** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

 

**Washington, D.C. 20549**

 

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**FORM 10-Q**

 

**(MARK ONE)**

 

**ý        QUARTERLY REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**FOR THE PERIOD ENDED SEPTEMBER 30, 2003**

 

**OR**

 

**o        TRANSITION REPORT PURSUANT TO SECTION 13OR 15(d) OF THE**

**SECURITIESEXCHANGE ACT OF 1934**

 

**FOR THE TRANSITION PERIOD FROM     TO**

 

COMMISSIONFILE NUMBER **001-13715**

 

**BIG CITY RADIO, INC.**

 

(Exactname of registrant as specified in its charter)

 

| **DELAWARE**                       |   | **13-3790661**          |
|------------------------------------|--------|-------------------------|
| (State  or other jurisdiction      |   | (I.R.S.  Employer       |
| of  incorporation or organization) |   | Identification  Number) |

 

**1888 Century Park East, Suite 212, Los Angeles, CA 90067**

(Addressand zip code of principal executive offices)

 

**(310) 556-2489**

(Registrant’stelephone number, including area code)

 

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Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.       YES ý  NO  o

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act).     YES  o   NO  ý

 

The number of shares of theregistrant’s Class A common stock and Class B common stock outstanding as ofNovember 5, 2003, was 6,226,817 and 8,250,458, respectively.

 

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**BIG CITY RADIO, INC.**
| **PART 1 —  FINANCIAL INFORMATION** |
|------------------------------------------|
|                                     |   |   |   |
| Item 1.                                  | Financial  Statements |   |
|                                     |   |   |   |
|                                     | Consolidated Balance Sheets |   |
|                                     |   |   |   |
|                                     | Consolidated  Statement of Operations |   |
|                                     |   |   |   |
|                                     | Consolidated  Statement of Cash Flows |   |
|                                     |   |   |   |
|                                     | Consolidated  Statement of Stockholders’ Equity (Deficiency) |   |
|                                     |   |   |   |
|                                     | Notes to  Consolidated Financial Statements |   |
|                                     |   |   |   |
| **Item 2.**                              | **Management’s  Discussion and Analysis of Financial Condition and Results of Operations** |   |
|                                     |   |   |   |
| **Item 3.**                              | **Quantitative and  Qualitative Disclosures About Market Risk** |   |
|                                     |   |   |   |
| **Item 4.**                              | **Controls  and Procedures** |   |
|                                     |   |   |   |
| **PART II — OTHER  INFORMATION**    |
|                                     |   |   |   |
| Item  1.                                 | Legal  Proceedings |   |
|                                     |   |   |   |
| Item 2.                                  | Changes in  Securities and Use of Proceeds |   |
|                                     |   |   |   |
| 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 |   |
|                                     |   |   |   |
| Signatures                               |   |
|                                     |   |   |   |
| Section 302 Certifications               |   |
|                                     |   |   |   |
| Exhibits                                 |   |
|                                     |   |   |   |

 

----

 

Part 1 — Financial Information

 

Item 1. Financial Statements

 

**BIG CITY RADIO, INC.**

**ConsolidatedBalance Sheets**

**(Unaudited)**

 
|                                                                                                                            |   | **September 30,** |       | **December 31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|------------------|--------|
|                                                                                                                            |   | **2003**          |       | **2002**         |   |
| **Assets**                                                                                                                      |   |              |       |             |   |
| Current assets:                                                                                                                 |   |              |       |             |   |
| Cash and cash equivalents                                                                                                       |   | $                 | 457,000    |             | $      | 732,000 |   |
| Cash held in investment, restricted                                                                                             |   | —            |       | 1,085,000        |   |
| Marketable securities                                                                                                           |   | 29,893,000        |       | 1,861,000        |   |
| Accounts receivable, net of allowance of  $362,000 in 2002                                                                      |   | —            |       | 1,997,000        |   |
| Interest receivable                                                                                                             |   | —            |       | 6,000            |   |
| Assets held for sale                                                                                                            |   | 426,000           |       | 79,571,000       |   |
| Prepaid expenses and other current assets                                                                                       |   | 270,000           |       | 289,000          |   |
| Total current assets                                                                                                            |   | 31,046,000        |       | 85,541,000       |   |
| Property and equipment, net                                                                                                     |   | 8,000             |       | 376,000          |   |
| Deferred financing fees, net                                                                                                    |   | —            |       | 1,441,000        |   |
| Other assets                                                                                                                    |   | 7,000             |       | 170,000          |   |
| Total assets                                                                                                                    |   | $                 | 31,061,000 |             | $      | 87,528,000 |   |
|                                                                                                                            |   |              |       |             |   |
| **Liabilities and Stockholders' Equity**                                                                                        |   |              |       |             |   |
| Current liabilities:                                                                                                            |   |              |       |             |   |
| Accounts payable                                                                                                                |   | $                 | 612,000    |             | $      | 883,000 |   |
| Accrued expenses                                                                                                                |   | 4,087,000         |       | 1,644,000        |   |
| Interest payable                                                                                                                |   | —            |       | 15,983,000       |   |
| Senior discount notes                                                                                                           |   | —            |       | 174,000,000      |   |
| Income tax payable                                                                                                              |   | 2,545,000         |       | —           |   |
| Other current liabilities                                                                                                       |   | —            |       | 74,000           |   |
| Total current liabilities                                                                                                       |   | 7,244,000         |       | 192,584,000      |   |
| Long-term liabilities:                                                                                                          |   |              |       |             |   |
| Other long-term liabilities                                                                                                     |   | 6,000             |       | 301,000          |   |
| Stockholders' equity (deficiency):                                                                                              |   |              |       |             |   |
| Preferred stock, $0.01 par value. Authorized  20,000,000 shares; zero shares issued and outstanding in 2003 and 2002            |   | —            |       | —           |   |
| Common stock, Class A, $0.01 par value.  Authorized 80,000,000 shares issued and outstanding 6,226,817 shares in 2003  and 2002 |   | 62,000            |       | 62,000           |   |
| Common stock, Class B, $0.01 par value.  Authorized 20,000,000 shares issued and outstanding 8,250,458 shares in 2003  and 2002 |   | 83,000            |       | 83,000           |   |
| Additional paid-in capital                                                                                                      |   | 29,492,000        |       | 29,492,000       |   |
| Other comprehensive loss                                                                                                        |   | —            |       | (8,000           | )      |
| Accumulated deficit                                                                                                             |   | (5,826,000        | )          | (134,986,000     | )      |
|                                                                                                                            |   | 23,811,000        |       | (105,357,000     | )      |
| Total liabilities and stockholders' equity  (deficiency)                                                                        |   | $                 | 31,061,000 |             | $      | 87,528,000 |   |
|                                                                                                                            |   |              |       |             |   |

 

See accompanying notes to consolidated financialstatements.

 

3

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**Big City Radio, Inc.**

**Consolidated Statements ofOperations**

**(Unaudited)**

 
|                                                               |   |                    |       |                   |       |        |   |              |        |
|--------------------------------------------------------------------|--------|-------------------------|------------|------------------------|------------|-------------|--------|-------------------|-------------|
|                                                               |   | **Three  Months Ended** |       | **Nine  Months Ended** |       |
|                                                               |   | **September  30,**      |       | **September  30,**     |       |
|                                                               |   | **2003**                |       | **2002**               |       | **2003**    |   | **2002**          |        |
|                                                               |   |                    |       | **(As Restated)**      | ** ** |        |   | **(As Restated)** |        |
|  

Net revenues                                               |   | $                       | —     |                   | $          | —      |   | $                 | —      |   | $ | — |   |
|                                                               |   |                    |       |                   |       |        |   |              |        |
| Operating expenses:                                                |   |                    |       |                   |       |        |   |              |        |
| Corporate, general and  administrative expenses                    |   | 1,276,000               |       | 1,094,000              |       | 5,963,000   |   | 3,010,000         |        |
| Depreciation and  amortization                                     |   | 6,000                   |       | 30,000                 |       | 56,000      |   | 90,000            |        |
| Total operating expenses                                           |   | 1,282,000               |       | 1,124,000              |       | 6,019,000   |   | 3,100,000         |        |
| Operating loss from  continuing operations                         |   | (1,282,000              | )          | (1,124,000             | )          | (6,019,000  | )      | (3,100,000        | )           |
|                                                               |   |                    |       |                   |       |        |   |              |        |
| Other income/(expenses):                                           |   |                    |       |                   |       |        |   |              |        |
| Interest income                                                    |   | 7,000                   |       | 23,000                 |       | 15,000      |   | 128,000           |        |
| Loss on disposal of fixed  assets                                  |   | —                  |       | —                 |       | (245,000    | )      | —            |        |
| Gain on sales of  marketable securities                            |   | 2,965,000               |       | —                 |       | 3,631,000   |   | —            |        |
| Unrealized gain/(loss) on  marketable securities                   |   | (8,788,000              | )          | —                 |       | 8,756,000   |   | —            |        |
| Other, net                                                         |   | 95,000                  |       | (2,000                 | )          | 154,000     |   | 13,000            |        |
| Total other  income/(expense)                                      |   | (5,721,000              | )          | 21,000                 |       | 12,311,000  |   | 141,000           |        |
|                                                               |   |                    |       |                   |       |        |   |              |        |
| Income/(loss) from  continuing operations before                   |   |                    |       |                   |       |        |   |              |        |
| income taxes                                                       |   | (7,003,000              | )          | (1,103,000             | )          | 6,292,000   |   | (2,959,000        | )           |
| Income tax  benefit/(expense), net                                 |   | 3,447,000               |       | —                 |       | (2,141,000  | )      | (8,631,000        | )           |
| Loss before extraordinary  loss                                    |   | (1,573,000              | )          | (1,000,000             | )          | (3,731,000  | )      | (10,487,000       | )           |
| Extraordinary loss on  extinguishment of debt, net of income taxes |   | —                  |       | —                 |       | —      |   | —            |        |
| Income/(loss) from  continuing operations                          |   | (3,556,000              | )          | (1,103,000             | )          | 4,151,000   |   | (11,590,000       | )           |
| Discontinued operations  (note 6):                                 |   |                    |       |                   |       |        |   |              |        |
| Radio operations                                                   |   | (147,000                | )          | (6,301,000             | )          | 125,009,000 |   | (19,343,000       | )           |
| Publishing operations                                              |   | —                  |       | (64,000                | )          | —      |   | (658,000          | )           |
| Income/(loss) from  discontinued operations, net                   |   |                    |       |                   |       |        |   |              |        |
| of income tax expense  (note 6)                                    |   | (147,000                | )          | (6,365,000             | )          | 125,009,000 |   | (20,001,000       | )           |
| Net income/(loss)                                                  |   | $                       | (3,703,000 | )                      | $          | (7,468,000  | )      | $                 | 129,160,000 |   | $ | (31,591,000 | ) |
|                                                               |   |                    |       |                   |       |        |   |              |        |
| Basic and diluted  earnings/(loss) per share:                      |   |                    |       |                   |       |        |   |              |        |
| Income/(loss) from  continuing operations                          |   | $                       | (0.25      | )                      | $          | (0.08       | )      | $                 | 0.29        |   | $ | (0.80 | ) |
| Income/(loss) from  discontinued operations                        |   | (0.01                   | )          | (0.44                  | )          | 8.64        |   | (1.38             | )           |
| Net income/(loss)                                                  |   | $                       | (0.26      | )                      | $          | (0.52       | )      | $                 | 8.92        |   | $ | (2.18 | ) |
|                                                               |   |                    |       |                   |       |        |   |              |        |
| Weighted average shares  outstanding                               |   | 14,477,000              |       | 14,477,000             |       | 14,477,000  |   | 14,477,000        |        |
|                                                                    |        |                         |            |                        |            |             |        |                   |             |  |  |  |  |  |  |  |

 

Seeaccompanying notes to consolidated financial statements

 

4

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**BIG CITY RADIO, INC.**

**Consolidated Statements of CashFlows**

**Nine months ended September 30,2003 and 2002**

**(Unaudited)**

** **
|                                                                         |   |       |      |        |   |
|------------------------------------------------------------------------------|--------|------------|-----------|-------------|--------|
|                                                                         |   | **2003**   |      | **2002**    |   |
| Cash flows from operating activities:                                        |   |       |      |        |   |
| Net income/(loss) from continuing operations                                 |   | $          | 4,151,000 |        | $      | (11,590,000 | ) |
| Adjustments to reconcile net loss to net cash used in operating  activities: |   |       |      |        |   |
| Depreciation and amortization                                                |   | 56,000     |      | 106,000     |   |
| Unrealized gain on marketable securities                                     |   | (8,756,000 | )         | —      |   |
| Deferred income taxes                                                        |   | —     |      | 8,628,000   |   |
| Loss on disposal of fixed assets                                             |   | 245,000    |      | —      |   |
| Change in operating assets and liabilities                                   |   |       |      |        |   |
| (Increase) decrease in assets:                                               |   |       |      |        |   |
| Accounts receivable                                                          |   | 3,000      |      | 438,000     |   |
| Interest receivable                                                          |   | 6,000      |      | 12,000      |   |
| Prepaid expenses and other current assets                                    |   | (60,000    | )         | (104,000    | )      |
| Other assets                                                                 |   | 5,000      |      | 2,000       |   |
| Increase (decrease) in liabilities:                                          |   |       |      |        |   |
| Accounts payable                                                             |   | (147,000   | )         | (224,000    | )      |
| Income tax payable                                                           |   | 2,141,000  |      | —      |   |
| Accrued expenses                                                             |   | 2,855,000  |      | (440,000    | )      |
| Net cash provided by (used in) continuing operating activities               |   | 499,000    |      | (3,172,000  | )      |
|                                                                         |   |       |      |        |   |
| Cash flows from investing activities:                                        |   |       |      |        |   |
| Purchase of marketable securities                                            |   | (3,630,000 | )         | —      |   |
| Sales of marketable securities                                               |   | 8,808,000  |      | 11,921,000  |   |
| Decrease in cash held in restricted investment                               |   | 1,085,000  |      | 39,000      |   |
| Net cash provided by continuing investing activities                         |   | 6,263,000  |      | 11,960,000  |   |
|                                                                         |   |       |      |        |   |
| Net cash provided by continuing financing activities                         |   | —     |      | —      |   |
| Cash used in discontinued operations (note 6)                                |   | (7,037,000 | )         | (11,659,000 | )      |
| Change in cash and cash equivalents                                          |   | (275,000   | )         | (2,871,000  | )      |
| Cash and cash equivalents at beginning of period                             |   | 732,000    |      | 3,194,000   |   |
| Cash and cash equivalents at end of period                                   |   | $          | 457,000   |        | $      | 323,000 |   |

 

Seeaccompanying notes to consolidated financial statements

 

5

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** **

**BIG CITY RADIO, INC.**

**Consolidated Statements of Stockholders’ Equity (Deficiency)**

**(Unaudited)**

 
|                                       |   |             |   |        |    |              |   |            |   |        |   |        |   |
|--------------------------------------------|--------|------------------|--------|-------------|---------|-------------------|--------|-----------------|--------|-------------|--------|-------------|--------|
|                                       |   |             |   |        |    | **Additional**    |   | **Other**       |   |        |   |        |   |
|                                       |   | **Common stock** |   | **paid-in** |    | **comprehensive** |   | **Accumulated** |   |        |   |
|                                       |   | **Shares**       |   | **Amount**  |    | **capital**       |   | **loss**        |   | **deficit** |   | **Total**   |   |
|                                       |   |             |   |        |    |              |   |            |   |        |   |        |   |
| Balance at December 31,2002                |   | 14,477,275       |   | $           | 145,000 |              | $      | 29,492,000      |   | $           | (8,000 | )           | $      | (134,986,000 | ) | $ | (105,357,000 | ) |
| Unrealized income on marketable securities |   | 8,000            |   | 8,000       |    |              |   |            |   |        |   |        |   |
| Net income                                 |   | —           |   | —      |    | —            |   | —          |   | 129,160,000 |   | 129,160,000 |   |
| Total comprehensive income, net.           |   | —           |   | —      |    | —            |   | 8,000           |   | 129,160,000 |   | 129,168,000 |   |
|                                       |   |             |   |        |    |              |   |            |   |        |   |        |   |
| Balance at September 30, 2003              |   | 14,477,275       |   | $           | 145,000 |              | $      | 29,492,000      |   | $           | — |        | $      | (5,826,000 | ) | $ | 23,811,000 |   |

 

Seeaccompanying notes to consolidated financial statements.

 

6

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** **

**BIG CITY RADIO, INC.**

** **

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

** **

**1.     Organization, Business and Basis ofPresentation**

 

BigCity Radio, Inc. (“Big City Radio” or the “Company”, formerly Odyssey Communications,Inc.) was incorporated in Delaware on August 2, 1994 and commencedoperations on January 1, 1995. On May 30, 1996, Big City Radio mergedwith Q Broadcasting, Inc. (“Q”), with Big City Radio being the survivingcompany. Big City Radio and Q were owned 94% and 100%, respectively, by Stuartand Anita Subotnick. Accordingly, the merger was accounted for as a combinationof entities under common control. As a result, the combination of Big CityRadio and Q was effected utilizing historical costs. At the date of conversionfrom S Corporation status to C Corporation status, the Company formed fivewholly owned subsidiaries, Big City Radio - LA, LLC; Big City Radio - NYC, LLC;Big City Radio - CHI, LLC; WRKL Rockland Radio, LLC; and Odyssey Traveling Billboards,Inc.

 

The Company owned and operated radio broadcastingstations.  As of September 30, 2003, theCompany owned one FM station, WYXX-FM in Morris, Illinois. However, onSeptember 5, 2003, the Company signed a definitive asset purchase agreement tosell WYXX-FM, which sale was completed on November 5, 2003 (see Notes 6 and 8).During the quarter ended June 30, 2003, Big City Radio completed thesale of its previously owned radio stations in Southern California, the NewYork City- area, and Illinois (excluding WYXX-FM). The sale of WVIV-FM,Highland Park, Illinois was reported as of May 2, 2003 when its non-FCC licenseassets were transferred to Hispanic Broadcasting Corporation (HBC), and HBCpaid Big City Radio $29.875 million. The remaining $3 million consideration wasreceived on July 18, 2003, the date of the transfer of the WVIV-FM FCClicenses. As the $3 million payment was not contingent upon the FCC licensetransfer, the entire gain on this transaction was reported as of May 2, 2003.The Company undertook this series of asset sales, and the recently completedWYXX-FM sale, as part of an auction process that the Company announced onNovember 4, 2002. Between December 24, 2002 and January 2, 2003, Big City Radiosigned four, separate definitive asset purchase agreements to sell eleven ofits twelve FCC FM licenses and associated radio station assets. Big City Radiosold these radio stations to raise the funds necessary to pay all principal of,and accrued and unpaid interest on, its 111⁄4% senior discount notes due 2005.Noteholders accelerated payment of the senior notes as a result of defaults byBig City Radio under these notes. As discussed in note 6, the radio stationoperations have been treated as discontinued operations.

