professional employees spend
approximately two weeks each year in the Interep Radio University and receive training from both staff members and instructors from leading marketing and management education programs. We support our sales efforts with sophisticated media research,
including a proprietary nationwide database. This research enables us to profile for advertisers the relevant characteristics of the audiences of our clients, to assist them in reaching their target audiences. We also provide concept development and
sales promotion services, such as advertising support, merchandising and sales incentive programs, which enable us to suggest promotional campaigns, including partnerships with other advertising media.

Experienced Management Team.    We have an experienced and entrepreneurial management team, headed by our Chief Executive
Officer, Ralph C. Guild, a recognized leader and innovator in the radio industry, and George E. Pine, our President and Chief Operating Officer. Our senior sales management have an average of over 25 years of industry experience and significant
equity ownership in Interep.

Cross Marketing.    Our strong relationships with advertisers places us in a
unique position to offer all of our marketing services to them. The Interep Marketing Group works closely with our radio and Internet sales forces to cross-market Internet advertising with radio and to reach potential radio advertisers who currently
advertise over other media. We intend to leverage our ability to cross-market as we incorporate other advertising media into the services we offer our advertisers.

Independence.    We are a publicly-owned company. We are the only major radio representation firm that is not owned by a broadcast group. We believe that our independence reduces perceived
conflicts of interest in our sales efforts on behalf of our clients.

Television.    In November 2005, we
entered into the television representation business by organizing Azteca America Spot Television Sales, Inc., a dedicated television rep company for the Azteca America network. We began with 16 television affiliate stations and now represent a total
of 24 affiliates, with an additional eight affiliates pending.



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Clients

Our client radio stations generally retain us on an exclusive basis through written agreements. These rep contracts generally provide for an initial term followed by an evergreen period, meaning that the contract term continues
until canceled following 12 months prior notice. If the client terminates the contract without cause, the rep contracts generally provide for termination payments equal to the estimated commissions that would have been payable to the rep firm
during the remaining portion of the term and the evergreen period, plus two months. For example, if a contract with an initial term of five years and a one-year evergreen period is canceled after three years, we would be compensated in an amount
equal to 38 months of commissions: 24 months for the remaining term, 12 months for the evergreen notice period, plus two spill over months. Spill over commissions are those earned on advertising placed or committed to prior
to the contract termination but broadcast later. It is customary in the industry for the successor rep firm to make this payment. However, certain contracts representing material revenues permit clients in certain circumstances to terminate their
agreements with less than 12 months notice and pay termination and evergreen payments over shorter periods of time.

For the year
ended December 31, 2005, no station or station group, other than Infinity Broadcasting Corporation, accounted for more than 10 percent of our commission revenues.

Competition

Our success in radio advertising sales depends on our ability to acquire and retain
representation contracts with radio stations. The media representation business is highly competitive, both in the competition for clients and in the sale of air time to advertisers. Our only significant competitor in the national spot radio
representation industry is Katz Radio Group, Inc., a subsidiary of Clear Channel Communications, Inc., a major media company. We also compete with other independent and network media representatives, direct national advertisers, national radio
networks, syndicators and other brokers of radio advertising. Moreover, on behalf of our clients, we compete for advertising dollars with other media such as broadcast and cable television, newspapers, magazines, outdoor and transit advertising,
Internet advertising, point-of-sale advertising and yellow pages directories. Certain of our competitors have greater financial and other resources than we do, and such resources may provide them with a competitive advantage in competing for client
stations or advertising expenditures.

A change in the ownership of a client station frequently results in a change of representation firm.
The consolidation of the radio industry that followed the enactment of the Telecommunications Act of 1996 resulted in larger station groups and an increase in the number of station ownership changes. This, in turn, increased the frequency of the
termination or buyout of representation contracts. Further, as station groups have become larger, they have gained bargaining power with representation firms over rates and terms. As a result, we continually compete for both the acquisition of new
client stations as well as the maintenance of existing relationships.

We believe that our ability to compete successfully is based on:



| |  |  | the number of stations and the inventory of air we represent;
| | - |  | -------------------------------------------------------------



| |  |  | our strong relationships with advertisers;
| | - |  | ------------------------------------------



| |  |  | the experience of our management and the training and motivation of our sales personnel;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | our past performance;
| | - |  | ---------------------



| |  |  | our ability to offer unwired networks;
| | - |  | --------------------------------------



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| |  |  | our use of technology; and
| | - |  | --------------------------



| |  |  | our research and marketing services for clients and advertisers.
| | - |  | ----------------------------------------------------------------

We believe that we compete effectively, in part, through our employees knowledge of, and experience in, our business and industry and their long standing relationships with clients.

Employees

As of December 31, 2005, we employed
approximately 425 employees, substantially all of who were sales-related personnel. None of our employees are represented by a union. We believe that our relations with our employees are excellent.

Executive Officers

The following table sets forth certain information regarding our executive officers:



|                        |  |     |  |                                                            
|----------------------- |  | --- |  | -----------------------------------------------------------
|Name                    |  | Age |  | Positions                                                  
|Ralph C. Guild          |  | 77  |  | Chairman of the Board and Chief Executive Officer; Director
|George E. Pine          |  | 57  |  | President and Chief Operating Officer; Director            
|Marc G. Guild           |  | 55  |  | President, Marketing Division; Director                    
|William J. McEntee, Jr. |  | 62  |  | Senior Vice President and Chief Financial Officer          

All executive officers are appointed for terms of one year.

Ralph C. Guild has been our Chairman of the Board and Chief Executive Officer since 1986, and has served as a director since 1967. He has been
employed by us or our predecessors since 1957 in various capacities. Mr. Guild is a prominent figure in the radio business, and has received many of the most prestigious awards in the industry. In November 1991, Mr. Guild became one of the
first inductees into the Broadcasting Hall of Fame. He also received the Golden Mike Award from the Broadcasters Foundation in 1998 for outstanding contributions to the radio industry. In March 2001, Mr. Guild received the International
Radio & Television Societys Golden Medal Award. Mr. Guild is active in a broad range of industry associations and charitable organizations. Currently, he serves on the Boards of Trustees of the Museum of Television &
Radio, the Center for Communications and the University of the Pacific.

George E. Pine was appointed our President and Chief
Operating Officer in March 2003. He joined our Board of Directors in April 2003. He was President of our ABC Radio subsidiary from 1998 until becoming our President. Before that, he served us in various sales management capacities since 1973,
including President of Interep East. Mr. Pine is a Member of the Board of Trustees for both the Webb School in Tennessee and Ithaca College. He also serves as Chairman of Ithaca Colleges Development Committee. Mr. Pine serves on the
Board of Directors of the Radio Advertising Bureau and the John Bayliss Broadcast Foundation. He is a member of the International Radio & Television Society and the Advertising Club of New York.

Marc G. Guild has been our President, Marketing Division, since November 1989, and has served as a director of the Company since 1989. He was
Executive Vice President of Network Sales/Operations from 1986 to 1989. Mr. Guild has been employed by us or our predecessors since 1972 in various capacities. As President of our Marketing Division, Mr. Guild plays a key role in our sales
and marketing programs, the Interep Radio University and our research and technology divisions.



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Mr. Guild serves on the Boards of Directors of the International Radio and Television Foundation and the Library of American Broadcasting. Marc Guild is
the son of Ralph Guild.

William J. McEntee, Jr. has been our Senior Vice President and Chief Financial Officer since March 1997.
Mr. McEntee serves in such positions pursuant to a Services Agreement between the Company and Media Financial Services, Inc. Mr. McEntee was Chief Financial Officer at Sudbrink Broadcasting in West Palm Beach, Florida, from 1971 through
1994. Mr. McEntee owned and managed WCEE-TV in Mt. Vernon, Illinois from 1994 until selling the station in 1996. Mr. McEntee currently owns WIOJ-AM in Jacksonville, Florida. He is a certified public accountant.

About Us

Interep National Radio Sales, Inc. is a New
York corporation founded in 1953. Our principal executive offices are located at 100 Park Avenue, New York, New York 10017. Our telephone number is (212) 916-0700, and our Internet address is www.interep.com.

Financial Information

Please refer to our financial
statements in this Report commencing on page F-1 for information regarding our results of operations. Substantially all of our revenues are generated in, and our long-lived assets are located in, the United States.

Item 1A.    RISK FACTORS

See Certain Risk Factors That May Affect Our Results of Operations  Managements Discussion and Analysis of Financial Condition and Results of Operations.

Item 2.    PROPERTIES

We
lease approximately 162,000 square feet of office space in 17 cities throughout the United States. Our principal executive offices are located at 100 Park Avenue, New York, New York, where we occupy 58,000 square feet under a lease, which expires in
March 2020. We believe that our office premises are adequate for our foreseeable needs.

Item 3.    LITIGATION

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

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

None.



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PART II



|Item 5. | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | ---------------------------------------------------------------------

Prior to February 9, 2005, our Class A Common Stock had been listed on the Nasdaq OTC Bulletin Board. On February 8, 2006, we filed with the U.S. Securities and Exchange Commission (SEC) a
Certification and Notice of Termination of Registration under Section 12(g) of the Securities Exchange Act of 1934 on Form 15. Our Class A Common Stock has been listed on Pink Sheets since February 9, 2006. The Class A Common
Stock now trades under the symbol IREP.PK. The Class A Common Stock had traded under the symbol IREP.OB. On March 15, 2006, the last sale price of the Class A Common Stock was $0.24 per share. The following
table sets forth the range of high and low closing prices for our Class A Common Stock through for the periods indicated. Such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions.



|                    |  |      |      |     |   |     
|------------------- |  | ---- | ---- | --- | - | ----
|Quarter             |  | High |      | Low
|First Quarter 2004  |  | $    | 2.41 |     | $ | 1.45
|Second Quarter 2004 |  | $    | 2.32 |     | $ | 1.10
|Third Quarter 2004  |  | $    | 1.15 |     | $ | 0.51
|Fourth Quarter 2004 |  | $    | 0.96 |     | $ | 0.64
|First Quarter 2005  |  | $    | 0.80 |     | $ | 0.46
|Second Quarter 2005 |  | $    | 0.65 |     | $ | 0.42
|Third Quarter 2005  |  | $    | 0.79 |     | $ | 0.43
|Fourth Quarter 2005 |  | $    | 0.55 |     | $ | 0.36

As of March 15, 2006, there were approximately 195 holders of record of our Class A
Common Stock.

Dividend Policy

We have
not paid any dividends on our common stock in the past two years, and we do not intend to pay any cash dividends on our common stock in the foreseeable future. Moreover, the terms of the documents governing our indebtedness prohibit the payment of
cash dividends on our common stock. See Recent Sales of Unregistered Securities below for a description of the dividend terms applicable to our Series A preferred stock. See Managements Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources for additional information relating to our ability to declare dividends.



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Equity Compensation Plan Information

The following table sets forth the securities of Interep authorized for issuance under equity compensation plans and arrangements as of December 31, 2005



|                                                                     |  |                                                                                            |  |                                                                            |      |                                                                                                                                |        
|-------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------ | -------
|Plan Category                                                        |  | (a)Number of securitiesto be issued
uponexercise of outstandingoptions, warrantsand rights |  | (b)Weighted-averageexercise price ofoutstandingoptions, warrantsand rights |      | (c)Number of securitiesremaining for futureissuance underequity compensationplans
(excludingsecurities reflectedin column (a))
|Equity compensation plans approved by security holders:              |  |                                                                                            |  |                                                                            |      |                                                                                                                                |        
|1999 Stock Incentive Plan                                            |  | 1,217,767                                                                                  |  | $                                                                          | 1.79 |                                                                                                                                | 751,901
|Equity compensation plans not approved by security holders:          |  |                                                                                            |  |                                                                            |      |                                                                                                                                |        
|Options granted pursuant to individual compensation arrangements (1) |  | 3,291,118                                                                                  |  | $                                                                          | 2.07 |                                                                                                                                | 0      

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|(1) |  | These shares are issuable pursuant to stock options that were awarded to employees of Interep at various times from 1988 through 1998 prior to the adoption of our 1999 Stock
Incentive Plan. The terms of the awards are substantially similar to the awards granted under our 1999 Stock Incentive Plan. All of the stock options granted prior to the adoption of our 1999 Stock Incentive Plan are currently vested and will expire
between the years 2006 and 2008.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Recent Sales of Unregistered Securities

We sold the following amounts of Class B Common Stock to our Stock Growth Plan on the following dates and at the following purchase prices per share and
aggregate purchase prices. Each purchase price per share was determined based on the trailing 15 trading-day average of our Class A Common Stock. One share of Class B Common Stock is convertible into one share of Class A Common Stock:



|                   |  |                                    |  |                 |      |                         |   |        
|------------------ |  | ---------------------------------- |  | --------------- | ---- | ----------------------- | - | -------
|Date               |  | Shares of Class BCommon Stock Sold |  | Price Per Share |      | Aggregate PurchasePrice
|March 31, 2004     |  | 238,759                            |  | $               | 2.28 |                         | $ | 544,000
|June 30, 2004      |  | 365,223                            |  | $               | 1.47 |                         | $ | 537,000
|September 30, 2004 |  | 410,402                            |  | $               | 0.71 |                         | $ | 290,000

There were no sales of unregistered Class B Common Stock in 2003 and 2005.

In connection with a consulting agreement, 33,333 shares of our Class A stock were issued to a consultant in the fourth quarter of 2004. The price
per share was determined based upon the closing price of our Class A Common Stock on the date that the shares were to be paid as per the consulting agreement.

The issuances of these securities were intended to be exempt from registration under the Securities Act in reliance on Section 4(2) thereof or Regulation D thereunder, as transactions by an issuer not involving
any public offering. The recipients of securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to, or for sale in connection with, any distribution thereof and
appropriate legends were affixed to the share certificates, warrants and options issued in such transactions. We believe that all recipients had adequate access, through their relationships with the registrant, to information about the registrant.



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|Item 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

The following table
contains selected consolidated financial information derived from our audited consolidated financial statements set forth elsewhere in this Form 10-K or in Forms 10-K previously filed with the SEC, and you should review the data in the table below
in conjunction with those audited consolidated financial statements and the notes thereto. The following table summarizes certain consolidated financial data derived from our audited consolidated financial statements for the fiscal years ended
December 31, 2005, 2004, 2003, 2002 and 2001.



|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|-------------------------------------------------------------------------------- |  | --------------------------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | - |  | ---- | --------- | - |  | - | --------- | -
|                                                                                 |  | Amounts in thousands, except share data |           
|                                                                                 |  | Year Ended December 31,                 |           
|                                                                                 |  | 2005                                    |            |   | 2004 |   |            | 2003 |  |   | 2002       |   |  | 2001 |          
|Statement of Operations Data:                                                    |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Revenues                                                                         |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Commission                                                                       |  | $                                       | 80,068     |   |      | $ | 78,455     |      |  | $ | 87,755     |   |  | $    | 87,372    |   |  | $ | 81,128    |  
|Contract termination                                                             |  |                                         | 20,001     |   |      |   | 24,462     |      |  |   | 666        |   |  |      | 7,220     |   |  |   | 21,431    |  
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Total revenues                                                                   |  |                                         | 100,069    |   |      |   | 102,917    |      |  |   | 88,421     |   |  |      | 94,592    |   |  |   | 102,559   |  
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Operating expenses:                                                              |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Selling, general and administrative expenses                                     |  |                                         | 73,003     |   |      |   | 78,828     |      |  |   | 79,148     |   |  |      | 70,163    |   |  |   | 77,707    |  
|Depreciation and amortization expense                                            |  |                                         | 20,050     |   |      |   | 19,783     |      |  |   | 33,989     |   |  |      | 23,651    |   |  |   | 36,673    |  
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Total operating expenses                                                         |  |                                         | 93,053     |   |      |   | 98,611     |      |  |   | 113,137    |   |  |      | 93,814    |   |  |   | 114,380   |  
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Operating income (loss)                                                          |  |                                         | 7,016      |   |      |   | 4,306      |      |  |   | (24,716    | ) |  |      | 778       |   |  |   | (11,821   | )
|Interest expense, net                                                            |  |                                         | 10,297     |   |      |   | 10,563     |      |  |   | 12,613     |   |  |      | 10,469    |   |  |   | 9,416     |  
|(Income) loss on investments                                                     |  |                                         | (377       | ) |      |   | (84        | )    |  |   |           |   |  |      | 525       |   |  |   | 3,340     |  
|Other loss (income)                                                              |  |                                         |           |   |      |   |           |      |  |   | 528        |   |  |      |          |   |  |   | (236      | )
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Loss before income taxes and loss from cumulative change in accounting principle |  |                                         | (2,904     | ) |      |   | (6,173     | )    |  |   | (37,857    | ) |  |      | (10,216   | ) |  |   | (24,341   | )
|Income taxes                                                                     |  |                                         | 134        |   |      |   | 261        |      |  |   | 343        |   |  |      | 7,360     |   |  |   | (4,486    | )
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Loss before cumulative change in accounting principle                            |  |                                         | (3,038     | ) |      |   | (6,434     | )    |  |   | (38,200    | ) |  |      | (17,576   | ) |  |   | (19,855   | )
|Cumulative change in accounting principle (A)                                    |  |                                         |           |   |      |   | (598       | )    |  |   |           |   |  |      |          |   |  |   |          |  
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Net loss                                                                         |  |                                         | (3,038     | ) |      |   | (7,032     | )    |  |   | (38,200    | ) |  |      | (17,576   | ) |  |   | (19,855   | )
|Preferred stock dividend                                                         |  |                                         | 486        |   |      |   | 468        |      |  |   | 468        |   |  |      | 2,381     |   |  |   |          |  
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Net loss applicable to common shareholders                                       |  | $                                       | (3,524     | ) |      | $ | (7,500     | )    |  | $ | (38,668    | ) |  | $    | (19,957   | ) |  | $ | (19,855   | )
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Basic and diluted loss per common share:                                         |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Before cumulative change in accounting principle                                 |  | $                                       | (0.27      | ) |      | $ | (0.60      | )    |  | $ | (3.73      | ) |  | $    | (1.85     | ) |  | $ | (2.28     | )
|Cumulative change in accounting principle                                        |  |                                         |           |   |      |   | (0.06      | )    |  |   |           |   |  |      |          |   |  |   |          |  
|Preferred stock dividend                                                         |  |                                         | (0.04      | ) |      |   | (0.04      | )    |  |   | (0.04      | ) |  |      | (0.25     | ) |  |   |          |  
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Total                                                                            |  | $                                       | (0.31      | ) |      | $ | (0.70      | )    |  | $ | (3.77      | ) |  | $    | (2.10     | ) |  | $ | (2.28     | )
|                                                                                 |  |                                         |            |   |      |   |            |      |  |   |            |   |  |      |           |   |  |   |           |  
|Basic and diluted weighted average common shares outstanding                     |  |                                         | 11,295,876 |   |      |   | 10,695,410 |      |  |   | 10,248,159 |   |  |      | 9,490,519 |   |  |   | 8,715,129 |  



