<PAGE>

                                  FORM 10-QSB/A
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 (Mark One)
 [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
 For Quarterly period ended June 30, 1996 or
                            -------------

 [ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange   Act of 1934
 For the Transition period from _________ to _________

 Commission File No. 0-21534
                     -------

                       Children's Broadcasting Corporation
           ----------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Minnesota                                     41-1663712
   -------------------------------                --------------------------
 (State or other jurisdiction of                            (IRS Employer
     incorporation or organization)                   Identification Number)

           724 First Street North-4th Floor, Minneapolis, MN    55401
         --------------------------------------------------------------
              (Address of principal executive office      zip code)

                                (612) 338-3300
              ----------------------------------------------------
               Registrant's telephone number, including area code

Former Address:
----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report

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

                APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS:

  Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court

   Yes          No
      -------     -------

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.    5,629,858
                                                    ---------


<PAGE>

INDEX

CHILDREN'S BROADCASTING CORPORATION

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited)

     Consolidated Balance Sheets -- June 30, 1996 and December
     31, 1995.

     Consolidated Statements of Operations -- Three and six months
     ended June 30, 1996 and 1995.

     Consolidated Statements of Cash Flows -- Six months ended June
     30, 1996 and 1995.

     Notes to consolidated financial statements  -- June 30, 1996.

Item 2.   Management's Discussion and Analysis of Financial Condition
and Results of Operations.



PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings
Item 2.   Changes in Securities
Item 3.   Defaults upon Senior Securities
Item 4.   Submission of Matters to a Vote of Security Holders
Item 5.   Other Information
Item 6.   Exhibits and Reports on Form 8-K


This Form 10-QSB/A for the quarter ended June 30, 1996 contains certain forward-
looking statements as defined in the Private Securities Litigation of 1995,
which may be identified by the use of such forward-looking terminology as
"believes," "expects," "anticipates," "will," and "intends," or comparable
terminology.  Such statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected.
Potential purchasers of the Company's securities are cautioned not to place
undue reliance on such forward looking statements which are qualified in their
entirety by the cautions and risk factors contained in the Company's Form 8-K
Report filed on July 8, 1996 (File NO. 0-21534).

<PAGE>
PART I.     FINANCIAL INFORMATION
ITEM 1.     FINANCIAL STATEMENTS

                       CHILDREN'S BROADCASTING CORPORATION
                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                 AMENDED
                                                                 JUNE 30          DECEMBER 31
                                                                  1996               1995
                                                              -------------       -----------
                                         ASSETS
<S>                                                           <C>                 <C>
Current assets:
   Cash and Cash Equivalents                                     $4,541,745          $587,292
   Accounts Receivable                                              933,472           876,487
      Allowance For Bad Debts                                       (54,890)          (71,490)
   Accounts Receivable-Other                                        108,334            49,576
   Prepaid Expenses                                                  92,343           707,689
   Trade Activity, Net                                              155,748            23,435
   Inventory                                                         77,260            74,046
                                                              -------------       -----------
               TOTAL CURRENT ASSETS                               5,854,012         2,247,035

   Deferred Expenses                                                  7,261         2,288,141
   Property & Equipment, Net                                      3,497,905         3,083,769
   Broadcast License, Net                                        17,140,364         4,969,573
   Intangible Assets, Net                                         1,136,792           738,220
                                                              -------------       -----------
               TOTAL ASSETS                                     $27,636,334       $13,326,738
                                                              -------------       -----------
                                                              -------------       -----------

                      LIABILITIES & SHAREHOLDERS' EQUITY

Current Liabilities:
   Accounts Payable                                                $515,370          $749,742
   Accrued Interest                                                  49,420           301,389
   Other Accrued Expenses                                           642,242           733,371
   Short-Term Debt                                                1,268,192         3,650,000
   Short-Term Debt -- Officers and Directors                              0           900,000
   Long-Term Debt - Current Portion                                 383,684           297,365
   Obligation Under Capital Lease - Current Portion                  11,276            36,173
                                                              -------------       -----------

               TOTAL CURRENT LIABILITIES                          2,870,184         6,668,040

   Long-Term Debt - Net of Current Portions                       1,747,164           872,338
   Obligation Under Capital Lease                                     8,437            52,847
                                                              -------------       -----------

               TOTAL LIABILITIES                                  4,625,785         7,593,225

Convertible Preferred Stock
   Autorized Shares - 290,213
   Issued and Outstanding Shares - 290,213 redeemable
     at $10 Per Share on August 29, 1999                          2,326,633         2,246,838