 

The Company owns HIH Acquisition, Inc. (“HIH”) whichowns the discontinued TodoAhora.com website, and also in turn owns UnitedPublishers of Florida, Inc. (“UPF”) which published the Hispanic music trademagazine, “Disco,” operated a graphic design business, and owns the LatinMusicTrends.comwebsite. In response to the continued downturn in the music industryadvertising marketplace, during December 2001 the Company ceased its internetoperations, and during June 2002 the Company ceased the operation of UPF, andwrote-off the remaining $108,000 of goodwill associated with UPF. As discussedin Note 6, the Company has treated these operations as discontinued operations.The Company also owns Independent Radio Reps, LLC (“IRR”), an in-house rep firmto represent it in generating national Hispanic radio business. As a result ofthe sales of the radio stations detailed above, IRR ceased operations duringthe quarter ended March 31, 2003.

 

The accompanying consolidated financial statementsinclude the accounts of Big City Radio and all its subsidiaries. Allsignificant intercompany accounts and transactions have been eliminated. As aresult of the Company’s decisions during 2002 to close down publishing operations and to sell the radio stations, thepublishing and radio station operations of the Company have been presented asdiscontinued operations (see note 6).

 

7

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Thepreparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosures ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates and the assumptions couldprove to be inaccurate.

 

Theaccompanying interim consolidated financial statements have been preparedwithout audit pursuant to the rules and regulations of the Securities and ExchangeCommission (“SEC”). Certain information and footnote disclosures normallyincluded in financial statements prepared in accordance with generally acceptedaccounting principles have been condensed or omitted pursuant to such rules andregulations, although the Company believes that the disclosures made areadequate to make the information presented not misleading. These financialstatements should be read in conjunction with the consolidated financialstatements and related footnotes included in the Company’s Annual Report onForm 10-K for the year ended December 31, 2002 (the “2002 Form 10-K”).  In the opinion of management alladjustments, consisting only of normal recurring adjustments, necessary topresent fairly in all material respects the financial position of the Companyas of September 30, 2003, and the results of its operations for the threemonths and nine months ended September 30, 2003 and 2002, and its cash flowsfor the three months and nine months ended September 30, 2003 and 2002, have beenincluded.  The results of operations forthe interim period are not necessarily indicative of the results which may berealized for the full year.

 

On January 1, 2002, the Company adopted the provisions ofSFAS 142 and stopped amortizing its FCC broadcast licenses as these intangibleassets were determined to have an indefinite useful life. Accordingly, deferredtax liabilities related to these intangible assets could no longer be utilizedto support the realization of deferred tax benefits. The Company restated its fiscal year 2002 quarterly results to recordan additional deferred tax valuation allowance of approximately $8.6 millionduring the quarter ended March 31, 2002 and additional tax expense relating tothe increase in the deferred tax liability of approximately $0.5 million duringthe quarters ended March 31, 2002, June 30, 2002, and September 30, 2002.Furthermore, the September 30, 2002 quarterly information has been restated toreflect the reclassification of the Company’s radio station and publishingassets as discontinued operations (see note 6).

 

**2.     Earnings per Share**

 

Basic earnings per share excludes all dilutivesecurities.  It is based upon theweighted average number of common shares outstanding during the period.  Diluted earnings per share reflects thepotential dilution that would occur if securities to issue common stock wereexercised or converted into common stock. In calculating diluted earnings per share, no potential shares of commonstock are included in the computation when a loss from continuing operationsavailable to common stockholders exists. At September 30, 2003 and 2002, theCompany had options amounting to 1,303,000****and 1,338,000 respectively, which were notincluded in the computation of diluted EPS because these options were eitherantidilutive or the options have an exercise price that is higher than theaverage market price of a share of common stock. In addition, if an acquisitionby any person, group of affiliated persons or entity of all of the stock of theCompany or of all or substantially all of the assets of the Company occurs onor prior to November 1, 2004 at a price of at least $4.00 per share of Class ACommon Stock, the former stockholders of HIH will be entitled to receive600,000 shares of the Company’s Class A Common Stock. The Company was notrequired to issue these shares as a result of the radio station sales describedin Note 6.

 

**3.    ****Accounting for Stock Options**

 

On January 1, 1996, the Company adopted Statement ofFinancial Accounting Standards (SFAS) No. 123, “Accounting for Stock-BasedCompensation,” which permits entities to recognize as expense over the vestingperiod the fair value of all stock-based awards on the date of grant.Alternatively, SFAS No. 123 allows entities to continue to apply the provisionsof APB Opinion No. 25 and provide pro forma net income and disclosure for

 

8

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employeestock grants made in 1995, 1996 and future years as if the fair-value-basedmethod defined in SFAS No. 123 had been applied. The Company has elected tocontinue to apply the provisions of APB Opinion No. 25 and provide the proforma disclosure provisions of SFAS No. 123. The Company has complied with thedisclosure requirements of SFAS No. 148, “Accounting for Stock BasedCompensation — Transition and Disclosure (an amendment of FASB Statement No.123).”

 

For the nine months ended September 30, 2003 and 2002,had the Company determined compensation cost based on the fair value at thegrant date for its stock options under SFAS No. 123, the Company’s net income(loss) would have been as follows:

 

|                                                                                      |   | **Nine  months Ended** |   |
|-------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                      |   | **September  30,**     |   |
|                                                                                      |   | **2003**               |   | **2002** |   |
| Net income/(loss):                                                                        |   |                   |   |   |   |
| As reported                                                                               |   | $129,160,000           |   | $(31,591,000 | ) |
| Stock based compensation expense determined under fair value based  method for all awards |   | (2,878,000             | )      | (2,285,000 | ) |
| Pro forma                                                                                 |   | $126,282,000           |   | $(33,876,000 | ) |
| Income/(loss) per share:                                                                  |   |                   |   |   |   |
| As reported                                                                               |   | $8.92                  |   | $(2.18 | ) |
| Pro forma                                                                                 |   | $8.72                  |   | $(2.34 | ) |

 

**4.**     **Recent Accounting Pronouncements**

** **

*Business Combinations and Goodwill and Other IntangibleAssets*

 

In accordance with SFAS No.142, the Companydiscontinued the amortization of goodwill and intangible assets (comprisedsolely of broadcast licenses) effective January 1, 2002.  During the quarter ended March 31, 2002, theCompany completed the transitional impairment test, which did not result inimpairment of recorded intangible assets. In June 2002, the Company ceased theoperation of UPF, and wrote off the remaining $108,000 of goodwill associatedwith UPF. During the fourth quarter of 2002, the Company made the decision tosell its broadcast licenses. In accordance with SFAS No.144, these licenses arereported as assets held for sale. The Company compared the licenses’ carryingvalue to their fair value, less the estimated cost to sell them. This review ofthe carrying value of its intangible assets resulted in total charges of$714,000 relating to the impairment in value of some of its FCC broadcastlicenses.  On September 5, 2003, theCompany entered into a definitive asset purchase agreement to sell its lastremaining radio station, WYXX-FM, Morris, Illinois to Grundy CountyBroadcasters, Inc. As of September 30, 2003 and December 31, 2002, the Companyhad no remaining un-amortized goodwill, and the carrying amount of unamortizedintangible assets were as follows:

 

|               |   | **September 30, 2003** |    | **December 31, 2002** |   |
|--------------------|--------|------------------------|---------|-----------------------|--------|
| Broadcast licenses |   | $                      | 350,000 |                  | $      | 76,325,000 |   |
|                    |        |                        |         |                       |        |  |  |

 

As discussed more fully innote 6, the Broadcast licenses above relate to the radio stations to be sold.Therefore, these assets are reported as assets held for sale at September 30,2003 and December 31, 2002.

 

*Accountingfor Costs Associated with Exit and Disposal Activities*

 

9

----

 

In June 2002, the Financial Accounting StandardsBoard issued FASB Statement No. 146, *Accounting for Costs Associated with Exit or DisposalActivities (“SFAS 146”)* which nullifies Emerging Issues Task Force(EITF) Issue No. 94-3, *Liability Recognition for Certain Employee TerminationBenefits and Other Costs to Exit an Activity* (*including Certain Costs Incurred in aRestructuring*) (“Issue 94-3”).

 

Theprincipal difference between this Statement and Issue 94-3 relates to itsrequirements for recognition of a liability for a cost associated with an exitor disposal activity. This Statement requires that a liability for a costassociated with an exit or disposal activity be recognized when the liabilityis incurred. Under Issue 94-3, a liability for an exit cost as defined in Issue94-3 was recognized at the date of an entity’s commitment to an exit plan.Under SFAS 146, a commitment to a plan, by itself, does not create a presentobligation to others that meets the definition of a liability. SFAS 146 alsoestablishes that fair value is the objective for initial measurement of theliability.

 

TheCompany is required to adopt SFAS 146 on exit and disposal activities that areinitiated after December 31, 2002, with early application encouraged. TheCompany has adopted SFAS No. 146 in relation to exit and disposal activitiesinitiated after September 30, 2002.

 

*Guarantor’sAccounting and Disclosure Requirements for Guarantees, Including IndirectGuarantees of Indebtedness of Others*

 

InNovember 2002, the FASB issued Interpretation No. 45, *Guarantor’s Accounting and DisclosureRequirements for Guarantees, Including Indirect Guarantees of Indebtedness ofOthers*(“FIN 45”)*,* which addresses the disclosure to bemade by a guarantor in its interim and annual financial statements about its obligationsunder guarantees.  The disclosurerequirements are effective for interim and annual financial statements endingafter December 15, 2002.

 

FIN45 also requires the recognition of a liability by a guarantor at the inceptionof certain guarantees.  FIN 45 requiresthe guarantor to recognize a liability for the non-contingent component of aguarantee, which is the obligation to stand ready to perform in the event thatspecified triggering events or conditions occur.  The initial measurement of this liability is the fair value ofthe guarantee at inception. The recognition of the liability is required evenif it is not probable that payments will be required under the guarantee or ifthe guarantee was issued with a premium payment or as part of a transactionwith multiple elements.  The initialrecognition and measurement provisions are effective for all guarantees withinthe scope of FIN 45 issued or modified after December 31, 2002.

 

Asnoted above, the Company adopted the disclosure requirements of FIN 45 and willapply the recognition and measurement provisions for all guarantees enteredinto or modified after December 31, 2002. To date the Company has not entered into any guarantees.

 

*Consolidationof Variable Interest Entities*

 

InFebruary 2003, the FASB issued Interpretation No. 46, *Consolidation of Variable InterestEntities*(“FIN 46”), which addresses the consolidation by businessenterprises of variable interest entities, which have one or both of thefollowing characteristics: (1) the equity investment at risk is not sufficientto permit the entity to finance its activities without additional financialsupport from other parties, or (2) the equity investors lack one or more of thefollowing essential characteristics of a controlling financial interest: (a)the direct or indirect ability to make decisions about the entity’s activitiesthrough voting or similar rights, (b) the obligation to absorb the expectedlosses of the entity if they occur, or (c) the right to receive the expectedresidual returns of the entity if they occur. FIN 46 will have a significant effect on existing practice because itrequires existing variable interest entities to be consolidated if thoseentities do not effectively disburse risks among parties involved.  In addition, FIN 46 contains detaileddisclosure requirements.  FIN 46 applies

 

10

----

 

immediately to variableinterest entities created after January 31, 2003, and to variable interestentities in which an enterprise obtains an interest after that date.  It applies in the first fiscal year orinterim period beginning after June 15, 2003, to variable interest entities inwhich an enterprise holds a variable interest that it acquired before February1, 2003.  This Interpretation may beapplied prospectively with a cumulative-effect adjustment as of the date onwhich it is first applied or by restating previously issued financialstatements for one or more years with a cumulative-effect adjustment as of thebeginning of the first year restated. Management expects the application ofthis interpretation will not have a material effect on the Company’sconsolidated financial statements.

 

**5.     SeniorDiscount Notes**

 

*Senior Discount Notes*

 

TheCompany completed a private placement of $174.0 million aggregate principalamount, at maturity, of 11.25% Senior Discount Notes due 2005 (the “Notes” or“senior notes”) on March 17, 1998 (the “Notes Offering”), generatingapproximately $125.4 million of gross proceeds for the Company of which theCompany used approximately $32.6 million to repay outstanding indebtednessunder its previous credit facility.  TheCompany used the proceeds of the Notes Offering to finance the acquisitioncosts of radio station properties and the remaining proceeds were used forgeneral working capital purposes.  OnMarch 15, 2001, the Notes commenced accruing cash interest at 11.25% per annum.Semi-annual cash interest payments of $9.8 million were required to commence onSeptember 15, 2001. (For a discussion of the Company’s current liquidityissues, including events of default under the Indenture governing the Notes andthe acceleration of the principal of and interest on the Notes, see note 7below.)

 

*Subsidiary Guarantors*

 

Pursuantto the terms of the indenture relating to the Notes (the “Indenture”), thedirect subsidiaries of Big City Radio, Inc.— consisting of Odyssey TravelingBillboards, Inc., Big City Radio-NYC, L.L.C., Big City Radio-LA, L.L.C., BigCity Radio-CHI, L.L.C. (collectively, the “Subsidiary Guarantors”), jointly andseverally, fully and unconditionally guaranteed the obligations of Big CityRadio, Inc. with respect to the Notes.

 

Allof the then existing Subsidiary Guarantors except Odyssey Traveling Billboards,Inc. (the “Station Subsidiaries”), were created in December 1997 as specialpurpose Delaware limited liability companies formed for the sole purpose ofholding the Company’s FCC radio licenses. The operating agreements for the Station Subsidiaries limit theactivities of these companies to owning the FCC radio licenses.  Odyssey Traveling Billboards, Inc. owned andoperated certain vehicles used to advertise the Company’s radio stations.  Because the Station Subsidiaries enteredinto assignment and use agreements with the Company whereby the Company managedand directed the day-to-day operations of the radio stations, paid all expensesand capital costs incurred in operating the radio stations, and retained alladvertising and other receipts collected in operating the radio stations, the StationSubsidiaries had no income or expenses other than the amortization of the FCClicenses. Odyssey Traveling Billboards, Inc. was similarly a special purposecorporation with no income and only expenses. During the quarter endedSeptember 30, 2003, the Subsidiary Guarantors, with the exception of Big CityRadio-CHI, L.L.C., were dissolved.

 

Accordingly,set forth below is certain condensed consolidating and consolidated financialinformation for the parent company, Big City Radio, Inc. and for the SubsidiaryGuarantors, with consolidation adjustments, as of September 30, 2003 and forthe nine months ended September 30, 2002 and 2003.

 

11

----

 

**Consolidating Balance Sheet**

**As of September 30, 2003**

 
|                                                                                               |   |       |       |           |   |          |   |              |       |             |   |
|----------------------------------------------------------------------------------------------------|--------|------------|------------|----------------|--------|---------------|--------|-------------------|------------|------------------|--------|
|                                                                                               |   |       |       |           |   |          |   |              |       |             |   |
|                                                                                               |   |       |       | **Subsidiary** |   |          |   | **Consolidation** |       |             |   |
|                                                                                               |   | **Parent** |       | **Guarantors** |   | **Sub-total** |   | **Adjustments**   |       | **Consolidated** |   |
| Assets                                                                                             |   |       |       |           |   |          |   |              |       |             |   |
| Current Assets                                                                                     |   |       |       |           |   |          |   |              |       |             |   |
| Cash and cash equivalents                                                                          |   | $          | 457,000    |           | $      | —        |   | $                 | 457,000    |             | $      | — |   | $ | 457,000 |   |
| Marketable securities                                                                              |   | 29,893,000 |       | —         |   | 29,893,000    |   | —            |       | 29,893,000       |   |
| Assets held for sale                                                                               |   | 76,000     |       | 350,000        |   | 426,000       |   | —            |       | 426,000          |   |
| Prepaid expenses and other current assets..                                                        |   | 270,000    |       | —         |   | 270,000       |   | —            |       | 270,000          |   |
| Total current assets                                                                               |   | 30,696,000 |       | 350,000        |   | 31,046,000    |   | —            |       | 31,046,000       |   |
| Property and equipment, net                                                                        |   | 8,000      |       | —         |   | 8,000         |   | —            |       | 8,000            |   |
| Investment in, and advances to subsidiaries.                                                       |   | 350,000    |       | —         |   | 350,000       |   | (350,000          | )          | —           |   |
| Other assets                                                                                       |   | 7,000      |       | —         |   | 7,000         |   | —            |       | 7,000            |   |
| Total assets                                                                                       |   | $          | 31,061,000 |           | $      | 350,000       |   | $                 | 31,411,000 |             | $      | (350,000 | ) | $ | 31,061,000 |   |
|                                                                                               |   |       |       |           |   |          |   |              |       |             |   |
| Liabilities and stockholders’ equity (deficiency)                                             |   |       |       |           |   |          |   |              |       |             |   |
| Accounts payable                                                                                   |   | $          | 612,000    |           | $      | —        |   | $                 | 612,000    |             | $      | — |   | $ | 612,000 |   |
| Accrued expenses                                                                                   |   | 4,087,000  |       | —         |   | 4,087,000     |   | —            |       | 4,087,000        |   |
| Income tax payable                                                                                 |   | 2,545,000  |       | —         |   | 2,545,000     |   | —            |       | 2,545,000        |   |
| Total current liabilities                                                                          |   | 7,244,000  |       | —         |   | 7,244,000     |   | —            |       | 7,244,000        |   |
|                                                                                               |   |       |       |           |   |          |   |              |       |             |   |
| Long-term liabilities                                                                              |   |       |       |           |   |          |   |              |       |             |   |
|                                                                                               |   |       |       |           |   |          |   |              |       |             |   |
| Other long-term liabilities                                                                        |   | 6,000      |       | —         |   | 6,000         |   | —            |       | 6,000            |   |
| Intercompany balances                                                                              |   | —     |       | 542,000        |   | 542,000       |   | (542,000          | )          | —           |   |
| Total long-term liabilities                                                                        |   | 6,000      |       | 542,000        |   | 548,000       |   | (542,000          | )          | 6,000            |   |
| Stockholders’ equity (deficiency) Preferred and common stock, and  additional paid-in capital |   | 29,637,000 |       | —         |   | 29,637,000    |   | —            |       | 29,637,000       |   |
| Accumulated deficit                                                                                |   | (5,826,000 | )          | (192,000       | )      | (6,018,000    | )      | 192,000           |       | (5,826,000       | )      |
| Total liabilities and stockholders’ equity (deficiency)                                       |   | $          | 31,061,000 |           | $      | 350,000       |   | $                 | 31,411,000 |             | $      | (350,000 | ) | $ | 31,061,000 |   |
|                                                                                               |   |       |       |           |   |          |   |              |       |             |   |