9



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|                                                                                         |  |                |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|---------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | -------
|                                                                                         |  | December 31,  
|                                                                                         |  | 2005           |         |   | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001
|                                                                                         |  | (in thousands)
|Balance Sheet Data:                                                                      |  |                |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Cash and cash equivalents                                                                |  | $              | 6,928   |   |      | $ | 4,937   |      |  | $ | 7,661   |   |  | $    | 18,114  |   |  | $ | 11,502 
|Working capital                                                                          |  |                | 18,855  |   |      |   | 13,006  |      |  |   | 15,651  |   |  |      | 38,883  |   |  |   | 41,499 
|Total assets                                                                             |  |                | 88,959  |   |      |   | 91,010  |      |  |   | 108,241 |   |  |      | 149,966 |   |  |   | 179,729
|Long-term debt (including current portion) (net of unamortized discount of $523 in 2002) |  |                | 99,000  |   |      |   | 99,000  |      |  |   | 103,000 |   |  |      | 108,477 |   |  |   | 99,000 
|Stockholders equity (Capital deficit)                                                   |  |                | (48,478 | ) |      |   | (45,427 | )    |  |   | (39,782 | ) |  |      | (1,555  | ) |  |   | 4,290  

---

|(A) |  | Effective July 2004, we applied the principles of Emerging Issues Task Force No. 03-16 Accounting for Investments in Limited Liability Companies. The effect of this
change in accounting principle was a $0.6 million reduction in the carrying amount of our investment in a limited liability company. We are now required to account for this investment on the equity method of accounting.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

The following discussion is based upon and should be read in conjunction with the previous section, Selected Financial Data, and our Consolidated
Financial Statements, including the notes thereto, which begin on page F-1.

Overview

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

Our operating results generally depend on:



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



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



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



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



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

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

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



10



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

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

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

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

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



11



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Our business generally follows the pattern of advertising expenditures. It is seasonal to the extent that
radio advertising spending increases during the fourth calendar quarter in connection with the Christmas season and tends to be weaker during the first calendar quarter. Radio advertising also generally increases during the second and third quarters
due to holiday-related advertising, school vacations and back-to-school sales. Additionally, radio tends to experience increases in the amount of advertising revenues as a result of special events such as political election campaigns. Furthermore,
the level of advertising revenues of radio stations, and therefore our level of revenues, is susceptible to prevailing general and local economic conditions and the corresponding increases or decreases in the budgets of advertisers, as well as
market conditions and trends affecting advertising expenditures in specific industries.

Results of Operations

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Commission revenues.    Commission revenue for 2005 increased $1.6 million, or 2.1%, to $80.1 million from $78.5 million in 2004. This increase reflected higher national spending for
advertising at our client stations during the year offset by the loss of revenues due to the termination of our Cumulus Broadcasting, Inc. and Radio One, Inc. representation contracts.

Contract termination revenue.    Contract termination revenue in 2005 decreased $4.5 million to $20.0 million from $24.5
million in 2004. This decrease was primarily attributable to the fact that the contract termination revenue we recorded in August 2004 on the termination of our representation contract with Citadel Broadcasting was greater than that recorded on
termination of our Cumulus Broadcasting, Inc. and Radio One, Inc. representation contracts in 2005. During 2005, approximately 408 stations terminated representation contracts with us, which had generated an aggregate of approximately $7.0 million
of commission revenue during their 12-month trailing periods.

Selling expenses.    Selling expenses for 2005
decreased to $61.5 million from $63.7 million during 2004. This decrease of $2.2 million, or approximately 3.5%, was, in large part, due to the termination of certain special promotion programs that affected 2004, lower compensations costs in 2005
as compared to 2004 and general cost efficiency measures implemented in 2005, offset in part by the costs associated with additional severance programs implemented in 2005.

General and administrative expenses.    General and administrative expenses of $11.5 million for 2005 decreased $3.6 million,
or 23.8%, from $15.1 million for 2004, primarily due to the non-recurrence of legal expenses relating to the Citadel litigation incurred in 2004 and lower compensation costs.

Operating income before depreciation and amortization.    Operating income before depreciation and amortization increased by
$3.0 million, or 12.4%, in 2005 to $27.1 million from $24.1 million in 2004, for the reasons discussed above. Included in operating income before depreciation and amortization in 2005 was $20.0 million of non-recurring contract termination revenue
as compared to contract termination revenue of $24.5 million in 2004. Operating income before depreciation and amortization is not a measure of performance calculated in accordance with Generally Accepted Accounting Principles (GAAP) and
should not be considered in isolation from or as a substitute for operating income (loss), net income (loss), cash flow or other GAAP measurements. We believe it is useful in evaluating our performance, in addition to the GAAP data presented, as it
is commonly used by lenders and the investment community to evaluate the performance of companies in our industry.



12



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|                                                                                    |  |                        |        |   |      |   |        |  
|----------------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | -
|Reconciliation of net loss to operating income before depreciation and amortization | 
|                                                                                    |  |                       
|                                                                                    |  | 2005                   |        |   | 2004 |  
|                                                                                    |  | (dollars in thousands) |       
|Net loss                                                                            |  | $                      | (3,038 | ) |      | $ | (7,032 | )
|Add back:                                                                           |  |                        |        |   |      |   |        |  
|Depreciation and amortization                                                       |  |                        | 20,050 |   |      |   | 19,783 |  
|Cumulative change in accounting principle                                           |  |                        |       |   |      |   | 598    |  
|Tax provision                                                                       |  |                        | 134    |   |      |   | 261    |  
|Net undistributed income of equity investee                                         |  |                        | (377   | ) |      |   | (84    | )
|Interest expense, net                                                               |  |                        | 10,297 |   |      |   | 10,563 |  
|                                                                                    |  |                        |        |   |      |   |        |  
|Operating income before depreciation and amortization                               |  | $                      | 27,066 |   |      | $ | 24,089 |  
|                                                                                    |  |                        |        |   |      |   |        |  

Depreciation and amortization expense.    Depreciation and amortization
expense increased $0.3 million, or 1.3%, to $20.1 million in 2005, from $19.8 million in 2004. The amortization of costs associated with acquiring representation contracts is included in depreciation and amortization. This increase was substantially
the result of the $3.3 million write-off of deferred representation contract costs related to the termination of the Cumulus representation contract, the $0.3 million write-off of deferred representation contract costs related to the termination of
the Radio One representation contract, and the write-off of $0.9 million of deferred representation contract costs related to the sale of a station by Infinity, which was offset by lower contract acquisition cost amortization, depreciation of fixed
assets and other amortization. We acquired representation contracts with approximately 66 new radio stations in 2005. We estimate these contracts generated an aggregate of $0.7 million of commission revenues during their 12-month trailing periods
prior to their acquisition.

Operating income.    In 2005, we had operating income of $7.0 million, as compared
to $4.3 million in 2004, for the reasons discussed above.

Interest expense, net.    Interest expense, net,
decreased $0.3 million, or 2.5%, to $10.3 million for 2005, from $10.6 million for 2004. This decrease primarily resulted from a lower balance on our revolving credit facility than in the prior year.

Income taxes.    Our current and deferred income taxes, and associated valuation allowances, are affected by events and
transactions arising in the normal course of business as well as special and non-recurring items. Assessment of the appropriate amount and classification of income taxes is dependent on several factors, including estimates of the timing and
realization of deferred income tax assets and the timing of income tax payments. Actual collections and payments may differ from these estimates as a result of changes in tax laws as well as unanticipated future transactions impacting related income
tax balances. The provision for income taxes in 2005 and 2004 was $0.1 million and $0.3 million and related principally to state income taxes. A valuation allowance of $0.7 million and $2.7 million was recorded in 2005 and 2004, to reflect
uncertainties with regard to when we will realize our net deferred tax assets.

Preferred stock dividend.    We
accrued $0.5 million for preferred stock dividends in 2005 and 2004. All dividends were paid in additional shares of preferred stock and not in cash.

Cumulative change in accounting principle.    Effective July 2004, we applied the principles of Emerging Issues Task Force (EITF) No. 03-16 Accounting for Investments in
Limited Liability Companies. The effect of this change in accounting principle was a $0.6 million reduction in the



13



---

carrying amount of our investment in a limited liability company. We are now required to account for this investment on the equity method of accounting. Our
portion of income for 2005 was $0.4 million and in 2004 was less than $0.1 million. There was no change in 2005. Prior to the change in accounting principle, we reduced the carrying value of our non-public investments primarily in the Internet
advertising industry by $0.5 million. As part of the evaluation, we considered, among other factors, the business plans of these firms, the quality and effectiveness of their management teams, their liquidity and capital resource positions, and
their business relationships with third parties.

Net loss applicable to common shareholders.    Our net loss
applicable to common shareholders of approximately $3.5 million for 2005, a $4.0 million decrease over the $7.5 million net loss applicable to common shareholders for 2004, was attributable to the reasons discussed above.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Commission revenues.    Commission revenue for 2004 decreased $9.3 million, or 10.6%, to $78.5 million from $87.8 million in 2003. A significant portion of this decrease was attributable to
the cancellation of our representation contract with Citadel Broadcasting in the fourth quarter of 2003. There was also a dramatic softness in national spot advertising that has only recently begun to improve. Factors contributing to this softness
were the sluggishness of the economic recovery in general, and, more particularly, the recurrence of the historical pattern of national advertisers over-emphasizing television during election and Olympic years at the expense of radio advertising.

Contract termination revenue.    Contract termination revenue in 2004 increased $23.8 million to $24.5 million
from $0.7 million in 2003. Substantially all of this increase was attributable to the Citadel representation contract termination in 2003. During 2004, approximately 25 stations terminated representation contracts with us, which had generated an
aggregate of approximately $1.0 million of commission revenue during their 12-month trailing periods.

Selling
expenses.    Selling expenses for 2004 decreased to $63.7 million from $64.8 million during 2003. This decrease of $1.1 million, or approximately 1.7%, was primarily due to a $2.5 million reduction in compensation costs,
resulting from prior year severance programs and the non-recurrence of a $1.0 million loss on the sublease of excess space in 2003, partially offset by $2.3 million of special promotion program costs.

General and administrative expenses.    General and administrative expenses of $15.1 million for 2004 increased $0.7 million,
or 5.4%, from $14.4 million for 2003, primarily due to non-recurring legal costs in connection with the litigation that we instituted to recover a buyout payment from Citadel.

Operating income before depreciation and amortization.    Operating income before depreciation and amortization increased by
$14.8 million, or 159.8%, in 2004 to $24.1 million from $9.3 million in 2003, for the reasons discussed above. Included in operating income before depreciation and amortization in 2004 was $24.5 million of non-recurring contract termination revenue
as compared to contract termination revenue of $0.7 million in 2003. Operating income before depreciation and amortization is not a measure of performance calculated in accordance with GAAP and should not be considered in isolation from or as a
substitute for operating income (loss), net income (loss), cash flow or other GAAP measurements. We believe it is useful in evaluating our performance, in addition to the GAAP data presented, as it is commonly used by lenders and the investment
community to evaluate the performance of companies in our industry. Moreover, the maintenance of certain levels of operating income before depreciation and amortization is required under the covenants of our revolving credit facility.



14



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Reconciliation of net loss to operating income before depreciation and amortization



|                                                      |  |                        |        |   |      |   |         |  
|----------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------- | -
|                                                      |  | 2004                   |        |   | 2003 |  
|                                                      |  | (dollars in thousands) |       
|Net loss                                              |  | $                      | (7,032 | ) |      | $ | (38,200 | )
|Add back:                                             |  |                        |        |   |      |   |         |  
|Depreciation and amortization                         |  |                        | 19,783 |   |      |   | 33,989  |  
|Cumulative change in accounting principle             |  |                        | 598    |   |      |   |        |  
|Tax provision                                         |  |                        | 261    |   |      |   | 343     |  
|Other (income) expense                                |  |                        | (84    | ) |      |   | 528     |  
|Interest expense, net                                 |  |                        | 10,563 |   |      |   | 12,613  |  
|                                                      |  |                        |        |   |      |   |         |  
|Operating income before depreciation and amortization |  | $                      | 24,089 |   |      | $ | 9,273   |  
|                                                      |  |                        |        |   |      |   |         |  

Depreciation and amortization expense.    Depreciation and amortization
expense decreased $14.2 million, or 41.8%, to $19.8 million in 2004, from $34.0 million in 2003. The amortization of costs associated with acquiring representation contracts is included in depreciation and amortization. The decrease consisted of the
$11.6 million write-off of deferred representation contract costs related to the termination of the Citadel representation contract in 2003 and a $2.6 million reduction in depreciation and amortization in 2004 related to fully amortized contracts
and depreciated assets. We acquired representation contracts with approximately 63 new radio stations in 2004. We believe these contracts generated an aggregate of $1.3 million of commission revenues during their 12-month trailing periods prior to
their acquisition.

Operating income (loss).    In 2004, there was operating income of $4.3 million as compared
to an operating loss of $24.7 million in 2003, for the reasons discussed above.

Interest expense,
net.    Interest expense, net, decreased $2.0 million, or 16.3%, to $10.6 million for 2004, from $12.6 million for 2003. This decrease primarily resulted from our replacement, in September 2003, of a term loan facility
obtained in November 2002 with a new revolving credit facility. The termination of our previous term loan facility required the write-off of $1.2 million of unamortized deferred debt financing costs and $0.4 million of unamortized discount related
to warrants issued in connection with the term loan facility and certain interest expense. See Other expense, below.

Other
expense.    Other expense in 2003 included a $0.5 million pre-payment penalty related to the early payoff of the term loan facility.

Income taxes.    Our current and deferred income taxes, and associated valuation allowances, are affected by events and transactions arising in the normal course of business as well as
special and non-recurring items. Assessment of the appropriate amount and classification of income taxes is dependent on several factors, including estimates of the timing and realization of deferred income tax assets and the timing of income tax
payments. Actual collections and payments may differ from these estimates as a result of changes in tax laws as well as unanticipated future transactions impacting related income tax balances. The provision for income taxes in 2004 and 2003 was $0.3
million and related principally to state income taxes. A valuation allowance of $2.7 million and $14.8 million was recorded in 2004 and 2003, to reflect uncertainties with regard to when we will realize our net deferred tax assets.

Preferred stock dividend.    We accrued $0.5 million for preferred stock dividends in 2004 and 2003. All dividends were paid
in additional shares of preferred stock and not in cash.



15



---

Cumulative change in accounting principle.    Effective July 2004, we applied
EITF No. 03-16 Accounting for Investments in Limited Liability Companies. The effect of this change in accounting principle was a $0.6 million reduction in the carrying amount of our investment in a limited liability company. We are now
account for this investment on the equity method of accounting. Our portion of income for 2004 was less than $0.1 million. There was no change in 2003.

Net loss applicable to common shareholders.    Our net loss applicable to common shareholders of approximately $7.5 million for 2004, a $31.2 million decrease over the $38.7 million net loss
applicable to common shareholders for 2003, was attributable to the reasons discussed above.