Shareholders' Equity:
   Common Stock, $.02 Par Value:
      Authorized shares - 12,500,000
      Issued & outstanding shares - Voting: 5,440,817
        1996 and 2,945,183-- 1995;
      Issued and Outstanding Shares - 189,041 nonvoting -
        1996 and 1995                                               112,597            62,683
   Additional Paid-In Capital                                    41,963,086        19,491,302
   Accumulated Deficit                                          (21,391,767)      (16,067,310)
                                                              -------------       -----------

               TOTAL SHAREHOLDERS' EQUITY                        20,683,916         3,486,675

   TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                     $27,636,334       $13,326,738
                                                              -------------       -----------
                                                              -------------       -----------
</TABLE>

<PAGE>

                       CHILDREN'S BROADCASTING CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                           Amended                          Amended
                                                      Three Months Ended                Six Months Ended
                                                           June 30                          June 30
                                                  -----------------------------  ----------------------------
                                                      1996           1995            1996           1995
                                                  -------------  -------------   -------------  -------------
<S>                                               <C>            <C>             <C>            <C>
REVENUES:
    Owned, Operated and LMA Stations                 $1,082,178     $1,140,322      $1,940,658     $2,030,126
    Network                                             249,289        263,950         606,832        635,976
                                                  -------------  -------------   -------------  -------------

       REVENUES                                      $1,331,467     $1,404,272       2,547,490      2,666,102

OPERATING EXPENSES:
    Owned, Operated and LMA Stations:
       General and Administrative                       524,774        480,243         994,212      1,041,702
       Technical and Programming                        222,073        231,345         421,875        525,901
       Selling                                          341,642        409,440         682,169        904,308
                                                  -------------  -------------   -------------  -------------
                                                      1,088,489      1,121,028       2,098,256      2,471,911

    Network:
       General and Administrative                       222,156        127,724         448,140        258,074
       Programming                                      212,997        150,119         431,127        282,069
       Selling                                          215,279        255,323         428,070        583,224
       Marketing                                        123,718          6,684         243,949         13,244
       Magazine                                          62,396         38,567         125,541         57,558
                                                  -------------  -------------   -------------  -------------
                                                        836,546        578,417       1,676,827      1,194,169

    TOTAL BROADCASTING OPERATING EXPENSES             1,925,035      1,699,445       3,775,083      3,666,080

    Corporate                                           364,712        213,565         656,889        427,964
    Corporate Expenses Paid to Affiliated
       Management Company                               150,000        150,000         300,000        300,000
    Depreciation & Amortization                         559,320        225,391       OP1,091,085        457,191
    Loss on Exchange of Assets                             -            24,226            -            28,687
 *  Write Off of Deferred Warrant Expense             1,662,378                      1,662,378
                                                  -------------  -------------   -------------  -------------

       TOTAL OPERATING EXPENSES                       4,661,445      2,312,627       7,485,435      4,879,922
                                                  -------------  -------------   -------------  -------------

LOSS FROM OPERATIONS                                 (3,329,978)      (908,355)     (4,937,945)    (2,213,820)
Interest Income                                        (132,955)        (4,673)       (170,191)        (7,449)
Interest Expense                                        171,766        169,801         476,908        305,490
                                                  -------------  -------------   -------------  -------------


NET LOSS                                            ($3,368,789)   ($1,073,483)    ($5,244,662)   ($2,511,861)
                                                  -------------  -------------   -------------  -------------
                                                  -------------  -------------   -------------  -------------


                                                         ($0.90)        ($1.40)         ($1.43)        ($0.93)
                                                  -------------  -------------   -------------  -------------
NET LOSS PER SHARE                                -------------  -------------   -------------  -------------


WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING         3,736,000      2,710,000       3,736,000      2,710,000

                                                  -------------  -------------   -------------  -------------
                                                  -------------  -------------   -------------  -------------
</TABLE>

 *  This write off is the result of the July 1996 decision by ABC Radio
    Networks, Inc. to terminate its joint operating agreement with the Company,
    effective October 1996.