 

12

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**ConsolidatingStatement of Operations for the nine months ended September 30, 2002**

 
|                                                                                |   |        |        |           |   |          |   |              |        |             |   |
|-------------------------------------------------------------------------------------|--------|-------------|-------------|----------------|--------|---------------|--------|-------------------|-------------|------------------|--------|
|                                                                                |   |        |        | **Subsidiary** |   |          |   | **Consolidation** |        |             |   |
|                                                                                |   | **Parent**  |        | **Guarantors** |   | **Sub-total** |   | **Adjustments**   |        | **Consolidated** |   |
|                                                                                |   |        |        |           |   |          |   |              |        |             |   |
| Net revenues                                                                        |   | $           | —      |           | $      | —        |   | $                 | —      |             | $      | — |   | $ | — |   |
|                                                                                |   |        |        |           |   |          |   |              |        |             |   |
| Operating expenses:                                                                 |   |        |        |           |   |          |   |              |        |             |   |
|                                                                                |   |        |        |           |   |          |   |              |        |             |   |
| Corporate, general and administrative expenses                                      |   | 3,010,000   |        | —         |   | 3,010,000     |   | —            |        | 3,010,000        |   |
| Depreciation and amortization                                                       |   | 90,000      |        | —         |   | 90,000        |   | —            |        | 90,000           |   |
| Total operating expenses                                                            |   | 3,100,000   |        | —         |   | 3,100,000     |   | —            |        | 3,100,000        |   |
| Operating loss                                                                      |   | (3,100,000  | )           | —         |   | (3,100,000    | )      | —            |        | (3,100,000       | )      |
|                                                                                |   |        |        |           |   |          |   |              |        |             |   |
| Other income (expenses)                                                             |   |        |        |           |   |          |   |              |        |             |   |
| Interest income/(expense)                                                           |   | 128,000     |        | —         |   | 128,000       |   | —            |        | 128,000          |   |
|                                                                                |   |        |        |           |   |          |   |              |        |             |   |
| Other, net                                                                          |   | 13,000      |        | —         |   | 13,000        |   | —            |        | 13,000           |   |
| Total other income                                                                  |   | 141,000     |        | —         |   | 141,000       |   | —            |        | 141,000          |   |
|                                                                                |   |        |        |           |   |          |   |              |        |             |   |
| Loss before income tax benefit, and equity in losses of  Subsidiary Guarantors |   | (2,959,000  | )           | —         |   | (2,959,000    | )      | —            |        | (2,959,000       | )      |
| Income tax expense, net                                                             |   | (8,631,000  | )           | —         |   | (8,631,000    | )      | —            |        | (8,631,000       | )      |
| Loss before equity in losses of                                                     |   |        |        |           |   |          |   |              |        |             |   |
| Subsidiary Guarantors                                                               |   | (11,590,000 | )           | —         |   | (11,590,000   | )      | —            |        | (11,590,000      | )      |
| Equity in net losses of Subsidiary Guarantors                                       |   | —      |        | —         |   | —        |   | —            |        | —           |   |
| Loss on discontinued operations                                                     |   | (20,001,000 | )           |           |   | (20,001,000   | )      |              |        | (20,001,000      | )      |
| Net loss                                                                            |   | $           | (31,591,000 | )              | $      | —        |   | $                 | (31,591,000 | )                | $      | — |   | $ | (31,591,000 | ) |
|                                                                                     |        |             |             |                |        |               |        |                   |             |                  |        |  |  |  |  |  |  |

 

13

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**Consolidating Statement ofOperations for the nine months ended September 30, 2003**

 
|                                                                                          |   |        |        |           |   |          |   |              |        |             |   |
|-----------------------------------------------------------------------------------------------|--------|-------------|-------------|----------------|--------|---------------|--------|-------------------|-------------|------------------|--------|
|                                                                                          |   |        |        | **Subsidiary** |   |          |   | **Consolidation** |        |             |   |
|                                                                                          |   | **Parent**  |        | **Guarantors** |   | **Sub-total** |   | **Adjustments**   |        | **Consolidated** |   |
|                                                                                          |   |        |        |           |   |          |   |              |        |             |   |
| Net revenues                                                                                  |   | $           | —      |           | $      | —        |   | $                 | —      |             | $      | — |   | $ | — |   |
|                                                                                          |   |        |        |           |   |          |   |              |        |             |   |
| Operating expenses:                                                                           |   |        |        |           |   |          |   |              |        |             |   |
|                                                                                          |   |        |        |           |   |          |   |              |        |             |   |
| Corporate, general and administrative expenses                                                |   | 5,963,000   |        | —         |   | 5,963,000     |   | —            |        | 5,963,000        |   |
| Depreciation and amortization                                                                 |   | 56,000      |        | —         |   | 56,000        |   | —            |        | 56,000           |   |
| Total operating expenses                                                                      |   | 6,019,000   |        | —         |   | 6,019,000     |   | —            |        | 6,019,000        |   |
| Operating loss                                                                                |   | (6,019,000  | )           | —         |   | (6,019,000    | )      | —            |        | (6,019,000       | )      |
|                                                                                          |   |        |        |           |   |          |   |              |        |             |   |
| Other income (expenses)                                                                       |   |        |        |           |   |          |   |              |        |             |   |
| Interest income/(expense)                                                                     |   | 15,000      |        | —         |   | 15,000        |   | —            |        | 15,000           |   |
| Loss on disposal of fixed assets                                                              |   | (245,000    | )           | —         |   | (245,000      | )      | —            |        | (245,000         | )      |
| Gain on sales of marketable securities                                                        |   | 3,631,000   |        | —         |   | 3,631,000     |   | —            |        | 3,631,000        |   |
| Unrealized gain on marketable securities                                                      |   | 8,756,000   |        | —         |   | 8,756,000     |   | —            |        | 8,756,000        |   |
| Other, net                                                                                    |   | 154,000     |        | —         |   | 154,000       |   | —            |        | 154,000          |   |
| Total other income                                                                            |   | 12,311,000  |        | —         |   | 12,311,000    |   | —            |        | 12,311,000       |   |
|                                                                                          |   |        |        |           |   |          |   |              |        |             |   |
| Income  before income tax  benefit, and equity in losses of   Subsidiary Guarantors |   | 6,292,000   |        | —         |   | 6,292,000     |   | —            |        | 6,292,000        |   |
| Income tax expense, net                                                                       |   | (2,141,000  | )           | —         |   | (2,141,000    | )      | —            |        | (2,141,000       | )      |
| Income  before equity in  losses of                                                      |   |        |        |           |   |          |   |              |        |             |   |
| Subsidiary Guarantors                                                                         |   | 4,151,000   |        | —         |   | 4,151,000     |   | —            |        | 4,151,000        |   |
| Equity in net income on Subsidiary Guarantors                                                 |   | 141,310,000 |        | —         |   | 141,310,000   |   | (141,310,000      | )           | —           |   |
| Income/(loss) from discontinued operations                                                    |   | (16,301,000 | )           | 141,310,000    |   | 125,009,000   |   |              |        | 125,009,000      |   |
| Net income                                                                                    |   | $           | 129,160,000 |           | $      | 141,310,000   |   | $                 | 270,470,000 |             | $      | (141,310,000 | ) | $ | 129,160,000 |   |

 

**Consolidating Statement of CashFlows for the nine months ended September 30, 2002**

 
|                                           |   |        |       |           |   |          |   |              |       |             |       |
|------------------------------------------------|--------|-------------|------------|----------------|--------|---------------|--------|-------------------|------------|------------------|------------|
|                                           |   |        |       | **Subsidiary** |   |          |   | **Consolidation** |       |             |       |
|                                           |   | **Parent**  |       | **Guarantors** |   | **Sub-total** |   | **Adjustments**   |       | **Consolidated** | ** ** |
| Net cash used in operating activities          |   | $           | (3,172,000 | )              | $      | —        |   | $                 | (3,172,000 | )                | $          | — |   | $ | (3,172,000 | ) |
| Cash flows from investing   activities:   |   |        |       |           |   |          |   |              |       |             |       |
| Sales of marketable securities                 |   | 11,921,000  |       | —         |   | 11,921,000    |   | —            |       | 11,921,000       |       |
| Decrease in cash held in restricted investment |   | 39,000      |       | —         |   | 39,000        |   | —            |       | 39,000           |       |
| Net cash provided by investing activities      |   | 11,960,000  |       | —         |   | 11,960,000    |   | —            |       | 11,960,000       |       |
| Net cash provided by financing activities      |   | —      |       | —         |   | —        |   | —            |       | —           |       |
| Cash flows used in discontinuing operations    |   | (11,659,000 | )          | —         |   | (11,659,000   | )      | —            |       | (11,659,000      | )          |
| Change in cash and cash equivalents            |   | (2,871,000  | )          | —         |   | (2,871,000    | )      | —            |       | (2,871,000       | )          |
| Cash and cash equivalents at beginning of year |   | 3,194,000   |       | —         |   | 3,194,000     |   | —            |       | 3,194,000        |       |
| Cash and cash equivalents at end of period     |   | $           | 323,000    |           | $      | —        |   | $                 | 323,000    |             | $          | — |   | $ | 323,000 |   |
|                                           |   |        |       |           |   |          |   |              |       |             |       |

 

14

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**Consolidating Statement of CashFlows for the nine months ended September 30, 2003**

 
|                                           |   |       |    |           |   |          |   |              |    |             |       |
|------------------------------------------------|--------|------------|---------|----------------|--------|---------------|--------|-------------------|---------|------------------|------------|
|                                           |   |       |    | **Subsidiary** |   |          |   | **Consolidation** |    |             |       |
|                                           |   | **Parent** |    | **Guarantors** |   | **Sub-total** |   | **Adjustments**   |    | **Consolidated** | ** ** |
| Net cash provided by operating activities      |   | $          | 499,000 |           | $      | —        |   | $                 | 499,000 |             | $          | — |   | $ | 499,000 |   |
| Cash flows from investing   activities:   |   |       |    |           |   |          |   |              |    |             |       |
| Purchase of marketable securities              |   | (3,630,000 | )       | —         |   | (3,630,000    | )      | —            |    | (3,630,000       | )          |
| Sales of marketable securities                 |   | 8,808,000  |    | —         |   | 8,808,000     |   | —            |    | 8,808,000        |       |
| Decrease in cash held in restricted investment |   | 1,085,000  |    | —         |   | 1,085,000     |   | —            |    | 1,085,000        |       |
| Net cash provided by investing activities      |   | 6,263,000  |    | —         |   | 6,263,000     |   | —            |    | 6,263,000        |       |
| Net cash provided by financing activities      |   | —     |    | —         |   | —        |   | —            |    | —           |       |
| Cash flows used in discontinuing operations    |   | (7,037,000 | )       | —         |   | (7,037,000    | )      | —            |    | (7,037,000       | )          |
| Change in cash and cash equivalents            |   | (275,000   | )       | —         |   | (275,000      | )      | —            |    | (275,000         | )          |
| Cash and cash equivalents at beginning of year |   | 732,000    |    | —         |   | 732,000       |   | —            |    | 732,000          |       |
| Cash and cash equivalents at end of period     |   | $          | 457,000 |           | $      | —        |   | $                 | 457,000 |             | $          | — |   | $ | 457,000 |   |
|                                           |   |       |    |           |   |          |   |              |    |             |       |

 

This summarizedfinancial information for the Subsidiary Guarantors has been prepared from thebooks and records maintained by the Subsidiary Guarantors and the Company.  The summarized financial information may notnecessarily be indicative of the results of operations or financial positionhad the Subsidiary Guarantors operated as independent entities.

 

**6.      Discontinued Operations**

 

As described more fully inNote 7, on November 4, 2002, Big City Radio announced its intention toundertake an auction sale of all of its radio stations. This auction processhas resulted in the asset disposition transactions detailed below, which as ofSeptember 30, 2003, resulted in the sale of eleven of the twelve FCC licensesowned by the Company. As detailed in Note 9, the sale of the last remainingstation, WYXX-FM, Morris, Illinois, was completed on November 5, 2003. TheCompany’s radio station operations have been presented as discontinuedoperations, and its consolidated financial statements for all periods presentedhave been adjusted to reflect the radio station operations as discontinuedoperations in accordance with SFAS No.144.

 

Summarized financial information for thediscontinued radio operations is as follows:

 

**Radio operations**
|                                            |   | **September  30,  2003** |    | **December  31,  2002** |   |
|-------------------------------------------------|--------|--------------------------|---------|-------------------------|--------|
| Property and equipment, net                     |   | $                        | 76,000  |                    | $      | 3,246,000 |   |
| Intangibles, net                                |   | 350,000                  |    | 76,325,000              |   |
| Net assets — discontinued radio operations |   | $                        | 426,000 |                    | $      | 79,571,000 |   |

 

At September 30, 2003 andDecember 31, 2002, the Company’s property and equipment and intangible assetsfrom the discontinued operations were reported as assets held for sale.

 

15

----

 
|                                                                 |   | **For the  three months** |     | **For the  nine months** |   |
|----------------------------------------------------------------------|--------|---------------------------|----------|--------------------------|--------|
|                                                                 |   | **ended  September 30,**  |     | **ended  September 30,** |   |
|                                                                 |   | **2003**                  |     | **2002**                 |   | **2003** |   | **2002** |   |
| Gross revenues                                                       |   | $                         | —   |                     | $      | 3,845,000 |   | $ | 1,267,000 |   | $ | 11,282,000 |   |
| Less commissions and fees                                            |   | —                    |     | 381,000                  |   | 28,000 |   | 1,054,000 |   |
| Net revenues                                                         |   | —                    |     | 3,464,000                |   | 1,239,000 |   | 10,228,000 |   |
| Operating expenses:                                                  |   |                      |     |                     |   |   |   |   |   |
| Stations operating expenses, excluding depreciation and amortization |   | 60,000                    |     | 3,793,000                |   | 6,257,000 |   | 11,830,000 |   |
| Impairment loss on broadcast license                                 |   | 84,000                    |     | —                   |   | 84,000 |   | — |   |
| Depreciation and amortization                                        |   | —                    |     | 335,000                  |   | 10,000 |   | 1,037,000 |   |
| Total operating expenses                                             |   | 144,000                   |     | 4,128,000                |   | 6,351,000 |   | 12,867,000 |   |
| Operating loss from discontinued operations                          |   | (144,000                  | )        | (664,000                 | )      | (5,112,000 | ) | (2,639,000 | ) |
| Other income (expenses):                                             |   |                      |     |                     |   |   |   |   |   |
| Gain on sale of radio stations                                       |   | —                    |     | —                   |   | 141,310,000 |   | — |   |
| Loss on disposal of fixed assets                                     |   | —                    |     | —                   |   | (57,000 | ) | — |   |
| Interest expense                                                     |   | (34,000                   | )        | (5,144,000               | )      | (6,926,000 | ) | (15,181,000 | ) |
| Other, net                                                           |   | 31,000                    |     | 7,000                    |   | 173,000 |   | (23,000 | ) |
| Total other income/(expenses)                                        |   | (3,000                    | )        | (5,137,000               | )      | 134,500,000 |   | (15,204,000 | ) |
| Income/(loss) before income tax                                      |   | (147,000                  | )        | (5,801,000               | )      | 129,388,000 |   | (17,843,000 | ) |
| Income tax expense                                                   |   | —                    |     | 500,000                  |   | 4,379,000 |   | 1,500,000 |   |
| Income/(loss) from  discontinued operations                          |   | $                         | (147,000 | )                        | $      | (6,301,000 | ) | $ | 125,009,000 |   | $ | (19,343,000 | ) |

 

On December 23, 2002, theCompany entered into an asset purchase agreement to sell its radio stationsKLYY-FM Arcadia, California, KSYY-FM Fallbrook, California and KVYY-FM Ventura,California to Entravision Communications Corporation (Entravision or EVC) for$100 million in cash and 3,766,478 shares of Entravision’s Class A CommonStock. This sale was completed on April 16, 2003. On January 15, 2003,Entravision and Big City Radio entered into a time brokerage agreementfollowing clearance of the asset sale under federal antitrust law. Under thetime brokerage agreement, Entravision provided programming and related servicesto the stations it purchased from Big City Radio through the date of completionof the asset sale. In addition, Entravision was entitled to revenue andresponsible for certain operating expenses. The Company has recorded the feereceived related to the time brokerage agreement as revenue.

 

On December 30, 2002, theCompany entered into an asset purchase agreement to sell its radio stationsWYNY-FM Briarcliff Manor, New York, WWXY-FM Hampton Bays, New York, WWYY-FMBelvidere, New Jersey and WWZY-FM Long Branch, New Jersey to NassauBroadcasting Holdings, Inc. for $43 million in cash. This sale was completed onApril 2, 2003.

 

On December 31, 2002, theCompany entered into an asset purchase agreement to sell its radio stationsWDEK-FM DeKalb, Illinois, WKIE-FM Arlington Heights, Illinois and WKIF-FMKankakee, Illinois to Spanish Broadcasting Systems, Inc. (SBS) for $22 millionin cash. This sale was completed on April 4, 2003. On December 31, 2002, SBSand Big City Radio entered into a time brokerage agreement. Under theagreement, SBS provided programming and related services to the stations itpurchased from Big City Radio through the date of completion of the asset sale.In addition SBS was entitled to revenue and responsible for certain operatingexpenses. The Company has recorded the fee received related to the timebrokerage agreement as revenue.