Liquidity and Capital Resources

Cash provided from operations and financing transactions has primarily funded our cash requirements. As of December 31, 2005, we had cash and cash
equivalents of $6.9 million and working capital of $18.9 million. Additionally, at December 31, 2005, we had available $10.0 million under our revolving credit facility.

Cash provided by operations during 2005 was $8.7 million, as compared to $7.8 million and $9.8 million for the years ended 2004 and 2003. These
fluctuations were primarily attributable to contract terminations and changes in working capital components, including increases in representation contract buyouts receivable of $11.9 million and accounts payable and accrued expenses of $1.1 million
and a decrease in other noncurrent liabilities of $0.5 million.

Net cash used in investing activities during 2005, 2004 and 2003 was $2.4
million, $0.9 million and $2.3 million, respectively, and was primarily the result of capital expenditures for computer equipment. The payments in 2005 include $1.8 million of leasehold improvements made to the New York Offices, which are being paid
for by the landlord as part of our lease renewal. In addition, the payments made in 2005 and 2004 include $0.1 million and $0.5 million, respectively, that were capitalized in 2003.

Cash used for financing activities of $4.3 million during 2005 consisted primarily of $6.1 million for the acquisition of representation contracts and,
no net change in debt, resulting from the $27.3 million of gross repayments and $27.3 million of gross borrowings on our credit facility, offset by $1.8 million of reimbursement from the New York landlord for leasehold improvements. Cash used for
financing activities of $9.6 million during 2004 consisted primarily of $7.0 million for the acquisition of representation contracts and a net $4 million reduction in debt, resulting from the $25.7 million of gross repayments and $21.7 million of
gross borrowings on our credit facility, offset by $1.4 million received by us for Class B common stock issued to our Stock Growth Plan. Cash used for financing activities of $18.0 million during 2003 consisted primarily of $11.6 million for the
acquisition of representation contracts and a net $6 million reduction in debt, resulting from the repayment of $10 million for the term loan facility offset by the borrowing of $4 million on the new senior secured revolving credit facility, net of
$0.5 million of related financing costs.

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

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



16



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The Senior Subordinated Notes were issued under an indenture that limits our ability to engage in various
activities. Among other things, we are generally not able to pay any dividends to our shareholders, other than dividends payable in shares of common stock; we can only incur additional indebtedness under limited circumstances, and certain types of
mergers, asset sales and changes of control either are not permitted or permit the note holders to demand immediate redemption of their Senior Subordinated Notes. Management believes that we are in compliance with these covenants.

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

In September 2003, we entered into a $10 million senior secured revolving credit facility with Commerce Bank, N.A. to replace our $10 million senior secured term loan facility with an institutional lender. In July
2005 we amended our revolving credit facility in certain respects (the Amendment). The revolving credit facility enables us to efficiently manage our cash as we may borrow, repay and re-borrow funds as needed. The revolving credit
facility had an initial term of three years, which was extended by 15 months pursuant to the Amendment. The credit facility is secured by a first priority lien on all of our and our subsidiaries property and assets, tangible and intangible.
Interest is payable monthly on the borrowings at rates based on either a prime rate or LIBOR, plus a premium of 1% for prime rate borrowings, and 4% for LIBOR borrowings. In addition to covenants similar to those in the indenture governing the
Notes, the credit facility requires, among other things, that we (i) maintain certain 12-month trailing Operating EBITDA levels (Operating EBITDA was defined in the Loan and Security Agreement, prior to the Amendment as, for any
period: (a) the Companys consolidated net income (loss), plus (b) all taxes on income plus state and local franchise and corporate taxes paid by the Company and any of its subsidiaries plus (c) all interest expense deducted in
determining such net income, plus (d) all depreciation and amortization expense and other non-cash charges (including, without limitation, non-cash charges resulting from the repricing of employee stock options), plus (e) severance costs
expensed but not yet paid in cash, less (f) extraordinary gains, plus (g) extraordinary losses, less (h) contract termination revenue); (ii) have a certain minimum accounts receivable balance as of the end of each quarter;
(iii) have not less than $200 million of representation contract value (as defined) as of the end of each quarter; and (iv) have not less than $2 million of cash and cash equivalents as of the end of each quarter. We incurred approximately
$0.5 million in legal and other costs directly related to the revolving credit facility, which are being amortized as interest expense over the life of the facility. Substantially all of our subsidiaries, jointly, severally and unconditionally
guarantee the revolving credit facility. At December 31, 2005, we had $10.0 million available under our revolving credit facility.

The Amendment was entered into on July 21, 2005. The principal change effected by the Amendment was to extend the term of our revolving credit facility from September 25, 2006 through December 31, 2007. The Amendment also
revised certain of the financial covenants to more appropriately reflect our current business operations. It also revised the definition of Operating EBITDA as for any period: (a) Net Income (Loss), plus (b) all taxes on income
plus state and local franchise and corporation taxes paid by the Borrower and any of its Subsidiaries plus (c) all interest expense deducted in determining such Net Income, plus (d) all depreciation and amortization expense and other
non-cash charges (including, without limitation, non-cash charges resulting from the repricing of employee stock options), plus (e) severance costs expensed but not yet paid in cash, less (f) extraordinary gains, plus
(g) extraordinary losses, less (h) Contract Termination Revenue, but plus



17



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Contract Termination Revenue received in cash and (i) less Contract Acquisition Payments, in each case for such period, in each case in connection with
Borrower and its Subsidiaries, on a consolidated basis. We incurred an additional $0.1 million in legal and other costs directly related to the amendment of the revolving credit facility, which are being amortized as interest expense over the life
of the extended facility. Management believes that we are in compliance with these covenants.

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

Our ability to fund our operations and required contract acquisition payments and to make
scheduled principal and interest payments will depend on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may also
need to refinance all or a portion of the Senior Subordinated Notes on or prior to maturity. There can be no assurance that we will be able to effect any such refinancing on commercially reasonable terms, if at all.

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

Certain Risk Factors That May Affect Our Results of Operations

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



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



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



| |  |  | Terrorism, the military action in Iraq and other geopolitical situations have caused uncertainty. While the ongoing consequences of these events remain unclear, we believe that they
have likely had an adverse effect on general economic conditions, consumer confidence, advertising and the media industry and may continue to do so in the future.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



18



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| |  |  | We depend heavily on our key personnel, including our Chief Executive Officer, Ralph C. Guild, and our President and Chief Operating Officer, George E. Pine, and our inability to
retain them could adversely affect our business.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



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

Critical Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Interep and all of its
subsidiaries. All significant intercompany transactions and balances have been eliminated.

Use of Estimates

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

Allowance for doubtful accounts

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

Revenue Recognition

We are a national representation firm serving radio broadcast clients and certain internet service providers throughout the United States. Commission revenues are derived from sales of advertising time for radio stations under
representation contracts. Commissions and fees are recognized in the month the advertisement is broadcast. In connection with our unwired network business, we collect fees for unwired network radio advertising and, after deducting our commissions,
remit the fees to the respective radio stations. In instances when we are not legally obligated to pay a station or service provider until the corresponding receivable is paid, fees payable to stations have been offset against the



19



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related receivable from advertising agencies in the accompanying consolidated balance sheets. We record all commission revenues on a net basis. Commissions
are recognized based on the standard broadcast calendar that ends on the last Sunday in each reporting period. The broadcast calendar for the calendar years ended December 31, 2005, 2004, and 2003 each had 52 weeks, though some broadcast
calendar years, such as 2006 may have 53 weeks.

Representation Contract Termination Revenue and Contract Acquisition Costs

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

In 2005, we recorded approximately $20 million of contract termination revenue primarily related to
Cumulus Broadcasting and Radio Ones termination of their representation contracts with us. We also wrote-off $3.6 million of deferred contract acquisition costs related to both contract terminations, which is reflected in depreciation and
amortization.

Cash and Cash Equivalents

We consider cash in banks and investments with an original maturity of three months or less to be cash equivalents.

Fixed Assets, net

Furniture, fixtures and equipment are recorded at cost and are depreciated over three to ten-year lives,
and leasehold improvements are amortized over the shorter of the lives of the leases or assets, all on a straight-line basis.

Statement of
Position 98-1 Accounting For The Costs Of Computer Software Developed Or Obtained For Internal Use (SOP 98-1) provides guidance on accounting for the costs of computer software developed or obtained for internal use. The costs for such
computer software will be amortized on a straight-line basis over three years.

Long-Lived Assets

We assess the impairment of our long-lived assets in accordance with SFAS No. 144, which requires testing when events or changes in circumstances
indicate that the carrying amount of the asset



20



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may not be recoverable. We reevaluate these intangible assets each reporting period to determine whether events and circumstances warrant a revision in their
remaining life. SFAS No. 144, which also applies to other long-lived assets such as plant, property and equipment, as well as groups of assets, provides examples of indicators of potential impairment such as: a significant decrease in market
price of the asset; a significant adverse change in the extent or manner in which the asset is used; a significant adverse change in legal factors or the business climate; an adverse action or assessment by a regulator; excess cost accumulation for
the acquisition or construction of the asset; current period operating cash flow losses combined with a similar history or a projection of future losses; and a more likely than not expectation that the asset will be sold. If any indicators were
present, we would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e. the
asset is not recoverable), we would perform the next step which is to determine the fair value of the asset and record an impairment, if any. Based on the Companys analysis, no impairment was recorded as of December 31, 2005.

Stock Growth Plan

We maintain a
Stock Growth Plan (SGP) for eligible employees. Cash contributions made by us to the SGP are recorded as compensation expense. Shares of our stock owned by the SGP are treated as outstanding common stock.

Stock-Based Compensation

We have
elected to continue to account for our employee stock-based compensation plan using the intrinsic value method, as prescribed by APB No. 25 Accounting for Stock Issued to Employees and interpretations thereof (collectively APB 25)
versus the fair value method allowed by SFAS No. 123. We have implemented the disclosure provision of SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure. This statement amended the disclosure
provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock Based Compensation, to require prominent disclosure of the
effect on reported net income of an entitys accounting policy decisions with respect to stock-based employee compensation and amended APB Opinion No. 28, Interim Financial Reporting, to require disclosure of those effects in interim
financial information. Accordingly, no compensation cost has been recognized in the accompanying Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003 in respect of stock options granted during those years.
In December 2004 the FASB issued SFAS No. 123R, Share-based Payment (SFAS No. 123(R)). The provisions of the new standard were scheduled to go into effect for all interim or annual periods beginning after June 15, 2005.
SFAS No. 123(R) requires that compensation cost for all share-based employee payments be recognized in the statement of operations based on grant date fair values of the awards, adjusted to reflect actual forfeitures and the outcome of certain
other conditions. The fair value is generally not re-measured, except in limited circumstances, or if the award is subsequently modified. The statement will require us to estimate the fair value of stock-based awards and recognize expense in the
statement of operations as the related services are provided. See Notes 1 and 4 to Consolidated Financial Statements for further discussion of our accounting for our stock-based compensation plans.

In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) which expresses views of the SEC staff regarding the
application of SFAS No.123(R). Among other things, SAB 107 provides interpretive guidance related to the interaction between SFAS No. 123(R) and certain SEC



21



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rules and regulations, as well as the SEC staffs views regarding the valuation of share-based payment arrangements for public companies. On
April 14, 2005, the SEC announced the adoption of a new rule that amends the compliance dates of SFAS No. 123(R). The new rule allows companies to implement SFAS No. 123(R) at the beginning of their next fiscal year.

We will implement SFAS No. 123(R) in the first quarter of 2006 and intend to use the modified prospective method. Adoption of the standard may have
a material impact on the results of operations in future periods. However, the impact of adoption will depend on levels of share-based payments granted in the future. Our estimate for 2006 is an approximate $0.8 million increase in compensation
expense based upon options outstanding at December 31, 2005.

Restructuring and Severance Charges

During 2005 and 2004, we continued to offer an early retirement program, which was accepted by 18 people in 2005, including four executives, and one
person in 2004, to reduce compensation costs on a going forward basis. This resulted in termination benefits to be paid over an extended period of time, which were recorded during 2005 and 2004 at net present value. SFAS No. 146 required that
we record this new liability at fair value as of the time the liability was incurred. See Note 1 to the Consolidated Financial Statements for further discussion.

Loss per Share

Basic loss per share for each of the respective years has been computed by dividing
the net loss applicable to common shareholders by the weighted average number of common shares outstanding during the year which was 11,295,876, 10,695,410, and 10,248,159 for the years ended December 31, 2005, 2004, and 2003, respectively.
Diluted loss per share would reflect the potential dilution that could occur if the outstanding options to purchase common stock were exercised. For the years ended December 31, 2005, 2004, and 2003, the exercise of outstanding options would
have an antidilutive effect and therefore have been excluded from the calculation. Shares issuable under options that have not been included in the fully diluted loss per share calculation because of their antidilutive effect were 4,508,885,
5,166,155 and 5,121,405 at December 31, 2005, 2004 and 2003.

Income Taxes

Deferred taxes are provided for temporary differences arising from the differences between financial statement and income tax bases of assets and
liabilities. Deferred tax assets and liabilities are measured using enacted tax rates. Valuation allowances are established when necessary to reduce deferred tax assets and liabilities to amounts considered more likely than not to be realized.

Segment Reporting

Statement of Financial Accounting Standards No. 131, Disclosure about Segments of an Enterprise and Related Information requires us to report segment financial information consistent with the presentation made to the
Companys management for decision making purposes. We are managed as one segment and all revenues are derived solely from representation operations and related activities. Our management decisions are based on operating cash flow (defined as
operating income before depreciation and amortization), general and administrative expenses, and adjusted EBITDA (operating income excluding contract termination revenue and depreciation and amortization expense).



22



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Off Balance Sheet Arrangements

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

Contractual
Obligations and Other Commercial Commitments



|                                    |  |                        |       |      |   |           |  |           |       |                 |   |      |  |   |     
|----------------------------------- |  | ---------------------- | ----- | ---- | - | --------- |  | --------- | ----- | --------------- | - | ---- |  | - | ----
|                                    |  | Payments Due by Period
|                                    |  | Total                  |       | 2006 |   | 2007-2008 |  | 2009-2010 |       | 2011-Thereafter
|                                    |  | (Dollars in Millions) 
|Long term debt                      |  | $                      | 99.0  |      | $ |          |  | $         | 99.0  |                 | $ |     |  | $ |    
|Operating leases                    |  |                        | 45.7  |      |   | 4.8       |  |           | 9.0   |                 |   | 6.4  |  |   | 25.5
|Interest expense                    |  |                        | 24.8  |      |   | 9.9       |  |           | 14.9  |                 |   |     |  |   |    
|Annual fees for accounting services |  |                        | 17.3  |      |   | 3.6       |  |           | 7.8   |                 |   | 5.9  |  |   |    
|Representation contract buyouts     |  |                        | 6.2   |      |   | 5.1       |  |           | 0.7   |                 |   | 0.4  |  |   |    
|                                    |  |                        |       |      |   |           |  |           |       |                 |   |      |  |   |     
|Total                               |  | $                      | 193.0 |      | $ | 23.4      |  | $         | 131.4 |                 | $ | 12.7 |  | $ | 25.5
|                                    |  |                        |       |      |   |           |  |           |       |                 |   |      |  |   |     



|Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

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

Because our obligation under the senior secured revolving credit facility bears interest at a variable rate, we are sensitive to changes in prevailing interest rates. A one-point fluctuation in market rates would not
have had a material impact on 2006 earnings.



|Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

Financial information required by this item appears in the pages marked F-1 through F-24 at the end of this Report and is incorporated herein by reference as if fully set forth herein.



|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

On October 8, 2004, we terminated the engagement of Ernst & Young LLP (Ernst & Young), our independent public
accountants. The reports of Ernst & Young on our financial statements for the fiscal years ended December 31, 2002 and December 31, 2003 did not contain an adverse opinion, disclaimer of opinion or qualification or modification as
to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2002 and December 31, 2003 and during the subsequent interim periods through the date of termination, we had no disagreements with
Ernst & Young on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedures. In addition, there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K) during
these periods.

The Audit Committee of our Board of Directors considered, approved and recommended to our Board of Directors the
termination of our engagement of Ernst & Young as our independent auditors. These actions were ratified and approved by our Board of Directors.



23



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We engaged BDO Seidman, LLP (BDO) to act as our independent auditors as of October 21,
2004. During the two most recent fiscal years, prior to that time we had not consulted with BDO regarding (i) either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion
that might be rendered on our financial statements, or (ii) any matter that was either the subject of disagreement on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures or a
reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K). The Audit Committee of our Board of Directors considered, approved and recommended to our Board of Directors the appointment of BDO as our independent auditors. These actions
were ratified and approved by our Board of Directors.



|Item 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

(a)    Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15 and 15d-15
under the Securities Exchange Act of 1934, our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(c) under that Act) as of the end of the period covered by this Annual Report on Form 10-K. Based upon that evaluation, our Chairman and Chief Executive Officer and our Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of December 31, 2005.

(b)    Changes
in Internal Controls

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during our fourth quarter of 2005 covered by Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, our control over financial reporting.



|Item 9B. | OTHER INFORMATION
|-------- | -----------------

There was no information
required to be disclosed in a Current Report on Form 8-K during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K that was not reported.