<PAGE>

                       CHILDREN'S BROADCASTING CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                               AMENDED
                                                                           SIX MONTHS ENDED
                                                                               JUNE 30
                                                              --------------------  --------------------
                                                                    1996                  1995
                                                              --------------------  --------------------
<S>                                                           <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss                                                              ($5,244,662)          ($2,511,861)

Adjustments to Reconcile Net Loss to Net
   Cash used in Operating Activities:
      Depreciation & Amortization                                       1,091,085               457,191
      Trade Activity                                                     (144,785)              (58,996)
      Amortization and Write-Off of Deferred Warrant Expense            1,971,629                  -
      Decrease (Increase) in:
         Accounts Receivable                                              (73,585)             (361,877)
         Other Receivables                                                (58,758)                1,174
         Prepaid Expenses                                                 338,133               (88,127)
         Inventory                                                         (3,214)                 (287)
         Other Assets                                                        -                     -

      Increase (Decrease) in:
         Accounts Payable                                                (234,372)               40,691
         Accrued Interest                                                (251,969)              192,376
         Other Accrued Expenses                                           (91,129)              (88,482)
                                                              --------------------  --------------------

   NET CASH USED IN OPERATIONS                                         (2,701,627)           (2,418,198)
                                                              --------------------  --------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Sale of Property & Equipment                                              -                  770,589
   Purchase of Property & Equipment                                      (675,866)             (160,167)
   Sale of Intangible Assets                                                 -                     -
   Purchase of Intangible Assets                                       (8,538,434)              (63,831)
                                                              --------------------  --------------------

         NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES           (9,214,300)              546,591
                                                              --------------------  --------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of Capital Lease Obligation                                  (69,307)              (10,904)
   Increase in Short Term Debt                                            900,000             2,125,000
   Decrease in Short Term Debt                                         (4,700,000)                 -
   Payment of Long Term Debt                                             (111,139)              (83,929)
   Proceeds from Long Term Debt                                              -                   69,350
   Proceeds from Convertible Preferred Stock                                 -                   74,415
   Proceeds from Issuance of Common Stock                              19,850,826                 5,001
                                                              --------------------  --------------------

         NET CASH PROVIDED BY FINANCING ACTIVITIES                     15,870,380             2,178,933
                                                              --------------------  --------------------



Increase in Cash                                                        3,954,453               307,326
Cash - Beginning of Period                                                587,292               243,733
                                                              --------------------  --------------------
CASH - END OF PERIOD                                                   $4,541,745              $551,060
                                                              --------------------  --------------------
                                                              --------------------  --------------------


Supplemental Disclosure of Cash Flow Information:

   Cash Paid During the Period for Interest                              $500,046               $24,340
                                                              --------------------  --------------------
                                                              --------------------  --------------------
</TABLE>

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

     In conjunction with the purchase of WJDM in the New York market, the
     Company recognized intangible assets and incurred long term debt of
     $1,072,284 through a non-competition agreement.  Additionally, assets
     aggregating $2,670,871 were purchased by issuing 270,468 shares of common
     stock, and assuming debt of $518,192 which was subsequently paid off in
     July 1996.

<PAGE>

CHILDREN'S BROADCASTING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1996

NOTE 1--BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 of
Regulation SB.  Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments (consisting
of normal recurring accruals with the exception of the adjustments discussed in
Note 2) considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996.  For further information, refer to the consolidated financial
statements and footnotes thereto included in the annual report or Form 10-KSB
for the year ended December 31, 1995.

NOTE 2--SIGNIFICANT TRANSACTIONS DURING 1996

The following significant transactions occurred during the first six months of
1996 and are considered non-recurring:

A.   In January 1996, the Company obtained financing of $750,000 from lenders,
     evidenced by notes bearing an interest rate of 6% per annum, payable July
     8, 1996.  The Company also granted warrants to the lenders to purchase
     57,500 shares of common stock at $13.00 per share.  Proceeds from this
     financing were used for the purchase of WJDM-AM in the New York market.
     The note was subsequently paid off in July 1996.

B.   The Company effected a one-for-two reverse stock split effective for
     shareholders of record January 23, 1996.  Management believes this action
     will enhance acceptability and marketability of the Company's stock by the
     financial community and investing public.

C.   In March 1996, the Company completed a public offering for 2.2 million
     shares of common stock at $10 per share.  Proceeds from the Offering were
     used to acquire radio stations in the New York and Detroit markets, to
     reduce debt and for working capital.

D.   With the proceeds obtained as a result of its public offering, the Company
     repaid $4,700,000 of principal on short term debt as well as approximately
     $408,000 of related interest.

E.   In June 1996, the Company purchased the assets of radio station WCAR-AM in
     Detroit, Michigan for $1.5 million cash.