 

On January 2, 2003, theCompany entered into an asset purchase agreement to sell its radio stationWXXY-FM Highland Park, Illinois to HBC for $32.875 million in cash. On January 10, 2003, HBC and Big City

 

16

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Radio entered into a time brokerageagreement. Under the agreement, HBC provided programming and related servicesto the stations it was purchasing from Big City Radio until the asset sale wascompleted. In addition HBC was entitled to revenue and was responsible forcertain operating expenses. The Company recorded the fee received related tothe time brokerage agreement as revenue. On May 2, 2003, the Company and HBCamended these agreements resulting in the transfer, on that date, of certainnon-license assets used in the operation of the radio station. HBC paid $29.875million of the $32.875 million purchase price to Big City Radio and theremaining $3 million was due at the earlier of 18 months from May 2, 2003 orthe transfer of the FCC licenses, which took place on July 18, 2003. As the $3million was not contingent on the transfer of the license, the Company includedsuch amount in the gain on sale of the station

 

On September 5, 2003,the Company entered into an asset purchase agreement to sell its radio stationWYXX-FM Morris, Illinois to Grundy County Broadcasters, Inc. (GCB) for $426,000in cash. This sale was completed on November 5, 2003.

 

During June 2002, theCompany discontinued the operation of UPF (which was comprised solely ofpublishing operations), and wrote-off the remaining $108,000 of goodwillassociated with its acquisition. The decision to terminate publishingoperations was made in response to the continued downturn in the music industryadvertising marketplace. As UPF’s publishing operation represented the onlypublishing operations of Big City Radio, Inc., the Company’s consolidatedfinancial statements for all periods presented have been adjusted to reflectthe publishing operations as discontinued operations in accordance with SFASNo.144.

 

Summarizedfinancial information for the discontinued publishing operations is as follows:

 

 
| **Publishing operations**         |   |                      |   |                     |   |     |   |     |   |
|-----------------------------------|--------|---------------------------|--------|--------------------------|--------|----------|--------|----------|--------|
|                              |   | **For the  three months** |   | **For the  nine months** |   |
|                              |   | **ended  September 30,**  |   | **ended  September 30,** |   |
|                              |   | **2003**                  |   | **2002**                 |   | **2003** |   | **2002** |   |
| Net revenues                      |   | $                         | — |                     | $      | 11,000   |   | $        | — |   | $ | 138,000 |   |
| Operating expenses                |   | —                    |   | 75,000                   |   | —   |   | 796,000  |   |
| Loss from discontinued operations |   | $                         | — |                     | $      | (64,000  | )      | $        | — |   | $ | (658,000 | ) |

 

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

 

 
| **Discontinued  operations**                                                 |   |                                         |        |        |   |
|------------------------------------------------------------------------------|--------|----------------------------------------------|-------------|-------------|--------|
|                                                                         |   | **For the nine months  ended September 30,** |        |
|                                                                         |   | **2003**                                     |        | **2002**    |   |
| Cash flows from operating activities:                                        |   |                                         |        |        |   |
| Net income/(loss) from discontinued operations                               |   | $                                            | 125,009,000 |        | $      | (20,001,000 | ) |
| Adjustments to reconcile net loss to net cash used in operating  activities: |   |                                         |        |        |   |
| Depreciation and amortization                                                |   | 10,000                                       |        | 1,037,000   |   |
| Deferred income tax expense                                                  |   | —                                       |        | 1,500,000   |   |
| Non cash interest                                                            |   | 1,441,000                                    |        | 489,000     |   |
| Loss on disposal of fixed assets                                             |   | 57,000                                       |        | 28,000      |   |
| Impairment loss on intangible assets                                         |   | 84,000                                       |        | 108,000     |   |
| Disposal of fixed assets                                                     |   | —                                       |        | 21,000      |   |
| Gain on sale of stations                                                     |   | (141,310,000                                 | )           | —      |   |
| Changes in operating assets and liabilities, net of acquisitions:            |   |                                         |        |        |   |
| (Increase) decrease in assets:                                               |   |                                         |        |        |   |
| Accounts receivable                                                          |   | 1,994,000                                    |        | 1,110,000   |   |
| Prepaid expenses and other current assets                                    |   | 78,000                                       |        | 66,000      |   |
| Other assets                                                                 |   | 158,000                                      |        | (60,000     | )      |
| Increase (decrease) in liabilities:                                          |   |                                         |        |        |   |
| Accounts payable                                                             |   | (124,000                                     | )           | (508,000    | )      |
| Accrued expenses                                                             |   | (412,000                                     | )           | (350,000    | )      |
| Interest payable                                                             |   | (15,983,000                                  | )           | 4,898,000   |   |
| Income tax payable                                                           |   | 404,000                                      |        | —      |   |
| Other liabilities                                                            |   | (369,000                                     | )           | (41,000     | )      |
| Net cash used in operating activities                                        |   | (28,963,000                                  | )           | (11,703,000 | )      |
| Cash flows from investing activities:                                        |   |                                         |        |        |   |
| Purchase of property and equipment                                           |   | —                                       |        | (251,000    | )      |
| Cash received for radio stations sold                                        |   | 195,926,000                                  |        | —      |   |
| Cash received for disposal of fixed assets                                   |   | —                                       |        | 295,000     |   |
| Net cash provided by investing activities                                    |   | 195,926,000                                  |        | 44,000      |   |
| Cash flow from financing activities                                          |   |                                         |        |        |   |
| Repayment of senior discount notes                                           |   | (174,000,000                                 | )           | —      |   |
| Net cash used in financing activities                                        |   | (174,000,000                                 | )           | —      |   |
|                                                                         |   |                                         |        |        |   |
| Cash used in discontinued operations                                         |   | $                                            | (7,037,000  | )           | $      | (11,659,000 | ) |

 

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**7.             Liquidityand Going Concern**

 

As described more fully below, events of defaultarose under the Indenture governing Big City Radio’s Notes and Big City Radioentered into a Forbearance Agreement with the holders of approximately $128million principal amount at maturity of the Notes, although theForbearance Agreement did not prevent the trustee under the Indenture ornote-holders that were not parties to the Forbearance Agreement from pursuingremedies under the Indenture, as provided therein.

 

Since its inception, Big City Radio incurred substantial net operatinglosses primarily due to broadcast cash flow deficits associated with the startup of its radio station operations. As of September 30, 2003, the Company hadcompleted four of five planned asset sale transactions. On November 5, 2003,the final transaction closed (see Note 9). As a result of these transactions, the Company has sold all of itsoperating assets.  As a further resultof the completed asset sales and the realized and unrealized gains in theEntravision Class A common stock since April 16, 2003, the date the Entravisiontransaction was completed, the Company has reported a total estimated taxprovision for Federal and State taxes for the nine months ended September 30,2003 of approximately $6.5 million. As of September 30, 2003, the Company hasmade estimated tax payments of approximately $4 million. This total provisionwas estimated assuming the liquidation of the Entravision Class A common stockat its closing price on September 30, 2003. As of September 30, 2003, theCompany had contractual liabilities to management under employment arrangementsestimated as approximately $2.2 million, approximately $1.04 million of whichrelated to Charles Fernandez. (For a discussion of Mr. Fernandez’ employmentwith the Company, please refer to Note 9.) As a result, Big City expects to generate net operating losses until it is dissolved.

 

Prior to completion of the asset sales describedabove, Big City Radio met its working capital needs primarily throughborrowings, including loans from Big City Radio’s principal stockholders,Stuart and Anita Subotnick, loans under credit facilities, and proceeds fromthe issuance of the senior notes in March 1998. From October 31, 2001 (the dateon which the Company sold its Phoenix radio stations) until the completion ofthe 2003 asset sales, Big City Radio met its working capital needs primarilyfrom the proceeds of the sale of Big City Radio’s Phoenix radio stations.

 

Big City Radio completed a sale of $174 millionaggregate principal amount at maturity of senior notes on March 17, 1998, generatingapproximately $125.4 million of gross proceeds. Big City Radio usedapproximately $32.6 million of these proceeds to repay outstanding indebtednessunder a credit facility with The Chase Manhattan Bank entered into in 1996. BigCity Radio used the proceeds of the senior notes offering to finance theacquisition costs of radio station properties and for general working capitalpurpose.

 

Cash interest commenced accruing on the seniornotes on March 15, 2001 and semi-annual cash interest payments of $9,800,000were required to commence on September 15, 2001. Big City Radio failed to makethe initial semi-annual interest payment when due on September 15, 2001. Inorder to obtain the funds to make this payment within the 30-day grace periodprovided under the indenture, Big City Radio obtained a bridge loan in theamount of $15,000,000 by the assignment of Big City Radio’s revolving creditfacility from the lender thereunder to a new lender. The bridge loan wassecured to the same extent as the revolving credit facility and bore interestat the rate of LIBOR plus 3.0%, or a base rate plus 2.0%, at the option of BigCity Radio. Big City Radio used the net proceeds of the bridge loan to pay thesemi-annual interest on the senior notes due on September 15, 2001, togetherwith applicable additional interest thereon, and to repay $2,235,000 ofprincipal indebtedness and $51,000 of interest incurred under the promissorynote issued to Mr. Subotnick in May 2001. Big City Radio repaid the bridge loanon October 31, 2001 with a portion of the proceeds from the sale of the Phoenixradio station properties, as discussed below. Big City Radio currently does nothave a credit facility.

 

On October 31, 2001, the Company completed the sale of its four Phoenixradio stations to Hispanic Broadcasting Corporation for a cash purchase priceof $34,000,000. The indenture governing the senior notes required Big CityRadio to either reinvest the approximately $18,000,000 of proceeds whichremained from the

 

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saleof the Phoenix stations after the repayment of the bridge loan in broadcastassets within one year from the date of these asset sales or make an offer torepurchase senior notes in an amount equal to the Phoenix sale proceeds thatwere not so reinvested. As described above, Big City Radio used a portion ofthe proceeds to repay indebtedness under the bridge loan and to fund thesemi-annual interest payment due on the senior notes on March 15, 2002. BigCity Radio used the remaining proceeds to fund its ongoing operations, and didnot reinvest such proceeds in broadcast assets. Big City Radio did not make therequired offer to repurchase senior notes, because it did not have sufficientcash resources to consummate such an offer. Its failure to make an offer torepurchase constitutes an event of default under the indenture.

 

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

 

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

 

On November 13, 2002, BigCity Radio, and the holders of approximately $128,000,000 in principal amountof the senior notes acting through an ad hoc committee of noteholders, enteredinto a forbearance agreement. Under the forbearance agreement, the signatorynoteholders agreed to forebear, through January 31, 2003 (later extended toMarch 31, 2003 and subsequently to April 30, 2003), from taking, initiating orcontinuing any action to enforce the Company’s payment obligations under the seniornotes, including, without limitation, any involuntary bankruptcy filing againstthe Company, or against any property, officers, directors, employees or agentsof the Company to collect on or enforce payment of any indebtedness orobligations, or to otherwise assert  anyclaims or causes of action seeking payment under the senior notes, in each casearising under or relating to the payment default or the default arising fromthe failure to make the required offer to repurchase senior notes or other existingdefaults known to the signatory noteholders as of November 13, 2002. Under theforbearance agreement, the Company agreed to conduct the auction of its radiostations in a good faith manner designed to sell the assets as soon aspracticable for net cash consideration in an amount at least sufficient to payall principal of, and accrued and unpaid interest on, the senior notes. If thesignatory noteholders reasonably believed that the Company was not conductingthe auction process in good faith or was not operating or managing the businessand financial affairs of the Company in good faith in the ordinary course andconsistent with past practices, they could have notified the Company in writingand could have elected to terminate the forbearance agreement. The Companyfurther agreed not to pay, discharge or satisfy any liability or obligationexcept for obligations reflected on the Company’s balance sheet as of December31, 2001 or incurred in the ordinary course since that date which were paid,discharged or satisfied for fair and equivalent value in the ordinary course ofbusiness and consistent with past practices. The forbearance agreement did notprevent the trustee under the indenture or noteholders that are not parties tothe forbearance agreement from pursuing remedies under the indenture.

 

Big City Radio and thenoteholders executed an amendment to the forbearance agreement as of January14, 2003, in which the expiration date of the forbearance period was extendedfrom January 31, 2003 through and including March 31, 2003. The forbearanceagreement was further amended to provide that:

 

•                  BigCity Radio would pay the noteholders the net cash proceeds of any asset salewithin five business days after the completion of such asset sale, until suchtime as the noteholders had received cash in an amount equal to all principalof, and accrued and unpaid interest on, the senior notes;

 

•                  theforbearance agreement could be terminated by either Big City Radio or the adhoc committee upon written notice if:

 

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•                  anyparty to the forbearance agreement failed to perform any of its obligations, orbreached any of its representations, covenants or warranties, under theforbearance agreement,

 

•                  BigCity Radio or any party to any asset purchase agreement for any asset salewhich Big City Radio had publicly announced on or before January 6, 2003breached any representation, warranty or covenant in such asset purchaseagreement, and did not cure such breach within ten days, or

 

•                  one ormore of the asset purchase agreements was terminated or modified in anymaterial respect; and

 

•                  BigCity Radio was required to immediately notify the ad hoc committee by writtennotice of:

** **

•                  anybreach by Big City Radio of the forbearance agreement,

** **

•                  anybreach by Big City Radio or any other party of any of the foregoing assetpurchase agreements, whether or not such breach was curable, and

** **

•                  anytermination by Big City Radio or any other party thereto of any such assetpurchase agreements.

 

In addition, the forbearance agreement providedthat it would automatically terminate upon the filing of a voluntary orinvoluntary petition under the insolvency or bankruptcy laws of the UnitedStates or any state with respect to Big City Radio, except that, upon thefiling of an involuntary bankruptcy petition by unaffiliated, arm’s lengthcreditors, Big City Radio would have a period of ten days to obtain thedismissal or withdrawal of such a petition before the forbearance agreementterminated as a result of the filing. In March 2003, a secondamendment to the forbearance agreement was signed extending the forbearanceperiod through and including April 30, 2003. Although Big City Radio and thesignatory noteholders discussed a further extension of the forbearance period,no such extension was executed. Accordingly, if any amounts remain to be paid under the Indenturegoverning the Notes, the signatory noteholders are presently able to exerciseany and all remedies under the Indenture governing the Notes.

 

BetweenDecember 23, 2002 and January 2, 2003, Big City Radio signed asset purchaseagreements to sell eleven of the twelve FCC radio stations that it owned. InMay 2003, the parties amended the HBC asset purchase agreement permitting thetransfer of non-license assets in exchange for an initial payment of $29.875million with a second and final payment of $3.0 million to be made upon theearlier of the transfer of the FCC license (which transfer was effected andwhich payment was received on July 18, 2003) or November 2, 2004. On September 5,2003, the Company entered into an asset purchase agreement to sell its lastremaining radio station, WYXX-FM Morris, Illinois, to Grundy CountyBroadcasters, Inc. (GCB) for  $426,000in cash. This sale was completed on November 5, 2003. Following the completion of these five asset purchase agreements, theCompany has received gross cash proceeds of approximately $198.3 million and3,766,478 shares of Entravision’s Class A Common Stock. Under the senior notes forbearanceagreement described above, Big City Radio is obligated to apply the netproceeds of the asset sales first to pay the principal amount of the seniornotes and all accrued and unpaid interest thereon through the date of suchpayment. The Company paid the trustee for the bondholders approximately$195.4 million, which amount the Company believes is sufficient to pay all ofthe principal of the Notes together with simple interest thereon. The Company held discussions with bondholders andthe trustee to determine whether interest on interest was also due and payable.The Company and the bondholders did not reach any agreement regarding thisissue and it is therefore possible that the Company could be liable to thebondholders in an additional amount of up to approximately $0.75 million. As ofSeptember 30, 2003, the Company has recorded its interest payable consistentwith its assessment of the most likely outcome of this contingency.

 

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OnAugust 22, 2003, Big City Radio’s board of directors unanimously adopted andapproved the plan of dissolution for Big City Radio.  Big City Radio obtained stockholder approval of the plan ofdissolution on November 13, 2003 by the written consent of the holders of a majorityof the voting power of Big City Radio’s common stock in accordance with therequirements of Delaware law and Big City Radio’s certificate ofincorporation.  Under the plan ofdissolution, Big City Radio will:

 

•                  file a certificate ofdissolution with the Delaware Secretary of State;

 

•                  cease conducting normalbusiness operations, except as may be required to wind up its business affairs;

 

•                  determine whether and whento transfer its property and assets, other than cash or cash equivalents, to aliquidating trust;

 

•                  attempt to convert all ofits remaining assets into cash or cash equivalents in an orderly fashion, withsuch exceptions as the board of directors may approve;

 

•                  pay or attempt to adequatelyprovide for the payment of all of its known claims and obligations;

 

•                  establish a contingencyreserve designed to satisfy any additional claims and obligations; and

 

•                  distribute allof its remaining assets, if any, in one or more liquidating distributions on apro rata basis to or for the benefit of its stockholders as of the applicablerecord date or dates.

 

A full discussion of, and the details and implications of, the adoptionof this plan of liquidation, will be sent to shareholders in an InformationStatement pursuant to Section 14(c) of the Securities Exchange Act of 1934.

 

Big City Radio will apply its remaining cash andother liquidity sources, to pay any remaining interest due on the Notes and to pay expenses relating to the assetsales, including employee severance, contractual liabilities to managementunder employment arrangements and tax liabilities, as well as trade payablesand other operating expenses.

 

Big City’s principal sources of liquidity consistof cash on hand, amounts earned on the investment of such cash and the sharesof Entravision Stock received in the sale of the Los Angeles radiostations to Entravision. Big City commenceda program of selling some of the shares of Entravision Stock during the quarterended June 30, 2003. This program continued throughout the quarter endedSeptember 30, 2003 and is continuing currently. As of November 3, 2003, BigCity Radio had sold an aggregate of 1,024,200 shares of Entravision Stock fortotal proceeds of $10,834,000. Big City Radio will continue to seek additionalliquidity by selling shares of the Entravision Stock, although any such saleswill be subject to numerous factors including market conditions and the timingof the Company’s future cash obligations. Big City Radio believes that theseliquidity sources will be sufficient to meet its short-term cash needs.

 

**8.      MarketableSecurities**

 

Marketable securities at September 30, 2003 andDecember 31, 2002 consist of U.S. Treasury, mortgage-backed, and corporate debtequity securities.  Marketablesecurities as of September 30, 2003 are mainly comprised of 2,908,878 shares ofEntravision Class A common stock. These Entravision securities were received onApril 16, 2003 in connection with the sale of the LA stations. Marketablesecurities are stated at fair value which is based on market quotes.  The Company has classified its debtsecurities as available-for-sale with the unrealized holding gain or lossexcluded from earnings and reported as a separate component of othercomprehensive income until realized.