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PART III

Items 10  Through 14 Inclusive.

The information required by Item 10 (Directors and Executive Officers of the
Registrant) (other than information as to our executive officers, which is set forth in Part I under the caption Executive Officers), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners
and Management), Item 13 (Certain Relationships and Related Transactions) and Item 14 (Principal accounting fees and services) is incorporated by reference to our definitive proxy statement for the 2006 Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission on or about April 28, 2006.



25



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PART IV



|Item 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
|-------- | ----------------------------------------------------------------

(A)    Documents Filed as Part of this Report

Financial Statements and Supplementary
Data.    The following Financial Statements of the Company are filed with this Form 10-K:



|                                                                                                                                  |  |     
|--------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Report of Independent Registered Public Accounting Firm                                                                           |  | F-2 
|Report of Independent Registered Public Accounting Firm                                                                           |  | F-3 
|Consolidated Balance Sheets as of December 31, 2005 and 2004                                                                      |  | F-4 
|Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003                                        |  | F-5 
|Consolidated Statements of Capital Deficit for the Years Ended December 31, 2005, 2004 and 2003                                   |  | F-6 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003                                        |  | F-7 
|Notes to Consolidated Financial Statements                                                                                        |  | F-8 
|                                                                                                                                 
|Financial Statement Schedules.    The following financial statement schedule is filed as part of this Annual Report
on Form 10-K:
|                                                                                                                                  | 
|Schedule IIValuation and Qualifying Accounts                                                                                     |  | F-25

Exhibits.    The following Exhibits are filed as part of this Report:



|            |  |                                                                                                                                                                                                                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                       
|3.1(5)      |  | Restated Certificate of Incorporation of Interep                                                                                                                                                                                                                                                                  
|3.2(8)      |  | Certificate of Amendment of the Restated Certificate of Incorporation                                                                                                                                                                                                                                             
|3.3(5)      |  | By-Laws of Interep                                                                                                                                                                                                                                                                                                
|3.4(13)     |  | Certificate of Correction                                                                                                                                                                                                                                                                                         
|4.1(1)      |  | A/B Exchange Registration Rights Agreement, dated July 2, 1998, among Interep, the Guarantors, BancBoston Securities Inc., Loenbaum & Company Incorporated and SPP Hambro & Co.,
LLC                                                                                                                              
|4.2(1)      |  | Indenture, dated July 2, 1998, between Interep, the Guarantors and Summit Bank                                                                                                                                                                                                                                    
|4.3(1)      |  | Form of 10% Senior Subordinated Note (Included in Exhibit 4.2)                                                                                                                                                                                                                                                    
|4.4(3)      |  | Supplemental Indenture, dated as of March 22, 1999, among American Radio Sales, Inc., Interep, the Guarantors and Summit Bank as Trustee                                                                                                                                                                          
|4.5(6)      |  | Form of Registration Rights Agreement among the Interep Employee Stock Ownership Plan, the Interep Stock Growth Plan and Interep                                                                                                                                                                                  
|4.6(8)      |  | Form of Warrant used in connection with issuance of Series A preferred stock and warrants                                                                                                                                                                                                                         
|4.7(10)     |  | Warrant to purchase 225,000 shares of Class A Common Stock of Interep, dated as of November 7, 2002                                                                                                                                                                                                               
|10.1(1)     |  | Agreement of Lease, dated December 31, 1992, between The Prudential Insurance Company of America and Interep                                                                                                                                                                                                      
|10.2(2)     |  | Lease, dated January 1, 1990, between Ralph C. Guild, doing business as The Tuxedo Park Executive Conference Center and Interep, as amended by Amendment of Lease, dated December 3, 1998,
between Ralph Guild 1990 Trust No. 1 (successor in interest to The Tuxedo Park Executive Conference Center) and Interep
|10.3(1)*    |  | Agreement, dated June 29, 1998, between Interep and Ralph C. Guild                                                                                                                                                                                                                                                
|10.4(7)*    |  | Amended and Restated Services Agreement, dated as of January 2, 2001, between Interep and Media Financial Services, Inc.                                                                                                                                                                                          
|10.5(3)*    |  | Fifth Amended and Restated Employment Agreement, dated as of March 1, 1999, between Interep and Ralph C. Guild                                                                                                                                                                                                    



26



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|            |  |                                                                                                                                                                              
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                  
|10.6(7)*    |  | Amended and Restated Employment Agreement, dated as of April 1, 2000, between Interep and Marc G. Guild                                                                      
|10.7(1)*    |  | Non-Qualified Stock Option granted to Ralph C. Guild on December 31, 1988                                                                                                    
|10.8(1)*    |  | Amendment and Extension of Option, dated January 1, 1991, between Interep and Ralph C. Guild                                                                                 
|10.9(1)*    |  | Non-Qualified Stock Option granted to Ralph C. Guild on January 1, 1991                                                                                                      
|10.10(1)*   |  | Non-Qualified Stock Option granted to Ralph C. Guild on December 31, 1995                                                                                                    
|10.11(1)*   |  | Non-Qualified Stock Option granted to Marc G. Guild on January 1, 1991                                                                                                       
|10.12(1)*   |  | Non-Qualified Stock Option granted to Ralph C. Guild on June 29, 1997                                                                                                        
|10.13(1)*   |  | Non-Qualified Stock Option granted to Marc G. Guild on June 29, 1997                                                                                                         
|10.14(1)*   |  | Non-Qualified Stock Option granted to William J. McEntee, Jr. on June 29, 1997                                                                                               
|10.15(1)*   |  | Supplemental Income Agreement, dated December 31, 1986, between Interep and Ralph C. Guild                                                                                   
|10.16(1)*   |  | Agreement, dated June 18, 1993, between Interep and Ralph C. Guild                                                                                                           
|10.17(2)*   |  | Non-Qualified Stock Option Granted to Ralph C. Guild on July 10, 1998                                                                                                        
|10.18(2)*   |  | Non-Qualified Stock Option Granted to Marc G. Guild July 10, 1998                                                                                                            
|10.19(2)*   |  | Non-Qualified Stock Option Granted to William J. McEntee, Jr. July 10, 1998                                                                                                  
|10.20(3)*   |  | Non-Qualified Stock Option Granted to Ralph C. Guild, December 16, 1998.                                                                                                     
|10.21(3)*   |  | Non-Qualified Stock Option Granted to Leslie D. Goldberg, December 16, 1998                                                                                                  
|10.22(7)*   |  | Non-Qualified Stock Option Granted to Ralph C. Guild on April 25, 2000                                                                                                       
|10.23(7)*   |  | Non-Qualified Stock Option Granted to Marc G. Guild on April 25, 2000                                                                                                        
|10.24(7)*   |  | Non-Qualified Stock Option Granted to William J. McEntee on April 25, 2000                                                                                                   
|10.25(4)*   |  | Form of Indemnification Agreement for directors and officers                                                                                                                 
|10.26(5)*   |  | 1999 Stock Incentive Plan                                                                                                                                                    
|10.27(6)*   |  | Form of Stock Option Agreement                                                                                                                                               
|10.28(5)    |  | Lease Agreement, dated as of June 30, 1999 between Bronxville Family Partnership, L.P. and Interep                                                                           
|10.29(6)*   |  | Agreement, dated as of November 30, 1999 between Interep and Ralph C. Guild                                                                                                  
|10.30(6)*   |  | Agreement, dated as of November 30, 1999 between Interep and Ralph C. Guild                                                                                                  
|10.31(5)*   |  | Agreement, dated as of November 30, 1999 between Interep and Marc G. Guild                                                                                                   
|10.32(10)   |  | Credit Agreement, dated as of November 7, 2002, among Interep, certain of its subsidiaries, Upper Columbia Capital Company, L.L.C. and Guggenheim Investment Management, LLC 
|10.33(8)    |  | Form of Stock Purchase Agreement used in connection with issuance of Series A preferred stock and warrants                                                                   
|10.34(8)    |  | Form of Registration Rights Agreement used in connection with issuance of Series A preferred stock and warrants                                                              
|10.35(10)   |  | Security Agreement, dated as of November 7, 2002, among Interep, certain of its subsidiaries and Guggenheim Investment Management, LLC                                       
|10.36(10)   |  | Guarantee of certain subsidiaries of Interep in favor of Upper Columbia Capital Company, L.L.C. and Guggenheim Investment Management, LLC                                    
|10.37(10)   |  | Senior Secured Note of Interep payable to Upper Columbia Capital Company, L.L.C., dated as of November 7, 2002                                                               
|10.38(10)   |  | Trademark Security Agreement, dated as of November 7, 2002, among Interep, certain of its subsidiaries and Guggenheim Investment Management, LLC                             
|10.39(10)   |  | Pledge Agreement, dated as of November 7, 2002, among Interep, certain of its subsidiaries and Guggenheim Investment Management, LLC                                         
|10.40(11)   |  | Agreement, dated as of March 19, 2003, between Interep and George E. Pine                                                                                                    
|10.41(12)   |  | Loan and Security Agreement, dated as of September 25, 2003, among Interep, each of the entities listed as a guarantor on the signature pages thereto and Commerce Bank,
N.A.
|10.42(12)   |  | Revolving Note, dated September 25, 2003, payable to the order of Commerce Bank, N.A.                                                                                        
|10.43(12)   |  | Guaranty, dated September 25, 2003, granted by the entities listed therein as guarantors in favor of Commerce Bank, N.A.                                                     



27



---

|            |  |                                                                                                                                                                                                                 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                     
|10.44(12)   |  | Pledge Agreement, dated September 25, 2003, among Interep, the other entities listed therein as pledgors and Commerce Bank, N.A.                                                                                
|10.45(13)   |  | Trademark Security Agreement, dated September 25, 2003, between Interep and Commerce Bank, N.A.                                                                                                                 
|10.46(15)   |  | Amendment, dated as of June 20, 2005, to the Fifth Amended and Restated Employment Agreement, between Interep and Ralph C. Guild                                                                                
|10.47(16)   |  | First Amendment, dated as of July 21, 2005 to the Loan and Security Agreement, dated as of September 25, 2003, among Commerce Bank, N.A., Interep National Radio Sales, Inc. and its subsidiaries
named therein.
|14(14)      |  | Code of Ethics for Senior Management                                                                                                                                                                            
|16.1(9)     |  | Letter, dated June 20, 2002 from Arthur Andersen LLP to the Securities and Exchange Commission                                                                                                                  
|21.1        |  | Subsidiaries of Interep (filed herewith)                                                                                                                                                                        
|23.1        |  | Consent of BDO Seidman, LLP (filed herewith)                                                                                                                                                                    
|23.2        |  | Consent of Ernst & Young LLP (filed herewith)                                                                                                                                                                   
|31.1        |  | Certification of Chief Executive Officer pursuant to Rule 15d-14(a) (filed herewith)                                                                                                                            
|31.2        |  | Certification of Chief Financial Officer pursuant to Rule 15d-14(a) (filed herewith)                                                                                                                            
|32.1        |  | Certification of Chief Executive Officer pursuant to Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350(a), (b)) (furnished herewith)**                                         
|32.2        |  | Certification of Chief Financial Officer pursuant to Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350(a), (b)) (furnished herewith)**                                         

---

|* |  | Management or compensatory contract required to be filed pursuant to Item 14(c) of the requirements for Form 10-K reports.
|- |  | --------------------------------------------------------------------------------------------------------------------------

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



|(1) |  | Incorporated by reference to Intereps registration statement on Form S-4 (Registration No. 333-60575), filed with the Commission on August 4, 1998.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Incorporated by reference to Intereps registration statement on Form S-4/A-2 (Registration No. 333-60575), filed with the Commission on January 26, 1999.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Incorporated by reference to Intereps Annual Report on Form 10-K for its fiscal year ended December 31, 1998, filed with the Commission on March 31, 1999 (File No.
000-28395).
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Incorporated by reference to Intereps registration statement on Form S-1 (Registration No. 333-88265), filed with the Commission on October 10, 1999.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Incorporated by reference to Intereps registration statement on Form S-1/A-1 (Registration No. 333-88265), filed with the Commission on November 8, 1999.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Incorporated by reference to Intereps registration statement on Form S-1/A-4 (Registration No. 333-88265), filed with the Commission on December 8, 1999.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Incorporated by reference to Intereps Annual Report on Form 10-K for its fiscal year ended December 31, 2000, filed with the Commission on April 2, 2001 (File No.
000-28395).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) |  | Incorporated by reference to Intereps Quarterly Report on Form 10-Q for its quarter ended March 31, 2002, filed with the Commission on May 15, 2002 (File No.
000-28395).
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) |  | Incorporated by reference to Intereps Current Report on Form 8-K date June 20, 2002, filed with the Commission on June 26, 2002 (File No. 000-28395).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) |  | Incorporated by reference to Intereps Quarterly Report on Form 10-Q for its quarter ended September 30, 2002, filed with the Commission on November 13, 2002 (File
No. 000-28395).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



28



---

|(11) |  | Incorporated by reference to Intereps Annual Report on Form 10-K for its fiscal year ended December 31, 2002, filed with the Commission on April 1, 2003 (File No.
000-28395).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) |  | Incorporated by reference to Intereps Current Report on Form 8-K dated September 25, 2003, filed with the Commission on September 30, 2003 (File No. 000-28395).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) |  | Incorporated by reference to Intereps Quarterly Report on Form 10-Q for its quarter ended June 30, 2004, filed with the Commission on August 13, 2004 (File No.
000-28395).
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(14) |  | Incorporated by reference to Intereps Annual Report on Form 10-K for its fiscal year ended December 31, 2003, filed with the Commission on March 29, 2004 (File
No. 000-28395).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(15) |  | Incorporated by reference to Intereps Current Report on Form 8-K dated June 20, 2005, filed with the Commission on June 22, 2005 (File No. 000-28395).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

|(16) |  | Incorporated by reference to Intereps Current Report on Form 8-K dated July 21, 2005, filed with the Commission on July 27, 2005 (File No. 000-28395).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

(B)    Reports on Form 8-K

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



|                  |  |                     |  |                          
|----------------- |  | ------------------- |  | -------------------------
|Date of Report    |  | Items Reported      |  | FinancialStatements Filed
|November 15, 2005 |  | Items 2.02 and 9.01 |  | No                       



29



---

INTEREP NATIONAL RADIO SALES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                |  |     
|----------------------------------------------------------------------------------------------- |  | ----
|                                                                                                |  | Page
|                                                                                                | 
|Report of Independent Registered Public Accounting Firm                                         |  | F-2 
|                                                                                                | 
|Report of Independent Registered Public Accounting Firm                                         |  | F-3 
|                                                                                                | 
|Consolidated Balance Sheets as of December 31, 2005 and 2004                                    |  | F-4 
|                                                                                                | 
|Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003      |  | F-5 
|                                                                                                | 
|Consolidated Statements of Capital Deficit for the Years Ended December 31, 2005, 2004 and 2003 |  | F-6 
|                                                                                                | 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003      |  | F-7 
|                                                                                                | 
|Notes to Consolidated Financial Statements                                                      |  | F-8 
|                                                                                                | 
|Financial Statement Schedule for the Years Ended December 31, 2005, 2004 and 2003:              |  |     
|                                                                                                | 
|Schedule IIValuation and Qualifying Accounts                                                   |  | F-25



F-1



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Interep National Radio Sales, Inc.:

We have audited the accompanying consolidated balance sheets of Interep National Radio Sales, Inc. (a New York corporation) and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations,
capital deficit, and cash flows for the years then ended. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our
opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Interep National Radio Sales, Inc. and subsidiaries at December 31, 2005 and 2004 and the consolidated results
of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As
discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for its investment in a limited liability company.

/s/    BDO SEIDMAN, LLP

West Palm Beach, Florida

March 17, 2006



F-2



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Interep National Radio Sales, Inc.

We have audited the accompanying consolidated statements of operations, shareholders (deficit) equity, and cash flows of Interep National Radio Sales, Inc (a New York Corporation) for the year ended December 31, 2003. Our audit
also included the financial statement schedule for the year ended December 31, 2003 listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements and schedule based on our audit.