<PAGE>

F.   In June 1996, the Company purchased the stock of Radio Elizabeth, Inc. in
     order to obtain WJDM-AM in the New York market.  The purchase price was
     $11,500,000, $2,500,000 of which was paid by the issuance of 270,468 shares
     of the Company's common stock.

G.   In July 1996, ABC Radio Networks, Inc. ("ABC") terminated its joint
     operating agreement with the Company.  In connection with obtaining this
     agreement, the Company capitalized deferred expenses aggregating $2,221,000
     related to the value of certain warrants issued to ABC. These costs were
     being amortized over the original 24 month term of the agreement.  The July
     termination by ABC, combined with other related factors, are felt to
     support the belief that the working relationship between the Company and
     ABC was deteriorating and call into question the value associated with this
     agreement related to the remaining net unamortized deferred expenses.
     Accordingly, the remaining deferred expenses aggregating $1,662,378 at June
     30, 1996, were written off as a second quarter expense.  Total amortization
     and write-off of these deferred expenses aggregated approximately
     $1,972,000 for the quarter.

     In September 1996, the Company commenced an action against ABC related to
     the termination.  No prediction of the outcome related to this action can
     be given at this time.

H.   The original quarterly financial statements have been amended to reflect
     the retroactive write-off of the $1,662,378 deferred expense as discussed
     in Note G above.

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

RESULTS OF OPERATIONS:

     THREE AND SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE AND SIX MONTHS
ENDED JUNE 30, 1995.

     REVENUE:

     The Company's total revenues decreased 5% in the second quarter of 1996 to
$1,331,000 compared to second quarter 1995 revenues of $1,404,000.  For the
first six months, total revenues of $2,547,000 were $119,000 or 4% lower than
the same period in 1995.  Trade/barter revenue decreased 40% during the first
half of 1996 compared to the first half of 1995.  Cash revenues derived from the
owned, operated and LMA stations increased $176,000 from $1,432,000 during the
first half of 1995 to $1,608,000 during the first half of 1996, an increase of
12%.  The decrease in network revenues was due in part to the elimination of
national advertising personnel and the transition of that function to ABC Radio
Network, Inc. (ABC) as part of the joint operating agreement.  Although the ABC
agreement was canceled by ABC in July 1996, revenues for the network are
expected to increase in the third and fourth quarters compared to the same
periods in the prior year.  These increases are expected due to booked
advertising commitments from various advertisers which have already been secured
by the Company without the assistance of ABC.

     OPERATING EXPENSES:

          Network Expenses:

          General and administrative expenses increased $94,000 in the second
quarter of 1996 to $222,000 as compared to $128,000 for the same period of 1995.
These expenses increased $190,000 or 74% for the first six months of 1996
compared to the same period in 1995.  The primary reason for the increase was
the monthly payment of $25,000 to ABC for services provided under the joint
operating agreement.  General and administrative expenses have grown as the
scope of the network's activities has increased.

          Programming expenses increased $63,000 to $213,000 in the second
quarter of 1996 compared to $150,000 in the second quarter of 1995.  For the
first six months, programming expenses increased 53% or $149,000 compared to the
same period in 1995.  This increase was due to the increase in programming
salaries and the increase in remote live broadcasts which carry line charge,
talent fee and rights fee expenses.  Additionally, the network implemented an
integrated telephone system to enhance programming and encourage active listener
participation.

          Sales expenses in the second quarter of 1996 were $215,000 compared to
$255,000 during the same period of 1995, a

<PAGE>

decrease of $40,000.  Sales expenses decreased 27% to $428,000 in the first half
of 1996 compared to $583,000 in the first half of 1995.  These sales expenses
relate to both advertising sales and affiliate relations sales.  This decrease
is due primarily to the reduction of advertising sales salaries as well as the
reduction of travel and lodging expenses as a result of the Company utilizing
the ABC advertising team under its joint operating agreement.  Commissions,
which are accounted for in the sales expense, vary with sales.

          Marketing expenses were $124,000 during the second quarter of 1996
compared to $7,000 in the second quarter of 1995.  During the six months ended
June 1996, marketing expenses increased $231,000 over the same period for 1995.
The Company has begun to develop this department and anticipates expenses will
remain at current levels as it becomes fully operational.