 

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The Entravision securities are classified as tradingsecurities with adjustments to fair value recorded to unrealized gain/(loss) onmarketable securities. Realized gains and losses from the sale of marketablesecurities are determined on a specific identification basis. At September 30,2003, the Company’s Entravision shares had an approximate fair value of$27,634,000, and the Company had recorded a cumulative unrealized gain of$8,756,000.

 

**9.      SubsequentEvents**

 

On November 5, 2003, the Company completed thepreviously announced sale of its last remaining radio station, WYXX-FM, Morris,Illinois to Grundy County Broadcasters, Inc. for an aggregate purchase price of$426,000 in cash.

 

On October 20, 2003, Charles M. Fernandez, President and ChiefExecutive Officer of the Company, sent a letter to the Company alleging thathis employment agreement with the Company had been breached by the Company dueto a substantial reduction in his duties as President and Chief ExecutiveOfficer resulting from the sale of substantially all of the Company’sassets.  The letter further providedthat a failure to cure such breach within ten days would constitute atermination of his employment without cause. Pursuant to his employmentagreement, Mr. Fernandez is entitled to receive a payment in the amount oftwice his annual salary of Five Hundred Twenty Two Thousand Dollars($522,000.00) (or an aggregate payment of One Million Forty Four ThousandDollars (1,044,000.00)) in the event of a termination of his employment withoutcause. The Company and Mr. Fernandez recently reached an agreement pursuant towhich the Company will pay Mr. Fernandez the sum of One Million Dollars($1,000,000.00) in exchange for a release of all claims he may have against theCompany, including any claims pursuant to his employment agreement. Pursuant tosuch agreement Mr. Fernandez’s employment with the Company ceased as of October31, 2003. Mr. Fernandez remains a member of the Company’s Board of Directors.

 

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**Item 2****.  MANAGEMENT’S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

Certain statements set forth below underthis caption constitute “Forward-Looking Statements” within the meaning ofSection 27A of the Securities Act of 1933, as amended (the “Securities Act”)and Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”).  See “Special NoteRegarding Forward-Looking Statements” for a discussion of considerationsrelating to such statements.

 

        **Recent Developments**

 

Since its inception, BigCity Radio has incurred substantial net operating losses primarily due tobroadcast cash flow deficits associated with the start up of its radio stationoperations. As of March 31, 2003, Big City Radio had incurred a cumulative cashflow deficit of approximately $165 million and a cumulative net loss ofapproximately $144 million. During the quarter ended June 30, 2003, Big CityRadio sold eleven of its twelve radio stations in transactions resulting froman auction process that it announced on November 4, 2002.  Between December 24, 2002 and January 2,2003, Big City Radio signed four separate definitive asset purchase agreementsto sell eleven of its twelve FCC FM licenses. Big City Radio entered into theseagreements to raise the funds necessary to pay all principal of, and accruedand unpaid interest on, its 111⁄4% Senior Discount Notes (“the Notes” or “seniornotes”) due 2005. Noteholders had accelerated payment of the senior notes as aresult of defaults by Big City Radio under the Notes. None of thesetransactions were conditioned on the completion of any other transaction. InApril 2003, the Company completed the sale of all of the stations that were thesubject of these agreements, other than radio station WVIV-FM (formerlyWXXY-FM) Highland Park, Illinois, which was sold to HBC for  $32.875 million in cash. In May 2003, theCompany amended its agreement with HBC, as a result of which it received $29.875million for the non-FCC license assets. On July 18, 2003, HBC paid theremaining $3 million and the Company transferred the FCC license. On September5, 2003, the Company entered into an asset purchase agreement to sell its lastremaining radio station, WYXX-FM Morris, Illinois, to Grundy CountyBroadcasters, Inc. for  $426,000 incash. This sale was completed on November 5, 2003.

 

Big City Radio’s board ofdirectors unanimously approved the asset sales and determined that the saleswere in the best interests of Big City Radio and its stockholders andcreditors. Big City Radio also obtained stockholder approval of the asset salesby the written consent of the holders of a majority of the voting power of BigCity Radio common stock in accordance with the requirements of Delaware law andBig City Radio’s certificate of incorporation. As is described more fully below, events of default exist under theIndenture governing the Company’s Notes and the Company entered into aForbearance Agreement with the holders of approximately $128 million principalamount at maturity of the Notes, although the Forbearance Agreement didnot prevent the trustee under the Indenture or note-holders that were notparties to the Forbearance Agreement from pursuing remedies under theIndenture, as provided therein, including aninvoluntary bankruptcy filing. Big City Radio and the noteholders executed anamendment to the forbearance agreement as of January 14, 2003, in which theparties extended the expiration date of the forbearance period from January 31,2003 through and including March 31, 2003. The parties executed a secondamendment to the forbearance agreement extending the forbearance period throughand including April 30, 2003. Although Big City Radio and the signatorynoteholders discussed a further extension of the forbearance period, no suchextension was executed. Accordingly, if any amounts remain to be paidunder the Indenture governing the Notes, thesignatory noteholders are presently able to exercise any and all remedies underthe Indenture governing the Notes.

 

OnAugust 22, 2003, Big City Radio’s board of directors unanimously adopted andapproved the plan of dissolution for Big City Radio.  Big City Radio obtained stockholder approval of the plan ofdissolution on November 13, 2003 by the written consent of the holders of amajority of the voting power of Big City Radio’s common stock in accordancewith the requirements of Delaware law and Big City Radio’s certificate ofincorporation.  Under the plan ofdissolution, Big City Radio will:

 

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•                  file a certificate ofdissolution with the Delaware Secretary of State;

 

•                  cease conducting normalbusiness operations, except as may be required to wind up its business affairs;

 

•                  determine whether and whento transfer its property and assets, other than cash or cash equivalents, to aliquidating trust;

 

•                  attempt to convert all ofits remaining assets into cash or cash equivalents in an orderly fashion, withsuch exceptions as the board of directors may approve;

 

•                  pay or attempt to provideadequately for the payment of all of its known claims and obligations;

 

•                  if determined to beappropriate, establish a contingency reserve designed to satisfy any additionalclaims and obligations; and

 

•                  distribute all of its remainingassets, if any, in one or more liquidating distributions on a pro rata basis toor for the benefit of its stockholders as of the applicable record date ordates.

 

Afull discussion of, and the details and implications of, the adoption of thisplan of liquidation, will be sent to shareholders in an Information Statementpursuant to Section 14(c) of the Securities Exchange Act of 1934.

 

Whilethe Company has some sources of liquidity, namely cash on hand of approximately$457,000, and marketable securities with a value of approximately $29,893,000as of September 30, 2003, it has future cash obligations including a possiblefinal payment to the bondholders, unpaid expenses relating to the asset salesincluding professional fees, employee severance and contractual payments tomanagement under employment arrangements, Federal and State tax liabilitiesresulting from the sale of the radio stations and the realized and unrealizedgains on the Entravision Class A common stock received in one of the asset sales,and trade payables. Although the Company believes it will have sufficientresources, there can be no assurances that the future sales of the marketablesecurities will enable the Company to meet these obligations.

 

Commencing in 2002, Big CityRadio’s Class A Common Stock, which is listed on the American Stock Exchange(the”AMEX” or the “Exchange”), was subject to a listing review and relatedproceedings by the Exchange. On October 20, 2003, the Company receivednotification from the AMEX that based upon its review of the Company’sQuarterly Report on SEC Form 10-Q for the period ended June 30, 2003, it hadconcluded that Big City Radio had regained compliance with all applicable AMEXcontinued listing requirements. The Exchange stated that it may initiatedelisting proceedings should Big City Radio fail to comply with AMEX continuedlisting standards in the future.  Inconnection with the Company’s announced plan of liquidation and dissolution.  Big City Radio intends to delist its Class Acommon stock from the AMEX on the date that Big City Radio files itscertificate of dissolution with the Delaware Secretary of State, which isexpected to occur on or about 20 days after Big City Radio’s informationstatement on Schedule 14(c) is first mailed to stockholders.  There will be no further trading of theClass A common stock on the AMEX after such stock is delisted.

 

**General**

 

Upuntil the quarterly period ended March 31, 2003, Big City Radio owned andoperated radio stations in three of the largest radio markets in the UnitedStates. During the quarter ended June 30, 2003, the Company sold eleven of itstwelve FCC licenses, thereby terminating all operations in New York and LosAngeles, and significantly curtailing operations in Chicago. In September 2003,the Company announced the signing of a definitive asset purchase agreement tosell its last remaining radio station in the Chicago area, which sale was

 

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completed on November 5,2003. Big City Radio’s radio broadcast properties were located in or adjacentto major metropolitan markets and utilized innovative engineering techniquesand low-cost, ratings-driven operating strategies to develop these propertiesinto metropolitan radio stations.

 

BigCity Radio’s financial results were dependent on a number of factors, includingthe general strength of the local and national economies, local marketcompetition, the relative efficiency and effectiveness of radio broadcastingcompared to other advertising media, governmental regulation and policies, andBig City Radio’s ability to provide popular programming.

 

BigCity Radio’s primary source of revenue was the sale of advertising. Eachstation’s total revenue was determined by the number of advertisements aired bythe station and the advertising rates that the station is able to charge. Untilit discontinued its publishing operations in June 2002, Big City Radio derivedpublishing revenues principally from the sale of advertising announcements andfrom contract graphic design projects.

 

BecauseBig City Radio’s strategy involved developing brand new metropolitan area radiostations, the initial revenue base was zero and subject to factors other thanratings and radio broadcasting seasonality. After a station start-up period, asis typical in the radio broadcasting industry, Big City Radio’s first calendarquarter generally would produce the lowest revenues for the year, and thefourth quarter generally would produce the highest revenues for the year. BigCity Radio’s operating results in any period were affected by the incurrence ofadvertising and promotional expenses that do not produce commensurate revenuesin the period in which the expenses were incurred.

 

Ineach of its markets, Big City Radio sought to maximize the operating results ofits broadcast properties by selecting the most competitively viable formats,engaging experienced and talented management, and optimizing the signalcoverage of its transmitting facilities.

 

Theindependent auditor’s reports on Big City Radio’s financial statements for eachof the last three fiscal years have stated that Big City Radio’s recurringlosses from operations, negative cash flows from operations, stockholders’deficiency and default under the terms of its senior notes raise substantialdoubt about Big City Radio’s ability to continue as a going concern. Because ofthe severe constraints on its liquidity, defaults arose under the Indenturegoverning the Company’s $174,000,000 principal amount of senior notes. As aresult, holders of the requisite amount of the notes declared the principal andinterest on the senior notes to be due and payable, and Big City Radio agreedwith the holders of approximately 75% of the notes to conduct an auction saleof substantially all of its operating properties as soon as practicable for netcash consideration in an amount at least sufficient to pay all principal of,and accrued and unpaid interest on, the senior notes. In the quarter ended June30, 2003, Big City Radio sold eleven of its twelve FCC radio station licenses.During the quarter ended September 30, 2003, the Company announced itsagreement to sell its final radio station, WYXX-FM, Morris, Illinois, whichsale was completed on November 5, 2003. As of the date of this report, Big CityRadio has collected approximately $198.3 million in cash and 3,766,478 sharesof Entravision Stock from these sales. TheCompany has paid the trustee for the bondholders approximately $195.4 million,which amount the Company believes is sufficient to pay all of the principal ofthe Notes together with simple interest thereon.  The Company held discussions with bondholders and the trustee todetermine whether interest on interest was also due and payable. The Company andthe bondholders did not reach any agreement regarding this issue and it istherefore possible that the Company could be liable to the bondholders in anadditional amount of up to $0.75 million. Asof September 30, 2003, the Company has recorded its interest payable consistentwith its assessment of the most likely outcome of this contingency.

 

Themajority of Big City Radio’s broadcast properties were in various stages ofdevelopment, either as a result of recently granted or pending requests to theFCC for enhancements or upgrades or as a result of having recently changedformats. As a result, since its inception, Big City Radio incurred substantialnet operating losses primarily due to broadcast cash flow deficits associatedwith the start up of its radio station operations. Big City Radio’s originalbusiness plan envisioned that Big City Radio would generate sufficient cashflows from operations to fund its operating requirements and capital needs andto service interest payments on the senior notes when those

 

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interest payments first became due. Although Big CityRadio sold the senior notes in March 1998, the senior notes were issued at anoriginal issue discount, and no note interest was payable in cash untilSeptember 15, 2001. Big City Radio’s inability to generate sufficient cashflows from operations to meet all of its cash needs was attributable to anumber of factors, including an adverse competitive environment, a downturn inthe demand for music industry advertising, which resulted in discontinuation ofthe internet and publishing businesses, and the reduction in listening levelsand resulting ratings for some of Big City Radio’s original station formats.Although a change in station formats produced an improvement in net revenues, theenhanced revenues were not sufficient in most markets to offset stationoperating expenses and other costs.

 

BigCity Radio’s liquidity crisis was precipitated by its lack of ability togenerate operating income and its obligation to make semi-annual interestpayments of $9.8 million on its senior notes beginning on September 15, 2001.Although it was able to make the first two such interest payments, Big CityRadio had to fund those payments from the proceeds of additional borrowings andthe sale of its four Phoenix stations in October 2001. To address its liquidityproblems, Big City Radio sought to reduce expenses by decreasing capitalexpenditures and expenditures for promotional and programming activities and byreducing corporate, general and administrative expenses through employeeterminations. These measures to decrease operating expenses further limited BigCity Radio’s ability to compete effectively during a time of industry-wideconsolidation and the exposure of smaller, less well-capitalized companies tocontinued deterioration in the national and regional advertising markets.

 

As noted elsewhere inthis report, the results of all radio station and publishing operationsdiscontinued in 2002 have been classifiedas *lossesfrom discontinued operations*.

 

**ThreeMonths Ended September 30, 2003 Compared with Three Months Ended September 30,2002**

 

*Corporate,general and administrative expenses* for the three months endedSeptember 30, 2003 were $1,276,000 compared with $1,094,000 for the threemonths ended September 30, 2002, an increase of $182,000, or 16.6%. Theincrease was primarily attributable to the following factors:

 

•                  higher legal andprofessional fees expense related to the sale of stations and ongoing legaldefense costs; and

 

•                  higher insurance costs.

 

*Depreciation and amortization expenses* for the threemonths ended September 30, 2003 were $6,000 compared with $30,000 for the threemonths ended September 30, 2002, a decrease of $24,000, or 80.0%. The decreasewas primarily attributable to the disposal of $245,000 of fixed assets relatedto the Miami facility.

 

*Interestincome*for the three months ended September 30, 2003 was $7,000 compared to$23,000 for the three months ended September 30, 2002, which represented adecrease of $16,000 or 69.6%. This decrease was primarily attributable to alower average balance of investments in the Company’s marketable securitiesexcluding Entravision Class A common stock.

 

*Gain on sales of marketable securities* for the threemonths ended September 30, 2003 was $2,965,000. During the quarter endedSeptember 30, 2003, the Company sold 701,000 shares of Entravision Class Acommon stock to generate cash which it used primarily to pay interest on itsSenior Discount Notes, and estimated Federal and State taxes. The realized gainon these sales was $2,965,000. There was no such gain for the three monthsended September 30, 2002.

 

*Unrealized loss on marketable securities* for the threemonths ended September 30, 2003 was $8,788,000. This loss represents thereduction in the market value of the unsold Entravision Class A Common Stock atSeptember 30, 2003 compared to its fair value at June 30, 2003. On April 16,2003, the Company sold its LA stations to Entravision and received $100 millionin cash and 3,766,478 shares of Entravision Class A common

 

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stock. The Company has classified these securities as trading securities. As ofSeptember 30, 2003, the Company had 2,908,878 shares of Entravision Class Acommon stock valued at $9.50 per share. At June 30, 2003, the Company had3,609,878 shares of Entravision Class A Common Stock valued at $11.35 pershare.

 

*Income tax benefits*for the three months endedSeptember 30, 2003 was $3,447,000, compared to $0 for the three months endedSeptember 30, 2002. This deferred tax benefit for the three months endedSeptember 30, 2003, comprises a tax expense on the gain on sales of marketablesecurities, offset by a tax benefit for the unrealized loss of $8,788,000 onthe remaining 2,908,878 shares of Entravision Class A common stock.

 

*Loss from discontinued operations*for the threemonths ended September 30, 2003 was $147,000 compared with $6,365,000 for thethree months ended September 30, 2002. This change was primarily attributable to (i) decreased stationoperating expenses and depreciation and amortization, due to the sales ofeleven of the twelve radio stations during the second quarter of 2003, (ii)decreased interest expense resulting from the repayment of the senior notes duringthe second quarter of 2003, and (iii) the absence of the $500,000 income taxcharge occurred in the 2002 quarter relating to the adoption of SFAS 142 (seeNote 1 to the consolidated financial statements). Partially offsetting theseitems was, (i) the absence of net revenues in the three months ended September30, 2003, and (ii) an impairment loss of $84,000 on broadcast license duringthe three months ended September 30, 2003.

 

*Net loss* for the threemonths ended September 30, 2003 was $3,703,000 compared with $7,468,000 for thethree months ended September 30, 2002, which represented a decrease of$3,765,000 or 50.4%. This change was primarily attributable to a reduction of$6,218,000 in the loss from discontinued operations in the three months ended September30, 2003 compared to the corresponding period of 2002, and income tax benefitsof $3,447,000 for the three months ended September 30, 2003, offset by netrealized and unrealized losses on the Entravision Class A Common Stockmarketable securities of $5,823,000 in the three months ended September 30,2003, which securities the Company did not own in the corresponding period of2002.

 

**Nine MonthsEnded September 30, 2003 compared with Nine Months Ended September 30, 2002**

 

*Corporate,general and administrative expenses* for the nine months endedSeptember 30, 2003 were $5,963,000 compared with $3,010,000 for the nine monthsended September 30, 2002, an increase of $2,953,000, or 98.1%. The increase wasprimarily attributable to the following factors:

 

•                  higher legal andprofessional fees expense related to the sale of stations and the defense andsettlement of lawsuits;

 

•                  higher accounting and filingfees expense related to the sale of stations; and

 

•                  higher insurance costs

 

*Depreciationand amortization expenses* for the nine months ended September 30, 2003were $56,000 compared with $90,000 for the nine months ended September 30,2002, a decrease of $34,000, or 37.8%. The decrease was primarily attributableto the disposal of $245,000 of fixed assets related to the Miami facility.