We conducted our audit in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were
not engaged to perform an audit of the Companys internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated results of operations and cash flows for the year ended December 31, 2003 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule for
the year ended December 31, 2003, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/S/    ERNST & YOUNG LLP

New York, New York

February 26, 2004



F-3



---

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands except share information)



|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ---- | - | ------- | -
|                                                                                                                                                                                            |  | December 31, |         
|                                                                                                                                                                                            |  | 2005         |          |   | 2004 |  
|ASSETS                                                                                                                                                                                      |  |              |          |   |      |   |         |  
|Current assets:                                                                                                                                                                             |  |              |          |   |      |   |         |  
|Cash and cash equivalents                                                                                                                                                                   |  | $            | 6,928    |   |      | $ | 4,937   |  
|Receivables, less allowance for doubtful accounts of $623 and $770                                                                                                                          |  |              | 20,905   |   |      |   | 24,041  |  
|Representation contract buyouts receivable                                                                                                                                                  |  |              | 12,054   |   |      |   | 1,987   |  
|Current portion of deferred representation contract costs                                                                                                                                   |  |              | 11,082   |   |      |   | 13,364  |  
|Prepaid expenses and other currents assets                                                                                                                                                  |  |              | 1,616    |   |      |   | 1,284   |  
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|Total current assets                                                                                                                                                                        |  |              | 52,585   |   |      |   | 45,613  |  
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|Fixed assets, net                                                                                                                                                                           |  |              | 3,594    |   |      |   | 3,114   |  
|Deferred representation contract costs                                                                                                                                                      |  |              | 21,799   |   |      |   | 33,137  |  
|Representation contract buyouts receivable                                                                                                                                                  |  |              | 5,123    |   |      |   | 3,336   |  
|Investments and other assets                                                                                                                                                                |  |              | 5,858    |   |      |   | 5,810   |  
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|                                                                                                                                                                                            |  | $            | 88,959   |   |      | $ | 91,010  |  
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|LIABILITIES AND CAPITAL DEFICIT                                                                                                                                                             |  |              |          |   |      |   |         |  
|Current liabilities:                                                                                                                                                                        |  |              |          |   |      |   |         |  
|Accounts payable and accrued expenses                                                                                                                                                       |  | $            | 19,287   |   |      | $ | 18,347  |  
|Accrued interest                                                                                                                                                                            |  |              | 4,950    |   |      |   | 4,950   |  
|Representation contract buyouts payable                                                                                                                                                     |  |              | 5,135    |   |      |   | 5,630   |  
|Accrued employee related liabilities                                                                                                                                                        |  |              | 4,358    |   |      |   | 3,680   |  
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|Total current liabilities                                                                                                                                                                   |  |              | 33,730   |   |      |   | 32,607  |  
|Long-term debt                                                                                                                                                                              |  |              | 99,000   |   |      |   | 99,000  |  
|Representation contract buyouts payable                                                                                                                                                     |  |              | 1,063    |   |      |   | 2,537   |  
|Other noncurrent liabilities                                                                                                                                                                |  |              | 3,644    |   |      |   | 2,293   |  
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|Total liabilities                                                                                                                                                                           |  |              | 137,437  |   |      |   | 136,437 |  
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|Commitments and Contingencies                                                                                                                                                               |  |              |          |   |      |   |         |  
|                                                                                                                                                                                            |  |             
|Capital deficit:                                                                                                                                                                            |  |              |          |   |      |   |         |  
|4% Series A cumulative convertible preferred stock, $0.01 par value400,000 shares authorized, 123,342 and 118,598 shares issued and
outstanding (aggregate liquidation preference$12,334) |  |              | 1        |   |      |   | 1       |  
|Class A common stock, $.01 par value20,000,000 shares authorized, 7,022,446 and 6,669,221 shares issued and
outstanding                                                                    |  |              | 70       |   |      |   | 67      |  
|Class B common stock, $.01 par value10,000,000 shares authorized, 4,273,430 and 4,626,655 shares issued and outstanding, convertible
into Class A common stock                             |  |              | 43       |   |      |   | 46      |  
|Additional paid-in-capital                                                                                                                                                                  |  |              | 52,512   |   |      |   | 52,525  |  
|Accumulated deficit                                                                                                                                                                         |  |              | (101,104 | ) |      |   | (98,066 | )
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|Total capital deficit                                                                                                                                                                       |  |              | (48,478  | ) |      |   | (45,427 | )
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  
|                                                                                                                                                                                            |  | $            | 88,959   |   |      | $ | 91,010  |  
|                                                                                                                                                                                            |  |              |          |   |      |   |         |  

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



F-4



---

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share data)



|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                 |  | For the Year Ended December 31, |        
|                                                                                 |  | 2005                            |         |   | 2004 |   |         | 2003 | 
|Revenues:                                                                        |  |                                 |         |   |      |   |         |      |  |   |         |  
|Commission                                                                       |  | $                               | 80,068  |   |      | $ | 78,455  |      |  | $ | 87,755  |  
|Contract termination                                                             |  |                                 | 20,001  |   |      |   | 24,462  |      |  |   | 666     |  
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Total revenues                                                                   |  |                                 | 100,069 |   |      |   | 102,917 |      |  |   | 88,421  |  
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Operating expenses:                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Selling                                                                          |  |                                 | 61,462  |   |      |   | 63,690  |      |  |   | 64,783  |  
|General and administrative                                                       |  |                                 | 11,541  |   |      |   | 15,138  |      |  |   | 14,365  |  
|Depreciation and amortization                                                    |  |                                 | 20,050  |   |      |   | 19,783  |      |  |   | 33,989  |  
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Total operating expenses                                                         |  |                                 | 93,053  |   |      |   | 98,611  |      |  |   | 113,137 |  
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Operating income (loss)                                                          |  |                                 | 7,016   |   |      |   | 4,306   |      |  |   | (24,716 | )
|Interest expense, net                                                            |  |                                 | 10,297  |   |      |   | 10,563  |      |  |   | 12,613  |  
|Net undistributed income of equity investee                                      |  |                                 | (377    | ) |      |   | (84     | )    |  |   |        |  
|Other loss                                                                       |  |                                 |        |   |      |   |        |      |  |   | 528     |  
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Loss before income taxes and loss from cumulative change in accounting principle |  |                                 | (2,904  | ) |      |   | (6,173  | )    |  |   | (37,857 | )
|Income taxes                                                                     |  |                                 | 134     |   |      |   | 261     |      |  |   | 343     |  
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Loss before cumulative change in accounting principle                            |  |                                 | (3,038  | ) |      |   | (6,434  | )    |  |   | (38,200 | )
|Cumulative change in accounting principle                                        |  |                                 |        |   |      |   | (598    | )    |  |   |        |  
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Net loss                                                                         |  |                                 | (3,038  | ) |      |   | (7,032  | )    |  |   | (38,200 | )
|Preferred stock dividend                                                         |  |                                 | 486     |   |      |   | 468     |      |  |   | 468     |  
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Net loss applicable to common shareholders                                       |  | $                               | (3,524  | ) |      | $ | (7,500  | )    |  | $ | (38,668 | )
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|                                                                                 |  |                                 |        
|                                                                                 |  |                                 |         |   |      |   |         |      | 
|Basic and diluted loss per common share:                                         |  |                                 |         |   |      |   |         |      |  |   |         |  
|Before cumulative effect of change in accounting principle                       |  | $                               | (0.27   | ) |      | $ | (0.60   | )    |  | $ | (3.73   | )
|Cumulative effect of change in accounting principle                              |  |                                 |        |   |      |   | (0.06   | )    |  |   |        |  
|Preferred stock dividend                                                         |  |                                 | (0.04   | ) |      |   | (0.04   | )    |  |   | (0.04   | )
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  
|Total                                                                            |  | $                               | (0.31   | ) |      | $ | (0.70   | )    |  | $ | (3.77   | )
|                                                                                 |  |                                 |         |   |      |   |         |      |  |   |         |  

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



F-5



---

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF CAPITAL DEFICIT

(in thousands except share information)



|                                            |  |                                                 |  |                      |   |                      |           |        |                            |        |  |                     |        |  |       |    |   |  |   |        |   |  |   |          |   |  |   |         |  
|------------------------------------------- |  | ----------------------------------------------- |  | -------------------- | - | -------------------- | --------- | ------ | -------------------------- | ------ |  | ------------------- | ------ |  | ----- | -- | - |  | - | ------ | - |  | - | -------- | - |  | - | ------- | -
|                                            |  | Series A Cumulative Convertible Preferred
Stock |  | Class A Common Stock |   | Class B Common Stock |           |        | Additional Paid-in Capital |        |  | Accumulated Deficit |        |  | Total |   
|                                            |  | Shares                                          |  | Amount               |   | Shares               |           | Amount |                            | Shares |  |                     | Amount |  |       |    |  
|Balance, January 1, 2003                    |  | 110,000                                         |  | $                    | 1 |                      | 5,644,699 |        | $                          | 56     |  | 4,603,460           |        |  | $     | 46 |   |  | $ | 51,176 |   |  | $ | (52,834  | ) |  | $ | (1,555  | )
|Net loss                                    |  |                                                |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   |       |   |  |   | (38,200  | ) |  |   | (38,200 | )
|Conversion of common stock                  |  |                                                |  |                      |  |                      | 544,761   |        |                            | 6      |  | (544,761            | )      |  |       | (6 | ) |  |   |       |   |  |   |         |   |  |   |        |  
|Preferred dividend                          |  |                                                |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   | (468   | ) |  |   |         |   |  |   | (468    | )
|Earned compensation, executive stock option |  |                                                |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   | 38     |   |  |   |         |   |  |   | 38      |  
|Issuance of preferred stock dividend        |  | 4,037                                           |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   | 403    |   |  |   |         |   |  |   | 403     |  
|                                            |  |                                                 |  |                      |   |                      |           |        |                            |        |  |                     |        |  |       |    |   |  |   |        |   |  |   |          |   |  |   |         |  
|Balance, December 31, 2003                  |  | 114,037                                         |  |                      | 1 |                      | 6,189,460 |        |                            | 62     |  | 4,058,699           |        |  |       | 40 |   |  |   | 51,149 |   |  |   | (91,034  | ) |  |   | (39,782 | )
|Net loss                                    |  |                                                |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   |       |   |  |   | (7,032   | ) |  |   | (7,032  | )
|Conversion of common stock                  |  |                                                |  |                      |  |                      | 446,428   |        |                            | 4      |  | (446,428            | )      |  |       | (4 | ) |  |   |       |   |  |   |         |   |  |   |        |  
|Issuance to Stock Growth Plan               |  |                                                |  |                      |  |                      |          |        |                            |       |  | 1,014,384           |        |  |       | 10 |   |  |   | 1,362  |   |  |   |         |   |  |   | 1,372   |  
|Issuance of 33,333 shares                   |  |                                                |  |                      |  |                      | 33,333    |        |                            | 1      |  |                    |        |  |       |   |   |  |   | 26     |   |  |   |         |   |  |   | 27      |  
|Preferred dividend                          |  |                                                |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   | (468   | ) |  |   |         |   |  |   | (468    | )
|Issuance of preferred stock dividend        |  | 4,561                                           |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   | 456    |   |  |   |         |   |  |   | 456     |  
|                                            |  |                                                 |  |                      |   |                      |           |        |                            |        |  |                     |        |  |       |    |   |  |   |        |   |  |   |          |   |  |   |         |  
|Balance, December 31, 2004                  |  | 118,598                                         |  | $                    | 1 |                      | 6,669,221 |        | $                          | 67     |  | 4,626,655           |        |  | $     | 46 |   |  | $ | 52,525 |   |  | $ | (98,066  | ) |  | $ | (45,427 | )
|Net loss                                    |  |                                                |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   |       |   |  |   | (3,038   | ) |  |   | (3,038  | )
|Conversion of common stock                  |  |                                                |  |                      |  |                      | 353,225   |        |                            | 3      |  | (353,225            | )      |  |       | (3 | ) |  |   |       |   |  |   |         |   |  |   |        |  
|Preferred dividend                          |  |                                                |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   | (486   | ) |  |   |         |   |  |   | (486    | )
|Issuance of preferred stock dividend        |  | 4,744                                           |  |                      |  |                      |          |        |                            |       |  |                    |        |  |       |   |   |  |   | 473    |   |  |   |         |   |  |   | 473     |  
|                                            |  |                                                 |  |                      |   |                      |           |        |                            |        |  |                     |        |  |       |    |   |  |   |        |   |  |   |          |   |  |   |         |  
|Balance, December 31, 2005                  |  | 123,342                                         |  | $                    | 1 |                      | 7,022,446 |        | $                          | 70     |  | 4,273,430           |        |  | $     | 43 |   |  | $ | 52,512 |   |  | $ | (101,104 | ) |  | $ | (48,478 | )
|                                            |  |                                                 |  |                      |   |                      |           |        |                            |        |  |                     |        |  |       |    |   |  |   |        |   |  |   |          |   |  |   |         |  

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



F-6



---

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|----------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                              |  | For the Year Ended December 31, |        
|                                                                              |  | 2005                            |         |   | 2004 |   |         | 2003 | 
|Cash flows from operating activities:                                         |  |                                 |         |   |      |   |         |      |  |   |         |  
|Net loss                                                                      |  | $                               | (3,038  | ) |      | $ | (7,032  | )    |  | $ | (38,200 | )
|Adjustments to reconcile income to net cash provided by operating activities: |  |                                 |         |   |      |   |         |      |  |   |         |  
|Depreciation and amortization                                                 |  |                                 | 20,050  |   |      |   | 19,783  |      |  |   | 33,989  |  
|Amortization of renewal payments                                              |  |                                 | 241     |   |      |   | 207     |      |  |   |        |  
|Net undistributed income of equity investee                                   |  |                                 | (377    | ) |      |   | (84     | )    |  |   |        |  
|Cumulative change in accounting principle                                     |  |                                 |        |   |      |   | 598     |      |  |   |        |  
|Non-cash compensation expense                                                 |  |                                 |        |   |      |   |        |      |  |   | 38      |  
|Non-cash consulting expense                                                   |  |                                 |        |   |      |   | 27      |      |  |   |        |  
|Non-cash interest expense                                                     |  |                                 |        |   |      |   |        |      |  |   | 1,688   |  
|Changes in assets and liabilities:                                            |  |                                 |         |   |      |   |         |      |  |   |         |  
|Receivables                                                                   |  |                                 | 3,136   |   |      |   | 3,544   |      |  |   | 2,321   |  
|Representation contract buyouts receivable                                    |  |                                 | (11,854 | ) |      |   | (4,855  | )    |  |   | 333     |  
|Prepaid expenses and other current assets                                     |  |                                 | (332    | ) |      |   | (177    | )    |  |   | 289     |  
|Other noncurrent assets                                                       |  |                                 | (380    | ) |      |   | (1,191  | )    |  |   | 690     |  
|Accounts payable and accrued expenses                                         |  |                                 | 1,062   |   |      |   | (1,795  | )    |  |   | 7,542   |  
|Accrued interest                                                              |  |                                 |        |   |      |   |        |      |  |   | (122    | )
|Accrued employee related liabilities                                          |  |                                 | 678     |   |      |   | 367     |      |  |   | 665     |  
|Other noncurrent liabilities                                                  |  |                                 | (454    | ) |      |   | (1,587  | )    |  |   | 605     |  
|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Net cash provided by operating activities                                     |  |                                 | 8,732   |   |      |   | 7,805   |      |  |   | 9,838   |  
|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Cash flows from investing activities:                                         |  |                                 |         |   |      |   |         |      |  |   |         |  
|Additions to fixed assets                                                     |  |                                 | (2,442  | ) |      |   | (918    | )    |  |   | (2,271  | )
|Increase in other investments                                                 |  |                                 |        |   |      |   | (5      | )    |  |   |        |  
|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Net cash used in investing activities                                         |  |                                 | (2,442  | ) |      |   | (923    | )    |  |   | (2,271  | )
|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Cash flows from financing activities:                                         |  |                                 |         |   |      |   |         |      |  |   |         |  
|Representation contract payments                                              |  |                                 | (6,104  | ) |      |   | (6,978  | )    |  |   | (11,553 | )
|Gross borrowings on credit facility                                           |  |                                 | 27,330  |   |      |   | 21,650  |      |  |   |        |  
|Gross repayments on credit facility                                           |  |                                 | (27,330 | ) |      |   | (25,650 | )    |  |   |        |  
|Reimbursement by landlord for leasehold improvements                          |  |                                 | 1,805   |   |      |   |        |      |  |   |        |  
|Debt repayments, net of financing costs                                       |  |                                 |        |   |      |   |        |      |  |   | (10,000 | )
|Net borrowings on credit facility, net of financing costs                     |  |                                 |        |   |      |   |        |      |  |   | 3,533   |  
|Issuance of common stock                                                      |  |                                 |        |   |      |   | 1,372   |      |  |   |        |  
|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Net cash used in financing activities                                         |  |                                 | (4,299  | ) |      |   | (9,606  | )    |  |   | (18,020 | )
|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                          |  |                                 | 1,991   |   |      |   | (2,724  | )    |  |   | (10,453 | )
|Cash and cash equivalents, beginning of year                                  |  |                                 | 4,937   |   |      |   | 7,661   |      |  |   | 18,114  |  
|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents, end of year                                        |  | $                               | 6,928   |   |      | $ | 4,937   |      |  | $ | 7,661   |  
|                                                                              |  |                                 |         |   |      |   |         |      |  |   |         |  
|Supplemental disclosures of cash flow information:                            |  |                                 |         |   |      |   |         |      |  |   |         |  
|Cash paid during the year for:                                                |  |                                 |         |   |      |   |         |      |  |   |         |  
|Interest                                                                      |  | $                               | 9,991   |   |      | $ | 10,206  |      |  | $ | 10,825  |  
|Income taxes, net                                                             |  |                                 | 134     |   |      |   | 261     |      |  |   | 343     |  
|Prepayment penalty on term loan                                               |  |                                 |        |   |      |   |        |      |  |   | 500     |  
|Non-cash investing and financing activities:                                  |  |                                 |         |   |      |   |         |      |  |   |         |  
|Station representation contracts acquired                                     |  | $                               | 4,135   |   |      | $ | 2,935   |      |  | $ | 4,100   |  
|Preferred stock dividend                                                      |  |                                 | 486     |   |      |   | 468     |      |  |   | 468     |  
|Issuance of warrants and common stock                                         |  |                                 |        |   |      |   | 27      |      |  |   |        |  

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



F-7



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands except share information)

1.    Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Interep National Radio Sales, Inc. (Interep), together with its subsidiaries
(collectively, the Company or we). All significant intercompany transactions and balances have been eliminated.