          Magazine expenses were $62,000 for the second quarter of 1996, and
$126,000 for the six months ended June, 1996.  These expenses are the result of
the 1994 agreement the Company entered into with Time Warner to produce the
national Radio AAHS monthly magazine.  Time Warner has closed Warner Music
Enterprises, the division responsible for producing the Radio AAHS magazine.
Since production and distribution of the magazine have been interrupted,
management expects these expenses to decrease until such time a new outlet is
found for the production of the magazine.


          Owned, Operated and LMA Station Expenses:

          General and administrative expenses increased 9% to $525,000 for the
second quarter of 1996 from $480,000 during the same period of 1995, due to the
addition of the Detroit and New York stations in June 1995.  Expenses decreased
5% in the six months ended June 30, 1996 to $994,000 from $1,042,000 in the six
month period ended June 30, 1995, due to the reallocation of expenses which were
included in the 1995 LMA fees incurred by the Denver station.  This station was
subsequently purchased by the Company in November 1995.

          Technical and programming expenses decreased $9,000 in the second
quarter of 1996 from $231,000 in the second quarter of 1995 to $222,000.  During
the first half of 1996, these expenses decreased $104,000 or 20% compared to the
same period in 1995.  The technical expenses have decreased as equipment has
been upgraded, thus requiring less maintenance and repair at this time.

          Sales expenses decreased from $409,000 in the second quarter of 1995
to $342,000 in the second quarter of 1996, a decrease of 17%.  For the first six
months of 1996, selling expenses of $682,000 were 25% lower than the same period
in 1995.  This change can be primarily attributed to the 61% reduction of
trade/barter expenses during 1996 compared to the first half of 1995.  Increases
in cash expensed for the period are due primarily

<PAGE>

to the increase of billboard and print advertising used for clients as sales
incentives.  Commissions, which are accounted for in sales expense, vary with
sales.

          Corporate charges were $515,000 in the second quarter of 1996 compared
to $364,000 in the second quarter of 1995, representing an increase of 42%.
Corporate charges increased 31% in the first six months of 1996 over the same
period in 1995.  This increase is attributable to an increase in outside service
fees including investor relations and professional fees related to stock,
trademark and employee matters.

          Depreciation and amortization increased to $250,000 in the second
quarter of 1996 from $225,000 in the second quarter of 1995.  For the first six
months depreciation and amortization of $782,000 was $325,000 or 71% higher than
the same period in 1995, due in part to the acquisition of the assets of its
Denver station acquired in November 1995 and the value of the warrant to
purchase the Company's common stock issued to ABC as part of a joint operations
agreement.

          Interest expense for the quarter decreased $126,000 as a result of the
repayment of debt from the proceeds of the public offering.  Interest expense
for the first half of 1996 increased 3% from $298,000 to $307,000.

          The net loss increased 213% in the second quarter of 1996 to
$3,369,000 up $2,295,000 over the second quarter of 1995.  For the first six
months, net loss of $5,245,000 was $2,733,000 or 108% higher than the same
period in 1995.  A significant portion of the increased loss is due to the write
off of the deferred warrant expense associated with the ABC Radio Networks joint
operating agreement.  This write-off, which totaled $1,662,378, became necessary
pursuant to the July 1996 decision by ABC to terminate this agreement, effective
October 1996.  Prior to ABC's termination, the deferred warrant expense was
being amortized over the life of the agreement.  Consistent with its business
plan and network strategy, the Company anticipates that its coverage of the
United States will continue to expand during the year either through affiliation
or acquisition of additional radio stations.  The Company expects to incur
operating losses as such network expansion increases, and that the losses will
continue throughout 1996 and for 1997.

LIQUIDITY AND CAPITAL RESOURCES


     The Company's liquidity, as measured by its working capital, was $2,984,000
at June 30, 1996 compared to negative working capital of $4,421,000 at December
31, 1995.  The increase in net working capital during the first half of 1996,
was the result of the Company completing its public offering of common stock and
repaying approximately $4,500,000 of short term debt and its corresponding
accrued interest. 

<PAGE>

     The Company recently closed on the acquisition of a Philadelphia radio 
station, reducing the Company's working capital to a projected $500,000 as 
of September 30, 1996. Subsequent to June 30, 1996, the Company signed a 
purchase agreement to acquire a radio station in the Chicago market in 
January, 1997 which will require approximately $2,000,000 of cash at the time 
of closing. The Company considers Chicago to be a key market in connection 
with the Company's strategy of building a national radio network. Given the 
Company's current cash and working capital balance, the Company will be 
required to raise additional capital to complete the acquisition of the radio 
station in the Chicago market and provide working capital for the Company. 
The Company is seeking to raise additional capital to enable it to complete 
this acquisition and to provide working capital for 1997, but no assurance 
can be given that the Company will be able to do so on a timely basis or on 
terms which are acceptable to the Company. The failure to obtain such 
additional capital could result in a default by the Company under its 
agreement with the Seller and would result in the loss of the escrow deposit 
and this opportunity to acquire a station in this key market.