 

*Interestincome*for the nine months ended September 30, 2003 was $15,000 compared to$128,000 for the nine months ended September 30, 2002, which represented adecrease of $113,000 or 88.3%. This decrease was primarily attributable to alower average balance of investments in marketable securities, excluding theEntravision Class A Common Stock.

 

*Loss on Disposal of fixed asset*for the ninemonths ended September 30, 2003 was $245,000. In May 2003, the Companyterminated its Miami facility lease agreement and abandoned the leaseholdimprovements related to this facility. The loss on this disposal was $245,000for the nine months ended September 30, 2003.

 

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*Gain on sales of marketable securities* for the ninemonths ended September 30, 2003 was $3,631,000. For the nine months endedSeptember 30, 2003, the Company sold 857,600 shares of Entravision Class Acommon stock to generate cash which it used primarily to pay interest on itssenior discount notes, and estimated Federal and State taxes. The realized gainon these sales was $3,631,000. There was no such gain for the nine months endedSeptember 30, 2002.

 

*Unrealized gain on marketable securities* for the ninemonths ended September 30, 2003 was $8,756,000. On April 16, 2003, the Companysold its LA stations to Entravision and received $100 million in cash and3,766,478 shares of Entravision Class A common stock valued at $6.49 pershare.  The Company has classified thesesecurities as trading securities. As of September 30, 2003, the Company has2,908,878 shares of Entravision Class A common stock valued at $9.50 per share,and at such date, the unrealized gain on these securities was $8,756,000.

 

*Income tax expense* for the nine months endedSeptember 30, 2003 was $2,141,000, compared to $8,631,000 for the nine monthsended September 30, 2002, which represented a decrease of $6,490,000 or 75.2%.The deferred tax expense for the nine months ended September 30, 2003, relatesto the gain on sale of marketable securities and a tax provision for theunrealized gain of $8,756,000 on the remaining 2,908,878 shares of EntravisionClass A common stock which are treated as trading securities and reported atfair value. On January 1, 2002, the Company adopted provision of SFAS 142 andstopped amortizing its FCC broadcast license as these intangible assets weredetermined to have an indefinite useful life. Accordingly, deferred taxliabilities related to these intangible assets could no longer be utilized tosupport the realization of deferred tax benefits. The Company restated itsfiscal 2002 quarterly results to record an additional deferred tax valuationallowance of approximately $8.6 million during the quarter ended March 31,2002. An additional tax expense relating to the increase in the deferred taxliability of approximately $1.5 million for the nine months ended September 30,2002 was recorded and reported under discontinued operations.

 

*Income from discontinued operations*for the ninemonths ended September 30, 2003 was $125,009,000 compared with a loss of  $20,001,000 for the nine months endedSeptember 30, 2002 This change was primarily attributable to (i) gain on saleof stations of $141,310,000 during the second quarter of 2003, and (ii)decreased interest expense resulting from the repayment of the senior notesduring the second quarter of 2003. Partially offsetting these items was anincreased income tax expense of $2,879,000, and costs associated with the radiostation sales of $3,400,000, mainly related to lease termination and employeecosts, during the nine months ended September 30, 2003.  It should be noted that under the timebrokerage agreements, which were in place during the nine months period endedSeptember 30, 2003 up to the date of sale of the Los Angeles and Chicago radiostations, the Company recorded fees received as revenue. In addition, stationrevenues were generated by third parties and such parties were responsible forsome operating expenses. These third party station revenues and expenses havebeen excluded from the Company’s results.

 

*Net income* for the ninemonths ended September 30, 2003 was $129,160,000 compared with a loss of$31,591,000 for the nine months ended September 30, 2002. This change wasprimarily attributable to the gain on sale of stations, lower interest expense,lower income tax expense, the gain on sale of marketable securities and theunrealized gain on marketable securities for the nine months ended September30, 2003, partially offset by increased corporate, general and administrativeexpenses, and a loss on disposal of fixed assets in the nine months endedSeptember 30, 2003 when compared to the nine months ended September 30, 2002.

 

**Liquidityand Capital Resources**

 

As of September 30, 2003, Big City Radio had available approximately$30.4 million of cash, cash equivalents and marketable securities. This amountincluded 2,908,878 shares of Entravision Class A common stock with a closingmarket valuation of $27,634,000 at that date. The independent auditors’ reporton Big City Radio’s financial statements for the year ended December 31, 2002notes that recurring losses from operations

 

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andnegative cash flows from operations raise substantial doubt about Big CityRadio’s ability to continue as a going concern. As discussed below, because ofthe severe constraints on its liquidity, Big City Radio failed to make paymentsdue on the senior notes. As a result, holders of the requisite amount of thenotes declared the principal and interest on the senior notes to be due andpayable, and Big City Radio agreed with the holders of approximately 75% of thenotes to conduct an auction sale of its radio stations as soon as practicablefor net cash consideration in an amount at least sufficient to pay allprincipal of, and accrued and unpaid interest on, the senior notes. During thequarter ended September 30, 2003, the Company announced it had signed adefinitive asset purchase agreement to sell its last remaining radio station,WYXX-FM, Morris, Illinois, for a cash consideration of $426,000. This sale wascompleted on November 5, 2003. Also in the quarter ended September 30, 2003,the Company received the final payment of $3 million on the previously reportedsale of WXXY-FM, Highland Park to HBC. In the quarter ended June 30, 2003, BigCity Radio reported the completion of its previously announced sales of elevenof its twelve FCC radio licenses. Big City Radio has received $198.3 million incash and 3,766,478 shares of Entravision Class A common stock in respect ofthese asset sales. To date, the Company has paid the trustee for thebondholders approximately $195.4 million, which amount the Company believes issufficient to pay all the principal of the Notes together with simple interestthereon.

 

Since its inception, Big City Radio incurred substantial net operatinglosses primarily due to broadcast cash flow deficits associated with the startup of its radio station operations. As of March 31, 2003, Big City Radio hadincurred a cumulative cash flow deficit of approximately $165 million and acumulative net loss of approximately $144 million. During the quarter endedSeptember 30, 2003, the Company announced the agreement to sell its lastremaining radio station, which sale was completed on November 5, 2003. Big CityRadio also collected the remaining cash consideration of $3 million on apreviously reported asset sale.  As aresult of these transactions, the Company has sold all of its radio stationsassets. As a further result of the completed asset sales and the realized andunrealized gains in the Entravision Class A common stock since April 16, 2003,the date the Entravision transaction was completed, the Company has reported atotal estimated tax provision for Federal and State taxes of approximately $6.5million. This total provision was estimated assuming the liquidation of theEntravision Class A common stock at its closing price on September 30, 2003. Asof September 30, 2003, the Company has made estimated tax payments ofapproximately $4 million. Big City Radio also has obligations for employeeseverance and contractual liabilities to management under employmentarrangements. As a result, Big City Radioexpects to generate net losses until it is dissolved.

 

Prior to the completion of the asset salesdescribed above, the Company met its working capital needs primarily throughborrowings, including loans from the Company’s principal stockholders, Stuartand Anita Subotnick, loans under credit facilities, and proceeds from theissuance of the senior notes in March 1998. From October 31, 2001 to thecompletion of the asset sales, the Company has met its working capital needsprimarily from the proceeds of the sale of the Company’s Phoenix radio stations,which it completed on that date.

 

The Company has entered into an employmentcontract with an officer. The minimum payment as of September 30, 2003 underthis contract was $43,500.

 

The Company has never paid cash or stockdividends. Although the Board of Directors of the Company has not yet made anydetermination, it is possible that the Board could determine to make one ormore liquidating or non-liquidating distributions. See *Application of Asset SaleProceeds; Future Operations of Big City Radio* below.

 

*Cash FlowsFrom Operating Activities*

 

In the nine months ended September 30, 2003, cash provided byoperations related primarily to income from continuing operations due to therealized gain on sale of marketable securities, and slower payments to vendorsassociated with the sale of the radio stations. This increase was partiallyoffset by increased payments to creditors, increased insurance prepayment, andcash used in corporate, general and administrative activities.  In the nine months ended September 30, 2002,cash used in operations related primarily to corporate, general and

 

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administrative activities, and to payments to creditors, net ofcollection of receivables, related to the Phoenix radio stations which theCompany sold in October 2001.

 

*Cash FlowsFrom Investing Activities*

 

Inthe nine months ended September 30, 2003, the Company sold $8,808,000 ofmarketable securities to generate cash for general working capital purposes,including estimated tax payments and interest on the Notes. In the nine monthsended September 30, 2002, the Company sold $11,921,000 of marketable securitiesto generate cash for general working capital purposes and payments on theNotes.

 

*Cash FlowsFrom Financing Activities*

 

Big City Radio completed asale of $174,000,000 aggregate principal amount at maturity of 11 1/4% seniordiscount notes due 2005 on March 17, 1998, generating approximately$125,400,000 of gross proceeds. Big City Radio used approximately $32,600,000 ofthese proceeds to repay outstanding indebtedness under a credit facility withThe Chase Manhattan Bank entered into in 1996. Big City Radio used the proceedsof the senior notes offering to finance the acquisition costs of radio stationproperties and for general working capital purposes.

 

The senior notes were issued at an original issue discount and accretedin value until March 15, 2001 at a rate of 11 1/4% per annum,compounded semi-annually to an aggregate principal amount of $174,000,000. Cashinterest began accruing on the senior notes on March 15, 2001 at a rate of 11 1/4%per annum and was payable in cash semi-annually, each March 15 and September15, commencing with September 15, 2001 and through and including March 15,2005. The senior notes were due to mature on March 15, 2005, but could beredeemed at the option of Big City Radio, in whole or in part, at a redemptionprice of 105.625%, 102.813% or 100.000% if redeemed during the 12-month periodcommencing on March 15, 2002, March 15, 2003 and on and after March 15, 2004,respectively. The Company has paid the trustee for the bondholdersapproximately $195.4 million, which amount the Company believes is sufficientto pay all of the principal of the Notes together with simple interest thereon.  The Company held discussions withbondholders and the trustee to determine whether interest on interest was alsodue and payable. The Company and the bondholders did not reach any agreementregarding this issue and it is therefore possible that the Company could beliable to the bondholders in an additional amount of up to $0.75 million.  As ofSeptember 30, 2003, the Company has recorded its interest payable consistentwith its assessment of the most likely outcome of this contingency.

 

Holders of the senior noteshad the right to require Big City Radio to repurchase their senior notes upon a“change of control” of Big City Radio, as defined in the indenture governingthe senior notes, at a price equal to 101% of the principal amount of suchnotes. A “change of control” for purposes of the senior notes was deemed tooccur:

 

•                       when any personother than Stuart and Anita Subotnick, officers and members of Big City Radio’smanagement as of March 17, 1998 and their respective family members, relativesand trusts becomes the beneficial owner of more than 35% of the total votingpower of Big City Radio’s capital stock and the foregoing permitted holders ownin the aggregate a lesser percentage of such voting power and do not have theright or ability to designate for election a majority of the board ofdirectors; 

 

•                       upon specifiedchanges in the composition of the board of directors; 

 

•                       upon theoccurrence of a sale, lease, transfer, conveyance or other disposition to anyperson of all or substantially all of the assets of Big City Radio taken as awhole; or 

 

•                       upon theadoption by the stockholders of a plan for the liquidation or dissolution ofBig City Radio. 

 

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Paymentsunder the senior notes were guaranteed on a senior unsecured basis by Big CityRadio’s “restricted subsidiaries,” as defined in the indenture governing thesenior notes. As of September 30, 2003, all of Big City Radio’s subsidiarieswere restricted subsidiaries. The senior notes contained financial andoperational covenants with which Big City Radio and its restricted subsidiarieshad to comply, including covenants restricting the incurrence of additionalindebtedness, investments, payment of dividends on and redemption of capitalstock, redemption of specified subordinated obligations, sales of assets andthe use of proceeds therefrom, transactions with affiliates, creation andexistence of liens, the types of businesses in which Big City Radio couldoperate, asset swaps, distributions from restricted subsidiaries, sales ofcapital stock of restricted subsidiaries, and consolidations, mergers andtransfers of all or substantially all of Big City Radio’s assets. The seniornotes contained customary events of default, including payment defaults and defaultin the performance of other covenants, specified bankruptcy defaults, crossdefaults to other indebtedness and to judgments, and failure of a subsidiaryguarantee to be in full force and effect.

 

Inconnection with the consummation of the senior notes offering, Big City Radioentered into a revolving credit facility providing for up to $15,000,000 ofborrowings based upon a multiple of the positive rolling four-quarter broadcastcash flow of Big City Radio’s stations and subject to compliance with specifiedfinancial and operational covenants. The revolving credit facility was tomature on March 17, 2003. At December 31, 2000, Big City Radio was incompliance with all material covenants and restrictions under the revolvingcredit facility, with the exception that, in violation of one such covenant,because the independent auditors’ report on Big City Radio’s financialstatements for the year ended December 31, 2000 included a “going concern”paragraph. In April 2001, the lender declined to permit Big City Radio to drawunder the revolving credit facility due to Big City Radio’s violation of theforegoing covenant. As a result of its inability to draw under the revolvingcredit facility, Big City Radio issued a promissory note in May 2001 to borrowup to $5,000,000 from Stuart Subotnick, a principal stockholder, in order tomeet its short-term working capital needs. The amount outstanding under thisnote, which was payable on demand, bore interest equal to JP Morgan ChaseBank’s prime rate plus 2.0%.

 

Cashinterest commenced accruing on the senior notes on March 15, 2001 andsemi-annual cash interest payments of $9,800,000 were required to commence onSeptember 15, 2001. Big City Radio failed to make the initial semi-annualinterest payment when due on September 15, 2001. In order to obtain the fundsto make this payment within the 30-day grace period provided under theindenture, Big City Radio obtained a bridge loan in the amount of $15,000,000by the assignment of Big City Radio’s revolving credit facility from the lenderthereunder to a new lender. The bridge loan was secured to the same extent asthe revolving credit facility and bore interest at the rate of LIBOR plus 3.0%,or a base rate plus 2.0%, at the option of Big City Radio. Big City Radio used thenet proceeds of the bridge loan to pay the semi-annual interest on the seniornotes due on September 15, 2001, together with applicable additional interestthereon, and to repay $2,235,000 of principal indebtedness and $51,000 ofinterest incurred under the promissory note issued to Mr. Subotnick in May2001. Big City Radio repaid the bridge loan on October 31, 2001 with a portionof the proceeds from the sale of the Phoenix radio station properties, asdiscussed below. Big City Radio currently does not have a credit facility.

 

OnOctober 31, 2001, Big City Radio completed the sale of its four Phoenix radioproperties to Hispanic Broadcasting Corporation for a cash price of$34,000,000. The indenture governing the senior notes required Big City Radioto either reinvest the approximately $18,000,000 of proceeds which remainedfrom the sale of the Phoenix stations after the repayment of the bridge loan inbroadcast assets within one year from the date of these asset sales or make anoffer to repurchase senior notes in an amount equal to the Phoenix saleproceeds that were not so reinvested. As described above, Big City Radio used aportion of the proceeds to repay indebtedness under the bridge loan and to fundthe semi-annual interest payment due on the senior notes on March 15, 2002. BigCity Radio used the remaining proceeds to fund its ongoing operations, and didnot reinvest such proceeds in broadcast assets. Big City Radio did not make therequired offer to repurchase senior notes, because it did not have sufficientcash resources to consummate such an offer. Its failure to make an offer torepurchase constituted an event of default under the indenture.

 

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TheCompany failed to make the semi-annual interest payment of $9,800,000 due onthe senior notes on September 15, 2002. Big City Radio’s cash resources wereinsufficient to enable it to make the semi-annual interest payment within the30-day grace period provided under the indenture. The grace period expired onOctober 15, 2002, thereby resulting in an additional event of default under theindenture. On October 17, 2002, pursuant to the indenture, holders of thesenior notes delivered an acceleration notice to the Company declaring theprincipal and interest on all of the senior notes to be immediately due andpayable.

 

TheCompany evaluated its strategic alternatives and the most efficient use of itscapital. These alternatives included the sale of its broadcast assets and,depending on market conditions, debt and/or equity financing, and purchasing,restructuring, recapitalizing, refinancing or otherwise retiring some of itssecurities in the open market or by other means. In each case, these strategicalternatives were subject to the restrictions contained in the indenturegoverning the senior notes. On November 4, 2002, Big City Radio announced ithad retained Jorgenson Broadcast Brokerage to market and conduct an auctionsale of all of its radio stations. As discussed below, proceeds from the salesof the stations have been and will be applied first to repay the senior notes.

 

BigCity Radio, the Subsidiary Guarantors of the senior notes, and the holders ofapproximately $128,000,000 in principal amount of the senior notes actingthrough an ad hoc committee of noteholders, entered into a forbearanceagreement on November 13, 2002. Under the forbearance agreement, the signatorynoteholders agreed to forbear, through January 31, 2003 (later extended toMarch 31, 2003 and again subsequently to through and including April 30, 2003),from taking, initiating or continuing any action to enforce Big City Radio’spayment obligations under the senior notes, including, without limitation, anyinvoluntary bankruptcy filing against Big City Radio, or against any property,officers, directors, employees or agents of Big City Radio to collect on orenforce payment of any indebtedness or obligations, or to otherwise assert anyclaims or causes of action seeking payment under the senior notes, in each casearising under or relating to the payment default or the default arising fromthe failure to make the required offer to repurchase senior notes or otherexisting defaults known to the signatory noteholders as of November 13, 2002.Under the forbearance agreement, Big City Radio agreed to conduct the auctionof its radio stations in a good faith manner designed to sell the assets assoon as practicable for net cash consideration in an amount at least sufficientto pay all principal of, and accrued and unpaid interest on, the senior notes.If the signatory noteholders reasonably believed that Big City Radio was notconducting the auction process in good faith or was not operating or managingthe business and financial affairs of Big City Radio in good faith in theordinary course and consistent with past practices, they could notify Big CityRadio in writing and could have elected to terminate the forbearance agreement.Big City Radio further agreed not to pay, discharge or satisfy any liability orobligation except for obligations reflected on Big City Radio’s balance sheetas of December 31, 2001 or incurred in the ordinary course since that datewhich were paid, discharged or satisfied for fair and equivalent value in theordinary course of business and consistent with past practices. The forbearanceagreement did not prevent the trustee under the indenture or noteholders thatwere not parties to the forbearance agreement from pursuing remedies under theindenture.