Use of Estimates

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

Allowance for doubtful accounts

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

Revenue Recognition

We are a national representation firm serving radio broadcast clients and certain internet service providers throughout the United States. Commission revenues are derived from sales of advertising time for radio
stations under representation contracts. Commissions and fees are recognized in the month the advertisement is broadcast. In connection with our unwired network business, we collect fees for unwired network radio advertising and, after deducting our
commissions, remit the fees to the respective radio stations. In instances when we are not legally obligated to pay a station or service provider until the corresponding receivable is paid, fees payable to stations have been offset against the
related receivable from advertising agencies in the accompanying consolidated balance sheets. For the years ended December 31, 2005, 2004 and 2003, commission revenues include revenue derived from sales of advertising on the Internet of $2,910,
$2,568 and $2,254, respectively. We record all commission revenues on a net basis. Commissions are recognized based on the standard broadcast calendar that ends on the last Sunday in each reporting period. The broadcast calendar for the calendar
years ended December 31, 2005, 2004, and 2003 each had 52 weeks, though some broadcast calendar years, such as 2006 may have 53 weeks.

Representation Contract Termination Revenue and Contract Acquisition Costs

Our station representation contracts have stated
initial terms, and thereafter usually renew automatically from year to year unless either party provides written notice of termination at least twelve months prior to the next automatic renewal date. In accordance with industry practice, in lieu of



F-8



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



termination, an arrangement is normally made for the purchase of such contracts by a successor representative firm. The purchase price paid by the successor
representation firm is generally based upon historic commission income projected over the remaining contract period plus two months. Income earned from the sale of station representation contracts (contract termination revenue) is recognized on the
effective date of the buyout agreement. Costs of obtaining station representation contracts are deferred and amortized over the life of the new contract. Such amortization is included in the accompanying consolidated statements of operations as a
component of depreciation and amortization expense. Amounts which are to be amortized during the next year are included as current assets in the accompanying consolidated balance sheets. We review the realizability of these deferred costs on a
quarterly basis. From time to time, we have paid inducements to extend the life of contracts with our radio groups. These inducement payments are recorded as deferred costs and expensed in the period benefited. Estimated amortization for the five
years following December 31, 2005 is as follows: 2006$11,100; 2007$7,800; 2008$5,500; 2009$4,200 and 2010$2,800.

In 2005, we recorded approximately $20,000 of contract termination revenue primarily related to Cumulus Broadcasting and Radio Ones termination of their representation contracts with us. In 2004, we recorded approximately $24,500 of
contract termination revenue substantially all of which was attributable to the Citadel representation contract termination in 2003.

Cash and Cash Equivalents

We consider cash in banks and investments with an original maturity of three months or less to be
cash equivalents.

Fixed Assets, net

Furniture, fixtures and equipment are recorded at cost and are depreciated over three to ten-year lives, and leasehold improvements are amortized over the shorter of the lives of the leases or assets, all on a
straight-line basis. The costs of such computer software is amortized on a straight-line basis over three years.

Depreciation and
Amortization Expense

A summary of annual depreciation and amortization expense is as follows:



|                                           |  |      |        |      |   |        |  |   |       
|------------------------------------------ |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                           |  | 2005 |        | 2004 |   | 2003  
|Depreciation of fixed assets               |  | $    | 1,827  |      | $ | 2,314  |  | $ | 2,574 
|Amortization of contract acquisition costs |  |      | 17,514 |      |   | 16,282 |  |   | 29,941
|Amortization of other assets               |  |      | 709    |      |   | 1,187  |  |   | 1,474 
|                                           |  |      |        |      |   |        |  |   |       
|                                           |  | $    | 20,050 |      | $ | 19,783 |  | $ | 33,989
|                                           |  |      |        |      |   |        |  |   |       

In 2005, the amortization of contract acquisition costs included the writeoff of approximately
$3,600 of deferred contract acquisition costs related Cumulus Broadcasting and Radio Ones termination of their representation contracts with us. In 2003, the amortization of contract acquisition



F-9



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



costs included the writeoff of approximately $11,600 of deferred contract acquisition costs related to the termination of the Citadel representation
contract.

Long-Lived Assets

We assess the impairment of our long-lived assets in accordance with SFAS No. 144, which requires testing when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We reevaluate
these intangible assets each reporting period to determine whether events and circumstances warrant a revision in their remaining life. SFAS No. 144, which also applies to other long-lived assets such as plant, property and equipment, as well
as groups of assets, provides examples of indicators of potential impairment such as: a significant decrease in market price of the asset; a significant adverse change in the extent or manner in which the asset is used; a significant adverse change
in legal factors or the business climate; an adverse action or assessment by a regulator; excess cost accumulation for the acquisition or construction of the asset; current period operating cash flow losses combined with a similar history or a
projection of future losses; and a more likely than not expectation that the asset will be sold. If any indicators were present, we would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows
expected to be generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e. the asset is not recoverable), we would perform the next step which is to determine the fair value of the asset and record an
impairment, if any.

Stock Growth Plan

We maintain a Stock Growth Plan (SGP) for eligible employees. Cash contributions made by us to the SGP are recorded as compensation expense. Shares of our stock owned by the SGP are treated as outstanding
common stock.

Stock-Based Compensation and New Accounting Pronouncement

We have elected to continue to account for our employee stock-based compensation plan using the intrinsic value method, as prescribed by APB No. 25
Accounting for Stock Issued to Employees and interpretations thereof (collectively APB 25) versus the fair value method allowed by SFAS No. 123. We have implemented the disclosure provision of SFAS No. 148, Accounting for
Stock-Based CompensationTransition and Disclosure. This statement amended the disclosure provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock Based Compensation, to require prominent disclosure of the effect on reported net income of an entitys accounting policy decisions with respect to stock-based employee compensation and amended APB
Opinion No. 28, Interim Financial Reporting, to require disclosure of those effects in interim financial information. Accordingly, no compensation cost has been recognized in the accompanying Consolidated Statements of Operations for the years
ended December 31, 2005 and 2004 in respect of stock options granted during those periods. See Note 4 to Consolidated Financial Statements for further discussion of our accounting for stock-based compensation plans. Had compensation cost for
these options been determined consistent with SFAS



F-10



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



No. 123 and SFAS No. 148, our net loss applicable to common shareholders, basic and diluted loss per share would have been as follows:



|                                                                                                                                            |  |      |        |   |      |   |        |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                                                                                            |  | 2005 |        |   | 2004 |   |        | 2003 | 
|Net loss applicable to common shareholders, as reported                                                                                     |  | $    | (3,524 | ) |      | $ | (7,500 | )    |  | $ | (38,668 | )
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |      | (761   | ) |      |   | (807   | )    |  |   | (746    | )
|                                                                                                                                            |  |      |        |   |      |   |        |      |  |   |         |  
|Pro forma net loss                                                                                                                          |  | $    | (4,285 | ) |      | $ | (8,307 | )    |  | $ | (39,414 | )
|                                                                                                                                            |  |      |        |   |      |   |        |      |  |   |         |  
|Loss per share:                                                                                                                             |  |      |        |   |      |   |        |      |  |   |         |  
|Basic and dilutedas reported                                                                                                               |  | $    | (0.31  | ) |      | $ | (0.70  | )    |  | $ | (3.77   | )
|Basic and dilutedpro forma                                                                                                                 |  | $    | (0.38  | ) |      | $ | (0.78  | )    |  | $ | (3.85   | )

Pro forma information regarding net income and earnings per share, as presented in Note 1, is
required by SFAS No. 123, as amended by SFAS No. 148, and has been determined as if we had accounted for our employee stock options under the fair value method of SFAS No. 123 as of its effective date. The weighted averaged fair value
for options was estimated at the dates of grants using the Black-Scholes option-pricing model to be $0.33 for 2005, $1.43 for 2004 and $1.72 for 2003, with the following weighted average assumptions: risk free interest rate of 3.25% for 2005, 2004
and 2003; expected volatility factors of 94%, 107% and 108% for 2005, 2004 and 2003, expected dividend yield of 0% for 2005, 2004 and 2003; and estimated option lives of 5 years for 2005, 2004 and 2003.

In December 2004 the FASB issued SFAS No. 123R, Share-based Payment (SFAS No. 123(R)). The provisions of the new standard were
scheduled to go into effect for all interim or annual periods beginning after June 15, 2005. SFAS No. 123(R) requires that compensation cost for all share-based employee payments be recognized in the statement of operations based on grant
date fair values of the awards, adjusted to reflect actual forfeitures and the outcome of certain other conditions. The fair value is generally not re-measured, except in limited circumstances, or if the award is subsequently modified. The statement
will require us to estimate the fair value of stock-based awards and recognize expense in the statement of operations as the related services are provided.

In March 2005, the U.S. Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 107 (SAB 107) which expresses views of the SEC staff regarding the application of SFAS
No.123(R). Among other things, SAB 107 provides interpretive guidance related to the interaction between SFAS No. 123(R) and certain SEC rules and regulations, as well as the SEC staffs views regarding the valuation of share-based payment
arrangements for public companies. On April 14, 2005, the SEC announced the adoption of a new rule that amends the compliance dates of SFAS No. 123(R). The new rule allows companies to implement SFAS No. 123(R) at the beginning of
their next fiscal year.

We will implement SFAS No. 123(R) in the first quarter of 2006 and intend to use the modified prospective
method. Adoption of the standard may have a material impact on the results of operations in future periods. However, the impact of adoption will depend on levels of share-based payments



F-11



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



granted in the future. Our estimate for 2006 is an approximate $800 increase in compensation expense based upon options outstanding at December 31,
2005.

Restructuring and Severance Charges

In 2005, we continued to offer an early retirement program, which was accepted by 18 people, including four executives, to reduce compensation costs on a going forward basis. We accrued $3,078 in 2005 for the 18
terminations, and $232 in 2004 for 7 terminations. In accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities,we recorded this liability at fair value as of the time the liability was incurred. We
paid approximately $2,611 and $1,542 of termination benefits during the years ended December 31, 2005 and 2004, and have accreted approximately $156 and $162 of interest expense in 2005 and 2004. At December 31, 2005 and 2004, the
accompanying consolidated balance sheets include accruals relating to the restructuring program of $1,705 and $1,082, of which $1,705 and $989, are included in accrued employee related liabilities and $93, is included in other noncurrent liabilities
in 2004.

Loss per Share

Basic loss per share for each of the respective years has been computed by dividing the net loss applicable to common shareholders by the weighted average number of common shares outstanding during the year which was 11,295,876, 10,695,410,
and 10,248,159 for the years ended December 31, 2005, 2004, and 2003, respectively. Diluted loss per share would reflect the potential dilution that could occur if the outstanding options to purchase common stock were exercised. For the years
ended December 31, 2005, 2004, and 2003, the exercise of outstanding options would have an antidilutive effect and therefore have been excluded from the calculation. Shares issuable under options that have not been included in the fully diluted
loss per share calculation because of their antidilutive effect were 4,508,885, 5,166,155, and 5,121,405 at December 31, 2005, 2004 and 2003.

Leasehold Improvements

In the fourth quarter of 2004, we renewed the lease on our New York City office space for an
additional 15 years. As part of the lease, the landlord is to reimburse us for leasehold improvements made to the property. We substantially completed these improvements in the third quarter of 2005. The reimbursement of $1,800, almost all of which
has been received from the landlord at December 31, 2005, is capitalized as leasehold improvements and will be amortized over the remaining term of the lease. We recognize rent expense on a straight-line basis over the term of the lease, taking
into account scheduled rent increases, rent abatement and leasehold improvement allowances, such as the one described above.

Income
Taxes

Deferred taxes are provided for temporary differences arising from the differences between financial statement and income tax
bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates. Valuation allowances are established when necessary to reduce deferred tax assets and liabilities to amounts considered more likely than not
to be realized.



F-12



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



Reclassification

Certain reclassifications have been made to prior period financial statements to conform to current periods presentation.

2.    Investments

Effective July 2004, we applied the principles of Emerging Issues Task Force
(EITF) No. 03-16 Accounting for Investments in Limited Liability Companies. The effect of this cumulative change in accounting principle is a $598 reduction of our investment in a limited liability company. Beginning July
2004, we began to use the equity method to account for this investment and recognized $377 of income in 2005 and $84 in 2004. There was no such change in 2003. Prior to 2004, we accounted for our investments using the cost method of accounting, as
we do not have the ability to exercise significant influence over operating and financial policies. The total carrying value of these investments was approximately $1,900 and $1,500 as of December 31, 2005 and 2004, representing a range of
ownership from 8% to 16% of the affiliated companies.

3.    Fixed Assets

Fixed assets are comprised of the following:



|                                               |  |              |        |      |   |       
|---------------------------------------------- |  | ------------ | ------ | ---- | - | ------
|                                               |  | December 31,
|                                               |  | 2005         |        | 2004
|Furniture and equipment                        |  | $            | 19,775 |      | $ | 21,036
|Computer software                              |  |              | 4,455  |      |   | 4,155 
|Leasehold improvements                         |  |              | 6,987  |      |   | 6,141 
|                                               |  |              |        |      |   |       
|                                               |  |              | 31,217 |      |   | 31,332
|LessAccumulated depreciation and amortization |  |              | 27,623 |      |   | 28,218
|                                               |  |              |        |      |   |       
|Fixed assets, net                              |  | $            | 3,594  |      | $ | 3,114 
|                                               |  |              |        |      |   |       

4.    Employee Stock Plans

Stock Growth Plan

On January 1,
1995, we established the Stock Growth Plan, a qualified stock bonus plan through which certain qualified employee compensation is allocated to the plan. Participation in the Stock Growth Plan is mandatory and non-contributory for all eligible
employees. Stock Growth Plan participants are at all times fully vested in their accounts without regard to age or years of service. We make regular quarterly cash contributions to the Stock Growth Plan. For the years ended December 31, 2005,
2004, and 2003, we recorded compensation expense of $2,337, $2,299, and $2,440, in relation to these contributions. Our contributions to the Stock Growth Plan were used to purchase shares of Interep Class B common stock from us in 2004. In 2003, we
used the contributions to purchase Interep Class A common stock on the open market. In 2005, no stock was purchased and the funds are in either the Stock Growth Plan or have been transferred to employee 401(K) Plan accounts. No accrual was
required as of December 31, 2005 and 2004.



F-13



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



During 2004, the Company issued 1,014,384 shares of Class B common stock to the Interep Stock Growth
Plan for net cash proceeds of approximately $1,372. The shares were issued at the estimated current fair market value on the date of issuance, determined based on the trailing 15-day trading average of the Companys Class A common stock.
During 2004 and 2003, the Stock Growth Plan purchased 14,247 and 668,480 shares of Class A common stock, on the open market at a weighted average fair value of $1.45 and $2.12, respectively. As of December 31, 2005 and 2004, the Stock
Growth Plan owned 3,690,544 and 4,058,592 Class B common shares, and 576,764 and 649,136 of Class A common shares, representing approximately 37.8% and 41.7% of the Companys total shares outstanding, before consideration of common stock
equivalents. Shares owned by the Stock Growth Plan are recorded as outstanding stock of the Company. Distributions to participants are made in the shares of the Companys Class B common stock allocated to their plan accounts upon termination of
employment.

Stock Options

We follow APB 25 and related Interpretations in accounting for our employee stock options. Under APB 25, because the exercise price of our employee stock options equals the market price of the underlying stock on the date of grant, no
compensation expense generally is recognized.

In 1999, we adopted the 1999 Stock Incentive Plan. The plan provides for the granting of
options and appreciation rights of the Companys Class A and Class B common stock. The option price per share may not be less than the fair market value of the Class A and Class B common stock on the date the option is granted. The
aggregate number of shares may not exceed 666,667 for any participant during any three consecutive 12-month periods, and the maximum term of an option may not exceed ten years. Options primarily vest in three equal annual installments. Under the
terms of the plan, we are authorized to grant options to purchase up to a total of 2,000,000 shares of Class A and Class B common stock.