     The Company is continuing to develop its radio network and is generally 
subject to the risks attendant to a new or emerging business venture. The 
Company has incurred net losses since its inception in 1990 and has not 
generated positive cash flow sufficient to fund its ongoing operations. For 
the three years ended December 31, 1993, 1994, 1995 and the six months ended 
June 30, 1996, the Company incurred net losses of $3,247,000, $4,519,000, 
$6,107,000 and $5,244,000, respectively, and anticipates that it will 
continue to operate at a loss from operations for the remainder of 1996. Due 
to past and current operating losses, and because the Company has not 
generated positive cash flow from operations, the Company has had frequent 
working capital shortages. Working capital requirements have been met by 
short-term borrowings from investors, including affiliates of the Company, 
and from the proceeds of public offerings of the Company's Common Stock. The 
Company is seeking sources of financing for its working capital needs and for 
acquisitions, although it has no current commitments for such financing. Such 
arrangements could include the leveraging of Company's radio station 
properties under agreements with asset-based lenders. If the Company should 
be unable to obtain working capital when required, its operations and 
prospects would be materially and adversely affected. Depending upon the 
terms of such financing the Company's leverage would be significantly 
increased and dilution to existing shareholders may result if equity 
securities or rights to acquire equity securities are issued in connection 
therewith.

     Consolidated cash was $4,542,000 at June 30, 1996 and $587,000 at 
December 31, 1995, an increase of $3,955,000. The change in cash can be 
attributed to the cash raised at the completion of the public offering of 
common stock less the cash used to purchase stations in the New York and 
Detroit markets.

     Accounts receivable increased $74,000 from $805,000 at December 31, 
1995. Prepaid expenses decreased $338,000 from December 31, 1995 while other 
receivables and inventory increased a total of $62,000. Accounts payable 
decreased $234,000 to $515,000 compared to the $750,000 balance at December 
31, 1995. Other accrued expenses also decreased 12% from December 31, 1995 
and accrued interest decreased $252,000 in the first six months of 1996. The 
increased amount of cash used for operations was a result of using the monies 
received through the Company's public offering of common stock to pay down 
interest and accounts payable.

     During the first six months of 1996, $13,476,000 was used for investing 
activities. This cash was used to purchase stations in the New York and 
Detroit markets.

     Cash obtained through financing activities amounted to $20,132,000 
during the first half of 1996. This cash represents the monies received from 
the Company's public offering of common stock less the repayment of debt.


<PAGE>

SEASONALITY AND INFLATION

     The Company's revenues generally follow retail sales trends, with the fall
season (September through December) reflecting the highest revenues for the
year, due primarily to back-to-school and holiday season retail advertising, and
the first quarter reflecting the lowest revenues for the year.  The Company does
not believe inflation has affected the results of its operations, and does not
anticipate that inflation will have an impact on its future operation.



PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS
     Not applicable

ITEMS 2. THROUGH 5.
     None

ITEM 6.
     The following documents filed by the company with the Commission (File No.
0-21534) are incorporated into this 10-QSB/A by reference:

     (a)  The Company's 8-K Report filed on June 19, 1996 (File No. 0-21534),
          relating to acquisition of Radio Elizabeth, Inc.;

     (b)  The Company's 8-K/A Report filed on June 21, 1996 (File No. 0-21534),
          relating to acquisition of Radio Elizabeth, Inc.;

     (C)  The Company's 8-K Report filed on June 18, 1996 (File No. 0-21534),
          relating to acquisition of the assets of Radio Station WCAR-AM; and

     (d)  The Company's 8-K/A Report filed on June 21, 1996 (File No. 0-21534),
          relating to acquisition of the assets of Radio Station WCAR-AM.

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the undersigned
thereunto duly authorized.

                                        CHILDREN'S BROADCASTING
                                        CORPORATION




Date:     10/17/96       BY:   /s/ James G. Gilbertson
          --------            ---------------------------
                              Treasurer (Chief Operating
                              Officer and Chief Financial
                              Officer)