 

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

 

•                  Big City Radio would pay thenoteholders the net cash proceeds of any asset sale within five business daysafter the completion of such asset sale, until such time as the noteholdershave received cash in an amount equal to all principal of, and accrued andunpaid interest on, the senior notes; 

 

•                  the forbearance agreementcould be terminated by either Big City Radio or the ad hoc committee uponwritten notice if: 

 

•                       any party tothe forbearance agreement failed to perform any of its obligations, or breachedany of its representations, covenants or warranties, under the forbearanceagreement, 

 

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•                       Big City Radioor any party to any asset purchase agreement for any asset sale which Big CityRadio had publicly announced on or before January 6, 2003, breached anyrepresentation, warranty or covenant in such asset purchase agreement, and didnot cure such breach within ten days, or 

 

•                       one or more ofthe asset purchase agreements was terminated or modified in any material respect;and 

 

•                  Big City Radio had toimmediately notify the ad hoc committee by written notice of:

 

•                       any breach byBig City Radio of the forbearance agreement, 

 

•                       any breach byBig City Radio or any other party of any of the foregoing asset purchase agreements,whether or not such breach was curable, and 

 

•                       any terminationby Big City Radio or any other party thereto of any of such asset purchaseagreements. 

 

Inaddition, the forbearance agreement provided that it would automaticallyterminate upon the filing of a voluntary or involuntary petition under theinsolvency or bankruptcy laws of the United States or any state with respect toBig City Radio, except that, upon the filing of an involuntary bankruptcypetition by unaffiliated, arm’s length creditors, Big City Radio would have aperiod of ten days to obtain the dismissal or withdrawal of such a petitionbefore the forbearance agreement terminated as a result of the filing.  In March 2003, a second amendment to theforbearance agreement was signed extending the forbearance period through andincluding April 30, 2003. Although Big City Radio and the signatory noteholdersdiscussed a further extension of the forbearance period, no such extension wasexecuted. Accordingly, if any amounts remain to be paid under the Indenturegoverning the Notes, the signatory noteholders are presently able to exerciseany and all remedies under the Indenture governing the Notes.

 

Between December 23, 2002 and January 2, 2003, BigCity Radio signed asset purchase agreements to sell eleven of the twelve FCCradio stations that it owned. In May 2003, the parties amended the HBC assetpurchase agreement permitting the transfer of non-license assets in exchangefor an initial payment of $29.875 million with a second and final payment of$3.0 million to be made upon the earlier of the transfer of the FCC license(which transfer was effected and which payment was received on July 18, 2003)or November 2, 2004. On September 5, 2003, the Company entered into anasset purchase agreement to sell its last remaining radio station, WYXX-FMMorris, Illinois, to Grundy County Broadcasters, Inc. (GCB) for  $426,000 in cash. This sale was completed onNovember 5, 2003. Following the completionof these five asset purchase agreements, the Company has received gross cashproceeds of approximately $198.3 million and 3,766,478 shares of Entravision’sClass A Common Stock. Under the senior notes forbearance agreementdescribed above, Big City Radio was obligated to apply the net proceeds of theasset sales first to pay the principal amount of the senior notes and allaccrued and unpaid interest thereon through the date of such payment. Followingcompletion of the asset purchase transactions, Big City Radio paid a total ofapproximately $195.4 million to the trustee for the bondholders, which amountthe Company believes is sufficient to pay all of the principal of the Notestogether with simple interest thereon. This total payment was made ininstallments, immediately after the cash consideration from each asset purchasetransaction was received. The Company held discussions with bondholders and thetrustee to determine whether interest on interest was also due and payable. TheCompany and the bondholders did not reach any agreement regarding this issueand it is therefore possible that the Company could be liable to thebondholders in an additional amount of up to $0.75 million. As of September 30, 2003, the Company has recordedits interest payable consistent with its assessment of the most likely outcomeof this contingency.

 

BigCity Radio will apply available cash from its liquidity sources, to make anyadditional principal or interest payment that may be due to the bondholders, aswell as pay expenses relating to the asset sales, including

 

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employee severance andcontractual liabilities due management under employment arrangements, taxliabilities and trade payables and other operating expenses.

 

Afterthe completion of the last remaining asset purchase agreement on November 5,2003, Big City Radio has disposed of all of its operating properties. Itsprincipal sources of liquidity consist of cash on hand, amounts earned on itsinvestment of such cash and the shares of the Entravision Class A common stockit received upon completion of one of its assets sales. Big City Radio willalso seek to obtain additional liquidity by selling shares of the EntravisionClass A common stock. Big City Radio believes that these liquidity sources willbe sufficient to meet its short-term cash needs. On August 22, 2003, Big CityRadio’s board of directors unanimously adopted and approved the plan ofdissolution for Big City Radio.  BigCity Radio obtained stockholder approval of the plan of dissolution on November13, 2003 by the written consent of the holders of a majority of the votingpower of Big City Radio’s common stock in accordance with the requirements ofDelaware law and Big City Radio’s certificate of incorporation.  Under the plan of dissolution, Big City Radiowill:

 

•                  file a certificate ofdissolution with the Delaware Secretary of State;

 

•                  cease conducting normalbusiness operations, except as may be required to wind up its business affairs;

 

•                  determine whether and whento transfer its property and assets, other than cash or cash equivalents, to aliquidating trust;

 

•                  attempt to convert all ofits remaining assets into cash or cash equivalents in an orderly fashion, withsuch exceptions as the board of directors may approve;

 

•                  pay or attempt to provideadequately for the payment of all of its known claims and obligations;

 

•                  if determined to beappropriate, establish a contingency reserve designed to satisfy any additionalclaims and obligations; and

 

•                  distribute all of itsremaining assets, if any, in one or more liquidating distributions on a prorata basis to or for the benefit of its stockholders as of the applicablerecord date or dates.

 

Afull discussion of, and the details and implications of, the adoption of thisplan of liquidation, will be sent to shareholders in an Information Statementpursuant to Section 14(c) of the Securities Exchange Act of 1934.

 

*Cashused in discontinued operations*

 

Inthe nine months ended September 30, 2003 and 2002, respectively, the Companyused cash in its discontinued operations. In the nine months ended September 30, 2003, cash generated from thesale of the discontinued radio operations and collection of the sold stationsreceivables was primarily used to repay the principal and interest on thesenior notes and accelerated payments to creditors due to the sale of itsstations. In the nine months ended September 30, 2002, the Company used cash inits discontinued operations primarily to make the semi-annual interest paymenton the senior notes and to fund operating cash deficits in the New York andChicago station operations.

 

**Applicationof Asset Sale Proceeds; Future Operations of Big City Radio**

 

Under its purchaseagreements with Entravision, Nassau, Spanish Broadcasting, HispanicBroadcasting, and Grundy County Broadcasters pursuant to which Big City Radiohas sold all 12 of its radio stations, Big City Radio has received gross cashproceeds of approximately $198.3 million. In addition, Entravision issued

 

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3,766,478 shares of Entravision’s Class Acommon stock to Big City Radio in connection with the asset sale toEntravision. Commencing during the quarter ended June 30, 2003, throughNovember 10, 2003, the Company has sold a total of 1,024,200 shares of EntravisionClass A common stock, realizing cash proceeds of approximately $10.8 million,representing an average selling price of $10.62 per share. Based upon theclosing price of the Entravision Class A common stock on November 10, 2003 of$10.12 per share, the remaining 2,742,278 shares of Entravision Class A commonstock are worth an aggregate of $27.8 million. The aggregate value of theshares of Entravision Class A common stock at the date of their receipt by theCompany, April 16, 2003, was approximately $24.4 million. Big City Radio mayhave to sell at least a portion of its Entravision Class A common stock togenerate sufficient cash to satisfy its remaining liabilities and obligations.If and when Big City Radio seeks to sell its shares of Entravision’s Class Acommon stock, it may not be able to do so for proceeds that approximate thevalue on the date of this Quarterly Report on Form 10-Q, or that are sufficientto meet its cash needs.

 

As a result of the completedasset sales and the realized and unrealized gains in the Entravision Class Acommon stock since April 16, 2003, the date the Entravision transaction wascompleted, the Company has reported a total estimated tax provision for Federaland State taxes for the nine months ended September 30, 2003 of approximately$6.5 million. This total provision was estimated assuming the liquidation ofthe Entravision Class A common stock at its closing price on September 30,2003. As of September 30, 2003, the Company has made estimated tax payments ofapproximately $4 million. Big City Radio has paid to date brokerage, legal andaccounting fees relating to the transactions and lease termination expenses ofapproximately $4.34 million. Big City Radio will incur other transaction costs,including payments to its executive officers and directors, severance and othercontractual obligations to management under employment arrangements, andamounts as yet unpaid to vendors.

 

Under its forbearanceagreement with holders of its senior notes, Big City Radio was obligated toapply the aggregate net cash proceeds of the asset sales first to pay theprincipal amount of the senior notes and all accrued and unpaid interestthereon through the date of such payment. The Company has paid the trustee forthe bondholders approximately $195.4 million, which amount the Company believesis sufficient to pay all of the principal of the Notes together with simpleinterest thereon. The Company held discussions with bondholders and the trusteeto determine whether interest on interest was also due and payable. The Companyand the bondholders did not reach any agreement regarding this issue and it istherefore possible that the Company could be liable to the bondholders in anadditional amount of up to $0.75 million. As of September 30, 2003, the Companyhas recorded its interest payable consistent with its assessment of the mostlikely outcome of this contingency.

 

BigCity Radio has completed its proposed asset sales.

 

OnAugust 22, 2003, Big City Radio’s board of directors unanimously adopted andapproved the plan of dissolution for Big City Radio.  Big City Radio obtained stockholder approval of the plan ofdissolution on November 13, 2003 by the written consent of the holders of amajority of the voting power of Big City Radio’s common stock in accordancewith the requirements of Delaware law and Big City Radio’s certificate ofincorporation.  Under the plan ofdissolution, Big City Radio will:

 

•                  file a certificate ofdissolution with the Delaware Secretary of State;

 

•                  cease conducting normalbusiness operations, except as may be required to wind up its business affairs;

 

•                  determine whether and whento transfer its property and assets, other than cash or cash equivalents, to aliquidating trust;

 

•                  attempt to convert all ofits remaining assets into cash or cash equivalents in an orderly fashion, withsuch exceptions as the board of directors may approve;

 

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•                  pay or attempt to provideadequately for the payment of all of its known claims and obligations;

 

•                  if determined to beappropriate, establish a contingency reserve designed to satisfy any additionalclaims and obligations; and

 

•                  distribute all of itsremaining assets, if any, in one or more liquidating distributions on a pro ratabasis to or for the benefit of its stockholders as of the applicable recorddate or dates.

 

A full discussion of, andthe details and implications of, the adoption of this plan of liquidation, willbe sent to shareholders in an Information Statement Pursuant to Section 14(c)of the Securities Exchange Act of 1934. Because of uncertainties concerning theprecise net value of Big City Radio’s non-cash assets, including its holdingsof Class A common stock of Entravision Communications Corporation, and the amountof any unforeseen claims and obligations it may incur, Big City Radio cannotcurrently predict the aggregate net value of its assets that ultimately may beavailable for distribution to stockholders. Although the board of directors has not yet established a timetable fordistributions, if any, to its stockholders, the board of directors will,subject to uncertainties inherent in winding up Big City Radio’s business, makeany such distributions as promptly as practicable after December 31, 2003.

 

Despite the adoption of aplan of dissolution, Big City Radio currently is obligated to comply with theapplicable reporting requirements of the Securities Exchange Act of 1934.  In order to eliminate expenses it incurs tocomply with these requirements, Big City Radio intends to terminate theregistration of its common stock under the Securities Exchange Act of 1934 onor about the final record date.  Uponits filing of notice of such termination with the SEC, Big City Radio willcease filing quarterly, annual and current reports with the SEC.

 

Because of the uncertaintiesdiscussed above, Big City Radio cannot provide any assurance that it will haveany assets available for distribution to its stockholders or, if it does haveassets available for distribution, that it will make a distribution of any orall of such assets.

 

**SpecialNote Regarding Forward-Looking Statements**

 

Certain statements in thisreport, including those utilizing the phrases “will,” “expects,” “intends,”“estimates,” “contemplates,” and similar phrases, are “forward-looking”statements (as such term is defined in Section 27A of the Securities Act of1933, as amended (the “Securities Act”), and Section 21E of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”)), including statementsregarding, among other items, the Company’s expectation of consummating theplanned sale of the Company’s sole remaining radio station.  Certain, but not necessarily all, of suchforward-looking statements can be identified by the use of forward-lookingterminology such as “believes,” “expects,” “may,” “will,” “should,” or“anticipates” or the negative thereof or other variations thereon or comparableterminology, or by discussions of strategy that involve risks anduncertainties. Such forward-looking statements involve known and unknownrisks, uncertainties and other factors which may cause the actual results,performance and achievements of the Company and its subsidiaries to bematerially different from any future results, performance or achievementsexpressed or implied by such forward-looking statements. Such factorsinclude, but are not limited to, the following: (i) changes in thefinancial markets and in the Company’s ability to sell its remaining shares ofEntravision Class A Common Stock, and (ii) changes in the regulatory framework.Other factors which may materially affect actual results include, among others,the following: general economic and business conditions, changes in political,social and economic conditions and various other factors beyond the Company’scontrol. The Company does not undertake and specifically declines anyobligation to publicly release the results of any revisions which may be madeto any forward-looking statements to reflect events or circumstancesafter the date of such statements or to reflect the occurrence of anticipatedor unanticipated events.

 

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**Factors that May Affect Future Results and FinancialCondition**

 

The following factors (inaddition to others) could have a material and adverse impact on the Company’sbusiness:

 

Cash on hand is insufficient to meet Big City Radio’s obligations andcommitments. Big City Radio’s debt has been accelerated under the indenturegoverning its senior notes. The Company has paid approximately $195.4 millionof principal and interest to the trustee for the bondholders, which amount theCompany believes is sufficient to pay all of the principal of the Notestogether with simple interest thereon. The Company held discussions withbondholders and the trustee to determine whether interest on interest was alsodue and payable. The Company and the bondholders did not reach any agreementregarding this issue and it is therefore possible that the Company could beliable to the bondholders in an additional amount of up to $0.75 million. As of September 30, 2003, the Company has recordedits interest payable consistent with its assessment of the most likely outcomeof this contingency.  Furthermore,Big City Radio has significant other liabilities for taxes, employee severanceand management employment arrangements, and other trade payables. Big CityRadio has sold all its operating assets and so it is not generating cash flowfrom operations to meet its obligations and commitments. Big City radio mustrely on its existing cash resources and the future sales of its marketablesecurities, predominantly shares of Entravision Class A common stock receivedin one of the asset sales, or it must raise additional debt or equity capital,or seek protection under the bankruptcy laws. These alternative strategiesmight not be effected on satisfactory terms, if at all.

 

Big City Radio currently does not have a credit agreement. The Companymay not be able to obtain a new credit agreement in the event that it were toseek such an agreement, which it does not plan to do.

 

Big City Radio is a defendant in A.L., a minor by her guardian ad litem C.V., a minor by her guardian ad litem v. Big City Radio, Inc., Firmo Martin Rosetti, aka Hector Rocksetti, aka Hector Rosetti; KSYY-FM; KVYY-FM; VIVA 107.1.  The plaintiffs commenced the case in Superior Court for the County of Los Angeles on August 15, 2002 and it was subsequently removed to the United States District Court for the Central District of California. The complaint alleges claims for negligence, sexual assault, battery, negligent infliction of emotional distress and intentional infliction of emotional distress arising from actions alleged to have been perpetrated by Hector Rosetti, a former employee of Big City Radio. Mr. Rosetti is currently incarcerated in a California state prison for the actions that are the subject of this lawsuit. The plaintiffs’ complaint does not specify the damages they seek, except that they have stated that they seek damages in excess of the $75,000 jurisdictional amount for the federal district courts. In addition, in mediation the plaintiffs demanded aggregate damages of $5 million, and at another time indicated that they could seek damages of $50 million. Big City Radio was vigorously contesting its liability based upon its contentions that Mr. Rosetti’s misconduct was outside the scope of his employment, done without the knowledge of Big City Radio or its officers and contrary to its policies and procedures.  Nonetheless, in order to avoid the costs and expenses of litigating the case, and the risks inherent in any litigation, Big City Radio recently entered into a Memorandum of Settlement pursuant to which Big City Radio will pay the plaintiffs an aggregate of $500,000 in exchange for a release and a dismissal of the case with prejudice. The settlement is subject to the execution of definitive settlement documentation and court approval.  The Company recorded an accrued expense for this settlement during the quarter ended September 30, 2003.

 

Big City Radio and its chairman, Stuart Subotnick, were defendants in O’Neill v. Big City Radio, Inc. et al., no. 03-1957 WMB(SHx), an action initiated in United States District Court for the Central District of California by Sean O’Neill, a former employee of Big City Radio. While the plaintiff’s statements of his damages have not been consistent, the plaintiff alleges that he is owed as much as $2.1 million under an oral employment agreement and written change of control agreement, and related claims of breach of implied covenant of good faith and fair dealing and fraud and deceit. Big City Radio was vigorously contesting its liability based upon its contention that no oral employment agreement existed, that its obligations under change of control agreements ended when the plaintiff’s employment with Big City Radio was terminated, and that the plaintiff did not have valid claims for breach of implied covenant of good faith and fair dealing or fraud and deceit.  Nonetheless, in order to avoid the costs and expenses of litigating the case, and the risks inherent in any litigation, Big City Radio

 

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recently settled the case by paying $362,500 to the plaintiff in exchange for a release and a dismissal of the case with prejudice.  The Company recorded an accrued expense for this settlement amount during the quarter ended September 30, 2003.

 

**CriticalAccounting Policies and Material Estimates**

 

BigCity Radio’s discussion and analysis of its financial condition and results ofoperations are based upon its consolidated financial statements, which havebeen prepared in accordance with the accounting principles generally acceptedin the United States. The preparation of these financial statements requiresBig City Radio to make estimates and judgments that affected the reportedamounts of assets, liabilities, revenues and expenses, and related disclosureof contingent assets and liabilities. On an on-going basis, Big City Radioevaluates its estimates, including those to broadcast rights, bad debts,intangible assets, income taxes, and contingencies and litigation. Big CityRadio bases its estimates on historical experience and on various otherassumptions that it believes to be reasonable under the circumstances, theresults of which form the basis for making judgments about the carrying valuesof assets and liabilities that are not readily apparent from other sources.Actual results may differ from these estimates under different assumptions orconditions. Big City Radio believes the following critical accounting policiesaffect its more significant judgment and estimates used in the preparation ofits consolidated financial statements.