A summary of the stock options outstanding during the years ended December 31, 2005, 2004, and 2003 is set forth below:



|                                 |  |                  |   |  |                                 |     
|-------------------------------- |  | ---------------- | - |  | ------------------------------- | ----
|                                 |  | Number of Shares |   |  | Weighted Average Exercise Price
|Outstanding at January 1, 2003   |  | 4,880,106        |   |  | $                               | 3.64
|Granted during 2003              |  | 290,000          |   |  |                                 | 1.96
|Forfeited during 2003            |  | (48,701          | ) |  |                                 | 2.81
|                                 |  |                  |   |  |                                 |     
|Outstanding at December 31, 2003 |  | 5,121,405        |   |  | $                               | 3.56
|Granted during 2004              |  | 95,000           |   |  |                                 | 1.81
|Forfeited during 2004            |  | (50,250          | ) |  |                                 | 2.81
|                                 |  |                  |   |  |                                 |     
|Outstanding at December 31, 2004 |  | 5,166,155        |   |  | $                               | 3.53
|Granted during 2005              |  | 275,000          |   |  |                                 | 0.50
|Expired during 2005              |  | (915,320         | ) |  |                                 | 3.01
|Forfeited during 2005            |  | (16,950          | ) |  |                                 | 2.81
|                                 |  |                  |   |  |                                 |     
|Outstanding at December 31, 2005 |  | 4,508,885        |   |  | $                               | 2.00
|                                 |  |                  |   |  |                                 |     



F-14



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



The following table summarizes information regarding the stock options outstanding at
December 31, 2005, either pursuant to the terms of the Plan or pursuant to the terms of the option grant, if granted prior to the adoption of the Plan:



|                             |  |                                  |  |                |  |                           
|---------------------------- |  | -------------------------------- |  | -------------- |  | --------------------------
|Number of
optionsoutstanding |  | Number of options    exercisable |  | Exercise Price |  | Remaining Contractual Life
|208,959                      |  | 208,959                          |  | 3.80           |  | 2.5 Years                 
|731,360                      |  | 731,360                          |  | 4.02           |  | 2.5 Years                 
|417,920                      |  | 417,920                          |  | 4.20           |  | 3 Years                   
|422,767                      |  | 422,767                          |  | 2.81           |  | 4.5 Years                 
|10,000                       |  | 10,000                           |  | 3.32           |  | 6.5 Years                 
|40,000                       |  | 26,666                           |  | 1.73           |  | 7.3 Years                 
|250,000                      |  | 166,666                          |  | 2.00           |  | 7.9 Years                 
|50,000                       |  | 16,666                           |  | 1.50           |  | 8 Years                   
|20,000                       |  | 6,666                            |  | 2.25           |  | 8.2 Years                 
|25,000                       |  | 8,333                            |  | 2.09           |  | 8.7 Years                 
|75,000                       |  |                                 |  | 0.46           |  | 9.2 Years                 
|200,000                      |  | 200,000                          |  | 0.51           |  | 9.2 Years                 
|2,057,879                    |  | 2,057,879                        |  | 0.69           |  | 10 Years                  
|                             |  |                                  |  |                |  |                           
|4,508,885                    |  | 4,273,882                        |  |                |  |                           
|                             |  |                                  |  |                |  |                           

On March 29, 2005, we granted, for Board-related service, 15,000 options to each of five
Directors and Officers at an exercise price of $0.46, which was the fair market value per share of our Class A Common Stock at the date of grant as quoted on the OTC Bulletin Board. On April 27, 2005, we granted 200,000 options to an
executive at an exercise price of $0.51, which was 110% of the fair market value on the date of grant. On January 5, 2004, we granted 50,000 options to an executive at an exercise price of $1.50, which was the fair market value at the date of
grant. On March 12, 2004, we granted 20,000 options, 10,000 each to two employees, at an exercise price of $2.25, which was the fair market value at the date of grant. On April 15, 2004, we granted 25,000 options to an executive at an
exercise price of $2.09, which was the fair market value at the date of grant. These options vest over a three-year period, except for the 200,000 options which were granted on April 27, 2005. Those options vested on the date of grant.

On April 27, 2005, we reduced the exercise price of certain stock options held by one of our executives. The original exercise prices
and number of shares were as follows: 626,880 shares at $3.80 per share; 1,253,759 shares at $4.02 per share; 52,240 shares at $4.20 per share and 125,000 at $2.81 per share. The price per share was reduced to $0.69 per share, which represented 150%
of the $0.46 per share closing price of our Class A Common Stock on April 27, 2005. The termination date of these options was changed to December 31, 2015. In accordance with generally accepted accounting principles, we have adopted
variable plan accounting for these options from the date of the repricing. At December 31, 2005, the price of the stock had dropped below the repriced level; accordingly, no compensation expense was required as of such date.

In prior years, we repriced 775,300 options with an exercise price of $8.77 to an exercise price of $2.81, which represented the fair market value on the
date of the repricing. In accordance with



F-15



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



generally accepted accounting principles, we adopted variable plan accounting for these options from the date of the repricing and reduced compensation
expense of $1,251 in 2002. The price of the stock dropped below the repriced levels after trading at prices higher than the repriced levels. No compensation expense was required in 2005 and 2004.

On January 5, 2004, we granted 50,000 options to an executive at an exercise price of $1.50, which was the fair market value at the date of grant.
On March 12, 2004, we granted 20,000 options, 10,000 each to two employees, at an exercise price of $2.25, which was the fair market value at the date of grant. On April 15, 2004, we granted 25,000 options to an executive at an exercise
price of $2.09, which was the fair market value at the date of grant. On March 19, 2003, we granted 40,000 options to an executive at an exercise price of $1.73, which was the fair market value at the date of grant. On November 21, 2003,
we granted 250,000 options to an executive at an exercise price of $2.00, which was the below fair market value at the date of grant. We recorded compensation expense of $38 related to these options, since they were granted at below market value.
All the options vest over a three-year period.

5.    Employee Benefit Plans

Managers Incentive Compensation Plans

We maintain various managers incentive compensation plans for substantially all managerial employees. The plans provide for incentives to be earned based on attainment of threshold operating profit and market share goals established
each year, as defined. We provided approximately $1,688, $1,998, and $774 for such compensation during 2005, 2004, and 2003.

401(k)
Plan

We have a defined contribution plan, the 401(k) Plan, which covers substantially all employees who have completed ninety days of
service with us. Under the terms of the 401(k) Plan, we may contribute a matching contribution percentage determined by, and at the discretion of, the Board of Directors but not in excess of the maximum amount deductible for federal income tax
purposes. Company contributions vest to the employees at 20% per year over a five-year period. We contributed $684, $728, and $722 in 2005, 2004, and 2003.

Deferred Compensation Plans

Certain of our subsidiaries maintain deferred compensation plans which
cover employees selected at the discretion of management. Participants are entitled to deferred compensation and other benefits under these plans. In 2005, 2004, and 2003, we provided compensation expense of $197, $67, and $67 related to these
plans.

We have agreements with several of our employees to provide supplemental income benefits. The benefits under these plans were fully
vested as of December 31, 2005. We provided $114, $129, and $126 in 2005, 2004, and 2003 for these plans, which principally represented interest on the vested benefits. Amounts due under these plans and agreements are $1,842 as of
December 31, 2005 and are



F-16



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



recorded as accrued expenses $508 and other noncurrent liabilities of $1,334 on our consolidated balance sheets; however, they remain subject to further
appreciation/depreciation upon changes in value (as defined).

Other

We have life insurance policies on certain of our executives for which Interep is the beneficiary. Proceeds from these policies will be used to partially
fund certain of the retirement benefits under these supplemental agreements. Such policies had cash surrender values of $2,515 and $2,102 as of December 31, 2005 and 2004, and offsetting loans of $1,129 and $1,141, which are included in
Investments and Other Assets on the accompanying consolidated balance sheets.

6.    Income Taxes

Interep and its subsidiaries file a consolidated federal tax return. However, for state tax purposes, separate tax returns are filed in various
jurisdictions where losses on certain subsidiaries are not available to offset income on other subsidiaries, and tax benefits on such losses may not be realized. As a result, the consolidated tax provisions are determined considering this tax
reporting structure and may not fluctuate directly with consolidated pretax income. We have recorded a valuation allowance to reflect uncertainties with regard to when in the future we will realize our net deferred tax assets.

Components of income taxes are as follows:



|                    |  |                         |      |   |      |   |        |      |  |   |         |  
|------------------- |  | ----------------------- | ---- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                    |  | Year ended December 31, |     
|                    |  | 2005                    |      |   | 2004 |   |        | 2003 | 
|Current:            |  |                         |      |   |      |   |        |      |  |   |         |  
|Federal             |  | $                       |     |   |      | $ |       |      |  | $ |        |  
|State               |  |                         | 134  |   |      |   | 261    |      |  |   | 343     |  
|Deferred:           |  |                         |      |   |      |   |        |      |  |   |         |  
|Federal             |  |                         | (668 | ) |      |   | (2,736 | )    |  |   | (14,843 | )
|Valuation Allowance |  |                         | 668  |   |      |   | 2,736  |      |  |   | 14,843  |  
|                    |  |                         |      |   |      |   |        |      |  |   |         |  
|Total Income Taxes  |  | $                       | 134  |   |      | $ | 261    |      |  | $ | 343     |  
|                    |  |                         |      |   |      |   |        |      |  |   |         |  

A reconciliation of the U.S. federal statutory tax rate to the effective tax rate on the loss
before income taxes for the periods ended December 31, 2005, 2004, and 2003, is as follows:



|                                                         |  |      |        |   |      |   |        |      |  |   |         |  
|-------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                         |  | 2005 |        |   | 2004 |   |        | 2003 | 
|Benefit computed at the federal statutory rate of 34%    |  | $    | (1,033 | ) |      | $ | (2,391 | )    |  | $ | (12,988 | )
|State and local taxes, net of federal income tax benefit |  |      | (130   | ) |      |   | (302   | )    |  |   | (1,639  | )
|Change in valuation allowance and other adjustments      |  |      | 668    |   |      |   | 2,736  |      |  |   | 14,843  |  
|Nondeductible travel and entertainment expense           |  |      | 60     |   |      |   | 135    |      |  |   | 163     |  
|Nondeductible insurance premiums                         |  |      | (74    | ) |      |   | (29    | )    |  |   | (73     | )
|Other                                                    |  |      | 643    |   |      |   | 112    |      |  |   | 37      |  
|                                                         |  |      |        |   |      |   |        |      |  |   |         |  
|Total                                                    |  | $    | 134    |   |      | $ | 261    |      |  | $ | 343     |  
|                                                         |  |      |        |   |      |   |        |      |  |   |         |  



F-17



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



Temporary differences and carryforwards which gave rise to deferred tax assets and liabilities at
December 31, 2005 and 2004, are as follows:



|                                                   |  |              |         |   |      |   |         |  
|-------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                   |  | December 31, |        
|                                                   |  | 2005         |         |   | 2004 |  
|Deferred tax assets:                               |  |              |         |   |      |   |         |  
|Depreciation and amortization                      |  | $            | 4,338   |   |      | $ | 4,685   |  
|Accruals not currently deductible for tax purposes |  |              | 1,470   |   |      |   | 1,178   |  
|Consolidated net operating loss carryforward       |  |              | 34,976  |   |      |   | 31,542  |  
|Other                                              |  |              | 2,534   |   |      |   | 2,727   |  
|                                                   |  |              |         |   |      |   |         |  
|                                                   |  |              | 43,318  |   |      |   | 40,132  |  
|Deferred tax liabilities:                          |  |              |         |   |      |   |         |  
|Buyout receivable                                  |  |              | (5,890  | ) |      |   | (2,042  | )
|Unamortized representation contracts               |  |              | (8,069  | ) |      |   | (9,331  | )
|Other                                              |  |              | (515    | ) |      |   | (583    | )
|                                                   |  |              |         |   |      |   |         |  
|Net deferred tax asset                             |  |              | 28,844  |   |      |   | 28,176  |  
|Valuation allowance                                |  |              | (28,844 | ) |      |   | (28,176 | )
|                                                   |  |              |         |   |      |   |         |  
|Net deferred tax asset (liability)                 |  | $            |        |   |      | $ |        |  
|                                                   |  |              |         |   |      |   |         |  

As of December 31, 2005 and 2004, we had an accrued state income tax liability of $134 and
$261 on our consolidated balance sheets. We have a tax net operating loss of $87,440 as of December 31, 2005 that expires 2018 through 2025.

7.    Long-Term Debt

Long-term debt at December 31, 2005 and 2004 was comprised of $99,000 in
10.0% Senior Subordinated Notes due July 1, 2008 (the Notes). At December 31, 2005 and 2004, there were no advances outstanding under the $10,000 senior secured revolving credit facility, maturing in December 2007. In 2004, the
senior secured revolving credit facility was to mature in September 2006, but was amended in July 2005.

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

We capitalized $4,689 of costs
incurred in the offering of the Notes which is being amortized over the ten year life of the Notes. At December 31, 2005, the remaining balance is $1,169.



F-18



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



In September 2003, we entered into a $10,000 senior secured revolving credit facility with Commerce
Bank, N.A. to replace our $10,000 senior secured term loan facility with an institutional lender. In July 2005 we amended our revolving credit facility in certain respects (the Amendment). The revolving credit facility enables us to
efficiently manage our cash as we may borrow, repay and re-borrow funds as needed. The revolving credit facility had an initial term of three years, which was extended by 15 months pursuant to the Amendment. The credit facility is secured by a first
priority lien on all of our and our subsidiaries property and assets, tangible and intangible. Interest is payable monthly on the borrowings at rates based on either a prime rate or LIBOR, plus a premium of 1% for prime rate borrowings, and 4%
for LIBOR borrowings. In addition to covenants similar to those in the indenture governing the Notes, the credit facility requires, among other things, that we (i) maintain certain 12-month trailing Operating EBITDA levels (Operating
EBITDA was defined in the Loan and Security Agreement, prior to the Amendment as, for any period: (a) the Companys consolidated net income (loss), plus (b) all taxes on income plus state and local franchise and corporate taxes
paid by the Company and any of its subsidiaries plus (c) all interest expense deducted in determining such net income, plus (d) all depreciation and amortization expense and other non-cash charges (including, without limitation, non-cash
charges resulting from the repricing of employee stock options), plus (e) severance costs expensed but not yet paid in cash, less (f) extraordinary gains, plus (g) extraordinary losses, less (h) contract termination revenue);
(ii) have a certain minimum accounts receivable balance as of the end of each quarter; (iii) have not less than $200,000 of representation contract value (as defined) as of the end of each quarter; and (iv) have not less than $2,000
of cash and cash equivalents as of the end of each quarter. We incurred approximately $500 in legal and other costs directly related to the revolving credit facility, which are being amortized as interest expense over the life of the facility.
Substantially all of our subsidiaries, jointly, severally and unconditionally guarantee the revolving credit facility.

The Amendment was
entered into on July 21, 2005. The principal change effected by the Amendment was to extend the term of our revolving credit facility from September 25, 2006 through December 31, 2007. The Amendment also revised certain of the
financial covenants to more appropriately reflect our current business operations. It also revised the definition of Operating EBITDA as for any period: (a) Net Income (Loss), plus (b) all taxes on income plus state and local
franchise and corporation taxes paid by the Borrower and any of its Subsidiaries plus (c) all interest expense deducted in determining such Net Income, plus (d) all depreciation and amortization expense and other non-cash charges
(including, without limitation, non-cash charges resulting from the repricing of employee stock options), plus (e) severance costs expensed but not yet paid in cash, less (f) extraordinary gains, plus (g) extraordinary losses, less
(h) Contract Termination Revenue, but plus Contract Termination Revenue received in cash and (i) less Contract Acquisition Payments, in each case for such period, in each case in connection with Borrower and its Subsidiaries, on a
consolidated basis. We incurred an additional $100 in legal and other costs directly related to the amendment of the revolving credit facility, which are being amortized as interest expense over the life of the extended facility. Management believes
that we are in compliance with these covenants.



F-19



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



8.    Capital Deficit

In May 2002, we amended our certificate of incorporation for the purpose of establishing a series of preferred stock referred to as the Series A
Convertible Preferred Stock (the Series A Stock), with the authorization to issue up to 400,000 shares. The Series A Stock has a face value of $100 per share and a liquidation preference in such amount in priority over our Class A
and Class B common stock. Each share of the Series A Stock may be converted at the option of the holder at any time into 25 shares of Class A common stock at an initial conversion price of $4.00 per share (subject to anti-dilution adjustments).
If the market price of our Class A common stock is $8.00 or more for 30 consecutive trading days, the Series A Stock will automatically be converted into shares of Class A common stock at the then applicable conversion price. The Series A
Stock bears a 4% annual cumulative dividend that may be paid in cash or in kind (in additional shares of the Series A Stock) at our discretion. We expect to pay such dividends in kind for the foreseeable future. Holders of shares of the Series A
Stock vote on most matters on an as converted basis, together with the holders of Class A and Class B common stock. During 2002, we completed a series of private placements to issue 110,000 units for an aggregate purchase price of
$11,000. Each unit consists of one share of Series A Stock and 6.25 warrants to acquire an equal number of shares of Class A common stock. The warrants are exercisable at any time from the date of grant and expire five years from the date of
grant. We allocated the net proceeds of approximately $10,230 from the sale of Series A Stock between the convertible preferred stock and the warrants, both of which are classified in additional paid in capital. We incurred approximately $770 in
legal and other costs directly related to the private placements. A stock dividend for the Series A Stock in the amount of 4,744 and 4,561 shares was paid as of May 1, 2005 and 2004, respectively.