 

***Revenue Recognition****.*BigCity Radio recorded revenue from the sale of airtime related to advertising andcontracted time at the time of broadcast. Big City Radio maintains allowancesfor doubtful accounts for estimated losses resulting from the inability of itscustomers to make required payments. Big City Radio utilizes informationavailable to Big City Radio, including the timing of payments and the financialcondition of its customers to estimate the allowance for doubtful accounts. Asof September 30, 2003, Big City Radio has made full provision for alluncollected amounts due from customers of the radio stations.

 

***Business Combinations and Goodwill andother Intangible Assets.***    InJuly 2001, the Financial Accounting Standards Board, or FASB, issued SFAS No.141, Business Combinations, and SFAS No. 142, Goodwill and Other IntangibleAssets. SFAS No. 141 requires that the purchase method of accounting be usedfor all business combinations initiated after June 30, 2001 as well as allpurchase method business combinations completed after June 30, 2001. SFAS No.141 also specifies criteria that intangible assets acquired in a purchasemethod business combination must meet to be recognized and reported apart fromgoodwill, noting that any purchase price allocable to an assembled workforcemay not be accounted for separately. SFAS No. 142 requires that goodwill andintangible assets with indefinite useful lives no longer be amortized, butinstead be tested for impairment at least annually in accordance with theprovisions of SFAS No. 142. SFAS No. 142 requires that intangible assets withdefinite useful lives be amortized over their respective estimated useful livesto their estimated residual values, and reviewed for impairment in accordancewith SFAS No. 144, Accounting for the Impairment or Disposal of Long-LivedAssets.

 

BigCity Radio adopted SFAS No. 141 and SFAS No. 142 effective January 1, 2002. Anygoodwill and any intangible asset determined to have an indefinite useful lifethat was acquired in a purchase business combination completed after June 30,2001 was not amortized, but will continue to be evaluated for impairment inaccordance with the appropriate pre-SFAS No. 142 accounting literature.Goodwill and intangible assets acquired in business combinations completedbefore July 1, 2001 were amortized through December 31, 2001.

 

SFASNo. 141 requires that upon adoption of SFAS No. 142, Big City Radio evaluateits existing intangible assets and goodwill that was acquired in a priorpurchase business combination, and make any necessary reclassifications inorder to conform with the new criteria in SFAS No. 141 for recognition apartfrom goodwill. Upon adoption of SFAS No. 142, Big City Radio reassessed theuseful lives and residual values of all intangible assets acquired in businesscombinations accounted for using the purchase method. In addition, to theextent Big City Radio identified an intangible asset as having an indefiniteuseful life, Big City Radio was required to test the intangible asset forimpairment in accordance with the provisions of SFAS No. 142 within the firstinterim period. Any impairment loss would have been measured as of the date ofadoption and recognized as the cumulative

 

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effect of a change inaccounting principle. No significant adjustments or impairment losses resultedfrom the adoption of SFAS No. 141 and SFAS No. 142.

 

Inconnection with the transitional goodwill impairment evaluation, SFAS No. 142required Big City Radio to perform an assessment of whether there was anindication that goodwill was impaired as of the date of adoption. To accomplishthis, Big City Radio identified its reporting units and determined the carryingvalue of each reporting unit by assigning the assets and liabilities, includingthe existing goodwill and intangible assets, to those reporting units as of thedate of adoption. As each reporting unit’s carrying amount did not exceed itsfair value, there was no indication that the reporting unit’s goodwill may beimpaired and Big City Radio was not required to perform the second step of thetransitional impairment test. In the second step, Big City Radio would comparethe implied fair value of the reporting unit’s goodwill, determined byallocating the reporting unit’s fair value to all of its assets, recognized andunrecognized, and liabilities in a manner similar to a purchase priceallocation in accordance with SFAS No. 141, to its carrying amount, both ofwhich would be measured as of the date of adoption. Any transitional impairmentloss was required to be recognized as the cumulative effect of a change inaccounting principle in Big City Radio’s statement of earnings. No such lossresulted from Big City Radio’s adoption of SFAS No. 142.

 

Inaccordance with SFAS No. 142, Big City Radio discontinued the amortization ofgoodwill and intangible assets, consisting of a broadcast license (intangibleasset with an indefinite useful life), effective January 1, 2002. During thequarter ended March 31, 2002, Big City Radio completed the transitionalimpairment test, which did not result in impairment of recorded intangibleassets. In June 2002, Big City Radio ceased the operation of its publishingoperations, and wrote off the remaining $108,000 of goodwill associated withsuch operations. During the fourth quarter of 2002, the Company made thedecision to sell its broadcast licenses. In accordance with SFAS No.144, theselicenses are reported as assets held for sale. The Company compared thelicenses’ carrying value to their fair value, less the estimated cost to sellthem. The fair value of the stations were based on asset sale agreements eachof the 12 stations. This review of the carrying value of its intangible assetsresulted in total charges of $714,000 relating to the impairment in value ofsome of its FCC broadcast licenses. As of September 30, 2003, Big City Radiohas no remaining un-amortized goodwill, and had un-amortized broadcast licensesin the amount of $350,000.

 

***Accounting for Impairment of Long-LivedAssets and Long-Lived Assets to be Disposed of.***   InAugust 2001, the FASB issued SFAS No. 144, Accounting for the Impairment orDisposal of Long-Lived Assets (“SFAS No. 144”), which supersedes both SFAS No.121, Accounting for the Impairment of Long-Lived Assets and for Long-LivedAssets to Be Disposed Of (“SFAS No. 121”), and the accounting and reportingprovisions of APB Opinion No. 30, Reporting the Results of Operations—Reportingthe Effects of Disposal of a Segment of a Business, and Extraordinary, Unusualand Infrequently Occurring Events and Transactions (“Opinion 30”), for thedisposal of a segment of a business (as previously defined in that Opinion).SFAS No. 144 retains the fundamental provisions in SFAS No. 121 for recognizingand measuring impairment losses on long-lived assets held for use and long-livedassets to be disposed of by sale, while also resolving significantimplementation issues associated with SFAS No. 121. For example, SFAS No. 144provides guidance on how a long-lived asset that is used as part of a groupshould be evaluated for impairment, establishes criteria for when a long-livedasset is held for sale, and prescribes the accounting for a long-lived assetthat will be disposed of other than by sale. SFAS No. 144 retains the basicprovisions of Opinion 30 on how to present discontinued operations in theincome statement but broadens that presentation to include a component of anentity, rather than a segment of a business. Unlike SFAS No. 121, an impairmentassessment under SFAS No. 144 will never result in a write-down of goodwill.Rather, goodwill is evaluated for impairment under SFAS No. 142, Goodwill andOther Intangible Assets.

 

BigCity Radio adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No.144 did not have a material impact on the financial position, cash flows, or resultsof operations of Big City Radio. Big City Radio discontinued its publishingoperations during June 2002. This was treated as a discontinued operation underSFAS No. 144. In December 2002, the Companyannounced sales of eleven of its twelve radio stations in Los Angeles, NewYork, and Chicago. The Company has recently completed the sale of its lastremaining radio station. Big City

 

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Radio’sconsolidated financial statements for all periods presented have been adjustedto reflect the radio station sales and ceased publishing operations asdiscontinued operations in accordance with SFAS No. 144.

 

***Accounting for Cost Associated with Exit orDisposal Activities****.* In June 2002, theFinancial Accounting Standards Board issued FASB Statement No. 146, Accountingfor Costs Associated with Exit or Disposal Activities (“SFAS No. 146”), whichnullifies Emerging Issues Task Force (EITF) Issue No. 94-3 LiabilityRecognition for Certain Employee Termination Benefits and Other Costs to Exitan Activity (including Certain Costs Incurred in a Restructuring) (“Issue94-3”).

 

Theprincipal difference between SFAS No. 146 and Issue 94-3 relates to itsrequirements for recognition of a liability for a cost associated with an exitor disposal activity. SFAS No. 146 requires that a liability for a costassociated with an exit or disposal activity be recognized when the liabilityis incurred. Under Issue 94-3, a liability for an exit cost as defined in Issue94-3 was recognized at the date of an entity’s commitment to an exit plan.Under SFAS No. 146, a commitment to a plan, by itself, does not create apresent obligation to others that meets the definition of a liability. SFAS No.146 also establishes that fair value is the objective for initial measurementof the liability.

 

BigCity Radio was required to adopt SFAS No. 146 on exit and disposal activitiesthat are initiated after December 31, 2002, with early application encouraged.Big City Radio adopted SFAS No. 146 in relation to exit and disposal activitiesinitiated after September 30, 2002. During the quarter ended June 30, 2003, the Company recorded leasetermination costs of $1.41 million.

 

**Off Balance Sheet Transactions**

 

TheCompany did not have any off-balance sheet transaction as of September 30,2003.

 

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**ITEM 3.****Quantitative and Qualitative****Disclosures About Market Risk**

 

The Company is exposed tothe impact of interest rate changes and the change in the market values of itsinvestments.

 

The Company’s exposure tomarket rate risk for changes in interest rates relates primarily to theCompany’s investment portfolio. The Company has not used derivative financialinstruments in its investment portfolio. The Company invests its excess cash indebt instruments of the U.S. Government and its agencies and, by policy, limitsthe amount of credit exposure to any one issuer. The Company protects andpreserves its invested funds by limiting default, market and reinvestment risk.

 

Investments in fixed rateinterest earning instruments carry a degree of interest rate risk. Fixed ratesecurities may have their fair market value adversely impacted due to a rise ininterest rates. The Company may suffer losses in principal if forced to sellsecurities which have declined in market value due to changes in interestrates.

 

**ITEM 4.****Controls and Procedures**

 

(a)          Evaluation ofDisclosure Controls and Procedures

 

The Company’s ChiefFinancial Officer has evaluated the effectiveness of the Company’s disclosurecontrols and procedures (as such term is defined in Rules 13a-14(c) and15d-14(c) under the Securities Exchange Act of 1934, as amended, or theExchange Act) as of a date within 90 days prior to the filing date of thisquarterly report, or the Evaluation Date. Based on such evaluation, suchofficer has concluded that as of the Evaluation Date, the Company’s disclosurecontrols and procedures are effective in alerting them on a timely basis tomaterial information relating to the Company, including its consolidatedsubsidiaries, that is required to be included in its reports filed or submittedunder the Exchange Act.

 

(b)         Changes inInternal Controls

 

Since the Evaluation Date,there have not been any significant changes in the Company’s internal controlsor in other factors that could significantly affect such controls.

 

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**Part II — Other Information**

 

**Item 1 — Legal Proceedings**

 

BigCity Radio is a defendant in A.L., a minor by her guardian ad litem C.V., aminor by her guardian ad litem v. Big City Radio, Inc., Firmo Martin Rosetti,aka Hector Rocksetti, aka Hector Rosetti; KSYY-FM; KVYY-FM; VIVA 107.1.  The plaintiffs commenced the case inSuperior Court for the County of Los Angeles on August 15, 2002 and it wassubsequently removed to the United States District Court for the CentralDistrict of California. The complaint alleges claims for negligence, sexualassault, battery, negligent infliction of emotional distress and intentionalinfliction of emotional distress arising from actions alleged to have beenperpetrated by Hector Rosetti, a former employee of Big City Radio. Mr. Rosettiis currently incarcerated in a California state prison for the actions that arethe subject to this lawsuit. The plaintiffs’ complaint does not specify thedamages they seek, except that they have stated that they seek damages inexcess of the $75,000 jurisdictional amount for the federal district courts. Inaddition, in mediation the plaintiffs demanded aggregate damages of $5 million,and at another time indicated that they could seek damages of $50 million. BigCity Radio was vigorously contesting its liability based upon its contentionsthat Mr. Rosetti’s misconduct was outside the scope of his employment, donewithout the knowledge of Big City Radio or its officers and contrary to itspolicies and procedures.  Nonetheless,in order to avoid the costs and expenses of litigating the case, and the risksinherent in any litigation, Big City Radio recently entered into a Memorandumof Settlement pursuant to which Big City Radio will pay the plaintiffs anaggregate of $500,000 in exchange for a release and a dismissal of the casewith prejudice. The settlement is subject to the execution of definitivesettlement documentation and court approval. The Company recorded an accrued expense for this settlement amountduring the quarter ended September 30, 2003.

 

BigCity Radio and its chairman, Stuart Subotnick, were defendants in O’Neill v.Big City Radio, Inc. et al., no. 03-1957 WMB(SHx), an action initiated inUnited States District Court for the Central District of California by SeanO’Neill, a former employee of Big City Radio. While the plaintiff’s statementsof his damages have not been consistent, the plaintiff alleges that he is owedas much as $2.1 million under an oral employment agreement and written changeof control agreement, and related claims of breach of implied covenant of goodfaith and fair dealing and fraud and deceit. Big City Radio was vigorously contestingits liability based upon its contention that no oral employment agreementexisted, that its obligations under change of control agreements ended when theplaintiff’s employment with Big City Radio was terminated, and that theplaintiff did not have valid claims for breach of implied covenant of goodfaith and fair dealing or fraud and deceit. Nonetheless, in order to avoid the costs and expenses of litigating thecase, and the risks inherent in any litigation, Big City Radio recently settledthe case by paying $362,500 to the plaintiff in exchange for a release and adismissal of the case with prejudice. The Company recorded an accrued expense for this settlement amountduring the quarter ended September 30, 2003.

 

TheCompany is involved in litigation from time to time in the ordinary course ofits business.  In management’s opinion,the outcome of all pending legal proceedings, individually and in theaggregate, will not have a material adverse effect on the Company.

 

**Item 2****— Changes inSecurities and Use of Proceeds**

 

None.

 

**Item 3****— Defaults Upon Senior Securities**

 

Anevent of default has occurred under the Indenture governing the Company’s11.25% Senior Discount Notes due 2005 (the “Notes”) as a result of theCompany’s failure to make payment of a semi-annual interest payment due underthe Notes on September 15, 2002 or during the applicable grace period, and anevent of default has occurred under section 3.7 of the Indenture concerning theCompany’s failure to make an offer to repurchase Notes using a portion of thecash proceeds from the October 31, 2001 sale of the Company’s four Phoenixradio stations to Hispanic Broadcasting Corporation. On October 17, 2002,pursuant to the indenture,

 

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holders of the senior notes delivered an acceleration notice to BigCity Radio declaring notice to Big City Radio declaring the principal andinterest on all of the senior notes to be immediately due and payable.

 

The Company has paid approximately $195.4 million of principal andinterest to the trustee for the bondholders, which amount the Company believesis sufficient to pay all of the principal of the Notes together with simpleinterest thereon. The Company helddiscussions with bondholders and the trustee to determine whether interest oninterest was also due and payable. The Company and the bondholders did notreach any agreement regarding this issue and it is therefore possible that theCompany could be liable to the bondholders in an additional amount of up toapproximately $0.75 million.  As of September 30, 2003, the Company has recordedits interest payable consistent with its assessment of the most likely outcomeof this contingency.

 

**Item 4****— Submission ofMatters to a Vote of Security Holders**

 

No matters were submitted to a vote of the Company’s security holdersduring the quarter ended September 30, 2003.

 

On August 22, 2003, Big City Radio’s board of directors unanimouslyadopted and approved a plan of complete liquidation and dissolution for Big CityRadio.  Big City Radio obtainedstockholder approval of the plan of dissolution on November 13, 2003  by the written consent of the holders of amajority of the voting power of Big City Radio’s common stock in accordancewith the requirements of Delaware law and Big City Radio’s certificate ofincorporation.  Under the plan ofdissolution, Big City Radio will:

 

•                  file a certificate ofdissolution with the Delaware Secretary of State;

 

•                  cease conducting normalbusiness operations, except as may be required to wind up its business affairs;

 

•                  determine whether and whento transfer its property and assets, other than cash or cash equivalents, to aliquidating trust;

 

•                  attempt to convert all ofits remaining assets into cash or cash equivalents in an orderly fashion, withsuch exceptions as the board of directors may approve;

 

•                  pay or attempt to provideadequately for the payment of all of its known claims and obligations;

 

•                  if determined to beappropriate, establish a contingency reserve designed to satisfy any additionalclaims and obligations; and

 

•                  distribute all of itsremaining assets, if any, in one or more liquidating distributions on a prorata basis to or for the benefit of its stockholders as of the applicablerecord date or dates.

 

A full discussion of, and the details and implications of, the adoptionof this plan of liquidation, will be sent to shareholders in an InformationStatement pursuant to Section 14(c) of the Securities Exchange Act of 1934.

 

**Item 5****— Other Information**

 

Aspreviously announced, the Company’s board of directors unanimously approved aplan of complete liquidation and dissolution of the Company in August2003.  On November 13, 2003, StuartSubotnick, Anita

 

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Subotnick and SubotnickPartners, L.P., holders of a majority of the voting power of Big City Radio’scommon stock, executed and delivered to the Company a written consent approvingthe plan.  Information describing theplan and related matters will be set forth in an information statement filedwith the SEC and mailed to stockholders. The Company may first take corporate action in accordance with thestockholder approval by filing a certificate of dissolution with the DelawareSecretary of State not less than 20 days after the date that the informationstatement is first mailed to its stockholders.

 

**Item 6****— Exhibits and Reports onForm 8-K**

 

(a)   Exhibits

 

Exhibit 31.1  Certification ofChief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of2002.

 

Exhibit 32.1  Certifications Pursuant to 18 U.S.C. Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

(b)   Reports on Form 8-K

 

The registrant filed a Current Report on Form 8-K on April 2, 2003,reporting its Chief Executive Officers and Chief Financial Officerscertification pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.

 

The registrant filed a Current Report on Form 8-K on April 21, 2003,reporting the sale of stations properties.

 

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**SIGNATURES**

 

Pursuant to the requirementsof Section 13 or 15(d) of the Securities and Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
|   |  BIG CITY RADIO, INC. |
|--------|----------------------------|
|   |                       |
|   | By:                        | /s/ PAUL R. THOMSON |   |
|   |                       | Paul R. Thomson |
|   |                       | *Vice President, Chief Financial Officer* |
|   |                       | *and Treasurer* |
|   |                       |

Dated: November 14, 2003

 

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