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

During 2005 and 2004, primarily in connection with employee terminations, 353,225 and 446,428 shares of Class B common stock were converted into Class A common stock.

In connection with a consulting agreement, 33,333 shares of our Class A stock, at an average price of $0.81 per share, were issued to a consultant
in the fourth quarter of 2004 and recorded as consulting expense.

9.    Related Party Transactions

Since 1997, we have had an agreement with Media Financial Services, Inc., an affiliate of one of our executives, whereby Media Financial Services provides
financial and accounting services to us. The fee for these services amounted to approximately $3,500, $3,500, and $3,400 in 2005, 2004 and 2003.



F-20



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



In January 2002, one of our executives personally guaranteed approximately $2,000 in connection with
the Katz litigation settlement. This executive received a fee of 7.5% of the guaranty amount, payable annually. In 2004 and 2003, this executive received payments of $59 and $50. The guaranty was in place until December 2004, which is when the
settlement was funded.

10.    Commitments and Contingencies

At December 31, 2005, we were committed under operating leases, principally for office space, which expire at various dates through 2020. Certain
leases are subject to rent reviews and require payment of expenses under escalation clauses. Rent expense was $5,454, $5,390, and $5,679 in 2005, 2004 and 2003. The noncash portion of rent expense that relates to the effect of free rent and
abatements was $157, $456, and $439 for 2005, 2004 and 2003. Also included in rent expense for 2003 is $990 related to the sublease lease loss contingency. Future minimum rental commitments under noncancellable operating leases are as follows:



|           |  |   |       
|---------- |  | - | ------
|2006       |  | $ | 4,842 
|2007       |  |   | 4,720 
|2008       |  |   | 4,262 
|2009       |  |   | 3,558 
|2010       |  |   | 2,852 
|Thereafter |  |   | 25,470

As of December 31, 2005, the total minimum sublease rentals to be received in the future
under noncancelable operating subleases were $1,876.

Representation contract buyouts payable are due over the next five years, as follows:



|     |  |   |      
|---- |  | - | -----
|2006 |  | $ | 5,136
|2007 |  |   | 412  
|2008 |  |   | 300  
|2009 |  |   | 200  
|2010 |  |   | 150  

We have employment agreements with certain of our officers and employees for terms ranging from
two to five years with annual compensation aggregating approximately $5,204. These agreements include escalation clauses (as defined) and provide for certain additional bonus and incentive compensation.

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

In October
2003, one of our subsidiaries instituted an arbitration proceeding in Las Vegas, Nevada against Citadel Broadcasting Corporation in connection with Citadels termination of its representation contract with us. We were seeking monetary damages
from Citadel for, among other things, unpaid



F-21



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



commissions to which we are contractually entitled and other damages arising from Citadels breach of the representation contract and certain other
contracts to which Citadel is a party. We commenced the arbitration proceeding pursuant to the commercial arbitration rules of the American Arbitration Association. In November 2003, Citadel served its answer and several counterclaims.

On August 19, 2004, we reached a settlement with Citadel Broadcasting with respect to the dispute. The parties agreed to jointly state that
Citadel no longer contends that we breached the Representation Agreement or failed to adequately perform. The precise terms of the settlement are confidential. Substantially all of the 2004 contract termination revenue in the statements of
operations relates to this contract.

We maintain some of our cash in bank deposit accounts, money market funds and certificates of
deposits, which at December 31, 2005 exceeded federally insured limits by approximately $5,750. These accounts are maintained in high credit quality financial institutions in order to reduce the risk of potential losses. We have not experienced
any losses in these accounts.

11.    Supplemental Information

Interest expense is shown net of interest income of $41, $36, and $100 in 2005, 2004, and 2003.

Revenues from Infinity Broadcasting Corporation were approximately 28%, 28% and 29% of our total revenues in 2005, 2004 and 2003. Infinity also
represented approximately 22% and 19% of our trade account receivable in 2005 and 2004.

12.    Fair Value of Financial Instruments

The estimated fair values of other financial instruments subject to fair value disclosures were determined based on broker quotes or
quoted market prices. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a
current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.



|               |  |                 |        |                      |   |                 |  |                      |        |  |   |       
|-------------- |  | --------------- | ------ | -------------------- | - | --------------- |  | -------------------- | ------ |  | - | ------
|               |  | December 31,   
|               |  | 2005            |        | 2004                
|               |  | Carrying Amount |        | Estimated Fair Value |   | Carrying Amount |  | Estimated Fair Value
|Long-term debt |  | $               | 99,000 |                      | $ | 84,150          |  | $                    | 99,000 |  | $ | 74,621

We also have a $10,000 senior secured credit facility, none of which was outstanding at
December 31, 2005 and 2004.

The fair value of cash and cash equivalents, accounts receivables and accounts payables approximate the
carrying amount due to the short maturity of those instruments.



F-22



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



13.    Liquidity

We believe that the anticipated cash from continuing operations and the availability from our $10,000 senior secured credit facility, should be sufficient
to fund our operations and anticipated needs for required representation contract acquisition payments, and to make the required 10% annual interest payments on the Senior Subordinated Notes, as well as the monthly interest payments under our senior
secured revolving loan facility, for at least the next 12 months. We may not, however, generate sufficient cash flow for these purposes or to repay the notes at maturity.

Our ability to fund our operations and required contract acquisition payments and to make scheduled principal and interest payments will depend on our future performance, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may also need to refinance all or a portion of the Senior Subordinated Notes on or prior to maturity. There can be no assurance that
we will be able to effect any such refinancing on commercially reasonable terms, if at all.

At December 31, 2005, $1,705 of
restructuring and severance charges remained in accrued liabilities related to the termination of four executives and 21 other employees during 2005 and 2004. These payments will continue into 2006. Our liquidity and cash flows will be impacted by
these headcount reductions. It is anticipated that our operations over the long term will further benefit from these terminations as well as other material cost efficiency measures implemented in 2004.

14.    Quarterly Financial Information (Unaudited)



|                                                    |  |          |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|--------------------------------------------------- |  | -------- | ------ | - | ------- | - | ------ | ------------ |  | ----------- | ------ |  | --------- | ------ | - |  | - | ------- | -
|2005 Quarter Ended                                  |  | March 31 |        |   | June 30 |   |        | September 30 |  | December 31 |        |  | 2005 Year |       
|Commission revenues                                 |  | $        | 17,447 |   |         | $ | 21,718 |              |  | $           | 20,135 |  | $         | 20,768 |   |  | $ | 80,068  |  
|Contract termination revenue                        |  |          | 226    |   |         |   | 13,189 |              |  |             | 5,943  |  |           | 643    |   |  |   | 20,001  |  
|                                                    |  |          |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|Total Revenues                                      |  |          | 17,673 |   |         |   | 34,907 |              |  |             | 26,078 |  |           | 21,411 |   |  |   | 100,069 |  
|Operating expenses                                  |  |          | 20,711 |   |         |   | 26,359 |              |  |             | 22,939 |  |           | 23,044 |   |  |   | 93,053  |  
|                                                    |  |          |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|Operating (loss) income                             |  | $        | (3,038 | ) |         | $ | 8,548  |              |  | $           | 3,139  |  | $         | (1,633 | ) |  | $ | 7,016   |  
|                                                    |  |          |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|Net (loss) income applicable to common shareholders |  | $        | (5,749 | ) |         | $ | 5,891  |              |  | $           | 479    |  | $         | (4,145 | ) |  | $ | (3,524  | )
|                                                    |  |          |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|Basic and diluted (loss) income per share           |  | $        | (0.51  | ) |         | $ | (0.52  | )            |  | $           | 0.04   |  | $         | (0.37  | ) |  | $ | (0.31   | )
|                                                    |  |          |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  



F-23



---

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(in thousands
except share information)



|                                                    |  |          |        |   |         |   |        |                           |  |             |        |  |           |        |   |  |   |         |  
|--------------------------------------------------- |  | -------- | ------ | - | ------- | - | ------ | ------------------------- |  | ----------- | ------ |  | --------- | ------ | - |  | - | ------- | -
|2004 Quarter Ended                                  |  | March 31 |        |   | June 30 |   |        | Restated (A) September 30 |  | December 31 |        |  | 2004 Year |       
|Commission revenues                                 |  | $        | 16,889 |   |         | $ | 20,632 |                           |  | $           | 18,556 |  | $         | 22,378 |   |  | $ | 78,455  |  
|Contract termination revenue                        |  |          | 236    |   |         |   | 928    |                           |  |             | 18,844 |  |           | 4,454  |   |  |   | 24,462  |  
|                                                    |  |          |        |   |         |   |        |                           |  |             |        |  |           |        |   |  |   |         |  
|Total Revenues                                      |  |          | 17,125 |   |         |   | 21,560 |                           |  |             | 37,400 |  |           | 26,832 |   |  |   | 102,917 |  
|Operating expenses                                  |  |          | 23,393 |   |         |   | 24,869 |                           |  |             | 24,369 |  |           | 25,980 |   |  |   | 98,611  |  
|                                                    |  |          |        |   |         |   |        |                           |  |             |        |  |           |        |   |  |   |         |  
|Operating (loss) income                             |  | $        | (6,268 | ) |         | $ | (3,309 | )                         |  | $           | 13,031 |  | $         | 852    |   |  | $ | 4,306   |  
|                                                    |  |          |        |   |         |   |        |                           |  |             |        |  |           |        |   |  |   |         |  
|Net (loss) income applicable to common shareholders |  | $        | (9,204 | ) |         | $ | (6,114 | )                         |  | $           | 9,682  |  | $         | (1,864 | ) |  | $ | (7,500  | )
|                                                    |  |          |        |   |         |   |        |                           |  |             |        |  |           |        |   |  |   |         |  
|Basic and diluted (loss) income per share           |  | $        | (0.90  | ) |         | $ | (0.59  | )                         |  | $           | 0.89   |  | $         | (0.17  | ) |  | $ | (0.70   | )
|                                                    |  |          |        |   |         |   |        |                           |  |             |        |  |           |        |   |  |   |         |  

---

|(A) |  | The September 2004 quarterly information has been restated to reflect the effect of the cumulative change in accounting principle, which should have been recorded in this quarter.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                    |  |              |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|--------------------------------------------------- |  | ------------ | ------ | - | ------- | - | ------ | ------------ |  | ----------- | ------ |  | --------- | ------ | - |  | - | ------- | -
|                                                    |  | Proforma (B) |       
|2004 Quarter Ended                                  |  | March 31     |        |   | June 30 |   |        | September 30 |  | December 31 |        |  | 2004 Year |       
|Commission revenues                                 |  | $            | 16,889 |   |         | $ | 20,632 |              |  | $           | 18,556 |  | $         | 22,378 |   |  | $ | 78,455  |  
|Contract termination revenue                        |  |              | 236    |   |         |   | 928    |              |  |             | 18,844 |  |           | 4,454  |   |  |   | 24,462  |  
|                                                    |  |              |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|Total Revenues                                      |  |              | 17,125 |   |         |   | 21,560 |              |  |             | 37,400 |  |           | 26,832 |   |  |   | 102,917 |  
|Operating expenses                                  |  |              | 23,393 |   |         |   | 24,869 |              |  |             | 24,369 |  |           | 25,980 |   |  |   | 98,611  |  
|                                                    |  |              |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|Operating (loss) income                             |  | $            | (6,268 | ) |         | $ | (3,309 | )            |  | $           | 13,031 |  | $         | 852    |   |  | $ | 4,306   |  
|                                                    |  |              |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|Net (loss) income applicable to common shareholders |  | $            | (9,200 | ) |         | $ | (6,081 | )            |  | $           | 10,280 |  | $         | (1,864 | ) |  | $ | (6,865  | )
|                                                    |  |              |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  
|Basic and diluted (loss) income per share           |  | $            | (0.90  | ) |         | $ | (0.58  | )            |  | $           | 0.95   |  | $         | (0.17  | ) |  | $ | (0.64   | )
|                                                    |  |              |        |   |         |   |        |              |  |             |        |  |           |        |   |  |   |         |  

---

|(B) |  | The March and June 2004 quarterly results have been shown as proforma to reflect the application of EITF No. 03-16 retroactive to prior quarters.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------



F-24



---

Schedule II

INTEREP NATIONAL RADIO SALES, INC.

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)



|                                           |  |                              |        |                                                    |        |   |            |      |   |                        |   |       
|------------------------------------------ |  | ---------------------------- | ------ | -------------------------------------------------- | ------ | - | ---------- | ---- | - | ---------------------- | - | ------
|                                           |  | Balance at beginning of year |        | Additions charged (credited) to costs and expenses |        |   | Deductions |      |   | Balance at end of year
|December 31, 2003                          |  |                              |        |                                                    |        |   |            |      |   |                        |   |       
|Allowance for Doubtful Accounts            |  | $                            | 1,317  |                                                    | (204   | ) |            | (305 | ) |                        | $ | 808   
|Valuation Allowance on Deferred Tax Assets |  | $                            | 10,597 |                                                    | 14,843 |   |            |     |   |                        | $ | 25,440
|December 31, 2004                          |  |                              |        |                                                    |        |   |            |      |   |                        |   |       
|Allowance for Doubtful Accounts            |  | $                            | 808    |                                                    | 70     |   |            | (108 | ) |                        | $ | 770   
|Valuation Allowance on Deferred Tax Assets |  | $                            | 25,440 |                                                    | 2,736  |   |            |     |   |                        | $ | 28,176
|December 31, 2005                          |  |                              |        |                                                    |        |   |            |      |   |                        |   |       
|Allowance for Doubtful Accounts            |  | $                            | 770    |                                                    | 100    |   |            | (247 | ) |                        | $ | 623   
|Valuation Allowance on Deferred Tax Assets |  | $                            | 28,176 |                                                    | 668    |   |            |     |   |                        | $ | 28,844



F-25



---

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in
the City of New York, State of New York.

March 31, 2006



INTEREP NATIONAL RADIO SALES, INC.By:

/s/    RALPH C.
GUILDRalph C. GuildChief Executive Officer and Chairman of the Board(principal executive officer)


Each person whose signature appears below hereby appoints Ralph C. Guild and William J.
McEntee, Jr., and both of them, either of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and all other documents in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents
full power and authority to perform each and every act and thing appropriate or necessary to be done, as fully and for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                       |  |                                                                                                |  |               
|------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------- |  | --------------
|/s/    RALPH C.
GUILD Ralph C. Guild                   |  | Chief Executive Officer, Chairman of the Board and Director                                    |  | March 31, 2006
|                                                       |  |                                                                                               
|/s/    GEORGE E.
PINE George E. Pine                   |  | President, Chief Operating Officer and Director                                                |  | March 31, 2006
|                                                       |  |                                                                                               
|/s/    MARC G.
GUILD Marc G. Guild                     |  | President, Marketing Division; Director                                                        |  | March 31, 2006
|                                                       |  |                                                                                               
|/s/    WILLIAM J. MCENTEE,
JR. William J. McEntee, Jr. |  | Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |  | March 31, 2006
|                                                       |  |                                                                                               
|/s/    TERENCE
BATE Terence Bate                       |  | Director                                                                                       |  | March 31, 2006
|                                                       |  |                                                                                               
|/s/    HOWARD M.
BRENNER Howard M. Brenner             |  | Director                                                                                       |  | March 31, 2006
|                                                       |  |                                                                                               
|/s/    JOHN
PALMER John Palmer                         |  | Director                                                                                       |  | March 31, 2006
|                                                       |  |                                                                                               
|/s/    ARNIE
SEMSKY Arnie Semsky                       |  | Director                                                                                       |  | March 31, 2006
|                                                       |  |                                                                                               
|/s/    ARNOLD
SHEIFFER Arnold Sheiffer                 |  | Director                                                                                       |  | March 31, 2006



---

SUPPLEMENTAL INFORMATION

As of the date of filing of this Report, we have not yet sent to our holders of common stock our 2005 annual report or proxy materials for our 2006
annual meeting of shareholders. We will send copies of such materials to the Securities and Exchange Commission when they are sent to our security holders.



---

Exhibit Index



|              |  |                                                                                                                                                 
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                             
|              | 
|21.1          |  | Subsidiaries of Interep                                                                                                                         
|              | 
|23.1          |  | Consent of BDO Seidman, LLP                                                                                                                     
|              | 
|23.2          |  | Consent of Ernst & Young LLP                                                                                                                    
|              | 
|31.1          |  | Certification of Chief Executive Officer pursuant to Rule 15d-14(a)                                                                             
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Rule 15d-14(a)                                                                             
|              | 
|32.1          |  | Certification of Chief Executive Officer pursuant to Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §
1350(a), (b))
|              | 
|32.2          |  | Certification of Chief Financial Officer pursuant to Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
§ 1350(a), (b))